EN BANC

G.R. No. 160261 November 10, 2003

ERNESTO B. FRANCISCO, JR., petitioner,

NAGMAMALASAKIT NA MGA MANANANGGOL NG MGA MANGGAGAWANG PILIPINO, INC., ITS
OFFICERS AND MEMBERS, petitioner-in-intervention,
WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, INC., petitioner-in-intervention,
vs.
THE HOUSE OF REPRESENTATIVES, REPRESENTED BY SPEAKER JOSE G. DE VENECIA,
THE SENATE, REPRESENTED BY SENATE PRESIDENT FRANKLIN M. DRILON,
REPRESENTATIVE GILBERTO C. TEODORO, JR. AND REPRESENTATIVE FELIX WILLIAM B.
FUENTEBELLA, respondents.
JAIME N. SORIANO, respondent-in-Intervention,
SENATOR AQUILINO Q. PIMENTEL, respondent-in-intervention.

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

G.R. No. 160262 November 10, 2003

SEDFREY M. CANDELARIA, CARLOS P. MEDINA, JR. AND HENEDINA RAZON-ABAD,

petitioners,
ATTYS. ROMULO B. MACALINTAL AND PETE QUIRINO QUADRA, petitioners-in-intervention,
WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, INC., petitioner-in-intervention,
vs.
THE HOUSE OF REPRESENTATIVES, THROUGH THE SPEAKER OR ACTING SPEAKER OR
PRESIDING OFFICER, SPEAKER JOSE G. DE VENECIA, REPRESENTATIVE GILBERTO G.
TEODORO, JR., REPRESENTA-TIVE FELIX WILLIAM B. FUENTEBELLA, THE SENATE OF THE
PHILIPPINES, THROUGH ITS PRESIDENT, SENATE PRESIDENT FRANKLIN M. DRILON,
respondents,
JAIME N. SORIANO, respondent-in-intervention,
SENATOR AQUILINO Q. PIMENTEL, respondent-in-intervention.

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

G.R. No. 160263 November 10, 2003

ARTURO M. DE CASTRO AND SOLEDAD M. CAGAMPANG, petitioners,

WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, INC., petitioners-in-
intervention,
vs.
FRANKLIN M. DRILON, IN HIS CAPACITY AS SENATE PRESIDENT, AND JOSE G. DE VENECIA,
JR., IN HIS CAPACITY AS SPEAKER OF THE HOUSE OF REPRESENTATIVES, respondents,
JAIME N. SORIANO, respondent-in-intervention,
SENATOR AQUILINO Q. PIMENTEL, respondent-in-intervention.

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

G.R. No. 160277 November 10, 2003

FRANCISCO I. CHAVEZ, petitioner,

WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, INC., petitioner-in-intervention,
vs.
JOSE G. DE VENECIA, IN HIS CAPACITY AS SPEAKER OF THE HOUSE OF
REPRESENTATIVES, FRANKLIN M. DRILON, IN HIS CAPACITY AS PRESIDENT OF THE
SENATE OF THE REPUBLIC OF THE PHILIPPINES, GILBERT TEODORO, JR., FELIX WILLIAM
FUENTEBELLA, JULIO LEDESMA IV, HENRY LANOT, KIM BERNARDO-LOKIN, MARCELINO
LIBANAN, EMMYLOU TALIÑO-SANTOS, DOUGLAS CAGAS, SHERWIN GATCHALIAN, LUIS
BERSAMIN, JR., NERISSA SOON-RUIZ, ERNESTO NIEVA, EDGAR ERICE, ISMAEL MATHAY,
SAMUEL DANGWA, ALFREDO MARAÑON, JR., CECILIA CARREON-JALOSJOS, AGAPITO
AQUINO, FAUSTO SEACHON, JR., GEORGILU YUMUL-HERMIDA, JOSE CARLOS LACSON,
MANUEL ORTEGA, ULIRAN JUAQUIN, SORAYA JAAFAR, WILHELMINO SY-ALVARADO,
CLAUDE BAUTISTA, DEL DE GUZMAN, ZENAIDA CRUZ-DUCUT, AUGUSTO BACULIO,
FAUSTINO DY III, AUGUSTO SYJUCO, ROZZANO RUFINO BIAZON, LEOVIGILDO BANAAG,
ERIC SINGSON, JACINTO PARAS, JOSE SOLIS, RENATO MATUBO, HERMINO TEVES, AMADO
ESPINO, JR., EMILIO MACIAS, ARTHUR PINGOY, JR., FRANCIS NEPOMUCENO, CONRADO
ESTRELLA III, ELIAS BULUT, JR., JURDIN ROMUALDO, JUAN PABLO BONDOC, GENEROSO
TULAGAN, PERPETUO YLAGAN, MICHAEL DUAVIT, JOSEPH DURANO, JESLI LAPUS,
CARLOS COJUANGCO, GIORGIDI AGGABAO, FRANCIS ESCUDERRO, RENE VELARDE,
CELSO LOBREGAT, ALIPIO BADELLES, DIDAGEN DILANGALEN, ABRAHAM MITRA, JOSEPH
SANTIAGO, DARLENE ANTONIO-CUSTODIO, ALETA SUAREZ, RODOLF PLAZA, JV BAUTISTA,
GREGORIO IPONG, GILBERT REMULLA, ROLEX SUPLICO, CELIA LAYUS, JUAN MIGUEL
ZUBIRI, BENASING MACARAMBON, JR., JOSEFINA JOSON, MARK COJUANGCO, MAURICIO
DOMOGAN, RONALDO ZAMORA, ANGELO MONTILLA, ROSELLER BARINAGA, JESNAR
FALCON, REYLINA NICOLAS, RODOLFO ALBANO, JOAQUIN CHIPECO, JR., AND RUY ELIAS
LOPEZ, respondents,
JAIME N. SORIANO, respondent-in-intervention,
SENATOR AQUILINO Q. PIMENTEL, respondent-in-intervention.

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

G.R. No. 160292 November 10, 2003

HERMINIO HARRY L. ROQUE, JR., JOEL RUIZ BUTUYAN, MA. CECILIA PAPA, NAPOLEON C.
REYES, ANTONIO H. ABAD, JR., ALFREDO C. LIGON, JOAN P. SERRANO AND GARY S.
MALLARI, petitioners,
WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, INC., petitioner-in-intervention,
vs.
HON. SPEAKER JOSE G. DE VENECIA, JR. AND ROBERTO P. NAZARENO, IN HIS CAPACITY
AS SECRETARY GENERAL OF THE HOUSE OF REPRESENTATIVES, AND THE HOUSE OF
REPRESENTATIVES, respondents,
JAIME N. SORIANO, respondent-in-intervention,
SENATOR AQUILINO Q. PIMENTEL, respondent-in-intervention.

x---------------------------------------------------------x
G.R. No. 160295 November 10, 2003

SALACNIB F. BATERINA AND DEPUTY SPEAKER RAUL M. GONZALES, petitioners,

WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, INC., petitioner-in-intervention,

vs.
THE HOUSE OF REPRESEN-TATIVES, THROUGH THE SPEAKER OR ACTING SPEAKER OR
PRESIDING OFFICER, SPEAKER JOSE G. DE VENECIA, REPRESENTATIVE GILBERTO G.
TEODORO, JR., REPRESENTATIVE FELIX WILLIAM B. FUENTEBELLA, THE SENATE OF THE
PHILIPPINES, THROUGH ITS PRESIDENT, SENATE PRESIDENT FRANKLIN M. DRILON,
respondents,
JAIME N. SORIANO, respondent-in-intervention,
SENATOR AQUILINO Q. PIMENTEL, respondent-in-intervention.

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

G.R. No. 160310 November 10, 2003

LEONILO R. ALFONSO, PETER ALVAREZ, SAMUEL DOCTOR, MELVIN MATIBAG, RAMON

MIQUIBAS, RODOLFO MAGSINO, EDUARDO MALASAGA, EDUARDO SARMIENTO,
EDGARDO NAOE, LEONARDO GARCIA, EDGARD SMITH, EMETERIO MENDIOLA, MARIO
TOREJA, GUILLERMO CASTASUS, NELSON A. LOYOLA, WILFREDO BELLO, JR., RONNIE
TOQUILLO, KATE ANN VITAL, ANGELITA Q. GUZMAN, MONICO PABLES, JR., JAIME
BOAQUINA, LITA A. AQUINO, MILA P. GABITO, JANETTE ARROYO, RIZALDY EMPIG, ERNA
LAHUZ, HOMER CALIBAG, DR. BING ARCE, SIMEON ARCE, JR., EL DELLE ARCE, WILLIE
RIVERO, DANTE DIAZ, ALBERTO BUENAVISTA, FAUSTO BUENAVISTA, EMILY SENERIS,
ANNA CLARISSA LOYOLA, SALVACION LOYOLA, RAINIER QUIROLGICO, JOSEPH
LEANDRO LOYOLA, ANTONIO LIBREA, FILEMON SIBULO, MANUEL D. COMIA, JULITO U.
SOON, VIRGILIO LUSTRE, AND NOEL ISORENA, MAU RESTRIVERA, MAX VILLAESTER, AND
EDILBERTO GALLOR, petitioners,
WORLD WAR II VETERANS LEGIONARIES OF THE PHILIPPINES, INC., petitioner-in-intervention,
vs.
THE HOUSE OF REPRESENTATIVES, REPRESENTED BY HON. SPEAKER JOSE C. DE
VENECIA, JR., THE SENATE, REPRESENTED BY HON. SENATE PRESIDENT FRANKLIN
DRILON, HON. FELIX FUENTEBELLA, ET AL., respondents.

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

G.R. No. 160318 November 10, 2003

PUBLIC INTEREST CENTER, INC., CRISPIN T. REYES, petitioners,

vs.
HON. SPEAKER JOSE G. DE VENECIA, ALL MEMBERS, HOUSE OF REPRESENTATIVES, HON.
SENATE PRESIDENT FRANKLIN M. DRILON, AND ALL MEMBERS, PHILIPPINE SENATE,
respondents.

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

G.R. No. 160342 November 10, 2003

ATTY. FERNANDO P.R. PERITO, IN HIS CAPACITY AS A MEMBER OF THE INTEGRATED BAR
OF THE PHILIPPINES, MANILA III, AND ENGR. MAXIMO N. MENEZ JR., IN HIS CAPACITY AS
A TAXPAYER AND MEMBER OF THE ENGINEERING PROFESSION, petitioners,
vs.
THE HOUSE OF REPRESENTA-TIVES REPRESENTED BY THE 83 HONORABLE MEMBERS OF
THE HOUSE LED BY HON. REPRESENTATIVE WILLIAM FUENTEBELLA, respondents.

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

G.R. No. 160343 November 10, 2003

INTEGRATED BAR OF THE PHILIPPINES, petitioner,

vs.
THE HOUSE OF REPRESENTA-TIVES, THROUGH THE SPEAKER OR ACTING SPEAKER OR
PRESIDING OFFICER, SPEAKER JOSE G. DE VENECIA, REPRESENTATIVE GILBERTO G.
TEODORO, JR., REPRESENTATIVE FELIX WILLIAM B. FUENTEBELLA, THE SENATE OF THE
PHILIPPINES THROUGH ITS PRESIDENT, SENATE PRESIDENT FRANKLIN M. DRILON,
respondents.

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

G.R. No. 160360 November 10, 2003

CLARO B. FLORES, petitioner,

vs.
THE HOUSE OF REPRESENTATIVES THROUGH THE SPEAKER, AND THE SENATE OF THE
PHILIPPINES, THROUGH THE SENATE PRESIDENT, respondents.

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

G.R. No. 160365 November 10, 2003

U.P. LAW ALUMNI CEBU FOUNDATION, INC., GOERING G.C. PADERANGA, DANILO V.
ORTIZ, GLORIA C. ESTENZO-RAMOS, LIZA D. CORRO, LUIS V. DIORES, SR., BENJAMIN S.
RALLON, ROLANDO P. NONATO, DANTE T. RAMOS, ELSA R. DIVINAGRACIA, KAREN B.
CAPARROS-ARQUILLANO, SYLVA G. AGUIRRE-PADERANGA, FOR THEMSELVES AND IN
BEHALF OF OTHER CITIZENS OF THE REPUBLIC OF THE PHILIPPINES, petitioners,
vs.
THE HOUSE OF REPRESENTA-TIVES, SPEAKER JOSE G. DE VENECIA, THE SENATE OF THE
PHILIPPINES, SENATE PRESIDENT FRANKLIN DRILON, HOUSE REPRESENTATIVES FELIX
FUENTEBELLA AND GILBERTO TEODORO, BY THEMSELVES AND AS REPRESENTATIVES
OF THE GROUP OF MORE THAN 80 HOUSE REPRESENTATIVES WHO SIGNED AND FILED
THE IMPEACHMENT COMPLAINT AGAINST SUPREME COURT CHIEF JUSTICE HILARIO G.
DAVIDE, JR. respondents.

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

G.R. No. 160370 November 10, 2003

FR. RANHILIO CALLANGAN AQUINO, petitioner,

vs.
THE HONORABLE PRESIDENT OF THE SENATE, THE HONORABLE SPEAKER OF THE
HOUSE OF REPRESENTATIVES, respondents.

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

G.R. No. 160376 November 10, 2003

NILO A. MALANYAON, petitioner,
vs.
HON. FELIX WILLIAM FUENTEBELLA AND GILBERT TEODORO, IN REPRESENTATION OF THE
86 SIGNATORIES OF THE ARTICLES OF IMPEACHMENT AGAINST CHIEF JUSTICE HILARIO
G. DAVIDE, JR. AND THE HOUSE OF REPRESENTATIVES, CONGRESS OF THE PHILIPPINES,
REPRESENTED BY ITS SPEAKER, HON. JOSE G. DE VENECIA, respondents.

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

G.R. No. 160392 November 10, 2003

VENICIO S. FLORES AND HECTOR L. HOFILEÑA, petitioners,

vs.
THE HOUSE OF REPRESENTATIVES, THROUGH SPEAKER JOSE G. DE VENECIA, AND THE
SENATE OF THE PHILIPPINES, THROUGH SENATE PRESIDENT FRANKLIN DRILON,
respondents.

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

G.R. No. 160397 November 10, 2003

IN THE MATTER OF THE IMPEACHMENT COMPLAINT AGAINST CHIEF JUSTICE HILARIO G.

DAVIDE, JR., ATTY. DIOSCORO U. VALLEJOS, JR., petitioner.

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

G.R. No. 160403 November 10, 2003

PHILIPPINE BAR ASSOCIATION, petitioner,

vs.
THE HOUSE OF REPRESENTATIVES, THROUGH THE SPEAKER OR PRESIDING OFFICER,
HON. JOSE G. DE VENECIA, REPRESENTATIVE GILBERTO G. TEODORO, JR.,
REPRESENTATIVE FELIX WILLIAM B. FUENTEBELA, THE SENATE OF THE PHILIPPINES,
THROUGH SENATE PRESIDENT, HON. FRANKLIN DRILON, respondents.

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

G.R. No. 160405 November 10, 2003

DEMOCRITO C. BARCENAS, PRESIDENT OF IBP, CEBU CITY CHAPTER, MANUEL M.

MONZON, PRESIDING OF IBP, CEBU PROVINCE, VICTOR A. MAAMBONG, PROVINCIAL
BOARD MEMBER, ADELINO B. SITOY, DEAN OF THE COLLEG EOF LAW, UNIVERSITY OF
CEBU, YOUNG LAWYERS ASSOCAITION OF CEBU, INC. [YLAC], REPRSEENTED BY ATTY.
MANUEL LEGASPI, CONFEDERATION OF ACCREDITED MEDIATORS OF THE PHILIPPINES,
INC. [CAMP, INC], REPRESENTED BY RODERIC R. POCA, MANDAUE LAWYERS
ASSOCIATION, [MANLAW], REPRESENTED BY FELIPE VELASQUEZ, FEDERACION
INTERNACIONAL DE ABOGADAS [FIDA], REPRESENTED BY THELMA L. JORDAN, CARLOS
G. CO, PRESIENT OF CEBU CHAMBER OF COMMERCE AND INDUSTRY AND CEBU LADY
LAWYERS ASSOCIATION, INC. [CELLA, INC.], MARIBELLE NAVARRO AND BERNARDITO
FLORIDO, PAST PRESIDENT CEBU CHAMBER OF COMMERCE AND INTEGRATED BAR OF
THE PHILIPPINES, CEBU CHAPTER, petitioners,
vs.
THE HOUSE OF REPRESENTA-TIVES, REPRESENTED BY REP. JOSE G. DE VENECIA, AS
HOUSE SPEAKER AND THE SENATE, REPRESENTED BY SENATOR FRANKLIN DRILON, AS
SENATE PRESIDENT, respondents.

CARPIO MORALES, J.:

There can be no constitutional crisis arising from a conflict, no matter how passionate and seemingly
irreconcilable it may appear to be, over the determination by the independent branches of
government of the nature, scope and extent of their respective constitutional powers where the
Constitution itself provides for the means and bases for its resolution.

Our nation's history is replete with vivid illustrations of the often frictional, at times turbulent,
dynamics of the relationship among these co-equal branches. This Court is confronted with one such
today involving the legislature and the judiciary which has drawn legal luminaries to chart antipodal
courses and not a few of our countrymen to vent cacophonous sentiments thereon.

There may indeed be some legitimacy to the characterization that the present controversy subject of
the instant petitions – whether the filing of the second impeachment complaint against Chief Justice
Hilario G. Davide, Jr. with the House of Representatives falls within the one year bar provided in the
Constitution, and whether the resolution thereof is a political question – has resulted in a political
crisis. Perhaps even more truth to the view that it was brought upon by a political crisis of
conscience.

In any event, it is with the absolute certainty that our Constitution is sufficient to address all the
issues which this controversy spawns that this Court unequivocally pronounces, at the first instance,
that the feared resort to extra-constitutional methods of resolving it is neither necessary nor legally
permissible. Both its resolution and protection of the public interest lie in adherence to, not departure
from, the Constitution.

In passing over the complex issues arising from the controversy, this Court is ever mindful of the
essential truth that the inviolate doctrine of separation of powers among the legislative, executive or
judicial branches of government by no means prescribes for absolute autonomy in the discharge by
each of that part of the governmental power assigned to it by the sovereign people.

At the same time, the corollary doctrine of checks and balances which has been carefully calibrated
by the Constitution to temper the official acts of each of these three branches must be given effect
without destroying their indispensable co-equality.
Taken together, these two fundamental doctrines of republican government, intended as they are to
insure that governmental power is wielded only for the good of the people, mandate a relationship of
interdependence and coordination among these branches where the delicate functions of enacting,
interpreting and enforcing laws are harmonized to achieve a unity of governance, guided only by
what is in the greater interest and well-being of the people. Verily, salus populi est suprema lex.

Article XI of our present 1987 Constitution provides:

ARTICLE XI

Accountability of Public Officers

SECTION 1. Public office is a public trust. Public officers and employees 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.
SECTION 2. The President, the Vice-President, the Members of the Supreme Court, the Members of
the Constitutional Commissions, and the Ombudsman may be removed from office, on impeachment
for, and conviction of, culpable violation of the Constitution, treason, bribery, graft and corruption,
other high crimes, or betrayal of public trust. All other public officers and employees may be
removed from office as provided by law, but not by impeachment.

SECTION 3. (1) The House of Representatives shall have the exclusive power to initiate all cases
of impeachment.

(2) A verified complaint for impeachment may be filed by any Member of the House of
Representatives or by any citizen upon a resolution of endorsement by any Member thereof, which
shall be included in the Order of Business within ten session days, and referred to the proper
Committee within three session days thereafter. The Committee, after hearing, and by a majority
vote of all its Members, shall submit its report to the House within sixty session days from such
referral, together with the corresponding resolution. The resolution shall be calendared for
consideration by the House within ten session days from receipt thereof.

(3) A vote of at least one-third of all the Members of the House shall be necessary either to affirm a
favorable resolution with the Articles of Impeachment of the Committee, or override its contrary
resolution. The vote of each Member shall be recorded.

(4) In case the verified complaint or resolution of impeachment is filed by at least one-third of all the
Members of the House, the same shall constitute the Articles of Impeachment, and trial by the
Senate shall forthwith proceed.

(5) No impeachment proceedings shall be initiated against the same official more than once within
a period of one year.

(6) The Senate shall have the sole power to try and decide all cases of impeachment. When sitting
for that purpose, the Senators shall be on oath or affirmation. When the President of the Philippines
is on trial, the Chief Justice of the Supreme Court shall preside, but shall not vote. No person shall
be convicted without the concurrence of two-thirds of all the Members of the Senate.

(7) Judgment in cases of impeachment shall not extend further than removal from office and
disqualification to hold any office under the Republic of the Philippines, but the party convicted shall
nevertheless be liable and subject to prosecution, trial, and punishment according to law.
(8) The Congress shall promulgate its rules on impeachment to effectively carry out the purpose
of this section. (Emphasis and underscoring supplied)

Following the above-quoted Section 8 of Article XI of the Constitution, the 12th Congress of the
House of Representatives adopted and approved the Rules of Procedure in Impeachment
Proceedings (House Impeachment Rules) on November 28, 2001, superseding the previous House
Impeachment Rules1 approved by the 11th Congress. The relevant distinctions between these two
Congresses' House Impeachment Rules are shown in the following tabulation:
 11TH CONGRESS RULES

RULE II

INITIATING IMPEACHMENT

Section 2. Mode of Initiating Impeachment. – Impeachment shall be initiated only by a verified

complaint for impeachment filed by any Member of the House of Representatives or by any citizen
upon a resolution of endorsement by any Member thereof or by a verified complaint or resolution of
impeachment filed by at least one-third (1/3) of all the Members of the House.

12TH CONGRESS NEW RULES

RULE V

BAR AGAINST INITIATION OF IMPEACHMENT PROCEEDINGS AGAINST THE SAME

OFFICIAL

Section 16. – Impeachment Proceedings Deemed Initiated. – In cases where a Member of the
House files a verified complaint of impeachment or a citizen files a verified complaint that is
endorsed by a Member of the House through a resolution of endorsement against an impeachable
officer, impeachment proceedings against such official are deemed initiated on the day the
Committee on Justice finds that the verified complaint and/or resolution against such official, as the
case may be, is sufficient in substance, or on the date the House votes to overturn or affirm the
finding of the said Committee that the verified complaint and/or resolution, as the case may be, is not
sufficient in substance.

In cases where a verified complaint or a resolution of impeachment is filed or endorsed, as the case
may be, by at least one-third (1/3) of the Members of the House, impeachment proceedings are
deemed initiated at the time of the filing of such verified complaint or resolution of
impeachment with the Secretary General.

RULE V

BAR AGAINST IMPEACHMENT

Section 14. Scope of Bar. – No impeachment proceedings shall be initiated against the same
official more than once within the period of one (1) year.

Section 17. Bar Against Initiation Of Impeachment Proceedings. – Within a period of one (1)
year from the date impeachment proceedings are deemed initiated as provided in Section 16 hereof,
no impeachment proceedings, as such, can be initiated against the same official. (Italics in the
original; emphasis and underscoring supplied)

On July 22, 2002, the House of Representatives adopted a Resolution, 2 sponsored by

Representative Felix William D. Fuentebella, which directed the Committee on Justice "to conduct an
investigation, in aid of legislation, on the manner of disbursements and expenditures by the Chief
Justice of the Supreme Court of the Judiciary Development Fund (JDF)." 3
On June 2, 2003, former President Joseph E. Estrada filed an impeachment complaint 4 (first
impeachment complaint) against Chief Justice Hilario G. Davide Jr. and seven Associate Justices 5 of
this Court for "culpable violation of the Constitution, betrayal of the public trust and other high
crimes."6 The complaint was endorsed by Representatives Rolex T. Suplico, Ronaldo B. Zamora and
Didagen Piang Dilangalen, 7 and was referred to the House Committee on Justice on August 5, 2003 8
in accordance with Section 3(2) of Article XI of the Constitution which reads:

Section 3(2) A verified complaint for impeachment may be filed by any Member of the House of
Representatives or by any citizen upon a resolution of endorsement by any Member thereof, which
shall be included in the Order of Business within ten session days, and referred to the proper
Committee within three session days thereafter. The Committee, after hearing, and by a majority
vote of all its Members, shall submit its report to the House within sixty session days from such
referral, together with the corresponding resolution. The resolution shall be calendared for
consideration by the House within ten session days from receipt thereof.

The House Committee on Justice ruled on October 13, 2003 that the first impeachment complaint
was "sufficient in form,"9 but voted to dismiss the same on October 22, 2003 for being insufficient in
substance.10 To date, the Committee Report to this effect has not yet been sent to the House in
plenary in accordance with the said Section 3(2) of Article XI of the Constitution.

Four months and three weeks since the filing on June 2, 2003 of the first complaint or on October
23, 2003, a day after the House Committee on Justice voted to dismiss it, the second impeachment
complaint11 was filed with the Secretary General of the House 12 by Representatives Gilberto C.
Teodoro, Jr. (First District, Tarlac) and Felix William B. Fuentebella (Third District, Camarines Sur)
against Chief Justice Hilario G. Davide, Jr., founded on the alleged results of the legislative inquiry
initiated by above-mentioned House Resolution. This second impeachment complaint was
accompanied by a "Resolution of Endorsement/Impeachment" signed by at least one-third (1/3) of all
the Members of the House of Representatives.13

Thus arose the instant petitions against the House of Representatives, et. al., most of which petitions
contend that the filing of the second impeachment complaint is unconstitutional as it violates the
provision of Section 5 of Article XI of the Constitution that "[n]o impeachment proceedings shall be
initiated against the same official more than once within a period of one year."

In G.R. No. 160261, petitioner Atty. Ernesto B. Francisco, Jr., alleging that he has a duty as a
member of the Integrated Bar of the Philippines to use all available legal remedies to stop an
unconstitutional impeachment, that the issues raised in his petition for Certiorari, Prohibition and
Mandamus are of transcendental importance, and that he "himself was a victim of the capricious and
arbitrary changes in the Rules of Procedure in Impeachment Proceedings introduced by the 12th
Congress,"14 posits that his right to bring an impeachment complaint against then Ombudsman
Aniano Desierto had been violated due to the capricious and arbitrary changes in the House
Impeachment Rules adopted and approved on November 28, 2001 by the House of Representatives
and prays that (1) Rule V, Sections 16 and 17 and Rule III, Sections 5, 6, 7, 8, and 9 thereof be
declared unconstitutional; (2) this Court issue a writ of mandamus directing respondents House of
Representatives et. al. to comply with Article IX, Section 3 (2), (3) and (5) of the Constitution, to
return the second impeachment complaint and/or strike it off the records of the House of
Representatives, and to promulgate rules which are consistent with the Constitution; and (3) this
Court permanently enjoin respondent House of Representatives from proceeding with the second
impeachment complaint.

In G.R. No. 160262, petitioners Sedfrey M. Candelaria, et. al., as citizens and taxpayers, alleging
that the issues of the case are of transcendental importance, pray, in their petition for
Certiorari/Prohibition, the issuance of a writ "perpetually" prohibiting respondent House of
Representatives from filing any Articles of Impeachment against the Chief Justice with the Senate;
and for the issuance of a writ "perpetually" prohibiting respondents Senate and Senate President
Franklin Drilon from accepting any Articles of Impeachment against the Chief Justice or, in the event
that the Senate has accepted the same, from proceeding with the impeachment trial.

In G.R. No. 160263, petitioners Arturo M. de Castro and Soledad Cagampang, as citizens,
taxpayers, lawyers and members of the Integrated Bar of the Philippines, alleging that their petition
for Prohibition involves public interest as it involves the use of public funds necessary to conduct the
impeachment trial on the second impeachment complaint, pray for the issuance of a writ of
prohibition enjoining Congress from conducting further proceedings on said second impeachment
complaint.

In G.R. No. 160277, petitioner Francisco I. Chavez, alleging that this Court has recognized that he
has locus standi to bring petitions of this nature in the cases of Chavez v. PCGG15 and Chavez v.
PEA-Amari Coastal Bay Development Corporation,16 prays in his petition for Injunction that the
second impeachment complaint be declared unconstitutional.

In G.R. No. 160292, petitioners Atty. Harry L. Roque, et. al., as taxpayers and members of the legal
profession, pray in their petition for Prohibition for an order prohibiting respondent House of
Representatives from drafting, adopting, approving and transmitting to the Senate the second
impeachment complaint, and respondents De Venecia and Nazareno from transmitting the Articles
of Impeachment to the Senate.

In G.R. No. 160295, petitioners Representatives Salacnib F. Baterina and Deputy Speaker Raul M.
Gonzalez, alleging that, as members of the House of Representatives, they have a legal interest in
ensuring that only constitutional impeachment proceedings are initiated, pray in their petition for
Certiorari/Prohibition that the second impeachment complaint and any act proceeding therefrom be
declared null and void.

In G.R. No. 160310, petitioners Leonilo R. Alfonso et al., claiming that they have a right to be
protected against all forms of senseless spending of taxpayers' money and that they have an
obligation to protect the Supreme Court, the Chief Justice, and the integrity of the Judiciary, allege in
their petition for Certiorari and Prohibition that it is instituted as "a class suit" and pray that (1) the
House Resolution endorsing the second impeachment complaint as well as all issuances emanating
therefrom be declared null and void; and (2) this Court enjoin the Senate and the Senate President
from taking cognizance of, hearing, trying and deciding the second impeachment complaint, and
issue a writ of prohibition commanding the Senate, its prosecutors and agents to desist from
conducting any proceedings or to act on the impeachment complaint.

In G.R. No. 160318, petitioner Public Interest Center, Inc., whose members are citizens and
taxpayers, and its co-petitioner Crispin T. Reyes, a citizen, taxpayer and a member of the Philippine
Bar, both allege in their petition, which does not state what its nature is, that the filing of the second
impeachment complaint involves paramount public interest and pray that Sections 16 and 17 of the
House Impeachment Rules and the second impeachment complaint/Articles of Impeachment be
declared null and void.

In G.R. No. 160342, petitioner Atty. Fernando P. R. Perito, as a citizen and a member of the
Philippine Bar Association and of the Integrated Bar of the Philippines, and petitioner Engr. Maximo
N. Menez, Jr., as a taxpayer, pray in their petition for the issuance of a Temporary Restraining Order
and Permanent Injunction to enjoin the House of Representatives from proceeding with the second
impeachment complaint.
In G.R. No. 160343, petitioner Integrated Bar of the Philippines, alleging that it is mandated by the
Code of Professional Responsibility to uphold the Constitution, prays in its petition for Certiorari and
Prohibition that Sections 16 and 17 of Rule V and Sections 5, 6, 7, 8, 9 of Rule III of the House
Impeachment Rules be declared unconstitutional and that the House of Representatives be
permanently enjoined from proceeding with the second impeachment complaint.

In G.R. No. 160360, petitioner-taxpayer Atty. Claro Flores prays in his petition for Certiorari and
Prohibition that the House Impeachment Rules be declared unconstitutional.

In G.R. No. 160365, petitioners U.P. Law Alumni Cebu Foundation Inc., et. al., in their petition for
Prohibition and Injunction which they claim is a class suit filed in behalf of all citizens, citing Oposa v.
Factoran17 which was filed in behalf of succeeding generations of Filipinos, pray for the issuance of a
writ prohibiting respondents House of Representatives and the Senate from conducting further
proceedings on the second impeachment complaint and that this Court declare as unconstitutional
the second impeachment complaint and the acts of respondent House of Representatives in
interfering with the fiscal matters of the Judiciary.

In G.R. No. 160370, petitioner-taxpayer Father Ranhilio Callangan Aquino, alleging that the issues in
his petition for Prohibition are of national and transcendental significance and that as an official of
the Philippine Judicial Academy, he has a direct and substantial interest in the unhampered
operation of the Supreme Court and its officials in discharging their duties in accordance with the
Constitution, prays for the issuance of a writ prohibiting the House of Representatives from
transmitting the Articles of Impeachment to the Senate and the Senate from receiving the same or
giving the impeachment complaint due course.

In G.R. No. 160376, petitioner Nilo A. Malanyaon, as a taxpayer, alleges in his petition for
Prohibition that respondents Fuentebella and Teodoro at the time they filed the second
impeachment complaint, were "absolutely without any legal power to do so, as they acted without
jurisdiction as far as the Articles of Impeachment assail the alleged abuse of powers of the Chief
Justice to disburse the (JDF)."

In G.R. No. 160392, petitioners Attorneys Venicio S. Flores and Hector L. Hofileña, alleging that as
professors of law they have an abiding interest in the subject matter of their petition for Certiorari and
Prohibition as it pertains to a constitutional issue "which they are trying to inculcate in the minds of
their students," pray that the House of Representatives be enjoined from endorsing and the Senate
from trying the Articles of Impeachment and that the second impeachment complaint be declared
null and void.

In G.R. No. 160397, petitioner Atty. Dioscoro Vallejos, Jr., without alleging his locus standi, but
alleging that the second impeachment complaint is founded on the issue of whether or not the
Judicial Development Fund (JDF) was spent in accordance with law and that the House of
Representatives does not have exclusive jurisdiction in the examination and audit thereof, prays in
his petition "To Declare Complaint Null and Void for Lack of Cause of Action and Jurisdiction" that
the second impeachment complaint be declared null and void.

In G.R. No. 160403, petitioner Philippine Bar Association, alleging that the issues raised in the filing
of the second impeachment complaint involve matters of transcendental importance, prays in its
petition for Certiorari/Prohibition that (1) the second impeachment complaint and all proceedings
arising therefrom be declared null and void; (2) respondent House of Representatives be prohibited
from transmitting the Articles of Impeachment to the Senate; and (3) respondent Senate be
prohibited from accepting the Articles of Impeachment and from conducting any proceedings
thereon.
In G.R. No. 160405, petitioners Democrit C. Barcenas et. al., as citizens and taxpayers, pray in their
petition for Certiorari/Prohibition that (1) the second impeachment complaint as well as the resolution
of endorsement and impeachment by the respondent House of Representatives be declared null and
void and (2) respondents Senate and Senate President Franklin Drilon be prohibited from accepting
any Articles of Impeachment against the Chief Justice or, in the event that they have accepted the
same, that they be prohibited from proceeding with the impeachment trial.

Petitions bearing docket numbers G.R. Nos. 160261, 160262 and 160263, the first three of the
eighteen which were filed before this Court, 18 prayed for the issuance of a Temporary Restraining
Order and/or preliminary injunction to prevent the House of Representatives from transmitting the
Articles of Impeachment arising from the second impeachment complaint to the Senate. Petition
bearing docket number G.R. No. 160261 likewise prayed for the declaration of the November 28,
2001 House Impeachment Rules as null and void for being unconstitutional.

Petitions bearing docket numbers G.R. Nos. 160277, 160292 and 160295, which were filed on
October 28, 2003, sought similar relief. In addition, petition bearing docket number G.R. No. 160292
alleged that House Resolution No. 260 (calling for a legislative inquiry into the administration by the
Chief Justice of the JDF) infringes on the constitutional doctrine of separation of powers and is a
direct violation of the constitutional principle of fiscal autonomy of the judiciary.

On October 28, 2003, during the plenary session of the House of Representatives, a motion was put
forth that the second impeachment complaint be formally transmitted to the Senate, but it was not
carried because the House of Representatives adjourned for lack of quorum, 19 and as reflected
above, to date, the Articles of Impeachment have yet to be forwarded to the Senate.

Before acting on the petitions with prayers for temporary restraining order and/or writ of preliminary
injunction which were filed on or before October 28, 2003, Justices Puno and Vitug offered to recuse
themselves, but the Court rejected their offer. Justice Panganiban inhibited himself, but the Court
directed him to participate.

Without necessarily giving the petitions due course, this Court in its Resolution of October 28, 2003,
resolved to (a) consolidate the petitions; (b) require respondent House of Representatives and the
Senate, as well as the Solicitor General, to comment on the petitions not later than 4:30 p.m. of
November 3, 2003; (c) set the petitions for oral arguments on November 5, 2003, at 10:00 a.m.; and
(d) appointed distinguished legal experts as amici curiae.20 In addition, this Court called on
petitioners and respondents to maintain the status quo, enjoining all the parties and others acting for
and in their behalf to refrain from committing acts that would render the petitions moot.

Also on October 28, 2003, when respondent House of Representatives through Speaker Jose C. De
Venecia, Jr. and/or its co-respondents, by way of special appearance, submitted a Manifestation
asserting that this Court has no jurisdiction to hear, much less prohibit or enjoin the House of
Representatives, which is an independent and co-equal branch of government under the
Constitution, from the performance of its constitutionally mandated duty to initiate impeachment
cases. On even date, Senator Aquilino Q. Pimentel, Jr., in his own behalf, filed a Motion to Intervene
(Ex Abudante Cautela)21 and Comment, praying that "the consolidated petitions be dismissed for lack
of jurisdiction of the Court over the issues affecting the impeachment proceedings and that the sole
power, authority and jurisdiction of the Senate as the impeachment court to try and decide
impeachment cases, including the one where the Chief Justice is the respondent, be recognized and
upheld pursuant to the provisions of Article XI of the Constitution." 22
Acting on the other petitions which were subsequently filed, this Court resolved to (a) consolidate
them with the earlier consolidated petitions; (b) require respondents to file their comment not later
than 4:30 p.m. of November 3, 2003; and (c) include them for oral arguments on November 5, 2003.

On October 29, 2003, the Senate of the Philippines, through Senate President Franklin M. Drilon,
filed a Manifestation stating that insofar as it is concerned, the petitions are plainly premature and
have no basis in law or in fact, adding that as of the time of the filing of the petitions, no justiciable
issue was presented before it since (1) its constitutional duty to constitute itself as an impeachment
court commences only upon its receipt of the Articles of Impeachment, which it had not, and (2) the
principal issues raised by the petitions pertain exclusively to the proceedings in the House of
Representatives.

On October 30, 2003, Atty. Jaime Soriano filed a "Petition for Leave to Intervene" in G.R. Nos.
160261, 160262, 160263, 160277, 160292, and 160295, questioning the status quo Resolution
issued by this Court on October 28, 2003 on the ground that it would unnecessarily put Congress
and this Court in a "constitutional deadlock" and praying for the dismissal of all the petitions as the
matter in question is not yet ripe for judicial determination.

On November 3, 2003, Attorneys Romulo B. Macalintal and Pete Quirino Quadra filed in G.R. No.
160262 a "Motion for Leave of Court to Intervene and to Admit the Herein Incorporated Petition in
Intervention."

On November 4, 2003, Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino,

Inc. filed a Motion for Intervention in G.R. No. 160261. On November 5, 2003, World War II Veterans
Legionnaires of the Philippines, Inc. also filed a "Petition-in-Intervention with Leave to Intervene" in
G.R. Nos. 160261, 160262, 160263, 160277, 160292, 160295, and 160310.

The motions for intervention were granted and both Senator Pimentel's Comment and Attorneys
Macalintal and Quadra's Petition in Intervention were admitted.

On November 5-6, 2003, this Court heard the views of the amici curiae and the arguments of
petitioners, intervenors Senator Pimentel and Attorney Makalintal, and Solicitor General Alfredo
Benipayo on the principal issues outlined in an Advisory issued by this Court on November 3, 2003,
to wit:

Whether the certiorari jurisdiction of the Supreme Court may be invoked; who can invoke it; on what
issues and at what time; and whether it should be exercised by this Court at this time.

In discussing these issues, the following may be taken up:

a) locus standi of petitioners;

b) ripeness(prematurity; mootness);

c) political question/justiciability;

d) House's "exclusive" power to initiate all cases of impeachment;

e) Senate's "sole" power to try and decide all cases of impeachment;

f) constitutionality of the House Rules on Impeachment vis-a-vis Section 3(5) of Article XI of the
Constitution; and

g) judicial restraint (Italics in the original)

In resolving the intricate conflux of preliminary and substantive issues arising from the instant
petitions as well as the myriad arguments and opinions presented for and against the grant of the
reliefs prayed for, this Court has sifted and determined them to be as follows: (1) the threshold and
novel issue of whether or not the power of judicial review extends to those arising from impeachment
proceedings; (2) whether or not the essential pre-requisites for the exercise of the power of judicial
review have been fulfilled; and (3) the substantive issues yet remaining. These matters shall now be
discussed in seriatim.

Judicial Review

As reflected above, petitioners plead for this Court to exercise the power of judicial review to
determine the validity of the second impeachment complaint.

This Court's power of judicial review is conferred on the judicial branch of the government in Section
1, Article VIII of our present 1987 Constitution:

SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower courts as
may be established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the government. (Emphasis supplied)

Such power of judicial review was early on exhaustively expounded upon by Justice Jose P. Laurel
in the definitive 1936 case of Angara v. Electoral Commission23 after the effectivity of the 1935
Constitution whose provisions, unlike the present Constitution, did not contain the present provision
in Article VIII, Section 1, par. 2 on what judicial power includes. Thus, Justice Laurel discoursed:

x x x In times of social disquietude or political excitement, the great landmarks of the Constitution are
apt to be forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial
department is the only constitutional organ which can be called upon to determine the proper
allocation of powers between the several departments and among the integral or constituent
units thereof.

As any human production, our Constitution is of course lacking perfection and perfectibility, but as
much as it was within the power of our people, acting through their delegates to so provide, that
instrument which is the expression of their sovereignty however limited, has established a republican
government intended to operate and function as a harmonious whole, under a system of checks and
balances, and subject to specific limitations and restrictions provided in the said instrument. The
Constitution sets forth in no uncertain language the restrictions and limitations upon
governmental powers and agencies. If these restrictions and limitations are transcended it
would be inconceivable if the Constitution had not provided for a mechanism by which to
direct the course of government along constitutional channels, for then the distribution of
powers would be mere verbiage, the bill of rights mere expressions of sentiment, and the principles
of good government mere political apothegms. Certainly, the limitations and restrictions embodied in
our Constitution are real as they should be in any living constitution. In the United States where no
express constitutional grant is found in their constitution, the possession of this moderating
power of the courts, not to speak of its historical origin and development there, has been set at rest
by popular acquiescence for a period of more than one and a half centuries. In our case, this
moderating power is granted, if not expressly, by clear implication from section 2 of article VIII
of our Constitution.
The Constitution is a definition of the powers of government. Who is to determine the nature,
scope and extent of such powers? The Constitution itself has provided for the
instrumentality of the judiciary as the rational way. And when the judiciary mediates to
allocate constitutional boundaries, it does not assert any superiority over the other departments;
it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and
sacred obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual controversy the
rights which that instrument secures and guarantees to them. This is in truth all that is
involved in what is termed "judicial supremacy" which properly is the power of judicial review
under the Constitution. Even then, this power of judicial review is limited to actual cases and
controversies to be exercised after full opportunity of argument by the parties, and limited further to
the constitutional question raised or the very lis mota presented. Any attempt at abstraction could
only lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities.
Narrowed as its function is in this manner, the judiciary does not pass upon questions of wisdom,
justice or expediency of legislation. More than that, courts accord the presumption of constitutionality
to legislative enactments, not only because the legislature is presumed to abide by the Constitution
but also because the judiciary in the determination of actual cases and controversies must reflect the
wisdom and justice of the people as expressed through their representatives in the executive and
legislative departments of the government.24 (Italics in the original; emphasis and underscoring
supplied)

As pointed out by Justice Laurel, this "moderating power" to "determine the proper allocation of
powers" of the different branches of government and "to direct the course of government along
constitutional channels" is inherent in all courts25 as a necessary consequence of the judicial power
itself, which is "the power of the court to settle actual controversies involving rights which are legally
demandable and enforceable."26

Thus, even in the United States where the power of judicial review is not explicitly conferred upon
the courts by its Constitution, such power has "been set at rest by popular acquiescence for a period
of more than one and a half centuries." To be sure, it was in the 1803 leading case of Marbury v.
Madison27 that the power of judicial review was first articulated by Chief Justice Marshall, to wit:

It is also not entirely unworthy of observation, that in declaring what shall be the supreme law of the
land, the constitution itself is first mentioned; and not the laws of the United States generally, but
those only which shall be made in pursuance of the constitution, have that rank.

Thus, the particular phraseology of the constitution of the United States confirms and
strengthens the principle, supposed to be essential to all written constitutions, that a law
repugnant to the constitution is void; and that courts, as well as other departments, are
bound by that instrument.28 (Italics in the original; emphasis supplied)

In our own jurisdiction, as early as 1902, decades before its express grant in the 1935 Constitution,
the power of judicial review was exercised by our courts to invalidate constitutionally infirm acts. 29
And as pointed out by noted political law professor and former Supreme Court Justice Vicente V.
Mendoza,30 the executive and legislative branches of our government in fact effectively
acknowledged this power of judicial review in Article 7 of the Civil Code, to wit:

Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall
not be excused by disuse, or custom or practice to the contrary.

When the courts declare a law to be inconsistent with the Constitution, the former shall be
void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when they are not
contrary to the laws or the Constitution. (Emphasis supplied)

As indicated in Angara v. Electoral Commission,31 judicial review is indeed an integral component of

the delicate system of checks and balances which, together with the corollary principle of separation
of powers, forms the bedrock of our republican form of government and insures that its vast powers
are utilized only for the benefit of the people for which it serves.

The separation of powers is a fundamental principle in our system of government. It obtains

not through express provision but by actual division in our Constitution. Each department of the
government has exclusive cognizance of matters within its jurisdiction, and is supreme within its own
sphere. But it does not follow from the fact that the three powers are to be kept separate and distinct
that the Constitution intended them to be absolutely unrestrained and independent of each other.
The Constitution has provided for an elaborate system of checks and balances to secure
coordination in the workings of the various departments of the government. x x x And the
judiciary in turn, with the Supreme Court as the final arbiter, effectively checks the other
departments in the exercise of its power to determine the law, and hence to declare executive
and legislative acts void if violative of the Constitution.32 (Emphasis and underscoring supplied)

In the scholarly estimation of former Supreme Court Justice Florentino Feliciano, "x x x judicial
review is essential for the maintenance and enforcement of the separation of powers and the
balancing of powers among the three great departments of government through the definition and
maintenance of the boundaries of authority and control between them." 33 To him, "[j]udicial review is
the chief, indeed the only, medium of participation – or instrument of intervention – of the judiciary in
that balancing operation."34

To ensure the potency of the power of judicial review to curb grave abuse of discretion by " any
branch or instrumentalities of government," the afore-quoted Section 1, Article VIII of the
Constitution engraves, for the first time into its history, into block letter law the so-called "expanded
certiorari jurisdiction" of this Court, the nature of and rationale for which are mirrored in the following
excerpt from the sponsorship speech of its proponent, former Chief Justice Constitutional
Commissioner Roberto Concepcion:

xxx

The first section starts with a sentence copied from former Constitutions. It says:

The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.

I suppose nobody can question it.

The next provision is new in our constitutional law. I will read it first and explain.

Judicial power includes the duty of courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part or instrumentality of
the government.

Fellow Members of this Commission, this is actually a product of our experience during martial
law. As a matter of fact, it has some antecedents in the past, but the role of the judiciary during
the deposed regime was marred considerably by the circumstance that in a number of cases
against the government, which then had no legal defense at all, the solicitor general set up
the defense of political questions and got away with it. As a consequence, certain principles
concerning particularly the writ of habeas corpus, that is, the authority of courts to order the release
of political detainees, and other matters related to the operation and effect of martial law failed
because the government set up the defense of political question. And the Supreme Court said:
"Well, since it is political, we have no authority to pass upon it." The Committee on the Judiciary
feels that this was not a proper solution of the questions involved. It did not merely request
an encroachment upon the rights of the people, but it, in effect, encouraged further violations
thereof during the martial law regime. x x x

xxx

Briefly stated, courts of justice determine the limits of power of the agencies and offices of
the government as well as those of its officers. In other words, the judiciary is the final arbiter
on the question whether or not a branch of government or any of its officials has acted
without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse
of discretion amounting to excess of jurisdiction or lack of jurisdiction. This is not only a
judicial power but a duty to pass judgment on matters of this nature.

This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter
evade the duty to settle matters of this nature, by claiming that such matters constitute a
political question.35 (Italics in the original; emphasis and underscoring supplied)

To determine the merits of the issues raised in the instant petitions, this Court must necessarily turn
to the Constitution itself which employs the well-settled principles of constitutional construction.

First, verba legis, that is, wherever possible, the words used in the Constitution must be given their
ordinary meaning except where technical terms are employed. Thus, in J.M. Tuason & Co., Inc. v.
Land Tenure Administration,36 this Court, speaking through Chief Justice Enrique Fernando,
declared:

We look to the language of the document itself in our search for its meaning. We do not of
course stop there, but that is where we begin. It is to be assumed that the words in which
constitutional provisions are couched express the objective sought to be attained. They are
to be given their ordinary meaning except where technical terms are employed in which case
the significance thus attached to them prevails. As the Constitution is not primarily a lawyer's
document, it being essential for the rule of law to obtain that it should ever be present in the people's
consciousness, its language as much as possible should be understood in the sense they have in
common use. What it says according to the text of the provision to be construed 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. Thus these are the cases where the need for construction is
reduced to a minimum.37 (Emphasis and underscoring supplied)

Second, where there is ambiguity, ratio legis est anima. The words of the Constitution should be
interpreted in accordance with the intent of its framers. And so did this Court apply this principle in
Civil Liberties Union v. Executive Secretary38 in this wise:

A foolproof yardstick in constitutional construction is the intention underlying the provision under
consideration. Thus, it has been held that the Court in construing a Constitution should bear in mind
the object sought to be accomplished by its adoption, and the evils, if any, sought to be prevented or
remedied. A doubtful provision will be examined in the light of the history of the times, and the
condition and circumstances under which the Constitution was framed. The object is to ascertain
the reason which induced the framers of the Constitution to enact the particular provision
and the purpose sought to be accomplished thereby, in order to construe the whole as to
make the words consonant to that reason and calculated to effect that purpose. 39 (Emphasis
and underscoring supplied)

As it did in Nitafan v. Commissioner on Internal Revenue 40 where, speaking through Madame Justice
Amuerfina A. Melencio-Herrera, it declared:

x x x The ascertainment of that intent is but in keeping with the fundamental principle of
constitutional construction that the intent of the framers of the organic law and of the people
adopting it should be given effect. The primary task in constitutional construction is to ascertain
and thereafter assure the realization of the purpose of the framers and of the people in the adoption
of the Constitution. It may also be safely assumed that the people in ratifying the Constitution
were guided mainly by the explanation offered by the framers.41 (Emphasis and underscoring
supplied)

Finally, ut magis valeat quam pereat. The Constitution is to be interpreted as a whole. Thus, in
Chiongbian v. De Leon,42 this Court, through Chief Justice Manuel Moran declared:

x x x [T]he members of the Constitutional Convention could not have dedicated a provision
of our Constitution merely for the benefit of one person without considering that it could also
affect others. When they adopted subsection 2, they permitted, if not willed, that said
provision should function to the full extent of its substance and its terms, not by itself alone,
but in conjunction with all other provisions of that great document. 43 (Emphasis and
underscoring supplied)

Likewise, still in Civil Liberties Union v. Executive Secretary,44 this Court affirmed that:

It is a well-established rule in constitutional construction that no one provision of the

Constitution is to be separated from all the others, to be considered alone, but that all the
provisions bearing upon a particular subject are to be brought into view and to be so
interpreted as to effectuate the great purposes of the instrument. Sections bearing on a
particular subject should be considered and interpreted together as to effectuate the whole
purpose of the Constitution and one section is not to be allowed to defeat another, if by any
reasonable construction, the two can be made to stand together.

In other words, the court must harmonize them, if practicable, and must lean in favor of a
construction which will render every word operative, rather than one which may make the words idle
and nugatory.45 (Emphasis supplied)

If, however, the plain meaning of the word is not found to be clear, resort to other aids is available. In
still the same case of Civil Liberties Union v. Executive Secretary, this Court expounded:

While it is permissible in this jurisdiction to consult the debates and proceedings of the
constitutional convention in order to arrive at the reason and purpose of the resulting Constitution,
resort thereto may be had only when other guides fail as said proceedings are powerless to
vary the terms of the Constitution when the meaning is clear. Debates in the constitutional
convention "are of value as showing the views of the individual members, and as indicating the
reasons for their votes, but they give us no light as to the views of the large majority who did not talk,
much less of the mass of our fellow citizens whose votes at the polls gave that instrument the force
of fundamental law. We think it safer to construe the constitution from what appears upon its
face." The proper interpretation therefore depends more on how it was understood by the
people adopting it than in the framers's understanding thereof. 46 (Emphasis and underscoring
supplied)
It is in the context of the foregoing backdrop of constitutional refinement and jurisprudential
application of the power of judicial review that respondents Speaker De Venecia, et. al. and
intervenor Senator Pimentel raise the novel argument that the Constitution has excluded
impeachment proceedings from the coverage of judicial review.

Briefly stated, it is the position of respondents Speaker De Venecia et. al. that impeachment is a
political action which cannot assume a judicial character. Hence, any question, issue or incident
arising at any stage of the impeachment proceeding is beyond the reach of judicial review. 47

For his part, intervenor Senator Pimentel contends that the Senate's "sole power to try"
impeachment cases48 (1) entirely excludes the application of judicial review over it; and (2)
necessarily includes the Senate's power to determine constitutional questions relative to
impeachment proceedings.49

In furthering their arguments on the proposition that impeachment proceedings are outside the
scope of judicial review, respondents Speaker De Venecia, et. al. and intervenor Senator Pimentel
rely heavily on American authorities, principally the majority opinion in the case of Nixon v. United
States.50 Thus, they contend that the exercise of judicial review over impeachment proceedings is
inappropriate since it runs counter to the framers' decision to allocate to different fora the powers to
try impeachments and to try crimes; it disturbs the system of checks and balances, under which
impeachment is the only legislative check on the judiciary; and it would create a lack of finality and
difficulty in fashioning relief.51 Respondents likewise point to deliberations on the US Constitution to
show the intent to isolate judicial power of review in cases of impeachment.

Respondents' and intervenors' reliance upon American jurisprudence, the American Constitution and
American authorities cannot be credited to support the proposition that the Senate's "sole power to
try and decide impeachment cases," as provided for under Art. XI, Sec. 3(6) of the Constitution, is a
textually demonstrable constitutional commitment of all issues pertaining to impeachment to the
legislature, to the total exclusion of the power of judicial review to check and restrain any grave
abuse of the impeachment process. Nor can it reasonably support the interpretation that it
necessarily confers upon the Senate the inherently judicial power to determine constitutional
questions incident to impeachment proceedings.

Said American jurisprudence and authorities, much less the American Constitution, are of dubious
application for these are no longer controlling within our jurisdiction and have only limited persuasive
merit insofar as Philippine constitutional law is concerned. As held in the case of Garcia vs.
COMELEC,52 "[i]n resolving constitutional disputes, [this Court] should not be beguiled by foreign
jurisprudence some of which are hardly applicable because they have been dictated by different
constitutional settings and needs."53 Indeed, although the Philippine Constitution can trace its origins
to that of the United States, their paths of development have long since diverged. In the colorful
words of Father Bernas, "[w]e have cut the umbilical cord."

The major difference between the judicial power of the Philippine Supreme Court and that of the
U.S. Supreme Court is that while the power of judicial review is only impliedly granted to the U.S.
Supreme Court and is discretionary in nature, that granted to the Philippine Supreme Court and
lower courts, as expressly provided for in the Constitution, is not just a power but also a duty, and it
was given an expanded definition to include the power to correct any grave abuse of discretion on
the part of any government branch or instrumentality.

There are also glaring distinctions between the U.S. Constitution and the Philippine Constitution with
respect to the power of the House of Representatives over impeachment proceedings. While the
U.S. Constitution bestows sole power of impeachment to the House of Representatives without
limitation,54 our Constitution, though vesting in the House of Representatives the exclusive power to
initiate impeachment cases,55 provides for several limitations to the exercise of such power as
embodied in Section 3(2), (3), (4) and (5), Article XI thereof. These limitations include the manner of
filing, required vote to impeach, and the one year bar on the impeachment of one and the same
official.

Respondents are also of the view that judicial review of impeachments undermines their finality and
may also lead to conflicts between Congress and the judiciary. Thus, they call upon this Court to
exercise judicial statesmanship on the principle that "whenever possible, the Court should defer to
the judgment of the people expressed legislatively, recognizing full well the perils of judicial
willfulness and pride."56

But did not the people also express their will when they instituted the above-mentioned safeguards
in the Constitution? This shows that the Constitution did not intend to leave the matter of
impeachment to the sole discretion of Congress. Instead, it provided for certain well-defined limits, or
in the language of Baker v. Carr,57 "judicially discoverable standards" for determining the validity of
the exercise of such discretion, through the power of judicial review.

The cases of Romulo v. Yniguez58 and Alejandrino v. Quezon,59 cited by respondents in support of
the argument that the impeachment power is beyond the scope of judicial review, are not in point.
These cases concern the denial of petitions for writs of mandamus to compel the legislature to
perform non-ministerial acts, and do not concern the exercise of the power of judicial review.

There is indeed a plethora of cases in which this Court exercised the power of judicial review over
congressional action. Thus, in Santiago v. Guingona, Jr.,60 this Court ruled that it is well within the
power and jurisdiction of the Court to inquire whether the Senate or its officials committed a violation
of the Constitution or grave abuse of discretion in the exercise of their functions and prerogatives. In
Tanada v. Angara,61 in seeking to nullify an act of the Philippine Senate on the ground that it
contravened the Constitution, it held that the petition raises a justiciable controversy and that when
an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes
not only the right but in fact the duty of the judiciary to settle the dispute. In Bondoc v. Pineda,62 this
Court declared null and void a resolution of the House of Representatives withdrawing the
nomination, and rescinding the election, of a congressman as a member of the House Electoral
Tribunal for being violative of Section 17, Article VI of the Constitution. In Coseteng v. Mitra,63 it held
that the resolution of whether the House representation in the Commission on Appointments was
based on proportional representation of the political parties as provided in Section 18, Article VI of
the Constitution is subject to judicial review. In Daza v. Singson,64 it held that the act of the House of
Representatives in removing the petitioner from the Commission on Appointments is subject to
judicial review. In Tanada v. Cuenco,65 it held that although under the Constitution, the legislative
power is vested exclusively in Congress, this does not detract from the power of the courts to pass
upon the constitutionality of acts of Congress. In Angara v. Electoral Commission, 66 it ruled that
confirmation by the National Assembly of the election of any member, irrespective of whether his
election is contested, is not essential before such member-elect may discharge the duties and enjoy
the privileges of a member of the National Assembly.

Finally, there exists no constitutional basis for the contention that the exercise of judicial review over
impeachment proceedings would upset the system of checks and balances. Verily, the Constitution
is to be interpreted as a whole and "one section is not to be allowed to defeat another." 67 Both are
integral components of the calibrated system of independence and interdependence that insures
that no branch of government act beyond the powers assigned to it by the Constitution.

Essential Requisites for Judicial Review

As clearly stated in Angara v. Electoral Commission, the courts' power of judicial review, like almost
all powers conferred by the Constitution, is subject to several limitations, namely: (1) an actual case
or controversy calling for the exercise of judicial power; (2) the person challenging the act must have
"standing" to challenge; he must have a personal and substantial interest in the case such that he
has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of
constitutionality must be raised at the earliest possible opportunity; and (4) the issue of
constitutionality must be the very lis mota of the case.

x x x Even then, this power of judicial review is limited to actual cases and controversies to be
exercised after full opportunity of argument by the parties, and limited further to the constitutional
question raised or the very lis mota presented. Any attempt at abstraction could only lead to
dialectics and barren legal questions and to sterile conclusions unrelated to actualities. Narrowed as
its function is in this manner, the judiciary does not pass upon questions of wisdom, justice or
expediency of legislation. More than that, courts accord the presumption of constitutionality to
legislative enactments, not only because the legislature is presumed to abide by the Constitution but
also because the judiciary in the determination of actual cases and controversies must reflect the
wisdom and justice of the people as expressed through their representatives in the executive and
legislative departments of the government.68 (Italics in the original)

Standing

Locus standi or legal standing or has been defined as a personal and substantial interest in the case
such that the party has sustained or will sustain direct injury as a result of the governmental act that
is being challenged. The gist of the question of standing is whether a party alleges such personal
stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court depends for illumination of difficult constitutional
questions.69

Intervenor Soriano, in praying for the dismissal of the petitions, contends that petitioners do not have
standing since only the Chief Justice has sustained and will sustain direct personal injury. Amicus
curiae former Justice Minister and Solicitor General Estelito Mendoza similarly contends.

Upon the other hand, the Solicitor General asserts that petitioners have standing since this Court
had, in the past, accorded standing to taxpayers, voters, concerned citizens, legislators in cases
involving paramount public interest 70 and transcendental importance, 71 and that procedural matters
are subordinate to the need to determine whether or not the other branches of the government have
kept themselves within the limits of the Constitution and the laws and that they have not abused the
discretion given to them. 72 Amicus curiae Dean Raul Pangalangan of the U.P. College of Law is of
the same opinion, citing transcendental importance and the well-entrenched rule exception that,
when the real party in interest is unable to vindicate his rights by seeking the same remedies, as in
the case of the Chief Justice who, for ethical reasons, cannot himself invoke the jurisdiction of this
Court, the courts will grant petitioners standing.

There is, however, a difference between the rule on real-party-in-interest and the rule on standing,
for the former is a concept of civil procedure 73 while the latter has constitutional underpinnings. 74 In
view of the arguments set forth regarding standing, it behooves the Court to reiterate the ruling in
Kilosbayan, Inc. v. Morato75 to clarify what is meant by locus standi and to distinguish it from real
party-in-interest.

The difference between the rule on standing and real party in interest has been noted by authorities
thus: "It is important to note . . . that standing because of its constitutional and public policy
underpinnings, is very different from questions relating to whether a particular plaintiff is the real
party in interest or has capacity to sue. Although all three requirements are directed towards
ensuring that only certain parties can maintain an action, standing restrictions require a partial
consideration of the merits, as well as broader policy concerns relating to the proper role of the
judiciary in certain areas.

Standing is a special concern in constitutional law because in some cases suits are brought not by
parties who have been personally injured by the operation of a law or by official action taken, but by
concerned citizens, taxpayers or voters who actually sue in the public interest. Hence the question in
standing is whether such parties have "alleged such a personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional questions."

xxx

On the other hand, the question as to "real party in interest" is whether he is "the party who would be
benefited or injured by the judgment, or the 'party entitled to the avails of the suit.'" 76 (Citations
omitted)

While rights personal to the Chief Justice may have been injured by the alleged unconstitutional acts
of the House of Representatives, none of the petitioners before us asserts a violation of the personal
rights of the Chief Justice. On the contrary, they invariably invoke the vindication of their own rights –
as taxpayers; members of Congress; citizens, individually or in a class suit; and members of the bar
and of the legal profession – which were supposedly violated by the alleged unconstitutional acts of
the House of Representatives.

In a long line of cases, however, concerned citizens, taxpayers and legislators when specific
requirements have been met have been given standing by this Court.

When suing as a citizen, the interest of the petitioner assailing the constitutionality of a statute must
be direct and personal. He must be able to show, not only that the law or any government act is
invalid, but also that he sustained or is in imminent danger of sustaining some direct injury as a
result of its enforcement, and not merely that he suffers thereby in some indefinite way. It must
appear that the person complaining has been or is about to be denied some right or privilege to
which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by
reason of the statute or act complained of. 77 In fine, when the proceeding involves the assertion of a
public right,78 the mere fact that he is a citizen satisfies the requirement of personal interest.

In the case of a taxpayer, he is allowed to sue where there is a claim that public funds are illegally
disbursed, or that public money is being deflected to any improper purpose, or that there is a
wastage of public funds through the enforcement of an invalid or unconstitutional law. 79 Before he
can invoke the power of judicial review, however, he must specifically prove that he has sufficient
interest in preventing the illegal expenditure of money raised by taxation and that he would sustain a
direct injury as a result of the enforcement of the questioned statute or contract. It is not sufficient
that he has merely a general interest common to all members of the public. 80

At all events, courts are vested with discretion as to whether or not a taxpayer's suit should be
entertained.81 This Court opts to grant standing to most of the petitioners, given their allegation that
any impending transmittal to the Senate of the Articles of Impeachment and the ensuing trial of the
Chief Justice will necessarily involve the expenditure of public funds.

As for a legislator, he is allowed to sue to question the validity of any official action which he claims
infringes his prerogatives as a legislator. 82 Indeed, a member of the House of Representatives has
standing to maintain inviolate the prerogatives, powers and privileges vested by the Constitution in
his office.83

While an association has legal personality to represent its members, 84 especially when it is
composed of substantial taxpayers and the outcome will affect their vital interests, 85 the mere
invocation by the Integrated Bar of the Philippines or any member of the legal profession of the duty
to preserve the rule of law and nothing more, although undoubtedly true, does not suffice to clothe it
with standing. Its interest is too general. It is shared by other groups and the whole citizenry.
However, a reading of the petitions shows that it has advanced constitutional issues which deserve
the attention of this Court in view of their seriousness, novelty and weight as precedents. 86 It,
therefore, behooves this Court to relax the rules on standing and to resolve the issues presented by
it.

In the same vein, when dealing with class suits filed in behalf of all citizens, persons intervening
must be sufficiently numerous to fully protect the interests of all concerned 87 to enable the court to
deal properly with all interests involved in the suit, 88 for a judgment in a class suit, whether favorable
or unfavorable to the class, is, under the res judicata principle, binding on all members of the class
whether or not they were before the court. 89 Where it clearly appears that not all interests can be
sufficiently represented as shown by the divergent issues raised in the numerous petitions before
this Court, G.R. No. 160365 as a class suit ought to fail. Since petitioners additionally allege
standing as citizens and taxpayers, however, their petition will stand.

The Philippine Bar Association, in G.R. No. 160403, invokes the sole ground of transcendental
importance, while Atty. Dioscoro U. Vallejos, in G.R. No. 160397, is mum on his standing.

There being no doctrinal definition of transcendental importance, the following instructive

determinants formulated by former Supreme Court Justice Florentino P. Feliciano are instructive: (1)
the character of the funds or other assets involved in the case; (2) the presence of a clear case of
disregard of a constitutional or statutory prohibition by the public respondent agency or
instrumentality of the government; and (3) the lack of any other party with a more direct and specific
interest in raising the questions being raised. 90 Applying these determinants, this Court is satisfied
that the issues raised herein are indeed of transcendental importance.

In not a few cases, this Court has in fact adopted a liberal attitude on the locus standi of a petitioner
where the petitioner is able to craft an issue of transcendental significance to the people, as when
the issues raised are of paramount importance to the public. 91 Such liberality does not, however,
mean that the requirement that a party should have an interest in the matter is totally eliminated. A
party must, at the very least, still plead the existence of such interest, it not being one of which
courts can take judicial notice. In petitioner Vallejos' case, he failed to allege any interest in the case.
He does not thus have standing.

With respect to the motions for intervention, Rule 19, Section 2 of the Rules of Court requires an
intervenor to possess a legal interest in the matter in litigation, or in the success of either of the
parties, or an interest against both, or is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or of an officer thereof. While intervention is
not a matter of right, it may be permitted by the courts when the applicant shows facts which satisfy
the requirements of the law authorizing intervention. 92

In Intervenors Attorneys Romulo Macalintal and Pete Quirino Quadra's case, they seek to join
petitioners Candelaria, et. al. in G.R. No. 160262. Since, save for one additional issue, they raise the
same issues and the same standing, and no objection on the part of petitioners Candelaria, et. al.
has been interposed, this Court as earlier stated, granted the Motion for Leave of Court to Intervene
and Petition-in-Intervention.

Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino, Inc., et. al. sought to join
petitioner Francisco in G.R. No. 160261. Invoking their right as citizens to intervene, alleging that
"they will suffer if this insidious scheme of the minority members of the House of Representatives is
successful," this Court found the requisites for intervention had been complied with.

Alleging that the issues raised in the petitions in G.R. Nos. 160261, 160262, 160263, 160277,
160292, 160295, and 160310 were of transcendental importance, World War II Veterans
Legionnaires of the Philippines, Inc. filed a "Petition-in-Intervention with Leave to Intervene" to raise
the additional issue of whether or not the second impeachment complaint against the Chief Justice is
valid and based on any of the grounds prescribed by the Constitution.

Finding that Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino, Inc., et al. and
World War II Veterans Legionnaires of the Philippines, Inc. possess a legal interest in the matter in
litigation the respective motions to intervene were hereby granted.

Senator Aquilino Pimentel, on the other hand, sought to intervene for the limited purpose of making
of record and arguing a point of view that differs with Senate President Drilon's. He alleges that
submitting to this Court's jurisdiction as the Senate President does will undermine the independence
of the Senate which will sit as an impeachment court once the Articles of Impeachment are
transmitted to it from the House of Representatives. Clearly, Senator Pimentel possesses a legal
interest in the matter in litigation, he being a member of Congress against which the herein petitions
are directed. For this reason, and to fully ventilate all substantial issues relating to the matter at
hand, his Motion to Intervene was granted and he was, as earlier stated, allowed to argue.

Lastly, as to Jaime N. Soriano's motion to intervene, the same must be denied for, while he asserts
an interest as a taxpayer, he failed to meet the standing requirement for bringing taxpayer's suits as
set forth in Dumlao v. Comelec,93 to wit:

x x x While, concededly, the elections to be held involve the expenditure of public moneys, nowhere
in their Petition do said petitioners allege that their tax money is "being extracted and spent in
violation of specific constitutional protection against abuses of legislative power," or that there is a
misapplication of such funds by respondent COMELEC, or that public money is being deflected to
any improper purpose. Neither do petitioners seek to restrain respondent from wasting public funds
through the enforcement of an invalid or unconstitutional law. 94 (Citations omitted)

In praying for the dismissal of the petitions, Soriano failed even to allege that the act of petitioners
will result in illegal disbursement of public funds or in public money being deflected to any improper
purpose. Additionally, his mere interest as a member of the Bar does not suffice to clothe him with
standing.

Ripeness and Prematurity

In Tan v. Macapagal,95 this Court, through Chief Justice Fernando, held that for a case to be
considered ripe for adjudication, "it is a prerequisite that something had by then been accomplished
or performed by either branch before a court may come into the picture." 96 Only then may the courts
pass on the validity of what was done, if and when the latter is challenged in an appropriate legal
proceeding.

The instant petitions raise in the main the issue of the validity of the filing of the second
impeachment complaint against the Chief Justice in accordance with the House Impeachment Rules
adopted by the 12th Congress, the constitutionality of which is questioned. The questioned acts
having been carried out, i.e., the second impeachment complaint had been filed with the House of
Representatives and the 2001 Rules have already been already promulgated and enforced, the
prerequisite that the alleged unconstitutional act should be accomplished and performed before suit,
as Tan v. Macapagal holds, has been complied with.

Related to the issue of ripeness is the question of whether the instant petitions are premature.
Amicus curiae former Senate President Jovito R. Salonga opines that there may be no urgent need
for this Court to render a decision at this time, it being the final arbiter on questions of
constitutionality anyway. He thus recommends that all remedies in the House and Senate should
first be exhausted.

Taking a similar stand is Dean Raul Pangalangan of the U.P. College of Law who suggests to this
Court to take judicial notice of on-going attempts to encourage signatories to the second
impeachment complaint to withdraw their signatures and opines that the House Impeachment Rules
provide for an opportunity for members to raise constitutional questions themselves when the
Articles of Impeachment are presented on a motion to transmit to the same to the Senate. The dean
maintains that even assuming that the Articles are transmitted to the Senate, the Chief Justice can
raise the issue of their constitutional infirmity by way of a motion to dismiss.

The dean's position does not persuade. First, the withdrawal by the Representatives of their
signatures would not, by itself, cure the House Impeachment Rules of their constitutional infirmity.
Neither would such a withdrawal, by itself, obliterate the questioned second impeachment complaint
since it would only place it under the ambit of Sections 3(2) and (3) of Article XI of the Constitution 97
and, therefore, petitioners would continue to suffer their injuries.

Second and most importantly, the futility of seeking remedies from either or both Houses of
Congress before coming to this Court is shown by the fact that, as previously discussed, neither the
House of Representatives nor the Senate is clothed with the power to rule with definitiveness on the
issue of constitutionality, whether concerning impeachment proceedings or otherwise, as said power
is exclusively vested in the judiciary by the earlier quoted Section I, Article VIII of the Constitution.
Remedy cannot be sought from a body which is bereft of power to grant it.

Justiciability

In the leading case of Tanada v. Cuenco,98 Chief Justice Roberto Concepcion defined the term
"political question," viz:

[T]he term "political question" connotes, in legal parlance, what it means in ordinary parlance,
namely, a question of policy. In other words, in the language of Corpus Juris Secundum, it refers to
"those questions which, under the Constitution, are to be decided by the people in their sovereign
capacity, or in regard to which full discretionary authority has been delegated to the Legislature or
executive branch of the Government." It is concerned with issues dependent upon the wisdom, not
legality, of a particular measure. 99 (Italics in the original)

Prior to the 1973 Constitution, without consistency and seemingly without any rhyme or reason, this
Court vacillated on its stance of taking cognizance of cases which involved political questions. In
some cases, this Court hid behind the cover of the political question doctrine and refused to exercise
its power of judicial review.100 In other cases, however, despite the seeming political nature of the
therein issues involved, this Court assumed jurisdiction whenever it found constitutionally imposed
limits on powers or functions conferred upon political bodies. 101 Even in the landmark 1988 case of
Javellana v. Executive Secretary 102 which raised the issue of whether the 1973 Constitution was
ratified, hence, in force, this Court shunted the political question doctrine and took cognizance
thereof. Ratification by the people of a Constitution is a political question, it being a question decided
by the people in their sovereign capacity.

The frequency with which this Court invoked the political question doctrine to refuse to take
jurisdiction over certain cases during the Marcos regime motivated Chief Justice Concepcion, when
he became a Constitutional Commissioner, to clarify this Court's power of judicial review and its
application on issues involving political questions, viz:

MR. CONCEPCION. Thank you, Mr. Presiding Officer.

I will speak on the judiciary. Practically, everybody has made, I suppose, the usual comment that the
judiciary is the weakest among the three major branches of the service. Since the legislature holds
the purse and the executive the sword, the judiciary has nothing with which to enforce its decisions
or commands except the power of reason and appeal to conscience which, after all, reflects the will
of God, and is the most powerful of all other powers without exception. x x x And so, with the body's
indulgence, I will proceed to read the provisions drafted by the Committee on the Judiciary.

The first section starts with a sentence copied from former Constitutions. It says:

The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.

I suppose nobody can question it.

The next provision is new in our constitutional law. I will read it first and explain.

Judicial power includes the duty of courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part or instrumentality of
the government.

Fellow Members of this Commission, this is actually a product of our experience during martial law.
As a matter of fact, it has some antecedents in the past, but the role of the judiciary during the
deposed regime was marred considerably by the circumstance that in a number of cases
against the government, which then had no legal defense at all, the solicitor general set up
the defense of political questions and got away with it. As a consequence, certain principles
concerning particularly the writ of habeas corpus, that is, the authority of courts to order the
release of political detainees, and other matters related to the operation and effect of martial
law failed because the government set up the defense of political question. And the Supreme
Court said: "Well, since it is political, we have no authority to pass upon it." The Committee on the
Judiciary feels that this was not a proper solution of the questions involved. It did not merely
request an encroachment upon the rights of the people, but it, in effect, encouraged further
violations thereof during the martial law regime. I am sure the members of the Bar are familiar
with this situation. But for the benefit of the Members of the Commission who are not lawyers, allow
me to explain. I will start with a decision of the Supreme Court in 1973 on the case of Javellana vs.
the Secretary of Justice, if I am not mistaken. Martial law was announced on September 22,
although the proclamation was dated September 21. The obvious reason for the delay in its
publication was that the administration had apprehended and detained prominent newsmen on
September 21. So that when martial law was announced on September 22, the media hardly
published anything about it. In fact, the media could not publish any story not only because our main
writers were already incarcerated, but also because those who succeeded them in their jobs were
under mortal threat of being the object of wrath of the ruling party. The 1971 Constitutional
Convention had begun on June 1, 1971 and by September 21 or 22 had not finished the
Constitution; it had barely agreed in the fundamentals of the Constitution. I forgot to say that upon
the proclamation of martial law, some delegates to that 1971 Constitutional Convention, dozens of
them, were picked up. One of them was our very own colleague, Commissioner Calderon. So, the
unfinished draft of the Constitution was taken over by representatives of Malacañang. In 17 days,
they finished what the delegates to the 1971 Constitutional Convention had been unable to
accomplish for about 14 months. The draft of the 1973 Constitution was presented to the President
around December 1, 1972, whereupon the President issued a decree calling a plebiscite which
suspended the operation of some provisions in the martial law decree which prohibited discussions,
much less public discussions of certain matters of public concern. The purpose was presumably to
allow a free discussion on the draft of the Constitution on which a plebiscite was to be held
sometime in January 1973. If I may use a word famous by our colleague, Commissioner Ople,
during the interregnum, however, the draft of the Constitution was analyzed and criticized with such
a telling effect that Malacañang felt the danger of its approval. So, the President suspended
indefinitely the holding of the plebiscite and announced that he would consult the people in a
referendum to be held from January 10 to January 15. But the questions to be submitted in the
referendum were not announced until the eve of its scheduled beginning, under the supposed
supervision not of the Commission on Elections, but of what was then designated as "citizens
assemblies or barangays." Thus the barangays came into existence. The questions to be
propounded were released with proposed answers thereto, suggesting that it was unnecessary to
hold a plebiscite because the answers given in the referendum should be regarded as the votes cast
in the plebiscite. Thereupon, a motion was filed with the Supreme Court praying that the holding of
the referendum be suspended. When the motion was being heard before the Supreme Court, the
Minister of Justice delivered to the Court a proclamation of the President declaring that the new
Constitution was already in force because the overwhelming majority of the votes cast in the
referendum favored the Constitution. Immediately after the departure of the Minister of Justice, I
proceeded to the session room where the case was being heard. I then informed the Court and the
parties the presidential proclamation declaring that the 1973 Constitution had been ratified by the
people and is now in force.

A number of other cases were filed to declare the presidential proclamation null and void. The main
defense put up by the government was that the issue was a political question and that the court had
no jurisdiction to entertain the case.

xxx

The government said that in a referendum held from January 10 to January 15, the vast majority
ratified the draft of the Constitution. Note that all members of the Supreme Court were residents of
Manila, but none of them had been notified of any referendum in their respective places of
residence, much less did they participate in the alleged referendum. None of them saw any
referendum proceeding.

In the Philippines, even local gossips spread like wild fire. So, a majority of the members of the Court
felt that there had been no referendum.

Second, a referendum cannot substitute for a plebiscite. There is a big difference between a
referendum and a plebiscite. But another group of justices upheld the defense that the issue
was a political question. Whereupon, they dismissed the case. This is not the only major case
in which the plea of "political question" was set up. There have been a number of other cases
in the past.
x x x The defense of the political question was rejected because the issue was clearly
justiciable.

xxx

x x x When your Committee on the Judiciary began to perform its functions, it faced the following
questions: What is judicial power? What is a political question?

The Supreme Court, like all other courts, has one main function: to settle actual controversies
involving conflicts of rights which are demandable and enforceable. There are rights which are
guaranteed by law but cannot be enforced by a judiciary party. In a decided case, a husband
complained that his wife was unwilling to perform her duties as a wife. The Court said: "We can tell
your wife what her duties as such are and that she is bound to comply with them, but we cannot
force her physically to discharge her main marital duty to her husband. There are some rights
guaranteed by law, but they are so personal that to enforce them by actual compulsion would be
highly derogatory to human dignity."

This is why the first part of the second paragraph of Section I provides that:

Judicial power includes the duty of courts to settle actual controversies involving rights which are
legally demandable or enforceable . . .

The courts, therefore, cannot entertain, much less decide, hypothetical questions. In a presidential
system of government, the Supreme Court has, also another important function. The powers
of government are generally considered divided into three branches: the Legislative, the
Executive and the Judiciary. Each one is supreme within its own sphere and independent of
the others. Because of that supremacy power to determine whether a given law is valid or not
is vested in courts of justice.

Briefly stated, courts of justice determine the limits of power of the agencies and offices of
the government as well as those of its officers. In other words, the judiciary is the final arbiter
on the question whether or not a branch of government or any of its officials has acted
without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse
of discretion amounting to excess of jurisdiction or lack of jurisdiction. This is not only a
judicial power but a duty to pass judgment on matters of this nature.

This is the background of paragraph 2 of Section 1, which means that the courts cannot
hereafter evade the duty to settle matters of this nature, by claiming that such matters
constitute a political question.

I have made these extended remarks to the end that the Commissioners may have an initial food for
thought on the subject of the judiciary.103 (Italics in the original; emphasis supplied)

During the deliberations of the Constitutional Commission, Chief Justice Concepcion further clarified
the concept of judicial power, thus:

MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial power is not
vested in the Supreme Court alone but also in other lower courts as may be created by law.

MR. CONCEPCION. Yes.

MR. NOLLEDO. And so, is this only an example?

MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify political
questions with jurisdictional questions. But there is a difference.
MR. NOLLEDO. Because of the expression "judicial power"?

MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases but where there is a
question as to whether the government had authority or had abused its authority to the
extent of lacking jurisdiction or excess of jurisdiction, that is not a political question.
Therefore, the court has the duty to decide.

xxx

FR. BERNAS. Ultimately, therefore, it will always have to be decided by the Supreme Court
according to the new numerical need for votes.

On another point, is it the intention of Section 1 to do away with the political question
doctrine?

MR. CONCEPCION. No.

FR. BERNAS. It is not.

MR. CONCEPCION. No, because whenever there is an abuse of discretion, amounting to a

lack of jurisdiction. . .

FR. BERNAS. So, I am satisfied with the answer that it is not intended to do away with the
political question doctrine.

MR. CONCEPCION. No, certainly not.

When this provision was originally drafted, it sought to define what is judicial power. But the
Gentleman will notice it says, "judicial power includes" and the reason being that the
definition that we might make may not cover all possible areas.

FR. BERNAS. So, this is not an attempt to solve the problems arising from the political
question doctrine.

MR. CONCEPCION. It definitely does not eliminate the fact that truly political questions are
beyond the pale of judicial power.104 (Emphasis supplied)

From the foregoing record of the proceedings of the 1986 Constitutional Commission, it is clear that
judicial power is not only a power; it is also a duty, a duty which cannot be abdicated by the mere
specter of this creature called the political question doctrine. Chief Justice Concepcion hastened to
clarify, however, that Section 1, Article VIII was not intended to do away with "truly political
questions." From this clarification it is gathered that there are two species of political questions: (1)
"truly political questions" and (2) those which "are not truly political questions."

Truly political questions are thus beyond judicial review, the reason for respect of the doctrine of
separation of powers to be maintained. On the other hand, by virtue of Section 1, Article VIII of the
Constitution, courts can review questions which are not truly political in nature.

As pointed out by amicus curiae former dean Pacifico Agabin of the UP College of Law, this Court
has in fact in a number of cases taken jurisdiction over questions which are not truly political
following the effectivity of the present Constitution.

In Marcos v. Manglapus,105 this Court, speaking through Madame Justice Irene Cortes, held:
The present Constitution limits resort to the political question doctrine and broadens the scope of
judicial inquiry into areas which the Court, under previous constitutions, would have normally left to
the political departments to decide.106 x x x

In Bengzon v. Senate Blue Ribbon Committee, 107 through Justice Teodoro Padilla, this Court
declared:

The "allocation of constitutional boundaries" is a task that this Court must perform under the
Constitution. Moreover, as held in a recent case, "(t)he political question doctrine neither
interposes an obstacle to judicial determination of the rival claims. The jurisdiction to delimit
constitutional boundaries has been given to this Court. It cannot abdicate that obligation
mandated by the 1987 Constitution, although said provision by no means does away with the
applicability of the principle in appropriate cases."108 (Emphasis and underscoring supplied)

And in Daza v. Singson,109 speaking through Justice Isagani Cruz, this Court ruled:

In the case now before us, the jurisdictional objection becomes even less tenable and decisive. The
reason is that, even if we were to assume that the issue presented before us was political in nature,
we would still not be precluded from resolving it under the expanded jurisdiction conferred upon us
that now covers, in proper cases, even the political question. 110 x x x (Emphasis and underscoring
supplied.)

Section 1, Article VIII, of the Court does not define what are justiciable political questions and non-
justiciable political questions, however. Identification of these two species of political questions may
be problematic. There has been no clear standard. The American case of Baker v. Carr111 attempts
to provide some:

x x x Prominent on the surface of any case held to involve a political question is found a textually
demonstrable constitutional commitment of the issue to a coordinate political department; or a lack
of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding
without an initial policy determination of a kind clearly for non-judicial discretion; or the impossibility
of a court's undertaking independent resolution without expressing lack of the respect due
coordinate branches of government; or an unusual need for questioning adherence to a political
decision already made; or the potentiality of embarrassment from multifarious pronouncements by
various departments on one question.112 (Underscoring supplied)
Of these standards, the more reliable have been the first three: (1) a textually demonstrable
constitutional commitment of the issue to a coordinate political department; (2) the lack of judicially
discoverable and manageable standards for resolving it; and (3) the impossibility of deciding without
an initial policy determination of a kind clearly for non-judicial discretion. These standards are not
separate and distinct concepts but are interrelated to each in that the presence of one strengthens
the conclusion that the others are also present.

The problem in applying the foregoing standards is that the American concept of judicial review is
radically different from our current concept, for Section 1, Article VIII of the Constitution provides our
courts with far less discretion in determining whether they should pass upon a constitutional issue.

In our jurisdiction, the determination of a truly political question from a non-justiciable political
question lies in the answer to the question of whether there are constitutionally imposed limits on
powers or functions conferred upon political bodies. If there are, then our courts are duty-bound to
examine whether the branch or instrumentality of the government properly acted within such limits.
This Court shall thus now apply this standard to the present controversy.
These petitions raise five substantial issues:

I. Whether the offenses alleged in the Second impeachment complaint constitute valid impeachable
offenses under the Constitution.

II. Whether the second impeachment complaint was filed in accordance with Section 3(4), Article XI
of the Constitution.

III. Whether the legislative inquiry by the House Committee on Justice into the Judicial Development
Fund is an unconstitutional infringement of the constitutionally mandated fiscal autonomy of the
judiciary.

IV. Whether Sections 15 and 16 of Rule V of the Rules on Impeachment adopted by the 12th
Congress are unconstitutional for violating the provisions of Section 3, Article XI of the Constitution.

V. Whether the second impeachment complaint is barred under Section 3(5) of Article XI of the
Constitution.

The first issue goes into the merits of the second impeachment complaint over which this Court has
no jurisdiction. More importantly, any discussion of this issue would require this Court to make a
determination of what constitutes an impeachable offense. Such a determination is a purely political
question which the Constitution has left to the sound discretion of the legislation. Such an intent is
clear from the deliberations of the Constitutional Commission. 113

Although Section 2 of Article XI of the Constitution enumerates six grounds for impeachment, two of
these, namely, other high crimes and betrayal of public trust, elude a precise definition. In fact, an
examination of the records of the 1986 Constitutional Commission shows that the framers could find
no better way to approximate the boundaries of betrayal of public trust and other high crimes than by
alluding to both positive and negative examples of both, without arriving at their clear cut definition or
even a standard therefor.114 Clearly, the issue calls upon this court to decide a non-justiciable political
question which is beyond the scope of its judicial power under Section 1, Article VIII.

Lis Mota

It is a well-settled maxim of adjudication that an issue assailing the constitutionality of a

governmental act should be avoided whenever possible. Thus, in the case of Sotto v. Commission
on Elections,115 this Court held:

x x x It is a well-established rule that a court should not pass upon a constitutional question and
decide a law to be unconstitutional or invalid, unless such question is raised by the parties and that
when it is raised, if the record also presents some other ground upon which the court may rest
its judgment, that course will be adopted and the constitutional question will be left for
consideration until a case arises in which a decision upon such question will be
unavoidable.116 [Emphasis and underscoring supplied]

The same principle was applied in Luz Farms v. Secretary of Agrarian Reform,117 where this Court
invalidated Sections 13 and 32 of Republic Act No. 6657 for being confiscatory and violative of due
process, to wit:

It has been established that this Court will assume jurisdiction over a constitutional question
only if it is shown that the essential requisites of a judicial inquiry into such a question are
first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal rights
susceptible of judicial determination, the constitutional question must have been opportunely raised
by the proper party, and the resolution of the question is unavoidably necessary to the
decision of the case itself.118 [Emphasis supplied]

Succinctly put, courts will not touch the issue of constitutionality unless it is truly unavoidable and is
the very lis mota or crux of the controversy.

As noted earlier, the instant consolidated petitions, while all seeking the invalidity of the second
impeachment complaint, collectively raise several constitutional issues upon which the outcome of
this controversy could possibly be made to rest. In determining whether one, some or all of the
remaining substantial issues should be passed upon, this Court is guided by the related cannon of
adjudication that "the court should not form a rule of constitutional law broader than is required by
the precise facts to which it is applied."119

In G.R. No. 160310, petitioners Leonilo R. Alfonso, et al. argue that, among other reasons, the
second impeachment complaint is invalid since it directly resulted from a Resolution 120 calling for a
legislative inquiry into the JDF, which Resolution and legislative inquiry petitioners claim to likewise
be unconstitutional for being: (a) a violation of the rules and jurisprudence on investigations in aid of
legislation; (b) an open breach of the doctrine of separation of powers; (c) a violation of the
constitutionally mandated fiscal autonomy of the judiciary; and (d) an assault on the independence of
the judiciary.121

Without going into the merits of petitioners Alfonso, et. al.'s claims, it is the studied opinion of this
Court that the issue of the constitutionality of the said Resolution and resulting legislative inquiry is
too far removed from the issue of the validity of the second impeachment complaint. Moreover, the
resolution of said issue would, in the Court's opinion, require it to form a rule of constitutional law
touching on the separate and distinct matter of legislative inquiries in general, which would thus be
broader than is required by the facts of these consolidated cases. This opinion is further
strengthened by the fact that said petitioners have raised other grounds in support of their petition
which would not be adversely affected by the Court's ruling.

En passant, this Court notes that a standard for the conduct of legislative inquiries has already been
enunciated by this Court in Bengzon, Jr. v. Senate Blue Ribbon Commttee,122 viz:

The 1987 Constitution expressly recognizes the power of both houses of Congress to conduct
inquiries in aid of legislation. Thus, Section 21, Article VI thereof provides:
The Senate or the House of Representatives or any of its respective committees may conduct
inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of
persons appearing in or affected by such inquiries shall be respected.

The power of both houses of Congress to conduct inquiries in aid of legislation is not, therefore
absolute or unlimited. Its exercise is circumscribed by the afore-quoted provision of the Constitution.
Thus, as provided therein, the investigation must be "in aid of legislation in accordance with its duly
published rules of procedure" and that "the rights of persons appearing in or affected by such
inquiries shall be respected." It follows then that the right rights of persons under the Bill of Rights
must be respected, including the right to due process and the right not be compelled to testify
against one's self.123

In G.R. No. 160262, intervenors Romulo B. Macalintal and Pete Quirino Quadra, while joining the
original petition of petitioners Candelaria, et. al., introduce the new argument that since the second
impeachment complaint was verified and filed only by Representatives Gilberto Teodoro, Jr. and
Felix William Fuentebella, the same does not fall under the provisions of Section 3 (4), Article XI of
the Constitution which reads:
Section 3(4) In case the verified complaint or resolution of impeachment is filed by at least one-third
of all the Members of the House, the same shall constitute the Articles of Impeachment, and trial by
the Senate shall forthwith proceed.

They assert that while at least 81 members of the House of Representatives signed a Resolution of
Endorsement/Impeachment, the same did not satisfy the requisites for the application of the afore-
mentioned section in that the "verified complaint or resolution of impeachment" was not filed "by at
least one-third of all the Members of the House." With the exception of Representatives Teodoro and
Fuentebella, the signatories to said Resolution are alleged to have verified the same merely as a
"Resolution of Endorsement." Intervenors point to the "Verification" of the Resolution of
Endorsement which states that:

"We are the proponents/sponsors of the Resolution of Endorsement of the abovementioned

Complaint of Representatives Gilberto Teodoro and Felix William B. Fuentebella x x x" 124

Intervenors Macalintal and Quadra further claim that what the Constitution requires in order for said
second impeachment complaint to automatically become the Articles of Impeachment and for trial in
the Senate to begin "forthwith," is that the verified complaint be "filed," not merely endorsed, by at
least one-third of the Members of the House of Representatives. Not having complied with this
requirement, they concede that the second impeachment complaint should have been calendared
and referred to the House Committee on Justice under Section 3(2), Article XI of the Constitution,
viz:

Section 3(2) A verified complaint for impeachment may be filed by any Member of the House of
Representatives or by any citizen upon a resolution of endorsement by any Member thereof, which
shall be included in the Order of Business within ten session days, and referred to the proper
Committee within three session days thereafter. The Committee, after hearing, and by a majority
vote of all its Members, shall submit its report to the House within sixty session days from such
referral, together with the corresponding resolution. The resolution shall be calendared for
consideration by the House within ten session days from receipt thereof.

Intervenors' foregoing position is echoed by Justice Maambong who opined that for Section 3 (4),
Article XI of the Constitution to apply, there should be 76 or more representatives who signed and
verified the second impeachment complaint as complainants, signed and verified the signatories to a
resolution of impeachment. Justice Maambong likewise asserted that the Resolution of
Endorsement/Impeachment signed by at least one-third of the members of the House of
Representatives as endorsers is not the resolution of impeachment contemplated by the
Constitution, such resolution of endorsement being necessary only from at least one Member
whenever a citizen files a verified impeachment complaint.

While the foregoing issue, as argued by intervenors Macalintal and Quadra, does indeed limit the
scope of the constitutional issues to the provisions on impeachment, more compelling considerations
militate against its adoption as the lis mota or crux of the present controversy. Chief among this is
the fact that only Attorneys Macalintal and Quadra, intervenors in G.R. No. 160262, have raised this
issue as a ground for invalidating the second impeachment complaint. Thus, to adopt this additional
ground as the basis for deciding the instant consolidated petitions would not only render for naught
the efforts of the original petitioners in G.R. No. 160262, but the efforts presented by the other
petitioners as well.

Again, the decision to discard the resolution of this issue as unnecessary for the determination of the
instant cases is made easier by the fact that said intervenors Macalintal and Quadra have joined in
the petition of Candelaria, et. al., adopting the latter's arguments and issues as their own.
Consequently, they are not unduly prejudiced by this Court's decision.

In sum, this Court holds that the two remaining issues, inextricably linked as they are, constitute the
very lis mota of the instant controversy: (1) whether Sections 15 and 16 of Rule V of the House
Impeachment Rules adopted by the 12th Congress are unconstitutional for violating the provisions of
Section 3, Article XI of the Constitution; and (2) whether, as a result thereof, the second
impeachment complaint is barred under Section 3(5) of Article XI of the Constitution.

Judicial Restraint

Senator Pimentel urges this Court to exercise judicial restraint on the ground that the Senate, sitting
as an impeachment court, has the sole power to try and decide all cases of impeachment. Again,
this Court reiterates that the power of judicial review includes the power of review over justiciable
issues in impeachment proceedings.

On the other hand, respondents Speaker De Venecia et. al. argue that "[t]here is a moral compulsion
for the Court to not assume jurisdiction over the impeachment because all the Members thereof are
subject to impeachment."125 But this argument is very much like saying the Legislature has a moral
compulsion not to pass laws with penalty clauses because Members of the House of
Representatives are subject to them.

The exercise of judicial restraint over justiciable issues is not an option before this Court.
Adjudication may not be declined, because this Court is not legally disqualified. Nor can jurisdiction
be renounced as there is no other tribunal to which the controversy may be referred." 126 Otherwise,
this Court would be shirking from its duty vested under Art. VIII, Sec. 1(2) of the Constitution. More
than being clothed with authority thus, this Court is duty-bound to take cognizance of the instant
petitions.127 In the august words of amicus curiae Father Bernas, "jurisdiction is not just a power; it is
a solemn duty which may not be renounced. To renounce it, even if it is vexatious, would be a
dereliction of duty."

Even in cases where it is an interested party, the Court under our system of government cannot
inhibit itself and must rule upon the challenge because no other office has the authority to do so. 128
On the occasion that this Court had been an interested party to the controversy before it, it has acted
upon the matter "not with officiousness but in the discharge of an unavoidable duty and, as always,
with detachment and fairness." 129 After all, "by [his] appointment to the office, the public has laid on [a
member of the judiciary] their confidence that [he] is mentally and morally fit to pass upon the merits
of their varied contentions. For this reason, they expect [him] to be fearless in [his] pursuit to render
justice, to be unafraid to displease any person, interest or power and to be equipped with a moral
fiber strong enough to resist the temptations lurking in [his] office." 130

The duty to exercise the power of adjudication regardless of interest had already been settled in the
case of Abbas v. Senate Electoral Tribunal.131 In that case, the petitioners filed with the respondent
Senate Electoral Tribunal a Motion for Disqualification or Inhibition of the Senators-Members thereof
from the hearing and resolution of SET Case No. 002-87 on the ground that all of them were
interested parties to said case as respondents therein. This would have reduced the Tribunal's
membership to only its three Justices-Members whose disqualification was not sought, leaving them
to decide the matter. This Court held:

Where, as here, a situation is created which precludes the substitution of any Senator sitting in the
Tribunal by any of his other colleagues in the Senate without inviting the same objections to the
substitute's competence, the proposed mass disqualification, if sanctioned and ordered, would leave
the Tribunal no alternative but to abandon a duty that no other court or body can perform, but which
it cannot lawfully discharge if shorn of the participation of its entire membership of Senators.

To our mind, this is the overriding consideration — that the Tribunal be not prevented from
discharging a duty which it alone has the power to perform, the performance of which is in the
highest public interest as evidenced by its being expressly imposed by no less than the fundamental
law.

It is aptly noted in the first of the questioned Resolutions that the framers of the Constitution could
not have been unaware of the possibility of an election contest that would involve all Senators—
elect, six of whom would inevitably have to sit in judgment thereon. Indeed, such possibility might
surface again in the wake of the 1992 elections when once more, but for the last time, all 24 seats in
the Senate will be at stake. Yet the Constitution provides no scheme or mode for settling such
unusual situations or for the substitution of Senators designated to the Tribunal whose
disqualification may be sought. Litigants in such situations must simply place their trust and hopes of
vindication in the fairness and sense of justice of the Members of the Tribunal. Justices and
Senators, singly and collectively.

Let us not be misunderstood as saying that no Senator-Member of the Senate Electoral Tribunal
may inhibit or disqualify himself from sitting in judgment on any case before said Tribunal. Every
Member of the Tribunal may, as his conscience dictates, refrain from participating in the resolution of
a case where he sincerely feels that his personal interests or biases would stand in the way of an
objective and impartial judgment. What we are merely saying is that in the light of the Constitution,
the Senate Electoral Tribunal cannot legally function as such, absent its entire membership of
Senators and that no amendment of its Rules can confer on the three Justices-Members alone the
power of valid adjudication of a senatorial election contest.

More recently in the case of Estrada v. Desierto,132 it was held that:

Moreover, to disqualify any of the members of the Court, particularly a majority of them, is nothing
short of pro tanto depriving the Court itself of its jurisdiction as established by the fundamental law.
Disqualification of a judge is a deprivation of his judicial power. And if that judge is the one
designated by the Constitution to exercise the jurisdiction of his court, as is the case with the
Justices of this Court, the deprivation of his or their judicial power is equivalent to the deprivation of
the judicial power of the court itself. It affects the very heart of judicial independence. The proposed
mass disqualification, if sanctioned and ordered, would leave the Court no alternative but to abandon
a duty which it cannot lawfully discharge if shorn of the participation of its entire membership of
Justices.133 (Italics in the original)

Besides, there are specific safeguards already laid down by the Court when it exercises its power of
judicial review.

In Demetria v. Alba,134 this Court, through Justice Marcelo Fernan cited the "seven pillars" of
limitations of the power of judicial review, enunciated by US Supreme Court Justice Brandeis in
Ashwander v. TVA135 as follows:

1. The Court will not pass upon the constitutionality of legislation in a friendly, non-adversary
proceeding, declining because to decide such questions 'is legitimate only in the last resort, and as a
necessity in the determination of real, earnest and vital controversy between individuals. It never
was the thought that, by means of a friendly suit, a party beaten in the legislature could transfer to
the courts an inquiry as to the constitutionality of the legislative act.'
2. The Court will not 'anticipate a question of constitutional law in advance of the necessity of
deciding it.' . . . 'It is not the habit of the Court to decide questions of a constitutional nature unless
absolutely necessary to a decision of the case.'

3. The Court will not 'formulate a rule of constitutional law broader than is required by the precise
facts to which it is to be applied.'

4. The Court will not pass upon a constitutional question although properly presented by the record,
if there is also present some other ground upon which the case may be disposed of. This rule has
found most varied application. Thus, if a case can be decided on either of two grounds, one involving
a constitutional question, the other a question of statutory construction or general law, the Court will
decide only the latter. Appeals from the highest court of a state challenging its decision of a question
under the Federal Constitution are frequently dismissed because the judgment can be sustained on
an independent state ground.

5. The Court will not pass upon the validity of a statute upon complaint of one who fails to show that
he is injured by its operation. Among the many applications of this rule, none is more striking than
the denial of the right of challenge to one who lacks a personal or property right. Thus, the challenge
by a public official interested only in the performance of his official duty will not be entertained . . . In
Fairchild v. Hughes, the Court affirmed the dismissal of a suit brought by a citizen who sought to
have the Nineteenth Amendment declared unconstitutional. In Massachusetts v. Mellon, the
challenge of the federal Maternity Act was not entertained although made by the Commonwealth on
behalf of all its citizens.

6. The Court will not pass upon the constitutionality of a statute at the instance of one who has
availed himself of its benefits.

7. When the validity of an act of the Congress is drawn in question, and even if a serious doubt of
constitutionality is raised, it is a cardinal principle that this Court will first ascertain whether a
construction of the statute is fairly possible by which the question may be avoided (citations omitted).

The foregoing "pillars" of limitation of judicial review, summarized in Ashwander v. TVA from different
decisions of the United States Supreme Court, can be encapsulated into the following categories:

1. that there be absolute necessity of deciding a case

2. that rules of constitutional law shall be formulated only as required by the facts of the case
3. that judgment may not be sustained on some other ground

4. that there be actual injury sustained by the party by reason of the operation of the statute

5. that the parties are not in estoppel

6. that the Court upholds the presumption of constitutionality.

As stated previously, parallel guidelines have been adopted by this Court in the exercise of judicial
review:

1. actual case or controversy calling for the exercise of judicial power

2. the person challenging the act must have "standing" to challenge; he must have a personal and
substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of
its enforcement
3. the question of constitutionality must be raised at the earliest possible opportunity

4. the issue of constitutionality must be the very lis mota of the case.136

Respondents Speaker de Venecia, et. al. raise another argument for judicial restraint the possibility
that "judicial review of impeachments might also lead to embarrassing conflicts between the
Congress and the [J]udiciary." They stress the need to avoid the appearance of impropriety or
conflicts of interest in judicial hearings, and the scenario that it would be confusing and humiliating
and risk serious political instability at home and abroad if the judiciary countermanded the vote of
Congress to remove an impeachable official. 137 Intervenor Soriano echoes this argument by alleging
that failure of this Court to enforce its Resolution against Congress would result in the diminution of
its judicial authority and erode public confidence and faith in the judiciary.

Such an argument, however, is specious, to say the least. As correctly stated by the Solicitor
General, the possibility of the occurrence of a constitutional crisis is not a reason for this Court to
refrain from upholding the Constitution in all impeachment cases. Justices cannot abandon their
constitutional duties just because their action may start, if not precipitate, a crisis.

Justice Feliciano warned against the dangers when this Court refuses to act.

x x x Frequently, the fight over a controversial legislative or executive act is not regarded as settled
until the Supreme Court has passed upon the constitutionality of the act involved, the judgment has
not only juridical effects but also political consequences. Those political consequences may follow
even where the Court fails to grant the petitioner's prayer to nullify an act for lack of the necessary
number of votes. Frequently, failure to act explicitly, one way or the other, itself constitutes a
decision for the respondent and validation, or at least quasi-validation, follows." 138

Thus, in Javellana v. Executive Secretary 139 where this Court was split and "in the end there were not
enough votes either to grant the petitions, or to sustain respondent's claims," 140 the pre-existing
constitutional order was disrupted which paved the way for the establishment of the martial law
regime.

Such an argument by respondents and intervenor also presumes that the coordinate branches of the
government would behave in a lawless manner and not do their duty under the law to uphold the
Constitution and obey the laws of the land. Yet there is no reason to believe that any of the branches
of government will behave in a precipitate manner and risk social upheaval, violence, chaos and
anarchy by encouraging disrespect for the fundamental law of the land.

Substituting the word public officers for judges, this Court is well guided by the doctrine in People v.
Veneracion, to wit:141

Obedience to the rule of law forms the bedrock of our system of justice. If [public officers], under the
guise of religious or political beliefs were allowed to roam unrestricted beyond boundaries within
which they are required by law to exercise the duties of their office, then law becomes meaningless.
A government of laws, not of men excludes the exercise of broad discretionary powers by those
acting under its authority. Under this system, [public officers] are guided by the Rule of Law, and
ought "to protect and enforce it without fear or favor," resist encroachments by governments, political
parties, or even the interference of their own personal beliefs. 142

Constitutionality of the Rules of Procedure

for Impeachment Proceedings
adopted by the 12th Congress
Respondent House of Representatives, through Speaker De Venecia, argues that Sections 16 and
17 of Rule V of the House Impeachment Rules do not violate Section 3 (5) of Article XI of our
present Constitution, contending that the term "initiate" does not mean "to file;" that Section 3 (1) is
clear in that it is the House of Representatives, as a collective body, which has the exclusive power
to initiate all cases of impeachment; that initiate could not possibly mean "to file" because filing can,
as Section 3 (2), Article XI of the Constitution provides, only be accomplished in 3 ways, to wit: (1)
by a verified complaint for impeachment by any member of the House of Representatives; or (2) by
any citizen upon a resolution of endorsement by any member; or (3) by at least 1/3 of all the
members of the House. Respondent House of Representatives concludes that the one year bar
prohibiting the initiation of impeachment proceedings against the same officials could not have been
violated as the impeachment complaint against Chief Justice Davide and seven Associate Justices
had not been initiated as the House of Representatives, acting as the collective body, has yet to act
on it.

The resolution of this issue thus hinges on the interpretation of the term "initiate." Resort to statutory
construction is, therefore, in order.

That the sponsor of the provision of Section 3(5) of the Constitution, Commissioner Florenz
Regalado, who eventually became an Associate Justice of this Court, agreed on the meaning of
"initiate" as "to file," as proffered and explained by Constitutional Commissioner Maambong during
the Constitutional Commission proceedings, which he (Commissioner Regalado) as amicus curiae
affirmed during the oral arguments on the instant petitions held on November 5, 2003 at which he
added that the act of "initiating" included the act of taking initial action on the complaint, dissipates
any doubt that indeed the word "initiate" as it twice appears in Article XI (3) and (5) of the
Constitution means to file the complaint and take initial action on it.

"Initiate" of course is understood by ordinary men to mean, as dictionaries do, to begin, to

commence, or set going. As Webster's Third New International Dictionary of the English Language
concisely puts it, it means "to perform or facilitate the first action," which jibes with Justice
Regalado's position, and that of Father Bernas, who elucidated during the oral arguments of the
instant petitions on November 5, 2003 in this wise:

Briefly then, an impeachment proceeding is not a single act. It is a comlexus of acts consisting of a
beginning, a middle and an end. The end is the transmittal of the articles of impeachment to the
Senate. The middle consists of those deliberative moments leading to the formulation of the articles
of impeachment. The beginning or the initiation is the filing of the complaint and its referral to the
Committee on Justice.

Finally, it should be noted that the House Rule relied upon by Representatives Cojuangco and
Fuentebella says that impeachment is "deemed initiated" when the Justice Committee votes in
favor of impeachment or when the House reverses a contrary vote of the Committee. Note that the
Rule does not say "impeachment proceedings" are initiated but rather are "deemed initiated." The
language is recognition that initiation happened earlier, but by legal fiction there is an attempt to
postpone it to a time after actual initiation. (Emphasis and underscoring supplied)

As stated earlier, one of the means of interpreting the Constitution is looking into the intent of the
law. Fortunately, the intent of the framers of the 1987 Constitution can be pried from its records:

MR. MAAMBONG. With reference to Section 3, regarding the procedure and the substantive
provisions on impeachment, I understand there have been many proposals and, I think, these would
need some time for Committee action.
However, I would just like to indicate that I submitted to the Committee a resolution on impeachment
proceedings, copies of which have been furnished the Members of this body. This is borne out of my
experience as a member of the Committee on Justice, Human Rights and Good Government which
took charge of the last impeachment resolution filed before the First Batasang Pambansa. For the
information of the Committee, the resolution covers several steps in the impeachment
proceedings starting with initiation, action of the Speaker committee action, calendaring of
report, voting on the report, transmittal referral to the Senate, trial and judgment by the
Senate.

xxx

MR. MAAMBONG. Mr. Presiding Officer, I am not moving for a reconsideration of the approval of the
amendment submitted by Commissioner Regalado, but I will just make of record my thinking that we
do not really initiate the filing of the Articles of Impeachment on the floor. The procedure, as I have
pointed out earlier, was that the initiation starts with the filing of the complaint. And what is
actually done on the floor is that the committee resolution containing the Articles of
Impeachment is the one approved by the body.

As the phraseology now runs, which may be corrected by the Committee on Style, it appears that
the initiation starts on the floor. If we only have time, I could cite examples in the case of the
impeachment proceedings of President Richard Nixon wherein the Committee on the Judiciary
submitted the recommendation, the resolution, and the Articles of Impeachment to the body, and it
was the body who approved the resolution. It is not the body which initiates it. It only approves
or disapproves the resolution. So, on that score, probably the Committee on Style could help in
rearranging these words because we have to be very technical about this. I have been bringing with
me The Rules of the House of Representatives of the U.S. Congress. The Senate Rules are with
me. The proceedings on the case of Richard Nixon are with me. I have submitted my proposal, but
the Committee has already decided. Nevertheless, I just want to indicate this on record.

xxx

MR. MAAMBONG. I would just like to move for a reconsideration of the approval of Section 3 (3). My
reconsideration will not at all affect the substance, but it is only in keeping with the exact formulation
of the Rules of the House of Representatives of the United States regarding impeachment.

I am proposing, Madam President, without doing damage to any of this provision, that on page 2,
Section 3 (3), from lines 17 to 18, we delete the words which read: "to initiate impeachment
proceedings" and the comma (,) and insert on line 19 after the word "resolution" the phrase WITH
THE ARTICLES, and then capitalize the letter "i" in "impeachment" and replace the word "by" with
OF, so that the whole section will now read: "A vote of at least one-third of all the Members of the
House shall be necessary either to affirm a resolution WITH THE ARTICLES of Impeachment OF
the Committee or to override its contrary resolution. The vote of each Member shall be recorded."

I already mentioned earlier yesterday that the initiation, as far as the House of Representatives
of the United States is concerned, really starts from the filing of the verified complaint and every
resolution to impeach always carries with it the Articles of Impeachment. As a matter of fact, the
words "Articles of Impeachment" are mentioned on line 25 in the case of the direct filing of a verified
compliant of one-third of all the Members of the House. I will mention again, Madam President, that
my amendment will not vary the substance in any way. It is only in keeping with the uniform
procedure of the House of Representatives of the United States Congress. Thank you, Madam
President.143 (Italics in the original; emphasis and udnerscoring supplied)
This amendment proposed by Commissioner Maambong was clarified and accepted by the
Committee on the Accountability of Public Officers.144

It is thus clear that the framers intended "initiation" to start with the filing of the complaint. In his
amicus curiae brief, Commissioner Maambong explained that "the obvious reason in deleting the
phrase "to initiate impeachment proceedings" as contained in the text of the provision of Section
3 (3) was to settle and make it understood once and for all that the initiation of impeachment
proceedings starts with the filing of the complaint, and the vote of one-third of the House in a
resolution of impeachment does not initiate the impeachment proceedings which was already
initiated by the filing of a verified complaint under Section 3, paragraph (2), Article XI of the
Constitution."145

Amicus curiae Constitutional Commissioner Regalado is of the same view as is Father Bernas, who
was also a member of the 1986 Constitutional Commission, that the word "initiate" as used in Article
XI, Section 3(5) means to file, both adding, however, that the filing must be accompanied by an
action to set the complaint moving.

During the oral arguments before this Court, Father Bernas clarified that the word "initiate,"
appearing in the constitutional provision on impeachment, viz:

Section 3 (1) The House of Representatives shall have the exclusive power to initiate all cases of
impeachment.

xxx

(5) No impeachment proceedings shall be initiated against the same official more than once within a
period of one year, (Emphasis supplied)

refers to two objects, "impeachment case" and "impeachment proceeding."

Father Bernas explains that in these two provisions, the common verb is "to initiate." The object in
the first sentence is "impeachment case." The object in the second sentence is "impeachment
proceeding." Following the principle of reddendo singuala sinuilis, the term "cases" must be
distinguished from the term "proceedings." An impeachment case is the legal controversy that must
be decided by the Senate. Above-quoted first provision provides that the House, by a vote of one-
third of all its members, can bring a case to the Senate. It is in that sense that the House has
"exclusive power" to initiate all cases of impeachment. No other body can do it. However, before a
decision is made to initiate a case in the Senate, a "proceeding" must be followed to arrive at a
conclusion. A proceeding must be "initiated." To initiate, which comes from the Latin word initium,
means to begin. On the other hand, proceeding is a progressive noun. It has a beginning, a middle,
and an end. It takes place not in the Senate but in the House and consists of several steps: (1) there
is the filing of a verified complaint either by a Member of the House of Representatives or by a
private citizen endorsed by a Member of the House of the Representatives; (2) there is the
processing of this complaint by the proper Committee which may either reject the complaint or
uphold it; (3) whether the resolution of the Committee rejects or upholds the complaint, the resolution
must be forwarded to the House for further processing; and (4) there is the processing of the same
complaint by the House of Representatives which either affirms a favorable resolution of the
Committee or overrides a contrary resolution by a vote of one-third of all the members. If at least one
third of all the Members upholds the complaint, Articles of Impeachment are prepared and
transmitted to the Senate. It is at this point that the House "initiates an impeachment case." It is at
this point that an impeachable public official is successfully impeached. That is, he or she is
successfully charged with an impeachment "case" before the Senate as impeachment court.
Father Bernas further explains: The "impeachment proceeding" is not initiated when the complaint is
transmitted to the Senate for trial because that is the end of the House proceeding and the beginning
of another proceeding, namely the trial. Neither is the "impeachment proceeding" initiated when the
House deliberates on the resolution passed on to it by the Committee, because something prior to
that has already been done. The action of the House is already a further step in the proceeding, not
its initiation or beginning. Rather, the proceeding is initiated or begins, when a verified complaint is
filed and referred to the Committee on Justice for action. This is the initiating step which triggers the
series of steps that follow.

The framers of the Constitution also understood initiation in its ordinary meaning. Thus when a
proposal reached the floor proposing that "A vote of at least one-third of all the Members of the
House shall be necessary… to initiate impeachment proceedings," this was met by a proposal to
delete the line on the ground that the vote of the House does not initiate impeachment proceeding
but rather the filing of a complaint does. 146 Thus the line was deleted and is not found in the present
Constitution.

Father Bernas concludes that when Section 3 (5) says, "No impeachment proceeding shall be
initiated against the same official more than once within a period of one year," it means that no
second verified complaint may be accepted and referred to the Committee on Justice for action. By
his explanation, this interpretation is founded on the common understanding of the meaning of "to
initiate" which means to begin. He reminds that the Constitution is ratified by the people, both
ordinary and sophisticated, as they understand it; and that ordinary people read ordinary meaning
into ordinary words and not abstruse meaning, they ratify words as they understand it and not as
sophisticated lawyers confuse it.

To the argument that only the House of Representatives as a body can initiate impeachment
proceedings because Section 3 (1) says "The House of Representatives shall have the exclusive
power to initiate all cases of impeachment," This is a misreading of said provision and is contrary to
the principle of reddendo singula singulis by equating "impeachment cases" with "impeachment
proceeding."

From the records of the Constitutional Commission, to the amicus curiae briefs of two former
Constitutional Commissioners, it is without a doubt that the term "to initiate" refers to the filing of the
impeachment complaint coupled with Congress' taking initial action of said complaint.

Having concluded that the initiation takes place by the act of filing and referral or endorsement of the
impeachment complaint to the House Committee on Justice or, by the filing by at least one-third of
the members of the House of Representatives with the Secretary General of the House, the meaning
of Section 3 (5) of Article XI becomes clear. Once an impeachment complaint has been initiated,
another impeachment complaint may not be filed against the same official within a one year period.

Under Sections 16 and 17 of Rule V of the House Impeachment Rules, impeachment proceedings
are deemed initiated (1) if there is a finding by the House Committee on Justice that the verified
complaint and/or resolution is sufficient in substance, or (2) once the House itself affirms or
overturns the finding of the Committee on Justice that the verified complaint and/or resolution is not
sufficient in substance or (3) by the filing or endorsement before the Secretary-General of the House
of Representatives of a verified complaint or a resolution of impeachment by at least 1/3 of the
members of the House. These rules clearly contravene Section 3 (5) of Article XI since the rules give
the term "initiate" a meaning different meaning from filing and referral.

In his amicus curiae brief, Justice Hugo Gutierrez posits that this Court could not use
contemporaneous construction as an aid in the interpretation of Sec.3 (5) of Article XI, citing Vera v.
Avelino147 wherein this Court stated that "their personal opinions (referring to Justices who were
delegates to the Constitution Convention) on the matter at issue expressed during this Court's our
deliberations stand on a different footing from the properly recorded utterances of debates and
proceedings." Further citing said case, he states that this Court likened the former members of the
Constitutional Convention to actors who are so absorbed in their emotional roles that intelligent
spectators may know more about the real meaning because of the latter's balanced perspectives
and disinterestedness.148

Justice Gutierrez's statements have no application in the present petitions. There are at present only
two members of this Court who participated in the 1986 Constitutional Commission – Chief Justice
Davide and Justice Adolf Azcuna. Chief Justice Davide has not taken part in these proceedings for
obvious reasons. Moreover, this Court has not simply relied on the personal opinions now given by
members of the Constitutional Commission, but has examined the records of the deliberations and
proceedings thereof.

Respondent House of Representatives counters that under Section 3 (8) of Article XI, it is clear and
unequivocal that it and only it has the power to make and interpret its rules governing impeachment.
Its argument is premised on the assumption that Congress has absolute power to promulgate its
rules. This assumption, however, is misplaced.

Section 3 (8) of Article XI provides that "The Congress shall promulgate its rules on impeachment to
effectively carry out the purpose of this section." Clearly, its power to promulgate its rules on
impeachment is limited by the phrase "to effectively carry out the purpose of this section." Hence,
these rules cannot contravene the very purpose of the Constitution which said rules were intended to
effectively carry out. Moreover, Section 3 of Article XI clearly provides for other specific limitations on
its power to make rules, viz:

Section 3. (1) x x x

(2) A verified complaint for impeachment may be filed by any Member of the House of
Representatives or by any citizen upon a resolution of endorsement by any Member thereof, which
shall be included in the Order of Business within ten session days, and referred to the proper
Committee within three session days thereafter. The Committee, after hearing, and by a majority
vote of all its Members, shall submit its report to the House within sixty session days from such
referral, together with the corresponding resolution. The resolution shall be calendared for
consideration by the House within ten session days from receipt thereof.

(3) A vote of at least one-third of all the Members of the House shall be necessary to either affirm a
favorable resolution with the Articles of Impeachment of the Committee, or override its contrary
resolution. The vote of each Member shall be recorded.

(4) In case the verified complaint or resolution of impeachment is filed by at least one-third of all the
Members of the House, the same shall constitute the Articles of Impeachment, and trial by the
Senate shall forthwith proceed.

(5) No impeachment proceedings shall be initiated against the same official more than once within a
period of one year.

It is basic that all rules must not contravene the Constitution which is the fundamental law. If as
alleged Congress had absolute rule making power, then it would by necessary implication have the
power to alter or amend the meaning of the Constitution without need of referendum.
In Osmeña v. Pendatun,149 this Court held that it is within the province of either House of Congress to
interpret its rules and that it was the best judge of what constituted "disorderly behavior" of its
members. However, in Paceta v. Secretary of the Commission on Appointments,150 Justice (later
Chief Justice) Enrique Fernando, speaking for this Court and quoting Justice Brandeis in United
States v. Smith,151 declared that where the construction to be given to a rule affects persons other
than members of the Legislature, the question becomes judicial in nature. In Arroyo v. De Venecia,152
quoting United States v. Ballin, Joseph & Co., 153 Justice Vicente Mendoza, speaking for this Court,
held that while the Constitution empowers each house to determine its rules of proceedings, it may
not by its rules ignore constitutional restraints or violate fundamental rights, and further that there
should be a reasonable relation between the mode or method of proceeding established by the rule
and the result which is sought to be attained. It is only within these limitations that all matters of
method are open to the determination of the Legislature. In the same case of Arroyo v. De Venecia,
Justice Reynato S. Puno, in his Concurring and Dissenting Opinion, was even more emphatic as he
stressed that in the Philippine setting there is even more reason for courts to inquire into the validity
of the Rules of Congress, viz:

With due respect, I do not agree that the issues posed by the petitioner are non-justiciable.
Nor do I agree that we will trivialize the principle of separation of power if we assume
jurisdiction over he case at bar. Even in the United States, the principle of separation of power is
no longer an impregnable impediment against the interposition of judicial power on cases involving
breach of rules of procedure by legislators.

Rightly, the ponencia uses the 1891 case of US v Ballin (144 US 1) as a window to view the issues
before the Court. It is in Ballin where the US Supreme Court first defined the boundaries of the
power of the judiciary to review congressional rules. It held:

"x x x

"The Constitution, in the same section, provides, that each house may determine the rules of its
proceedings." It appears that in pursuance of this authority the House had, prior to that day, passed
this as one of its rules:

Rule XV

3. On the demand of any member, or at the suggestion of the Speaker, the names of members
sufficient to make a quorum in the hall of the House who do not vote shall be noted by the clerk and
recorded in the journal, and reported to the Speaker with the names of the members voting, and be
counted and announced in determining the presence of a quorum to do business. (House Journal,
230, Feb. 14, 1890)

The action taken was in direct compliance with this rule. The question, therefore, is as to the
validity of this rule, and not what methods the Speaker may of his own motion resort to for
determining the presence of a quorum, nor what matters the Speaker or clerk may of their own
volition place upon the journal. Neither do the advantages or disadvantages, the wisdom or folly, of
such a rule present any matters for judicial consideration. With the courts the question is only one of
power. The Constitution empowers each house to determine its rules of proceedings. It may
not by its rules ignore constitutional restraints or violate fundamental rights, and there
should be a reasonable relation between the mode or method of proceedings established by
the rule and the result which is sought to be attained. But within these limitations all matters of
method are open to the determination of the House, and it is no impeachment of the rule to say that
some other way would be better, more accurate, or even more just. It is no objection to the validity of
a rule that a different one has been prescribed and in force for a length of time. The power to make
rules is not one which once exercised is exhausted. It is a continuous power, always subject to be
exercised by the House, and within the limitations suggested, absolute and beyond the challenge of
any other body or tribunal."

Ballin, clearly confirmed the jurisdiction of courts to pass upon the validity of congressional
rules, i.e, whether they are constitutional. Rule XV was examined by the Court and it was found
to satisfy the test: (1) that it did not ignore any constitutional restraint; (2) it did not violate any
fundamental right; and (3) its method had a reasonable relationship with the result sought to be
attained. By examining Rule XV, the Court did not allow its jurisdiction to be defeated by the mere
invocation of the principle of separation of powers. 154

xxx

In the Philippine setting, there is a more compelling reason for courts to categorically reject
the political question defense when its interposition will cover up abuse of power. For
section 1, Article VIII of our Constitution was intentionally cobbled to empower courts "x x x
to determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the government." This
power is new and was not granted to our courts in the 1935 and 1972 Constitutions. It was not also
xeroxed from the US Constitution or any foreign state constitution. The CONCOM granted
this enormous power to our courts in view of our experience under martial law where abusive
exercises of state power were shielded from judicial scrutiny by the misuse of the political
question doctrine. Led by the eminent former Chief Justice Roberto Concepcion, the CONCOM
expanded and sharpened the checking powers of the judiciary vis-à-vis the Executive and the
Legislative departments of government.155

xxx

The Constitution cannot be any clearer. What it granted to this Court is not a mere power which
it can decline to exercise. Precisely to deter this disinclination, the Constitution imposed it as
a duty of this Court to strike down any act of a branch or instrumentality of government or
any of its officials done with grave abuse of discretion amounting to lack or excess of
jurisdiction. Rightly or wrongly, the Constitution has elongated the checking powers of this Court
against the other branches of government despite their more democratic character, the President
and the legislators being elected by the people. 156

xxx

The provision defining judicial power as including the 'duty of the courts of justice. . . to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government' constitutes the capstone of the
efforts of the Constitutional Commission to upgrade the powers of this court vis-à-vis the other
branches of government. This provision was dictated by our experience under martial law which
taught us that a stronger and more independent judiciary is needed to abort abuses in government. x
xx

xxx

In sum, I submit that in imposing to this Court the duty to annul acts of government committed with
grave abuse of discretion, the new Constitution transformed this Court from passivity to activism.
This transformation, dictated by our distinct experience as nation, is not merely evolutionary but
revolutionary. Under the 1935 and the 1973 Constitutions, this Court approached constitutional
violations by initially determining what it cannot do; under the 1987 Constitution, there is a shift in
stress – this Court is mandated to approach constitutional violations not by finding out what
it should not do but what it must do. The Court must discharge this solemn duty by not
resuscitating a past that petrifies the present.

I urge my brethren in the Court to give due and serious consideration to this new constitutional
provision as the case at bar once more calls us to define the parameters of our power to review
violations of the rules of the House. We will not be true to our trust as the last bulwark against
government abuses if we refuse to exercise this new power or if we wield it with timidity. To
be sure, it is this exceeding timidity to unsheathe the judicial sword that has increasingly
emboldened other branches of government to denigrate, if not defy, orders of our courts. In
Tolentino, I endorsed the view of former Senator Salonga that this novel provision stretching the
latitude of judicial power is distinctly Filipino and its interpretation should not be depreciated by
undue reliance on inapplicable foreign jurisprudence. In resolving the case at bar, the lessons of our
own history should provide us the light and not the experience of foreigners. 157 (Italics in the original
emphasis and underscoring supplied)

Thus, the ruling in Osmena v. Pendatun is not applicable to the instant petitions. Here, the third
parties alleging the violation of private rights and the Constitution are involved.

Neither may respondent House of Representatives' rely on Nixon v. US158 as basis for arguing that
this Court may not decide on the constitutionality of Sections 16 and 17 of the House Impeachment
Rules. As already observed, the U.S. Federal Constitution simply provides that "the House of
Representatives shall have the sole power of impeachment." It adds nothing more. It gives no clue
whatsoever as to how this "sole power" is to be exercised. No limitation whatsoever is given. Thus,
the US Supreme Court concluded that there was a textually demonstrable constitutional commitment
of a constitutional power to the House of Representatives. This reasoning does not hold with regard
to impeachment power of the Philippine House of Representatives since our Constitution, as earlier
enumerated, furnishes several provisions articulating how that "exclusive power" is to be exercised.

The provisions of Sections 16 and 17 of Rule V of the House Impeachment Rules which state that
impeachment proceedings are deemed initiated (1) if there is a finding by the House Committee on
Justice that the verified complaint and/or resolution is sufficient in substance, or (2) once the House
itself affirms or overturns the finding of the Committee on Justice that the verified complaint and/or
resolution is not sufficient in substance or (3) by the filing or endorsement before the Secretary-
General of the House of Representatives of a verified complaint or a resolution of impeachment by
at least 1/3 of the members of the House thus clearly contravene Section 3 (5) of Article XI as they
give the term "initiate" a meaning different from "filing."

Validity of the Second Impeachment Complaint

Having concluded that the initiation takes place by the act of filing of the impeachment complaint and
referral to the House Committee on Justice, the initial action taken thereon, the meaning of Section 3
(5) of Article XI becomes clear. Once an impeachment complaint has been initiated in the foregoing
manner, another may not be filed against the same official within a one year period following Article
XI, Section 3(5) of the Constitution.

In fine, considering that the first impeachment complaint, was filed by former President Estrada
against Chief Justice Hilario G. Davide, Jr., along with seven associate justices of this Court, on
June 2, 2003 and referred to the House Committee on Justice on August 5, 2003, the second
impeachment complaint filed by Representatives Gilberto C. Teodoro, Jr. and Felix William
Fuentebella against the Chief Justice on October 23, 2003 violates the constitutional prohibition
against the initiation of impeachment proceedings against the same impeachable officer within a
one-year period.

Conclusion

If there is anything constant about this country, it is that there is always a phenomenon that takes the
center stage of our individual and collective consciousness as a people with our characteristic flair
for human drama, conflict or tragedy. Of course this is not to demean the seriousness of the
controversy over the Davide impeachment. For many of us, the past two weeks have proven to be
an exasperating, mentally and emotionally exhausting experience. Both sides have fought bitterly a
dialectical struggle to articulate what they respectively believe to be the correct position or view on
the issues involved. Passions had ran high as demonstrators, whether for or against the
impeachment of the Chief Justice, took to the streets armed with their familiar slogans and chants to
air their voice on the matter. Various sectors of society - from the business, retired military, to the
academe and denominations of faith – offered suggestions for a return to a state of normalcy in the
official relations of the governmental branches affected to obviate any perceived resulting instability
upon areas of national life.

Through all these and as early as the time when the Articles of Impeachment had been constituted,
this Court was specifically asked, told, urged and argued to take no action of any kind and form with
respect to the prosecution by the House of Representatives of the impeachment complaint against
the subject respondent public official. When the present petitions were knocking so to speak at the
doorsteps of this Court, the same clamor for non-interference was made through what are now the
arguments of "lack of jurisdiction," "non-justiciability," and "judicial self-restraint" aimed at halting the
Court from any move that may have a bearing on the impeachment proceedings.

This Court did not heed the call to adopt a hands-off stance as far as the question of the
constitutionality of initiating the impeachment complaint against Chief Justice Davide is concerned.
To reiterate what has been already explained, the Court found the existence in full of all the requisite
conditions for its exercise of its constitutionally vested power and duty of judicial review over an
issue whose resolution precisely called for the construction or interpretation of a provision of the
fundamental law of the land. What lies in here is an issue of a genuine constitutional material which
only this Court can properly and competently address and adjudicate in accordance with the clear-
cut allocation of powers under our system of government. Face-to-face thus with a matter or problem
that squarely falls under the Court's jurisdiction, no other course of action can be had but for it to
pass upon that problem head on.

The claim, therefore, that this Court by judicially entangling itself with the process of impeachment
has effectively set up a regime of judicial supremacy, is patently without basis in fact and in law.

This Court in the present petitions subjected to judicial scrutiny and resolved on the merits only the
main issue of whether the impeachment proceedings initiated against the Chief Justice transgressed
the constitutionally imposed one-year time bar rule. Beyond this, it did not go about assuming
jurisdiction where it had none, nor indiscriminately turn justiciable issues out of decidedly political
questions. Because it is not at all the business of this Court to assert judicial dominance over the
other two great branches of the government. Rather, the raison d'etre of the judiciary is to
complement the discharge by the executive and legislative of their own powers to bring about
ultimately the beneficent effects of having founded and ordered our society upon the rule of law.

It is suggested that by our taking cognizance of the issue of constitutionality of the impeachment
proceedings against the Chief Justice, the members of this Court have actually closed ranks to
protect a brethren. That the members' interests in ruling on said issue is as much at stake as is that
of the Chief Justice. Nothing could be farther from the truth.

The institution that is the Supreme Court together with all other courts has long held and been
entrusted with the judicial power to resolve conflicting legal rights regardless of the personalities
involved in the suits or actions. This Court has dispensed justice over the course of time, unaffected
by whomsoever stood to benefit or suffer therefrom, unfraid by whatever imputations or speculations
could be made to it, so long as it rendered judgment according to the law and the facts. Why can it
not now be trusted to wield judicial power in these petitions just because it is the highest ranking
magistrate who is involved when it is an incontrovertible fact that the fundamental issue is not him
but the validity of a government branch's official act as tested by the limits set by the Constitution?
Of course, there are rules on the inhibition of any member of the judiciary from taking part in a case
in specified instances. But to disqualify this entire institution now from the suit at bar is to regard the
Supreme Court as likely incapable of impartiality when one of its members is a party to a case,
which is simply a non sequitur.

No one is above the law or the Constitution. This is a basic precept in any legal system which
recognizes equality of all men before the law as essential to the law's moral authority and that of its
agents to secure respect for and obedience to its commands. Perhaps, there is no other government
branch or instrumentality that is most zealous in protecting that principle of legal equality other than
the Supreme Court which has discerned its real meaning and ramifications through its application to
numerous cases especially of the high-profile kind in the annals of jurisprudence. The Chief Justice
is not above the law and neither is any other member of this Court. But just because he is the Chief
Justice does not imply that he gets to have less in law than anybody else. The law is solicitous of
every individual's rights irrespective of his station in life.

The Filipino nation and its democratic institutions have no doubt been put to test once again by this
impeachment case against Chief Justice Hilario Davide. Accordingly, this Court has resorted to no
other than the Constitution in search for a solution to what many feared would ripen to a crisis in
government. But though it is indeed immensely a blessing for this Court to have found answers in
our bedrock of legal principles, it is equally important that it went through this crucible of a
democratic process, if only to discover that it can resolve differences without the use of force and
aggression upon each other.

WHEREFORE, Sections 16 and 17 of Rule V of the Rules of Procedure in Impeachment

Proceedings which were approved by the House of Representatives on November 28, 2001 are
unconstitutional. Consequently, the second impeachment complaint against Chief Justice Hilario G.
Davide, Jr. which was filed by Representatives Gilberto C. Teodoro, Jr. and Felix William B.
Fuentebella with the Office of the Secretary General of the House of Representatives on October 23,
2003 is barred under paragraph 5, section 3 of Article XI of the Constitution.

SO ORDERED.

Bellosillo and Tinga, JJ., see separate opinion.

Puno, and Ynares-Santiago, J., see concurring and dissenting opinion.
Vitug, Panganiban, Sandoval-Gutierrez and Callejo, Sr., JJ., see separate concurring opinion.
Quisumbing, J., concurring separate opinion received.
Carpio, J., concur.
Austria-Martinez, J., concur in the majority opinion and in the separate opinion of J. Vitug.
Corona, J., will write a separate concurring opinion.
Azcuna, J., concur in the separate opinion.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-28196 November 9, 1967

RAMON A. GONZALES, petitioner,

vs.
COMMISSION ON ELECTIONS, DIRECTOR OF PRINTING and AUDITOR GENERAL,
respondents.

G.R. No. L-28224 November 9, 1967

PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), petitioner,

vs.
COMMISSION ON ELECTIONS, respondent.

No. 28196:
Ramon A. Gonzales for and in his own behalf as petitioner.
Juan T. David as amicus curiae
Office of the Solicitor General for respondents.

No. 28224:
Salvador Araneta for petitioner.
Office of the Solicitor General for respondent.

CONCEPCION, C.J.:

G. R. No. L-28196 is an original action for prohibition, with preliminary injunction.

Petitioner therein prays for judgment:

1) Restraining: (a) the Commission on Elections from enforcing Republic Act No. 4913, or from
performing any act that will result in the holding of the plebiscite for the ratification of the
constitutional amendments proposed in Joint Resolutions Nos. 1 and 3 of the two Houses of
Congress of the Philippines, approved on March 16, 1967; (b) the Director of Printing from printing
ballots, pursuant to said Act and Resolutions; and (c) the Auditor General from passing in audit any
disbursement from the appropriation of funds made in said Republic Act No. 4913; and

2) declaring said Act unconstitutional and void.

The main facts are not disputed. On March 16, 1967, the Senate and the House of Representatives
passed the following resolutions:

1. R. B. H. (Resolution of Both Houses) No. 1, proposing that Section 5, Article VI, of the
Constitution of the Philippines, be amended so as to increase the membership of the House of
Representatives from a maximum of 120, as provided in the present Constitution, to a maximum of
180, to be apportioned among the several provinces as nearly as may be according to the number of
their respective inhabitants, although each province shall have, at least, one (1) member;

2. R. B. H. No. 2, calling a convention to propose amendments to said Constitution, the convention

to be composed of two (2) elective delegates from each representative district, to be "elected in the
general elections to be held on the second Tuesday of November, 1971;" and

3. R. B. H. No. 3, proposing that Section 16, Article VI, of the same Constitution, be amended so as
to authorize Senators and members of the House of Representatives to become delegates to the
aforementioned constitutional convention, without forfeiting their respective seats in Congress.

Subsequently, Congress passed a bill, which, upon approval by the President, on June 17, 1967,
became Republic Act No. 4913, providing that the amendments to the Constitution proposed in the
aforementioned Resolutions No. 1 and 3 be submitted, for approval by the people, at the general
elections which shall be held on November 14, 1967.

The petition in L-28196 was filed on October 21, 1967. At the hearing thereof, on October 28, 1967,
the Solicitor General appeared on behalf of respondents. Moreover, Atty. Juan T. David and counsel
for the Philippine Constitution Association — hereinafter referred to as the PHILCONSA — were
allowed to argue as amici curiae. Said counsel for the PHILCONSA, Dr. Salvador Araneta, likewise
prayed that the decision in this case be deferred until after a substantially identical case brought by
said organization before the Commission on Elections, 1 which was expected to decide it any time,
and whose decision would, in all probability, be appealed to this Court — had been submitted
thereto for final determination, for a joint decision on the identical issues raised in both cases. In fact,
on October 31, 1967, the PHILCONSA filed with this Court the petition in G. R. No. L-28224, for
review by certiorari of the resolution of the Commission on Elections 2 dismissing the petition therein.
The two (2) cases were deemed submitted for decision on November 8, 1967, upon the filing of the
answer of respondent, the memorandum of the petitioner and the reply memorandum of respondent
in L-28224.

Ramon A. Gonzales, the petitioner in L-28196, is admittedly a Filipino citizen, a taxpayer, and a
voter. He claims to have instituted case L-28196 as a class unit, for and in behalf of all citizens,
taxpayers, and voters similarly situated. Although respondents and the Solicitor General have filed
an answer denying the truth of this allegation, upon the ground that they have no knowledge or
information to form a belief as to the truth thereof, such denial would appear to be a perfunctory one.
In fact, at the hearing of case L-28196, the Solicitor General expressed himself in favor of a judicial
determination of the merits of the issued raised in said case.

The PHILCONSA, petitioner in L-28224, is admittedly a corporation duly organized and existing
under the laws of the Philippines, and a civic, non-profit and non-partisan organization the objective
of which is to uphold the rule of law in the Philippines and to defend its Constitution against erosions
or onslaughts from whatever source. Despite his aforementioned statement in L-28196, in his
answer in L-28224 the Solicitor General maintains that this Court has no jurisdiction over the
subject-matter of L-28224, upon the ground that the same is "merely political" as held in Mabanag
vs. Lopez Vito.3 Senator Arturo M. Tolentino, who appeared before the Commission on Elections and
filed an opposition to the PHILCONSA petition therein, was allowed to appear before this Court and
objected to said petition upon the ground: a) that the Court has no jurisdiction either to grant the
relief sought in the petition, or to pass upon the legality of the composition of the House of
Representatives; b) that the petition, if granted, would, in effect, render in operational the legislative
department; and c) that "the failure of Congress to enact a valid reapportionment law . . . does not
have the legal effect of rendering illegal the House of Representatives elected thereafter, nor of
rendering its acts null and void."
 JURISDICTION

As early as Angara vs. Electoral Commission,4 this Court — speaking through one of the leading
members of the Constitutional Convention and a respected professor of Constitutional Law, Dr. Jose
P. Laurel — declared that "the judicial department is the only constitutional organ which can be
called upon to determine the proper allocation of powers between the several departments and
among the integral or constituent units thereof." It is true that in Mabanag vs. Lopez Vito,5 this Court
characterizing the issue submitted thereto as a political one, declined to pass upon the question
whether or not a given number of votes cast in Congress in favor of a proposed amendment to the
Constitution — which was being submitted to the people for ratification — satisfied the three-fourths
vote requirement of the fundamental law. The force of this precedent has been weakened, however,
by Suanes vs. Chief Accountant of the Senate, 6 Avelino vs. Cuenco,7 Tañada vs. Cuenco,8 and
Macias vs. Commission on Elections.9 In the first, we held that the officers and employees of the
Senate Electoral Tribunal are under its supervision and control, not of that of the Senate President,
as claimed by the latter; in the second, this Court proceeded to determine the number of Senators
necessary for a quorum in the Senate; in the third, we nullified the election, by Senators belonging to
the party having the largest number of votes in said chamber, purporting to act on behalf of the party
having the second largest number of votes therein, of two (2) Senators belonging to the first party,
as members, for the second party, of the, Senate Electoral Tribunal; and in the fourth, we declared
unconstitutional an act of Congress purporting to apportion the representative districts for the House
of Representatives, upon the ground that the apportionment had not been made as may be possible
according to the number of inhabitants of each province. Thus we rejected the theory, advanced in
these four (4) cases, that the issues therein raised were political questions the determination of
which is beyond judicial review.

Indeed, the power to amend the Constitution or to propose amendments thereto is not included in
the general grant of legislative powers to Congress. 10 It is part of the inherent powers of the people
— as the repository of sovereignty in a republican state, such as ours 11 — to make, and, hence, to
amend their own Fundamental Law. Congress may propose amendments to the Constitution merely
because the same explicitly grants such power. 12 Hence, when exercising the same, it is said that
Senators and Members of the House of Representatives act, not as members of Congress, but as
component elements of a constituent assembly. When acting as such, the members of Congress
derive their authority from the Constitution, unlike the people, when performing the same function, 13
for their authority does not emanate from the Constitution — they are the very source of all powers
of government, including the Constitution itself .

Since, when proposing, as a constituent assembly, amendments to the Constitution, the members of
Congress derive their authority from the Fundamental Law, it follows, necessarily, that they do not
have the final say on whether or not their acts are within or beyond constitutional limits. Otherwise,
they could brush aside and set the same at naught, contrary to the basic tenet that ours is a
government of laws, not of men, and to the rigid nature of our Constitution. Such rigidity is stressed
by the fact that, the Constitution expressly confers upon the Supreme Court, 14 the power to declare a
treaty unconstitutional,15 despite the eminently political character of treaty-making power.

In short, the issue whether or not a Resolution of Congress — acting as a constituent assembly —
violates the Constitution essentially justiciable, not political, and, hence, subject to judicial review,
and, to the extent that this view may be inconsistent with the stand taken in Mabanag vs. Lopez
Vito,16 the latter should be deemed modified accordingly. The Members of the Court are unanimous
on this point.

THE MERITS
Section 1 of Article XV of the Constitution, as amended, reads:

The Congress in joint session assembled by a vote of three-fourths of all the Members of the Senate
and of the House of Representatives voting separately, may propose amendments to this
Constitution or call a convention for that purpose. Such amendments shall be valid as part of this
Constitution when approved by a majority of the votes cast at an election at which the amendments
are submitted to the people for their ratification.

Pursuant to this provision, amendments to the Constitution may be proposed, either by Congress, or
by a convention called by Congress for that purpose. In either case, the vote of "three-fourths of all
the members of the Senate and of the House of Representatives voting separately" is necessary.
And, "such amendments shall be valid as part of" the "Constitution when approved by a majority of
the votes cast at an election at which the amendments are submitted to the people for their
ratification."

In the cases at bar, it is conceded that the R. B. H. Nos. 1 and 3 have been approved by a vote of
three-fourths of all the members of the Senate and of the House of Representatives voting
separately. This, notwithstanding, it is urged that said resolutions are null and void because:

1. The Members of Congress, which approved the proposed amendments, as well as the resolution
calling a convention to propose amendments, are, at best, de facto Congressmen;

2. Congress may adopt either one of two alternatives propose — amendments or call a convention
therefore but may not avail of both — that is to say, propose amendment and call a convention — at
the same time;

3. The election, in which proposals for amendment to the Constitution shall be submitted for
ratification, must be a special election, not a general election, in which officers of the national and
local governments — such as the elections scheduled to be held on November 14, 1967 — will be
chosen; and

4. The spirit of the Constitution demands that the election, in which proposals for amendment shall
be submitted to the people for ratification, must be held under such conditions — which, allegedly,
do not exist — as to give the people a reasonable opportunity to have a fair grasp of the nature and
implications of said amendments.

Legality of Congress and Legal Status of the Congressmen

The first objection is based upon Section 5, Article VI, of the Constitution, which provides:

The House of Representatives shall be composed of not more than one hundred and twenty
Members who shall be apportioned among the several provinces as nearly as may be according to
the number of their respective inhabitants, but each province shall have at least one Member. The
Congress shall by law make an apportionment within three years after the return of every
enumeration, and not otherwise. Until such apportionment shall have been made, the House of
Representatives shall have the same number of Members as that fixed by law for the National
Assembly, who shall be elected by the qualified electors from the present Assembly districts. Each
representative district shall comprise, as far as practicable, contiguous and compact territory.

It is urged that the last enumeration or census took place in 1960; that, no apportionment having
been made within three (3) years thereafter, the Congress of the Philippines and/or the election of its
Members became illegal; that Congress and its Members, likewise, became a de facto Congress
and/or de facto congressmen, respectively; and that, consequently, the disputed Resolutions,
proposing amendments to the Constitution, as well as Republic Act No. 4913, are null and void.

It is not true, however, that Congress has not made an apportionment within three years after the
enumeration or census made in 1960. It did actually pass a bill, which became Republic Act No.
3040,17 purporting to make said apportionment. This Act was, however, declared unconstitutional,
upon the ground that the apportionment therein undertaken had not been made according to the
number of inhabitants of the different provinces of the Philippines. 18

Moreover, we are unable to agree with the theory that, in view of the failure of Congress to make a
valid apportionment within the period stated in the Constitution, Congress became an
"unconstitutional Congress" and that, in consequence thereof, the Members of its House of
Representatives are de facto officers. The major premise of this process of reasoning is that the
constitutional provision on "apportionment within three years after the return of every enumeration,
and not otherwise," is mandatory. The fact that Congress is under legal obligation to make said
apportionment does not justify, however, the conclusion that failure to comply with such obligation
rendered Congress illegal or unconstitutional, or that its Members have become de facto officers.

It is conceded that, since the adoption of the Constitution in 1935, Congress has not made a valid
apportionment as required in said fundamental law. The effect of this omission has been envisioned
in the Constitution, pursuant to which:

. . . Until such apportionment shall have been made, the House of Representatives shall have the
same number of Members as that fixed by law for the National Assembly, who shall be elected by
the qualified electors from the present Assembly districts. . . . .

The provision does not support the view that, upon the expiration of the period to make the
apportionment, a Congress which fails to make it is dissolved or becomes illegal. On the contrary, it
implies necessarily that Congress shall continue to function with the representative districts existing
at the time of the expiration of said period.

It is argued that the above-quoted provision refers only to the elections held in 1935. This theory
assumes that an apportionment had to be made necessarily before the first elections to be held after
the inauguration of the Commonwealth of the Philippines, or in 1938. 19 The assumption, is, however,
unwarranted, for there had been no enumeration in 1935, and nobody could foretell when it would be
made. Those who drafted and adopted the Constitution in 1935 could be certain, therefore, that the
three-year period, after the earliest possible enumeration, would expire after the elections in 1938.

What is more, considering that several provisions of the Constitution, particularly those on the
legislative department, were amended in 1940, by establishing a bicameral Congress, those who
drafted and adopted said amendment, incorporating therein the provision of the original Constitution
regarding the apportionment of the districts for representatives, must have known that the three-year
period therefor would expire after the elections scheduled to be held and actually held in 1941.

Thus, the events contemporaneous with the framing and ratification of the original Constitution in
1935 and of the amendment thereof in 1940 strongly indicate that the provision concerning said
apportionment and the effect of the failure to make it were expected to be applied to conditions
obtaining after the elections in 1935 and 1938, and even after subsequent elections.

Then again, since the report of the Director of the Census on the last enumeration was submitted to
the President on November 30, 1960, it follows that the three-year period to make the apportionment
did not expire until 1963, or after the Presidential elections in 1961. There can be no question,
therefore, that the Senate and the House of Representatives organized or constituted on December
30, 1961, were de jure bodies, and that the Members thereof were de jure officers. Pursuant to the
theory of petitioners herein, upon expiration of said period of three years, or late in 1963, Congress
became illegal and its Members, or at least, those of the House of Representatives, became illegal
holder of their respective offices, and were de facto officers.

Petitioners do not allege that the expiration of said three-year period without a reapportionment, had
the effect of abrogating or repealing the legal provision creating Congress, or, at least, the House of
Representatives, and are not aware of any rule or principle of law that would warrant such
conclusion. Neither do they allege that the term of office of the members of said House automatically
expired or that they ipso facto forfeited their seats in Congress, upon the lapse of said period for
reapportionment. In fact, neither our political law, nor our law on public officers, in particular,
supports the view that failure to discharge a mandatory duty, whatever it may be, would
automatically result in the forfeiture of an office, in the absence of a statute to this effect.

Similarly, it would seem obvious that the provision of our Election Law relative to the election of
Members of Congress in 1965 were not repealed in consequence of the failure of said body to make
an apportionment within three (3) years after the census of 1960. Inasmuch as the general elections
in 1965 were presumably held in conformity with said Election Law, and the legal provisions creating
Congress — with a House of Representatives composed of members elected by qualified voters of
representative districts as they existed at the time of said elections — remained in force, we can not
see how said Members of the House of Representatives can be regarded as de facto officers owing
to the failure of their predecessors in office to make a reapportionment within the period
aforementioned.

Upon the other hand, the Constitution authorizes the impeachment of the President, the Vice-
President, the Justices of the Supreme Court and the Auditor General for, inter alia, culpable
violation of the Constitution, 20 the enforcement of which is, not only their mandatory duty, but also,
their main function. This provision indicates that, despite the violation of such mandatory duty, the
title to their respective offices remains unimpaired, until dismissal or ouster pursuant to a judgment
of conviction rendered in accordance with Article IX of the Constitution. In short, the loss of office or
the extinction of title thereto is not automatic.

Even if we assumed, however, that the present Members of Congress are merely de facto officers, it
would not follow that the contested resolutions and Republic Act No. 4913 are null and void. In fact,
the main reasons for the existence of the de facto doctrine is that public interest demands that acts
of persons holding, under color of title, an office created by a valid statute be, likewise, deemed valid
insofar as the public — as distinguished from the officer in question — is concerned. 21 Indeed,
otherwise, those dealing with officers and employees of the Government would be entitled to
demand from them satisfactory proof of their title to the positions they hold, before dealing with them,
or before recognizing their authority or obeying their commands, even if they should act within the
limits of the authority vested in their respective offices, positions or employments. 22 One can imagine
this great inconvenience, hardships and evils that would result in the absence of the de facto
doctrine.

As a consequence, the title of a de facto officer cannot be assailed collaterally. 23 It may not be
contested except directly, by quo warranto proceedings. Neither may the validity of his acts be
questioned upon the ground that he is merely a de facto officer.24 And the reasons are obvious: (1) it
would be an indirect inquiry into the title to the office; and (2) the acts of a de facto officer, if within
the competence of his office, are valid, insofar as the public is concerned.

It is argued that the foregoing rules do not apply to the cases at bar because the acts therein
involved have not been completed and petitioners herein are not third parties. This pretense is
untenable. It is inconsistent with Tayko vs. Capistrano.25 In that case, one of the parties to a suit
being heard before Judge Capistrano objected to his continuing to hear the case, for the reason that,
meanwhile, he had reached the age of retirement. This Court held that the objection could not be
entertained, because the Judge was at least, a de facto Judge, whose title can not be assailed
collaterally. It should be noted that Tayko was not a third party insofar as the Judge was concerned.
Tayko was one of the parties in the aforementioned suit. Moreover, Judge Capistrano had not, as
yet, finished hearing the case, much less rendered decision therein. No rights had vested in favor of
the parties, in consequence of the acts of said Judge. Yet, Tayko's objection was overruled.
Needless to say, insofar as Congress is concerned, its acts, as regards the Resolutions herein
contested and Republic Act No. 4913, are complete. Congress has nothing else to do in connection
therewith.

The Court is, also, unanimous in holding that the objection under consideration is untenable.

Available Alternatives to Congress

Atty. Juan T. David, as amicus curiae, maintains that Congress may either propose amendments to
the Constitution or call a convention for that purpose, but it can not do both, at the same time. This
theory is based upon the fact that the two (2) alternatives are connected in the Constitution by the
disjunctive "or." Such basis is, however, a weak one, in the absence of other circumstances — and
none has brought to our attention — supporting the conclusion drawn by the amicus curiae. In fact,
the term "or" has, oftentimes, been held to mean "and," or vice-versa, when the spirit or context of
the law warrants it.26

It is, also, noteworthy that R. B. H. Nos. 1 and 3 propose amendments to the constitutional provision
on Congress, to be submitted to the people for ratification on November 14, 1967, whereas R. B. H.
No. 2 calls for a convention in 1971, to consider proposals for amendment to the Constitution, in
general. In other words, the subject-matter of R. B. H. No. 2 is different from that of R B. H. Nos. 1
and 3. Moreover, the amendments proposed under R. B. H. Nos. 1 and 3, will be submitted for
ratification several years before those that may be proposed by the constitutional convention called
in R. B. H. No. 2. Again, although the three (3) resolutions were passed on the same date, they were
taken up and put to a vote separately, or one after the other. In other words, they were not passed at
the same time.

In any event, we do not find, either in the Constitution, or in the history thereof anything that would
negate the authority of different Congresses to approve the contested Resolutions, or of the same
Congress to pass the same in, different sessions or different days of the same congressional
session. And, neither has any plausible reason been advanced to justify the denial of authority to
adopt said resolutions on the same day.

Counsel ask: Since Congress has decided to call a constitutional convention to propose
amendments, why not let the whole thing be submitted to said convention, instead of, likewise,
proposing some specific amendments, to be submitted for ratification before said convention is held?
The force of this argument must be conceded. but the same impugns the wisdom of the action taken
by Congress, not its authority to take it. One seeming purpose thereof to permit Members of
Congress to run for election as delegates to the constitutional convention and participate in the
proceedings therein, without forfeiting their seats in Congress. Whether or not this should be done is
a political question, not subject to review by the courts of justice.

On this question there is no disagreement among the members of the Court.

May Constitutional Amendments Be Submitted for Ratification in a General Election?

Article XV of the Constitution provides:

. . . The Congress in joint session assembled, by a vote of three-fourths of all the Members of the
Senate and of the House of Representatives voting separately, may propose amendments to this
Constitution or call a contention for that purpose. Such amendments shall be valid as part of this
Constitution when approved by a majority of the votes cast at an election at which the amendments
are submitted to the people for their ratification.

There is in this provision nothing to indicate that the "election" therein referred to is a "special," not a
general, election. The circumstance that three previous amendments to the Constitution had been
submitted to the people for ratification in special elections merely shows that Congress deemed it
best to do so under the circumstances then obtaining. It does not negate its authority to submit
proposed amendments for ratification in general elections.

It would be better, from the viewpoint of a thorough discussion of the proposed amendments, that
the same be submitted to the people's approval independently of the election of public officials. And
there is no denying the fact that an adequate appraisal of the merits and demerits proposed
amendments is likely to be overshadowed by the great attention usually commanded by the choice
of personalities involved in general elections, particularly when provincial and municipal officials are
to be chosen. But, then, these considerations are addressed to the wisdom of holding a plebiscite
simultaneously with the election of public officer. They do not deny the authority of Congress to
choose either alternative, as implied in the term "election" used, without qualification, in the
abovequoted provision of the Constitution. Such authority becomes even more patent when we
consider: (1) that the term "election," normally refers to the choice or selection of candidates to
public office by popular vote; and (2) that the word used in Article V of the Constitution, concerning
the grant of suffrage to women is, not "election," but "plebiscite."

Petitioners maintain that the term "election," as used in Section 1 of Art. XV of the Constitution,
should be construed as meaning a special election. Some members of the Court even feel that said
term ("election") refers to a "plebiscite," without any "election," general or special, of public officers.
They opine that constitutional amendments are, in general, if not always, of such important, if not
transcendental and vital nature as to demand that the attention of the people be focused exclusively
on the subject-matter thereof, so that their votes thereon may reflect no more than their intelligent,
impartial and considered view on the merits of the proposed amendments, unimpaired, or, at least,
undiluted by extraneous, if not insidious factors, let alone the partisan political considerations that
are likely to affect the selection of elective officials.

This, certainly, is a situation to be hoped for. It is a goal the attainment of which should be promoted.
The ideal conditions are, however, one thing. The question whether the Constitution forbids the
submission of proposals for amendment to the people except under such conditions, is another
thing. Much as the writer and those who concur in this opinion admire the contrary view, they find
themselves unable to subscribe thereto without, in effect, reading into the Constitution what they
believe is not written thereon and can not fairly be deduced from the letter thereof, since the spirit of
the law should not be a matter of sheer speculation.

The majority view — although the votes in favor thereof are insufficient to declare Republic Act No.
4913 unconstitutional — as ably set forth in the opinion penned by Mr. Justice Sanchez, is, however,
otherwise.

Would the Submission now of the Contested Amendments to the People Violate the Spirit of the
Constitution?
It should be noted that the contested Resolutions were approved on March 16, 1967, so that, by
November 14, 1967, our citizenry shall have had practically eight (8) months to be informed on the
amendments in question. Then again, Section 2 of Republic Act No. 4913 provides:

(1) that "the amendments shall be published in three consecutive issues of the Official Gazette, at
least twenty days prior to the election;"

(2) that "a printed copy of the proposed amendments shall be posted in a conspicuous place in every
municipality, city and provincial office building and in every polling place not later than October 14,
1967," and that said copy "shall remain posted therein until after the election;"

(3) that "at least five copies of said amendment shall be kept in each polling place, to be made
available for examination by the qualified electors during election day;"

(4) that "when practicable, copies in the principal native languages, as may be determined by the
Commission on Elections, shall be kept in each polling place;"

(5) that "the Commission on Elections shall make available copies of said amendments in English,
Spanish and, whenever practicable, in the principal native languages, for free distributing:" and

(6) that the contested Resolutions "shall be printed in full" on the back of the ballots which shall be
used on November 14, 1967.

We are not prepared to say that the foregoing measures are palpably inadequate to comply with the
constitutional requirement that proposals for amendment be "submitted to the people for their
ratification," and that said measures are manifestly insufficient, from a constitutional viewpoint, to
inform the people of the amendment sought to be made.

These were substantially the same means availed of to inform the people of the subject submitted to
them for ratification, from the original Constitution down to the Parity Amendment. Thus, referring to
the original Constitution, Section 1 of Act No. 4200, provides:

Said Constitution, with the Ordinance appended thereto, shall be published in the Official Gazette, in
English and in Spanish, for three consecutive issues at least fifteen days prior to said election, and a
printed copy of said Constitution, with the Ordinance appended thereto, shall be posted in a
conspicuous place in each municipal and provincial government office building and in each polling
place not later than the twenty-second day of April, nineteen hundred and thirty-five, and shall
remain posted therein continually until after the termination of the election. At least ten copies of the
Constitution with the Ordinance appended thereto, in English and in Spanish, shall be kept at each
polling place available for examination by the qualified electors during election day. Whenever
practicable, copies in the principal local dialects as may be determined by the Secretary of the
Interior shall also be kept in each polling place.

The provision concerning woman's suffrage is Section 1 of Commonwealth Act No. 34, reading:

Said Article V of the Constitution shall be published in the Official Gazette, in English and in Spanish,
for three consecutive issues at least fifteen days prior to said election, and the said Article V shall be
posted in a conspicuous place in each municipal and provincial office building and in each polling
place not later than the twenty-second day of April, nineteen and thirty-seven, and shall remain
posted therein continually until after the termination of the plebiscite. At least ten copies of said
Article V of the Constitution, in English and in Spanish, shall be kept at each polling place available
for examination by the qualified electors during the plebiscite. Whenever practicable, copies in the
principal native languages, as may be determined by the Secretary of the Interior, shall also be kept
in each polling place.

Similarly, Section 2, Commonwealth Act No. 517, referring to the 1940 amendments, is of the
following tenor:

The said amendments shall be published in English and Spanish in three consecutive issues of the
Official Gazette at least twenty days prior to the election. A printed copy thereof shall be posted in a
conspicuous place in every municipal, city, and provincial government office building and in every
polling place not later than May eighteen, nineteen hundred and forty, and shall remain posted
therein until after the election. At least ten copies of said amendments shall be kept in each polling
place to be made available for examination by the qualified electors during election day. When
practicable, copies in the principal native languages, as may be determined by the Secretary of the
Interior, shall also be kept therein.

As regards the Parity Amendment, Section 2 of Republic Act No. 73 is to the effect that:

The said amendment shall be published in English and Spanish in three consecutive issues of the
Official Gazette at least twenty days prior to the election. A printed copy thereof shall be posted in a
conspicuous place in every municipal, city, and provincial government office building and in every
polling place not later than February eleven, nineteen hundred and forty-seven, and shall remain
posted therein until after the election. At least, ten copies of the said amendment shall be kept in
each polling place to be made available for examination by the qualified electors during election day.
When practicable, copies in the principal native languages, as may be determined by the
Commission on Elections, shall also be kept in each polling place.

The main difference between the present situation and that obtaining in connection with the former
proposals does not arise from the law enacted therefor. The difference springs from the
circumstance that the major political parties had taken sides on previous amendments to the
Constitution — except, perhaps, the woman's suffrage — and, consequently, debated thereon at
some length before the plebiscite took place. Upon the other hand, said political parties have not
seemingly made an issue on the amendments now being contested and have, accordingly, refrained
from discussing the same in the current political campaign. Such debates or polemics as may have
taken place — on a rather limited scale — on the latest proposals for amendment, have been due
principally to the initiative of a few civic organizations and some militant members of our citizenry
who have voiced their opinion thereon. A legislation cannot, however, be nullified by reason of the
failure of certain sectors of the community to discuss it sufficiently. Its constitutionality or
unconstitutionality depends upon no other factors than those existing at the time of the enactment
thereof, unaffected by the acts or omissions of law enforcing agencies, particularly those that take
place subsequently to the passage or approval of the law.

Referring particularly to the contested proposals for amendment, the sufficiency or insufficiency,
from a constitutional angle, of the submission thereof for ratification to the people on November 14,
1967, depends — in the view of those who concur in this opinion, and who, insofar as this phase of
the case, constitute the minority — upon whether the provisions of Republic Act No. 4913 are such
as to fairly apprise the people of the gist, the main idea or the substance of said proposals, which is
— under R. B. H. No. 1 — the increase of the maximum number of seats in the House of
Representatives, from 120 to 180, and — under R. B. H. No. 3 — the authority given to the members
of Congress to run for delegates to the Constitutional Convention and, if elected thereto, to
discharge the duties of such delegates, without forfeiting their seats in Congress. We — who
constitute the minority — believe that Republic Act No. 4913 satisfies such requirement and that said
Act is, accordingly, constitutional.
A considerable portion of the people may not know how over 160 of the proposed maximum of
representative districts are actually apportioned by R. B. H. No. 1 among the provinces in the
Philippines. It is not improbable, however, that they are not interested in the details of the
apportionment, or that a careful reading thereof may tend in their simple minds, to impair a clear
vision thereof. Upon the other hand, those who are more sophisticated, may enlighten themselves
sufficiently by reading the copies of the proposed amendments posted in public places, the copies
kept in the polling places and the text of contested resolutions, as printed in full on the back of the
ballots they will use.

It is, likewise, conceivable that as many people, if not more, may fail to realize or envisage the effect
of R. B. H. No. 3 upon the work of the Constitutional Convention or upon the future of our Republic.
But, then, nobody can foretell such effect with certainty. From our viewpoint, the provisions of Article
XV of the Constitution are satisfied so long as the electorate knows that R. B. H. No. 3 permits
Congressmen to retain their seats as legislators, even if they should run for and assume the
functions of delegates to the Convention.

We are impressed by the factors considered by our distinguished and esteemed brethren, who opine
otherwise, but, we feel that such factors affect the wisdom of Republic Act No. 4913 and that of R. B.
H. Nos. 1 and 3, not the authority of Congress to approve the same.

The system of checks and balances underlying the judicial power to strike down acts of the
Executive or of Congress transcending the confines set forth in the fundamental laws is not in
derogation of the principle of separation of powers, pursuant to which each department is supreme
within its own sphere. The determination of the conditions under which the proposed amendments
shall be submitted to the people is concededly a matter which falls within the legislative sphere. We
do not believe it has been satisfactorily shown that Congress has exceeded the limits thereof in
enacting Republic Act No. 4913. Presumably, it could have done something better to enlighten the
people on the subject-matter thereof. But, then, no law is perfect. No product of human endeavor is
beyond improvement. Otherwise, no legislation would be constitutional and valid. Six (6) Members of
this Court believe, however, said Act and R. B. H. Nos. 1 and 3 violate the spirit of the Constitution.

Inasmuch as there are less than eight (8) votes in favor of declaring Republic Act 4913 and R. B. H.
Nos. 1 and 3 unconstitutional and invalid, the petitions in these two (2) cases must be, as they are
hereby, dismiss and the writs therein prayed for denied, without special pronouncement as to costs.
It is so ordered.

Makalintal and Bengzon, J.P., JJ., concur.

Fernando, J., concurs fully with the above opinion, adding a few words on the question of
jurisdiction.

Separate Opinions

MAKALINTAL, J., concurring:

I concur in the foregoing opinion of the Chief Justice. I would make some additional observations in
connection with my concurrence. Sections 2 and 4 of Republic Act No. 4913 provide:

Sec. 2. The amendments shall be published in three consecutive issues of the Official Gazette at
least twenty days prior to the election. A printed copy thereof shall be posted in a conspicuous place
in every municipality, city and provincial office building and in every polling place not later than
October fourteen, nineteen hundred and sixty-seven, and shall remain posted therein until after the
election. At least five copies of the said amendments shall be kept in each polling place to be made
available for examination by the qualified electors during election day. When practicable, copies in
the principal native languages, as may be determined by the Commission on Elections, shall be kept
in each polling place. The Commission on Elections shall make available copies of each
amendments in English, Spanish and, whenever practicable, in the principal native languages, for
free distribution.

xxx xxx xxx

Sec. 4. The ballots which shall be used in the election for the approval of said amendments shall be
printed in English and Pilipino and shall be in the size and form prescribed by the Commission on
Elections: Provided, however, That at the back of said ballot there shall be printed in full Resolutions
of both Houses of Congress Numbered One and Three, both adopted on March sixteen, nineteen
hundred and sixty-seven, proposing the amendments: Provided, further, That the questionnaire
appearing on the face of the ballot shall be as follows:

Are you in favor of the proposed amendment to Section five of Article VI of our Constitution printed
at the back of this ballot?

Are you in favor of the proposed amendment to section sixteen of Article VI of our Constitution
printed at the back of this ballot?

To vote for the approval of the proposed amendments, the voter shall write the word "yes" or its
equivalent in Pilipino or in the local dialect in the blank space after each question; to vote for the
rejection thereof, he shall write the word "No" or its equivalent in Pilipino or in the local dialect.

I believe that intrinsically, that is, considered in itself and without reference to extraneous factors and
circumstances, the manner prescribed in the aforesaid provisions is sufficient for the purpose of
having the proposed amendments submitted to the people for their ratification, as enjoined in
Section 1, Article XV of the Constitution. I am at a loss to say what else should have been required
by the Act to make it adhere more closely to the constitutional requirement. Certainly it would have
been out of place to provide, for instance, that government officials and employees should go out
and explain the amendments to the people, or that they should be the subject of any particular
means or form of public discussion.
The objection of some members of the Court to Republic Act No. 4913 seems to me predicated on
the fact that there are so many other issues at stake in the coming general election that the attention
of the electorate, cannot be entirely focused on the proposed amendments, such that there is a
failure to properly submit them for ratification within the intendment of the Constitution. If that is so,
then the defect is not intrinsic in the law but in its implementation. The same manner of submitting
the proposed amendments to the people for ratification may, in a different setting, be sufficient for
the purpose. Yet I cannot conceive that the constitutionality or unconstitutionality of a law may be
made to depend willy-nilly on factors not inherent in its provisions. For a law to be struck down as
unconstitutional it must be so by reason of some irreconcilable conflict between it and the
Constitution. Otherwise a law may be either valid or invalid, according to circumstances not found in
its provisions, such as the zeal with which they are carried out. To such a thesis I cannot agree. The
criterion would be too broad and relative, and dependent upon individual opinions that at best are
subjective. What one may regard as sufficient compliance with the requirement of submission to the
people, within the context of the same law, may not be so to another. The question is susceptible of
as many views as there are viewers; and I do not think this Court would be justified in saying that its
own view on the matter is the correct one, to the exclusion of the opinions of others.
On the other hand, I reject the argument that the ratification must necessarily be in a special election
or plebiscite called for that purpose alone. While such procedure is highly to be preferred, the
Constitution speaks simply of "an election at which the amendments are submitted to the people for
their ratification," and I do not subscribe to the restrictive interpretation that the petitioners would
place on this provision, namely, that it means only a special election.

BENGZON, J.P., J., concurring:

It is the glory of our institutions that they are founded upon law, that no one can exercise any
authority over the rights and interests of others except pursuant to and in the manner authorized by
law.1 Based upon this principle, petitioners Ramon A. Gonzales and Philippine Constitution
Association (PHILCONSA) come to this Court in separate petitions.

Petitioner Gonzales, as taxpayer, voter and citizen, and allegedly in representation thru class suit of
all citizens of this country, filed this suit for prohibition with preliminary injunction to restrain the
Commission on Elections, Director of Printing and Auditor General from implementing and/or
complying with Republic Act 4913, assailing said law as unconstitutional.

Petitioner PHILCONSA, as a civic, non-profit and non-partisan corporation, assails the

constitutionality not only of Republic Act 4913 but also of Resolutions of Both Houses Nos. 1 and 3
of March 16, 1967.

Republic Act 4913, effective June 17, 1967, is an Act submitting to the Filipino people for approval
the amendments to the Constitution of the Philippines proposed by the Congress of the Philippines
in Resolutions of Both Houses Numbered 1 and 3, adopted on March 16, 1967. Said Republic Act
fixes the date and manner of the election at which the aforesaid proposed amendments shall be
voted upon by the people, and appropriates funds for said election. Resolutions of Both Houses Nos.
1 and 3 propose two amendments to the Constitution: the first, to amend Sec. 5, Art. VI, by
increasing the maximum membership of the House of Representatives from 120 to 180, apportioning
160 of said 180 seats and eliminating the provision that Congress shall by law make an
apportionment within three years after the return of every enumeration; the second, to amend Sec.
16, Art. VI, by allowing Senators and Representatives to be delegates to a constitutional convention
without forfeiting their seats.

Since both petitions relate to the proposed amendments, they are considered together herein.

Specifically and briefly, petitioner Gonzales' objections are as follows: (1) Republic Act 4913 violates
Sec. 1, Art. XV of the Constitution, in submitting the proposed amendments to the Constitution, to
the people for approval, at the general election of 1967 instead of at a special election solely for that
purpose; (2) Republic Act 4913 violates Sec. 1, Art. XV of the Constitution, since it was not passed
with the 3/4 vote in joint session required when Congress proposes amendments to the Constitution,
said Republic Act being a step in or part of the process of proposing amendments to the
Constitution; and (3) Republic Act 4913 violates the due process clause of the Constitution (Sec. 1,
Subsec. 1, Art. III), in not requiring that the substance of the proposed amendments be stated on the
face of the ballot or otherwise rendering clear the import of the proposed amendments, such as by
stating the provisions before and after said amendments, instead of printing at the back of the ballot
only the proposed amendments.
Since observance of Constitutional provisions on the procedure for amending the Constitution is
concerned, the issue is cognizable by this Court under its powers to review an Act of Congress to
determine its conformity to the fundamental law. For though the Constitution leaves Congress free to
propose whatever Constitutional amendment it deems fit, so that the substance or content of said
proposed amendment is a matter of policy and wisdom and thus a political question, the Constitution
nevertheless imposes requisites as to the manner or procedure of proposing such amendments,
e.g., the three-fourths vote requirement. Said procedure or manner, therefore, from being left to the
discretion of Congress, as a matter of policy and wisdom, is fixed by the Constitution. And to that
extent, all questions bearing on whether Congress in proposing amendments followed the procedure
required by the Constitution, is perforce justiciable, it not being a matter of policy or wisdom.

Turning then to petitioner Gonzales' first objection, Sec. 1, Art. XV clearly does not bear him on the
point. It nowhere requires that the ratification be thru an election solely for that purpose. It only
requires that it be at "an election at which the amendments are submitted to the people for their
ratification." To join it with an election for candidates to public office, that is, to make it concurrent
with such election, does not render it any less an election at which the proposed amendments are
submitted to the people for their ratification. To prohibition being found in the plain terms of the
Constitution, none should be inferred. Had the framers of requiring Constitution thought of requiring
a special election for the purpose only of the proposed amendments, they could have said so, by
qualifying the phrase with some word such as "special" or "solely" or "exclusively". They did not.

It is not herein decided that such concurrence of election is wise, or that it would not have been
better to provide for a separate election exclusively for the ratification of the proposed amendments.
The point however is that such separate and exclusive election, even if it may be better or wiser,
which again, is not for this Court to decide, is not included in the procedure required by the
Constitution to amend the same. The function of the Judiciary is "not to pass upon questions of
wisdom, justice or expediency of legislation". 2 It is limited to determining whether the action taken by
the Legislative Department has violated the Constitution or not. On this score, I am of the opinion
that it has not.

Petitioner Gonzales' second point is that Republic Act 4913 is deficient for not having been passed
by Congress in joint session by 3/4 vote.

Sec. 1, Art. XV of the Constitution provides:

Sec. 1. The Congress in joint session assembled, by a vote of three-fourths of all the members of
the Senate and of the House of Representatives voting separately, may propose amendments to this
Constitution or call a convention for that purpose. Such amendments shall be valid as part of this
Constitution when approved by a majority of the votes cast at an election to which the amendments
are submitted to the people for their ratification.

Does Republic Act 4913 propose amendments to the Constitution? If by the term "propose
amendment" is meant to determine WHAT said amendment shall be, then Republic Act 4913 does
not; Resolutions of Both Houses 1 and 3 already did that. If, on the other hand, it means, or also
means, to provide for how, when, and by what means the amendments shall be submitted to the
people for approval, then it does.

A careful reading of Sec. 1, Art. XV shows that the first sense. is the one intended. Said Section has
two sentences: in the first, it requires the 3/4 voting in joint session, for Congress to "propose
amendments". And then in the second sentence, it provides that "such amendments . . . shall be
submitted to the people for their ratification". This clearly indicates that by the term "propose
amendments" in the first sentence is meant to frame the substance or the content or the WHAT-
element of the amendments; for it is this and this alone that is submitted to the people for their
ratification. The details of when the election shall be held for approval or rejection of the proposed
amendments, or the manner of holding it, are not submitted for ratification to form part of the
Constitution. Stated differently, the plain language of Section 1, Art. XV, shows that the act of
proposing amendments is distinct from — albeit related to — that of submitting the amendments to
the people for their ratification; and that the 3/4 voting requirement applies only to the first step, not
to the second one.

It follows that the submission of proposed amendments can be done thru an ordinary statute passed
by Congress. The Constitution does not expressly state by whom the submission shall be
undertaken; the rule is that a power not lodged elsewhere under the Constitution is deemed to reside
with the legislative body, under the doctrine of residuary powers. Congress therefore validly enacted
Republic Act 4913 to fix the details of the date and manner of submitting the proposed amendments
to the people for their ratification. Since it does not "propose amendments" in the sense referred to
by Sec. 1, Art. XV of the Constitution, but merely provides for how and when the amendments,
already proposed, are going to be voted upon, the same does not need the 3/4 vote in joint session
required in Sec. 1, Art. XV of the Constitution. Furthermore, Republic Act 4913 is an appropriation
measure. Sec. 6 thereof appropriates P1,000,000 for carrying out its provisions. Sec. 18, Art. VI of
the Constitution states that "All appropriation . . . bills shall originate exclusively in the House of
Representatives". Republic Act 4913, therefore, could not have been validly adopted in a joint
session, reinforcing the view that Sec. 1, Art. XV does not apply to such a measure providing for the
holding of the election to ratify the proposed amendments, which must perforce appropriate funds for
its purpose.

Petitioner Gonzales contends, thirdly, that Republic Act 4913 offends against substantive due
process. An examination of the provisions of the law shows no violation of the due process clause of
the Constitution. The publication in the Official Gazette at least 20 days before the election, the
posting of notices in public buildings not later than October 14, 1967, to remain posted until after the
elections, the placing of copies of the proposed amendments in the polling places, aside from
printing the same at the back of the ballot, provide sufficient opportunity to the voters to cast an
intelligent vote on the proposal. Due process refers only to providing fair opportunity; it does not
guarantee that the opportunity given will in fact be availed of; that is the look-out of the voter and the
responsibility of the citizen. As long as fair and reasonable opportunity to be informed is given, and it
is, the due process clause is not infringed.

Non-printing of the provisions to be amended as they now stand, and the printing of the full proposed
amendments at the back of the ballot instead of the substance thereof at the face of the ballot, do
not deprive the voter of fair opportunity to be informed. The present wording of the Constitution is not
being veiled or suppressed from him; he is conclusively presumed to know them and they are
available should he want to check on what he is conclusively presumed to know. Should the voters
choose to remain ignorant of the present Constitution, the fault does not lie with Congress. For
opportunity to familiarize oneself with the Constitution as it stands has been available thru all these
years. Perhaps it would have been more convenient for the voters if the present wording of the
provisions were also to be printed on the ballot. The same however is a matter of policy. As long as
the method adopted provides sufficiently reasonable chance to intelligently vote on the amendments,
and I think it does in this case, it is not constitutionally defective.

Petitioner Gonzales' other arguments touch on the merits or wisdom of the proposed amendments.
These are for the people in their sovereign capacity to decide, not for this Court.
Two arguments were further advanced: first, that Congress cannot both call a convention and
propose amendments; second, that the present Congress is a de facto one, since no apportionment
law was adopted within three years from the last census of 1960, so that the Representatives
elected in 1961 are de facto officers only. Not being de jure, they cannot propose amendments, it is
argued.

As to the first point, Sec. 1 of Art. XV states that Congress "may propose amendments or call a
convention for that purpose". The term "or", however, is frequently used as having the same
meaning as "and" particularly in permissive, affirmative sentences so that the interpretation of the
word "or" as "and" in the Constitution in such use will not change its meaning (Vicksburg S. & P. R.
Co. v. Goodenough, 32 So. 404, 411, 108 La, 442). And it should be pointed out that the resolutions
proposing amendments (R.B.H. Nos. 1 and 3) are different from that calling for a convention (R.B.H.
No. 2). Surely, if Congress deems it better or wise to amend the Constitution before a convention
called for is elected, it should not be fettered from doing so. For our purposes in this case, suffice it
to note that the Constitution does not prohibit it from doing so.

As to the second argument, it is also true that Sec. 5 of Art. VI of the Constitution provides in part
that "The Congress shall by law make an apportionment within three years after the return of every
enumeration, and not otherwise". It however further states in the next sentence: "Until such
apportionment shall have been made, the House of Representatives shall have the same number of
Members as that fixed by law for the National Assembly, who shall be elected by the qualified
electors from the present assembly districts." The failure of Congress, therefore, to pass a valid
redistricting law since the time the above provision was adopted, does not render the present
districting illegal or unconstitutional. For the Constitution itself provides for its continuance in such
case, rendering legal and de jure the status quo.

For the above reasons, I vote to uphold the constitutionality of Republic Act 4913, and fully concur
with the opinion of the Chief Justice.

FERNANDO, J., concurring:

At the outset, we are faced with a question of jurisdiction. The opinion prepared by the Chief Justice
discusses the matter with a fullness that erases doubts and misgivings and clarifies the applicable
principles. A few words may however be added.

We start from the premise that only where it can be shown that the question is to be solved by public
opinion or where the matter has been left by the Constitution to the sole discretion of any of the
political branches, as was so clearly stated by the then Justice Concepcion in Tañada v. Cuenco,1
may this Court avoid passing on the issue before it. Whatever may be said about the present
question, it is hard to speak with certitude considering Article XV, that Congress may be entrusted
with the full and uncontrolled discretion on the procedure leading to proposals for an amendment of
the Constitution.

It may be said however that in Mabanag v. Lopez Vito,2 this Court through Justice Tuason followed
Coleman v. Miller,3 in its holding that certain aspects of the amending process may be considered
political. His opinion quoted with approval the view of Justice Black, to which three other members of
the United States Supreme Court agreed, that the process itself is political in its entirety, "from
submission until an amendment becomes part of the Constitution, and is not subject to judicial
guidance, control or interference at any point." In a sense that would solve the matter neatly. The
judiciary would be spared the at times arduous and in every case soul-searching process of
determining whether the procedure for amendments required by the Constitution has been followed.

At the same time, without impugning the motives of Congress, which cannot be judicially inquired
into at any rate, it is not beyond the realm of possibility that a failure to observe the requirements of
Article XV would occur. In the event that judicial intervention is sought, to rely automatically on the
theory of political question to avoid passing on such a matter of delicacy might under certain
circumstances be considered, and rightly so, as nothing less than judicial abdication or surrender.

What appears regrettable is that a major opinion of an esteemed jurist, the late Justice Tuason,
would no longer be controlling. There is comfort in the thought that the view that then prevailed was
itself a product of the times. It could very well be that considering the circumstances existing in 1947
as well as the particular amendment sought to be incorporated in the Constitution, the parity rights
ordinance, the better part of wisdom in view of the grave economic situation then confronting the
country would be to avoid the existence of any obstacle to its being submitted for ratification.
Moreover, the Republic being less than a year old, American Supreme Court opinions on
constitutional questions were-invariably accorded uncritical acceptance. Thus the approach followed
by Justice Tuason is not difficult to understand. It may be said that there is less propensity now,
which is all to the good, for this Court to accord that much deference to constitutional views coming
from the quarter.

Nor is this mode of viewing the opinion of Justice Tuason to do injustice to his memory. For as he
stated in another major opinion in Araneta v. Dinglasan,4 in ascertaining the meaning to be given the
Emergency Powers Act,5 one should not ignore what would ensue if a particular mode of
construction were followed. As he so emphatically stated, "We test a rule by its results."

The consequences of a judicial veto on the then proposed amendment on the economic survival of
the country, an erroneous appraisal it turned out later, constituted an effective argument for its
submission. Why not then consider the question political and let the people decide? That assumption
could have been indulged in. It could very well be the inarticulate major premise. For many it did
bear the stamp of judicial statesmanship.

The opinion of Chief Justice Concepcion renders crystal-clear why as of this date and in the
foreseeable future judicial inquiry to assure the utmost compliance with the constitutional
requirement would be a more appropriate response.

SANCHEZ, J., in separate opinion:

Right at the outset, the writer expresses his deep appreciation to Mr. Justice Calixto O. Zaldivar and
Mr. Justice Fred Ruiz Castro for their invaluable contribution to the substance and form of the
opinion which follows.

Directly under attack in this, a petition for prohibition, is the constitutionality of Republic Act 4913,
approved on June 17, 1967. This Act seeks to implement Resolutions 1 and 3 adopted by the
Senate and the House of Representatives on March 16, 1967 with the end in view of amending vital
portions of the Constitution.

Since the problem here presented has its roots in the resolutions aforesaid of both houses of
Congress, it may just as well be that we recite in brief the salient features thereof. Resolution No. 1
increases the membership of the House of Representatives from 120 to 180 members, and
immediately apportions 160 seats. A companion resolution is Resolution No. 3 which permits
Senators and Congressmen — without forfeiting their seats in Congress — to be members of the
Constitutional Convention1 to be convened, as provided in another resolution — Resolution No. 2.
Parenthetically, two of these proposed amendments to the Constitution (Resolutions I and 3) are to
be submitted to the people for their ratification next November 14, 1967. Resolution No. 2 just
adverted to calls for a constitutional convention also to propose amendments to the Constitution.
The delegates thereto are to be elected on the second Tuesday of November 1970; the convention
to sit on June 1, 1971; and the amendments proposed by the convention to be submitted to the
people thereafter for their ratification.

Of importance now are the proposed amendments increasing the number of members of the House
of representatives under Resolution No. 1, and that in Resolution No. 3 which gives Senators and
Congressmen the right to sit as members of the constitutional convention to be convened on June 1,
1971. Because, these are the two amendments to be submitted to the people in the general
elections soon to be held on November 14, 1967, upon the provisions of Section 1, Republic Act
4913, which reads:

The amendments to the Constitution of the Philippines proposed by the Congress of the Philippines
in Resolutions of both Houses Numbered One and Three, both adopted on March sixteen, nineteen
hundred and sixty- seven, shall be submitted to the people for approval at the general election which
shall be held on November fourteen, nineteen hundred and sixty- seven, in accordance with the
provisions of this Act.

Republic Act 4913 projects the basic angle of the problem thrust upon us — the manner in which the
amendments proposed by Congress just adverted to be brought to the people's attention.

First, to the controlling constitutional precept. In order that proposed amendments to the Constitution
may become effective, Section 1, Article XV thereof commands that such amendments must be
"approved by a majority of the votes cast at an election at which amendments are submitted to the
people for their ratification."2 The accent is on two words complementing each other, namely,
"submitted" and "ratification."

1. We are forced to take a long hard look at the core of the problem facing us. And this, because the
amendments submitted are transcendental and encompassing. The ceiling of the number of
Congressmen is sought to be elevated from 120 to 180 members; and Senators and Congressmen
may run in constitutional conventions without forfeiting their seats. These certainly affect the people
as a whole. The increase in the number of Congressmen has its proportional increase in the
people's tax burdens. They may not look at this with favor, what with the constitutional provision
(Section 5, Article VI) that Congress "shall by law make an apportionment", without the necessity of
disturbing the present constitutionally provided number of Congressmen. People in Quezon City, for
instance, may balk at the specific apportionment of the 160 seats set forth in Resolution No. 1, and
ask for a Congressman of their own, on the theory of equal representation. And then, people may
question the propriety of permitting the increased 180 Congressmen from taking part in the
forthcoming constitutional convention and future conventions for fear that they may dominate its
proceedings. They may entertain the belief that, if at all, increase in the number of Congressmen
should be a proper topic for deliberation in a constitutional convention which, anyway, will soon take
place. They probably would ask: Why the hurry? These ponderables require the people's close
scrutiny.

2. With these as backdrop, we perforce go into the philosophy behind the constitutional directive that
constitutional amendments be submitted to the people for their ratification.
A constitutional amendment is not a temporary expedient. Unlike a statute which may suffer
amendments three or more times in the same year, it is intended to stand the test of time. It is an
expression of the people's sovereign will.

And so, our approach to the problem of the mechanics of submission for ratification of amendments
is that reasoning on the basis of the spirit of the Constitution is just as important as reasoning by a
strict adherence to the phraseology thereof. We underscore this, because it is within the realm of
possibility that a Constitution maybe overhauled. Supposing three-fourths of the Constitution is to be
amended. Or, the proposal is to eliminate the all important; Bill of Rights in its entirety. We believe it
to be beyond debate that in some such situations the amendments ought to call for a constitutional
convention rather than a legislative proposal. And yet, nothing there is in the books or in the
Constitution itself. which would require such amendments to be adopted by a constitutional
convention. And then, too, the spirit of the supreme enactment, we are sure, forbids that proposals
therefor be initiated by Congress and thereafter presented to the people for their ratification.

In the context just adverted to, we take the view that the words "submitted to the people for their
ratification", if construed in the light of the nature of the Constitution — a fundamental charter that is
legislation direct from the people, an — expression of their sovereign will — is that it can only be
amended by the people expressing themselves according to the procedure ordained by the
Constitution. Therefore, amendments must be fairly laid before the people for their blessing or
spurning. The people are not to be mere rubber stamps. They are not to vote blindly. They must be
afforded ample opportunity to mull over the original provisions compare them with the proposed
amendments, and try to reach a conclusion as the dictates of their conscience suggest, free from the
incubus of extraneous or possibly in insidious influences. We believe, the word "submitted" can only
mean that the government, within its maximum capabilities, should strain every effort to inform very
citizen of the provisions to be amended, and the proposed amendments and the meaning, nature
and effects thereof. By this, we are not to be understood as saying that, if one citizen or 100 citizens
or 1,000 citizens cannot be reached, then there is no submission within the meaning of the word as
intended by the framers of the Constitution. What the Constitution in effect directs is that the
government, in submitting an amendment for ratification, should put every instrumentality or agency
within its structural framework to enlighten the people, educate them with respect to their act of
ratification or rejection. For, as we have earlier stated, one thing is submission and another is
ratification. There must be fair submission, intelligent, consent or rejection. If with all these
safeguards the people still approve the amendment no matter how prejudicial it is to them, then so
be it. For, the people decree their own fate.

Aptly had it been said:

. . . The great men who builded the structure of our state in this respect had the mental vision of a
good Constitution voiced by Judge Cooley, who has said "A good Constitution should beyond the
reach of temporary excitement and popular caprice or passion. It is needed for stability and
steadiness; it must yield to the thought of the people; not to the whim of the people, or the thought
evolved the excitement or hot blood, but the sober second thought, which alone, if the government is
to be safe, can be allowed efficiency. . . . Changes in government are to be feared unless the benefit
is certain. As Montaign says: "All great mutations shake and disorder a state. Good does not
necessarily succeed evil; another evil may succeed and a worse." Am. Law Rev. 1889, p. 3113

3. Tersely put, the issue before us funnels down to this proposition: If the people are not sufficiently
informed of the amendments to be voted upon, to conscientiously deliberate thereon, to express
their will in a genuine manner can it be said that in accordance with the constitutional mandate, "the
amendments are submitted to the people for their ratification?" Our answer is "No".
We examine Republic Act 4913, approved on June 17, 1967 — the statute that submits to the
people the constitutional amendments proposed by Congress in Resolutions 1 and 3. Section 2 of
the Act provides the manner of propagation of the nature of the amendments throughout the country.
There are five parts in said Section 2, viz:

(1) The amendment shall be published in three consecutive issues of the Official Gazette at least
twenty days prior to the election.

(2) A printed copy thereof shall be posted in a conspicuous place in every municipality, city and
provincial office building and in every polling place not later than October fourteen, nineteen hundred
and sixty-seven, and shall remain posted therein until after the election.

(3) At least five copies of the said amendments shall be kept in each polling place to be made
available for examination by the qualified electors during election day.

(4) When practicable, copies in the principal native languages, as may be determined by the
Commission on Elections, shall be kept in each polling place.

(5) The Commission on Elections shall make available copies of said amendments in English,
Spanish and, whenever practicable, in the principal native languages, for free distribution.

A question that comes to mind is whether the procedure for dissemination of information regarding
the amendments effectively brings the matter to the people. A dissection of the mechanics yields
disturbing thoughts. First, the Official Gazette is not widely read. It does not reach the barrios. And
even if it reaches the barrios, is it available to all? And if it is, would all under stand English? Second,
it should be conceded that many citizens, especially those in the outlying barrios, do not go to
municipal, city and/or provincial office buildings, except on special occasions like paying taxes or
responding to court summonses. And if they do, will they notice the printed amendments posted on
the bulletin board? And if they do notice, such copy again is in English (sample submitted to this
Court by the Solicitor General) for, anyway, the statute does not require that it be in any other
language or dialect. Third, it would not help any if at least five copies are kept in the polling place for
examination by qualified electors during election day. As petitioner puts it, voting time is not study
time. And then, who can enter the polling place, except those who are about to vote? Fourth, copies
in the principal native languages shall be kept in each polling place. But this is not, as Section 2 itself
implies, in the nature of a command because such copies shall be kept therein only "when
practicable" and "as may be determined by the Commission on Elections." Even if it be said that
these are available before election, a citizen may not intrude into the school building where the
polling places are usually located without disturbing the school classes being held there. Fifth, it is
true that the Comelec is directed to make available copies of such amendments in English, Spanish
or whenever practicable, in the principal native languages, for free distribution. However, Comelec is
not required to actively distribute them to the people. This is significant as to people in the provinces,
especially those in the far-flung barrios who are completely unmindful of the discussions that go on
now and then in the cities and centers of population on the merits and demerits of the amendments.
Rather, Comelec, in this case, is but a passive agency which may hold copies available, but which
copies may not be distributed at all. Finally, it is of common knowledge that Comelec has more than
its hands full in these pre-election days. They cannot possibly make extensive distribution.

Voters will soon go to the polls to say "yes" or "no". But even the official sample ballot submitted to
this Court would show that only the amendments are printed at the back. And this, in pursuance to
Republic Act 4913 itself.
Surely enough, the voters do not have the benefit of proper notice of the proposed amendments thru
dissemination by publication in extenso. People do not have at hand the necessary data on which to
base their stand on the merits and demerits of said amendments.

We, therefore, hold that there is no proper submission of the proposed constitutional amendments
within the meaning and intendment of Section 1, Article XV of the Constitution.

4. Contemporary history is witness to the fact that during the present election campaign the focus is
on the election of candidates. The constitutional amendments are crowded out. Candidates on the
homestretch, and their leaders as well as the voters, gear their undivided efforts to the election of
officials; the constitutional amendments cut no ice with them. The truth is that even in the ballot itself,
the space accorded to the casting of "yes" or "no" vote would give one the impression that the
constitutional amendments are but a bootstrap to the electoral ballot. Worse still, the fortunes of
many elective officials, on the national and local levels, are inextricably intertwined with the results of
the votes on the plebiscite. In a clash between votes for a candidate and conscience on the merits
and demerits of the constitutional amendments, we are quite certain that it is the latter that will be
dented.

5. That proper submission of amendments to the people to enable them to equally ratify them
properly is the meat of the constitutional requirement, is reflected in the sequence of uniform past
practices. The Constitution had been amended thrice — in 1939, 1940 and 1947. In each case, the
amendments were embodied in resolutions adopted by the Legislature, which thereafter fixed the
dates at which the proposed amendments were to be ratified or rejected. These plebiscites have
been referred to either as an "election" or "general election". At no time, however, was the vote for
the amendments of the Constitution held simultaneously with the election officials, national or local.
Even with regard to the 1947 parity amendment; the record shows that the sole issue was the 1947
parity amendment; and the special elections simultaneously held in only three provinces, Iloilo,
Pangasinan and Bukidnon, were merely incidental thereto.

In the end we say that the people are the last ramparts that guard against indiscriminate changes in
the Constitution that is theirs. Is it too much to ask that reasonable guarantee be made that in the
matter of the alterations of the law of the land, their true voice be heard? The answer perhaps is best
expressed in the following thoughts: "It must be remembered that the Constitution is the people's
enactment. No proposed change can become effective unless they will it so through the compelling
force of need of it and desire for it."4

For the reasons given, our vote is that Republic Act 4913 must be stricken down as in violation of the
Constitution.

Zaldivar and Castro, JJ., concur.

Reyes, J.B.L., Dizon and Angeles, JJ., concur in the result.

REYES, J.B.L., J., concurring:

I concur in the result with the opinion penned by Mr. Justice Sanchez. To approve a mere proposal
to amend the Constitution requires (Art. XV) a three-fourths (3/4) vote of all the members of each
legislative chamber, the highest majority ever demanded by the fundamental charter, one higher
even than that required in order to declare war (Sec. 24, Article VI), with all its dire consequences. If
such an overwhelming majority, that was evidently exacted in order to impress upon all and sundry
the seriousness of every constitutional amendment, is asked for a proposal to amend the
Constitution, I find it impossible to believe that it was ever intended by its framers that such
amendment should be submitted and ratified by just "a majority of the votes cast at an election at
which the amendments are submitted to the people for their ratification", if the concentration of the
people's attention thereon to be diverted by other extraneous issues, such as the choice of local and
national officials. The framers of the Constitution, aware of the fundamental character thereof, and of
the need of giving it as much stability as is practicable, could have only meant that any amendments
thereto should be debated, considered and voted upon at an election wherein the people could
devote undivided attention to the subject. That this was the intention and the spirit of the provision is
corroborated in the case of all other constitutional amendments in the past, that were submitted to
and approved in special elections exclusively devoted to the issue whether the legislature's
amendatory proposals should be ratified or not.

Dizon, Angeles, Zaldivar and Castro, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 127325 March 19, 1997

MIRIAM DEFENSOR SANTIAGO, ALEXANDER PADILLA, and MARIA ISABEL ONGPIN,

petitioners,
vs.
COMMISSION ON ELECTIONS, JESUS DELFIN, ALBERTO PEDROSA & CARMEN PEDROSA, in
their capacities as founding members of the People's Initiative for Reforms, Modernization and
Action (PIRMA), respondents.

SENATOR RAUL S. ROCO, DEMOKRASYA-IPAGTANGGOL ANG KONSTITUSYON (DIK),

MOVEMENT OF ATTORNEYS FOR BROTHERHOOD INTEGRITY AND NATIONALISM, INC.
(MABINI), INTEGRATED BAR OF THE PHILIPPINES (IBP), and LABAN NG DEMOKRATIKONG
PILIPINO (LABAN), petitioners-intervenors.
DAVIDE, JR., J.:

The heart of this controversy brought to us by way of a petition for prohibition under Rule 65 of the
Rules of Court is the right of the people to directly propose amendments to the Constitution through
the system of initiative under Section 2 of Article XVII of the 1987 Constitution. Undoubtedly, this
demands special attention, as this system of initiative was unknown to the people of this country,
except perhaps to a few scholars, before the drafting of the 1987 Constitution. The 1986
Constitutional Commission itself, through the original proponent and the main sponsor of the
1 2

proposed Article on Amendments or Revision of the Constitution, characterized this system as

"innovative". Indeed it is, for both under the 1935 and 1973 Constitutions, only two methods of
3

proposing amendments to, or revision of, the Constitution were recognized, viz., (1) by Congress
upon a vote of three-fourths of all its members and (2) by a constitutional convention. For this and
4

the other reasons hereafter discussed, we resolved to give due course to this petition.

On 6 December 1996, private respondent Atty. Jesus S. Delfin filed with public respondent
Commission on Elections (hereafter, COMELEC) a "Petition to Amend the Constitution, to Lift Term
Limits of Elective Officials, by People's Initiative" (hereafter, Delfin Petition) wherein Delfin asked the
5

COMELEC for an order

1. Fixing the time and dates for signature gathering all over the country;

2. Causing the necessary publications of said Order and the attached "Petition for Initiative on the
1987 Constitution, in newspapers of general and local circulation;

3. Instructing Municipal Election Registrars in all Regions of the Philippines, to assist Petitioners and
volunteers, in establishing signing stations at the time and on the dates designated for the purpose.

Delfin alleged in his petition that he is a founding member of the Movement for People's Initiative, a 6

group of citizens desirous to avail of the system intended to institutionalize people power; that he
and the members of the Movement and other volunteers intend to exercise the power to directly
propose amendments to the Constitution granted under Section 2, Article XVII of the Constitution;
that the exercise of that power shall be conducted in proceedings under the control and supervision
of the COMELEC; that, as required in COMELEC Resolution No. 2300, signature stations shall be
established all over the country, with the assistance of municipal election registrars, who shall verify
the signatures affixed by individual signatories; that before the Movement and other volunteers can
gather signatures, it is necessary that the time and dates to be designated for the purpose be first
fixed in an order to be issued by the COMELEC; and that to adequately inform the people of the
electoral process involved, it is likewise necessary that the said order, as well as the Petition on
which the signatures shall be affixed, be published in newspapers of general and local circulation,
under the control and supervision of the COMELEC.

The Delfin Petition further alleged that the provisions sought to be amended are Sections 4 and 7 of
Article VI, Section 4 of Article VII, and Section 8 of Article X of the Constitution. Attached to the
7 8 9

petition is a copy of a "Petition for Initiative on the 1987 Constitution" embodying the proposed
10

amendments which consist in the deletion from the aforecited sections of the provisions concerning
term limits, and with the following proposition:

DO YOU APPROVE OF LIFTING THE TERM LIMITS OF ALL ELECTIVE GOVERNMENT

OFFICIALS, AMENDING FOR THE PURPOSE SECTIONS 4 AND 7 OF ARTICLE VI,
 SECTION 4 OF ARTICLE VII, AND SECTION 8 OF ARTICLE X OF THE 1987 PHILIPPINE
CONSTITUTION?

According to Delfin, the said Petition for Initiative will first be submitted to the people, and after it is
signed by at least twelve per cent of the total number of registered voters in the country it will be
formally filed with the COMELEC.

Upon the filing of the Delfin Petition, which was forthwith given the number UND 96-037
(INITIATIVE), the COMELEC, through its Chairman, issued an Order (a) directing Delfin "to cause
11

the publication of the petition, together with the attached Petition for Initiative on the 1987
Constitution (including the proposal, proposed constitutional amendment, and the signature form),
and the notice of hearing in three (3) daily newspapers of general circulation at his own expense" not
later than 9 December 1996; and (b) setting the case for hearing on 12 December 1996 at 10:00
a.m.

At the hearing of the Delfin Petition on 12 December 1996, the following appeared: Delfin and Atty.
Pete Q. Quadra; representatives of the People's Initiative for Reforms, Modernization and Action
(PIRMA); intervenor-oppositor Senator Raul S. Roco, together with his two other lawyers, and
representatives of, or counsel for, the Integrated Bar of the Philippines (IBP), Demokrasya-
Ipagtanggol ang Konstitusyon (DIK), Public Interest Law Center, and Laban ng Demokratikong
Pilipino (LABAN). Senator Roco, on that same day, filed a Motion to Dismiss the Delfin Petition on
12

the ground that it is not the initiatory petition properly cognizable by the COMELEC.

After hearing their arguments, the COMELEC directed Delfin and the oppositors to file their
"memoranda and/or oppositions/memoranda" within five days. 13

On 18 December 1996, the petitioners herein — Senator Miriam Defensor Santiago, Alexander
Padilla, and Maria Isabel Ongpin — filed this special civil action for prohibition raising the following
arguments:

(1) The constitutional provision on people's initiative to amend the Constitution can only be
implemented by law to be passed by Congress. No such law has been passed; in fact,
Senate Bill No. 1290 entitled An Act Prescribing and Regulating Constitution Amendments
by People's Initiative, which petitioner Senator Santiago filed on 24 November 1995, is still
pending before the Senate Committee on Constitutional Amendments.
(2) It is true that R.A. No. 6735 provides for three systems of initiative, namely, initiative on the
Constitution, on statutes, and on local legislation. However, it failed to provide any subtitle on
initiative on the Constitution, unlike in the other modes of initiative, which are specifically provided for
in Subtitle II and Subtitle III. This deliberate omission indicates that the matter of people's initiative to
amend the Constitution was left to some future law. Former Senator Arturo Tolentino stressed this
deficiency in the law in his privilege speech delivered before the Senate in 1994: "There is not a
single word in that law which can be considered as implementing [the provision on constitutional
initiative]. Such implementing provisions have been obviously left to a separate law.

(3) Republic Act No. 6735 provides for the effectivity of the law after publication in print media. This
indicates that the Act covers only laws and not constitutional amendments because the latter take
effect only upon ratification and not after publication.

(4) COMELEC Resolution No. 2300, adopted on 16 January 1991 to govern "the conduct of initiative
on the Constitution and initiative and referendum on national and local laws, is ultra vires insofar as
initiative on amendments to the Constitution is concerned, since the COMELEC has no power to
provide rules and regulations for the exercise of the right of initiative to amend the Constitution. Only
Congress is authorized by the Constitution to pass the implementing law.

(5) The people's initiative is limited to amendments to the Constitution, not to revision thereof.
Extending or lifting of term limits constitutes a revision and is, therefore, outside the power of the
people's initiative.

(6) Finally, Congress has not yet appropriated funds for people's initiative; neither the COMELEC nor
any other government department, agency, or office has realigned funds for the purpose.

To justify their recourse to us via the special civil action for prohibition, the petitioners allege that in
the event the COMELEC grants the Delfin Petition, the people's initiative spearheaded by PIRMA
would entail expenses to the national treasury for general re-registration of voters amounting to at
least P180 million, not to mention the millions of additional pesos in expenses which would be
incurred in the conduct of the initiative itself. Hence, the transcendental importance to the public and
the nation of the issues raised demands that this petition for prohibition be settled promptly and
definitely, brushing aside technicalities of procedure and calling for the admission of a taxpayer's and
legislator's suit. Besides, there is no other plain, speedy, and adequate remedy in the ordinary
14

course of law.

On 19 December 1996, this Court (a) required the respondents to comment on the petition within a
non-extendible period of ten days from notice; and (b) issued a temporary restraining order, effective
immediately and continuing until further orders, enjoining public respondent COMELEC from
proceeding with the Delfin Petition, and private respondents Alberto and Carmen Pedrosa from
conducting a signature drive for people's initiative to amend the Constitution.

On 2 January 1997, private respondents, through Atty Quadra, filed their Comment 15
on the petition.
They argue therein that:

1. IT IS NOT TRUE THAT "IT WOULD ENTAIL EXPENSES TO THE NATIONAL

TREASURY FOR GENERAL REGISTRATION OF VOTERS AMOUNTING TO AT LEAST
PESOS: ONE HUNDRED EIGHTY MILLION (P180,000,000.00)" IF THE "COMELEC
GRANTS THE PETITION FILED BY RESPONDENT DELFIN BEFORE THE COMELEC.

2. NOT A SINGLE CENTAVO WOULD BE SPENT BY THE NATIONAL GOVERNMENT IF THE

COMELEC GRANTS THE PETITION OF RESPONDENT DELFIN. ALL EXPENSES IN THE
SIGNATURE GATHERING ARE ALL FOR THE ACCOUNT OF RESPONDENT DELFIN AND HIS
VOLUNTEERS PER THEIR PROGRAM OF ACTIVITIES AND EXPENDITURES SUBMITTED TO
THE COMELEC. THE ESTIMATED COST OF THE DAILY PER DIEM OF THE SUPERVISING
SCHOOL TEACHERS IN THE SIGNATURE GATHERING TO BE DEPOSITED and TO BE PAID
BY DELFIN AND HIS VOLUNTEERS IS P2,571,200.00;

3. THE PENDING PETITION BEFORE THE COMELEC IS ONLY ON THE SIGNATURE

GATHERING WHICH BY LAW COMELEC IS DUTY BOUND "TO SUPERVISE CLOSELY"
PURSUANT TO ITS "INITIATORY JURISDICTION" UPHELD BY THE HONORABLE COURT IN
ITS RECENT SEPTEMBER 26, 1996 DECISION IN THE CASE OF SUBIC BAY METROPOLITAN
AUTHORITY VS. COMELEC, ET AL. G.R. NO. 125416;

4. REP. ACT NO. 6735 APPROVED ON AUGUST 4, 1989 IS THE ENABLING LAW
IMPLEMENTING THE POWER OF PEOPLE INITIATIVE TO PROPOSE AMENDMENTS TO THE
CONSTITUTION. SENATOR DEFENSOR-SANTIAGO'S SENATE BILL NO. 1290 IS A
DUPLICATION OF WHAT ARE ALREADY PROVIDED FOR IN REP. ACT NO. 6735;
5. COMELEC RESOLUTION NO. 2300 PROMULGATED ON JANUARY 16, 1991 PURSUANT TO
REP. ACT 6735 WAS UPHELD BY THE HONORABLE COURT IN THE RECENT SEPTEMBER 26,
1996 DECISION IN THE CASE OF SUBIC BAY METROPOLITAN AUTHORITY VS. COMELEC, ET
AL. G.R. NO. 125416 WHERE THE HONORABLE COURT SAID: "THE COMMISSION ON
ELECTIONS CAN DO NO LESS BY SEASONABLY AND JUDICIOUSLY PROMULGATING
GUIDELINES AND RULES FOR BOTH NATIONAL AND LOCAL USE, IN IMPLEMENTING OF
THESE LAWS."

6. EVEN SENATOR DEFENSOR-SANTIAGO'S SENATE BILL NO. 1290 CONTAINS A PROVISION

DELEGATING TO THE COMELEC THE POWER TO "PROMULGATE SUCH RULES AND
REGULATIONS AS MAY BE NECESSARY TO CARRY OUT THE PURPOSES OF THIS ACT."
(SEC. 12, S.B. NO. 1290, ENCLOSED AS ANNEX E, PETITION);

7. THE LIFTING OF THE LIMITATION ON THE TERM OF OFFICE OF ELECTIVE OFFICIALS

PROVIDED UNDER THE 1987 CONSTITUTION IS NOT A "REVISION" OF THE CONSTITUTION.
IT IS ONLY AN AMENDMENT. "AMENDMENT ENVISAGES AN ALTERATION OF ONE OR A FEW
SPECIFIC PROVISIONS OF THE CONSTITUTION. REVISION CONTEMPLATES A RE-
EXAMINATION OF THE ENTIRE DOCUMENT TO DETERMINE HOW AND TO WHAT EXTENT IT
SHOULD BE ALTERED." (PP. 412-413, 2ND. ED. 1992, 1097 PHIL. CONSTITUTION, BY
JOAQUIN G. BERNAS, S.J.).

Also on 2 January 1997, private respondent Delfin filed in his own behalf a Comment which starts
16

off with an assertion that the instant petition is a "knee-jerk reaction to a draft 'Petition for Initiative on
the 1987 Constitution'. . . which is not formally filed yet." What he filed on 6 December 1996 was an
"Initiatory Pleading" or "Initiatory Petition," which was legally necessary to start the signature
campaign to amend the Constitution or to put the movement to gather signatures under COMELEC
power and function. On the substantive allegations of the petitioners, Delfin maintains as follows:

(1) Contrary to the claim of the petitioners, there is a law, R.A. No. 6735, which governs the
conduct of initiative to amend the Constitution. The absence therein of a subtitle for such
initiative is not fatal, since subtitles are not requirements for the validity or sufficiency of laws.

(2) Section 9(b) of R.A. No. 6735 specifically provides that the proposition in an initiative to amend
the Constitution approved by the majority of the votes cast in the plebiscite shall become effective as
of the day of the plebiscite.

(3) The claim that COMELEC Resolution No. 2300 is ultra vires is contradicted by (a) Section 2,
Article IX-C of the Constitution, which grants the COMELEC the power to enforce and administer all
laws and regulations relative to the conduct of an election, plebiscite, initiative, referendum, and
recall; and (b) Section 20 of R.A. 6735, which empowers the COMELEC to promulgate such rules
and regulations as may be necessary to carry out the purposes of the Act.

(4) The proposed initiative does not involve a revision of, but mere amendment to, the Constitution
because it seeks to alter only a few specific provisions of the Constitution, or more specifically, only
those which lay term limits. It does not seek to reexamine or overhaul the entire document.

As to the public expenditures for registration of voters, Delfin considers petitioners' estimate of P180
million as unreliable, for only the COMELEC can give the exact figure. Besides, if there will be a
plebiscite it will be simultaneous with the 1997 Barangay Elections. In any event, fund requirements
for initiative will be a priority government expense because it will be for the exercise of the sovereign
power of the people.
In the Comment for the public respondent COMELEC, filed also on 2 January 1997, the Office of
17

the Solicitor General contends that:

(1) R.A. No. 6735 deals with, inter alia, people's initiative to amend the Constitution. Its
Section 2 on Statement of Policy explicitly affirms, recognizes, and guarantees that power;
and its Section 3, which enumerates the three systems of initiative, includes initiative on the
Constitution and defines the same as the power to propose amendments to the Constitution.
Likewise, its Section 5 repeatedly mentions initiative on the Constitution.

(2) A separate subtitle on initiative on the Constitution is not necessary in R.A. No. 6735 because,
being national in scope, that system of initiative is deemed included in the subtitle on National
Initiative and Referendum; and Senator Tolentino simply overlooked pertinent provisions of the law
when he claimed that nothing therein was provided for initiative on the Constitution.

(3) Senate Bill No. 1290 is neither a competent nor a material proof that R.A. No. 6735 does not deal
with initiative on the Constitution.

(4) Extension of term limits of elected officials constitutes a mere amendment to the Constitution, not
a revision thereof.

(5) COMELEC Resolution No. 2300 was validly issued under Section 20 of R.A. No. 6735 and under
the Omnibus Election Code. The rule-making power of the COMELEC to implement the provisions of
R.A. No. 6735 was in fact upheld by this Court in Subic Bay Metropolitan Authority vs. COMELEC.

On 14 January 1997, this Court (a) confirmed nunc pro tunc the temporary restraining order; (b)
noted the aforementioned Comments and the Motion to Lift Temporary Restraining Order filed by
private respondents through Atty. Quadra, as well as the latter's Manifestation stating that he is the
counsel for private respondents Alberto and Carmen Pedrosa only and the Comment he filed was for
the Pedrosas; and (c) granted the Motion for Intervention filed on 6 January 1997 by Senator Raul
Roco and allowed him to file his Petition in Intervention not later than 20 January 1997; and (d) set
the case for hearing on 23 January 1997 at 9:30 a.m.

On 17 January 1997, the Demokrasya-Ipagtanggol ang Konstitusyon (DIK) and the Movement of
Attorneys for Brotherhood Integrity and Nationalism, Inc. (MABINI), filed a Motion for Intervention.
Attached to the motion was their Petition in Intervention, which was later replaced by an Amended
Petition in Intervention wherein they contend that:
(1) The Delfin proposal does not involve a mere amendment to, but a revision of, the
Constitution because, in the words of Fr. Joaquin Bernas, S.J., it would involve a change
18

from a political philosophy that rejects unlimited tenure to one that accepts unlimited tenure;
and although the change might appear to be an isolated one, it can affect other provisions,
such as, on synchronization of elections and on the State policy of guaranteeing equal
access to opportunities for public service and prohibiting political dynasties. A revision
19

cannot be done by initiative which, by express provision of Section 2 of Article XVII of the
Constitution, is limited to amendments.

(2) The prohibition against reelection of the President and the limits provided for all other national
and local elective officials are based on the philosophy of governance, "to open up the political arena
to as many as there are Filipinos qualified to handle the demands of leadership, to break the
concentration of political and economic powers in the hands of a few, and to promote effective
proper empowerment for participation in policy and decision-making for the common good"; hence,
to remove the term limits is to negate and nullify the noble vision of the 1987 Constitution.
(3) The Delfin proposal runs counter to the purpose of initiative, particularly in a conflict-of-interest
situation. Initiative is intended as a fallback position that may be availed of by the people only if they
are dissatisfied with the performance of their elective officials, but not as a premium for good
performance. 20

(4) R.A. No. 6735 is deficient and inadequate in itself to be called the enabling law that implements
the people's initiative on amendments to the Constitution. It fails to state (a) the proper parties who
may file the petition, (b) the appropriate agency before whom the petition is to be filed, (c) the
contents of the petition, (d) the publication of the same, (e) the ways and means of gathering the
signatures of the voters nationwide and 3% per legislative district, (f) the proper parties who may
oppose or question the veracity of the signatures, (g) the role of the COMELEC in the verification of
the signatures and the sufficiency of the petition, (h) the appeal from any decision of the COMELEC,
(I) the holding of a plebiscite, and (g) the appropriation of funds for such people's initiative.
Accordingly, there being no enabling law, the COMELEC has no jurisdiction to hear Delfin's petition.

(5) The deficiency of R.A. No. 6735 cannot be rectified or remedied by COMELEC Resolution No.
2300, since the COMELEC is without authority to legislate the procedure for a people's initiative
under Section 2 of Article XVII of the Constitution. That function exclusively pertains to Congress.
Section 20 of R.A. No. 6735 does not constitute a legal basis for the Resolution, as the former does
not set a sufficient standard for a valid delegation of power.

On 20 January 1997, Senator Raul Roco filed his Petition in

Intervention. He avers that R.A. No. 6735 is the enabling law that implements the people's right to
21

initiate constitutional amendments. This law is a consolidation of Senate Bill No. 17 and House Bill
No. 21505; he co-authored the House Bill and even delivered a sponsorship speech thereon. He
likewise submits that the COMELEC was empowered under Section 20 of that law to promulgate
COMELEC Resolution No. 2300. Nevertheless, he contends that the respondent Commission is
without jurisdiction to take cognizance of the Delfin Petition and to order its publication because the
said petition is not the initiatory pleading contemplated under the Constitution, Republic Act No.
6735, and COMELEC Resolution No. 2300. What vests jurisdiction upon the COMELEC in an
initiative on the Constitution is the filing of a petition for initiative which is signed by the required
number of registered voters. He also submits that the proponents of a constitutional amendment
cannot avail of the authority and resources of the COMELEC to assist them is securing the required
number of signatures, as the COMELEC's role in an initiative on the Constitution is limited to the
determination of the sufficiency of the initiative petition and the call and supervision of a plebiscite, if
warranted.

On 20 January 1997, LABAN filed a Motion for Leave to Intervene.

The following day, the IBP filed a Motion for Intervention to which it attached a Petition in
Intervention raising the following arguments:

(1) Congress has failed to enact an enabling law mandated under Section 2, Article XVII of
the 1987 Constitution.

(2) COMELEC Resolution No. 2300 cannot substitute for the required implementing law on the
initiative to amend the Constitution.

(3) The Petition for Initiative suffers from a fatal defect in that it does not have the required number of
signatures.

(4) The petition seeks, in effect a revision of the Constitution, which can be proposed only by
Congress or a constitutional convention. 22
On 21 January 1997, we promulgated a Resolution (a) granting the Motions for Intervention filed by
the DIK and MABINI and by the IBP, as well as the Motion for Leave to Intervene filed by LABAN; (b)
admitting the Amended Petition in Intervention of DIK and MABINI, and the Petitions in Intervention
of Senator Roco and of the IBP; (c) requiring the respondents to file within a nonextendible period of
five days their Consolidated Comments on the aforesaid Petitions in Intervention; and (d) requiring
LABAN to file its Petition in Intervention within a nonextendible period of three days from notice, and
the respondents to comment thereon within a nonextendible period of five days from receipt of the
said Petition in Intervention.

At the hearing of the case on 23 January 1997, the parties argued on the following pivotal issues,
which the Court formulated in light of the allegations and arguments raised in the pleadings so far
filed:

1. Whether R.A. No. 6735, entitled An Act Providing for a System of Initiative and
Referendum and Appropriating Funds Therefor, was intended to include or cover initiative on
amendments to the Constitution; and if so, whether the Act, as worded, adequately covers
such initiative.

2. Whether that portion of COMELEC Resolution No. 2300 (In re: Rules and Regulations Governing
the Conduct of Initiative on the Constitution, and Initiative and Referendum on National and Local
Laws) regarding the conduct of initiative on amendments to the Constitution is valid, considering the
absence in the law of specific provisions on the conduct of such initiative.

3. Whether the lifting of term limits of elective national and local officials, as proposed in the draft
"Petition for Initiative on the 1987 Constitution," would constitute a revision of, or an amendment to,
the Constitution.

4. Whether the COMELEC can take cognizance of, or has jurisdiction over, a petition solely intended
to obtain an order (a) fixing the time and dates for signature gathering; (b) instructing municipal
election officers to assist Delfin's movement and volunteers in establishing signature stations; and
(c) directing or causing the publication of, inter alia, the unsigned proposed Petition for Initiative on
the 1987 Constitution.

5. Whether it is proper for the Supreme Court to take cognizance of the petition when there is a
pending case before the COMELEC.
After hearing them on the issues, we required the parties to submit simultaneously their respective
memoranda within twenty days and requested intervenor Senator Roco to submit copies of the
deliberations on House Bill No. 21505.

On 27 January 1997, LABAN filed its Petition in Intervention wherein it adopts the allegations and
arguments in the main Petition. It further submits that the COMELEC should have dismissed the
Delfin Petition for failure to state a sufficient cause of action and that the Commission's failure or
refusal to do so constituted grave abuse of discretion amounting to lack of jurisdiction.

On 28 January 1997, Senator Roco submitted copies of portions of both the Journal and the Record
of the House of Representatives relating to the deliberations of House Bill No. 21505, as well as the
transcripts of stenographic notes on the proceedings of the Bicameral Conference Committee,
Committee on Suffrage and Electoral Reforms, of 6 June 1989 on House Bill No. 21505 and Senate
Bill No. 17.
Private respondents Alberto and Carmen Pedrosa filed their Consolidated Comments on the
Petitions in Intervention of Senator Roco, DIK and MABINI, and IBP. The parties thereafter filed, in
23

due time, their separate memoranda. 24

As we stated in the beginning, we resolved to give due course to this special civil action.

For a more logical discussion of the formulated issues, we shall first take up the fifth issue which
appears to pose a prejudicial procedural question.

THE INSTANT PETITION IS VIABLE DESPITE THE PENDENCY IN THE COMELEC OF THE
DELFIN PETITION.

Except for the petitioners and intervenor Roco, the parties paid no serious attention to the fifth issue,
i.e., whether it is proper for this Court to take cognizance of this special civil action when there is a
pending case before the COMELEC. The petitioners provide an affirmative answer. Thus:

28. The Comelec has no jurisdiction to take cognizance of the petition filed by private
respondent Delfin. This being so, it becomes imperative to stop the Comelec from
proceeding any further, and under the Rules of Court, Rule 65, Section 2, a petition for
prohibition is the proper remedy.

29. The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior jurisdiction
and directed to an inferior court, for the purpose of preventing the inferior tribunal from usurping a
jurisdiction with which it is not legally vested. (People v. Vera, supra., p. 84). In this case the writ is
an urgent necessity, in view of the highly divisive and adverse environmental consequences on the
body politic of the questioned Comelec order. The consequent climate of legal confusion and
political instability begs for judicial statesmanship.

30. In the final analysis, when the system of constitutional law is threatened by the political ambitions
of man, only the Supreme Court
can save a nation in peril and uphold the paramount majesty of the Constitution. 25

It must be recalled that intervenor Roco filed with the COMELEC a motion to dismiss the Delfin
Petition on the ground that the COMELEC has no jurisdiction or authority to entertain the petition. 26

The COMELEC made no ruling thereon evidently because after having heard the arguments of
Delfin and the oppositors at the hearing on 12 December 1996, it required them to submit within five
days their memoranda or oppositions/memoranda. Earlier, or specifically on 6 December 1996, it
27

practically gave due course to the Delfin Petition by ordering Delfin to cause the publication of the
petition, together with the attached Petition for Initiative, the signature form, and the notice of
hearing; and by setting the case for hearing. The COMELEC's failure to act on Roco's motion to
dismiss and its insistence to hold on to the petition rendered ripe and viable the instant petition under
Section 2 of Rule 65 of the Rules of Court, which provides:

Sec. 2. Petition for prohibition. — Where the proceedings of any tribunal, corporation, board,
or person, 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 and adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court alleging the facts with certainty and
praying that judgment be rendered commanding the defendant to desist from further
proceedings in the action or matter specified therein.
It must also be noted that intervenor Roco claims that the COMELEC has no jurisdiction over the
Delfin Petition because the said petition is not supported by the required minimum number of
signatures of registered voters. LABAN also asserts that the COMELEC gravely abused its
discretion in refusing to dismiss the Delfin Petition, which does not contain the required number of
signatures. In light of these claims, the instant case may likewise be treated as a special civil action
for certiorari under Section I of Rule 65 of the Rules of Court.

In any event, as correctly pointed out by intervenor Roco in his Memorandum, this Court may brush
aside technicalities of procedure in
cases of transcendental importance. As we stated in Kilosbayan, Inc. v. Guingona, Jr. 28

A party's standing before this Court is a procedural technicality which it may, in the exercise
of its discretion, set aside in view of the importance of issues raised. In the landmark
Emergency Powers Cases, this Court brushed aside this technicality because the
transcendental importance to the public of these cases demands that they be settled
promptly and definitely, brushing aside, if we must, technicalities of procedure.

II

R.A. NO. 6735 INTENDED TO INCLUDE THE SYSTEM OF INITIATIVE ON AMENDMENTS TO

THE CONSTITUTION, BUT IS, UNFORTUNATELY, INADEQUATE TO COVER THAT SYSTEM.

Section 2 of Article XVII of the Constitution provides:

Sec. 2. Amendments to this Constitution may likewise be directly proposed by the people
through initiative upon a petition of at least twelve per centum of the total number of
registered voters, of which every legislative district must be represented by at least three per
centum of the registered voters therein. No amendment under this section shall be
authorized within five years following the ratification of this Constitution nor oftener than once
every five years thereafter.

The Congress shall provide for the implementation of the exercise of this right.

This provision is not self-executory. In his book, 29

Joaquin Bernas, a member of the 1986
Constitutional Commission, stated:

Without implementing legislation Section 2 cannot operate. Thus, although this mode of
amending the Constitution is a mode of amendment which bypasses congressional action, in
the last analysis it still is dependent on congressional action.

Bluntly stated, the right of the people to directly propose amendments to the Constitution through the
system of initiative would remain entombed in the cold niche of the Constitution until Congress
provides for its implementation. Stated otherwise, while the Constitution has recognized or granted
that right, the people cannot exercise it if Congress, for whatever reason, does not provide for its
implementation.

This system of initiative was originally included in Section 1 of the draft Article on Amendment or
Revision proposed by the Committee on Amendments and Transitory Provisions of the 1986
Constitutional Commission in its Committee Report No. 7 (Proposed Resolution No. 332). That 30

section reads as follows:

Sec. 1. Any amendment to, or revision of, this Constitution may be proposed:

(a) by the National Assembly upon a vote of three-fourths of all its members; or
(b) by a constitutional convention; or

(c) directly by the people themselves thru initiative as provided for in Article___ Section ___of the
Constitution.31

After several interpellations, but before the period of amendments, the Committee submitted a new
formulation of the concept of initiative which it denominated as Section 2; thus:

MR. SUAREZ. Thank you, Madam President. May we respectfully call

attention of the Members of the Commission that pursuant to the mandate
given to us last night, we submitted this afternoon a complete Committee
Report No. 7 which embodies the proposed provision governing the matter of
initiative. This is now covered by Section 2 of the complete committee report.
With the permission of the Members, may I quote Section 2:

The people may, after five years from the date of the last plebiscite held, directly propose
amendments to this Constitution thru initiative upon petition of at least ten percent of the registered
voters.

This completes the blanks appearing in the original Committee Report No. 7. 32

The interpellations on Section 2 showed that the details for carrying out Section 2 are left to the
legislature. Thus:

FR. BERNAS. Madam President, just two simple, clarificatory questions.

First, on Section 1 on the matter of initiative upon petition of at least 10 percent, there are no details
in the provision on how to carry this out. Do we understand, therefore, that we are leaving this matter
to the legislature?

MR. SUAREZ. That is right, Madam President.

FR. BERNAS. And do we also understand, therefore, that for as long as the legislature does not
pass the necessary implementing law on this, this will not operate?

MR. SUAREZ. That matter was also taken up during the committee hearing, especially with respect
to the budget appropriations which would have to be legislated so that the plebiscite could be called.
We deemed it best that this matter be left to the legislature. The Gentleman is right. In any event, as
envisioned, no amendment through the power of initiative can be called until after five years from the
date of the ratification of this Constitution. Therefore, the first amendment that could be proposed
through the exercise of this initiative power would be after five years. It is reasonably expected that
within that five-year period, the National Assembly can come up with the appropriate rules governing
the exercise of this power.

FR. BERNAS. Since the matter is left to the legislature — the details on how this is to be carried out
— is it possible that, in effect, what will be presented to the people for ratification is the work of the
legislature rather than of the people? Does this provision exclude that possibility?

MR. SUAREZ. No, it does not exclude that possibility because even the legislature itself as a body
could propose that amendment, maybe individually or collectively, if it fails to muster the three-
fourths vote in order to constitute itself as a constituent assembly and submit that proposal to the
people for ratification through the process of an initiative.

xxx xxx xxx

 MS. AQUINO. Do I understand from the sponsor that the intention in the proposal is
to vest constituent power in the people to amend the Constitution?

MR. SUAREZ. That is absolutely correct, Madam President.

MS. AQUINO. I fully concur with the underlying precept of the proposal in terms of institutionalizing
popular participation in the drafting of the Constitution or in the amendment thereof, but I would have
a lot of difficulties in terms of accepting the draft of Section 2, as written. Would the sponsor agree
with me that in the hierarchy of legal mandate, constituent power has primacy over all other legal
mandates?

MR. SUAREZ. The Commissioner is right, Madam President.

MS. AQUINO. And would the sponsor agree with me that in the hierarchy of legal values, the
Constitution is source of all legal mandates and that therefore we require a great deal of
circumspection in the drafting and in the amendments of the Constitution?

MR. SUAREZ. That proposition is nondebatable.

MS. AQUINO. Such that in order to underscore the primacy of constituent power we have a separate
article in the constitution that would specifically cover the process and the modes of amending the
Constitution?

MR. SUAREZ. That is right, Madam President.

MS. AQUINO. Therefore, is the sponsor inclined, as the provisions are drafted now, to again
concede to the legislature the process or the requirement of determining the mechanics of amending
the Constitution by people's initiative?

MR. SUAREZ. The matter of implementing this could very well be placed in the hands of the
National Assembly, not unless we can incorporate into this provision the mechanics that would
adequately cover all the conceivable situations. 33

It was made clear during the interpellations that the aforementioned Section 2 is limited to proposals
to AMEND — not to REVISE — the Constitution; thus:

MR. SUAREZ. . . . This proposal was suggested on the theory that this
matter of initiative, which came about because of the extraordinary
developments this year, has to be separated from the traditional modes of
amending the Constitution as embodied in Section 1. The committee
members felt that this system of initiative should not extend to the revision of
the entire Constitution, so we removed it from the operation of Section 1 of
the proposed Article on Amendment or Revision. 34

xxx xxx xxx

MS. AQUINO. In which case, I am seriously bothered by providing this process of

initiative as a separate section in the Article on Amendment. Would the sponsor be
amenable to accepting an amendment in terms of realigning Section 2 as another
subparagraph (c) of Section 1, instead of setting it up as another separate section as
if it were a self-executing provision?

MR. SUAREZ. We would be amenable except that, as we clarified a while ago, this process of
initiative is limited to the matter of amendment and should not expand into a revision which
contemplates a total overhaul of the Constitution. That was the sense that was conveyed by the
Committee.

MS. AQUINO. In other words, the Committee was attempting to distinguish the coverage of modes
(a) and (b) in Section 1 to include the process of revision; whereas the process of initiation to
amend, which is given to the public, would only apply to amendments?

MR. SUAREZ. That is right. Those were the terms envisioned in the Committee. 35

Amendments to the proposed Section 2 were thereafter introduced by then Commissioner Hilario G.
Davide, Jr., which the Committee accepted. Thus:

MR. DAVIDE. Thank you Madam President. I propose to substitute the entire
Section 2 with the following:

MR. DAVIDE. Madam President, I have modified the proposed amendment after taking into account
the modifications submitted by the sponsor himself and the honorable Commissioners Guingona,
Monsod, Rama, Ople, de los Reyes and Romulo. The modified amendment in substitution of the
proposed Section 2 will now read as follows: "SECTION 2. — AMENDMENTS TO THIS
CONSTITUTION MAY LIKEWISE BE DIRECTLY PROPOSED BY THE PEOPLE THROUGH
INITIATIVE UPON A PETITION OF AT LEAST TWELVE PERCENT OF THE TOTAL NUMBER Of
REGISTERED VOTERS, OF WHICH EVERY LEGISLATIVE DISTRICT MUST BE REPRESENTED
BY AT LEAST THREE PERCENT OF THE REGISTERED VOTERS THEREOF. NO AMENDMENT
UNDER THIS SECTION SHALL BE AUTHORIZED WITHIN FIVE YEARS FOLLOWING THE
RATIFICATION OF THIS CONSTITUTION NOR OFTENER THAN ONCE EVERY FIVE YEARS
THEREAFTER.

THE NATIONAL ASSEMBLY SHALL BY LAW PROVIDE FOR THE IMPLEMENTATION OF THE
EXERCISE OF THIS RIGHT.

MR. SUAREZ. Madam President, considering that the proposed amendment is reflective of the
sense contained in Section 2 of our completed Committee Report No. 7, we accept the proposed
amendment. 36

The interpellations which ensued on the proposed modified amendment to Section 2 clearly showed
that it was a legislative act which must implement the exercise of the right. Thus:

MR. ROMULO. Under Commissioner Davide's amendment, is it possible for

the legislature to set forth certain procedures to carry out the initiative. . .?

MR. DAVIDE. It can.

xxx xxx xxx

MR. ROMULO. But the Commissioner's amendment does not prevent the legislature
from asking another body to set the proposition in proper form.

MR. DAVIDE. The Commissioner is correct. In other words, the implementation of this particular
right would be subject to legislation, provided the legislature cannot determine anymore the
percentage of the requirement.

MR. ROMULO. But the procedures, including the determination of the proper form for submission to
the people, may be subject to legislation.
MR. DAVIDE. As long as it will not destroy the substantive right to initiate. In other words, none of
the procedures to be proposed by the legislative body must diminish or impair the right conceded
here.

MR. ROMULO. In that provision of the Constitution can the procedures which I have discussed be
legislated?

MR. DAVIDE. Yes. 37

Commissioner Davide also reaffirmed that his modified amendment strictly confines initiative to
AMENDMENTS to — NOT REVISION of — the Constitution. Thus:

MR. DAVIDE. With pleasure, Madam President.

MR. MAAMBONG. My first question: Commissioner Davide's proposed amendment on line 1 refers
to "amendment." Does it not cover the word "revision" as defined by Commissioner Padilla when he
made the distinction between the words "amendments" and "revision"?

MR. DAVIDE. No, it does not, because "amendments" and "revision" should be covered by Section
1. So insofar as initiative is concerned, it can only relate to "amendments" not "revision."
38

Commissioner Davide further emphasized that the process of proposing amendments through
initiative must be more rigorous and difficult than the initiative on legislation. Thus:

MR. DAVIDE. A distinction has to be made that under this proposal, what is
involved is an amendment to the Constitution. To amend a Constitution
would ordinarily require a proposal by the National Assembly by a vote of
three-fourths; and to call a constitutional convention would require a higher
number. Moreover, just to submit the issue of calling a constitutional
convention, a majority of the National Assembly is required, the import being
that the process of amendment must be made more rigorous and difficult
than probably initiating an ordinary legislation or putting an end to a law
proposed by the National Assembly by way of a referendum. I cannot agree
to reducing the requirement approved by the Committee on the Legislative
because it would require another voting by the Committee, and the voting as
precisely based on a requirement of 10 percent. Perhaps, I might present
such a proposal, by way of an amendment, when the Commission shall take
up the Article on the Legislative or on the National Assembly on plenary
sessions. 39

The Davide modified amendments to Section 2 were subjected to amendments, and the final
version, which the Commission approved by a vote of 31 in favor and 3 against, reads as follows:

MR. DAVIDE. Thank you Madam President. Section 2, as amended, reads

as follows: "AMENDMENT TO THIS CONSTITUTION MAY LIKEWISE BE
DIRECTLY PROPOSED BY THE PEOPLE THROUGH INITIATIVE UPON A
PETITION OF AT LEAST TWELVE PERCENT OF THE TOTAL NUMBER
OF REGISTERED VOTERS, OF WHICH EVERY LEGISLATIVE DISTRICT
MUST BE REPRESENTED BY AT LEAST THREE PERCENT OF THE
REGISTERED VOTERS THEREOF. NO AMENDMENT UNDER THIS
SECTION SHALL BE AUTHORIZED WITHIN FIVE YEARS FOLLOWING
THE RATIFICATION OF THIS CONSTITUTION NOR OFTENER THAN
ONCE EVERY FIVE YEARS THEREAFTER.
THE NATIONAL ASSEMBLY SHALL BY LAW PROVIDE
FOR THE IMPLEMENTATION OF THE EXERCISE OF THIS RIGHT. 40

The entire proposed Article on Amendments or Revisions was approved on second reading on 9
July 1986. Thereafter, upon his motion for reconsideration, Commissioner Gascon was allowed to
41

introduce an amendment to Section 2 which, nevertheless, was withdrawn. In view thereof, the
Article was again approved on Second and Third Readings on 1 August 1986. 42

However, the Committee on Style recommended that the approved Section 2 be amended by
changing "percent" to "per centum" and "thereof" to "therein" and deleting the phrase "by law" in the
second paragraph so that said paragraph reads: The Congress shall provide for the
43

implementation of the exercise of this right. This amendment was approved and is the text of the
44

present second paragraph of Section 2.

The conclusion then is inevitable that, indeed, the system of initiative on the Constitution under
Section 2 of Article XVII of the Constitution is not self-executory.

Has Congress "provided" for the implementation of the exercise of this right? Those who answer the
question in the affirmative, like the private respondents and intervenor Senator Roco, point to us
R.A. No. 6735.

There is, of course, no other better way for Congress to implement the exercise of the right than
through the passage of a statute or legislative act. This is the essence or rationale of the last minute
amendment by the Constitutional Commission to substitute the last paragraph of Section 2 of Article
XVII then reading:

The Congress shall by law provide for the implementation of the exercise of this right.
45

with

The Congress shall provide for the implementation of the exercise of this right.

This substitute amendment was an investiture on Congress of a power to provide for the rules
implementing the exercise of the right. The "rules" means "the details on how [the right] is to be
carried out." 46

We agree that R.A. No. 6735 was, as its history reveals, intended to cover initiative to propose
amendments to the Constitution. The Act is a consolidation of House Bill No. 21505 and Senate Bill
No. 17. The former was prepared by the Committee on Suffrage and Electoral Reforms of the House
of Representatives on the basis of two House Bills referred to it, viz., (a) House Bill No. 497, which
47

dealt with the initiative and referendum mentioned

in Sections 1 and 32 of Article VI of the Constitution; and (b) House Bill No. 988, which dealt with
48

the subject matter of House Bill No. 497, as well as with initiative and referendum under Section 3 of
Article X (Local Government) and initiative provided for in Section 2 of Article XVII of the
Constitution. Senate Bill No. 17 solely dealt with initiative and referendum concerning ordinances
49

or resolutions of local government units. The Bicameral Conference Committee consolidated Senate
Bill No. 17 and House Bill No. 21505 into a draft bill, which was subsequently approved on 8 June
1989 by the Senate and by the House of Representatives. This approved bill is now R.A. No.
50 51

6735.

But is R.A. No. 6735 a full compliance with the power and duty of Congress to "provide for the
implementation of the exercise of the right?"

A careful scrutiny of the Act yields a negative answer.

First. Contrary to the assertion of public respondent COMELEC, Section 2 of the Act does not
suggest an initiative on amendments to the Constitution. The said section reads:

Sec. 2. Statement and Policy. — The power of the people under a system of initiative and
referendum to directly propose, enact, approve or reject, in whole or in part, the Constitution,
laws, ordinances, or resolutions passed by any legislative body upon compliance with the
requirements of this Act is hereby affirmed, recognized and guaranteed. (Emphasis
supplied).

The inclusion of the word "Constitution" therein was a delayed afterthought. That word is neither
germane nor relevant to said section, which exclusively relates to initiative and referendum on
national laws and local laws, ordinances, and resolutions. That section is silent as to amendments
on the Constitution. As pointed out earlier, initiative on the Constitution is confined only to proposals
to AMEND. The people are not accorded the power to "directly propose, enact, approve, or reject, in
whole or in part, the Constitution" through the system of initiative. They can only do so with respect
to "laws, ordinances, or resolutions."

The foregoing conclusion is further buttressed by the fact that this section was lifted from Section 1
of Senate Bill No. 17, which solely referred to a statement of policy on local initiative and referendum
and appropriately used the phrases "propose and enact," "approve or reject" and "in whole or in
part."52

Second. It is true that Section 3 (Definition of Terms) of the Act defines initiative on amendments to
the Constitution and mentions it as one of the three systems of initiative, and that Section 5
(Requirements) restates the constitutional requirements as to the percentage of the registered voters
who must submit the proposal. But unlike in the case of the other systems of initiative, the Act does
not provide for the contents of a petition for initiative on the Constitution. Section 5, paragraph (c)
requires, among other things, statement of the proposed law sought to be enacted, approved or
rejected, amended or repealed, as the case may be. It does not include, as among the contents of
the petition, the provisions of the Constitution sought to be amended, in the case of initiative on the
Constitution. Said paragraph (c) reads in full as follows:

(c) The petition shall state the following:

c.1 contents or text of the proposed law sought to be enacted, approved or rejected, amended or
repealed, as the case may be;

c.2 the proposition;

c.3 the reason or reasons therefor;

c.4 that it is not one of the exceptions provided therein;

c.5 signatures of the petitioners or registered voters; and

c.6 an abstract or summary proposition is not more than one hundred (100) words which shall be
legibly written or printed at the top of every page of the petition. (Emphasis supplied).

The use of the clause "proposed laws sought to be enacted, approved or rejected, amended or
repealed" only strengthens the conclusion that Section 2, quoted earlier, excludes initiative on
amendments to the Constitution.

Third. While the Act provides subtitles for National Initiative and Referendum (Subtitle II) and for
Local Initiative and Referendum (Subtitle III), no subtitle is provided for initiative on the Constitution.
This conspicuous silence as to the latter simply means that the main thrust of the Act is initiative and
referendum on national and local laws. If Congress intended R.A. No. 6735 to fully provide for the
implementation of the initiative on amendments to the Constitution, it could have provided for a
subtitle therefor, considering that in the order of things, the primacy of interest, or hierarchy of
values, the right of the people to directly propose amendments to the Constitution is far more
important than the initiative on national and local laws.

We cannot accept the argument that the initiative on amendments to the Constitution is subsumed
under the subtitle on National Initiative and Referendum because it is national in scope. Our reading
of Subtitle II (National Initiative and Referendum) and Subtitle III (Local Initiative and Referendum)
leaves no room for doubt that the classification is not based on the scope of the initiative involved,
but on its nature and character. It is "national initiative," if what is proposed to be adopted or enacted
is a national law, or a law which only Congress can pass. It is "local initiative" if what is proposed to
be adopted or enacted is a law, ordinance, or resolution which only the legislative bodies of the
governments of the autonomous regions, provinces, cities, municipalities, and barangays can pass.
This classification of initiative into national and local is actually based on Section 3 of the Act, which
we quote for emphasis and clearer understanding:

Sec. 3. Definition of terms —

xxx xxx xxx

There are three (3) systems of initiative, namely:

a.1 Initiative on the Constitution which refers to a petition proposing amendments to the
Constitution;

a.2 Initiative on Statutes which refers to a petition proposing to enact a national legislation; and

a.3 Initiative on local legislation which refers to a petition proposing to enact a regional, provincial,
city, municipal, or barangay law, resolution or ordinance. (Emphasis supplied).

Hence, to complete the classification under subtitles there should have been a subtitle on initiative
on amendments to the Constitution. 53

A further examination of the Act even reveals that the subtitling is not accurate. Provisions not
germane to the subtitle on National Initiative and Referendum are placed therein, like (1) paragraphs
(b) and (c) of Section 9, which reads:

(b) The proposition in an initiative on the Constitution approved by the majority of the votes
cast in the plebiscite shall become effective as to the day of the plebiscite.

(c) A national or local initiative proposition approved by majority of the votes cast in an election
called for the purpose shall become effective fifteen (15) days after certification and proclamation of
the Commission. (Emphasis supplied).

(2) that portion of Section 11 (Indirect Initiative) referring to indirect initiative with the legislative
bodies of local governments; thus:

Sec. 11. Indirect Initiative. — Any duly accredited people's organization, as defined by law,
may file a petition for indirect initiative with the House of Representatives, and other
legislative bodies. . . .
and (3) Section 12 on Appeal, since it applies to decisions of the COMELEC on the findings of
sufficiency or insufficiency of the petition for initiative or referendum, which could be petitions for
both national and local initiative and referendum.

Upon the other hand, Section 18 on "Authority of Courts" under subtitle III on Local Initiative and
Referendum is misplaced, since the provision therein applies to both national and local initiative
54

and referendum. It reads:

Sec. 18. Authority of Courts. — Nothing in this Act shall prevent or preclude the proper
courts from declaring null and void any proposition approved pursuant to this Act for violation
of the Constitution or want of capacity of the local legislative body to enact the said measure.

Curiously, too, while R.A. No. 6735 exerted utmost diligence and care in providing for the details in
the implementation of initiative and referendum on national and local legislation thereby giving them
special attention, it failed, rather intentionally, to do so on the system of initiative on amendments to
the Constitution. Anent the initiative on national legislation, the Act provides for the following:

(a) The required percentage of registered voters to sign the petition and the contents of the petition;

(b) The conduct and date of the initiative;

(c) The submission to the electorate of the proposition and the required number of votes for its
approval;

(d) The certification by the COMELEC of the approval of the proposition;

(e) The publication of the approved proposition in the Official Gazette or in a newspaper of general
circulation in the Philippines; and

(f) The effects of the approval or rejection of the proposition. 55

As regards local initiative, the Act provides for the following:

(a) The preliminary requirement as to the number of signatures of registered voters for the petition;

(b) The submission of the petition to the local legislative body concerned;

(c) The effect of the legislative body's failure to favorably act thereon, and the invocation of the
power of initiative as a consequence thereof;

(d) The formulation of the proposition;

(e) The period within which to gather the signatures;

(f) The persons before whom the petition shall be signed;

(g) The issuance of a certification by the COMELEC through its official in the local government unit
concerned as to whether the required number of signatures have been obtained;

(h) The setting of a date by the COMELEC for the submission of the proposition to the registered
voters for their approval, which must be within the period specified therein;

(i) The issuance of a certification of the result;

(j) The date of effectivity of the approved proposition;

(k) The limitations on local initiative; and

(l) The limitations upon local legislative bodies. 56

Upon the other hand, as to initiative on amendments to the Constitution, R.A. No. 6735, in all of its
twenty-three sections, merely (a) mentions, the word "Constitution" in Section 2; (b) defines "initiative
on the Constitution" and includes it in the enumeration of the three systems of initiative in Section 3;
(c) speaks of "plebiscite" as the process by which the proposition in an initiative on the Constitution
may be approved or rejected by the people; (d) reiterates the constitutional requirements as to the
number of voters who should sign the petition; and (e) provides for the date of effectivity of the
approved proposition.

There was, therefore, an obvious downgrading of the more important or the paramount system of
initiative. RA. No. 6735 thus delivered a humiliating blow to the system of initiative on amendments
to the Constitution by merely paying it a reluctant lip service.57

The foregoing brings us to the conclusion that R.A. No. 6735 is incomplete, inadequate, or wanting
in essential terms and conditions insofar as initiative on amendments to the Constitution is
concerned. Its lacunae on this substantive matter are fatal and cannot be cured by "empowering" the
COMELEC "to promulgate such rules and regulations as may be necessary to carry out the
purposes of [the] Act. 58

The rule is that what has been delegated, cannot be delegated or as expressed in a Latin maxim:
potestas delegata non delegari potest. The recognized exceptions to the rule are as follows:
59

(1) Delegation of tariff powers to the President under Section 28(2) of Article VI of the Constitution;

(2) Delegation of emergency powers to the President under Section 23(2) of Article VI of the
Constitution;

(3) Delegation to the people at large;

(4) Delegation to local governments; and

(5) Delegation to administrative bodies. 60

Empowering the COMELEC, an administrative body exercising quasi-judicial functions, to

promulgate rules and regulations is a form of delegation of legislative authority under no. 5 above.
However, in every case of permissible delegation, there must be a showing that the delegation itself
is valid. It is valid only if the law (a) is complete in itself, setting forth therein the policy to be
executed, carried out, or implemented by the delegate; and (b) fixes a standard — the limits of which
are sufficiently determinate and determinable — to which the delegate must conform in the
performance of his functions. A sufficient standard is one which defines legislative policy, marks its
61

limits, maps out its boundaries and specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be effected. 62

Insofar as initiative to propose amendments to the Constitution is concerned, R.A. No. 6735
miserably failed to satisfy both requirements in subordinate legislation. The delegation of the power
to the COMELEC is then invalid.

III

COMELEC RESOLUTION NO. 2300, INSOFAR AS IT PRESCRIBES RULES AND REGULATIONS

ON THE CONDUCT OF INITIATIVE ON AMENDMENTS TO THE CONSTITUTION, IS VOID.

It logically follows that the COMELEC cannot validly promulgate rules and regulations to implement
the exercise of the right of the people to directly propose amendments to the Constitution through
the system of initiative. It does not have that power under R.A. No. 6735. Reliance on the
COMELEC's power under Section 2(1) of Article IX-C of the Constitution is misplaced, for the laws
and regulations referred to therein are those promulgated by the COMELEC under (a) Section 3 of
Article IX-C of the Constitution, or (b) a law where subordinate legislation is authorized and which
satisfies the "completeness" and the "sufficient standard" tests.

IV

COMELEC ACTED WITHOUT JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION IN

ENTERTAINING THE DELFIN PETITION.

Even if it be conceded ex gratia that R.A. No. 6735 is a full compliance with the power of Congress
to implement the right to initiate constitutional amendments, or that it has validly vested upon the
COMELEC the power of subordinate legislation and that COMELEC Resolution No. 2300 is valid,
the COMELEC acted without jurisdiction or with grave abuse of discretion in entertaining the Delfin
Petition.

Under Section 2 of Article XVII of the Constitution and Section 5(b) of R.A. No. 6735, a petition for
initiative on the Constitution must be signed by at least 12% of the total number of registered voters
of which every legislative district is represented by at least 3% of the registered voters therein. The
Delfin Petition does not contain signatures of the required number of voters. Delfin himself admits
that he has not yet gathered signatures and that the purpose of his petition is primarily to obtain
assistance in his drive to gather signatures. Without the required signatures, the petition cannot be
deemed validly initiated.

The COMELEC acquires jurisdiction over a petition for initiative only after its filing. The petition then
is the initiatory pleading. Nothing before its filing is cognizable by the COMELEC, sitting en banc.
The only participation of the COMELEC or its personnel before the filing of such petition are (1) to
prescribe the form of the petition; (2) to issue through its Election Records and Statistics Office a
63

certificate on the total number of registered voters in each legislative district; (3) to assist, through
64

its election registrars, in the establishment of signature stations; and (4) to verify, through its
65

election registrars, the signatures on the basis of the registry list of voters, voters' affidavits, and
voters' identification cards used in the immediately preceding election. 66

Since the Delfin Petition is not the initiatory petition under R.A. No. 6735 and COMELEC Resolution
No. 2300, it cannot be entertained or given cognizance of by the COMELEC. The respondent
Commission must have known that the petition does not fall under any of the actions or proceedings
under the COMELEC Rules of Procedure or under Resolution No. 2300, for which reason it did not
assign to the petition a docket number. Hence, the said petition was merely entered as UND,
meaning, undocketed. That petition was nothing more than a mere scrap of paper, which should not
have been dignified by the Order of 6 December 1996, the hearing on 12 December 1996, and the
order directing Delfin and the oppositors to file their memoranda or oppositions. In so dignifying it,
the COMELEC acted without jurisdiction or with grave abuse of discretion and merely wasted its
time, energy, and resources.

The foregoing considered, further discussion on the issue of whether the proposal to lift the term
limits of elective national and local officials is an amendment to, and not a revision of, the
Constitution is rendered unnecessary, if not academic.

CONCLUSION
This petition must then be granted, and the COMELEC should be permanently enjoined from
entertaining or taking cognizance of any petition for initiative on amendments to the Constitution until
a sufficient law shall have been validly enacted to provide for the implementation of the system.

We feel, however, that the system of initiative to propose amendments to the Constitution should no
longer be kept in the cold; it should be given flesh and blood, energy and strength. Congress should
not tarry any longer in complying with the constitutional mandate to provide for the implementation of
the right of the people under that system.

WHEREFORE, judgment is hereby rendered

a) GRANTING the instant petition;

b) DECLARING R.A. No. 6735 inadequate to cover the system of initiative on amendments to the
Constitution, and to have failed to provide sufficient standard for subordinate legislation;

c) DECLARING void those parts of Resolution No. 2300 of the Commission on Elections prescribing
rules and regulations on the conduct of initiative or amendments to the Constitution; and

d) ORDERING the Commission on Elections to forthwith DISMISS the DELFIN petition (UND-96-
037).

The Temporary Restraining Order issued on 18 December 1996 is made permanent as against the
Commission on Elections, but is LIFTED as against private respondents.

Resolution on the matter of contempt is hereby reserved.

SO ORDERED.

Narvasa, C.J., Regalado, Romero, Bellosillo, Kapunan, Hermosisima, Jr. and Torres, Jr., JJ.,
concur.

Padilla, J., took no part.

Separate Opinions

PUNO, J., concurring and dissenting:

I join the ground-breaking ponencia of our esteemed colleague, Mr. Justice Davide insofar as it
orders the COMELEC to dismiss the Delfin petition. I regret, however, I cannot share the view that
R.A. No. 5735 and COMELEC Resolution No. 2300 are legally defective and cannot implement the
people's initiative to amend the Constitution. I likewise submit that the petition with respect to the
Pedrosas has no leg to stand on and should be dismissed. With due respect:

First, I submit that R.A. No. 6735 sufficiently implements the right of the people to initiate
amendments to the Constitution thru initiative. Our effort to discover the meaning of R.A. No. 6735
should start with the search of the intent of our lawmakers. A knowledge of this intent is critical for
the intent of the legislature is the law and the controlling factor in its interpretation. Stated otherwise,
1

intent is the essence of the law, the spirit which gives life to its enactment.2
Significantly, the majority decision concedes that ". . . R.A. No. 6735 was intended to cover initiative
to propose amendments to the Constitution." It ought to be so for this intent is crystal clear from the
history of the law which was a consolidation of House Bill No. 21505 and Senate Bill No. 17. Senate
3 4

Bill No. 17 was entitled "An Act Providing for a System of Initiative and Referendum and the
Exception Therefrom, Whereby People in Local Government Units Can Directly Propose and Enact
Resolutions and Ordinances or Approve or Reject any Ordinance or Resolution Passed by the Local
Legislative Body." Beyond doubt, Senate Bill No. 17 did not include people's initiative to propose
amendments to the Constitution. In checkered contrast, House Bill No. 21505 expressly included
5

people's initiative to amend the Constitution. Congressman (now Senator) Raul Roco emphasized in
his sponsorship remarks: 6

xxx xxx xxx

SPONSORSHIP REMARKS OF MR. ROCO

At the outset, Mr. Roco provided the following backgrounder on the constitutional basis of the
proposed measure.

1. As cited in Vera vs. Avelino (1946), the presidential system which was introduced by the 1935
Constitution saw the application of the principle of separation of powers.

2. While under the parliamentary system of the 1973 Constitution the principle remained applicable,
the 1981 amendments to the Constitution of 1973 ensured presidential dominance over the
Batasang Pambansa.

Constitutional history then saw the shifting and sharing of legislative powers between the Legislature
and the Executive departments. Transcending changes in the exercise of legislative power is the
declaration in the Philippine Constitution that the Philippines is a republican state where sovereignty
resides in the people and all sovereignty emanates from them.

3. Under the 1987 Constitution, the lawmaking power is still preserved in Congress; however, to
institutionalize direct action of the people as exemplified in the 1986 Revolution, the Constitution
recognizes the power of the people, through the system of initiative and referendum.

As cited in Section 1, Article VI of the 1987 Constitution, Congress does not have plenary powers
since reserve powers are given to the people expressly. Section 32 of the same Article mandates
Congress to pass at the soonest possible time, a bill on referendum and initiative, and to share its
legislative powers with the people.

Section 2, Article XVII of the 1987 Constitution, on the other hand, vests in the people the power to
directly propose amendments to the Constitution through initiative, upon petition of at least 12
percent of the total number of registered voters.

Stating that House Bill No. 21505 is the Committee's response to the duty imposed on Congress to
implement the exercise by the people of the right to initiative and referendum, Mr. Roco recalled the
beginnings of the system of initiative and referendum under Philippine Law. He cited Section 99 of
the Local Government Code which vests in the barangay assembly the power to initiate legislative
processes, decide the holding of plebiscite and hear reports of the Sangguniang Barangay, all of
which are variations of the power of initiative and referendum. He added that the holding of barangay
plebiscites and referendum are likewise provided in Sections 100 and 101 of the same Code.

Thereupon, for the sake of brevity, Mr. Roco moved that pertinent quotation on the subject which he
will later submit to the Secretary of the House be incorporated as part of his sponsorship speech.
He then cited examples of initiative and referendum similar to those contained in the instant Bill
among which are the constitutions of states in the United States which recognize the right of
registered voters to initiate the enactment of any statute or to project any existing law or parts
thereof in a referendum. These states, he said, are Alaska, Alabama, Montana, Massachusets,
Dakota, Oklahoma, Oregon, and practically all other states.

Mr. Roco explained that in certain American states, the kind of laws to which initiative and
referendum apply is also without limitation, except for emergency measures, which are likewise
incorporated in House Bill No. 21505. He added that the procedure provided by the Bill from the
filing of the petition, the requirements of a certain percentage of supporters to present a proposition,
to the submission to electors are substantially similar to the provisions in American laws. Although
an infant in Philippine political structure, the system of initiative and referendum, he said, is a tried
and tested system in other jurisdictions, and the Bill is patterned after American experience.

He further explained that the bill has only 12 sections, and recalled that the Constitutional
Commissioners saw the system of the initiative and referendum as an instrument which can be used
should the legislature show itself to be indifferent to the needs of the people. This is the reason, he
claimed, why now is an opportune time to pass the Bill even as he noted the felt necessity of the
times to pass laws which are necessary to safeguard individual rights and liberties.

At this juncture Mr. Roco explained the process of initiative and referendum as advocated in House
Bill No. 21505. He stated that:

1. Initiative means that the people, on their own political judgment, submit a Bill for the consideration
of the general electorate.

2. The instant Bill provides three kinds of initiative, namely; the initiative to amend the Constitution
once every five years; the initiative to amend statutes approved by Congress; and the initiative to
amend local ordinances.

3. The instant Bill gives a definite procedure and allows the Commission on Elections (COMELEC)
to define rules and regulations on the power of initiative.

4. Referendum means that the legislators seek the consent of the people on measures that they
have approved.

5. Under Section 4 of the Bill the people can initiate a referendum which is a mode of plebiscite by
presenting a petition therefor, but under certain limitations, such as the signing of said petition by at
least 10 percent of the total of registered voters at which every legislative district is represented by at
least three percent of the registered voters thereof. Within 30 days after receipt of the petition, the
COMELEC shall determine the sufficiency of the petition, publish the same, and set the date of the
referendum within 45 to 90-day period.

6. When the matter under referendum or initiative is approved by the required number of votes, it
shall become effective 15 days following the completion of its publication in the Official Gazette.

In concluding his sponsorship remarks, Mr. Roco stressed that the Members cannot ignore the
people's call for initiative and referendum and urged the Body to approve House Bill No. 21505.

At this juncture, Mr. Roco also requested that the prepared text of his speech together with the
footnotes be reproduced as part of the Congressional Records.
The same sentiment as to the bill's intent to implement people's initiative to amend the Constitution
was stressed by then Congressman (now Secretary of Agriculture) Salvador Escudero III in his
sponsorship remarks, viz: 7

xxx xxx xxx

SPONSORSHIP REMARKS OF MR. ESCUDERO

Mr. Escudero first pointed out that the people have been clamoring for a truly popular
democracy ever since, especially in the so-called parliament of the streets. A substantial
segment of the population feels, he said, that the form of democracy is there, but not the
reality or substance of it because of the increasingly elitist approach of their representatives
to the country's problem.

Whereupon, Mr. Escudero pointed out that the Constitution has provided a means whereby the
people can exercise the reserved power of initiative to propose amendments to the Constitution, and
requested that Sections 1 and 32, Article VI; Section 3, Article X; and Section 2, Article XVII of the
Constitution be made part of his sponsorship remarks.

Mr. Escudero also stressed that an implementing law is needed for the aforecited Constitutional
provisions. While the enactment of the Bill will give way to strong competition among cause-oriented
and sectoral groups, he continued, it will hasten the politization of the citizenry, aid the government
in forming an enlightened public opinion, and produce more responsive legislation. The passage of
the Bill will also give street parliamentarians the opportunity to articulate their ideas in a democratic
forum, he added.

Mr. Escudero stated that he and Mr. Roco hoped for the early approval of the Bill so that it can be
initially used for the Agrarian Reform Law. He said that the passage of House Bill No. 21505 will
show that the Members can set aside their personal and political consideration for the greater good
of the people.

The disagreeing provisions in Senate Bill No. 17 and House Bill No. 21505 were threshed out in a
Bicameral Conference Committee. In the meeting of the Committee on June 6, 1989, the members
8 9

agreed that the two (2) bills should be consolidated and that the consolidated version should include
people's initiative to amend the Constitution as contemplated by House Bill No. 21505. The transcript
of the meeting states:
xxx xxx xxx

CHAIRMAN GONZALES. But at any rate, as I have said, because this is new in our political
system, the Senate decided on a more cautious approach and limiting it only to the local
government units because even with that stage where . . . at least this has been quite
popular, ano? It has been attempted on a national basis. Alright. There has not been a single
attempt. Now, so, kami limitado doon. And, second, we consider also that it is only fair that
the local legislative body should be given a chance to adopt the legislation bill proposed,
right? Iyong sinasabing indirect system of initiative. If after all, the local legislative assembly
or body is willing to adopt it in full or in toto, there ought to be any reason for initiative, ano for
initiative. And, number 3, we feel that there should be some limitation on the frequency with
which it should be applied. Number 4, na the people, thru initiative, cannot enact any
ordinance that is beyond the scope of authority of the local legislative body, otherwise, my
God, mag-aassume sila ng power that is broader and greater than the grant of legislative
power to the Sanggunians. And Number 5, because of that, then a proposition which has
been the result of a successful initiative can only carry the force and effect of an ordinance
 and therefore that should not deprive the court of its jurisdiction to declare it null and void for
want of authority. Ha, di ba? I mean it is beyond powers of local government units to enact.
Iyon ang main essence namin, so we concentrated on that. And that is why . . . so ang sa
inyo naman includes iyon sa Constitution, amendment to the Constitution eh . . . national
laws. Sa amin, if you insist on that, alright, although we feel na it will in effect become a dead
statute. Alright, and we can agree, we can agree. So ang mangyayari dito, and magiging
basic nito, let us not discuss anymore kung alin and magiging basic bill, ano, whether it is the
Senate Bill or whether it is the House bill. Logically it should be ours sapagkat una iyong sa
amin eh. It is one of the first bills approved by the Senate kaya ang number niyan, makikita
mo, 17, eh. Huwag na nating pagusapan. Now, if you insist, really iyong features ng national
at saka constitutional, okay. ____ gagawin na natin na consolidation of both bills.

HON. ROCO. Yes, we shall consolidate.

CHAIRMAN GONZALES. Consolidation of the Senate and House Bill No. so and so. 10

When the consolidated bill was presented to the House for approval, then Congressman Roco upon
interpellation by Congressman Rodolfo Albano, again confirmed that it covered people's initiative to
amend the Constitution. The record of the House Representative states: 11

xxx xxx xxx

THE SPEAKER PRO TEMPORE. The Gentleman from Camarines Sur is recognized.

MR. ROCO. On the Conference Committee Report on the disagreeing provisions between Senate
Bill No. 21505 which refers to the system providing for the initiative and referendum, fundamentally,
Mr. Speaker, we consolidated the Senate and the House versions, so both versions are totally intact
in the bill. The Senators ironically provided for local initiative and referendum and the House
Representatives correctly provided for initiative and referendum on the Constitution and on national
legislation.

I move that we approve the consolidated bill.

MR. ALBANO. Mr. Speaker.

THE SPEAKER PRO TEMPORE. What is the pleasure of the Minority Floor Leader?

MR. ALBANO. Will the distinguished sponsor answer just a few questions?

THE SPEAKER PRO TEMPORE. The Gentlemen will please proceed.

MR. ALBANO. I heard the sponsor say that the only difference in the two bills was that in the Senate
version there was a provision for local initiative and referendum, whereas the House version has
none.

MR. ROCO. In fact, the Senate version provide purely for local initiative and referendum, whereas in
the House version, we provided purely for national and constitutional legislation.

MR. ALBANO. Is it our understanding therefore, that the two provisions were incorporated?

MR. ROCO. Yes, Mr. Speaker.

MR. ALBANO. So that we will now have a complete initiative and referendum both in the
constitutional amendment and national legislation.

MR. ROCO. That is correct.

MR. ALBANO. And provincial as well as municipal resolutions?

MR. ROCO. Down to barangay, Mr. Speaker.

MR. ALBANO. And this initiative and referendum is in consonance with the provision of the
Constitution whereby it mandates this Congress to enact the enabling law, so that we shall have a
system which can be done every five years. Is it five years in the provision of the Constitution?

MR. ROCO. That is correct, Mr. Speaker. For constitutional amendments in the 1987 Constitution, it
is every five years.

MR. ALBANO. For every five years, Mr. Speaker?

MR. ROCO. Within five years, we cannot have multiple initiatives and referenda.

MR. ALBANO. Therefore, basically, there was no substantial difference between the two versions?

MR. ROCO. The gaps in our bill were filled by the Senate which, as I said earlier, ironically was
about local, provincial and municipal legislation.

MR. ALBANO. And the two bills were consolidated?

MR. ROCO. Yes, Mr. Speaker.

MR. ALBANO. Thank you, Mr. Speaker.

APPROVAL OF C.C.R.
ON S.B. NO. 17 AND H.B. NO. 21505
(The Initiative and Referendum Act)

THE SPEAKER PRO TEMPORE. There was a motion to approve this consolidated bill on Senate
Bill No. 17 and House Bill No. 21505.

Is there any objection? (Silence. The Chair hears none; the motion is approved.

Since it is crystalline that the intent of R.A. No. 6735 is to implement the people's initiative to amend
the Constitution, it is our bounden duty to interpret the law as it was intended by the legislature. We
have ruled that once intent is ascertained, it must be enforced even if it may not be consistent with
the strict letter of the law and this ruling is as old as the mountain. We have also held that where a
law is susceptible of more than one interpretation, that interpretation which will most tend to
effectuate the manifest intent of the legislature will be adopted.
12

The text of R.A. No. 6735 should therefore be reasonably construed to effectuate its intent to
implement the people's initiative to amend the Constitution. To be sure, we need not torture the text
of said law to reach the conclusion that it implements people's initiative to amend the Constitution.
R.A. No. 6735 is replete with references to this prerogative of the people.

First, the policy statement declares:

Sec. 2. Statement of Policy. — The power of the people under a system of initiative and
referendum to directly propose, enact, approve or reject, in whole or in part, the Constitution,
laws, ordinances, or resolutions passed by any legislative body upon compliance with the
requirements of this Act is hereby affirmed, recognized and guaranteed. (emphasis supplied)

Second, the law defines "initiative" as "the power of the people to propose amendments to the
constitution or to propose and enact legislations through an election called for the purpose," and
"plebiscite" as "the electoral process by which an initiative on the Constitution is approved or
rejected by the people.

Third, the law provides the requirements for a petition for initiative to amend the Constitution. Section
5(b) states that "(a) petition for an initiative on the 1987 Constitution must have at least twelve per
centum (12%) of the total number of registered voters as signatories, of which every legislative
district must be represented by at least three per centum (3%) of the registered voters therein." It
also states that "(i)nitiative on the Constitution may be exercised only after five (5) years from the
ratification of the 1987 Constitution and only once every five (5) years thereafter.

Finally, R.A. No. 6735 fixes the effectivity date of the amendment. Section 9(b) states that "(t)he
proposition in an initiative on the Constitution approved by a majority of the votes cast in the
plebiscite shall become effective as to the day of the plebiscite.

It is unfortunate that the majority decision resorts to a strained interpretation of R.A. No. 6735 to
defeat its intent which it itself concedes is to implement people's initiative to propose amendments to
the Constitution. Thus, it laments that the word "Constitution" is neither germane nor relevant to the
policy thrust of section 2 and that the statute's subtitling is not accurate. These lapses are to be
expected for laws are not always written in impeccable English. Rightly, the Constitution does not
require our legislators to be word-smiths with the ability to write bills with poetic commas like Jose
Garcia Villa or in lyrical prose like Winston Churchill. But it has always been our good policy not to
refuse to effectuate the intent of a law on the ground that it is badly written. As the distinguished
Vicente Francisco reminds us: "Many laws contain words which have not been used accurately.
13

But the use of inapt or inaccurate language or words, will not vitiate the statute if the legislative
intention can be ascertained. The same is equally true with reference to awkward, slovenly, or
ungrammatical expressions, that is, such expressions and words will be construed as carrying the
meaning the legislature intended that they bear, although such a construction necessitates a
departure from the literal meaning of the words used.

In the same vein, the argument that R.A. No. 7535 does not include people's initiative to amend the
Constitution simply because it lacks a sub-title on the subject should be given the weight of helium.
Again, the hoary rule in statutory construction is that headings prefixed to titles, chapters and
sections of a statute may be consulted in aid of interpretation, but inferences drawn therefrom are
entitled to very little weight, and they can never control the plain terms of the enacting clauses. 14

All said, it is difficult to agree with the majority decision that refuses to enforce the manifest intent or
spirit of R.A. No. 6735 to implement the people's initiative to amend the Constitution. It blatantly
disregards the rule cast in concrete that the letter of the law must yield to its spirit for the letter of the
law is its body but its spirit is its soul.15

II

COMELEC Resolution No. 2300, promulgated under the stewardship of Commissioner Haydee
16

Yorac, then its Acting Chairman, spelled out the procedure on how to exercise the people's initiative
to amend the Constitution. This is in accord with the delegated power granted by section 20 of R.A.
No. 6735 to the COMELEC which expressly states: "The Commission is hereby empowered to
promulgate such rules and regulations as may be necessary to carry out the purposes of this Act."
By no means can this delegation of power be assailed as infirmed. In the benchmark case of Pelaez
v. Auditor General, this Court, thru former Chief Justice Roberto Concepcion laid down the test to
17

determine whether there is undue delegation of legislative power, viz:

xxx xxx xxx

Although Congress may delegate to another branch of the Government the power to fill details in the
execution, enforcement or administration of a law, it is essential, to forestall a violation of the
principle of separation of powers, that said law: (a) be complete in itself — it must set forth therein
the policy to be executed, carried out or implemented by the delegate — and (b) to fix standard —
the limits of which are sufficiently determinate or determinable — to which the delegate must
conform in the performance of his functions. Indeed, without a statutory declaration of policy, which
is the essence of every law, and, without the aforementioned standard, there would be no means to
determine, with reasonable certainty, whether the delegate has acted within or beyond the scope of
his authority. Hence, he could thereby arrogate upon himself the power, not only to make the law,
but, also — and this is worse — to unmake it, by adopting measures inconsistent with the end
sought to be attained by the Act of Congress, thus nullifying the principle of separation of powers
and the system of checks and balances, and, consequently, undermining the very foundation of our
republican system.

Section 68 of the Revised Administrative Code does not meet these well-settled requirements for a
valid delegation of the power to fix the details in the enforcement of a law. It does not enunciate any
policy to be carried out or implemented by the President. Neither does it give a standard sufficiently
precise to avoid the evil effects above referred to.

Former Justice Isagani A. Cruz, similarly elucidated that "a sufficient standard is intended to map out
the boundaries of the delegates' authority by defining the legislative policy and indicating the
circumstances under which it is to be pursued and effected. The purpose of the sufficient standard is
to prevent a total transference of legislative power from the lawmaking body to the delegate." In 25

enacting R.A. No. 6735, it cannot be said that Congress totally transferred its power to enact the law
implementing people's initiative to COMELEC. A close look at COMELEC Resolution No. 2300 will
show that it merely provided the procedure to effectuate the policy of R.A. No. 6735 giving life to the
people's initiative to amend the Constitution. The debates in the Constitutional Commission make it
26

clear that the rules of procedure to enforce the people's initiative can be delegated, thus:

MR. ROMULO. Under Commissioner Davide's amendment, it is possible for

the legislature to set forth certain procedures to carry out the initiative. . . ?

MR. DAVIDE. It can.

xxx xxx xxx

MR. ROMULO. But the Commissioner's amendment does not prevent the legislature
from asking another body to set the proposition in proper form.

MR. DAVIDE. The Commissioner is correct. In other words, the implementation of this particular
right would be subject to legislation, provided the legislature cannot determine anymore the
percentage of the requirement.

MR. DAVIDE. As long as it will not destroy the substantive right to initiate. In other words, none of
the procedures to be proposed by the legislative body must diminish or impair the right conceded
here.

MR. ROMULO. In that provision of the Constitution can the procedures which I have discussed be
legislated?

MR. DAVIDE. Yes.

In his book, The Intent of the 1986 Constitution Writers, Father Bernas likewise affirmed: "In
27

response to questions of Commissioner Romulo, Davide explained the extent of the power of the
legislature over the process: it could for instance, prescribe the 'proper form before (the amendment)
is submitted to the people,' it could authorize another body to check the proper form. It could also
authorize the COMELEC, for instance, to check the authenticity of the signatures of petitioners.
Davide concluded: 'As long as it will not destroy the substantive right to initiate. In other words, none
of the procedures to be proposed by the legislative body must diminish or impair the right conceded
here.'" Quite clearly, the prohibition against the legislature is to impair the substantive right of the
people to initiate amendments to the Constitution. It is not, however, prohibited from legislating the
procedure to enforce the people's right of initiative or to delegate it to another body like the
COMELEC with proper standard.

A survey of our case law will show that this Court has prudentially refrained from invalidating
administrative rules on the ground of lack of adequate legislative standard to guide their
promulgation. As aptly perceived by former Justice Cruz, "even if the law itself does not expressly
pinpoint the standard, the courts will bend backward to locate the same elsewhere in order to spare
the statute, if it can, from constitutional infirmity." He cited the ruling in Hirabayashi v. United
28

States, viz:
29

xxx xxx xxx

It is true that the Act does not in terms establish a particular standard to which orders of the military
commander are to conform, or require findings to be made as a prerequisite to any order. But the
Executive Order, the Proclamations and the statute are not to be read in isolation from each other.
They were parts of a single program and must be judged as such. The Act of March 21, 1942, was
an adoption by Congress of the Executive Order and of the Proclamations. The Proclamations
themselves followed a standard authorized by the Executive Order — the necessity of protecting
military resources in the designated areas against espionage and sabotage.

In the case at bar, the policy and the standards are bright-lined in R.A. No. 6735. A 20-20 look at the
law cannot miss them. They were not written by our legislators in invisible ink. The policy and
standards can also be found in no less than section 2, Article XVII of the Constitution on
Amendments or Revisions. There is thus no reason to hold that the standards provided for in R.A.
No. 6735 are insufficient for in other cases we have upheld as adequate more general standards
such as "simplicity and dignity," "public interest," "public welfare," "interest of law and order,"
30 31 32 33

"justice and equity," "adequate and efficient instruction," "public safety," "public policy", "greater
34 35 36 37

national interest", "protect the local consumer by stabilizing and subsidizing domestic pump rates",
38

39
and "promote simplicity, economy and efficiency in government." A due regard and respect to the
40

legislature, a co-equal and coordinate branch of government, should counsel this Court to refrain
from refusing to effectuate laws unless they are clearly unconstitutional.

III

It is also respectfully submitted that the petition should he dismissed with respect to the Pedrosas.
The inclusion of the Pedrosas in the petition is utterly baseless. The records show that the case at
bar started when respondent Delfin alone and by himself filed with the COMELEC a Petition to
Amend the Constitution to Lift Term Limits of Elective Officials by People's Initiative. The Pedrosas
did not join the petition. It was Senator Roco who moved to intervene and was allowed to do so by
the COMELEC. The petition was heard and before the COMELEC could resolve the Delfin petition,
the case at bar was filed by the petitioners with this Court. Petitioners sued the COMELEC. Jesus
Delfin, Alberto Pedrosa and Carmen Pedrosa in their capacities as founding members of the
People's Initiative for Reform, Modernization and Action (PIRMA). The suit is an original action for
prohibition with prayer for temporary restraining order and/or writ of preliminary injunction.

The petition on its face states no cause of action against the Pedrosas. The only allegation against
the Pedrosas is that they are founding members of the PIRMA which proposes to undertake the
signature drive for people's initiative to amend the Constitution. Strangely, the PIRMA itself as an
organization was not impleaded as a respondent. Petitioners then prayed that we order the
Pedrosas ". . . to desist from conducting a signature drive for a people's initiative to amend the
Constitution." On December 19, 1996, we temporarily enjoined the Pedrosas ". . . from conducting a
signature drive for people's initiative to amend the Constitution." It is not enough for the majority to
lift the temporary restraining order against the Pedrosas. It should dismiss the petition and all
motions for contempt against them without equivocation.

One need not draw a picture to impart the proposition that in soliciting signatures to start a people's
initiative to amend the Constitution the Pedrosas are not engaged in any criminal act. Their
solicitation of signatures is a right guaranteed in black and white by section 2 of Article XVII of the
Constitution which provides that ". . . amendments to this Constitution may likewise be directly
proposed by the people through initiative. . ." This right springs from the principle proclaimed in
section 1, Article II of the Constitution that in a democratic and republican state "sovereignty resides
in the people and all government authority emanates from them." The Pedrosas are part of the
people and their voice is part of the voice of the people. They may constitute but a particle of our
sovereignty but no power can trivialize them for sovereignty is indivisible.

But this is not all. Section 16 of Article XIII of the Constitution provides: "The right of the people and
their organizations to effective and reasonable participation at all levels of social, political and
economic decision-making shall not be abridged. The State shall by law, facilitate the establishment
of adequate consultation mechanisms." This is another novel provision of the 1987 Constitution
strengthening the sinews of the sovereignty of our people. In soliciting signatures to amend the
Constitution, the Pedrosas are participating in the political decision-making process of our people.
The Constitution says their right cannot be abridged without any ifs and buts. We cannot put a
question mark on their right.

Over and above these new provisions, the Pedrosas' campaign to amend the Constitution is an
exercise of their freedom of speech and expression and their right to petition the government for
redress of grievances. We have memorialized this universal right in all our fundamental laws from
the Malolos Constitution to the 1987 Constitution. We have iterated and reiterated in our rulings that
freedom of speech is a preferred right, the matrix of other important rights of our people. Undeniably,
freedom of speech enervates the essence of the democratic creed of think and let think. For this
reason, the Constitution encourages speech even if it protects the speechless.

It is thus evident that the right of the Pedrosas to solicit signatures to start a people's initiative to
amend the Constitution does not depend on any law, much less on R.A. 6735 or COMELEC
Resolution No. 2300. No law, no Constitution can chain the people to an undesirable status quo. To
be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the
predicate of progress and we should not fear change. Mankind has long recognized the truism that
the only constant in life is change and so should the majority.

IV

In a stream of cases, this Court has rhapsodized people power as expanded in the 1987
Constitution. On October 5, 1993, we observed that people's might is no longer a myth but an article
of faith in our Constitution. On September 30, 1994, we postulated that people power can be
41
trusted to check excesses of government and that any effort to trivialize the effectiveness of people's
initiatives ought to be rejected. On September 26, 1996, we pledged that ". . . this Court as a
42

matter of policy and doctrine will exert every effort to nurture, protect and promote their legitimate
exercise." Just a few days ago, or on March 11, 1997, by a unanimous decision, we allowed a
43 44

recall election in Caloocan City involving the mayor and ordered that he submits his right to continue
in office to the judgment of the tribunal of the people. Thus far, we have succeeded in transforming
people power from an opaque abstraction to a robust reality. The Constitution calls us to encourage
people empowerment to blossom in full. The Court cannot halt any and all signature campaigns to
amend the Constitution without setting back the flowering of people empowerment. More important,
the Court cannot seal the lips of people who are pro-change but not those who are anti-change
without concerting the debate on charter change into a sterile talkaton. Democracy is enlivened by a
dialogue and not by a monologue for in a democracy nobody can claim any infallibility.

Melo and Mendoza, JJ., concur.

VITUG, J., concurring and dissenting:

The COMELEC should have dismissed, outrightly, the Delfin Petition.

It does seem to me that there is no real exigency on the part of the Court to engross, let alone to
commit, itself on all the issues raised and debated upon by the parties. What is essential at this time
would only be to resolve whether or not the petition filed with the COMELEC, signed by Atty. Jesus
S. Delfin in his capacity as a "founding member of the Movement for People's Initiative" and seeking
through a people initiative certain modifications on the 1987 Constitution, can properly be regarded
and given its due course. The Constitution, relative to any proposed amendment under this method,
is explicit. Section 2, Article XVII, thereof provides:

Sec. 2. Amendments to this Constitution may likewise be directly proposed by the people
through initiative upon a petition of at least twelve per centum of the total number of
registered voters, of which every legislative district must be represented by at least three per
centum of the registered voters therein. No amendment under this section shall be
authorized within five years following the ratification of this Constitution nor oftener than once
every five years thereafter.

The Congress shall provide for the implementation of the exercise of this right.

The Delfin petition is thus utterly deficient. Instead of complying with the constitutional imperatives,
the petition would rather have much of its burden passed on, in effect, to the COMELEC. The
petition would require COMELEC to schedule "signature gathering all over the country," to cause the
necessary publication of the petition "in newspapers of general and local circulation," and to instruct
"Municipal Election Registrars in all Regions of the Philippines to assist petitioners and volunteers in
establishing signing stations at the time and on the dates designated for the purpose.

I submit, even then, that the TRO earlier issued by the Court which, consequentially, is made
permanent under the ponencia should be held to cover only the Delfin petition and must not be so
understood as having intended or contemplated to embrace the signature drive of the Pedrosas. The
grant of such a right is clearly implicit in the constitutional mandate on people initiative.

The distinct greatness of a democratic society is that those who reign are the governed themselves.
The postulate is no longer lightly taken as just a perceived myth but a veritable reality. The past has
taught us that the vitality of government lies not so much in the strength of those who lead as in the
consent of those who are led. The role of free speech is pivotal but it can only have its true meaning
if it comes with the correlative end of being heard.

Pending a petition for a people's initiative that is sufficient in form and substance, it behooves the
Court, I most respectfully submit, to yet refrain from resolving the question of whether or not
Republic Act No. 6735 has effectively and sufficiently implemented the Constitutional provision on
right of the people to directly propose constitutional amendments. Any opinion or view formulated by
the Court at this point would at best be only a non-binding, albeit possibly persuasive, obiter dictum.

I vote for granting the instant petition before the Court and for clarifying that the TRO earlier issued
by the Court did not prescribe the exercise by the Pedrosas of their right to campaign for
constitutional amendments.

FRANCISCO, J., dissenting and concurring:

There is no question that my esteemed colleague Mr. Justice Davide has prepared a scholarly and
well-written ponencia. Nonetheless, I cannot fully subscribe to his view that R. A. No. 6735 is
inadequate to cover the system of initiative on amendments to the Constitution.

To begin with, sovereignty under the constitution, resides in the people and all government authority
emanates from them. Unlike our previous constitutions, the present 1987 Constitution has given
1

more significance to this declaration of principle for the people are now vested with power not only to
propose, enact or reject any act or law passed by Congress or by the local legislative body, but to
propose amendments to the constitution as well. To implement these constitutional edicts, Congress
2

in 1989 enacted Republic Act No. 6735, otherwise known as "The initiative and Referendum Act".
This law, to my mind, amply covers an initiative on the constitution. The contrary view maintained by
petitioners is based principally on the alleged lack of sub-title in the law on initiative to amend the
constitution and on their allegation that:

Republic Act No. 6735 provides for the effectivity of the law after publication in print media.
[And] [t]his indicates that Republic Act No. 6735 covers only laws and not constitutional
amendments, because constitutional amendments take effect upon ratification not after
publication.
3

which allegation manifests petitioners' selective interpretation of the law, for under Section 9 of
Republic Act No. 6735 on the Effectivity of Initiative or Referendum Proposition paragraph (b)
thereof is clear in providing that:

The proposition in an initiative on the constitution approved by a majority of the votes cast in the
plebiscite shall become effective as to the day of the plebiscite.

It is a rule that every part of the statute must be interpreted with reference the context, i.e., that every
part of the statute must be construed together with the other parts and kept subservient to the
general intent of the whole enactment. Thus, the provisions of Republic Act No. 6735 may not be
4

interpreted in isolation. The legislative intent behind every law is to be extracted from the statute as a
whole. 5

In its definition of terms, Republic Act No. 6735 defines initiative as "the power of the people to
propose amendments to the constitution or to propose and enact legislations through an election
called for the purpose". The same section, in enumerating the three systems of initiative, included
6

an "initiative on the constitution which refers to a petition proposing amendments to the constitution" 7
Paragraph (e) again of Section 3 defines "plebiscite" as "the electoral process by which an initiative
on the constitution is approved or rejected by the people" And as to the material requirements for an
initiative on the Constitution, Section 5(b) distinctly enumerates the following:

A petition for an initiative on the 1987 Constitution must have at least twelve per centum
(12%) of the total number of the registered voters as signatories, of which every legislative
district must be represented by at least three per centum (3%) of the registered voters
therein. Initiative on the constitution may be exercised only after five (5) years from the
ratification of the 1987 Constitution and only once every five years thereafter.

These provisions were inserted, on purpose, by Congress the intent being to provide for the
implementation of the right to propose an amendment to the Constitution by way of initiative. "A legal
provision", the Court has previously said, "must not be construed as to be a useless surplusage, and
accordingly, meaningless, in the sense of adding nothing to the law or having no effect whatsoever
thereon". That this is the legislative intent is further shown by the deliberations in Congress, thus:
8

. . . More significantly, in the course of the consideration of the Conference Committee

Report on the disagreeing provisions of Senate Bill No. 17 and House Bill No. 21505, it was
noted:

MR. ROCO. On the Conference Committee Report on the disagreeing provisions between
Senate Bill No. 17 and the consolidated House Bill No. 21505 which refers to the system
providing for the initiative and referendum, fundamentally, Mr. Speaker, we consolidated the
Senate and the House versions, so both versions are totally intact in the bill. The Senators
ironically provided for local initiative and referendum and the House of Representatives
correctly provided for initiative and referendum an the Constitution and on national
legislation.

I move that we approve the consolidated bill.

MR. ALBANO, Mr. Speaker.

THE SPEAKER PRO TEMPORE. What is the pleasure of the Minority Floor Leader?

MR. ALBANO. Will the distinguished sponsor answer just a few questions?

THE SPEAKER PRO TEMPORE. What does the sponsor say?

MR. ROCO. Willingly, Mr. Speaker.

THE SPEAKER PRO TEMPORE. The Gentleman will please proceed.

MR. ALBANO. I heard the sponsor say that the only difference in the two bills was that in the Senate
version there was a provision for local initiative and referendum, whereas the House version has
none.

MR. ROCO. In fact, the Senate version provided purely for local initiative and referendum, whereas
in the House version, we provided purely for national and constitutional legislation.

MR. ALBANO. Is it our understanding, therefore, that the two provisions were incorporated?

MR. ROCO. Yes, Mr. Speaker.

MR. ALBANO. So that we will now have a complete initiative and referendum both in the
constitutional amendment and national legislation.
MR. ROCO. That is correct.

MR. ALBANO. And provincial as well as municipal resolutions?

MR. ROCO. Down to barangay, Mr. Speaker.

MR. ALBANO. And this initiative and referendum is in consonance with the provision of the
Constitution to enact the enabling law, so that we shall have a system which can be done every five
years. Is it five years in the provision of the Constitution?

MR. ROCO. That is correct, Mr. Speaker. For constitutional amendments to the 1987 Constitution, it
is every five years." (Id. [Journal and Record of the House of Representatives], Vol. VIII, 8 June
1989, p. 960; quoted in Garcia v. Comelec, 237 SCRA 279, 292-293 [1994]; emphasis supplied)

. . . The Senate version of the Bill may not have comprehended initiatives on the Constitution. When
consolidated, though, with the House version of the Bill and as approved and enacted into law, the
proposal included initiative on both the Constitution and ordinary laws.
9

Clearly then, Republic Act No. 6735 covers an initiative on the constitution. Any other construction
as what petitioners foist upon the Court constitute a betrayal of the intent and spirit behind the
enactment.

At any rate, I agree with the ponencia that the Commission on Elections, at present, cannot take any
action (such as those contained in the Commission's orders dated December 6, 9, and 12, 1996
[Annexes B, C and B-1]) indicative of its having already assumed jurisdiction over private
respondents' petition. This is so because from the tenor of Section 5 (b) of R.A. No. 6735 it would
appear that proof of procurement of the required percentage of registered voters at the time the
petition for initiative is filed, is a jurisdictional requirement.

Thus:

A petition for an initiative on the 1987 Constitution must have at least twelve per centum
(12%) of the total number of registered voters as signatories, of which every legislative
district must be represented by at least three per centum (3%) of the registered voters
therein. Initiative on the Constitution may be exercised only after five (5) years from the
ratification of the 1987 Constitution and only once every five (5) years thereafter.

Here private respondents' petition is unaccompanied by the required signatures. This defect
notwithstanding, it is without prejudice to the refiling of their petition once compliance with the
required percentage is satisfactorily shown by private respondents. In the absence, therefore, of an
appropriate petition before the Commission on Elections, any determination of whether private
respondents' proposal constitutes an amendment or revision is premature.

ACCORDINGLY, I take exception to the conclusion reached in the ponencia that R.A. No. 6735 is an
"inadequate" legislation to cover a people's initiative to propose amendments to the Constitution. I,
however, register my concurrence with the dismissal, in the meantime, of private respondents'
petition for initiative before public respondent Commission on Elections until the same be supported
by proof of strict compliance with Section 5 (b) of R.A. No. 6735.

Melo and Mendoza, JJ., concur.

PANGANIBAN, J., concurring and dissenting:

Our distinguished colleague, Mr. Justice Hilario G. Davide Jr., writing for the majority, holds that:

(1) The Comelec acted without jurisdiction or with grave abuse of discretion in entertaining the
"initiatory" Delfin Petition.

(2) While the Constitution allows amendments to "be directly proposed by the people through
initiative," there is no implementing law for the purpose. RA 6735 is "incomplete, inadequate, or
wanting in essential terms and conditions insofar as initiative on amendments to the Constitution is
concerned."

(3) Comelec Resolution No. 2330, "insofar as it prescribes rules and regulations on the conduct of
initiative on amendments to the Constitution, is void."

I concur with the first item above. Until and unless an initiatory petition can show the required
number of signatures — in this case, 12% of all the registered voters in the Philippines with at least
3% in every legislative district — no public funds may be spent and no government resources may
be used in an initiative to amend the Constitution. Verily, the Comelec cannot even entertain any
petition absent such signatures. However, I dissent most respectfully from the majority's two other
rulings. Let me explain.

Under the above restrictive holdings espoused by the Court's majority, the Constitution cannot be
amended at all through a people's initiative. Not by Delfin, not by Pirma, not by anyone, not even by
all the voters of the country acting together. This decision will effectively but unnecessarily curtail,
nullify, abrogate and render inutile the people's right to change the basic law. At the very least, the
majority holds the right hostage to congressional discretion on whether to pass a new law to
implement it, when there is already one existing at present. This right to amend through initiative, it
bears stressing, is guaranteed by Section 2, Article XVII of the Constitution, as follows:

Sec. 2. Amendments to this Constitution may likewise be directly proposed by the people
through initiative upon a petition of at least twelve per centum of the total number of
registered voters, of which every legislative district must be represented by at least three per
centum of the registered voters therein. No amendment under this section shall be
authorized within five years following the ratification of this Constitution nor oftener than once
every five years thereafter.

With all due respect, I find the majority's position all too sweeping and all too extremist. It is
equivalent to burning the whole house to exterminate the rats, and to killing the patient to relieve him
of pain. What Citizen Delfin wants the Comelec to do we should reject. But we should not thereby
preempt any future effort to exercise the right of initiative correctly and judiciously. The fact that the
Delfin Petition proposes a misuse of initiative does not justify a ban against its proper use. Indeed,
there is a right way to do the right thing at the right time and for the right reason.

Taken Together and Interpreted Properly, the Constitution, RA 6735 and Comelec Resolution 2300
Are Sufficient to Implement Constitutional Initiatives

While RA 6735 may not be a perfect law, it was — as the majority openly concedes — intended by
the legislature to cover and, I respectfully submit, it contains enough provisions to effectuate an
initiative on the Constitution. I completely agree with the inspired and inspiring opinions of Mr.
1

Justice Reynato S. Puno and Mr. Justice Ricardo J. Francisco that RA 6735, the Roco law on
initiative, sufficiently implements the right of the people to initiate amendments to the Constitution.
Such views, which I shall no longer repeat nor elaborate on, are thoroughly consistent with this
Court's unanimous en banc rulings in Subic Bay Metropolitan Authority vs. Commission on Elections,
2
that "provisions for initiative . . . are (to be) liberally construed to effectuate their purposes, to
facilitate and not hamper the exercise by the voters of the rights granted thereby"; and in Garcia vs.
Comelec, that any "effort to trivialize the effectiveness of people's initiatives ought to be rejected."
3

No law can completely and absolutely cover all administrative details. In recognition of this, RA 6735
wisely empowered the Commission on Election "to promulgate such rules and regulations as may
4

be necessary to carry out the purposes of this Act." And pursuant thereto, the Comelec issued its
Resolution 2300 on 16 January 1991. Such Resolution, by its very words, was promulgated "to
govern the conduct of initiative on the Constitution and initiative and referendum on national and
local laws," not by the incumbent Commission on Elections but by one then composed of Acting
Chairperson Haydee B. Yorac, Comms. Alfredo E. Abueg Jr., Leopoldo L. Africa, Andres R. Flores,
Dario C. Rama and Magdara B. Dimaampao. All of these Commissioners who signed Resolution
2300 have retired from the Commission, and thus we cannot ascribe any vile motive unto them,
other than an honest, sincere and exemplary effort to give life to a cherished right of our people.

The majority argues that while Resolution 2300 is valid in regard to national laws and local
legislations, it is void in reference to constitutional amendments. There is no basis for such
differentiation. The source of and authority for the Resolution is the same law, RA 6735.

I respectfully submit that taken together and interpreted properly and liberally, the Constitution
(particularly Art. XVII, Sec. 2), R4 6735 and Comelec Resolution 2300 provide more than sufficient
authority to implement, effectuate and realize our people's power to amend the Constitution.

Petitioner Delfin and the Pedrosa

Spouses Should Not Be Muzzled

I am glad the majority decided to heed our plea to lift the temporary restraining order issued by this
Court on 18 December 1996 insofar as it prohibited Petitioner Delfin and the Spouses Pedrosa from
exercising their right of initiative. In fact, I believe that such restraining order as against private
respondents should not have been issued, in the first place. While I agree that the Comelec should
be stopped from using public funds and government resources to help them gather signatures, I
firmly believe that this Court has no power to restrain them from exercising their right of initiative.
The right to propose amendments to the Constitution is really a species of the right of free speech
and free assembly. And certainly, it would be tyrannical and despotic to stop anyone from speaking
freely and persuading others to conform to his/her beliefs. As the eminent Voltaire once said, "I may
disagree with what you say, but I will defend to the death your right to say it." After all, freedom is not
really for the thought we agree with, but as Justice Holmes wrote, "freedom for the thought that we
hate."5

Epilogue

By way of epilogue, let me stress the guiding tenet of my Separate Opinion. Initiative, like
referendum and recall, is a new and treasured feature of the Filipino constitutional system. All three
are institutionalized legacies of the world-admired EDSA people power. Like elections and
plebiscites, they are hallowed expressions of popular sovereignty. They are sacred democratic rights
of our people to be used as their final weapons against political excesses, opportunism, inaction,
oppression and misgovernance; as well as their reserved instruments to exact transparency,
accountability and faithfulness from their chosen leaders. While on the one hand, their misuse and
abuse must be resolutely struck down, on the other, their legitimate exercise should be carefully
nurtured and zealously protected.

WHEREFORE, I vote to GRANT the petition of Sen. Miriam D. Santiago et al. and to DIRECT
Respondent Commission on Elections to DISMISS the Delfin Petition on the ground of prematurity,
but not on the other grounds relied upon by the majority. I also vote to LIFT the temporary restraining
order issued on 18 December 1996 insofar as it prohibits Jesus Delfin, Alberto Pedrosa and Carmen
Pedrosa from exercising their right to free speech in proposing amendments to the Constitution.

Melo and Mendoza, JJ., concur.

Separate Opinions

PUNO, J., concurring and dissenting:

I join the ground-breaking ponencia of our esteemed colleague, Mr. Justice Davide insofar as it
orders the COMELEC to dismiss the Delfin petition. I regret, however, I cannot share the view that
R.A. No. 5735 and COMELEC Resolution No. 2300 are legally defective and cannot implement the
people's initiative to amend the Constitution. I likewise submit that the petition with respect to the
Pedrosas has no leg to stand on and should be dismissed. With due respect:

First, I submit that R.A. No. 6735 sufficiently implements the right of the people to initiate
amendments to the Constitution thru initiative. Our effort to discover the meaning of R.A. No. 6735
should start with the search of the intent of our lawmakers. A knowledge of this intent is critical for
the intent of the legislature is the law and the controlling factor in its interpretation. Stated otherwise,
1

intent is the essence of the law, the spirit which gives life to its enactment.2

Significantly, the majority decision concedes that ". . . R.A. No. 6735 was intended to cover initiative
to propose amendments to the Constitution." It ought to be so for this intent is crystal clear from the
history of the law which was a consolidation of House Bill No. 21505 and Senate Bill No. 17. Senate
3 4

Bill No. 17 was entitled "An Act Providing for a System of Initiative and Referendum and the
Exception Therefrom, Whereby People in Local Government Units Can Directly Propose and Enact
Resolutions and Ordinances or Approve or Reject any Ordinance or Resolution Passed by the Local
Legislative Body." Beyond doubt, Senate Bill No. 17 did not include people's initiative to propose
amendments to the Constitution. In checkered contrast, House Bill No. 21505 expressly included
5

people's initiative to amend the Constitution. Congressman (now Senator) Raul Roco emphasized in
his sponsorship remarks: 6

xxx xxx xxx

SPONSORSHIP REMARKS OF MR. ROCO

At the outset, Mr. Roco provided the following backgrounder on the constitutional basis of the
proposed measure.

1. As cited in Vera vs. Avelino (1946), the presidential system which was introduced by the 1935
Constitution saw the application of the principle of separation of powers.

2. While under the parliamentary system of the 1973 Constitution the principle remained applicable,
the 1981 amendments to the Constitution of 1973 ensured presidential dominance over the
Batasang Pambansa.

Constitutional history then saw the shifting and sharing of legislative powers between the Legislature
and the Executive departments. Transcending changes in the exercise of legislative power is the
declaration in the Philippine Constitution that the Philippines is a republican state where sovereignty
resides in the people and all sovereignty emanates from them.

3. Under the 1987 Constitution, the lawmaking power is still preserved in Congress; however, to
institutionalize direct action of the people as exemplified in the 1986 Revolution, the Constitution
recognizes the power of the people, through the system of initiative and referendum.

As cited in Section 1, Article VI of the 1987 Constitution, Congress does not have plenary powers
since reserve powers are given to the people expressly. Section 32 of the same Article mandates
Congress to pass at the soonest possible time, a bill on referendum and initiative, and to share its
legislative powers with the people.

Section 2, Article XVII of the 1987 Constitution, on the other hand, vests in the people the power to
directly propose amendments to the Constitution through initiative, upon petition of at least 12
percent of the total number of registered voters.

Stating that House Bill No. 21505 is the Committee's response to the duty imposed on Congress to
implement the exercise by the people of the right to initiative and referendum, Mr. Roco recalled the
beginnings of the system of initiative and referendum under Philippine Law. He cited Section 99 of
the Local Government Code which vests in the barangay assembly the power to initiate legislative
processes, decide the holding of plebiscite and hear reports of the Sangguniang Barangay, all of
which are variations of the power of initiative and referendum. He added that the holding of barangay
plebiscites and referendum are likewise provided in Sections 100 and 101 of the same Code.

Thereupon, for the sake of brevity, Mr. Roco moved that pertinent quotation on the subject which he
will later submit to the Secretary of the House be incorporated as part of his sponsorship speech.

He then cited examples of initiative and referendum similar to those contained in the instant Bill
among which are the constitutions of states in the United States which recognize the right of
registered voters to initiate the enactment of any statute or to project any existing law or parts
thereof in a referendum. These states, he said, are Alaska, Alabama, Montana, Massachusets,
Dakota, Oklahoma, Oregon, and practically all other states.

Mr. Roco explained that in certain American states, the kind of laws to which initiative and
referendum apply is also without limitation, except for emergency measures, which are likewise
incorporated in House Bill No. 21505. He added that the procedure provided by the Bill from the
filing of the petition, the requirements of a certain percentage of supporters to present a proposition,
to the submission to electors are substantially similar to the provisions in American laws. Although
an infant in Philippine political structure, the system of initiative and referendum, he said, is a tried
and tested system in other jurisdictions, and the Bill is patterned after American experience.

He further explained that the bill has only 12 sections, and recalled that the Constitutional
Commissioners saw the system of the initiative and referendum as an instrument which can be used
should the legislature show itself to be indifferent to the needs of the people. This is the reason, he
claimed, why now is an opportune time to pass the Bill even as he noted the felt necessity of the
times to pass laws which are necessary to safeguard individual rights and liberties.

At this juncture Mr. Roco explained the process of initiative and referendum as advocated in House
Bill No. 21505. He stated that:

1. Initiative means that the people, on their own political judgment, submit a Bill for the consideration
of the general electorate.
2. The instant Bill provides three kinds of initiative, namely; the initiative to amend the Constitution
once every five years; the initiative to amend statutes approved by Congress; and the initiative to
amend local ordinances.

3. The instant Bill gives a definite procedure and allows the Commission on Elections (COMELEC)
to define rules and regulations on the power of initiative.

4. Referendum means that the legislators seek the consent of the people on measures that they
have approved.

5. Under Section 4 of the Bill the people can initiate a referendum which is a mode of plebiscite by
presenting a petition therefor, but under certain limitations, such as the signing of said petition by at
least 10 percent of the total of registered voters at which every legislative district is represented by at
least three percent of the registered voters thereof. Within 30 days after receipt of the petition, the
COMELEC shall determine the sufficiency of the petition, publish the same, and set the date of the
referendum within 45 to 90-day period.

6. When the matter under referendum or initiative is approved by the required number of votes, it
shall become effective 15 days following the completion of its publication in the Official Gazette.

In concluding his sponsorship remarks, Mr. Roco stressed that the Members cannot ignore the
people's call for initiative and referendum and urged the Body to approve House Bill No. 21505.

At this juncture, Mr. Roco also requested that the prepared text of his speech together with the
footnotes be reproduced as part of the Congressional Records.

The same sentiment as to the bill's intent to implement people's initiative to amend the Constitution
was stressed by then Congressman (now Secretary of Agriculture) Salvador Escudero III in his
sponsorship remarks, viz: 7

xxx xxx xxx

SPONSORSHIP REMARKS OF MR. ESCUDERO

Mr. Escudero first pointed out that the people have been clamoring for a truly popular
democracy ever since, especially in the so-called parliament of the streets. A substantial
segment of the population feels, he said, that the form of democracy is there, but not the
reality or substance of it because of the increasingly elitist approach of their representatives
to the country's problem.

Whereupon, Mr. Escudero pointed out that the Constitution has provided a means whereby the
people can exercise the reserved power of initiative to propose amendments to the Constitution, and
requested that Sections 1 and 32, Article VI; Section 3, Article X; and Section 2, Article XVII of the
Constitution be made part of his sponsorship remarks.

Mr. Escudero also stressed that an implementing law is needed for the aforecited Constitutional
provisions. While the enactment of the Bill will give way to strong competition among cause-oriented
and sectoral groups, he continued, it will hasten the politization of the citizenry, aid the government
in forming an enlightened public opinion, and produce more responsive legislation. The passage of
the Bill will also give street parliamentarians the opportunity to articulate their ideas in a democratic
forum, he added.

Mr. Escudero stated that he and Mr. Roco hoped for the early approval of the Bill so that it can be
initially used for the Agrarian Reform Law. He said that the passage of House Bill No. 21505 will
show that the Members can set aside their personal and political consideration for the greater good
of the people.

The disagreeing provisions in Senate Bill No. 17 and House Bill No. 21505 were threshed out in a
Bicameral Conference Committee. In the meeting of the Committee on June 6, 1989, the members
8 9

agreed that the two (2) bills should be consolidated and that the consolidated version should include
people's initiative to amend the Constitution as contemplated by House Bill No. 21505. The transcript
of the meeting states:

xxx xxx xxx

CHAIRMAN GONZALES. But at any rate, as I have said, because this is new in our political
system, the Senate decided on a more cautious approach and limiting it only to the local
government units because even with that stage where . . . at least this has been quite
popular, ano? It has been attempted on a national basis. Alright. There has not been a single
attempt. Now, so, kami limitado doon. And, second, we consider also that it is only fair that
the local legislative body should be given a chance to adopt the legislation bill proposed,
right? Iyong sinasabing indirect system of initiative. If after all, the local legislative assembly
or body is willing to adopt it in full or in toto, there ought to be any reason for initiative, ano for
initiative. And, number 3, we feel that there should be some limitation on the frequency with
which it should be applied. Number 4, na the people, thru initiative, cannot enact any
ordinance that is beyond the scope of authority of the local legislative body, otherwise, my
God, mag-aassume sila ng power that is broader and greater than the grant of legislative
power to the Sanggunians. And Number 5, because of that, then a proposition which has
been the result of a successful initiative can only carry the force and effect of an ordinance
and therefore that should not deprive the court of its jurisdiction to declare it null and void for
want of authority. Ha, di ba? I mean it is beyond powers of local government units to enact.
Iyon ang main essence namin, so we concentrated on that. And that is why . . . so ang sa
inyo naman includes iyon sa Constitution, amendment to the Constitution eh . . . national
laws. Sa amin, if you insist on that, alright, although we feel na it will in effect become a dead
statute. Alright, and we can agree, we can agree. So ang mangyayari dito, and magiging
basic nito, let us not discuss anymore kung alin and magiging basic bill, ano, whether it is the
Senate Bill or whether it is the House bill. Logically it should be ours sapagkat una iyong sa
amin eh. It is one of the first bills approved by the Senate kaya ang number niyan, makikita
mo, 17, eh. Huwag na nating pagusapan. Now, if you insist, really iyong features ng national
at saka constitutional, okay. ____ gagawin na natin na consolidation of both bills.

HON. ROCO. Yes, we shall consolidate.

CHAIRMAN GONZALES. Consolidation of the Senate and House Bill No. so and so. 10

When the consolidated bill was presented to the House for approval, then Congressman Roco upon
interpellation by Congressman Rodolfo Albano, again confirmed that it covered people's initiative to
amend the Constitution. The record of the House Representative states: 11

xxx xxx xxx

THE SPEAKER PRO TEMPORE. The Gentleman from Camarines Sur is recognized.

MR. ROCO. On the Conference Committee Report on the disagreeing provisions between Senate
Bill No. 21505 which refers to the system providing for the initiative and referendum, fundamentally,
Mr. Speaker, we consolidated the Senate and the House versions, so both versions are totally intact
in the bill. The Senators ironically provided for local initiative and referendum and the House
Representatives correctly provided for initiative and referendum on the Constitution and on national
legislation.

I move that we approve the consolidated bill.

MR. ALBANO. Mr. Speaker.

THE SPEAKER PRO TEMPORE. What is the pleasure of the Minority Floor Leader?

MR. ALBANO. Will the distinguished sponsor answer just a few questions?

THE SPEAKER PRO TEMPORE. The Gentlemen will please proceed.

MR. ALBANO. I heard the sponsor say that the only difference in the two bills was that in the Senate
version there was a provision for local initiative and referendum, whereas the House version has
none.

MR. ROCO. In fact, the Senate version provide purely for local initiative and referendum, whereas in
the House version, we provided purely for national and constitutional legislation.

MR. ALBANO. Is it our understanding therefore, that the two provisions were incorporated?

MR. ROCO. Yes, Mr. Speaker.

MR. ALBANO. So that we will now have a complete initiative and referendum both in the
constitutional amendment and national legislation.

MR. ROCO. That is correct.

MR. ALBANO. And provincial as well as municipal resolutions?

MR. ROCO. Down to barangay, Mr. Speaker.

MR. ALBANO. And this initiative and referendum is in consonance with the provision of the
Constitution whereby it mandates this Congress to enact the enabling law, so that we shall have a
system which can be done every five years. Is it five years in the provision of the Constitution?

MR. ROCO. That is correct, Mr. Speaker. For constitutional amendments in the 1987 Constitution, it
is every five years.

MR. ALBANO. For every five years, Mr. Speaker?

MR. ROCO. Within five years, we cannot have multiple initiatives and referenda.

MR. ALBANO. Therefore, basically, there was no substantial difference between the two versions?

MR. ROCO. The gaps in our bill were filled by the Senate which, as I said earlier, ironically was
about local, provincial and municipal legislation.

MR. ALBANO. And the two bills were consolidated?

MR. ROCO. Yes, Mr. Speaker.

MR. ALBANO. Thank you, Mr. Speaker.

APPROVAL OF C.C.R.
ON S.B. NO. 17 AND H.B. NO. 21505
(The Initiative and Referendum Act)
THE SPEAKER PRO TEMPORE. There was a motion to approve this consolidated bill on Senate
Bill No. 17 and House Bill No. 21505.

Is there any objection? (Silence. The Chair hears none; the motion is approved.

Since it is crystalline that the intent of R.A. No. 6735 is to implement the people's initiative to amend
the Constitution, it is our bounden duty to interpret the law as it was intended by the legislature. We
have ruled that once intent is ascertained, it must be enforced even if it may not be consistent with
the strict letter of the law and this ruling is as old as the mountain. We have also held that where a
law is susceptible of more than one interpretation, that interpretation which will most tend to
effectuate the manifest intent of the legislature will be adopted.
12

The text of R.A. No. 6735 should therefore be reasonably construed to effectuate its intent to
implement the people's initiative to amend the Constitution. To be sure, we need not torture the text
of said law to reach the conclusion that it implements people's initiative to amend the Constitution.
R.A. No. 6735 is replete with references to this prerogative of the people.

First, the policy statement declares:

Sec. 2. Statement of Policy. — The power of the people under a system of initiative and
referendum to directly propose, enact, approve or reject, in whole or in part, the Constitution,
laws, ordinances, or resolutions passed by any legislative body upon compliance with the
requirements of this Act is hereby affirmed, recognized and guaranteed. (emphasis supplied)

Second, the law defines "initiative" as "the power of the people to propose amendments to the
constitution or to propose and enact legislations through an election called for the purpose," and
"plebiscite" as "the electoral process by which an initiative on the Constitution is approved or
rejected by the people.

Third, the law provides the requirements for a petition for initiative to amend the Constitution. Section
5(b) states that "(a) petition for an initiative on the 1987 Constitution must have at least twelve per
centum (12%) of the total number of registered voters as signatories, of which every legislative
district must be represented by at least three per centum (3%) of the registered voters therein." It
also states that "(i)nitiative on the Constitution may be exercised only after five (5) years from the
ratification of the 1987 Constitution and only once every five (5) years thereafter.

Finally, R.A. No. 6735 fixes the effectivity date of the amendment. Section 9(b) states that "(t)he
proposition in an initiative on the Constitution approved by a majority of the votes cast in the
plebiscite shall become effective as to the day of the plebiscite.

It is unfortunate that the majority decision resorts to a strained interpretation of R.A. No. 6735 to
defeat its intent which it itself concedes is to implement people's initiative to propose amendments to
the Constitution. Thus, it laments that the word "Constitution" is neither germane nor relevant to the
policy thrust of section 2 and that the statute's subtitling is not accurate. These lapses are to be
expected for laws are not always written in impeccable English. Rightly, the Constitution does not
require our legislators to be word-smiths with the ability to write bills with poetic commas like Jose
Garcia Villa or in lyrical prose like Winston Churchill. But it has always been our good policy not to
refuse to effectuate the intent of a law on the ground that it is badly written. As the distinguished
Vicente Francisco reminds us: "Many laws contain words which have not been used accurately.
13

But the use of inapt or inaccurate language or words, will not vitiate the statute if the legislative
intention can be ascertained. The same is equally true with reference to awkward, slovenly, or
ungrammatical expressions, that is, such expressions and words will be construed as carrying the
meaning the legislature intended that they bear, although such a construction necessitates a
departure from the literal meaning of the words used.

In the same vein, the argument that R.A. No. 7535 does not include people's initiative to amend the
Constitution simply because it lacks a sub-title on the subject should be given the weight of helium.
Again, the hoary rule in statutory construction is that headings prefixed to titles, chapters and
sections of a statute may be consulted in aid of interpretation, but inferences drawn therefrom are
entitled to very little weight, and they can never control the plain terms of the enacting clauses. 14

All said, it is difficult to agree with the majority decision that refuses to enforce the manifest intent or
spirit of R.A. No. 6735 to implement the people's initiative to amend the Constitution. It blatantly
disregards the rule cast in concrete that the letter of the law must yield to its spirit for the letter of the
law is its body but its spirit is its soul.15

II

COMELEC Resolution No. 2300, promulgated under the stewardship of Commissioner Haydee
16

Yorac, then its Acting Chairman, spelled out the procedure on how to exercise the people's initiative
to amend the Constitution. This is in accord with the delegated power granted by section 20 of R.A.
No. 6735 to the COMELEC which expressly states: "The Commission is hereby empowered to
promulgate such rules and regulations as may be necessary to carry out the purposes of this Act."
By no means can this delegation of power be assailed as infirmed. In the benchmark case of Pelaez
v. Auditor General, this Court, thru former Chief Justice Roberto Concepcion laid down the test to
17

determine whether there is undue delegation of legislative power, viz:

xxx xxx xxx

Although Congress may delegate to another branch of the Government the power to fill details in the
execution, enforcement or administration of a law, it is essential, to forestall a violation of the
principle of separation of powers, that said law: (a) be complete in itself — it must set forth therein
the policy to be executed, carried out or implemented by the delegate — and (b) to fix standard —
the limits of which are sufficiently determinate or determinable — to which the delegate must
conform in the performance of his functions. Indeed, without a statutory declaration of policy, which
is the essence of every law, and, without the aforementioned standard, there would be no means to
determine, with reasonable certainty, whether the delegate has acted within or beyond the scope of
his authority. Hence, he could thereby arrogate upon himself the power, not only to make the law,
but, also — and this is worse — to unmake it, by adopting measures inconsistent with the end
sought to be attained by the Act of Congress, thus nullifying the principle of separation of powers
and the system of checks and balances, and, consequently, undermining the very foundation of our
republican system.

Section 68 of the Revised Administrative Code does not meet these well-settled requirements for a
valid delegation of the power to fix the details in the enforcement of a law. It does not enunciate any
policy to be carried out or implemented by the President. Neither does it give a standard sufficiently
precise to avoid the evil effects above referred to.

R.A. No. 6735 sufficiently states the policy and the standards to guide the COMELEC in
promulgating the law's implementing rules and regulations of the law. As aforestated, section 2
spells out the policy of the law; viz: "The power of the people under a system of initiative and
referendum to directly propose, enact, approve or reject, in whole or in part, the Constitution, laws,
ordinances, or resolutions passed by any legislative body upon compliance with the requirements of
this Act is hereby affirmed, recognized and guaranteed." Spread out all over R.A. No. 6735 are the
standards to canalize the delegated power to the COMELEC to promulgate rules and regulations
from overflowing. Thus, the law states the number of signatures necessary to start a people's
initiative, directs how initiative proceeding is commenced, what the COMELEC should do upon
18 19

filing of the petition for initiative, how a proposition is approved, when a plebiscite may be held,
20 21 22

when the amendment takes effect and what matters may not be the subject of any initiative. By
23 24

any measure, these standards are adequate.

Former Justice Isagani A. Cruz, similarly elucidated that "a sufficient standard is intended to map out
the boundaries of the delegates' authority by defining the legislative policy and indicating the
circumstances under which it is to be pursued and effected. The purpose of the sufficient standard is
to prevent a total transference of legislative power from the lawmaking body to the delegate." In 25

enacting R.A. No. 6735, it cannot be said that Congress totally transferred its power to enact the law
implementing people's initiative to COMELEC. A close look at COMELEC Resolution No. 2300 will
show that it merely provided the procedure to effectuate the policy of R.A. No. 6735 giving life to the
people's initiative to amend the Constitution. The debates in the Constitutional Commission make it
26

clear that the rules of procedure to enforce the people's initiative can be delegated, thus:

MR. ROMULO. Under Commissioner Davide's amendment, it is possible for

the legislature to set forth certain procedures to carry out the initiative. . . ?

MR. DAVIDE. It can.

xxx xxx xxx

MR. ROMULO. But the Commissioner's amendment does not prevent the legislature
from asking another body to set the proposition in proper form.

MR. DAVIDE. The Commissioner is correct. In other words, the implementation of this particular
right would be subject to legislation, provided the legislature cannot determine anymore the
percentage of the requirement.

MR. DAVIDE. As long as it will not destroy the substantive right to initiate. In other words, none of
the procedures to be proposed by the legislative body must diminish or impair the right conceded
here.

MR. ROMULO. In that provision of the Constitution can the procedures which I have discussed be
legislated?
MR. DAVIDE. Yes.

In his book, The Intent of the 1986 Constitution Writers, Father Bernas likewise affirmed: "In
27

response to questions of Commissioner Romulo, Davide explained the extent of the power of the
legislature over the process: it could for instance, prescribe the 'proper form before (the amendment)
is submitted to the people,' it could authorize another body to check the proper form. It could also
authorize the COMELEC, for instance, to check the authenticity of the signatures of petitioners.
Davide concluded: 'As long as it will not destroy the substantive right to initiate. In other words, none
of the procedures to be proposed by the legislative body must diminish or impair the right conceded
here.'" Quite clearly, the prohibition against the legislature is to impair the substantive right of the
people to initiate amendments to the Constitution. It is not, however, prohibited from legislating the
procedure to enforce the people's right of initiative or to delegate it to another body like the
COMELEC with proper standard.
A survey of our case law will show that this Court has prudentially refrained from invalidating
administrative rules on the ground of lack of adequate legislative standard to guide their
promulgation. As aptly perceived by former Justice Cruz, "even if the law itself does not expressly
pinpoint the standard, the courts will bend backward to locate the same elsewhere in order to spare
the statute, if it can, from constitutional infirmity." He cited the ruling in Hirabayashi v. United
28

States, viz:
29

xxx xxx xxx

It is true that the Act does not in terms establish a particular standard to which orders of the military
commander are to conform, or require findings to be made as a prerequisite to any order. But the
Executive Order, the Proclamations and the statute are not to be read in isolation from each other.
They were parts of a single program and must be judged as such. The Act of March 21, 1942, was
an adoption by Congress of the Executive Order and of the Proclamations. The Proclamations
themselves followed a standard authorized by the Executive Order — the necessity of protecting
military resources in the designated areas against espionage and sabotage.

In the case at bar, the policy and the standards are bright-lined in R.A. No. 6735. A 20-20 look at the
law cannot miss them. They were not written by our legislators in invisible ink. The policy and
standards can also be found in no less than section 2, Article XVII of the Constitution on
Amendments or Revisions. There is thus no reason to hold that the standards provided for in R.A.
No. 6735 are insufficient for in other cases we have upheld as adequate more general standards
such as "simplicity and dignity," "public interest," "public welfare," "interest of law and order,"
30 31 32 33

"justice and equity," "adequate and efficient instruction," "public safety," "public policy", "greater
34 35 36 37

national interest", "protect the local consumer by stabilizing and subsidizing domestic pump rates",
38

39
and "promote simplicity, economy and efficiency in government." A due regard and respect to the
40

legislature, a co-equal and coordinate branch of government, should counsel this Court to refrain
from refusing to effectuate laws unless they are clearly unconstitutional.

III

It is also respectfully submitted that the petition should he dismissed with respect to the Pedrosas.
The inclusion of the Pedrosas in the petition is utterly baseless. The records show that the case at
bar started when respondent Delfin alone and by himself filed with the COMELEC a Petition to
Amend the Constitution to Lift Term Limits of Elective Officials by People's Initiative. The Pedrosas
did not join the petition. It was Senator Roco who moved to intervene and was allowed to do so by
the COMELEC. The petition was heard and before the COMELEC could resolve the Delfin petition,
the case at bar was filed by the petitioners with this Court. Petitioners sued the COMELEC. Jesus
Delfin, Alberto Pedrosa and Carmen Pedrosa in their capacities as founding members of the
People's Initiative for Reform, Modernization and Action (PIRMA). The suit is an original action for
prohibition with prayer for temporary restraining order and/or writ of preliminary injunction.

The petition on its face states no cause of action against the Pedrosas. The only allegation against
the Pedrosas is that they are founding members of the PIRMA which proposes to undertake the
signature drive for people's initiative to amend the Constitution. Strangely, the PIRMA itself as an
organization was not impleaded as a respondent. Petitioners then prayed that we order the
Pedrosas ". . . to desist from conducting a signature drive for a people's initiative to amend the
Constitution." On December 19, 1996, we temporarily enjoined the Pedrosas ". . . from conducting a
signature drive for people's initiative to amend the Constitution." It is not enough for the majority to
lift the temporary restraining order against the Pedrosas. It should dismiss the petition and all
motions for contempt against them without equivocation.
One need not draw a picture to impart the proposition that in soliciting signatures to start a people's
initiative to amend the Constitution the Pedrosas are not engaged in any criminal act. Their
solicitation of signatures is a right guaranteed in black and white by section 2 of Article XVII of the
Constitution which provides that ". . . amendments to this Constitution may likewise be directly
proposed by the people through initiative. . ." This right springs from the principle proclaimed in
section 1, Article II of the Constitution that in a democratic and republican state "sovereignty resides
in the people and all government authority emanates from them." The Pedrosas are part of the
people and their voice is part of the voice of the people. They may constitute but a particle of our
sovereignty but no power can trivialize them for sovereignty is indivisible.

But this is not all. Section 16 of Article XIII of the Constitution provides: "The right of the people and
their organizations to effective and reasonable participation at all levels of social, political and
economic decision-making shall not be abridged. The State shall by law, facilitate the establishment
of adequate consultation mechanisms." This is another novel provision of the 1987 Constitution
strengthening the sinews of the sovereignty of our people. In soliciting signatures to amend the
Constitution, the Pedrosas are participating in the political decision-making process of our people.
The Constitution says their right cannot be abridged without any ifs and buts. We cannot put a
question mark on their right.

Over and above these new provisions, the Pedrosas' campaign to amend the Constitution is an
exercise of their freedom of speech and expression and their right to petition the government for
redress of grievances. We have memorialized this universal right in all our fundamental laws from
the Malolos Constitution to the 1987 Constitution. We have iterated and reiterated in our rulings that
freedom of speech is a preferred right, the matrix of other important rights of our people. Undeniably,
freedom of speech enervates the essence of the democratic creed of think and let think. For this
reason, the Constitution encourages speech even if it protects the speechless.

It is thus evident that the right of the Pedrosas to solicit signatures to start a people's initiative to
amend the Constitution does not depend on any law, much less on R.A. 6735 or COMELEC
Resolution No. 2300. No law, no Constitution can chain the people to an undesirable status quo. To
be sure, there are no irrepealable laws just as there are no irrepealable Constitutions. Change is the
predicate of progress and we should not fear change. Mankind has long recognized the truism that
the only constant in life is change and so should the majority.

IV

In a stream of cases, this Court has rhapsodized people power as expanded in the 1987
Constitution. On October 5, 1993, we observed that people's might is no longer a myth but an article
of faith in our Constitution. On September 30, 1994, we postulated that people power can be
41

trusted to check excesses of government and that any effort to trivialize the effectiveness of people's
initiatives ought to be rejected. On September 26, 1996, we pledged that ". . . this Court as a
42

matter of policy and doctrine will exert every effort to nurture, protect and promote their legitimate
exercise." Just a few days ago, or on March 11, 1997, by a unanimous decision, we allowed a
43 44

recall election in Caloocan City involving the mayor and ordered that he submits his right to continue
in office to the judgment of the tribunal of the people. Thus far, we have succeeded in transforming
people power from an opaque abstraction to a robust reality. The Constitution calls us to encourage
people empowerment to blossom in full. The Court cannot halt any and all signature campaigns to
amend the Constitution without setting back the flowering of people empowerment. More important,
the Court cannot seal the lips of people who are pro-change but not those who are anti-change
without concerting the debate on charter change into a sterile talkaton. Democracy is enlivened by a
dialogue and not by a monologue for in a democracy nobody can claim any infallibility.
Melo and Mendoza, JJ., concur.

VITUG, J., concurring and dissenting:

The COMELEC should have dismissed, outrightly, the Delfin Petition.

It does seem to me that there is no real exigency on the part of the Court to engross, let alone to
commit, itself on all the issues raised and debated upon by the parties. What is essential at this time
would only be to resolve whether or not the petition filed with the COMELEC, signed by Atty. Jesus
S. Delfin in his capacity as a "founding member of the Movement for People's Initiative" and seeking
through a people initiative certain modifications on the 1987 Constitution, can properly be regarded
and given its due course. The Constitution, relative to any proposed amendment under this method,
is explicit. Section 2, Article XVII, thereof provides:

Sec. 2. Amendments to this Constitution may likewise be directly proposed by the people
through initiative upon a petition of at least twelve per centum of the total number of
registered voters, of which every legislative district must be represented by at least three per
centum of the registered voters therein. No amendment under this section shall be
authorized within five years following the ratification of this Constitution nor oftener than once
every five years thereafter.

The Congress shall provide for the implementation of the exercise of this right.

The Delfin petition is thus utterly deficient. Instead of complying with the constitutional imperatives,
the petition would rather have much of its burden passed on, in effect, to the COMELEC. The
petition would require COMELEC to schedule "signature gathering all over the country," to cause the
necessary publication of the petition "in newspapers of general and local circulation," and to instruct
"Municipal Election Registrars in all Regions of the Philippines to assist petitioners and volunteers in
establishing signing stations at the time and on the dates designated for the purpose.

I submit, even then, that the TRO earlier issued by the Court which, consequentially, is made
permanent under the ponencia should be held to cover only the Delfin petition and must not be so
understood as having intended or contemplated to embrace the signature drive of the Pedrosas. The
grant of such a right is clearly implicit in the constitutional mandate on people initiative.

The distinct greatness of a democratic society is that those who reign are the governed themselves.
The postulate is no longer lightly taken as just a perceived myth but a veritable reality. The past has
taught us that the vitality of government lies not so much in the strength of those who lead as in the
consent of those who are led. The role of free speech is pivotal but it can only have its true meaning
if it comes with the correlative end of being heard.

Pending a petition for a people's initiative that is sufficient in form and substance, it behooves the
Court, I most respectfully submit, to yet refrain from resolving the question of whether or not
Republic Act No. 6735 has effectively and sufficiently implemented the Constitutional provision on
right of the people to directly propose constitutional amendments. Any opinion or view formulated by
the Court at this point would at best be only a non-binding, albeit possibly persuasive, obiter dictum.

I vote for granting the instant petition before the Court and for clarifying that the TRO earlier issued
by the Court did not prescribe the exercise by the Pedrosas of their right to campaign for
constitutional amendments.
FRANCISCO, J., dissenting and concurring:

There is no question that my esteemed colleague Mr. Justice Davide has prepared a scholarly and
well-written ponencia. Nonetheless, I cannot fully subscribe to his view that R. A. No. 6735 is
inadequate to cover the system of initiative on amendments to the Constitution.

To begin with, sovereignty under the constitution, resides in the people and all government authority
emanates from them. Unlike our previous constitutions, the present 1987 Constitution has given
1

more significance to this declaration of principle for the people are now vested with power not only to
propose, enact or reject any act or law passed by Congress or by the local legislative body, but to
propose amendments to the constitution as well. To implement these constitutional edicts, Congress
2

in 1989 enacted Republic Act No. 6735, otherwise known as "The initiative and Referendum Act".
This law, to my mind, amply covers an initiative on the constitution. The contrary view maintained by
petitioners is based principally on the alleged lack of sub-title in the law on initiative to amend the
constitution and on their allegation that:

Republic Act No. 6735 provides for the effectivity of the law after publication in print media.
[And] [t]his indicates that Republic Act No. 6735 covers only laws and not constitutional
amendments, because constitutional amendments take effect upon ratification not after
publication.
3

which allegation manifests petitioners' selective interpretation of the law, for under Section 9 of
Republic Act No. 6735 on the Effectivity of Initiative or Referendum Proposition paragraph (b)
thereof is clear in providing that:

The proposition in an initiative on the constitution approved by a majority of the votes cast in the
plebiscite shall become effective as to the day of the plebiscite.

It is a rule that every part of the statute must be interpreted with reference the context, i.e., that every
part of the statute must be construed together with the other parts and kept subservient to the
general intent of the whole enactment. Thus, the provisions of Republic Act No. 6735 may not be
4

interpreted in isolation. The legislative intent behind every law is to be extracted from the statute as a
whole. 5

In its definition of terms, Republic Act No. 6735 defines initiative as "the power of the people to
propose amendments to the constitution or to propose and enact legislations through an election
called for the purpose". The same section, in enumerating the three systems of initiative, included
6

an "initiative on the constitution which refers to a petition proposing amendments to the constitution" 7

Paragraph (e) again of Section 3 defines "plebiscite" as "the electoral process by which an initiative
on the constitution is approved or rejected by the people" And as to the material requirements for an
initiative on the Constitution, Section 5(b) distinctly enumerates the following:

A petition for an initiative on the 1987 Constitution must have at least twelve per centum
(12%) of the total number of the registered voters as signatories, of which every legislative
district must be represented by at least three per centum (3%) of the registered voters
therein. Initiative on the constitution may be exercised only after five (5) years from the
ratification of the 1987 Constitution and only once every five years thereafter.

These provisions were inserted, on purpose, by Congress the intent being to provide for the
implementation of the right to propose an amendment to the Constitution by way of initiative. "A legal
provision", the Court has previously said, "must not be construed as to be a useless surplusage, and
accordingly, meaningless, in the sense of adding nothing to the law or having no effect whatsoever
thereon". That this is the legislative intent is further shown by the deliberations in Congress, thus:
8
 . . . More significantly, in the course of the consideration of the Conference Committee
Report on the disagreeing provisions of Senate Bill No. 17 and House Bill No. 21505, it was
noted:

MR. ROCO. On the Conference Committee Report on the disagreeing provisions between
Senate Bill No. 17 and the consolidated House Bill No. 21505 which refers to the system
providing for the initiative and referendum, fundamentally, Mr. Speaker, we consolidated the
Senate and the House versions, so both versions are totally intact in the bill. The Senators
ironically provided for local initiative and referendum and the House of Representatives
correctly provided for initiative and referendum an the Constitution and on national
legislation.

I move that we approve the consolidated bill.

MR. ALBANO, Mr. Speaker.

THE SPEAKER PRO TEMPORE. What is the pleasure of the Minority Floor Leader?

MR. ALBANO. Will the distinguished sponsor answer just a few questions?

THE SPEAKER PRO TEMPORE. What does the sponsor say?

MR. ROCO. Willingly, Mr. Speaker.

THE SPEAKER PRO TEMPORE. The Gentleman will please proceed.

MR. ALBANO. I heard the sponsor say that the only difference in the two bills was that in the Senate
version there was a provision for local initiative and referendum, whereas the House version has
none.

MR. ROCO. In fact, the Senate version provided purely for local initiative and referendum, whereas
in the House version, we provided purely for national and constitutional legislation.

MR. ALBANO. Is it our understanding, therefore, that the two provisions were incorporated?

MR. ROCO. Yes, Mr. Speaker.

MR. ALBANO. So that we will now have a complete initiative and referendum both in the
constitutional amendment and national legislation.

MR. ROCO. That is correct.

MR. ALBANO. And provincial as well as municipal resolutions?

MR. ROCO. Down to barangay, Mr. Speaker.

MR. ALBANO. And this initiative and referendum is in consonance with the provision of the
Constitution to enact the enabling law, so that we shall have a system which can be done every five
years. Is it five years in the provision of the Constitution?

MR. ROCO. That is correct, Mr. Speaker. For constitutional amendments to the 1987 Constitution, it
is every five years." (Id. [Journal and Record of the House of Representatives], Vol. VIII, 8 June
1989, p. 960; quoted in Garcia v. Comelec, 237 SCRA 279, 292-293 [1994]; emphasis supplied)

. . . The Senate version of the Bill may not have comprehended initiatives on the Constitution. When
consolidated, though, with the House version of the Bill and as approved and enacted into law, the
proposal included initiative on both the Constitution and ordinary laws.
9
Clearly then, Republic Act No. 6735 covers an initiative on the constitution. Any other construction
as what petitioners foist upon the Court constitute a betrayal of the intent and spirit behind the
enactment.

At any rate, I agree with the ponencia that the Commission on Elections, at present, cannot take any
action (such as those contained in the Commission's orders dated December 6, 9, and 12, 1996
[Annexes B, C and B-1]) indicative of its having already assumed jurisdiction over private
respondents' petition. This is so because from the tenor of Section 5 (b) of R.A. No. 6735 it would
appear that proof of procurement of the required percentage of registered voters at the time the
petition for initiative is filed, is a jurisdictional requirement.

Thus:

A petition for an initiative on the 1987 Constitution must have at least twelve per centum
(12%) of the total number of registered voters as signatories, of which every legislative
district must be represented by at least three per centum (3%) of the registered voters
therein. Initiative on the Constitution may be exercised only after five (5) years from the
ratification of the 1987 Constitution and only once every five (5) years thereafter.

Here private respondents' petition is unaccompanied by the required signatures. This defect
notwithstanding, it is without prejudice to the refiling of their petition once compliance with the
required percentage is satisfactorily shown by private respondents. In the absence, therefore, of an
appropriate petition before the Commission on Elections, any determination of whether private
respondents' proposal constitutes an amendment or revision is premature.

ACCORDINGLY, I take exception to the conclusion reached in the ponencia that R.A. No. 6735 is an
"inadequate" legislation to cover a people's initiative to propose amendments to the Constitution. I,
however, register my concurrence with the dismissal, in the meantime, of private respondents'
petition for initiative before public respondent Commission on Elections until the same be supported
by proof of strict compliance with Section 5 (b) of R.A. No. 6735.

Melo and Mendoza, JJ., concur.

PANGANIBAN, J., concurring and dissenting:

Our distinguished colleague, Mr. Justice Hilario G. Davide Jr., writing for the majority, holds that:

(1) The Comelec acted without jurisdiction or with grave abuse of discretion in entertaining the
"initiatory" Delfin Petition.

(2) While the Constitution allows amendments to "be directly proposed by the people through
initiative," there is no implementing law for the purpose. RA 6735 is "incomplete, inadequate, or
wanting in essential terms and conditions insofar as initiative on amendments to the Constitution is
concerned."

(3) Comelec Resolution No. 2330, "insofar as it prescribes rules and regulations on the conduct of
initiative on amendments to the Constitution, is void."

I concur with the first item above. Until and unless an initiatory petition can show the required
number of signatures — in this case, 12% of all the registered voters in the Philippines with at least
3% in every legislative district — no public funds may be spent and no government resources may
be used in an initiative to amend the Constitution. Verily, the Comelec cannot even entertain any
petition absent such signatures. However, I dissent most respectfully from the majority's two other
rulings. Let me explain.

Under the above restrictive holdings espoused by the Court's majority, the Constitution cannot be
amended at all through a people's initiative. Not by Delfin, not by Pirma, not by anyone, not even by
all the voters of the country acting together. This decision will effectively but unnecessarily curtail,
nullify, abrogate and render inutile the people's right to change the basic law. At the very least, the
majority holds the right hostage to congressional discretion on whether to pass a new law to
implement it, when there is already one existing at present. This right to amend through initiative, it
bears stressing, is guaranteed by Section 2, Article XVII of the Constitution, as follows:

Sec. 2. Amendments to this Constitution may likewise be directly proposed by the people
through initiative upon a petition of at least twelve per centum of the total number of
registered voters, of which every legislative district must be represented by at least three per
centum of the registered voters therein. No amendment under this section shall be
authorized within five years following the ratification of this Constitution nor oftener than once
every five years thereafter.

With all due respect, I find the majority's position all too sweeping and all too extremist. It is
equivalent to burning the whole house to exterminate the rats, and to killing the patient to relieve him
of pain. What Citizen Delfin wants the Comelec to do we should reject. But we should not thereby
preempt any future effort to exercise the right of initiative correctly and judiciously. The fact that the
Delfin Petition proposes a misuse of initiative does not justify a ban against its proper use. Indeed,
there is a right way to do the right thing at the right time and for the right reason.

Taken Together and Interpreted Properly, the Constitution, RA 6735 and Comelec Resolution 2300
Are Sufficient to Implement Constitutional Initiatives

While RA 6735 may not be a perfect law, it was — as the majority openly concedes — intended by
the legislature to cover and, I respectfully submit, it contains enough provisions to effectuate an
initiative on the Constitution. I completely agree with the inspired and inspiring opinions of Mr.
1

Justice Reynato S. Puno and Mr. Justice Ricardo J. Francisco that RA 6735, the Roco law on
initiative, sufficiently implements the right of the people to initiate amendments to the Constitution.
Such views, which I shall no longer repeat nor elaborate on, are thoroughly consistent with this
Court's unanimous en banc rulings in Subic Bay Metropolitan Authority vs. Commission on Elections,
2
that "provisions for initiative . . . are (to be) liberally construed to effectuate their purposes, to
facilitate and not hamper the exercise by the voters of the rights granted thereby"; and in Garcia vs.
Comelec, that any "effort to trivialize the effectiveness of people's initiatives ought to be rejected."
3

No law can completely and absolutely cover all administrative details. In recognition of this, RA 6735
wisely empowered the Commission on Election "to promulgate such rules and regulations as may
4

be necessary to carry out the purposes of this Act." And pursuant thereto, the Comelec issued its
Resolution 2300 on 16 January 1991. Such Resolution, by its very words, was promulgated "to
govern the conduct of initiative on the Constitution and initiative and referendum on national and
local laws," not by the incumbent Commission on Elections but by one then composed of Acting
Chairperson Haydee B. Yorac, Comms. Alfredo E. Abueg Jr., Leopoldo L. Africa, Andres R. Flores,
Dario C. Rama and Magdara B. Dimaampao. All of these Commissioners who signed Resolution
2300 have retired from the Commission, and thus we cannot ascribe any vile motive unto them,
other than an honest, sincere and exemplary effort to give life to a cherished right of our people.
The majority argues that while Resolution 2300 is valid in regard to national laws and local
legislations, it is void in reference to constitutional amendments. There is no basis for such
differentiation. The source of and authority for the Resolution is the same law, RA 6735.

I respectfully submit that taken together and interpreted properly and liberally, the Constitution
(particularly Art. XVII, Sec. 2), R4 6735 and Comelec Resolution 2300 provide more than sufficient
authority to implement, effectuate and realize our people's power to amend the Constitution.

Petitioner Delfin and the Pedrosa

Spouses Should Not Be Muzzled

I am glad the majority decided to heed our plea to lift the temporary restraining order issued by this
Court on 18 December 1996 insofar as it prohibited Petitioner Delfin and the Spouses Pedrosa from
exercising their right of initiative. In fact, I believe that such restraining order as against private
respondents should not have been issued, in the first place. While I agree that the Comelec should
be stopped from using public funds and government resources to help them gather signatures, I
firmly believe that this Court has no power to restrain them from exercising their right of initiative.
The right to propose amendments to the Constitution is really a species of the right of free speech
and free assembly. And certainly, it would be tyrannical and despotic to stop anyone from speaking
freely and persuading others to conform to his/her beliefs. As the eminent Voltaire once said, "I may
disagree with what you say, but I will defend to the death your right to say it." After all, freedom is not
really for the thought we agree with, but as Justice Holmes wrote, "freedom for the thought that we
hate."5

Epilogue

By way of epilogue, let me stress the guiding tenet of my Separate Opinion. Initiative, like
referendum and recall, is a new and treasured feature of the Filipino constitutional system. All three
are institutionalized legacies of the world-admired EDSA people power. Like elections and
plebiscites, they are hallowed expressions of popular sovereignty. They are sacred democratic rights
of our people to be used as their final weapons against political excesses, opportunism, inaction,
oppression and misgovernance; as well as their reserved instruments to exact transparency,
accountability and faithfulness from their chosen leaders. While on the one hand, their misuse and
abuse must be resolutely struck down, on the other, their legitimate exercise should be carefully
nurtured and zealously protected.

WHEREFORE, I vote to GRANT the petition of Sen. Miriam D. Santiago et al. and to DIRECT
Respondent Commission on Elections to DISMISS the Delfin Petition on the ground of prematurity,
but not on the other grounds relied upon by the majority. I also vote to LIFT the temporary restraining
order issued on 18 December 1996 insofar as it prohibits Jesus Delfin, Alberto Pedrosa and Carmen
Pedrosa from exercising their right to free speech in proposing amendments to the Constitution.

Melo and Mendoza, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-34150 October 16, 1971

ARTURO M. TOLENTINO, petitioner,

vs.
COMMISSION ON ELECTIONS, and THE CHIEF ACCOUNTANT, THE AUDITOR, and THE
DISBURSING OFFICER OF THE 1971 CONSTITUTIONAL CONVENTION, respondents, RAUL S.
MANGLAPUS, JESUS G. BARRERA, PABLO S. TRILLANA III, VICTOR DE LA SERNA,
MARCELO B. FERNAN, JOSE Y. FERIA, LEONARDO SIGUION REYNA, VICTOR F. ORTEGA,
and JUAN V. BORRA, Intervenors.

Arturo M. Tolentino in his own behalf.

Ramon A. Gonzales for respondents Chief Accountant and Auditor of the 1971 Constitutional
Convention.

Emmanuel Pelaez, Jorge M. Juco and Tomas L. Echivarre for respondent Disbursing Officer of the
1971 Constitutional Convention.

Intervenors in their own behalf.

BARREDO, J.:

Petition for prohibition principally to restrain the respondent Commission on Elections "from
undertaking to hold a plebiscite on November 8, 1971," at which the proposed constitutional
amendment "reducing the voting age" in Section 1 of Article V of the Constitution of the Philippines
to eighteen years "shall be, submitted" for ratification by the people pursuant to Organic Resolution
No. 1 of the Constitutional Convention of 1971, and the subsequent implementing resolutions, by
declaring said resolutions to be without the force and effect of law in so far as they direct the holding
of such plebiscite and by also declaring the acts of the respondent Commission (COMELEC)
performed and to be done by it in obedience to the aforesaid Convention resolutions to be null and
void, for being violative of the Constitution of the Philippines.

As a preliminary step, since the petition named as respondent only the COMELEC, the Count
required that copies thereof be served on the Solicitor General and the Constitutional Convention,
through its President, for such action as they may deem proper to take. In due time, respondent
COMELEC filed its answer joining issues with petitioner. To further put things in proper order, and
considering that the fiscal officers of the Convention are indispensable parties in a proceeding of this
nature, since the acts sought to be enjoined involve the expenditure of funds appropriated by law for
the Convention, the Court also ordered that the Disbursing Officer, Chief Accountant and Auditor of
the Convention be made respondents. After the petition was so amended, the first appeared thru
Senator Emmanuel Pelaez and the last two thru Delegate Ramon Gonzales. All said respondents,
thru counsel, resist petitioner's action.

For reasons of orderliness and to avoid unnecessary duplication of arguments and even possible
confusion, and considering that with the principal parties being duly represented by able counsel,
their interests would be adequately protected already, the Court had to limit the number of
intervenors from the ranks of the delegates to the Convention who, more or less, have legal interest
in the success of the respondents, and so, only Delegates Raul S. Manglapus, Jesus G. Barrera,
Pablo S. Trillana III, Victor de la Serna, Marcelo B. Fernan, Jose Y. Feria, Leonardo Siguion Reyna,
Victor Ortega and Juan B. Borra, all distinguished lawyers in their own right, have been allowed to
intervene jointly. The Court feels that with such an array of brilliant and dedicated counsel, all
interests involved should be duly and amply represented and protected. At any rate, notwithstanding
that their corresponding motions for leave to intervene or to appear as amicus curiae 1 have been
denied, the pleadings filed by the other delegates and some private parties, the latter in
representation of their minor children allegedly to be affected by the result of this case with the
records and the Court acknowledges that they have not been without value as materials in the
extensive study that has been undertaken in this case.

The background facts are beyond dispute. The Constitutional Convention of 1971 came into being
by virtue of two resolutions of the Congress of the Philippines approved in its capacity as a
constituent assembly convened for the purpose of calling a convention to propose amendments to
the Constitution namely, Resolutions 2 and 4 of the joint sessions of Congress held on March 16,
1967 and June 17, 1969 respectively. The delegates to the said Convention were all elected under
and by virtue of said resolutions and the implementing legislation thereof, Republic Act 6132. The
pertinent portions of Resolution No 2 read as follows:

SECTION 1. There is hereby called a convention to propose amendments to the Constitution

of the Philippines, to be composed of two elective Delegates from each representative
district who shall have the same qualifications as those required of Members of the House of
Representatives.

xxx xxx xxx

SECTION 7. The amendments proposed by the Convention shall be valid and considered part of the
Constitution when approved by a majority of the votes cast in an election at which they are submitted
to the people for their ratification pursuant to Article XV of the Constitution.

Resolution No. 4 merely modified the number of delegates to represent the different cities and
provinces fixed originally in Resolution No 2.

After the election of the delegates held on November 10, 1970, the Convention held its inaugural
session on June 1, 1971. Its preliminary labors of election of officers, organization of committees and
other preparatory works over, as its first formal proposal to amend the Constitution, its session which
began on September 27, 1971, or more accurately, at about 3:30 in the morning of September 28,
1971, the Convention approved Organic Resolution No. 1 reading thus: .
CC ORGANIC RESOLUTION NO. 1

A RESOLUTION AMENDING SECTION ONE OF ARTICLE V OF THE CONSTITUTION OF

THE PHILIPPINES SO AS TO LOWER THE VOTING AGE TO 18

BE IT RESOLVED as it is hereby resolved by the 1971 Constitutional Convention:

Section 1. Section One of Article V of the Constitution of the Philippines is amended to as follows:

Section 1. Suffrage may be exercised by (male) citizens of the Philippines not

otherwise disqualified by law, who are (twenty-one) EIGHTEEN years or over and
are able to read and write, and who shall have resided in the Philippines for one year
and in the municipality wherein they propose to vote for at least six months preceding
the election.

Section 2. This amendment shall be valid as part of the Constitution of the Philippines when
approved by a majority of the votes cast in a plebiscite to coincide with the local elections in
November 1971.
Section 3. This partial amendment, which refers only to the age qualification for the exercise of
suffrage shall be without prejudice to other amendments that will be proposed in the future by the
1971 Constitutional Convention on other portions of the amended Section or on other portions of the
entire Constitution.

Section 4. The Convention hereby authorizes the use of the sum of P75,000.00 from its savings or
from its unexpended funds for the expense of the advanced plebiscite; provided, however that
should there be no savings or unexpended sums, the Delegates waive P250.00 each or the
equivalent of 2-1/2 days per diem.

By a letter dated September 28, 1971, President Diosdado Macapagal, called upon respondent
Comelec "to help the Convention implement (the above) resolution." The said letter reads:

September 28, 1971

The Commission on Elections Manila

Thru the Chairman

Gentlemen:

Last night the Constitutional Convention passed Resolution No. 1 quoted as follows:

xxx xxx xxx

(see above)

Pursuant to the provision of Section 14, Republic Act No. 6132 otherwise known as the
Constitutional Convention Act of 1971, may we call upon you to help the Convention
implement this resolution:

Sincerely,

(Sgd.) DIOSDADO P. MACAPAGAL

DIOSDADO P. MACAPAGAL
President

On September 30, 1971, COMELEC "RESOLVED to inform the Constitutional Convention that it will
hold the plebiscite on condition that:

(a) The Constitutional Convention will undertake the printing of separate official ballots,
election returns and tally sheets for the use of said plebiscite at its expense;

(b) The Constitutional Convention will adopt its own security measures for the printing and shipment
of said ballots and election forms; and

(c) Said official ballots and election forms will be delivered to the Commission in time so that they
could be distributed at the same time that the Commission will distribute its official and sample
ballots to be used in the elections on November 8, 1971.

What happened afterwards may best be stated by quoting from intervenors' Governors' statement of
the genesis of the above proposal:

The President of the Convention also issued an order forming an Ad Hoc Committee to
implement the Resolution.
This Committee issued implementing guidelines which were approved by the President who then
transmitted them to the Commission on Elections.

The Committee on Plebiscite and Ratification filed a report on the progress of the implementation of
the plebiscite in the afternoon of October 7,1971, enclosing copies of the order, resolution and letters
of transmittal above referred to (Copy of the report is hereto attached as Annex 8-Memorandum).

RECESS RESOLUTION

In its plenary session in the evening of October 7, 1971, the Convention approved a
resolution authored by Delegate Antonio Olmedo of Davao Oriental, calling for a recess of
the Convention from November 1, 1971 to November 9, 1971 to permit the delegates to
campaign for the ratification of Organic Resolution No. 1. (Copies of the resolution and the
transcript of debate thereon are hereto attached as Annexes 9 and 9-A Memorandum,
respectively).

RESOLUTION CONFIRMING IMPLEMENTATION

On October 12, 1971, the Convention passed Resolution No. 24 submitted by Delegate Jose
Ozamiz confirming the authority of the President of the Convention to implement Organic Resolution
No. 1, including the creation of the Ad Hoc Committee ratifying all acts performed in connection with
said implementation.

Upon these facts, the main thrust of the petition is that Organic Resolution No. 1 and the other
implementing resolutions thereof subsequently approved by the Convention have no force and effect
as laws in so far as they provide for the holding of a plebiscite co-incident with the elections of eight
senators and all city, provincial and municipal officials to be held on November 8, 1971, hence all of
Comelec's acts in obedience thereof and tending to carry out the holding of the plebiscite directed by
said resolutions are null and void, on the ground that the calling and holding of such a plebiscite is,
by the Constitution, a power lodged exclusively in Congress, as a legislative body, and may not be
exercised by the Convention, and that, under Section 1, Article XV of the Constitution, the proposed
amendment in question cannot be presented to the people for ratification separately from each and
all of the other amendments to be drafted and proposed by the Convention. On the other hand,
respondents and intervenors posit that the power to provide for, fix the date and lay down the details
of the plebiscite for the ratification of any amendment the Convention may deem proper to propose
is within the authority of the Convention as a necessary consequence and part of its power to
propose amendments and that this power includes that of submitting such amendments either
individually or jointly at such time and manner as the Convention may direct in discretion. The
Court's delicate task now is to decide which of these two poses is really in accord with the letter and
spirit of the Constitution.

As a preliminary and prejudicial matter, the intervenors raise the question of jurisdiction. They
contend that the issue before Us is a political question and that the Convention being legislative
body of the highest order is sovereign, and as such, its acts impugned by petitioner are beyond the
control of the Congress and the courts. In this connection, it is to be noted that none of the
respondent has joined intervenors in this posture. In fact, respondents Chief Accountant and Auditor
of the convention expressly concede the jurisdiction of this Court in their answer acknowledging that
the issue herein is a justifiable one.

Strangely, intervenors cite in support of this contention portions of the decision of this Court in the
case of Gonzales v. Comelec, 21 SCRA 774, wherein the members of the Court, despite their being
divided in their opinions as to the other matters therein involved, were precisely unanimous in
upholding its jurisdiction. Obviously, distinguished counsel have either failed to grasp the full impact
of the portions of Our decision they have quoted or would misapply them by taking them out of
context.

There should be no more doubt as to the position of this Court regarding its jurisdiction vis-a-vis the
constitutionality of the acts of the Congress, acting as a constituent assembly, and, for that matter,
those of a constitutional convention called for the purpose of proposing amendments to the
Constitution, which concededly is at par with the former. A simple reading of Our ruling in that very
case of Gonzales relied upon by intervenors should dispel any lingering misgivings as regards that
point. Succinctly but comprehensively, Chief Justice Concepcion held for the Court thus: .

As early as Angara vs. Electoral Commission (63 Phil. 139, 157), this Court — speaking
through one of the leading members of the Constitutional Convention and a respected
professor of Constitutional Law, Dr. Jose P. Laurel — declared that "the judicial department
is the only constitutional organ which can be called upon to determine the proper allocation
of powers between the several departments and among the integral or constituent units
thereof."

It is true that in Mabanag v. Lopez Vito (supra), this Court characterizing the issue submitted thereto
as a political one declined to pass upon the question whether or not a given number of votes cast in
Congress in favor of a proposed amendment to the Constitution — which was being submitted to the
people for ratification — satisfied the three-fourths vote requirement of the fundamental law. The
force of this precedent has been weakened, however, by Suanes v. Chief Accountant of the Senate
(81 Phil. 818), Avelino v. Cuenco, (L-2851, March 4 & 14, 1949), Tañada v. Cuenco, (L-10520, Feb.
28, 1957) and Macias v. Commission on Elections, (L-18684, Sept. 14, 1961). In the first we held
that the officers and employees of the Senate Electoral Tribunal are under its supervision and
control, not of that of the Senate President, as claimed by the latter; in the second, this Court
proceeded to determine the number of Senators necessary for quorum in the Senate; in the third, we
nullified the election, by Senators belonging to the party having the largest number of votes in said
chamber, purporting to act, on behalf of the party having the second largest number of votes therein
of two (2) Senators belonging to the first party, as members, for the second party, of the Senate
Electoral Tribunal; and in the fourth, we declared unconstitutional an act of Congress purporting to
apportion the representatives districts for the House of Representatives, upon the ground that the
apportionment had not been made as may be possible according to the number of inhabitants of
each province. Thus we rejected the theory, advanced in these four (4) cases that the issues therein
raised were political questions the determination of which is beyond judicial review.

Indeed, the power to amend the Constitution or to propose amendments thereto is not included in
the general grant of legislative powers to Congress (Section 1, Art. VI, Constitution of the
Philippines). It is part of the inherent powers of the people — as the repository sovereignty in a
republican state, such as ours (Section 1, Art. 11, Constitution of the Philippines) — to make, and,
hence, to amend their own Fundamental Law. Congress may propose amendments to the
Constitution merely because the same explicitly grants such power. (Section 1, Art. XV, Constitution
of the Philippines) Hence, when exercising the same, it is said that Senators and members of the
House of Representatives act, not as members of Congress, but as component elements of a
constituent assembly. When acting as such, the members of Congress derive their authority from the
Constitution, unlike the people, when performing the same function, (Of amending the Constitution)
for their authority does not emanate from the Constitution — they are the very source of all powers
of government including the Constitution itself.
Since, when proposing, as a constituent assembly, amendments to the Constitution, the members of
Congress derive their authority from the Fundamental Law, it follows, necessarily, that they do not
have the final say on whether or not their acts are within or beyond constitutional limits. Otherwise,
they could brush aside and set the same at naught, contrary to the basic tenet that ours is a
government of laws, not of men, and to the rigid nature of our Constitution. Such rigidity is stressed
by the fact that the Constitution expressly confers upon the Supreme Court, (And, inferentially, to
lower courts.) the power to declare a treaty unconstitutional. (Sec. 2(1), Art. VIII of the Constitution),
despite the eminently political character of treaty-making power.

In short, the issue whether or not a Resolution of Congress — acting as a constituent assembly —
violates the Constitution is essentially justiciable not political, and, hence, subject to judicial review,
and, to the extent that this view may be inconsistent with the stand taken in Mabanag v. Lopez Vito,
(supra) the latter should be deemed modified accordingly. The Members of the Court are unanimous
on this point.

No one can rightly claim that within the domain of its legitimate authority, the Convention is not
supreme. Nowhere in his petition and in his oral argument and memoranda does petitioner point
otherwise. Actually, what respondents and intervenors are seemingly reluctant to admit is that the
Constitutional Convention of 1971, as any other convention of the same nature, owes its existence
and derives all its authority and power from the existing Constitution of the Philippines. This
Convention has not been called by the people directly as in the case of a revolutionary convention
which drafts the first Constitution of an entirely new government born of either a war of liberation
from a mother country or of a revolution against an existing government or of a bloodless seizure of
power a la coup d'etat. As to such kind of conventions, it is absolutely true that the convention is
completely without restrain and omnipotent all wise, and it is as to such conventions that the remarks
of Delegate Manuel Roxas of the Constitutional Convention of 1934 quoted by Senator Pelaez refer.
No amount of rationalization can belie the fact that the current convention came into being only
because it was called by a resolution of a joint session of Congress acting as a constituent assembly
by authority of Section 1, Article XV of the present Constitution which provides:

ARTICLE XV — AMENDMENTS

SECTION 1. The Congress in joint session assembled, by a vote of three-fourths of all the
Members of the Senate and of the House of Representatives voting separately, may propose
amendments to this Constitution or call a convention for the purpose. Such amendments
shall be valid as part of this Constitution when approved by a majority of the votes cast at an
election at which the amendments are submitted to the people for their ratification.

True it is that once convened, this Convention became endowed with extra ordinary powers
generally beyond the control of any department of the existing government, but the compass of such
powers can be co-extensive only with the purpose for which the convention was called and as it may
propose cannot have any effect as part of the Constitution until the same are duly ratified by the
people, it necessarily follows that the acts of convention, its officers and members are not immune
from attack on constitutional grounds. The present Constitution is in full force and effect in its entirety
and in everyone of its parts the existence of the Convention notwithstanding, and operates even
within the walls of that assembly. While it is indubitable that in its internal operation and the
performance of its task to propose amendments to the Constitution it is not subject to any degree of
restraint or control by any other authority than itself, it is equally beyond cavil that neither the
Convention nor any of its officers or members can rightfully deprive any person of life, liberty or
property without due process of law, deny to anyone in this country the equal protection of the laws
or the freedom of speech and of the press in disregard of the Bill of Rights of the existing
Constitution. Nor, for that matter, can such Convention validly pass any resolution providing for the
taking of private property without just compensation or for the imposition or exacting of any tax,
impost or assessment, or declare war or call the Congress to a special session, suspend the
privilege of the writ of habeas corpus, pardon a convict or render judgment in a controversy between
private individuals or between such individuals and the state, in violation of the distribution of powers
in the Constitution.

It being manifest that there are powers which the Convention may not and cannot validly assert,
much less exercise, in the light of the existing Constitution, the simple question arises, should an act
of the Convention be assailed by a citizen as being among those not granted to or inherent in it,
according to the existing Constitution, who can decide whether such a contention is correct or not? It
is of the very essence of the rule of law that somehow somewhere the Power and duty to resolve
such a grave constitutional question must be lodged on some authority, or we would have to confess
that the integrated system of government established by our founding fathers contains a wide
vacuum no intelligent man could ignore, which is naturally unworthy of their learning, experience and
craftsmanship in constitution-making.

We need not go far in search for the answer to the query We have posed. The very decision of Chief
Justice Concepcion in Gonzales, so much invoked by intervenors, reiterates and reinforces the
irrefutable logic and wealth of principle in the opinion written for a unanimous Court by Justice Laurel
in Angara vs. Electoral Commission, 63 Phil., 134, reading:

... (I)n the main, the Constitution has blocked out with deft strokes and in bold lines, allotment
of power to the executive, the legislative and the judicial departments of the government.
The overlapping and interlacing of functions and duties between the several departments,
however, sometimes makes it hard to say where the one leaves off and the other begins. In
times of social disquietude or political excitement, the great landmark of the Constitution are
apt to be forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial
department is the only constitutional organ which can be called upon to determine the proper
allocation of powers between the several departments and among the integral or constituent
units thereof.

As any human production our Constitution is of course lacking perfection and perfectibility, but as
much as it was within the power of our people, acting through their delegates to so provide, that
instrument which is the expression of their sovereignty however limited, has established a republican
government intended to operate and function as a harmonious whole, under a system of check and
balances and subject to specific limitations and restrictions provided in the said instrument. The
Constitution sets forth in no uncertain language the restrictions and limitations upon governmental
powers and agencies. If these restrictions and limitations are transcended it would be inconceivable
if the Constitution had not provided for a mechanism by which to direct the course of government
along constitutional channels, for then the distribution of powers would be mere verbiage, the bill of
rights mere expressions of sentiment and the principles of good government mere political
apothegms. Certainly the limitations and restrictions embodied in our Constitution are real as they
should be in any living Constitution. In the United States where no express constitutional grant is
found in their constitution, the possession of this moderating power of the courts, not to speak of its
historical origin and development there, has been set at rest by popular acquiescence for a period of
more than one and half centuries. In our case, this moderating power is granted, if not expressly, by
clear implication from section 2 of Article VIII of our Constitution.

The Constitution is a definition of the powers or government. Who is to determine the nature, scope
and extent of such powers? The Constitution itself has provided for the instrumentality of the
judiciary as the rational way. And when the judiciary mediates to allocate constitutional boundaries, it
does not assert any superiority over the other departments; it does not in reality nullify or invalidate
an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority under the Constitution and to establish for
the parties in an actual controversy the rights which that instrument secures and guarantees to them.
This is in truth all that is involved in what is termed "judicial supremacy" which properly is the power
of judicial review under the Constitution. Even then, this power of judicial review is limited to actual
cases and controversies to be exercised after full opportunity of argument by the parties, and limited
further to the constitutional question raised or the very lis mota presented. Any attempt at abstraction
could only lead to dialectics and barren legal questions and to strike conclusions unrelated to
actualities. Narrowed as its functions is in this manner the judiciary does not pass upon questions of
wisdom, justice or expediency of legislation. More than that, courts accord the presumption of
constitutionality to legislative enactments, not only because the legislature is presumed to abide by
the Constitution but also because the judiciary in the determination of actual cases and
controversies must reflect the wisdom and justice of the people as expressed through their
representatives in the executive and legislative departments of the government.

But much as we might postulate on the internal checks of power provided in our Constitution, it
ought not the less to be remembered that, in the language of James Madison, the system itself is not
"the chief palladium of constitutional liberty ... the people who are authors of this blessing must also
be its guardians ... their eyes must be ever ready to mark, their voices to pronounce ... aggression
on the authority of their Constitution." In the last and ultimate analysis then, must the success of our
government in the unfolding years to come be tested in the crucible of Filipino minds and hearts than
in consultation rooms and court chambers.

In the case at bar, the National Assembly has by resolution (No. 8) of December 3, 1935, confirmed
the election of the herein petitioner to the said body. On the other hand, the Electoral Commission
has by resolution adopted on December 9, 1935, fixed said date as the last day for the filing of
protests against the election, returns and qualifications of members of the National Assembly;
notwithstanding the previous confirmations made by the National Assembly as aforesaid. If, as
contended by the petitioner, the resolution of the National Assembly has the effect of cutting off the
power of the Electoral Commission to entertain protests against the election, returns and
qualifications of members of the National Assembly, submitted after December 3, 1935 then the
resolution of the Electoral Commission of December 9, 1935, is mere surplusage and had no effect.
But, if, as contended by the respondents, the Electoral Commission has the sole power of regulating
its proceedings to the exclusion of the National Assembly, then the resolution of December 9, 1935,
by which the Electoral Commission fixed said date as the last day for filing protests against the
election, returns and qualifications of members of the National Assembly, should be upheld.

Here is then presented an actual controversy involving as it does a conflict of a grave constitutional
nature between the National Assembly on the one hand and the Electoral Commission on the other.
From the very nature of the republican government established in our country in the light of
American experience and of our own, upon the judicial department is thrown the solemn and
inescapable obligation of interpreting the Constitution and defining constitutional boundaries. The
Electoral Commission as we shall have occasion to refer hereafter, is a constitutional organ, created
for a specific purpose, namely, to determine all contests relating to the election, returns and
qualifications of the members of the National Assembly. Although the Electoral Commission may not
be interfered with, when and while acting within the limits of its authority, it does not follow that it is
beyond the reach of the constitutional mechanism adopted by the people and that it is not subject to
constitutional restriction. The Electoral Commission is not a separate department of the government,
and even if it were, conflicting claims of authority under the fundamental law between departmental
powers and agencies of the government are necessarily determined by the judiciary in justiciable
and appropriate cases. Discarding the English type and other European types of constitutional
government, the framers of our Constitution adopted the American type where the written
constitution is interpreted and given effect by the judicial department. In some countries which have
declined to follow the American example, provisions have been inserted in their constitutions
prohibiting the courts from exercising the power to interpret the fundamental law. This is taken as a
recognition of what otherwise would be the rule that in the absence of direct prohibition, courts are
bound to assume what is logically their function. For instance, the Constitution of Poland of 1921
expressly provides that courts shall have no power to examine the validity of statutes (art. 81, Chap.
IV). The former Austrian Constitution contained a similar declaration. In countries whose constitution
are silent in this respect, courts have assumed this power. This is true in Norway, Greece, Australia
and South Africa. Whereas, in Czechoslovakia (arts. 2 and 3, Preliminary Law to Constitutional
Charter of the Czechoslavak, Republic, February 29, 1920) and Spain (arts. 121-123, Title IX,
Constitution of the Republic of 1931) especial constitutional courts are established to pass upon the
validity of ordinary laws. In our case, the nature of the present controversy shows the necessity of a
final constitutional arbiter to determine the conflict of authority between two agencies created by the
Constitution. Were we to decline to take cognizance of the controversy, who will determine the
conflict? And if the conflict were left undecided and undetermined, would not a void be thus created
in our constitutional system which may in the long run prove destructive of the entire framework? To
ask these questions is to answer them. Natura vacuum abhorret, so must we avoid exhaustion in our
constitutional system. Upon principle, reason, and authority, we are clearly of the opinion that upon
the admitted facts of the present case, this court has jurisdiction over the Electoral Commission and
the subject matter of the present controversy for the purpose of determining the character, scope
and extent of the constitutional grant to the Electoral Commission as "the sole judge of all contests
relating to the election, returns and qualifications of the members of the National Assembly." .

As the Chief Justice has made it clear in Gonzales, like Justice Laurel did in Angara, these
postulates just quoted do not apply only to conflicts of authority between the three existing regular
departments of the government but to all such conflicts between and among these departments, or,
between any of them, on the one hand, and any other constitutionally created independent body, like
the electoral tribunals in Congress, the Comelec and the Constituent assemblies constituted by the
House of Congress, on the other. We see no reason of logic or principle whatsoever, and none has
been convincingly shown to Us by any of the respondents and intervenors, why the same ruling
should not apply to the present Convention, even if it is an assembly of delegate elected directly by
the people, since at best, as already demonstrated, it has been convened by authority of and under
the terms of the present Constitution..

Accordingly, We are left with no alternative but to uphold the jurisdiction of the Court over the
present case. It goes without saying that We do this not because the Court is superior to the
Convention or that the Convention is subject to the control of the Court, but simply because both the
Convention and the Court are subject to the Constitution and the rule of law, and "upon principle,
reason and authority," per Justice Laurel, supra, it is within the power as it is the solemn duty of the
Court, under the existing Constitution to resolve the issues in which petitioner, respondents and
intervenors have joined in this case.

II

The issue of jurisdiction thus resolved, We come to the crux of the petition. Is it within the powers of
the Constitutional Convention of 1971 to order, on its own fiat, the holding of a plebiscite for the
ratification of the proposed amendment reducing to eighteen years the age for the exercise of
suffrage under Section 1 of Article V of the Constitution proposed in the Convention's Organic
Resolution No. 1 in the manner and form provided for in said resolution and the subsequent
implementing acts and resolution of the Convention?

At the threshold, the environmental circumstances of this case demand the most accurate and
unequivocal statement of the real issue which the Court is called upon to resolve. Petitioner has very
clearly stated that he is not against the constitutional extension of the right of suffrage to the
eighteen-year-olds, as a matter of fact, he has advocated or sponsored in Congress such a
proposal, and that, in truth, the herein petition is not intended by him to prevent that the proposed
amendment here involved be submitted to the people for ratification, his only purpose in filing the
petition being to comply with his sworn duty to prevent, Whenever he can, any violation of the
Constitution of the Philippines even if it is committed in the course of or in connection with the most
laudable undertaking. Indeed, as the Court sees it, the specific question raised in this case is limited
solely and only to the point of whether or not it is within the power of the Convention to call for a
plebiscite for the ratification by the people of the constitutional amendment proposed in the
abovequoted Organic Resolution No. 1, in the manner and form provided in said resolution as well
as in the subject question implementing actions and resolution of the Convention and its officers, at
this juncture of its proceedings, when as it is a matter of common knowledge and judicial notice, it is
not set to adjourn sine die, and is, in fact, still in the preliminary stages of considering other reforms
or amendments affecting other parts of the existing Constitution; and, indeed, Organic Resolution
No. 1 itself expressly provides, that the amendment therein proposed "shall be without prejudice to
other amendments that will be proposed in the future by the 1971 Constitutional Convention on other
portions of the amended section or on other portions of the entire Constitution." In other words,
nothing that the Court may say or do, in this case should be understood as reflecting, in any degree
or means the individual or collective stand of the members of the Court on the fundamental issue of
whether or not the eighteen-year-olds should be allowed to vote, simply because that issue is not
before Us now. There should be no doubt in the mind of anyone that, once the Court finds it
constitutionally permissible, it will not hesitate to do its part so that the said proposed amendment
may be presented to the people for their approval or rejection.

Withal, the Court rests securely in the conviction that the fire and enthusiasm of the youth have not
blinded them to the absolute necessity, under the fundamental principles of democracy to which the
Filipino people is committed, of adhering always to the rule of law. Surely, their idealism, sincerity
and purity of purpose cannot permit any other line of conduct or approach in respect of the problem
before Us. The Constitutional Convention of 1971 itself was born, in a great measure, because of
the pressure brought to bear upon the Congress of the Philippines by various elements of the
people, the youth in particular, in their incessant search for a peaceful and orderly means of bringing
about meaningful changes in the structure and bases of the existing social and governmental
institutions, including the provisions of the fundamental law related to the well-being and economic
security of the underprivileged classes of our people as well as those concerning the preservation
and protection of our natural resources and the national patrimony, as an alternative to violent and
chaotic ways of achieving such lofty ideals. In brief, leaving aside the excesses of enthusiasm which
at times have justifiably or unjustifiably marred the demonstrations in the streets, plazas and
campuses, the youth of the Philippines, in general, like the rest of the people, do not want confusion
and disorder, anarchy and violence; what they really want are law and order, peace and orderliness,
even in the pursuit of what they strongly and urgently feel must be done to change the present order
of things in this Republic of ours. It would be tragic and contrary to the plain compulsion of these
perspectives, if the Court were to allow itself in deciding this case to be carried astray by
considerations other than the imperatives of the rule of law and of the applicable provisions of the
Constitution. Needless to say, in a larger measure than when it binds other departments of the
government or any other official or entity, the Constitution imposes upon the Court the sacred duty to
give meaning and vigor to the Constitution, by interpreting and construing its provisions in
appropriate cases with the proper parties, and by striking down any act violative thereof. Here, as in
all other cases, We are resolved to discharge that duty.

During these twice when most anyone feels very strongly the urgent need for constitutional reforms,
to the point of being convinced that meaningful change is the only alternative to a violent revolution,
this Court would be the last to put any obstruction or impediment to the work of the Constitutional
Convention. If there are respectable sectors opining that it has not been called to supplant the
existing Constitution in its entirety, since its enabling provision, Article XV, from which the
Convention itself draws life expressly speaks only of amendments which shall form part of it, which
opinion is not without persuasive force both in principle and in logic, the seemingly prevailing view is
that only the collective judgment of its members as to what is warranted by the present condition of
things, as they see it, can limit the extent of the constitutional innovations the Convention may
propose, hence the complete substitution of the existing constitution is not beyond the ambit of the
Convention's authority. Desirable as it may be to resolve, this grave divergence of views, the Court
does not consider this case to be properly the one in which it should discharge its constitutional duty
in such premises. The issues raised by petitioner, even those among them in which respondents and
intervenors have joined in an apparent wish to have them squarely passed upon by the Court do not
necessarily impose upon Us the imperative obligation to express Our views thereon. The Court
considers it to be of the utmost importance that the Convention should be untrammelled and
unrestrained in the performance of its constitutionally as signed mission in the manner and form it
may conceive best, and so the Court may step in to clear up doubts as to the boundaries set down
by the Constitution only when and to the specific extent only that it would be necessary to do so to
avoid a constitutional crisis or a clearly demonstrable violation of the existing Charter. Withal, it is a
very familiar principle of constitutional law that constitutional questions are to be resolved by the
Supreme Court only when there is no alternative but to do it, and this rule is founded precisely on the
principle of respect that the Court must accord to the acts of the other coordinate departments of the
government, and certainly, the Constitutional Convention stands almost in a unique footing in that
regard.

In our discussion of the issue of jurisdiction, We have already made it clear that the Convention
came into being by a call of a joint session of Congress pursuant to Section I of Article XV of the
Constitution, already quoted earlier in this opinion. We reiterate also that as to matters not related to
its internal operation and the performance of its assigned mission to propose amendments to the
Constitution, the Convention and its officers and members are all subject to all the provisions of the
existing Constitution. Now We hold that even as to its latter task of proposing amendments to the
Constitution, it is subject to the provisions of Section I of Article XV. This must be so, because it is
plain to Us that the framers of the Constitution took care that the process of amending the same
should not be undertaken with the same ease and facility in changing an ordinary legislation.
Constitution making is the most valued power, second to none, of the people in a constitutional
democracy such as the one our founding fathers have chosen for this nation, and which we of the
succeeding generations generally cherish. And because the Constitution affects the lives, fortunes,
future and every other conceivable aspect of the lives of all the people within the country and those
subject to its sovereignty, every degree of care is taken in preparing and drafting it. A constitution
worthy of the people for which it is intended must not be prepared in haste without adequate
deliberation and study. It is obvious that correspondingly, any amendment of the Constitution is of no
less importance than the whole Constitution itself, and perforce must be conceived and prepared
with as much care and deliberation. From the very nature of things, the drafters of an original
constitution, as already observed earlier, operate without any limitations, restraints or inhibitions
save those that they may impose upon themselves. This is not necessarily true of subsequent
conventions called to amend the original constitution. Generally, the framers of the latter see to it
that their handiwork is not lightly treated and as easily mutilated or changed, not only for reasons
purely personal but more importantly, because written constitutions are supposed to be designed so
as to last for some time, if not for ages, or for, at least, as long as they can be adopted to the needs
and exigencies of the people, hence, they must be insulated against precipitate and hasty actions
motivated by more or less passing political moods or fancies. Thus, as a rule, the original
constitutions carry with them limitations and conditions, more or less stringent, made so by the
people themselves, in regard to the process of their amendment. And when such limitations or
conditions are so incorporated in the original constitution, it does not lie in the delegates of any
subsequent convention to claim that they may ignore and disregard such conditions because they
are as powerful and omnipotent as their original counterparts.

Nothing of what is here said is to be understood as curtailing in any degree the number and nature
and the scope and extent of the amendments the Convention may deem proper to propose. Nor
does the Court propose to pass on the issue extensively and brilliantly discussed by the parties as to
whether or not the power or duty to call a plebiscite for the ratification of the amendments to be
proposed by the Convention is exclusively legislative and as such may be exercised only by the
Congress or whether the said power can be exercised concurrently by the Convention with the
Congress. In the view the Court takes of present case, it does not perceive absolute necessity to
resolve that question, grave and important as it may be. Truth to tell, the lack of unanimity or even of
a consensus among the members of the Court in respect to this issue creates the need for more
study and deliberation, and as time is of the essence in this case, for obvious reasons, November 8,
1971, the date set by the Convention for the plebiscite it is calling, being nigh, We will refrain from
making any pronouncement or expressing Our views on this question until a more appropriate case
comes to Us. After all, the basis of this decision is as important and decisive as any can be.

The ultimate question, therefore boils down to this: Is there any limitation or condition in Section 1 of
Article XV of the Constitution which is violated by the act of the Convention of calling for a plebiscite
on the sole amendment contained in Organic Resolution No. 1? The Court holds that there is, and it
is the condition and limitation that all the amendments to be proposed by the same Convention must
be submitted to the people in a single "election" or plebiscite. It being indisputable that the
amendment now proposed to be submitted to a plebiscite is only the first amendment the
Convention propose We hold that the plebiscite being called for the purpose of submitting the same
for ratification of the people on November 8, 1971 is not authorized by Section 1 of Article XV of the
Constitution, hence all acts of the Convention and the respondent Comelec in that direction are null
and void.

We have arrived at this conclusion for the following reasons:

1. The language of the constitutional provision aforequoted is sufficiently clear. lt says distinctly that
either Congress sitting as a constituent assembly or a convention called for the purpose "may
propose amendments to this Constitution," thus placing no limit as to the number of amendments
that Congress or the Convention may propose. The same provision also as definitely provides that
"such amendments shall be valid as part of this Constitution when approved by a majority of the
votes cast at an election at which the amendments are submitted to the people for their ratification,"
thus leaving no room for doubt as to how many "elections" or plebiscites may be held to ratify any
amendment or amendments proposed by the same constituent assembly of Congress or convention,
and the provision unequivocably says "an election" which means only one.
(2) Very little reflection is needed for anyone to realize the wisdom and appropriateness of this
provision. As already stated, amending the Constitution is as serious and important an undertaking
as constitution making itself. Indeed, any amendment of the Constitution is as important as the
whole of it if only because the Constitution has to be an integrated and harmonious instrument, if it is
to be viable as the framework of the government it establishes, on the one hand, and adequately
formidable and reliable as the succinct but comprehensive articulation of the rights, liberties,
ideology, social ideals, and national and nationalistic policies and aspirations of the people, on the
other. lt is inconceivable how a constitution worthy of any country or people can have any part which
is out of tune with its other parts..

A constitution is the work of the people thru its drafters assembled by them for the purpose. Once
the original constitution is approved, the part that the people play in its amendment becomes harder,
for when a whole constitution is submitted to them, more or less they can assumed its harmony as
an integrated whole, and they can either accept or reject it in its entirety. At the very least, they can
examine it before casting their vote and determine for themselves from a study of the whole
document the merits and demerits of all or any of its parts and of the document as a whole. And so
also, when an amendment is submitted to them that is to form part of the existing constitution, in like
fashion they can study with deliberation the proposed amendment in relation to the whole existing
constitution and or any of its parts and thereby arrive at an intelligent judgment as to its acceptability.

This cannot happen in the case of the amendment in question. Prescinding already from the fact that
under Section 3 of the questioned resolution, it is evident that no fixed frame of reference is provided
the voter, as to what finally will be concomitant qualifications that will be required by the final draft of
the constitution to be formulated by the Convention of a voter to be able to enjoy the right of
suffrage, there are other considerations which make it impossible to vote intelligently on the
proposed amendment, although it may already be observed that under Section 3, if a voter would
favor the reduction of the voting age to eighteen under conditions he feels are needed under the
circumstances, and he does not see those conditions in the ballot nor is there any possible indication
whether they will ever be or not, because Congress has reserved those for future action, what kind
of judgment can he render on the proposal?

But the situation actually before Us is even worse. No one knows what changes in the fundamental
principles of the constitution the Convention will be minded to approve. To be more specific, we do
not have any means of foreseeing whether the right to vote would be of any significant value at all.
Who can say whether or not later on the Convention may decide to provide for varying types of
voters for each level of the political units it may divide the country into. The root of the difficulty in
other words, lies in that the Convention is precisely on the verge of introducing substantial changes,
if not radical ones, in almost every part and aspect of the existing social and political order enshrined
in the present Constitution. How can a voter in the proposed plebiscite intelligently determine the
effect of the reduction of the voting age upon the different institutions which the Convention may
establish and of which presently he is not given any idea?

We are certain no one can deny that in order that a plebiscite for the ratification of an amendment to
the Constitution may be validly held, it must provide the voter not only sufficient time but ample basis
for an intelligent appraisal of the nature of the amendment per se as well as its relation to the other
parts of the Constitution with which it has to form a harmonious whole. In the context of the present
state of things, where the Convention has hardly started considering the merits of hundreds, if not
thousands, of proposals to amend the existing Constitution, to present to the people any single
proposal or a few of them cannot comply with this requirement. We are of the opinion that the
present Constitution does not contemplate in Section 1 of Article XV a plebiscite or "election"
wherein the people are in the dark as to frame of reference they can base their judgment on. We
reject the rationalization that the present Constitution is a possible frame of reference, for the simple
reason that intervenors themselves are stating that the sole purpose of the proposed amendment is
to enable the eighteen year olds to take part in the election for the ratification of the Constitution to
be drafted by the Convention. In brief, under the proposed plebiscite, there can be, in the language
of Justice Sanchez, speaking for the six members of the Court in Gonzales, supra, "no proper
submission".

III

The Court has no desire at all to hamper and hamstring the noble work of the Constitutional
Convention. Much less does the Court want to pass judgment on the merits of the proposal to allow
these eighteen years old to vote. But like the Convention, the Court has its own duties to the people
under the Constitution which is to decide in appropriate cases with appropriate parties Whether or
not the mandates of the fundamental law are being complied with. In the best light God has given
Us, we are of the conviction that in providing for the questioned plebiscite before it has finished, and
separately from, the whole draft of the constitution it has been called to formulate, the Convention's
Organic Resolution No. 1 and all subsequent acts of the Convention implementing the same violate
the condition in Section 1, Article XV that there should only be one "election" or plebiscite for the
ratification of all the amendments the Convention may propose. We are not denying any right of the
people to vote on the proposed amendment; We are only holding that under Section 1, Article XV of
the Constitution, the same should be submitted to them not separately from but together with all the
other amendments to be proposed by this present Convention.

IN VIEW OF ALL THE FOREGOING, the petition herein is granted. Organic Resolution No. 1 of the
Constitutional Convention of 1971 and the implementing acts and resolutions of the Convention,
insofar as they provide for the holding of a plebiscite on November 8, 1971, as well as the resolution
of the respondent Comelec complying therewith (RR Resolution No. 695) are hereby declared null
and void. The respondents Comelec, Disbursing Officer, Chief Accountant and Auditor of the
Constitutional Convention are hereby enjoined from taking any action in compliance with the said
organic resolution. In view of the peculiar circumstances of this case, the Court declares this
decision immediately executory. No costs.

Concepcion, C.J., Teehankee, Villamor and Makasiar, JJ., concur.

Separate Opinions

MAKALINTAL, J., reserves his vote —

I reserve my vote. The resolution in question is voted down by a sufficient majority of the Court on
just one ground, which to be sure achieves the result from the legal and constitutional viewpoint. I
entertain grave doubts as to the validity of the premises postulated and conclusions reached in
support of the dispositive portion of the decision. However, considering the urgent nature of this
case, the lack of time to set down at length my opinion on the particular issue upon which the
decision is made to rest, and the fact that a dissent on the said issue would necessarily be
inconclusive unless the other issues raised in the petition are also considered and ruled upon — a
task that would be premature and pointless at this time — I limit myself to this reservation.

REYES, J.B.L., ZALDIVAR, CASTRO and MAKASIAR, JJ., concurring:

We concur in the main opinion penned by Mr. Justice Barredo in his usual inimitable, forthright and
vigorous style. Like him, we do not express our individual views on the wisdom of the proposed
constitutional amendment, which is not in issue here because it is a matter that properly and
exclusively addresses itself to the collective judgment of the people.

We must, however, articulate two additional objections of constitutional dimension which, although
they would seem to be superfluous because of the reach of the basic constitutional infirmity
discussed in extenso in the main opinion, nevertheless appear to us to be just as fundamental in
character and scope.

Assuming that the Constitutional Convention has power to propose piecemeal amendments and
submit each separately to the people for ratification, we are nonetheless persuaded that (1) that
there is no proper submission of title proposed amendment in question within the meaning and
intendment of Section 1 of Article XV of the Constitution, and (2) that the forthcoming election is not
the proper election envisioned by the same provision of the Constitution.

Mr. Justice C. V. Sanchez, in his dissent in Gonzales vs. Commission on

Elections and Philippine Constitution Association vs. Commission on Elections, expounded his
1 2

view, with which we essentially agree, on the minimum requirements that must be met in order that
there can be a proper submission to the people of a proposed constitutional amendment. This is
what he said:

... amendments must be fairly laid before the people for their blessing or spurning. The
people are not to be mere rubber stamps. They are not to vote blindly. They must be
afforded ample opportunity to mull over the original provisions, compare them with the
proposed amendments, and try to reach a conclusion as the dictates of their conscience
suggest, free from the incubus of extraneous or possibly insidious influences. We believe the
word "submitted" can only mean that the government, within its maximum capabilities,
should strain every effort to inform citizen of the provisions to be amended, and the proposed
amendments and the meaning, nature and effects thereof. By this, we are not to be
understood as saying that, if one citizen or 100 citizens or 1,000 citizens cannot be reached,
then there is no submission within the meaning of the word as intended by the framers of the
Constitution. What the Constitution in effect directs is that the government, in submitting an
amendment for ratification, should put every instrumentality or agency within its structural
framework to enlighten the people, educate them with respect to their act of ratification or
rejection. For we have earlier stated, one thing is submission and another is ratification.
There must be fair submission, intelligent consent or rejection." .

The second constitutional objection was given expression by one of the writers of this concurring
opinion, in the following words:

I find it impossible to believe that it was ever intended by its framers that such amendment
should be submitted and ratified by just "a majority of the votes cast at an election at which
the amendments are submitted to the people for their ratification", if the concentration of the
people's attention thereon is to be diverted by other extraneous issues, such as the choice of
local and national officials. The framers of the Constitution, aware of the fundamental
character thereof, and of the need of giving it as much stability as is practicable, could have
only meant that any amendments thereto should be debated, considered and voted upon an
election wherein the people could devote undivided attention to the subject. 4
True it is that the question posed by the proposed amendment, "Do you or do you not want the 18-
year old to be allowed to vote?," would seem to be uncomplicated and innocuous. But it is one of
life's verities that things which appear to be simple may turn out not to be so simple after all.

A number of doubts or misgivings could conceivably and logically assail the average voter. Why
should the voting age be lowered at all, in the first place? Why should the new voting age be
precisely 18 years, and not 19 or 20? And why not 17? Or even 16 or 15? Is the 18-year old as
mature as the 21-year old so that there is no need of an educational qualification to entitle him to
vote? In this age of permissiveness and dissent, can the 18-year old be relied upon to vote with
judiciousness when the 21-year old, in the past elections, has not performed so well? If the proposed
amendment is voted down by the people, will the Constitutional Convention insist on the said
amendment? Why is there an unseemly haste on the part of the Constitutional Convention in having
this particular proposed amendment ratified at this particular time? Do some of the members of the
Convention have future political plans which they want to begin to subserve by the approval this year
of this amendment? If this amendment is approved, does it thereby mean that the 18-year old should
now also shoulder the moral and legal responsibilities of the 21-year old? Will he be required to
render compulsory military service under the colors? Will the age of contractual consent be reduced
to 18 years? If I vote against this amendment, will I not be unfair to my own child who will be 18
years old, come 1973? .

The above are just samplings from here, there and everywhere — from a domain (of searching
questions) the bounds of which are not immediately ascertainable. Surely, many more questions can
be added to the already long litany. And the answers cannot be had except as the questions are
debated fully, pondered upon purposefully, and accorded undivided attention.

Scanning the contemporary scene, we say that the people are not, and by election time will not be,
sufficiently informed of the meaning, nature and effects of the proposed constitutional amendment.
They have not been afforded ample time to deliberate thereon conscientiously. They have been and
are effectively distracted from a full and dispassionate consideration of the merits and demerits of
the proposed amendment by their traditional pervasive involvement in local elections and politics.
They cannot thus weigh in tranquility the need for and the wisdom of the proposed amendment.

Upon the above disquisition, it is our considered view that the intendment of the words, "at an
election at which the amendments are submitted to the people for their ratification," embodied in
Section 1 of Article XV of the Constitution, has not been met.

FERNANDO, J., concurring and dissenting:

There is much to be said for the opinion of the Court penned by Justice Barredo, characterized by
clarity and vigor, its manifestation of fealty to the rule of law couched in eloquent language, that
commands assent. As the Constitution occupies the topmost rank in the hierarchy of legal norms,
Congress and Constitutional Convention alike, no less than this Court, must bow to its supremacy.
Thereby constitutionalism asserts itself. With the view I entertain of what is allowable, if not indeed
required by the Constitution, my conformity does not extend as far as the acceptance of the
conclusion reached. The question presented is indeed novel, not being controlled by constitutional
prescription, definite and certain. Under the circumstances, with the express recognition in the
Constitution of the powers of the Constitutional Convention to propose amendments, I cannot
discern any objection to the validity of its action there being no legal impediment that would call for
its nullification. Such an approach all the more commends itself to me considering that what was
sought to be done is to refer the matter to the people in whom, according to our Constitution,
sovereignty resides. It is in that sense that, with due respect, I find myself unable to join my brethren.
I. It is understandable then why the decisive issue posed could not be resolved by reliance on,
implicit in the petition and the answer of intervenors, such concepts as legislative control of the
constitutional convention referred to by petitioner on the one hand or, on the other, the theory of
conventional sovereignty favored by intervenors. It is gratifying to note that during the oral argument
of petitioner and counsel for respondents and intervenors, there apparently was a retreat from such
extreme position, all parties, as should be the case, expressly avowing the primacy of the
Constitution, the applicable provision of which as interpreted by this Court, should be controlling on
both Congress and the Convention. It cannot be denied though that in at least one American state,
that is Pennsylvania, there were decisions announcing the doctrine that the powers to be exercised
by a constitutional convention are dependent on a legislative grant, in the absence of any authority
conferred directly by the fundamental law. The result is a convention that is subordinate to the
lawmaking body. Its field of competence is circumscribed. It has to look to the latter for the
delimitation of its permissible scope of activity. It is thus made subordinate to the legislature.
Nowhere has such a view been more vigorously expressed than in the Pennsylvania case of Wood's
Appeal. Its holding though finds no support under our constitutional provision.
1

It does not thereby follow that while free from legislative control, a constitutional convention may lay
claim to an attribute sovereign in character. The Constitution is quite explicit that it is to the people,
and to the people alone, in whom sovereignty resides. Such a prerogative is therefore withheld from
2

a convention. It is an agency entrusted with the responsibility of high import and significance it is
true; it is denied unlimited legal competence though. That is what sovereignty connotes. It has to
yield to the superior force of the Constitution. There can then be no basis for the exaggerated
pretension that it is an alter ego of the people. It is to be admitted that there are some American
state decisions, the most notable of which is Sproule v. Fredericks, a Mississippi case, that dates
3

back to 1892, that yield a different conclusion. The doctrine therein announced cannot bind us. Our
Constitution makes clear that the power of a constitutional convention is not sovereign. It is
appropriately termed constituent, limited as it is to the purpose of drafting a constitution or proposing
revision or amendments to one in existence, subject in either case to popular approval.

The view that commends itself for acceptance is that legislature and constitutional convention, alike
recognized by the Constitution, are coordinate, there being no superiority of one over the other.
Insofar as the constituent power of proposing amendments to the Constitution is concerned, a
constitutional convention enjoys a wide sphere of autonomy consistently with the Constitution which
can be the only source of valid restriction on its competence. It is true it is to the legislative body that
the call to a convention must proceed, but once convened, it cannot in any wise be interfered with,
much less controlled by Congress. A contrary conclusion would impair its usefulness for the delicate,
and paramount task assigned to it. A convention then is to be looked upon as if it were one of the
three coordinate departments which under the principle of separation of powers is supreme within its
field and has exclusive cognizance of matters properly subject to its jurisdiction. A succinct
statement of the appropriate principle that should govern the relationship between a constitutional
convention and a legislative body under American law is that found in Orfield's work. Thus: "The
earliest view seems to have been that a convention was absolute. The convention was sovereign
and subject to no restraint. On the other hand, Jameson, whose views have been most frequently
cited in decisions, viewed a convention as a body with strictly limited powers, and subject to the
restrictions imposed on it by the legislative call. A third and intermediate view is that urged by Dodd
— that a convention, though not sovereign, is a body independent of the legislature; it is bound by
the existing constitution, but not by the acts of the legislature, as to the extent of its constituent
power. This view has become increasingly prevalent in the state decisions." 4
2. It is to the Constitution, and to the Constitution alone then, as so vigorously stressed in the opinion
of the Court, that any limitation on the power the Constitutional, Convention must find its source. I
turn to its Article XV. It reads: "The Congress in joint session assembled, by a vote of three fourths of
all the Members of the Senate and of the House of Representatives voting separately, may propose
amendments to this Constitution or call a convention for that purpose. Such amendments shall be
valid as part of this Constitution when approved by a majority of the votes cast at an election at
which the amendments are submitted to the people for their ratification."

Clearly, insofar as amendments, including revision, are concerned, there are two steps, proposal
and thereafter ratification. Thus as to the former, two constituent bodies are provided for, the
Congress of the Philippines in the mode therein provided, and a constitutional convention that may
be called into being. Once assembled, a constitutional convention, like the Congress of the
Philippines, possesses in all its plenitude the constituent power. Inasmuch as Congress may
determine what amendments it would have the people ratify and thereafter take all the steps
necessary so that the approval or disapproval of the electorate may be obtained, the convention
likewise, to my mind, should be deemed possessed of all the necessary authority to assure that
whatever amendments it seeks to introduce would be submitted to the people at an election called
for that purpose. It would appear to me that to view the convention as being denied a prerogative
which is not withheld from Congress as a constituent body would be to place it in an inferior
category. Such a proposition I do not find acceptable. Congress and constitutional convention are
agencies for submitting proposals under the fundamental law. A power granted to one should not be
denied the other. No justification for such a drastic differentiation either in theory or practice exists.

Such a conclusion has for me the added reinforcement that to require ordinary legislation before the
convention could be enabled to have its proposals voted on by the people would be to place a power
in the legislative and executive branches that could, whether by act or omission, result in the
frustration of the amending process. I am the first to admit that such likelihood is remote, but if such
a risk even if minimal could be avoided, it should be, unless the compelling force of an applicable
constitutional provision requires otherwise. Considering that a constitutional convention is not
precluded from imposing additional restrictions on the powers of either the executive or legislative
branches, or, for that matter, the judiciary, it would appear to be the better policy to interpret Article
XV in such a way that would not sanction such restraint on the authority that must be recognized as
vested in a constitutional convention. There is nothing in such a view that to my mind would collide
with a reasonable interpretation of Article XV. It certainly is one way by which freed from pernicious
abstractions, it would be easier to accommodate a constitution to the needs of an unfolding future.
That is to facilitate its being responsive to the challenge that time inevitably brings in its wake.

From such an approach then, I am irresistibly led to the conclusion that the challenged resolution
was well within the power of the convention. That would be to brush aside the web of unreality spun
from a too-restrictive mode of appraising the legitimate scope of its competence. That would be, for
me, to give added vigor and life to the conferment of authority vested in it, attended by such grave
and awesome responsibility.

3. It becomes pertinent to inquire then whether the last sentence of Article XV providing that such
amendment shall be valid when submitted and thereafter approved by the majority of the votes cast
by the people at an election is a bar to the proposed submission. It is the conclusion arrived at by my
brethren that there is to be only one election and that therefore the petition must be sustained as
only when the convention has finished its work should all amendments proposed be submitted for
ratification. That is not for me, and I say this with respect, the appropriate interpretation. It is true that
the Constitution uses the word "election" in the singular, but that is not decisive. No undue reliance
should be accorded rules of grammar; they do not exert a compelling force in constitutional
interpretation. Meaning is to be sought not from specific language in the singular but from the mosaic
of significance derived from the total context. It could be, if it were not thus, self-defeating. Such a
mode of construction does not commend itself. The words used in the Constitution are not inert; they
derive vitality from the obvious purposes at which they are aimed. Petitioner's stress on linguistic
refinement, while not implausible does not, for me, carry the day.

It was likewise argued by petitioner that the proposed amendment is provisional and therefore is not
such as was contemplated in this article. I do not find such contention convincing. The fact that the
Constitutional Convention did seek to consult the wishes of the people by the proposed submission
of a tentative amendatory provision is an argument for its validity. It might be said of course that until
impressed with finality, an amendment is not to be passed upon by the electorate. There is
plausibility in such a view. A literal reading of the Constitution would support it. The spirit that informs
it though would not, for me, be satisfied. From its silence I deduce the inference that there is no
repugnancy to the fundamental law when the Constitutional Convention ascertains the popular will.
In that sense, the Constitution, to follow the phraseology of Thomas Reed Powel, is not silently silent
but silently vocal. What I deem the more important consideration is that while a public official, as an
agent, has to locate his source of authority in either Constitution or statute, the people, as the
principal, can only be limited in the exercise of their sovereign powers by the express terms of the
Constitution. A concept to the contrary would to my way of thinking be inconsistent with the
fundamental principle that it is in the people, and the people alone, that sovereignty resides.

4. The constitutional Convention having acted within the scope of its authority, an action to restrain
or prohibit respondent Commission on Elections from conducting the plebiscite does not lie. It should
not be lost sight of that the Commission on Elections in thus being charged with such a duty does
not act in its capacity as the constitutional agency to take charge of all laws relative to the conduct of
election. That is a purely executive function vested in it under Article X of the Constitution. It is not
5

precluded from assisting the Constitutional Convention if pursuant to its competence to amend the
fundamental law it seeks, as in this case, to submit a proposal, even if admittedly tentative, to the
electorate to ascertain its verdict. At any rate, it may be implied that under the 1971 Constitutional
Convention Act, it is not to turn a deaf ear to a summons from the Convention to aid it in the
legitimate discharge of its functions.6

The aforesaid considerations, such as they are, but which for me have a force that I mind myself
unable to overcome, leave me no alternative but to dissent from my brethren, with due
acknowledgement of course that from their basic premises, the conclusion arrived at by them cannot
be characterized as in any wise bereft of a persuasive quality of a high order.

Separate Opinions

MAKALINTAL, J., reserves his vote —

I reserve my vote. The resolution in question is voted down by a sufficient majority of the Court on
just one ground, which to be sure achieves the result from the legal and constitutional viewpoint. I
entertain grave doubts as to the validity of the premises postulated and conclusions reached in
support of the dispositive portion of the decision. However, considering the urgent nature of this
case, the lack of time to set down at length my opinion on the particular issue upon which the
decision is made to rest, and the fact that a dissent on the said issue would necessarily be
inconclusive unless the other issues raised in the petition are also considered and ruled upon — a
task that would be premature and pointless at this time — I limit myself to this reservation.

REYES, J.B.L., ZALDIVAR, CASTRO and MAKASIAR, JJ., concurring:

We concur in the main opinion penned by Mr. Justice Barredo in his usual inimitable, forthright and
vigorous style. Like him, we do not express our individual views on the wisdom of the proposed
constitutional amendment, which is not in issue here because it is a matter that properly and
exclusively addresses itself to the collective judgment of the people.

We must, however, articulate two additional objections of constitutional dimension which, although
they would seem to be superfluous because of the reach of the basic constitutional infirmity
discussed in extenso in the main opinion, nevertheless appear to us to be just as fundamental in
character and scope.

Assuming that the Constitutional Convention has power to propose piecemeal amendments and
submit each separately to the people for ratification, we are nonetheless persuaded that (1) that
there is no proper submission of title proposed amendment in question within the meaning and
intendment of Section 1 of Article XV of the Constitution, and (2) that the forthcoming election is not
the proper election envisioned by the same provision of the Constitution.

Mr. Justice C. V. Sanchez, in his dissent in Gonzales vs. Commission on

Elections and Philippine Constitution Association vs. Commission on Elections, expounded his
1 2

view, with which we essentially agree, on the minimum requirements that must be met in order that
there can be a proper submission to the people of a proposed constitutional amendment. This is
what he said:

... amendments must be fairly laid before the people for their blessing or spurning. The
people are not to be mere rubber stamps. They are not to vote blindly. They must be
afforded ample opportunity to mull over the original provisions, compare them with the
proposed amendments, and try to reach a conclusion as the dictates of their conscience
suggest, free from the incubus of extraneous or possibly insidious influences. We believe the
word "submitted" can only mean that the government, within its maximum capabilities,
should strain every effort to inform citizen of the provisions to be amended, and the proposed
amendments and the meaning, nature and effects thereof. By this, we are not to be
understood as saying that, if one citizen or 100 citizens or 1,000 citizens cannot be reached,
then there is no submission within the meaning of the word as intended by the framers of the
Constitution. What the Constitution in effect directs is that the government, in submitting an
amendment for ratification, should put every instrumentality or agency within its structural
framework to enlighten the people, educate them with respect to their act of ratification or
rejection. For we have earlier stated, one thing is submission and another is ratification.
There must be fair submission, intelligent consent or rejection." .

The second constitutional objection was given expression by one of the writers of this concurring
opinion, in the following words:

I find it impossible to believe that it was ever intended by its framers that such amendment
should be submitted and ratified by just "a majority of the votes cast at an election at which
the amendments are submitted to the people for their ratification", if the concentration of the
people's attention thereon is to be diverted by other extraneous issues, such as the choice of
local and national officials. The framers of the Constitution, aware of the fundamental
character thereof, and of the need of giving it as much stability as is practicable, could have
 only meant that any amendments thereto should be debated, considered and voted upon an
election wherein the people could devote undivided attention to the subject. 4

True it is that the question posed by the proposed amendment, "Do you or do you not want the 18-
year old to be allowed to vote?," would seem to be uncomplicated and innocuous. But it is one of
life's verities that things which appear to be simple may turn out not to be so simple after all.

A number of doubts or misgivings could conceivably and logically assail the average voter. Why
should the voting age be lowered at all, in the first place? Why should the new voting age be
precisely 18 years, and not 19 or 20? And why not 17? Or even 16 or 15? Is the 18-year old as
mature as the 21-year old so that there is no need of an educational qualification to entitle him to
vote? In this age of permissiveness and dissent, can the 18-year old be relied upon to vote with
judiciousness when the 21-year old, in the past elections, has not performed so well? If the proposed
amendment is voted down by the people, will the Constitutional Convention insist on the said
amendment? Why is there an unseemly haste on the part of the Constitutional Convention in having
this particular proposed amendment ratified at this particular time? Do some of the members of the
Convention have future political plans which they want to begin to subserve by the approval this year
of this amendment? If this amendment is approved, does it thereby mean that the 18-year old should
now also shoulder the moral and legal responsibilities of the 21-year old? Will he be required to
render compulsory military service under the colors? Will the age of contractual consent be reduced
to 18 years? If I vote against this amendment, will I not be unfair to my own child who will be 18
years old, come 1973? .

The above are just samplings from here, there and everywhere — from a domain (of searching
questions) the bounds of which are not immediately ascertainable. Surely, many more questions can
be added to the already long litany. And the answers cannot be had except as the questions are
debated fully, pondered upon purposefully, and accorded undivided attention.

Scanning the contemporary scene, we say that the people are not, and by election time will not be,
sufficiently informed of the meaning, nature and effects of the proposed constitutional amendment.
They have not been afforded ample time to deliberate thereon conscientiously. They have been and
are effectively distracted from a full and dispassionate consideration of the merits and demerits of
the proposed amendment by their traditional pervasive involvement in local elections and politics.
They cannot thus weigh in tranquility the need for and the wisdom of the proposed amendment.

Upon the above disquisition, it is our considered view that the intendment of the words, "at an
election at which the amendments are submitted to the people for their ratification," embodied in
Section 1 of Article XV of the Constitution, has not been met.

FERNANDO, J., concurring and dissenting:

There is much to be said for the opinion of the Court penned by Justice Barredo, characterized by
clarity and vigor, its manifestation of fealty to the rule of law couched in eloquent language, that
commands assent. As the Constitution occupies the topmost rank in the hierarchy of legal norms,
Congress and Constitutional Convention alike, no less than this Court, must bow to its supremacy.
Thereby constitutionalism asserts itself. With the view I entertain of what is allowable, if not indeed
required by the Constitution, my conformity does not extend as far as the acceptance of the
conclusion reached. The question presented is indeed novel, not being controlled by constitutional
prescription, definite and certain. Under the circumstances, with the express recognition in the
Constitution of the powers of the Constitutional Convention to propose amendments, I cannot
discern any objection to the validity of its action there being no legal impediment that would call for
its nullification. Such an approach all the more commends itself to me considering that what was
sought to be done is to refer the matter to the people in whom, according to our Constitution,
sovereignty resides. It is in that sense that, with due respect, I find myself unable to join my brethren.

I. It is understandable then why the decisive issue posed could not be resolved by reliance on,
implicit in the petition and the answer of intervenors, such concepts as legislative control of the
constitutional convention referred to by petitioner on the one hand or, on the other, the theory of
conventional sovereignty favored by intervenors. It is gratifying to note that during the oral argument
of petitioner and counsel for respondents and intervenors, there apparently was a retreat from such
extreme position, all parties, as should be the case, expressly avowing the primacy of the
Constitution, the applicable provision of which as interpreted by this Court, should be controlling on
both Congress and the Convention. It cannot be denied though that in at least one American state,
that is Pennsylvania, there were decisions announcing the doctrine that the powers to be exercised
by a constitutional convention are dependent on a legislative grant, in the absence of any authority
conferred directly by the fundamental law. The result is a convention that is subordinate to the
lawmaking body. Its field of competence is circumscribed. It has to look to the latter for the
delimitation of its permissible scope of activity. It is thus made subordinate to the legislature.
Nowhere has such a view been more vigorously expressed than in the Pennsylvania case of Wood's
Appeal. Its holding though finds no support under our constitutional provision.
1

It does not thereby follow that while free from legislative control, a constitutional convention may lay
claim to an attribute sovereign in character. The Constitution is quite explicit that it is to the people,
and to the people alone, in whom sovereignty resides. Such a prerogative is therefore withheld from
2

a convention. It is an agency entrusted with the responsibility of high import and significance it is
true; it is denied unlimited legal competence though. That is what sovereignty connotes. It has to
yield to the superior force of the Constitution. There can then be no basis for the exaggerated
pretension that it is an alter ego of the people. It is to be admitted that there are some American
state decisions, the most notable of which is Sproule v. Fredericks, a Mississippi case, that dates
3

back to 1892, that yield a different conclusion. The doctrine therein announced cannot bind us. Our
Constitution makes clear that the power of a constitutional convention is not sovereign. It is
appropriately termed constituent, limited as it is to the purpose of drafting a constitution or proposing
revision or amendments to one in existence, subject in either case to popular approval.

The view that commends itself for acceptance is that legislature and constitutional convention, alike
recognized by the Constitution, are coordinate, there being no superiority of one over the other.
Insofar as the constituent power of proposing amendments to the Constitution is concerned, a
constitutional convention enjoys a wide sphere of autonomy consistently with the Constitution which
can be the only source of valid restriction on its competence. It is true it is to the legislative body that
the call to a convention must proceed, but once convened, it cannot in any wise be interfered with,
much less controlled by Congress. A contrary conclusion would impair its usefulness for the delicate,
and paramount task assigned to it. A convention then is to be looked upon as if it were one of the
three coordinate departments which under the principle of separation of powers is supreme within its
field and has exclusive cognizance of matters properly subject to its jurisdiction. A succinct
statement of the appropriate principle that should govern the relationship between a constitutional
convention and a legislative body under American law is that found in Orfield's work. Thus: "The
earliest view seems to have been that a convention was absolute. The convention was sovereign
and subject to no restraint. On the other hand, Jameson, whose views have been most frequently
cited in decisions, viewed a convention as a body with strictly limited powers, and subject to the
restrictions imposed on it by the legislative call. A third and intermediate view is that urged by Dodd
— that a convention, though not sovereign, is a body independent of the legislature; it is bound by
the existing constitution, but not by the acts of the legislature, as to the extent of its constituent
power. This view has become increasingly prevalent in the state decisions." 4

2. It is to the Constitution, and to the Constitution alone then, as so vigorously stressed in the opinion
of the Court, that any limitation on the power the Constitutional, Convention must find its source. I
turn to its Article XV. It reads: "The Congress in joint session assembled, by a vote of three fourths of
all the Members of the Senate and of the House of Representatives voting separately, may propose
amendments to this Constitution or call a convention for that purpose. Such amendments shall be
valid as part of this Constitution when approved by a majority of the votes cast at an election at
which the amendments are submitted to the people for their ratification."

Clearly, insofar as amendments, including revision, are concerned, there are two steps, proposal
and thereafter ratification. Thus as to the former, two constituent bodies are provided for, the
Congress of the Philippines in the mode therein provided, and a constitutional convention that may
be called into being. Once assembled, a constitutional convention, like the Congress of the
Philippines, possesses in all its plenitude the constituent power. Inasmuch as Congress may
determine what amendments it would have the people ratify and thereafter take all the steps
necessary so that the approval or disapproval of the electorate may be obtained, the convention
likewise, to my mind, should be deemed possessed of all the necessary authority to assure that
whatever amendments it seeks to introduce would be submitted to the people at an election called
for that purpose. It would appear to me that to view the convention as being denied a prerogative
which is not withheld from Congress as a constituent body would be to place it in an inferior
category. Such a proposition I do not find acceptable. Congress and constitutional convention are
agencies for submitting proposals under the fundamental law. A power granted to one should not be
denied the other. No justification for such a drastic differentiation either in theory or practice exists.

Such a conclusion has for me the added reinforcement that to require ordinary legislation before the
convention could be enabled to have its proposals voted on by the people would be to place a power
in the legislative and executive branches that could, whether by act or omission, result in the
frustration of the amending process. I am the first to admit that such likelihood is remote, but if such
a risk even if minimal could be avoided, it should be, unless the compelling force of an applicable
constitutional provision requires otherwise. Considering that a constitutional convention is not
precluded from imposing additional restrictions on the powers of either the executive or legislative
branches, or, for that matter, the judiciary, it would appear to be the better policy to interpret Article
XV in such a way that would not sanction such restraint on the authority that must be recognized as
vested in a constitutional convention. There is nothing in such a view that to my mind would collide
with a reasonable interpretation of Article XV. It certainly is one way by which freed from pernicious
abstractions, it would be easier to accommodate a constitution to the needs of an unfolding future.
That is to facilitate its being responsive to the challenge that time inevitably brings in its wake.

From such an approach then, I am irresistibly led to the conclusion that the challenged resolution
was well within the power of the convention. That would be to brush aside the web of unreality spun
from a too-restrictive mode of appraising the legitimate scope of its competence. That would be, for
me, to give added vigor and life to the conferment of authority vested in it, attended by such grave
and awesome responsibility.

3. It becomes pertinent to inquire then whether the last sentence of Article XV providing that such
amendment shall be valid when submitted and thereafter approved by the majority of the votes cast
by the people at an election is a bar to the proposed submission. It is the conclusion arrived at by my
brethren that there is to be only one election and that therefore the petition must be sustained as
only when the convention has finished its work should all amendments proposed be submitted for
ratification. That is not for me, and I say this with respect, the appropriate interpretation. It is true that
the Constitution uses the word "election" in the singular, but that is not decisive. No undue reliance
should be accorded rules of grammar; they do not exert a compelling force in constitutional
interpretation. Meaning is to be sought not from specific language in the singular but from the mosaic
of significance derived from the total context. It could be, if it were not thus, self-defeating. Such a
mode of construction does not commend itself. The words used in the Constitution are not inert; they
derive vitality from the obvious purposes at which they are aimed. Petitioner's stress on linguistic
refinement, while not implausible does not, for me, carry the day.

It was likewise argued by petitioner that the proposed amendment is provisional and therefore is not
such as was contemplated in this article. I do not find such contention convincing. The fact that the
Constitutional Convention did seek to consult the wishes of the people by the proposed submission
of a tentative amendatory provision is an argument for its validity. It might be said of course that until
impressed with finality, an amendment is not to be passed upon by the electorate. There is
plausibility in such a view. A literal reading of the Constitution would support it. The spirit that informs
it though would not, for me, be satisfied. From its silence I deduce the inference that there is no
repugnancy to the fundamental law when the Constitutional Convention ascertains the popular will.
In that sense, the Constitution, to follow the phraseology of Thomas Reed Powel, is not silently silent
but silently vocal. What I deem the more important consideration is that while a public official, as an
agent, has to locate his source of authority in either Constitution or statute, the people, as the
principal, can only be limited in the exercise of their sovereign powers by the express terms of the
Constitution. A concept to the contrary would to my way of thinking be inconsistent with the
fundamental principle that it is in the people, and the people alone, that sovereignty resides.

4. The constitutional Convention having acted within the scope of its authority, an action to restrain
or prohibit respondent Commission on Elections from conducting the plebiscite does not lie. It should
not be lost sight of that the Commission on Elections in thus being charged with such a duty does
not act in its capacity as the constitutional agency to take charge of all laws relative to the conduct of
election. That is a purely executive function vested in it under Article X of the Constitution. It is not
5

precluded from assisting the Constitutional Convention if pursuant to its competence to amend the
fundamental law it seeks, as in this case, to submit a proposal, even if admittedly tentative, to the
electorate to ascertain its verdict. At any rate, it may be implied that under the 1971 Constitutional
Convention Act, it is not to turn a deaf ear to a summons from the Convention to aid it in the
legitimate discharge of its functions. 6

The aforesaid considerations, such as they are, but which for me have a force that I mind myself
unable to overcome, leave me no alternative but to dissent from my brethren, with due
acknowledgement of course that from their basic premises, the conclusion arrived at by them cannot
be characterized as in any wise bereft of a persuasive quality of a high order.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-68635 May 14, 1987

IN THE MATTER OF PROCEEDINGS FOR DISCIPLINARY ACTION AGAINST ATTY.
WENCESLAO LAURETA, AND OF CONTEMPT PROCEEDINGS AGAINST EVA MARAVILLA-
ILUSTRE in G.R. No. 68635, entitled "EVA MARAVILLA-ILUSTRE, vs. HON. INTERMEDIATE
APPELLATE COURT, ET AL."

RESOLUTION

PER CURIAM:

Before us are 1) Atty. Wenceslao Laureta's Motion for Reconsideration of the Per Curiam Resolution
of this Court promulgated on March 12, 1987, finding him guilty of grave professional misconduct
and suspending him indefinitely from the practice of law; and 2) Eva Maravilla-Ilustre's Motion for
Reconsideration of the same Resolution holding her in contempt and ordering her to pay a fine of
P1,000.00.

Essentially, Atty. Laureta maintains that the Order of suspension without hearing violated his right to
life and due process of law and by reason thereof the Order is null and void; that the acts of
misconduct imputed to him are without basis; that the charge against him that it was he who had
circulated to the press copies of the Complaint filed before the Tanodbayan is unfounded such that,
even in this Court's Resolution, his having distributed copies to the press is not stated positively; that
the banner headline which appeared In the Daily Express is regrettable but that he was not
responsible for such "misleading headline;" that he "did nothing of the sort" being fully conscious of
his responsibilities as a law practitioner and officer of the Court; that as a former newspaperman, he
would not have been satisfied with merely circulating copies of the Complaint to the press in
envelopes where his name appears; "he himself would have written stories about the case in a
manner that sells newspapers; even a series of juicy articles perhaps, something that would have
further subjected the respondent justices to far worse publicity;" that, on the contrary, the press
conference scheduled by Ilustre was cancelled through his efforts in order to prevent any further
adverse publicity resulting from the filing of the complaint before the Tanodbayan; that, as a matter
of fact, it was this Court's Resolution that was serialized in the Bulletin Today, which newspaper also
made him the subject of a scathing editorial but that he "understands the cooperation because after
all, the Court rendered a favorable judgment in the Bulletin union case last year;" that he considered
it "below his dignity to plead for the chance to present his side" with the Editor, Mr. Ben Rodriguez,
"a long-time personal friend" since he "can afford to be the sacrificial lamb if only to help the
Honorable Court uphold its integrity;" that he was called by a reporter of DZRH and was asked to
comment on the case filed before the Tanodbayan but that his remarks were confined to the filing of
the case by Ilustre herself, and that the judgment of the trial Court had attained its finality long ago;
that he is not Ilustre's counsel before the Tanodbayan and did not prepare the complaint filed before
it, his professional services having been terminated upon the final dismissal of Ilustre's case before
this Court; that similarities in the language and phraseology used in the Ilustre letters, in pleadings
before this Court and before the Tanodbayan do not prove his authorship since other lawyers "even
of a mediocre caliber" could very easily have reproduced them; that the discussions on the merits in
the Per Curiam Resolution are "more properly addressed to the Tanodbayan, Justice Raul M.
Gonzales being competent to deal with the case before him;" that he takes exception to the
accusation that he has manifested lack of respect for and exposed to public ridicule the two highest
Courts of the land, all he did having been to call attention to errors or injustice committed in the
promulgation of judgments or orders; that he has "not authorized or assisted and/or abetted and
could not have prevented the contemptuous statements, conduct, acts and malicious charges of Eva
Maravilla Ilustre who was no longer his client when these alleged acts were done; that "he is grateful
to this Court for the reminder on the first duty of a lawyer which is to the Court and not to his client, a
duty that he has always impressed upon his law students;" and finally, that "for the record, he is
sorry for the adverse publicity generated by the filing of the complaint against the Justices before the
Tanodbayan."

In her own Motion for Reconsideration, Eva Maravilla-Ilustre also raises as her main ground the
alleged deprivation of her constitutional right to due process. She maintains that as contempt
proceedings are commonly treated as criminal in nature, the mode of procedure and rules of
evidence in criminal prosecution should be assimilated, as far as practicable, in this proceeding, and
that she should be given every opportunity to present her side. Additionally, she states that, with
some sympathetic lawyers, they made an "investigation" and learned that the Resolution of the First
Division was arrived at without any deliberation by its members; that Court personnel were "tight-
lipped about the matter, which is shrouded mystery" thereby prompting her to pursue a course which
she thought was legal and peaceful; that there is nothing wrong in making public the manner of
voting by the Justices, and it was for that reason that she addressed Identical letters to Associate
Justices Andres Narvasa, Ameurfina M. Herrera, Isagani Cruz and Florentino Feliciano; that "if the
lawyers of my opponents were not a Solicitor General, and member of the Supreme Court and a
Division Chairman, respectively, the resolution of May 14, 1986 would not have aroused my
suspicion;" that instead of taking the law into her own hands or joining any violent movement, she
took the legitimate step of making a peaceful investigation into how her case was decided, and
brought her grievance to the Tanodbayan "in exasperation" against those whom she felt had
committed injustice against her "in an underhanded manner."

We deny reconsideration in both instances.

The argument premised on lack of hearing and due process, is not impressed with merit. What due
process abhors is absolute lack of opportunity to be heard (Tajonera vs. Lamaroza, et al., 110 SCRA
438 [1981]). The word "hearing" does not necessarily connote a "trial-type" proceeding. In the show-
cause Resolution of this Court, dated January 29, 1987, Atty. Laureta was given sufficient
opportunity to inform this Court of the reasons why he should not be subjected to dispose action. His
Answer, wherein he prayed that the action against him be dismissed, contained twenty-two (22)
pages, double spaced. Eva Maravilla-Ilustre was also given a like opportunity to explain her
statements, conduct, acts and charges against the Court and/or the official actions of the Justices
concerned. Her Compliance Answer, wherein she prayed that the contempt proceeding against her
be dismissed, contained nineteen (19) pages, double spaced. Both were afforded ample latitude to
explain matters fully. Atty. Laureta denied having authored the letters written by Ilustre, his being her
counsel before the Tanodbayan, his having circularized to the press copies of the complaint filed
before said body, and his having committed acts unworthy of his profession. But the Court believed
otherwise and found that those letters and the charges levelled against the Justices concerned, of
themselves and by themselves, betray not only their malicious and contemptuous character, but also
the lack of respect for the two highest Courts of the land, a complete obliviousness to the
fundamental principle of separation of powers, and a wanton disregard of the cardinal doctrine of
independence of the Judiciary. Res ipsa loquitur. Nothing more needed to have been said or proven.
The necessity to conduct any further evidentially hearing was obviated (See People vs. Hon.
Valenzuela, G.R. Nos. 63950-60, April 19, 1985, 135 SCRA 712). Atty. Laureta and Ilustre were
given ample opportunity to be heard, and were, in fact, heard.

(1)
In his Motion for Reconsideration, Atty. Laureta reiterates his allegations in his Answer to the show-
cause Resolution that his professional services were terminated by Ilustre after the dismissal of the
main petition by this Court; that he had nothing to do with the contemptuous letters to the individual
Justices; and that he is not Ilustre's counsel before the Tanodbayan.

Significantly enough, however, copy of the Tanodbayan Resolution dismissing Ilustre's Complaint
was furnished Atty. Laureta as "counsel for the complainant" at his address of record. Of note, too, is
the fact that it was he who was following up the Complaint before the Tanodbayan and, after its
dismissal, the Motion for Reconsideration of the Order of dismissal.

Of import, as well, is the report of Lorenzo C. Bardel, a process server of this Court, that after having
failed to serve copy of the Per Curiam Resolution of March 12, 1987 of this Court on Ilustre
personally at her address of record, "101 F. Manalo St., Cubao, Quezon City," having been informed
that she is 6 not a resident of the place," he proceeded to the residence of Atty. Laureta where the
latter's wife "voluntarily received the two copies of decision for her husband and for Ms. Maravina-
Ilustre" (p. 670, Rollo, Vol. 11).

That Ilustre subsequently received copy of this Court's Resolution delivered to Mrs. Laureta is shown
by the fact that she filed, as of March 27, 1987, a "Petition for Extension of Time to file Motion for
Reconsideration" and subsequently the Motion for Reconsideration. In that Petition Ilustre
acknowledged receipt of the Resolution on March 12, 1987, the very same date Mrs. Laureta
received copy thereof. If, indeed, the lawyer-client relationship between her husband and Ilustre had
been allegedly completely severed, all Mrs. Laureta had to do was to return to the Sheriff the copy
intended for Ilustre. As it was, however, service on Atty. Laureta proved to be service on Ilustre as
well. The close tie- up between the corespondents is heightened by the fact that three process
servers of this Court failed to serve copy of this Court's Per Curiam Resolution on Ilustre personally.

Noteworthy, as well, is that by Atty. Laureta's own admission, he was the one called by a "reporter"
of DZRH to comment on the Ilustre charges before the Tanodbayan. If, in fact, he had nothing to do
with the complaint, he would not have been pinpointed at all. And if his disclaimer were the truth, the
logical step for him to have taken was to refer the caller to the lawyer/s allegedly assisting Ilustre, at
the very least, out of elementary courtesy and propriety. But he did nothing of the sort. " He gave his
comment with alacrity.

The impudence and lack of respect of Atty. Laureta for this Court again surfaces when he asserts in
his Motion for Reconsideration that he "understands the cooperation" of the Bulletin Today as
manifested in the serialized publication of the Per Curiam Resolution of this Court and his being
subjected to a scathing editorial by the same newspaper "because after all, the Court rendered a
favorable judgment in the Bulletin union case last year." The malice lurking in that statement is most
unbecoming of an officer of the Court and is an added reason for denying reconsideration.

Further, Atty. Laureta stubbornly contends that discussions on the merits in the Court's Per Curiam
Resolution are more properly addressed to the Tanodbayan, forgetting, however, his own discourse
on the merits in his Answer to this Court's Resolution dated January 29, 1987. He thus incorrigibly
insists on subordinating the Judiciary to the executive notwithstanding the categorical
pronouncement in the Per Curiam Resolution of March 12, 1987, that Article 204 of the Revised
Penal Code has no application to the members of a collegiate Court; that a charge of violation of the
Anti-Graft and Corrupt Practices Act on the ground that a collective decision is "unjust" cannot
prosper; plus the clear and extended dissertation in the same Per Curiam Resolution on the
fundamental principle of separation of powers and of checks and balances, pursuant to which it is
this Court "entrusted exclusively with the judicial power to adjudicate with finality all justifiable
disputes, public and private. No other department or agency may pass upon its judgments or declare
them 'unjust' upon controlling and irresistible reasons of public policy and of sound practice."

Atty. Laureta's protestations that he has done his best to protect and uphold the dignity of this Court
are belied by environmental facts and circumstances. His apologetic stance for the "adverse
publicity" generated by the filing of the charges against the Justices concerned before the
Tanodbayan rings with insincerity. The complaint was calculated precisely to serve that very
purpose. The threat to bring the case to "another forum of justice" was implemented to the fun.
Besides, he misses the heart of the matter. Exposure to the glare of publicity is an occupational
hazard. If he has been visited with disciplinary sanctions it is because by his conduct, acts and
statements, he has, overall, deliberately sought to destroy the "authenticity, integrity, and
conclusiveness of collegiate acts," to "undermine the role of the Supreme Court as the final arbiter of
all justifiable disputes," and to subvert public confidence in the integrity of the Courts and the
Justices concerned, and in the orderly administration of justice.

In fine, we discern nothing in Atty. Laureta's Motion for Reconsideration that would call for a
modification, much less a reversal, of our finding that he is guilty of grave professional misconduct
that renders him unfit to continue to be entrusted with the duties and responsibilities pertaining to an
attorney and officer of the Court.

(2)

Neither do we find merit in Ilustre's Motion for Reconsideration. She has turned deaf ears to any
reason or clarification. She and her counsel have refused to accept the untenability of their case and
the inevitability of losing in Court. They have allowed suspicion alone to blind their actions and in so
doing degraded the administration of justice. "Investigation" was utterly uncalled for. All conclusions
and judgments of the Court, be they en banc or by Division, are arrived at only after deliberation.
The fact that no dissent was indicated in the Minutes of the proceedings held on May 14, 1986
showed that the members of the Division voted unanimously. Court personnel are not in a position to
know the voting in any case because all deliberations are held behind closed doors without any one
of them being present. No malicious inferences should have been drawn from their inability to furnish
the information Ilustre and Atty. Laureta desired The personality of the Solicitor General never came
into the picture. It was Justice Abad Santos, and not Justice Yap, who was Chairman of the First
Division when the Resolution of May 14, 1986 denying the Petition was rendered. Thereafter Justice
Yap inhibited himself from any participation. The fact that the Court en banc upheld the challenged
Resolutions of the First Division emphasizes the irrespective of Ilustre's case irrespective of the
personalities involved.

Additionally, Ilustre has been trifling with this Court. She has given our process servers the run-
around. Three of them failed to serve on her personally her copy of this Court's Per Curiam
Resolution of March 12, 1987 at her address of record. Mrs. Laureta informed process server
Lorenzo C. Bardel that Ilustre was residing at 17-D, Quezon St., Tondo, Manila. Romeo C. Regala,
another process server, went to that address to serve copy of the Resolution but he reported:

4. That inspite of diligent efforts to locate the address of ms.Eva Maravilla-Ilustre, said
address could not be located;

5. That I even asked the occupants (Cerdan Family) of No. 17 Quezon Street, Tondo, Manila, and
they informed that there is no such Ms. Eva Maravilla-Ilustre in the neighborhood and/or in the
vicinity; ... (p. 672, Rollo, Vol. 11).
The third process server, Nelson C. Cabesuela, was also unable to serve copy of this Court's
Resolution on Ilustre. He reported:

2. On March 17, 1987, at about 9:30 A.M., I arrived at the house in the address furnished at;
the notice of judgment (101 Felix Manalo St., Cubao, Quezon City), and was received by an
elderly woman who admitted to be the owner of the house but vehemently refused to be
Identified, and told me that she does not know the addressee Maravilla, and told me further
that she always meets different persons looking for Miss Maravilla because the latter always
gives the address of her house;

3. That, I was reminded of an incident that I also experienced in the same place trying to serve a
resolution to Miss Maravilla which was returned unserved because she is not known in the place; ...
(p. 674, Rollo, Vol. II).

And yet, in her Petition for Extension of Time and in her Motion for Reconsideration she persists in
giving that address at 101 Felix Manalo St., Cubao, Quezon City, where our process servers were
told that she was not a resident of and that she was unknown thereat. If for her contumacious
elusiveness and lack of candor alone, Ilustre deserves no further standing before this Court.

ACCORDINGLY, the respective Motions for reconsideration of Atty. Wenceslao G. Laureta for the
setting aside of the order suspending him from the practice of law, and of Eva Maravilla Ilustre for
the lifting of the penalty for contempt are DENIED, and this denial is FINAL. Eva Maravilla Ilustre
shall pay the fine of P1,000.00 imposed on her within ten (10) days from notice, or, suffer
imprisonment for ten (10) days upon failure to pay said fine within the stipulated period.

SO ORDERED.

Teehankee, C.J., Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

Yap, J.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-45081 July 15, 1936

JOSE A. ANGARA, petitioner,
vs.
THE ELECTORAL COMMISSION, PEDRO YNSUA, MIGUEL CASTILLO, and DIONISIO C.
MAYOR, respondents.

Godofredo Reyes for petitioner.

Office of the Solicitor General Hilado for respondent Electoral Commission.
Pedro Ynsua in his own behalf.
No appearance for other respondents.

LAUREL, J.:

This is an original action instituted in this court by the petitioner, Jose A. Angara, for the issuance of
a writ of prohibition to restrain and prohibit the Electoral Commission, one of the respondents, from
taking further cognizance of the protest filed by Pedro Ynsua, another respondent, against the
election of said petitioner as member of the National Assembly for the first assembly district of the
Province of Tayabas.

The facts of this case as they appear in the petition and as admitted by the respondents are as
follows:

(1) That in the elections of September 17, 1935, the petitioner, Jose A. Angara, and the
respondents, Pedro Ynsua, Miguel Castillo and Dionisio Mayor, were candidates voted for the
position of member of the National Assembly for the first district of the Province of Tayabas;

(2) That on October 7, 1935, the provincial board of canvassers, proclaimed the petitioner as
member-elect of the National Assembly for the said district, for having received the most number of
votes;

(3) That on November 15, 1935, the petitioner took his oath of office;

(4) That on December 3, 1935, the National Assembly in session assembled, passed the following
resolution:

[No. 8]

RESOLUCION CONFIRMANDO LAS ACTAS DE AQUELLOS DIPUTADOS CONTRA

QUIENES NO SE HA PRESENTADO PROTESTA.

Se resuelve: Que las actas de eleccion de los Diputados contra quienes no se hubiere presentado
debidamente una protesta antes de la adopcion de la presente resolucion sean, como por la
presente, son aprobadas y confirmadas.

Adoptada, 3 de diciembre, 1935.

(5) That on December 8, 1935, the herein respondent Pedro Ynsua filed before the Electoral
Commission a "Motion of Protest" against the election of the herein petitioner, Jose A. Angara, being
the only protest filed after the passage of Resolutions No. 8 aforequoted, and praying, among other-
things, that said respondent be declared elected member of the National Assembly for the first
district of Tayabas, or that the election of said position be nullified;

(6) That on December 9, 1935, the Electoral Commission adopted a resolution, paragraph 6 of which
provides:
 6. La Comision no considerara ninguna protesta que no se haya presentado en o antes de
este dia.

(7) That on December 20, 1935, the herein petitioner, Jose A. Angara, one of the respondents in the
aforesaid protest, filed before the Electoral Commission a "Motion to Dismiss the Protest", alleging
(a) that Resolution No. 8 of Dismiss the Protest", alleging (a) that Resolution No. 8 of the National
Assembly was adopted in the legitimate exercise of its constitutional prerogative to prescribe the
period during which protests against the election of its members should be presented; (b) that the
aforesaid resolution has for its object, and is the accepted formula for, the limitation of said period;
and (c) that the protest in question was filed out of the prescribed period;

(8) That on December 27, 1935, the herein respondent, Pedro Ynsua, filed an "Answer to the Motion
of Dismissal" alleging that there is no legal or constitutional provision barring the presentation of a
protest against the election of a member of the National Assembly after confirmation;

(9) That on December 31, 1935, the herein petitioner, Jose A. Angara, filed a "Reply" to the
aforesaid "Answer to the Motion of Dismissal";

(10) That the case being submitted for decision, the Electoral Commission promulgated a resolution
on January 23, 1936, denying herein petitioner's "Motion to Dismiss the Protest."

The application of the petitioner sets forth the following grounds for the issuance of the writ prayed
for:

(a) That the Constitution confers exclusive jurisdiction upon the electoral Commission solely as
regards the merits of contested elections to the National Assembly;

(b) That the Constitution excludes from said jurisdiction the power to regulate the proceedings of
said election contests, which power has been reserved to the Legislative Department of the
Government or the National Assembly;

(c) That like the Supreme Court and other courts created in pursuance of the Constitution, whose
exclusive jurisdiction relates solely to deciding the merits of controversies submitted to them for
decision and to matters involving their internal organization, the Electoral Commission can regulate
its proceedings only if the National Assembly has not availed of its primary power to so regulate
such proceedings;

(d) That Resolution No. 8 of the National Assembly is, therefore, valid and should be respected and
obeyed;

(e) That under paragraph 13 of section 1 of the ordinance appended to the Constitution and
paragraph 6 of article 7 of the Tydings-McDuffie Law (No. 127 of the 73rd Congress of the United
States) as well as under section 1 and 3 (should be sections 1 and 2) of article VIII of the
Constitution, this Supreme Court has jurisdiction to pass upon the fundamental question herein
raised because it involves an interpretation of the Constitution of the Philippines.

On February 25, 1936, the Solicitor-General appeared and filed an answer in behalf of the
respondent Electoral Commission interposing the following special defenses:

(a) That the Electoral Commission has been created by the Constitution as an instrumentality of the
Legislative Department invested with the jurisdiction to decide "all contests relating to the election,
returns, and qualifications of the members of the National Assembly"; that in adopting its resolution
of December 9, 1935, fixing this date as the last day for the presentation of protests against the
election of any member of the National Assembly, it acted within its jurisdiction and in the legitimate
exercise of the implied powers granted it by the Constitution to adopt the rules and regulations
essential to carry out the power and functions conferred upon the same by the fundamental law; that
in adopting its resolution of January 23, 1936, overruling the motion of the petitioner to dismiss the
election protest in question, and declaring itself with jurisdiction to take cognizance of said protest, it
acted in the legitimate exercise of its quasi-judicial functions a an instrumentality of the Legislative
Department of the Commonwealth Government, and hence said act is beyond the judicial
cognizance or control of the Supreme Court;

(b) That the resolution of the National Assembly of December 3, 1935, confirming the election of the
members of the National Assembly against whom no protest had thus far been filed, could not and
did not deprive the electoral Commission of its jurisdiction to take cognizance of election protests
filed within the time that might be set by its own rules:

(c) That the Electoral Commission is a body invested with quasi-judicial functions, created by the
Constitution as an instrumentality of the Legislative Department, and is not an "inferior tribunal, or
corporation, or board, or person" within the purview of section 226 and 516 of the Code of Civil
Procedure, against which prohibition would lie.

The respondent Pedro Ynsua, in his turn, appeared and filed an answer in his own behalf on March
2, 1936, setting forth the following as his special defense:

(a) That at the time of the approval of the rules of the Electoral Commission on December 9, 1935,
there was no existing law fixing the period within which protests against the election of members of
the National Assembly should be filed; that in fixing December 9, 1935, as the last day for the filing
of protests against the election of members of the National Assembly, the Electoral Commission was
exercising a power impliedly conferred upon it by the Constitution, by reason of its quasi-judicial
attributes;

(b) That said respondent presented his motion of protest before the Electoral Commission on
December 9, 1935, the last day fixed by paragraph 6 of the rules of the said Electoral Commission;

(c) That therefore the Electoral Commission acquired jurisdiction over the protest filed by said
respondent and over the parties thereto, and the resolution of the Electoral Commission of January
23, 1936, denying petitioner's motion to dismiss said protest was an act within the jurisdiction of the
said commission, and is not reviewable by means of a writ of prohibition;
(d) That neither the law nor the Constitution requires confirmation by the National Assembly of the
election of its members, and that such confirmation does not operate to limit the period within which
protests should be filed as to deprive the Electoral Commission of jurisdiction over protest filed
subsequent thereto;

(e) That the Electoral Commission is an independent entity created by the Constitution, endowed
with quasi-judicial functions, whose decision are final and unappealable;

( f ) That the electoral Commission, as a constitutional creation, is not an inferior tribunal,

corporation, board or person, within the terms of sections 226 and 516 of the Code of Civil
Procedure; and that neither under the provisions of sections 1 and 2 of article II (should be article
VIII) of the Constitution and paragraph 13 of section 1 of the Ordinance appended thereto could it be
subject in the exercise of its quasi-judicial functions to a writ of prohibition from the Supreme Court;

(g) That paragraph 6 of article 7 of the Tydings-McDuffie Law (No. 127 of the 73rd Congress of the
united States) has no application to the case at bar.
The case was argued before us on March 13, 1936. Before it was submitted for decision, the
petitioner prayed for the issuance of a preliminary writ of injunction against the respondent Electoral
Commission which petition was denied "without passing upon the merits of the case" by resolution of
this court of March 21, 1936.

There was no appearance for the other respondents.

The issues to be decided in the case at bar may be reduced to the following two principal
propositions:

1. Has the Supreme Court jurisdiction over the Electoral Commission and the subject matter of the
controversy upon the foregoing related facts, and in the affirmative,

2. Has the said Electoral Commission acted without or in excess of its jurisdiction in assuming to the
cognizance of the protest filed the election of the herein petitioner notwithstanding the previous
confirmation of such election by resolution of the National Assembly?

We could perhaps dispose of this case by passing directly upon the merits of the controversy.
However, the question of jurisdiction having been presented, we do not feel justified in evading the
issue. Being a case primæ impressionis, it would hardly be consistent with our sense of duty to
overlook the broader aspect of the question and leave it undecided. Neither would we be doing
justice to the industry and vehemence of counsel were we not to pass upon the question of
jurisdiction squarely presented to our consideration.

The separation of powers is a fundamental principle in our system of government. It obtains not
through express provision but by actual division in our Constitution. Each department of the
government has exclusive cognizance of matters within its jurisdiction, and is supreme within its own
sphere. But it does not follow from the fact that the three powers are to be kept separate and distinct
that the Constitution intended them to be absolutely unrestrained and independent of each other.
The Constitution has provided for an elaborate system of checks and balances to secure
coordination in the workings of the various departments of the government. For example, the Chief
Executive under our Constitution is so far made a check on the legislative power that this assent is
required in the enactment of laws. This, however, is subject to the further check that a bill may
become a law notwithstanding the refusal of the President to approve it, by a vote of two-thirds or
three-fourths, as the case may be, of the National Assembly. The President has also the right to
convene the Assembly in special session whenever he chooses. On the other hand, the National
Assembly operates as a check on the Executive in the sense that its consent through its
Commission on Appointments is necessary in the appointments of certain officers; and the
concurrence of a majority of all its members is essential to the conclusion of treaties. Furthermore, in
its power to determine what courts other than the Supreme Court shall be established, to define their
jurisdiction and to appropriate funds for their support, the National Assembly controls the judicial
department to a certain extent. The Assembly also exercises the judicial power of trying
impeachments. And the judiciary in turn, with the Supreme Court as the final arbiter, effectively
checks the other departments in the exercise of its power to determine the law, and hence to declare
executive and legislative acts void if violative of the Constitution.

But in the main, the Constitution has blocked out with deft strokes and in bold lines, allotment of
power to the executive, the legislative and the judicial departments of the government. The
overlapping and interlacing of functions and duties between the several departments, however,
sometimes makes it hard to say just where the one leaves off and the other begins. In times of social
disquietude or political excitement, the great landmarks of the Constitution are apt to be forgotten or
marred, if not entirely obliterated. In cases of conflict, the judicial department is the only
constitutional organ which can be called upon to determine the proper allocation of powers between
the several departments and among the integral or constituent units thereof.

As any human production, our Constitution is of course lacking perfection and perfectibility, but as
much as it was within the power of our people, acting through their delegates to so provide, that
instrument which is the expression of their sovereignty however limited, has established a republican
government intended to operate and function as a harmonious whole, under a system of checks and
balances, and subject to specific limitations and restrictions provided in the said instrument. The
Constitution sets forth in no uncertain language the restrictions and limitations upon governmental
powers and agencies. If these restrictions and limitations are transcended it would be inconceivable
if the Constitution had not provided for a mechanism by which to direct the course of government
along constitutional channels, for then the distribution of powers would be mere verbiage, the bill of
rights mere expressions of sentiment, and the principles of good government mere political
apothegms. Certainly, the limitation and restrictions embodied in our Constitution are real as they
should be in any living constitution. In the United States where no express constitutional grant is
found in their constitution, the possession of this moderating power of the courts, not to speak of its
historical origin and development there, has been set at rest by popular acquiescence for a period of
more than one and a half centuries. In our case, this moderating power is granted, if not expressly,
by clear implication from section 2 of article VIII of our constitution.

The Constitution is a definition of the powers of government. Who is to determine the nature, scope
and extent of such powers? The Constitution itself has provided for the instrumentality of the
judiciary as the rational way. And when the judiciary mediates to allocate constitutional boundaries, it
does not assert any superiority over the other departments; it does not in reality nullify or invalidate
an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the
Constitution to determine conflicting claims of authority under the Constitution and to establish for
the parties in an actual controversy the rights which that instrument secures and guarantees to them.
This is in truth all that is involved in what is termed "judicial supremacy" which properly is the power
of judicial review under the Constitution. Even then, this power of judicial review is limited to actual
cases and controversies to be exercised after full opportunity of argument by the parties, and limited
further to the constitutional question raised or the very lis mota presented. Any attempt at abstraction
could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to
actualities. Narrowed as its function is in this manner, the judiciary does not pass upon questions of
wisdom, justice or expediency of legislation. More than that, courts accord the presumption of
constitutionality to legislative enactments, not only because the legislature is presumed to abide by
the Constitution but also because the judiciary in the determination of actual cases and
controversies must reflect the wisdom and justice of the people as expressed through their
representatives in the executive and legislative departments of the governments of the government.

But much as we might postulate on the internal checks of power provided in our Constitution, it
ought not the less to be remembered that, in the language of James Madison, the system itself is not
"the chief palladium of constitutional liberty . . . the people who are authors of this blessing must also
be its guardians . . . their eyes must be ever ready to mark, their voice to pronounce . . . aggression
on the authority of their constitution." In the Last and ultimate analysis, then, must the success of our
government in the unfolding years to come be tested in the crucible of Filipino minds and hearts than
in consultation rooms and court chambers.

In the case at bar, the national Assembly has by resolution (No. 8) of December 3, 1935, confirmed
the election of the herein petitioner to the said body. On the other hand, the Electoral Commission
has by resolution adopted on December 9, 1935, fixed said date as the last day for the filing of
protests against the election, returns and qualifications of members of the National Assembly,
notwithstanding the previous confirmation made by the National Assembly as aforesaid. If, as
contended by the petitioner, the resolution of the National Assembly has the effect of cutting off the
power of the Electoral Commission to entertain protests against the election, returns and
qualifications of members of the National Assembly, submitted after December 3, 1935, then the
resolution of the Electoral Commission of December 9, 1935, is mere surplusage and had no effect.
But, if, as contended by the respondents, the Electoral Commission has the sole power of regulating
its proceedings to the exclusion of the National Assembly, then the resolution of December 9, 1935,
by which the Electoral Commission fixed said date as the last day for filing protests against the
election, returns and qualifications of members of the National Assembly, should be upheld.

Here is then presented an actual controversy involving as it does a conflict of a grave constitutional
nature between the National Assembly on the one hand, and the Electoral Commission on the other.
From the very nature of the republican government established in our country in the light of
American experience and of our own, upon the judicial department is thrown the solemn and
inescapable obligation of interpreting the Constitution and defining constitutional boundaries. The
Electoral Commission, as we shall have occasion to refer hereafter, is a constitutional organ, created
for a specific purpose, namely to determine all contests relating to the election, returns and
qualifications of the members of the National Assembly. Although the Electoral Commission may not
be interfered with, when and while acting within the limits of its authority, it does not follow that it is
beyond the reach of the constitutional mechanism adopted by the people and that it is not subject to
constitutional restrictions. The Electoral Commission is not a separate department of the
government, and even if it were, conflicting claims of authority under the fundamental law between
department powers and agencies of the government are necessarily determined by the judiciary in
justifiable and appropriate cases. Discarding the English type and other European types of
constitutional government, the framers of our constitution adopted the American type where the
written constitution is interpreted and given effect by the judicial department. In some countries
which have declined to follow the American example, provisions have been inserted in their
constitutions prohibiting the courts from exercising the power to interpret the fundamental law. This
is taken as a recognition of what otherwise would be the rule that in the absence of direct prohibition
courts are bound to assume what is logically their function. For instance, the Constitution of Poland
of 1921, expressly provides that courts shall have no power to examine the validity of statutes (art.
81, chap. IV). The former Austrian Constitution contained a similar declaration. In countries whose
constitutions are silent in this respect, courts have assumed this power. This is true in Norway,
Greece, Australia and South Africa. Whereas, in Czechoslovakia (arts. 2 and 3, Preliminary Law to
constitutional Charter of the Czechoslovak Republic, February 29, 1920) and Spain (arts. 121-123,
Title IX, Constitutional of the Republic of 1931) especial constitutional courts are established to pass
upon the validity of ordinary laws. In our case, the nature of the present controversy shows the
necessity of a final constitutional arbiter to determine the conflict of authority between two agencies
created by the Constitution. Were we to decline to take cognizance of the controversy, who will
determine the conflict? And if the conflict were left undecided and undetermined, would not a void be
thus created in our constitutional system which may be in the long run prove destructive of the entire
framework? To ask these questions is to answer them. Natura vacuum abhorret, so must we avoid
exhaustion in our constitutional system. Upon principle, reason and authority, we are clearly of the
opinion that upon the admitted facts of the present case, this court has jurisdiction over the Electoral
Commission and the subject mater of the present controversy for the purpose of determining the
character, scope and extent of the constitutional grant to the Electoral Commission as "the sole
judge of all contests relating to the election, returns and qualifications of the members of the National
Assembly."
Having disposed of the question of jurisdiction, we shall now proceed to pass upon the second
proposition and determine whether the Electoral Commission has acted without or in excess of its
jurisdiction in adopting its resolution of December 9, 1935, and in assuming to take cognizance of
the protest filed against the election of the herein petitioner notwithstanding the previous
confirmation thereof by the National Assembly on December 3, 1935. As able counsel for the
petitioner has pointed out, the issue hinges on the interpretation of section 4 of Article VI of the
Constitution which provides:

"SEC. 4. There shall be an Electoral Commission composed of three Justice of the Supreme Court
designated by the Chief Justice, and of six Members chosen by the National Assembly, three of
whom shall be nominated by the party having the largest number of votes, and three by the party
having the second largest number of votes therein. The senior Justice in the Commission shall be its
Chairman. The Electoral Commission shall be the sole judge of all contests relating to the election,
returns and qualifications of the members of the National Assembly." It is imperative, therefore, that
we delve into the origin and history of this constitutional provision and inquire into the intention of its
framers and the people who adopted it so that we may properly appreciate its full meaning, import
and significance.

The original provision regarding this subject in the Act of Congress of July 1, 1902 (sec. 7, par. 5)
laying down the rule that "the assembly shall be the judge of the elections, returns, and qualifications
of its members", was taken from clause 1 of section 5, Article I of the Constitution of the United
States providing that "Each House shall be the Judge of the Elections, Returns, and Qualifications of
its own Members, . . . ." The Act of Congress of August 29, 1916 (sec. 18, par. 1) modified this
provision by the insertion of the word "sole" as follows: "That the Senate and House of
Representatives, respectively, shall be the sole judges of the elections, returns, and qualifications of
their elective members . . ." apparently in order to emphasize the exclusive the Legislative over the
particular case s therein specified. This court has had occasion to characterize this grant of power to
the Philippine Senate and House of Representatives, respectively, as "full, clear and complete"
(Veloso vs. Boards of Canvassers of Leyte and Samar [1919], 39 Phil., 886, 888.)

The first step towards the creation of an independent tribunal for the purpose of deciding contested
elections to the legislature was taken by the sub-committee of five appointed by the Committee on
Constitutional Guarantees of the Constitutional Convention, which sub-committee submitted a report
on August 30, 1934, recommending the creation of a Tribunal of Constitutional Security empowered
to hear legislature but also against the election of executive officers for whose election the vote of
the whole nation is required, as well as to initiate impeachment proceedings against specified
executive and judicial officer. For the purpose of hearing legislative protests, the tribunal was to be
composed of three justices designated by the Supreme Court and six members of the house of the
legislature to which the contest corresponds, three members to be designed by the majority party
and three by the minority, to be presided over by the Senior Justice unless the Chief Justice is also a
member in which case the latter shall preside. The foregoing proposal was submitted by the
Committee on Constitutional Guarantees to the Convention on September 15, 1934, with slight
modifications consisting in the reduction of the legislative representation to four members, that is,
two senators to be designated one each from the two major parties in the Senate and two
representatives to be designated one each from the two major parties in the House of
Representatives, and in awarding representation to the executive department in the persons of two
representatives to be designated by the President.

Meanwhile, the Committee on Legislative Power was also preparing its report. As submitted to the
Convention on September 24, 1934 subsection 5, section 5, of the proposed Article on the
Legislative Department, reads as follows:
The elections, returns and qualifications of the members of either house and all cases contesting the
election of any of their members shall be judged by an Electoral Commission, constituted, as to each
House, by three members elected by the members of the party having the largest number of votes
therein, three elected by the members of the party having the second largest number of votes, and
as to its Chairman, one Justice of the Supreme Court designated by the Chief Justice.

The idea of creating a Tribunal of Constitutional Security with comprehensive jurisdiction as

proposed by the Committee on Constitutional Guarantees which was probably inspired by the
Spanish plan (art. 121, Constitution of the Spanish Republic of 1931), was soon abandoned in favor
of the proposition of the Committee on Legislative Power to create a similar body with reduced
powers and with specific and limited jurisdiction, to be designated as a Electoral Commission. The
Sponsorship Committee modified the proposal of the Committee on Legislative Power with respect
to the composition of the Electoral Commission and made further changes in phraseology to suit the
project of adopting a unicameral instead of a bicameral legislature. The draft as finally submitted to
the Convention on October 26, 1934, reads as follows:

(6) The elections, returns and qualifications of the Members of the National Assembly and all cases
contesting the election of any of its Members shall be judged by an Electoral Commission,
composed of three members elected by the party having the largest number of votes in the National
Assembly, three elected by the members of the party having the second largest number of votes,
and three justices of the Supreme Court designated by the Chief Justice, the Commission to be
presided over by one of said justices.

During the discussion of the amendment introduced by Delegates Labrador, Abordo, and others,
proposing to strike out the whole subsection of the foregoing draft and inserting in lieu thereof the
following: "The National Assembly shall be the soled and exclusive judge of the elections, returns,
and qualifications of the Members", the following illuminating remarks were made on the floor of the
Convention in its session of December 4, 1934, as to the scope of the said draft:

xxx xxx xxx

Mr. VENTURA. Mr. President, we have a doubt here as to the scope of the meaning of the first four
lines, paragraph 6, page 11 of the draft, reading: "The elections, returns and qualifications of the
Members of the National Assembly and all cases contesting the election of any of its Members shall
be judged by an Electoral Commission, . . ." I should like to ask from the gentleman from Capiz
whether the election and qualification of the member whose elections is not contested shall also be
judged by the Electoral Commission.

Mr. ROXAS. If there is no question about the election of the members, there is nothing to be judged;
that is why the word "judge" is used to indicate a controversy. If there is no question about the
election of a member, there is nothing to be submitted to the Electoral Commission and there is
nothing to be determined.

Mr. VENTURA. But does that carry the idea also that the Electoral Commission shall confirm also
the election of those whose election is not contested?

Mr. ROXAS. There is no need of confirmation. As the gentleman knows, the action of the House of
Representatives confirming the election of its members is just a matter of the rules of the assembly.
It is not constitutional. It is not necessary. After a man files his credentials that he has been elected,
that is sufficient, unless his election is contested.
Mr. VENTURA. But I do not believe that that is sufficient, as we have observed that for purposes of
the auditor, in the matter of election of a member to a legislative body, because he will not authorize
his pay.

Mr. ROXAS. Well, what is the case with regards to the municipal president who is elected? What
happens with regards to the councilors of a municipality? Does anybody confirm their election? The
municipal council does this: it makes a canvass and proclaims — in this case the municipal council
proclaims who has been elected, and it ends there, unless there is a contest. It is the same case;
there is no need on the part of the Electoral Commission unless there is a contest. The first clause
refers to the case referred to by the gentleman from Cavite where one person tries to be elected in
place of another who was declared elected. From example, in a case when the residence of the man
who has been elected is in question, or in case the citizenship of the man who has been elected is in
question.

However, if the assembly desires to annul the power of the commission, it may do so by certain
maneuvers upon its first meeting when the returns are submitted to the assembly. The purpose is to
give to the Electoral Commission all the powers exercised by the assembly referring to the elections,
returns and qualifications of the members. When there is no contest, there is nothing to be judged.

Mr. VENTURA. Then it should be eliminated.

Mr. ROXAS. But that is a different matter, I think Mr. Delegate.

Mr. CINCO. Mr. President, I have a similar question as that propounded by the gentleman from
Ilocos Norte when I arose a while ago. However I want to ask more questions from the delegate from
Capiz. This paragraph 6 on page 11 of the draft cites cases contesting the election as separate from
the first part of the sections which refers to elections, returns and qualifications.

Mr. ROXAS. That is merely for the sake of clarity. In fact the cases of contested elections are
already included in the phrase "the elections, returns and qualifications." This phrase "and contested
elections" was inserted merely for the sake of clarity.

Mr. CINCO. Under this paragraph, may not the Electoral Commission, at its own instance, refuse to
confirm the elections of the members."

Mr. ROXAS. I do not think so, unless there is a protest.

Mr. LABRADOR. Mr. President, will the gentleman yield?

THE PRESIDENT. The gentleman may yield, if he so desires.

Mr. ROXAS. Willingly.

Mr. LABRADOR. Does not the gentleman from Capiz believe that unless this power is granted to the
assembly, the assembly on its own motion does not have the right to contest the election and
qualification of its members?

Mr. ROXAS. I have no doubt but that the gentleman is right. If this draft is retained as it is, even if
two-thirds of the assembly believe that a member has not the qualifications provided by law, they
cannot remove him for that reason.

Mr. LABRADOR. So that the right to remove shall only be retained by the Electoral Commission.

Mr. ROXAS. By the assembly for misconduct.

Mr. LABRADOR. I mean with respect to the qualifications of the members.

Mr. ROXAS. Yes, by the Electoral Commission.

Mr. LABRADOR. So that under this draft, no member of the assembly has the right to question the
eligibility of its members?

Mr. ROXAS. Before a member can question the eligibility, he must go to the Electoral Commission
and make the question before the Electoral Commission.

Mr. LABRADOR. So that the Electoral Commission shall decide whether the election is contested or
not contested.

Mr. ROXAS. Yes, sir: that is the purpose.

Mr. PELAYO. Mr. President, I would like to be informed if the Electoral Commission has power and
authority to pass upon the qualifications of the members of the National Assembly even though that
question has not been raised.

Mr. ROXAS. I have just said that they have no power, because they can only judge.

In the same session, the first clause of the aforesaid draft reading "The election, returns and
qualifications of the members of the National Assembly and" was eliminated by the Sponsorship
Committee in response to an amendment introduced by Delegates Francisco, Ventura, Vinzons,
Rafols, Lim, Mumar and others. In explaining the difference between the original draft and the draft
as amended, Delegate Roxas speaking for the Sponsorship Committee said:

xxx xxx xxx

Sr. ROXAS. La diferencia, señor Presidente, consiste solamente en obviar la objecion apuntada por
varios Delegados al efecto de que la primera clausula del draft que dice: "The elections, returns and
qualifications of the members of the National Assembly" parece que da a la Comision Electoral la
facultad de determinar tambien la eleccion de los miembros que no ha sido protestados y para
obviar esa dificultad, creemos que la enmienda tien razon en ese sentido, si enmendamos el draft,
de tal modo que se lea como sigue: "All cases contesting the election", de modo que los jueces de
la Comision Electoral se limitaran solamente a los casos en que haya habido protesta contra las
actas." Before the amendment of Delegate Labrador was voted upon the following interpellation also
took place:

El Sr. CONEJERO. Antes de votarse la enmienda, quisiera

El Sr. PRESIDENTE. ¿Que dice el Comite?

El Sr. ROXAS. Con mucho gusto.

El Sr. CONEJERO. Tal como esta el draft, dando tres miembros a la mayoria, y otros tres a la
minoria y tres a la Corte Suprema, ¿no cree Su Señoria que esto equivale practicamente a dejar el
asunto a los miembros del Tribunal Supremo?

El Sr. ROXAS. Si y no. Creemos que si el tribunal o la Commission esta constituido en esa forma,
tanto los miembros de la mayoria como los de la minoria asi como los miembros de la Corte
Suprema consideraran la cuestion sobre la base de sus meritos, sabiendo que el partidismo no es
suficiente para dar el triunfo.
El Sr. CONEJERO. ¿Cree Su Señoria que en un caso como ese, podriamos hacer que tanto los de
la mayoria como los de la minoria prescindieran del partidismo?

El Sr. ROXAS. Creo que si, porque el partidismo no les daria el triunfo.

xxx xxx xxx

The amendment introduced by Delegates Labrador, Abordo and others seeking to restore the power
to decide contests relating to the election, returns and qualifications of members of the National
Assembly to the National Assembly itself, was defeated by a vote of ninety-eight (98) against fifty-six
(56).

In the same session of December 4, 1934, Delegate Cruz (C.) sought to amend the draft by reducing
the representation of the minority party and the Supreme Court in the Electoral Commission to two
members each, so as to accord more representation to the majority party. The Convention rejected
this amendment by a vote of seventy-six (76) against forty-six (46), thus maintaining the non-
partisan character of the commission.

As approved on January 31, 1935, the draft was made to read as follows:

(6) All cases contesting the elections, returns and qualifications of the Members of the National
Assembly shall be judged by an Electoral Commission, composed of three members elected by the
party having the largest number of votes in the National Assembly, three elected by the members of
the party having the second largest number of votes, and three justices of the Supreme Court
designated by the Chief Justice, the Commission to be presided over by one of said justices.

The Style Committee to which the draft was submitted revised it as follows:

SEC. 4. There shall be an Electoral Commission composed of three Justices of the Supreme Court
designated by the Chief Justice, and of six Members chosen by the National Assembly, three of
whom shall be nominated by the party having the largest number of votes, and three by the party
having the second largest number of votes therein. The senior Justice in the Commission shall be its
chairman. The Electoral Commission shall be the sole judge of the election, returns, and
qualifications of the Members of the National Assembly.

When the foregoing draft was submitted for approval on February 8, 1935, the Style Committee,
through President Recto, to effectuate the original intention of the Convention, agreed to insert the
phrase "All contests relating to" between the phrase "judge of" and the words "the elections", which
was accordingly accepted by the Convention.

The transfer of the power of determining the election, returns and qualifications of the members of
the legislature long lodged in the legislative body, to an independent, impartial and non-partisan
tribunal, is by no means a mere experiment in the science of government.

Cushing, in his Law and Practice of Legislative Assemblies (ninth edition, chapter VI, pages 57, 58),
gives a vivid account of the "scandalously notorious" canvassing of votes by political parties in the
disposition of contests by the House of Commons in the following passages which are partly quoted
by the petitioner in his printed memorandum of March 14, 1936:

153. From the time when the commons established their right to be the exclusive judges of the
elections, returns, and qualifications of their members, until the year 1770, two modes of proceeding
prevailed, in the determination of controverted elections, and rights of membership. One of the
standing committees appointed at the commencement of each session, was denominated the
committee of privileges and elections, whose functions was to hear and investigate all questions of
this description which might be referred to them, and to report their proceedings, with their opinion
thereupon, to the house, from time to time. When an election petition was referred to this committee
they heard the parties and their witnesses and other evidence, and made a report of all the
evidence, together with their opinion thereupon, in the form of resolutions, which were considered
and agreed or disagreed to by the house. The other mode of proceeding was by a hearing at the bar
of the house itself. When this court was adopted, the case was heard and decided by the house, in
substantially the same manner as by a committee. The committee of privileges and elections
although a select committee. The committee of privileges and elections although a select committee
was usually what is called an open one; that is to say, in order to constitute the committee, a quorum
of the members named was required to be present, but all the members of the house were at liberty
to attend the committee and vote if they pleased.

154. With the growth of political parties in parliament questions relating to the right of membership
gradually assumed a political character; so that for many years previous to the year 1770,
controverted elections had been tried and determined by the house of commons, as mere party
questions, upon which the strength of contending factions might be tested. Thus, for Example, in
1741, Sir Robert Walpole, after repeated attacks upon his government, resigned his office in
consequence of an adverse vote upon the Chippenham election. Mr. Hatsell remarks, of the trial of
election cases, as conducted under this system, that "Every principle of decency and justice were
notoriously and openly prostituted, from whence the younger part of the house were insensibly, but
too successfully, induced to adopt the same licentious conduct in more serious matters, and in
questions of higher importance to the public welfare." Mr. George Grenville, a distinguished member
of the house of commons, undertook to propose a remedy for the evil, and, on the 7th of March,
1770, obtained the unanimous leave of the house to bring in a bill, "to regulate the trial of
controverted elections, or returns of members to serve in parliament." In his speech to explain his
plan, on the motion for leave, Mr. Grenville alluded to the existing practice in the following terms:
"Instead of trusting to the merits of their respective causes, the principal dependence of both parties
is their private interest among us; and it is scandalously notorious that we are as earnestly
canvassed to attend in favor of the opposite sides, as if we were wholly self-elective, and not bound
to act by the principles of justice, but by the discretionary impulse of our own inclinations; nay, it is
well known, that in every contested election, many members of this house, who are ultimately to
judge in a kind of judicial capacity between the competitors, enlist themselves as parties in the
contention, and take upon themselves the partial management of the very business, upon which
they should determine with the strictest impartiality."

155. It was to put an end to the practices thus described, that Mr. Grenville brought in a bill which
met with the approbation of both houses, and received the royal assent on the 12th of April, 1770.
This was the celebrated law since known by the name of the Grenville Act; of which Mr. Hatsell
declares, that it "was one of the nobles works, for the honor of the house of commons, and the
security of the constitution, that was ever devised by any minister or statesman." It is probable, that
the magnitude of the evil, or the apparent success of the remedy, may have led many of the
contemporaries of the measure to the information of a judgement, which was not acquiesced in by
some of the leading statesmen of the day, and has not been entirely confirmed by subsequent
experience. The bill was objected to by Lord North, Mr. De Grey, afterwards chief justice of the
common pleas, Mr. Ellis, Mr. Dyson, who had been clerk of the house, and Mr. Charles James Fox,
chiefly on the ground, that the introduction of the new system was an essential alteration of the
constitution of parliament, and a total abrogation of one of the most important rights and jurisdictions
of the house of commons.
As early as 1868, the House of Commons in England solved the problem of insuring the non-
partisan settlement of the controverted elections of its members by abdicating its prerogative to two
judges of the King's Bench of the High Court of Justice selected from a rota in accordance with rules
of court made for the purpose. Having proved successful, the practice has become imbedded in
English jurisprudence (Parliamentary Elections Act, 1868 [31 & 32 Vict. c. 125] as amended by
Parliamentary Elections and Corrupt Practices Act. 1879 [42 & 43 Vict. c. 75], s. 2; Corrupt and
Illegal Practices Preventions Act, 1883 [46 & 47 Vict. c. 51;, s. 70; Expiring Laws Continuance Act,
1911 [1 & 2 Geo. 5, c. 22]; Laws of England, vol. XII, p. 408, vol. XXI, p. 787). In the Dominion of
Canada, election contests which were originally heard by the Committee of the House of Commons,
are since 1922 tried in the courts. Likewise, in the Commonwealth of Australia, election contests
which were originally determined by each house, are since 1922 tried in the High Court. In Hungary,
the organic law provides that all protests against the election of members of the Upper House of the
Diet are to be resolved by the Supreme Administrative Court (Law 22 of 1916, chap. 2, art. 37, par.
6). The Constitution of Poland of March 17, 1921 (art. 19) and the Constitution of the Free City of
Danzig of May 13, 1922 (art. 10) vest the authority to decide contested elections to the Diet or
National Assembly in the Supreme Court. For the purpose of deciding legislative contests, the
Constitution of the German Reich of July 1, 1919 (art. 31), the Constitution of the Czechoslovak
Republic of February 29, 1920 (art. 19) and the Constitution of the Grecian Republic of June 2, 1927
(art. 43), all provide for an Electoral Commission.

The creation of an Electoral Commission whose membership is recruited both from the legislature
and the judiciary is by no means unknown in the United States. In the presidential elections of 1876
there was a dispute as to the number of electoral votes received by each of the two opposing
candidates. As the Constitution made no adequate provision for such a contingency, Congress
passed a law on January 29, 1877 (United States Statutes at Large, vol. 19, chap. 37, pp. 227-229),
creating a special Electoral Commission composed of five members elected by the Senate, five
members elected by the House of Representatives, and five justices of the Supreme Court, the fifth
justice to be selected by the four designated in the Act. The decision of the commission was to be
binding unless rejected by the two houses voting separately. Although there is not much of a moral
lesson to be derived from the experience of America in this regard, judging from the observations of
Justice Field, who was a member of that body on the part of the Supreme Court (Countryman, the
Supreme Court of the United States and its Appellate Power under the Constitution [Albany, 1913]
— Relentless Partisanship of Electoral Commission, p. 25 et seq.), the experiment has at least
abiding historical interest.

The members of the Constitutional Convention who framed our fundamental law were in their
majority men mature in years and experience. To be sure, many of them were familiar with the
history and political development of other countries of the world. When , therefore, they deemed it
wise to create an Electoral Commission as a constitutional organ and invested it with the exclusive
function of passing upon and determining the election, returns and qualifications of the members of
the National Assembly, they must have done so not only in the light of their own experience but also
having in view the experience of other enlightened peoples of the world. The creation of the Electoral
Commission was designed to remedy certain evils of which the framers of our Constitution were
cognizant. Notwithstanding the vigorous opposition of some members of the Convention to its
creation, the plan, as hereinabove stated, was approved by that body by a vote of 98 against 58. All
that can be said now is that, upon the approval of the constitutional the creation of the Electoral
Commission is the expression of the wisdom and "ultimate justice of the people". (Abraham Lincoln,
First Inaugural Address, March 4, 1861.)
From the deliberations of our Constitutional Convention it is evident that the purpose was to transfer
in its totality all the powers previously exercised by the legislature in matters pertaining to contested
elections of its members, to an independent and impartial tribunal. It was not so much the knowledge
and appreciation of contemporary constitutional precedents, however, as the long-felt need of
determining legislative contests devoid of partisan considerations which prompted the people, acting
through their delegates to the Convention, to provide for this body known as the Electoral
Commission. With this end in view, a composite body in which both the majority and minority parties
are equally represented to off-set partisan influence in its deliberations was created, and further
endowed with judicial temper by including in its membership three justices of the Supreme Court.

The Electoral Commission is a constitutional creation, invested with the necessary authority in the
performance and execution of the limited and specific function assigned to it by the Constitution.
Although it is not a power in our tripartite scheme of government, it is, to all intents and purposes,
when acting within the limits of its authority, an independent organ. It is, to be sure, closer to the
legislative department than to any other. The location of the provision (section 4) creating the
Electoral Commission under Article VI entitled "Legislative Department" of our Constitution is very
indicative. Its compositions is also significant in that it is constituted by a majority of members of the
legislature. But it is a body separate from and independent of the legislature.

The grant of power to the Electoral Commission to judge all contests relating to the election, returns
and qualifications of members of the National Assembly, is intended to be as complete and
unimpaired as if it had remained originally in the legislature. The express lodging of that power in the
Electoral Commission is an implied denial of the exercise of that power by the National Assembly.
And this is as effective a restriction upon the legislative power as an express prohibition in the
Constitution (Ex parte Lewis, 45 Tex. Crim. Rep., 1; State vs. Whisman, 36 S.D., 260; L.R.A.,
1917B, 1). If we concede the power claimed in behalf of the National Assembly that said body may
regulate the proceedings of the Electoral Commission and cut off the power of the commission to lay
down the period within which protests should be filed, the grant of power to the commission would
be ineffective. The Electoral Commission in such case would be invested with the power to
determine contested cases involving the election, returns and qualifications of the members of the
National Assembly but subject at all times to the regulative power of the National Assembly. Not only
would the purpose of the framers of our Constitution of totally transferring this authority from the
legislative body be frustrated, but a dual authority would be created with the resultant inevitable
clash of powers from time to time. A sad spectacle would then be presented of the Electoral
Commission retaining the bare authority of taking cognizance of cases referred to, but in reality
without the necessary means to render that authority effective whenever and whenever the National
Assembly has chosen to act, a situation worse than that intended to be remedied by the framers of
our Constitution. The power to regulate on the part of the National Assembly in procedural matters
will inevitably lead to the ultimate control by the Assembly of the entire proceedings of the Electoral
Commission, and, by indirection, to the entire abrogation of the constitutional grant. It is obvious that
this result should not be permitted.

We are not insensible to the impassioned argument or the learned counsel for the petitioner
regarding the importance and necessity of respecting the dignity and independence of the national
Assembly as a coordinate department of the government and of according validity to its acts, to
avoid what he characterized would be practically an unlimited power of the commission in the
admission of protests against members of the National Assembly. But as we have pointed out
hereinabove, the creation of the Electoral Commission carried with it ex necesitate rei the power
regulative in character to limit the time with which protests intrusted to its cognizance should be filed.
It is a settled rule of construction that where a general power is conferred or duty enjoined, every
particular power necessary for the exercise of the one or the performance of the other is also
conferred (Cooley, Constitutional Limitations, eight ed., vol. I, pp. 138, 139). In the absence of any
further constitutional provision relating to the procedure to be followed in filing protests before the
Electoral Commission, therefore, the incidental power to promulgate such rules necessary for the
proper exercise of its exclusive power to judge all contests relating to the election, returns and
qualifications of members of the National Assembly, must be deemed by necessary implication to
have been lodged also in the Electoral Commission.

It is, indeed, possible that, as suggested by counsel for the petitioner, the Electoral Commission may
abuse its regulative authority by admitting protests beyond any reasonable time, to the disturbance
of the tranquillity and peace of mind of the members of the National Assembly. But the possibility of
abuse is not argument against the concession of the power as there is no power that is not
susceptible of abuse. In the second place, if any mistake has been committed in the creation of an
Electoral Commission and in investing it with exclusive jurisdiction in all cases relating to the
election, returns, and qualifications of members of the National Assembly, the remedy is political, not
judicial, and must be sought through the ordinary processes of democracy. All the possible abuses
of the government are not intended to be corrected by the judiciary. We believe, however, that the
people in creating the Electoral Commission reposed as much confidence in this body in the
exclusive determination of the specified cases assigned to it, as they have given to the Supreme
Court in the proper cases entrusted to it for decision. All the agencies of the government were
designed by the Constitution to achieve specific purposes, and each constitutional organ working
within its own particular sphere of discretionary action must be deemed to be animated with the
same zeal and honesty in accomplishing the great ends for which they were created by the
sovereign will. That the actuations of these constitutional agencies might leave much to be desired in
given instances, is inherent in the perfection of human institutions. In the third place, from the fact
that the Electoral Commission may not be interfered with in the exercise of its legitimate power, it
does not follow that its acts, however illegal or unconstitutional, may not be challenge in appropriate
cases over which the courts may exercise jurisdiction.

But independently of the legal and constitutional aspects of the present case, there are
considerations of equitable character that should not be overlooked in the appreciation of the
intrinsic merits of the controversy. The Commonwealth Government was inaugurated on November
15, 1935, on which date the Constitution, except as to the provisions mentioned in section 6 of
Article XV thereof, went into effect. The new National Assembly convened on November 25th of that
year, and the resolution confirming the election of the petitioner, Jose A. Angara was approved by
that body on December 3, 1935. The protest by the herein respondent Pedro Ynsua against the
election of the petitioner was filed on December 9 of the same year. The pleadings do not show
when the Electoral Commission was formally organized but it does appear that on December 9,
1935, the Electoral Commission met for the first time and approved a resolution fixing said date as
the last day for the filing of election protest. When, therefore, the National Assembly passed its
resolution of December 3, 1935, confirming the election of the petitioner to the National Assembly,
the Electoral Commission had not yet met; neither does it appear that said body had actually been
organized. As a mater of fact, according to certified copies of official records on file in the archives
division of the National Assembly attached to the record of this case upon the petition of the
petitioner, the three justices of the Supreme Court the six members of the National Assembly
constituting the Electoral Commission were respectively designated only on December 4 and 6,
1935. If Resolution No. 8 of the National Assembly confirming non-protested elections of members
of the National Assembly had the effect of limiting or tolling the time for the presentation of protests,
the result would be that the National Assembly — on the hypothesis that it still retained the incidental
power of regulation in such cases — had already barred the presentation of protests before the
Electoral Commission had had time to organize itself and deliberate on the mode and method to be
followed in a matter entrusted to its exclusive jurisdiction by the Constitution. This result was not and
could not have been contemplated, and should be avoided.

From another angle, Resolution No. 8 of the National Assembly confirming the election of members
against whom no protests had been filed at the time of its passage on December 3, 1935, can not be
construed as a limitation upon the time for the initiation of election contests. While there might have
been good reason for the legislative practice of confirmation of the election of members of the
legislature at the time when the power to decide election contests was still lodged in the legislature,
confirmation alone by the legislature cannot be construed as depriving the Electoral Commission of
the authority incidental to its constitutional power to be "the sole judge of all contest relating to the
election, returns, and qualifications of the members of the National Assembly", to fix the time for the
filing of said election protests. Confirmation by the National Assembly of the returns of its members
against whose election no protests have been filed is, to all legal purposes, unnecessary. As
contended by the Electoral Commission in its resolution of January 23, 1936, overruling the motion
of the herein petitioner to dismiss the protest filed by the respondent Pedro Ynsua, confirmation of
the election of any member is not required by the Constitution before he can discharge his duties as
such member. As a matter of fact, certification by the proper provincial board of canvassers is
sufficient to entitle a member-elect to a seat in the national Assembly and to render him eligible to
any office in said body (No. 1, par. 1, Rules of the National Assembly, adopted December 6, 1935).

Under the practice prevailing both in the English House of Commons and in the Congress of the
United States, confirmation is neither necessary in order to entitle a member-elect to take his seat.
The return of the proper election officers is sufficient, and the member-elect presenting such return
begins to enjoy the privileges of a member from the time that he takes his oath of office (Laws of
England, vol. 12, pp. 331. 332; vol. 21, pp. 694, 695; U. S. C. A., Title 2, secs. 21, 25, 26).
Confirmation is in order only in cases of contested elections where the decision is adverse to the
claims of the protestant. In England, the judges' decision or report in controverted elections is
certified to the Speaker of the House of Commons, and the House, upon being informed of such
certificate or report by the Speaker, is required to enter the same upon the Journals, and to give
such directions for confirming or altering the return, or for the issue of a writ for a new election, or for
carrying into execution the determination as circumstances may require (31 & 32 Vict., c. 125, sec.
13). In the United States, it is believed, the order or decision of the particular house itself is generally
regarded as sufficient, without any actual alternation or amendment of the return (Cushing, Law and
Practice of Legislative Assemblies, 9th ed., sec. 166).

Under the practice prevailing when the Jones Law was still in force, each house of the Philippine
Legislature fixed the time when protests against the election of any of its members should be filed.
This was expressly authorized by section 18 of the Jones Law making each house the sole judge of
the election, return and qualifications of its members, as well as by a law (sec. 478, Act No. 3387)
empowering each house to respectively prescribe by resolution the time and manner of filing contest
in the election of member of said bodies. As a matter of formality, after the time fixed by its rules for
the filing of protests had already expired, each house passed a resolution confirming or approving
the returns of such members against whose election no protests had been filed within the prescribed
time. This was interpreted as cutting off the filing of further protests against the election of those
members not theretofore contested (Amistad vs. Claravall [Isabela], Second Philippine Legislature,
Record — First Period, p. 89; Urguello vs. Rama [Third District, Cebu], Sixth Philippine Legislature;
Fetalvero vs. Festin [Romblon], Sixth Philippine Legislature, Record — First Period, pp. 637-640;
Kintanar vs. Aldanese [Fourth District, Cebu], Sixth Philippine Legislature, Record — First Period,
pp. 1121, 1122; Aguilar vs. Corpus [Masbate], Eighth Philippine Legislature, Record — First Period,
vol. III, No. 56, pp. 892, 893). The Constitution has repealed section 18 of the Jones Law. Act No.
3387, section 478, must be deemed to have been impliedly abrogated also, for the reason that with
the power to determine all contest relating to the election, returns and qualifications of members of
the National Assembly, is inseparably linked the authority to prescribe regulations for the exercise of
that power. There was thus no law nor constitutional provisions which authorized the National
Assembly to fix, as it is alleged to have fixed on December 3, 1935, the time for the filing of contests
against the election of its members. And what the National Assembly could not do directly, it could
not do by indirection through the medium of confirmation.

Summarizing, we conclude:

(a) That the government established by the Constitution follows fundamentally the theory of
separation of power into the legislative, the executive and the judicial.

(b) That the system of checks and balances and the overlapping of functions and duties often makes
difficult the delimitation of the powers granted.

(c) That in cases of conflict between the several departments and among the agencies thereof, the
judiciary, with the Supreme Court as the final arbiter, is the only constitutional mechanism devised
finally to resolve the conflict and allocate constitutional boundaries.

(d) That judicial supremacy is but the power of judicial review in actual and appropriate cases and
controversies, and is the power and duty to see that no one branch or agency of the government
transcends the Constitution, which is the source of all authority.

(e) That the Electoral Commission is an independent constitutional creation with specific powers and
functions to execute and perform, closer for purposes of classification to the legislative than to any of
the other two departments of the governments.

(f ) That the Electoral Commission is the sole judge of all contests relating to the election, returns
and qualifications of members of the National Assembly.

(g) That under the organic law prevailing before the present Constitution went into effect, each
house of the legislature was respectively the sole judge of the elections, returns, and qualifications of
their elective members.

(h) That the present Constitution has transferred all the powers previously exercised by the
legislature with respect to contests relating to the elections, returns and qualifications of its
members, to the Electoral Commission.

(i) That such transfer of power from the legislature to the Electoral Commission was full, clear and
complete, and carried with it ex necesitate rei the implied power inter alia to prescribe the rules and
regulations as to the time and manner of filing protests.

( j) That the avowed purpose in creating the Electoral Commission was to have an independent
constitutional organ pass upon all contests relating to the election, returns and qualifications of
members of the National Assembly, devoid of partisan influence or consideration, which object
would be frustrated if the National Assembly were to retain the power to prescribe rules and
regulations regarding the manner of conducting said contests.

(k) That section 4 of article VI of the Constitution repealed not only section 18 of the Jones Law
making each house of the Philippine Legislature respectively the sole judge of the elections, returns
and qualifications of its elective members, but also section 478 of Act No. 3387 empowering each
house to prescribe by resolution the time and manner of filing contests against the election of its
members, the time and manner of notifying the adverse party, and bond or bonds, to be required, if
any, and to fix the costs and expenses of contest.

(l) That confirmation by the National Assembly of the election is contested or not, is not essential
before such member-elect may discharge the duties and enjoy the privileges of a member of the
National Assembly.

(m) That confirmation by the National Assembly of the election of any member against whom no
protest had been filed prior to said confirmation, does not and cannot deprive the Electoral
Commission of its incidental power to prescribe the time within which protests against the election of
any member of the National Assembly should be filed.

We hold, therefore, that the Electoral Commission was acting within the legitimate exercise of its
constitutional prerogative in assuming to take cognizance of the protest filed by the respondent
Pedro Ynsua against the election of the herein petitioner Jose A. Angara, and that the resolution of
the National Assembly of December 3, 1935 can not in any manner toll the time for filing protests
against the elections, returns and qualifications of members of the National Assembly, nor prevent
the filing of a protest within such time as the rules of the Electoral Commission might prescribe.

In view of the conclusion reached by us relative to the character of the Electoral Commission as a
constitutional creation and as to the scope and extent of its authority under the facts of the present
controversy, we deem it unnecessary to determine whether the Electoral Commission is an inferior
tribunal, corporation, board or person within the purview of sections 226 and 516 of the Code of Civil
Procedure.

The petition for a writ of prohibition against the Electoral Commission is hereby denied, with costs
against the petitioner. So ordered.

Avanceña, C. J., Diaz, Concepcion, and Horrilleno, JJ., concur.

Separate Opinions

ABAD SANTOS, J., concurring:

I concur in the result and in most of the views so ably expressed in the preceding opinion. I am,
however, constrained to withhold my assent to certain conclusions therein advanced.

The power vested in the Electoral Commission by the Constitution of judging of all contests relating
to the election, returns, and qualifications of the members of the National Assembly, is judicial in
nature. (Thomas vs. Loney, 134 U.S., 372; 33 Law. ed., 949, 951.) On the other hand, the power to
regulate the time in which notice of a contested election may be given, is legislative in character.
(M'Elmoyle vs. Cohen, 13 Pet., 312; 10 Law. ed., 177; Missouri vs. Illinois, 200 U. S. 496; 50 Law.
ed., 572.)

It has been correctly stated that the government established by the Constitution follows
fundamentally the theory of the separation of powers into legislative, executive, and judicial.
Legislative power is vested in the National Assembly. (Article VI, sec. 1.) In the absence of any clear
constitutional provision to the contrary, the power to regulate the time in which notice of a contested
election may be given, must be deemed to be included in the grant of legislative power to the
National Assembly.
The Constitution of the United States contains a provision similar to the that found in Article VI,
section 4, of the Constitution of the Philippines. Article I, section 5, of the Constitution of the United
States provides that each house of the Congress shall be the judge of the elections, returns, and
qualifications of its own members. Notwithstanding this provision, the Congress has assumed the
power to regulate the time in which notice of a contested election may be given. Thus section 201,
Title 2, of the United States Code Annotated prescribes:

Whenever any person intends to contest an election of any Member of the House of Representatives
of the United States, he shall, within thirty days after the result of such election shall have been
determined by the officer or board of canvassers authorized by law to determine the same, give
notice, in writing, to the Member whose seat he designs to contest, of his intention to contest the
same, and, in such notice, shall specify particularly the grounds upon which he relies in the contest.
(R. S., par. 105.)

The Philippine Autonomy Act, otherwise known as the Jones Law, also contained a provision to the
effect that the Senate and House of Representatives, respectively, shall be the sole judges of the
elections, returns, and qualifications of their elective members. Notwithstanding this provision, the
Philippine Legislature passed the Election Law, section 478 of which reads as follows:

The Senate and the House of Representatives shall by resolution respectively prescribe the time
and manner of filing contest in the election of members of said bodies, the time and manner of
notifying the adverse party, and bond or bonds, to be required, if any, and shall fix the costs and
expenses of contest which may be paid from their respective funds.

The purpose sought to be attained by the creation of the Electoral Commission was not to erect a
body that would be above the law, but to raise legislative elections contests from the category of
political to that of justiciable questions. The purpose was not to place the commission beyond the
reach of the law, but to insure the determination of such contests with the due process of law.

Section 478 of the Election Law was in force at the time of the adoption of the Constitution, Article
XV, section 2, of which provides that —

All laws of the Philippine Islands shall continue in force until the inauguration of the Commonwealth
of the Philippines; thereafter, such laws shall remain operative, unless inconsistent with this
Constitution, until amended, altered, modified, or repealed by the National Assembly, and all
references in such laws to the Government or officials of the Philippine Islands shall be construed, in
so far as applicable, to refer to the Government and corresponding officials under this Constitution.

The manifest purpose of this constitutional provision was to insure the orderly processes of
government, and to prevent any hiatus in its operations after the inauguration of the Commonwealth
of the Philippines. It was thus provided that all laws of the Philippine Islands shall remain operative
even after the inauguration of the Commonwealth of the Philippines, unless inconsistent with the
Constitution, and that all references in such laws to the government or officials of the Philippine
Islands shall be construed, in so far as applicable, to refer to the government and corresponding
officials under the Constitution. It would seem to be consistent not only with the spirit but the letter of
the Constitution to hold that section 478 of the Election Law remains operative and should now be
construed to refer to the Electoral Commission, which, in so far as the power to judge election
contests is concerned, corresponds to either the Senate or the House of Representative under the
former regime. It is important to observe in this connection that said section 478 of the Election Law
vested the power to regulate the time and manner in which notice of a contested election may be
given, not in the Philippine Legislature but in the Senate and House of Representatives singly. In
other words, the authority to prescribe the time and manner of filing contests in the elections of
members of the Philippine Legislature was by statute lodged separately in the bodies clothed with
power to decide such contests. Construing section 478 of the Election Law to refer to the National
Assembly, as required by Article XV, section 2, of the Constitution, it seems reasonable to conclude
that the authority to prescribe the time and manner of filing contests in the election of members of
the National Assembly is vested in the Electoral Commission, which is now the body clothed with
power to decide such contests.

In the light of what has been said, the resolution of the National Assembly of December 3, 1935,
could not have the effect of barring the right of the respondent Pedro Ynsua to contest the election of
the petitioner. By the same token, the Electoral Commission was authorized by law to adopt its
resolution of December 9, 1935, which fixed the time with in which written contests must be filed with
the commission.

Having been filed within the time fixed by its resolutions, the Electoral Commission has jurisdiction to
hear and determine the contest filed by the respondent Pedro Ynsua against the petitioner Jose A.
Angara.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 133064 September 16, 1999

JOSE C. MIRANDA, ALFREDO S. DIRIGE, MANUEL H. AFIADO, MARIANO V. BABARAN and

ANDRES R. CABUYADAO, petitioners,
vs.
HON. ALEXANDER AGUIRRE, In his capacity as Executive Secretary; HON. EPIMACO VELASCO,
in his capacity as Secretary of Local Government, HON. SALVADOR ENRIQUEZ, in his capacity as
Secretary of Budget, THE COMMISSION ON AUDIT, THE COMMISSION ON ELECTIONS, HON.
BENJAMIN G. DY, in his capacity as Governor of Isabela, THE HONORABLE SANGGUNIANG
PANLALAWIGAN OF ISABELA, ATTY. BALTAZAR PICIO, in his capacity as Provincial
Administrator, and MR. ANTONIO CHUA, in his capacity as Provincial Treasurer, respondents,
GIORGIDI B. AGGABAO, intervenor.

PUNO, J.:

This is a petition for a writ of prohibition with prayer for preliminary injunction assailing the
constitutionality of Republic Act No. 8528 converting the city of Santiago, Isabela from an
independent component city to a component city.

On May 5, 1994, Republic Act No. 7720 which converted the municipality of Santiago, Isabela into
an independent component city was signed into law. On July 4, 1994, the people of Santiago ratified
R.A. No. 7720 in a plebiscite.
1

On February 14, 1998, Republic Act No. 8528 was enacted. It amended R.A. No. 7720. Among
others, it changed the status of Santiago from an independent component city to a component city,
viz.:

AN ACT AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED 7720 — AN

ACT CONVERTING THE MUNICIPALITY OF SANTIAGO INTO AN INDEPENDENT
COMPONENT CITY TO BE KNOWN AS THE CITY OF SANTIAGO.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

Sec. 1. Section 2 of Republic Act No. 7720 is hereby amended by deleting the words "an
independent" thereon so that said Section will read as follows:

Sec. 2. The City of Santiago. — The Municipality of Santiago shall be converted into
a component city to be known as the City of Santiago, hereinafter referred to as the
City, which shall comprise of the present territory of the Municipality of Santiago,
Isabela. The territorial jurisdiction of the City shall be within the present metes and
bounds of the Municipality of Santiago.

Sec. 2. Section 51 of Republic Act No. 7720 is hereby amended deleting the entire section and in its
stead substitute the following:

Sec. 51. Election of Provincial Governor, Vice-Governor, Sangguniang Panlalawigan

Members, and any Elective Provincial Position for the Province of Isabela. — The
voters of the City of Santiago shall be qualified to vote in the elections of the
Provincial Governor, Vice-Governor, Sangguniang Panlalawigan members and other
elective provincial positions of the Province of Isabela, and any such qualified voter
can be a candidate for such provincial positions and any elective provincial office.

Sec. 3. Repealing Clause. — All existing laws or parts thereof inconsistent with the provisions of this
Act are hereby repealed or modified accordingly.

Sec. 4. Effectivity. — This Act shall take effect upon its approval.

Approved.

Petitioners assail the constitutionality of R.A. No. 8528. 2 They alleged as ground the lack of
provision in R.A. No. 8528 submitting the law for ratification by the people of Santiago City in a
proper plebiscite. Petitioner Miranda was the mayor of Santiago at the time of the filing of the petition
at bar. Petitioner Afiado is the President of the Liga ng mga Barangay ng Santiago City. Petitioners
Dirige, Cabuyadao and Babaran are residents of Santiago City.

In their Comment, respondent provincial officials of Isabela defended the constitutionality of R.A. No.
8528. They assailed the standing of petitioners to file the petition at bar. They also contend that the
petition raises a political question over which this Court lacks jurisdiction.

Another Comment was filed by the Solicitor General for the respondent public officials. The Solicitor
General also contends that petitioners are not real parties in interest. More importantly, it is
contended that R.A. No. 8528 merely reclassified Santiago City from an independent component city
to a component city. It allegedly did not involve any "creation, division, merger, abolition, or
substantial alteration of boundaries of local government units," hence, a plebiscite of the people of
Santiago is unnecessary.

A third Comment similar in tone was submitted by intervenor Giorgidi B. Aggabao, 3 a member of the
provincial board of Isabela. 4 He contended that both the Constitution and the Local Government
Code of 1991 do not require a plebiscite "to approve a law that merely allowed qualified voters of a
city to vote in provincial elections. The rules implementing the Local Government Code cannot
require a plebiscite. He also urged that petitioners lacked locus standi.
Petitioners filed a Reply to meet the arguments of the respondents and the intervenor. They
defended their standing. They also stressed the changes that would visit the city of Santiago as a
result of its reclassification.

We find merit in the petition.

First. The challenge to the locus standi of petitioners cannot succeed. It is now an ancient rule that
the constitutionality of law can be challenged by one who will sustain a direct injury as a result of its
enforcement. 5 Petitioner Miranda was the mayor of Santiago City when he filed the present petition
in his own right as mayor and not on behalf of the city, hence, he did not need the consent of the city
council of Santiago. It is also indubitable that the change of status of the city of Santiago from
independent component city to a mere component city will affect his powers as mayor, as will be
shown hereafter. The injury that he would sustain from the enforcement of R.A. No. 8528 is direct
and immediate and not a mere generalized grievance shared with the people of Santiago City.
Similarly, the standing of the other petitioners rests on a firm foundation. They are residents and
voters in the city of Santiago. They have the right to be heard in the conversion of their city thru a
plebiscite to be conducted by the COMELEC. The denial of this right in R.A. No. 8528 gives them
proper standing to strike the law as unconstitutional. 1âwphi1.nêt

Second. The plea that this court back off from assuming jurisdiction over the petition at bar on the
ground that it involves a political question has to be brushed aside. This plea has long lost its appeal
especially in light of Section 1 of Article VIII of the 1987 Constitution which defines judicial power as
including "the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the government." To be sure, the cut between a political and justiciable issue has been made by
this Court in many cases and need no longer mystify us. In Tañada v. Cuenco, 6 we held:

xxx xxx xxx

The term "political question" connotes what it means in ordinary parlance, namely, a question of
policy. It refers "to those questions which under the Constitution are to be decided by the people in
their sovereign capacity; or in regard to which full discretionary authority has been delegated to the
legislative or executive branch of the government." It is concerned with issues dependent upon the
wisdom, not legality, of a particular measure.

In Casibang v. Aquino, 7 we defined a justiciable issue as follows:

A purely justiciable issue implies a given right, legally demandable and enforceable, an act
or omission violative of such right, and a remedy granted and sanctioned by law, for said
breach of right.

Clearly, the petition at bar presents a justiciable issue. Petitioners claim that under Section 10,
Article X of the 1987 Constitution they have a right to approve or disapprove R.A. No. 8528 in a
plebiscite before it can be enforced. It ought to be self-evident that whether or not petitioners have
the said right is a legal not a political question. For whether or not laws passed by Congress comply
with the requirements of the Constitution pose questions that this Court alone can decide. The
proposition that this Court is the ultimate arbiter of the meaning and nuances of the Constitution
need not be the subject of a prolix explanation.

Third. The threshold issue is whether R.A. No. 8528 is unconstitutional for its failure to provide that
the conversion of the city of Santiago from an independent component city to a component city
should be submitted to its people in a proper plebiscite. We hold that the Constitution requires a
plebiscite. Section 10, Article X of the 1987 Constitution provides:

No province, city, municipality, or barangay may be created, or divided, merged, abolished,

or its boundary substantially altered except in accordance with the criteria established in the
local government code and subject to approval by a majority of the votes cast in a plebiscite
in the political units directly affected.

This constitutional requirement is reiterrated in Section 10, Chapter 2 of the Local Government Code
(R.A. No. 7160), thus:

Sec. 10. No province, city, municipality, or barangay may be created, divided, merged,
abolished, or its boundary substantially altered except in accordance with the criteria
established in the local government code and subject to approval by a majority of the votes
cast in a plebiscite in the political units directly affected.

The power to create, divide, merge, abolish or substantially alter boundaries of local government
units belongs to Congress. 8 This power is part of the larger power to enact laws which the
Constitution vested in Congress. 9 The exercise of the power must be in accord with the mandate of
the Constitution. In the case at bar, the issue is whether the downgrading of Santiago City from an
independent component city to a mere component city requires the approval of the people of
Santiago City in a plebiscite. The resolution of the issue depends on whether or not the downgrading
falls within the meaning of creation, division, merger, abolition or substantial alteration of boundaries
of municipalities per Section 10, Article X of the Constitution. A close analysis of the said
constitutional provision will reveal that the creation, division, merger, abolition or substantial
alteration of boundaries of local government units involve a common denominator — material
change in the political and economic rights of the local government units directly affected as well as
the people therein. It is precisely for this reason that the Constitution requires the approval of the
people "in the political units directly affected." It is not difficult to appreciate the rationale of this
constitutional requirement. The 1987 Constitution, more than any of our previous Constitutions, gave
more reality to the sovereignty of our people for it was borne out of the people power in the 1986
EDSA revolution. Its Section 10, Article X addressed the undesirable practice in the past whereby
local government units were created, abolished, merged or divided on the basis of the vagaries of
politics and not of the welfare of the people. Thus, the consent of the people of the local government
unit directly affected was required to serve as a checking mechanism to any exercise of legislative
power creating, dividing, abolishing, merging or altering the boundaries of local government units. It
is one instance where the people in their sovereign capacity decide on a matter that affects them —
direct democracy of the people as opposed to democracy thru people's representatives. This
plebiscite requirement is also in accord with the philosophy of the Constitution granting more
autonomy to local government units.

The changes that will result from the downgrading of the city of Santiago from an independent
component city to a component city are many and cannot be characterized as insubstantial. For one,
the independence of the city as a political unit will be diminished. The city mayor will be placed under
the administrative supervision of the provincial governor. The resolutions and ordinances of the city
council of Santiago will have to be reviewed by the Provincial Board of Isabela. Taxes that will be
collected by the city will now have to be shared with the province. Petitioners pointed out these far
reaching changes on the life of the people of the city of Santiago, viz.: 10

Although RESPONDENTS would like to make it appear that R.A. No. 8528 had "merely re-
classified" Santiago City from an independent component city into a component city, the
effect when challenged (sic) the Act were operational would be, actually, that of conversion.
 Consequently, there would be substantial changes in the political culture and administrative
responsibilities of Santiago City, and the Province of Isabela. Santiago City from an
independent component city will revert to the Province of Isabela, geographically, politically,
and administratively. Thus, the territorial land area of Santiago City will be added to the land
area comprising the province of Isabela. This will be to the benefit or advantage of the
Provincial Government of Isabela on account of the subsequent increase of its share from
the internal revenue allotment (IRA) from the National Government (Section 285, R.A. No.
7160 or the Local Government Code of 1991). The IRA is based on land area and population
of local government units, provinces included.

The nature or kinds, and magnitude of the taxes collected by the City Government, and which taxes
shall accrue solely to the City Government, will be redefined (Section 151, R.A. No. 7160), and may
be shared with the province such as taxes on sand, gravel and other quarry resources (Section 138,
R.A. No. 7160), professional taxes (Section 139, R.A. No. 7160), or amusement taxes (Section 140,
R.A. No. 7160). The Provincial Government will allocate operating funds for the City. Inarguably,
there would be a (sic) diminished funds for the local operations of the City Government because of
reduced shares of the IRA in accordance with the schedule set forth by Section 285 of R.A. No.
7160. The City Government's share in the proceeds in the development and utilization of national
wealth shall be diluted since certain portions shall accrue to the Provincial Government (Section 292,
R.A. No. 7160).

The registered voters of Santiago City will vote for and can be voted as provincial officials (Section
451 and 452 [c], R.A. No. 7160).

The City Mayor will now be under the administrative supervision of the Provincial Governor who is
tasked by law to ensure that every component city and municipality within the territorial jurisdiction of
the province acts within the scope of its prescribed powers and functions (Section 29 and 465 (b) (2)
(i), R.A. No. 7160), and to review (Section 30, R.A. No. 7160) all executive orders submitted by the
former (Section 455 (b) (1) (xii), R.A. No. 7160) and (R)eportorial requirements with respect to the
local governance and state of affairs of the city (Section 455 (b) (1) (xx), R.A. No. 7160). Elective city
officials will also be effectively under the control of the Provincial Governor (Section 63, R.A. No.
7160). Such will be the great change in the state of the political autonomy of what is now Santiago
City where by virtue of R.A. No. 7720, it is the Office of the President which has supervisory
authority over it as an independent component city (Section 25, R.A. No. 7160; Section 4 (ARTICLE
X), 1987 Constitution).

The resolutions and ordinances adopted and approved by the Sangguniang Panlungsod will be
subject to the review of the Sangguniang Panlalawigan (Sections 56, 468, (a) (1) (i), 468 (a) (2) (vii),
and 469 (c) (4), R.A. No. 7160). Likewise, the decisions in administrative cases by the former could
be appealed and acted upon by the latter (Section 67 R.A. No. 7160).

It is markworthy that when R.A. No. 7720 upgraded the status of Santiago City from a municipality to
an independent component city, it required the approval of its people thru a plebiscite called for the
purpose. There is neither rhyme nor reason why this plebiscite should not be called to determine the
will of the people of Santiago City when R.A. No. 8528 downgrades the status of their city. Indeed,
there is more reason to consult the people when a law substantially diminishes their right. Rule II,
Article 6, paragraph (f) (1) of the Implementing Rules and Regulations of the Local Government
Code is in accord with the Constitution when it provides that:

(f) Plebiscite — (1) no creation, conversion, division, merger, abolition, or substantial

alteration of boundaries of LGUS shall take effect unless approved by a majority of the votes
cast in a plebiscite called for the purpose in the LGU or LGUs affected. The plebiscite shall
 be conducted by the Commission on Elections (COMELEC) within one hundred twenty (120)
days from the effectivity of the law or ordinance prescribing such action, unless said law or
ordinance fixes another date.

xxx xxx xxx

The rules cover all conversions, whether upward or downward in character, so long as they result in
a material change in the local government unit directly affected, especially a change in the political
and economic rights of its people.

A word on the dissenting opinions of our esteemed brethren. Mr. Justice Buena justifies R.A. No.
8528 on the ground that Congress has the power to amend the charter of Santiago City. This power
of amendment, however, is limited by Section 10, Article X of the Constitution. Quite clearly, when
an amendment of a law involves the creation, merger, division, abolition or substantial alteration of
boundaries of local government units, a plebiscite in the political units directly affected is mandatory.
He also contends that the amendment merely caused a transition in the status of Santiago as a city.
Allegedly, it is a transition because no new city was created nor was a former city dissolved by R.A.
No. 8528. As discussed above, the spirit of Section 10, Article X of the Constitution calls for the
people of the local government unit directly affected to vote in a plebiscite whenever there is a
material change in their rights and responsibilities. They may call the downgrading of Santiago to a
component city as a mere transition but they cannot blink away from the fact that the transition will
radically change its physical and political configuration as well as the rights and responsibilities of its
people.

On the other hand, our esteemed colleague, Mr. Justice Mendoza, posits the theory that "only if the
classification involves changes in income, population, and land area of the local government unit is
there a need for such changes to be approved by the people . . . ."

With due respect, such an interpretation runs against the letter and spirit of Section 10, Article X of
the 1987 Constitution which, to repeat, states: "No province, city, municipality, or barangay may be
created, divided, merged, abolished, or its boundary substantially altered except in accordance with
the criteria established in the Local Government Code and subject to approval by a majority of the
votes cast in a plebiscite in the political units directly affected." It is clear that the Constitution
imposes two conditions — first, the creation, division, merger, abolition or substantial alteration of
boundary of a local government unit must meet the criteria fixed by the Local Government Code on
income, population and land area and second, the law must be approved by the people "by a
majority of the votes cast in a plebiscite in the political units directly affected."

In accord with the Constitution, sections 7, 8, and 9 of the Local Government Code fixed the said
criteria and they involve requirements on income, population and land area. These requirements,
however, are imposed to help assure the economic viability of the local government unit concerned.
They were not imposed to determine the necessity for a plebiscite of the people . Indeed, the Local
Government Code does not state that there will be no more plebiscite after its requirements on
income, population and land area have been satisfied. On the contrary, section 10, Chapter 2 of the
Code provides: "No creation, division, merger, abolition, or substantial alteration of boundaries of
local government units shall take effect unless approved by a majority of the votes casts in a
plebiscite called for the purpose in the political unit or units directly affected. Said plebiscite shall be
conducted by the COMELEC within one hundred twenty (120) days from the date of the effectivity of
the law or ordinance effecting such action, unless said law or ordinance fixes another
date. 11 Senator Aquilino Pimentel, the principal author of the Local Government Code of 1991,
opines that the plebiscite is absolute and mandatory. 12
It cannot be overstressed that the said two requirements of the Constitution have different purposes.
The criteria fixed by the Local Government Code on income, population and land area are designed
to achieve an economic purpose. They are to be based on verified indicators, hence, section 7,
Chapter 2 of the Local Government Code requires that these "indicators shall be attested by the
Department of Finance, the National Statistics Office, and the Lands Management Bureau of the
Department of Environment and Natural Resources." In contrast, the people's plebiscite is required
to achieve a political purpose — to use the people's voice as a check against the pernicious political
practice of gerrymandering. There is no better check against this excess committed by the political
representatives of the people themselves than the exercise of direct people power. As well-observed
by one commentator, as the creation, division, merger, abolition, or substantial alteration of
boundaries are ". . . basic to local government, it is also imperative that these acts be done not only
by Congress but also be approved by the inhabitants of the locality concerned. . . . By giving the
inhabitants a hand in their approval, the provision will also eliminate the old practice of
gerrymandering and minimize legislative action designed for the benefit of a few politicians. Hence, it
promotes the autonomy of local government units." 13

The records show that the downgrading of Santiago City was opposed by certain segments of its
people. In the debates in Congress, it was noted that at the time R.A. No. 8528 was proposed,
Santiago City has been converted to an independent component city barely two and a half (2 1/2)
years ago and the conversion was approved by a majority of 14,000 votes. Some legislators
expressed surprise for the sudden move to downgrade the status of Santiago City as there had been
no significant change in its socio-economic-political status. The only reason given for the
downgrading is to enable the people of the city to aspire for the leadership of the province. To say
the least, the alleged reason is unconvincing for it is the essence of an independent component city
that its people can no longer participate or be voted for in the election of officials of the province. The
people of Santiago City were aware that they gave up that privilege when they voted to be
independent from the province of Isabela. There was an attempt on the part of the Committee on
Local Government to submit the downgrading of Santiago City to its people via a plebiscite. The
amendment to this effect was about to be voted upon when a recess was called. After the recess,
the chairman of the Committee announced the withdrawal of the amendment "after a very
enlightening conversion with the elders of the Body." We quote the debates, viz.: 14

BILL ON SECOND READING

H.B. No. 8729 — City of Santiago

Senator Tatad. Mr. President, I move that we consider

House Bill No. 8729 as reported out under Committee
Report No. 971.

The President. Is there any objection? [Silence] there being none, the motion is approved.

Consideration of House Bill No. 8729 is now in order. With the permission of the Body, the Secretary
will read only the title of the bill without prejudice to inserting in the Record the whole text thereof.

The Acting Secretary [Atty. Raval]. House Bill No. 8729, entitled:

AN ACT AMENDING CERTAIN SECTIONS OF R.A. NO. 7720

ENTITLED "AN ACT CONVERTING THE MUNICIPALITY OF
SANTIAGO INTO AN INDEPENDENT COMPONENT CITY TO BE
KNOWN AS THE CITY OF SANTIAGO

The following is the full text of H.B. No. 8729

 Insert

Senator Tatad. Mr. President, for the sponsorship, I

ask that the distinguished Chairman of the Committee
on Local Government be recognized.

The President. Senator Sotto is recognized.

SPONSORSHIP SPEECH OF SENATOR SOTTO

Mr. President. House Bill No. 8729, which was

introduced in the House by Congressman Antonio M.
Abaya as its principal author, is a simple measure
which merely seeks to convert the City of Santiago
into a component city of the Province of Isabela.

The City of Santiago is geographically located within, and is physically an integral part of the
Province of Isabela. As an independent component city, however, it is completely detached and
separate from the said province as a local political unit. To use the language of the Explanatory Note
of the proposed bill, the City of Santiago is an "island in the provincial milieu.

The residents of the city no longer participate in the elections, nor are they qualified to run for any
elective positions in the Province of Isabela.

The Province of Isabela, on the other hand, is no longer vested with the power and authority of
general supervision over the city and its officials, which power and authority are now exercised by
the Office of the President, which is very far away from Santiago City.

Being geographically located within the Province of Isabela, the City of Santiago is affected, one way
or the other, by the happenings in the said province, and is benefited by its progress and
development. Hence, the proposed bill to convert the City of Santiago into a component city of
Isabela.

Mr. President, it is my pleasure, therefore, to present for consideration of this august Body
Committee Report No. 971 of the Committee on Local Government, recommending approval, with
our proposed committee amendment, of House Bill No. 8729.

Thank you, Mr. President.

The President. The Majority Leader is recognized.

Senator Tatad. Mr. President, I moved (sic) that we close the period of interpellations.

The President. Is there any objection? [Silence] There being none, the period of interpellations is
closed.

Senator Tatad. I move that we now consider the committee amendments.

Senator Roco. Mr. President.

The President. What is the pleasure of Senator Roco?

Senator Roco. Mr. President, may I ask for a reconsideration of the ruling on the motion to close the
period of interpellations just to be able to ask a few questions?

Senator Tatad. May I move for a reconsideration of my motion, Mr. President.

The President. Is there any objection to the reconsideration of the closing of the period of
interpellations? [Silence] There being none, the motion is approved.

Senator Roco is recognized.

Senator Roco. Will the distinguished gentlemen yield for some

questions?

Senator Sotto. Willingly, Mr. President.

Senator Roco. Mr. President, together with the Chairman of the Committee on Local Government,
we were with the sponsors when we approved this bill to make Santiago a City. That was about two
and a half years ago. At that time, I remember it was the cry of the city that it be "independent." Now
we are deleting that word "independent."

Mr. President, only because I was a co-author and a co-sponsor, for the Record, I want some
explanation on what happened between then and now that has made us decided that the City of
Santiago should cease to be independent and should now become a component city.

Senator Sotto. Mr. President, the officials of the

province said during the public hearing that they are
no longer vested with the power and authority of
general supervision over the city. The power and
authority is now being exercised by the Office of the
President and it is quite far from the City of Santiago.

In the public hearing, we also gathered that there is a clamor from some sectors that they want to
participate in the provincial elections.

Senator Roco. Mr. President, I did not mean to delay

this. I did want it on record, however. I think there was
a majority of 14,000 who approved the charter, and
maybe we owe it to those who voted for that charter
some degree of respect. But if there has been a
change of political will, there has been a change of
political will, then so be it.

Thank you, Mr. President.

Senator Sotto. Mr. President, to be very frank about it, that was a
very important point raised by Senator Roco, and I will have to place
it on the Record of the Senate that the reason why we are proposing
a committee amendment is that, originally, there was an objection on
the part of the local officials and those who oppose it by incorporating
a plebiscite in this bill. That was the solution. Because there were
some sectors in the City of Santiago who were opposing the
reclassification or reconversion of the city into a component city.

Senator Roco. All I wanted to say, Mr. President — because the two of us had special pictures (sic)
in the city — is that I thought it should be put on record that we have supported originally the
proposal to make it an independent city. But now if it is their request, then, on the manifestation of
the Chairman, let it be so.

Thank you.
Senator Drilon. Mr. President.

Senator Drilon. Will the gentleman yield for a few questions, Mr. President.

Senator Sotto. Yes, Mr. President.

Senator Drilon. Mr. President, further to the interpellation of our good friend, the Senator from Bicol,
on the matter of the opinion of the citizens of Santiago City, there is a resolution passed by the
Sanggunian on January 30, 1997 opposing the conversion of Santiago from an independent city.

This opposition was placed on records during the committee hearings. And that is the reason why,
as mentioned by the good sponsor, one of the amendments is that a plebiscite be conducted before
the law takes effect.

The question I would like to raise — and I would like to recall the statement of our Minority Leader —
is that, at this time we should not be passing it for a particular politician.

In this particular case, it is obvious that this bill is being passed in order that the additional territory
be added to the election of the provincial officials of the province of Isabela.

Now, is this for the benefit of any particular politician, Mr. President.

Senator Sotto. If it is, I am not aware of it, Mr.

President.

Senator Alvarez. Mr. President.

The President. With the permission of the two gentlemen on the Floor, Senator Alvarez is
recognized.

Senator Alvarez. As a born inbred citizen of this city, Mr. President, may I share some information.

Mr. President, if we open up the election of the city to the provincial leadership, it will not be to the
benefit of the provincial leadership, because the provincial leadership will then campaign in a bigger
territory.

As a matter of fact, the ones who will benefit from this are the citizens of Santiago who will now be
enfranchised in the provincial electoral process, and whose children will have the opportunity to grow
into provincial leadership. This is one of the prime reasons why this amendment is being put forward.

While it is true that there may have been a resolution by the city council, those who signed the
resolution were not the whole of the council. This bill was sponsored by the congressman of that
district who represents a constituency, the voice of the district.

I think, Mr. President, in considering which interest is paramount, whose voice must be heard, and if
we have to fathom the interest of the people, the law which has been crafted here in accordance
with the rules should be given account, as we do give account to many of the legislations coming
from the House on local issues.

Senator Drilon. Mr. President, the reason why I am

raising this question is that, as Senator Roco said,
just two and-a-half years ago we passed a bill which
indeed disenfranchized — if we want to use that
phrase — the citizens of the City of Santiago in the
 matter of the provincial election. Two-and-a-half years
after, we are changing the rule.

In the original charter, the citizens of the City of Santiago participated in a plebiscite in order to
approve the conversion of the city into an independent city. I believe that the only way to resolve this
issue raised by Senator Roco is again to subject this issue to another plebiscite as part of the
provision of this proposed bill and as will be proposed by the Committee Chairman as an
amendment.

Thank you very much, Mr. President.

Senator Alvarez. Mr. President, the Constitution does not require that the change
from an independent to a component city be subjected to a plebiscite.

Secs. 10, 11, 12 of Article X of the 1987 Constitution provides as follows:

Sec. 10. No province, city, municipality, or barangay may be created, divided,

merged, abolished, or its boundary substantially altered, except in accordance with
the criteria established in the local government code and subject to approval by a
majority of the votes cast in a plebiscite in the political units directly affected.

This change from an independent city into a component city is none of those enumerated. So the
proposal coming from the House is in adherence to this constitutional mandate which does not
require a plebiscite.

Senator Sotto. Mr. President, the key word here is

"conversion". The word "conversion" appears in that
provision wherein we must call a plebiscite. During
the public hearing, the representative of
Congressman Abaya was insisting that this is not a
conversion; this is merely a reclassification. But it is
clear in the bill.

We are amending a bill that converts, and we are converting it into a component city. That is how the
members of the committee felt. That is why we have proposed an amendment to this, and this is to
incorporate a plebiscite in as much as there is no provision on incorporating a plebiscite. Because
we would like not only to give the other people of Santiago a chance or be enfranchised as far as the
leadership of the province is concerned, but also we will give a chance to those who are opposing it.
To them, this is the best compromise. Let the people decide, instead of the political leaders of
Isabela deciding for them.

Senator Tatad. Mr. President.

The President. The Majority Leader is recognized.

Senator Tatad. At this point, Mr. President, I think we can move to close the period of interpellations.

The President. Is there any objection? [Silence] There being none, the motion is approved.

Senator Tatad. I move that we now consider the committee amendments, Mr. President.

The President. Is there any objection? [Silence] There being none the motion is approved.

Senator Sotto. On page 2, after line 13, insert a new Section 3, as follows:
Sec 3. SECTION 49 OF REPUBLIC ACT NO. 7720 IS HEREBY AMENDED BY DELETING THE
ENTIRE SECTION AND IN ITS STEAD SUBSTITUTE THE FOLLOWING:

Sec. 49. PLEBISCITE. — THE CONVERSION OF THE CITY OF SANTIAGO INTO

A COMPONENT CITY OF THE PROVINCE OF ISABELA SHALL TAKE EFFECT
UPON THE RETIFICATION OF THIS ACT BY A MAJORITY OF THE PEOPLE OF
SAID CITY IN A PLEBISCITE WHICH SHALL BE HELD FOR THE PURPOSE
WITHIN SIXTY (60) DAYS FROM THE APPROVAL OF THIS ACT. THE
COMMISSION ON ELECTIONS SHALL CONDUCT AND SUPERVISE SUCH
PLEBISCITE.

The President. Is there any objection?

Senator Enrile. Mr. President.

The President. Senator Enrile is recognized.

Senator Enrile. I object to this committee amendment, Mr. President.

SUSPENSION OF SESSION

Senator Tatad. May I ask for a one-minute

suspension of the session.

The President. The session is suspended for a few minutes if there is no objection. [There was
none].

It was 7:54 p.m.

RESUMPTION OF SESSION

At 7:57 p.m., the session was resumed.

The President. The session is resumed.

Senator Sotto is recognized.

Senator Sotto. Mr. President, after a very enlightening conversation

with the elders of the Body, I withdraw my amendment.

The President. The amendment is withdrawn.

Senator Maceda. Mr. President.

The President. Senator Maceda is recognized.

Senator Maceda. We wish to thank the sponsor for the withdrawal of the amendment.

Mr. President, with due respect to the Senator from Isabela — I am no great fan of the Senator from
Isabela — but it so happens that this is a local bill affecting not only his province but his own city
where he is a resident and registered voter.

So, unless the issue is really a matter of life and death and of national importance, senatorial
courtesy demands that we, as much as possible, accommodate the request of the Senator from
Isabela as we have done on matters affecting the district of other senators. I need not remind them.

Thank you anyway, Mr. President.

 Senator Alvarez. Mr. President.

The President. Senator Alvarez is recognized.

Senator Alvarez. Mr. President, may I express my deepest appreciation for the statement of the
gentleman from Ilocos and Laguna. Whatever he may have said, the feeling is not mutual. At least
for now, I have suddenly become his great fan for the evening.

May I put on record, Mr. President, that I campaigned against the cityhood of Santiago not because I
do not want it to be a city but because it had disenfranchised the young men of my city from aspiring
for the leadership of the province. The town is the gem of the province. How could we extricate the
town from the province?

But I would like to thank the gentleman, Mr. President, and also the Chairman of the Committee.

Senator Tatad. Mr. President.

The President. The Majority Leader is recognized.

Senator Tatad. There being no committee amendments, I move that the period of committee
amendments be closed.

The President. Shall we amend the title of this bill by removing the word "independent" preceding
"component city"?

Senator Sotto. No, Mr. President. We are merely citing the title. The main title of this House Bill No.
8729 is "An Act Amending Certain Sections of Republic Act 7720". The title is the title of Republic
Act 7720. So, I do not think that we should amend that anymore.

The President. What is the pending motion? Will the gentleman kindly state the motion?

Senator Tatad. I move that we close the period of committee amendments.

The President. Is there any objection? [Silence] There being none, the motion is approved.

Senator Tatad. Unless there are any individual amendments, I move that we close the period of
individual amendments.

The President. Is there any objection? [Silence] There being none, the period of individual
amendments is closed.

APPROVAL OF H.B. NO. 8729 ON SECOND READING

Senator Tatad. Mr. President, I move that we vote on

Second Reading on House Bill No. 8729.

The President. Is there any objection? [Silence] There being none, we shall now vote on Second
Reading on House Bill No. 8729.

As many as are in favor of the bill, say aye.

Several Members. Aye.

As many as are against the bill, say nay. [Silences]

House Bill No. 8279 is approved on Second Reading.

The debates cannot but raise some quizzical eyebrows on the real purpose for the downgrading of
the city of Santiago. There is all the reason to listen to the voice of the people of the city via a
plebiscite.

In the case of Tan, et al. v. COMELEC, BP 885 was enacted partitioning the province of Negros
15

Occidental without consulting its people in a plebiscite. In his concurring opinion striking down the
law as unconstitutional, Chief Justice Teehankee cited the illicit political purpose behind its
enactment, viz:

The scenario, as petitioners urgently asserted, was "to have the creation of the new Province
a fait accompli by the time elections are held on February 7, 1986. The transparent purpose
is unmistakably so that the new Governor and other officials shall by then have been
installed in office, ready to function for purposes of the election for President and Vice-
President." Thus, the petitioners reported after the event: "With indecent haste, the plebiscite
was held; Negros del Norte was set up and proclaimed by President Marcos as in existence;
a new set of government officials headed by Governor Armando Gustilo was appointed; and,
by the time the elections were held on February 7, 1986, the political machinery was in place
to deliver the "solid North" to ex-President Marcos. The rest is history. What happened in
Negros del Norte during the elections — the unashamed use of naked power and resources
— contributed in no small way to arousing "people's power" and steel the ordinary citizen to
perform deeds of courage and patriotism that makes one proud to be a Filipino today.

The challenged Act is manifestly void and unconstitutional. Consequently, all the implementing acts
complained of, viz., the plebiscite, the proclamation of a new province of Negros del Norte and the
appointment of its officials are equally void. The limited holding of the plebiscite only in the areas of
the proposed new province (as provided by Section 4 of the Act) to the exclusion of the voters of the
remaining areas of the integral province of Negros Occidental (namely, the three cities of Bacolod,
Bago and La Carlota and the Municipalities of Las Castellana, Isabela, Moises Padilla, Pontevedra,
Hinigaran, Himamaylan, Kabankalan, Murcia, Valladoid, San Enrique, Ilog, Cauayan, Hinoba-an and
Sipalay and Candoni), grossly contravenes and disregards the mandate of Article XI, section 3 of the
then prevailing 1973 Constitution that no province may be created or divided or its boundary
substantially altered without "the approval of a majority of the votes in a plebiscite in the unit or units
affected." It is plain that all the cities and municipalities of the province of Negros Occidental, not
merely those of the proposed new province, comprise the units affected. It follows that the voters of
the whole and entire province of Negros Occidental have to participate and give their approval in the
plebiscite, because the whole is affected by its proposed division and substantial alteration of its
boundary. To limit the plebiscite to only the voters of the areas to be partitioned and seceded from
the province is as absurd and illogical as allowing only the secessionists to vote for the secession
that they demanded against the wishes of the majority and to nullify the basic principle of majority
rule.

Mr. Justice Mendoza and Mr. Justice Buena also cite two instances when allegedly independent
component cities were downgraded into component cities without need of a plebiscite. They cite the
City of Oroquieta, Misamis Occidental, 16 and the City of San Carlos, Pangasinan 17 whose charters
were amended to allow their people to vote and be voted upon in the election of officials of the
province to which their city belongs without submitting the amendment to a plebiscite. With due
respect, the cities of Oroquieta and San Carlos are not similarly situated as the city of Santiago. The
said two cities then were not independent component cities unlike the city of Santiago. The two cities
were chartered but were not independent component cities for both were not highly urbanized cities
which alone were considered independent cities at that time. Thus, when the case of San Carlos
City was under consideration by the Senate, Senator Pimentel explained: 18
 . . . Senator Pimentel. The bill under consideration, Mr. President, merely empowers the
voters of San Carlos to vote in the elections of provincial officials. There is no intention
whatsoever to downgrade the status of the City of San Carlos and there is no showing
whatsoever that the enactment of this bill will, in any way, diminish the powers and
prerogatives already enjoyed by the City of San Carlos. In fact, the City of San Carlos as of
now, is a component city. It is not a highly urbanized city. Therefore, this bill merely, as we
said earlier, grants the voters of the city, the power to vote in provincial elections, without in
any way changing the character of its being a component city. It is for this reason that I vote
in favor of this bill.

It was Senator Pimentel who also sponsored the bill 19 allowing qualified voters of the city of
Oroquieta to vote in provincial elections of the province of Misamis Occidental. In his sponsorship
speech, he explained that the right to vote being given to the people of Oroquieta City was
consistent with its status as a component city. 20 Indeed, during the debates, former Senator Neptali
Gonzales pointed out the need to remedy the anomalous situation then obtaining ". . . where voters
of one component city cannot vote simply because their charters so provide." 21 Thus, Congress
amended other charters of component cities prohibiting their people from voting in provincial
elections.

IN VIEW WHEREOF, the petition is granted. Republic Act No. 8528 is declared unconstitutional and
the writ of prohibition is hereby issued commanding the respondents to desist from implementing
said law.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Melo, Kapunan, Panganiban, Pardo, Gonzaga-Reyes and Ynares-
Santiago, JJ., concur.

Vitug, J., pls. see separate opinion.

Mendoza, J., please see dissent.

Quisumbing and Purisima, JJ., we join Justice Mendoza in his dissent.

Buena, J., please see dissent.

Separate Opinions

VITUG, J., separate opinion;

I share the opinion of the majority of my colleagues that, for the reasons expressed in the ponencia,
a plebiscite is essential in order to render effective the conversion of the City of Santiago, Isabela,
from an independent to a component city. I would not go to the extent, however, of declaring
Republic Act No. 7720 unconstitutional; instead, with due respect, I take the view that a plebiscite
can be held conformably with the provisions of the Local Government Code. I do not see, in this
instance, a serious incompatibility in having Republic Act No. 7720 stand along with the Local
Government Code.

MENDOZA, J., dissenting opinion;

The issue in this case is whether the conversion of the City of Santiago in Isabela province from an
independent component city to a component city constitutes the creation, division, merger, abolition,
or substantial alteration of the boundary of a city within the contemplation of Art. X, §10 of the
Constitution so as to require the approval of the people in a plebiscite. The Court, in declaring R.A.
No. 8528 unconstitutional for lack of provision for a plebiscite, does not say that the reclassification
of Santiago City as an ordinary component city constitutes creation, division, merger, abolition, or
substantial alteration of boundary. Nonetheless, the Court today holds that because the
reclassification of the city would result in a "material change in the political and economic rights of
the local government units directly affected as well as the people therein," the approval of the law in
a plebiscite is required.1âwphi1.nêt

With all due respect I submit that not every change — however "material" and far-reaching — in the
classification of a local government unit requires popular approval. Only if the reclassification
involves changes in income, population, and land area of the local government unit is there a need
for such changes to be approved by the people, for then there would be a creation, division, merger,
abolition, or substantial alteration of the boundary of a local government unit, as the case may be,
within the meaning of Art. X, §10 of the Constitution. Thus, the Local Government Code (R.A. No.
7160), in implementing the constitutional provision in question, states:

Sec. 7. Creation and Conversion. — As a general rule, the creation of a local government
unit or its conversion from one level to another level shall be based on verifiable indicators or
viability and projected capacity to provide services, to wit:

(a) Income. — It must be sufficient, based on acceptable standards, to provide for all essential
government facilities and services and special functions commensurate with the size of its
population, as expected of the local government unit concerned;

(b) Population. — It shall be determined as the total number of inhabitants within the territorial
jurisdiction of the local government unit concerned; and

(c) Land Area. — It must be contiguous, unless it comprises two (2) or more islands or is separated
by a local government unit independent of the others; properly identified by metes and bounds with
technical descriptions; and sufficient to provide for such basic services and facilities to meet the
requirements of its populace.

Compliance with the foregoing indicators shall be attested to by the Department of Finance (DOF),
the National Statistics Office (NSO), and the Lands Management Bureau (LMB) of the Department of
Environment and Natural Resources (DENR).

Sec. 8. Division and Merger. — Division and merger of existing local government units shall comply
with the same requirements herein prescribed for their creation: Provided, however, That such
division shall not reduce the income, population, or land area of the local government unit or units
concerned to less than the minimum requirements prescribed in this Code: Provided, further, That
the income classification of the original local government unit or units shall not fall below its current
income classification prior to such division.

The income classification of local government units shall be updated within six (6) months from the
effectivity of this Code to reflect the changes in their financial position resulting from the increased
revenues as provided herein.

Sec. 9. Abolition of Local Government Units. — A local government unit may be abolished when its
income, population, or land area has been irreversibly reduced to less than the minimum standards
prescribed for its creation under Book III of this Code, as certified by the national agencies
mentioned in Section 7 hereof to Congress or to the sanggunian concerned, as the case may be.
The law or ordinance abolishing a local government unit shall specify the province, city, municipality,
or barangay with which the local government unit sought to be abolished will be incorporated or
merged.

The conversion from an independent component city to a component city involves no such changes
in income, population, or land area. There may be changes in the voting rights of the residents of the
city, the supervision of the city's administration, and the city's share in the local taxes, as petitioners
point out, but such changes do not amount to the creation, division, merger, abolition, or substantial
alteration of the boundary of a local government unit so as to require a plebiscite for their approval.
An independent component city and an ordinary component city are both component cities, as
distinguished from highly urbanized cities. The only difference between them is that the charters of
1

the independent component cities prohibit their voters from voting for provincial elective officials and
such cities are independent of the provinces in which they are located. 2 Thus, the Local Government
Code provides:

Sec. 450. Requisites for Creation. — (a) A municipality or a cluster of barangays may be
converted into a component city if it has an average annual income, as certified by the
Department of Finance, of at least Twenty million pesos (P20,000,000.00) for the last two (2)
consecutive years based on 1991 constant prices, and if it has either of the following
requisites:

(i) a contiguous territory of at least one hundred (100) square kilometers, as certified by the Lands
Management Bureau; or

(ii) a population of not less than one hundred fifty thousand (150,000) inhabitants, as certified by the
National Statistics Office:

Provided, That, the creation thereof shall not reduce the land area, population, and income of the
original unit or units at the time of said creation to less than the minimum requirements prescribed
herein.

(b) The territorial jurisdiction of a newly-created city shall be properly identified by metes and
bounds. The requirement on land area shall not apply where the city proposed to be created is
composed of one (1) or more islands. The territory need not be contiguous if it comprises two (2) or
more islands.
(c) The average annual income shall include the income accruing to the general fund, exclusive of
special funds, transfers, and nonrecurring income.

Sec. 451. Cities, Classified. — A city may either be component or highly urbanized: Provided,
however, That the criteria established in this Code shall not affect the classification and corporate
status of existing cities.

Independent component cities are those component cities whose charters prohibit their voters from
voting for provincial elective officials. Independent component cities shall be independent of the
province.

Sec. 452. Highly Urbanized Cities. — (a) Cities with a minimum population of two hundred thousand
(200,000.00) inhabitants, as certified by the National Statistics Office, and with the latest annual
income of at least Fifty Million Pesos (P50,000,000.00) based on 1991 constant prices, as certified
by the city treasurer; shall be classified as highly urbanized cities.
(b) Cities which do not meet the above requirements shall be considered component cities of the
province in which they are geographically located. If a component city is located within the
boundaries of two (2) or more provinces, such city shall be considered a component of the province
of which it used to be a municipality.

(c) Qualified voters of highly urbanized cities shall remain excluded from voting for elective provincial
officials.

Unless otherwise provided in the Constitution or this Code, qualified voters of independent
component cities shall be governed by their respective charters, as amended, on the participation of
voters in provincial elections.

Qualified voters of cities who acquired the right to vote for elective provincial officials prior to the
classification of said cities as highly urbanized after the ratification of the Constitution and before the
effectivity of this Code, shall continue to exercise such right.

The Court says that the changes resulting from the reclassification of Santiago City as an ordinary
component city "cannot be considered insubstantial." For one, it is said, its independence will be
diminished because the city mayor will be placed under the administrative supervision of the
provincial governor. For another, the resolutions and ordinances of the city council will have to be
approved by the provincial board of Isabela.

The fact is that whether the City of Santiago is an independent component city or an ordinary
component city, it is subject to administrative supervision, with the only difference that, as an
independent component city, it is under the direct supervision of the President of the Philippines,
whereas, as an ordinary component city, it will be subject to the supervision of the President through
the province. That is hardly a distinction. For the fact is that under the Constitution, the President of
3

the Philippines exercises general supervision over all local governments. 4

Nor does it matter that ordinances passed by the city councils of component cities are subject to
review (not approval as the Court says) by the provincial boards for the purpose of determining
whether the ordinances are within the powers of the city councils to enact. 5 For that matter,
ordinances passed by the city councils of independent component cities are likewise subject to
review, although by the Office of the President. 6 The reason for this is to be found in Art. X, §4 of the
Constitution which provides:
The President of the Philippines shall exercise general supervision over local governments.
Provinces with respect to component cities and municipalities, and cities and municipalities
with respect to component barangays shall ensure that the acts of their component units are
within the scope of their prescribed powers and functions.

In any case, these are not important differences which determine whether the law effecting them
should be approved in a plebiscite. The defining characteristics of a local government unit are its
income, population, and local area, as §§450 and 452 of the LGC provide. These are referred to in
§7 of the LGC and its Implementing Rules as the "verifiable indicators of viability and projected
capacity to provide services." Tested by these standards, there is no change in the City of Santiago
requiring the approval of the people in a plebiscite.

The majority states: "It is markworthy that when R.A. No. 7720 upgraded the status of Santiago City
from a municipality to an independent component city, it required the approval of its People thru a
plebiscite called for the purpose. There is neither rhyme nor reason why this plebiscite should not be
called to determine the will of the people of Santiago City when R.A. No. 8525 downgrades the
status of their city." The conversion of the then Municipality of Santiago in Isabela Province by R.A.
No. 7720 was an act of creation. It was based on the municipality's satisfying the requisites for the
creation of a city as provided in the LGC, to wit:

Sec. 450. Requisites for Creation. — (a) A municipality or a cluster of barangays may be
converted into a component city if it has an average annual income, as certified by the
Department of Finance, of a least Twenty million pesos (P20,000,000.00) for the last two (2)
consecutive years based on 1991 constant prices, and if it has either of the following
requisites:

(i) a contiguous territory of at least one hundred (100) square kilometers, as certified by the Lands
Management Bureau; or

(ii) a population of not less than one hundred fifty thousand (150,000) inhabitants, as certified by the
National Statistics Office;

Provided, That, the creation thereof shall not reduce the land area, population, and income of the
original unit or units at the time of said creation to less than the minimum requirements prescribed
herein.

(b) The territorial jurisdiction of a newly-created city shall be properly identified by metes and
bounds. The requirement on land area shall not apply where the city proposed to be created is
composed of one (1) or more islands. The territory need not be contiguous if it comprises two (2) or
more islands.

(c) The average annual income shall include the income accruing to the general fund, exclusive of
special funds, transfers, and nonrecurring income.

As thus indicated these requisites are based on the "verifiable indicators" of income, population, and
land area and, therefore, the conversion of what was once a municipality into a city needed approval
in a plebiscite. But the conversion of Santiago City from an independent component city into a
component city involves no more than a change in the right of the people (i.e., the registered voters
of the city) to vote for provincial elective officials.

If an analogy is needed, it is to the reversion of a component city — whether independent or ordinary

— to the status of a municipality. For then the city is actually abolished and abolition, as stated in the
Art. X, §10 of the Constitution, must be approved by the majority of the votes cast in a plebiscite.
Stated otherwise, when a municipality is converted into a city, a city is created, and when the city is
reverted into a municipality, the city is abolished. Both acts of creation and abolition require the
approval of the people in a plebiscite called for the purpose. But when an independent component
city is converted into a component city, it is not created into another form, it is not divided, it is not
merged with another unit of local government, it is not abolished, much less is its boundary
substantially altered.

Indeed, this is not the first time that an independent component city is converted into a component
city without a plebiscite. The City of Oroquieta, created as an independent component city in 1969
by R.A. No. 5518, was converted into a component city in 1989 by R.A. No. 6726, while the City of
San Carlos, created as an independent component city in 1965 by R.A. No. 4187, was converted
into a component city by R.A. No. 6843 in 1990. In both cases, the conversion was made without
submitting the matter to a plebiscite.

There is, therefore, no reason for requiring that the reclassification of Santiago City as a component
city must be approved by the majority of the votes cast in a plebiscite and for holding that, because
R.A. No. 8528 contains no provision for such plebiscite, it is unconstitutional.
It is easy to sympathize with calls for plebiscites as an exercise of direct democracy by the people.
But, although the Constitution declares that "Sovereignty resides in the people and all government
authority emanates from them," it also provides that we are a "republican State." 7 It is thus a
representative form of government that we have. With few exceptions, we have vested the legislative
power in the Congress of the Philippines. 8 This means that when an act of the people's
representatives assembled in Congress is duly passed and approved by the President in the manner
prescribed in the Constitution, the act becomes a law 9 without the need of approval or ratification by
the people in order to be effective.
10

This is the theory of representative government. Such a government is no less democratic because
it is indirect. In some ways it is better than direct government given the complexity of modern
society, let alone the volatility of voters and their susceptibility to manipulation. In this age of mass
communication there is less reason to distrust the judgment of the people's representatives in
Congress on matters such as this and, therefore, no reason to require the people to manifest their
sovereign will, except where this is expressly required by the Constitution.

For the foregoing reasons, I vote to dismiss the petition in this case.

BUENA, J., dissenting opinion;

With all due respect to my esteemed colleague, Mr. Justice Reynato S. Puno, whose well-written
ponencia expresses his opinion with clarity, I regret that I am unable to agree that Republic Act No.
8528 should be declared as unconstitutional for the following reasons:

1. Section 10, Article X of the 1987 Constitution provides that —

Sec. 10, Article X. — No province, city, municipality, or barangay may be created, divided,
merged, abolished, or its boundary substantially altered, except in accordance with the
criteria established in the Local Government Code and subject to approval by a majority of
the votes cast in a plebiscite in the political units directly affected.

Sec. 10 Chapter 2 of the Local Government Code (R.A. No. 7160) provides:

Sec. 10, Chapter 2. — Plebiscite Requirement. No creation, division, merger, abolition, or

substantial alteration of boundaries of local government units shall take effect unless
approved by a majority of the votes cast in a plebiscite called for the purpose in the political
unit or units directly affected. Said plebiscite shall be conducted by the Commission on
Elections (COMELEC) within one hundred twenty (120) days from the date of effectivity of
the law or ordinance effecting such action, unless said law or ordinance fixes another date.

In short, conversion does not appear in the 1987 Constitution nor in the Section 10, Chapter 2 of the
Local Government Code. Surprisingly, Rule II, Article 6, paragraph (f) (1) of the Implementing Rules
of the Local Government Code included conversion in the enumeration of the modes of changing the
status of local government units, thus:

(f) Plebiscite. — (1) No creation, conversion, division, merger, abolition, or substantial

alteration of boundaries of LGUs shall take effect unless approved by a majority of the votes
cast in a plebiscite called for the purpose in the LGU or LGUs affected. The plebiscite shall
be conducted by the Commission on Elections (COMELEC) within one hundred twenty (120)
days from the effectivity of the law or ordinance prescribing such action, unless said law or
ordinance fixes another date.

xxx xxx xxx (emphasis supplied)

Other than that, the Local Government Code uses the term "conversion" only in the following
instances: (1) Section 7, which provides that "[a]s a general rule, the creation of a local government
unit or its conversion from one level to another shall be based on verifiable indicators of viability and
projected capacity to provide services, to wit: . . . . . .;" (2) Section 450, which provides for the
requisites for the "conversion" of a municipality or a cluster of barangays into a component city; and
(3) Section 462, which involves the "conversion" of existing sub-provinces into regular provinces.

Senator Aquilino Pimentel, Jr. defines 1 — "conversion," as "the elevation of an LGU from one level
to another, like converting a municipality to a city or a component city to a highly urbanized one or
the raising of the classification of one municipality, city or province from a fourth class category to
third, second or first." It is my humble opinion therefore that the requirement of a plebiscite does not
apply to the case at bar which does not involve the upgrading or elevation of Santiago City but a
downgrading thereof.

2. I am not convinced that a mere Rule and Regulation intended to implement the Local Government
Code can expand the terms and provisions clearly expressed in the basic law to be implemented. As
aptly contended by the Solicitor General in his Comment on the petition viz.:

It is a settled jurisprudence that the power of administrative agencies to promulgate rules

and regulations must be in strict compliance with the legislative enactment. Thus, in Tayug
Rural Bank vs. Central Bank of the Philippines (146 SCRA 129-30), this Honorable Court
ruled that in the case of discrepancy between the basic law and a rule or regulation to
implement said law, the basic law prevails as said rule or regulation can not go beyond the
terms and provisions of the basic law. Neither can such rules and regulations extend or
expand the letter and spirit of the law they seek to implement. (Iglesia ni Kristo vs. Court of
Appeals, 259 SCRA
529) 2

As a matter of fact, Mr. Justice Puno, in his ponencia in the above cited case of Iglesia ni Kristo,
opined that "(T)his rule is void for it runs smack against the hoary doctrine that administrative rules
and regulations cannot expand the letter and spirit of the law they seek to enforce. 3

3. The proceedings in the Senate show that the Committee on Local Government, to which H.B. No.
8729 was referred, reported back to the Senate with the recommendation that it be approved with
the following amendment:

Sec. 3. Section 49 of Republic Act No. 7720 is hereby amended by deleting the entire
section and in its stead substitute the following:

Sec. 49. PLEBISCITE. — THE CONVERSION OF THE CITY OF SANTIAGO INTO A

COMPONENT CITY OF THE PROVINCE OF ISABELA SHALL TAKE EFFECT UPON THE
RATIFICATION OF THIS ACT BY A MAJORITY OF THE PEOPLE OF SAID CITY IN A
PLEBISCITE WHICH SHALL BE HELD FOR THE PURPOSE WITHIN (60) DAYS FROM
THE APPROVAL OF THIS ACT. THE COMMISSION ON ELECTIONS SHALL CONDUCT
AND SUPERVISE SUCH PLEBISCITE.

However, after the deliberations in the Senate, the Committee on Local Government decided to
withdraw the foregoing proposed amendment. Hence, on February 6, 1998, the Republic Act No.
8528, the constitutionality of which is challenged by the petitioners, was approved.

Be that as it may, may this Court properly require a plebiscite for the validity of said law when
Congress itself, which had been given the opportunity to include such a requirement, decided
against it? Are we not supplanting our judgment over that of Congress, a co-equal branch of
government entrusted by the Constitution to enact laws? I respectfully submit that we may not do so
without disturbing the balance of power as apportioned and delineated by the Constitution.

4. I likewise submit that we must consider the ramifications of a declaration of unconstitutionality of

Republic Act No. 8528 on Republic Act No. 6726 (1989) and Republic Act No. 6843 (1990),
respectively allowing the voters of the City of Oroquieta (Misamis Oriental) and San Carlos City
(Pangasinan) to vote and be voted for any of the respective provincial offices, in effect downgrading
them from independent component cities to component cities. The resulting confusion on the political
structures of the local government units involved would surely be disastrous to the order and stability
of these cities.

5. Finally, in a situation where the supposed breach of the constitution is doubtful, equivocal and, at
best, based on argumentative implications, I believe that, as we have ruled in a plethora of cases 4,
every law has in its favor, the presumption of constitutionality and in case of doubt, the Court must
exert every effort to prevent the invalidation of the law and the nullification of the will of the
legislature that enacted it and the executive that approved it. 1âwphi1.nêt

I therefore vote to dismiss the petition.

 EN BANC

G.R. No. 127882 December 1, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., Represented by its Chairman F'LONG

MIGUEL M. LUMAYONG; WIGBERTO E. TAÑADA; PONCIANO BENNAGEN; JAIME TADEO;
RENATO R. CONSTANTINO JR.; F'LONG AGUSTIN M. DABIE; ROBERTO P. AMLOY; RAQIM
L. DABIE; SIMEON H. DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN; MARCELO L.
GUSANAN; QUINTOL A. LABUAYAN; LOMINGGES D. LAWAY; BENITA P. TACUAYAN;
Minors JOLY L. BUGOY, Represented by His Father UNDERO D. BUGOY and ROGER M.
DADING; Represented by His Father ANTONIO L. DADING; ROMY M. LAGARO, Represented
by His Father TOTING 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; ALDEN S. TUSAN; AMPARO S. YAP; VIRGILIO CULAR; MARVIC M.V.F.
LEONEN; JULIA REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR JR., Represented
by Their Father VIRGILIO CULAR; PAUL ANTONIO P. VILLAMOR, Represented by His Parents
JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR; ANA GININA R. TALJA, Represented by
Her Father MARIO JOSE B. 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 MARALAG LINGATING, 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; LOLITA G. DEMONTEVERDE; BENJIE L. NEQUINTO; ROSE LILIA S.
1

ROMANO; ROBERTO S. VERZOLA; EDUARDO AURELIO C. REYES; LEAN LOUEL A. PERIA,

Represented by His Father ELPIDIO V. PERIA; GREEN FORUM PHILIPPINES; GREEN FORUM
2

WESTERN VISAYAS (GF-WV); ENVIRONMENTAL LEGAL ASSISTANCE CENTER (ELAC);

KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN
(KAISAHAN); PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT
3

SERVICES, INC. (PARRDS); PHILIPPINE PARTNERSHIP FOR THE DEVELOPMENT OF

HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA); WOMEN'S LEGAL BUREAU
(WLB); CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI); UPLAND
DEVELOPMENT INSTITUTE (UDI); KINAIYAHAN FOUNDATION, INC.; SENTRO NG
ALTERNATIBONG LINGAP PANLIGAL (SALIGAN); and LEGAL RIGHTS AND NATURAL
RESOURCES CENTER, INC. (LRC), petitioners,
vs.
VICTOR O. RAMOS, Secretary, Department of Environment and Natural Resources (DENR);
HORACIO RAMOS, Director, Mines and Geosciences Bureau (MGB-DENR); RUBEN TORRES,
Executive Secretary; and WMC (PHILIPPINES), INC., respondents.
4

RESOLUTION

PANGANIBAN, J.:

All mineral resources are owned by the State. Their exploration, development and utilization (EDU)
must always be subject to the full control and supervision of the State. More specifically, given the
inadequacy of Filipino capital and technology in large-scale EDU activities, the State may secure the
help of foreign companies in all relevant matters -- especially financial and technical assistance --
provided that, at all times, the State maintains its right of full control. The foreign assistor or
contractor assumes all financial, technical and entrepreneurial risks in the EDU activities; hence, it
may be given reasonable management, operational, marketing, audit and other prerogatives to
protect its investments and to enable the business to succeed.

Full control is not anathematic to day-to-day management by the contractor, provided that the State
retains the power to direct overall strategy; and to set aside, reverse or modify plans and actions of
the contractor. The idea of full control is similar to that which is exercised by the board of directors of
a private corporation: the performance of managerial, operational, financial, marketing and other
functions may be delegated to subordinate officers or given to contractual entities, but the board
retains full residual control of the business.

Who or what organ of government actually exercises this power of control on behalf of the State?
The Constitution is crystal clear: the President. Indeed, the Chief Executive is the official
constitutionally mandated to "enter into agreements with foreign owned corporations." On the other
hand, Congress may review the action of the President once it is notified of "every contract entered
into in accordance with this [constitutional] provision within thirty days from its execution." In contrast
to this express mandate of the President and Congress in the EDU of natural resources, Article XII
of the Constitution is silent on the role of the judiciary. However, should the President and/or
Congress gravely abuse their discretion in this regard, the courts may -- in a proper case -- exercise
their residual duty under Article VIII. Clearly then, the judiciary should not inordinately interfere in the
exercise of this presidential power of control over the EDU of our natural resources.

The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate
economic growth or to serve narrow, parochial interests. Rather, it should be construed to grant the
President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign
investments and expertise, as well as to secure for our people and our posterity the blessings of
prosperity and peace.

On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining
Law, its Implementing Rules and Regulations -- insofar as they relate to financial and technical
agreements -- as well as the subject Financial and Technical Assistance Agreement (FTAA). 5

Background

The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1)
Republic Act No. [RA] 7942 (The Philippine Mining Act of 1995); (2) its Implementing Rules and
Regulations (DENR Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March 30,
1995, executed by the government with Western Mining Corporation (Philippines), Inc. (WMCP).
6 7

On January 27, 2004, the Court en banc promulgated its Decision granting the Petition and declaring
8

the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as of the entire FTAA
executed between the government and WMCP, mainly on the finding that FTAAs are service
contracts prohibited by the 1987 Constitution.

The Decision struck down the subject FTAA for being similar to service contracts, which, though
9

permitted under the 1973 Constitution, were subsequently denounced for being antithetical to the
10

principle of sovereignty over our natural resources, because they allowed foreign control over the
exploitation of our natural resources, to the prejudice of the Filipino nation.

The Decision quoted several legal scholars and authors who had criticized service contracts for,
inter alia, vesting in the foreign contractor exclusive management and control of the enterprise,
including operation of the field in the event petroleum was discovered; control of production,
expansion and development; nearly unfettered control over the disposition and sale of the products
discovered/extracted; effective ownership of the natural resource at the point of extraction; and
beneficial ownership of our economic resources. According to the Decision, the 1987 Constitution
(Section 2 of Article XII) effectively banned such service contracts.

Subsequently, respondents filed separate Motions for Reconsideration. In a Resolution dated March
9, 2004, the Court required petitioners to comment thereon. In the Resolution of June 8, 2004, it set
the case for Oral Argument on June 29, 2004.

After hearing the opposing sides, the Court required the parties to submit their respective
Memoranda in amplification of their arguments. In a Resolution issued later the same day, June 29,
2004, the Court noted, inter alia, the Manifestation and Motion (in lieu of comment) filed by the Office
of the Solicitor General (OSG) on behalf of public respondents. The OSG said that it was not
interposing any objection to the Motion for Intervention filed by the Chamber of Mines of the
Philippines, Inc. (CMP) and was in fact joining and adopting the latter's Motion for Reconsideration.

Memoranda were accordingly filed by the intervenor as well as by petitioners, public respondents,
and private respondent, dwelling at length on the three issues discussed below. Later, WMCP
submitted its Reply Memorandum, while the OSG -- in obedience to an Order of this Court -- filed a
Compliance submitting copies of more FTAAs entered into by the government.

Three Issues Identified by the Court

During the Oral Argument, the Court identified the three issues to be resolved in the present
controversy, as follows:
1. Has the case been rendered moot by the sale of WMC shares in WMCP to Sagittarius (60 percent
of Sagittarius' equity is owned by Filipinos and/or Filipino-owned corporations while 40 percent is
owned by Indophil Resources NL, an Australian company) and by the subsequent transfer and
registration of the FTAA from WMCP to Sagittarius?

2. Assuming that the case has been rendered moot, would it still be proper to resolve the
constitutionality of the assailed provisions of the Mining Law, DAO 96-40 and the WMCP FTAA?

3. What is the proper interpretation of the phrase Agreements Involving Either Technical or Financial
Assistance contained in paragraph 4 of Section 2 of Article XII of the Constitution?

Should the Motion for Reconsideration Be Granted?

Respondents' and intervenor's Motions for Reconsideration should be granted, for the reasons
discussed below. The foregoing three issues identified by the Court shall now be taken up seriatim.

First Issue:

Mootness

In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and the WMCP FTAA, the
majority Decision agreed with petitioners' contention that the subject FTAA had been executed in
violation of Section 2 of Article XII of the 1987 Constitution. According to petitioners, the FTAAs
entered into by the government with foreign-owned corporations are limited by the fourth paragraph
of the said provision to agreements involving only technical or financial assistance for large-scale
exploration, development and utilization of minerals, petroleum and other mineral oils. Furthermore,
the foreign contractor is allegedly permitted by the FTAA in question to fully manage and control the
mining operations and, therefore, to acquire "beneficial ownership" of our mineral resources.

The Decision merely shrugged off the Manifestation by WMPC informing the Court (1) that on
January 23, 2001, WMC had sold all its shares in WMCP to Sagittarius Mines, Inc., 60 percent of
whose equity was held by Filipinos; and (2) that the assailed FTAA had likewise been transferred
from WMCP to Sagittarius. The ponencia declared that the instant case had not been rendered
11

moot by the transfer and registration of the FTAA to a Filipino-owned corporation, and that the
validity of the said transfer remained in dispute and awaited final judicial determination. Patently
12

therefore, the Decision is anchored on the assumption that WMCP had remained a foreign
corporation.
The crux of this issue of mootness is the fact that WMCP, at the time it entered into the FTAA,
happened to be wholly owned by WMC Resources International Pty., Ltd. (WMC), which in turn was
a wholly owned subsidiary of Western Mining Corporation Holdings Ltd., a publicly listed major
Australian mining and exploration company.

The nullity of the FTAA was obviously premised upon the contractor being a foreign corporation.
Had the FTAA been originally issued to a Filipino-owned corporation, there would have been no
constitutionality issue to speak of. Upon the other hand, the conveyance of the WMCP FTAA to a
Filipino corporation can be likened to the sale of land to a foreigner who subsequently acquires
Filipino citizenship, or who later resells the same land to a Filipino citizen. The conveyance would be
validated, as the property in question would no longer be owned by a disqualified vendee.

And, inasmuch as the FTAA is to be implemented now by a Filipino corporation, it is no longer

possible for the Court to declare it unconstitutional. The case pending in the Court of Appeals is a
dispute between two Filipino companies (Sagittarius and Lepanto), both claiming the right to
purchase the foreign shares in WMCP. So, regardless of which side eventually wins, the FTAA
would still be in the hands of a qualified Filipino company. Considering that there is no longer any
justiciable controversy, the plea to nullify the Mining Law has become a virtual petition for
declaratory relief, over which this Court has no original jurisdiction.

In their Final Memorandum, however, petitioners argue that the case has not become moot,
considering the invalidity of the alleged sale of the shares in WMCP from WMC to Sagittarius, and of
the transfer of the FTAA from WMCP to Sagittarius, resulting in the change of contractor in the FTAA
in question. And even assuming that the said transfers were valid, there still exists an actual case
predicated on the invalidity of RA 7942 and its Implementing Rules and Regulations (DAO 96-40).
Presently, we shall discuss petitioners' objections to the transfer of both the shares and the FTAA.
We shall take up the alleged invalidity of RA 7942 and DAO 96-40 later on in the discussion of the
third issue.

No Transgression of the Constitution

by the Transfer of the WMCP Shares

Petitioners claim, first, that the alleged invalidity of the transfer of the WMCP shares to Sagittarius
violates the fourth paragraph of Section 2 of Article XII of the Constitution; second, that it is contrary
to the provisions of the WMCP FTAA itself; and third, that the sale of the shares is suspect and
should therefore be the subject of a case in which its validity may properly be litigated.

On the first ground, petitioners assert that paragraph 4 of Section 2 of Article XII permits the
government to enter into FTAAs only with foreign-owned corporations. Petitioners insist that the first
paragraph of this constitutional provision limits the participation of Filipino corporations in the
exploration, development and utilization of natural resources to only three species of contracts --
production sharing, co-production and joint venture -- to the exclusion of all other arrangements or
variations thereof, and the WMCP FTAA may therefore not be validly assumed and implemented by
Sagittarius. In short, petitioners claim that a Filipino corporation is not allowed by the Constitution to
enter into an FTAA with the government.

However, a textual analysis of the first paragraph of Section 2 of Article XII does not support
petitioners' argument. The pertinent part of the said provision states: "Sec. 2. x x x The exploration,
development and utilization of natural resources shall be under the full control and supervision of the
State. The State may directly undertake such activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or corporations or associations at
least sixty per centum of whose capital is owned by such citizens. x x x." Nowhere in the provision is
there any express limitation or restriction insofar as arrangements other than the three
aforementioned contractual schemes are concerned.

Neither can one reasonably discern any implied stricture to that effect. Besides, there is no basis to
believe that the framers of the Constitution, a majority of whom were obviously concerned with
furthering the development and utilization of the country's natural resources, could have wanted to
restrict Filipino participation in that area. This point is clear, especially in the light of the overarching
constitutional principle of giving preference and priority to Filipinos and Filipino corporations in the
development of our natural resources.

Besides, even assuming (purely for argument's sake) that a constitutional limitation barring Filipino
corporations from holding and implementing an FTAA actually exists, nevertheless, such provision
would apply only to the transfer of the FTAA to Sagittarius, but definitely not to the sale of WMC's
equity stake in WMCP to Sagittarius. Otherwise, an unreasonable curtailment of property rights
without due process of law would ensue. Petitioners' argument must therefore fail.
FTAA Not Intended
Solely for Foreign Corporation

Equally barren of merit is the second ground cited by petitioners -- that the FTAA was intended to
apply solely to a foreign corporation, as can allegedly be seen from the provisions therein. They
manage to cite only one WMCP FTAA provision that can be regarded as clearly intended to apply
only to a foreign contractor: Section 12, which provides for international commercial arbitration under
the auspices of the International Chamber of Commerce, after local remedies are exhausted. This
provision, however, does not necessarily imply that the WMCP FTAA cannot be transferred to and
assumed by a Filipino corporation like Sagittarius, in which event the said provision should simply be
disregarded as a superfluity.

No Need for a Separate

Litigation of the Sale of Shares

Petitioners claim as third ground the "suspicious" sale of shares from WMC to Sagittarius; hence, the
need to litigate it in a separate case. Section 40 of RA 7942 (the Mining Law) allegedly requires the
President's prior approval of a transfer.

A re-reading of the said provision, however, leads to a different conclusion. "Sec. 40.
Assignment/Transfer -- A financial or technical assistance agreement may be assigned or
transferred, in whole or in part, to a qualified person subject to the prior approval of the President:
Provided, That the President shall notify Congress of every financial or technical assistance
agreement assigned or converted in accordance with this provision within thirty (30) days from the
date of the approval thereof."

Section 40 expressly applies to the assignment or transfer of the FTAA, not to the sale and transfer
of shares of stock in WMCP. Moreover, when the transferee of an FTAA is another foreign
corporation, there is a logical application of the requirement of prior approval by the President of the
Republic and notification to Congress in the event of assignment or transfer of an FTAA. In this
situation, such approval and notification are appropriate safeguards, considering that the new
contractor is the subject of a foreign government.

On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need
for such safeguard is not critical; hence, the lack of prior approval and notification may not be
deemed fatal as to render the transfer invalid. Besides, it is not as if approval by the President is
entirely absent in this instance. As pointed out by private respondent in its Memorandum , the issue
13

of approval is the subject of one of the cases brought by Lepanto against Sagittarius in GR No.
162331. That case involved the review of the Decision of the Court of Appeals dated November 21,
2003 in CA-GR SP No. 74161, which affirmed the DENR Order dated December 31, 2001 and the
Decision of the Office of the President dated July 23, 2002, both approving the assignment of the
WMCP FTAA to Sagittarius.

Petitioners also question the sale price and the financial capacity of the transferee. According to the
Deed of Absolute Sale dated January 23, 2001, executed between WMC and Sagittarius, the price
of the WMCP shares was fixed at US$9,875,000, equivalent to P553 million at an exchange rate of
56:1. Sagittarius had an authorized capital stock of P250 million and a paid up capital of P60 million.
Therefore, at the time of approval of the sale by the DENR, the debt-to-equity ratio of the transferee
was over 9:1 -- hardly ideal for an FTAA contractor, according to petitioners.

However, private respondents counter that the Deed of Sale specifically provides that the payment
of the purchase price would take place only after Sagittarius' commencement of commercial
production from mining operations, if at all. Consequently, under the circumstances, we believe it
would not be reasonable to conclude, as petitioners did, that the transferee's high debt-to-equity ratio
per se necessarily carried negative implications for the enterprise; and it would certainly be improper
to invalidate the sale on that basis, as petitioners propose.

FTAA Not Void,

Thus Transferrable

To bolster further their claim that the case is not moot, petitioners insist that the FTAA is void and,
hence cannot be transferred; and that its transfer does not operate to cure the constitutional infirmity
that is inherent in it; neither will a change in the circumstances of one of the parties serve to ratify the
void contract.

While the discussion in their Final Memorandum was skimpy, petitioners in their Comment (on the
MR) did ratiocinate that this Court had declared the FTAA to be void because, at the time it was
executed with WMCP, the latter was a fully foreign-owned corporation, in which the former vested
full control and management with respect to the exploration, development and utilization of mineral
resources, contrary to the provisions of paragraph 4 of Section 2 of Article XII of the Constitution.
And since the FTAA was per se void, no valid right could be transferred; neither could it be ratified,
so petitioners conclude.

Petitioners have assumed as fact that which has yet to be established. First and foremost, the
Decision of this Court declaring the FTAA void has not yet become final. That was precisely the
reason the Court still heard Oral Argument in this case. Second, the FTAA does not vest in the
foreign corporation full control and supervision over the exploration, development and utilization of
mineral resources, to the exclusion of the government. This point will be dealt with in greater detail
below; but for now, suffice it to say that a perusal of the FTAA provisions will prove that the
government has effective overall direction and control of the mining operations, including marketing
and product pricing, and that the contractor's work programs and budgets are subject to its review
and approval or disapproval.

As will be detailed later on, the government does not have to micro-manage the mining operations
and dip its hands into the day-to-day management of the enterprise in order to be considered as
having overall control and direction. Besides, for practical and pragmatic reasons, there is a need for
government agencies to delegate certain aspects of the management work to the contractor. Thus
the basis for declaring the FTAA void still has to be revisited, reexamined and reconsidered.

Petitioners sniff at the citation of Chavez v. Public Estates Authority, and Halili v. CA, claiming that
14 15

the doctrines in these cases are wholly inapplicable to the instant case.

Chavez clearly teaches: "Thus, the Court has ruled consistently that where a Filipino citizen sells
land to an alien who later sells the land to a Filipino, the invalidity of the first transfer is corrected by
the subsequent sale to a citizen. Similarly, where the alien who buys the land subsequently acquires
Philippine citizenship, the sale is validated since the purpose of the constitutional ban to limit land
ownership to Filipinos has been achieved. In short, the law disregards the constitutional
disqualification of the buyer to hold land if the land is subsequently transferred to a qualified party, or
the buyer himself becomes a qualified party." 16

In their Comment, petitioners contend that in Chavez and Halili, the object of the transfer (the land)
was not what was assailed for alleged unconstitutionality. Rather, it was the transaction that was
assailed; hence subsequent compliance with constitutional provisions would cure its infirmity. In
contrast, in the instant case it is the FTAA itself, the object of the transfer, that is being assailed as
invalid and unconstitutional. So, petitioners claim that the subsequent transfer of a void FTAA to a
Filipino corporation would not cure the defect.

Petitioners are confusing themselves. The present Petition has been filed, precisely because the
grantee of the FTAA was a wholly owned subsidiary of a foreign corporation. It cannot be gainsaid
that anyone would have asserted that the same FTAA was void if it had at the outset been issued to
a Filipino corporation. The FTAA, therefore, is not per se defective or unconstitutional. It was
questioned only because it had been issued to an allegedly non-qualified, foreign-owned
corporation.

We believe that this case is clearly analogous to Halili, in which the land acquired by a non-Filipino
was re-conveyed to a qualified vendee and the original transaction was thereby cured. Paraphrasing
Halili, the same rationale applies to the instant case: assuming arguendo the invalidity of its prior
grant to a foreign corporation, the disputed FTAA -- being now held by a Filipino corporation -- can
no longer be assailed; the objective of the constitutional provision -- to keep the exploration,
development and utilization of our natural resources in Filipino hands -- has been served.

More accurately speaking, the present situation is one degree better than that obtaining in Halili, in
which the original sale to a non-Filipino was clearly and indisputably violative of the constitutional
prohibition and thus void ab initio. In the present case, the issuance/grant of the subject FTAA to the
then foreign-owned WMCP was not illegal, void or unconstitutional at the time. The matter had to be
brought to court, precisely for adjudication as to whether the FTAA and the Mining Law had indeed
violated the Constitution. Since, up to this point, the decision of this Court declaring the FTAA void
has yet to become final, to all intents and purposes, the FTAA must be deemed valid and
constitutional.
17

At bottom, we find completely outlandish petitioners' contention that an FTAA could be entered into
by the government only with a foreign corporation, never with a Filipino enterprise. Indeed, the
nationalistic provisions of the Constitution are all anchored on the protection of Filipino interests.
How petitioners can now argue that foreigners have the exclusive right to FTAAs totally overturns
the entire basis of the Petition -- preference for the Filipino in the exploration, development and
utilization of our natural resources. It does not take deep knowledge of law and logic to understand
that what the Constitution grants to foreigners should be equally available to Filipinos.

Second Issue:

Whether the Court Can Still Decide the Case,

Even Assuming It Is Moot

All the protagonists are in agreement that the Court has jurisdiction to decide this controversy, even
assuming it to be moot.

Petitioners stress the following points. First, while a case becomes moot and academic when "there
is no more actual controversy between the parties or no useful purpose can be served in passing
upon the merits," what is at issue in the instant case is not only the validity of the WMCP FTAA, but
18

also the constitutionality of RA 7942 and its Implementing Rules and Regulations. Second, the acts
of private respondent cannot operate to cure the law of its alleged unconstitutionality or to divest this
Court of its jurisdiction to decide. Third, the Constitution imposes upon the Supreme Court the duty
to declare invalid any law that offends the Constitution.

Petitioners also argue that no amendatory laws have been passed to make the Mining Act of 1995
conform to constitutional strictures (assuming that, at present, it does not); that public respondents
will continue to implement and enforce the statute until this Court rules otherwise; and that the said
law continues to be the source of legal authority in accepting, processing and approving numerous
applications for mining rights.

Indeed, it appears that as of June 30, 2002, some 43 FTAA applications had been filed with the
Mines and Geosciences Bureau (MGB), with an aggregate area of 2,064,908.65 hectares -- spread
over Luzon, the Visayas and Mindanao -- applied for. It may be a bit far-fetched to assert, as
19

petitioners do, that each and every FTAA that was entered into under the provisions of the Mining
Act "invites potential litigation" for as long as the constitutional issues are not resolved with finality.
Nevertheless, we must concede that there exists the distinct possibility that one or more of the future
FTAAs will be the subject of yet another suit grounded on constitutional issues.

But of equal if not greater significance is the cloud of uncertainty hanging over the mining industry,
which is even now scaring away foreign investments. Attesting to this climate of anxiety is the fact
that the Chamber of Mines of the Philippines saw the urgent need to intervene in the case and to
present its position during the Oral Argument; and that Secretary General Romulo Neri of the
National Economic Development Authority (NEDA) requested this Court to allow him to speak,
during that Oral Argument, on the economic consequences of the Decision of January 27, 2004. 20

We are convinced. We now agree that the Court must recognize the exceptional character of the
situation and the paramount public interest involved, as well as the necessity for a ruling to put an
end to the uncertainties plaguing the mining industry and the affected communities as a result of
doubts cast upon the constitutionality and validity of the Mining Act, the subject FTAA and future
FTAAs, and the need to avert a multiplicity of suits. Paraphrasing Gonzales v. Commission on
Elections, it is evident that strong reasons of public policy demand that the constitutionality issue be
21

resolved now. 22

In further support of the immediate resolution of the constitutionality issue, public respondents cite
Acop v. Guingona, to the effect that the courts will decide a question -- otherwise moot and
23

academic -- if it is "capable of repetition, yet evading review." Public respondents ask the Court to
24

avoid a situation in which the constitutionality issue may again arise with respect to another FTAA,
the resolution of which may not be achieved until after it has become too late for our mining industry
to grow out of its infancy. They also recall Salonga v. Cruz Paño, in which this Court declared that
25

"(t)he Court also has the duty to formulate guiding and controlling constitutional principles, precepts,
doctrines or rules. It has the symbolic function of educating the bench and bar on the extent of
protection given by constitutional guarantees. x x x."

The mootness of the case in relation to the WMCP FTAA led the undersigned ponente to state in his
dissent to the Decision that there was no more justiciable controversy and the plea to nullify the
Mining Law has become a virtual petition for declaratory relief. The entry of the Chamber of Mines of
26

the Philippines, Inc., however, has put into focus the seriousness of the allegations of
unconstitutionality of RA 7942 and DAO 96-40 which converts the case to one for prohibition in the 27

enforcement of the said law and regulations.

Indeed, this CMP entry brings to fore that the real issue in this case is whether paragraph 4 of
Section 2 of Article XII of the Constitution is contravened by RA 7942 and DAO 96-40, not whether it
was violated by specific acts implementing RA 7942 and DAO 96-40. "[W]hen an act of the
legislative department is seriously alleged to have infringed the Constitution, settling the controversy
becomes the duty of this Court. By the mere enactment of the questioned law or the approval of the
challenged action, the dispute is said to have ripened into a judicial controversy even without any
other overt act." This ruling can be traced from Tañada v. Angara, in which the Court said:
28 29
"In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative
branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact
the duty of the judiciary to settle the dispute.

xxxxxxxxx

"As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress from or
abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse
of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality
or department of the government." 30

Additionally, the entry of CMP into this case has also effectively forestalled any possible objections
arising from the standing or legal interest of the original parties.

For all the foregoing reasons, we believe that the Court should proceed to a resolution of the
constitutional issues in this case.

Third Issue:

The Proper Interpretation of the Constitutional Phrase

"Agreements Involving Either Technical or Financial Assistance"

The constitutional provision at the nucleus of the controversy is paragraph 4 of Section 2 of Article
XII of the 1987 Constitution. In order to appreciate its context, Section 2 is reproduced in full:

"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development and utilization of natural resources
shall be under the full control and supervision of the State. The State may directly undertake such
activities, or it may enter into co-production, joint venture or production-sharing agreements with
Filipino citizens or corporations or associations at least sixty per centum of whose capital is owned
by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and under such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.
"The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive 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, as
well 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
technical or financial assistance for large-scale exploration, development, and utilization of
minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of the
country. In such agreements, the State shall promote the development and use of local scientific
and technical resources.

"The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution."
31
No Restriction of Meaning by
a Verba Legis Interpretation

To interpret the foregoing provision, petitioners adamantly assert that the language of the
Constitution should prevail; that the primary method of interpreting it is to seek the ordinary meaning
of the words used in its provisions. They rely on rulings of this Court, such as the following:

"The fundamental principle in constitutional construction however is that the primary source from
which to ascertain constitutional intent or purpose is the language of the provision itself. The
presumption is that the words in which the constitutional provisions are couched express the
objective sought to be attained. In other words, verba legis prevails. Only when the meaning of the
words used is unclear and equivocal should resort be made to extraneous aids of construction and
interpretation, such as the proceedings of the Constitutional Commission or Convention to shed light
on and ascertain the true intent or purpose of the provision being construed." 32

Very recently, in Francisco v. The House of Representatives, this Court indeed had the occasion to
33

reiterate the well-settled principles of constitutional construction:

"First, verba legis, that is, wherever possible, the words used in the Constitution must be given their
ordinary meaning except where technical terms are employed. x x x.

xxxxxxxxx

"Second, where there is ambiguity, ratio legis est anima. The words of the Constitution should be
interpreted in accordance with the intent of its framers. x x x.

xxxxxxxxx

"Finally, ut magis valeat quam pereat. The Constitution is to be interpreted as a whole." 34

For ease of reference and in consonance with verba legis, we reconstruct and stratify the
aforequoted Section 2 as follows:

1. All natural resources are owned by the State. Except for agricultural lands, natural resources
cannot be alienated by the State.

2. The exploration, development and utilization (EDU) of natural resources shall be under the full
control and supervision of the State.

3. The State may undertake these EDU activities through either of the following:

(a) By itself directly and solely

(b) By (i) co-production; (ii) joint venture; or (iii) production sharing agreements with Filipino citizens
or corporations, at least 60 percent of the capital of which is owned by such citizens

4. Small-scale utilization of natural resources may be allowed by law in favor of Filipino citizens.

5. For large-scale EDU of minerals, petroleum and other mineral oils, the President may enter into
"agreements with foreign-owned corporations involving either technical or financial assistance
according to the general terms and conditions provided by law x x x."

Note that in all the three foregoing mining activities -- exploration, development and utilization -- the
State may undertake such EDU activities by itself or in tandem with Filipinos or Filipino corporations,
except in two instances: first, in small-scale utilization of natural resources, which Filipinos may be
allowed by law to undertake; and second, in large-scale EDU of minerals, petroleum and mineral
oils, which may be undertaken by the State via "agreements with foreign-owned corporations
involving either technical or financial assistance" as provided by law.

Petitioners claim that the phrase "agreements x x x involving either technical or financial assistance"
simply means technical assistance or financial assistance agreements, nothing more and nothing
else. They insist that there is no ambiguity in the phrase, and that a plain reading of paragraph 4
quoted above leads to the inescapable conclusion that what a foreign-owned corporation may enter
into with the government is merely an agreement for either financial or technical assistance only, for
the large-scale exploration, development and utilization of minerals, petroleum and other mineral
oils; such a limitation, they argue, excludes foreign management and operation of a mining
enterprise.35

This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the
Constitution reserving to Filipino citizens and corporations the use and enjoyment of the country's
natural resources. They maintain that this Court's Decision of January 27, 2004 correctly declared
36

the WMCP FTAA, along with pertinent provisions of RA 7942, void for allowing a foreign contractor
to have direct and exclusive management of a mining enterprise. Allowing such a privilege not only
runs counter to the "full control and supervision" that the State is constitutionally mandated to
exercise over the exploration, development and utilization of the country's natural resources; doing
so also vests in the foreign company "beneficial ownership" of our mineral resources. It will be
recalled that the Decision of January 27, 2004 zeroed in on "management or other forms of
assistance" or other activities associated with the "service contracts" of the martial law regime, since
"the management or operation of mining activities by foreign contractors, which is the primary
feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought
to eradicate."

On the other hand, the intervenor and public respondents argue that the FTAA allowed by
37

paragraph 4 is not merely an agreement for supplying limited and specific financial or technical
services to the State. Rather, such FTAA is a comprehensive agreement for the foreign-owned
corporation's integrated exploration, development and utilization of mineral, petroleum or other
mineral oils on a large-scale basis. The agreement, therefore, authorizes the foreign contractor's
rendition of a whole range of integrated and comprehensive services, ranging from the discovery to
the development, utilization and production of minerals or petroleum products.

We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could
inexorably lead to the conclusions arrived at in the ponencia. First, the drafters' choice of words --
their use of the phrase agreements x x x involving either technical or financial assistance -- does
not indicate the intent to exclude other modes of assistance. The drafters opted to use involving
when they could have simply said agreements for financial or technical assistance, if that was their
intention to begin with. In this case, the limitation would be very clear and no further debate would
ensue.

In contrast, the use of the word "involving" signifies the possibility of the inclusion of other forms
of assistance or activities having to do with, otherwise related to or compatible with financial or
technical assistance. The word "involving" as used in this context has three connotations that can be
differentiated thus: one, the sense of "concerning," "having to do with," or "affecting"; two, "entailing,"
"requiring," "implying" or "necessitating"; and three, "including," "containing" or "comprising."38

Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word "involving,"
when understood in the sense of "including," as in including technical or financial assistance,
necessarily implies that there are activities other than those that are being included . In other words,
if an agreement includes technical or financial assistance, there is apart from such assistance --
something else already in, and covered or may be covered by, the said agreement.

In short, it allows for the possibility that matters, other than those explicitly mentioned, could be
made part of the agreement. Thus, we are now led to the conclusion that the use of the word
"involving" implies that these agreements with foreign corporations are not limited to mere financial
or technical assistance. The difference in sense becomes very apparent when we juxtapose
"agreements for technical or financial assistance" against "agreements including technical or
financial assistance." This much is unalterably clear in a verba legis approach.

Second, if the real intention of the drafters was to confine foreign corporations to financial or
technical assistance and nothing more, their language would have certainly been so unmistakably
restrictive and stringent as to leave no doubt in anyone's mind about their true intent. For example,
they would have used the sentence foreign corporations are absolutely prohibited from
involvement in the management or operation of mining or similar ventures or words of similar import.
A search for such stringent wording yields negative results. Thus, we come to the inevitable
conclusion that there was a conscious and deliberate decision to avoid the use of restrictive
wording that bespeaks an intent not to use the expression "agreements x x x involving either
technical or financial assistance" in an exclusionary and limiting manner.

Deletion of "Service Contracts" to

Avoid Pitfalls of Previous Constitutions,
Not to Ban Service Contracts Per Se

Third, we do not see how a verba legis approach leads to the conclusion that "the management or
operation of mining activities by foreign contractors, which is the primary feature of service contracts,
was precisely the evil that the drafters of the 1987 Constitution sought to eradicate." Nowhere in the
above-quoted Section can be discerned the objective to keep out of foreign hands the management
or operation of mining activities or the plan to eradicate service contracts as these were understood
in the 1973 Constitution. Still, petitioners maintain that the deletion or omission from the 1987
Constitution of the term "service contracts" found in the 1973 Constitution sufficiently proves the
drafters' intent to exclude foreigners from the management of the affected enterprises.

To our mind, however, such intent cannot be definitively and conclusively established from the mere
failure to carry the same expression or term over to the new Constitution, absent a more specific,
explicit and unequivocal statement to that effect. What petitioners seek (a complete ban on foreign
participation in the management of mining operations, as previously allowed by the earlier
Constitutions) is nothing short of bringing about a momentous sea change in the economic and
developmental policies; and the fundamentally capitalist, free-enterprise philosophy of our
government. We cannot imagine such a radical shift being undertaken by our government, to the
great prejudice of the mining sector in particular and our economy in general, merely on the basis of
the omission of the terms service contract from or the failure to carry them over to the new
Constitution. There has to be a much more definite and even unarguable basis for such a drastic
reversal of policies.

Fourth, a literal and restrictive interpretation of paragraph 4, such as that proposed by petitioners,
suffers from certain internal logical inconsistencies that generate ambiguities in the understanding of
the provision. As the intervenor pointed out, there has never been any constitutional or statutory
provision that reserved to Filipino citizens or corporations, at least 60 percent of which is Filipino-
owned, the rendition of financial or technical assistance to companies engaged in mining or the
development of any other natural resource. The taking out of foreign-currency or peso-denominated
loans or any other kind of financial assistance, as well as the rendition of technical assistance --
whether to the State or to any other entity in the Philippines -- has never been restricted in favor of
Filipino citizens or corporations having a certain minimum percentage of Filipino equity. Such a
restriction would certainly be preposterous and unnecessary. As a matter of fact, financial, and even
technical assistance, regardless of the nationality of its source, would be welcomed in the mining
industry anytime with open arms, on account of the dearth of local capital and the need to continually
update technological know-how and improve technical skills.

There was therefore no need for a constitutional provision specifically allowing foreign-owned
corporations to render financial or technical assistance, whether in respect of mining or some other
resource development or commercial activity in the Philippines. The last point needs to be
emphasized: if merely financial or technical assistance agreements are allowed, there would
be no need to limit them to large-scale mining operations, as there would be far greater need
for them in the smaller-scale mining activities (and even in non-mining areas). Obviously, the
provision in question was intended to refer to agreements other than those for mere financial
or technical assistance.

In like manner, there would be no need to require the President of the Republic to report to
Congress, if only financial or technical assistance agreements are involved. Such agreements are in
the nature of foreign loans that -- pursuant to Section 20 of Article VII of the 1987 Constitution -- the
39

President may contract or guarantee, merely with the prior concurrence of the Monetary Board. In
turn, the Board is required to report to Congress within thirty days from the end of every quarter of
the calendar year, not thirty days after the agreement is entered into.

And if paragraph 4 permits only agreements for loans and other forms of financial, or technical
assistance, what is the point of requiring that they be based on real contributions to the economic
growth and general welfare of the country? For instance, how is one to measure and assess the
"real contributions" to the "economic growth" and "general welfare" of the country that may ensue
from a foreign-currency loan agreement or a technical-assistance agreement for, say, the
refurbishing of an existing power generating plant for a mining operation somewhere in Mindanao?
Such a criterion would make more sense when applied to a major business investment in a principal
sector of the industry.

The conclusion is clear and inescapable -- a verba legis construction shows that paragraph 4 is not
to be understood as one limited only to foreign loans (or other forms of financial support) and to
technical assistance. There is definitely more to it than that. These are provisions permitting
participation by foreign companies; requiring the President's report to Congress; and using,
as yardstick, contributions based on economic growth and general welfare. These were
neither accidentally inserted into the Constitution nor carelessly cobbled together by the
drafters in lip service to shallow nationalism. The provisions patently have significance and
usefulness in a context that allows agreements with foreign companies to include more than mere
financial or technical assistance.

Fifth, it is argued that Section 2 of Article XII authorizes nothing more than a rendition of specific and
limited financial service or technical assistance by a foreign company. This argument begs the
question "To whom or for whom would it be rendered"? or Who is being assisted? If the answer is
"The State," then it necessarily implies that the State itself is the one directly and solely undertaking
the large-scale exploration, development and utilization of a mineral resource, so it follows that the
State must itself bear the liability and cost of repaying the financing sourced from the foreign lender
and/or of paying compensation to the foreign entity rendering technical assistance.

However, it is of common knowledge, and of judicial notice as well, that the government is and has
for many many years been financially strapped, to the point that even the most essential services
have suffered serious curtailments -- education and health care, for instance, not to mention judicial
services -- have had to make do with inadequate budgetary allocations. Thus, government has had
to resort to build-operate-transfer and similar arrangements with the private sector, in order to get
vital infrastructure projects built without any governmental outlay.

The very recent brouhaha over the gargantuan "fiscal crisis" or "budget deficit" merely confirms what
the ordinary citizen has suspected all along. After the reality check, one will have to admit the
implausibility of a direct undertaking -- by the State itself -- of large-scale exploration, development
and utilization of minerals, petroleum and other mineral oils. Such an undertaking entails not only
humongous capital requirements, but also the attendant risk of never finding and developing
economically viable quantities of minerals, petroleum and other mineral oils. 40

It is equally difficult to imagine that such a provision restricting foreign companies to the rendition of
only financial or technical assistance to the government was deliberately crafted by the drafters of
the Constitution, who were all well aware of the capital-intensive and technology-oriented nature of
large-scale mineral or petroleum extraction and the country's deficiency in precisely those areas. To 41

say so would be tantamount to asserting that the provision was purposely designed to ladle the
large-scale development and utilization of mineral, petroleum and related resources with impossible
conditions; and to remain forever and permanently "reserved" for future generations of Filipinos.

A More Reasonable Look

at the Charter's Plain Language

Sixth, we shall now look closer at the plain language of the Charter and examining the logical
inferences. The drafters chose to emphasize and highlight agreements x x x involving either
technical or financial assistance in relation to foreign corporations' participation in large-scale EDU.
The inclusion of this clause on "technical or financial assistance" recognizes the fact that foreign
business entities and multinational corporations are the ones with the resources and know-how to
provide technical and/or financial assistance of the magnitude and type required for large-scale
exploration, development and utilization of these resources.

The drafters -- whose ranks included many academicians, economists, businessmen, lawyers,
politicians and government officials -- were not unfamiliar with the practices of foreign corporations
and multinationals.

Neither were they so naïve as to believe that these entities would provide "assistance" without
conditionalities or some quid pro quo. Definitely, as business persons well know and as a matter of
judicial notice, this matter is not just a question of signing a promissory note or executing a
technology transfer agreement. Foreign corporations usually require that they be given a say in the
management, for instance, of day-to-day operations of the joint venture. They would demand the
appointment of their own men as, for example, operations managers, technical experts, quality
control heads, internal auditors or comptrollers. Furthermore, they would probably require seats on
the Board of Directors -- all these to ensure the success of the enterprise and the repayment of the
loans and other financial assistance and to make certain that the funding and the technology they
supply would not go to waste. Ultimately, they would also want to protect their business reputation
and bottom lines. 42

In short, the drafters will have to be credited with enough pragmatism and savvy to know that these
foreign entities will not enter into such "agreements involving assistance" without requiring
arrangements for the protection of their investments, gains and benefits.
Thus, by specifying such "agreements involving assistance," the drafters necessarily gave implied
assent to everything that these agreements necessarily entailed; or that could reasonably be
deemed necessary to make them tenable and effective, including management authority with
respect to the day-to-day operations of the enterprise and measures for the protection of the
interests of the foreign corporation, PROVIDED THAT Philippine sovereignty over natural resources
and full control over the enterprise undertaking the EDU activities remain firmly in the State.

Petitioners' Theory Deflated by the

Absence of Closing-Out Rules or Guidelines

Seventh and final point regarding the plain-language approach, one of the practical difficulties that
results from it is the fact that there is nothing by way of transitory provisions that would serve to
confirm the theory that the omission of the term "service contract" from the 1987 Constitution
signaled the demise of service contracts.

The framers knew at the time they were deliberating that there were various service contracts extant
and in force and effect, including those in the petroleum industry. Many of these service contracts
were long-term (25 years) and had several more years to run. If they had meant to ban service
contracts altogether, they would have had to provide for the termination or pretermination of the
existing contracts. Accordingly, they would have supplied the specifics and the when and how of
effecting the extinguishment of these existing contracts (or at least the mechanics for determining
them); and of putting in place the means to address the just claims of the contractors for
compensation for their investments, lost opportunities, and so on, if not for the recovery thereof.

If the framers had intended to put an end to service contracts, they would have at least left specific
instructions to Congress to deal with these closing-out issues, perhaps by way of general guidelines
and a timeline within which to carry them out. The following are some extant examples of such
transitory guidelines set forth in Article XVIII of our Constitution:

"Section 23. Advertising entities affected by paragraph (2), Section 11 of Article XVI of this
Constitution shall have five years from its ratification to comply on a graduated and proportionate
basis with the minimum Filipino ownership requirement therein.

xxxxxxxxx

"Section 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines
and the United States of America concerning military bases, foreign military bases, troops, or
facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the
Senate and, when the Congress so requires, ratified by a majority of the votes cast by the people in
a national referendum held for that purpose, and recognized as a treaty by the other contracting
State.

"Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated
March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative for not more
than eighteen months after the ratification of this Constitution. However, in the national interest, as
certified by the President, the Congress may extend such period.

A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order
and the list of the sequestered or frozen properties shall forthwith be registered with the proper
court. For orders issued before the ratification of this Constitution, the corresponding judicial action
or proceeding shall be filed within six months from its ratification. For those issued after such
ratification, the judicial action or proceeding shall be commenced within six months from the
issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is
commenced as herein provided." 43]

It is inconceivable that the drafters of the Constitution would leave such an important matter -- an
expression of sovereignty as it were -- indefinitely hanging in the air in a formless and ineffective
state. Indeed, the complete absence of even a general framework only serves to further deflate
petitioners' theory, like a child's balloon losing its air.

Under the circumstances, the logical inconsistencies resulting from petitioners' literal and purely
verba legis approach to paragraph 4 of Section 2 of Article XII compel a resort to other aids to
interpretation.

Petitioners' Posture Also Negated

by Ratio Legis Et Anima

Thus, in order to resolve the inconsistencies, incongruities and ambiguities encountered and to
supply the deficiencies of the plain-language approach, there is a need for recourse to the
proceedings of the 1986 Constitutional Commission. There is a need for ratio legis et anima.

Service Contracts Not

"Deconstitutionalized"

Pertinent portions of the deliberations of the members of the Constitutional Commission (ConCom)
conclusively show that they discussed agreements involving either technical or financial assistance
in the same breadth as service contracts and used the terms interchangeably. The following
exchange between Commissioner Jamir (sponsor of the provision) and Commissioner Suarez
irrefutably proves that the "agreements involving technical or financial assistance" were none other
than service contracts.

THE PRESIDENT. Commissioner Jamir is recognized. We are still on Section 3.

MR. JAMIR. Yes, Madam President. With respect to the second paragraph of Section 3, my
amendment by substitution reads: THE PRESIDENT MAY ENTER INTO AGREEMENTS WITH
FOREIGN-OWNED CORPORATIONS INVOLVING EITHER TECHNICAL OR FINANCIAL
ASSISTANCE FOR LARGE-SCALE EXPLORATION, DEVELOPMENT AND UTILIZATION OF
NATURAL RESOURCES ACCORDING TO THE TERMS AND CONDITIONS PROVIDED BY LAW.

MR. VILLEGAS. The Committee accepts the amendment. Commissioner Suarez will give the
background.

MR. JAMIR. Thank you.

THE PRESIDENT. Commissioner Suarez is recognized.

MR. SUAREZ. Thank you, Madam President.

Will Commissioner Jamir answer a few clarificatory questions?

MR. JAMIR. Yes, Madam President.

MR. SUAREZ. This particular portion of the section has reference to what was popularly known
before as service contracts, among other things, is that correct?

MR. JAMIR. Yes, Madam President.

MR. SUAREZ. As it is formulated, the President may enter into service contracts but subject to the
guidelines that may be promulgated by Congress?

MR. JAMIR. That is correct.

MR. SUAREZ. Therefore, that aspect of negotiation and consummation will fall on the President, not
upon Congress?

MR. JAMIR. That is also correct, Madam President.

MR. SUAREZ. Except that all of these contracts, service or otherwise, must be made strictly in
accordance with guidelines prescribed by Congress?

MR. JAMIR. That is also correct.

MR. SUAREZ. And the Gentleman is thinking in terms of a law that uniformly covers situations of the
same nature?

MR. JAMIR. That is 100 percent correct.

MR. SUAREZ. I thank the Commissioner.

MR. JAMIR. Thank you very much. 44

The following exchange leaves no doubt that the commissioners knew exactly what they were
dealing with: service contracts.

THE PRESIDENT. Commissioner Gascon is recognized.

MR. GASCON. Commissioner Jamir had proposed an amendment with regard to special service
contracts which was accepted by the Committee. Since the Committee has accepted it, I would like
to ask some questions.

THE PRESIDENT. Commissioner Gascon may proceed.

MR. GASCON. As it is proposed now, such service contracts will be entered into by the President
with the guidelines of a general law on service contract to be enacted by Congress. Is that correct?

MR. VILLEGAS. The Commissioner is right, Madam President.

MR. GASCON. According to the original proposal, if the President were to enter into a particular
agreement, he would need the concurrence of Congress. Now that it has been changed by the
proposal of Commissioner Jamir in that Congress will set the general law to which the President
shall comply, the President will, therefore, not need the concurrence of Congress every time he
enters into service contracts. Is that correct?

MR. VILLEGAS. That is right.

MR. GASCON. The proposed amendment of Commissioner Jamir is in indirect contrast to my

proposed amendment, so I would like to object and present my proposed amendment to the body.

xxxxxxxxx

MR. GASCON. Yes, it will be up to the body.

I feel that the general law to be set by Congress as regard service contract agreements which the
President will enter into might be too general or since we do not know the content yet of such a law,
it might be that certain agreements will be detrimental to the interest of the Filipinos. This is in direct
contrast to my proposal which provides that there be effective constraints in the implementation of
service contracts.

So instead of a general law to be passed by Congress to serve as a guideline to the President when
entering into service contract agreements, I propose that every service contract entered into by
the President would need the concurrence of Congress, so as to assure the Filipinos of their
interests with regard to the issue in Section 3 on all lands of the public domain. My alternative
amendment, which we will discuss later, reads: THAT THE PRESIDENT SHALL ENTER INTO
SUCH AGREEMENTS ONLY WITH THE CONCURRENCE OF TWO-THIRDS VOTE OF ALL THE
MEMBERS OF CONGRESS SITTING SEPARATELY.

xxxxxxxxx

MR. BENGZON. The reason we made that shift is that we realized the original proposal could breed
corruption. By the way, this is not just confined to service contracts but also to financial
assistance. If we are going to make every single contract subject to the concurrence of Congress –
which, according to the Commissioner's amendment is the concurrence of two-thirds of Congress
voting separately – then (1) there is a very great chance that each contract will be different from
another; and (2) there is a great temptation that it would breed corruption because of the great
lobbying that is going to happen. And we do not want to subject our legislature to that.

Now, to answer the Commissioner's apprehension, by "general law," we do not mean statements of
motherhood. Congress can build all the restrictions that it wishes into that general law so that every
contract entered into by the President under that specific area will have to be uniform. The President
has no choice but to follow all the guidelines that will be provided by law.

MR. GASCON. But my basic problem is that we do not know as of yet the contents of such a general
law as to how much constraints there will be in it. And to my mind, although the Committee's
contention that the regular concurrence from Congress would subject Congress to extensive
lobbying, I think that is a risk we will have to take since Congress is a body of representatives of the
people whose membership will be changing regularly as there will be changing circumstances every
time certain agreements are made. It would be best then to keep in tab and attuned to the interest of
the Filipino people, whenever the President enters into any agreement with regard to such an
important matter as technical or financial assistance for large-scale exploration, development
and utilization of natural resources or service contracts, the people's elected representatives
should be on top of it.

xxxxxxxxx

MR. OPLE. Madam President, we do not need to suspend the session. If Commissioner Gascon
needs a few minutes, I can fill up the remaining time while he completes his proposed amendment. I
just wanted to ask Commissioner Jamir whether he would entertain a minor amendment to his
amendment, and it reads as follows: THE PRESIDENT SHALL SUBSEQUENTLY NOTIFY
CONGRESS OF EVERY SERVICE CONTRACT ENTERED INTO IN ACCORDANCE WITH THE
GENERAL LAW. I think the reason is, if I may state it briefly, as Commissioner Bengzon said,
Congress can always change the general law later on to conform to new perceptions of standards
that should be built into service contracts. But the only way Congress can do this is if there were a
notification requirement from the Office of the President that such service contracts had been
entered into, subject then to the scrutiny of the Members of Congress. This pertains to a situation
where the service contracts are already entered into, and all that this amendment seeks is the
reporting requirement from the Office of the President. Will Commissioner Jamir entertain that?
MR. JAMIR. I will gladly do so, if it is still within my power.

MR. VILLEGAS. Yes, the Committee accepts the amendment.

xxxxxxxxx

SR. TAN. Madam President, may I ask a question?

THE PRESIDENT. Commissioner Tan is recognized.

SR. TAN. Am I correct in thinking that the only difference between these future service contracts
and the past service contracts under Mr. Marcos is the general law to be enacted by the legislature
and the notification of Congress by the President? That is the only difference, 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. 45

More Than Mere Financial

and Technical Assistance
Entailed by the Agreements

The clear words of Commissioner Jose N. Nolledo quoted below explicitly and eloquently
demonstrate that the drafters knew that the agreements with foreign corporations were going to
entail not mere technical or financial assistance but, rather, foreign investment in and management
of an enterprise involved in large-scale exploration, development and utilization of minerals,
petroleum, and other mineral oils.

THE PRESIDENT. Commissioner Nolledo is recognized.

MR. NOLLEDO. Madam President, I have the permission of the Acting Floor Leader to speak for
only two minutes in favor of the amendment of Commissioner Gascon.

THE PRESIDENT. Commissioner Nolledo may proceed.

MR. NOLLEDO. With due respect to the members of the Committee and Commissioner Jamir, I am
in favor of the objection of Commissioner Gascon.

Madam President, I was one of those who refused to sign the 1973 Constitution, and one of
the reasons is that there were many provisions in the Transitory Provisions therein that
favored aliens. I was shocked when I read a provision authorizing service contracts while
we, in this Constitutional Commission, provided for Filipino control of the economy. We are,
therefore, providing for exceptional instances where aliens may circumvent Filipino control of
our economy. And one way of circumventing the rule in favor of Filipino control of the
economy is to recognize service contracts.

As far as I am concerned, if I should have my own way, I am for the complete deletion of this
provision. However, we are presenting a compromise in the sense that we are requiring a two-
thirds vote of all the Members of Congress as a safeguard. I think we should not mistrust the future
Members of Congress by saying that the purpose of this provision is to avoid corruption. We cannot
claim that they are less patriotic than we are. I think the Members of this Commission should know
that entering into service contracts is an exception 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. It seems to me that we are liberalizing the rules in favor of aliens.

I say these things with a heavy heart, Madam President. I do not claim to be a nationalist, but I love
my country. Although we need investments, we must adopt safeguards that are truly reflective
of the sentiments of the people and not mere cosmetic safeguards as they now appear in the Jamir
amendment. (Applause)

Thank you, Madam President. 46

Another excerpt, featuring then Commissioner (now Chief Justice) Hilario G. Davide Jr., indicates
the limitations of the scope of such service contracts -- they are valid only in regard to minerals,
petroleum and other mineral oils, not to all natural resources.

THE PRESIDENT. Commissioner Davide is recognized.

MR. DAVIDE. Thank you, Madam President. This is an amendment to the Jamir amendment and
also to the Ople amendment. I propose to delete "NATURAL RESOURCES" and substitute it with
the following: MINERALS, PETROLEUM AND OTHER MINERAL OILS. On the Ople amendment, I
propose to add: THE NOTIFICATION TO CONGRESS SHALL BE WITHIN THIRTY DAYS FROM
THE EXECUTION OF THE SERVICE CONTRACT.

THE PRESIDENT. What does the Committee say with respect to the first amendment in lieu of
"NATURAL RESOURCES"?

MR. VILLEGAS. Could Commissioner Davide explain that?

MR. DAVIDE. Madam President, with the use of "NATURAL RESOURCES" here, it would
necessarily include all lands of the public domain, our marine resources, forests, parks and so on.
So we would like to limit the scope of these service contracts to those areas really where these
may be needed, the exploitation, development and exploration of minerals, petroleum and other
mineral oils. And so, we believe that we should really, if we want to grant service contracts at all,
limit the same to only those particular areas where Filipino capital may not be sufficient, and
not to all natural resources.

MR. SUAREZ. Just a point of clarification again, Madam President. When the Commissioner made
those enumerations and specifications, I suppose he deliberately did not include "agricultural land"?

MR. DAVIDE. That is precisely the reason we have to enumerate what these resources are into
which service contracts may enter. So, beyond the reach of any service contract will be lands of
the public domain, timberlands, forests, marine resources, fauna and flora, wildlife and national
parks.47

After the Jamir amendment was voted upon and approved by a vote of 21 to 10 with 2 abstentions,
Commissioner Davide made the following statement, which is very relevant to our quest:

THE PRESIDENT. Commissioner Davide is recognized.

MR. DAVIDE. I am very glad that Commissioner Padilla emphasized minerals, petroleum and
mineral oils. The Commission has just approved the possible foreign entry into the development,
exploration and utilization of these minerals, petroleum and other mineral oils by virtue of the Jamir
amendment. I voted in favor of the Jamir amendment because it will eventually give way to vesting in
exclusively Filipino citizens and corporations wholly owned by Filipino citizens the right to utilize the
other natural resources. This means that as a matter of policy, natural resources should be utilized
and exploited only by Filipino citizens or corporations wholly owned by such citizens. But by virtue of
the Jamir amendment, since we feel that Filipino capital may not be enough for the development and
utilization of minerals, petroleum and other mineral oils, the President can enter into service
contracts with foreign corporations precisely for the development and utilization of such resources.
And so, there is nothing to fear that we will stagnate in the development of minerals, petroleum and
mineral oils because we now allow service contracts. x x x." 48

The foregoing are mere fragments of the framers' lengthy discussions of the provision dealing with
agreements x x x involving either technical or financial assistance, which ultimately became
paragraph 4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the members of the
ConCom were actually debating about the martial-law-era service contracts for which they were
crafting appropriate safeguards.

In the voting that led to the approval of Article XII by the ConCom, the explanations given by
Commissioners Gascon, Garcia and Tadeo indicated that they had voted to reject this provision on
account of their objections to the "constitutionalization" of the "service contract" concept.

Mr. Gascon said, "I felt that if we would constitutionalize any provision on service contracts, this
should always be with the concurrence of Congress and not guided only by a general law to be
promulgated by Congress." Mr. Garcia explained, "Service contracts are given constitutional
49

legitimization in Sec. 3, even when they have been proven to be inimical to the interests of the
nation, providing, as they do, the legal loophole for the exploitation of our natural resources for the
benefit of foreign interests." Likewise, Mr. Tadeo cited inter alia the fact that service contracts
50

continued to subsist, enabling foreign interests to benefit from our natural resources. It was hardly
51

likely that these gentlemen would have objected so strenuously, had the provision called for
mere technical or financial assistance and nothing more.

The deliberations of the ConCom and some commissioners' explanation of their votes leave no room
for doubt that the service contract concept precisely underpinned the commissioners' understanding
of the "agreements involving either technical or financial assistance."

Summation of the
Concom Deliberations

At this point, we sum up the matters established, based on a careful reading of the ConCom
deliberations, as follows:

· In their deliberations on what was to become paragraph 4, the framers used the term service
contracts in referring to agreements x x x involving either technical or financial assistance.

· They spoke of service contracts as the concept was understood in the 1973 Constitution.

· It was obvious from their discussions that they were not about to ban or eradicate service
contracts.

· Instead, they were plainly crafting provisions to put in place safeguards that would eliminate or
minimize the abuses prevalent during the marital law regime. In brief, they were going to permit
service contracts with foreign corporations as contractors, but with safety measures to prevent
abuses, as an exception to the general norm established in the first paragraph of Section 2 of Article
XII. This provision reserves or limits to Filipino citizens -- and corporations at least 60 percent of
which is owned by such citizens -- the exploration, development and utilization of natural resources.
· This provision was prompted by the perceived insufficiency of Filipino capital and the felt need for
foreign investments in the EDU of minerals and petroleum resources.

· The framers for the most part debated about the sort of safeguards that would be considered
adequate and reasonable. But some of them, having more "radical" leanings, wanted to ban service
contracts altogether; for them, the provision would permit aliens to exploit and benefit from the
nation's natural resources, which they felt should be reserved only for Filipinos.

· In the explanation of their votes, the individual commissioners were heard by the entire body. They
sounded off their individual opinions, openly enunciated their philosophies, and supported or
attacked the provisions with fervor. Everyone's viewpoint was heard.

· In the final voting, the Article on the National Economy and Patrimony -- including paragraph 4
allowing service contracts with foreign corporations as an exception to the general norm in
paragraph 1 of Section 2 of the same article -- was resoundingly approved by a vote of 32 to 7, with
2 abstentions.

Agreements Involving Technical

or Financial Assistance Are

Service Contracts With Safeguards

From the foregoing, we are impelled to conclude that the phrase agreements involving either
technical or financial assistance, referred to in paragraph 4, are in fact service contracts. But unlike
those of the 1973 variety, the new ones are between foreign corporations acting as contractors on
the one hand; and on the other, the government as principal or "owner" of the works. In the new
service contracts, the foreign contractors provide capital, technology and technical know-how, and
managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and
the government, through its agencies (DENR, MGB), actively exercises control and supervision over
the entire operation.

Such service contracts may be entered into only with respect to minerals, petroleum and other
mineral oils. The grant thereof is subject to several safeguards, among which are these
requirements:

(1) The service contract shall be crafted in accordance with a general law that will set standard or
uniform terms, conditions and requirements, presumably to attain a certain uniformity in provisions
and avoid the possible insertion of terms disadvantageous to the country.

(2) The President shall be the signatory for the government because, supposedly before an
agreement is presented to the President for signature, it will have been vetted several times over at
different levels to ensure that it conforms to law and can withstand public scrutiny.

(3) Within thirty days of the executed agreement, the President shall report it to Congress to give
that branch of government an opportunity to look over the agreement and interpose timely
objections, if any.

Use of the Record of the

ConCom to Ascertain Intent

At this juncture, we shall address, rather than gloss over, the use of the "framers' intent" approach,
and the criticism hurled by petitioners who quote a ruling of this Court:
"While it is permissible in this jurisdiction to consult the debates and proceedings of the
constitutional convention in order to arrive at the reason and purpose of the resulting Constitution,
resort thereto may be had only when other guides fail as said proceedings are powerless to vary the
terms of the Constitution when the meaning is clear. Debates in the constitutional convention 'are of
value as showing the views of the individual members, and as indicating the reason for their votes,
but they give us no light as to the views of the large majority who did not talk, much less the mass of
our fellow citizens whose votes at the polls gave that instrument the force of fundamental law. We
think it safer to construe the constitution from what appears upon its face.' The proper interpretation
therefore depends more on how it was understood by the people adopting it than in the framers'
understanding thereof." 52

The notion that the deliberations reflect only the views of those members who spoke out and not the
views of the majority who remained silent should be clarified. We must never forget that those who
spoke out were heard by those who remained silent and did not react. If the latter were silent
because they happened not to be present at the time, they are presumed to have read the minutes
and kept abreast of the deliberations. By remaining silent, they are deemed to have signified their
assent to and/or conformity with at least some of the views propounded or their lack of objections
thereto. It was incumbent upon them, as representatives of the entire Filipino people, to follow the
deliberations closely and to speak their minds on the matter if they did not see eye to eye with the
proponents of the draft provisions.

In any event, each and every one of the commissioners had the opportunity to speak out and to vote
on the matter. Moreover, the individual explanations of votes are on record, and they show where
each delegate stood on the issues. In sum, we cannot completely denigrate the value or
usefulness of the record of the ConCom, simply because certain members chose not to
speak out.

It is contended that the deliberations therein did not necessarily reflect the thinking of the voting
population that participated in the referendum and ratified the Constitution. Verily, whether we like it
or not, it is a bit too much to assume that every one of those who voted to ratify the proposed
Charter did so only after carefully reading and mulling over it, provision by provision.

Likewise, it appears rather extravagant to assume that every one of those who did in fact bother to
read the draft Charter actually understood the import of its provisions, much less analyzed it vis-à-vis
the previous Constitutions. We believe that in reality, a good percentage of those who voted in favor
of it did so more out of faith and trust. For them, it was the product of the hard work and careful
deliberation of a group of intelligent, dedicated and trustworthy men and women of integrity and
conviction, whose love of country and fidelity to duty could not be questioned.

In short, a large proportion of the voters voted "yes" because the drafters, or a majority of them,
endorsed the proposed Constitution. What this fact translates to is the inescapable conclusion that
many of the voters in the referendum did not form their own isolated judgment about the draft
Charter, much less about particular provisions therein. They only relied or fell back and acted upon
the favorable endorsement or recommendation of the framers as a group. In other words, by voting
yes, they may be deemed to have signified their voluntary adoption of the understanding and
interpretation of the delegates with respect to the proposed Charter and its particular provisions. "If
it's good enough for them, it's good enough for me;" or, in many instances, "If it's good enough for
President Cory Aquino, it's good enough for me."

And even for those who voted based on their own individual assessment of the proposed Charter,
there is no evidence available to indicate that their assessment or understanding of its provisions
was in fact different from that of the drafters. This unwritten assumption seems to be petitioners' as
well. For all we know, this segment of voters must have read and understood the provisions of the
Constitution in the same way the framers had, an assumption that would account for the favorable
votes.

Fundamentally speaking, in the process of rewriting the Charter, the members of the ConCom as a
group were supposed to represent the entire Filipino people. Thus, we cannot but regard their views
as being very much indicative of the thinking of the people with respect to the matters deliberated
upon and to the Charter as a whole.

It is therefore reasonable and unavoidable to make the following conclusion, based on the
above arguments. As written by the framers and ratified and adopted by the people, the
Constitution allows the continued use of service contracts with foreign corporations -- as
contractors who would invest in and operate and manage extractive enterprises, subject to
the full control and supervision of the State -- sans the abuses of the past regime. The
purpose is clear: to develop and utilize our mineral, petroleum and other resources on a large
scale for the immediate and tangible benefit of the Filipino people.

In view of the foregoing discussion, we should reverse the Decision of January 27, 2004, and in fact
now hold a view different from that of the Decision, which had these findings: (a) paragraph 4 of
Section 2 of Article XII limits foreign involvement in the local mining industry to agreements strictly
for either financial or technical assistance only; (b) the same paragraph precludes agreements that
grant to foreign corporations the management of local mining operations, as such agreements are
purportedly in the nature of service contracts as these were understood under the 1973 Constitution;
(c) these service contracts were supposedly "de-constitutionalized" and proscribed by the omission
of the term service contracts from the 1987 Constitution; (d) since the WMCP FTAA contains
provisions permitting the foreign contractor to manage the concern, the said FTAA is invalid for
being a prohibited service contract; and (e) provisions of RA 7942 and DAO 96-40, which likewise
grant managerial authority to the foreign contractor, are also invalid and unconstitutional.

Ultimate Test: State's "Control"

Determinative of Constitutionality

But we are not yet at the end of our quest. Far from it. It seems that we are confronted with a
possible collision of constitutional provisions. On the one hand, paragraph 1 of Section 2 of Article
XII explicitly mandates the State to exercise "full control and supervision" over the exploration,
development and utilization of natural resources. On the other hand, paragraph 4 permits
safeguarded service contracts with foreign contractors. Normally, pursuant thereto, the contractors
exercise management prerogatives over the mining operations and the enterprise as a whole. There
is thus a legitimate ground to be concerned that either the State's full control and supervision may
rule out any exercise of management authority by the foreign contractor; or, the other way around,
allowing the foreign contractor full management prerogatives may ultimately negate the State's full
control and supervision.

Ut Magis Valeat
Quam Pereat

Under the third principle of constitutional construction laid down in Francisco -- ut magis valeat quam
pereat -- every part of the Constitution is to be given effect, and the Constitution is to be read and
understood as a harmonious whole. Thus, "full control and supervision" by the State must be
understood as one that does not preclude the legitimate exercise of management prerogatives by
the foreign contractor. Before any further discussion, we must stress the primacy and supremacy of
the principle of sovereignty and State control and supervision over all aspects of exploration,
development and utilization of the country's natural resources, as mandated in the first paragraph of
Section 2 of Article XII.

But in the next breadth we have to point out that "full control and supervision" cannot be taken
literally to mean that the State controls and supervises everything involved, down to the minutest
details, and makes all decisions required in the mining operations. This strained concept of control
and supervision over the mining enterprise would render impossible the legitimate exercise by the
contractors of a reasonable degree of management prerogative and authority necessary and
indispensable to their proper functioning.

For one thing, such an interpretation would discourage foreign entry into large-scale exploration,
development and utilization activities; and result in the unmitigated stagnation of this sector, to the
detriment of our nation's development. This scenario renders paragraph 4 inoperative and useless.
And as respondents have correctly pointed out, the government does not have to micro-manage the
mining operations and dip its hands into the day-to-day affairs of the enterprise in order for it to be
considered as having full control and supervision.

The concept of control adopted in Section 2 of Article XII must be taken to mean less than
53

dictatorial, all-encompassing control; but nevertheless sufficient to give the State the power to direct,
restrain, regulate and govern the affairs of the extractive enterprises. Control by the State may be on
a macro level, through the establishment of policies, guidelines, regulations, industry standards and
similar measures that would enable the government to control the conduct of affairs in various
enterprises and restrain activities deemed not desirable or beneficial.

The end in view is ensuring that these enterprises contribute to the economic development and
general welfare of the country, conserve the environment, and uplift the well-being of the affected
local communities. Such a concept of control would be compatible with permitting the foreign
contractor sufficient and reasonable management authority over the enterprise it invested in, in order
to ensure that it is operating efficiently and profitably, to protect its investments and to enable it to
succeed.

The question to be answered, then, is whether RA 7942 and its Implementing Rules enable
the government to exercise that degree of control sufficient to direct and regulate the
conduct of affairs of individual enterprises and restrain undesirable activities.

On the resolution of these questions will depend the validity and constitutionality of certain provisions
of the Philippine Mining Act of 1995 (RA 7942) and its Implementing Rules and Regulations (DAO
96-40), as well as the WMCP FTAA.

Indeed, petitioners charge that RA 7942, as well as its Implementing Rules and Regulations, makes
54

it possible for FTAA contracts to cede full control and management of mining enterprises over to fully
foreign-owned corporations, with the result that the State is allegedly reduced to a passive regulator
dependent on submitted plans and reports, with weak review and audit powers. The State does not
supposedly act as the owner of the natural resources for and on behalf of the Filipino people; it
practically has little effective say in the decisions made by the enterprise. Petitioners then conclude
that the law, the implementing regulations, and the WMCP FTAA cede "beneficial ownership" of the
mineral resources to the foreign contractor.

A careful scrutiny of the provisions of RA 7942 and its Implementing Rules belies petitioners' claims.
Paraphrasing the Constitution, Section 4 of the statute clearly affirms the State's control thus:

"Sec. 4. Ownership of Mineral Resources. – Mineral resources are owned by the State and the
exploration, development, utilization and processing thereof shall be under its full control and
supervision. The State may directly undertake such activities or it may enter into mineral agreements
with contractors.

"The State shall recognize and protect the rights of the indigenous cultural communities to their
ancestral lands as provided for by the Constitution."

The aforequoted provision is substantively reiterated in Section 2 of DAO 96-40 as follows:

"Sec. 2. Declaration of Policy. All mineral resources in public and private lands within the territory
and exclusive economic zone of the Republic of the Philippines are owned by the State. It shall be
the responsibility of the State to promote their rational exploration, development, utilization and
conservation through the combined efforts of the Government and private sector in order to enhance
national growth in a way that effectively safeguards the environment and protects the rights of
affected communities."

Sufficient Control Over Mining

Operations Vested in the State
by RA 7942 and DAO 96-40

RA 7942 provides for the State's control and supervision over mining operations. The following
provisions thereof establish the mechanism of inspection and visitorial rights over mining operations
and institute reportorial requirements in this manner:

1. Sec. 8 which provides for the DENR's power of over-all supervision and periodic review for "the
conservation, management, development and proper use of the State's mineral resources";

2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to exercise
"direct charge in the administration and disposition of mineral resources", and empowers the MGB to
"monitor the compliance by the contractor of the terms and conditions of the mineral agreements",
"confiscate surety and performance bonds", and deputize whenever necessary any member or unit
of the Phil. National Police, barangay, duly registered non-governmental organization (NGO) or any
qualified person to police mining activities;

3. Sec. 66 which vests in the Regional Director "exclusive jurisdiction over safety inspections of all
installations, whether surface or underground", utilized in mining operations.

4. Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:

"(g) Mining operations shall be conducted in accordance with the provisions of the Act and its
IRR.

"(h) Work programs and minimum expenditures commitments.

xxxxxxxxx

"(k) Requiring proponent to effectively use appropriate anti-pollution technology and facilities to
protect the environment and restore or rehabilitate mined-out areas.

"(l) The contractors shall furnish the Government records of geologic, accounting and other relevant
data for its mining operation, and that books of accounts and records shall be open for inspection by
the government. x x x.

"(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous
terms and conditions.
"(n) x x x x x x x x x

"(o) Such other terms and conditions consistent with the Constitution and with this Act as the
Secretary may deem to be for the best interest of the State and the welfare of the Filipino people."

The foregoing provisions of Section 35 of RA 7942 are also reflected and implemented in Section 56
(g), (h), (l), (m) and (n) of the Implementing Rules, DAO 96-40.

Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the government's
control over mining enterprises:

· The contractor is to relinquish to the government those portions of the contract area not needed for
mining operations and not covered by any declaration of mining feasibility (Section 35-e, RA 7942;
Section 60, DAO 96-40).

· The contractor must comply with the provisions pertaining to mine safety, health and environmental
protection (Chapter XI, RA 7942; Chapters XV and XVI, DAO 96-40).

· For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter XVII,
RA 7942; Chapter XXIV, DAO 96-40).

· An FTAA contractor is obliged to open its books of accounts and records for inspection by the
government (Section 56-m, DAO 96-40).

· An FTAA contractor has to dispose of the minerals and by-products at the highest market price and
register with the MGB a copy of the sales agreement (Section 56-n, DAO 96-40).

· MGB is mandated to monitor the contractor's compliance with the terms and conditions of the
FTAA; and to deputize, when necessary, any member or unit of the Philippine National Police, the
barangay or a DENR-accredited nongovernmental organization to police mining activities (Section 7-
d and -f, DAO 96-40).

· An FTAA cannot be transferred or assigned without prior approval by the President (Section 40, RA
7942; Section 66, DAO 96-40).

· A mining project under an FTAA cannot proceed to the construction/development/utilization stage,

unless its Declaration of Mining Project Feasibility has been approved by government (Section 24,
RA 7942).

· The Declaration of Mining Project Feasibility filed by the contractor cannot be approved without
submission of the following documents:

1. Approved mining project feasibility study (Section 53-d, DAO 96-40)

2. Approved three-year work program (Section 53-a-4, DAO 96-40)

3. Environmental compliance certificate (Section 70, RA 7942)

4. Approved environmental protection and enhancement program (Section 69, RA 7942)

5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA 7942; Section 27,

RA 7160)

6. Free and prior informed consent by the indigenous peoples concerned, including payment of
royalties through a Memorandum of Agreement (Section 16, RA 7942; Section 59, RA 8371)
· The FTAA contractor is obliged to assist in the development of its mining community, promotion of
the general welfare of its inhabitants, and development of science and mining technology (Section
57, RA 7942).

· The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis as the
case may be; per Section 270, DAO 96-40), pertaining to the following:

1. Exploration

2. Drilling

3. Mineral resources and reserves

4. Energy consumption

5. Production

6. Sales and marketing

7. Employment

8. Payment of taxes, royalties, fees and other Government Shares

9. Mine safety, health and environment

10. Land use

11. Social development

12. Explosives consumption

· An FTAA pertaining to areas within government reservations cannot be granted without a written
clearance from the government agencies concerned (Section 19, RA 7942; Section 54, DAO 96-40).

· An FTAA contractor is required to post a financial guarantee bond in favor of the government in an
amount equivalent to its expenditures obligations for any particular year. This requirement is apart
from the representations and warranties of the contractor that it has access to all the financing,
managerial and technical expertise and technology necessary to carry out the objectives of the
FTAA (Section 35-b, -e, and -f, RA 7942).

· Other reports to be submitted by the contractor, as required under DAO 96-40, are as follows: an
environmental report on the rehabilitation of the mined-out area and/or mine waste/tailing covered
area, and anti-pollution measures undertaken (Section 35-a-2); annual reports of the mining
operations and records of geologic accounting (Section 56-m); annual progress reports and final
report of exploration activities (Section 56-2).

· Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the
following: a safety and health program (Section 144); an environmental work program (Section 168);
an annual environmental protection and enhancement program (Section 171).

The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the
FTAA contractor by the statute and regulations easily overturns petitioners' contention. The setup
under RA 7942 and DAO 96-40 hardly relegates the State to the role of a "passive regulator"
dependent on submitted plans and reports. On the contrary, the government agencies concerned
are empowered to approve or disapprove -- hence, to influence, direct and change -- the various
work programs and the corresponding minimum expenditure commitments for each of the
exploration, development and utilization phases of the mining enterprise.

Once these plans and reports are approved, the contractor is bound to comply with its commitments
therein. Figures for mineral production and sales are regularly monitored and subjected to
government review, in order to ensure that the products and by-products are disposed of at the best
prices possible; even copies of sales agreements have to be submitted to and registered with MGB.
And the contractor is mandated to open its books of accounts and records for scrutiny, so as to
enable the State to determine if the government share has been fully paid.

The State may likewise compel the contractor's compliance with mandatory requirements on mine
safety, health and environmental protection, and the use of anti-pollution technology and facilities.
Moreover, the contractor is also obligated to assist in the development of the mining community and
to pay royalties to the indigenous peoples concerned.

Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or
noncompliance with statutes or regulations. This general, all-around, multipurpose sanction is no
trifling matter, especially to a contractor who may have yet to recover the tens or hundreds of
millions of dollars sunk into a mining project.

Overall, considering the provisions of the statute and the regulations just discussed, we believe that
the State definitely possesses the means by which it can have the ultimate word in the operation of
the enterprise, set directions and objectives, and detect deviations and noncompliance by the
contractor; likewise, it has the capability to enforce compliance and to impose sanctions, should the
occasion therefor arise.

In other words, the FTAA contractor is not free to do whatever it pleases and get away with it;
on the contrary, it will have to follow the government line if it wants to stay in the enterprise.
Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient
degree of control and supervision over the conduct of mining operations.

Section 3(aq) of RA 7942

Not Unconstitutional

An objection has been expressed that Section 3(aq) of RA 7942 -- which allows a foreign contractor
55

to apply for and hold an exploration permit -- is unconstitutional. The reasoning is that Section 2 of
Article XII of the Constitution does not allow foreign-owned corporations to undertake mining
operations directly. They may act only as contractors of the State under an FTAA; and the State, as
the party directly undertaking exploitation of its natural resources, must hold through the government
all exploration permits and similar authorizations. Hence, Section 3(aq), in permitting foreign-owned
corporations to hold exploration permits, is unconstitutional.

The objection, however, is not well-founded. While the Constitution mandates the State to exercise
full control and supervision over the exploitation of mineral resources, nowhere does it require the
government to hold all exploration permits and similar authorizations. In fact, there is no prohibition
at all against foreign or local corporations or contractors holding exploration permits. The reason is
not hard to see.

Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the
right to conduct exploration for all minerals in specified areas. Such a permit does not amount to an
authorization to extract and carry off the mineral resources that may be discovered. This phase
involves nothing but expenditures for exploring the contract area and locating the mineral bodies. As
no extraction is involved, there are no revenues or incomes to speak of. In short, the exploration
permit is an authorization for the grantee to spend its own funds on exploration programs that are
pre-approved by the government, without any right to recover anything should no minerals in
commercial quantities be discovered. The State risks nothing and loses nothing by granting these
permits to local or foreign firms; in fact, it stands to gain in the form of data generated by the
exploration activities.

Pursuant to Section 24 of RA 7942, an exploration permit grantee who determines the commercial
viability of a mining area may, within the term of the permit, file with the MGB a declaration of mining
project feasibility accompanied by a work program for development. The approval of the mining
project feasibility and compliance with other requirements of RA 7942 vests in the grantee the
exclusive right to an MPSA or any other mineral agreement, or to an FTAA.

Thus, the permit grantee may apply for an MPSA, a joint venture agreement, a co-production
agreement, or an FTAA over the permit area, and the application shall be approved if the permit
grantee meets the necessary qualifications and the terms and conditions of any such agreement.
Therefore, the contractor will be in a position to extract minerals and earn revenues only when the
MPSA or another mineral agreement, or an FTAA, is granted. At that point, the contractor's rights
and obligations will be covered by an FTAA or a mineral agreement.

But prior to the issuance of such FTAA or mineral agreement, the exploration permit grantee (or
prospective contractor) cannot yet be deemed to have entered into any contract or agreement with
the State, and the grantee would definitely need to have some document or instrument as evidence
of its right to conduct exploration works within the specified area. This need is met by the exploration
permit issued pursuant to Sections 3(aq), 20 and 23 of RA 7942.

In brief, the exploration permit serves a practical and legitimate purpose in that it protects the
interests and preserves the rights of the exploration permit grantee (the would-be contractor)
-- foreign or local -- during the period of time that it is spending heavily on exploration works,
without yet being able to earn revenues to recoup any of its investments and expenditures.
Minus this permit and the protection it affords, the exploration works and expenditures may end up
benefiting only claim-jumpers. Such a possibility tends to discourage investors and contractors.
Thus, Section 3(aq) of RA 7942 may not be deemed unconstitutional.

The Terms of the WMCP FTAA

A Deference to State Control

A perusal of the WMCP FTAA also reveals a slew of stipulations providing for State control and
supervision:

1. The contractor is obligated to account for the value of production and sale of minerals (Clause
1.4).

2. The contractor's work program, activities and budgets must be approved by/on behalf of the State
(Clause 2.1).

3. The DENR secretary has the power to extend the exploration period (Clause 3.2-a).

4. Approval by the State is necessary for incorporating lands into the FTAA contract area (Clause
4.3-c).

5. The Bureau of Forest Development is vested with discretion in regard to approving the inclusion of
forest reserves as part of the FTAA contract area (Clause 4.5).
6. The contractor is obliged to relinquish periodically parts of the contract area not needed for
exploration and development (Clause 4.6).

7. A Declaration of Mining Feasibility must be submitted for approval by the State (Clause 4.6-b).

8. The contractor is obligated to report to the State its exploration activities (Clause 4.9).

9. The contractor is required to obtain State approval of its work programs for the succeeding two-
year periods, containing the proposed work activities and expenditures budget related to exploration
(Clause 5.1).

10. The contractor is required to obtain State approval for its proposed expenditures for exploration
activities (Clause 5.2).

11. The contractor is required to submit an annual report on geological, geophysical, geochemical
and other information relating to its explorations within the FTAA area (Clause 5.3-a).

12. The contractor is to submit within six months after expiration of exploration period a final report
on all its findings in the contract area (Clause 5.3-b).

13. The contractor, after conducting feasibility studies, shall submit a declaration of mining feasibility,
along with a description of the area to be developed and mined, a description of the proposed mining
operations and the technology to be employed, and a proposed work program for the development
phase, for approval by the DENR secretary (Clause 5.4).

14. The contractor is obliged to complete the development of the mine, including construction of the
production facilities, within the period stated in the approved work program (Clause 6.1).

15. The contractor is obligated to submit for approval of the DENR secretary a work program
covering each period of three fiscal years (Clause 6.2).

16. The contractor is to submit reports to the DENR secretary on the production, ore reserves, work
accomplished and work in progress, profile of its work force and management staff, and other
technical information (Clause 6.3).

17. Any expansions, modifications, improvements and replacements of mining facilities shall be
subject to the approval of the secretary (Clause 6.4).

18. The State has control with respect to the amount of funds that the contractor may borrow within
the Philippines (Clause 7.2).

19. The State has supervisory power with respect to technical, financial and marketing issues
(Clause 10.1-a).

20. The contractor is required to ensure 60 percent Filipino equity in the contractor, within ten years
of recovering specified expenditures, unless not so required by subsequent legislation (Clause 10.1).

21. The State has the right to terminate the FTAA for the contractor's unremedied substantial breach
thereof (Clause 13.2);

22. The State's approval is needed for any assignment of the FTAA by the contractor to an entity
other than an affiliate (Clause 14.1).

We should elaborate a little on the work programs and budgets, and what they mean with respect to
the State's ability to exercise full control and effective supervision over the enterprise. For instance,
throughout the initial five-year exploration and feasibility phase of the project, the contractor is
mandated by Clause 5.1 of the WMCP FTAA to submit a series of work programs (copy furnished
the director of MGB) to the DENR secretary for approval. The programs will detail the contractor's
proposed exploration activities and budget covering each subsequent period of two fiscal years.

In other words, the concerned government officials will be informed beforehand of the proposed
exploration activities and expenditures of the contractor for each succeeding two-year period, with
the right to approve/disapprove them or require changes or adjustments therein if deemed
necessary.

Likewise, under Clause 5.2(a), the amount that the contractor was supposed to spend for exploration
activities during the first contract year of the exploration period was fixed at not less than P24 million;
and then for the succeeding years, the amount shall be as agreed between the DENR secretary and
the contractor prior to the commencement of each subsequent fiscal year. If no such agreement is
arrived upon, the previous year's expenditure commitment shall apply.

This provision alone grants the government through the DENR secretary a very big say in the
exploration phase of the project. This fact is not something to be taken lightly, considering that the
government has absolutely no contribution to the exploration expenditures or work activities and yet
is given veto power over such a critical aspect of the project. We cannot but construe as very
significant such a degree of control over the project and, resultantly, over the mining enterprise itself.

Following its exploration activities or feasibility studies, if the contractor believes that any part of the
contract area is likely to contain an economic mineral resource, it shall submit to the DENR secretary
a declaration of mining feasibility (per Clause 5.4 of the FTAA), together with a technical description
of the area delineated for development and production, a description of the proposed mining
operations including the technology to be used, a work program for development, an environmental
impact statement, and a description of the contributions to the economic and general welfare of the
country to be generated by the mining operations (pursuant to Clause 5.5).

The work program for development is subject to the approval of the DENR secretary. Upon its
approval, the contractor must comply with it and complete the development of the mine, including
the construction of production facilities and installation of machinery and equipment, within the
period provided in the approved work program for development (per Clause 6.1).

Thus, notably, the development phase of the project is likewise subject to the control and
supervision of the government. It cannot be emphasized enough that the proper and timely
construction and deployment of the production facilities and the development of the mine are of
pivotal significance to the success of the mining venture. Any missteps here will potentially be very
costly to remedy. Hence, the submission of the work program for development to the DENR
secretary for approval is particularly noteworthy, considering that so many millions of dollars worth of
investments -- courtesy of the contractor -- are made to depend on the State's consideration and
action.

Throughout the operating period, the contractor is required to submit to the DENR secretary for
approval, copy furnished the director of MGB, work programs covering each period of three fiscal
years (per Clause 6.2). During the same period (per Clause 6.3), the contractor is mandated to
submit various quarterly and annual reports to the DENR secretary, copy furnished the director of
MGB, on the tonnages of production in terms of ores and concentrates, with corresponding grades,
values and destinations; reports of sales; total ore reserves, total tonnage of ores, work
accomplished and work in progress (installations and facilities related to mining operations),
investments made or committed, and so on and so forth.
Under Section VIII, during the period of mining operations, the contractor is also required to submit
to the DENR secretary (copy furnished the director of MGB) the work program and corresponding
budget for the contract area, describing the mining operations that are proposed to be carried out
during the period covered. The secretary is, of course, entitled to grant or deny approval of any work
program or budget and/or propose revisions thereto. Once the program/budget has been approved,
the contractor shall comply therewith.

In sum, the above provisions of the WMCP FTAA taken together, far from constituting a surrender of
control and a grant of beneficial ownership of mineral resources to the contractor in question,
bestow upon the State more than adequate control and supervision over the activities of the
contractor and the enterprise.

No Surrender of Control
Under the WMCP FTAA

Petitioners, however, take aim at Clause 8.2, 8.3, and 8.5 of the WMCP FTAA which, they say,
amount to a relinquishment of control by the State, since it "cannot truly impose its own discretion" in
respect of the submitted work programs.

"8.2. The Secretary shall be deemed to have approved any Work Programme or Budget or variation
thereof submitted by the Contractor unless within sixty (60) days after submission by the Contractor
the Secretary gives notice declining such approval or proposing a revision of certain features and
specifying its reasons therefor ('the Rejection Notice').

8.3. If the Secretary gives a Rejection Notice, the Parties shall promptly meet and endeavor to agree
on amendments to the Work Programme or Budget. If the Secretary and the Contractor fail to agree
on the proposed revision within 30 days from delivery of the Rejection Notice then the Work
Programme or Budget or variation thereof proposed by the Contractor shall be deemed approved,
so as not to unnecessarily delay the performance of the Agreement.

8.4. x x x x x x x x x

8.5. So far as is practicable, the Contractor shall comply with any approved Work Programme and
Budget. It is recognized by the Secretary and the Contractor that the details of any Work
Programmes or Budgets may require changes in the light of changing circumstances. The
Contractor may make such changes without approval of the Secretary provided they do not change
the general objective of any Work Programme, nor entail a downward variance of more than twenty
per centum (20percent) of the relevant Budget. All other variations to an approved Work Programme
or Budget shall be submitted for approval of the Secretary."

From the provisions quoted above, petitioners generalize by asserting that the government does not
participate in making critical decisions regarding the operations of the mining firm. Furthermore,
while the State can require the submission of work programs and budgets, the decision of the
contractor will still prevail, if the parties have a difference of opinion with regard to matters affecting
operations and management.

We hold, however, that the foregoing provisions do not manifest a relinquishment of control. For
instance, Clause 8.2 merely provides a mechanism for preventing the business or mining operations
from grinding to a complete halt as a result of possibly over-long and unjustified delays in the
government's handling, processing and approval of submitted work programs and budgets. Anyway,
the provision does give the DENR secretary more than sufficient time (60 days) to react to submitted
work programs and budgets. It cannot be supposed that proper grounds for objecting thereto, if any
exist, cannot be discovered within a period of two months.
On the other hand, Clause 8.3 seeks to provide a temporary, stop-gap solution in the event a
disagreement over the submitted work program or budget arises between the State and the
contractor and results in a stalemate or impasse, in order that there will be no unreasonably long
delays in the performance of the works.

These temporary or stop-gap solutions are not necessarily evil or wrong. Neither does it follow that
the government will inexorably be aggrieved if and when these temporary remedies come into play.
First, avoidance of long delays in these situations will undoubtedly redound to the benefit of the
State as well as the contractor. Second, who is to say that the work program or budget proposed by
the contractor and deemed approved under Clause 8.3 would not be the better or more reasonable
or more effective alternative? The contractor, being the "insider," as it were, may be said to be in a
better position than the State -- an outsider looking in -- to determine what work program or budget
would be appropriate, more effective, or more suitable under the circumstances.

All things considered, we take exception to the characterization of the DENR secretary as a
subservient nonentity whom the contractor can overrule at will, on account of Clause 8.3. And
neither is it true that under the same clause, the DENR secretary has no authority whatsoever to
disapprove the work program. As Respondent WMCP reasoned in its Reply-Memorandum, the State
-- despite Clause 8.3 -- still has control over the contract area and it may, as sovereign authority,
prohibit work thereon until the dispute is resolved. And ultimately, the State may terminate the
agreement, pursuant to Clause 13.2 of the same FTAA, citing substantial breach thereof. Hence, it
clearly retains full and effective control of the exploitation of the mineral resources.

On the other hand, Clause 8.5 is merely an acknowledgment of the parties' need for flexibility, given
that no one can accurately forecast under all circumstances, or predict how situations may change.
Hence, while approved work programs and budgets are to be followed and complied with as far as
practicable, there may be instances in which changes will have to be effected, and effected rapidly,
since events may take shape and unfold with suddenness and urgency. Thus, Clause 8.5 allows the
contractor to move ahead and make changes without the express or implicit approval of the DENR
secretary. Such changes are, however, subject to certain conditions that will serve to limit or restrict
the variance and prevent the contractor from straying very far from what has been approved.

Clause 8.5 provides the contractor a certain amount of flexibility to meet unexpected situations, while
still guaranteeing that the approved work programs and budgets are not abandoned altogether.
Clause 8.5 does not constitute proof that the State has relinquished control. And ultimately, should
there be disagreement with the actions taken by the contractor in this instance as well as under
Clause 8.3 discussed above, the DENR secretary may resort to cancellation/termination of the FTAA
as the ultimate sanction.

Discretion to Select Contract

Area Not an Abdication of Control

Next, petitioners complain that the contractor has full discretion to select -- and the government has
no say whatsoever as to -- the parts of the contract area to be relinquished pursuant to Clause 4.6 of
the WMCP FTAA. This clause, however, does not constitute abdication of control. Rather, it is a
56

mere acknowledgment of the fact that the contractor will have determined, after appropriate
exploration works, which portions of the contract area do not contain minerals in commercial
quantities sufficient to justify developing the same and ought therefore to be relinquished. The State
cannot just substitute its judgment for that of the contractor and dictate upon the latter which areas to
give up.
Moreover, we can be certain that the contractor's self-interest will propel proper and efficient
relinquishment. According to private respondent, a mining company tries to relinquish as much non-
57

mineral areas as soon as possible, because the annual occupation fees paid to the government are
based on the total hectarage of the contract area, net of the areas relinquished. Thus, the larger the
remaining area, the heftier the amount of occupation fees to be paid by the contractor. Accordingly,
relinquishment is not an issue, given that the contractor will not want to pay the annual occupation
fees on the non-mineral parts of its contract area. Neither will it want to relinquish promising sites,
which other contractors may subsequently pick up.

Government Not a Subcontractor

Petitioners further maintain that the contractor can compel the government to exercise its power of
eminent domain to acquire surface areas within the contract area for the contractor's use. Clause
10.2 (e) of the WMCP FTAA provides that the government agrees that the contractor shall "(e) have
the right to require the Government at the Contractor's own cost, to purchase or acquire surface
areas for and on behalf of the Contractor at such price and terms as may be acceptable to the
contractor. At the termination of this Agreement such areas shall be sold by public auction or tender
and the Contractor shall be entitled to reimbursement of the costs of acquisition and maintenance,
adjusted for inflation, from the proceeds of sale."

According to petitioners, "government becomes a subcontractor to the contractor" and may, on

account of this provision, be compelled "to make use of its power of eminent domain, not for public
purposes but on behalf of a private party, i.e., the contractor." Moreover, the power of the courts to
determine the amount corresponding to the constitutional requirement of just compensation has
allegedly also been contracted away by the government, on account of the latter's commitment that
the acquisition shall be at such terms as may be acceptable to the contractor.

However, private respondent has proffered a logical explanation for the provision. Section 10.2(e)
58

contemplates a situation applicable to foreign-owned corporations. WMCP, at the time of the

execution of the FTAA, was a foreign-owned corporation and therefore not qualified to own land. As
contractor, it has at some future date to construct the infrastructure -- the mine processing plant, the
camp site, the tailings dam, and other infrastructure -- needed for the large-scale mining operations.
It will then have to identify and pinpoint, within the FTAA contract area, the particular surface areas
with favorable topography deemed ideal for such infrastructure and will need to acquire the surface
rights. The State owns the mineral deposits in the earth, and is also qualified to own land.

Section 10.2(e) sets forth the mechanism whereby the foreign-owned contractor, disqualified to own
land, identifies to the government the specific surface areas within the FTAA contract area to be
acquired for the mine infrastructure. The government then acquires ownership of the surface land
areas on behalf of the contractor, in order to enable the latter to proceed to fully implement the
FTAA.

The contractor, of course, shoulders the purchase price of the land. Hence, the provision allows it,
after termination of the FTAA, to be reimbursed from proceeds of the sale of the surface areas,
which the government will dispose of through public bidding. It should be noted that this provision
will not be applicable to Sagittarius as the present FTAA contractor, since it is a Filipino corporation
qualified to own and hold land. As such, it may therefore freely negotiate with the surface rights
owners and acquire the surface property in its own right.
Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the
rationale for the said provision. That provision does not call for the exercise of the power of eminent
domain -- and determination of just compensation is not an issue -- as much as it calls for a qualified
party to acquire the surface rights on behalf of a foreign-owned contractor.

Rather than having the foreign contractor act through a dummy corporation, having the State do the
purchasing is a better alternative. This will at least cause the government to be aware of such
transaction/s and foster transparency in the contractor's dealings with the local property owners. The
government, then, will not act as a subcontractor of the contractor; rather, it will facilitate the
transaction and enable the parties to avoid a technical violation of the Anti-Dummy Law.

Absence of Provision
Requiring Sale at Posted
Prices Not Problematic

The supposed absence of any provision in the WMCP FTAA directly and explicitly requiring the
contractor to sell the mineral products at posted or market prices is not a problem. Apart from Clause
1.4 of the FTAA obligating the contractor to account for the total value of mineral production and the
sale of minerals, we can also look to Section 35 of RA 7942, which incorporates into all FTAAs
certain terms, conditions and warranties, including the following:

"(l) The contractors shall furnish the Government records of geologic, accounting and other relevant
data for its mining operation, and that books of accounts and records shall be open for inspection by
the government. x x x

(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous
terms and conditions."

For that matter, Section 56(n) of DAO 99-56 specifically obligates an FTAA contractor to dispose of
the minerals and by-products at the highest market price and to register with the MGB a copy of the
sales agreement. After all, the provisions of prevailing statutes as well as rules and regulations are
deemed written into contracts.

Contractor's Right to Mortgage

Not Objectionable Per Se

Petitioners also question the absolute right of the contractor under Clause 10.2 (l) to mortgage and
encumber not only its rights and interests in the FTAA and the infrastructure and improvements
introduced, but also the mineral products extracted. Private respondents do not touch on this matter,
but we believe that this provision may have to do with the conditions imposed by the creditor-banks
of the then foreign contractor WMCP to secure the lendings made or to be made to the latter.
Ordinarily, banks lend not only on the security of mortgages on fixed assets, but also on
encumbrances of goods produced that can easily be sold and converted into cash that can be
applied to the repayment of loans. Banks even lend on the security of accounts receivable that are
collectible within 90 days.59

It is not uncommon to find that a debtor corporation has executed deeds of assignment "by way of
security" over the production for the next twelve months and/or the proceeds of the sale thereof -- or
the corresponding accounts receivable, if sold on terms -- in favor of its creditor-banks. Such deeds
may include authorizing the creditors to sell the products themselves and to collect the sales
proceeds and/or the accounts receivable.
Seen in this context, Clause 10.2(l) is not something out of the ordinary or objectionable. In any
case, as will be explained below, even if it is allowed to mortgage or encumber the mineral end-
products themselves, the contractor is not freed of its obligation to pay the government its basic and
additional shares in the net mining revenue, which is the essential thing to consider.

In brief, the alarum raised over the contractor's right to mortgage the minerals is simply unwarranted.
Just the same, the contractor must account for the value of mineral production and the sales
proceeds therefrom. Likewise, under the WMCP FTAA, the government remains entitled to its sixty
percent share in the net mining revenues of the contractor. The latter's right to mortgage the
minerals does not negate the State's right to receive its share of net mining revenues.

Shareholders Free to Sell Their Stocks

Petitioners likewise criticize Clause 10.2(k), which gives the contractor authority "to change its equity
structure at any time." This provision may seem somewhat unusual, but considering that WMCP
then was 100 percent foreign-owned, any change would mean that such percentage would either
stay unaltered or be decreased in favor of Filipino ownership. Moreover, the foreign-held shares may
change hands freely. Such eventuality is as it should be.

We believe it is not necessary for government to attempt to limit or restrict the freedom of the
shareholders in the contractor to freely transfer, dispose of or encumber their shareholdings,
consonant with the unfettered exercise of their business judgment and discretion. Rather, what is
critical is that, regardless of the identity, nationality and percentage ownership of the various
shareholders of the contractor -- and regardless of whether these shareholders decide to take the
company public, float bonds and other fixed-income instruments, or allow the creditor-banks to take
an equity position in the company -- the foreign-owned contractor is always in a position to render
the services required under the FTAA, under the direction and control of the government.

Contractor's Right to Ask

For Amendment Not Absolute

With respect to Clauses 10.4(e) and (i), petitioners complain that these provisions bind government
to allow amendments to the FTAA if required by banks and other financial institutions as part of the
conditions for new lendings. However, we do not find anything wrong with Clause 10.4(e), which only
states that "if the Contractor seeks to obtain financing contemplated herein from banks or other
financial institutions, (the Government shall) cooperate with the Contractor in such efforts provided
that such financing arrangements will in no event reduce the Contractor's obligations or the
Government's rights hereunder." The colatilla obviously safeguards the State's interests; if breached,
it will give the government cause to object to the proposed amendments.

On the other hand, Clause 10.4(i) provides that "the Government shall favourably consider any
request from [the] Contractor for amendments of this Agreement which are necessary in order for
the Contractor to successfully obtain the financing." Petitioners see in this provision a complete
renunciation of control. We disagree.

The proviso does not say that the government shall grant any request for amendment. Clause 10.4(i)
only obliges the State to favorably consider any such request, which is not at all unreasonable, as it
is not equivalent to saying that the government must automatically consent to it. This provision
should be read together with the rest of the FTAA provisions instituting government control and
supervision over the mining enterprise. The clause should not be given an interpretation that enables
the contractor to wiggle out of the restrictions imposed upon it by merely suggesting that certain
amendments are requested by the lenders.
Rather, it is up to the contractor to prove to the government that the requested changes to the FTAA
are indispensable, as they enable the contractor to obtain the needed financing; that without such
contract changes, the funders would absolutely refuse to extend the loan; that there are no other
sources of financing available to the contractor (a very unlikely scenario); and that without the
needed financing, the execution of the work programs will not proceed. But the bottom line is, in the
exercise of its power of control, the government has the final say on whether to approve or
disapprove such requested amendments to the FTAA. In short, approval thereof is not mandatory on
the part of the government.

In fine, the foregoing evaluation and analysis of the aforementioned FTAA provisions
sufficiently overturns petitioners' litany of objections to and criticisms of the State's alleged
lack of control.

Financial Benefits Not

Surrendered to the Contractor

One of the main reasons certain provisions of RA 7942 were struck down was the finding mentioned
in the Decision that beneficial ownership of the mineral resources had been conveyed to the
contractor. This finding was based on the underlying assumption, common to the said provisions,
that the foreign contractor manages the mineral resources in the same way that foreign contractors
in service contracts used to. "By allowing foreign contractors to manage or operate all the aspects of
the mining operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed
beneficial ownership over the nation's mineral resources to these contractors, leaving the State
with nothing but bare title thereto." As the WMCP FTAA contained similar provisions deemed by the
60

ponente to be abhorrent to the Constitution, the Decision struck down the Contract as well.

Beneficial ownership has been defined as ownership recognized by law and capable of being
enforced in the courts at the suit of the beneficial owner. Black's Law Dictionary indicates that the
61

term is used in two senses: first, to indicate the interest of a beneficiary in trust property (also called
"equitable ownership"); and second, to refer to the power of a corporate shareholder to buy or sell
the shares, though the shareholder is not registered in the corporation's books as the owner. 62

Usually, beneficial ownership is distinguished from naked ownership, which is the enjoyment of all
the benefits and privileges of ownership, as against possession of the bare title to property.

An assiduous examination of the WMCP FTAA uncovers no indication that it confers upon WMCP
ownership, beneficial or otherwise, of the mining property it is to develop, the minerals to be
produced, or the proceeds of their sale, which can be legally asserted and enforced as against the
State.

As public respondents correctly point out, any interest the contractor may have in the proceeds of
the mining operation is merely the equivalent of the consideration the government has undertaken to
pay for its services. All lawful contracts require such mutual prestations, and the WMCP FTAA is no
different. The contractor commits to perform certain services for the government in respect of the
mining operation, and in turn it is to be compensated out of the net mining revenues generated from
the sale of mineral products. What would be objectionable is a contractual provision that unduly
benefits the contractor far in excess of the service rendered or value delivered, if any, in exchange
therefor.

A careful perusal of the statute itself and its implementing rules reveals that neither RA 7942 nor
DAO 99-56 can be said to convey beneficial ownership of any mineral resource or product to any
foreign FTAA contractor.
Equitable Sharing
of Financial Benefits

On the contrary, DAO 99-56, entitled "Guidelines Establishing the Fiscal Regime of Financial or
Technical Assistance Agreements" aims to ensure an equitable sharing of the benefits derived from
mineral resources. These benefits are to be equitably shared among the government (national and
local), the FTAA contractor, and the affected communities. The purpose is to ensure sustainable
mineral resources development; and a fair, equitable, competitive and stable investment regime for
the large-scale exploration, development and commercial utilization of minerals. The general
framework or concept followed in crafting the fiscal regime of the FTAA is based on the principle that
the government expects real contributions to the economic growth and general welfare of the
country, while the contractor expects a reasonable return on its investments in the project.
63

Specifically, under the fiscal regime, the government's expectation is, inter alia, the receipt of its
share from the taxes and fees normally paid by a mining enterprise. On the other hand, the FTAA
contractor is granted by the government certain fiscal and non-fiscal incentives to help support the
64

former's cash flow during the most critical phase (cost recovery) and to make the Philippines
competitive with other mineral-producing countries. After the contractor has recovered its initial
investment, it will pay all the normal taxes and fees comprising the basic share of the government,
plus an additional share for the government based on the options and formulae set forth in DAO 99-
56.

The said DAO spells out the financial benefits the government will receive from an FTAA, referred to
as "the Government Share," composed of a basic government share and an additional
government share.

The basic government share is comprised of all direct taxes, fees and royalties, as well as other
payments made by the contractor during the term of the FTAA. These are amounts paid directly to (i)
the national government (through the Bureau of Internal Revenue, Bureau of Customs, Mines &
Geosciences Bureau and other national government agencies imposing taxes or fees), (ii) the local
government units where the mining activity is conducted, and (iii) persons and communities directly
affected by the mining project. The major taxes and other payments constituting the basic
government share are enumerated below: 65

Payments to the National Government:

· Excise tax on minerals - 2 percent of the gross output of mining operations

· Contractor' income tax - maximum of 32 percent of taxable income for corporations

· Customs duties and fees on imported capital equipment -the rate is set by the Tariff and Customs
Code (3-7 percent for chemicals; 3-10 percent for explosives; 3-15 percent for mechanical and
electrical equipment; and 3-10 percent for vehicles, aircraft and vessels

· VAT on imported equipment, goods and services – 10 percent of value

· Royalties due the government on minerals extracted from mineral reservations, if applicable – 5
percent of the actual market value of the minerals produced

· Documentary stamp tax - the rate depends on the type of transaction

· Capital gains tax on traded stocks - 5 to 10 percent of the value of the shares

· Withholding tax on interest payments on foreign loans -15 percent of the amount of interest
· Withholding tax on dividend payments to foreign stockholders – 15 percent of the dividend

· Wharfage and port fees

· Licensing fees (for example, radio permit, firearms permit, professional fees)

· Other national taxes and fees.

Payments to Local Governments:

· Local business tax - a maximum of 2 percent of gross sales or receipts (the rate varies
among local government units)

· Real property tax - 2 percent of the fair market value of the property, based on an assessment level
set by the local government

· Special education levy - 1 percent of the basis used for the real property tax

· Occupation fees - PhP50 per hectare per year; PhP100 per hectare per year if located in a mineral
reservation

· Community tax - maximum of PhP10,500 per year

· All other local government taxes, fees and imposts as of the effective date of the FTAA - the rate
and the type depend on the local government

Other Payments:

· Royalty to indigenous cultural communities, if any – 1 percent of gross output from mining
operations

· Special allowance - payment to claim owners and surface rights holders

Apart from the basic share, an additional government share is also collected from the FTAA
contractor in accordance with the second paragraph of Section 81 of RA 7942, which provides that
the government share shall be comprised of, among other things, certain taxes, duties and fees. The
subject proviso reads:

"The Government share in a financial or technical assistance agreement shall consist of, among
other things, the contractor's corporate income tax, excise tax, special allowance, withholding tax
due from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholder in case of a foreign national, and all such other taxes, duties and fees as
provided for under existing laws." (Bold types supplied.)

The government, through the DENR and the MGB, has interpreted the insertion of the phrase
among other things as signifying that the government is entitled to an "additional government share"
to be paid by the contractor apart from the "basic share," in order to attain a fifty-fifty sharing of net
benefits from mining.

The additional government share is computed by using one of three options or schemes
presented in DAO 99-56: (1) a fifty-fifty sharing in the cumulative present value of cash flows; (2) the
share based on excess profits; and (3) the sharing based on the cumulative net mining revenue. The
particular formula to be applied will be selected by the contractor, with a written notice to the
government prior to the commencement of the development and construction phase of the mining
project.
66
Proceeds from the government shares arising from an FTAA contract are distributed to and received
by the different levels of government in the following proportions:

Natio 50
nal perce
Gove nt
rnme
nt
Provi 10
ncial perce
Gove nt
rnme
nt
Muni 20
cipal perce
Gove nt
rnme
nt
Affec 20
ted perce
Bara nt
ngay
s
The portion of revenues remaining after the deduction of the basic and additional government shares
is what goes to the contractor.

Government's Share in an
FTAA Not Consisting Solely
of Taxes, Duties and Fees

In connection with the foregoing discussion on the basic and additional government shares, it is
pertinent at this juncture to mention the criticism leveled at the second paragraph of Section 81 of
RA 7942, quoted earlier. The said proviso has been denounced, because, allegedly, the State's
share in FTAAs with foreign contractors has been limited to taxes, fees and duties only; in effect, the
State has been deprived of a share in the after-tax income of the enterprise. In the face of this
allegation, one has to consider that the law does not define the term among other things; and the
Office of the Solicitor General, in its Motion for Reconsideration, appears to have erroneously
claimed that the phrase refers to indirect taxes.

The law provides no definition of the term among other things, for the reason that Congress
deliberately avoided setting unnecessary limitations as to what may constitute compensation to the
State for the exploitation and use of mineral resources. But the inclusion of that phrase clearly and
unmistakably reveals the legislative intent to have the State collect more than just the usual taxes,
duties and fees. Certainly, there is nothing in that phrase -- or in the second paragraph of Section 81
-- that would suggest that such phrase should be interpreted as referring only to taxes, duties, fees
and the like.

Precisely for that reason, to fulfill the legislative intent behind the inclusion of the phrase among
other things in the second paragraph of Section 81, the DENR structured and formulated in DAO
67

99-56 the said additional government share. Such a share was to consist not of taxes, but of a
share in the earnings or cash flows of the mining enterprise. The additional government share
was to be paid by the contractor on top of the basic share, so as to achieve a fifty-fifty sharing --
between the government and the contractor -- of net benefits from mining. In the Ramos-DeVera
paper, the explanation of the three options or formulas -- presented in DAO 99-56 for the
68

computation of the additional government share -- serves to debunk the claim that the government's
take from an FTAA consists solely of taxes, fees and duties.

Unfortunately, the Office of the Solicitor General -- although in possession of the relevant data --
failed to fully replicate or echo the pertinent elucidation in the Ramos-DeVera paper regarding the
three schemes or options for computing the additional government share presented in DAO 99-56.
Had due care been taken by the OSG, the Court would have been duly apprised of the real nature
and particulars of the additional share.

But, perhaps, on account of the esoteric discussion in the Ramos-DeVera paper, and the even more
abstruse mathematical jargon employed in DAO 99-56, the OSG omitted any mention of the three
options. Instead, the OSG skipped to a side discussion of the effect of indirect taxes, which had
nothing at all to do with the additional government share, to begin with. Unfortunately, this move
created the wrong impression, pointed out in Justice Antonio T. Carpio's Opinion, that the OSG had
taken the position that the additional government share consisted of indirect taxes.

In any event, what is quite evident is the fact that the additional government share, as formulated,
has nothing to do with taxes -- direct or indirect -- or with duties, fees or charges. To repeat, it is over
and above the basic government share composed of taxes and duties. Simply put, the additional
share may be (a) an amount that will result in a 50-50 sharing of the cumulative present value of the
cash flows of the enterprise; (b) an amount equivalent to 25 percent of the additional or excess
69

profits of the enterprise, reckoned against a benchmark return on investments; or (c) an amount that
will result in a fifty-fifty sharing of the cumulative net mining revenue from the end of the recovery
period up to the taxable year in question. The contractor is required to select one of the three options
or formulae for computing the additional share, an option it will apply to all of its mining operations.

As used above, "net mining revenue" is defined as the gross output from mining operations for a
calendar year, less deductible expenses (inclusive of taxes, duties and fees). Such revenue would
roughly be equivalent to "taxable income" or income before income tax. Definitely, as compared
with, say, calculating the additional government share on the basis of net income (after income
tax), the net mining revenue is a better and much more reasonable basis for such computation, as it
gives a truer picture of the profitability of the company.

To demonstrate that the three options or formulations will operate as intended, Messrs. Ramos and
de Vera also performed some quantifications of the government share via a financial modeling of
each of the three options discussed above. They found that the government would get the highest
share from the option that is based on the net mining revenue, as compared with the other two
options, considering only the basic and the additional shares; and that, even though production rate
decreases, the government share will actually increase when the net mining revenue and the
additional profit-based options are used.

Furthermore, it should be noted that the three options or formulae do not yet take into account the
indirect taxes and other financial contributions of mining projects. These indirect taxes and other
70 71

contributions are real and actual benefits enjoyed by the Filipino people and/or government. Now, if
some of the quantifiable items are taken into account in the computations, the financial modeling
would show that the total government share increases to 60 percent or higher -- in one instance, as
much as 77 percent and even 89 percent -- of the net present value of total benefits from the project.
As noted in the Ramos-DeVera paper, these results are not at all shabby, considering that the
contractor puts in all the capital requirements and assumes all the risks, without the government
having to contribute or risk anything.
Despite the foregoing explanation, Justice Carpio still insisted during the Court's deliberations that
the phrase among other things refers only to taxes, duties and fees. We are bewildered by his
position. On the one hand, he condemns the Mining Law for allegedly limiting the government's
benefits only to taxes, duties and fees; and on the other, he refuses to allow the State to benefit from
the correct and proper interpretation of the DENR/MGB. To remove all doubts then, we hold that the
State's share is not limited to taxes, duties and fees only and that the DENR/MGB interpretation of
the phrase among other things is correct. Definitely, this DENR/MGB interpretation is not only legally
sound, but also greatly advantageous to the government.

One last point on the subject. The legislature acted judiciously in not defining the terms among other
things and, instead, leaving it to the agencies concerned to devise and develop the various modes of
arriving at a reasonable and fair amount for the additional government share. As can be seen from
DAO 99-56, the agencies concerned did an admirable job of conceiving and developing not just one
formula, but three different formulae for arriving at the additional government share. Each of these
options is quite fair and reasonable; and, as Messrs. Ramos and De Vera stated, other alternatives
or schemes for a possible improvement of the fiscal regime for FTAAs are also being studied by the
government.

Besides, not locking into a fixed definition of the term among other things will ultimately be more
beneficial to the government, as it will have that innate flexibility to adjust to and cope with rapidly
changing circumstances, particularly those in the international markets. Such flexibility is especially
significant for the government in terms of helping our mining enterprises remain competitive in world
markets despite challenging and shifting economic scenarios.

In conclusion, we stress that we do not share the view that in FTAAs with foreign contractors
under RA 7942, the government's share is limited to taxes, fees and duties. Consequently, we
find the attacks on the second paragraph of Section 81 of RA 7942 totally unwarranted.

Collections Not Made Uncertain

by the Third Paragraph of Section 81

The third or last paragraph of Section 81 provides that the government share in FTAAs shall be
72

collected when the contractor shall have recovered its pre-operating expenses and exploration and
development expenditures. The objection has been advanced that, on account of the proviso, the
collection of the State's share is not even certain, as there is no time limit in RA 7942 for this grace
period or recovery period.

We believe that Congress did not set any time limit for the grace period, preferring to leave it to the
concerned agencies, which are, on account of their technical expertise and training, in a better
position to determine the appropriate durations for such recovery periods. After all, these recovery
periods are determined, to a great extent, by technical and technological factors peculiar to the
mining industry. Besides, with developments and advances in technology and in the geosciences,
we cannot discount the possibility of shorter recovery periods. At any rate, the concerned agencies
have not been remiss in this area. The 1995 and 1996 Implementing Rules and Regulations of RA
7942 specify that the period of recovery, reckoned from the date of commercial operation, shall be
for a period not exceeding five years, or until the date of actual recovery, whichever comes earlier.

Approval of Pre-Operating
Expenses Required by RA 7942

Still, RA 7942 is criticized for allegedly not requiring government approval of pre-operating,
exploration and development expenses of the foreign contractors, who are in effect given unfettered
discretion to determine the amounts of such expenses. Supposedly, nothing prevents the
contractors from recording such expenses in amounts equal to the mining revenues anticipated for
the first 10 or 15 years of commercial production, with the result that the share of the State will be
zero for the first 10 or 15 years. Moreover, under the circumstances, the government would be
unable to say when it would start to receive its share under the FTAA.

We believe that the argument is based on incorrect information as well as speculation. Obviously,
certain crucial provisions in the Mining Law were overlooked. Section 23, dealing with the rights and
obligations of the exploration permit grantee, states: "The permittee shall undertake exploration work
on the area as specified by its permit based on an approved work program." The next proviso reads:
"Any expenditure in excess of the yearly budget of the approved work program may be carried
forward and credited to the succeeding years covering the duration of the permit. x x x."
(underscoring supplied)

Clearly, even at the stage of application for an exploration permit, the applicant is required to submit
-- for approval by the government -- a proposed work program for exploration, containing a yearly
budget of proposed expenditures. The State has the opportunity to pass upon (and approve or
reject) such proposed expenditures, with the foreknowledge that -- if approved -- these will
subsequently be recorded as pre-operating expenses that the contractor will have to recoup over the
grace period. That is not all.

Under Section 24, an exploration permit holder who determines the commercial viability of a project
covering a mining area may, within the term of the permit, file with the Mines and Geosciences
Bureau a declaration of mining project feasibility. This declaration is to be accompanied by a work
program for development for the Bureau's approval, the necessary prelude for entering into an
FTAA, a mineral production sharing agreement (MPSA), or some other mineral agreement. At this
stage, too, the government obviously has the opportunity to approve or reject the proposed work
program and budgeted expenditures for development works on the project. Such expenditures will
ultimately become the pre-operating and development costs that will have to be recovered by the
contractor.

Naturally, with the submission of approved work programs and budgets for the exploration and the
development/construction phases, the government will be able to scrutinize and approve or reject
such expenditures. It will be well-informed as to the amounts of pre-operating and other expenses
that the contractor may legitimately recover and the approximate period of time needed to effect
such a recovery. There is therefore no way the contractor can just randomly post any amount of pre-
operating expenses and expect to recover the same.

The aforecited provisions on approved work programs and budgets have counterparts in Section 35,
which deals with the terms and conditions exclusively applicable to FTAAs. The said provision
requires certain terms and conditions to be incorporated into FTAAs; among them, "a firm
commitment x x x of an amount corresponding to the expenditure obligation that will be invested in
the contract area" and "representations and warranties x x x to timely deploy these [financing,
managerial and technical expertise and technological] resources under its supervision pursuant to
the periodic work programs and related budgets x x x," as well as "work programs and minimum
expenditures commitments." (underscoring supplied)

Unarguably, given the provisions of Section 35, the State has every opportunity to pass upon the
proposed expenditures under an FTAA and approve or reject them. It has access to all the
information it may need in order to determine in advance the amounts of pre-operating and
developmental expenses that will have to be recovered by the contractor and the amount of time
needed for such recovery.
In summary, we cannot agree that the third or last paragraph of Section 81 of RA 7942 is in
any manner unconstitutional.

No Deprivation of Beneficial Rights

It is also claimed that aside from the second and the third paragraphs of Section 81 (discussed
above), Sections 80, 84 and 112 of RA 7942 also operate to deprive the State of beneficial rights of
ownership over mineral resources; and give them away for free to private business enterprises
(including foreign owned corporations). Likewise, the said provisions have been construed as
constituting, together with Section 81, an ingenious attempt to resurrect the old and discredited
system of "license, concession or lease."

Specifically, Section 80 is condemned for limiting the State's share in a mineral production-sharing
agreement (MPSA) to just the excise tax on the mineral product. Under Section 151(A) of the Tax
Code, such tax is only 2 percent of the market value of the gross output of the minerals. The colatilla
in Section 84, the portion considered offensive to the Constitution, reiterates the same limitation
made in Section 80. 73

It should be pointed out that Section 80 and the colatilla in Section 84 pertain only to MPSAs and
have no application to FTAAs. These particular statutory provisions do not come within the issues
that were defined and delineated by this Court during the Oral Argument -- particularly the third
issue, which pertained exclusively to FTAAs. Neither did the parties argue upon them in their
pleadings. Hence, this Court cannot make any pronouncement in this case regarding the
constitutionality of Sections 80 and 84 without violating the fundamental rules of due process.
Indeed, the two provisos will have to await another case specifically placing them in issue.

On the other hand, Section 112 is disparaged for allegedly reverting FTAAs and all mineral
74

agreements to the old and discredited "license, concession or lease" system. This Section states in
relevant part that "the provisions of Chapter XIV [which includes Sections 80 to 82] on government
share in mineral production-sharing agreement x x x shall immediately govern and apply to a mining
lessee or contractor." (underscoring supplied) This provision is construed as signifying that the 2
percent excise tax which, pursuant to Section 80, comprises the government share in MPSAs shall
now also constitute the government share in FTAAs -- as well as in co-production agreements and
joint venture agreements -- to the exclusion of revenues of any other nature or from any other
source.

Apart from the fact that Section 112 likewise does not come within the issues delineated by this
Court during the Oral Argument, and was never touched upon by the parties in their pleadings, it
must also be noted that the criticism hurled against this Section is rooted in unwarranted conclusions
made without considering other relevant provisions in the statute. Whether Section 112 may properly
apply to co-production or joint venture agreements, the fact of the matter is that it cannot be made to
apply to FTAAs.

First, Section 112 does not specifically mention or refer to FTAAs; the only reason it is being applied
to them at all is the fact that it happens to use the word "contractor." Hence, it is a bit of a stretch to
insist that it covers FTAAs as well. Second, mineral agreements, of which there are three types --
MPSAs, co-production agreements, and joint venture agreements -- are covered by Chapter V of RA
7942. On the other hand, FTAAs are covered by and in fact are the subject of Chapter VI, an entirely
different chapter altogether. The law obviously intends to treat them as a breed apart from mineral
agreements, since Section 35 (found in Chapter VI) creates a long list of specific terms, conditions,
commitments, representations and warranties -- which have not been made applicable to mineral
agreements -- to be incorporated into FTAAs.
Third, under Section 39, the FTAA contractor is given the option to "downgrade" -- to convert the
FTAA into a mineral agreement at any time during the term if the economic viability of the contract
area is inadequate to sustain large-scale mining operations. Thus, there is no reason to think that
the law through Section 112 intends to exact from FTAA contractors merely the same government
share (a 2 percent excise tax) that it apparently demands from contractors under the three forms of
mineral agreements. In brief, Section 112 does not apply to FTAAs.

Notwithstanding the foregoing explanation, Justices Carpio and Morales maintain that the Court
must rule now on the constitutionality of Sections 80, 84 and 112, allegedly because the WMCP
FTAA contains a provision which grants the contractor unbridled and "automatic" authority to convert
the FTAA into an MPSA; and should such conversion happen, the State would be prejudiced since
its share would be limited to the 2 percent excise tax. Justice Carpio adds that there are five MPSAs
already signed just awaiting the judgment of this Court on respondents' and intervenor's Motions for
Reconsideration. We hold however that, at this point, this argument is based on pure speculation.
The Court cannot rule on mere surmises and hypothetical assumptions, without firm factual anchor.
We repeat: basic due process requires that we hear the parties who have a real legal interest in the
MPSAs (i.e. the parties who executed them) before these MPSAs can be reviewed, or worse, struck
down by the Court. Anything less than that requirement would be arbitrary and capricious.

In any event, the conversion of the present FTAA into an MPSA is problematic. First, the contractor
must comply with the law, particularly Section 39 of RA 7942; inter alia, it must convincingly show
that the "economic viability of the contract is found to be inadequate to justify large-scale mining
operations;" second, it must contend with the President's exercise of the power of State control over
the EDU of natural resources; and third, it will have to risk a possible declaration of the
unconstitutionality (in a proper case) of Sections 80, 84 and 112.

The first requirement is not as simple as it looks. Section 39 contemplates a situation in which an
FTAA has already been executed and entered into, and is presumably being implemented, when the
contractor "discovers" that the mineral ore reserves in the contract area are not sufficient to justify
large-scale mining, and thus the contractor requests the conversion of the FTAA into an MPSA. The
contractor in effect needs to explain why, despite its exploration activities, including the conduct of
various geologic and other scientific tests and procedures in the contract area, it was unable to
determine correctly the mineral ore reserves and the economic viability of the area. The contractor
must explain why, after conducting such exploration activities, it decided to file a declaration of
mining feasibility, and to apply for an FTAA, thereby leading the State to believe that the area could
sustain large-scale mining. The contractor must justify fully why its earlier findings, based on
scientific procedures, tests and data, turned out to be wrong, or were way off. It must likewise prove
that its new findings, also based on scientific tests and procedures, are correct. Right away, this puts
the contractor's technical capabilities and expertise into serious doubt. We wonder if anyone would
relish being in this situation. The State could even question and challenge the contractor's
qualification and competence to continue the activity under an MPSA.

All in all, while there may be cogent grounds to assail the aforecited Sections, this Court -- on
considerations of due process -- cannot rule upon them here. Anyway, if later on these
Sections are declared unconstitutional, such declaration will not affect the other portions
since they are clearly separable from the rest.

Our Mineral Resources Not

Given Away for Free by RA 7942
Nevertheless, if only to disabuse our minds, we should address the contention that our mineral
resources are effectively given away for free by the law (RA 7942) in general and by Sections 80,
81, 84 and 112 in particular.

Foreign contractors do not just waltz into town one day and leave the next, taking away mineral
resources without paying anything. In order to get at the minerals, they have to invest huge sums of
money (tens or hundreds of millions of dollars) in exploration works first. If the exploration proves
unsuccessful, all the cash spent thereon will not be returned to the foreign investors; rather, those
funds will have been infused into the local economy, to remain there permanently. The benefits
therefrom cannot be simply ignored. And assuming that the foreign contractors are successful in
finding ore bodies that are viable for commercial exploitation, they do not just pluck out the minerals
and cart them off. They have first to build camp sites and roadways; dig mine shafts and connecting
tunnels; prepare tailing ponds, storage areas and vehicle depots; install their machinery and
equipment, generator sets, pumps, water tanks and sewer systems, and so on.

In short, they need to expend a great deal more of their funds for facilities, equipment and supplies,
fuel, salaries of local labor and technical staff, and other operating expenses. In the meantime, they
also have to pay taxes, duties, fees, and royalties. All told, the exploration, pre-feasibility, feasibility,
75

development and construction phases together add up to as many as eleven years. The contractors
76

have to continually shell out funds for the duration of over a decade, before they can commence
commercial production from which they would eventually derive revenues. All that money translates
into a lot of "pump-priming" for the local economy.

Granted that the contractors are allowed subsequently to recover their pre-operating expenses, still,
that eventuality will happen only after they shall have first put out the cash and fueled the economy.
Moreover, in the process of recouping their investments and costs, the foreign contractors do not
actually pull out the money from the economy. Rather, they recover or recoup their investments out
of actual commercial production by not paying a portion of the basic government share
corresponding to national taxes, along with the additional government share, for a period of not more
than five years counted from the commencement of commercial production.
77

It must be noted that there can be no recovery without commencing actual commercial production. In
the meantime that the contractors are recouping costs, they need to continue operating; in order to
do so, they have to disburse money to meet their various needs. In short, money is continually
infused into the economy.

The foregoing discussion should serve to rid us of the mistaken belief that, since the foreign
contractors are allowed to recover their investments and costs, the end result is that they practically
get the minerals for free, which leaves the Filipino people none the better for it.

All Businesses Entitled

to Cost Recovery

Let it be put on record that not only foreign contractors, but all businessmen and all business entities
in general, have to recoup their investments and costs. That is one of the first things a student learns
in business school. Regardless of its nationality, and whether or not a business entity has a five-year
cost recovery period, it will -- must -- have to recoup its investments, one way or another. This is just
common business sense. Recovery of investments is absolutely indispensable for business survival;
and business survival ensures soundness of the economy, which is critical and contributory to the
general welfare of the people. Even government corporations must recoup their investments in order
to survive and continue in operation. And, as the preceding discussion has shown, there is no
business that gets ahead or earns profits without any cost to it.
It must also be stressed that, though the State owns vast mineral wealth, such wealth is not readily
accessible or transformable into usable and negotiable currency without the intervention of the
credible mining companies. Those untapped mineral resources, hidden beneath tons of earth and
rock, may as well not be there for all the good they do us right now. They have first to be extracted
and converted into marketable form, and the country needs the foreign contractor's funds,
technology and know-how for that.

After about eleven years of pre-operation and another five years for cost recovery, the foreign
contractors will have just broken even. Is it likely that they would at that point stop their operations
and leave? Certainly not. They have yet to make profits. Thus, for the remainder of the contract
term, they must strive to maintain profitability. During this period, they pay the whole of the basic
government share and the additional government share which, taken together with indirect taxes
and other contributions, amount to approximately 60 percent or more of the entire financial benefits
generated by the mining venture.

In sum, we can hardly talk about foreign contractors taking our mineral resources for free. It takes a
lot of hard cash to even begin to do what they do. And what they do in this country ultimately
benefits the local economy, grows businesses, generates employment, and creates infrastructure ,
as discussed above. Hence, we definitely disagree with the sweeping claim that no FTAA under
Section 81 will ever make any real contribution to the growth of the economy or to the general
welfare of the country. This is not a plea for foreign contractors. Rather, this is a question of focusing
the judicial spotlight squarely on all the pertinent facts as they bear upon the issue at hand, in order
to avoid leaping precipitately to ill-conceived conclusions not solidly grounded upon fact.

Repatriation of After-Tax Income

Another objection points to the alleged failure of the Mining Law to ensure real contributions to the
economic growth and general welfare of the country, as mandated by Section 2 of Article XII of the
Constitution. Pursuant to Section 81 of the law, the entire after-tax income arising from the
exploitation of mineral resources owned by the State supposedly belongs to the foreign contractors,
which will naturally repatriate the said after-tax income to their home countries, thereby resulting in
no real contribution to the economic growth of this country. Clearly, this contention is premised on
erroneous assumptions.

First, as already discussed in detail hereinabove, the concerned agencies have correctly interpreted
the second paragraph of Section 81 of RA 7942 to mean that the government is entitled to an
additional share, to be computed based on any one of the following factors: net mining revenues, the
present value of the cash flows, or excess profits reckoned against a benchmark rate of return on
investments. So it is not correct to say that all of the after-tax income will accrue to the foreign FTAA
contractor, as the government effectively receives a significant portion thereof.

Second, the foreign contractors can hardly "repatriate the entire after-tax income to their home
countries." Even a bit of knowledge of corporate finance will show that it will be impossible to
maintain a business as a "going concern" if the entire "net profit" earned in any particular year will be
taken out and repatriated. The "net income" figure reflected in the bottom line is a mere accounting
figure not necessarily corresponding to cash in the bank, or other quick assets. In order to produce
and set aside cash in an amount equivalent to the bottom line figure, one may need to sell off assets
or immediately collect receivables or liquidate short-term investments; but doing so may very likely
disrupt normal business operations.

In terms of cash flows, the funds corresponding to the net income as of a particular point in time are
actually in use in the normal course of business operations. Pulling out such net income disrupts the
cash flows and cash position of the enterprise and, depending on the amount being taken out, could
seriously cripple or endanger the normal operations and financial health of the business enterprise.
In short, no sane business person, concerned with maintaining the mining enterprise as a
going concern and keeping a foothold in its market, can afford to repatriate the entire after-
tax income to the home country.

The State's Receipt of Sixty

Percent of an FTAA Contractor's
After-Tax Income Not Mandatory

We now come to the next objection which runs this way: In FTAAs with a foreign contractor, the
State must receive at least 60 percent of the after-tax income from the exploitation of its mineral
resources. This share is the equivalent of the constitutional requirement that at least 60 percent of
the capital, and hence 60 percent of the income, of mining companies should remain in Filipino
hands.

First, we fail to see how we can properly conclude that the Constitution mandates the State to
extract at least 60 percent of the after-tax income from a mining company run by a foreign
contractor. The argument is that the Charter requires the State's partner in a co-production
agreement, joint venture agreement or MPSA to be a Filipino corporation (at least 60 percent owned
by Filipino citizens).

We question the logic of this reasoning, premised on a supposedly parallel or analogous situation.
We are, after all, dealing with an essentially different equation, one that involves different elements.
The Charter did not intend to fix an iron-clad rule on the 60 percent share, applicable to all
situations at all times and in all circumstances. If ever such was the intention of the framers, they
would have spelt it out in black and white. Verba legis will serve to dispel unwarranted and untenable
conclusions.

Second, if we would bother to do the math, we might better appreciate the impact (and
reasonableness) of what we are demanding of the foreign contractor. Let us use a simplified
illustration. Let us base it on gross revenues of, say, P500. After deducting operating expenses, but
prior to income tax, suppose a mining firm makes a taxable income of P100. A corporate income tax
of 32 percent results in P32 of taxable income going to the government, leaving the mining firm with
P68. Government then takes 60 percent thereof, equivalent to P40.80, leaving only P27.20 for the
mining firm.

At this point the government has pocketed P32.00 plus P40.80, or a total of P72.80 for every P100
of taxable income, leaving the mining firm with only P27.20. But that is not all. The government has
also taken 2 percent excise tax "off the top," equivalent to another P10. Under the minimum 60
percent proposal, the government nets around P82.80 (not counting other taxes, duties, fees and
charges) from a taxable income of P100 (assuming gross revenues of P500, for purposes of
illustration). On the other hand, the foreign contractor, which provided all the capital, equipment and
labor, and took all the entrepreneurial risks -- receives P27.20. One cannot but wonder whether such
a distribution is even remotely equitable and reasonable, considering the nature of the mining
business. The amount of P82.80 out of P100.00 is really a lot – it does not matter that we call part of
it excise tax or income tax, and another portion thereof income from exploitation of mineral
resources. Some might think it wonderful to be able to take the lion's share of the benefits. But we
have to ask ourselves if we are really serious in attracting the investments that are the indispensable
and key element in generating the monetary benefits of which we wish to take the lion's share.
Fairness is a credo not only in law, but also in business.
Third, the 60 percent rule in the petroleum industry cannot be insisted upon at all times in the mining
business. The reason happens to be the fact that in petroleum operations, the bulk of expenditures
is in exploration, but once the contractor has found and tapped into the deposit, subsequent
investments and expenditures are relatively minimal. The crude (or gas) keeps gushing out, and the
work entailed is just a matter of piping, transporting and storing. Not so in mineral mining. The ore
body does not pop out on its own. Even after it has been located, the contractor must continually
invest in machineries and expend funds to dig and build tunnels in order to access and extract the
minerals from underneath hundreds of tons of earth and rock.

As already stated, the numerous intrinsic differences involved in their respective operations and
requirements, cost structures and investment needs render it highly inappropriate to use petroleum
operations FTAAs as benchmarks for mining FTAAs. Verily, we cannot just ignore the realities of the
distinctly different situations and stubbornly insist on the "minimum 60 percent."

The Mining and the Oil Industries

Different From Each Other

To stress, there is no independent showing that the taking of at least a 60 percent share in the after-
tax income of a mining company operated by a foreign contractor is fair and reasonable under most
if not all circumstances. The fact that some petroleum companies like Shell acceded to such
percentage of sharing does not ipso facto mean that it is per se reasonable and applicable to non-
petroleum situations (that is, mining companies) as well. We can take judicial notice of the fact that
there are, after all, numerous intrinsic differences involved in their respective operations and
equipment or technological requirements, costs structures and capital investment needs, and
product pricing and markets.

There is no showing, for instance, that mining companies can readily cope with a 60 percent
government share in the same way petroleum companies apparently can. What we have is a
suggestion to enforce the 60 percent quota on the basis of a disjointed analogy. The only factor
common to the two disparate situations is the extraction of natural resources.

Indeed, we should take note of the fact that Congress made a distinction between mining firms and
petroleum companies. In Republic Act No. 7729 -- "An Act Reducing the Excise Tax Rates on
Metallic and Non-Metallic Minerals and Quarry Resources, Amending for the Purpose Section
151(a) of the National Internal Revenue Code, as amended" -- the lawmakers fixed the excise tax
rate on metallic and non-metallic minerals at two percent of the actual market value of the annual
gross output at the time of removal. However, in the case of petroleum, the lawmakers set the excise
tax rate for the first taxable sale at fifteen percent of the fair international market price thereof.

There must have been a very sound reason that impelled Congress to impose two very dissimilar
excise tax rate. We cannot assume, without proof, that our honorable legislators acted arbitrarily,
capriciously and whimsically in this instance. We cannot just ignore the reality of two distinctly
different situations and stubbornly insist on going "minimum 60 percent."

To repeat, the mere fact that gas and oil exploration contracts grant the State 60 percent of the net
revenues does not necessarily imply that mining contracts should likewise yield a minimum of 60
percent for the State. Jumping to that erroneous conclusion is like comparing apples with oranges.
The exploration, development and utilization of gas and oil are simply different from those of mineral
resources.
To stress again, the main risk in gas and oil is in the exploration. But once oil in commercial
quantities is struck and the wells are put in place, the risk is relatively over and black gold simply
flows out continuously with comparatively less need for fresh investments and technology.

On the other hand, even if minerals are found in viable quantities, there is still need for continuous
fresh capital and expertise to dig the mineral ores from the mines. Just because deposits of mineral
ores are found in one area is no guarantee that an equal amount can be found in the adjacent areas.
There are simply continuing risks and need for more capital, expertise and industry all the time.

Note, however, that the indirect benefits -- apart from the cash revenues -- are much more in the
mineral industry. As mines are explored and extracted, vast employment is created, roads and other
infrastructure are built, and other multiplier effects arise. On the other hand, once oil wells start
producing, there is less need for employment. Roads and other public works need not be
constructed continuously. In fine, there is no basis for saying that government revenues from the oil
industry and from the mineral industries are to be identical all the time.

Fourth, to our mind, the proffered "minimum 60 percent" suggestion tends to limit the flexibility and
tie the hands of government, ultimately hampering the country's competitiveness in the international
market, to the detriment of the Filipino people. This "you-have-to-give-us-60-percent-of-after-tax-
income-or-we-don't-do- business-with-you" approach is quite perilous. True, this situation may not
seem too unpalatable to the foreign contractor during good years, when international market prices
are up and the mining firm manages to keep its costs in check. However, under unfavorable
economic and business conditions, with costs spiraling skywards and minerals prices plummeting, a
mining firm may consider itself lucky to make just minimal profits.

The inflexible, carved-in-granite demand for a 60 percent government share may spell the end of the
mining venture, scare away potential investors, and thereby further worsen the already dismal
economic scenario. Moreover, such an unbending or unyielding policy prevents the government from
responding appropriately to changing economic conditions and shifting market forces. This
inflexibility further renders our country less attractive as an investment option compared with other
countries.

And fifth, for this Court to decree imperiously that the government's share should be not less than 60
percent of the after-tax income of FTAA contractors at all times is nothing short of dictating upon the
government. The result, ironically, is that the State ends up losing control. To avoid compromising
the State's full control and supervision over the exploitation of mineral resources, this Court must
back off from insisting upon a "minimum 60 percent" rule. It is sufficient that the State has the power
and means, should it so decide, to get a 60 percent share (or more) in the contractor's net mining
revenues or after-tax income, or whatever other basis the government may decide to use in
reckoning its share. It is not necessary for it to do so in every case, regardless of circumstances.

In fact, the government must be trusted, must be accorded the liberty and the utmost flexibility to
deal, negotiate and transact with contractors and third parties as it sees fit; and upon terms that it
ascertains to be most favorable or most acceptable under the circumstances, even if it means
agreeing to less than 60 percent. Nothing must prevent the State from agreeing to a share less than
that, should it be deemed fit; otherwise the State will be deprived of full control over mineral
exploitation that the Charter has vested in it.

To stress again, there is simply no constitutional or legal provision fixing the minimum share of the
government in an FTAA at 60 percent of the net profit. For this Court to decree such minimum is to
wade into judicial legislation, and thereby inordinately impinge on the control power of the State. Let
it be clear: the Court is not against the grant of more benefits to the State; in fact, the more the
better. If during the FTAA negotiations, the President can secure 60 percent, or even 90 percent,
78

then all the better for our people. But, if under the peculiar circumstances of a specific contract, the
President could secure only 50 percent or 55 percent, so be it. Needless to say, the President will
have to report (and be responsible for) the specific FTAA to Congress, and eventually to the people.

Finally, if it should later be found that the share agreed to is grossly disadvantageous to the
government, the officials responsible for entering into such a contract on its behalf will have to
answer to the courts for their malfeasance. And the contract provision voided. But this Court would
abuse its own authority should it force the government's hand to adopt the 60 percent demand of
some of our esteemed colleagues.

Capital and Expertise Provided,

Yet All Risks Assumed by Contractor

Here, we will repeat what has not been emphasized and appreciated enough: the fact that the
contractor in an FTAA provides all the needed capital, technical and managerial expertise, and
technology required to undertake the project.

In regard to the WMCP FTAA, the then foreign-owned WMCP as contractor committed, at the very
outset, to make capital investments of up to US$50 million in that single mining project. WMCP
claims to have already poured in well over P800 million into the country as of February 1998, with
more in the pipeline. These resources, valued in the tens or hundreds of millions of dollars, are
invested in a mining project that provides no assurance whatsoever that any part of the investment
will be ultimately recouped.

At the same time, the contractor must comply with legally imposed environmental standards and the
social obligations, for which it also commits to make significant expenditures of funds. Throughout,
the contractor assumes all the risks of the business, as mentioned earlier. These risks are indeed
79

very high, considering that the rate of success in exploration is extremely low. The probability of
finding any mineral or petroleum in commercially viable quantities is estimated to be about 1:1,000
only. On that slim chance rides the contractor's hope of recouping investments and generating
profits. And when the contractor has recouped its initial investments in the project, the government
share increases to sixty percent of net benefits -- without the State ever being in peril of incurring
costs, expenses and losses.

And even in the worst possible scenario -- an absence of commercial quantities of minerals to justify
development -- the contractor would already have spent several million pesos for exploration works,
before arriving at the point in which it can make that determination and decide to cut its losses. In
fact, during the first year alone of the exploration period, the contractor was already committed to
spend not less than P24 million. The FTAA therefore clearly ensures benefits for the local economy,
courtesy of the contractor.

All in all, this setup cannot be regarded as disadvantageous to the State or the Filipino
people; it certainly cannot be said to convey beneficial ownership of our mineral resources to
foreign contractors.

Deductions Allowed by the

WMCP FTAA Reasonable

Petitioners question whether the State's weak control might render the sharing arrangements
ineffective. They cite the so-called "suspicious" deductions allowed by the WMCP FTAA in arriving at
the net mining revenue, which is the basis for computing the government share. The WMCP FTAA,
for instance, allows expenditures for "development within and outside the Contract Area relating to
the Mining Operations," "consulting fees incurred both inside and outside the Philippines for work
80

related directly to the Mining Operations," and "the establishment and administration of field offices
81

including administrative overheads incurred within and outside the Philippines which are properly
allocatable to the Mining Operations and reasonably related to the performance of the Contractor's
obligations and exercise of its rights under this Agreement." 82

It is quite well known, however, that mining companies do perform some marketing activities abroad
in respect of selling their mineral products and by-products. Hence, it would not be improper to allow
the deduction of reasonable consulting fees incurred abroad, as well as administrative expenses and
overheads related to marketing offices also located abroad -- provided that these deductions are
directly related or properly allocatable to the mining operations and reasonably related to the
performance of the contractor's obligations and exercise of its rights. In any event, more facts are
needed. Until we see how these provisions actually operate, mere "suspicions" will not suffice to
propel this Court into taking action.

Section 7.9 of the WMCP FTAA

Invalid and Disadvantageous

Having defended the WMCP FTAA, we shall now turn to two defective provisos. Let us start with
Section 7.9 of the WMCP FTAA. While Section 7.7 gives the government a 60 percent share in the
net mining revenues of WMCP from the commencement of commercial production, Section 7.9
deprives the government of part or all of the said 60 percent. Under the latter provision, should
WMCP's foreign shareholders -- who originally owned 100 percent of the equity -- sell 60 percent or
more of its outstanding capital stock to a Filipino citizen or corporation, the State loses its right to
receive its 60 percent share in net mining revenues under Section 7.7.

Section 7.9 provides:

The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7 shall be
reduced by 1percent of Net Mining Revenues for every 1percent ownership interest in the
Contractor (i.e., WMCP) held by a Qualified Entity. 83

Evidently, what Section 7.7 grants to the State is taken away in the next breath by Section 7.9
without any offsetting compensation to the State. Thus, in reality, the State has no vested right to
receive any income from the FTAA for the exploitation of its mineral resources. Worse, it would
seem that what is given to the State in Section 7.7 is by mere tolerance of WMCP's foreign
stockholders, who can at any time cut off the government's entire 60 percent share. They can do so
by simply selling 60 percent of WMCP's outstanding capital stock to a Philippine citizen or
corporation. Moreover, the proceeds of such sale will of course accrue to the foreign stockholders of
WMCP, not to the State.

The sale of 60 percent of WMCP's outstanding equity to a corporation that is 60 percent Filipino-
owned and 40 percent foreign-owned will still trigger the operation of Section 7.9. Effectively, the
State will lose its right to receive all 60 percent of the net mining revenues of WMCP; and foreign
stockholders will own beneficially up to 64 percent of WMCP, consisting of the remaining 40 percent
foreign equity therein, plus the 24 percent pro-rata share in the buyer-corporation.84

In fact, the January 23, 2001 sale by WMCP's foreign stockholder of the entire outstanding equity in
WMCP to Sagittarius Mines, Inc. -- a domestic corporation at least 60 percent Filipino owned -- may
be deemed to have automatically triggered the operation of Section 7.9, without need of further
action by any party, and removed the State's right to receive the 60 percent share in net mining
revenues.
At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share in the net mining
revenues of WMCP without any offset or compensation whatsoever. It is possible that the inclusion
of the offending provision was initially prompted by the desire to provide some form of incentive for
the principal foreign stockholder in WMCP to eventually reduce its equity position and ultimately
divest in favor of Filipino citizens and corporations. However, as finally structured, Section 7.9 has
the deleterious effect of depriving government of the entire 60 percent share in WMCP's net mining
revenues, without any form of compensation whatsoever. Such an outcome is completely
unacceptable.

The whole point of developing the nation's natural resources is to benefit the Filipino people, future
generations included. And the State as sovereign and custodian of the nation's natural wealth is
mandated to protect, conserve, preserve and develop that part of the national patrimony for their
benefit. Hence, the Charter lays great emphasis on "real contributions to the economic growth and
general welfare of the country" as essential guiding principles to be kept in mind when negotiating
85

the terms and conditions of FTAAs.

Earlier, we held (1) that the State must be accorded the liberty and the utmost flexibility to deal,
negotiate and transact with contractors and third parties as it sees fit, and upon terms that it
ascertains to be most favorable or most acceptable under the circumstances, even if that should
mean agreeing to less than 60 percent; (2) that it is not necessary for the State to extract a 60
percent share in every case and regardless of circumstances; and (3) that should the State be
prevented from agreeing to a share less than 60 percent as it deems fit, it will be deprived of the full
control over mineral exploitation that the Charter has vested in it.

That full control is obviously not an end in itself; it exists and subsists precisely because of the need
to serve and protect the national interest. In this instance, national interest finds particular application
in the protection of the national patrimony and the development and exploitation of the country's
mineral resources for the benefit of the Filipino people and the enhancement of economic growth
and the general welfare of the country. Undoubtedly, such full control can be misused and
abused, as we now witness.

Section 7.9 of the WMCP FTAA effectively gives away the State's share of net mining revenues
(provided for in Section 7.7) without anything in exchange. Moreover, this outcome constitutes
unjust enrichment on the part of the local and foreign stockholders of WMCP. By their mere
divestment of up to 60 percent equity in WMCP in favor of Filipino citizens and/or corporations, the
local and foreign stockholders get a windfall. Their share in the net mining revenues of WMCP is
automatically increased, without their having to pay the government anything for it. In short, the
provision in question is without a doubt grossly disadvantageous to the government, detrimental to
the interests of the Filipino people, and violative of public policy.

Moreover, it has been reiterated in numerous decisions that the parties to a contract may establish
86

any agreements, terms and conditions that they deem convenient; but these should not be contrary
to law, morals, good customs, public order or public policy. Being precisely violative of anti-graft
87

provisions and contrary to public policy, Section 7.9 must therefore be stricken off as invalid.

Whether the government officials concerned acceded to that provision by sheer mistake or with full
awareness of the ill consequences, is of no moment. It is hornbook doctrine that the principle of
estoppel does not operate against the government for the act of its agents, and that it is never
88

estopped by any mistake or error on their part. It is therefore possible and proper to rectify the
89

situation at this time. Moreover, we may also say that the FTAA in question does not involve mere
contractual rights; being impressed as it is with public interest, the contractual provisions and
stipulations must yield to the common good and the national interest.
Since the offending provision is very much separable from Section 7.7 and the rest of the FTAA, the
90

deletion of Section 7.9 can be done without affecting or requiring the invalidation of the WMCP FTAA
itself. Such a deletion will preserve for the government its due share of the benefits. This way, the
mandates of the Constitution are complied with and the interests of the government fully protected,
while the business operations of the contractor are not needlessly disrupted.

Section 7.8(e) of the WMCP FTAA

Also Invalid and Disadvantageous

Section 7.8(e) of the WMCP FTAA is likewise invalid. It provides thus:

"7.8 The Government Share shall be deemed to include all of the following sums:

"(a) all Government taxes, fees, levies, costs, imposts, duties and royalties including excise
tax, corporate income tax, customs duty, sales tax, value added tax, occupation and
regulatory fees, Government controlled price stabilization schemes, any other form of
Government backed schemes, any tax on dividend payments by the Contractor or its
Affiliates in respect of revenues from the Mining Operations and any tax on interest on
domestic and foreign loans or other financial arrangements or accommodations, including
loans extended to the Contractor by its stockholders;

"(b) any payments to local and regional government, including taxes, fees, levies, costs, imposts,
duties, royalties, occupation and regulatory fees and infrastructure contributions;

"(c) any payments to landowners, surface rights holders, occupiers, indigenous people or
Claimowners;

"(d) costs and expenses of fulfilling the Contractor's obligations to contribute to national development
in accordance with Clause 10.1(i) (1) and 10.1(i) (2);

"(e) an amount equivalent to whatever benefits that may be extended in the future by the
Government to the Contractor or to financial or technical assistance agreement contractors in
general;

"(f) all of the foregoing items which have not previously been offset against the Government Share in
an earlier Fiscal Year, adjusted for inflation." (underscoring supplied)

Section 7.8(e) is out of place in the FTAA. It makes no sense why, for instance, money spent by the
government for the benefit of the contractor in building roads leading to the mine site should still be
deductible from the State's share in net mining revenues. Allowing this deduction results in benefiting
the contractor twice over. It constitutes unjust enrichment on the part of the contractor at the
expense of the government, since the latter is effectively being made to pay twice for the same
item. For being grossly disadvantageous and prejudicial to the government and contrary to public
91

policy, Section 7.8(e) is undoubtedly invalid and must be declared to be without effect. Fortunately,
this provision can also easily be stricken off without affecting the rest of the FTAA.

Nothing Left Over

After Deductions?

In connection with Section 7.8, an objection has been raised: Specified in Section 7.8 are numerous
items of deduction from the State's 60 percent share. After taking these into account, will the State
ever receive anything for its ownership of the mineral resources?
We are confident that under normal circumstances, the answer will be yes. If we examine the
various items of "deduction" listed in Section 7.8 of the WMCP FTAA, we will find that they
correspond closely to the components or elements of the basic government share established in
DAO 99-56, as discussed in the earlier part of this Opinion.

Likewise, the balance of the government's 60 percent share -- after netting out the items of
deduction listed in Section 7.8 --corresponds closely to the additional government share provided
for in DAO 99-56 which, we once again stress, has nothing at all to do with indirect taxes. The
Ramos-DeVera paper concisely presents the fiscal contribution of an FTAA under DAO 99-56 in this
92

equation:

Receipts from an FTAA = basic gov't share + add'l gov't share

Transposed into a similar equation, the fiscal payments system from the WMCP FTAA assumes the
following formulation:

Government's 60 percent share in net mining revenues of WMCP = items listed in Sec. 7.8 of the
FTAA + balance of Gov't share, payable 4 months from the end of the fiscal year

It should become apparent that the fiscal arrangement under the WMCP FTAA is very similar to that
under DAO 99-56, with the "balance of government share payable 4 months from end of fiscal year"
being the equivalent of the additional government share computed in accordance with the "net-
mining-revenue-based option" under DAO 99-56, as discussed above. As we have emphasized
earlier, we find each of the three options for computing the additional government share -- as
presented in DAO 99-56 -- to be sound and reasonable.

We therefore conclude that there is nothing inherently wrong in the fiscal regime of the
WMCP FTAA, and certainly nothing to warrant the invalidation of the FTAA in its entirety.

Section 3.3 of the WMCP

FTAA Constitutional

Section 3.3 of the WMCP FTAA is assailed for violating supposed constitutional restrictions on the
term of FTAAs. The provision in question reads:

"3.3 This Agreement shall be renewed by the Government for a further period of twenty-five (25)
years under the same terms and conditions provided that the Contractor lodges a request for
renewal with the Government not less than sixty (60) days prior to the expiry of the initial term of this
Agreement and provided that the Contractor is not in breach of any of the requirements of this
Agreement."

Allegedly, the above provision runs afoul of Section 2 of Article XII of the 1987 Constitution, which
states:

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

"The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive 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, as
well 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 technical
or financial assistance for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and conditions provided by law,
based on real contributions to the economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local scientific and technical
resources.

"The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution."
93

We hold that the term limitation of twenty-five years does not apply to FTAAs. The reason is that the
above provision is found within paragraph 1 of Section 2 of Article XII, which refers to mineral
agreements -- co-production agreements, joint venture agreements and mineral production-sharing
agreements -- which the government may enter into with Filipino citizens and corporations, at least
60 percent owned by Filipino citizens. The word "such" clearly refers to these three mineral
agreements -- CPAs, JVAs and MPSAs -- not to FTAAs.

Specifically, FTAAs are covered by paragraphs 4 and 5 of Section 2 of Article XII of the Constitution.
It will be noted that there are no term limitations provided for in the said paragraphs dealing with
FTAAs. This shows that FTAAs are sui generis, in a class of their own. This omission was obviously
a deliberate move on the part of the framers. They probably realized that FTAAs would be different
in many ways from MPSAs, JVAs and CPAs. The reason the framers did not fix term limitations
applicable to FTAAs is that they preferred to leave the matter to the discretion of the legislature
and/or the agencies involved in implementing the laws pertaining to FTAAs, in order to give the latter
enough flexibility and elbow room to meet changing circumstances.

Note also that, as previously stated, the exploratory phrases of an FTAA lasts up to eleven years.
Thereafter, a few more years would be gobbled up in start-up operations. It may take fifteen years
before an FTAA contractor can start earning profits. And thus, the period of 25 years may really be
short for an FTAA. Consider too that in this kind of agreement, the contractor assumes all
entrepreneurial risks. If no commercial quantities of minerals are found, the contractor bears all
financial losses. To compensate for this long gestation period and extra business risks, it would not
be totally unreasonable to allow it to continue EDU activities for another twenty five years.

In any event, the complaint is that, in essence, Section 3.3 gives the contractor the power to compel
the government to renew the WMCP FTAA for another 25 years and deprives the State of any say
on whether to renew the contract.

While we agree that Section 3.3 could have been worded so as to prevent it from favoring the
contractor, this provision does not violate any constitutional limits, since the said term limitation does
not apply at all to FTAAs. Neither can the provision be deemed in any manner to be illegal, as no law
is being violated thereby. It is certainly not illegal for the government to waive its option to refuse the
renewal of a commercial contract.

Verily, the government did not have to agree to Section 3.3. It could have said "No" to the stipulation,
but it did not. It appears that, in the process of negotiations, the other contracting party was able to
convince the government to agree to the renewal terms. Under the circumstances, it does not seem
proper for this Court to intervene and step in to undo what might have perhaps been a possible
miscalculation on the part of the State. If government believes that it is or will be aggrieved by the
effects of Section 3.3, the remedy is the renegotiation of the provision in order to provide the State
the option to not renew the FTAA.

Financial Benefits for Foreigners

Not Forbidden by the Constitution

Before leaving this subject matter, we find it necessary for us to rid ourselves of the false belief that
the Constitution somehow forbids foreign-owned corporations from deriving financial benefits from
the development of our natural or mineral resources.

The Constitution has never prohibited foreign corporations from acquiring and enjoying "beneficial
interest" in the development of Philippine natural resources. The State itself need not directly
undertake exploration, development, and utilization activities. Alternatively, the Constitution
authorizes the government to enter into joint venture agreements (JVAs), co-production agreements
(CPAs) and mineral production sharing agreements (MPSAs) with contractors who are Filipino
citizens or corporations that are at least 60 percent Filipino-owned. They may do the actual "dirty
work" -- the mining operations.

In the case of a 60 percent Filipino-owned corporation, the 40 percent individual and/or corporate
non-Filipino stakeholders obviously participate in the beneficial interest derived from the
development and utilization of our natural resources. They may receive by way of dividends, up to
40 percent of the contractor's earnings from the mining project. Likewise, they may have a say in the
decisions of the board of directors, since they are entitled to representation therein to the extent of
their equity participation, which the Constitution permits to be up to 40 percent of the contractor's
equity. Hence, the non-Filipino stakeholders may in that manner also participate in the management
of the contractor's natural resource development work. All of this is permitted by our Constitution, for
any natural resource, and without limitation even in regard to the magnitude of the mining project or
operations (see paragraph 1 of Section 2 of Article XII).

It is clear, then, that there is nothing inherently wrong with or constitutionally objectionable about the
idea of foreign individuals and entities having or enjoying "beneficial interest" in -- and participating
in the management of operations relative to -- the exploration, development and utilization of our
natural resources.

FTAA More Advantageous

Than Other Schemes
Like CPA, JVA and MPSA

A final point on the subject of beneficial interest. We believe the FTAA is a more advantageous
proposition for the government as compared with other agreements permitted by the Constitution. In
a CPA that the government enters into with one or more contractors, the government shall provide
inputs to the mining operations other than the mineral resource itself. 94

In a JVA, a JV company is organized by the government and the contractor, with both parties having
equity shares (investments); and the contractor is granted the exclusive right to conduct mining
operations and to extract minerals found in the area. On the other hand, in an MPSA, the
95

government grants the contractor the exclusive right to conduct mining operations within the contract
area and shares in the gross output; and the contractor provides the necessary financing,
technology, management and manpower.

The point being made here is that, in two of the three types of agreements under consideration, the
government has to ante up some risk capital for the enterprise. In other words, government funds
(public moneys) are withdrawn from other possible uses, put to work in the venture and placed at
risk in case the venture fails. This notwithstanding, management and control of the operations of the
enterprise are -- in all three arrangements -- in the hands of the contractor, with the government
being mainly a silent partner. The three types of agreement mentioned above apply to any natural
resource, without limitation and regardless of the size or magnitude of the project or operations.

In contrast to the foregoing arrangements, and pursuant to paragraph 4 of Section 2 of Article XII,
the FTAA is limited to large-scale projects and only for minerals, petroleum and other mineral oils.
Here, the Constitution removes the 40 percent cap on foreign ownership and allows the foreign
corporation to own up to 100 percent of the equity. Filipino capital may not be sufficient on account
of the size of the project, so the foreign entity may have to ante up all the risk capital.

Correlatively, the foreign stakeholder bears up to 100 percent of the risk of loss if the project fails. In
respect of the particular FTAA granted to it, WMCP (then 100 percent foreign owned) was
responsible, as contractor, for providing the entire equity, including all the inputs for the project. It
was to bear 100 percent of the risk of loss if the project failed, but its maximum potential "beneficial
interest" consisted only of 40 percent of the net beneficial interest, because the other 60 percent is
the share of the government, which will never be exposed to any risk of loss whatsoever.

In consonance with the degree of risk assumed, the FTAA vested in WMCP the day-to-day
management of the mining operations. Still such management is subject to the overall control and
supervision of the State in terms of regular reporting, approvals of work programs and budgets, and
so on.

So, one needs to consider in relative terms, the costs of inputs for, degree of risk attendant to, and
benefits derived or to be derived from a CPA, a JVA or an MPSA vis-à-vis those pertaining to an
FTAA. It may not be realistically asserted that the foreign grantee of an FTAA is being unduly
favored or benefited as compared with a foreign stakeholder in a corporation holding a CPA, a JVA
or an MPSA. Seen the other way around, the government is definitely better off with an FTAA than a
CPA, a JVA or an MPSA.

Developmental Policy on the Mining Industry

During the Oral Argument and in their Final Memorandum, petitioners repeatedly urged the Court to
consider whether mining as an industry and economic activity deserved to be accorded priority,
preference and government support as against, say, agriculture and other activities in which Filipinos
and the Philippines may have an "economic advantage." For instance, a recent US study reportedly
96

examined the economic performance of all local US counties that were dependent on mining and 20
percent of whose labor earnings between 1970 and 2000 came from mining enterprises.

The study -- covering 100 US counties in 25 states dependent on mining -- showed that per capita
income grew about 30 percent less in mining-dependent communities in the 1980s and 25 percent
less for the entire period 1980 to 2000; the level of per capita income was also lower. Therefore,
given the slower rate of growth, the gap between these and other local counties increased.
Petitioners invite attention to the OXFAM America Report's warning to developing nations that
mining brings with it serious economic problems, including increased regional inequality,
unemployment and poverty. They also cite the final report of the Extractive Industries Review
97

project commissioned by the World Bank (the WB-EIR Report), which warns of environmental
degradation, social disruption, conflict, and uneven sharing of benefits with local communities that
bear the negative social and environmental impact. The Report suggests that countries need to
decide on the best way to exploit their natural resources, in order to maximize the value added from
the development of their resources and ensure that they are on the path to sustainable development
once the resources run out.

Whatever priority or preference may be given to mining vis-à-vis other economic or non-economic
activities is a question of policy that the President and Congress will have to address; it is not for this
Court to decide. This Court declares what the Constitution and the laws say, interprets only when
necessary, and refrains from delving into matters of policy.

Suffice it to say that the State control accorded by the Constitution over mining activities assures a
proper balancing of interests. More pointedly, such control will enable the President to demand the
best mining practices and the use of the best available technologies to protect the environment and
to rehabilitate mined-out areas. Indeed, under the Mining Law, the government can ensure the
protection of the environment during and after mining. It can likewise provide for the mechanisms to
protect the rights of indigenous communities, and thereby mold a more socially-responsive,
culturally-sensitive and sustainable mining industry.

Early on during the launching of the Presidential Mineral Industry Environmental Awards on
February 6, 1997, then President Fidel V. Ramos captured the essence of balanced and sustainable
mining in these words:

"Long term, high profit mining translates into higher revenues for government, more decent jobs for
the population, more raw materials to feed the engines of downstream and allied industries, and
improved chances of human resource and countryside development by creating self-reliant
communities away from urban centers.

xxxxxxxxx

"Against a fragile and finite environment, it is sustainability that holds the key. In sustainable mining,
we take a middle ground where both production and protection goals are balanced, and where
parties-in-interest come to terms."

Neither has the present leadership been remiss in addressing the concerns of sustainable mining
operations. Recently, on January 16, 2004 and April 20, 2004, President Gloria Macapagal Arroyo
issued Executive Orders Nos. 270 and 270-A, respectively, "to promote responsible mineral
resources exploration, development and utilization, in order to enhance economic growth, in a
manner that adheres to the principles of sustainable development and with due regard for justice
and equity, sensitivity to the culture of the Filipino people and respect for Philippine sovereignty."98

REFUTATION OF DISSENTS

The Court will now take up a number of other specific points raised in the dissents of Justices Carpio
and Morales.

1. Justice Morales introduced us to Hugh Morgan, former president and chief executive officer of
Western Mining Corporation (WMC) and former president of the Australian Mining Industry Council,
who spearheaded the vociferous opposition to the filing by aboriginal peoples of native title claims
against mining companies in Australia in the aftermath of the landmark Mabo decision by the
Australian High Court. According to sources quoted by our esteemed colleague, Morgan was also a
racist and a bigot. In the course of protesting Mabo, Morgan allegedly uttered derogatory remarks
belittling the aboriginal culture and race.

An unwritten caveat of this introduction is that this Court should be careful not to permit the entry of
the likes of Hugh Morgan and his hordes of alleged racist-bigots at WMC. With all due respect, such
scare tactics should have no place in the discussion of this case. We are deliberating on the
constitutionality of RA 7942, DAO 96-40 and the FTAA originally granted to WMCP, which had been
transferred to Sagittarius Mining, a Filipino corporation. We are not discussing the apparition of white
Anglo-Saxon racists/bigots massing at our gates.

2. On the proper interpretation of the phrase agreements involving either technical or financial
assistance, Justice Morales points out that at times we "conveniently omitted" the use of the
disjunctive either…or, which according to her denotes restriction; hence the phrase must be deemed
to connote restriction and limitation.

But, as Justice Carpio himself pointed out during the Oral Argument, the disjunctive phrase either
technical or financial assistance would, strictly speaking, literally mean that a foreign contractor may
provide only one or the other, but not both. And if both technical and financial assistance were
required for a project, the State would have to deal with at least two different foreign contractors --
one for financial and the other for technical assistance. And following on that, a foreign contractor,
though very much qualified to provide both kinds of assistance, would nevertheless be prohibited
from providing one kind as soon as it shall have agreed to provide the other.

But if the Court should follow this restrictive and literal construction, can we really find two (or more)
contractors who are willing to participate in one single project -- one to provide the "financial
assistance" only and the other the "technical assistance" exclusively; it would be excellent if these
two or more contractors happen to be willing and are able to cooperate and work closely together on
the same project (even if they are otherwise competitors). And it would be superb if no conflicts
would arise between or among them in the entire course of the contract. But what are the chances
things will turn out this way in the real world? To think that the framers deliberately imposed this kind
of restriction is to say that they were either exceedingly optimistic, or incredibly naïve. This begs the
question -- What laudable objective or purpose could possibly be served by such strict and restrictive
literal interpretation?

3. Citing Oposa v. Factoran Jr., Justice Morales claims that a service contract is not a contract or
property right which merits protection by the due process clause of the Constitution, but merely a
license or privilege which may be validly revoked, rescinded or withdrawn by executive action
whenever dictated by public interest or public welfare.

Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive Secretary as authority. The
latter cases dealt specifically with timber licenses only. Oposa allegedly reiterated that a license is
merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between
the authority, federal, state or municipal, granting it and the person to whom it is granted; neither is it
property or a property right, nor does it create a vested right; nor is it taxation. Thus this Court held
that the granting of license does not create irrevocable rights, neither is it property or property rights.

Should Oposa be deemed applicable to the case at bar, on the argument that natural resources are
also involved in this situation? We do not think so. A grantee of a timber license, permit or license
agreement gets to cut the timber already growing on the surface; it need not dig up tons of earth to
get at the logs. In a logging concession, the investment of the licensee is not as substantial as the
investment of a large-scale mining contractor. If a timber license were revoked, the licensee packs
up its gear and moves to a new area applied for, and starts over; what it leaves behind are mainly
the trails leading to the logging site.

In contrast, the mining contractor will have sunk a great deal of money (tens of millions of dollars)
into the ground, so to speak, for exploration activities, for development of the mine site and
infrastructure, and for the actual excavation and extraction of minerals, including the extensive
tunneling work to reach the ore body. The cancellation of the mining contract will utterly deprive the
contractor of its investments (i.e., prevent recovery of investments), most of which cannot be pulled
out.

To say that an FTAA is just like a mere timber license or permit and does not involve contract or
property rights which merit protection by the due process clause of the Constitution, and may
therefore be revoked or cancelled in the blink of an eye, is to adopt a well-nigh confiscatory stance;
at the very least, it is downright dismissive of the property rights of businesspersons and corporate
entities that have investments in the mining industry, whose investments, operations and
expenditures do contribute to the general welfare of the people, the coffers of government, and the
strength of the economy. Such a pronouncement will surely discourage investments (local and
foreign) which are critically needed to fuel the engine of economic growth and move this country out
of the rut of poverty. In sum, Oposa is not applicable.

4. Justice Morales adverts to the supposedly "clear intention" of the framers of the Constitution to
reserve our natural resources exclusively for the Filipino people. She then quoted from the records
of the ConCom deliberations a passage in which then Commissioner Davide explained his vote,
arguing in the process that aliens ought not be allowed to participate in the enjoyment of our natural
resources. One passage does not suffice to capture the tenor or substance of the entire extensive
deliberations of the commissioners, or to reveal the clear intention of the framers as a group. A re-
reading of the entire deliberations (quoted here earlier) is necessary if we are to understand the true
intent of the framers.

5. Since 1935, the Filipino people, through their Constitution, have decided that the retardation or
delay in the exploration, development or utilization of the nation's natural resources is merely
secondary to the protection and preservation of their ownership of the natural resources, so says
Justice Morales, citing Aruego. If it is true that the framers of the 1987 Constitution did not care
much about alleviating the retardation or delay in the development and utilization of our natural
resources, why did they bother to write paragraph 4 at all? Were they merely paying lip service to
large-scale exploration, development and utilization? They could have just completely ignored the
subject matter and left it to be dealt with through a future constitutional amendment. But we have to
harmonize every part of the Constitution and to interpret each provision in a manner that would give
life and meaning to it and to the rest of the provisions. It is obvious that a literal interpretation of
paragraph 4 will render it utterly inutile and inoperative.

6. According to Justice Morales, the deliberations of the Constitutional Commission do not support
our contention that the framers, by specifying such agreements involving financial or technical
assistance, necessarily gave implied assent to everything that these agreements implicitly entailed,
or that could reasonably be deemed necessary to make them tenable and effective, including
management authority in the day-to-day operations. As proof thereof, she quotes one single
passage from the ConCom deliberations, consisting of an exchange among Commissioners
Tingson, Garcia and Monsod.

However, the quoted exchange does not serve to contradict our argument; it even bolsters it. Comm.
Christian Monsod was quoted as saying: "xxx I think we have to make a distinction that it is not
really realistic to say that we will borrow on our own terms. Maybe we can say that we inherited
unjust loans, and we would like to repay these on terms that are not prejudicial to our own growth.
But the general statement that we should only borrow on our own terms is a bit unrealistic." Comm.
Monsod is one who knew whereof he spoke.

7. Justice Morales also declares that the optimal time for the conversion of an FTAA into an MPSA is
after completion of the exploration phase and just before undertaking the development and
construction phase, on account of the fact that the requirement for a minimum investment of $50
million is applicable only during the development, construction and utilization phase, but not during
the exploration phase, when the foreign contractor need merely comply with minimum ground
expenditures. Thus by converting, the foreign contractor maximizes its profits by avoiding its
obligation to make the minimum investment of $50 million.

This argument forgets that the foreign contractor is in the game precisely to make money. In order to
come anywhere near profitability, the contractor must first extract and sell the mineral ore. In order to
do that, it must also develop and construct the mining facilities, set up its machineries and
equipment and dig the tunnels to get to the deposit. The contractor is thus compelled to expend
funds in order to make profits. If it decides to cut back on investments and expenditures, it will
necessarily sacrifice the pace of development and utilization; it will necessarily sacrifice the amount
of profits it can make from the mining operations. In fact, at certain less-than-optimal levels of
operation, the stream of revenues generated may not even be enough to cover variable expenses,
let alone overhead expenses; this is a dismal situation anyone would want to avoid. In order to make
money, one has to spend money. This truism applies to the mining industry as well.

8. Mortgaging the minerals to secure a foreign FTAA contractor's obligations is anomalous,

according to Justice Morales since the contractor was from the beginning obliged to provide all
financing needed for the mining operations. However, the mortgaging of minerals by the contractor
does not necessarily signify that the contractor is unable to provide all financing required for the
project, or that it does not have the financial capability to undertake large-scale operations.
Mortgaging of mineral products, just like the assignment (by way of security) of manufactured goods
and goods in inventory, and the assignment of receivables, is an ordinary requirement of banks,
even in the case of clients with more than sufficient financial resources. And nowadays, even the
richest and best managed corporations make use of bank credit facilities -- it does not necessarily
signify that they do not have the financial resources or are unable to provide the financing on their
own; it is just a manner of maximizing the use of their funds.

9. Does the contractor in reality acquire the surface rights "for free," by virtue of the fact that it is
entitled to reimbursement for the costs of acquisition and maintenance, adjusted for inflation? We
think not. The "reimbursement" is possible only at the end of the term of the contract, when the
surface rights will no longer be needed, and the land previously acquired will have to be disposed of,
in which case the contractor gets reimbursement from the sales proceeds. The contractor has to pay
out the acquisition price for the land. That money will belong to the seller of the land. Only if and
when the land is finally sold off will the contractor get any reimbursement. In other words, the
contractor will have been cash-out for the entire duration of the term of the contract -- 25 or 50 years,
depending. If we calculate the cost of money at say 12 percent per annum, that is the cost or
opportunity loss to the contractor, in addition to the amount of the acquisition price. 12 percent per
annum for 50 years is 600 percent; this, without any compounding yet. The cost of money is
therefore at least 600 percent of the original acquisition cost; it is in addition to the acquisition cost.
"For free"? Not by a long shot.
10. The contractor will acquire and hold up to 5,000 hectares? We doubt it. The acquisition by the
State of land for the contractor is just to enable the contractor to establish its mine site, build its
facilities, establish a tailings pond, set up its machinery and equipment, and dig mine shafts and
tunnels, etc. It is impossible that the surface requirement will aggregate 5,000 hectares. Much of the
operations will consist of the tunneling and digging underground, which will not require possessing or
using any land surface. 5,000 hectares is way too much for the needs of a mining operator. It simply
will not spend its cash to acquire property that it will not need; the cash may be better employed for
the actual mining operations, to yield a profit.

11. Justice Carpio claims that the phrase among other things (found in the second paragraph of
Section 81 of the Mining Act) is being incorrectly treated as a delegation of legislative power to the
DENR secretary to issue DAO 99-56 and prescribe the formulae therein on the State's share from
mining operations. He adds that the phrase among other things was not intended as a delegation of
legislative power to the DENR secretary, much less could it be deemed a valid delegation of
legislative power, since there is nothing in the second paragraph of Section 81 which can be said to
grant any delegated legislative power to the DENR secretary. And even if there were, such
delegation would be void, for lack of any standards by which the delegated power shall be exercised.

While there is nothing in the second paragraph of Section 81 which can directly be construed as a
delegation of legislative power to the DENR secretary, it does not mean that DAO 99-56 is invalid
per se, or that the secretary acted without any authority or jurisdiction in issuing DAO 99-56. As we
stated earlier in our Prologue, "Who or what organ of government actually exercises this power of
control on behalf of the State? The Constitution is crystal clear: the President. Indeed, the Chief
Executive is the official constitutionally mandated to 'enter into agreements with foreign owned
corporations.' On the other hand, Congress may review the action of the President once it is notified
of 'every contract entered into in accordance with this [constitutional] provision within thirty days from
its execution.'" It is the President who is constitutionally mandated to enter into FTAAs with foreign
corporations, and in doing so, it is within the President's prerogative to specify certain terms and
conditions of the FTAAs, for example, the fiscal regime of FTAAs -- i.e., the sharing of the net
mining revenues between the contractor and the State.

Being the President's alter ego with respect to the control and supervision of the mining industry, the
DENR secretary, acting for the President, is necessarily clothed with the requisite authority and
power to draw up guidelines delineating certain terms and conditions, and specifying therein the
terms of sharing of benefits from mining, to be applicable to FTAAs in general. It is important to
remember that DAO 99-56 has been in existence for almost six years, and has not been amended or
revoked by the President.

The issuance of DAO 99-56 did not involve the exercise of delegated legislative power. The
legislature did not delegate the power to determine the nature, extent and composition of the items
that would come under the phrase among other things. The legislature's power pertains to the
imposition of taxes, duties and fees. This power was not delegated to the DENR secretary. But the
power to negotiate and enter into FTAAs was withheld from Congress, and reserved for the
President. In determining the sharing of mining benefits, i.e., in specifying what the phrase among
other things include, the President (through the secretary acting in his/her behalf) was not
determining the amount or rate of taxes, duties and fees, but rather the amount of INCOME to be
derived from minerals to be extracted and sold, income which belongs to the State as owner of the
mineral resources. We may say that, in the second paragraph of Section 81, the legislature in a
sense intruded partially into the President's sphere of authority when the former provided that
"The Government share in financial or technical assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due from
the contractor's foreign stockholders arising from dividend or interest payments to the said foreign
stockholder in case of a foreign national and all such other taxes, duties and fees as provided for
under existing laws." (Italics supplied)

But it did not usurp the President's authority since the provision merely included the enumerated
items as part of the government share, without foreclosing or in any way preventing (as in fact
Congress could not validly prevent) the President from determining what constitutes the State's
compensation derived from FTAAs. In this case, the President in effect directed the inclusion or
addition of "other things," viz., INCOME for the owner of the resources, in the government's share,
while adopting the items enumerated by Congress as part of the government share also.

12. Justice Carpio's insistence on applying the ejusdem generis rule of statutory construction to the
phrase among other things is therefore useless, and must fall by the wayside. There is no point
trying to construe that phrase in relation to the enumeration of taxes, duties and fees found in
paragraph 2 of Section 81, precisely because "the constitutional power to prescribe the sharing
of mining income between the State and mining companies," to quote Justice Carpio pursuant
to an FTAA is constitutionally lodged with the President, not with Congress. It thus makes no
sense to persist in giving the phrase among other things a restricted meaning referring only to taxes,
duties and fees.

13. Strangely, Justice Carpio claims that the DENR secretary can change the formulae in DAO 99-
56 any time even without the approval of the President, and the secretary is the sole authority to
determine the amount of consideration that the State shall receive in an FTAA, because Section 5 of
the DAO states that "xxx any amendment of an FTAA other than the provision on fiscal regime shall
require the negotiation with the Negotiation Panel and the recommendation of the Secretary for
approval of the President xxx". Allegedly, because of that provision, if an amendment in the FTAA
involves non-fiscal matters, the amendment requires approval of the President, but if the amendment
involves a change in the fiscal regime, the DENR secretary has the final authority, and approval of
the President may be dispensed with; hence the secretary is more powerful than the President.

We believe there is some distortion resulting from the quoted provision being taken out of context.
Section 5 of DAO 99-56 reads as follows:

"Section 5. Status of Existing FTAAs. All FTAAs approved prior to the effectivity of this
Administrative Order shall remain valid and be recognized by the Government: Provided, That
should a Contractor desire to amend its FTAA, it shall do so by filing a Letter of Intent (LOI) to the
Secretary thru the Director. Provided, further, That if the Contractor desires to amend the fiscal
regime of its FTAA, it may do so by seeking for the amendment of its FTAA's whole fiscal regime by
adopting the fiscal regime provided hereof: Provided, finally, That any amendment of an FTAA other
than the provision on fiscal regime shall require the negotiation with the Negotiating Panel and the
recommendation of the Secretary for approval of the President of the Republic of the Philippines."
(underscoring supplied)

It looks like another case of misapprehension. The proviso being objected to by Justice Carpio is
actually preceded by a phrase that requires a contractor desiring to amend the fiscal regime of its
FTAA, to amend the same by adopting the fiscal regime prescribed in DAO 99-56 -- i.e., solely in
that manner, and in no other. Obviously, since DAO 99-56 was issued by the secretary under
the authority and with the presumed approval of the President, the amendment of an FTAA by
merely adopting the fiscal regime prescribed in said DAO 99-56 (and nothing more) need not
have the express clearance of the President anymore. It is as if the same had been pre-
approved. We cannot fathom the complaint that that makes the secretary more powerful than the
President, or that the former is trying to hide things from the President or Congress.

14. Based on the first sentence of Section 5 of DAO 99-56, which states "[A]ll FTAAs approved prior
to the effectivity of this Administrative Order shall remain valid and be recognized by the
Government", Justice Carpio concludes that said Administrative Order allegedly exempts FTAAs
approved prior to its effectivity -- like the WMCP FTAA -- from having to pay the State any share
from their mining income, apart from taxes, duties and fees.

We disagree. What we see in black and white is the statement that the FTAAs approved before the
DAO came into effect are to continue to be valid and will be recognized by the State. Nothing is said
about their fiscal regimes. Certainly, there is no basis to claim that the contractors under said FTAAs
were being exempted from paying the government a share in their mining incomes.

For the record, the WMCP FTAA is NOT and has never been exempt from paying the government
share. The WMCP FTAA has its own fiscal regime -- Section 7.7 -- which gives the government
a 60 percent share in the net mining revenues of WMCP from the commencement of
commercial production.

For that very reason, we have never said that DAO 99-56 is the basis for claiming that the WMCP
FTAA has a consideration. Hence, we find quite out of place Justice Carpio's statement that
ironically, DAO 99-56, the very authority cited to support the claim that the WMCP FTAA has a
consideration, does not apply to the WMCP FTAA. By its own express terms, DAO 99-56 does not
apply to FTAAs executed before the issuance of DAO 99-56, like the WMCP FTAA. The majority's
position has allegedly no leg to stand on since even DAO 99-56, assuming it is valid, cannot save
the WMCP FTAA from want of consideration. Even assuming arguendo that DAO 99-56 does not
apply to the WMCP FTAA, nevertheless, the WMCP FTAA has its own fiscal regime, found in
Section 7.7 thereof. Hence, there is no such thing as "want of consideration" here.

Still more startling is this claim: The majority supposedly agrees that the provisions of the WMCP
FTAA, which grant a sham consideration to the State, are void. Since the majority agrees that the
WMCP FTAA has a sham consideration, the WMCP FTAA thus lacks the third element of a valid
contract. The Decision should declare the WMCP FTAA void for want of consideration unless it
treats the contract as an MPSA under Section 80. Indeed the only recourse of WMCP to save the
validity of its contract is to convert it into an MPSA.

To clarify, we said that Sections 7.9 and 7.8(e) of the WMCP FTAA are provisions grossly
disadvantageous to government and detrimental to the interests of the Filipino people, as well as
violative of public policy, and must therefore be stricken off as invalid. Since the offending provisions
are very much separable from Section 7.7 and the rest of the FTAA, the deletion of Sections 7.9 and
7.8(e) can be done without affecting or requiring the invalidation of the WMCP FTAA itself, and such
deletion will preserve for government its due share of the 60 percent benefits. Therefore, the WMCP
FTAA is NOT bereft of a valid consideration (assuming for the nonce that indeed this is the
"consideration" of the FTAA).

SUMMATION

To conclude, a summary of the key points discussed above is now in order.

The Meaning of "Agreements Involving

Either Technical or Financial Assistance"
Applying familiar principles of constitutional construction to the phrase agreements involving either
technical or financial assistance, the framers' choice of words does not indicate the intent to exclude
other modes of assistance, but rather implies that there are other things being included or possibly
being made part of the agreement, apart from financial or technical assistance. The drafters avoided
the use of restrictive and stringent phraseology; a verba legis scrutiny of Section 2 of Article XII of
the Constitution discloses not even a hint of a desire to prohibit foreign involvement in the
management or operation of mining activities, or to eradicate service contracts. Such moves would
necessarily imply an underlying drastic shift in fundamental economic and developmental policies of
the State. That change requires a much more definite and irrefutable basis than mere omission of
the words "service contract" from the new Constitution.

Furthermore, a literal and restrictive interpretation of this paragraph leads to logical inconsistencies.
A constitutional provision specifically allowing foreign-owned corporations to render financial or
technical assistance in respect of mining or any other commercial activity was clearly unnecessary;
the provision was meant to refer to more than mere financial or technical assistance.

Also, if paragraph 4 permits only agreements for financial or technical assistance, there would be no
point in requiring that they be "based on real contributions to the economic growth and general
welfare of the country." And considering that there were various long-term service contracts still in
force and effect at the time the new Charter was being drafted, the absence of any transitory
provisions to govern the termination and closing-out of the then existing service contracts strongly
militates against the theory that the mere omission of "service contracts" signaled their prohibition by
the new Constitution.

Resort to the deliberations of the Constitutional Commission is therefore unavoidable, and a careful
scrutiny thereof conclusively shows that the ConCom members discussed agreements involving
either technical or financial assistance in the same sense as service contracts and used the terms
interchangeably. The drafters in fact knew that the agreements with foreign corporations were going
to entail not mere technical or financial assistance but, rather, foreign investment in and
management of an enterprise for large-scale exploration, development and utilization of minerals.

The framers spoke about service contracts as the concept was understood in the 1973 Constitution.
It is obvious from their discussions that they did not intend to ban or eradicate service contracts.
Instead, they were intent on crafting provisions to put in place safeguards that would eliminate or
minimize the abuses prevalent during the martial law regime. In brief, they were going to permit
service contracts with foreign corporations as contractors, but with safety measures to
prevent abuses, as an exception to the general norm established in the first paragraph of
Section 2 of Article XII, which reserves or limits to Filipino citizens and corporations at least
60 percent owned by such citizens the exploration, development and utilization of mineral or
petroleum resources. This was prompted by the perceived insufficiency of Filipino capital and the
felt need for foreign expertise in the EDU of mineral resources.

Despite strong opposition from some ConCom members during the final voting, the Article on the
National Economy and Patrimony -- including paragraph 4 allowing service contracts with foreign
corporations as an exception to the general norm in paragraph 1 of Section 2 of the same Article --
was resoundingly and overwhelmingly approved.

The drafters, many of whom were economists, academicians, lawyers, businesspersons and
politicians knew that foreign entities will not enter into agreements involving assistance without
requiring measures of protection to ensure the success of the venture and repayment of their
investments, loans and other financial assistance, and ultimately to protect the business reputation
of the foreign corporations. The drafters, by specifying such agreements involving assistance,
necessarily gave implied assent to everything that these agreements entailed or that could
reasonably be deemed necessary to make them tenable and effective -- including management
authority with respect to the day-to-day operations of the enterprise, and measures for the protection
of the interests of the foreign corporation, at least to the extent that they are consistent with
Philippine sovereignty over natural resources, the constitutional requirement of State control, and
beneficial ownership of natural resources remaining vested in the State.

From the foregoing, it is clear that agreements involving either technical or financial assistance
referred to in paragraph 4 are in fact service contracts, but such new service contracts are between
foreign corporations acting as contractors on the one hand, and on the other hand government as
principal or "owner" (of the works), whereby the foreign contractor provides the capital, technology
and technical know-how, and managerial expertise in the creation and operation of the large-scale
mining/extractive enterprise, and government through its agencies (DENR, MGB) actively exercises
full control and supervision over the entire enterprise.

Such service contracts may be entered into only with respect to minerals, petroleum and other
mineral oils. The grant of such service contracts is subject to several safeguards, among them: (1)
that the service contract be crafted in accordance with a general law setting standard or uniform
terms, conditions and requirements; (2) the President be the signatory for the government; and (3)
the President report the executed agreement to Congress within thirty days.

Ultimate Test: Full State Control

To repeat, the primacy of the principle of the State's sovereign ownership of all mineral resources,
and its full control and supervision over all aspects of exploration, development and utilization of
natural resources must be upheld. But "full control and supervision" cannot be taken literally to mean
that the State controls and supervises everything down to the minutest details and makes all
required actions, as this would render impossible the legitimate exercise by the contractor of a
reasonable degree of management prerogative and authority, indispensable to the proper
functioning of the mining enterprise. Also, government need not micro-manage mining operations
and day-to-day affairs of the enterprise in order to be considered as exercising full control and
supervision.

Control, as utilized in Section 2 of Article XII, must be taken to mean a degree of control sufficient to
enable the State to direct, restrain, regulate and govern the affairs of the extractive enterprises.
Control by the State may be on a macro level, through the establishment of policies, guidelines,
regulations, industry standards and similar measures that would enable government to regulate the
conduct of affairs in various enterprises, and restrain activities deemed not desirable or beneficial,
with the end in view of ensuring that these enterprises contribute to the economic development and
general welfare of the country, conserve the environment, and uplift the well-being of the local
affected communities. Such a degree of control would be compatible with permitting the foreign
contractor sufficient and reasonable management authority over the enterprise it has invested in, to
ensure efficient and profitable operation.

Government Granted Full Control

by RA 7942 and DAO 96-40

Baseless are petitioners' sweeping claims that RA 7942 and its Implementing Rules and Regulations
make it possible for FTAA contracts to cede full control and management of mining enterprises over
to fully foreign owned corporations. Equally wobbly is the assertion that the State is reduced to a
passive regulator dependent on submitted plans and reports, with weak review and audit powers
and little say in the decision-making of the enterprise, for which reasons "beneficial ownership" of the
mineral resources is allegedly ceded to the foreign contractor.

As discussed hereinabove, the State's full control and supervision over mining operations are
ensured through the following provisions in RA 7942: Sections 8, 9, 16, 19, 24, 35[(b), (e), (f), (g),
(h), (k), (l), (m) and (o)], 40, 57, 66, 69, 70, and Chapters XI and XVII; as well as the following
provisions of DAO 96-40: Sections7[(d) and (f)], 35(a-2), 53[(a-4) and (d)], 54, 56[(g), (h), (l), (m) and
(n)], 56(2), 60, 66, 144, 168, 171 and 270, and also Chapters XV, XVI and XXIV.

Through the foregoing provisions, the government agencies concerned are empowered to approve
or disapprove -- hence, in a position to influence, direct, and change -- the various work programs
and the corresponding minimum expenditure commitments for each of the exploration, development
and utilization phases of the enterprise. Once they have been approved, the contractor's compliance
with its commitments therein will be monitored. Figures for mineral production and sales are
regularly monitored and subjected to government review, to ensure that the products and by-
products are disposed of at the best prices; copies of sales agreements have to be submitted to and
registered with MGB.

The contractor is mandated to open its books of accounts and records for scrutiny, to enable the
State to determine that the government share has been fully paid. The State may likewise compel
compliance by the contractor with mandatory requirements on mine safety, health and environmental
protection, and the use of anti-pollution technology and facilities. The contractor is also obligated to
assist the development of the mining community, and pay royalties to the indigenous peoples
concerned. And violation of any of the FTAA's terms and conditions, and/or non-compliance with
statutes or regulations, may be penalized by cancellation of the FTAA. Such sanction is significant to
a contractor who may have yet to recover the tens or hundreds of millions of dollars sunk into a
mining project.

Overall, the State definitely has a pivotal say in the operation of the individual enterprises, and can
set directions and objectives, detect deviations and non-compliances by the contractor, and enforce
compliance and impose sanctions should the occasion arise. Hence, RA 7942 and DAO 96-40 vest
in government more than a sufficient degree of control and supervision over the conduct of mining
operations.

Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a foreign contractor
to apply for and hold an exploration permit. During the exploration phase, the permit grantee (and
prospective contractor) is spending and investing heavily in exploration activities without yet being
able to extract minerals and generate revenues. The exploration permit issued under Sections 3(aq),
20 and 23 of RA 7942, which allows exploration but not extraction, serves to protect the interests
and rights of the exploration permit grantee (and would-be contractor), foreign or local. Otherwise,
the exploration works already conducted, and expenditures already made, may end up only
benefiting claim-jumpers. Thus, Section 3(aq) of RA 7942 is not unconstitutional.

WMCP FTAA Likewise Gives the

State Full Control and Supervision

The WMCP FTAA obligates the contractor to account for the value of production and sale of
minerals (Clause 1.4); requires that the contractor's work program, activities and budgets be
approved by the State (Clause 2.1); gives the DENR secretary power to extend the exploration
period (Clause 3.2-a); requires approval by the State for incorporation of lands into the contract area
(Clause 4.3-c); requires Bureau of Forest Development approval for inclusion of forest reserves as
part of the FTAA contract area (Clause 4.5); obligates the contractor to periodically relinquish parts
of the contract area not needed for exploration and development (Clause 4.6); requires submission
of a declaration of mining feasibility for approval by the State (Clause 4.6-b); obligates the contractor
to report to the State the results of its exploration activities (Clause 4.9); requires the contractor to
obtain State approval for its work programs for the succeeding two year periods, containing the
proposed work activities and expenditures budget related to exploration (Clause 5.1); requires the
contractor to obtain State approval for its proposed expenditures for exploration activities (Clause
5.2); requires the contractor to submit an annual report on geological, geophysical, geochemical and
other information relating to its explorations within the FTAA area (Clause 5.3-a); requires the
contractor to submit within six months after expiration of exploration period a final report on all its
findings in the contract area (Clause 5.3-b); requires the contractor after conducting feasibility
studies to submit a declaration of mining feasibility, along with a description of the area to be
developed and mined, a description of the proposed mining operations and the technology to be
employed, and the proposed work program for the development phase, for approval by the DENR
secretary (Clause 5.4); obligates the contractor to complete the development of the mine, including
construction of the production facilities, within the period stated in the approved work program
(Clause 6.1); requires the contractor to submit for approval a work program covering each period of
three fiscal years (Clause 6.2); requires the contractor to submit reports to the secretary on the
production, ore reserves, work accomplished and work in progress, profile of its work force and
management staff, and other technical information (Clause 6.3); subjects any expansions,
modifications, improvements and replacements of mining facilities to the approval of the secretary
(Clause 6.4); subjects to State control the amount of funds that the contractor may borrow within the
Philippines (Clause 7.2); subjects to State supervisory power any technical, financial and marketing
issues (Clause 10.1-a); obligates the contractor to ensure 60 percent Filipino equity in the contractor
within ten years of recovering specified expenditures unless not so required by subsequent
legislation (Clause 10.1); gives the State the right to terminate the FTAA for unremedied substantial
breach thereof by the contractor (Clause 13.2); requires State approval for any assignment of the
FTAA by the contractor to an entity other than an affiliate (Clause 14.1).

In short, the aforementioned provisions of the WMCP FTAA, far from constituting a surrender of
control and a grant of beneficial ownership of mineral resources to the contractor in question, vest
the State with control and supervision over practically all aspects of the operations of the FTAA
contractor, including the charging of pre-operating and operating expenses, and the disposition of
mineral products.

There is likewise no relinquishment of control on account of specific provisions of the WMCP FTAA.
Clause 8.2 provides a mechanism to prevent the mining operations from grinding to a complete halt
as a result of possible delays of more than 60 days in the government's processing and approval of
submitted work programs and budgets. Clause 8.3 seeks to provide a temporary, stop-gap solution
in case a disagreement between the State and the contractor (over the proposed work program or
budget submitted by the contractor) should result in a deadlock or impasse, to avoid unreasonably
long delays in the performance of the works.

The State, despite Clause 8.3, still has control over the contract area, and it may, as sovereign
authority, prohibit work thereon until the dispute is resolved, or it may terminate the FTAA, citing
substantial breach thereof. Hence, the State clearly retains full and effective control.

Clause 8.5, which allows the contractor to make changes to approved work programs and budgets
without the prior approval of the DENR secretary, subject to certain limitations with respect to the
variance/s, merely provides the contractor a certain amount of flexibility to meet unexpected
situations, while still guaranteeing that the approved work programs and budgets are not abandoned
altogether. And if the secretary disagrees with the actions taken by the contractor in this instance, he
may also resort to cancellation/termination of the FTAA as the ultimate sanction.

Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of the contract area to
be relinquished. The State is not in a position to substitute its judgment for that of the contractor,
who knows exactly which portions of the contract area do not contain minerals in commercial
quantities and should be relinquished. Also, since the annual occupation fees paid to government
are based on the total hectarage of the contract area, net of the areas relinquished, the contractor's
self-interest will assure proper and efficient relinquishment.

Clause 10.2(e) of the WMCP FTAA does not mean that the contractor can compel government to
use its power of eminent domain. It contemplates a situation in which the contractor is a foreign-
owned corporation, hence, not qualified to own land. The contractor identifies the surface areas
needed for it to construct the infrastructure for mining operations, and the State then acquires the
surface rights on behalf of the former. The provision does not call for the exercise of the power of
eminent domain (or determination of just compensation); it seeks to avoid a violation of the anti-
dummy law.

Clause 10.2(l) of the WMCP FTAA giving the contractor the right to mortgage and encumber the
mineral products extracted may have been a result of conditions imposed by creditor-banks to
secure the loan obligations of WMCP. Banks lend also upon the security of encumbrances on goods
produced, which can be easily sold and converted into cash and applied to the repayment of loans.
Thus, Clause 10.2(l) is not something out of the ordinary. Neither is it objectionable, because even
though the contractor is allowed to mortgage or encumber the mineral end-products themselves, the
contractor is not thereby relieved of its obligation to pay the government its basic and additional
shares in the net mining revenue. The contractor's ability to mortgage the minerals does not negate
the State's right to receive its share of net mining revenues.

Clause 10.2(k) which gives the contractor authority "to change its equity structure at any time,"
means that WMCP, which was then 100 percent foreign owned, could permit Filipino equity
ownership. Moreover, what is important is that the contractor, regardless of its ownership, is always
in a position to render the services required under the FTAA, under the direction and control of the
government.

Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if required by banks and
other financial institutions as part of the conditions of new lendings. There is nothing objectionable
here, since Clause 10.4(e) also provides that such financing arrangements should in no event
reduce the contractor's obligations or the government's rights under the FTAA. Clause 10.4(i)
provides that government shall "favourably consider" any request for amendments of this agreement
necessary for the contractor to successfully obtain financing. There is no renunciation of control, as
the proviso does not say that government shall automatically grant any such request. Also, it is up to
the contractor to prove the need for the requested changes. The government always has the final
say on whether to approve or disapprove such requests.

In fine, the FTAA provisions do not reduce or abdicate State control.

No Surrender of Financial Benefits

The second paragraph of Section 81 of RA 7942 has been denounced for allegedly limiting the
State's share in FTAAs with foreign contractors to just taxes, fees and duties, and depriving the
State of a share in the after-tax income of the enterprise. However, the inclusion of the phrase
"among other things" in the second paragraph of Section 81 clearly and unmistakably reveals the
legislative intent to have the State collect more than just the usual taxes, duties and fees.

Thus, DAO 99-56, the "Guidelines Establishing the Fiscal Regime of Financial or Technical
Assistance Agreements," spells out the financial benefits government will receive from an FTAA, as
consisting of not only a basic government share, comprised of all direct taxes, fees and royalties,
as well as other payments made by the contractor during the term of the FTAA, but also an
additional government share, being a share in the earnings or cash flows of the mining
enterprise, so as to achieve a fifty-fifty sharing of net benefits from mining between the government
and the contractor.

The additional government share is computed using one of three (3) options or schemes detailed
in DAO 99-56, viz., (1) the fifty-fifty sharing of cumulative present value of cash flows; (2) the excess
profit-related additional government share; and (3) the additional sharing based on the cumulative
net mining revenue. Whichever option or computation is used, the additional government share has
nothing to do with taxes, duties, fees or charges. The portion of revenues remaining after the
deduction of the basic and additional government shares is what goes to the contractor.

The basic government share and the additional government share do not yet take into account the
indirect taxes and other financial contributions of mining projects, which are real and actual benefits
enjoyed by the Filipino people; if these are taken into account, total government share increases to
60 percent or higher (as much as 77 percent, and 89 percent in one instance) of the net present
value of total benefits from the project.

The third or last paragraph of Section 81 of RA 7942 is slammed for deferring the payment of the
government share in FTAAs until after the contractor shall have recovered its pre-operating
expenses, exploration and development expenditures. Allegedly, the collection of the State's share is
rendered uncertain, as there is no time limit in RA 7942 for this grace period or recovery period. But
although RA 7942 did not limit the grace period, the concerned agencies (DENR and MGB) in
formulating the 1995 and 1996 Implementing Rules and Regulations provided that the period of
recovery, reckoned from the date of commercial operation, shall be for a period not exceeding five
years, or until the date of actual recovery, whichever comes earlier.

And since RA 7942 allegedly does not require government approval for the pre-operating,
exploration and development expenses of the foreign contractors, it is feared that such expenses
could be bloated to wipe out mining revenues anticipated for 10 years, with the result that the State's
share is zero for the first 10 years. However, the argument is based on incorrect information.

Under Section 23 of RA 7942, the applicant for exploration permit is required to submit a proposed
work program for exploration, containing a yearly budget of proposed expenditures, which the State
passes upon and either approves or rejects; if approved, the same will subsequently be recorded as
pre-operating expenses that the contractor will have to recoup over the grace period.

Under Section 24, when an exploration permittee files with the MGB a declaration of mining project
feasibility, it must submit a work program for development, with corresponding budget, for approval
by the Bureau, before government may grant an FTAA or MPSA or other mineral agreements; again,
government has the opportunity to approve or reject the proposed work program and budgeted
expenditures for development works, which will become the pre-operating and development costs
that will have to be recovered. Government is able to know ahead of time the amounts of pre-
operating and other expenses to be recovered, and the approximate period of time needed therefor.
The aforecited provisions have counterparts in Section 35, which deals with the terms and conditions
exclusively applicable to FTAAs. In sum, the third or last paragraph of Section 81 of RA 7942 cannot
be deemed defective.

Section 80 of RA 7942 allegedly limits the State's share in a mineral production-sharing agreement
(MPSA) to just the excise tax on the mineral product, i.e., only 2 percent of market value of the
minerals. The colatilla in Section 84 reiterates the same limitation in Section 80. However, these
two provisions pertain only to MPSAs, and have no application to FTAAs. These particular
provisions do not come within the issues defined by this Court. Hence, on due process
grounds, no pronouncement can be made in this case in respect of the constitutionality of
Sections 80 and 84.

Section 112 is disparaged for reverting FTAAs and all mineral agreements to the old "license,
concession or lease" system, because it allegedly effectively reduces the government share in
FTAAs to just the 2 percent excise tax which pursuant to Section 80 comprises the government
share in MPSAs. However, Section 112 likewise does not come within the issues delineated by this
Court, and was never touched upon by the parties in their pleadings. Moreover, Section 112 may not
properly apply to FTAAs. The mining law obviously meant to treat FTAAs as a breed apart from
mineral agreements. There is absolutely no basis to believe that the law intends to exact from FTAA
contractors merely the same government share (i.e., the 2 percent excise tax) that it apparently
demands from contractors under the three forms of mineral agreements.

While there is ground to believe that Sections 80, 84 and 112 are indeed unconstitutional, they
cannot be ruled upon here. In any event, they are separable; thus, a later finding of nullity will not
affect the rest of RA 7942.

In fine, the challenged provisions of RA 7942 cannot be said to surrender financial benefits
from an FTAA to the foreign contractors.

Moreover, there is no concrete basis for the view that, in FTAAs with a foreign contractor, the State
must receive at least 60 percent of the after-tax income from the exploitation of its mineral
resources, and that such share is the equivalent of the constitutional requirement that at least 60
percent of the capital, and hence 60 percent of the income, of mining companies should remain in
Filipino hands. Even if the State is entitled to a 60 percent share from other mineral agreements
(CPA, JVA and MPSA), that would not create a parallel or analogous situation for FTAAs. We are
dealing with an essentially different equation. Here we have the old apples and oranges syndrome.

The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable to all situations,
regardless of circumstances. There is no indication of such an intention on the part of the framers.
Moreover, the terms and conditions of petroleum FTAAs cannot serve as standards for mineral
mining FTAAs, because the technical and operational requirements, cost structures and
investment needs of off-shore petroleum exploration and drilling companies do not have the
remotest resemblance to those of on-shore mining companies.

To take the position that government's share must be not less than 60 percent of after-tax income of
FTAA contractors is nothing short of this Court dictating upon the government. The State resultantly
ends up losing control. To avoid compromising the State's full control and supervision over the
exploitation of mineral resources, there must be no attempt to impose a "minimum 60 percent" rule.
It is sufficient that the State has the power and means, should it so decide, to get a 60 percent share
(or greater); and it is not necessary that the State does so in every case.

Invalid Provisions of the WMCP FTAA

Section 7.9 of the WMCP FTAA clearly renders illusory the State's 60 percent share of WMCP's
revenues. Under Section 7.9, should WMCP's foreign stockholders (who originally owned 100
percent of the equity) sell 60 percent or more of their equity to a Filipino citizen or corporation, the
State loses its right to receive its share in net mining revenues under Section 7.7, without any
offsetting compensation to the State. And what is given to the State in Section 7.7 is by mere
tolerance of WMCP's foreign stockholders, who can at any time cut off the government's entire share
by simply selling 60 percent of WMCP's equity to a Philippine citizen or corporation.

In fact, the sale by WMCP's foreign stockholder on January 23, 2001 of the entire outstanding equity
in WMCP to Sagittarius Mines, Inc., a domestic corporation at least 60 percent Filipino owned, can
be deemed to have automatically triggered the operation of Section 7.9 and removed the State's
right to receive its 60 percent share. Section 7.9 of the WMCP FTAA has effectively given away the
State's share without anything in exchange.

Moreover, it constitutes unjust enrichment on the part of the local and foreign stockholders in
WMCP, because by the mere act of divestment, the local and foreign stockholders get a windfall, as
their share in the net mining revenues of WMCP is automatically increased, without having to pay
anything for it.

Being grossly disadvantageous to government and detrimental to the Filipino people, as well as
violative of public policy, Section 7.9 must therefore be stricken off as invalid. The FTAA in question
does not involve mere contractual rights but, being impressed as it is with public interest, the
contractual provisions and stipulations must yield to the common good and the national interest.
Since the offending provision is very much separable from the rest of the FTAA, the deletion of
Section 7.9 can be done without affecting or requiring the invalidation of the entire WMCP FTAA
itself.

Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums spent by
government for the benefit of the contractor to be deductible from the State's share in net mining
revenues, it results in benefiting the contractor twice over. This constitutes unjust enrichment on the
part of the contractor, at the expense of government. For being grossly disadvantageous and
prejudicial to government and contrary to public policy, Section 7.8(e) must also be declared without
effect. It may likewise be stricken off without affecting the rest of the FTAA.

EPILOGUE

AFTER ALL IS SAID AND DONE, it is clear that there is unanimous agreement in the Court upon
the key principle that the State must exercise full control and supervision over the exploration,
development and utilization of mineral resources.

The crux of the controversy is the amount of discretion to be accorded the Executive Department,
particularly the President of the Republic, in respect of negotiations over the terms of FTAAs,
particularly when it comes to the government share of financial benefits from FTAAs. The Court
believes that it is not unconstitutional to allow a wide degree of discretion to the Chief Executive,
given the nature and complexity of such agreements, the humongous amounts of capital and
financing required for large-scale mining operations, the complicated technology needed, and the
intricacies of international trade, coupled with the State's need to maintain flexibility in its dealings, in
order to preserve and enhance our country's competitiveness in world markets.

We are all, in one way or another, sorely affected by the recently reported scandals involving
corruption in high places, duplicity in the negotiation of multi-billion peso government contracts, huge
payoffs to government officials, and other malfeasances; and perhaps, there is the desire to see
some measures put in place to prevent further abuse. However, dictating upon the President
what minimum share to get from an FTAA is not the solution. It sets a bad precedent since such
a move institutionalizes the very reduction if not deprivation of the State's control. The remedy may
be worse than the problem it was meant to address. In any event, provisions in such future
agreements which may be suspected to be grossly disadvantageous or detrimental to government
may be challenged in court, and the culprits haled before the bar of justice.

Verily, under the doctrine of separation of powers and due respect for co-equal and coordinate
branches of government, this Court must restrain itself from intruding into policy matters and must
allow the President and Congress maximum discretion in using the resources of our country and in
securing the assistance of foreign groups to eradicate the grinding poverty of our people and answer
their cry for viable employment opportunities in the country.

"The judiciary is loath to interfere with the due exercise by coequal branches of government of their
official functions." As aptly spelled out seven decades ago by Justice George Malcolm, "Just as the
99

Supreme Court, as the guardian of constitutional rights, should not sanction usurpations by any
other department of government, so should it as strictly confine its own sphere of influence to the
powers expressly or by implication conferred on it by the Organic Act." Let the development of the
100

mining industry be the responsibility of the political branches of government. And let not this Court
interfere inordinately and unnecessarily.

The Constitution of the Philippines is the supreme law of the land. It is the repository of all the
aspirations and hopes of all the people. We fully sympathize with the plight of Petitioner La Bugal
B'laan and other tribal groups, and commend their efforts to uplift their communities. However, we
cannot justify the invalidation of an otherwise constitutional statute along with its implementing rules,
or the nullification of an otherwise legal and binding FTAA contract.

We must never forget that it is not only our less privileged brethren in tribal and cultural communities
who deserve the attention of this Court; rather, all parties concerned -- including the State itself, the
contractor (whether Filipino or foreign), and the vast majority of our citizens -- equally deserve the
protection of the law and of this Court. To stress, the benefits to be derived by the State from mining
activities must ultimately serve the great majority of our fellow citizens. They have as much right and
interest in the proper and well-ordered development and utilization of the country's mineral resources
as the petitioners.

Whether we consider the near term or take the longer view, we cannot overemphasize the need for
an appropriate balancing of interests and needs -- the need to develop our stagnating mining
industry and extract what NEDA Secretary Romulo Neri estimates is some US$840 billion (approx.
PhP47.04 trillion) worth of mineral wealth lying hidden in the ground, in order to jumpstart our
floundering economy on the one hand, and on the other, the need to enhance our nationalistic
aspirations, protect our indigenous communities, and prevent irreversible ecological damage.

This Court cannot but be mindful that any decision rendered in this case will ultimately impact not
only the cultural communities which lodged the instant Petition, and not only the larger community of
the Filipino people now struggling to survive amidst a fiscal/budgetary deficit, ever increasing prices
of fuel, food, and essential commodities and services, the shrinking value of the local currency, and
a government hamstrung in its delivery of basic services by a severe lack of resources, but also
countless future generations of Filipinos.

For this latter group of Filipinos yet to be born, their eventual access to education, health care and
basic services, their overall level of well-being, the very shape of their lives are even now being
determined and affected partly by the policies and directions being adopted and implemented by
government today. And in part by the this Resolution rendered by this Court today.

Verily, the mineral wealth and natural resources of this country are meant to benefit not merely a
select group of people living in the areas locally affected by mining activities, but the entire Filipino
nation, present and future, to whom the mineral wealth really belong. This Court has therefore
weighed carefully the rights and interests of all concerned, and decided for the greater good of the
greatest number. JUSTICE FOR ALL, not just for some; JUSTICE FOR THE PRESENT AND THE
FUTURE, not just for the here and now.

WHEREFORE, the Court RESOLVES to GRANT the respondents' and the intervenors' Motions for
Reconsideration; to REVERSE and SET ASIDE this Court's January 27, 2004 Decision; to DISMISS
the Petition; and to issue this new judgment declaring CONSTITUTIONAL (1) Republic Act No. 7942
(the Philippine Mining Law), (2) its Implementing Rules and Regulations contained in DENR
Administrative Order (DAO) No. 9640 -- insofar as they relate to financial and technical assistance
agreements referred to in paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the
Financial and Technical Assistance Agreement (FTAA) dated March 30, 1995 executed by the
government and Western Mining Corporation Philippines Inc. (WMCP), except Sections 7.8 and 7.9
of the subject FTAA which are hereby INVALIDATED for being contrary to public policy and for being
grossly disadvantageous to the government.

SO ORDERED.

Davide Jr., C.J., Sandoval-Gutierrez, Austria-Martinez, and Garcia, JJ., concur.

Puno, J., in the result and votes to invalidate sections 3.3; 7.8 and 7.9 of the WMC FTAA.
Quisumbing, J., in the result.
Ynares-Santiago, J., joins dissenting opinion of J. Antonio Carpio & J. Conchita C. Morales.
Carpio, and Carpio-Morales, JJ., see dissenting opinion.
Corona, J., certifies he voted affirmatively with the majority and he was allowed to do so although he
is on leave.
Callejo, Sr., J., concurs to the dissenting opinion of J. Carpio.
Azcuna, J., took no part-same reason.
Tinga, and Chico-Nazario, JJ., concur with a separate opinion.

CONCURRING OPINION

CHICO-NAZARIO, J.:

I concur in the well-reasoned ponencia of my esteemed colleague Mr. Justice Artemio V.

Panganiban. I feel obligated, however, to add the following observations:

I. RE "FULL CONTROL AND SUPERVISION"

With all due respect, I believe that the issue of unconstitutionality of Republic Act No. 7942, its
implementing rules, and the Financial Assistance Agreement between the Philippine Government
and WMPC (Philippines) Inc. (WMPC FTAA) executed pursuant to Rep. Act No. 7942 hinges, to a
large extent, on the interpretation of the phrase in Section 2, Article XII of the 1987 Constitution,
which states:
(T)he exploration, development, and utilization of natural resources shall be under the full control
and supervision of the State. x x x. (Emphasis supplied)

Construing said phrase vis-à-vis the entire provision, it appears from the deliberations in the
Constitutional Commission that the term "control" does not have the meaning it ordinarily has in
political law which is the power of a superior to substitute his judgment for that of an inferior. 1 Thus –

MR. NOLLEDO: Suppose a judicial entity is given the power to exploit natural resources and, of
course, there are decisions made by the governing board of that judicial entity, can the state change
the decisions of the governing board of that entity based on the words "full control".

MR. VILLEGAS: If it is within the context of the contract, I think the State cannot violate the laws of
the land.2

Moreover, "full control and supervision" does not mean that foreign stockholders cannot be legally
elected as members of the board of a corporation doing business under, say, a co-production, joint
venture or profit-sharing agreement, 40% of whose capital is foreign owned. Otherwise, and as
Commissioner Romulo declared, it would be unfair to the foreign stockholder 3 and, per
Commissioner Padilla, "refusing them a voice in management would make a co-production, joint
venture and production sharing illusory."4

It is apparently for the foregoing reasons that there was a disapproval of the amendment proposed
by Commissioner, now Mr. Chief Justice Davide, that the governing and managing bodies of such
corporations shall be vested exclusively in citizens of the Philippines 5 so that control of all
corporations involved in the business of utilizing our natural resources would always be in Filipino
hands.

The disapproval must be juxtaposed with the fact that a provision substantially similar to the
proposed Davide amendment was approved with regard to educational institutions, viz:

Section 4 (2). Educational institutions, other than those established by religious groups and mission
boards, shall be owned solely by citizens of the Philippines or corporations or associations at least
sixty per centum of the capital of which is owned by such citizens. The Congress may, however,
require increased Filipino equity participation in all educational institutions.

The control and administration of educational institutions shall be vested in citizens of the
Philippines. (Emphasis supplied)
From the foregoing, it can be clearly inferred that it was NOT the intention of the framers of the
Constitution to deprive governing boards of domestic corporations with non-Filipino members, the
right to control and administer the corporation that explores, develops and utilizes natural resources
insofar as agreements with the State for co-production, joint venture and production-sharing are
concerned, otherwise the Davide amendment would have been approved and, like the prohibition in
above-quoted Section 4(2), Article XIV, control and supervision of all business involved in the
exploration and development of mineral resources would have been left solely in Filipino hands.

Accordingly, to the extent that the corporate board governs and manages the operations for the
exploration and use of natural resources, to that extent the "full control and supervision" thereof by
the State is diminished.

In effect, therefore, when the State enters into such agreements as provided in the Constitution, it
allows itself to surrender part of its sovereign right to full control and supervision of said activities, the
State having the right to partly surrender the exercise of sovereign powers under the doctrine of
auto-limitation.6

If foreigners (under joint ventures etc.) have a say in the management of the business of utilizing
natural resources as corporate directors of domestic corporations, there is no justification for holding
that foreign corporations who put in considerably large amounts of money under agreements
involving either technical or financial assistance for large scale exploration, development and
utilization of minerals, petroleum and other mineral oils are prohibited from managing such business.

Indeed, to say that the Constitution requires the State to have full and total control and supervision of
the exploration, development and utilization of minerals when undertaken in a large scale under
agreements with foreign corporations involving huge amounts of money is to divorce oneself from
reality. As Mr. Justice Panganiban said, no firm would invest funds in such enterprise unless it has a
say in the management of the business.

To paraphrase this Court in one of its landmark cases, the fundamental law does not intend an
impossible undertaking.7 It must therefore be presumed that the Constitution did not at all intend an
interpretation of Section 2, Article XII which deprives the foreign corporation engaged in large scale
mining activities a measure of control in the management and operation of such activities, and in
said manner, remove from the realm of the possible the enterprise the Constitution envisions
thereunder.

This brings me to the final point raised by my esteemed colleague, Mme. Justice Conchita Carpio
Morales, that it is of no moment that the declaration of Rep. Act No. 7942 may discourage foreign
assistance and/or retard or delay the exploration, development or utilization of the nation's natural
resources as the Filipino people, as early as the 1935 Constitution, have determined such matters
as secondary to the protection and preservation of their ownership of these natural resources. With
due respect, I find such proposition not legally justifiable as it looks backward to the justification in
the 1935 Constitution instead of forward under the 1987 Constitution which expressly allows foreign
participation in the exploration, development or utilization of the nation's marine wealth to allow the
State to take advantage of foreign funding or technical assistance. As long as the means employed
by such foreign assistance result in real contributions to the economic growth of our country and
enhance the general welfare of our people, the development of our mineral resources by and
through foreign corporations, such FTAAs are not unconstitutional.

II. RE: REQUIREMENT THAT FTAAs MUST BE "BASED

ON REAL CONTRIBUTIONS TO THE ECONOMIC GROWTH
AND GENERAL WELFARE OF THE COUNTRY"

The policy behind Rep. Act No. 7942 is to promote the "rational exploration, development, utilization
and conservation" of the State-owned mineral resources "through the combined efforts of
government and the private sector in order to enhance national growth in a way that effectively safe-
guards the environment and protect the rights of affected communities". 8 This policy, with reference
specifically to FTAAs, is in keeping with the constitutional precept that FTAAs must be based on real
contributions to the economic growth and general welfare of the country. As has been said, "a
statute derives its vitality from the purpose for which it is enacted and to construe it in a manner that
disregards or defeats such purpose is to nullify or destroy the law." 9 In this regard, much has been
said about the alleged unconstitutionality of Section 81 of Rep. Act No. 7942 as it allegedly allows for
the waiver of the State's right to receive income from the exploitation of its mineral resources as it
limits the State's share in FTAAs with foreign contractors to taxes, duties and fees. For clarity, the
provision states –
SEC. 81. Government Share in Other Mineral Agreements. -- The share of the Government in co-
production and joint-venture agreements shall be negotiated by the Government and the contractor
taking into consideration the: (a) capital investment of the project, (b) risks involved, (c) contribution
of the project to the economy, and (d) other factors that will provide for a fair and equitable sharing
between the Government and the contractor. The Government 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 from dividend or interest payments to the
said foreign stockholders, in case of a foreign national, and all such other taxes, duties and fees as
provided for under existing laws.

The Government share in financial or technical assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due
from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholder in case of foreign national and all such other taxes, duties and fees as
provided for under existing laws.

The collection of Government share in financial or technical assistance agreement shall commence
after the financial or technical assistance agreement contractor has fully recovered its pre-operating
expenses, exploration, and development expenditures, inclusive. (Emphasis supplied)

The controversy revolves around the proper interpretation of "among other things" stated in the
second paragraph of Section 81. Mr. Justice Carpio is of the opinion that "among other things" could
only mean "among other taxes", referring to the unnamed "other taxes, duties, and fees as provided
for under existing laws" contained in the last clause of Section 81, paragraph 2. If such were the
correct interpretation, then truly, the provision is unconstitutional as a sharing based only on taxes
cannot be considered as contributing to the economic growth and general welfare of the country. I
am bothered, however, by the interpretation that the phrase "among other things" refers to "and all
such other taxes, duties and fees as provided for under existing laws" since it would render the
former phrase superfluous. In other words, there would have been no need to include the phrase
"among other things" if all it means is "all other taxes" since the latter is already expressly stated in
the provision. As it is a truism that all terms/phrases used in a statute has relevance to the object of
the law, then I find the view of Mr. Justice Panganiban – that "all other things" means "additional
government share" in the form of "earnings or cash flow of the mining enterprise" as interpreted by
the DENR -- more compelling. Besides, such an interpretation would affirm the constitutionality of
the provision which would then be in keeping with the rudimentary principle that a law shall not be
declared invalid unless the conflict with the Constitution is clear beyond reasonable doubt. 10 To
justify nullification of a law, there must be a clear and unequivocal breach of the Constitution, not a
doubtful and argumentative implication. 11

Finally, I wish to stress that it would appear that the constitutional mandate that large-scale mining
activities under FTAAs must be based on real contributions to the economic growth and general
welfare of the country is both a standard for the statute required to implement subject provision as
well as the vehicle for the exercise of the State's resultant residual control and supervision of the
mining activities.

In all FTAAs, the State is deemed to reserve its right to control the end to be achieved so that real
contributions to the economy can be realized and, in the final analysis, the business will redound to
the general welfare of the country.

However, the question of whether or not the FTAA will, in fact, redound to the general welfare of the
public involves a "judgment call" by our policy makers who are answerable to our people during the
appropriate electoral exercises and are not subject to judicial pronouncements based on grave
abuse of discretion.12

For the foregoing reasons, I vote to grant the motion for reconsideration.

DISSENTING OPINION

CARPIO, J.:

I dissent and vote to deny respondents' motions for reconsideration. I find that Section 3(aq), Section
39, Section 80, the second paragraph of Section 81, the proviso in Section 84, and the first proviso
in Section 112 of Republic Act No. 7942 1 ("RA 7942") violate Section 2, Article XII of the 1987
Constitution and are therefore unconstitutional.

In essence, these provisions of RA 7942 waive the State's ownership rights under the
Constitution over mineral resources. These provisions also abdicate the State's constitutional
duty to control and supervise fully the exploitation of mineral resources.

A. The Threshold Issue for Resolution

Petitioners claim that respondent Department of Environment and Natural Resources Secretary
Victor O. Ramos, in issuing the rules to implement RA 7942, gravely abused his discretion
amounting to lack or excess of jurisdiction. Petitioners assert that RA 7942 is unconstitutional for the
following reasons:

1. RA 7942 "allows fully foreign owned corporations to explore, develop, utilize and exploit mineral
resources in a manner contrary to Section 2, paragraph 4, Article XII of the Constitution";

2. RA 7942 "allows enjoyment by foreign citizens as well as fully foreign owned corporations of the
nation's marine wealth contrary to Section 2, paragraph 2 of Article XII of the Constitution";

3. RA 7942 "violates Section 1, Article III of the Constitution";

4. RA 7942 "allows priority to foreign and fully foreign owned corporations in the exploration,
development and utilization of mineral resources contrary to Article XII of the Constitution";

5. RA 7942 "allows the inequitable sharing of wealth contrary to Section 1, paragraph 1, and
Section 2, paragraph 4, Article XII of the Constitution."2 (Emphasis supplied)

Petitioners also assail the validity of the Financial and Technical Assistance Agreement between the
Philippine Government and WMCP (Philippines), Inc. dated 2 March 1995 3 ("WMCP FTAA") for
violation of Section 2, Article XII of the 1987 Constitution.

The issues that petitioners raise boil down to whether RA 7942 and the WMCP FTAA violate
Section 2, Article XII of the 1987 Constitution.

B. The Constitutional Declaration and Mandate

Section 2, Article XII of the 1987 Constitution4 provides as follows:

All x x x minerals, x x x petroleum, and other mineral oils, x x x and other natural resources are
owned by the State. x x x The exploration, development, and utilization of natural resources shall
be under the full control and supervision of the State. x x x. (Emphasis supplied)
Two basic principles flow from this constitutional provision. First, the Constitution vests in the State
ownership of all mineral resources. Second, the Constitution mandates the State to exercise full
control and supervision over the exploitation of mineral resources.

The first principle reiterates the Regalian doctrine, which established State ownership of natural
resources since the arrival of the Spaniards in the Philippines in the 16 th century. The 1935, 1973
and 1987 Constitutions incorporate the Regalian doctrine. 5 The State, as owner of the nation's
natural resources, exercises the attributes of ownership over its natural resources. 6 An important
attribute of ownership is the right to receive the income from any commercial exploitation of
the natural resources.7

The second principle insures that the benefits of State ownership of natural resources accrue to the
Filipino people. The framers of the 1987 Constitution introduced the second principle to avoid the
adverse effects of the "license, concession or lease" 8 system of exploitation under the 1935 and
1973 Constitutions.9 The "license, concession or lease" system enriched the private concessionaires
who controlled the exploitation of natural resources. However, the "license, concession or lease"
system left the Filipino people impoverished, starkly exemplified by the nation's denuded forests
whose exploitation did not benefit the Filipino people.

The framers of the 1987 Constitution clearly intended to abandon the "license, concession or lease"
system prevailing under the 1935 and 1973 Constitutions. This exchange in the deliberations of the
Constitutional Commission reveals this clear intent:

MR. DAVIDE: Thank you, Mr. Vice-President. I would like to seek some clarifications.

MR. VILLEGAS: Yes.

MR. DAVIDE: Under the proposal, I notice that except for the lands of the public domain, all the
other natural resources cannot be alienated and in respect to lands of the public domain, private
corporations with the required ownership by Filipino citizens can only lease the same. Necessarily,
insofar as other natural resources are concerned, it would only be the State which can
exploit, develop, explore and utilize the same. However, the State may enter into a joint
venture, co-production or production-sharing. Is that not correct?

MR. VILLEGAS: Yes.

MR. DAVIDE: Consequently, henceforth upon the approval of this Constitution, no timber or
forest concessions, permits or authorization can be exclusively granted to any citizen of the
Philippines nor to any corporation qualified to acquire lands of the public domain?

MR. VILLEGAS: Would Commissioner Monsod like to comment on that? I think his answer is "yes."

MR. DAVIDE: So, what will happen now to licenses or concessions earlier granted by the Philippine
government to private corporations or to Filipino citizens? Would they be deemed repealed?

MR. VILLEGAS: This is not applied retroactively. They will be respected. 10 (Emphasis supplied)

To carry out this intent, the 1987 Constitution uses a different phraseology from that used in the
1935 and 1973 Constitutions. The previous Constitutions used the phrase "license, concession or
lease" in referring to exploitation of natural resources. The 1987 Constitution uses the phrase "co-
production, joint venture or production-sharing agreements," with "full control and supervision" by the
State. The change in language was a clear rejection of the old system of "license, concession or
lease."
The 1935 and 1973 Constitutions also used the words "belong to" in stating the Regalian doctrine,
thus declaring that natural resources "belong to the State." The 1987 Constitution uses the word
"owned," thus prescribing that natural resources are "owned" by the State. In using the word
"owned," the 1987 Constitution emphasizes the attributes of ownership, among which is the right to
the income of the property owned.11

The State as owner of the natural resources must receive income from the exploitation of its natural
resources. The payment of taxes, fees and charges, derived from the taxing or police power of
the State, is not a substitute. The State is duty bound to secure for the Filipino people a fair share
of the income from any exploitation of the nation's precious and exhaustible natural resources. As
explained succinctly by a textbook writer:

Under the former licensing, concession, or lease schemes, the government benefited from such
activities only through fees, charges and taxes. Such benefits were very minimal compared with
the enormous profits reaped by the licensees, concessionaires or lessees who had control over the
particular resources over which they had been given exclusive right to exploit. Moreover, some of
them disregarded the conservation of natural resources. With the new role, the State will be able to
obtain a greater share in the profits. It can also actively husband our natural resources and engage
in development programs that will be beneficial to the nation. 12 (Emphasis supplied)

Thus, the 1987 Constitution commands the State to exercise full control and supervision over the
exploitation of natural resources to insure that the State receives its fair share of the income. In
Miners Association of the Philippines v. Hon. Factoran, Jr., et al.,13 the Court ruled that "the old
system of exploration, development and utilization of natural resources through 'license,
concession or lease' x x x has been disallowed by Article XII, Section 2 of the 1987
Constitution." The Court explained:

Upon the effectivity of the 1987 Constitution on February 2, 1987, the State assumed a more
dynamic role in the exploration, development and utilization of the natural resources of the
country. Article XII, Section 2 of the said Charter explicitly ordains that the exploration, development
and utilization of natural resources shall be under the full control and supervision of the State.
Consonant therewith, the exploration, development and utilization of natural resources may be
undertaken by means of direct act of the State, or it may opt to enter into co-production, joint
venture, or production-sharing agreements, or it may enter into agreements with foreign-owned
corporations involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic growth and
general welfare of the country. (Emphasis supplied)

The old system of "license, concession or lease" which merely gave the State a pittance in the form
of taxes, fees and charges is now buried in history. Any attempt to resurrect it is unconstitutional and
deserves outright rejection by this Court.

The Constitution prohibits the alienation of all natural resources except agricultural lands. 14 The
Constitution, however, allows the State to exploit commercially its natural resources and sell the
marketable products from such exploitation. This the State may do through a co-production, joint
venture or production-sharing arrangement with companies at least 60% Filipino owned. The
necessary implication is that the State, as owner of the natural resources, must receive a fair share
of the income from such commercial operation. The State may receive its share of the net income
in cash or in kind.
The State may also directly exploit its natural resources in either of two ways. The State may set
up its own company to engage in the exploitation of natural resources. Alternatively, the State may
enter into a financial or technical assistance agreement ("FTAA") with private companies who act as
contractors of the State. The State may seek from such contractors either financial or technical
assistance, or both, depending on the State's own needs. Under an FTAA, the contractor, foreign or
local, manages the contracted work or operations to the extent of its financial or technical
contribution, subject to the State's control and supervision.

Except in large-scale exploitation of certain minerals, the State's contractors must be 60% Filipino
owned companies. The State pays such contractors, for their technical services or financial
assistance, a share of the income from the exploitation of the natural resources. The State retains
the remainder of the income after paying the Filipino owned contractor.

In large-scale exploitation of minerals, petroleum and other mineral oils, the Constitution allows the
State to contract with "foreign-owned corporations" under an FTAA. This is still a direct
exploitation by the State but using a foreign instead of a local contractor. However, the Constitution
requires that the participation of foreign contractors must make a real contribution to the national
economy and the general welfare. The State pays the foreign contractor, for its technical services or
financial assistance, a share of the income from the exploitation of the minerals, petroleum or other
mineral oils. The State retains the rest of the income after paying the foreign contractor.

Whether the FTAA contractor is local or foreign, the State must retain its fair share of the income
from the exploitation of the natural resources that it owns. To insure it retains its fair share of the
income, the State must exercise full control and supervision over the exploitation of its natural
resources. And whether the FTAA contractor is local or foreign, the State is directly undertaking
the exploitation of its natural resources, with the FTAA contractor providing technical services or
financing to the State. Since the State is directly undertaking the exploitation, all exploration
permits and similar authorizations are in the name of the Philippine Government, which then
authorizes the contractor to act on its behalf.

The State exercises full control and supervision over the mining operations in the Philippines of the
foreign contractor. However, the State does not exercise control and supervision over the foreign
contractor itself or its board of directors. The State does not also exercise any control or supervision
over the foreign contractor's mining operations in other countries, or even its non-mining operations
in the Philippines. There is no conflict of power between the State and the foreign contractor's board
of directors. By entering into an FTAA, the foreign contractor, through its board of directors, agrees
to manage the contracted work or operations to the extent of its financial or technical contribution
subject to the State's control and supervision.

No government should contract with a corporation, local or foreign, to exploit commercially the
nation's natural resources without the State receiving any income as owner of the natural resources.
Natural resources are non-renewable and exhaustible assets of the State. Certainly, no government
in its right mind should give away for free its natural resources to private business enterprises, local
or foreign, amidst widespread poverty among its people.

In sum, two basic constitutional principles govern the exploitation of natural resources in the country.
First, the State owns the country's natural resources and must benefit as owner from any exploitation
of its natural resources. Second, to insure that it receives its fair share as owner of the natural
resources, the State must exercise full control and supervision over the exploitation of its natural
resources.

We shall subject RA 7942 to constitutional scrutiny based on these two basic principles.
C. Waiver of Beneficial Rights from Ownership of Mineral Resources

RA 7942 contains five provisions which waive the State's right to receive income from the
exploitation of its mineral resources. These provisions are Sections 39, 80, 81, 84 and 112:

Section 39. Option to Convert into a Mineral Agreement. — The contractor has the option to
convert the financial or technical assistance agreement to a mineral agreement at any time
during the term of the agreement, if the economic viability of the contract area is found to be
inadequate to justify large-scale mining operations, after proper notice to the Secretary as
provided for under the implementing rules and regulations: Provided, That the mineral agreement
shall only be for the remaining period of the original agreement.

In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the corporation,
partnership, association, or cooperative. Upon compliance with this requirement by the
contractor, the Secretary shall approve the conversion and execute the mineral production-
sharing agreement.

Section 80. Government Share in Mineral Production Sharing Agreement. — The total government
share in a mineral production sharing agreement shall be the excise tax on mineral products
as provided in Republic Act No. 7729, amending Section 151(a) of the National Internal Revenue
Code, as amended.

Section 81. Government Share in Other Mineral Agreements. — The share of the Government in co-
production and joint-venture agreements shall be negotiated by the Government and the contractor
taking into consideration the: (a) capital investment of the project, (b) risks involved, (c) contribution
of the project to the economy, and (d) other factors that will provide for a fair and equitable sharing
between the Government and the contractor. The Government shall also be entitled to
compensation 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 from dividend or interest payments to the said
foreign stockholders, in case of a foreign national, and all such other taxes, duties and fees as
provided for under existing laws.

The Government share in financial or technical assistance agreement shall consist of, among
other things, the contractor's corporate income tax, excise tax, special allowance,
withholding tax due from the contractor's foreign stockholders arising from dividend or
interest payments to the said foreign stockholder in case of a foreign national and all such
other taxes, duties and fees as provided for under existing laws.

The collection of Government share in financial or technical assistance agreement shall

commence after the financial or technical assistance agreement contractor has fully
recovered its pre-operating expenses, exploration, and development expenditures, inclusive.

Section 84. Excise Tax on Mineral Products. — The contractor shall be liable to pay the excise tax
on mineral products as provided for under Section 151 of the National Internal Revenue Code:
Provided, however, That with respect to a mineral production sharing agreement, the excise
tax on mineral products shall be the government share under said agreement.

Section 112. Non-impairment of Existing Mining/Quarrying Rights. - All valid and existing mining
lease contracts, permits/licenses, leases pending renewal, mineral production–sharing agreements
granted under Executive Order No. 279, at the date of effectivity of this Act, shall remain valid x x x
Provided, That the provisions of Chapter XIV15 on government share in mineral production-
sharing agreement x x x shall immediately govern and apply to a mining lessee or contractor
unless the mining lessee or contractor indicates his intention to the Secretary, in writing, not to avail
of said provisions: x x x.

(Emphasis supplied)

Section 80 of RA 7942 limits to the excise tax the State's share in a mineral production-sharing
agreement ("MPSA"). Section 80 expressly states that the excise tax on mineral products shall
constitute the "total government share in a mineral production sharing agreement." Under
Section 151(A) of the Tax Code, this excise tax on metallic and non-metallic minerals is only 2% of
the market value, as follows:

Section 151. Mineral Products. —

(A) Rates of Tax. — There shall be levied, assessed and collected on minerals, mineral products
and quarry resources, excise tax as follows:

(1) On coal and coke, a tax of Ten pesos (P10.00) per metric ton;

(2) On all nonmetallic minerals and quarry resources, a tax of two percent (2%) based on the actual
market value of the gross output thereof at the time of removal, in the case of those locally extracted
or produced; or the value used by the Bureau of Customs in determining tariff and customs duties,
net of excise tax and value-added tax, in the case of importation.

xxx

(3) On all metallic minerals, a tax based on the actual market value of the gross output thereof at the
time of removal, in the case of those locally extracted or produced; or the value used by the Bureau
of Customs in determining tariff and customs duties, net of excise tax and value-added tax, in the
case of importation, in accordance with the following schedule:

(a) Copper and other metallic minerals:

(i) On the first three (3) years upon the effectivity of Republic Act No. 7729, one percent
(1%);

(ii) On the fourth and the fifth years, one and a half percent (1½%); and

(iii) On the sixth year and thereafter, two percent (2%).

(b) Gold and chromite, two percent (2%).

x x x. (Emphasis supplied)

Section 80 of RA 7942 does not allow the State to receive any income as owner of the mineral
resources. The proviso in Section 84 of RA 7942 reiterates this when it states that "the excise tax
on mineral products shall be the government share under said agreement." 16 The State
receives only an excise tax flowing from its taxing power, not from its ownership of the mineral
resources. The excise tax is imposed not only on mineral products, but also on alcohol, tobacco and
automobiles17 produced by companies that do not exploit natural resources owned by the State. The
excise tax is not payment for the exploitation of the State's natural resources, but payment for the
"privilege of engaging in business." 18 Clearly, under Section 80 of RA 7942, the State does not
receive as owner of the mineral resources any income from the exploitation of its mineral
resources.
The second paragraph of Section 81 of RA 7942 also limits the State's share in FTAAs with foreign
contractors to taxes, duties and fees. Section 81 of RA 7942 provides that the State's share in
FTAAs with foreign contractors –

shall consist of, among other things, the contractor's corporate income tax, excise tax, special
allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or
interest payments to the said foreign stockholder in case of a foreign national and all such other
taxes, duties and fees as provided for under existing laws. (Emphasis supplied)

RA 7942 does not explain the phrase "among other things." The Solicitor General states correctly
that the phrase refers to taxes.19 The phrase is an ejusdem generis phrase, and means "among other
taxes, duties and fees" since the items specifically enumerated are all taxes, duties and fees. The
last phrase "all such other taxes, duties and fees as provided for under existing laws" at the end of
the sentence clarifies further that the phrase "among other things" refers to taxes, duties and fees.

The second paragraph of Section 81 does not require the Government and the foreign FTAA
contractor to negotiate the State's share. In contrast, the first paragraph of Section 81 expressly
provides that the "share of the Government in co-production and joint-venture agreements shall be
negotiated by the Government and the contractor" which is 60% Filipino owned.

In a co-production or joint venture agreement, the Government contributes other inputs or equity in
addition to its mineral resources. 20 Thus, the first paragraph of Section 81 requires the Government
and the 60% Filipino owned company to negotiate the State's share. However, in an FTAA with a
foreign contractor under the second paragraph of Section 81, the Government's contribution is only
the mineral resources. Section 81 does not require the Government and the foreign contractor to
negotiate the State's share from the net proceeds because there is no share for the State. Section
81 does not recognize the State's contribution of mineral resources as worthy of any share of
the net proceeds from the mining operations.

Thus, in FTAAs with foreign contractors under RA 7942, the State's share is limited to taxes,
fees and duties. The taxes include "withholding tax due from the contractor's foreign stockholders
arising from dividend or interest payments." All these taxes, fees and duties are imposed pursuant to
the State's taxing power. The tax on income, including dividend and interest income, is imposed on
all taxpayers whether or not they are stockholders of mining companies. These taxes, fees and
duties are not contractual payments to the State as owner of the mineral resources but are
mandatory exactions based on the taxing power of the State.

Section 112 of RA 7942 is another provision that violates Section 2, Article XII of the 1987
Constitution. Section 112 "immediately" reverts all mineral agreements to the old and discredited
"license, concession or lease" system outlawed by the 1987 Constitution. Section 112 states that
"the provisions of Chapter XIV 21 on government share in mineral production-sharing
agreement x x x shall immediately govern and apply to a mining lessee or contractor." The
contractor, local or foreign, will now pay only the "government share in a mineral production-
sharing agreement" under RA 7942. Section 80 of RA 7942, which specifically governs
MPSAs, limits the "government share" solely to the excise tax on mineral products - 2% on
metallic and non-metallic minerals and 3% on indigenous petroleum.

In allowing the payment of the excise tax as the only share of the government in any mineral
agreement, whether co-production, joint venture or production-sharing, Section 112 of RA 7942
reinstates the old "license, concession or lease" system where the State receives only minimal
taxes, duties and fees. This clearly violates Section 2, Article XII of the Constitution and is therefore
unconstitutional. Section 112 of RA 7942 is a sweeping negation of the clear letter and intent of the
1987 Constitution that the exploitation of the State's natural resources must benefit primarily the
Filipino people.

Of course, Section 112 gives contractors the option not to avail of the benefit of Section 112. This is
in the guise that the enactment of RA 7942 shall not impair pre-existing mining rights, as the heading
of Section 112 states. It is doubtful, however, if any contractor of sound mind would refuse to receive
100% rather than only 40% of the net proceeds from the exploitation of minerals under the FTAA.

Another provision that violates Section 2, Article XII of the Constitution is Section 39 of RA 7942.
Section 39 grants the foreign contractor the option to convert the FTAA into a "mineral production-
sharing agreement" if the foreign contractor finds that the mineral deposits do not justify large-scale
mining operations. Section 39 of RA 7942 operates to deprive the State of income from the mining
operations and limits the State to the excise tax on mineral products.

Section 39 grants the foreign contractor the option to revert to the "license, concession or lease"
system which the 1987 Constitution has banned. The only requirement for the exercise of the option
is for the foreign contractor to divest 60% of its equity to a Philippine citizen or to a corporation 60%
Filipino owned. Section 39 states, "Upon compliance with this requirement by the contractor,
the Secretary shall approve the conversion and execute the mineral production-sharing
agreement." The foreign contractor only needs to give "proper notice to the Secretary as provided
for under the implementing rules and regulations" if the contractor finds the contract area not viable
for large-scale mining. Thus, Section 39 of RA 7942 is unconstitutional.

Sections 39, 80, 81, 84 and 112 of RA 7942 operate to deprive the State of the beneficial rights
arising from its ownership of mineral resources. What Section 2, Article XII of the 1987 Constitution
vests in absolute ownership to the State, Sections 80, 81, 84 and 112 of RA 7942 take away and
give for free to private business enterprises, including foreign-owned companies.

The legislature has discretion whether to tax a business or product. If the legislature chooses to tax
a business or product, it is free to determine the rate or amount of the tax, provided it is not
confiscatory.22 The legislature has the discretion to impose merely a 2% excise tax on mineral
products. Courts cannot inquire into the wisdom of the amount of such tax, no matter how meager it
may be. This discretion of the legislature emanates from the State's taxing power, a power vested
solely in the legislature.

However, the legislature has no power to waive for free the benefits accruing to the State from its
ownership of mineral resources. Absent considerations of social justice, the legislature has no power
to give away for free what forms part of the national patrimony of the State. Any surrender by the
legislature of the nation's mineral resources, especially to foreign private enterprises, is repugnant to
the concept of national patrimony. Mineral resources form part of the national patrimony under
Article XII (National Economy and Patrimony) of the 1987 Constitution.

Under the last paragraph of Section 81, the collection of the State's so-called "share" (consisting of
taxes) in FTAAs with foreign contractors is not even certain. This paragraph provides that the State's
"share x x x shall commence after the financial or technical assistance agreement contractor has
fully recovered its pre-operating expenses, exploration, and development expenditures." There is no
time limit in RA 7942 for this grace period when the collection of the State's "share" does not run. 23

RA 7942 itself does not require government approval for the pre-operating, exploration and
development expenses of the foreign contractor. The determination of the amount of pre-operating,
exploration and development expenses is left solely to the discretion of the foreign contractor.
Nothing prevents the foreign contractor from recording pre-operating, exploration and development
expenses equal to the mining revenues it anticipates for the first 10 years. If that happens, the
State's share is ZERO for the first 10 years.

The Government cannot tell the Filipino people when the State will start to receive its "share"
(consisting of taxes) in mining revenues under the FTAA. The Executive Department cannot correct
these deficiencies in RA 7942 through remedial implementing rules. The correction involves
substantive legislation, not merely filling in the implementing details of the law.

Taxes, fees and duties cannot constitute payment for the State's share as owner of the mineral
resources. This was the mode of payment used under the old system of "license, concession or
lease" which the 1987 Constitution abrogated. Obviously, Sections 80, 81, 84 and 112 of RA 7942
constitute an ingenious attempt to resurrect the old and discredited system, which the 1987
Constitution has now outlawed. Under the 1987 Constitution, the State must receive its fair share
as owner of the mineral resources, separate from taxes, fees and duties paid by taxpayers. The
legislature may waive taxes, fees and duties, but it cannot waive the State's share in mining
operations.

Any law waiving for free the State's right to the benefits arising from its ownership of mineral
resources is unconstitutional. Such law negates Section 2, Article XII of the 1987 Constitution
vesting ownership of mineral resources in the State. Such law will not contribute to "economic
growth and the general welfare of the country" as required in the fourth paragraph of Section 2.
Thus, in waiving the State's income from the exploitation of mineral resources, Section 80, the
second paragraph of Section 81, the proviso in Section 84, and Section 112 of RA 7942 violate the
Constitution and are therefore void.

D. Abdication of the State's Duty to Control and Supervise

Fully the Exploitation of Mineral Resources

The 1987 Constitution commands the State to exercise "full control and supervision" over the
exploitation of natural resources. The purpose of this mandatory directive is to insure that the State
receives its fair share in the exploitation of natural resources. The framers of the Constitution were
determined to avoid the disastrous mistakes of the past. Under the old system of "license,
concession or lease," the State gave full control to the concessionaires who enriched themselves
while paying the State minimal taxes, fees and charges.

Under the 1987 Constitution, for a co-production, joint venture or production-sharing agreement to
be valid the State must exercise full control and supervision over the mining operations. This means
that the State should approve all capital and operating expenses in the exploitation of the natural
resources. Approval of capital expenses determines how much capital is recoverable by the mining
contractor. Approval of operating expenses determines the reasonable amounts deductible from the
annual income from mining operations. Such approvals are essential because the net income from
mining operations, which is the basis of the State's share, depends on the allowable amount of
capital and operating expenses. There is approval of capital and operating expenses when the State
approves them, or if the State disapproves them and a dispute arises, when their final allowance is
subject to arbitration.

The provisions of RA 7942 on MPSAs and FTAAs do not give the State any control and supervision
over mining operations. The reason is obvious. The State's so-called "share" in a mineral production-
sharing agreement under Section 80 is limited solely to the excise tax on mineral products. This
excise tax is based on the market value of the mineral product determined without reference to the
capital or operating expenses of the mining contractor.
Likewise, the State's "share" in an FTAA under Section 81 has no relation to the capital or operating
expenses of the foreign contractor. The State's "share" constitutes the same excise tax on mineral
products, in addition to other direct and indirect taxes. The basis of the excise tax is the selling price
of the mineral product. Hence, there is no reason for the State to approve or disapprove the capital
or operating expenses of the mining contractor. Consequently, RA 7942 does not give the State any
control and supervision over mining operations contrary to the express command of the Constitution.
This makes Section 80, the second paragraph of Section 81, the proviso in Section 84, and Section
112 of RA 7942 unconstitutional.

E. RA 7942 Will Not Contribute to Economic

Growth or General Welfare of the Country

The fourth paragraph of Section 2, Article XII of the 1987 Constitution requires that FTAAs with
foreign contractors must make "real contributions to the economic growth and general welfare
of the country." Under Section 81 of RA 7942, all the net proceeds arising from the exploitation of
mineral resources accrue to the foreign contractor even if the State owns the mineral resources. The
foreign contractor will naturally repatriate the entire after-tax net proceeds to its home country.
Sections 94(a) and 94(b) of RA 7942 guarantee the foreign contractor the right to repatriate its after-
tax net proceeds, as well as its entire capital investment, after the termination of its mining
operations in the country.24

Clearly, no FTAA under Section 81 will ever make any real contribution to the growth of the economy
or to the general welfare of the country. The foreign contractor, after it ceases to operate in the
country, can even remit to its home country the scrap value of its capital equipment. Thus, the
second paragraph of Section 81 of RA 7942 is unconstitutional for failure to meet the constitutional
requirement that the FTAA with a foreign contractor should make a real contribution to the national
economy and general welfare.

F. Example of FTAA that Complies with Section 2, Article XII of the 1987 Constitution

The Solicitor General warns that declaring unconstitutional RA 7942 or its provisions will endanger
the Philippine Government's contract with the foreign contractor extracting petroleum in Malampaya,
Palawan.25 On the contrary, the FTAA with the foreign petroleum contractor meets the essential
constitutional requirements since the State receives a fair share of the income from the petroleum
operations. The State also exercises control and supervision over the exploitation of the petroleum.
The petroleum FTAA provides enough safeguards to insure that the petroleum operations will make
a real contribution to the national economy and general welfare.

The Service Contract dated 11 December 1990 between the Philippine Government as the first
party, and Occidental Philippines, Inc. and Shell Exploration B.V. as the second party 26 ("Occidental-
Shell FTAA"), covering offshore exploitation of petroleum in Northwest Palawan, contains the
following provisions:

a. There is express recognition that the "conduct of Petroleum Operations shall be under the
full control and supervision of the Office of Energy Affairs," 27 now Department of Energy
("DOE"), and that the "CONTRACTOR shall undertake and execute the Petroleum Operations
contemplated hereunder under the full control and supervision of the OFFICE OF ENERGY
AFFAIRS;"28

b. The State receives 60% of the net proceeds from the petroleum operations, while the
foreign contractor receives the remaining 40%; 29
c. The DOE has a right to inspect and audit every year the foreign contractor's books and accounts
relating to the petroleum operations, and object in writing to any expense (operating and capital
expenses)30 within 60 days from completion of the audit, and if there is no amicable
settlement, the dispute goes to arbitration;31

d. The operating expenses in any year cannot exceed 70% of the gross proceeds from the sale of
petroleum in the same year, and any excess may be carried over in succeeding years; 32

e. The Bureau of Internal Revenue ("BIR") can inspect and examine all the accounts, books and
records of the foreign contractor relating to the petroleum operations upon 24 hours written notice; 33

f. The petroleum output is sold at posted or market prices; 34

g. The foreign contractor pays the 32% Philippine corporate income tax on its 40% share of the net
proceeds, including withholding tax on dividends or remittances of profits. 35 (Emphasis supplied)

The Occidental-Shell FTAA gives the State its fair share of the income from the petroleum
operations of the foreign contractor. There is no question that the State receives its rightful share,
amounting to 60% of the net proceeds, in recognition of its ownership of the petroleum resources.
In addition, Occidental-Shell's 40% share in the net proceeds is subject to the 32% Philippine
income tax. The Occidental-Shell FTAA also gives the State, through the DOE and BIR, full control
and supervision over the petroleum operations of the foreign contractor. The foreign contractor
can recover only the capital and operating expenses approved by the DOE or by the arbitral
panel.36 The Occidental-Shell FTAA also contains other safeguards to protect the interest of the
State as owner of the petroleum resources. While the foreign contractor manages the contracted
work or operations to the extent of its financial or technical contribution, there are sufficient
safeguards in the FTAA to insure compliance with the constitutional requirements. The terms of the
Occidental-Shell FTAA are fair to the State and to Occidental-Shell.

In FTAAs with a foreign contractor, the State must receive at least 60% percent of the net proceeds
from the exploitation of its mineral resources. This share is the equivalent of the constitutional
requirement that at least 60% of the capital, and hence 60% of the income, of mining companies
should remain in Filipino hands. Intervenor CMP and even respondent WMCP agree that the
State has a 60% interest in the mining operations under an FTAA with a foreign contractor.
Intervenor CMP asserts that the Philippine Government "stands in the place of the 60% Filipino-
owned company."37 Intervenor CMP also states that "the contractor will get 40% of the financial
benefits,"38 admitting that the State, which is the owner of the mineral resources, will retain the
remaining 60% of the net proceeds.

Respondent WMCP likewise admits that the 60%-40% "sharing ratio between the Philippine
Government and the Contractor is also in accordance with the 60%-40% equity requirement
for Filipino-owned corporations."39 Respondent WMCP even adds that the 60%-40% sharing ratio
is "in line with the intent behind Section 2 of Article XII that the Filipino people, as
represented by the State, benefit primarily from the exploration, development, and utilization
of the Philippines' natural resources."40 If the State has a 60% interest in the mining operations
under an FTAA, then it must retain at least 60% of the net proceeds.

Otherwise, there is no sense exploiting the State's natural resources if all or a major part of the
profits are remitted abroad, precluding any real contribution to the national economy or the general
welfare. The constitutional requirement of full control and supervision necessarily means that the
State must receive the income that corresponds to the party exercising full control, and this logically
means a majority of the income.
The Occidental-Shell FTAA satisfies these constitutional requirements because the State receives
60% of the net proceeds and exercises full control and supervision of the petroleum operations. The
State's right to receive 60% of the net proceeds and its exercise of full control and supervision are
the essential constitutional requirements for the validity of any FTAA. The name given to the contract
is immaterial – whether a "Service Contract" or any other name - provided these two essential
constitutional requirements are present. Thus, the designation of the Occidental-Shell FTAA as a
"Service Contract" is inconsequential since the two essential constitutional requirements for the
validity of the contract as an FTAA are present.

With the State's right to receive 60% of the net proceeds, coupled with its control and supervision,
the petroleum operations in the Occidental-Shell FTAA are legally and in fact 60% owned and
controlled by Filipinos. Indeed, the State is directly undertaking the petroleum exploitation with
Occidental-Shell as the foreign contractor. The Occidental-Shell FTAA does not provide for the
issuance of exploration permits to Occidental-Shell precisely because the State itself is directly
undertaking the petroleum exploitation.

Section 3(aq) of RA 7942 allows the foreign contractor to hold the exploration permit under the
FTAA. However, Section 2, Article XII of the 1987 Constitution does not allow foreign owned
corporations to undertake directly mining operations. Foreign owned corporations can only act as
contractors of the State under the FTAA, which is one method for the State to undertake directly the
exploitation of its natural resources. The State, as the party directly undertaking the exploitation of its
natural resources, must hold through the Government all exploration permits and similar
authorizations. Section 3(aq) of RA 7942, in allowing foreign owned corporations to hold exploration
permits, is unconstitutional.

The Occidental-Shell FTAA, involving a far riskier offshore venture than land-based mining
operations, is a model for emulation if foreign contractors want to comply with the constitutional
requirements. Section 112 of RA 7942, however, negates the benefits of the State from the
Occidental-Shell FTAA.

Occidental-Shell can invoke Section 112 of RA 7942 and deny the State its 60% share of the net
proceeds from the exploitation of petroleum. Section 112 allows the foreign contractor to pay only
the "government share in a mineral production-sharing agreement" under RA 7942. Section 80
of RA 7942 on MPSAs limits the "government share" solely to the excise tax – 2% on metallic and
non-metallic mineral products and 3% on petroleum. Section 112 of RA 7942 is unconstitutional
since it is contrary to Section 2, Article XII of the 1987 Constitution.

G. The WMCP FTAA Violates Section 2, Article XII of the 1987 Constitution

The WMCP FTAA41 ostensibly gives the State 60% share of the net mining revenue. In reality, this
60% share is illusory. Section 7.7 of the WMCP FTAA provides that:

From the Commencement of Commercial Production, the Contractor shall pay a government
share of sixty per centum (60%) of Net Mining Revenues, calculated in accordance with the
following provisions (the Government Share). The Contractor shall be entitled to retain the balance
of all revenues from the Mining Operations. (Emphasis supplied)

However, under Section 7.9 of the WMCP FTAA, if WMCP's foreign stockholders sell 60% of their
equity to a Philippine citizen or corporation, the State loses its right to receive its 60% share of the
net mining revenues under Section 7.7. Thus, Section 7.9 provides:
The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7
shall be reduced by 1% of Net Mining Revenues for every 1% ownership interest in the
Contractor held by a Qualified Entity. (Emphasis supplied)

What Section 7.7 gives to the State, Section 7.9 takes away without any offsetting compensation to
the State. In reality, the State has no vested right to receive any income from the exploitation of its
mineral resources. What the WMCP FTAA gives to the State in Section 7.7 is merely by
tolerance of WMCP's foreign stockholders, who can at anytime cut off the State's entire 60%
share by selling 60% of WMCP's equity to a Philippine citizen or corporation. 42 The proceeds of
such sale do not accrue to the State but belong entirely to the foreign stockholders of WMCP.

Section 2.1 of the WMCP FTAA defines a "Qualified Entity" to include a corporation 60% Filipino
owned and 40% foreign owned. 43 WMCP's foreign stockholders can sell 60% of WMCP's equity to
such corporation and the sale will still trigger the operation of Section 7.9 of the WMCP FTAA. Thus,
the State will receive ZERO percent of the income but the foreign stockholders will own beneficially
64% of WMCP, consisting of their remaining 40% equity and 24% pro-rata share in the buyer-
corporation. WMCP will then invoke Section 39 of RA 7942 allowing it to convert the FTAA into an
MPSA, thus subjecting WMCP to pay only 2% excise tax on mineral products in lieu of sharing its
mining income with the State. This violates Section 2, Article XII of the 1987 Constitution requiring
that only corporations "at least sixty per centum of whose capital is owned by such citizens" can
enter into co-production, joint venture or production-sharing agreements with the State.

The State, as owner of the mineral resources, must receive a fair share of the income from any
commercial exploitation of its mineral resources. Mineral resources form part of the national
patrimony, and so are the net proceeds from such resources. The Legislature or Executive
Department cannot waive the State's right to receive a fair share of the income from such mineral
resources.

The intervenor Chamber of Mines of the Philippines ("CMP") admits that under an FTAA with a
foreign contractor, the Philippine Government "stands in the place of the 60% Filipino owned
company" and hence must retain 60% of the net proceeds. Thus, intervenor CMP concedes that:

x x x In other words, in the FTAA situation, the Government stands in the place of the 60%
Filipino-owned company, and the 100% foreign-owned contractor company takes all the risks of
failure to find a commercially viable large-scale ore body or oil deposit, for which the contractor will
get 40% of the financial benefits.44 (Emphasis supplied)

For this reason, intervenor CMP asserts that the "contractor's stipulated share under the WMCP
FTAA is limited to a maximum of 40% of the net production."45 Intervenor CMP further insists
that "60% of its (contractor's) net returns from mining, if any, will go to the Government under
the WMCP FTAA."46 Intervenor CMP, however, fails to consider that the Government's 60% share is
illusory because under Section 7.9 of the WMCP FTAA the foreign stockholders of WMCP can
reduce at any time to ZERO percent the Government's share.

If WMCP's foreign stockholders do not immediately sell 60% of WMCP's equity to a Philippine citizen
or corporation, the State in the meantime receives its 60% share. However, under Section 7.10 of
the WMCP FTAA, the State shall receive its share "after the offsetting of the items referred to in
Clauses 7.8 and 7.9," namely:

7.8. The Government Share shall be deemed to include all of the following sums:

(a) all Government taxes, fees, levies, costs, imposts, duties and royalties including excise
tax, corporate income tax, customs duty, sales tax, value added tax, occupation and
 regulatory fees, Government controlled price stabilization schemes, any other form of
Government backed schemes, any tax on dividend payments by the Contractor or its
Affiliates in respect of revenues from the Mining Operations and any tax on interest on
domestic and foreign loans or other financial arrangements or accommodation, including
loans extended to the Contractor by its stockholders;

(b) any payments to local and regional government, including taxes, fees, levies, costs, imposts,
duties, royalties, occupation and regulatory fees and infrastructure contributions;

(c) any payments to landowners, surface rights holders, occupiers, indigenous people or Claim-
owners;

(d) costs and expenses of fulfilling the Contractor's obligations to contribute to national development
in accordance with Clause 10.1(i)(1) and 10.1(i)(2);

(e) an amount equivalent to whatever benefits that may be extended in the future by the Government
to the Contractor or to financial or technical assistance agreement contractors in general;

(f) all of the foregoing items which have not previously been offset against the Government Share in
an earlier Fiscal year, adjusted for inflation.

7.9. The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7
shall be reduced by 1% of Net Mining Revenues for every 1% ownership interest in the Contractor
held by a Qualified Entity.

It makes no sense why under Section 7.8(e) money spent by the Government for the benefit of the
contractor, like building roads leading to the mine site, is deductible from the State's 60% share of
the Net Mining Revenues. Unless of course the purpose is solely to reduce further the State's share
regardless of any reason. In any event, the numerous deductions from the State's 60% share make
one wonder if the State will ever receive anything for its ownership of the mineral resources. Even
assuming the State will receive something, the foreign stockholders of WMCP can at anytime take it
away by selling 60% of WMCP's equity to a Philippine citizen or corporation.

In short, the State does not have any right to any share in the net income from the mining operations
under the WMCP FTAA. The stipulated 60% share of the Government is illusory. The State is left to
collect only the 2% excise tax as its sole share from the mining operations.

Indeed, on 23 January 2001, WMCP's foreign stockholders sold 100% of WMCP's equity to
Sagittarius Mines, Inc., a domestic corporation 60% Filipino owned and 40% foreign owned. 47 This
sale automatically triggered the operation of Section 7.9 of the WMCP FTAA reducing the
State's share in the Net Mining Revenues to ZERO percent without any offsetting
compensation to the State. Thus, as of now, the State has no right under the WMCP FTAA to
receive any share in the mining revenues of the contractor, even though the State owns the mineral
resources being exploited under the WMCP FTAA.

Intervenor CMP anchors its arguments on the erroneous interpretation that the WMCP FTAA gives
the State 60% of the net income of the foreign contractor. Thus, intervenor CMP states that "60% of
its (WMCP's) net returns from mining, if any, will go to the Government under the WMCP FTAA." 48
This basic error in interpretation leads intervenor CMP to erroneous conclusions of law and fact.

Like intervenor CMP, respondent WMCP also maintains that under the WMCP FTAA, the State is
"guaranteed" a 60% share of the foreign contractor's Net Mining Revenues. Respondent WMCP
contends, after quoting Section 7.7 of the WMCP FTAA, that:
In other words, the State is guaranteed a sixty per centum (60%) share of the Mining
Revenues, or 60% of the actual fruits of the endeavor. This is in line with the intent behind
Section 2 of Article XII that the Filipino people, as represented by the State, benefit primarily
from the exploration, development, and utilization of the Philippines' natural resources.

Incidentally, this sharing ratio between the Philippine Government and the Contractor is also
in accordance with the 60%-40% equity requirement for Filipino-owned corporations in
Paragraph 1 of Section 2 of Article XII.49 (Italics and underscoring in the original)

This so-called "guarantee" is a sham. Respondent WMCP gravely misleads this Court. Section 7.9
of the WMCP FTAA provides that the State's share "shall be reduced by 1% of Net Mining
Revenues for every 1% ownership interest in the Contractor held by a Qualified Entity." This
reduction is without any offsetting compensation to the State and constitutes a waiver of the State's
share to WMCP's foreign stockholders. The Executive Department cannot give away for free,
especially to foreigners, what forms part of the national patrimony. This negates the constitutionally
mandated State ownership of mineral resources for the benefit of the Filipino people.

WMCP's stockholders may also invoke Section 112 of RA 7942 allowing a mining contractor to pay
the State's share in accordance with Section 80 of RA 7942. WMCP will end up paying only the 2%
excise tax to the Philippine Government for the exploitation of the mineral resources the State
owns. In short, the old and discredited system of "license, concession or lease" will govern
the WMCP FTAA.

The WMCP FTAA is also emphatic in stating that WMCP shall have exclusive right to exploit,
utilize, process and dispose of all mineral products produced under the WMCP FTAA. Section
1.3 of the WMCP FTAA provides:

The Contractor shall have the exclusive right to explore, exploit, utilise, process and dispose of all
Mineral products and by-products thereof that may be derived or produced from the Contract Area
but shall not, by virtue only of this Agreement, acquire any title to lands encompassed within the
Contract Area.

Under the WMCP FTAA, the contractor has exclusive right to exploit, utilize and process the
mineral resources to the exclusion of third parties and even the Philippine Government. Since
WMCP's right is exclusive, the Government has no participation in approving the operating expenses
of the foreign contractor relating to the exploitation, utilization, and processing of mineral resources.
The Government will have to accept whatever operating expenses the contractor decides to incur in
exploiting, utilizing and processing mineral resources.

Under the WMCP FTAA, the contractor has exclusive right to dispose of the minerals recovered in
the mining operations. This means that the contractor can sell the minerals to any buyer, local or
foreign, at the price and terms the contractor chooses without any intervention from the State. There
is no requirement in the WMCP FTAA that the contractor must sell the minerals at posted or market
prices. The contractor has the sole right to "mortgage, charge or encumber" the "Minerals produced
from the Mining Operations."50

Section 8.3 of the WMCP FTAA also makes a sham of the DENR Secretary's authority to approve
the foreign contractor's Work Program. Section 8.3 provides:

If the Secretary gives a Rejection Notice the Parties shall promptly meet and endeavour to agree on
amendments to the Work Program or budget. If the Secretary and the Contractor fail to agree on
the proposed revision within 30 days from delivery of the Rejection Notice then the Work
Programme or Budget or variation thereof proposed by the Contractor shall be deemed
approved, so as not to unnecessarily delay the performance of the Agreement. (Emphasis supplied)

The DENR Secretary is the representative of the State which owns the mineral resources. The
DENR Secretary implements the mining laws, including RA 7942. Section 8.3, however, treats the
DENR Secretary like a subservient non-entity whom the contractor can overrule at will. Under
Section 8.3 of the WMCP FTAA, the DENR Secretary has no authority whatsoever to disapprove the
Work Program. This is not what the Constitution means by full control and supervision by the State
of mining operations.

Section 10.4(i) of the WMCP FTAA compels the Philippine Government to agree to any request
by the foreign contractor to amend the WMCP FTAA to satisfy the conditions of creditors of the
contractor. Thus, Section 10.4(i) states:

(i) the Government shall favourably consider any request, from Contractor for amendments of
this Agreement which are necessary in order for the Contractor to successfully obtain the
financing;

x x x. (Emphasis supplied)

This provision requires the Government to favorably consider any request from the contractor -
which means that the Government must render a response favorable to the contractor. In
effect, the contractor has the right to amend the WMCP FTAA even against the will of the Philippine
Government just so the contractor can borrow money from banks.

True, the preceding Section 10.4(e) of the WMCP FTAA provides that "such financing arrangements
will in no event reduce the Contractor's obligations or the Government's rights." However, Section
10.4(i) binds the Government to agree to any future amendment requested by the foreign
contractor even if the Government does not agree with the wisdom of the amendment. This provision
is contrary to the State's full control and supervision in the exploitation of mineral resources.

Clearly, under the WMCP FTAA the State has no full control and supervision over the mining
operations of the contractor. Provisions in the WMCP FTAA that grant the State full control and
supervision are negated by other provisions that take away such control and supervision.

The WMCP FTAA also violates the constitutional limits on the term of an FTAA. Section 2, Article XII
of the 1987 Constitution limits the term of a mineral agreement to "a period not exceeding twenty-
five years, renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law." The original term cannot exceed 25 years, and at the end
of such term, either the Government or the contracting party may decide not to renew the mineral
agreement. However, both the Government and the contracting party may also decide to renew the
agreement, in which case the renewal cannot exceed another 25 years. What is essential is that
either party has the option to renew or not to renew the mineral agreement at the end of the
original term.

However, Section 3.3 of the WMCP FTAA binds the Philippine Government to an ironclad 50-year
term. Section 3.3 compels the Government to renew the FTAA for another 25 years after the
original 25-year term expires. Thus, Section 3.3 states:

This Agreement shall be renewed by the Government for a further period of twenty-five (25)
years under the same terms and conditions provided that the Contractor lodges a request for a
renewal with the Government not less than sixty (60) days prior to the expiry of the initial term of this
Agreement and provided that the Contractor is not in breach of any of the requirements of this
Agreement. (Emphasis supplied)

Under Section 3.3, the contractor has the option to renew or not to renew the agreement. The
Government has no such option and must renew the agreement once the contractor makes a
request for renewal. Section 3.3 violates the constitutional limits because it binds the Government to
a 50-year FTAA at the sole option of the contractor.

H. Arguments of the Solicitor General and the NEDA Secretary

The Solicitor General states that the "basic share" of the State in FTAAs involving large-scale
exploitation of minerals, petroleum and other mineral oils –

x x x consists of all direct taxes, fees and royalties, as well as other payments made by the
Contractor during the term of the FTAA. The amounts are paid to the (i) national government, (ii)
local governments, and (iii) persons directly affected by the mining project. Some of the major taxes
paid are as follows Section 3(g) of DAO-99-56:

A. Payments to National Government

· Excise tax on minerals – 2% of gross output of mining operations

· Contractor's income tax – 32% of taxable income for corporation

· Customs duties and fees - rate is set by Tariff and Customs Code

· VAT on imported equipment, goods and services - 10% of value

· Royalty on minerals extracted from mineral reservations, if applicable – 5% of the actual market
value of the minerals produced

· Documentary stamp tax – rate depends on the type of transaction

· Capital gains tax on traded stocks – 5 to 10% of the value

· Tax on interest payments on foreign loans – 15% of the interest

· Tax on foreign stockholders dividends - 15% of the dividend

· Wharfage and port fees

· Licensing fees (e.g., radio permit, firearms permit, professional fees)

B. Payments to Local Governments

· Local business tax - maximum of 2% of gross sale or receipt

· Real property tax - 2% of the fair market value of property based on an assessment level set by the
local government

· Local business tax - maximum of 2% of gross sale or receipt

· Special education levy - 1% of the basis used in real property tax

· Occupation tax - 50 pesos per hectare per year; 100 pesos per hectare per year if located in a
mineral concession

· Community tax - 10,500 pesos maximum per year

· Other local taxes and fees - rate and type depends on the local government

C. Other Payments

· Royalty to indigenous cultural communities, if any - not less than 1% of the gross output from
mining operations

· Special allowance – payment to claim owners or surface right owners

The Solicitor General argues that the phrase "among other things" in the second paragraph of
Section 81 of RA 7942 means that the State "is entitled to an additional government share to be
paid by the Contractor." The Solicitor General explains:

An additional government share is collected from an FTAA contractor to fulfill the intent of Section
81 of RA No. 7942, to wit:

Sec. 81. The Government share in an FTAA shall consist of, among other things, the
Contractor's corporate income tax, excise tax, special allowance, withholding tax due from
the Contractor's foreign stockholders arising from dividends or interest payments to the said
foreign stockholders in case of a foreign-owned corporation and all such other taxes, duties
and fees as provided for in existing laws. (Underscoring supplied)

The phrase "among other things" indicates that the Government is entitled to an additional share
to be paid by the Contractor, aside from the basic share in order to achieve the fifty-fifty sharing of
net benefits from mining.

By including indirect taxes and other financial contributions in the form of fuel tax;
employees' payroll and fringe benefits; various withholding taxes on royalties to land owners
and claim owners, and employees' income; value added tax on local goods, equipment,
supplies and services; and expenditures for social infrastructures in the mine site (hospitals,
schools, etc.) and development of host and neighboring communities, geosciences and
mining technology, the government share will be in the range of 60% or more of the total
financial benefits. (Bold and underscoring in the original)

The Solicitor General enumerates this "additional government share" as "indirect taxes and other
financial contributions in the form of fuel tax; employees' payroll and fringe benefits; various
withholding taxes on royalties to land owners and claim owners, and employees' income;
value added tax on local goods, equipment, supplies and services; x x x." The Solicitor
General's argument merely confirms that under Section 81 of RA 7942 the State only receives taxes,
duties and fees under the FTAA. The State does not receive, as owner of the mineral resources, any
income from the mining operations of the contractor.

In short, the "basic share" of the State consists of direct taxes by the national and local
governments. The "additional share" of the State consists of indirect taxes including even fringe
benefits to employees and compensation to private surface right owners. Direct and indirect
taxes, however, are impositions by the taxing authority, a burden borne by all taxpayers whether or
not they exploit the State's mineral resources. Fringe benefits of employees are compensation for
services rendered under an employer-employee relationship. Compensation to surface right owners
is payment for the damage suffered by private landowners arising from the mining operations. All
these direct and indirect taxes, as well as other expenses of the contractor, do not constitute
payment for the share of the State as owner of the mineral resources.
Clearly, the so-called "share" of the State consists only of direct and indirect taxes, as well as other
operating expenses not even payable to the State. The Solicitor General in effect concedes that
under the second paragraph of Section 81, the State does not receive any share of the net proceeds
from the mining operations of the FTAA contractor. Despite this, the Solicitor General insists that the
State remains the owner of the mineral resources and exercises full control over the mining
operations of the FTAA contractor. The Solicitor General has redefined the civil law concept of
ownership,51 by giving the owner full control in the exploitation of the property he owns but denying
him the fruits or income from such exploitation. The only satisfaction of the owner is that the FTAA
contractor pays taxes to the Government.

However, even this psychological satisfaction is dubious. Under the third paragraph of Section 81 of
RA 7942, the "collection of Government share in financial and technical assistance agreement shall
commence after the financial and technical assistance agreement contractor has fully recovered its
pre-operating expenses, exploration, and development expenditures, inclusive." This provision does
not defer the collection of the State's "share," but prevents the accrual of the State's "share" until
the contractor has fully recovered all its pre-operating, exploration and development expenditures.
This provision exempts for an undefined period the contractor from all existing taxes that are
part of the Government's so-called "share" under Section 81. 52 The Solicitor General has
interpreted these taxes to include "other national taxes and fees" as well as "other local taxes and
fees."

Secretary Romulo L. Neri of the National Economic and Development Authority ("NEDA") has
warned this Court of the supposed dire repercussions to the nation's long-term economic growth if
this Court declares the assailed provisions of RA 7942 unconstitutional. 53 Under the Constitution, the
NEDA is the "independent (economic) planning agency of the government." 54 However, in this case
the NEDA Secretary has joined the chorus of the foreign chambers of commerce to uphold the
validity of RA 7942 as essential to entice foreign investors to exploit the nation's mineral resources.

We cannot fault the foreign chambers of commerce for driving a hard bargain to maximize the profits
of foreign investors. We are, however, saddened that the NEDA Secretary is willing to give away for
free to foreign investors the State's share of the income from its ownership of mineral resources. If
the NEDA Secretary owns the mineral resources instead of the State, will he allow the foreign
contractor to exploit his mineral resources for free, the only obligation of the foreign contractor being
to pay taxes to the Government?

Secretary Neri claims that the potential tax collection from the mining industry alone is P57 billion as
against the present collection of P2 billion. Secretary Neri adds that the potential tax collection from
incremental activities linked to mining is another P100 billion, thus putting the total potential tax
collection from mining and related industries at P157 billion.55 Secretary Neri also estimates the
"potential mining wealth in the Philippines" at P47 trillion or US$840 billion, 15 times our total
foreign debt of US$56 billion. 56

If all that the State will receive from its P47 trillion potential mineral wealth is the P157 billion in direct
and indirect taxes, then the State will truly receive only a pittance. The P157 billion in taxes
constitute a mere .33% or a third of 1% of the total mineral wealth of P47 trillion. Even if the
P157 billion is collected annually over 25 years, the original term of an FTAA, the total tax collection
will amount to only P3.92 trillion, or a mere 8.35% of the total mineral wealth. The rest of the
country's mineral wealth will flow out of the country if foreign contractors exploit our mineral
resources under FTAAs pursuant to RA 7942.

Secretary Neri also warns that foreign investors who have acquired local cement factories in the last
ten years will find their investments illegal if the Court declares unconstitutional the assailed
provisions of RA 7942.57 Such specious arguments deserve scant consideration. Cement
manufacturing is not a nationalized activity. Hence, foreigners can own 100% of cement companies
in this country. When the foreign investors acquired the local cement factories, they spun off the
quarry operations into separate companies 60% owned by Filipino citizens. The foreign investors
knew the constitutional requirements of holding quarry permits.

Besides, the quarrying requirement of cement companies is just a simple surface mining of
limestone. Such activity does not constitute large-scale exploitation of mineral resources. It definitely
cannot qualify for FTAAs with foreign contractors under the fourth paragraph of Section 2, Article XII
of the Constitution. Obviously, only a company at least 60% Filipino owned can engage in such
mining activity.

The offshore Occidental-Shell FTAA shows that even in riskier ventures involving far more capital
investments, the State can negotiate and secure at least 60% of the net proceeds from the
exploitation of mineral resources. Foreign contractors like Occidental-Shell are willing to pay the
State 60% of the net proceeds from petroleum operations, in addition to paying the Government the
32% corporate income tax on its 40% share of the net proceeds. Even intervenor CMP and
respondent WMCP agree that the State has a 60% interest in mining operations under an
FTAA. I simply cannot fathom why the NEDA Secretary is willing to accept a ZERO percent share in
the income from the exploitation of inland mineral resources.

FTAAs like the WMCP FTAA, which gives the State an illusory 60% share of the net proceeds from
mining revenues, will only impoverish further the Filipino people. The nation's potential mineral
wealth of P47 trillion will contribute to economic development only if the bulk of the wealth remains in
the country, not if remitted abroad by foreign contractors.

I. Refutation of Arguments of Majority Opinion

The majority opinion advances the following arguments:

1. DENR Department Administrative Order No. 56-99 ("DAO 56-99") is the basis for determining the
State's share in the mining income of the foreign FTAA contractor. The DENR Secretary issued DAO
56-99 pursuant to the phrase "among other things" in Section 81 of RA 7942. The majority opinion
claims that the phrase "among other things" "clearly and unmistakably reveals the legislative
intent to have the State collect more than just the usual taxes, duties and fees." The majority
opinion anchors on the phrase "among other things" its argument that RA 7942 allows the State
to collect a share in the mining income of the foreign FTAA contractor, in addition to taxes, duties
and fees. Thus, on the phrase "among other things" depends whether the State and the
Filipino people are entitled under RA 7942 to share in the vast mineral wealth of the nation,
estimated by NEDA at P47 trillion or US$840 billion.

2. FTAAs, like the WMCP FTAA, are not subject to the term limit in Section 2, Article XII of the
1987 Constitution. In short, while co-production, joint venture and production-sharing agreements
cannot exceed 25 years, renewable for another 25 years, as provided in Section 2, Article XII of the
1987 Constitution, the WMCP FTAA is not governed by the constitutional limitation. The majority
opinion states that the "constitutional term limitations do not apply to FTAAs." Thus, the
majority opinion upholds the validity of Section 3.3 of the WMCP FTAA providing for a 50-year term
at the sole option of WMCP.

3. Section 112 of RA 7942, placing "all valid and existing" mining agreements under the fiscal
regime prescribed in Section 80 of RA 7942, does not apply to FTAAs. Thus, the majority opinion
states, "[W]hether Section 112 may properly apply to co-production or joint venture
agreements, the fact of the matter is that it cannot be made to apply to FTAAs."

4. Foreign FTAA contractors and even foreign corporations can hold exploration permits, despite
Section 2, Article XII of the 1987 Constitution reserving to Philippine citizens and to corporations
60% Filipino owned the "exploration, development and utilization of natural resources." Thus, the
majority opinion states that "there is no prohibition at all against foreign or local corporations
or contractors holding exploration permits."

5. The Constitution does not require that the State's share in FTAAs or other mineral agreements
should be at least 60% of the net mining revenues. Thus, the majority opinion states that "the
Charter did not intend to fix an iron-clad rule on the 60 percent share, applicable to all
situations at all times and in all circumstances."

I respond to the arguments of the majority opinion.

1. DAO 99-56 as Basis for Government's Share in FTAAs

The main thrust of my separate opinion is that mineral agreements under RA 7942, whether FTAAs
under Section 81 or MPSAs under Section 80, do not allow the State to receive any share from the
income of mining companies. The State can collect only taxes, duties and fees from mining
companies.

The majority opinion, however, points to the phrase "among other things" in the second paragraph
of Section 81 as the authority of the State to collect in FTAAs a share in the mining income separate
from taxes, duties and fees. The majority opinion can point to no other provision in RA 7942 allowing
the State to collect any share. The majority opinion admits that limiting the State's share in any
mineral agreement to taxes, duties and fees is unconstitutional. Thus, the majority opinion's case
rises or falls on whether the phrase "among other things" allows the State to collect from
FTAA contractors any income in addition to taxes, duties and fees.

In the case of MPSAs, the majority opinion cannot point to any provision in RA 7942 allowing the
State to collect any share in MPSAs separate from taxes, duties and fees. The language of Section
80 is so crystal clear – "the total government share in a mineral production sharing agreement
shall be the excise tax on mineral products" - that there is no dispute whatsoever about it. The
majority opinion merely states that the constitutionality of Section 80 is not in issue in the present
case. Section 81, the constitutionality of which the majority opinion admits is in issue here, is
intertwined with Sections 39, 80, 84 and 112. Resolving the constitutionality of Section 81
necessarily involves a determination of the constitutionality of Sections 39, 80, 84 and 112.

The WMCP FTAA, the constitutionality of which is certainly in issue, is governed not only by Section
81 but also by Sections 39, 80 and 112. The reason is that the WMCP FTAA is a reversible contract
that gives WMCP the absolute option at anytime to convert the FTAA into an MPSA. In short, the
WMCP FTAA is like a single coin with two sides - one an FTAA and the other an MPSA.

a. The Integrated Intent, Plan and Structure of RA 7942

The clear intent of RA 7942 is to limit the State's share from mining operations to taxes, duties and
fees, unless the State contributes equity in addition to the mineral resources. RA 7942 does not
recognize the mere contribution of mineral resources as entitling the State to receive a share in the
net mining revenues separate from taxes, duties and fees. Thus, Section 80 expressly states that
the "total government share in a mineral production sharing agreement shall be the excise
tax on mineral products." Section 84 reiterates this by stating that "with respect to mineral
production sharing agreement, the excise tax on mineral products shall be the government
share under said agreement." The only share of the State in an MPSA is the excise tax. Ironically,
Sections 80 and 84 disallow the State from sharing in the production or income, even as the contract
itself is called a mineral production sharing agreement.

In co-production and joint venture agreements, where the State contributes equity in addition to the
mineral resources, the first paragraph of Section 81 expressly requires that "the share of the
government x x x shall be negotiated by the Government and the contractor." However, in
FTAAs where the State contributes only its mineral resources, the second paragraph of Section 81
states –

The Government share in financial or technical assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due from
the contractor's foreign stockholders arising from dividend or interest payments to the said foreign
stockholder in case of a foreign national and all such other taxes, duties and fees as provided for
under existing laws.

All the items enumerated in the second paragraph of Section 81 as comprising the "Government
share" refer to taxes, duties and fees. The phrase "all such other taxes, duties and fees as
provided for under existing laws" makes this clear.

Section 112 places "all valid and existing mining" agreements "at the date of effectivity" of RA
7942 under the fiscal regime prescribed in Section 80. Section 112 expressly states that the
"government share in mineral production sharing agreement x x x shall immediately govern
and apply to a mining lessee or contractor." Section 112 provides:

Section 112. Non-impairment of Existing Mining/Quarrying Rights. — All valid and existing mining
lease contracts, permits/licenses, leases pending renewal, mineral production-sharing agreements
granted under Executive Order No. 279, at the date of effectivity of this Act, shall remain valid,
shall not be impaired, and shall be recognized by the Government: Provided, That the provisions
of Chapter XIV on government share in mineral production-sharing agreement and of Chapter
XVI on incentives of this Act shall immediately govern and apply to a mining lessee or
contractor unless the mining lessee or contractor indicates his intention to the secretary, in writing,
not to avail of said provisions: Provided, further, That no renewal of mining lease contracts shall be
made after the expiration of its term: Provided, finally, That such leases, production-sharing
agreements, financial or technical assistance agreements shall comply with the applicable provisions
of this Act and its implementing rules and regulations. (Emphasis supplied)

Thus, Section 112 requires "all" FTAAs and MPSAs, as of the date of effectivity of RA 7942, to pay
only the excise tax - 2% on metallic and non-metallic minerals and 3% on petroleum 58 - instead of the
stipulated mining income sharing, if any, in their respective FTAAs or MPSAs.

This means that Section 112 applies even to the Occidental-Shell FTAA, which was executed
before the enactment of RA 7942. This reduces the State's share in the Malampaya gas
extraction from 60% of net proceeds to 3% of the market price of the gas as provided in
Section 80 of RA 7942 in relation to Section 151 of the National Internal Revenue Code. This
is disastrous to the national economy because Malampaya under the original Occidental-
Shell FTAA generates annually some US$0.5 billion to the National Treasury.

Section 112 applies to all agreements executed "under Executive Order No. 279." The WMCP
FTAA expressly states in its Section 1.1, "This Agreement is a Financial & Technical Assistance
Agreement entered into pursuant to Executive Order No. 279." Thus, Section 112 applies to the
WMCP FTAA.

Section 39 of RA 7942 grants the FTAA contractor the "option to convert" the FTAA into an MPSA
"at any time during the term" of the FTAA if the contract areas are not economically viable for
large-scale mining. Once the contractor reduces its foreign equity to not more than 40%, the
Secretary "shall approve the conversion and execute the mineral production sharing
agreement. Thus, Section 39 provides:

Section 39. Option to Convert into a Mineral Agreement. — The contractor has the option to
convert the financial or technical assistance agreement to a mineral agreement at any time
during the term of the agreement, if the economic viability of the contract area is found to be
inadequate to justify large-scale mining operations, after proper notice to the Secretary as provided
for under the implementing rules and regulations: Provided, That the mineral agreement shall only
be for the remaining period of the original agreement.

In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the corporation,
partnership, association, or cooperative. Upon compliance with this requirement by the
contractor, the Secretary shall approve the conversion and execute the mineral production-
sharing agreement. (Emphasis supplied)

The only requirement in the second paragraph of Section 39 is that the FTAA contractor shall reduce
its foreign equity to 40%. The second paragraph states, "Upon compliance with this requirement,
the Secretary shall approve the conversion and execute the mineral production sharing
agreement." The determination of the economic viability of the contract area for large-scale mining,
which is left to the foreign contractor with "proper notice" only to the DENR Secretary, is not even
made a condition for the conversion.

Under Section 3(aq) of RA 7942, the foreign contractor holds the exploration permit and conducts
the physical exploration. The foreign contractor controls the release of the technical data on the
mineral resources. The foreign contractor can easily justify the non-viability of the contract area for
large-scale mining. The Philippine Government will have to depend on the foreign contractor
for technical data on whether the contract area is viable for large-scale mining. Obviously,
such a situation gives the foreign contractor actual control in determining whether the contract area
is viable for large-scale mining.

The conversion from an FTAA into an MPSA is solely at the will of the foreign contractor because
the contractor can choose at any time to sell 60% of its equity to a Philippine citizen. The price or
consideration for the sale of the contractor's 60% equity does not go to the State but to the foreign
stockholders of the contractor. Under Section 80 of RA 7942, once the FTAA is converted into an
MPSA the only share of the State is the 2% excise tax on mineral products. Thus, under RA 7942
the FTAA contractor has the absolute option to pay the State only the 2% excise tax, despite
any other stipulated consideration in the FTAA.

Clearly, Sections 3(aq), 39, 80, 81, 84 and 112 are tightly integrated under a single intent, plan and
structure: unless the State contributes equity in addition to the mineral resources, the State shall
receive only taxes, duties and fees. The State's contribution of mineral resources is not sufficient to
entitle the State to receive any income from the mining operations separate from taxes, duties and
fees.

b. The Meaning of the Phrase "Among Other Things"

As far as the State and the Filipino people are concerned, the most important part of an FTAA is the
consideration: how much will the State receive from the exploitation of its non-renewable and
exhaustible mineral resources?

Section 81 of RA 7942 does not require the foreign FTAA contractor to pay the State any share from
the mining income apart from taxes, duties and fees. The second paragraph of Section 81, just like
Section 80, only allows the State to collect taxes, duties and fees as the State's share from the
mining operations. The intent of RA 7942 is that the State cannot share in the income from mining
operations, separate from taxes, duties and fees, based only on the mineral resources that the State
contributes to the mining operations.

This is also the position of the Solicitor General – that the State's share under Section 81 refers only
to direct and indirect taxes. Thus, the Solicitor General agrees that Section 81 does not allow
the State to collect any share from the mining income separate from taxes, duties and fees.
The majority opinion agrees that Section 81 is unconstitutional if it does not require the foreign FTAA
contractor to pay the State any share of the net mining income apart from taxes, duties and fees.

However, the majority opinion says that the phrase "among other things" in Section 81 is the
authority to require the FTAA contractor to pay a consideration separate from taxes, duties and fees.
The majority opinion cites the phrase "among other things" as the source of power of the DENR
Secretary to adopt DAO 56-9959 prescribing the formulae on the State's share from mining
operations separate from taxes, duties and fees.

In short, the majority opinion says that the phrase "among other things" is a delegation of
legislative power to the DENR Secretary to adopt the formulae on the share of the State from mining
operations. The issue now is whether the phrase "among other things" in the second
paragraph of Section 81 is intended as a delegation of legislative power to the DENR
Secretary. If so, the issue turns on whether it is a valid delegation of legislative power. I
reproduce again the second paragraph of Section 81 for easy reference:

The Government share in financial or technical assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due
from the contractor's foreign stockholders arising from dividend or interest payments to the said
foreign stockholder in case of a foreign national and all such other taxes, duties and fees as
provided for under existing laws. (Emphasis supplied)

Section 81 of RA 7942 does not delegate any legislative power to the DENR Secretary to adopt the
formulae in determining the share of the State. There is absolutely no language in the second
paragraph of Section 81 granting the DENR Secretary any delegated legislative power. Thus,
the DENR Secretary acted without authority or jurisdiction in issuing DAO 56-99 based on a
supposed delegated power in the second paragraph of Section 81. This makes DAO 56-99 void.

Even assuming, for the sake of argument, that there is language in Section 81 delegating legislative
power to the DENR Secretary to adopt the formulae in DAO 56-99, such delegation is void.
Section 81 has no standards by which the delegated power shall be exercised. There is no
specification on the minimum or maximum share that the State must receive from mining operations
under FTAAs. No parameters on the extent of the delegated power to the DENR Secretary are found
in Section 81. Neither were such parameters ever discussed even remotely by Congress when it
enacted RA 7942.

In sharp contrast, the first paragraph of the same Section 81, in prescribing the State's share in co-
production and joint venture agreements, expressly specifies the standards in determining the
State's share as follows: "(a) capital investment of the project, (b) risks involved, (c) contribution of
the project to the economy, and (d) other factors that will provide for a fair and equitable sharing
between the Government and the contractor." The reason for the absence of similar standards in the
succeeding paragraph of Section 81 in determining the State's share in FTAAs is obvious - the
State's share in FTAAs is limited solely to taxes, duties and fees. Thus, such standards are
inapplicable and irrelevant.

The majority opinion now makes the formulae in DAO 56-99 the heart and soul of RA 7942 because
the formulae supposedly determine the consideration of the FTAA. The consideration is the most
important part of the FTAA as far as the State and Filipino people are concerned. The formulae in
DAO 56-99 derive life solely from the phrase "among other things." DAO 56-99 itself states that it
is issued "[P]ursuant to Section 81 and other pertinent provisions of Republic Act No. 7942." Without
the phrase "among other things," the majority opinion could not point to any other provision in RA
7942 to support the existence of the formulae in DAO 56-99.

Thus, the phrase "among other things" determines whether the FTAA has the third element of a
valid contract – the commercial value or consideration that the State will receive. The majority
opinion in effect says that Congress made the wealth and even the future prosperity of the nation to
depend on the phrase "among other things."

The DENR Secretary can change the formulae in DAO 56-99 any time even without the approval of
the President or Congress. The DENR Secretary is the sole authority to determine the amount of
consideration that the State shall receive in an FTAA. Section 5 of DAO 56-99 states:

x x x any amendment of an FTAA other than the provision on fiscal regime shall require the
negotiation with the Negotiation Panel and the recommendation of the Secretary for approval of the
President of the Republic of the Philippines. (Emphasis supplied)

Under Section 5, if the amendment in the FTAA involves non-fiscal matters, the amendment requires
the approval of the President. However, if the amendment involves a change in the fiscal regime –
referring to the consideration of the FTAA - the DENR Secretary has the final authority and approval
of the President is not required. This makes the DENR Secretary more powerful than the President.

Section 5 of DAO 56-99 violates paragraphs 4 and 5 of Section 2, Article XII of the 1987 Constitution
mandating that the President shall approve all FTAAs and send copies of all approved FTAAs to
Congress. The consideration of the FTAA is the most important part of the FTAA as far as the State
and the Filipino people are concerned. The DENR Secretary, in issuing DAO 56-99, has
arrogated to himself the power to approve FTAAs, a power vested by the Constitution solely
in the President. By not even informing the President of changes in the fiscal regime and thus
preventing such changes from reaching Congress, DAO 56-99 even seeks to hide changes in the
fiscal regime from Congress. By its provisions alone, DAO 56-99 is clearly unconstitutional and void.

Section 5 of DAO 56-99 also states that "[A]ll FTAAs approved prior to the effectivity of this
Administrative Order shall remain valid and be recognized by the Government." This means that
the fiscal regime of an FTAA executed prior to the effectivity of DAO 56-99 "shall remain valid and be
recognized." If the earlier FTAA provides for a fiscal regime different from DAO 56-99, then the fiscal
regime in the earlier FTAA shall prevail. In effect, DAO 56-99 exempts an FTAA approved prior to its
effectivity from paying the State the share prescribed in the formulae under DAO 56-99 if the earlier
FTAA provides for a different fiscal regime. Such is the case of the WMCP FTAA.

Based on the majority opinion's position that the 1987 Constitution requires payment in addition to
taxes, duties and fees, this makes DAO 56-99 unconstitutional and void. DAO 56-99 does not
require prior FTAAs to pay the State the share prescribed in the formulae under DAO 56-99 even if
the consideration in the prior FTAAs is limited only to taxes, duties and fees. DAO 56-99 recognizes
such payment of taxes, duties and fees as a "valid" consideration. Certainly, the DENR Secretary
has no authority to exempt foreign FTAA contractors from a constitutional requirement. Not even
Congress or the President can do so.

Ironically, DAO 56-99, the very authority the majority opinion cites to support its claim that the
WMCP FTAA has a consideration, does not apply to the WMCP FTAA. By its own express terms,
DAO 56-99 does not apply to FTAAs executed before the issuance of DAO 56-99, like the
WMCP FTAA. The majority opinion's position has no leg to stand on since even DAO 56-99,
assuming it is valid, cannot save the WMCP FTAA from want of consideration.

The formulae prescribed in DAO 56-99 are totally alien to the phrase "among other things." There is
no relationship whatsoever between the phrase "among other things" and the highly esoteric
formulae prescribed in DAO 56-99. No one in this Court can assure the Filipino people that the
formulae in DAO 56-99 will guarantee the State 60%, or 30% or even 10% of the net proceeds from
the mining operations. And yet the majority opinion trumpets DAO 56-99 as the savior of Section 81
from certain constitutional infirmity.

The majority opinion gives the stamp of approval and legitimacy on DAO 56-99. This assumes that
the majority understand fully the formulae in DAO 56-99. Can the majority tell the Court and the
Filipino people the minimum share that the State will receive under the formulae in DAO 56-99? The
formulae in DAO 56-99 are fuzzy since they do not guarantee the minimum share of the State,
unlike the clear and specific income sharing provisions in the Occidental-Shell FTAA or in the case
of Consolidated Mines, Inc. v. Court of Tax Appeals.60

The Solicitor General asserts that the phrase "among other things" refers to indirect taxes, an
interpretation that contradicts the DENR Secretary's interpretation under DAO 56-99. The Solicitor
General is correct. The ejusdem generis rule of statutory interpretation applies squarely to the
phrase "among other things."

In Philippine Bank of Communications v. Court of Appeals,61 the Court held:

Under the rule of ejusdem generis, where a description of things of a particular class or kind is
'accompanied by words of a generic character, the generic words will usually be limited to things of a
kindred nature with those particularly enumerated x x x.'

In Grapilon v. Municipal Council of Cigara,62 the Court construed the general word "absence" in
the phrase "absence, suspension or other temporary disability of the mayor" in Section 2195 of the
Revised Administrative Code as "on the same level as 'suspension' and 'other forms of temporary
disability'." The Court quoted with approval the following Opinion of the Secretary of Interior:

The phrase 'other temporary disability' found in section 2195 of the Code, follows the words
'absence' and 'suspension' and is used as a modifier of the two preceding words, under the principle
of statutory construction known as ejusdem generis.

In City of Manila v. Entote,63 the Court ruled that broad expressions such as "and all others" or
"any others" or "other matters," when accompanied by an enumeration of items of the same kind
or class, "are usually to be restricted to persons or things of the same kind or class with those
specifically named" in the enumeration. Thus, the Court held:

In our jurisdiction, this Court in Ollada vs. Court of Tax Appeals, et al. applied the rule of "ejusdem
generis" to construe the purview of a general phrase "other matters" appearing after an
enumeration of specific cases decided by the Collector of Internal Revenue and appealable to the
Court of Tax Appeals found in section 7, paragraph 1, of Republic Act No. 1125, and it held that in
order that a matter may come under said general clause, it is necessary that it belongs to the same
kind or class of cases therein specifically enumerated. (Emphasis supplied)

The four requisites of the ejusdem generis rule64 are present in the phrase "among other things"
as appearing in Section 81 of RA 7942. First, the general phrase "among other things" is
accompanied by an enumeration of specific items, namely, "the contractor's corporate income tax,
excise tax, special allowance, withholding tax due from the contractor's foreign stockholders
arising from dividend or interest payments to the said foreign stockholder in case of a foreign
national and all such other taxes, duties and fees as provided for under existing laws." Second, all
the items enumerated are of the same kind or class - they are all taxes, duties and fees. Third, the
enumeration of the specific items is not exhaustive because "all such other taxes, duties and fees"
are included. Thus, the enumeration of specific items is merely illustrative. Fourth, there is no
indication of legislative intent to give the general phrase "among other things" a broader meaning.
On the contrary, the legislative intent of RA 7942 is to limit the State's share from mining operations
to taxes, duties and fees.

In short, the phrase "among other things" refers to taxes, duties and fees. The phrase "among
other things" is even followed at the end of the sentence by the phrase "and all such other taxes,
duties, and fees," reinforcing even more the restriction of the phrase "among other things" to
taxes, duties and fees. The function of the phrase "and such other taxes, duties and fees" is to clarify
that the taxes enumerated are not exhaustive but merely illustrative.

c. Formulae in DAO 56-99 a Mere Creation of DENR

The majority opinion praises the DENR for "conceiving and developing" the formulae in DAO 56-
99. Thus, the majority opinion states:

As can be seen from DAO 56-99, the agencies concerned did an admirable job of conceiving and
developing not just one formula, but three different formulas for arriving at the additional
government share. (Emphasis supplied)

Indeed, we credit the DENR for conceiving and developing on their own the formulae in DAO 56-
99. The formulae are the creation of DENR, not of Congress.
The DENR conceived and developed the formulae to save Section 81 not only from constitutional
infirmity, but also from blatantly depriving the State and Filipino people from any share in the income
of mining companies. However, the DENR's admittedly "admirable job" cannot amend Section 81 of
RA 7942. The DENR has no legislative power to correct constitutional infirmities in RA 7942. The
DENR does not also possess the constitutional power to prescribe the sharing of mining income
between the State and mining companies, the act the DENR attempts to do in adopting DAO 56-99.

d. DAO 56-99 is an Exercise in Futility

Even assuming arguendo the majority opinion is correct that the phrase "among other things"
constitutes sufficient legal basis to issue DAO 56-99, the FTAA contractor can still prevent the State
from collecting any share of the mining income. By invoking Section 39 of RA 7942 giving the foreign
FTAA contractor the option to convert the FTAA into an MPSA, the FTAA contractor can easily
place itself outside the scope of DAO 56-99 which expressly applies only to FTAAs.

Also, by invoking Section 112, the foreign contractor need not even convert its FTAA into a mineral
production agreement to place its contract under Section 80 and outside of Section 81. Section 112
automatically and immediately places all FTAAs under the fiscal regime applicable to MPSAs,
forcing the State to collect only the 2% excise tax. Thus, DAO 56-99 is an exercise in futility. This
now compels the Court to resolve the constitutionality of Sections 39 and 112 of RA 7942 in the
present case.

e. Congress Prescribes the Terms and Conditions of FTAAs.

In a last-ditch attempt to justify the constitutionality of DAO 56-99, the majority opinion now claims
that the President has the prerogative to prescribe the terms and conditions of FTAAs,
including the fiscal regime of FTAAs. The majority opinion states:

x x x It is the President who is constitutionally mandated to enter into FTAAs with foreign
corporations, and in doing so, it is within the President's prerogative to specify certain terms and
conditions of the FTAAs, for example, the fiscal regime of FTAAs - i.e., the sharing of the net
revenues between the contractor and the State. (Emphasis in the original; underscoring supplied)

The majority opinion is re-writing the 1987 Constitution and even RA 7942. Paragraph 4, Section 2,
Article XII of the 1987 Constitution expressly provides:

The President may enter into agreements with foreign-owned corporations involving either technical
or financial assistance for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and conditions provided by
law, x x x. (Emphasis supplied)

Clearly, the 1987 Constitution mandates that the President may enter into FTAAs only "according
to the general terms and conditions provided by law." There is no doubt whatsoever that it is
Congress that prescribes the terms and conditions of FTAAs, not the President as the majority
opinion claims. The 1987 Constitution mandates the President to comply with the terms and
conditions prescribed by Congress for FTAAs.

Indeed, RA 7942 stipulates the terms and conditions for FTAAs. Section 35 of RA 7942 provides that
the "following terms, conditions, and warranties shall be incorporated in the financial or
technical assistance agreement to wit: x x x." Section 38 of RA 7942 expressly limits an FTAA to
a "term not exceeding twenty-five (25) years," which is one of the issues in the present case.

The majority opinion claims that the President has the power to prescribe "the fiscal regime of
FTAAs – i.e., the sharing of the net mining revenues between the contractor and the State."
This claim of the majority opinion renders the entire Chapter XIV of RA 7942 an act of usurpation by
Congress of Presidential power. Chapter XIV – entitled "Government Share" - prescribes the
fiscal regimes of MPSAs and FTAAs. The constitutionality of Sections 80 and 81 of Chapter XIV -
whether the fiscal regimes prescribed in these sections of RA 7942 comply with the 1987
Constitution - is the threshold issue in this case.

The majority opinion seeks to uphold the constitutionality of Section 81 of RA 7942, an act of
Congress prescribing the fiscal regime of FTAAs. If it is the President who has the constitutional
authority to prescribe the fiscal regime of FTAAs, then Section 81 is unconstitutional for being a
usurpation by Congress of a Presidential power. The majority opinion not only re-writes the 1987
Constitution, it also contradicts itself.

That is not all. By claiming that the President has the prerogative to prescribe the fiscal regime of
FTAAs, the majority opinion contradicts its basic theory that DAO 56-99 draws life from the phrase
"among other things" in Section 81 of RA 7942. Apparently, the majority opinion is no longer
confident of its position that DAO 56-99 draws life from the phrase "among other things." The
majority opinion now invokes a non-existent Presidential power that directly collides with the express
constitutional power of Congress to prescribe the "general terms and conditions" of FTAAs.

f. Sections 80 and 84 of RA 7942 are Void on their Face

Definitely, Section 80 of RA 7942 is constitutionally infirm even based on the reasoning of the
majority opinion. The majority opinion agrees that the 1987 Constitution requires the mining
contractor to pay the State "more than just the usual taxes, duties and fees." Under Section 80,
the excise tax – 2% for metallic and non-metallic minerals and 3% for petroleum - is the only and
total share of the State from mining operations. Section 80 provides:

Section 80. Government Share in Mineral Production Sharing Agreement. — The total government
share in a mineral production sharing agreement shall be the excise tax on mineral products
as provided in Republic Act No. 7729, amending Section 151(a) of the National Internal Revenue
Code, as amended. (Emphasis supplied)

Section 80 has no ifs or buts. Section 84 even reiterates Section 80 that "with respect to a mineral
production sharing agreement, the excise tax on mineral products shall be the government
share under said agreement." There is no ejusdem generis phrase like "among other things" in
Section 80 that the majority opinion can cling on to save it from constitutional infirmity. DAO 56-99,
the magic wand of the majority opinion, expressly applies only to FTAAs and not to MPSAs. By any
legal yardstick, even by the arguments of the majority opinion, Sections 80 and 84 are void and
unconstitutional.

g. Necessity of Resolving Constitutionality of Sections 39, 80 and 84

The majority opinion states that the constitutionality of Sections 80 and 84 of RA 7942 is not in issue
in the present case. The majority opinion forgets that petitioners have assailed the constitutionality of
RA 7942 and the WMCP FTAA for violation of Section 2, Article XII of the 1987 Constitution.
Petitioner specifically assails the "inequitable sharing of wealth" in the WMCP FTAA, which
petitioners assert is "contrary to Section 1, paragraph 1, and Section 2, paragraph 4, Article
XII of the Constitution."

Section 9.1 of the WMCP FTAA grants WMCP the absolute option, by mere notice to the DENR
Secretary, to convert the FTAA into an MPSA under Section 80. The "sharing of wealth" in Section
80 is "inequitable" and "contrary to x x x Section 2, paragraph 4, Article XII of the Constitution"
because the State will only collect the 2% excise tax in an MPSA. Such a pittance of a sharing will
not make any "real contributions to the economic growth and general welfare of the country" as
required in paragraph 4, Section 2, Article XII of the 1987 Constitution.

Section 39 of RA 7942 also grants foreign FTAA contractors the option, by mere notice to the DENR
Secretary, to convert their FTAAs into MPSAs under Section 80. Necessarily, the constitutionality of
the WMCP FTAA must be resolved in conjunction with Section 80 of RA 7942.

The WMCP FTAA is like a coin with two sides, one side is an FTAA, and the other an MPSA. By
mere notice to the DENR Secretary, WMCP can convert the contract from an FTAA to an MPSA, a
copy of which, complete with all terms and conditions, is annexed to the WMCP FTAA.65 The
DENR Secretary has no option but to sign the annexed MPSA. There are only two conditions to
WMCP's exercise of this option: the reduction of foreign equity in WMCP to 40%, and notice to the
DENR Secretary. The first condition is already fulfilled since all the equity of WMCP is now owned by
a corporation 60% Filipino owned. The notice to the DENR Secretary is solely at the will of WMCP.
What this Court is staring at right now is a dual contract - an FTAA which, by mere notice to the
DENR Secretary, immediately becomes an MPSA. The majority opinion agrees that the provisions of
the WMCP FTAA, which grant a sham consideration to the State, are void. Since the majority
opinion agrees that the WMCP FTAA has a sham consideration, the WMCP FTAA thus lacks
the third element of a valid contract. The majority opinion should declare the WMCP FTAA
void for want of consideration unless the majority opinion treats the contract as an MPSA
under Section 80. Indeed, the only recourse of WMCP to save the validity of its contract is to
convert it into an MPSA.

Thus, with the absence of consideration in the WMCP FTAA, what is actually before this Court is an
MPSA. This squarely puts in issue whether an MPSA is constitutional if the only consideration or
payment to the State is the 2% excise tax as provided in Section 80 of RA 7942.

The basic constitutional infirmity of the WMCP FTAA is the absence of a fair consideration to the
State as owner of the mineral resources. Petitioners call this the "inequitable sharing of wealth." The
constitutionality of the consideration for the WMCP FTAA cannot be resolved without determining
the validity of both Sections 80 and 81 of RA 7942 because the consideration for the WMCP FTAA is
anchored on both Sections 80 and 81.

The majority opinion refuses to face the issue of whether the WMCP contract can validly rely on
Section 80 for its consideration. If this issue is not resolved now, then the WMCP FTAA has no
consideration. The majority opinion admits that the consideration in the WMCP FTAA granting the
State 60% share in the mining revenues is a sham and thus void ab initio.

Strangely, the majority opinion claims that the share of the State in the mining revenues is not the
principal consideration of the FTAA. The majority opinion claims that the principal consideration
of the FTAA is the "development" of the minerals by the foreign contractor. The foreign contractor
can bring equipment to the mine site, tunnel the mines, and construct underground rails to bring the
minerals to the surface - in short develop the mines. What will the State and the Filipino people
benefit from such activities unless they receive a share of the mining proceeds? After the minerals
are exhausted, those equipment, tunnels and rails would be dilapidated and even obsolete. Besides,
those equipment belong to the foreign contractor even after the expiration of the FTAA.

Plainly, even a businessman with limited experience will not agree that the principal consideration in
an FTAA, as far as the State and Filipino people are concerned, is the development of the mines. It
is obvious why the majority opinion will not accept that the principal consideration is the share of the
State in the mining proceeds. Otherwise, the majority opinion will have to admit that the WMCP
FTAA lacks the third element of a valid contract - the consideration. This will compel the majority
opinion to admit that the WMCP FTAA is void ab initio.

The only way for the majority opinion to save the WMCP FTAA from nullity is to treat it as an MPSA
and thus apply Section 80 of RA 7942. This puts in issue the constitutionality of Section 80. The
majority opinion, however, refuses to treat the WMCP FTAA as an MPSA. Thus, the WMCP FTAA
still lacks a valid consideration. However, the majority opinion insists that the WMCP FTAA is valid.

If the majority opinion puts the constitutionality of Section 80 in issue, the majority opinion will have
to declare Section 80 unconstitutional. The majority opinion agrees that the 1987 Constitution
requires the State to collect "more than the usual taxes, duties and fees." Section 80 indisputably
limits the State to collect only the excise tax and nothing more.

The equivocal stance of the majority opinion will not put an end to this litigation. Once WMCP
converts its FTAA into an MPSA to avoid paying "more than the usual taxes, duties and fees,"
petitioners will immediately question the validity of WMCP's MPSA as well as the constitutionality of
Section 80. The case will end up again in this Court on the same issue of whether there is a valid
consideration for such MPSA, which necessarily involves a determination of the constitutionality of
Section 80. Clearly, this Court has no recourse but to decide now the constitutionality of Section 80.

As the Solicitor General reported in his Compliance dated 20 October 2004, the DENR has signed
five MPSAs with different parties.66 These five MPSAs uniformly contain the following provision:

Share of the Government - The Government Share shall be the excise tax on mineral
products at the time of removal and at the rate provided for in Republic Act No. 7729
amending Section 151(a) of the National Internal Revenue Code, as amended, as well as other
taxes, duties, and fees levied by existing laws. (Emphasis supplied)

If the constitutionality of Section 80 is not resolved now, these five MPSAs, including the WMCP
FTAA once converted into an MPSA, will remain in limbo. There will be no implementation of these
MPSAs until the Court finally resolves this constitutional issue.

Even if evaded now, the constitutionality of Section 80 will certainly resurface, resulting in a repeat of
this litigation, most probably even between the same parties. To avoid unnecessary delay, this Court
must rule now on the constitutionality of Section 80 of RA 7942.

2. The Constitutional Term Limit Applies to FTAAs

Section 3.3 of the WMCP FTAA provides a fixed contract term of 50 years at the option of WMCP.
Thus, Section 3.3 provides:

This Agreement shall be renewed by the Government for a further period of twenty-five (25)
years under the same terms and conditions provided that the Contractor lodges a request for a
renewal with the Government not less than sixty (60) days prior to the expiry of the initial term of this
Agreement and provided that the Contractor is not in breach of any of the requirements of this
Agreement. (Emphasis supplied)

This provision grants WMCP the absolute right to extend the first 25-year term of the FTAA to
another 25-year term upon mere lodging of a request or notice to the Philippine Government.
WMCP has the absolute right to extend the term of the FTAA to 50 years and all that the
Government can do is to acquiesce to the wish of WMCP.

Section 3.3 of the WMCP FTAA is void because it violates Section 2, Article XII of the 1987
Constitution, the first paragraph of which provides:

All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. The State may directly undertake such activities, or it may enter
into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by such citizens.
Such agreements may be for a period not exceeding twenty-five years, renewable for not
more than twenty-five years, and under such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant. (Emphasis
supplied)
The majority opinion, however, makes the startling assertion that FTAAs are not covered by the
term limit under Section 2, Article XII of the 1987 Constitution. The majority opinion states:

I believe that the constitutional term limits do not apply to FTAAs. The reason is that the
above provision is found within paragraph 1 of Section 2 of Article XII, which refers to
mineral agreements – co-production agreements, joint venture agreements and mineral production
sharing agreements - which the government may enter into with Filipino citizens and corporations, at
least 60 percent owned by Filipino citizens. (Emphasis supplied)

If the term limit does not apply to FTAAs because the term limit is found in the first paragraph of
Section 2, then the other limitations in the same first paragraph of Section 2 do not also apply to
FTAAs. These limitations are three: first, that the State owns the natural resources; second, except
for agricultural lands, natural resources shall not be alienated; third, the State shall exercise full
control and supervision in the exploitation of natural resources. Under the majority opinion's
interpretation, these three limitations will no longer apply to FTAAs, leading to patently
absurd results. The majority opinion will also contradict its own admission that even in FTAAs the
State must exercise full control and supervision in the exploitation of natural resources.

Section 2, Article XII of the 1987 Constitution is a consolidation of Sections 8 and 9, Article XIV of
the 1973 Constitution, which state:

Section 8. All lands of public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to
the State. With the exception of agricultural, industrial or commercial, residential, or resettlement
lands of the public domain, natural resources shall not be alienated, and no license, concession, or
lease for the exploration, or utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than development of water power, in which cases, beneficial use may be the
measure and the limit of the grant.

Section 9. The disposition, exploration, development, exploitation, or utilization of any of the natural
resources of the Philippines shall be limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital which is owned by such citizens. The Batasang
Pambansa, in the national interest, may allow such citizens, corporations or associations to enter
into service contracts for financial, technical, management, or other forms of assistance with any
foreign person or entity for the exploration, or utilization of any of the natural resources. Existing
valid and binding service contracts for financial, technical, management, or other forms of assistance
are hereby recognized as such.

Section 9, Article XIV of the 1973 Constitution, a one-paragraph section, contained the provision
reserving the exploration, development and utilization of natural resources to Philippine
citizens or corporations 60% Filipino owned as well as the provision on FTAAs. The provision
on the 25-year term limit was found in the preceding Section 8 of Article XIV. If the 25-year term limit
under the 1973 Constitution did not apply to FTAAs, then it should not also have applied to non-
FTAA mining contracts, an interpretation that is obviously wrong. Thus, the term limit in Section 8,
Article XIV of the 1973 Constitution necessarily applied to both non-FTAA mining contracts and
FTAAs in Section 9.

What the framers of the 1987 Constitution did was to consolidate Sections 8 and 9, Article XIV of the
1973 Constitution into one section, the present Section 2, Article XII of the 1987 Constitution. The
consolidation necessitated re-arranging the sentences and paragraphs without any intention of
destroying their unity and coherence. Certainly, the consolidation did not mean that the FTAAs are
no longer subject to the 25-year term limit. If anything, the consolidation merely strengthened the
need, following the rules of statutory construction, to read and interpret together all the paragraphs,
and even the sentences, of Section 2, Article XII of the 1987 Constitution.

In his book The 1987 Constitution of the Republic of the Philippines: A Commentary, Father
Joaquin G. Bernas, S.J., who was a leading member of the 1986 Constitutional Commission,
discussed the limitations on the exploitation of natural resources. Father Bernas states:

4. Other limitations

Agreements for the exploitation of the natural resources can have a life of only twenty-five
years. This twenty-five year limit dates back to the 1935 Constitution and is considered to be a
"reasonable time to attract capital, local and foreign, and to enable them to recover their investment
and make a profit. The twenty-five year limit on the exploitation of natural resources is not applicable
to "water rights for irrigation, water supply, fisheries, or industrial uses other than the development of
water power." In these cases, "beneficial use may be the measure and the limit of the grant." But in
the case of water rights for water power, the twenty-five year limit is applicable." 67 (Emphasis
supplied)

The 1935, 1973 and 1987 Constitutions all limit the exploitation of natural resources to 25-year
terms. They also limit franchises for public utilities, leases of alienable lands of public domain, and
water rights for power development to 25-year terms. If a different term is intended, the Constitution
expressly says so as in water rights for uses other than power development. Under the 1973 and
1987 Constitutions, there is no separate term for FTAAs other than the 25-year term for the
exploitation of natural resources.

The WMCP FTAA draws life from Executive Order No. 279 issued on 25 July 1987 by then
President Corazon C. Aquino when she still exercised legislative powers. Section 1.1 of the WMCP
FTAA expressly states, "This Agreement is a Financial & Technical Assistance Agreement
entered into pursuant to Executive Order No. 279." Section 7 of Executive Order No. 279
provides:

Section 7. All provisions of Presidential Decree No. 463, as amended, other existing mining
laws, and their implementing rules and regulations, or parts thereof, which are not inconsistent with
the provisions of this Executive Order, shall continue in force and effect. (Emphasis supplied)
Section 40 of Presidential Decree No. 463 ("PD 463"), as amended by Presidential Decree No.
1385, provides:

Section 40. Issuance of Mining Lease Contracts - x x x After the mining claim has been verified as to
its mineral contents and its actual location on the ground as determined through reports submitted to
the Director, the Secretary shall approve and issue the corresponding mining lease contract,
which shall be for a period not exceeding twenty-five (25) years, renewable upon the
expiration thereof for another period not exceeding twenty-five (25) years under such terms
and conditions as provided by law. (Emphasis supplied)

Thus, at the time of execution of the WMCP FTAA, statutory law limited the term of all mining
contracts to 25-year terms. PD 463 merely implemented the mandate of the 1973 Constitution on the
25-year term limit, which is the same 25-year term limit in the 1987 Constitution. Under Section 7 of
Executive Order No. 279, Section 40 of PD 463 limiting mining contracts to a 25-year term
applies to the WMCP FTAA. Therefore, Section 3.3 of the WMCP FTAA providing for a 50-year
term is void.
Then President Aquino also issued Executive Order No. 211 on 10 July 1987, a bare 17 days before
issuing Executive Order No. 279. Section 3 of Executive Order No. 211 states:

Section 3. The processing, evaluation and approval of all mining applications, declarations of
locations, operating agreements and service contracts as provided for in Section 2 above, shall be
governed by Presidential Decree No. 463, as amended, other existing mining laws, and their
implementing rules and regulations: Provided, However, that the privileges granted as well as
the terms and conditions thereof shall be subject to any and all modifications or alterations
which Congress may adopt pursuant to Section 2, Article XII of the 1987 Constitution.
(Emphasis supplied)

Section 3 of Executive Order No. 211 applies to the WMCP FTAA which was executed on 22 March
1995, more than seven years after the issuance of Executive Order No. 211. Subsequently,
Congress enacted RA 7942 to prescribe new terms and conditions for all mineral agreements. RA
7942 took effect on 9 April 1995.

RA 7942 governs the WMCP FTAA because Executive Order No. 211 expressly makes mining
agreements like the WMCP FTAA subject to "any and all modifications or alterations which
Congress may adopt pursuant to Section 2, Article XII of the 1987 Constitution." Section 38 of
RA 7942 provides for a 25-year term limit specifically for FTAAs, thus:

Section 38. Term of Financial or Technical Assistance Agreement. — A financial or technical

assistance agreement shall have a term not exceeding twenty-five (25) years to start from the
execution thereof, renewable for not more than twenty-five (25) years under such terms and
conditions as may be provided by law. (Emphasis supplied)

Thus, the 25-year term limit specifically for FTAAs in Section 38 of RA 7942 applies to the WMCP
FTAA. Again, Section 3.3 of the WMCP FTAA providing for a 50-year term is void.

What is clear from the foregoing is that the 25-year statutory term limit on mining contracts is merely
an implementation of the 25-year constitutional term limit, whether under the 1935, 1973 or 1987
Constitutions. The majority opinion's assertion that the 25-year term in the first paragraph of Section
2, Article XII of the 1987 Constitutions does not apply to FTAAs is obviously wrong.

3. Section 112 of RA 7942 Applies to the WMCP FTAA

The majority opinion insists that Section 112 of RA 7942 does not apply to the WMCP FTAA.
Section 112 provides:

Section 112. Non-impairment of Existing Mining/Quarrying Rights. — All valid and existing mining
lease contracts, permits/licenses, leases pending renewal, mineral production-sharing agreements
granted under Executive Order No. 279, at the date of effectivity of this Act , shall remain valid,
shall not be impaired, and shall be recognized by the Government: Provided, That the provisions
of Chapter XIV on government share in mineral production-sharing agreement and of Chapter
XVI on incentives of this Act shall immediately govern and apply to a mining lessee or
contractor unless the mining lessee or contractor indicates his intention to the secretary, in
writing, not to avail of said provisions: Provided, further, That no renewal of mining lease contracts
shall be made after the expiration of its term: Provided, finally, That such leases, production-sharing
agreements, financial or technical assistance agreements shall comply with the applicable provisions
of this Act and its implementing rules and regulations. (Emphasis supplied)

Section 112 "immediately" applies the fiscal regime under Section 80 on "mineral production sharing
agreement" to "all valid and existing mining" contracts, including those "granted under Executive
Order No. 279." If Section 112 applies to the WMCP FTAA, then the WMCP FTAA is subject
only to the 2% excise tax under Section 80 as the "total share" of the Philippine Government.

The majority opinion states, "Whether Section 112 may properly apply to co-production or joint
venture agreements, the fact of the matter is that it cannot be made to apply to FTAAs." This
position of the majority opinion is understandable. If Section 112 applies to FTAAs, the majority
opinion would have to rule on the constitutionality of Section 80 of RA 7942. The majority opinion
already agrees that the 1987 Constitution requires the FTAA contractor to pay the State "more than
the usual taxes, duties and fees." If Section 112 applies to FTAAs, the majority opinion would have
no choice but declare unconstitutional Section 80.

Thus, the majority opinion insists that Section 112 "cannot be made to apply to FTAAs." This
insistence of the majority opinion collides with the very clear and plain language of Section
112 of RA 7942 and Section 1.1 of the WMCP FTAA. This insistence of the majority opinion will
lead to absurd results.

First, Section 112 of RA 7942 speaks of "all valid and existing mining" contracts. The phrase "all
valid and existing mining" contracts means the entire or total mining contracts in existence "at the
date of effectivity" of RA 7942 without exception. The word "all" negates any exception. This
certainly includes the WMCP FTAA, unless the majority opinion concedes that the WMCP FTAA is
not a mining contract, or if it is, that it is not a valid contract.

Second, the last proviso of Section 112 itself expressly states that "financial or technical
assistance agreements shall comply with the applicable provisions of this Act and its
implementing rules and regulations." There is no shadow of doubt whatsoever that Section 112,
by its own plain, clear and indisputable language, commands that FTAAs shall comply with RA
7942. I truly cannot fathom how the majority opinion can assert that Section 112 cannot apply to
FTAAs.

Third, Section 112 expressly refers to Chapters XIV and XVI of RA 7942. Chapter XIV refers to the
"Government Share" and covers Sections 80, 81 and 82 of RA 7942. Section 81, as the majority
opinion concedes, applies to FTAAs. Chapter XVI refers to "Incentives" and covers Section 90 to
94 of RA 7942. Section 90 states that the "contractors in mineral agreements, and financial
technical and assistance agreements shall be entitled to the fiscal and non-fiscal incentives as
provided under Executive Order No. 226 x x x." Clearly, Section 112 applies to FTAAs.

Fourth, Section 1.1 of the WMCP FTAA expressly states, "This Agreement is a Financial &
Technical Assistance Agreement entered into pursuant to Executive Order No. 279." Section
112 states in unequivocal language that "all valid and existing" agreements "granted under
Executive Order No. 279" are immediately placed under the fiscal regime of MPSAs. In short,
mining agreements granted under Executive Order No. 279 are expressly among the agreements
included in Section 112 and placed under the fiscal regime prescribed in Section 80. There is no
doubt whatsoever that Section 112 applies to the WMCP FTAA which was "entered into pursuant
to Executive Order No. 279."

Fifth, Section 3 of Executive Order No. 211 expressly subjects all mining contracts executed by the
Executive Department to the terms and conditions of new mining laws that Congress might enact in
the future. Thus, Section 3 of Executive Order No. 211 states:

Section 3. The processing, evaluation and approval of all mining applications, declarations of
locations, operating agreements and service contracts as provided for in Section 2 above, shall be
governed by Presidential Decree No. 463, as amended, other existing mining laws, and their
implementing rules and regulations: Provided, However, that the privileges granted as well as
the terms and conditions thereof shall be subject to any and all modifications or alterations
which Congress may adopt pursuant to Section 2, Article XII of the 1987 Constitution.
(Emphasis supplied)

There is no dispute that Executive Order No. 211, issued prior to the execution of the WMCP FTAA,
applies to the WMCP FTAA. There is also no dispute that RA 7942 took effect after the issuance of
Executive Order No. 211 and after the execution of the WMCP FTAA. Therefore, Section 112 of RA
7942 applies specifically to the WMCP FTAA.

Indeed, it is plain to see why Section 112 of RA 7942 applies to FTAAs, like the WMCP FTAA, that
were executed prior to the enactment of RA 7942. Section 112 is found in Chapter XX of RA 7942
on "Transitory and Miscellaneous Provisions." The title of Section 112 refers to the "[N]on-
impairment of Existing Mining Quarrying Rights." RA 7942 is the general law governing all kinds of
mineral agreements, including FTAAs. In fact, Chapter VI of RA 7942, covering nine sections,
deals exclusively on FTAAs. The fiscal regime in FTAAs executed prior to the enactment of RA
7942 may differ from the fiscal regime prescribed in RA 7942. Hence, Section 112 provides the
transitory provisions to resolve differences in the fiscal regimes, ostensibly to avoid impairment of
contract obligations. Clearly, Section 112 applies to FTAAs.

There are no ifs or buts in Section 112. The plain, simple and clear language of Section 112 makes
FTAAs, like the WMCP FTAA, subject to Section 112. We repeat the express words of Section 112 -

(1) "All valid and existing mining lease contracts x x x mineral production-sharing
agreements granted under Executive Order No. 279, at the date of effectivity of this Act x x x."

(2) the "x x x government share in mineral production- sharing agreement x x x shall
immediately govern and apply to a mining lessee or contractor x x x."

(3) "financial or technical assistance agreements shall comply with the applicable provisions
of this Act and its implementing rules and regulations."

With such clear and unequivocal language, how can the majority opinion blithely state that Section
112 "cannot be made to apply to FTAAs"? It defies common sense, simple logic and plain English
to assert that Section 112 does not apply to FTAAs. It defies the fundamental rule of statutory
construction as repeated again and again in jurisprudence:
Time and time again, it has been repeatedly declared by this Court that where the law speaks in
clear and categorical language, there is no room for interpretation. There is only room for
application.68

For nothing is better settled than that the first and fundamental duty of courts is to apply the law as
they find it, not as they like it to be. Fidelity to such a task precludes construction or interpretation,
unless application is impossible or inadequate without it. 69

Where the law is clear and unambiguous, it must be taken to mean exactly what it says and the
court has no choice but to see to it that its mandate is obeyed. 70

If Section 112 of RA 7942 does not apply to FTAAs as the majority opinion asserts, what will
govern FTAAs executed before the enactment of RA 7942, like the WMCP FTAA? Section 112
expressly addresses FTAAs executed before the enactment of RA 7942, requiring these earlier
FTAAs to comply with the provisions of RA 7942 and its implementing rules. Executive Order No.
211, issued seven years before the execution of the WMCP FTAA, requires all FTAAs subsequently
executed to comply with the terms and conditions of any future mining law that Congress may enact.
That law is RA 7942 which took effect after the execution of the WMCP FTAA.

The majority opinion allows the WMCP FTAA to become sui generis, an FTAA outside the scope of
RA 7942 which expressly governs "all" mining agreements, whether MPSAs or FTAAs. This means
that the WMCP FTAA is not even governed by Section 81 of RA 7942 and its phrase "among other
things," which the majority opinion claims is the authority to subject the WMCP FTAA to the payment
of consideration that is "more than the usual taxes, duties and fees."

This makes the majority opinion's position self-contradictory and inutile. The majority opinion claims
that the WMCP FTAA is subject to the phrase "among other things" in Section 81. At the same time,
the majority opinion asserts that Section 112, which requires earlier FTAAs to comply with Section
81 and other provisions of RA 7942, does not apply to the WMCP FTAA. The majority opinion is
caught in a web of self-contradictions.

This exemption by the majority opinion of the WMCP FTAA from Section 112 is judicial class
legislation. Why is the WMCP FTAA so special that the majority opinion wants it exempted from
Section 112 of RA 7942? Why are only "all" other FTAAs subject to the terms and conditions of RA
7942 and not the WMCP FTAA?

4. Foreign Corporations and Contractors Cannot Hold Exploration Permits

The majority opinion states that "there is no prohibition at all against foreign or local
corporations or contractors holding exploration permits." This is another assertion of the
majority opinion that directly collides with the plain language of the 1987 Constitution.

Section 2, Article XII of the 1987 Constitution expressly reserves to Philippine citizens and
corporations 60% Filipino owned the "exploration, development and utilization of natural
resources." The majority opinion rationalizes its assertion in this manner:

Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person

the right to conduct exploration for minerals in specified areas. Such a permit does not
amount to an authorization to extract and carry off the mineral resources that may be
discovered. x x x. (Italics in original)

The issue is not whether an exploration permit allows a foreign contractor or corporation to extract
mineral resources, for apparently by its language alone a mere exploration permit does not. There is
no dispute that an exploration permit merely means authority to explore, not to extract. The issue is
whether the issuance of an exploration permit to a foreign contractor violates the constitutional
limitation that only Philippine citizens or corporations 60% Filipino owned can engage in the
"exploration x x x of natural resources."

The plain language of Section 2, Article XII of the 1987 Constitution clearly limits to Philippine
citizens or to corporations 60% Filipino owned the right to engage in the "exploration x x x of
natural resources." To engage in "exploration" is simply to explore, not to develop, utilize or
extract. To engage in exploration one must secure an exploration permit. The mere issuance of
the exploration permit is the authority to engage in the exploration of natural resources.

This activity of exploration, which requires an exploration permit, is a reserved activity not allowed
to foreign contractors or foreign corporations. Foreign contractors and foreign corporations cannot
secure exploration permits because they cannot engage in the exploration of natural resources. If,
as the majority opinion asserts, foreign contractors or foreign corporations can secure and hold
exploration permits, then they can engage in the "exploration x x x of natural resources." This
violates Section 2, Article XII of the 1987 Constitution.

Consequently, Section 3(aq) of RA 7942, which provides that "a legally organized foreign-owned
corporation shall be deemed a qualified person for purposes of granting an exploration permit," is
void and unconstitutional.

However, the State may directly undertake to explore, develop and utilize the natural resources. To
do this the State may contract a foreign corporation to conduct the physical act of exploration in
the State's behalf, as in an FTAA. In such a case, the foreign FTAA contractor is merely an agent of
the State which holds the right to explore. No exploration permit is given to the foreign contractor
because it is the State that is directly undertaking the exploration, development and utilization of
the natural resources.

The requirement reserving "exploration x x x of natural resources" to Philippine citizens or to

corporations 60% Filipino owned is not a matter of constitutional whim. The State cannot allow
foreign corporations, except as contractual agents under the full control and supervision of the State,
to explore our natural resources because information derived from such exploration may have
national security implications.

If a Chinese company from the People's Republic of China is allowed to explore for oil and gas in the
Spratlys, the technical information obtained by the Chinese company may only bolster the resolve of
the Chinese Government to hold on to their occupied reefs in the Spratlys despite these reefs being
within the Exclusive Economic Zone of the Philippines. Certainly, we cannot expect the Chinese
company to disclose to the Philippine Government the important technical data obtained from such
exploration.

In Africa, foreign mining companies who have explored the mineral resources of certain countries
shift their support back and forth between government and rebel forces depending on who can give
them better terms in exploiting the mineral resources. Technical data obtained from mineral
exploration have triggered or fueled wars and rebellions in many countries. The right to explore
mineral resources is not a trivial matter as the majority opinion would want us to believe.

Even if the foreign companies come from countries with no territorial dispute with the Philippines,
can we expect them to disclose fully to the Philippine Government all the technical data they obtain
on our mineral resources? These foreign companies know that the Philippine Government will use
the very same data in negotiating from them a higher share of the mining revenues. Why will the
foreign companies give to the Philippine Government technical data justifying a higher share for the
Philippine Government and a lower share for the foreign companies? The framers of the 1935, 1973
and 1986 Constitutions were acutely aware of this problem. That is why the 1987 Constitution not
only reserves the "exploration x x x of natural resources" to Philippine citizens and to
corporations 60% Filipino owned, it also now requires the State to exercise "full control and
supervision" over the "exploration x xx of natural resources."

5. The State is Entitled to 60% Share in the Net Mining Revenues

The majority opinion claims that the Constitution does not require that the State's share in FTAAs or
other mineral agreements should be at least 60% of the net mining revenues. Thus, the majority
opinion states that "the Charter did not intend to fix an iron-clad rule on the 60 percent share,
applicable to all situations at all times and in all circumstances."

The majority opinion makes this claim despite the express admission by intervenor CMP and
respondent WMCP that the State, as owner of the natural resources, is entitled to 60% of the net
mining revenues. The intervenor CMP admits that under an FTAA, the Philippine Government
"stands in the place of the 60% Filipino owned company" and hence must retain 60% of the net
income. Thus, intervenor CMP concedes that:

x x x In other words, in the FTAA situation, the Government stands in the place of the 60%
Filipino-owned company, and the 100% foreign-owned contractor company takes all the risks of
failure to find a commercially viable large-scale ore body or oil deposit, for which the contractor will
get 40% of the financial benefits.71 (Emphasis supplied)

As applied to the WMCP FTAA, intervenor CMP asserts that the "contractor's stipulated share
under the WMCP FTAA is limited to a maximum of 40% of the net production."72 Intervenor
CMP further insists that "60% of its (contractor's) net returns from mining, if any, will go to the
Government under the WMCP FTAA."73

Like intervenor CMP, respondent WMCP also maintains that under an FTAA, the State is
"guaranteed" a 60% share of the foreign contractor's Net Mining Revenues. Respondent WMCP
admits that:

In other words, the State is guaranteed a sixty per centum (60%) share of the Mining
Revenues, or 60% of the actual fruits of the endeavor. This is in line with the intent behind
Section 2 of Article XII that the Filipino people, as represented by the State, benefit primarily
from the exploration, development, and utilization of the Philippines' natural resources.

Incidentally, this sharing ratio between the Philippine Government and the Contractor is also
in accordance with the 60%-40% equity requirement for Filipino-owned corporations in
Paragraph 1 of Section 2 of Article XII.74 (Emphasis supplied)

In short, the entire mining industry, as represented by intervenor CMP, is willing to pay the State a
share equivalent to 60% of the net mining revenues. Even the foreign contractor WMCP agrees to
pay the State 60% of its net mining revenues, albeit dishonestly.

However, the majority opinion refuses to accept that the State is entitled to what the entire mining
industry is willing to pay the State. Incredibly, the majority opinion claims that "there is no
independent showing that the taking of at least 60 percent share in the after-tax income of a
mining company operated by a foreign contractor is fair and reasonable under most if not all
circumstances." Despite the willingness of the entire mining industry to pay the State a 60% share
without exception, the majority opinion insists that such sharing is not fair and reasonable to the
mining industry "under most if not all circumstances." What is the basis of the majority opinion in
saying this when the entire mining industry already admits, concedes and accepts that the State is
entitled, without exception, to 60% of the net mining revenues?

Oddly, the majority opinion cites only the personal experience of the ponente, who had previously
"been engaged in private business for many years." The majority opinion even states, in insisting
that the State should receive less than 60% share, that "[F]airness is a credo not only in law, but
also in business." The majority opinion cannot be more popish than the Pope. The majority
opinion ponente's business judgment cannot supplant the unanimous business judgment of the
entire mining industry, as manifested by intervenor CMP before this Court. What is obvious is that it
is not fair to deprive the Filipino people, many of whom live in hand to mouth existence, of what is
legally their share of the national patrimony, in light of the willingness of the entire mining industry to
pay the Filipino people their rightful share.

The majority opinion gives a "simplified illustration" to show that the State does not deserve a 60%
share of the net proceeds from mining revenues. The majority opinion states:
x x x Let us base it on gross revenues of, say, P500. After deducting operating expenses, but prior to
income tax, suppose a mining makes a taxable income of P100. A corporate income tax of 32
percent results in P32 of taxable income going to the government, leaving the mining firm with P68.
Government then takes 60 percent thereof, equivalent to P40.80, leaving only P27.20 for the mining
firm.

The majority opinion's "simplified illustration" is indeed too simplified because it does not even
consider the exploration, development and capital expenses. The majority opinion's "simplified
illustration" deducts from gross revenues only "operating expenses." This is an egregious error that
makes this "simplified illustration" misleading. Exploration, development and other capital expenses
constitute a huge part of the deductions from gross revenues. In the early years of commercial
production, the exploration, development and capital expenses, if not subject to a cap or limitation,
can wipe out the gross revenues.

The majority opinion's operating expenses are not even taken from mining industry rates. One can
even zero out the taxable income by simply jacking up the operating expenses. A "simplified
illustration" of an income statement of an operating mining company, omitting the deduction of
amortized capital expenses, serves no purpose whatsoever. What is important is the return on the
investment of the foreign contractor. The absolute amount that goes to the contractor may be
smaller than what goes to the State. However, the amount that goes to the contractor may be a
hundred times its investment. This can only be determined if the capital expenditures of the
contractor are taken into account.

Under an FTAA, the State is directly undertaking the exploitation of mineral resources. The net
proceeds are not subject to income tax since there is no separate taxable entity. The State is an
entity but not a taxable corporate entity. The State does not pay income tax to itself, and even if it
does, it is just a book entry since it is the payor and payee at the same time. Only the 40% share of
the FTAA contractor is subject to the 32% corporate income tax. On this score alone, the majority
opinion's "simplified illustration" is wrong.

Intervenor CMP and respondent WMCP are correct in anchoring on Section 2, Article XII of the 1987
Constitution their admission that the State is entitled to 60% of the net mining revenues. Their
common position is based on the Constitution, existing laws and industry practice.

First, the State owns the mineral resources. To the owner of the mineral resources belongs the
income from any exploitation of the mineral resources. The owner may share its income with the
contractor as compensation to the contractor, which is an agent of the owner. The industry practice
is the owner receives an equal or larger share of the income as against the share of the contractor or
agent.

In the Occidental-Shell FTAA covering Malampaya, where the contractor contributed all the capital
and technology, the State receives 60% of the net proceeds. In addition, Occidental-Shell's 40%
share is subject to the 32% Philippine income tax. Occidental-Shell's US$2 billion investment 75 in
Malampaya is by far the single biggest foreign investment in the Philippines. The offshore
Malampaya gas extraction is also by far more capital intensive and riskier than land-based mineral
extraction. Over the 20-year life of the natural gas reserves, the State will receive US$8-10 billion 76
from its share in the Occidental-Shell FTAA.

In Consolidated Mines, Inc. v. Court of Tax Appeals,77 a case decided under the 1973
Constitution, Consolidated Mines, the concessionaire of the mines, shared equally the net mining
income with Benguet Consolidated Mines, the mining operator or contractor. Thus, as quoted in
Consolidated Mines, the agreement between the concessionaire and operator stated:
X. After Benguet has been fully reimbursed for its expenditures, advances and disbursements as
aforesaid the net profits from the operation shall be divided between Benguet and Consolidated
share and share alike, it being understood however, that the net profits as the term is used in this
agreement shall be computed by deducting from gross income all operating expenses and all
disbursements of any nature whatsoever as may be made in order to carry out the terms of this
agreement. (Emphasis supplied)

Incidentally, in Consolidated Mines the State did not receive any share in the net mining income
because of the "license, concession or lease" system under the 1935 and 1973 Constitutions. The
State and the Filipino people received only taxes, duties and fees.

Second, the State exercises "full control and supervision" over the exploitation of mineral
resources. "Full control" as used in the Constitution means more than ordinary majority control. In
corporate practice, ordinary control of a corporation means a simple majority control, or at least
50% plus one of the total voting stock. In contrast, full or total control means two-thirds of the
voting stock, which enables the owner of the two-thirds equity to amend any provision in the charter
of the corporation. However, since foreigners can own up to 40% of the equity of mining companies,
"full control" cannot exceed the control corresponding to the State's 60% equity. Thus, the State's
share in the net proceeds of mining companies should correspond to its 60% interest and control in
mining companies.

Third, Section 2, Article XII of the 1987 Constitution requires that the FTAA must make "real
contributions to the economic growth and general welfare of the country." As respondent
WMCP aptly admits, "the intent behind Section 2 of Article XII (is) that the Filipino people, as
represented by the State, (shall) benefit primarily from the exploration, development, and
utilization of the Philippines' natural resources." For the Filipino people to benefit primarily from
the exploitation of natural resources, and for FTAAs to make real contributions to the national
economy, the majority of the net proceeds from mining operations must accrue to the State.

Fourth, the 1987 Constitution ordains the State to "conserve and develop our patrimony." The
nation's mineral resources are part of our national patrimony. The State can "conserve" our mineral
resources only if the majority of the net proceeds from the exploitation of mineral resources accrue
to the State.

In sum, only the majority opinion refuses to accept that the State has a right to receive at least 60%
of the net proceeds from mining operations. The principal parties involved in this case do not object
that the State shall receive such share. The entire mining industry and respondent WMCP admit that
the State is entitled to a 60% share of the net proceeds. The State, represented by the Government,
will certainly not object to such share.

More than anything else, the intent and language of the 1987 Constitution require that the State
receive the bulk of the income from mining operations. Only Congress, through a law, may allow a
share lesser than 60% if certain compelling conditions are present. Congress may authorize the
President to make such determination subject to standards and limitations that Congress shall
prescribe.

The majority opinion wants to give the President the absolute discretion to determine the State's
share from mining revenues. The President will be hard put accepting anything less than 60% of the
net proceeds. If the President accepts less than 60%, the President is open to a charge of entering
into a manifestly and grossly disadvantageous contract to the Government because the entire
mining industry, including WMCP, has already agreed to pay 60% of the net proceeds to the State.
The only way to avoid this is for Congress to enact a law providing for the conditions when the State
may receive less than 60% of the net proceeds.

Conclusion

Let us assume that one of the Justices of this Court is the owner of mineral resources – say gold
reserves. A foreigner offers to extract the gold and pay for all development, capital and operating
expenses. How much will the good Justice demand as his or her share of the gold extracted by the
foreigner? If the Justice follows the Malampaya precedent, he or she will demand a 60% share of the
net proceeds. If the Justice follows the manifestation of intervenor CMP and respondent WMCP
before this Court, he or she will also demand a 60% share in the net proceeds. If the Justice follows
the Consolidated Mines precedent, he or she will demand no less than 50% of the net proceeds. In
either case, the 2% excise tax on the gold extracted is part of the operating expenses to be paid by
the foreigner but deducted from the gross proceeds.

Now, under the Regalian doctrine the State, not the Justice, owns the gold reserves. How much
should the State demand from the foreigner as the State's share of the gold that is extracted? If we
follow Sections 39, 80, 81, 84 and 112 of RA 7942, the State will receive only 2% excise tax as
its "total share" from the gold that is extracted.

Is this fair to the State and the Filipino people, many of whom live below the poverty line? Is this
what the 1987 Constitution mandates when it says that (a) the State must conserve and develop the
nation's patrimony, (b) the State owns all the natural resources, (c) the State must exercise full
control and supervision over the exploitation of its natural resources, and (d) FTAAs must make real
contributions to the national economy and the general welfare?

How this Court decides the present case will determine largely whether our country will remain poor,
or whether we can progress as a nation. Based on NEDA's estimates, the total mineral wealth of the
nation is P47 trillion, or US$840 billion. This is 15 times more than our US$56 billion foreign debt.
Can this Court in conscience agree that the State will receive only 2% of the P47 trillion
mineral wealth of the nation?

In Miners Association, this Court ruled that the 1987 Constitution has abandoned the old system of
"license, concession or lease" and instead installed full State control and supervision over the
exploitation of natural resources. No amount of dire warnings or media publicity should intimidate
this Court into resurrecting the old and discredited system that has caused the denudation of almost
all of the nation's virgin forests without any visible benefit to the Filipino people.

The framers of the 1987 Constitution have wisely instituted the new system to prevent a repeat of
the denudation of our forestlands that did not even make any real contribution to the economic
growth of the nation. This Court must do its solemn duty to uphold the intent and letter of the
Constitution and, in the words of the Preamble of the 1987 Constitution, "conserve and develop our
patrimony" for the benefit of the Filipino people.

This Court cannot trivialize the Filipino people's right to be the primary beneficiary of the nation's
mineral resources by ruling that the phrase "among other things" is sufficient to insure that FTAAs
will "make real contributions to the economic growth and general welfare of the country." This
Court cannot tell the Filipino people that the phrase "among other things" is sufficient to "preserve
and develop the national patrimony." This Court cannot tell the Filipino people that the phrase
"among other things" means that they will receive the bulk of mining revenues.

This Court cannot tell the Filipino people that Congress deliberately used the phrase "among other
things" to guarantee that the Filipino people will receive their equitable share from mining revenues
of foreign contractors. This Court cannot tell the Filipino people that with the phrase "among other
things," this Court has protected the national interest as mandated by the 1987 Constitution.

I therefore vote to deny the motions for reconsideration. I vote to declare unconstitutional Section
3(aq), Section 39, Section 80, the second paragraph of Section 81, the proviso in Section 84, and
the first proviso in Section 112 of RA 7942 for violation of Section 2, Article XII of the 1987
Constitution. In issuing the rules to implement these void provisions of RA 7942, DENR Secretary
Victor O. Ramos gravely abused his discretion amounting to lack or excess of jurisdiction.

I also vote to declare unconstitutional the present WMCP FTAA for violation of the same Section 2,
Article XII of the 1987 Constitution. However, WMCP may negotiate with the Philippine Government
for a new mineral agreement covering the same area consistent with this Decision.

DISSENTING OPINION

CARPIO MORALES, J.:

Regrettably, a majority of the members of this Court has voted to reverse its January 27, 2004
Decision in La Bugal-B'Laan Tribal Association, Inc. v. Ramos 1 by which it declared certain
provisions2 of the Mining Act of 1995 3 on Financial or Technical Assistance Agreements (FTAAs), the
related provisions of Department of Environment and Natural Resources Administrative Order 96-40
(DAO No. 96-40), and the March 22, 1995 Financial and Technical Assistance Agreement (FTAA)
executed between the Government of the Republic of the Philippines and WMC Philippines, Inc.
(WMCP) in violation of Section 2, Article XII of the Constitution.

Because I find that: (1) the "agreements … involving either technical or financial assistance"
contemplated by the fourth paragraph of Section 2, Article XII of the 1987 Constitution are distinct
and dissimilar from the "service contracts" under the 1973 Constitution; and (2) these certain
provisions of the Mining Act, its implementing rules, and the WMCP FTAA unconstitutionally convey
beneficial ownership and control over Philippine mineral and petroleum resources to foreign
contractors, I most respectfully dissent.

Antecedents

By motion, private respondent WMCP seeks a reconsideration of this Court's Decision, it arguing
essentially that FTAAs are the same as service contracts which were sanctioned under the 1973
Constitution.

By Resolution of June 22, 2004, this Court, upon motion, 4 impleaded Philippine Chamber of Mines
(PCM), as respondent-in-intervention. Intervenor PCM argues that the "agreements" referred to in
paragraph 4 of Section 2, Article XII of the Constitution were intended to involve or include the
"service contracts" provided for in the 1973 Constitution.

The parties were, on June 29, 2004, heard on oral arguments during which two major issues were
tackled: first, the proper interpretation of the phrase "agreements… involving either technical or
financial assistance" in Section 2, Article XII of the Constitution, and second, mootness.

Thereafter, the parties submitted their respective memoranda, as required by Resolution of this
Court. However, despite the verbal request of Associate Justice Artemio V. Panganiban during the
oral arguments,5 intervenor PCM failed to submit along with its memorandum any documents to
establish international mining practices, particularly in developing countries.
 Issues for Resolution

The majority opinion holds that the resolution of the Motions for Reconsideration in this case should
be confined to the issues taken up during the oral arguments on June 29, 2004. These were: (1) the
proper interpretation of the phrase "agreements… involving either technical or financial assistance"
in Section 2, Article XII of the Constitution, and (2) mootness.

It further holds that the issue of whether the Mining Act and the WMCP FTAA are manifestly
disadvantageous to the government could not be passed upon because the same was supposedly
not raised in the original petition.

These rulings, while well intentioned, cannot be accepted.

First, there is no rule of procedure, whether in Rule 52 or elsewhere, which restricts the resolution of
a case to the issues taken up in the oral arguments. The reason is obvious. The issues for resolution
in any given case are determined by the conflicting arguments of the parties as set forth in their
pleadings. On the other hand, the matters to be taken up in an oral argument may be limited, by
order of the court, to only such points as the court may deem necessary. Thus, Section 1 of Rule 49
provides:

Section 1. When allowed. – At its own instance or upon motion of a party, the court may hear the
parties in oral argument on the merits of a case, or on any material incident in connection
therewith.

The oral argument shall be limited to such matters as the court may specify in its order or
resolution (Emphasis supplied)

A narrow delimitation of matters to be taken up during oral argument is a matter of practical

necessity since often not all the relevant issues can be thoroughly discussed without unduly
imposing on the time of the Court. However, unlike a pre-trial order, 6 the delimitation does not control
or limit the issues to be resolved. These issues may be subject matter of the parties' memoranda, as
in this case.

Second, as noted in the Decision,7 the issue of whether the Mining Act and the WMCP FTAA afford
the State a just share in the proceeds of its natural resources was in fact raised by the petitioners,
viz:

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

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act
No. 7942, the latter being unconstitutional in that it allows fully foreign owned corporations to
explore, 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 Act
No. 7942, the latter being unconstitutional in that it allows the taking of private property without the
determination of public use and for just compensation;

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

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act
No. 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 Article
XII of the Constitution;

VI

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing

Republic Act No. 7942, the latter being unconstitutional in that it allows the inequitable
sharing of wealth contrary to 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 Mining
Corporation Philippines Inc. because the same is illegal and unconstitutional. 8 (Emphasis and
underscoring supplied)

Indeed, this Court expressly passed upon this issue in the Decision when it held that:

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 technical
agreements" in accordance with the 1987 Constitution, it actually treats these agreements as
service contracts that grant beneficial ownership to foreign contractors contrary to the
fundamental law.9 (Emphasis and underscoring supplied)

Moreover, the issue of whether the State is deprived of its just share in the proceeds from mining
was touched upon by the parties in their memoranda. Thus, respondent WMCP argues that:

Section 10.2 (a) of the COLUMBIO FTAA does not prohibit the State from partaking of the
fruits of the exploration. In fact, Section 7.7 of the COLUMBIO FTAA provides:

"7.7 Government Share

From the Commencement of Commercial Production, the Contractor shall pay a government
share of sixty per centum (60%) of Net Mining Revenues, calculated in accordance with the
following provisions (the "Government Share"). The Contractor shall be entitled to retain the
balance of all revenues from the Mining Operations."

In other words, the State is guaranteed a sixty per centum (60%) share of the Net Mining Revenues,
or 60% of the actual fruits of the endeavor. This is in line with the intent behind Section 2 of
Article XII that the Filipino people, as represented by the State, benefit primarily from the
exploration, development, and utilization of the Philippines' natural resources. 10
(Emphasis
and underscoring supplied)

while the petitioners, for their part, claim:

For instance, government share is computed on the basis of net mining revenue. Net mining
revenue is gross mining revenue less, among others, deductible expenses. Some of the allowable
deductions from the base amount to be used to compute government share are suspicious.
The WMCP FTAA contract, for instance, allows expenditures for development "outside the Contract
Area," consulting fees for work done "outside the Philippines," and the "establishment and
administration of field offices including administrative overheads incurred within and outside the
Philippines."

xxx

One mischief inherent in past service contracts was the practice of transfer pricing. UNCTAD defines
this as the "pricing of transfers of goods, services and other assets within a TNC network." If
government does not control the exploration, development and utilization of natural
resources, then the intra-transnational corporation pricing of expenditures may not become
transparent. 11 (Emphasis supplied; footnotes omitted)

In fine, the majority opinion skirts an issue raised in the original Petition for Prohibition and
Mandamus, passed upon in its Decision of January 27, 2004 and argued by the parties in the
present Motion for Reconsideration.

Instead, I find that the myriad arguments raised by the parties may be grouped according to two
broad categories: first, the arguments pertaining to the constitutionality of FTAA provisions of the
Mining Act; and second, those pertaining to the validity of the WMCP FTAA. Within these categories,
the following issues are submitted for resolution: (1) whether in invalidating certain provisions of the
Mining Act a non-justiciable political question is passed upon; (2) whether the FTAAs contemplated
in Section 2, Article XII of the 1987 Constitution are identical to, or inclusive of, the "service
contracts" provided for in the 1973 Constitution; (3) whether the declaration of the unconstitutionality
of certain provisions of the Mining Act should be reconsidered; (4) whether the question of validity of
the WMCP FTAA was rendered moot before the promulgation of the Decision; and (5) whether the
decision to declare the WMCP FTAA unconstitutional and void should be reconsidered.
Following the foregoing framework of analysis, I now proceed to resolve the issues raised in the
motion for reconsideration.

Constitutionality of the Philippine Mining Act of 1995

The issues presented constitute

justiciable questions.

Contrary to the posture of respondent WMCP, this Court did not tread on a political question in
rendering its Decision of January 27, 2004.

The Constitution delineates the parameters of the powers of the legislative, the executive and the
judiciary.12 Whether the first and second great departments of government exceeded those
parameters is the function of the third. 13 Thus, the Constitution defines judicial power to include "the
duty… to determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government." 14
Judicial power does not extend to political questions, which are concerned with issues dependent
upon the wisdom, not the legality, of a particular measure. 15 The reason is that, under our system of
government, policy issues are within the domain of the political branches of government and of the
people themselves as the repository of all state power. 16 In short, the judiciary does not settle policy
issues.17

The distinction between a truly political question and an ostensible one lies in the answer to the
question of whether there are constitutionally imposed limits on powers or functions conferred upon
political bodies.18 If there are constitutionally imposed limits, then the issue is justiciable, and a court
is duty-bound to examine whether the branch or instrumentality of the government properly acted
within those limits.19

Respondent WMCP argues that the "exploration, development, and utilization of natural resources
are matters of policy, in other words, political matters or questions," over which this Court has no
jurisdiction.

Respondent is mistaken. The questions involved in this case are not political. The provisions of
paragraph 4, Section 2 of Article XII of the Constitution, including the phrase "agreements…
involving either technical or financial assistance," incorporate limitations 20 on the scope of such
agreements or FTAAs. Consequently, they constitute limitations on the powers of the legislative to
determine their terms, as well as the powers of the Executive to enter into them. In its Decision, this
Court found that, by enacting the objectionable portions of the Mining Act and in entering into the
subject FTAA, the Congress and the President went beyond the constitutionally delimited scope of
such agreements and thereby transgressed the boundaries of their constitutional powers.

The "agreements" contemplated in paragraph 4, Section 2,

Article XII of the Constitution are distinct and dissimilar from the old "service contracts."

The majority and respondents share a common thesis: that the fourth paragraph of Sec. 2, Article XII
contemplates not only financial or technical assistance but, just like the service contracts which were
allowed under the 1973 Constitution, management assistance as well.

The constitutional provision in dispute reads:

Art. XII

National Economy and Patrimony

xxx

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and utilization of natural resources
shall be under the full control and supervision of the State. The State may directly undertake such
activities or it may enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned
by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and under such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive 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, as
well 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
technical or financial assistance for large-scale exploration, development, and utilization of
minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of
the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution. (Emphasis and underscoring supplied)

Its counterpart provision in Article XIV of the 1973 Constitution authorized "service contracts" as
follows:

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

Respondent WMCP contends that the fourth paragraph of Section 2 is an exception to the rule that
participation in the country's natural resources is reserved to Filipinos. 21 It hastens to add, however,
that the word "may" therein is permissive not restrictive; 22 and that consistent with the provision's
permissive nature, the word "involving" therein should be construed to mean "to include," such that
the assistance by foreign corporations should not be confined to technical or financial, but also to
management forms.23 And it notes that the Constitution used "involving" instead of such restrictive
terms as "solely," "only," or "limited to."24

To the Office of the Solicitor General (OSG), the intent behind the fourth paragraph is to prevent the
practice under the 1973 Constitution of allowing foreigners to circumvent the capitalization
requirement,25 as well as to address the absence of a governing law that led to the abuse of service
contracts.26 The phrase "technical or financial" is merely for emphasis, the OSG adds, that it is
descriptive, not definitive, of the forms of assistance that the State needs and which foreign
corporations may provide in the large-scale exploration, development and utilization of the specified
resources.27 Furthermore, the OSG contends that the denomination of the subject FTAA as a
"financial and technical assistance agreement" is a misnomer and should more properly be called
"agreements for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils."28 It argues that the President has broad discretion to enter into any agreement,
regardless of the scope of assistance, with foreign corporations. 29 Driving its point, the OSG poses: If
the framers of the Constitution intended to limit the service of foreign corporations to "passive
assistance," such as simple loan agreements, why confine them to large-scale ventures? 30 Why does
the Constitution require that such agreements be based on real contributions to economic growth
and general welfare of the country?31 Why the condition in the last paragraph of Section 2 that the
President report to Congress? 32 Finally, the OSG asserts that these requirements would be
superfluous if the assistance to be rendered were merely technical or financial. 33 And that it would
make more sense if the phrase "agreements… involving technical or financial assistance" were
construed to mean the same concept as the service contracts under the 1973 Constitution.

The OSG's contentions are complemented by intervenor PCM which maintains that the FTAA "is an
agreement for [the] rendition of a whole range of services of an integrated and comprehensive
character, ranging from discovery through development and utilization and production of minerals or
petroleum by the foreign-owned corporation." 34 In fine, intervenor posits that the change in
phraseology in the 1987 Constitution does not relate to the substance of the agreement, 35 otherwise,
the State itself would be compelled to conduct the exploration, development and utilization of natural
resources, ventures that it is ill-equipped to undertake. 36

Primary Concepts in Article XII of the Constitution

Before passing upon the foregoing arguments and for better clarity, it may be helpful to first examine
the concepts of (a) "beneficial ownership," (b) "full control and supervision," and (c) "real
contributions to the economic growth and general welfare of the country" which are at the heart of
Section 2, Article XII of the Constitution.

Beneficial Ownership

Beneficial ownership, as the plain meaning of the words implies, refers to the right to the gains,
rewards and advantages generated by the property. 37

The concept is not new, but in fact is well entrenched in the law of trusts. 38 Thus, while the trustee
holds the legal title to or ownership of the property entrusted to him, he is nevertheless not the
beneficial owner. Rather, he holds and administers the property for the benefit of another, called the
beneficiary or the cestui que trust. Hence, the profits realized from the administration and
management of the property by the trustee, who is the "naked owner," less any lawful fees due to
the latter, accrue to the cestui que trust, who is the "beneficial" or "equitable" owner.39

The foregoing concepts are directly applicable to the statement in Section 2, Article XII of the
Constitution that "[a]ll lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State."
The words "owned" and "State" should both be understood on two levels. "Owned" or "ownership"
refers to both the legal title to and the beneficial ownership of the natural resources. Similarly,
"State" should be understood as denoting both the body politic making up the Republic of the
Philippines, i.e., the Filipino people, as well as the Government which represents them and acts on
their behalf.

Thus, the phrase "natural resources are owned by the State" simultaneously vests the legal title to
the nation's natural resources in the Government, and the beneficial ownership of these resources in
the sovereign Filipino people, from whom all governmental authority emanates. 40

On this point, petitioners and respondent WMCP appear to be in rare agreement. Thus, petitioners,
in their Memorandum state:

xxx With respect to exploration, development and utilization of mineral resources, the State should
not merely be concerned about passing laws. It is expected that it holds these natural resources
covered in Article XII, Section 2 in dominium and in trust for [the] Filipino people.41 (Emphasis
and underscoring supplied; italics in the original)

Respondent WMCP is even more emphatic:

The Regalian Doctrine, as embodied under the Constitution, is a recognition that sovereignty resides
in the Filipino people, and the prime duty of government or the State is to serve and protect the
people. Thus, the ownership of natural resources by the State under Section 2, Article XII of
the Constitution is actually a beneficial trust in favor of the Filipino people.

Stated differently, it is the Filipino people who own the nation's natural resources, and the
State is merely the guardian-in-trust therof.42 (Emphasis and underscoring supplied; italics in the
original; citations omitted)

Clearly, in the exploration, development and utilization of the nation's natural resources, the
Government is in a position analogous to a trustee, holding title to and managing these resources for
the benefit of the Filipino people, including future generations. 43 As the trustee of the sovereign, the
Government has a fiduciary duty to ensure that the gains, rewards and advantages generated by the
Philippines' natural resources accrue to the benefit of the Filipino people. Corollary to this, the
Government cannot, without violating its sacred trust, enter into any agreement or arrangement
which effectively deprives the Filipino people of their beneficial ownership of these resources – e.g.,
when it enters into an agreement whereby the vast majority of the resources, or the profit generated
from the resources, is bargained away in favor of a foreign entity.

Full Control and Supervision

In the context of its role as trustee, the Government's "full control and supervision" over the
exploration, development and utilization of the nation's natural resources, in its most basic and
fundamental sense, is accomplished by maintaining a position whereby it can carry out its fiduciary
duty to protect the beneficial interest of its cestui que trust in these resources.

Significantly, Section 2, Article XII of the Constitution provides that the Government may undertake
the exploration, development and utilization of these resources by itself or together with a third
party.44 In the first case, where no third party is involved, the Government's "full control and
supervision" over the resources is easily achieved. In the second case, where the third party may
naturally be expected to seek participation in the operation of the venture and ask for compensation
in proportion to its contribution(s), the Government must still maintain a position vis-à-vis its third
party partner whereby it can adequately protect the interest of the Filipino people, who are the
beneficial owners of the resources.

By way of concrete example, the Government may enter into a joint venture agreement 45 with a third
party to explore, develop or utilize certain natural resources through a jointly owned corporation,
wherein the government has the controlling interest. Under this arrangement, the Government would
clearly be in a position to protect the interest of the beneficial owners of the natural resources.

In the alternative, as suggested by the OSG, 46 the Government may be allowed one or more
directors (holding nominal shares) on the governing board and executive committee(s) of the private
corporation contracted to undertake mining activities in behalf of the government. Depending on the
by-laws of the private corporation, strategic representation of the Government in its governing board
and executive committee(s) may afford sufficient protection to the interest of the people.

However, Section 2, Article XII of the Constitution does not limit the options available to the
Government, when dealing with prospective mining partners, to joint ventures or representation in
the contractor's board of directors. To be sure, the provision states that the Government may enter
into "co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations," or, for large scale exploration, development and utilization,
"agreements with foreign-owned corporations involving either technical or financial assistance." But
whatever form the agreement entered into by the Government and its third party partner(s) may
take, the same must contain, as an absolute minimum, provisions that ensure that the
Government can effectively perform its fiduciary duty to safeguard the beneficial interest of the
Filipino people in their natural resources, as mandated by the Constitution.

Real Contributions to the Economy

and the General Welfare of the Country

Section 2, Article XII likewise requires that "agreements … involving financial or technical
assistance" be "based on real contributions to the economic growth and general welfare of the
country." This provision articulates the value which the Constitution places on natural resources, and
recognizes their potential benefits. It likewise acknowledges the fact that the impact of mining
operations is not confined to the economy but, perhaps to a greater extent, affects Philippine society
as a whole as well.

"Minerals, petroleum and other mineral oils," are part of the non-renewable wealth of the Filipino
people. By pursuing large scale exploration, development and utilization of these resources, the
State would be allowing the consumption or exhaustion of these resources, and thus deprive future
Filipino generations the enjoyment thereof. Mining – especially large-scale mining – often results in
the displacement of local residents. Its negative effects on the environment are well-documented. 47

Thus, for benefits from the exploration, development and utilization of these resources to be real,
they must yield profits over and above 1) the capital and operating costs incurred, 2) the resulting
damage to the environment, and 3) the social costs to the people who are immediately and
adversely affected thereby.

Moreover, the State must ensure that the real benefits from the utilization of these resources are
sufficient to offset the corresponding loss of these resources to future generations. Real benefits
are intergenerational benefits because the motherland's natural resources are the birthright not only
of the present generation of Filipinos but of future generations as well. 48

The requirement of real benefit is applicable even when the exploration, development and utilization
are being undertaken directly by the Government or with the aid of Filipinos or Filipino corporations.
But it takes on greater significance when a foreign entity is involved. In the latter instance, the
foreign entity would naturally expect to be compensated for its assistance. In that event, it is
inescapable that a foreigner would be benefiting from an activity (i.e. mining) which also results in
numerous, serious and long term harmful consequences to the environment and to Philippine
society.

Moreover, as recognized by the 1935 Constitutional Convention, foreign involvement in the

exploitation of Philippine natural resources has serious implications on national security. As
recounted by delegate Jose Aruego:

The nationalization of the natural resources was also intended as an instrument of national defense.
The Convention felt that to permit foreigners to own or control the natural resources would
be to weaken the national defense. It would be making possible the gradual extension of
foreign influence into our politics, thereby increasing the possibility of foreign control. xxx
Not only these. The nationalization of the natural resources, it was believed, would prevent
making the Philippines a source of international conflicts with the consequent danger to its
internal security and independence. For unless the natural resources were nationalized, with the
nationals of foreign countries having the opportunity to own or control them, conflicts of interest
among them might arise inviting danger to the safety and independence of the nation. 49 (Emphasis
supplied)

Significantly, and contrary to the posture of the OSG, it is immaterial whether the foreign involvement
takes the form of "active" participation in the mining concern or "passive" assistance such as a
foreign mining loan or the licensing of mining technology. Whether the foreign involvement is passive
or active, the fact remains that the foreigner will expect to be compensated and, as a necessary
consequence, a fraction of the gains, rewards and advantages generated by Philippine natural
resources will be diverted to foreign hands even as the long term pernicious "side effects" of the
mining activity will be borne solely by the Filipino people.

Under such circumstances, the Executive, in determining whether or not to avail of the assistance of
a foreign corporation in the large scale exploration, development and utilization of Philippine natural
resources, must carefully weigh the costs and benefits if it is to faithfully discharge its fiduciary duty
to protect the beneficial interest of the Filipino people in these resources.

These same considerations likewise explain why the last paragraph of Section 2 mandates that the
President "notify the Congress of every contract entered into in accordance with this provision, within
thirty days from its execution." The Constitution requires that the Legislative branch, which is
perceived to be more broadly representative of the people and therefore more immediately sensitive
to their concerns, be given a timely opportunity to scrutinize and evaluate the Executive's decision.

With these concepts in mind, I now turn to what I believe to be the proper interpretation of
"agreements… involving either technical or financial assistance" in paragraph 4 of Section 2, Article
XII of the Constitution.

Construction of paragraph 4, Section 2,

Article XII of the Constitution

The suggestion that the avoidance of the term "service contracts" in the fourth paragraph is to
prevent the circumvention, prevalent under the 1973 Constitution, of the 60-40 capital requirement
does not persuade, it being too narrow an interpretation of that provision. If that were the only
purpose in the change of phraseology, this Court reiterates, there would have been no need to
replace the term "service contracts" with "agreements… involving either technical or financial
assistance."

The loophole in the 1973 Constitution that sanctioned dummyism is easily plugged by the provision
in the present Constitution that the President, not Congress or the Batasan Pambansa (under the
1973 Constitution), may enter into either technical or financial agreements with foreign corporations.
The framers then could have easily employed the more traditional term "service contracts" in
designating the agreements contemplated, and thus obviated confusion, especially since the term
was employed by the legal system then prevailing50 and had a settled acceptation.

The other proffered raison d'être of the fourth paragraph, i.e. to address the absence of a governing
law that led to the abuse of service contracts, is equally unpersuasive. In truth, there were a host of
laws governing service contracts pertaining to various natural resources, as this Court noted when it
traced the history of Section 2, Article XII in its Decision. 51
Respondent WMCP nevertheless correctly states that the fourth paragraph establishes an exception
to the rule limiting the exploration, development and utilization of the nation's natural resources to
Filipinos. As an exception, however, it is illogical to deduce that the provision should be
interpreted liberally, not restrictively. It bears repeating that the provision, being an exception,
should be strictly construed against foreign participation.

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 is
reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their
enjoyment by non-Filipinos. As Commissioner Villegas emphasized, the provision is "very
restrictive." Commissioner Nolledo also remarked that "entering into service contracts is an
exception 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."
Indeed, exceptions should be strictly but reasonably construed; they extend only so far as their
language fairly warrants and all doubts should be resolved in favor of the general provision rather
than the exception.52 (Emphasis and underscoring supplied; citations omitted).

That the fourth paragraph employs the word "may" does not make it non-restrictive. Indeed, "may"
does make the provision permissive, but only as opposed to mandatory, 53 and operates to confer
discretion upon a party.54 Thus, as used in the fourth paragraph, "may" provides the President with
the option to enter into FTAAs. It is, however, not incumbent upon the President to do so for, as
owner of the natural resources, the "State [itself] may directly undertake such activities." 55 If the
President opts to exercise the prerogative to enter into FTAAs, the agreement must conform to the
restrictions laid down by Section 2, including the scope of the assistance, which must be limited to
financial or technical forms.

"May" in the fourth paragraph, therefore, should be understood in the same sense as it is used in the
first paragraph, that is, that the State "may enter into… agreements with Filipino citizens, or
corporations or association at least sixty per centum of whose capital is owned by such citizens."

The majority, however, opines that the "agreements involving either technical or financial assistance"
referred to in paragraph 4 of Section 2 of Article XII of the 1987 Constitution are indeed service
contracts. In support of this conclusion, the majority maintains that the use of the phrase
"agreements… involving either technical or financial assistance" does not indicate the intent to
exclude other modes of assistance because the use of the word "involving" signifies the possibility of
the inclusion of other forms of assistance or activities. And it proffers that the word "involving" has
three connotations that can be differentiated as follows: (1) the sense of concerning, having to do
with, or affecting; (2) entailing, requiring, implying or necessitating; (3) including, containing or
comprising. None of these three connotations, it is contended, convey a sense of exclusivity. Thus, it
concludes that had the framers intended to exclude other forms of assistance, they would have
simply said "agreements for technical or financial assistance" as opposed to "agreements including
technical or financial assistance."

To interpret the term "involving" in the fourth paragraph to mean "including," as the majority
contends, would run counter to the restrictive spirit of the provision. Notably, the 1987 Constitution
uses "involving" not "including." As admitted in the majority opinion, the word "involve" may also
mean concerning, having to do with or affecting. Following the majority opinion's own methodology
of substitution, "agreements… involving either technical or financial assistance" means
"agreements…concerning either technical or financial assistance." And the word "concerning"
according to Webster's Third New International Dictionary means "regarding", "respecting" or
"about." To reiterate, these terms indicate exclusivity. More tellingly, the 1987 Constitution not only
deleted the term "management" in the 1973 Constitution, but also the catch-all phrase "or other
forms of assistance,"56 thus reinforcing the exclusivity of "either technical or financial assistance."

That the fourth paragraph does not employ the terms "solely," "only," or "limited to" to qualify "either
technical or financial assistance" does not detract from the provision's restrictive nature. Moreover,
the majority opinion's illustration conveniently omits "either… or." As Senior Associate Justice
Reynato S. Puno pointed out during the oral arguments, the use of the disjunctive "either… or"
denotes restriction.57

According to the Penguin Dictionary, the word "either" may be used as (1) an adjective or (2) a
pronoun or (3) a conjunction or (4) an adverb. As an adjective, the word "either" means (1) any one
of two; one or the other; or (2) one and the other; each. As a pronoun, the word "either" means the
one or the other. As a conjunction, the word "either" is used before two or more sentence
elements of the same class or function joined usually by "or" to indicate what immediately
follows is the first of two or more alternatives. Lastly, as an adverb, "either" is used for emphasis
after a negative or implied negation (i.e. for that matter or likewise). The traditional rule holds that
"either" should be used only to refer to one of two items and that "any" is required when more than
two items are involved.58 However, modern English usage has relaxed this rule when "either" is used
as a conjunction.59 Thus, the word "either" may indicate the choice between two or more possibilities.

"Either" in paragraph 4, section 2, Article XII, is clearly used as a conjunction, joining two (and only
two) concepts – financial and technical. The use of the word "either" clearly limits the President to
only two possibilities, financial and technical assistance. Other forms of assistance are plainly not
allowed, since only the words "financial and technical" follow the word "either."

In accordance with the intent of the provision, "agreements… involving either technical or financial"
is deemed restrictive and not just descriptive. It is a condition, a limitation, not a mere description.

The OSG's suggestion that the President may enter into "any" agreement, the scope of which may
go beyond technical or financial assistance, with a foreign-owned corporation, does not impress. The
first paragraph of Section 2 limits contracts with Filipino citizens or corporations to co-production,
joint venture or production-sharing agreements. To subscribe to the OSG's theory would allow
foreign-owned corporations participation in the country's natural resources equal to, perhaps even
greater than, that of Filipino citizens or corporations.

The OSG cites the Separate Opinion of Justice Jose C. Vitug, now retired, who proposed that, on
the premise that the State itself may undertake the exploration, development and utilization of
natural resources, a foreign-owned corporation may engage in such activities in behalf of the State:

The Constitution has not prohibited the State from itself exploring, developing, or utilizing the
country's natural resources, and, for this purpose, it may, I submit, enter into the necessary
agreements with individuals or entities in the pursuit of a feasible operation.

The fundamental law is deemed written in every contract. The FTAA entered into by the government
and WMCP recognizes this vital principle. Thus, two of the agreement's clauses provide:

"WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in Article XII,
Section 2 that all lands of the public domain, waters, minerals, coal, petroleum, and other
natural resources are owned by the State, and that the exploration, development and
utilization of natural resources shall be under the full control and supervision of the State;
and
"WHEREAS, the Constitution further provides that the Government may enter into agreements with
foreign-owned corporations involving either technical or financial assistance for large scale
exploration, development and utilization of minerals."

The assailed contract or its provisions must then be read in conformity with abovementioned
constitutional mandate. Hence, Section 10.2(a) of the FTAA, for instance, which states that "the
Contractor shall have the exclusive right to explore for, exploit, utilize, process, market, export and
dispose of all minerals and products and by-products thereof that may be derived or produced from
the Contract Area and to otherwise conduct Mining Operations in the Contract Area in accordance
with the terms and conditions hereof," must be taken to mean that the foregoing rights are to be
exercised by WMCP for and in behalf of the State and that WMCP, as the Contractor, would be
bound to carry out the terms and conditions of the agreement acting for and in behalf of the State. In
exchange for the financial and technical assistance, inclusive of its services, the Contractor enjoys
an exclusivity of the contract and a corresponding compensation therefor. 60 (Underscoring supplied).

This proposition must be rejected since it sanctions the circumvention, if not outright violation, of the
fourth paragraph by allowing foreign corporations to render more than technical or financial
assistance on the pretext that it is an agent of the State. Quando aliquid prohibitur ex directo,
prohibitur et per obliquum. What is prohibited directly is prohibited indirectly. 61 Further, the
proposition lends itself to mischievous consequences. If followed to its logical conclusion, nothing
would stop the State from engaging the services of a foreign corporation to undertake in its behalf
the exploration, development and utilization of all other natural resources, not just "minerals,
petroleum and mineral oils," even on a small scale, not just "large-scale."

The present Constitution restricts foreign involvement to large-scale activities because the idea is to
limit the participation of foreign corporations only to areas where they are needed.

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

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

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

I wonder if this first 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 or exploration, development and effective disposition of our natural resources to
the detriment of Filipino investors. I am not saying that we should not consider borrowing
money from foreign sources. What I refer to is that foreign interest should be allowed to
participate only to the extent that they lend us money and give us technical assistance with
the appropriate government permit. In this way, we can insure the enjoyment of our natural
resources by out people.

MR. VILLEGAS. Actually, the second provision about the President does not permit foreign
investors to participate. It is only technical or financial assistance – they do not own anything
– but on conditions that have to be determined by law with the concurrence of Congress. So, it is
very restrictive.
If the Commissioner will remember, this removes the possibility for service contracts which we
said yesterday were avenues used in the previous regime to go around the 60-40
requirement.62 (Emphasis and underscoring supplied)

The intent is to allow Filipinos to benefit from Filipino resources.

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 me three minutes.

The Commission had just approved the Preamble. In the Preamble we clearly sated there that the
Filipino people 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
national patrimony or our natural resources are exclusively reserved for the Filipino people.
No alien must be allowed to enjoy, exploit and develop our natural resources. As a matter of
fact, that principle proceeds from the fact that our natural resources are gifts from God to the
Filipino people and it would be a breach of that special blessing from God if we will allow
aliens to exploit our natural resources.

I voted in favor of the Jamir proposal because it is not really exploitation that we granted to
the alien corporations but only for them to render financial or technical assistance. It is not
for them to enjoy our natural resources. Madam President, our natural resources are depleting;
our population is increasing by leaps and bounds. Fifty years from now, if we will allow these aliens
to exploit our natural 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
certain extent the exploitation of our natural resources, and we became victims of foreign dominance
and control. The aliens are interested in coming to the Philippines because they would like to enjoy
the bounty of nature exclusively intended for the 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 the
generations to come," we must at this time decide once and for all that our natural resources must
be reserved only to Filipino citizens.

Thank you.63 (Emphasis and underscoring supplied)

The intent loses all significance if foreign-owned corporations are likewise allowed to participate
even in small or medium-scale ventures.

Thus, in keeping with the clear intent and rationale of the Constitution, financial or technical
assistance by foreign corporations are allowable only where there is no Filipino or Filipino-owned
corporation (including corporations at least 60% of the capital of which are owned by Filipinos) which
can provide the same or similar assistance.

To reiterate, the over-arching letter and intent of the Constitution is to reserve the exploration,
development and utilization of natural resources to Filipinos.

The justification for foreign involvement in the exploration, development and utilization of natural
resources was that Filipino nationals or corporations may not possess the necessary capital,
technical knowledge or technology to mount a large scale undertaking. In the words of the "Draft of
the 1986 U.P. Law Constitution Project" (U.P. Law Draft) which was taken into consideration during
the deliberation of the CONCOM:64
Under the proposed provision, only technical assistance or financial assistance agreements
may be entered into, and only for large-scale activities. These are contract forms which
recognize and assert our sovereignty and ownership over natural resources since the foreign
entity is just a pure contractor and not a beneficial owner of our economic resources. The
proposal recognizes the need for capital and technology to develop our natural resources
without sacrificing our sovereignty and control over such resources 65 x x x (Emphasis and
underscoring supplied)

Thus, the contention that Section 2, Article XII allows for any agreement for assistance by a foreign
corporation "so long as such assistance requires specialized knowledge or skills, and are related to
the exploration, development and utilization of mineral resources" is erroneous. 66

Where a foreign corporation does not offer financial or technological assistance beyond the
capabilities of its Philippine counterparts, an FTAA with such a corporation would be highly
questionable. Similarly, where the scope of the undertaking does not qualify as "large scale," an
FTAA with a foreign corporation is equally suspect.

"Agreements" in Section 2, Article XII

do not include "service contracts."

This Court's ruling in the Decision under reconsideration that the agreements involving either
technical or financial assistance contemplated by the 1987 Constitution are different and dissimilar
from the service contracts under the 1973 Constitution must thus be affirmed. That there is this
difference, as noted in the Decision, is gathered from the change in phraseology. 67 There was no
need to employ strongly prohibitory language, like that found in the Bill of Rights. 68 For the framers to
expressly prohibit "management and other forms of assistance" would be redundant inasmuch as
the elimination of such phrase serves the same purpose. The deletion is simply too significant to
ignore and speaks just as profoundly – it is an outright rejection.

It bears noting that the fourth paragraph does not employ the same language adopted in the first
paragraph, which specifically denominates the agreements that the State may enter into with
Filipinos or Filipino-owned corporations. The fourth paragraph does not state "The President may
also enter into co-production, joint venture, or production-sharing agreements with foreign-
owned corporations for large-scale exploration, development, and utilization of minerals, petroleum,
and other mineral oils…." On the other hand, the fourth paragraph cannot be construed as a grant of
boundless discretion to the President to enter into any agreement regardless of the scope of
assistance because it would result in a bias against Filipino citizens and corporations.

On this point, the following observations from the U.P. Law Draft on the odious and objectionable
features of service contracts bear restating:

5. The last paragraph is a modification of the service contract provision found in Section 9, Article
XIV of the 1973 Constitution as amended. This 1973 provision shattered the framework of
nationalism in our fundamental law (see Magallona, "Nationalism and its Subversion in the
Constitution"). Through the service contract, the 1973 Constitution had legitimized that which
was prohibited under the 1935 constitution—the exploitation of the country's natural
resources by foreign nationals. Through the service contract, acts prohibited by the Anti-Dummy
Law were recognized as legitimate arrangements. Service contracts lodge exclusive
management and control of the enterprise to the service contractor, not unlike the old
concession regime where the concessionaire had complete control over the country's natural
resources, having been given exclusive and plenary rights to exploit a particular resource
and, in effect, having been assured of ownership of that resource 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 our natural resources. 69 (Emphasis
supplied)

Furthermore, Professor Pacifico A. Agabin, a member of the working group of the U.P. Law
Constitution Project and now counsel for intervenor PCM, stated in his position paper:

Recognizing the service contract for what it is, we have to expunge it from the Constitution and
reaffirm ownership over our natural resources. That is the only way we can exercise effective
control over 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-
production agreements, joint ventures, production-sharing [agreements] – could still be utilized and
adopted without violating constitutional provisions. In other words, we can adopt contract forms
which recognize and assert our sovereignty and ownership over natural resources, and where the
entity is just a pure contractor instead of the beneficial owner of our economic resources. 70
(Emphasis & underscoring supplied),

indicating that the proposed financial or technical assistance agreements are contract forms
different from the 1973 Constitution service contracts.

Thus the phrase "agreements with foreign-owned corporations involving either technical or financial
assistance" in Section 2, Article XII of the Constitution must be interpreted as restricting foreign
involvement in the exploration, development and utilization of natural resources to large scale
undertakings requiring foreign financial or technical assistance and not, as alleged by respondents,
inclusive of any possible agreement under the sun.

The majority however argues that the deletion or omission from the 1987 Constitution of the term
"service contracts" found in the 1973 Constitution does not sufficiently prove the drafters' intent to
exclude foreigners from management since such intent cannot be definitively and conclusively
established. This argument overlooks three basic principles of statutory construction.

First, casus omisus pro omisso habendus est.71 As recently as 2001 in Commission on Audit of the
Province of Cebu v. Province of Cebu,72 this Court held that a person, object or thing omitted from an
enumeration must be held to have been omitted intentionally.73 That there is a difference between
technical or financial assistance contemplated by the 1987 Constitution and the service contracts
under the 1973 Constitution is gathered from the omission of the phrase "management or other
forms of assistance."

As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Article
on National Economy and Patrimony. If the CONCOM intended to retain the concept of service
contracts under the 1973 Constitution, it would have simply adopted the old terminology ("service
contracts") instead of employing new and unfamiliar terms ("agreements…involving either technical
or financial assistance.") Such a difference between the language of a provision in a revised
constitution and that of a similar provision in the preceding constitution is viewed as
indicative of a difference in purpose. If, as respondents suggest, the concept of "technical or
financial assistance" agreements is identical to that of "service contracts," the CONCOM would not
have bothered to fit the same dog with a new collar. To uphold respondents' theory would reduce the
first to a mere euphemism for the second render the change in phraseology meaningless. 74
(Emphasis and underscoring supplied; citation omitted)

Second, expressio unius est exclusion alterius.75 The express mention of one person, thing, act, or
consequence excludes all others.76

Third and lastly, expressium facit cessare tacitum.77 What is expressed puts an end to that which is
implied.78 Since the constitutional provision, by its terms, is expressly limited to financial or technical
agreements, it may not, by interpretation or construction, be extended to other forms of assistance.

These three principles of statutory construction, derived from the well-settled principle of verba legis,
proceed from the premise that the Constitutional Commission would not have made specific
enumerations in the provision if it had the intention not to restrict its meaning and confine its terms to
those expressly mentioned. And this Court may not, in the guise of interpretation, enlarge the scope
of a constitutional provision and include therein situations not provided nor intended by the framers.
To do so would be to do violence to the very language of the Constitution, the same Constitution
which this Court has sworn to uphold.

The majority counters, however, that service contracts were not de-constitutionalized since the
deliberations of the members of the Constitutional Commission conclusively show that they
discussed agreements involving either technical or financial assistance in the same breath as
service contracts and used the terms interchangeably. This argument merely echoes that of private
respondent WMCP which had already been addressed in this Court's Decision of January 27, 2004,
(the Decision) viz:

While certain commissioners may have mentioned the term "service contracts" during the CONCOM
deliberations, they may not have been necessarily referring to the concept of service contracts under
the 1973 Constitution. As noted earlier "service contracts" is a term that assumes different
meanings to different people. The commissioners may have been using the term loosely, and
not in its technical and legal sense, to refer, in general, to agreements concerning natural
resources entered into by the Government with foreign corporations. These loose statements
do not necessarily 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 [the] 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 general law as there were no laws previously authorizing the same. 79 However, such remark is
far outweighed by his more categorical statement in his exchange with Commissioner
Quesada that the draft article "does not permit foreign investors to participate" in the nation's
natural resources – which was exactly what service contracts did – except to provide
"technical or financial assistance."

In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the
present charter prohibits service contracts. Commissioner Gascon was not totally averse to foreign
participation, but favored stricter restrictions in the form of majority congressional concurrence. On
the other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of the
spectrum and their objections may be interpreted as votes against any foreign participation in our
natural resources whatsoever.80 (Emphasis and underscoring supplied; citations omitted)
In fact, the opinion of Commissioner Nolledo in his textbook which is cited in this Court's January 27,
2004 Decision should leave no doubt as to the intention of the framers to eliminate service contracts
altogether.

Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign
investors (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-scale
enterprises.

The intention of this provision, as well as other provisions on foreign investments, is to prevent the
practice (prevalent in the Marcos government) of skirting the 60/40 equation using the cover of
service contracts.81

Next, the majority opinion asserts that if the framers had meant to ban service contracts altogether,
they would have provided for the termination or pre-termination of the existing service contracts.

There was no need for a constitutional provision to govern the termination or pre-termination of
existing service contracts since the intention of the framers was to apply the rule banning service
contracts prospectively.

MR. DAVIDE. Under the proposal, I notice that except for the lands of the public domain, all other
natural resources cannot be alienated and in respect to lands of the public domain, private
corporations with the required ownership by Filipino citizens can only lease the same. Necessarily,
insofar as other natural resources are concerned, it would only be the State which can exploit,
develop, explore and utilize the same. However, the State may enter into a joint venture,
coproduction (sic) or production-sharing. Is that not correct?

MR. VILLEGAS. Yes.

MR. DAVIDE. Consequently, henceforth upon the approval of this Constitution, no timber or forest
concessions, permits or authorization can be exclusively granted to any citizen of the Philippines nor
to any corporation qualified to acquire lands of the public domain?

MR. VILLEGAS. Would Commissioner Monsod like to comment on that? I think his answer is "yes."

MR. DAVIDE. So, what will happen now to licenses or concessions earlier granted by the Philippine
government to private corporations or to Filipino citizens? Would they be deemed repealed?

MR. VILLEGAS. This is not applied retroactively. They will be respected.

MR. DAVIDE. In effect, they will be deemed repealed?

MR. VILLEGAS. No.82 (Emphasis and underscoring supplied)

Besides, a service contract is only a license or privilege, not a contract or property right which merits
protection by the due process clause of the Constitution. Thus in the landmark case of Oposa v.
Factoran, Jr,83 this Court held:

x x x Needless to say, all licenses may thus be revoked or rescinded by executive action. It is
not a contract, property or a property right protected by the due process clause of the
Constitution. In Tan vs. Director of Forestry, this Court held:

"x x x A timber license is an instrument by which the State regulates the utilization and disposition of
forest resources to the end that public welfare is promoted. A timber license is not a contract within
the purview of the due process clause; it is only a license or privilege, which can be validly
withdrawn whenever dictated by public interest or public welfare as in this case.

'A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a
contract between the authority, federal, state, or municipal, granting it and the person to
whom it is granted; neither is it property or a property right, nor does it create a vested
right; nor is it taxation' Thus, this Court held that the granting of license does not
create irrevocable rights, neither is it property or property rights."

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co, Inc. vs. Deputy Executive Secretary:

"x x x Timber licenses, permits and license agreements are the principal instruments by which the
State regulates the utilization and disposition of forest resources to the end that public welfare is
promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the State to
qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular
concession area and the forest products therein. They may be validly amended, modified,
replaced or rescinded by the Chief Executive when national interests so require. Thus, they
are not deemed contracts within the purview of the due process clause."

Since timber licenses are not contracts, the non-impairment clause which reads:

"SEC 10. No law impairing, the obligation of contracts shall be passed."

cannot be invoked.

In the second place, even if it is to be assumed that the same are contracts, the instant case does
not involve a law or even an executive issuance declaring the cancellation or modification of existing
timber licenses. Hence, the non-impairment clause cannot as yet be invoked. Nevertheless, granting
further that a law has actually been passed mandating cancellations or modifications, the same
cannot still be stigmatized as a violation of the non-impairment clause. This is because by its very
nature and purpose, such a law could have only been passed in the exercise of the police power of
the state for the purpose of advancing the right of the people to a balanced and healthful ecology,
promoting their health and enhancing the general welfare. In Abe vs. Foster Wheeler Corp., this
Court stated:

"The freedom of contract, under our system of government, is not meant to be absolute. The same is
understood to be subject to reasonable legislative regulation aimed at the promotion of public health,
moral, safety and welfare. In other words, the constitutional guaranty of non-impairment of
obligations of contract is limited by the exercise of the police power of the State, in the
interest of public health, safety, moral and general welfare."

The reason for this is emphatically set forth in Nebia vs. New York quoted in Philippine American
Life Insurance Co. vs. Auditor General, to wit:

"Under our form of government the use of property and the making of contracts are normally matters
of private and not of public concern. The general rule is that both shall be free of governmental
interference. But neither property rights nor contract rights are absolute; for government cannot exist
if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of
contract to work them harm. Equally fundamental with the private right is that of the public to
regulate it in the common interest."

In short, the non-impairment clause must yield to the police power of the state.84 (Emphasis
and underscoring supplied; citations omitted)
The majority however argues that Oposa is not applicable since the investment in a logging
concession is not as substantial an investment as that of a large scale mining contractor. Such a
contention is patently absurd. Taken to its logical conclusion, the majority would have this Court
exempt firms in highly capital intensive industries from the exercise of police power simply to protect
their investment. That would mean that the legislature would, for example, be powerless to revoke or
amend legislative franchises of public utilities, such as power and telecommunications firms, which
no doubt require huge sums of capital.

The majority opinion then proffers that the framers of the Constitution were pragmatic enough to
know that foreign entities would not enter into such agreements without requiring arrangements for
the protection of their investments, gains, and benefits or other forms of conditionalities. It goes on to
argue that "by specifying such 'agreements involving assistance,' the framers of the Constitution
necessarily gave implied assent to everything that these agreements necessarily entailed; or that
could reasonably be deemed necessary to make them tenable and effective, including management
authority with respect to the day-to-day operations of the enterprise and measures for the protection
of the interests of the foreign corporation."

The deliberations of the Constitutional Commission, however, do not support the immediately
foregoing contentions.

MR. TINGSON. Within the purview of what the Gentleman is saying, would he welcome friendly
foreigners to lend us their technical expertise in helping develop our country?

MR. GARCIA. Part 2 of this proposal, Filipino control of the economy, in fact, says that the entry of
foreign capital, technology and business enterprises into the national economy shall be effectively
regulated to ensure the protection of the interest of our people.

In other words, we welcome them but on our own terms. This is very similar to our position
on loans. We welcome loans as long as they are paid on our own terms, on our ability to pay,
not on their terms. For example, the case of Peru is instructive. They decided first to develop and
grow, and were willing to pay only 10 percent of their foreign exchange earnings. That, I think, is a
very commendable position given the economic situation of a country such as Peru. The Philippines
is a similar case, especially when we realize that the foreign debt was made by a government that
was bankrupt in its desire to serve the people.

MR. MONSOD. Mr. Vice-President, I think we have to make a distinction that it is not really realistic
to say that we will borrow on our own terms. Maybe we can say that we inherited unjust loans, and
we would like to repay these on terms that are not prejudicial to our own growth. But the general
statement that we should only borrow on our own terms is a bit unrealistic.

MR. GARCIA. Excuse me. The point I am trying to make is that we do not have to borrow. If we
have to borrow, it must be on our terms. In other words, banks do not lend out of the
goodness of their hearts. Banks lend to make a profit.

MR. TINGSON. Mr. Vice-President, I think the trouble in our country is that we have forgotten the
scriptural injunction that the borrower becomes a slave to the lender. That is the trouble with
our country; we have borrowed and borrowed but we forget that we become slaves to those
who lend us.85 (Emphasis and underscoring supplied)

By public respondent's information, "[t]he potential mining wealth in the Philippines is estimated at
$840 billion or P47 trillion or 10 times our annual GDP, and 15 times our total foreign debt of $56
billion. Globally, the Philippines ranks third in gold, fourth in copper, fifth in nickel and sixth in
chromite."86 With such high concentration of valuable minerals coupled with the Filipino people's
willingness to protect and preserve ownership of their natural resources at the expense of retarding
or postponing the exploration, development, and utilization of these resources, the Philippines
clearly has the superior bargaining position and should be able to dictate its terms. No foreign entity
should be able to bully the Philippines and intimidate the Government into conceding to certain
conditions incompatible with the Constitution.

Extent of foreign corporation's

participation in the management of an FTAA

Foreign-owned corporations, however, are not precluded from a limited participation in the
management of the exploration, development and utilization of natural resources.

Some degree of participation by the contractor in management, to assure the proper application of
its investment and/or to facilitate the technical assistance and transfer of technology may be
unavoidable and not necessarily undesirable. Thus, there is merit in respondent WMCP's contention,
to which even petitioners conceded during the oral arguments, that a foreign-owned corporation is
not prevented from having limited participation in the management assistance or participation so
long as it is incidental to the financial or technical assistance being rendered:

JUSTICE PANGANIBAN:

Alright. Going back to verba legis, you say that the FTAA's are limited to financial or
technical assistance only.

ATTY. LEONEN:

Either financial or technical assistance, yes your Honor.

ATTY. LEONEN:

Full management, your Honor.

JUSTICE PANGANIBAN:

Full management is excluded.

ATTY. LEONEN:

Yes your Honor.

JUSTICE PANGANIBAN:

But incidental management to protect the financial or technical assistance should be

allowed.

ATTY. LEONEN:

If a mining company would get the technical expertise to bring in drilling rig your
Honor, and that is the sole contract, then we cannot imagine a situation were it is not
the technicians that we will do the actual drilling your Honor, but for the entire
contract area your Honor as it is now in the FTAA then I think that would be different.

JUSTICE PANGANIBAN:

Yes I agree. In other words, the words financial or technical may include parts of
management, isn't it? Its reasonable in other words if I may re state it, it's reasonable to
expect that entities, foreign entities who don't know anything about this country, well that
 is an exaggeration, who know not too much about this country, would not just extend money,
period. They would want to have a say a little bit of say management and sometimes
even in auditing of the company, isn't it reasonable to expect.

ATTY. LEONEN:

I would qualify my answer your Honor with management of what your Honor. It means if it's
for development and utilization of the minerals.

JUSTICE PANGANIBAN:

No.

ATTY. LEONEN:

Yes your Honor, but if it's management of sub-contracted activity like a symposium then that
would be all right your Honor. Mining companies do symposiums also.

JUSTICE PANGANIBAN:

Management to protect their own investments, whether it be technical or financial.

ATTY. LEONEN:

Their investment, your Honor, which cannot be the entire mining operation from my
perspective, your Honor.

JUSTICE PANGANIBAN:

Yes I agree because there is the Constitutional provision of control and supervision,
full control and supervision to the State.

ATTY. LEONEN:

And Filipino corporations your Honor.

JUSTICE PANGANIBAN:

Or even Filipino corporation, the full control and supervision is still with the State.

ATTY. LEONEN:

Yes your Honor.

JUSTICE PANGANIBAN:

Even with Filipino citizens being the contractors, full control and supervision is still with the
State.

ATTY. LEONEN:

Yes, your Honor.

JUSTICE PANGANIBAN:

In all these contract full control and supervision is with the State.

ATTY. LEONEN:
 Yes your Honor and we can only hope that the State is responsive to the people we
represent.

xxx

JUSTICE PANGANIBAN:

Yes, yes. Can it also not be said reading that the Constitution that the safeguards on
contracts with foreigners was left by the Constitutional Commission or by Constitution itself to
Congress to craft out.

ATTY. LEONEN:

I can accept your Honor that there was a province of power that was given to Congress, but
it was delimited by the fact, that they removed the word management and other
arrangement and put the words either financial and technical.

JUSTICE PANGANIBAN:

Yes but you just admitted earlier that these two words would also include some form
of management or other things to protect the investment or the technology being put
by the foreign company.

ATTY. LEONEN:

Yes your Honor for so long as it's not the entire.

JUSTICE PANGANIBAN:

Yes, yes provided the State does not lose control and supervision, isn't it?

ATTY. LEONEN:

Yes your Honor.87 (Emphasis and underscoring supplied)

Thus, the degree of the foreign corporation's participation in the management of the mining concern
is co-extensive with and strictly limited to the degree of financial or technical assistance extended.
The scope of the assistance defines the limits of the participation in management.

However, to whatever extent the foreign corporation's incidental participation in the management of
the mining concern may be, full control and supervision, sufficient to protect the interest of the
Filipino people, over all aspects of mining operations must be retained by the Government.
While this does not necessarily mean that the Government must assume the role of a back seat
driver, actively second guessing every decision made by the foreign corporation, it does mean that
sufficient safeguards must be incorporated into the FTAA to insure that the people's beneficial
interest in their natural resources are protected at all times.

Moreover, the foreign contractor's limited participation in management, as the Court held in its
Decision, should not effectively grant foreign-owned corporations beneficial ownership over
the natural resources.

The opinion, submitted by the OSG, of Bernardo M. Villegas, who was a Member of the
Constitutional Commission and Chair of its Committee on National Economy and Patrimony, is not
inconsistent with the foregoing conclusion. Commissioner Villegas opined:
The phrase "service contracts" contained in the 1973 Constitution was deleted in the 1987
Constitution because there was the general perception among the Concom members that it was
used during the Marcos regime as an instrument to circumvent the 60-40 limit in favor of Filipino
ownership. There was also the impression that the inclusion of the word "management" in the
description of the service contract concept in the 1973 Constitution was tantamount to ownership by
the foreign partner.

The majority of the Concom members, however, recognized the vital need of the Philippine economy
for foreign capital and technology in the exploitation of natural resources to benefit Filipinos,
especially the poor in the countryside where the mining sites are located. For this reason, the
majority voted for "agreements involving financial or technical assistance" or FTAA.

I maintain that the majority who voted Yes to this FTAA provision realized that an FTAA involved
more than borrowing money and/or buying technology from foreigners. If an FTAA involved only a
loan and/or purchase of technology, there would not have been a need for a constitutional provision
because existing laws in the Philippines more than adequately regulate these transactions.

It can be deducted from the various comments of both those who voted Yes and No to the FTAA
provision that an FTAA also involves the participation in management of the foreign partner. What
was then assumed in 1986 is now even clearer in the way business organizations have evolved in
the last decade or so under the modern concept of good governance. There are numerous
stakeholders in a business other than the stockholders or equity owners who participate actively in
the management of a business enterprise. Not only do creditors and suppliers demand
representation in boards of directors. There are also other so-called independent directors who
actively participate in management.

In summary, the word "management" was deleted from the description of the FTAA because
some CONCOM delegates identified management with beneficial ownership. In order not to
prolong the debate, those in favor of the FTAA provision agreed not to include the word
management. But from what has been discussed above, it was clear in the minds of those who
voted YES that the FTAA included more than just a loan and/or purchase of technology from
foreigners but necessarily allowed the active participation of the foreign partners in the
management of the enterprise engaged in the exploitation of natural resources.88 (Emphasis
supplied).

Under no circumstances should the execution of an FTAA be tantamount to the grant of a roving
commission whereby a foreign contractor is given blanket and unfettered discretion to do whatever it
deems necessary – denude watersheds, divert sources of water, drive communities from their
homes – in pursuit of its pecuniary goals.

Nor should the scope of an FTAA be broadened to include "managerial assistance." As discussed
extensively in the Decision, 89 "managerial assistance" – a euphemism by which full control and
beneficial ownership of natural resources were vested in foreigners – is part and parcel of the martial
law era "service contracts" and the old "concession regime" which the 1987 Constitution has
consigned to the dust bin of history.

The elimination of the phrase "service contracts" effectuates another purpose. Intervenor PCM
agrees that the Constitution tries to veer away from the old concession system, 90 which vested
foreign-owned corporations control and beneficial ownership over Philippine natural resources.
Hence, the 1987 Constitution also deleted the provision in the 1935 and 1973 Constitutions
authorizing the State to grant licenses, concessions, or leases for the exploration, exploitation,
development, or utilization of natural resources.91
Prof. Agabin had no flattering words for the concession system, which he described in his position
paper as follows:

Under the concession system, the concessionaire makes a direct equity investment for the purpose
of exploiting a particular natural resource within a given area. Thus, the concession amounts to a
complete control by the concessionaire over the country's natural resource, for it is given
exclusive and plenary rights to exploit a particular resource and is in effect assured
ownership of that resource at the point of extraction. In consideration for the right to exploit a
natural resource, the concessionaire either pays rent or royalty which is a fixed percentage of the
gross proceeds. But looking beyond the legal significance of the concession regime, we can see that
there are functional implications which give the concessionaire great economic power
arising from 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 of production of the natural resource, such as volume of production, expansion,
research and development; 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 the natural 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. The concession system, investing as it does ownership of
natural resources, constitutes a consistent inconsistency with the principle embodied in our
Constitution that natural resources belong to the State and shall not be alienated, not to mention the
fact that the concession was the bedrock of the colonial system in the exploitation of natural
resources.92 (Underscoring in the original)

Vestiges of the concession system endured in the service contract regime, including the vesting on
the contractor of the management of the enterprise, as well as the control of production and other
matters, such as expansion and development. 93 Also, while title to the resource discovered was
nominally in the name of the government, the contractor had almost unfettered control over its
disposition and sale.94

The salutary intent of the 1987 Constitution notwithstanding, these stubborn features of the
concession system persist in the Mining Act of 1995. The statute allows a foreign-owned corporation
to carry out mining operations, 95 which includes the conduct of exploration, 96 development97 and
utilization98 of the resources.99 The same law grants foreign contractors auxiliary mining rights, i.e.,
timber rights,100 water rights,101 the right to possess explosives ,102 easement rights,103 and entry into
private lands and concession areas.104 These are the very same rights granted under the old
concession and service contract systems.

The majority opinion proposes two alternative standards of Government control over FTAA
operations. Thus, in the opening paragraphs it states:

Full control is not anathema to day-to-day management by the contractor, provided that the State
retains the power to direct overall strategy; and to set aside, reverse, or modify plans and
actions of the contractor. The idea of full control is similar to that which is exercised by the
board of directors of a private corporation x x x (Emphasis and underscoring supplied)

However, the majority opinion subsequently substantially reduces the scope of its definition of
"control" in this wise:

The concept of control adopted in Section 2 of Article XII must be taken to mean less than
dictatorial, all-encompassing control; but nevertheless sufficient to give the State the power to
direct, restrain, regulate and govern the affairs of the extractive enterprises. Control by the
State may be on a macro level, through the establishment of policies, guidelines, regulations,
industry standards and similar measures that would enable the government to control the
conduct of affairs in various enterprises and restrain activities deemed not desirable or
beneficial. (Emphasis and underscoring supplied; citations omitted; italics in the original)

This second definition is apparently analogous to regulatory control which the Government is
automatically presumed to exercise over all business activities by virtue of the Police Power. This
definition of the "full control and supervision" mandated by Section 2, Article XII of the Constitution
strikes a discordant and unconvincing chord as it gives no effect to the mandated "full" character of
the State's control but merely places it at par with any other business activity or industry regulated by
the Government.

But even under this second and more limited concept of regulatory control, the provisions of the
Mining Act pertaining to FTAAs do not pass the test of constitutionality.

To be sure, the majority opinion cites a litany of documents, plans, reports and records which the
foreign FTAA contractor is obliged to submit or make available under the Mining Act and DAO 96-40.
However, the mere fact that the Act requires the submission of work programs and minimum
expenditure commitments105 does not provide adequate protection. These were also required under
the old concession106 and service contract107 systems, but did not serve to place full control and
supervision of the country's natural resources in the hands of the Government.

Conspicuously absent from the Mining Act are effective means by which the Government can protect
the beneficial interest of the Filipino people in the exploration, development and utilization of their
resources. It appears from the provisions of the Mining Act that the Government, once it has
determined that a foreign corporation is eligible for an FTAA and enters into such an agreement, has
very little say in the corporation's actual operations.

Thus, when pressed to identify the mechanism by which the Government can administratively
compel compliance with the foregoing requirements as well as the other terms and conditions of the
Mining Act, DAO 96-40 and DAO 99-56, the majority can only point to the cancellation of the
agreement(s) and/or the incentives concerned under Section 95 to 99 of the Mining Act: 108

CHAPTER XVII

Ground for Cancellation, Revocation, and Termination

SECTION 95. Late or Non-filing of Requirements. — Failure of the permittee or contractor to comply
with any of the requirements provided in this Act or in its implementing rules and regulations, without
a valid reason, shall be sufficient ground for the suspension of any permit or agreement provided
under this Act.

SECTION 96. Violation of the Terms and Conditions of Permit or Agreements. — Violation of the
terms and conditions of the permits or agreements shall be a sufficient ground for cancellation of the
same.

SECTION 97. Non-payment of Taxes and Fees. — Failure to pay taxes and fees due the
Government for two (2) consecutive years shall cause the cancellation of the exploration permit,
mineral agreement, financial or technical assistance agreement and other agreements and the re-
opening of the area subject thereof to new applicants.
SECTION 98. Suspension or Cancellation of Tax Incentives and Credits. — Failure to abide by the
terms and conditions of tax incentives and credits shall cause the suspension or cancellation of said
incentives and credits.

SECTION 99. Falsehood or Omission of Facts in the Statement — All statements made in the
exploration permit, mining agreement and financial or technical assistance agreement shall be
considered as conditions and essential parts thereof and any falsehood in said statements or
omission of facts therein which may alter, change or affect substantially the facts set forth in said
statements may cause the revocation and termination of the exploration permit, mining agreement
and financial or technical assistance agreement.

An examination of the foregoing fails to impress. For instance, how does cancellation of the FTAA
under Section 97 for nonpayment of taxes and fees (comprising the "basic share" of the
government) for two consecutive years facilitate the collection of the unpaid taxes and fees? How
does it preserve and protect the beneficial interest of the Filipino people? For that matter, how does
the DENR administratively compel compliance with the anti-pollution and other requirements? 109 If
minerals are found to have been sold overseas at less than the most advantageous market prices,
how does the DENR obtain satisfaction from the offending foreign FTAA contractor for the
difference?

In sum, the enforcement provisions of the Mining Act and its Implementing Rules are scarcely
effective, and, worse, perceptibly less than the analogous provisions of other Government
Regulatory Agencies.

For instance, the Bangko Sentral Ng Pilipinas, the Central Monetary Authority mandated by the
Constitution to exercise supervision (but not full control and supervision) over banks,110 is
empowered to (1) appoint a conservator with such powers as shall be deemed necessary to take
charge of the assets, liabilities and management of a bank or quasi-bank; 111 (2) under certain well
defined conditions, summarily and without need for prior hearing forbid a bank from doing business
in the Philippines and appoint the Philippine Deposit Insurance Corporation as receiver; 112 and (3)
impose a number of administrative sanctions such as (a) fines not to exceed P30,000 per day for
each violation, (b) suspension of a bank's rediscounting privileges, (c) suspension of lending or
foreign exchange operations or authority to accept new deposits or make new investments, (d)
suspension of interbank clearing privileges, and (e) revocation of quasi-banking license. 113

Similarly, to give effect to the Constitutional mandate to afford full protection to labor, 114 the Labor
Code115 grants the Secretary of Labor the power to (1) issue compliance orders to give effect to the
labor standards provisions of the Code; 116 and (2) enjoin an intended or impending strike or lockout
by assuming jurisdiction over a labor dispute in an industry determined to be indispensable to the
national interest.117

Under the Tax Code, the Commissioner of Internal Revenue has the power to (1) temporarily
suspend the business operations of a taxpayer found to have committed certain specified
violations;118 (2) order the constructive distraint of the property of a taxpayer; 119 and (3) impose the
summary remedies of distraint of personal property and or levy on real property for nonpayment of
taxes.120

In comparison, the Mining Act and its Implementing Rules conspicuously fail to provide the DENR
with anything remotely analogous to the foregoing regulatory and enforcement powers of other
government agencies.
In fine, the provisions of the Mining Act and its Implementing Rules give scarcely more than
lip service to the constitutional mandate for the State to exercise full control and supervision
over the exploration, development and utilization of Philippine Natural Resources. Evaluated
as a whole and in comparison with other government agencies, the provisions of the Mining
Act and its Implementing Rules fail to meet even the reduced standard of effective regulatory
control over mining operations. In effect, they abdicate control over mining operations in
favor of the foreign FTAA contractor. For this reason, the provisions of the Mining Act,
insofar as they pertain to FTAA contracts, must be declared unconstitutional and void.

The majority opinion vigorously asserts that it is the Chief Executive who exercises the power of
control on behalf of the State.

This only begs the question. How does President effectively enforce the terms and conditions of an
FTAA? What specific powers are subsumed within the constitutionally mandated "power of control?"
On these particular matters the majority opinion, like the Mining Act, is silent.

Provisions of the Mining Act pertaining to FTAAs

void for conveying beneficial ownership of
Philippine mineral resources to foreign contractors

An examination of the Mining Act reveals that the law grants the lion's share of the proceeds of the
mining operation to the foreign corporation. Thus the second and third paragraphs of Section 81 of
the law provide:

SECTION 81. Government Share in Other Mineral Agreements. — x x x

The Government share in financial or technical assistance agreement shall consist of, among
other things, the contractor's corporate income tax, excise tax, special allowance,
withholding tax due from the contractor's foreign stockholders arising from dividend or interest
payments to the said foreign stockholder in case of a foreign national and all such other taxes,
duties and fees as provided for under existing laws.

The collection of Government share in financial or technical assistance agreement shall

commence after the financial or technical assistance agreement contractor has fully
recovered its pre-operating expenses, exploration, and development expenditures, inclusive.
(Emphasis supplied)
Under the foregoing provisions, the Government does not receive a share in the proceeds of the
mining operation. All it receives are taxes and fees from the foreign corporation, just as in the old
concession121 and service contract122 regimes. The collection of taxes and fees cannot be considered
a return on the resources mined corresponding to beneficial ownership of the Filipino people. Taxes
are collected under the State's power to generate funds to finance the needs of the citizenry and to
advance the common weal.123 They are not a return on investment or property. Similarly, fees are
imposed under the police power primarily for purposes of regulation. 124 Again, they do not
correspond to a return on investment or property.

Even more galling is the stipulation in the above-quoted third paragraph that the Government's share
(composed only of taxes and fees) shall not be collected until after the foreign corporation has "fully
recovered its pre-operating expenses, exploration, and development expenditures, inclusive." In one
breath this provision virtually guarantees the foreigner a return on his investment while
simultaneously leaving the Government's (and People's) share to chance.
It is, therefore, clearly evident that the foregoing provisions of the Mining Act effectively transfer the
beneficial ownership over the resources covered by the agreement to a foreigner, in contravention of
the letter and spirit of the Constitution.

Consequently, the assailed Decision inescapably concluded that:

The underlying assumption in all these provisions is that the foreign contractor manages the mineral
resources, just like the foreign contractor in a service contract. 125

The Mining Act gives the foreign-owned corporation virtually complete control, not mere
"incidental" participation in management, over the entire operations.

The law is thus at its core a retention of the concession system. It still grants beneficial
ownership of the natural resources to the foreign contractor and does little to affirm the
State's ownership over them, and its supervision and control over their exploration,
development and utilization.

While agreeing that the Constitution vests the beneficial ownership of Philippine minerals with the
Filipino people, entitling them to gains, rewards and advantages generated by these minerals, the
majority opinion nevertheless maintains that the Mining Act, as implemented by DENR
Administrative Order 99-56126 (DAO 99-56), is constitutional as, so it claims, it does not "convey
beneficial ownership of any mineral resource or product to any foreign FTAA contractor." The
majority opinion adds that the State's share, as expounded by DAO 99-56, amounts to "real
contributions to the economic growth and general welfare of the country," at the same time allowing
the contractor to recover "a reasonable return on its investments in the project."

Under DAO 99-56, the "government's share" in an FTAA is divided into (1) a "basic government
share" composed of a number of taxes and fees 127 and (2) an "additional government share"128
computed according to one of three possible methods – (a) a 50-50 sharing in the cumulative
present value of cash flows,129 (b) a profit related additional government share 130 or (c) an additional
share based on the cumulative net mining revenue131 – at the option of the contractor.

Thus, the majority opinion claims that the total government share, equal to the sum of the "basic
government share" and the "additional government share," will achieve "a fifty-fifty sharing –
between the government and the contractor – of net benefits from mining."

This claim is misleading and meaningless for two reasons:

First, as priorly discussed, the taxes and fees which make up the government's "basic share"
cannot be considered a return on the resources mined corresponding to the beneficial
ownership of the Filipino people. Again, they do not correspond to a return on investment or
property.

Second, and more importantly, the provisions of the Mining Act effectively allow the foreign
contractor to circumvent all the provisions of DAO 99-56, including its intended "50-50
sharing" of the net benefits from mining, and reduce government's total share to as low as
TWO percent (2%) of the value of the minerals mined.

The foreign contractor can do this because Section 39 of the Mining Act allows it to convert its FTAA
into a Mineral Production-Sharing Agreement (MPSA) by the simple expedient of reducing its equity
in the corporation undertaking the FTAA to 40%:

SECTION 39. Option to Convert into a Mineral Agreement. — The contractor has the option to
convert the financial or technical assistance agreement to a mineral agreement at any time
during the term of the agreement, if the economic viability of the contract area is found to be
inadequate to justify large-scale mining operations, after proper notice to the Secretary as provided
for under the implementing rules and regulations: Provided, That the mineral agreement shall only
be for the remaining period of the original agreement.

In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the
corporation, partnership, association, or cooperative. Upon compliance with this requirement by
the contractor, the Secretary shall approve the conversion and execute the mineral
production-sharing agreement. (Emphasis and underscoring supplied)

And under Section 80 of the Mining Act, in connection with Section 151(a) of the National Internal
Revenue Code132 (Tax Code), the TOTAL GOVERNMENT SHARE in an MPSA is ONLY TWO
PERCENT (2%) of the value of the minerals. Section 80 of the Mining Act provides:

SECTION 80. Government Share in Mineral Production Sharing Agreement. — The total
government share in a mineral production sharing agreement shall be the excise tax on
mineral products as provided in Republic Act No. 7729, amending Section 151(a) of the
National Internal Revenue Code, as amended. (Emphasis supplied)

While Section 151(a) of the Tax Code reads:

Sec. 151. Mineral Products. — (a) Rates of Tax. — There shall be levied, assessed and collected
on mineral, mineral products and quarry resources, excise tax as follows:

(1) On coal and coke, a tax of ten pesos (P10.00) per metric ton.

(2) On non-metallic minerals and quarry resources, a tax of two percent (2%) based on the
actual market value of the annual gross output thereof at the time of removal, in the case of those
locally extracted or produced; or the value used by the Bureau of Customs in determining tariff and
customs duties, net of excise tax and value-added tax, in the case of importation.

(3) On all metallic minerals, a tax based on the actual market value of the gross output thereof at
the time of removal, in the case of those locally extracted or produced; or the value used by the
Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax,
in the case of importation, in accordance with the following schedule:

(a) Copper and other metallic minerals:

(i) On the first three (3) years upon the effectivity of this Act, one percent (1%);

(ii) On the fourth and fifth year, one and a half percent (1 1/2%); and

(iii) On the sixth year and thereafter, two percent (2%)

(b) Gold and chromite, two percent (2%)

(4) On indigenous petroleum, a tax of fifteen percent (15%) of the fair international market price
thereof, on the first taxable sale, such tax to be paid by the buyer or purchaser within 15 days from
the date of actual or constructive delivery to the said buyer or purchaser. The phrase 'first taxable
sale, barter, exchange or similar transaction' means the transfer of indigenous petroleum in its
original state to a first taxable transferee. The fair international market price shall be determined in
consultation with an appropriate government agency.

For the purpose of this subsection, 'indigenous petroleum' shall include locally extracted mineral oil,
hydrocarbon gas, bitumen, crude asphalt, mineral gas and all other similar or naturally associated
substances with the exception of coal, peat, bituminous shale and/or stratified mineral deposits.
(Emphasis supplied)

By taking advantage of the foregoing provisions and selling 60% of its equity to a Filipino corporation
(such as any of the members of respondent-in-intervention Philippine Chamber of Mines) a foreign
contractor can easily reduce the total government's share (held in trust for the benefit of the Filipino
People) in the minerals mined to a paltry 2% while maintaining a 40% beneficial interest in the same.

What is more, if the Filipino corporation acquiring the foreign contractor's stake is itself 60% Filipino-
owned and 40% foreign-owned (a "60-40" Filipino corporation such as Sagittarius Mines, the
putative purchaser of WMC's 100% equity in WMCP), then the total beneficial interest of foreigners
in the mineral output of the mining concern would constitute a majority of 64% 133 while the beneficial
ownership of Filipinos would, at most, 134 amount to 36% – 34% for the Filipino stockholders of the 60-
40 Filipino corporation and 2% for the Government (in trust for the Filipino People).

The foregoing scheme, provided for in the Mining Act itself, is no different and indeed is virtually
identical to that embodied in Section 7.9 of the WMCP FTAA which the majority opinion itself
found to be "without a doubt grossly disadvantageous to the government, detrimental to the
interests of the Filipino people, and violative of public policy:"

x x x While Section 7.7 gives the government a 60 percent share in the net mining revenues of
WMCP from the commencement of commercial production; Section 7.9 deprives the government
of part or all of the said 60 percent. Under the latter provision, should WMCP's foreign
shareholders – who originally owned 100 percent of the equity – sell 60 percent or more of its
outstanding capital stock to a Filipino citizen or corporation, the State loses its right to receive its 60
percent share in net mining revenues under Section 7.7.

Section 7.9 provides

The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7 shall be
reduced by 1percent of Net Mining Revenues for every 1percent ownership interest in the
Contractor (i.e., WMCP) held by a Qualified Entity.

Evidently, what Section 7.7 grants to the State is taken away in the next breath by Section 7.9
without any offsetting compensation to the State. Thus, in reality, the State has no vested right to
receive any income from the FTAA for the exploration of its mineral resources. Worse, it
would seem that what is given to the State in Section 7.7 is by mere tolerance of WMCP's
foreign stockholders, who can at any time cut off the government's entire 60 percent share.
They can do so by simply selling 60 percent of WMCP's outstanding stock to a Philippine
citizen or corporation. Moreover, the proceeds of such sale will of course accrue to the
foreign stockholders of WMCP, not to the State.

The sale of 60 percent of WMCP's outstanding equity to a corporation that is 60 percent Filipino-
owned and 40 percent foreign-owned will still trigger the operation of Section 7.9. Effectively, the
State will lose its right to receive all 60 percent of the net mining revenues of WMCP; and
foreign stockholders will own beneficially up to 64 percent of WMCP, consisting of the
remaining 40percent foreign equity therein, plus the 24 percent pro-rata share in the buyer-
corporation.

xxx

At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share in the net mining
revenues of WMCP without any offset or compensation whatsoever. It is possible that the
inclusion of the offending provision was initially prompted by the desire to provide some
form of incentive for the principal foreign stockholder in WMCP to eventually reduce its
equity position and ultimately divest itself thereof in favor of Filipino citizens and
corporations. However, as finally structured, Section 7.9 has the deleterious effect of
depriving government of the entire 60 percent share in WMCP's net mining revenues, without
any form of compensation whatsoever. Such an outcome is completely unacceptable.

The whole point of developing the nation's natural resources is to benefit the Filipino people, future
generations included. And the State as sovereign and custodian of the nation's natural wealth is
mandated to protect, conserve, preserve and develop that part of the national patrimony for their
benefit. Hence, the Charter lays great emphasis on "real contributions to the economic growth and
general welfare of the country" [Footnote 75 of the Dissent omitted] as essential guiding principles to
be kept in mind when negotiating the terms and conditions of FTAAs.

xxx

Section 7.9 of the WMCP FTAA effectively gives away the State's share of net mining
revenues (provided for in Section 7.7) without anything in exchange. Moreover, this outcome
constitutes unjust enrichment on the part of local and foreign stockholders of WMCP. By their
mere divestment of up to 60 percent equity in WMCP in favor of Filipino citizens and/or corporations,
the local and foreign stockholders get a windfall. Their share in the net mining revenues of WMCP is
automatically increased, without their having to pay the government anything for it. In short, the
provision in question is without a doubt grossly disadvantageous to the government,
detrimental to the interests of the Filipino people, and violative of public policy. (Emphasis
supplied; italics and underscoring in the original; footnotes omitted)

The foregoing disquisition is directly applicable to the provisions of the Mining Act. By selling 60% of
its outstanding equity to a 60% Filipino-owned and 40% foreign-owned corporation, the foreign
contractor can readily convert its FTAA into an MPSA. Effectively, the State's share in the net
benefits from mining will be automatically and drastically reduced from the theoretical 50%
anticipated under DAO 99-56 to merely 2%. What is given to the State by Section 81 and DAO
99-56 is all but eliminated by Sections 39 and 80. At the same time, foreign stockholders will
beneficially own up to 64% of the mining concern, consisting of the remaining 40% foreign
equity therein plus the 24% pro-rata share in the buyer-corporation.

It is possible that, like Section 7.9 of the WMCP FTAA, Section 39 of the Mining Act was intended to
provide some form of incentive for the foreign FTAA contractor to eventually reduce its equity
position and ultimately divest itself thereof in favor of Filipino citizens and corporations. However,
the net effect is to allow the Filipino people to be robbed of their just share in Philippine
mineral resources. Such an outcome is completely unacceptable and cannot be sanctioned
by this Court.

By this simple conversion, which may be availed of at any time, the local and foreign stockholders
will obtain a windfall at the expense of the Government, which is the trustee of the Filipino people.
The share of these stockholders in the net mining revenues from Philippine resources will be
automatically increased without their having to pay the government anything in exchange.

On this basis alone, and despite whatever other differences of opinion might exist, the majority
must concede that the provisions of the Mining Act are grossly disadvantageous to the
government, detrimental to the interests of the Filipino people, and violative of Section 2,
Article XII of the Constitution.
En passant, it is significant to note that Section 39 of the Mining Act allows an FTAA holder to covert
its agreement to an MPSA "at any time during the term of the agreement."

As any reasonable person with a modicum of business experience can readily determine, the
optimal time for the foreign contractor to convert its FTAA into an MPSA is after the completion of
the exploration phase and just before undertaking the development, construction and utilization
phase. This is because under Section 56 (a) of DAO 40-96, the requirement for a minimum
investment of Fifty Million U.S. Dollars (US$ 50,000,000.00) 135 is only applicable during the
development, construction and utilization phase and NOT during the exploration phase where the
foreign contractor need only comply with the stipulated minimum ground expenditures:

SECTION 56. Terms and Conditions of an FTAA. — The following terms, conditions and warranties
shall be incorporated in the FTAA, namely:

a. A firm commitment, in the form of a sworn statement during the existence of the Agreement, that
the Contractor shall comply with minimum ground expenditures during the exploration and pre-
feasibility periods as follows:

Year US $/Hectare

12

22

38

48

5 18

6 23

and a minimum investment of Fifty Million US Dollars ($50,000,000.00) or its Philippine Peso
equivalent in the case of Filipino Contractor for infrastructure and development in the
contract area. If a Temporary/Special Exploration Permit has been issued prior to the approval of
an FTAA, the exploration expenditures incurred shall form part of the expenditures during the first
year of the exploration period of the FTAA.

In the event that the Contractor exceeds the minimum expenditure requirement in any one (1) year,
the amount in excess may be carried forward and deducted from the minimum expenditure required
in the subsequent year. In case the minimum ground expenditure commitment for a given year is not
met for justifiable reasons as determined by the Bureau/concerned Regional Office, the unexpended
amount may be spent on the subsequent year(s) of the exploration period. (Emphasis supplied)

By converting its FTAA to an MPSA just before undertaking development, construction and
utilization activities, a foreign contractor further maximizes its profits by avoiding its obligation to
make a minimum investment of US$ 50,000,000.00. Assuming an exploration term of 6 years, it will
have paid out only a little over US$ 2.4 million136 in minimum ground expenditures.

Clearly, under the terms and provisions of the Mining Act, even the promised influx of tens of
millions of dollars in direct foreign investments is merely hypothetical and ultimately illusory.

Grant of Exploration Permits to Foreign

Corporations is Unconstitutional
The majority is also convinced that Section 3(aq) of the Mining Act, defining foreign corporations as
a qualified entity for the purposes of granting exploration permits, is "not unconstitutional."

The questioned provision reads:

SECTION 3. Definition of Terms. — As used in and for purposes of this Act, the following terms,
whether in singular or plural, shall mean:

xxx

(aq) "Qualified person" means any citizen of the Philippines with capacity to contract, or a
corporation, partnership, association, or cooperative organized or authorized for the purpose of
engaging in mining, with technical and financial capability to undertake mineral resources
development and duly registered in accordance with law at least sixty per centum (60%) of the
capital of which is owned by citizens of the Philippines: Provided, That a legally organized
foreign-owned corporation shall be deemed a qualified person for purposes of granting an
exploration permit, financial or technical assistance agreement or mineral processing permit.
(Emphasis supplied)

In support of its contention that the above-quoted provision does not offend against the Constitution,
the majority opinion states that: (1) "there is no prohibition at all against foreign or local corporations
or contractors holding exploration permits;" and (2) an "exploration permit serves a practical and
legitimate purpose in that it protects the interests and preserves the rights of the exploration permit
grantee x x x during the period of time that it is spending heavily on exploration works, without yet
being able to earn revenues x x x."

The majority opinion also characterizes an exploration permit as "an authorization for the grantee to
spend its funds on exploration programs that are pre-approved by the government." And it
comments that "[t]he State risks nothing and loses nothing by granting these permits" to foreign
firms.

These contentions fail for two obvious reasons.

First, setting aside for the moment all disagreements pertaining to the construction of Section 2,
Article XII of the Constitution, the following, at the very least, may be said to have been conclusively
determined by this Court: (1) the only constitutionally sanctioned method by which a foreign entity
may participate in the natural resources of the Philippines is by virtue of paragraph 4 of Section 2,
Article XII of the Constitution; (2) said provision requires that an agreement be entered into (3)
between the President and the foreign corporation (4) for the large-scale exploration, development,
and utilization of minerals, petroleum, and other mineral oils (5) according to the general terms and
conditions provided by law, (6) based on real contributions to the economic growth and general
welfare of the country; (7) such agreements will promote the development and use of local scientific
and technical resources; and (8) the President shall notify the Congress of every contract entered
into in accordance with this provision, within thirty days from its execution.

However, by the majority opinion's express admission, the grant of an exploration permit does not
even contemplate the entry into an agreement between the State and the applicant foreign
corporation since "prior to the issuance of such FTAA or mineral agreement, the exploration permit
grantee (or prospective contractor) cannot yet be deemed to have entered into any contract or
agreement with the State."

Consequently, the grant of an exploration permit – which is not an agreement – cannot possibly be
construed as being favorably sanctioned by paragraph 4 of Section 2, Article XII of the Constitution
which refers to "agreements … involving either financial or technical assistance." Not falling within
the exception embodied in paragraph 4 of Section 2, Article XII of the Constitution, the grant of such
a permit to a foreign corporation is prohibited and the proviso providing for such grant in Section 3
(aq) of the Mining Act is void for being unconstitutional.

Second, given the foregoing discussion on the circumvention of the State's share in an FTAA, it is
clearly evident that to allow the grant of exploration permits to foreign corporations is to allow the
whole-sale circumvention of the entire system of FTAAs mandated by the Constitution.

For Chapter IV of the Mining Act on Exploration Permits grants to the permit holder, including foreign
corporations, the principal rights conferred on an FTAA contractor during the exploration phase,
including (1) the right to enter, occupy and explore the permit area under Section 23,137 and (2) the
exclusive right to an MPSA or other mineral agreements or FTAAs upon the filing of a Declaration of
Mining Project Feasibility under Sections 23 and 24; 138 but requires none of the obligations of an
FTAA – not even the obligation under Section 56 of DAO 40-96 to pay the minimum ground
expenditures during the exploration and feasibility period. 139

Thus, all that a foreign mining company need do to further maximize its profits and further reduce the
Government's revenue from mining operations is to apply for an exploration permit and content itself
with the "smaller" permit area of 400 meridional blocks onshore (which itself is not small considering
that it is equivalent to 32,400 hectares or 324,000,000 square meters). 140 It is not obligated to pay
any minimum ground expenditures during the exploration period.

Should it discover minerals in commercial quantities, it can circumvent the Fiscal Regime in DAO 99-
56 by divesting 60% of its equity in favor of a Philippine corporation and opting to enter into an
MPSA. By doing so it automatically reduces the Government's TOTAL SHARE to merely 2% of
value of the minerals mined by operation of Section 81.

And if the Philippine corporation to which it divested its 60% foreign equity is itself a 60-40 Philippine
Corporation, then the beneficial interest of foreigners in the minerals mined would be a minimum of
64%.

In light of the foregoing, Section 3 (aq), in so far as it allows the granting of exploration permits to
foreign corporations, is patently unconstitutional, hence, null and void.

II
Invalidity of the WMCP FTAA Sale of foreign
interest in WMCP to a Filipino corporation
did not render the case moot and academic.

Respondent WMCP, now renamed Tampakan Mineral Resources Corporation, submits that the
case has been rendered moot since "[e]xcept for the nominal shares of directors, 100% of TMRC's
share are now owned by Sagittarius Mines, which is a Filipino-owned corporation. More than 60% of
the equity of Sagittarius is owned by Filipinos or Filipino-owned corporations." 141 This Court initially
reserved judgment on this issue.142

Petitioner invokes by analogy the rule that where land is invalidly transferred to an alien who
subsequently becomes a Filipino citizen or transfers it to one, the infirmity in the original transaction
is considered cured and the title of the transferee is rendered valid, citing Halili v. Court of Appeals.143
The rationale for this rule is that if the ban on aliens from acquiring lands is to preserve the nation's
lands for future generations of Filipinos, that aim or purpose would not be thwarted but achieved by
making lawful the acquisition of real estate by Filipino citizens. 144
Respondent WMCP's analogy is fallacious. Whether the legal title to the corporate vehicle holding
the FTAA has been transferred from a foreigner to a Filipino is irrelevant. What is relevant is whether
a foreigner has improperly and illegally obtained an FTAA and has therefore benefited from the
exploration, development or utilization of Philippine natural resources in a manner contrary to the
provisions of the Constitution.

As above-stated the doctrine enunciated in Halili is based on the premise that the purpose of the
Constitution in prohibiting alien ownership of agricultural land is to retain the ownership or legal title
of the land in the hands of Filipinos. This purpose is not identical or even analogous to that in
Section 2, Article XII of the Constitution. As priorly discussed, the primary purpose of the provisions
on National Patrimony is to preserve to the Filipino people the beneficial ownership of their natural
resources – i.e. the right to the gains, rewards and advantages generated by their natural resources.
Except under the terms of Section 2, Article XII, foreigners are prohibited from involving themselves
in the exploration, development or utilization of these resources, much less from profiting from them.

Divestment by a foreigner of an illegally acquired right to mine Philippine resources does not alter
the illegal character of the right being divested or sold. Indeed, such divestment or sale is obviously
a method by which the foreigner may derive pecuniary benefit from his unlawful act since he
receives payment for his illegally acquired interest in the country's natural resources.

To rule otherwise would be to condone, even to invite, foreign entities to obtain Philippine mining
interests in violation of the Constitution with the assurance that they can escape liability and at the
same time make a tidy sum by later selling these interests to Filipinos. This is nothing less than
allowing foreign speculation in Philippine natural resources. Worse, there is the very real possibility
that these foreign entities may intentionally inflate the value of their illegally–acquired mineral rights
to the detriment of their Filipino purchasers as the past Bre-X scandal 145 and recent Shell oil reserve
controversy146 vividly illustrate.

To allow a foreigner to profit from illegally obtained mining rights or FTAAs subverts and circumvents
the letter and intent of Article XII of the Constitution. It facilitates rather than prevents the rape and
plunder of the nation's natural resources by unscrupulous neo-colonial entities. It thwarts, rather than
achieves, the purpose of the fundamental law.

As applied to the facts of this case, respondent WMCP, in essence, claims that now that the
operation and management of the WMCP FTAA is in the hands of a Filipino company, no serious
question as to the FTAA's validity need arise.

On the contrary, this very fact – that WMC has sold its 100% interest in WMCP to a Filipino company
for US$10,000,000.00 – directly leads to some very serious questions concerning the WMCP FTAA
and its validity. First, if a Filipino corporation is capable of undertaking the terms of the FTAA, why
was an agreement with a foreign owned corporation entered into in the first place? Second, does not
the fact that, as alleged by petitioners 147 and admitted by respondent WMCP, 148 Sagittarius, WMCP's
putative new owner, is capitalized at less than half the purchase price 149 of WMC's shares in WMCP,
a strong indication that Sagittarius is merely acting as the dummy of WMC? Third, if indeed WMCP
has, to date, spent US$40,000,000.00 in the implementation of the FTAA, as it claims, 150 why did
WMC sell 100% of its shares in WMCP for only US$10,000,000.00? Finally, considering that, as
emphasized by WMCP,151 "payment of the purchase price by Sagittarius to WMC will come only after
the commencement of commercial production," hasn't WMC effectively acquired a beneficial interest
in any minerals mined in the FTAA area to the extent of US$10,000,000.00? If so, is the acquisition
of such a beneficial interest by a foreign corporation permitted under our Constitution?
Succinctly put, the question remains: What is the validity of the FTAA by which WMC, a fully
foreign owned corporation, has acquired a more than half billion peso152 interest in Philippine
mineral resources located in a contract area of 99,387 (alleged to have later been reduced to
30,000)153 hectares of land spread across the four provinces of South Cotabato, Sultan Kudarat,
Davao del Sur and North Cotabato?

Clearly then, the issues of this case have not been rendered moot by the sale of WMC's 100%
interest in WMCP to a Filipino corporation, whether the latter be Sagittarius or Lepanto. If the FTAA
is held to be valid under the Constitution, then the sale is valid and, more importantly, WMC's
US$10,000,000.00 interest in Philippine mineral deposit, arising as it did from the sale and its prior
100% ownership of WMCP, is likewise valid. However, if the FTAA is held to be invalid, then neither
WMC's interest nor the sale which gave rise to said interest is valid for no foreigner may profit
from the natural resources of the Republic of the Philippines in a manner contrary to the
terms of the Philippine Constitution. If held unconstitutional, the WMCP FTAA is void ab initio for
being contrary to the fundamental law and no rights may arise from it, either in favor of WMC or its
Filipino transferee.

Evidently, the transfer of the shares in WMCP from WMC Resources International Pty. Ltd. (WMC),
a foreign-owned corporation, to a Filipino-owned one, whether Sagittarius or Lepanto, now presently
engaged in a dispute over said shares, 154 did not "cure" the FTAA nor moot the petition at bar. On the
contrary, it is the Decision in this case that rendered those pending cases moot for the invalidation of
the FTAA leaves Sagittarius and Lepanto with nothing to dispute.

Terms of the WMCP FTAA are

contrary to the Constitution and
render said FTAA null and void.

The WMCP FTAA is clearly contrary to the agreements provided for in Section 2, Article XII of the
Constitution. In the Decision under reconsideration, this Court observed:

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 the
Contract Area." 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 of
conducting tests and studies in respect thereof;

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

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

xxx

(f) to construct roadways, mining, drainage, power generation and transmission facilities and all
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 resources in the Contract
Area without cost for the purposes of the Mining Operations;

xxx

(l) have the right to mortgage, charge or encumber all or part of its interest and obligations under this
Agreement, the plant, equipment and infrastructure and the Minerals produced from the Mining
Operations;

x x x.

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

Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, management
and personnel necessary for the Mining Operations." The mining company binds itself to "perform all
Mining Operations . . . providing all necessary services, technology and financing in connection
therewith," and to "furnish all materials, labour, equipment and other installations that may be
required for carrying on all Mining Operations." WMCP may make expansions, improvements and
replacements of the mining facilities and may add such new facilities as it considers necessary for
the mining operations.

These contractual stipulations, taken together, grant WMCP beneficial ownership over natural
resources that properly belong to the State and are intended for the benefit of its citizens. These
stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental
law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they
spring must be struck down.155 (Citations omitted)

Indeed, save for the fact that the contract covers a larger area, the subject FTAA is actually a
mineral production sharing agreement. Respondent WMCP admitted as much in its Memorandum. 156
The first paragraph of Section 2, Article XII of the Constitution, however, allows this type of
agreement only with Filipino citizens or corporations.

That the subject FTAA is void for having an unlawful cause bears reaffirmation. In onerous contracts
the cause is understood to be, for each contracting party, the prestation or promise of a thing or
service by the other.157 On the part of WMCP, a foreign-owned corporation, the cause was to extend
not only technical or financial assistance but management assistance as well. The management
prerogatives contemplated by the FTAA are not merely incidental to the two other forms of
assistance, but virtually grant WMCP full control over its mining operations. Thus, in Section 8.3 158 of
the FTAA, in case of a dispute between the DENR and WMCP, it is WMCP's decision which will
prevail.

The questioned FTAA also grants beneficial ownership over Philippine natural resources to WMCP,
which is prohibited from entering into such contracts not only by the fourth paragraph of Section 2,
Article XII of the Constitution, but also by the first paragraph, the FTAA practically being a
production-sharing agreement reserved to Filipinos.
Contracts whose cause is contrary to law or public policy are inexistent and void from the
beginning.159 They produce no effect whatsoever. 160 They cannot be ratified, 161 and so cannot the
WMCP FTAA.

The terms of the WMCP FTAA effectively give away

the Beneficial Ownership of Philippine minerals

As previously observed, the majority opinion finds Section 7.9. of the WMCP FTAA to be "grossly
disadvantageous to the government, detrimental to the interests of the Filipino people, and violative
of public policy" since it "effectively gives away the State's share of net mining revenues (provided
for in Section 7.7) without anything in exchange."

It likewise finds Section 7.8(e) of the WMCP FTAA to be invalid. Said provision states:

7.8 The Government Share shall be deemed to include all of the following sums:

xxx

(e) an amount equivalent to whatever benefits that may be extended in the future by
the Government to the Contractor or to financial or technical assistance agreement
contractors in general. (Emphasis supplied)

And in its own estimation:

Section 7.8(e) is out of place in the FTAA. This provision does not make any sense why, for
instance, money spent by the government for the benefit of the contractor in building roads leading
to the mine site should still be deductible from the State's share in net mining revenues. Allowing
this deduction results in benefiting the contractor twice over. To do so would constitute
unjust enrichment on the part of the contractor at the expense of the government, since the
latter is effectively being made to pay twice for the same item. For being grossly
disadvantageous and prejudicial to the government and contrary to public policy, Section
7.8(e) is undoubtedly invalid and must be declared to be without effect. xxx (Emphasis
supplied; citations omitted; underscore in the original)

The foregoing estimation notwithstanding, the majority opinion declines to invalidate the WMCP
FTAA on the theory that Section 7.9 and 7.8 are separable from the rest of the agreement, which
may supposedly be given effect without the offending provisions.

As previously discussed, the same deleterious results are easily achieved by the foreign contractor's
conversion of its FTAA into an MPSA under the provisions of the Mining Act. Hence, merely striking
out Sections 7.9 and 7.8(e) of the WMCP FTAA will not suffice; the provisions pertaining to FTAAs in
the Mining Act must be stricken out for being unconstitutional as well.

Moreover, Section 7.8 (e) and 7.9 are not the only provisions of the WMCP FTAA which convey
beneficial ownership of mineral resources to a foreign corporation.

Under Section 10.2 (l) of the WMCP FTAA, the foreign FTAA contractor shall have the right to
mortgage and encumber, not only its rights and interests in the FTAA, but the very minerals
themselves:

10.2 Rights of Contractor

The Government agrees that the Contractor shall:-

xxx
(l) have the right to mortgage, charge or encumber all or part of its interest and obligations under this
Agreement, the plant, equipment and infrastructure and the Minerals produced from the Mining
Operations; (Emphasis supplied)

Although respondents did not proffer their own explanation, the majority opinion theorizes that the
foregoing provision is necessitated by the conditions that may be imposed by creditor-banks on the
FTAA contractor:

xxx I believe that this provision may have to do with the conditions imposed by the creditor-banks of
the then foreign contractor WMCP to secure the lendings made to the latter. Ordinarily, banks lend
not only on the security of mortgages on fixed assets, but also on encumbrances of goods produced
that can easily be sold and converted into cash that can be applied to the repayment of loans. Banks
even lend on the security of accounts receivable that are collectible within 90 days. (Citations
omitted; underscore in the original)

It, however, overlooks the provision of Art. 2085 of the Civil Code which enumerates the essential
requisites of a contract of mortgage:

Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;

(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and
in the absence thereof, that they be legally authorized for the purpose.

Third persons who are not parties to the principal obligation may secure the latter by pledging or
mortgaging their own property. (Emphasis and underscoring supplied)

From the foregoing provision of law, it is abundantly clear that only the absolute owner of the
minerals has the right to mortgage the same, and under Section 2, Article XII of the
Constitution the absolute owner of the minerals is none other than the State. While the foreign
FTAA contractor may have an interest in the proceeds of the minerals, it does not acquire ownership
over the minerals themselves.

Put differently, the act of mortgaging the minerals is an act of ownership, which, under the
Constitution, is reserved solely to the State. In purporting to grant such power to a foreign FTAA
contractor, Section 10.2 (l) of the WMCP FTAA clearly runs afoul of the Constitution.

Moreover, it bears noting that to encumber natural resources of the State to secure a foreign FTAA
contractor's obligations is anomalous since Section 1.2 of the WMCP FTAA provides that "[a]ll
financing, technology, management and personnel necessary for the Mining Operations shall be
provided by the Contractor."

Indeed, even the provisions of the Mining Act, irredeemably flawed though they may be, require that
the FTAA contractor have the financial capability to undertake the large-scale exploration,
development and utilization of mineral resources in the Philippines; 162 and, specifically, that the
contractor warrant that it has or has access to all the financing required to promptly and effectively
carry out the objectives of the FTAA.163

Under Section 10.2 (e) of the WMCP FTAA, the foreign FTAA Contractor has the power to require
the Government to acquire surface rights in its behalf at such price and terms acceptable to it:

10.2 Rights of Contractor

The Government agrees that the Contractor shall:-

xxx

(e) have the right to require the Government at the Contractor's own cost, to purchase or
acquire surface areas for and on behalf of the Contractor at such price and terms as may be
acceptable to the Contractor. At the termination of this Agreement such areas shall be sold by
public auction or tender and the Contractor shall be entitled to reimbursement of the costs of
acquisition and maintenance, adjusted for inflation, from the proceeds of sale; (Emphasis
supplied)

Petitioners, in their Memorandum, point out that pursuant to the foregoing, the foreign FTAA
contractor may compel the Government to exercise its power of eminent domain to acquire the title
to the land under which the minerals are located for and in its behalf.

The majority opinion, however, readily accepts the explanation proffered by respondent WMCP,
thus:

Section 10.2 (e) sets forth the mechanism whereby the foreign-owned contractor, disqualified to own
land, identifies to the government the specific surface areas within the FTAA contract area to be
acquired for the mine infrastructure. The government then acquires ownership of the surface land
areas on behalf of the contractor, in order to enable the latter to proceed to fully implement the
FTAA.

The contractor, of course, shoulders the purchase price of the land. Hence, the provision allows it,
after the termination of the FTAA to be reimbursed from proceeds of the sale of the surface areas,
which the government will dispose of through public bidding.

And it concludes that "the provision does not call for the exercise of the power of eminent domain"
and the determination of just compensation.

The foregoing arguments are specious.

First, the provision in question clearly contemplates a situation where the surface area is not already
owned by the Government – i.e. when the land over which the minerals are located is owned by
some private person.

Second, the logical solution in that situation is not, as asserted by respondent WMCP, to have the
Government purchase or acquire the land, but for the foreign FTAA contractor to negotiate a lease
over the property with the private owner.

Third, it is plain that the foreign FTAA contractor would only avail of Section 10.2 (e) if, for some
reason or another, it is unable to lease the land in question at the price it is willing to pay. In that
situation, it would have the power under Section 10.2 (e) to compel the State, as the only entity
which can legally compel the landowner to involuntarily part with his property, to acquire the land at
a price dictated by the foreign FTAA contractor.

Clearly, the State's power of eminent domain is very much related to the practical workings of
Section 10.2 (e) of the WMCP FTAA. It is the very instrument by which the contractor assures itself
that it can obtain the "surface right" to the property at a price of its own choosing. Moreover, under
Section 60 of DAO 40-96, the contractor may, after final relinquishment, hold up to 5,000 hectares of
land in this manner.
More. While the foreign FTAA contractor advances the purchase price for the property, in reality it
acquires the "surface right" for free since under the same provision of the WMCP FTAA it is entitled
to reimbursement of the costs of acquisition and maintenance, adjusted for inflation . And as if the
foregoing were not enough, when read together with Section 3.3, 164 the foreign FTAA contractor
would have the right to hold the "surface area" for a maximum of 50 years, at its option.

In sum, by virtue of Sections 10.2 (e) and 3.3. of the WMCP FTAA, the foreign FTAA contractor is
given the power to hold inalienable mineral land of up to 5,000 hectares, with the assistance
of the State's power of eminent domain, free of charge, for a period of up to 50 years in
contravention of Section 3, Article XII of the Constitution:

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands,
and national parks. Agricultural lands of the public domain may be further classified by law according
to the uses which they may be devoted. Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such alienable lands of
the public domain except by lease, for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and not to exceed one thousand hectares in area.
Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than
twelve hectares thereof by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the
requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public
domain which may be acquired, developed, held, or leased and the conditions therefor. (Emphasis
supplied)

Taken together, the foregoing provisions of the WMCP FTAA amount to a conveyance to a foreign
corporation of the beneficial ownership of both the minerals and the surface rights to the same in
contravention of the clear provisions of the Constitution.

The majority opinion posits that "[t]he acquisition by the State of land for the contractor is just to
enable the contractor to establish its mine site, build its facilities, establish a tailings pond, set up its
machinery and equipment, and dig mine shafts and tunnels, etc." It thus concludes that "5,000
hectares is way too much for the needs of a mining operator."

Evidently, the majority opinion does not take into account open pit mining. Open pit or opencut
mining, as differentiated from methods that require tunneling into the earth, is a method of extracting
minerals by their removal from an open pit or borrow; 165 it is a mine working in which excavation is
performed from the surface.166 It entails a surface mining operation in which blocks of earth are dug
from the surface to extract the ore contained in them. During the mining process, the surface of the
land is excavated forming a deeper and deeper pit until the end of mining operations. 167 It is used
extensively in mining metal ores, copper, gold, iron, aluminum 168 – the very minerals which the
Philippines is believed to possess in vast quantities; and is considered the most cost-effective mining
method.169

Furthermore, considering that FTAAs deal with large scale exploration, development and utilization
of mineral resources and that the original contract area of the WMCP FTAA was 99,387 hectares, an
open pit mining operation covering a total of 5,000 hectares is not outside the realm of possibility.

In any event, regardless of what the majority opinion considers "way too much" (or too little), it is
undisputed that under Section 60 of DAO 40-96, which is among the enactments under review, the
contractor may, after final relinquishment, hold up to 5,000 hectares of land. And, under Section 3.3.
of the WMCP FTAA, it may do so for a term of 25 years automatically renewable for another 25
years, at the option of the contractor.

The majority opinion also argues that, although entitled to reimbursement of its acquisition cost at
the end of the contract term, the FTAA contractor does not acquire its surface rights for free since
"the contractor will have been cash-out for the entire duration of the term of the contract – 25 to 50
years, depending," thereby foregoing any interest income he might have earned. This is the
"opportunity cost" of the contractor's decision to use its money to acquire the surface rights instead
of leaving it in the bank.

The majority opinion does not consider the fact that "opportunity cost" is more theoretical rather than
actual and, for that reason, is not an allowable deduction from gross income in an income statement.
In layman's terms it is equivalent to "the value of the chickens that might have been hatched if only
the cook had not scrambled the eggs." Neither does it consider the fact that the contractor's
foregone interest income does not find its way to the pockets of either the previous land owner (in
this case, the Bugal B'Laans) or the State.

But even if the contractor does incur some opportunity cost in holding the surface rights for 35 to 50
years. The fact remains that, under the terms of the WMCP FTAA, the contractor is given the
power to hold inalienable mineral land of up to 5,000 hectares, with the assistance of the
State's power of eminent domain for a period of up to 50 years in contravention of Section 3,
Article XII of the Constitution.

Clearly, Section 3 and 10.2 (e) of the WMCP FTAA in conjunction with Section 60 of DAO 40-96,
amount to a conveyance to a foreign corporation of the beneficial ownership of both the minerals
and the surface rights over the same, in contravention of the clear provisions of the Constitution.

The terms of the WMCP FTAA abdicate all control over the
mining operation in favor of the foreign FTAA contractor

The majority opinion's defense of the constitutionality of Section 8.1, 8.2, 8.3 of the WMCP FTAA is
similarly unpersuasive. These Sections provide:

8.1 The Secretary shall be deemed to have approved any Work Programme or Budget or
variation thereof submitted by the Contractor unless within sixty (60) days after submission
by the Contractor the Secretary gives notice declining such approval or proposing a revision
of certain features and specifying its reasons therefore ("the Rejection Notice").

8.2 If the Secretary gives a Rejection Notice the Parties shall promptly meet and endeavour to agree
on amendments to the Work Programme or budget. If the Secretary and the Contractor fail to
agree on the proposed revision within 30 days from delivery of the Rejection Notice then the
Work Programme or Budget or variation thereof proposed by the Contractor shall be deemed
approved so as not to unnecessarily delay the performance of this Agreement.

Even measured against the majority opinion's standards of control – i.e. either (1) the power to set
aside, reverse, or modify plans and actions of the contractor; or (2) regulatory control – the foregoing
provisions cannot pass muster. This is because, by virtue of the foregoing provisions, the foreign
FTAA contractor has unfettered discretion to countermand the orders of its putative regulator, the
DENR.

Contrary to the majority's assertions, the foregoing provisions do not provide merely temporary or
stop-gap solutions. The determination of the FTAA contractor permanently reverses the "Rejection
Notice" of the DENR since, by the majority opinion's own admission, there is no available remedy for
the DENR under the agreement except to seek the cancellation of the same.

Indeed, the justification for the foregoing provisions is revealing:

xxx First, avoidance of long delays in these situations will undoubtedly redound to the benefit of the
State as well as to the contractor. Second, who is to say that the work program or budget
proposed by the contractor and deemed approved under Clause 8.3 would not be the better
or more reasonable or more effective alternative? The contractor, being the "insider," as it
were, may be said to be in a better position than the State – an outsider looking in – to
determine what work program or budget would be appropriate, more effective, or more
suitable under the circumstances. (Emphasis and underscoring supplied)

Both reasons tacitly rely on the unstated assumption that the interest of the foreign FTAA contractor
and that of the Government are identical. They are not.

Private businesses, including large foreign-owned corporations brimming with capital and technical
expertise, are primarily concerned with maximizing the pecuniary returns to their owners or
shareholders. To this extent, they can be relied upon to pursue the most efficient courses of action
which maximize their profits at the lowest possible cost.

The Government, on the other hand, is mandated to concern itself with more than just narrow self-
interest. With respect to the nation's natural wealth, as the majority opinion points out, the
Government is mandated to preserve, protect and even maximize the beneficial interest of the
Filipino people in their natural resources. Moreover, it is directed to ensure that the large-scale
exploration, development and utilization of these resources results in real contributions to the
economic growth and general welfare of the nation. To achieve these broader goals, the Constitution
mandates that the State exercise full control and supervision over the exploration, development and
utilization of the country's natural resources.

However, taking the majority opinion's reasoning to its logical conclusion, the business "insider's
opinion" would always be superior to the Government's administrative or regulatory determination
with respect to mining operations. Consequently, it is the foreign contractor's opinion that should
always prevail. Ultimately, this means that, at least for the majority, foreign private business interests
outweigh those of the State – at least with respect to the conduct of mining operations.
Indeed, in what other industry can the person regulated permanently overrule the administrative
determinations of the regulatory agency?

To any reasonable mind, the absence of an effective means to enforce even administrative
determinations over an FTAA contractor, except to terminate the contract itself, falls far too short of
the concept of "full control and supervision" as to cause the offending FTAA to fall outside the ambit
of Section 2, Article XII of the Constitution.

Verily, viewed in its entirety, the WMCP FTAA cannot withstand a rigid constitutional scrutiny
since, by its provisions, it conveys both the beneficial ownership of Philippine minerals and
control over their exploration, development and utilization to a foreign corporation. Being
contrary to both the letter and intent of Section 2, Article XII of the Constitution, the WMCP
FTAA must be declared void and of no effect whatsoever.

A Final Note
For over 350 years, the natural resources of this nation have been under the control and domination
of foreign powers – whether political or corporate. Philippine mineral wealth, viciously wrenched from
the bosom of the motherland, has enriched foreign shores while the Filipino people, to whom such
wealth justly belongs, have remained impoverished and unrecompensed.

Time and time again the Filipino people have sought an end to this intolerable situation. From 1935
they have struggled to assert their legal control and ownership over their patrimony only to have their
efforts repeatedly subverted – first, by the parity amendment to the 1935 Constitution and
subsequently by the service contract provision in the 1973 Constitution.

It is not surprising that an industry, overly dependent on foreign support and now in decline, should
implore this Court to reverse itself if only to perpetuate its otherwise economically unsustainable
conduct. It is even understandable, however regrettable, that a government, strapped for cash and in
the midst of a self-proclaimed fiscal crisis, would be inclined to turn a blind eye to the consequences
of unconstitutional legislation in the hope, however false or empty, of obtaining fabulous amounts of
hard currency.

But these considerations should not outweigh the Constitution.

As always, the one overriding consideration of this Court should be the will of the sovereign Filipino
people as embodied in their Constitution. The Constitution which gives life to and empowers this
Court. The same Constitution to which the members of this Court have sworn their unshakable
loyalty and their unwavering fidelity.

Now, the unmistakable letter and intent of the 1987 Constitution notwithstanding, the majority of this
Court has chosen to reverse its earlier Decision which, to me, would once again open the doors to
foreign control and ownership of Philippine natural resources. The task of reclaiming Filipino control
over Philippine natural resources now belongs to another generation.

ACCORDINGLY, I vote to deny respondents' Motions for Reconsideration.

SEPARATE OPINION

TINGA, J.:

The Constitution was crafted by men and women of divergent backgrounds and varying ideologies.
Understandably, the resultant document is accommodative of these distinct, at times competing
philosophies. Untidy as any mélange would seem, our fundamental law nevertheless hearkens to
the core democratic ethos over and above the obvious inconveniences it spawns.

However, when the task of judicial construction of the Constitution comes to fore, clarity is
demanded from this Court. In turn, there is a need to balance and reconcile the diverse views that
animate the provisions of the Constitution, so as to effectuate its true worth as an instrument of
national unity and progress.

The variances and consequent challenges are vividly reflected in Article XII of the Constitution on
National Patrimony, in a manner akin to Article II on Declaration of Principles and State Policies.
Some of the provisions impress as protectionist, yet there is also an undisguised accommodation of
liberal economic policies. Section 2, Article XII, 1 the provision key to this case, is one such Janus-
faced creature. It seems to close the door on foreign handling of our natural resources, but at the
same time it leaves open a window for alien participation in some aspects. The central question
before us is how wide is the entry of opportunity created by the provision.

My vote on the motions for reconsideration is hinged on a renewed exegesis of Section 2 2 of Article
XII in conjunction with the proper understanding of the nature of the power vested on the President
under Section 2. It has to be appreciated in relation to the inherent functions of the executive branch
of government.

The Contract-Making Power of the President

While all government authority emanates from the people, the breadth and depth of such authority
are not brought to bear by direct popular action, but through representative government in accord
with the principles of republicanism.3 By investiture of the Constitution, the function of executive
power is parceled solely to the duly elected President. 4 The Constitution contains several express
manifestations of executive power, such as the provision on control over all executive departments,
bureaus and offices,5 as well as the so-called "Commander-in-Chief" clause. 6

Yet it has likewise been recognized in this jurisdiction that "executive power" is not limited to such
powers as are expressly granted by the Constitution. Marcos v. Manglapus7 concedes that the
President has powers other than those expressly stated under the Constitution, 8 and thus implies
that these powers may be exercised without being derivative from constitutional authority. 9 The
precedental value of Marcos v. Manglapus may be controvertible,10 but the cogency of its analysis of
the scope of executive power is indisputable. Neither is the concept of plenary executive power
novel, as discussed by Justice Irene Cortes in her ponencia:

It has been advanced that whatever power inherent in the government that is neither legislative nor
judicial has to be executive. Thus, in the landmark decision of Springer v. Government of the
Philippine Islands, 277 U.S. 189 (1928), on the issue of who between the Governor-General of the
Philippines and the Legislature may vote the shares of stock held by the Government to elect
directors in the National Coal Company and the Philippine National Bank, the U.S. Supreme Court,
in upholding the power of the Governor-General to do so, said:

. . . Here the members of the legislature who constitute a majority of the "board" and
"committee" respectively, are not charged with the performance of any legislative functions
or with the doing of anything which is in aid of performance of any such functions by the
legislature. Putting aside for the moment the question whether the duties devolved upon
these members are vested by the Organic Act in the Governor-General, it is clear that they
are not legislative in character, and still more clear that they are not judicial. The fact that
they do not fall within the authority of either of these two constitutes logical ground for
concluding that they do fall within that of the remaining one among which the powers of
government are divided . . . [At 202-203; emphasis supplied.]

We are not unmindful of Justice Holmes' strong dissent. But in his enduring words of dissent we find
reinforcement for the view that it would indeed be a folly to construe the powers of a branch of
government to embrace only what are specifically mentioned in the Constitution:

The great ordinances of the Constitution do not establish and divide fields of black and white.
Even the more specific of them are found to terminate in a penumbra shading gradually from
one extreme to the other. . . .

xxx xxx xxx

It does not seem to need argument to show that however we may disguise it by veiling words we do
not and cannot carry out the distinction between legislative and executive action with mathematical
precision and divide the branches into watertight compartments, were it ever so desirable to do so,
which I am far from believing that it is, or that the Constitution requires.[At 210-211.] 11

Such general power has not been diminished notwithstanding the avowed intent of some of the
framers of the 1987 Constitution to limit the powers of the President as a reaction to abuses under
President Marcos, for as the Court noted, "the result was a limitation of the specific powers of the
President, particularly those relating to the commander-in-chief clause, but not a diminution of the
general grant of executive power." 12 The critical perspective of this case should spring from a
recognition of this elemental fact.

Undeniably, the particular power now in question is expressly provided for by Section 2, Article XII of
the Constitution. Still, it originates from the concept of executive power that is not explicitly provided
for by the Constitution. As a necessary incident of the functions of the executive office, it can be
concluded that the President has the authority to enter into contracts in behalf of the State in matters
which are not denied him or her or not otherwise assigned to the other great branches of
government, even if such general power is not categorically recognized in the Constitution. Among
these traditional functions of the executive branch is the power to determine economic policy.

As once noted by Justice Feliciano, the Republic of the Philippines is itself a body corporate and
juridical person vested with the full panoply of powers and attributes which are compendiously
described as "legal personality." 13 As "Chief of State" the President is also regarded as the head of
this body corporate,14 and thus is capacitated to represent the State when engaging with other
entities. Such executive function, in theory, does not require a constitutional provision, or even a
Constitution, in order to be operative. It is a power possessed by every duly constituted presidency
starting with Aguinaldo's. This faculty is complementary to the traditional regard of a Head of State
as emblematic of the State he/she represents.

The power to contract in behalf of the State is clearly an executive function, as opposed to legislative
or judicial. This is easily discernible through the process of exclusion. The other branches of
government — the legislative and the judiciary — are not similarly capacitated since their core
functions pertain to legislating and adjudicating respectively.

However, I am not making any pretense that such executive power to contract is unimpeachable or
limitless. The Constitution frowns on unchecked executive power, mandating in broad strokes, the
power of judicial review15 and legislative oversight. 16 The Constitution itself may expressly restrict the
exercise of any sort of executive function. Section 2 undeniably constrains the exercise of the
executive power to contract in several regards.

Constitutional Limitations under Section 2, Article XII

What are the express limitations under Section 2 on the power of the executive to contract with
foreign corporations regarding the exploration, development and utilization of our natural resources?

There are two fundamental restrictions, both of which are asserted in the second paragraph of
Section 2. These are that the State retains legal ownership of all natural resources, 17 and that the
State shall have full control and supervision over the exploration, development and utilization of
natural resources.18 These key postulates are facially broad and warrant clarification. They also
predicate several specific restrictions laid down in the fourth paragraph of Section 2 on the power of
the President to enter into agreements with foreign corporations. These specific limitations are as
follows:
First, the natural resources that may be subject of the agreement are a limited class, particularly
minerals, petroleum, and other mineral oils. Among the natural resources which are excluded from
these agreements are lands of the public domain, waters, coal, fisheries, forests or timbers, wildlife,
flora and fauna. Most notable of the exclusions are forests and timbers which are in all respects
expressly limited to Filipinos.

It is noteworthy that a previous version of the fourth paragraph of Section 2 deliberated upon during
the 1987 Constitutional Commission allowed agreements with foreign-owned corporations with
respect to all classes of natural resources. 19 However, on the initiative of Commissioner (now Chief
Justice) Davide, the provision was amended to limit the scope of such agreements to minerals,
petroleum and other mineral oils, which Commissioner Davide recognized as "those particular areas
where Filipino capital may not be sufficient." 20

The exclusion of timber resources from the scope of financial/technical assistance

agreements marks a significant distinction from the service contracts of old. This does not
come as a surprise, considering well-reported abuses under the old regime of issuing timber
licensing agreements, which numbered in the thousands prior to the 1987 Constitution. On
the other hand, no similar extensive collateral damage has been reported for the petroleum
and mining industry, capital-intensive industries whose potential for government revenues in
billions of pesos has long been sought after by the State. 21 Hence, the variance in treatment
from the timber industry and the rest of the natural resources.

Second, these agreements with foreign-owned corporations can only be entered into for only large-
scale exploration, development and utilization of minerals, petroleum, and other mineral oils.

Third, it is only the President who may enter into these agreements. This is another pronounced
change from the 1973 Constitution, which allowed private persons to enter into service contracts
with foreign corporations.

Fourth, these agreements must be in accord with the general terms and conditions provided by law.
This proviso by itself, and more so when taken together, as it should, with another provision, 22 entails
legislative intervention and affirmance in the exercise of this executive power. While it is the
President who enters into these contracts, he/she must act within such terms and conditions as may
be prescribed by Congress through legislation. The value of legislative input as a means of
influencing policy should not be discounted. Policy initiatives grounded on particular economic
ideologies may find enactment through legislation when approved by the necessary majorities in
Congress. Legislative work includes consultative processes with persons of diverse interests,
assuring that economic decisions need not be made solely from an ivory tower. There is also the
possible sanction of repudiation by the voters of legislators who prove insensate to the economic
concerns of their constituents.

Fifth, the President is mandated to base the decision of entering into these agreements on "real
contributions to the economic growth and general welfare of the country." In terms of real limitations,
this condition has admittedly little effect. The discretion as to whether or not to enter into these
agreements is vested solely by the Constitution in the President, and such exercise of discretion,
pertaining as it does to the political wisdom of a co-equal branch, generally deserves respect from
the courts.

The above conditionalities, particularly the first three, effect the desire of the framers of the 1987
Constitution to limit foreign participation in natural resource-oriented enterprises. They provide a
vivid contrast to the 1973 Constitution, which permitted private persons to enter into service
contracts for financial, technical, management, or other forms of assistance with any person or
entity, including foreigners, and for the exploration or utilization of any of the natural resources. 23
These requisites imposed by the 1987 Constitution, which are significantly more onerous than those
laid down in the 1973 Constitution, warrant obeisance by the executive branch and recognition by
this Court.

Not Strictly Technical or Financial Assistance

The Court's previous Decision, now for reconsideration, insisted on another restriction purportedly
imposed by the fourth paragraph of Section 2. It is argued that foreign–owned corporations are
allowed to render only technical or financial assistance in the large-scale exploration, development
and utilization of minerals, petroleum and mineral oils. This conservative view is premised on the
sentiment that the Constitution limits foreign involvement only to areas where they are needed, the
overpowering intent being to allow Filipinos to benefit from Filipino resources. 24 Towards that end,
the perception arises that the power of the executive to enter into agreements with foreign-owned
corporations is an executive privilege, hampered by the limitations that generally attach to the grant
of privileges.

On the fundamental nature of this power, I harbor an entirely different view. The actual art of
governing under our Constitution does not and cannot conform to judicial definitions of the power of
any of its branches based on isolated clauses or even single articles torn from context. 25 The
previously adopted approach is rigidly formalist, and impervious to the traditional prerogatives of
executive power.

As I stated earlier, the executive authority to contract is a right emanating from traditional executive
functions, and is connected with the power of the executive branch to determine economic policy.
Hence, the proper approach in interpreting Section 2, Article XII is to tilt in favor of asserting
the right rather than view the provision as a limitation on a privilege. To subscribe to the
Court's previous view will necessitate adopting as a fundamental premise that absent an
express grant of power, the executive branch has no capacity to contract since such capacity
arises from a privilege.

Had the provision been worded to state that the President may enter into agreements for technical or
financial assistance only, then this unambiguous limitation should be affirmed. Yet the Constitution
does not express such an intent. The controversial provision is crafted in such a way that allows any
type of agreement, so long as they involve either technical or financial assistance. In fact, the
provision does not restrict the scope of the agreement so as to pertain exclusively either to technical
or financial assistance.

The Constitution, in allowing foreign participation specifically in the large scale exploration,
development and utilization of natural resources, is cognizant of the sad truth that such activities
entail significant outlay of capital and advanced technological know-how that domestic corporations
may not yet have.26 The provision expressly adverts to "technical" and "financial" assistance
in recognition of the reality that these two facets are the indispensable requisites to qualify
foreign participants in the exploration, development, and utilization of mineral and petroleum
resources.

Had the framers chosen to restrict all aspects of all mining activities to domestic persons, the real
fear would have materialized that our mineral reserves could remain untapped for a significant
period of time, owing to the paucity of venture capital. There was a real option to heed dogmatic
guns who insisted that the mineral resources remain unutilized until the day when the domestic
mining industry becomes capacitated to undertake the extraction without need of foreign aid.
Obviously, the more pragmatic view won the day.
If indeed the foreign entity is limited only to technical or financial participation, the
implication is that it is up to the State to do all the rest. Considering the lack of know-how and
financial capital, matters which were appreciated by the framers of the Constitution, this
intended effect is preposterous. Even the State itself would hesitate to undertake such
extractive activities owing to the intensive capital and extensive training such enterprise
would entail. By allowing this expansive set-up under Section 2, the Constitution enables the
minimization of risk on the part of the State should it desire to undertake large-scale mineral
extractive activities. The pay-off though, understandably, is an atypical cession of several
State prerogatives in the development of its mineral and petroleum resources.

Perhaps there is need to be explicit and incisive about the implications of Section 2. The word
"assistance," shorn of context, implies a charitable grant offered without any quid pro quo attached.
Unconditional foreign aid may be more prevalent this day and age with the acceptance of the notion
that there are base minimum standards of decent living which all persons are entitled to. However,
such concept is alien to the mining industry. There is no such entity as an International Benevolent
Association for Extraction of Minerals. If "assistance" is to be restrictively interpreted according to
ordinary parlance, no entity would be interested in undertaking this regulated industry.

Any decision by any enterprise to assist in the exploration, development or utilization of mineral
resources does not arise from a philanthropic impulse. It is a pure and simple investment, and one
that is not engaged in unless there is the expectation or hope of a reasonable return. I hasten to add
that the deliberate incorporation of the fourth paragraph of Section 2 has created a window of
opportunity for foreign investments in the extractive enterprises involving petroleum and other
mineral oils, subject of course to limitations under the law. The term may prove discomfiting to the
ideologically committed, the sentimental nationalist or the visceral oppositionist. Still, the notion is
not inconsistent with the general power of the executive to enter into agreements for the purpose of
enticing foreign investments.

Why then the term "assistance?" Apart from its apparent political palatability in comparison with
"investment," as intimated before, the term is useful in underscoring the essential facets of the
foreign investment which is assistance in the financial or technical areas, as well as the
fundamental limitations and conditionalities of the investment. What is allowed is participation,
though limited, by foreign corporations which in turn are entitled to expect a return on their
investments.

The Court had earlier premised the invalidity of several provisions of the Mining Act on the argument
that those provisions authorized service contracts. But while the 1987 Constitution does not
utilize the term "service contracts," it actually contemplates a broader expanse of
agreements beyond mere contracts for services rendered. Still, although the provision sanctions
a more numerous class of agreements, these are subjected to more stringent restrictions than what
had been allowed under the 1973 Constitution. Thus, the test should be whether the law and the
contract take away the State's full control and supervision over the exploration, development
and utilization of the country's mineral resources and negate or defeat the State's ownership
thereof.

In line with the test, Section 2 should be accorded a liberal interpretation so as to recognize this
fundamental prerogative of the presidency. Such "liberal interpretation" does not equate to a
wholesale concession of mining resources to foreigners, much less to an atmosphere of
complaisance, whether from their perception or the Filipinos.' The fourth paragraph sets specific
limitations on the exercise by the President of this contract-making power. On the other hand, the
second paragraph of Section 2 lays down the fundamental limitations which likewise may not be
countermanded.

On the basis of the foregoing discussion, and as a necessary consequence of my view that the
agreements under Section 2 are not strictly limited to financial or technical assistance, I would
consider the following questioned provisions of Republic Act No. 7942 as valid —Sections 3 (g), 34
to 38, 40 to 41, 56 and 90. These provisions were struck down on the premise that they allowed the
constitution of "service contracts," an agreement which to my mind is still within the contemplation of
Section 2, Article XII.

State Ownership over Mineral and Petroleum Resources

There is need to clarify the specific meaning of these general limitations arising from the State's
assertion of ownership, full control and supervision.

In respect to the petition, the question of ownership has become material to the proper share the
State should receive from the exploration, development and utilization of mineral resources. I
perceive that all the members of the Court agree that such profit may not be limited to only such
revenue derived from the taxation of the mining activities. Since the right of the State to obtain a
share in the net proceeds and not merely through taxes arises as an attribute of ownership
unequivocally reserved by the Constitution for the State, such right may not be proscribed either by
legislative provision or contractual stipulation.

Yet it should be conceded that the State has the right to enter into an agreement concerning such
profits. There are, as probably should be, political consequences if the President opts to surrender
all of the State's profits to a foreign corporation, yet in bare theory, the right to bargain profits
pertains to the wisdom of a political act not ordinarily justiciable before this Court. Still, the overriding
adherence of the Constitution to the regalian doctrine should be given due respect, and an
interpretation allowing "beneficial ownership" by the foreign corporation should not be favored.

For purposes of the present judicial review, I would consider it prudent to limit myself to conceding
that the Court had previously erred in invalidating certain provisions of Rep. Act No. 7942 and the
WMC FTAA on the mistaken notion that the law and the agreement cede beneficial ownership of
mineral resources to a foreign corporation.

Section 4 of Rep. Act No. 7942 expressly recognizes State ownership over mineral resources,
though it is silent on the operational terms of such ownership. Of course, such general submission
would not be in itself curative of whatever contraventions to State ownership are contained in the
same law; hence, the need for deeper inquiry.

The dissenters wish to strike down the second paragraph of Section 81 of Rep. Act No. 7942
because it purportedly precludes the Government from obtaining profits under the agreement from
sources other than its share in taxation. However, as the ponencia points out, the phrase "among
other things" sufficiently allows the government from demanding a share in the cash flow or earnings
of the mining enterprise. A contrary view is anchored on a rule of statutory construction that
concludes that "among other things" refers only to taxes. Yet, there is also a rule of construction that
laws should be interpreted with a view of upholding rather than destroying it. Thus, the ponencia's
formulation, which achieves the result of the minority without need of statutory invalidation, is highly
preferable.

The provisions of Rep. Act No. 7942 which authorize the conversion of a financial or technical
assistance into a mineral production sharing agreement (MPSA) turned out to be just as
controversial. In this regard, the minority wishes to strike down Section 39, which in conjunction with
Sections 80 and 84 of the law would purportedly allow such conversion, in that it would effectively
limit the government share in the profits to only the excise tax on mineral products under internal
revenue law.

These concerns are valid and raise troubling questions. Yet equally troubling is that the Court is
being called upon to rule on a premature question. There is no such creature yet as an FTAA
converted into an MPSA, and so there is no occasion that calls for the application of Sections 39, 80
and 84. I do not subscribe to judicial pre-emptive strikes, as they preclude the application of still
undisclosed considerations which may prove illuminating and even crucial to the proper disposition
of the case. By seeking invalidation of these "MPSA provisions," the Court is also asked to strike
down an enactment of a co-equal branch which has not given rise to an actual case or controversy.
After all, such enactment deserves due respect from this branch of government. Assuming that the
provisions are indeed invalid, the Court will not hesitate, at the proper time, to strike them down or at
least impose a proper interpretation that does not run afoul of the Constitution. 27 However, in the
absence of any actual attempt to convert an FTAA to an MPSA, the time is not now.

I likewise agree with the ponencia that Section 7.9 deprives the State of its rightful share as an
incident of ownership without offsetting compensation. The provisions of the FTAA are fair game for
judicial review considering their present applicability. In fact, the invalidation of Section 7.9 becomes
even more proper now under the circumstances since the provision has become effectual
considering the sale of the foreign equity in WMCP to a domestic corporation. It is within the
competence of this Court to invalidate Section 7.9 here and now. For that matter, Section 7.8(e) of
the FTAA may be similarly invalidated as it can already serve to unduly deprive the Government of
its proper share by allowing double recovery by WMC.

"Full Control and Supervision" of the State

The matter of "full control and supervision" emerges just as controversial. Does this grant of power
mandate that the State exercise management over the activity, or exclude the exercise of
managerial control by the foreign corporation?

I don't think it proper to construe the word "full" as implying that such control or supervision may not
be at all yielded or delegated, for reasons I shall elaborate upon. Instead, "full" should be read as
pertaining to the encompassing scope of the concerns of the State relating to the extractive
enterprises on which it may interfere or impose its will.

It must be conceded that whichever party obtains managerial control must be allowed considerable
elbow room in the exercise of management prerogatives. Management is in the most informed
position to make resources productive in the pursuit of the enterprise's objectives. 28 In this age of
specialization, corporations have benefited with the devolution of operational control to specialists,
rather than generalists. The era of the buccaneer entrepreneur chartering his industry solely on gut
feel is over. The vagaries of international finance have dictated that prudent capitalists cede to the
opinion of their experts who are hired because they trained within their particular fields to know
better than the persons who employ them. The Constitution does not prescribe a particular manner
of management; thus, we can conclude that the State is not compelled to adopt outmoded methods
that could tend to minimize profits.

Still, the question as to who should exercise management is best left to the parties of the agreement,
namely the President and the foreign corporations. They would be in the best position to determine
who is best qualified to exert managerial control. This prerogative of management can be exercised
by the State if it so insists and the co-parties agree, and the wisdom of such arrogation is ultimately
a policy question this Court has little control over. And even if the State cedes management to a
different entity such as the foreign corporation, it has the duty to safeguard that the actual
exercise of managerial power does not contravene our laws and public policy.

There is barely any support of the view that only the State may exert managerial control. Even the
minority concede that these foreign corporations are not precluded from participating in the
management of the project. I think it unwise to construe "full supervision and control" to the effect
that the State's assent or opinion is necessary before any day-to-day operational questions may be
resolved. There is neither an express rule to that effect, nor any law of construction that necessitates
such interpretation. Ideally of course, the most qualified party should be allowed to manage the
enterprise, and we should not allow an interpretation that compels a possibly unsuited entity, such
as the State, to operationalize the business. 29 Such a limited construction would be inconvenient and
absurd,30 not to mention potentially wasteful.

The Constitution itself concedes that the State may not have the best sense as to how to undertake
large-scale exploration, development and utilization of mineral and petroleum resources. This is
evinced by the allowance of foreign technical assistance and foreign participation in the extractive
enterprise. Had the Constitution recognized that the State was supremely qualified to undertake the
operational aspects of the activity, then it could have phrased the provision in such a way that would
strictly limit the foreign participation to monetary investment or a financial grant of assistance.

The absence of an express provision on management permits consideration of the following sensible
critique on yielding too many management prerogatives to a remote overseer such as the State. An
early United Nations report once noted that while it is theoretically possible to endow a government
department with a high degree of operating flexibility, it is in practice difficult to do so. 31 It has been
proposed that the further away a decision-maker is to the market, the higher the information cost, or
the opportunity cost to the gaining of information. 32 Remoteness can be achieved through the
layering of bureaucratic structure, and because of the information loss that accompanies the
transmission of information and judgments from lower levels of the hierarchy to higher levels, the
ultimate basis of a decision may be misleading at best and erroneous at worst. 33

The same conclusion arises from the view that what the provision authorizes is foreign investment.
The foreign player necessarily at least has a reasonable say in how the mining venture is run. The
interest of the investor in seeing that the investment is not wasted should be recognized not only as
a right available to the investor, but from the broader view that such say would lead to a more
prudent management of the project. It must be noted that mineral and petroleum resources are non-
renewable, thus a paramount interest arises to ensure against wasteful exploitation.

Next for consideration is the situation, as in this case, if management is ceded to the foreign
corporation, or even to a private domestic corporation for that matter. What should be the proper
dichotomy, if any, between the private entity's exercise of managerial control, and the State's full
control and supervision?

The President may insist on conditions into the agreement pertaining to the State's degree of control
and supervision in the mining activity. This was certainly done with the WMC FTAA, which is replete
with stipulations delineating the State's control which are judicially enforceable, imposed presumably
at the President's call. But the FTAA itself is not the only vehicle by which State control and
supervision is exercised. These can similarly be enforced through statutes, as well as executive or
administrative issuances. The Mining Act itself is an expression of State control and supervision,
implemented in coordination with the executive and legislative branches.

As a general point, I believe that State control and supervision is unconstitutionally yielded if either of
the Mining Act or the FTAA precludes the application of the laws and regulations of the Philippines,
enunciatory as they are of State policy. Neither the Mining Act nor the WMC FTAA are flawed in that
regard. The agreements under contemplation are not beyond the ambit of our regular laws, or
regulatory enactments pertaining to such areas as environmental concerns. Violations of these laws
uttered in the name of the FTAA are punishable in this jurisdiction.

Still, the fact that the Constitution requires "full control and supervision" indicates an expectation of a
more activist role on the part of the State in the operations of the mining enterprise, perhaps to the
prejudice of the laissez-faire capitalist. Most importantly, the State cannot abdicate its traditional
functions by contractual limitations. It could compel the mining operations to comply with existing
environmental regulations, as well as with future issuances. It may compel the foreign corporation
payment of all assessable levies. It may evict officers of the foreign corporation for violation of
immigration laws. It may preclude mining operations that affect prerogatives granted by law to
indigenous peoples. It could restrict particular mining operations which are established to be
disasters or nuisances to the affected communities. The power of the State to enforce its police
powers needs no statutory grant and are certainly not limited either by the Mining Act or the WMC
FTAA.

As to "business decisions," I think that the State may exercise control for the purpose of ensuring
profit of the enterprise as a whole. This may involve visitorial activity, the conduct of periodic audits,
and such powers normally attributed to an overseer of a business. Just as the foreign corporation is
expected to guard against waste of financial capital, the State is expected likewise to guard against
the waste of resource capital.

I might as well add that, in my view, the constitutional objective of maintaining full control and
supervision over the exploration, development and utilization of the country's mineral resources in
the State would be best served by the creation of a public corporation for the development and
utilization of these resources, accountable to the State for all actions in its behalf. The device of a
corporation properly utilized provides sufficient protection to the State's interests while affording
flexibility and efficiency in the conduct of mining operations. 34

The creation of a public corporation could remedy a number of potential problems regarding full
State control and supervision of extractive activities concerning our mineral resources by entities
which have the funds and/or technical know-how but which cannot have a great degree of control
and supervision over such activities. Persons knowledgeable and competent in mining operations
may sit in the corporation's board of directors and craft policies which implement and further
concretize the broad aims of R.A. No. 7942, taking into consideration the nature of the mining
industry. The Board would also be in charge of studying existing contracts for mining activities, and
approving proposed contracts. The Board may also employ corporate officers and employees to take
charge of the day-to-day operations of the mining activities pursuant to the corporation's contracts
with other entities.

Under such a scheme, the perceived abdication by the State of control and supervision over mining
activities in favor of the foreign entities rendering financial and/or technical assistance would be
greatly diminished. It would be the public corporation which would principally undertake mining
activities and contract with foreign entities for financial and/or technical assistance if necessary. The
foreign contractor in such cases would not have the power to determine the course of the project or
the major policies involved therein because these functions would belong to the public corporation
as the agent of the State.

A public corporation would also have the additional benefit of compelling the input of not only the
executive branch, but also that of the legislative. Such executive-legislative coordination is
necessary since public corporations may only be created through statute.
 Section 3.3 of WMC FTAA Constitutional

Finally, it is argued that Section 3.3 of the WMC FTAA violates paragraph 1, Section 2, Article XII of
the Constitution, which imposes a limitation on the term of mineral agreements. I agree with the
ponencia that the constitutional provision does not pertain to FTAAs. It is clear from reading Section
1 that the agreements limited in term therein are co-production agreements, joint venture
agreements, and mineral production-sharing agreements, which are all referred to in Section 1, and
not the FTAAs mentioned only in Section 4. Accordingly, Section 3.3 of the WMC FTAA is not infirm.

Epilogue

Behind the legal issues presented by the petition are fundamental policy questions from which highly
opinionated views can develop, even from the members of this Court. The promise brought about by
the large-scale exploitation of our mineral and petroleum resources may bring in much needed
revenue, but Filipinos should properly inquire at what cost. As a Filipino, I am distressed whenever
the government crosses the line from cooperation to subservience to foreign partners in
development. Popular Western wisdom aside, what is good for General Motors is not necessarily
good for the country. The propagation of a foreign-influenced mining industry may lead to a whole
slew of social problems 35 which shall be exacerbated if the government is complicit, either through
active participation or benign neglect, to abuses committed by the mining industry against the
Filipino people. Unlike the foreign corporation, the bottom line which the State should consider is not
found below a ledger, but in the socio-economic dynamic that will confront the government as a
result of the large-scale mining venture. Political capital is more fickle than financial capital.

Still, the right to vote I exercise today is that as of a member of the Court, and not that of the general
electorate. The limits of judicial power would exasperate any well-meaning judge who feels duty-
bound to affirm a constitutionally valid law or principle he or she may otherwise disagree with. My
views on how the government should act are segregate from my view on whether the government
has the power to act at all.

My conclusions are borne out of a close textual analysis of Section 2 in light of my fundamental
understanding of the constitutional powers of the executive branch. This is in line with my perception
of the judicial duty as being limited to charting the scope and boundaries of the law. The philosophy
of inclusiveness that drives my interpretation of Section 2 is bolstered not because it might lead to
benefits to the economy, but because it gives due regard to the discretion of the Executive to
determine what is good for the economy. This judicial attitude may not always ensure the economic
good. But before we carve that judicial path out of what we believe are good intentions, restraint is
imperative out of due deference to our co-equal branches, since the duty of formulating and
implementing economic policies falls exclusively within their purview.

In view of the foregoing, I concur with the opinion of Justice Panganiban.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-5279 October 31, 1955

PHILIPPINE ASSOCIATION OF COLLEGES AND UNIVERSITIES, ETC., petitioner,

vs.
SECRETARY OF EDUCATION and the BOARD OF TEXTBOOKS, respondents.
Manuel C. Briones, Vicente G. Sinco, Manuel V. Gallego and Enrique M. Fernando for petitioner.
Office of the Solicitor General Pompeyo Diaz and Assistant Solicitor General Francisco Carreon for
respondents.

BENGZON, J.:

The petitioning colleges and universities request that Act No. 2706 as amended by Act No. 3075 and
Commonwealth Act No. 180 be declared unconstitutional, because: A. They deprive owners of
schools and colleges as well as teachers and parents of liberty and property without due process of
law; B. They deprive parents of their natural rights and duty to rear their children for civic efficiency;
and C. Their provisions conferring on the Secretary of Education unlimited power and discretion to
prescribe rules and standards constitute an unlawful delegation of legislative power.

A printed memorandum explaining their position in extenso is attached to the record.

The Government's legal representative submitted a mimeographed memorandum contending that,

(1) the matter constitutes no justiciable controversy exhibiting unavoidable necessity of deciding the
constitutional questions; (2) petitioners are in estoppel to challenge the validity of the said acts; and
(3) the Acts are constitutionally valid.

Petitioners submitted a lengthy reply to the above arguments.

Act No. 2706 approved in 1917 is entitled, "An Act making the inspection and recognition of private
schools and colleges obligatory for the Secretary of Public Instruction." Under its provisions, the
Department of Education has, for the past 37 years, supervised and regulated all private schools in
this country apparently without audible protest, nay, with the general acquiescence of the general
public and the parties concerned.

It should be understandable, then, that this Court should be doubly reluctant to consider petitioner's
demand for avoidance of the law aforesaid, specially where, as respondents assert, petitioners
suffered no wrong—nor allege any—from the enforcement of the criticized statute.

It must be evident to any one that the power to declare a legislative enactment void is one which the
judge, conscious of the fallability of the human judgment, will shrink from exercising in any case
where he can conscientiously and with due regard to duty and official oath decline the responsibility.
(Cooley Constitutional Limitations, 8th Ed., Vol. I, p. 332.)

When a law has been long treated as constitutional and important rights have become dependent
thereon, the Court may refuse to consider an attack on its validity. (C. J. S. 16, p. 204.)

As a general rule, the constitutionality of a statute will be passed on only if, and to the extent that, it
is directly and necessarily involved in a justiciable controversy and is essential to the protection of
the rights of the parties concerned. (16 C. J. S., p. 207.)

In support of their first proposition petitioners contend that the right of a citizen to own and operate a
school is guaranteed by the Constitution, and any law requiring previous governmental approval or
permit before such person could exercise said right, amounts to censorship of previous restraint, a
practice abhorent to our system of law and government. Petitioners obviously refer to section 3 of
Act No. 2706 as amended which provides that before a private school may be opened to the public it
must first obtain a permit from the Secretary of Education. The Solicitor General on the other hand
points out that none of the petitioners has cause to present this issue, because all of them have
permits to operate and are actually operating by virtue of their permits.1 And they do not assert that
the respondent Secretary of Education has threatened to revoke their permits. They have suffered
no wrong under the terms of law—and, naturally need no relief in the form they now seek to obtain.

It is an established principle that to entitle a private individual immediately in danger of sustaining a

direct injury as the result of that action and it is not sufficient that he has merely a general to invoke
the judicial power to determine the validity of executive or legislative action he must show that he
has sustained or is interest common to all members of the public. (Ex parte Levitt, 302 U. S. 633 82
L. Ed. 493.)

Courts will not pass upon the constitutionality of a law upon the complaint of one who fails to show
that he is injured by its operation. (Tyler vs. Judges, 179 U. S. 405; Hendrick vs. Maryland, 235 U. S.
610; Coffman vs. Breeze Corp., 323 U. S. 316-325.)

The power of courts to declare a law unconstitutional arises only when the interests of litigant require
the use of that judicial authority for their protection against actual interference, a hypothetical threat
being insufficient. (United Public Works vs. Mitchell, 330 U .S. 75; 91 L. Ed. 754.)

Bona fide suit.—Judicial power is limited to the decision of actual cases and controversies. The
authority to pass on the validity of statutes is incidental to the decision of such cases where
conflicting claims under the Constitution and under a legislative act assailed as contrary to the
Constitution are raised. It is legitimate only in the last resort, and as necessity in the determination of
real, earnest, and vital controversy between litigants. (Tañada and Fernando, Constitution of the
Philippines, p. 1138.)

Mere apprehension that the Secretary of Education might under the law withdraw the permit of one
of petitioners does not constitute a justiciable controversy. (Cf. Com. ex rel Watkins vs. Winchester
Waterworks (Ky.) 197 S. W. 2d. 771.)

And action, like this, is brought for a positive purpose, nay, to obtain actual and positive relief.
(Salonga vs. Warner Barnes, L-2245, January, 1951.) Courts do not sit to adjudicate mere academic
questions to satisfy scholarly interest therein, however intellectually solid the problem may be. This
is specially true where the issues "reach constitutional dimensions, for then there comes into play
regard for the court's duty to avoid decision of constitutional issues unless avoidance becomes
evasion." (Rice vs. Sioux City, U. S. Sup. Ct. Adv. Rep., May 23, 1995, Law Ed., Vol. 99, p. 511.)

The above notwithstanding, in view of the several decisions of the United States Supreme Court
quoted by petitioners, apparently outlawing censorship of the kind objected to by them, we have
decided to look into the matter, lest they may allege we refuse to act even in the face of clear
violation of fundamental personal rights of liberty and property.

Petitioners complain that before opening a school the owner must secure a permit from the
Secretary of Education. Such requirement was not originally included in Act No. 2706. It was
introduced by Commonwealth Act No. 180 approved in 1936. Why?

In March 1924 the Philippine Legislature approved Act No. 3162 creating a Board of Educational
Survey to make a study and survey of education in the Philippines and of all educational institutions,
facilities and agencies thereof. A Board chairmaned by Dr. Paul Munroe, Columbia University,
assisted by a staff of carefully selected technical members performed the task, made a five-month
thorough and impartial examination of the local educational system, and submitted a report with
recommendations, printed as a book of 671 pages. The following paragraphs are taken from such
report:

PRIVATE-ADVENTURE SCHOOLS
There is no law or regulation in the Philippine Islands today to prevent a person, however
disqualified by ignorance, greed, or even immoral character, from opening a school to teach the
young. It it true that in order to post over the door "Recognized by the Government," a private
adventure school must first be inspected by the proper Government official, but a refusal to grant
such recognition does not by any means result in such a school ceasing to exist. As a matter of fact,
there are more such unrecognized private schools than of the recognized variety. How many, no one
knows, as the Division of Private Schools keeps records only of the recognized type.

Conclusion.—An unprejudiced consideration of the fact presented under the caption Private
Adventure Schools leads but to one conclusion, viz.: the great majority of them from primary grade
to university are money-making devices for the profit of those who organize and administer them.
The people whose children and youth attend them are not getting what they pay for. It is obvious that
the system constitutes a great evil. That it should be permitted to exist with almost no supervision is
indefensible. The suggestion has been made with the reference to the private institutions of
university grade that some board of control be organized under legislative control to supervise their
administration. The Commission believes that the recommendations it offers at the end of this
chapter are more likely to bring about the needed reforms.

Recommendations.—The Commission recommends that legislation be enacted to prohibit the

opening of any school by an individual or organization without the permission of the Secretary of
Public Instruction. That before granting such permission the Secretary assure himself that such
school measures up to proper standards in the following respects, and that the continued existence
of the school be dependent upon its continuing to conform to these conditions:

(1) The location and construction of the buildings, the lighting and ventilation of the rooms, the
nature of the lavatories, closets, water supply, school furniture and apparatus, and methods of
cleaning shall be such as to insure hygienic conditions for both pupils and teachers.

(2) The library and laboratory facilities shall be adequate to the needs of instruction in the subjects
taught.

(3) The classes shall not show an excessive number of pupils per teacher. The Commission
recommends 40 as a maximum.

(4) The teachers shall meet qualifications equal to those of teachers in the public schools of the
same grade.

xxx xxx xxx

In view of these findings and recommendations, can there be any doubt that the Government in the
exercise of its police power to correct "a great evil" could validly establish the "previous permit"
system objected to by petitioners? This is what differentiates our law from the other statutes
declared invalid in other jurisdictions. And if any doubt still exists, recourse may now be had to the
provision of our Constitution that "All educational institutions shall be under the supervision and
subject to regulation by the State." (Art. XIV, sec. 5.) The power to regulate establishments or
business occupations implies the power to require a permit or license. (53 C. J. S. 4.)

What goes for the "previous permit" naturally goes for the power to revoke such permit on account of
violation of rules or regulations of the Department.

II. This brings us to the petitioners' third proposition that the questioned statutes "conferring on the
Secretary of Education unlimited power and discretion to prescribe rules and standards constitute an
unlawful delegation of legislative power."
This attack is specifically aimed at section 1 of Act No. 2706 which, as amended, provides:

It shall be the duty of the Secretary of Public Instruction to maintain a general standard of efficiency
in all private schools and colleges of the Philippines so that the same shall furnish adequate
instruction to the public, in accordance with the class and grade of instruction given in them, and for
this purpose said Secretary or his duly authorized representative shall have authority to advise,
inspect, and regulate said schools and colleges in order to determine the efficiency of instruction
given in the same,

"Nowhere in this Act" petitioners argue "can one find any description, either general or specific, of
what constitutes a 'general standard of efficiency.' Nowhere in this Act is there any indication of any
basis or condition to ascertain what is 'adequate instruction to the public.' Nowhere in this Act is
there any statement of conditions, acts, or factors, which the Secretary of Education must take into
account to determine the 'efficiency of instruction.'"

The attack on this score is also extended to section 6 which provides:

The Department of Education shall from time to time prepare and publish in pamphlet form the
minimum standards required of primary, intermediate, and high schools, and colleges granting the
degrees of Bachelor of Arts, Bachelor of Science, or any other academic degree. It shall also from
time to time prepare and publish in pamphlet form the minimum standards required of law, medical,
dental, pharmaceutical, engineering, agricultural and other medical or vocational schools or colleges
giving instruction of a technical, vocational or professional character.

Petitioners reason out, "this section leaves everything to the uncontrolled discretion of the Secretary
of Education or his department. The Secretary of Education is given the power to fix the standard. In
plain language, the statute turns over to the Secretary of Education the exclusive authority of the
legislature to formulate standard. . . .."

It is quite clear the two sections empower and require the Secretary of Education to prescribe rules
fixing minimum standards of adequate and efficient instruction to be observed by all such private
schools and colleges as may be permitted to operate. The petitioners contend that as the legislature
has not fixed the standards, "the provision is extremely vague, indefinite and uncertain"—and for that
reason constitutionality objectionable. The best answer is that despite such alleged vagueness the
Secretary of Education has fixed standards to ensure adequate and efficient instruction, as shown
by the memoranda fixing or revising curricula, the school calendars, entrance and final
examinations, admission and accreditation of students etc.; and the system of private education has,
in general, been satisfactorily in operation for 37 years. Which only shows that the Legislature did
and could, validly rely upon the educational experience and training of those in charge of the
Department of Education to ascertain and formulate minimum requirements of adequate instruction
as the basis of government recognition of any private school.

At any rate, petitioners do not show how these standards have injured any of them or interfered with
their operation. Wherefore, no reason exists for them to assail the validity of the power nor the
exercise of the power by the Secretary of Education.

True, the petitioners assert that, the Secretary has issued rules and regulations "whimsical and
capricious" and that such discretionary power has produced arrogant inspectors who "bully heads
and teachers of private schools." Nevertheless, their remedy is to challenge those regulations
specifically, and/or to ring those inspectors to book, in proper administrative or judicial proceedings
—not to invalidate the law. For it needs no argument, to show that abuse by the officials entrusted
with the execution of a statute does not per se demonstrate the unconstitutionality of such statute.
Anyway, we find the defendants' position to be sufficiently sustained by the decision in Alegra vs.
Collector of Customs, 53 Phil., 394 upon holding the statute that authorized the Director of
Agriculture to "designate standards for the commercial grades of abaca, maguey and sisal" against
vigorous attacks on the ground of invalid delegation of legislative power.

Indeed "adequate and efficient instruction" should be considered sufficient, in the same way as
"public welfare" "necessary in the interest of law and order" "public interest" and "justice and equity
and substantial merits of the case" have been held sufficient as legislative standards justifying
delegation of authority to regulate. (See Tañada and Fernando, Constitution of the Philippines, p.
793, citing Philippine cases.)

On this phase of the litigation we conclude that there has been no undue delegation of legislative
power.

In this connection, and to support their position that the law and the Secretary of Education have
transcended the governmental power of supervision and regulation, the petitioners appended a list
of circulars and memoranda issued by the said Department. However they failed to indicate which of
such official documents was constitutionally objectionable for being "capricious," or pain "nuisance";
and it is one of our decisional practices that unless a constitutional point is specifically raised,
insisted upon and adequately argued, the court will not consider it. (Santiago vs. Far Eastern, 73
Phil., 408.)

We are told that such list will give an idea of how the statute has placed in the hands of the
Secretary of Education complete control of the various activities of private schools, and why the
statute should be struck down as unconstitutional. It is clear in our opinion that the statute does not
in express terms give the Secretary complete control. It gives him powers to inspect private schools,
to regulate their activities, to give them official permits to operate under certain conditions, and to
revoke such permits for cause. This does not amount to complete control. If any of such Department
circulars or memoranda issued by the Secretary go beyond the bounds of regulation and seeks to
establish complete control, it would surely be invalid. Conceivably some of them are of this nature,
but besides not having before us the text of such circulars, the petitioners have omitted to specify. In
any event with the recent approval of Republic Act No. 1124 creating the National Board of
Education, opportunity for administrative correction of the supposed anomalies or encroachments is
amply afforded herein petitioners. A more expeditious and perhaps more technically competent
forum exists, wherein to discuss the necessity, convenience or relevancy of the measures criticized
by them. (See also Republic Act No. 176.)

If however the statutes in question actually give the Secretary control over private schools, the
question arises whether the power of supervision and regulation granted to the State by section 5
Article XIV was meant to include control of private educational institutions. It is enough to point out
that local educators and writers think the Constitution provides for control of Education by the State.
(See Tolentino, Government of the Philippine Constitution, Vol. II, p. 615; Benitez, Philippine Social
Life and Progress, p. 335.)

The Constitution (it) "provides for state control of all educational institutions" even as it enumerates
certain fundamental objectives of all education to wit, the development of moral character, personal
discipline, civic conscience and vocational efficiency, and instruction in the duties of citizenship.
(Malcolm & Laurel, Philippine Constitutional Law, 1936.)

The Solicitor General cities many authorities to show that the power to regulate means power to
control, and quotes from the proceedings of the Constitutional Convention to prove that State control
of private education was intended by the organic law. It is significant to note that the Constitution
grants power to supervise and to regulate. Which may mean greater power than mere regulation.

III. Another grievance of petitioners—probably the most significant—is the assessment of 1 per cent
levied on gross receipts of all private schools for additional Government expenses in connection with
their supervision and regulation. The statute is section 11-A of Act No. 2706 as amended by
Republic Act No. 74 which reads as follows:

SEC. 11-A. The total annual expense of the Office of Private Education shall be met by the regular
amount appropriated in the annual Appropriation Act: Provided, however, That for additional
expenses in the supervision and regulation of private schools, colleges and universities and in the
purchase of textbook to be sold to student of said schools, colleges and universities and President of
the Philippines may authorize the Secretary of Instruction to levy an equitable assessment from each
private educational institution equivalent to one percent of the total amount accruing from tuition and
other fees: . . . and non-payment of the assessment herein provided by any private school, college
or university shall be sufficient cause for the cancellation by the Secretary of Instruction of the permit
for recognition granted to it.

Petitioners maintain that this is a tax on the exercise of a constitutional right—the right to open a
school, the liberty to teach etc. They claim this is unconstitutional, in the same way that taxes on the
privilege of selling religious literature or of publishing a newspaper—both constitutional privileges—
have been held, in the United States, to be invalid as taxes on the exercise of a constitutional right.

The Solicitor General on the other hand argues that insofar as petitioners' action attempts to restrain
the further collection of the assessment, courts have no jurisdiction to restrain the collection of taxes
by injunction, and in so far as they seek to recover fees already paid the suit, it is one against the
State without its consent. Anyway he concludes, the action involving "the legality of any tax impost or
assessment" falls within the original jurisdiction of Courts of First Instance.

There are good grounds in support of Government's position. If this levy of 1 per cent is truly a mere
fee—and not a tax—to finance the cost of the Department's duty and power to regulate and
supervise private schools, the exaction may be upheld; but such point involves investigation and
examination of relevant data, which should best be carried out in the lower courts. If on the other
hand it is a tax, petitioners' issue would still be within the original jurisdiction of the Courts of First
Instance.

The last grievance of petitioners relates to the validity of Republic Act No. 139 which in its section 1
provides:

The textbooks to be used in the private schools recognized or authorized by the government shall be
submitted to the Board (Board of Textbooks) which shall have the power to prohibit the use of any of
said textbooks which it may find to be against the law or to offend the dignity and honor of the
government and people of the Philippines, or which it may find to be against the general policies of
the government, or which it may deem pedagogically unsuitable.

This power of the Board, petitioners aver, is censorship in "its baldest form". They cite two U. S.
cases (Miss. and Minnesota) outlawing statutes that impose previous restraints upon publication of
newspapers, or curtail the right of individuals to disseminate teachings critical of government
institutions or policies.

Herein lies another important issue submitted in the cause. The question is really whether the law
may be enacted in the exercise of the State's constitutional power (Art. XIV, sec. 5) to supervise and
regulate private schools. If that power amounts to control of private schools, as some think it is,
maybe the law is valid. In this connection we do not share the belief that section 5 has added new
power to what the State inherently possesses by virtue of the police power. An express power is
necessarily more extensive than a mere implied power. For instance, if there is conflict between an
express individual right and the express power to control private education it cannot off-hand be said
that the latter must yield to the former—conflict of two express powers. But if the power to control
education is merely implied from the police power, it is feasible to uphold the express individual right,
as was probably the situation in the two decisions brought to our attention, of Mississippi and
Minnesota, states where constitutional control of private schools is not expressly produced.

However, as herein previously noted, no justiciable controversy has been presented to us. We are
not informed that the Board on Textbooks has prohibited this or that text, or that the petitioners
refused or intend to refuse to submit some textbooks, and are in danger of losing substantial
privileges or rights for so refusing.

The average lawyer who reads the above quoted section of Republic Act 139 will fail to perceive
anything objectionable. Why should not the State prohibit the use of textbooks that are illegal, or
offensive to the Filipinos or adverse to governmental policies or educationally improper? What's the
power of regulation and supervision for? But those trained to the investigation of constitutional
issues are likely to apprehend the danger to civil liberties, of possible educational dictatorship or
thought control, as petitioners' counsel foresee with obvious alarm. Much depends, however, upon
the execution and implementation of the statute. Not that constitutionality depends necessarily upon
the law's effects. But if the Board on Textbooks in its actuations strictly adheres to the letter of the
section and wisely steers a middle course between the Scylla of "dictatorship" and the Charybdis of
"thought control", no cause for complaint will arise and no occasion for judicial review will develop.
Anyway, and again, petitioners now have a more expeditious remedy thru an administrative appeal
to the National Board of Education created by Republic Act 1124.

Of course it is necessary to assure herein petitioners, that when and if, the dangers they apprehend
materialize and judicial intervention is suitably invoked, after all administrative remedies are
exhausted, the courts will not shrink from their duty to delimit constitutional boundaries and protect
individual liberties.

IV. For all the foregoing considerations, reserving to the petitioners the right to institute in the proper
court, and at the proper time, such actions as may call for decision of the issue herein presented by
them, this petition for prohibition will be denied. So ordered.

Paras, C. J., Padilla, Montemayor, Reyes, A., and Jugo, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 118577 March 7, 1995

JUANITO MARIANO, JR. et al., petitioners,

vs.
THE COMMISSION ON ELECTIONS, THE MUNICIPALITY OF MAKATI, HON. JEJOMAR BINAY,
THE MUNICIPAL TREASURER, AND SANGGUNIANG BAYAN OF MAKATI, respondents.

G.R. No. 118627 March 7, 1995

JOHN R. OSMEÑA, petitioner,

vs.
THE COMMISSION ON ELECTIONS, THE MUNICIPALITY OF MAKATI, HON. JEJOMAR BINAY,
MUNICIPAL TREASURER, AND SANGGUNIANG BAYAN OF MAKATI, respondents.

PUNO, J.:

At bench are two (2) petitions assailing certain provisions of Republic Act No. 7854 as
unconstitutional. R.A. No. 7854 as unconstitutional. R.A. No. 7854 is entitled, "An Act Converting the
Municipality of Makati Into a Highly Urbanized City to be known as the City of Makati." 1

G.R. No. 118577 involves a petition for prohibition and declaratory relief. It was filed by petitioners
Juanito Mariano, Jr., Ligaya S. Bautista, Teresita Tibay, Camilo Santos, Frankie Cruz, Ricardo
Pascual, Teresita Abang, Valentina Pitalvero, Rufino Caldoza, Florante Alba, and Perfecto Alba. Of
the petitioners, only Mariano, Jr., is a resident of Makati. The others are residents of Ibayo Ususan,
Taguig, Metro Manila. Suing as taxpayers, they assail as unconstitutional sections 2, 51, and 52 of
R.A. No. 7854 on the following grounds:

1. Section 2 of R.A. No. 7854 did not properly identify the land area or territorial jurisdiction of
Makati by metes and bounds, with technical descriptions, in violation of Section 10, Article X
of the Constitution, in relation to Sections 7 and 450 of the Local Government Code;

2. Section 51 of R.A. No. 7854 attempts to alter or restart the "three consecutive term" limit for local
elective officials, in violation of Section 8, Article X and Section 7, Article VI of the Constitution.

3. Section 52 of R.A. No. 7854 is unconstitutional for:

(a) it increased the legislative district of Makati only by special law (the Charter in
violation of the constitutional provision requiring a general reapportionment law to be
passed by Congress within three (3) years following the return of every census;

(b) the increase in legislative district was not expressed in the title of the bill; and
(c) the addition of another legislative district in Makati is not in accord with Section 5 (3), Article VI of
the Constitution for as of the latest survey (1990 census), the population of Makati stands at only
450,000.

G.R. No. 118627 was filed by the petitioner John H. Osmeña as senator, taxpayer, and concerned
citizen. Petitioner assails section 52 of R.A. No. 7854 as unconstitutional on the same grounds as
aforestated.

We find no merit in the petitions.

Section 2, Article I of R.A. No. 7854 delineated the land areas of the proposed city of Makati, thus:

Sec. 2. The City of Makati. — The Municipality of Makati shall be converted into a highly
urbanized city to be known as the City of Makati, hereinafter referred to as the City, which
shall comprise the present territory of the Municipality of Makati in Metropolitan Manila Area
over which it has jurisdiction bounded on the northeast by Pasig River and beyond by the
City of Mandaluyong and the Municipality of Pasig; on the southeast by the municipalities of
Pateros and Taguig; on the southwest by the City of Pasay and the Municipality of Taguig;
and, on the northwest, by the City of Manila.

The foregoing provision shall be without prejudice to the resolution by the appropriate agency or
forum of existing boundary disputes or cases involving questions of territorial jurisdiction between
the City of Makati and the adjoining local government units. (Emphasis supplied)

In G.R. No. 118577, petitioners claim that this delineation violates sections 7 and 450 of the Local
Government Code which require that the area of a local government unit should be made by metes
and bounds with technical descriptions. 2

The importance of drawing with precise strokes the territorial boundaries of a local unit of
government cannot be overemphasized. The boundaries must be clear for they define the limits of
the territorial jurisdiction of a local government unit. It can legitimately exercise powers of
government only within the limits, its acts are ultra vires. Needless to state, any uncertainty in the
boundaries of local government units will sow costly conflicts in the exercise of governmental powers
which ultimately will prejudice the people's welfare. This is the evil sought to avoided by the Local
Government Code in requiring that the land area of a local government unit must be spelled out in
metes and bounds, with technical descriptions.

Given the facts of the cases at bench, we cannot perceive how this evil can be brought about by the
description made in section 2 of R.A. No. 7854, Petitioners have not demonstrated that the
delineation of the land area of the proposed City of Makati will cause confusion as to its boundaries.
We note that said delineation did not change even by an inch the land area previously covered by
Makati as a municipality. Section 2 did not add, subtract, divide, or multiply the established land area
of Makati. In language that cannot be any clearer, section 2 stated that, the city's land area "shall
comprise the present territory of the municipality."

The deliberations of Congress will reveal that there is a legitimate reason why the land area of the
proposed City of Makati was not defined by metes and bounds, with technical descriptions. At the
time of the consideration of R.A. No. 7854, the territorial dispute between the municipalities of Makati
and Taguig over Fort Bonifacio was under court litigation. Out of a becoming sense of respect to co-
equal department of government, legislators felt that the dispute should be left to the courts to
decide. They did not want to foreclose the dispute by making a legislative finding of fact which could
decide the issue. This would have ensued if they defined the land area of the proposed city by its
exact metes and bounds, with technical descriptions. We take judicial notice of the fact that
3

Congress has also refrained from using the metes and bounds description of land areas of other
local government units with unsettled boundary disputes. 4

We hold that the existence of a boundary dispute does not per se present an insurmountable
difficulty which will prevent Congress from defining with reasonable certitude the territorial
jurisdiction of a local government unit. In the cases at bench, Congress maintained the existing
boundaries of the proposed City of Makati but as an act of fairness, made them subject to the
ultimate resolution by the courts. Considering these peculiar circumstances, we are not prepared to
hold that section 2 of R.A. No. 7854 is unconstitutional. We sustain the submission of the Solicitor
General in this regard, viz.:

Going now to Sections 7 and 450 of the Local Government Code, it is beyond cavil that the
requirement stated therein, viz.: "the territorial jurisdiction of newly created or converted
cities should be described by meted and bounds, with technical descriptions" — was made in
order to provide a means by which the area of said cities may be reasonably ascertained. In
other words, the requirement on metes and bounds was meant merely as tool in the
establishment of local government units. It is not an end in itself. Ergo, so long as the
territorial jurisdiction of a city may be reasonably ascertained, i.e., by referring to common
boundaries with neighboring municipalities, as in this case, then, it may be concluded that
the legislative intent behind the law has been sufficiently served.

Certainly, Congress did not intends that laws creating new cities must contain therein detailed
technical descriptions similar to those appearing in Torrens titles, as petitioners seem to imply. To
require such description in the law as a condition sine qua non for its validity would be to defeat the
very purpose which the Local Government Code to seeks to serve. The manifest intent of the Code
is to empower local government units and to give them their rightful due. It seeks to make local
governments more responsive to the needs of their constituents while at the same time serving as a
vital cog in national development. To invalidate R.A. No. 7854 on the mere ground that no cadastral
type of description was used in the law would serve the letter but defeat the spirit of the Code. It then
becomes a case of the master serving the slave, instead of the other way around. This could not be
the intendment of the law.

Too well settled is the rule that laws must be enforced when ascertained, although it may not be
consistent with the strict letter of the statute. Courts will not follow the letter of the statute when to do
so would depart from the true intent of the legislature or would otherwise yield conclusions
inconsistent with the general purpose of the act. (Torres v. Limjap, 56 Phil., 141; Tañada v. Cuenco,
103 Phil. 1051; Hidalgo v. Hidalgo, 33 SCRA 1105). Legislation is an active instrument of
government, which, for purposes of interpretation, means that laws have ends to achieve, and
statutes should be so construed as not to defeat but to carry out such ends and purposes (Bocolbo
v. Estanislao, 72 SCRA 520). The same rule must indubitably apply to the case at bar.

II

Petitioners in G.R. No. 118577 also assail the constitutionality of section 51, Article X of R.A. No.
7854. Section 51 states:

Sec. 51. Officials of the City of Makati. — The represent elective officials of the Municipality
of Makati shall continue as the officials of the City of Makati and shall exercise their powers
and functions until such time that a new election is held and the duly elected officials shall
have already qualified and assume their offices: Provided, The new city will acquire a new
 corporate existence. The appointive officials and employees of the City shall likewise
continues exercising their functions and duties and they shall be automatically absorbed by
the city government of the City of Makati.

They contend that this section collides with section 8, Article X and section 7, Article VI of the
Constitution which provide:

Sec. 8. The term of office of elective local officials, except barangay officials, which shall be
determined by law, shall be three years and no such official shall serve for more than three
consecutive terms. Voluntary renunciation of the office for any length of time shall not be
considered as an interruption in the continuity of his service for the full term for which he was
elected.

xxx xxx xxx

Sec. 7. The Members of the House of Representatives shall be elected for a term of three years
which shall begin, unless otherwise provided by law, at noon on the thirtieth day of June next
following their election.

No Member of the House of Representatives shall serve for more than three consecutive terms.
Voluntary renunciation of the office for any length of time shall not be considered as an interruption
in the continuity of his service for the full term for which he was elected.

Petitioners stress that under these provisions, elective local officials, including Members of the
House of Representative, have a term of three (3) years and are prohibited from serving for more
than three (3) consecutive terms. They argue that by providing that the new city shall acquire a new
corporate existence, section 51 of R.A. No. 7854 restarts the term of the present municipal elective
officials of Makati and disregards the terms previously served by them. In particular, petitioners point
that section 51 favors the incumbent Makati Mayor, respondent Jejomar Binay, who has already
served for two (2) consecutive terms. They further argue that should Mayor Binay decide to run and
eventually win as city mayor in the coming elections, he can still run for the same position in 1998
and seek another three-year consecutive term since his previous three-year consecutive term as
municipal mayor would not be counted. Thus, petitioners conclude that said section 51 has been
conveniently crafted to suit the political ambitions of respondent Mayor Binay.

We cannot entertain this challenge to the constitutionality of section 51. The requirements before a
litigant can challenge the constitutionality of a law are well delineated. They are: 1) there must be an
actual case or controversy; (2) the question of constitutionality must be raised by the proper party;
(3) the constitutional question must be raised at the earliest possible opportunity; and (4) the
decision on the constitutional question must be necessary to the determination of the case itself. 5

Petitioners have far from complied with these requirements. The petition is premised on the
occurrence of many contingent events, i.e., that Mayor Binay will run again in this coming mayoralty
elections; that he would be re-elected in said elections; and that he would seek re-election for the
same position in the 1998 elections. Considering that these contingencies may or may not happen,
petitioners merely pose a hypothetical issue which has yet to ripen to an actual case or controversy.
Petitioners who are residents of Taguig (except Mariano) are not also the proper parties to raise this
abstract issue. Worse, they hoist this futuristic issue in a petition for declaratory relief over which this
Court has no jurisdiction.

III
Finally, petitioners in the two (2) cases at bench assail the constitutionality of section 52, Article X of
R.A. No. 7854. Section 52 of the Charter provides:

Sec. 52. Legislative Districts. — Upon its conversion into a highly-urbanized city, Makati shall
thereafter have at least two (2) legislative districts that shall initially correspond to the two (2)
existing districts created under Section 3(a) of Republic Act. No. 7166 as implemented by the
Commission on Elections to commence at the next national elections to be held after the
effectivity of this Act. Henceforth, barangays Magallanes, Dasmariñas and Forbes shall be
with the first district, in lieu of Barangay Guadalupe-Viejo which shall form part of the second
district. (emphasis supplied)

They contend. that the addition of another legislative district in Makati is unconstitutional for: (1)
reapportionment cannot made by a special law, (2) the addition of a legislative district is not
6

expressed in the title of the bill and (3) Makati's population, as per the 1990 census, stands at only
7

four hundred fifty thousand (450,000).

Petitioners cannot insist that the addition of another legislative district in Makati is not in accord with
section 5(3), Article VI of the Constitution for as of the latest survey (1990 census), the population
12

of Makati stands at only four hundred fifty thousand (450,000). Said section provides, inter alia, that
13

a city with a population of at least two hundred fifty thousand (250,000) shall have at least one
representative. Even granting that the population of Makati as of the 1990 census stood at four
hundred fifty thousand (450,000), its legislative district may still be increased since it has met the
minimum population requirement of two hundred fifty thousand (250,000). In fact, section 3 of the
Ordinance appended to the Constitution provides that a city whose population has increased to
more than two hundred fifty thousand (250,000) shall be entitled to at least one congressional
representative. 14

Finally, we do not find merit in petitioners' contention that the creation of an additional legislative
district in Makati should have been expressly stated in the title of the bill. In the same case of Tobias
v. Abalos, op cit., we reiterated the policy of the Court favoring a liberal construction of the "one title-
one subject" rule so as not to impede legislation. To be sure, with Constitution does not command
that the title of a law should exactly mirror, fully index, or completely catalogue all its details. Hence,
we ruled that "it should be sufficient compliance if the title expresses the general subject and all the
provisions are germane to such general subject."

WHEREFORE, the petitions are hereby DISMISSED for lack of merit No costs.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Vitug,
Kapunan, Mendoza and Francisco, JJ., concur.

Separate Opinions

DAVIDE, JR., J., concurring:

I concur in the well written opinion of Mr. Justice Reynato S. Puno. I wish, however, to add a few
observations.

I.

Section 10, Article X of the Constitution provides that "[n]o province, city, municipality or barangay
may be created, divided, merged, abolished, or its boundary substantially altered, except in
accordance with the criteria established in the local government code and subject to the approval by
a majority of the votes cast in a plebiscite in the political units directly affected." These criteria are
now set forth in Section 7 of the Local Government Code of 1991 (R.A. No. 7160). One of these is
that the territorial jurisdiction of the local government unit to be created or converted should be
properly identified by metes and bounds with technical descriptions.

The omission of R.A. No. 7854 (An Act Converting the Municipality of Makati Into a Highly Urbanized
City to be Known as the City of Makati) to describe the territorial boundaries of the city by metes and
bounds does not make R.A. No. 7854 unconstitutional or illegal. The Constitution does not provide
for a description by metes and bounds as a condition sine qua non for the creation of a local
government unit or its conversion from one level to another. The criteria provided for in Section 7 of
R.A. No. 7854 are not absolute, for, as a matter of fact, the section starts with the clause "as a
general rule." The petitioners' reliance on Section 450 of R.A. No. 7160 is unavailing Said section
only applies to the conversion of a municipality or a cluster of barangays into a COMPONENT CITY,
not a highly urbanized city. It pertinently reads as follows:

Sec. 450. Requisite for creation. — (a) A municipality or a cluster of barangays may be
converted into a component city if it has an average annual income, as certified by the
Department of Finance, of at least Twenty million pesos (P20,000,000.00) for the last two (2)
consecutive years based on 1991 constant prices, and if it has either of the following
requisites:

xxx xxx xxx

(b) The territorial jurisdiction of a newly created city shall be properly identified by metes and
bounds. . . .

The constitution classifies cities as either highly urbanized or component. Section 12 of Article X
thereof provides:
Sec. 12. Cities that are highly urbanized, as determined by law, and component cities whose
charters prohibit their voters from voting for provincial elective officials, shall be independent
of the province. The voters of component cities within a province, whose charters contain no
such prohibition, shall not be deprived of their right to vote for elective provincial officials.

And Section 451 of R.A. No. 7160 provides:

Sec. 451. Cities Classified. — A city may either be component or highly urbanized: Provided,
however, That the criteria established in this Code shall not affect the classification and
corporate status of existing cities.

Independent component cities are those component cities whose charters prohibit their voters from
voting for provincial elective officials. Independent component cities shall be independent of the
province.

II.
Strictly speaking, the increase in the number of legislative seats for the City of Makati provided for in
R.A. No. 7854 is not an increase justified by the clause unless otherwise fixed by law in paragraph 1,
Section 5, Article VI of the Constitution. That clause contemplates of the reapportionment mentioned
in the succeeding paragraph (4) of the said Section which reads in full as follows:

Within three years following the return of every census, the Congress shall make a
reapportionment of legislative districts based on the standards provided in this section.

In short, the clause refers to a general reapportionment law.

The increase under R.A. No. 7854 is a permissible increase under Sections 1 and 3 of the
Ordinance appended to the Constitution which reads:

Sec. 1. For purposes of the election of Members of the House of Representatives of the First
Congress of the Philippines under the Constitution proposed by the 1986 Constitutional
Commission and subsequent elections, and until otherwise provided by law, the Members
thereof shall be elected from legislative districts apportioned among the provinces, cities, and
the Metropolitan Manila Area as follows:

METROPOLITAN MANILA AREA

xxx xxx xxx

MAKATI one (1)

xxx xxx xxx

Sec. 3. Any province that may hereafter be created, or any city whose population may hereafter
increase to more than two hundred fifty thousand shall be entitled in the immediately following
election to at least one Member or such number of Members as it may be entitled to on the basis of
the number of its inhabitants and according to the standards set forth in paragraph (3), Section 5 of
Article VI of the Constitution. The number of Members apportioned to the province out of which such
new province was created, or where the city, whose population has so increased, is geographically
located shall be correspondingly adjusted by the Commission on Elections but such adjustment shall
not be made within one hundred and twenty days before the election. (Emphases supplied)

Separate Opinions

DAVIDE, JR., J., concurring:

I concur in the well written opinion of Mr. Justice Reynato S. Puno. I wish, however, to add a few
observations.

I.

Section 10, Article X of the Constitution provides that "[n]o province, city, municipality or barangay
may be created, divided, merged, abolished, or its boundary substantially altered, except in
accordance with the criteria established in the local government code and subject to the approval by
a majority of the votes cast in a plebiscite in the political units directly affected." These criteria are
now set forth in Section 7 of the Local Government Code of 1991 (R.A. No. 7160). One of these is
that the territorial jurisdiction of the local government unit to be created or converted should be
properly identified by metes and bounds with technical descriptions.

The omission of R.A. No. 7854 (An Act Converting the Municipality of Makati Into a Highly Urbanized
City to be Known as the City of Makati) to describe the territorial boundaries of the city by metes and
bounds does not make R.A. No. 7854 unconstitutional or illegal. The Constitution does not provide
for a description by metes and bounds as a condition sine qua non for the creation of a local
government unit or its conversion from one level to another. The criteria provided for in Section 7 of
R.A. No. 7854 are not absolute, for, as a matter of fact, the section starts with the clause "as a
general rule." The petitioners' reliance on Section 450 of R.A. No. 7160 is unavailing Said section
only applies to the conversion of a municipality or a cluster of barangays into a COMPONENT CITY,
not a highly urbanized city. It pertinently reads as follows:

Sec. 450. Requisite for creation. — (a) A municipality or a cluster of barangays may be
converted into a component city if it has an average annual income, as certified by the
Department of Finance, of at least Twenty million pesos (P20,000,000.00) for the last two (2)
consecutive years based on 1991 constant prices, and if it has either of the following
requisites:

xxx xxx xxx

(b) The territorial jurisdiction of a newly created city shall be properly identified by metes and
bounds. . . .

The constitution classifies cities as either highly urbanized or component. Section 12 of Article X
thereof provides:

Sec. 12. Cities that are highly urbanized, as determined by law, and component cities whose
charters prohibit their voters from voting for provincial elective officials, shall be independent
of the province. The voters of component cities within a province, whose charters contain no
such prohibition, shall not be deprived of their right to vote for elective provincial officials.

And Section 451 of R.A. No. 7160 provides:

Sec. 451. Cities Classified. — A city may either be component or highly urbanized: Provided,
however, That the criteria established in this Code shall not affect the classification and
corporate status of existing cities.
Independent component cities are those component cities whose charters prohibit their voters from
voting for provincial elective officials. Independent component cities shall be independent of the
province.

II.

Strictly speaking, the increase in the number of legislative seats for the City of Makati provided for in
R.A. No. 7854 is not an increase justified by the clause unless otherwise fixed by law in paragraph 1,
Section 5, Article VI of the Constitution. That clause contemplates of the reapportionment mentioned
in the succeeding paragraph (4) of the said Section which reads in full as follows:

Within three years following the return of every census, the Congress shall make a
reapportionment of legislative districts based on the standards provided in this section.

In short, the clause refers to a general reapportionment law.

The increase under R.A. No. 7854 is a permissible increase under Sections 1 and 3 of the
Ordinance appended to the Constitution which reads:

Sec. 1. For purposes of the election of Members of the House of Representatives of the First
Congress of the Philippines under the Constitution proposed by the 1986 Constitutional
Commission and subsequent elections, and until otherwise provided by law, the Members
thereof shall be elected from legislative districts apportioned among the provinces, cities, and
the Metropolitan Manila Area as follows:

METROPOLITAN MANILA AREA

xxx xxx xxx

MAKATI one (1)

xxx xxx xxx

Sec. 3. Any province that may hereafter be created, or any city whose population may hereafter
increase to more than two hundred fifty thousand shall be entitled in the immediately following
election to at least one Member or such number of Members as it may be entitled to on the basis of
the number of its inhabitants and according to the standards set forth in paragraph (3), Section 5 of
Article VI of the Constitution. The number of Members apportioned to the province out of which such
new province was created, or where the city, whose population has so increased, is geographically
located shall be correspondingly adjusted by the Commission on Elections but such adjustment shall
not be made within one hundred and twenty days before the election. (Emphases supplied)

These issues have been laid to rest in the recent case of Tobias v. Abalos. In said case, we ruled
8

that reapportionment of legislative districts may be made through a special law, such as in the
charter of a new city. The Constitution clearly provides that Congress shall be composed of not
9

more than two hundred fifty (250) members, unless otherwise fixed by law. As thus worded, the
Constitution did not preclude Congress from increasing its membership by passing a law, other than
a general reapportionment of the law. This is its exactly what was done by Congress in enacting
R.A. No. 7854 and providing for an increase in Makati's legislative district. Moreover, to hold that
reapportionment can only be made through a general apportionment law, with a review of all the
legislative districts allotted to each local government unit nationwide, would create an inequitable
situation where a new city or province created by Congress will be denied legislative representation
for an indeterminate period of time. The intolerable situations will deprive the people of a new city
10

or province a particle of their sovereignty. Sovereignty cannot admit of any kind of subtraction. It is
11

indivisible. It must be forever whole or it is not sovereignty.

 EN BANC

G.R. No. 152295 - July 9, 2002

ANTONIETTE V.C. MONTESCLAROS, MARICEL CARANZO, JOSEPHINE ATANGAN, RONALD

ATANGAN and CLARIZA DECENA, and OTHER YOUTH OF THE LAND SIMILARLY SITUATED,
Petitioners, vs. COMMISSION ON ELECTIONS, DEPARTMENT OF INTERIOR AND LOCAL
GOVERNMENT, DEPARTMENT OF BUDGET AND MANAGEMENT, EXECUTIVE SECRETARY of the
OFFICE OF THE PRESIDENT, SENATOR FRANKLIN DRILON in his capacity as Senate
President and SENATOR AQUILINO PIMENTEL in his capacity as Minority Leader of the
Senate of the Philippines, CONGRESSMAN JOSE DE VENECIA in his capacity as Speaker,
CONGRESSMAN AGUSTO L. SYJOCO in his capacity as Chairman of the Committee on
Suffrage and Electoral Reforms, and CONGRESSMAN EMILIO C. MACIAS II in his capacity as
Chairman of the Committee on Local Government of the House of Representatives, THE
PRESIDENT OF THE PAMBANSANG KATIPUNAN NG MGA SANGGUNIANG KABATAAN, AND
ALL THEIR AGENTS AND REPRESENTATIVES, Respondents.

CARPIO, J.:

The Case

Before us is a petition for certiorari, prohibition and mandamus with prayer for a temporary restraining
order or preliminary injunction. The petition seeks to prevent the postponement of the Sangguniang
Kabataan ("SK" for brevity) elections originally scheduled last May 6, 2002. The petition also seeks to
prevent the reduction of the age requirement for membership in the SK.

Petitioners, who are all 20 years old, filed this petition as a taxpayer's and class suit, on their own
behalf and on behalf of other youths similarly situated. Petitioners claim that they are in danger of
being disqualified to vote and be voted for in the SK elections should the SK elections on May 6, 2002
be postponed to a later date. Under the Local Government Code of 1991 (R.A. No. 7160), membership
in the SK is limited to youths at least 15 but not more than 21 years old.
Petitioners allege that public respondents "connived, confederated and conspired" to postpone the May
6, 2002 SK elections and to lower the membership age in the SK to at least 15 but less than 18 years
of age. Petitioners assail the alleged conspiracy because youths at least 18 but not more than 21
years old will be "summarily and unduly dismembered, unfairly discriminated, unnecessarily
disenfranchised, unjustly disassociated and obnoxiously disqualified from the SK organization." 1

Thus, petitioners pray for the issuance of a temporary restraining order or preliminary injunction -

"a) To prevent, annul or declare unconstitutional any law, decree, Comelec resolution/directive and
other respondents' issuances, orders and actions and the like in postponing the May 6, 2002 SK
elections.

b) To command the respondents to continue the May 6, 2002 SK elections set by the present law and
in accordance with Comelec Resolutions No. 4713 and 4714 and to expedite the funding of the SK
elections.

c) In the alternative, if the SK elections will be postponed for whatever reason, there must be a
definite date for said elections, for example, July 15, 2002, and the present SK membership, except
those incumbent SK officers who were elected on May 6, 1996, shall be allowed to run for any SK
elective position even if they are more than 21 years old.

d) To direct the incumbent SK officers who are presently representing the SK in every sanggunian and
the NYC to vacate their post after the barangay elections." 2

The Facts

The SK is a youth organization originally established by Presidential Decree No. 684 as the Kabataang
Barangay ("KB" for brevity). The KB was composed of all barangay residents who were less than 18
years old, without specifying the minimum age. The KB was organized to provide its members with the
opportunity to express their views and opinions on issues of transcendental importance. 3

The Local Government Code of 1991 renamed the KB to SK and limited SK membership to those
youths "at least 15 but not more than 21 years of age." 4 The SK remains as a youth organization in
every barangay tasked to initiate programs "to enhance the social, political, economic, cultural,
intellectual, moral, spiritual, and physical development of the youth." 5 The SK in every barangay is
composed of a chairperson and seven members, all elected by the Katipunan ng Kabataan. The
Katipunan ng Kabataan in every barangay is composed of all citizens actually residing in the barangay
for at least six months and who meet the membership age requirement.

The first SK elections took place on December 4, 1992. RA No. 7808 reset the SK elections to the first
Monday of May of 1996 and every three years thereafter. RA No. 7808 mandated the Comelec to
supervise the conduct of the SK elections under rules the Comelec shall promulgate. Accordingly, the
Comelec on December 4, 2001 issued Resolution Nos. 4713 6 and 47147 to govern the SK elections on
May 6, 2002.

On February 18, 2002, petitioner Antoniette V.C. Montesclaros ("Montesclaros" for brevity) sent a
letter8 to the Comelec, demanding that the SK elections be held as scheduled on May 6, 2002.
Montesclaros also urged the Comelec to respond to her letter within 10 days upon receipt of the letter,
otherwise, she will seek judicial relief.

On February 20, 2002, Alfredo L. Benipayo ("Chairman Benipayo" for brevity), then Comelec
Chairman, wrote identical letters to the Speaker of the House 9 and the Senate President 10 about the
status of pending bills on the SK and Barangay elections. In his letters, the Comelec Chairman
intimated that it was "operationally very difficult" to hold both elections simultaneously in May 2002.
Instead, the Comelec Chairman expressed support for the bill of Senator Franklin Drilon that proposed
to hold the Barangay elections in May 2002 and postpone the SK elections to November 2002.
Ten days lapsed without the Comelec responding to the letter of Montesclaros. Subsequently,
petitioners received a copy of Comelec En Banc Resolution No. 4763 11 dated February 5, 2002
recommending to Congress the postponement of the SK elections to November 2002 but holding the
Barangay elections in May 2002 as scheduled.12

On March 6, 2002, the Senate and the House of Representatives passed their respective bills
postponing the SK elections. On March 11, 2002, the Bicameral Conference Committee ("Bicameral
Committee" for brevity) of the Senate and the House came out with a Report 13 recommending
approval of the reconciled bill consolidating Senate Bill No. 2050 14 and House Bill No. 4456. 15 The
Bicameral Committee's consolidated bill reset the SK and Barangay elections to July 15, 2002 and
lowered the membership age in the SK to at least 15 but not more than 18 years of age.

On March 11, 2002, petitioners filed the instant petition.

On March 11, 2002, the Senate approved the Bicameral Committee's consolidated bill and on March
13, 2002, the House of Representatives approved the same. The President signed the approved bill
into law on March 19, 2002.

The Issues

Petitioners16 raise the following grounds in support of their petition:

"I.

RESPONDENTS ACTED WHIMSICALLY, ILLEGALLY AND UNCONSTITUTIONALLY THUS CONSTITUTED

(SIC) WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN THEY INTENDED TO POSTPONE THE SK ELECTIONS.

II.

RESPONDENTS ACTED WHIMSICALLY, ILLEGALLY AND UNCONSTITUTIONALLY THUS CONSTITUTED

(SIC) WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN THEY INTENDED TO DISCRIMINATE, DISENFRANCHISE, SINGLE OUT AND DISMEMBER THE SK
MEMBERS WHO ARE 18 BUT NOT LESS 17 (SIC) THAN 21 YEARS OLD COMPOSED OF ABOUT 7 MILLION
YOUTH.

III.

RESPONDENTS ACTED WHIMSICALLY, ILLEGALLY AND UNCONSTITUTIONALLY THUS CONSTITUTED

(SIC) WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN THEY WILLFULLY FAILED TO FUND THE SK ELECTION PURPORTEDLY TO POSTPONE THE SAME
IN ORDER TO IMPLEMENT THEIR ILLEGAL SCHEME AND MACHINATION IN SPITE OF THE FACT THAT
THERE ARE AVAILABLE FUNDS FOR THE PURPOSE.

IV.

THE INCUMBENT SK OFFICERS WANTED TO PERPETUALLY SIT ON THEIR RESPECTIVE OFFICES

CONTRARY TO THE ENVISION (SIC) OF THE CREATION OF THE SK ORGANIZATION, HENCE, IN
VIOLATION OF LAW AND CONSTITUTION." 18

The Court's Ruling

The petition is bereft of merit.

At the outset, the Court takes judicial notice of the following events that have transpired since
petitioners filed this petition:

1. The May 6, 2002 SK elections and May 13, 2002 Barangay elections were not held as scheduled.
2. Congress enacted RA No. 9164 19 which provides that voters and candidates for the SK elections
must be "at least 15 but less than 18 years of age on the day of the election." 20 RA No. 9164 also
provides that there shall be a synchronized SK and Barangay elections on July 15, 2002.

3. The Comelec promulgated Resolution No. 4846, the rules and regulations for the conduct of the July
15, 2002 synchronized SK and Barangay elections.

Petitioners, who all claim to be 20 years old, argue that the postponement of the May 6, 2002 SK
elections disenfranchises them, preventing them from voting and being voted for in the SK elections.
Petitioners' theory is that if the SK elections were postponed to a date later than May 6, 2002, the
postponement would disqualify from SK membership youths who will turn 21 years old between May
6, 2002 and the date of the new SK elections. Petitioners claim that a reduction in the SK membership
age to 15 but less than 18 years of age from the then membership age of 15 but not more than 21
years of age would disqualify about seven million youths. The public respondents' failure to hold the
elections on May 6, 2002 would prejudice petitioners and other youths similarly situated.

Thus, petitioners instituted this petition to: (1) compel public respondents to hold the SK elections on
May 6, 2002 and should it be postponed, the SK elections should be held not later than July 15, 2002;
(2) prevent public respondents from passing laws and issuing resolutions and orders that would lower
the membership age in the SK; and (3) compel public respondents to allow petitioners and those who
have turned more than 21 years old on May 6, 2002 to participate in any re-scheduled SK elections.

The Court's power of judicial review may be exercised in constitutional cases only if all the following
requisites are complied with, namely: (1) the existence of an actual and appropriate case or
controversy; (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.21

In the instant case, there is no actual controversy requiring the exercise of the power of judicial
review. While seeking to prevent a postponement of the May 6, 2002 SK elections, petitioners are
nevertheless amenable to a resetting of the SK elections to any date not later than July 15, 2002. RA
No. 9164 has reset the SK elections to July 15, 2002, a date acceptable to petitioners. With respect to
the date of the SK elections, there is therefore no actual controversy requiring judicial intervention.

Petitioners' prayer to prevent Congress from enacting into law a proposed bill lowering the
membership age in the SK does not present an actual justiciable controversy. A proposed bill is not
subject to judicial review because it is not a law. A proposed bill creates no right and imposes no duty
legally enforceable by the Court. A proposed bill, having no legal effect, violates no constitutional right
or duty. The Court has no power to declare a proposed bill constitutional or unconstitutional because
that would be in the nature of rendering an advisory opinion on a proposed act of Congress. The
power of judicial review cannot be exercised in vacuo.22 The second paragraph of Section 1, Article
VIII of the Constitution states -

"Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government." (Emphasis supplied)

Thus, there can be no justiciable controversy involving the constitutionality of a proposed bill. The
Court can exercise its power of judicial review only after a law is enacted, not before.

Under the separation of powers, the Court cannot restrain Congress from passing any law, or from
setting into motion the legislative mill according to its internal rules. Thus, the following acts of
Congress in the exercise of its legislative powers are not subject to judicial restraint: the filing of bills
by members of Congress, the approval of bills by each chamber of Congress, the reconciliation by the
Bicameral Committee of approved bills, and the eventual approval into law of the reconciled bills by
each chamber of Congress. Absent a clear violation of specific constitutional limitations or of
constitutional rights of private parties, the Court cannot exercise its power of judicial review over the
internal processes or procedures of Congress. 23

The Court has also no power to dictate to Congress the object or subject of bills that Congress should
enact into law. The judicial power to review the constitutionality of laws does not include the power to
prescribe to Congress what laws to enact. The Court has no power to compel Congress by mandamus
to enact a law allowing petitioners, regardless of their age, to vote and be voted for in the July 15,
2002 SK elections. To do so would destroy the delicate system of checks and balances finely crafted
by the Constitution for the three co-equal, coordinate and independent branches of government.

Under RA No. 9164, Congress merely restored the age requirement in PD No. 684, the original charter
of the SK, which fixed the maximum age for membership in the SK to youths less than 18 years old.
Petitioners do not have a vested right to the permanence of the age requirement under Section 424 of
the Local Government Code of 1991. Every law passed by Congress is always subject to amendment
or repeal by Congress. The Court cannot restrain Congress from amending or repealing laws, for the
power to make laws includes the power to change the laws. 24

The Court cannot also direct the Comelec to allow over-aged voters to vote or be voted for in an
election that is limited under RA No. 9164 to youths at least 15 but less than 18 years old. A law is
needed to allow all those who have turned more than 21 years old on or after May 6, 2002 to
participate in the July 15, 2002 SK elections. Youths from 18 to 21 years old as of May 6, 2002 are
also no longer SK members, and cannot participate in the July 15, 2002 SK elections. Congress will
have to decide whether to enact an amendatory law. Petitioners' remedy is legislation, not judicial
intervention.

Petitioners have no personal and substantial interest in maintaining this suit. A party must show that
he has been, or is about to be denied some personal right or privilege to which he is lawfully entitled. 25
A party must also show that he has a real interest in the suit. By "real interest" is meant a present
substantial interest, as distinguished from a mere expectancy or future, contingent, subordinate, or
inconsequential interest. 26

In the instant case, petitioners seek to enforce a right originally conferred by law on those who were
at least 15 but not more than 21 years old. Now, with the passage of RA No. 9164, this right is limited
to those who on the date of the SK elections are at least 15 but less than 18 years old. The new law
restricts membership in the SK to this specific age group. Not falling within this classification,
petitioners have ceased to be members of the SK and are no longer qualified to participate in the July
15, 2002 SK elections. Plainly, petitioners no longer have a personal and substantial interest in the SK
elections.

This petition does not raise any constitutional issue. At the time petitioners filed this petition, RA No.
9164, which reset the SK elections and reduced the age requirement for SK membership, was not yet
enacted into law. After the passage of RA No. 9164, petitioners failed to assail any provision in RA No.
9164 that could be unconstitutional. To grant petitioners' prayer to be allowed to vote and be voted
for in the July 15, 2002 SK elections necessitates assailing the constitutionality of RA No. 9164. This,
petitioners have not done. The Court will not strike down a law unless its constitutionality is properly
raised in an appropriate action and adequately argued. 27

The only semblance of a constitutional issue, albeit erroneous, that petitioners raise is their claim that
SK membership is a "property right within the meaning of the Constitution." 28 Since certain public
offices are "reserved" for SK officers, petitioners also claim a constitutionally protected "opportunity"
to occupy these public offices. In petitioners' own words, they and others similarly situated stand to
"lose their opportunity to work in the government positions reserved for SK members or officers." 29
Under the Local Government Code of 1991, the president of the federation of SK organizations in a
municipality, city or province is an ex-officio member of the municipal council, city council or provincial
board, respectively.30 The chairperson of the SK in the barangay is an ex-officio member of the
Sangguniang Barangay.31 The president of the national federation of SK organizations is an ex-officio
member of the National Youth Commission, with rank of a Department Assistant Secretary. 32
Congress exercises the power to prescribe the qualifications for SK membership. One who is no longer
qualified because of an amendment in the law cannot complain of being deprived of a proprietary right
to SK membership. Only those who qualify as SK members can contest, based on a statutory right,
any act disqualifying them from SK membership or from voting in the SK elections. SK membership is
not a property right protected by the Constitution because it is a mere statutory right conferred by
law. Congress may amend at any time the law to change or even withdraw the statutory right.

A public office is not a property right. As the Constitution expressly states, a "[P]ublic office is a public
trust."33 No one has a vested right to any public office, much less a vested right to an expectancy of
holding a public office. In Cornejo v. Gabriel,34 decided in 1920, the Court already ruled:

"Again, for this petition to come under the due process of law prohibition, it would be necessary to
consider an office a "property." It is, however, well settled x x x that a public office is not
property within the sense of the constitutional guaranties of due process of law, but is a
public trust or agency. x x x The basic idea of the government x x x is that of a popular representative
government, the officers being mere agents and not rulers of the people, one where no one man or
set of men has a proprietary or contractual right to an office, but where every officer accepts office
pursuant to the provisions of the law and holds the office as a trust for the people he represents."
(Emphasis supplied)

Petitioners, who apparently desire to hold public office, should realize from the very start that no one
has a proprietary right to public office. While the law makes an SK officer an ex-officio member of a
local government legislative council, the law does not confer on petitioners a proprietary right or even
a proprietary expectancy to sit in local legislative councils. The constitutional principle of a public office
as a public trust precludes any proprietary claim to public office. Even the State policy directing "equal
access to opportunities for public service" 35 cannot bestow on petitioners a proprietary right to SK
membership or a proprietary expectancy to ex-officio public offices.

Moreover, while the State policy is to encourage the youth's involvement in public affairs, 36 this policy
refers to those who belong to the class of people defined as the youth. Congress has the power to
define who are the youth qualified to join the SK, which itself is a creation of Congress. Those who do
not qualify because they are past the age group defined as the youth cannot insist on being part of
the youth. In government service, once an employee reaches mandatory retirement age, he cannot
invoke any property right to cling to his office. In the same manner, since petitioners are now past the
maximum age for membership in the SK, they cannot invoke any property right to cling to their SK
membership.

The petition must also fail because no grave abuse of discretion attended the postponement of the SK
elections. RA No. 9164 is now the law that prescribes the qualifications of candidates and voters for
the SK elections. This law also fixes the date of the SK elections. Petitioners are not even assailing the
constitutionality of RA No. 9164. RA No. 9164 enjoys the presumption of constitutionality and will
apply to the July 15, 2002 SK elections.

Petitioners have not shown that the Comelec acted illegally or with grave abuse of discretion in
recommending to Congress the postponement of the SK elections. The very evidence relied upon by
petitioners contradict their allegation of illegality. The evidence consist of the following: (1) Comelec
en banc Resolution No. 4763 dated February 5, 2002 that recommended the postponement of the SK
elections to 2003; (2) the letter of then Comelec Chairman Benipayo addressed to the Speaker of the
House of Representatives and the President of the Senate; and (3) the Conference Committee Report
consolidating Senate Bill No. 2050 and House Bill No. 4456.

The Comelec exercised its power and duty to "enforce and administer all laws and regulations relative
to the conduct of an election, plebiscite, initiative, referendum and recall" 37 and to "recommend to
Congress effective measures to minimize election spending." 38 The Comelec's acts enjoy the
presumption of regularity in the performance of official duties. 39 These acts cannot constitute proof, as
claimed by petitioners, that there "exists a connivance and conspiracy (among) respondents in
contravention of the present law." As the Court held in Pangkat Laguna v. Comelec,40 the "Comelec, as
the government agency tasked with the enforcement and administration of elections laws, is entitled
to the presumption of regularity of official acts with respect to the elections."

The 1987 Constitution imposes upon the Comelec the duty of enforcing and administering all laws and
regulations relative to the conduct of elections. Petitioners failed to prove that the Comelec committed
grave abuse of discretion in recommending to Congress the postponement of the May 6, 2002 SK
elections. The evidence cited by petitioners even establish that the Comelec has demonstrated an
earnest effort to address the practical problems in holding the SK elections on May 6, 2002. The
presumption remains that the decision of the Comelec to recommend to Congress the postponement
of the elections was made in good faith in the regular course of its official duties.

Grave abuse of discretion is such capricious and whimsical exercise of judgment that is patent and
gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by
law.41 Public respondents having acted strictly pursuant to their constitutional powers and duties, we
find no grave abuse of discretion in their assailed acts.

Petitioners contend that the postponement of the SK elections would allow the incumbent SK officers
to perpetuate themselves in power, depriving other youths of the opportunity to serve in elective SK
positions. This argument deserves scant consideration. While RA No. 9164 contains a hold-over
provision, incumbent SK officials can remain in office only until their successors have been elected or
qualified. On July 15, 2002, when the SK elections are held, the hold-over period expires and all
incumbent SK officials automatically cease to hold their SK offices and their ex-officio public offices.

In sum, petitioners have no personal and substantial interest in maintaining this suit. This petition
presents no actual justiciable controversy. Petitioners do not cite any provision of law that is alleged to
be unconstitutional. Lastly, we find no grave abuse of discretion on the part of public respondents.

WHEREFORE, the petition is DISMISSED for utter lack of merit.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Ynares-
Santiago, Sandoval-Gutierrez, Austria-Martinez, and Corona, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 93100 June 19, 1997

ATLAS FERTILIZER CORPORATION, petitioner,

vs.
THE HONORABLE SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, respondent.

G.R. No. 97855 June 19, 1997

PHILIPPINE FEDERATION OF FISHFARM PRODUCERS, INC. petitioner,
vs.
THE HONORABLE SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, respondent.

RESOLUTION

ROMERO, J.:

Before this Court are consolidated petitions questioning the constitutionality of some portions of
Republic Act No. 6657 otherwise known as the Comprehensive Agrarian Reform Law. 1

Petitioners Atlas Fertilizer Corporation, Philippine Federation of Fishfarm Producers, Inc. and
2

petitioner-in-intervention Archie's Fishpond, Inc. and Arsenio Al. Acuna 3

are engaged in the
aquaculture industry utilizing fishponds and prawn farms. They assail Sections 3 (b), 11, 13, 16 (d),
17 and 32 of R.A. 6657, as well as the implementing guidelines and procedures contained in
Administrative Order Nos. 8 and 10 Series of 1988 issued by public respondent Secretary of the
Department of Agrarian Reform as unconstitutional.

Petitioners claim that the questioned provisions of CARL violate the Constitution in the following
manner:

1. Sections 3 (b), 11, 13, 16 (d), 17 and 32 of CARL extend agrarian reform to aquaculture
lands even as Section 4, Article XIII of the Constitution limits agrarian reform only to
agricultural lands.

2. The questioned provisions similarly treat of aquaculture lands and agriculture lands when they are
differently situated, and differently treat aquaculture lands and other industrial lands, when they are
similarly situated in violation of the constitutional guarantee of the equal protection of the laws.

3. The questioned provisions distort employment benefits and burdens in favor of aquaculture
employees and against other industrial workers even as Section 1 and 3, Article XIII of the
Constitution mandate the State to promote equality in economic and employment opportunities.

4. The questioned provisions deprive petitioner of its government-induced investments in

aquaculture even as Sections 2 and 3, Article XIII of the Constitution mandate the State to respect
the freedom of enterprise and the right of enterprises to reasonable returns on investments and to
expansion and growth.

The constitutionality of the above-mentioned provisions has been ruled upon in the case of Luz
Farms, Inc. v. Secretary of Agrarian Reform regarding the inclusion of land devoted to the raising of
4

livestock, poultry and swine in its coverage.

The issue now before this Court is the constitutionality of the same above-mentioned provisions
insofar as they include in its coverage lands devoted to the aquaculture industry, particularly
fishponds and prawn farms.

In their first argument , petitioners contend that in the case of Luz Farms, Inc. v. Secretary of
Agrarian Reform, this Court has already ruled impliedly that lands devoted to fishing are not
5

agricultural lands. In aquaculture, fishponds and prawn farms, the use of land is only incidental to
and not the principal factor in productivity and, hence, as held in "Luz Farms," they too should be
excluded from R.A. 6657 just as lands devoted to livestock, swine, and poultry have been excluded
for the same reason. They also argue that they are entitled to the full benefit of "Luz Farms" to the
effect that only five percent of the total investment in aquaculture activities, fishponds, and prawn
farms, is in the form of land, and therefore, cannot be classified as agricultural activity. Further, that
in fishponds and prawn farms, there are no farmers, nor farm workers, who till lands, and no
agrarian unrest, and therefore, the constitutionally intended beneficiaries under Section 4, Art. XIII,
1987 Constitution do not exist in aquaculture.

In their second argument, they contend that R.A. 6657, by including in its coverage, the raising of
fish and aquaculture operations including fishponds and prawn ponds, treating them as in the same
class or classification as agriculture or farming violates the equal protection clause of the
Constitution and is, therefore, void. Further, the Constitutional Commission debates show that the
intent of the constitutional framers is to exclude "industrial" lands, to which category lands devoted to
aquaculture, fishponds, and fish farms belong.
Petitioners also claim that Administrative Order Nos. 8 and 10 issued by the Secretary of the
Department of Agrarian Reform are, likewise, unconstitutional, as held in "Luz Farms," and are
therefore void as they implement the assailed provisions of CARL.

The provisions of CARL being assailed as unconstitutional are as follows:

(a) Section 3 (b) which includes the "raising of fish in the definition of "Agricultural,
Agricultural Enterprise or Agricultural Activity." (Emphasis Supplied)

(b) Section 11 which defines "commercial farms" as private agricultural lands devoted to fishponds
and prawn ponds. . . . (Emphasis Supplied)

(c) Section 13 which calls upon petitioner to execute a production-sharing plan.

(d) Section 16(d) and 17 which vest on the Department of Agrarian reform the authority to summarily
determine the just compensation to be paid for lands covered by the comprehensive Agrarian reform
Law.

(e) Section 32 which spells out the production-sharing plan mentioned in section 13 —

. . . (W)hereby three percent (3%) of the gross sales from the production of such lands are
distributed within sixty (60) days at the end of the fiscal year as compensation to regular and other
farmworkers in such lands over and above the compensation they currently receive: Provided, That
these individuals or entities realize gross sales in excess of five million pesos per annum unless the
DAR, upon proper application, determines a lower ceiling.

In the event that the individual or entity realizes a profit, an additional ten percent (10%) of the net
profit after tax shall be distributed to said regular and other farmworkers within ninety (90) days of
the end of the fiscal year. . . .

While the Court will not hesitate to declare a law or an act void when confronted squarely with
constitutional issues, neither will it preempt the Legislative and the Executive branches of the
government in correcting or clarifying, by means of amendment, said law or act. On February 20,
1995, Republic Act No. 7881 was approved by Congress. Provisions of said Act pertinent to the
6

assailed provisions of CARL are the following:

Sec. 1. Section 3, Paragraph (b) of Republic Act No. 6657 is hereby amended to read as
follows:

Sec. 3. Definitions. — For the purpose of this Act, unless the context indicates otherwise:

(b) Agriculture, Agricultural Enterprise or Agricultural Activity means the cultivation of the soil,
planting of crops, growing of fruit trees, including the harvesting of such farm products and other
farm activities and practices performed by a farmer in conjunction with such farming operations done
by persons whether natural or juridical.

Sec. 2. Section 10 of Republic Act No. 6657 is hereby amended to read as follows:

Sec. 10. Exemptions and Exclusions. —

xxx xxx xxx

b) Private lands actually, directly and exclusively used for prawn farms and fishponds
shall be exempt from the coverage of this Act: Provided, That said prawn farms and
fishponds have not been distributed and Certificate of Land Ownership Award
 (CLOA) issued to agrarian reform beneficiaries under the Comprehensive Agrarian
Reform Program.

In cases where the fishponds or prawn farms have been subjected to the Comprehensive Agrarian
Reform Law, by voluntary offer to sell, or commercial farms deferment or notices of compulsory
acquisition, a simple and absolute majority of the actual regular workers or tenants must consent to
the exemption within one (1) year from the effectivity of this Act. when the workers or tenants do not
agree to this exemption, the fishponds or prawn farms shall be distributed collectively to the worker
— beneficiaries or tenants who shall form a cooperative or association to manage the same.

In cases where the fishponds or prawn farms have not been subjected to the Comprehensive
Agrarian Reform Law, the consent of the farm workers shall no longer be necessary, however, the
provision of Section 32-A hereof on incentives shall apply.

xxx xxx xxx

Sec. 3. Section 11, Paragraph 1 is hereby amended to read as follows:

Sec. 11. Commercial Farming. — Commercial farms, which are private agricultural
lands devoted to saltbeds, fruit farms, orchards, vegetable and cut-flower farms and
cacao, coffee and rubber plantations, shall be subject to immediate compulsory
acquisition and distribution after ten (10) years from the effectivity of this Act. In the
case of new farms, the ten-year period shall begin from the first year of commercial
production and operation, as determined by the DAR. During the ten-year period, the
Government shall initiate steps necessary to acquire these lands, upon payment of
just compensation for the land and the improvements thereon, preferably in favor of
organized cooperatives or associations, which shall thereafter manage the said lands
for the workers — beneficiaries.

Sec. 4. There shall be incorporated after Section 32 of Republic Act No. 6657 a section to read as
follows

Sec. 32-A. Incentives. — Individuals or entities owning or operating fishponds and

prawn farms are hereby mandated to execute within six (6) months from the
effectivity of this Act, an incentive plan with their regular fishpond or prawn farm
workers' organization, if any, whereby seven point five percent (7.5%) of their net
profit before tax from the operation of the fishpond or prawn farms are distributed
within sixty (60) days at the end of the fiscal year as compensation to regular and
other pond workers in such ponds over and above the compensation they currently
receive.

In order to safeguard the right of the regular fishpond or prawn farm workers under the incentive
plan, the books of the fishpond or prawn owners shall be subject to periodic audit or inspection by
certified public accountants chosen by the workers.

The foregoing provision shall not apply to agricultural lands subsequently converted to fishponds or
prawn farms provided the size of the land converted does not exceed the retention limit of the
landowner.

The above-mentioned provisions of R.A. No. 7881 expressly state that fishponds and prawn farms
are excluded from the coverage of CARL. In view of the foregoing, the question concerning the
constitutionality of the assailed provisions has become moot and academic with the passage of R.A.
No. 7881.
WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Melo, Puno, Vitug, Mendoza, Hermosisima, Jr., Panganiban
and Torres, Jr., JJ., concur.

Padilla, Bellosillo, Kapunan and Francisco, JJ., are on leave.

EN BANC

G.R. No. 147780 May 10, 2001

PANFILO LACSON, MICHAEL RAY B. AQUINO and CESAR O. MANCAO, petitioners,

vs.
SECRETARY HERNANDO PEREZ, P/DIRECTOR LEANDRO MENDOZA, and P/SR. SUPT.
REYNALDO BERROYA, respondents.

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

G.R. No. 147781 May 10, 2001

MIRIAM DEFENSOR-SANTIAGO, petitioner,

vs.
ANGELO REYES, Secretary of National Defense, ET AL., respondents.
----------------------------------------

G.R. No. 147799 May 10, 2001

RONALDO A. LUMBAO, petitioner,

vs.
SECRETARY HERNANDO PEREZ, GENERAL DIOMEDIO VILLANUEVA, P/DIRECTOR
LEANDRO MENDOZA, and P/SR. SUPT. REYNALDO BERROYA, respondents.

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

G.R. No. 147810 May 10, 2001

THE LABAN NG DEMOKRATIKONG PILIPINO, petitioner,

vs.
THE DEPARTMENT OF JUSTICE, SECRETARY HERNANDO PEREZ, THE ARMED FORCES OF
THE PHILIPPINES, GENERAL DIOMEDIO VILLANUEVA, THE PHILIPPINE NATIONAL POLICE,
and DIRECTOR GENERAL LEANDRO MENDOZA, respondents.

RESOLUTION

MELO, J.:

On May 1, 2001, President Macapagal-Arroyo, faced by an "angry and violent mob armed with
explosives, firearms, bladed weapons, clubs, stones and other deadly weapons" assaulting and
attempting to break into Malacañang, issued Proclamation No. 38 declaring that there was a state of
rebellion in the National Capital Region. She likewise issued General Order No. 1 directing the
Armed Forces of the Philippines and the Philippine National Police to suppress the rebellion in the
National Capital Region. Warrantless arrests of several alleged leaders and promoters of the
"rebellion" were thereafter effected.

Aggrieved by the warrantless arrests, and the declaration of a "state of rebellion," which allegedly
gave a semblance of legality to the arrests, the following four related petitions were filed before the
Court –

(1) G. R. No. 147780 for prohibition, injunction, mandamus, and habeas corpus (with an urgent
application for the issuance of temporary restraining order and/or writ of preliminary injunction) filed
by Panfilio M. Lacson, Michael Ray B. Aquino, and Cezar O. Mancao; (2) G. R. No. 147781 for
mandamus and/or review of the factual basis for the suspension of the privilege of the writ of habeas
corpus, with prayer for the suspension of the privilege of the writ of habeas corpus, with prayer for a
temporary restraining order filed by Miriam Defensor-Santiago; (3) G. R. No. 147799 for prohibition
and injunction with prayer for a writ of preliminary injunction and/or restraining order filed by Ronaldo
A. Lumbao; and (4) G. R. No. 147810 for certiorari and prohibition filed by the political party Laban
ng Demokratikong Pilipino.

All the foregoing petitions assail the declaration of a state of rebellion by President Gloria
Macapagal-Arroyo and the warrantless arrests allegedly effected by virtue thereof, as having no
basis both in fact and in law. Significantly, on May 6, 2001, President Macapagal-Arroyo ordered the
lifting of the declaration of a "state of rebellion" in Metro Manila. Accordingly, the instant petitions
have been rendered moot and academic. As to petitioners' claim that the proclamation of a "state of
rebellion" is being used by the authorities to justify warrantless arrests, the Secretary of Justice
denies that it has issued a particular order to arrest specific persons in connection with the
"rebellion." He states that what is extant are general instructions to law enforcement officers and
military agencies to implement Proclamation No. 38. Indeed, as stated in respondents' Joint
Comments:

[I]t is already the declared intention of the Justice Department and police authorities to obtain
regular warrants of arrests from the courts for all acts committed prior to and until May 1,
2001 which means that preliminary investigations will henceforth be conducted.

(Comment, G.R. No. 147780, p. 28; G.R. No. 147781, p. 18; G.R. No. 147799, p. 16; G.R.
No. 147810, p. 24)

With this declaration, petitioners' apprehensions as to warrantless arrests should be laid to rest.

In quelling or suppressing the rebellion, the authorities may only resort to warrantless arrests of
persons suspected of rebellion, as provided under Section 5, Rule 113 of the Rules of Court, if the
circumstances so warrant. The warrantless arrest feared by petitioners is, thus, not based on the
declaration of a "state of rebellion."

Moreover, petitioners' contention in G. R. No. 147780 (Lacson Petition), 147781 (Defensor-Santiago

Petition), and 147799 (Lumbao Petition) that they are under imminent danger of being arrested
without warrant do not justify their resort to the extraordinary remedies of mandamus and prohibition,
since an individual subjected to warrantless arrest is not without adequate remedies in the ordinary
course of law. Such an individual may ask for a preliminary investigation under Rule 112 of the
Rules of Court, where he may adduce evidence in his defense, or he may submit himself to inquest
proceedings to determine whether or not he should remain under custody and correspondingly be
charged in court. Further, a person subject of a warrantless arrest must be delivered to the proper
judicial authorities within the periods provided in Article 125 of the Revised Penal Code, otherwise
the arresting officer could be held liable for delay in the delivery of detained persons. Should the
detention be without legal ground, the person arrested can charge the arresting officer with arbitrary
detention. All this is without prejudice to his filing an action for damages against the arresting officer
under Article 32 of the Civil Code. Verily, petitioners have a surfeit of other remedies which they can
avail themselves of, thereby making the prayer for prohibition and mandamus improper at this time
(Section 2 and 3, Rule 65, Rules of Court).1âwphi1.nêt

Aside from the foregoing reasons, several considerations likewise inevitably call for the dismissal of
the petitions at bar.
G.R. No. 147780

In connection with their alleged impending warrantless arrest, petitioners Lacson, Aquino, and
mancao pray that the "appropriate court before whom the informations against petitioners are filed
be directed to desist from arraigning and proceeding with the trial of the case, until the instant
petition is finally resolved." This relief is clearly premature considering that as of this date, no
complaints or charges have been filed against any of the petitioners for any crime. And in the event
that the same are later filed, this Court cannot enjoin criminal prosecution conducted in accordance
with the Rules of Court, for by that time any arrest would have been in pursuant of a duly issued
warrant.

As regards petitioners' prayer that the hold departure orders issued against them be declared null
and void ab initio, it is to be noted that petitioners are not directly assailing the validity of the subject
hold departure orders in their petition. They are not even expressing intention to leave the country in
the near future. The prayer to set aside the same must be made in proper proceedings initiated for
that purpose.
Anent petitioners' allegations ex abundante ad cautelam in support of their application for the
issuance of a writ of habeas corpus, it is manifest that the writ is not called for since its purpose is to
relieve petitioners from unlawful restraint (Ngaya-an v. Balweg, 200 SCRA 149 [1991]), a matter
which remains speculative up to this very day.

G.R. No. 147781

The petition herein is denominated by petitioner Defensor-Santiago as one for mandamus. It is basic
in matters relating to petitions for mandamus that the legal right of the petitioner to the performance
of a particular act which is sought to be compelled must be clear and complete. Mandamus will not
issue unless the right to relief is clear at the time of the award (Palileo v. Ruiz Castro, 85 Phil. 272).
Up to the present time, petitioner Defensor Santiago has not shown that she is in imminent danger of
being arrested without a warrant. In point of fact, the authorities have categorically stated that
petitioner will not be arrested without a warrant.

G.R. No. 147799

Petitioner Lumbao, leader of the People's Movement against Poverty (PMAP), for his part, argues
that the declaration of a "state of rebellion" is violative of the doctrine of separation of powers, being
an encroachment on the domain of the judiciary which has the constitutional prerogative to
"determine or interpret" what took place on May 1, 2001, and that the declaration of a state of
rebellion cannot be an exception to the general rule on the allocation of the governmental powers.

We disagree. To be sure, Section 18, Article VII of the Constitution expressly provides that "[t]he
President shall be the Commander-in-Chief of all armed forces of the Philippines and whenever it
becomes necessary, he may call out such armed forces to prevent or suppress lawless violence,
invasion or rebellion…" Thus, we held in Integrated Bar of the Philippines v. Hon. Zamora, (G.R. No.
141284, August 15, 2000):

x x x The factual necessity of calling out the armed forces is not easily quantifiable and cannot be
objectively established since matters considered for satisfying the same is a combination of several
factors which are not always accessible to the courts. Besides the absence of textual standards that
the court may use to judge necessity, information necessary to arrive at such judgment might also
prove unmanageable for the courts. Certain pertinent information might be difficult to verify, or wholly
unavailable to the courts. In many instances, the evidence upon which the President might decide
that there is a need to call out the armed forces may be of a nature not constituting technical proof.

On the other hand, the President as Commander-in-Chief has a vast intelligence network to gather
information, some of which may be classified as highly confidential or affecting the security of the
state. In the exercise of the power to call, on-the-spot decisions may be imperatively necessary in
emergency situations to avert great loss of human lives and mass destruction of property. x x x

(at pp.22-23)

The Court, in a proper case, may look into the sufficiency of the factual basis of the exercise of this
power. However, this is no longer feasible at this time, Proclamation No. 38 having been lifted.

G.R. No. 147810

Petitioner Laban ng Demokratikong Pilipino is not a real party-in-interest. The rule requires that a
party must show a personal stake in the outcome of the case or an injury to himself that can be
redressed by a favorable decision so as to warrant an invocation of the court's jurisdiction and to
justify the exercise of the court's remedial powers in his behalf (KMU Labor Center v. Garcia, Jr., 239
SCRA 386 [1994]). Here, petitioner has not demonstrated any injury to itself which would justify
resort to the Court. Petitioner is a juridical person not subject to arrest. Thus, it cannot claim to be
threatened by a warrantless arrest. Nor is it alleged that its leaders, members, and supporters are
being threatened with warrantless arrest and detention for the crime of rebellion. Every action must
be brought in the name of the party whose legal right has been invaded or infringed, or whose legal
right is under imminent threat of invasion or infringement.

At best, the instant petition may be considered as an action for declaratory relief, petitioner claiming
that its right to freedom of expression and freedom of assembly is affected by the declaration of a
"state of rebellion" and that said proclamation is invalid for being contrary to the Constitution.

However, to consider the petition as one for declaratory relief affords little comfort to petitioner, this
Court not having jurisdiction in the first instance over such a petition. Section 5[1], Article VIII of the
Constitution limits the original jurisdiction of the Court to cases affecting ambassadors, other public
ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.

WHEREFORE, premises considered, the petitions are hereby DISMISSED. However, in G.R. No.
147780, 147781, and 147799, respondents, consistent and congruent with their undertaking earlier
adverted to, together with their agents, representatives, and all persons acting for and in their behalf,
are hereby enjoined from arresting petitioners therein without the required judicial warrant for all acts
committed in relation to or in connection with the may 1, 2001 siege of Malacañang.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Mendoza, Panganiban, Gonzaga-Reyes, JJ., concur.

Vitug, separate opinion.

Kapunan, dissenting opinion.

Pardo, join the dissent of J. Kapunan.

Sandoval-Gutierrez, dissenting opinion.

Quisumbing, Buena, Ynares-Santiago, De Leon, Jr., on leave.

G.R. No. 147780 May 10, 2001

PANFILO LACSON, MICHAEL RAY B. AQUINO and CESAR O. MANCAO, petitioners,

vs.
SECRETARY HERNANDO PEREZ, P/DIRECTOR LEANDRO MENDOZA, and P/SR. SUPT.
REYNALDO BERROYA, respondents.

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

G.R. No. 147781 May 10, 2001

MIRIAM DEFENSOR-SANTIAGO, petitioner,

vs.
ANGELO REYES, Secretary of National Defense, ET AL., respondents.

SEPARATE OPINION

VITUG, J.:
I concur insofar as the resolution enjoins any continued warrantless arrests for acts related
to, or connected with, the May 1st incident but respectfully dissent from the order of dismissal
of the petitions for being said to be moot and academic. The petitions have raised important
constitutional issues that, in my view, must likewise be fully addressed.

G.R. No. 147780 May 10, 2001

PANFILO LACSON, MICHAEL RAY B. AQUINO and CESAR O. MANCAO, petitioners,

vs.
SECRETARY HERNANDO PEREZ, P/DIRECTOR LEANDRO MENDOZA, and P/SR. SUPT.
REYNALDO BERROYA, respondents.

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

G.R. No. 147781 May 10, 2001

MIRIAM DEFENSOR-SANTIAGO, petitioner,

vs.
ANGELO REYES, Secretary of National Defense, ET AL., respondents.

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

G.R. No. 147799 May 10, 2001

RONALDO A. LUMBAO, petitioner,

vs.
SECRETARY HERNANDO PEREZ, GENERAL DIOMEDIO VILLANUEVA, P/DIRECTOR
LEANDRO MENDOZA, and P/SR. SUPT. REYNALDO BERROYA, respondents.

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

G.R. No. 147810 May 10, 2001

THE LABAN NG DEMOKRATIKONG PILIPINO, petitioner,

vs.
THE DEPARTMENT OF JUSTICE, SECRETARY HERNANDO PEREZ, THE ARMED FORCES OF
THE PHILIPPINES, GENERAL DIOMEDIO VILLANUEVA, THE PHILIPPINE NATIONAL POLICE,
and DIRECTOR GENERAL LEANDRO MENDOZA, respondents.

DISSENTING OPINION

KAPUNAN, J.:

The right against unreasonable searches and seizure has been characterized as belonging "in the
catalog of indispensable freedoms."

Among deprivation of rights, none is so effective in cowing a population, crushing the spirit of the
individual and putting terror in every heart. Uncontrolled search and seizure is one of the first and
most effective weapons in the arsenal of every arbitrary government. And one need only briefly to
have dwelt and worked among a people know that the human personality deteriorates and dignity
and self-reliance disappear where homes, persons and possessions are subject at any hour to
unheralded search and seizure by the police. 1

Invoking the right against unreasonable searches and seizures, petitioners Panfilo Lacson, Michael
Ray Aquino and Cezar O. Mancao II now seek a temporary restraining order and/or injunction from
the Court against their impending warrantless arrests upon order of the Secretary of Justice. 2
Petitioner Laban ng Demokratikong Pilipino (LDP), likewise, seeks to enjoin the arrests of its
senatorial candidates, namely, Senator Juan Ponce-Enrile, Senator Miriam Defensor-Santiago,
Senator Gregorio B. Honasan and General Panfilo Lacson. 3 Separate petitioners were also filed by
Senator Juan Ponce Enrile. 4 Former Ambassador Ernesto M. Maceda, 5 Senator Miriam Defensor-
Santiago,6 Senator Gregorio B. Honasan,7 and the Integrated Bar of the Philippines (IBP).8

Briefly, the order for the arrests of these political opposition leaders and police officers stems from
the following facts:

On April 25, 2001, former President Joseph Estrada was arrested upon the warrant issued by the
Sandiganbayan in connection with the criminal case for plunder filed against him. Several hundreds
of policemen were deployed to effect his arrest. At the time, a number of Mr. Estrada's supporters,
who were then holding camp outside his residence in Greenhills Subdivision, sought to prevent his
arrest. A skirmish ensued between them and the police. The police had to employ batons and water
hoses to control the rock-throwing pro-Estrada rallyists and allow the sheriffs to serve the warrant.
Mr. Estrada and his son and co-accused, Mayor Jinggoy Estrada, were then brought to Camp
Crame where, with full media coverage, their fingerprints were obtained and their mug shots taken.

Later that day, and on the succeeding days, a huge gathered at the EDSA Shrine to show its support
for the deposed President. Senators Enrile, Santiago, Honasan, opposition senatorial candidates
including petitioner Lacson, as well as other political personalities, spoke before the crowd during
these rallies.

In the meantime, on April 28, 2001, Mr. Estrada and his son were brought to the Veterans memorial
Medical Center for a medical check-up. It was announced that from there, they would be transferred
to Fort Sto. Domingo in Sta. Rosa, Laguna.

In the early morning of May 1, 2001, the crowd at EDSA decided to march to Malacañang Palace.
The Armed Forces of the Philippines (AFP) was called to reinforce the Philippine National Police
(PNP) to guard the premises of the presidential residence. The marchers were able to penetrate the
barricades put up by the police at various points leading to Mendiola and were able to reach Gate 7
of Malacañan. As they were being dispersed with warning shots, tear gas and water canons, the
rallyists hurled stones at the police authorities. A melee erupted. Scores of people, including some
policemen, were hurt.

At noon of the same day, after the crowd in Mendiola had been dispersed, President Gloria
Macapagal-Arroyo issued Proclamation No. 38 declaring a "state of rebellion" in Metro Manila:

Presidential Proclamation No. 38

DECLARING STATE OF REBELLION IN THE NATIONAL CAPITAL REGION

WHEREAS, the angry and violent mob, armed with explosives, firearms, bladed weapons, clubs,
stones and other deadly weapons, in great part coming from the mass gathering at the EDSA
Shrine, and other armed groups, having been agitated and incited and, acting upon the instigation
and under the command and direction of known and unknown leaders, have and continue to assault
and attempt to break into Malacañang with the avowed purpose of overthrowing the duly constituted
Government and forcibly seize power, and have and continue to rise publicly, shown open hostility,
and take up arms against the duly constituted Government for the purpose of removing from the
allegiance to the Government certain bodies of the Armed Forces of the Philippines and the
Philippine National Police, and to deprive the President of the Republic of the Philippines, wholly and
partially, of her powers and prerogatives which constitute the continuing crime of rebellion
punishable under Article 134 of the Revised Penal Code;

WHEREAS, armed groups recruited by known and unknown leaders, conspirators, and plotters have
continue (sic) to rise publicly by the use of arms to overthrow the duly constituted Government and
seize political power;

WHEREAS, under Article VII, Section 18 of the Constitution, whenever necessary, the President as
the Commander-in-Chief of all armed forces of the Philippines, may call out such armed forces to
suppress the rebellion;

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested in me by

law hereby recognize and confirm the existence of an actual and on-going rebellion compelling me
to declare a state of rebellion;

In view of the foregoing, I am issuing General Order NO. 1 in accordance with Section 18, Article VII
of the Constitution calling upon the Armed Forces of the Philippines and the Philippine National
police to suppress and quell the rebellion.

City of Manila, May 1, 2001.

The President likewise issued General Order No. 1 which reads:

GENERAL ORDER NO. 1

DIRECTING THE ARMED FORCES OF THE PHILIPPIENS AND THE PHILIPPINE NATIONAL
POLICE TO SUPPRESS THE REBELLION IN THE NATIONAL CAPITAL REGION

WHEREAS, the angry and violent mob, armed with explosives, firearms, bladed weapons, clubs,
stones and other deadly weapons, in great part coming from the mass gathering at the EDSA
Shrine, and other armed groups, having been agitated and incited and, acting upon the instigation
and under the command and direction of known and unknown leaders, have and continue to assault
and attempt to break into Malacañang with the avowed purpose of overthrowing the duly constituted
Government and forcibly seize political power, and have and continue to rise publicly, show open
hostility, and take up arms against the duly constituted Government certain bodies of the Armed
Forces of the Philippines and the Philippine National Police, and to deprive the President of the
Republic of the Philippines, wholly and partially, of her powers and prerogatives which constitute the
continuing crime of rebellion punishable under Article 134 of the Revised Penal Code;

WHEREAS, armed groups recruited by known and unknown leaders, conspirators, and plotters have
continue (sic) to rise publicly by the use of arms to overthrow the duly constituted Government and
seize political power;

WHEREAS, under Article VII, Section 18 of the Constitution, whenever necessary, the President as
the Commander-in-Chief of all armed forces of the Philippines, may call out such armed forces to
suppress the rebellion;

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested in me

under the Constitution as President of the Republic of the Philippines and Commander-in-Chief of all
armed forces of the Philippines and pursuant to Proclamation No. 38, dated May 1, 2001, do hereby
call upon the Armed Forces of the Philippines and the Philippine national police to suppress and
quell the rebellion.
I hereby direct the Chief of Staff of the Armed Forces of the Philippines and the Chief of the
Philippine National Police and the officers and men of the Armed Forces of the Philippines and the
Philippine National Police to immediately carry out the necessary and appropriate actions and
measures to suppress and quell the rebellion with due regard to constitutional rights.

City of Manila, May 1, 2001.

Pursuant to the proclamation, several key leaders of the opposition were ordered arrested. Senator
Enrile was arrested without warrant in his residence at around 4:00 in the afternoon. Likewise
arrested without warrant the following day was former Ambassador Ernesto Maceda. Senator
Honasan and Gen. Lacson were also ordered arrested but the authorities have so far failed to
apprehend them. Ambassador Maceda was temporarily released upon recognizance while Senator
Ponce Enrile was ordered released by the Court on cash bond.

The basic issue raised by the consolidated petitions is whether the arrest or impending arrest without
warrant, pursuant to a declaration of "state of rebellion" by the President of the above-mentioned
persons and unnamed other persons similarly situated suspected of having committed rebellion is
illegal, being unquestionably a deprivation of liberty and violative of the Bill of Rights under the
Constitution.

The declaration of a "state of rebellion" is supposedly based on Section 18, Article VII of the
Constitution which reads:

The President shall be the Commander-in-Chief of all armed forces of the Philippines and whenever
it becomes necessary, he may call out such armed forces to prevent or suppress lawless violence,
invasion or rebellion. In case of invasion or rebellion, when the public safety requires it, he may, for a
period not exceeding sixty days, suspend the privilege of the writ of habeas corpus or place the
Philippines or any part thereof under martial law. Within forty-eight hours from the proclamation of
martial law or the suspension of the writ of habeas corpus, the President shall submit a report in
person or in writing to the Congress. The Congress, voting jointly, by a vote of at least a majority of
all its Members in regular or special session, may revoke such proclamation or suspension, which
revocation shall not be set aside by the President. Upon the initiative of the President, the Congress
may, in the same manner, extend such proclamation or suspension for a period to be determined by
the Congress if the invasion or rebellion shall persist and public safety requires it.

The Congress, if not in session, shall, within twenty-four hours following such proclamation or
suspension, convene in accordance with its rules without need of a call.

The Supreme Court may review, in an appropriate proceeding filed by any citizen, the sufficiency of
the factual basis of the proclamation of martial law or the suspension of the privilege of the writ or
the extension thereof, and must promulgate its decision thereon within thirty days from its filing.

A state of martial law does not suspend the operation of the Constitution, nor supplant the
functioning of the civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on
military courts and agencies over civilians where civil courts are able to function, nor automatically
suspend the privilege of the writ.

The suspension of the privilege of the writ shall apply only to persons judicially charged for rebellion
or offenses inherent in or directly connected with invasion.

During the suspension of the privilege of the writ, any person thus arrested or detained shall be
judicially charged within three days, otherwise he shall be released.
Section 18 grants the President, as Commander-in-Chief, the power to call out the armed forces in
cases of (1) lawless violence, (2) rebellion and (3) invasion. 9 In the latter two cases, i.e., rebellion or
invasion, the President may, when public safety requires, also (a) suspend the privilege of the writ of
habeas corpus, or (b) place the Philippines or any part thereof under martial law. However, in the
exercise of this calling out power as Commander-in-Chief of the armed forces, the Constitution does
not require the President to make a declaration of a "state of rebellion" (or, for that matter, of lawless
violence or invasion). The term "state of rebellion" has no legal significance. It is vague and
amorphous and does not give the President more power than what the Constitution says, i. e,
whenever it becomes necessary, he may call out such armed forces to prevent or suppress lawless
violence, invasion or rebellion. As Justice Mendoza observed during the hearing of this case, such a
declaration is "legal surplusage." But whatever the term means, it cannot diminish or violate
constitutionally-protected rights, such as the right to due process, 10 the rights to free speech and
peaceful assembly to petition the government for redress of grievances, 11 and the right against
unreasonable searches and seizures,12 among others.

In Integrated Bar of the Philippines vs. Zamora, et al.,13 the Court held that:

x x x [T]he distinction (between the calling out power, on one hand, and the power to suspend the
privilege of the write of habeas corpus and to declare martial law, on the other hand) places the
calling out power in a different category from the power to declare martial law and the power to
suspend the privilege of the writ of habeas corpus, otherwise, the framers of the Constitution would
have simply lumped together the three powers and provided for their revocation and review without
any qualification. Expressio unius est exclusio alterius.

xxx

The reason for the difference in the treatment of the aforementioned powers highlights the intent to
grant the President the widest leeway and broadest discretion in using the "calling out" power
because it is considered as the lesser and more benign power compared to the power to suspend
the privilege of the writ of habeas corpus and the power to impose martial law, both of which involve
the curtailment and suppression of certain basic civil rights and individual freedoms, and thus
necessitating affirmation by Congress and, in appropriate cases, review by this Court.

On the other hand, if the motive behind the declaration of a "state of rebellion" is to arrest persons
without warrant and detain them without bail and, thus, skirt the Constitutional safeguards for the
citizens' civil liberties, the so-called "state of rebellion" partakes the nature of martial law without
declaring on its face, yet, if it is applied and administered by public authority with an evil eye so as to
practically make it unjust and oppressive, it is within the prohibition of the Constitution. 14 In an ironic
sense, a "state of rebellion" declared as a subterfuge to effect warrantless arrest and detention for
an unbailable offense places a heavier burden on the people's civil liberties than the suspension of
the privilege of the writ of habeas corpus the declaration of martial law because in the latter case,
built-in safeguards are automatically set on motion: (1) The period for martial law or suspension is
limited to a period not exceeding sixty day; (2) The President is mandated to submit a report to
Congress within forty-eight hours from the proclamation or suspension; (3) The proclamation or
suspension is subject to review by Congress, which may revoke such proclamation or suspension. If
Congress is not in session, it shall convene in 24 hours without need for call; and (4) The sufficiency
of the factual basis thereof or its extension is subject to review by the Supreme Court in an
appropriate proceeding.15

No right is more fundamental than the right to life and liberty. Without these rights, all other individual
rights may not exist. Thus, the very first section in our Constitution's Bill of Rights, Article III, reads:
SECTION 1. No person shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the equal protection of the laws.

And to assure the fullest protection of the right, more especially against government impairment,
Section 2 thereof provides:

SEC. 2. The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and
no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons or
things to be seized.

Indeed, there is nothing in Section 18 which authorizes the President or any person acting under her
direction to make unwarranted arrests. The existence of "lawless violence, invasion or rebellion" only
authorizes the President to call out the "armed forces to prevent or suppress lawless violence,
invasion or rebellion."

Not even the suspension of the privilege of the writ of habeas corpus or the declaration of martial law
authorizes the President to order the arrest of any person. The only significant consequence of the
suspension of the writ of habeas corpus is to divest the courts of the power to issue the writ whereby
the detention of the person is put in issue. It does not by itself authorize the President to order the
arrest of a person. And even then, the Constitution in Section 18, Article VII makes the following
qualifications:

The suspension of the privilege of the writ shall apply only to persons judicially charged for rebellion
or offenses inherent in or directly connected with invasion.

During the suspension of the privilege of the writ, any person thus arrested or detained shall be
judicially charged within three days, otherwise he shall be released.

In the instant case, the President did not suspend the writ of habeas corpus. Nor did she declare
martial law. A declaration of a "state of rebellion," at most, only gives notice to the nation that it
exists, and that the armed forces may be called to prevent or suppress it, as in fact she did. Such
declaration does not justify any deviation from the Constitutional proscription against unreasonable
searches and seizures.
As a general rule, an arrest may be made only upon a warrant issued by a court. In very
circumscribed instances, however, the Rules of Court allow warrantless arrests. Section 5, Rule 113
provides:

SEC. 5. Arrest without warrant; when lawful. – A police officer or a private person may, without a
warrant, arrest a person:

(a) When, in his presence, the person to be arrested has committed, is actually committing, or is
attempting to commit an offense;

(b) When an offense has just been committed and he has probable cause to believe based on
personal knowledge of facts or circumstances that the person to be arrested has committed it; and

xxx
In cases falling under paragraphs (a) and (b) above, the person arrested without a warrant shall be
forthwith delivered to the nearest police station or jail and shall be proceeded against in accordance
with section 7 of Rule 112.

It must be noted that the above are exceptions to the constitutional norm enshrined in the Bill of
Rights that a person may only be arrested on the strength of a warrant of arrest issued by a "judge"
after determining "personally" the existence of "probable cause" after examination under oath or
affirmation of the complainant and the witnesses he may produce. Its requirements should,
therefore, be scrupulously met:

The right of a person to be secure against any unreasonable seizure of his body and any deprivation
of his liberty is a most basic and fundamental one. The statute or rule which allows exceptions to the
requirement of warrants of arrests is strictly construed. Any exception must clearly fall within the
situations when securing a warrant would be absurd or is manifestly unnecessary as provided by the
Rule. We cannot liberally construe the rule on arrests without warrant or extend its application
beyond the cases specifically provided by law. To do so would infringe upon personal liberty and set
back a basic right so often violated and so deserving of full protection. 16

A warrantless arrest may be justified only if the police officer had facts and circumstances before him
which, had they been before a judge, would constitute adequate basis for a finding of probable
cause of the commission of an offense and that the person arrested is probably guilty of committing
the offense. That is why the Rules of Criminal Procedure require that when arrested, the person
"arrested has committed, is actually committing, or is attempting to commit an offense" in the
presence of the arresting officer. Or if it be a case of an offense which had "just been committed,"
that the police officer making the arrest "has personal knowledge of facts or circumstances that the
person to be arrested has committed it."

Petitioners were arrested or sought to be arrested without warrant for acts of rebellion ostensibly
under Section 5 of Rule 113. Respondents' theory is based on Umil vs. Ramos,17 where this Court
held:

The crimes of rebellion, subversion, conspiracy or proposal to commit such crimes, and crimes or
offenses committed in furtherance thereof or in connection therewith constitute direct assault against
the State and are in the nature of continuing crimes.18

Following this theory, it is argued that under Section 5(a), a person who "has committed, is actually
committing, or is attempting to commit" rebellion and may be arrested without a warrant at any time
so long as the rebellion persists.

Reliance on Umil is misplaced. The warrantless arrests therein, although effected a day or days after
the commission of the violent acts of petitioners therein, were upheld by the Court because at the
time of their respective arrests, they were members of organizations such as the Communist Party of
the Philippines, the New Peoples Army and the National United Front Commission, then outlawed
groups under the Anti-Subversion Act. Their mere membership in said illegal organizations
amounted to committing the offense of subversion19 which justified their arrests without warrants.

In contrast, it has not been alleged that the persons to be arrested for their alleged participation in
the "rebellion" on May 1, 2001 are members of an outlawed organization intending to overthrow the
government. Therefore, to justify a warrantless arrest under Section 5(a), there must be a showing
that the persons arrested or to be arrested has committed, is actually committing or is attempting to
commit the offense of rebellion. 20 In other words, there must be an overt act constitutive of rebellion
taking place in the presence of the arresting officer. In United States vs. Samonte,21 the term" in his
[the arresting officer's] presence" was defined thus:

An offense is said to be committed in the presence or within the view of an arresting officer or private
citizen when such officer or person sees the offense, even though at a distance, or hears the
disturbance created thereby and proceeds at once to the scene thereof; or the offense is continuing,
or has not been consummated, at the time the arrest is made. 22

This requirement was not complied with particularly in the arrest of Senator Enrile. In the Court's
Resolution of May 5, 2001 in the petition for habeas corpus filed by Senator Enrile, the Court noted
that the sworn statements of the policemen who purportedly arrested him were hearsay. 23 Senator
Enrile was arrested two (2) days after he delivered allegedly seditious speeches. Consequently, his
arrest without warrant cannot be justified under Section 5(b) which states that an arrest without a
warrant is lawful when made after an offense has just been committed and the arresting officer or
private person has probable cause to believe based on personal knowledge of facts and
circumstances that the person arrested has committed the offense.

At this point, it must be stressed that apart from being inapplicable to the cases at bar, Umil is not
without any strong dissents. It merely re-affirmed Garcia-Padilla vs. Enrile,24 a case decided during
the Marcos martial law regime. 25 It cannot apply when the country is supposed to be under the
regime of freedom and democracy. The separate opinions of the following Justices in the motion for
reconsideration of said case26 are apropos:

FERNAN C.J., concurring and dissenting:

Secondly, warrantless arrests may not be allowed if the arresting officers are not sure what particular
provision of law had been violated by the person arrested. True it is that law enforcement agents and
even prosecutors are not all adept at the law. However, erroneous perception, not to mention
ineptitude among their ranks, especially if it would result in the violation of any right of a person, may
not be tolerated. That the arrested person has the "right to insist during the pre-trial or trial on the
merits" (Resolution, p. 18) that he was exercising a right which the arresting officer considered as
contrary to law, is beside the point. No person should be subjected to the ordeal of a trial just
because the law enforcers wrongly perceived his action. 27 (Underscoring supplied)

GUTIERREZ, JR., J., concurring and dissenting opinion

Insofar as G.R. NO. 81567 is concerned, I joint the other dissenting Justices in their observations
regarding "continuing offenses." To base warrantless arrests on the doctrine of continuing offense is
to give a license for the illegal detention of persons on pure suspicion. Rebellion, insurrection, or
sedition are political offenses where the line between overt acts and simple advocacy or adherence
to a belief is extremely thin. If a court has convicted an accused of rebellion and he is found roaming
around, he may be arrested. But until a person is proved guilty, I fail to see how anybody can jump
to a personal conclusion that the suspect is indeed a rebel and must be picked up on sight whenever
seen. The grant of authority in the majority opinion is too broad. If warrantless searches are to be
validated, it should be Congress and not this Court which should draw strict and narrow standards.
Otherwise, the non-rebels who are critical, noisy, or obnoxious will be indiscriminately lumped up
with those actually taking up arms against the Government.

The belief of law enforcement authorities, no matter how well-grounded on past events, that the
petitioner would probably shoot other policemen whom he may meet does not validate warrantless
arrests. I cannot understand why the authorities preferred to bide their time, await the petitioner's
surfacing from underground, and ounce on him with no legal authority instead of securing warrants
of arrest for his apprehension.28 (Underscoring supplied)

CRUZ, J., concurring and dissenting:

I submit that the affirmation by this Court of the Garcia-Padilla decision to justify the illegal arrests
made in the cases before us is a step back to that shameful past when individual rights were
wantonly and systematically violated by the Marcos dictatorship. It seem some of us have short
memories of that repressive regime, but I for one am not one to forget so soon. As the ultimate
defender of the Constitution, this Court should not gloss over the abuses of those who, out of
mistaken zeal, would violate individual liberty in the dubious name of national security. Whatever
their ideology and even if it be hostile to ours, the petitioners are entitled to the protection of the Bill
of Rights, no more and no less than any other person in this country. That is what democracy is all
about.29 (Underscoring supplied)

FELICIANO, J., concurring and dissenting:

12. My final submission, is that, the doctrine of "continuing crimes," which has its own legitimate
function to serve in our criminal law jurisprudence, cannot be invoked for weakening and dissolving
the constitutional guarantee against warrantless arrest. Where no overt acts comprising all or some
of the elements of the offense charged are shown to have been committed by the person arrested
without warrant, the "continuing crime" doctrine should not be used to dress up the pretense that a
crime, begun or committed elsewhere, continued to be committed by the person arrested in the
presence of the arresting officer. The capacity for mischief of such a utilization of the "continuing
crimes" doctrine, is infinitely increased where the crime charged does not consist of unambiguous
criminal acts with a definite beginning and end in time and space (such as the killing or wounding of
a person or kidnapping and illegal detention or arson) but rather or such problematic offenses as
membership in or affiliation with or becoming a member of, a subversive association or organization.
For in such cases, the overt constitutive acts may be morally neutral in themselves, and the
unlawfulness of the acts a function of the aims or objectives of the organization involved. Note, for
instance, the following acts which constitute prima facie evidence of "membership in any subversive
association:"

a) Allowing himself to be listed as a member in any book or any of the lists, records,
correspondence, or any other document of the organization;

b) Subjecting himself to the discipline of such or association or organization in any form whatsoever;

c) Giving financial contribution to such association or organization in dues, assessments, loans or in

any other forms;

xxx

f) Conferring with officers or other members of such association or organization in furtherance of any
plan or enterprise thereof;

xxx

g) Preparing documents, pamphlets, leaflets, books, or any other type of publication to promote the
objectives and purposes of such association or organization;

xxx
k) Participating in any way in the activities, planning action, objectives, or purposes of such
association or organization.

It may well be, as the majority implies, that the constitutional rule against warrantless arrests and
seizures makes the law enforcement work of police agencies more difficult to carry out. It is not our
Court's function, however, and the Bill of Rights was not designed, to make life easy for police forces
but rather to protect the liberties of private individuals. Our police forces must simply learn to live
with the requirements of the Bill of Rights, to enforce the law by modalities which themselves comply
with the fundamental law. Otherwise they are very likely to destroy, whether through sheer ineptness
or excess of zeal, the very freedoms which make our policy worth protecting and saving. 30
(Underscoring supplied)

It is observed that a sufficient period has lapsed between the fateful day of May 1, 2001 up to the
present. If respondents have ample evidence against petitioners, then they should forthwith file the
necessary criminal complaints in order that the regular procedure can be followed and the warrants
of arrest issued by the courts in the normal course. When practicable, resort to the warrant process
is always to be preferred because "it interposes an orderly procedure involving 'judicial impartiality'
whereby a neutral and detached magistrate can make informed and deliberate determinations on the
issue of probable cause."31

The neutrality, detachment and independence that judges are supposed to possess is precisely the
reason the framers of the 1987 Constitution have reposed upon them alone the power to issue
warrants of arrest. To vest the same to a branch of government, which is also charged with
prosecutorial powers, would make such branch the accused's adversary and accuser, his judge and
jury.32

A declaration of a state of rebellion does not relieve the State of its burden of proving probable
cause. The declaration does not constitute a substitute for proof. It does not in any way bind the
courts, which must still judge for itself the existence of probable cause. Under Section 18, Article VII,
the determination of the existence of a state of rebellion for purposes of proclaiming martial law or
the suspension of the privilege of the writ of habeas corpus rests for which the President is granted
ample, though not absolute, discretion. Under Section 2, Article III, the determination of probable
cause is a purely legal question of which courts are the final arbiters.

Justice Secretary Hernando Perez is reported to have announced that the lifting of the "state of
rebellion" on May 7, 2001 does not stop the police from making warrantless arrests. 33 If this is so, the
pernicious effects of the declaration on the people's civil liberties have not abated despite the lifting
thereof. No one exactly knows who are in the list or who prepared the list of those to be arrested for
alleged complicity in the "continuing" crime of "rebellion" defined as such by executive fiat. The list of
the perceived leaders, financiers and supporters of the "rebellion" to be arrested and incarcerated
could expand depending on the appreciation of the police. The coverage and duration of effectivity of
the orders of arrest are thus so open-ended and limitless as to place in constant and continuing peril
the people's Bill of Rights. It is of no small significance that four of he petitioners are opposition
candidates for the Senate. Their campaign activities have been to a large extent immobilized. If the
arrests and orders of arrest against them are illegal, then their Constitutional right to seek public
office, as well as the right of he people to choose their officials, is violated.

In view of the transcendental importance and urgency of the issues raised in these cases affecting
as they do the basic liberties of the citizens enshrined in our Constitution, it behooves us to rule
thereon now, instead of relegating the cases to trial courts which unavoidably may come up with
conflicting dispositions, the same to reach this Court inevitably for final ruling. As we aptly
pronounced in Salonga vs. Cruz Paño:34
The Court also has the duty to formulate guiding and controlling constitutional principles, precepts,
doctrines, or rules. It has the symbolic function of educating bench and bar on the extent of
protection given by constitutional guarantees.

Petitioners look up in urgent supplication to the Court, considered the last bulwark of democracy, for
relief. If we do not act promptly, justly and fearlessly, to whom will they turn to?

WHEREFORE, I vote as follows:

(1) Give DUE COURSE to and GRANT the petitions;

(2) Declare as NULL and VOID the orders of arrest issued against petitioners;

(3) Issue a WRIT OF INJUNCTION enjoining respondents, their agents and all other persons acting
for and in their behalf from effecting warrantless arrests against petitioners and all other persons
similarly situated on the basis of Proclamation No. 38 and General Order No. 1 of the President.

SO ORDERED.

Footnote
1
Dissention Opinion, J. Jackson, in Brinegar vs. United States, 338 U.S. 2084 (1949).
2
G.R. No. 147780, for Prohibition, Injunction, Mandamus and Habeas Corpus.
3
G.R. No. 147810, for Certiorari and Prohibition.
4
G.R. No. 147785, for Habeas Corpus.
5
G.R. No. 147787, for Habeas Corpus.
6
G.R. No. 147781, for Mandamus.
7
G.R. No. 147818, for Injunction.
8
G.R. No. 147819, for Certiorari and Mandamus.
9
Integrated Bar of the Philippines vs. Zamora, et al. G.R. No. 141284, August 15, 2000.
10
Constitution, Article III, Section 1.
11
Constitution, Article III, Section 4.
12
Constitution, Article III, Section 2.
13
G.R. No. 141284, supra.
14
See Yick Wo vs. Hopkins, 118 U.S. 356.
15
Id., at Article VII, Section 18.
16
People vs. Burgos, 144 SCRA 1, 14 (1986).
17
187 SCRA 311 (1990).
18
Id., at 318.
19
187 SCRA 311, 318, 321, 323-24. (1990).
20
Under Article 134 of the Revised Penal Code, these acts would involve rising publicly and taking
up arms against the Government: (1) to remove from the allegiance of the Government or its laws,
the entire, or a portion of Philippine territory, or any body of land, naval or other armed forces, or (2)
to deprive the Chief Executive or the Legislature, wholly or partially, of any of their powers or
prerogatives.
21
16 Phil 516 (1910).
22
Id., at 519.
23
G.R. No. 147785.
24
121 SCRA 472 (1983).
25
See Note 396 in Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary,
p. 180.
26
Umil vs. Ramos, 202 SCRA 251 (1991).
27
Id., at 274.
28
Id., at 279.
29
Id., at 284.
30
Id., at 293-295.
31
LAFAVE, I SEARCH AND SEIZURE: A TREATISE ON THE FOURTH AMENDMENT (1987), pp.
548-549. Citations omitted.
32
Presidential Anti-Dollar Salting Task Force vs. CA, 171 SCRA 348 (1989).

Manila Bulletin issue of May 8, 2001 under the heading "Warrantless arrest continue" by Rey G.
33

Panaligan:

Justice Secretary Hernando Perez said yesterday the lifting of the state of rebellion in Metro Manila
does not ban the police from making warrantless arrest of suspected leaders of the failed May 1
Malacañang siege.

In a press briefing, Perez said, "we can make warrantless arrest because that is provided for in the
Rules of Court," citing Rule 113.
34
134 SCRA 438 (1985).

G.R. No. 147780 May 10, 2001

PANFILO LACSON, MICHAEL RAY B. AQUINO and CESAR O. MANCAO, petitioners,

vs.
SECRETARY HERNANDO PEREZ, P/DIRECTOR LEANDRO MENDOZA, and P/SR. SUPT.
REYNALDO BERROYA, respondents.

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

G.R. No. 147781 May 10, 2001

MIRIAM DEFENSOR-SANTIAGO, petitioner,
vs.
ANGELO REYES, Secretary of National Defense, ET AL., respondents.

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

G.R. No. 147799 May 10, 2001

RONALDO A. LUMBAO, petitioner,

vs.
SECRETARY HERNANDO PEREZ, GENERAL DIOMEDIO VILLANUEVA, P/DIRECTOR
LEANDRO MENDOZA, and P/SR. SUPT. REYNALDO BERROYA, respondents.

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

G.R. No. 147810 May 10, 2001

THE LABAN NG DEMOKRATIKONG PILIPINO, petitioner,

vs.
THE DEPARTMENT OF JUSTICE, SECRETARY HERNANDO PEREZ, THE ARMED FORCES OF
THE PHILIPPINES, GENERAL DIOMEDIO VILLANUEVA, THE PHILIPPINE NATIONAL POLICE,
and DIRECTOR GENERAL LEANDRO MENDOZA, respondents.

DISSENTING OPINION

SANDOVAL-GUTIERREZ, J.:

The exercise of certain powers by the President in an atmosphere of civil unrest may sometimes
raise constitutional issues. If such powers are used arbitrarily and capriciously, they may degenerate
into the worst form of despotism.

It is on this premise that I express my dissent.

The chain of events which led to the present constitutional crisis are as follows:

On March 2, 2001, the Supreme Court rendered the landmark decision that would bar further
questions on the legitimacy of Gloria Macapagal-Arroyo's presidency. 1 In a unanimous decision, the
Court declared that Joseph Ejercito Estrada had effectively resigned his post and that Macapagal-
Arroyo is the legitimate President of the Philippines. Estrada was stripped of all his powers and
presidential immunity from suit.

Knowing that a warrant of arrest may at any time be issued against Estrada, his loyalists rushed to
his residence in Polk Street, North Greenhills Subdivision, San Juan, Metro Manila. They conducted
vigil in the vicinity swearing that no one can take away their "president."

Then the dreadful day for the Estrada loyalists came.

On April 25, 2001, the Third Division of the Sandiganbayan issued warrants of arrest against
Estrada, his son Jinggoy, Charlie "Atong" Ang, Edward Serapio, Yolanda Ricaforte, Alma Alfaro,
Eleuterio Tan and Delia Rajas.2 Emotions ran high as an estimated 10,000 Estrada loyalists, ranging
from tattooed teenagers of Tondo to well-heeled Chinese, gathered in Estrada's neighborhood. 3
Supporters turned hysterical. Newspapers captured pictures of raging men and wailing women. 4
When policemen came, riots erupted. Police had to use their batons as well as water hoses to
control the rock-throwing Estrada loyalists.5
It took the authorities about four hours to implement the warrant of arrest. At about 3:30 o'clock in
the afternoon of the same day, Philippine National Police (PNP) Chief, Director General Leandro R.
Mendoza, with the aid of PNP's Special Action Force and reinforcements from the Philippine Army
and Marines, implemented the warrant of arrest against Estrada. 6

Like a common criminal, Estrada was fingerprinted and had his mug shots taken at the detention
center of the former Presidential Anti-Organized Task Force at Camp Crame. The shabby treatment,
caught on live TV cameras nationwide, had sparked off a wave of protest all over the country. Even
international news agencies like CNN and BBC were appalled over the manner of Estrada's arrest
calling it "overkill." In a taped message aired over radio and television, Estrada defended himself and
said, "I followed the rule of law to the letter. I asked our people now to tell the powers to respect our
constitution and the rule of law."

Being loyal to the end, the supporters of Estrada followed him to Camp Crame. About 3,000 of them
massed up in front of the camp. They were shouting "Edsa Three! Edsa Three! They vowed not to
leave the place until Estrada is released. When asked how long they planned to stay, the protesters
said, "Kahit isang buwan, kahit isang taon.7

At about 6:00 o' clock in the afternoon, also of the same day, the PNP's anti-riot squads dispersed
them. Thus, they proceeded to the Edsa Shrine in Mandaluyong City where they joined forces with
hundreds more who came from North Greenhills. 8 Hordes of Estrada loyalists began gathering at the
historic shrine.

On April 27, 2001, the crowd at Edsa begun to swell in great magnitude. Estrada loyalists from
various sectors, most of them obviously belonging to the "masses," brought with them placards and
streamers denouncing the manner of arrest done to the former president. 9 In the afternoon, buses
loaded with loyalists from the nearby provinces arrived at the Edsa Shrine. One of their leaders said
that the Estrada supporters will stay at Edsa Shrine until the former president gets justice from the
present administration.10

An estimated 1,500 PNP personnel from the different parts of the metropolis were deployed to
secure the area.11 On April 28, 2001, the PNP and the Armed Forces declared a "nationwide red
alert."12 Counter-intelligence agents checked on possible defectors from the military top officials.
Several senators were linked to an alleged junta plot.

During the rally, several Puwersa Ng Masa candidates delivered speeches before the crowd. Among
those who showed up at the rally were Senators Miriam Defensor-Santiago, Gregorio Honasan,
Juan Ponce Enrile, Edgardo Angara, Vicente Sotto and former PNP Director General Panfilo Lacson
and former Ambassador Ernesto Maceda.13

On April 30, 2001, the government started to prepare its forces. A 2,000-strong military force backed
up by helicopter gunships, Scorpion tanks and armored combat vehicles stood ready to counter any
attempt by Estrada loyalists to mount a coup. And to show that it meant business, the task force
parked two MG-520 attack helicopters armed to the teeth with rockets on the parade ground at
Camp Aguinaldo, Quezon City. Also deployed were two armored personnel carriers and troops in
camouflage uniforms.14 Over 2,500 soldiers from the army, navy, and air force were formed into Task
Force Libra to quell the indignant Estrada loyalists. 15

On May 1, 2001, at about 1:30 o'clock in the morning, the huge crowd at Edsa started their march to
Malacañang.16 Along the way, they overran the barricades set up by the members of the PNP Crowd
Dispersal Control Management.17
Shortly past 5:00 o'clock in the morning of the same day, the marchers were at the gates of
Malacañang chanting, dancing, singing and waving flags. 18

At around 10:00 o'clock in the morning, the police, with the assistance of combat-ready soldiers,
conducted dispersal operations. Some members of the dispersal team were unceasingly firing their
high-powered firearms in the air, while the police, armed with truncheons and shields, were slowly
pushing the protesters away from the gates of Malacañang. Television footages showed protesters
hurling stones and rocks on the advancing policemen, shouting invectives against them and
attacking them with clubs. They burned police cars, a motorcycle, three pick-ups owned by a
television station, construction equipment and a traffic police outpost along Mendiola Street. 19 They
also attacked Red Cross vans, destroyed traffic lights, and vandalized standing structures.
Policemen were seen clubbing protesters, hurling back stones, throwing teargas under the fierce
midday sun, and firing guns towards the sky. National Security Adviser Roilo Golez said the Street
had to be bleared of rioters at all costs because "this is like an arrow, a dagger going all the way to
(Malacañang) Gate 7."20

Before noontime of that same day, the Estrada loyalists were driven away.

The violent street clashes prompted President Macapagal-Arroyo to place Metro Manila under a
"state of rebellion."

Presidential Spokesperson Rigoberto Tiglao told reporters, "We are in a state of rebellion. This is not
an ordinary demonstration."21 After the declaration, there were threats of arrests against those
suspected of instigating the march to Malacañang.

At about 3:30 o'clock in the afternoon, Senator Juan Ponce Enrile was arrested in his house in
Dasmariñas Village, Makati City by a group led by Reynaldo Berroya, Chief of the Philippine
National Police Intelligence Group. 22 Thereafter, Berroya and his men proceeded to hunt re-
electionist Senator Gregorio Honasan, former PNP Chief Panfilo Lacson, former Ambassador
Ernesto Maceda, Brig. Gen. Jake Malajakan, Senior Superintendents Michael Ray Aquino and
Cesar Mancao II, Ronald Lumbao and Cesar Tanega of the People's Movement Against Poverty
(PMAP).23 Justice Secretary Hernando Perez said that he was "studying" the possibility of placing
Senator Miriam Defensor – Santiago "under the Witness protection program."

Director Victor Batac,24 former Chief of the PNP Directorate for Police Community Relations, and
Senior Superintendent Diosdado Valeroso, of the Philippine Center for Transnational Crime,
surrendered to Berroya. Both denied having plotted the siege.

On May 2, 2001, former Ambassador Ernesto Maceda was arrested.

The above scenario presents three crucial queries: First, is President Macapagal-Arroyo's
declaration of a "state of rebellion" constitutional? Second, was the implementation of the
warrantless arrests on the basis of the declaration of a "state of rebellion" constitutional? And third,
did the rallyists commit rebellion at the vicinity of Malacañang Palace on May 1, 2001?

The first and second queries involve constitutional issues, hence, the basic yardstick is the 1987
Constitution of the Philippines. The third query requires a factual analysis of the events which
culminated in the declaration of a state of rebellion, hence, an examination of Article 134 of the
Revised Penal Code is in order.

On May 7, 2001, President Macapagal-Arroyo issued Proclamation No. 39, "DECLARING THAT
THE STATE OF REBELLION IN THE NATIONAL CAPITAL REGION HAS CEASED TO EXIST",
which in effect, has lifted the previous Proclamation No. 38.
I beg to disagree with the majority opinion in ruling that the instant petitions have been rendered
moot and academic with the lifting by the President of the declaration of a "state of rebellion".

I believe that such lifting should not render moot and academic the very serious and unprecedented
constitutional issues at hand, considering their grave implications involving the basic human rights
and civil liberties of our people. A resolution of these issues becomes all the more necessary since,
as reported in the papers, there are saturation drives (sonas) being conducted by the police wherein
individuals in Metro Manila are picked up without warrants of arrest.

Moreover, the acts sought to be declared illegal and unconstitutional are capable of being repeated
by the respondents. In Salva v. Makalintat (G.R. No. 132603, Sept. 18, 2000), this Court held that
"courts will decide a question otherwise moot and academic if it is 'capable of repetition, yet evading
review' …"

I & II – President Macapagal-Arroyo's declaration of a "state of rebellion" and the

implementation of the warrantless arrests premised on the said declaration are
unconstitutional.

Nowhere in the Constitution can be found a provision which grants upon the executive the power to
declare a "state of rebellion," much more, to exercise on the basis of such declaration the
prerogatives which a president may validly do under a state of martial law. President-Macapagal-
Arroyo committed a constitutional short cut. She disregarded the clear provisions of the Constitution
which provide:

"Sec. 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines and
whenever it becomes necessary, he may call out such armed forces to prevent or suppress lawless
violence, invasion or rebellion. In case of invasion or rebellion, when the public safety requires it, he
may, for a period not exceeding sixty days, suspend the privilege of the writ of habeas corpus or
place the Philippines or any part thereof under martial law. Within forty-eight hours from the
proclamation of martial law or the suspension of the privilege of the writ of habeas corpus, the
President shall submit a report in person or in writing to the Congress. The Congress, voting jointly,
by a vote of at least a majority of all its Members in regular or special session, may revoke such
proclamation or suspension, which revocation shall not be set aside by the President. Upon the
initiative of the President, the Congress may, in the same manner, extend such proclamation or
suspension for a period to be determined by the Congress, if the invasion or rebellion shall persist
and public safety requires it.

The Congress, if not in session, shall within twenty-four hours following such proclamation or
suspension, convene in accordance with its rules without need of a call.

The Supreme Court may review, in an appropriate proceeding filed by any citizen, the sufficiency of
the factual bases of the proclamation of martial law or the suspension of the privilege of the writ or
the extension thereof, and must promulgate its decision thereon within thirty days from its filing.

A state of martial law does not suspend the operation of the Constitution, nor supplant the
functioning of the civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on
military courts and agencies over civilians where civil courts are able to function, nor automatically
suspend the privilege of the writ.

The suspension of the privilege of the writ shall apply only to persons judicially charged for rebellion
or offenses inherent in or directly connected with invasion.
During the suspension of the privilege of the writ, any person thus arrested or detained shall be
judicially charged within three days, otherwise he shall be released." 25

Obviously, the power of the President in cases when she assumed the existence of rebellion is
properly laid down by the Constitution. I see no reason or justification for the President's deviation
from the concise and plain provisions. To accept the theory that the President could disregard the
applicable statutes, particularly that which concerns arrests, searches and seizures, on the mere
declaration of a "state of rebellion" is in effect to place the Philippines under martial law without
a declaration of the executive to that effect and without observing the proper procedure. This
should not be countenanced. In a society which adheres to the rule of law, resort to extra-
constitutional measures is unnecessary where the law has provided everything for any emergency or
contingency. For even if it may be proven beneficial for a time, the precedent it sets is pernicious as
the law may, in a little while, be disregarded again on the same pretext but for evil purposes. Even
in time of emergency, government action may vary in breath and intensity from more normal
times, yet it need not be less constitutional.26

My fear is rooted in history. Our nation had seen the rise of a dictator into power. As a matter of fact,
the changes made by the 1986 Constitutional Commission on the martial law text of the Constitution
were to a large extent a reaction against the direction which the Supreme Court took during the
regime of President Marcos.27 Now, if this Court would take a liberal view, and consider that the
declaration of a "state of rebellion" carries with it the prerogatives given to the President during a
"state of martial law," then, I say, the Court is traversing a very dangerous path. It will open the way
to those who, in the end, would turn our democracy into a totalitarian rule. History must not be
allowed to repeat itself. Any act which gears towards possible dictatorship must be severed at its
inception.

The implementation of warrantless arrests premised on the declaration of a "state of rebellion" is

unconstitutional and contrary to existing laws. The Constitution provides that "the right of the people
to be secure in their persons, houses, papers and effects against unreasonable searches and
seizure of whatever nature and for any purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to be determined personally by the judge
after examination under oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or things to be seized." 28 If a
state of martial law "does not suspend the operation of the Constitution, nor supplant the functioning
of the civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on military
courts and agencies over civilians, where civil courts are able to function, nor automatically suspend
the privilege of the writ,"28(a) then it is with more reason, that a mere declaration of a state of rebellion
could not bring about the suspension of the operation of the Constitution or of the writ of habeas
corpus.

Neither can we find the implementation of the warrantless arrests justified under the Revised Rules
on Criminal Procedure. Pertinent is Section 5, Rule 113, thus:

"Sec. 5. Arrest without warrant, when lawful. – A peace officer or a private person may, without a
warrant, arrest a person:

(a) When, in his presence, the person to be arrested has committed, is actually committing, or is
attempting to commit an offense.

(b) When an offense has just been committed and he has probable cause to believe based on
personal knowledge of facts and circumstances that the person to be arrested has committed it; and
x x x."

Petitioners cannot be considered "to have committed, is actually committing, or is attempting to

commit an offense" at the time they were hunted by Berroya for the implementation of the
warrantless arrests. None of them participated in the riot which took place in the vicinity of the
Malacañang Palace. Some of them were on their respective houses performing innocent acts such
as watching television, resting etc. The sure fact however is that they were not in the presence of
Berroya. Clearly, he did not see whether they had committed, were committing or were attempting to
commit the crime of rebellion. But of course, I cannot lose sight of the legal implication of President
Macapagal-Arroyo's declaration of a "state of rebellion." Rebellion is a continuing offense and a
suspected insurgent or rebel may be arrested anytime as he is considered to be committing the
crime. Nevertheless, assuming ex gratia argumenti that the declaration of a state of rebellion is
constitutional, it is imperative that the said declaration be reconsidered. In view of the changing
times, the dissenting opinion of the noted jurist, Justice Isagani Cruz, in Umil v. Ramos,29 quoted
below must be given a second look.

"I dissent insofar as the ponencia affirms the ruling in Garcia-Padilla vs. Enrile that subversion is a
continuing offense, to justify the arrest without warrant of any person at any time as long as the
authorities say he has been placed under surveillance on suspicion of the offense. That is a
dangerous doctrine. A person may be arrested when he is doing the most innocent acts, as when he
is only washing his hands, or taking his supper, or even when he is sleeping, on the ground that he
is committing the 'continuing' offense of subversion. Libertarians were appalled when that doctrine
was imposed during the Marcos regime. I am alarmed that even now this new Court is willing to
sustain it. I strongly urge my colleagues to discard it altogether as one of the disgraceful vestiges of
the past dictatorship and uphold the rule guaranteeing the right of the people against unreasonable
searches and seizures. We can do no less if we are really to reject the past oppression and commit
ourselves to the true freedom. Even if it be argued that the military should be given every support in
our fight against subversion, I maintain that fight must be waged honorably, in accordance with the
Bill of Rights. I do not believe that in fighting the enemy we must adopt the ways of the enemy, which
are precisely what we are fighting against. I submit that our more important motivation should be
what are we fighting for."

I need not belabor that at the time some of the suspected instigators were arrested, (the others are
still at-large), a long interval of time already passed and hence, it cannot be legally said that they had
just committed an offense. Neither can it be said that Berroya or any of his men had "personal
knowledge of facts or circumstances that the persons to be arrested have committed a crime." That
would be far from reality.

III – The acts of the rallyists at the vicinity of Malacañang Palace on May 1, 2001 do not
constitute rebellion.

Article 134 of the Revised Penal Code reads:

"ART. 134. Rebellion or insurrection – How committed. – The crime of rebellion or insurrection is
committed by rising publicly and taking arms against the Government for the purpose of removing
from the allegiance to said Government or its laws, the territory of the Republic of the Philippines or
any part thereof, of any body of land, naval or other armed forces, or depriving the Chief Executive
or the Legislature, wholly or partially, of any of their powers or prerogatives." ( As amended by RA
No. 6968, O.G. 52, p. 9864, 1990)

From the foregoing provisions, the elements o the crime of rebellion may be deduced, thus: first, that
there be (a) public uprising and (b) taking arms against the government; second, that the purpose
of the uprising or movement is either (a) to remove from the allegiance to said government or its
laws (1) the territory of the Philippines or any part thereof; or (2) anybody of land, naval or other
armed forces; or (b) to deprive the Chief Executive or Congress, wholly or partially, of any of their
powers or prerogatives.30

Looking at the events on a magnified scale, I am convinced that the two elements of the crime of
rebellion are lacking.

First, there was no "taking of arms" against the government. To my mind, "taking arms" connotes the
multitude's deliberate and conscious resort to arms or weapons for the purpose of aiding them in
accomplishing any of the purposes of rebellion. Admittedly, the Estrada loyalists pelted the
policemen with rocks and stones and attacked them with sticks and clubs, but such was merely a
result of the heightening tension between opposite camps during the period of dispersal. The stones,
rocks, sticks, clubs and other improvised weapons were not deliberately resorted to by the Estrada
loyalists to further any of the purposes of rebellion. They availed of them, at the precise moment of
dispersal (this explains why their weapons were those which could be easily gathered on the street)
and only for the purpose of stopping the policemen from dispersing them. In this age of modernity,
one who intends to overthrow the government will not only settle for stones, woods, rocks, sticks or
clubs as means to disable the government. It will be extremely pathetic and the result will only be in
vain. Unlike a true rebellion which is organized, what happened at the vicinity of Malacañang was
merely a riot, a mob violence, or a tumultuous uprising. At this juncture, it bears stressing that the
crime of rebellion is a vast movement of men and a complex net of intrigues and plots.31 It must be
distinguished from riot and offenses connected with mob violence. In rebellion/insurrection, there is
an organized and armed uprising against authority. 32

Second, the purpose of the Estrada loyalists was neither (a) to remove from the allegiance to the
government or its laws (1) the territory of the Philippines or any part thereof; or (2) any part of land,
naval or other armed forces; nor (b) to deprive the Chief Executive or Congress, wholly or partially,
of any of their powers or prerogatives. I looked at the chronology of events, and one thing surfaced –
the Estrada loyalists mainly demanded that their beloved "president" should not be incarcerated. The
crowd at Edsa swelled in great magnitude on April 25, 2001, the day Estrada was arrested. In fact,
when they followed Erap at Camp Crame, they were shouting "Edsa! Edsa! And they vowed not to
leave until Estrada is released."33

One must not be swayed by the theory of respondents that the purpose of those people who
gathered in Edsa and marched to Malacañang was to commit rebellion. For sure, there were a
thousand and one reasons why they proceeded to Edsa. In determining their purpose, one must
trace the roots, - what prompted them to go to Edsa? They were the Estrada loyalists who wanted
him to be freed. If indeed there were minorities who advocated another cause, the same should not
be considered as the prevailing one in the determination of what crime was committed. Facts should
not be stretched just to build a case of rebellion. This runs counter to the principle of due process.

As a final word, I subscribe to the principle that the rule of law implies the precept that similar cases
be treated similarly. Men can not regulate their actions by means of rule if this precept is not
followed. Edsa I, Edsa II and Edsa III are all public uprisings. Statements urging people to overthrow
the government were uttered in all these occasions. Injuries were sustained, policemen were
attacked, standing structures were vandalized… in all these scenarios, one cannot be said to be
extremely away from the other. The only difference is that the first two succeeded, while the last
failed. This should not result to an unbridled or unlimited exercise of power by the duly constituted
authorities. It is during these trying times that fealty to the Constitution is strongly demanded from all,
especially the authorities concerned.1âwphi1.nêt
WHEREFORE, I vote to give DUE COURSE to the petitions and GRANT the same and to enjoin the
respondents from arresting the petitioners in G.R. Nos. 147780, 147781, and 147799 without the
corresponding warrants.

SO ORDERED.1âwphi1.nêt

EN BANC

G.R. No. 159085 February 3, 2004

SANLAKAS, represented by REP. J.V. Bautista, and PARTIDO NG MANGGAGAWA,

represented by REP. RENATO MAGTUBO petitioners,
vs
EXECUTIVE SECRETARY SECRETARY ANGELO REYES, GENERAL NARCISO ABAYA, DIR.
GEN. HERMOGENES EBDANE, respondents.

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

G.R. No. 159103 February 3, 2004

SOCIAL JUSTICE SOCIETY (SJS) OFFICERS/MEMBERS namely, SAMSON S. ALCANTARA,

ED VINCENT S. ALBANO, RENE B. GOROSPE, EDWIN R. SANDOVAL and RODOLFO D.
MAPILE, petitioners,
vs
HON. EXECUTIVE SECRETARY ALBERTO G. ROMULO, HON. SECRETARY OF JUSTICE
SIMEON DATUMANONG, HON. SECRETARY OF NATIONAL DEFENSE ANGELO REYES, and
HON. SECRETARY JOSE LINA, JR., respondents.

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

G.R. No. 159185 February 3, 2004

REP. ROLEX T. SUPLICO, REP. CARLOS M. PADILLA, REP. CELSO L. LOBREGAT, REP.
HUSSIN U. AMIN, REP. ABRAHAM KAHLIL B. MITRA, REP. EMMYLOU J. TALINO-SANTOS,
and REP. GEORGILU R. YUMUL-HERMIDA, petitioners,
vs
PRESIDENT GLORIA MACAPAGAL-ARROYO; and EXECUTIVE SECRETARY ALBERTO G.
ROMULO, respondents.

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

G.R. No. 159196 February 3, 2004

AQUILINO Q. PIMENTEL, JR. as a Member of the Senate, petitioner,
vs
SECRETARY ALBERTO ROMULO, AS EXECUTIVE SECRETARY; SECRETARY ANGELO
REYES, AS SECRETARY OF NATIONAL DEFENSE; GENERAL NARCISO ABAYA, AS CHIEF OF
STAFF OF THE ARMED FORCES; SECRETARY JOSE LINA, et al., respondents.

DECISION

TINGA, J.:

They came in the middle of the night. Armed with high-powered ammunitions and explosives, some
three hundred junior officers and enlisted men of the Armed Forces of the Philippines (AFP) stormed
into the Oakwood Premiere apartments in Makati City in the wee hours of July 27, 2003. Bewailing
the corruption in the AFP, the soldiers demanded, among other things, the resignation of the
President, the Secretary of Defense and the Chief of the Philippine National Police (PNP). 1

In the wake of the Oakwood occupation, the President issued later in the day Proclamation No. 427
and General Order No. 4, both declaring "a state of rebellion" and calling out the Armed Forces to
suppress the rebellion. Proclamation No. 427 reads in full:

PROCLAMATION NO. 427

DECLARING A STATE OF REBELLION

WHEREAS, certain elements of the Armed Forces of the Philippines, armed with high-powered
firearms and explosives, acting upon the instigation and command and direction of known and
unknown leaders, have seized a building in Makati City, put bombs in the area, publicly declared
withdrawal of support for, and took arms against the duly constituted Government, and continue to
rise publicly and show open hostility, for the purpose of removing allegiance to the Government
certain bodies of the Armed Forces of the Philippines and the Philippine National Police, and
depriving the President of the Republic of the Philippines, wholly or partially, of her powers and
prerogatives which constitute the crime of rebellion punishable under Article 134 of the Revised
Penal Code, as amended;

WHEREAS, these misguided elements of the Armed Forces of the Philippines are being supported,
abetted and aided by known and unknown leaders, conspirators and plotters in the government
service and outside the government;
WHEREAS, under Section 18, Article VII of the present Constitution, whenever it becomes
necessary, the President, as the Commander-in-Chief of the Armed Forces of the Philippines, may
call out such Armed Forces to suppress the rebellion;

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested in me by

law, hereby confirm the existence of an actual and on-going rebellion, compelling me to declare a
state of rebellion.

In view of the foregoing, I am issuing General Order No. 4 in accordance with Section 18, Article VII
of the Constitution, calling out the Armed Forces of the Philippines and the Philippine National Police
to immediately carry out the necessary actions and measures to suppress and quell the rebellion
with due regard to constitutional rights.

General Order No. 4 is similarly worded:

GENERAL ORDER NO. 4

 DIRECTING THE ARMED FORCES OF THE PHILIPPINES AND THE PHILIPPINE NATIONAL
POLICE TO SUPPRESS REBELLION

WHEREAS, certain elements of the Armed Forces of the Philippines, armed with high-powered
firearms and explosives, acting upon the instigation and command and direction of known and
unknown leaders, have seized a building in Makati City, put bombs in the area, publicly declared
withdrawal of support for, and took arms against the duly constituted Government, and continue to
rise publicly and show open hostility, for the purpose of removing allegiance to the Government
certain bodies of the Armed Forces of the Philippines and the Philippine National Police, and
depriving the President of the Republic of the Philippines, wholly or partially, of her powers and
prerogatives which constitute the crime of rebellion punishable under Article 134 et seq. of the
Revised Penal Code, as amended;

WHEREAS, these misguided elements of the Armed Forces of the Philippines are being supported,
abetted and aided by known and unknown leaders, conspirators and plotters in the government
service and outside the government;

WHEREAS, under Section 18, Article VII of the present Constitution, whenever it becomes
necessary, the President, as the Commander-in-Chief of all Armed Forces of the Philippines, may
call out such Armed Forces to suppress the rebellion;

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, by virtue of the powers vested in me by

the Constitution as President of the Republic of the Philippines and Commander-in-Chief of all the
armed forces of the Philippines and pursuant to Proclamation No. 427 dated July 27, 2003, do
hereby call upon the Armed Forces of the Philippines and the Philippine National Police to suppress
and quell the rebellion.

I hereby direct the Chief of the Armed Forces of the Philippines and the Chief of the Philippine
National Police and the officers and men of the Armed Forces of the Philippines and the Philippine
National Police to immediately carry out the necessary and appropriate actions and measures to
suppress and quell the rebellion with due regard to constitutional rights.

By the evening of July 27, 2003, the Oakwood occupation had ended. After hours-long negotiations,
the soldiers agreed to return to barracks. The President, however, did not immediately lift the
declaration of a state of rebellion and did so only on August 1, 2003, through Proclamation No. 435:
DECLARING THAT THE STATE OF REBELLION HAS CEASED TO EXIST

WHEREAS, by virtue of Proclamation No. 427 dated July 27, 2003, a state of rebellion was
declared;

WHEREAS, by virtue of General Order No. 4 dated July 27, 2003, which was issued on the basis of
Proclamation No. 427 dated July 27, 2003, and pursuant to Article VII, Section 18 of the
Constitution, the Armed Forces of the Philippines and the Philippine National Police were directed to
suppress and quell the rebellion;

WHEREAS, the Armed Forces of the Philippines and the Philippine National Police have effectively
suppressed and quelled the rebellion.

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, by virtue of

the powers vested in me by law, hereby declare that the state of rebellion has ceased to exist.

In the interim, several petitions were filed before this Court challenging the validity of Proclamation
No. 427 and General Order No. 4.
In G.R. No. 159085 (Sanlakas and PM v. Executive Secretary, et al.),2 party-list organizations
Sanlakas and Partido ng Manggagawa (PM), contend that Section 18, Article VII of the Constitution
does not require the declaration of a state of rebellion to call out the armed forces. 3 They further
submit that, because of the cessation of the Oakwood occupation, there exists no sufficient factual
basis for the proclamation by the President of a state of rebellion for an indefinite period. 4

Petitioners in G.R. No. 159103 (SJS Officers/Members v. Hon. Executive Secretary, et al.) are
officers/members of the Social Justice Society (SJS), "Filipino citizens, taxpayers, law professors
and bar reviewers."5 Like Sanlakas and PM, they claim that Section 18, Article VII of the Constitution
does not authorize the declaration of a state of rebellion. 6 They contend that the declaration is a
"constitutional anomaly" that "confuses, confounds and misleads" because "[o]verzealous public
officers, acting pursuant to such proclamation or general order, are liable to violate the constitutional
right of private citizens."7 Petitioners also submit that the proclamation is a circumvention of the
report requirement under the same Section 18, Article VII, commanding the President to submit a
report to Congress within 48 hours from the proclamation of martial law. 8 Finally, they contend that
the presidential issuances cannot be construed as an exercise of emergency powers as Congress
has not delegated any such power to the President. 9

In G.R. No. 159185 (Rep. Suplico et al. v. President Macapagal-Arroyo and Executive Secretary
Romulo), petitioners brought suit as citizens and as Members of the House of Representatives
whose rights, powers and functions were allegedly affected by the declaration of a state of
rebellion.10 Petitioners do not challenge the power of the President to call out the Armed Forces. 11
They argue, however, that the declaration of a state of rebellion is a "superfluity," and is actually an
exercise of emergency powers.12 Such exercise, it is contended, amounts to a usurpation of the
power of Congress granted by Section 23 (2), Article VI of the Constitution. 13

In G.R. No. 159196 (Pimentel v. Romulo, et al.), petitioner Senator assails the subject presidential
issuances as "an unwarranted, illegal and abusive exercise of a martial law power that has no basis
under the Constitution."14 In the main, petitioner fears that the declaration of a state of rebellion
"opens the door to the unconstitutional implementation of warrantless arrests" for the crime of
rebellion.15

Required to comment, the Solicitor General argues that the petitions have been rendered moot by
the lifting of the declaration. 16 In addition, the Solicitor General questions the standing of the
petitioners to bring suit.17

The Court agrees with the Solicitor General that the issuance of Proclamation No. 435, declaring
that the state of rebellion has ceased to exist, has rendered the case moot. As a rule, courts do not
adjudicate moot cases, judicial power being limited to the determination of "actual controversies."18
Nevertheless, courts will decide a question, otherwise moot, if it is "capable of repetition yet evading
review."19 The case at bar is one such case.

Once before, the President on May 1, 2001 declared a state of rebellion and called upon the AFP
and the PNP to suppress the rebellion through Proclamation No. 38 and General Order No. 1. On
that occasion, "'an angry and violent mob armed with explosives, firearms, bladed weapons, clubs,
stones and other deadly weapons' assaulted and attempted to break into Malacañang." 20 Petitions
were filed before this Court assailing the validity of the President's declaration. Five days after such
declaration, however, the President lifted the same. The mootness of the petitions in Lacson v.
Perez and accompanying cases21 precluded this Court from addressing the constitutionality of the
declaration.
To prevent similar questions from reemerging, we seize this opportunity to finally lay to rest the
validity of the declaration of a state of rebellion in the exercise of the President's calling out power,
the mootness of the petitions notwithstanding.

Only petitioners Rep. Suplico et al. and Sen. Pimentel, as Members of Congress, have standing to
challenge the subject issuances. In Philippine Constitution Association v. Enriquez,22 this Court
recognized that:

To the extent the powers of Congress are impaired, so is the power of each member thereof, since
his office confers a right to participate in the exercise of the powers of that institution.

An act of the Executive which injures the institution of Congress causes a derivative but nonetheless
substantial injury, which can be questioned by a member of Congress. In such a case, any member
of Congress can have a resort to the courts.

Petitioner Members of Congress claim that the declaration of a state of rebellion by the President is
tantamount to an exercise of Congress' emergency powers, thus impairing the lawmakers' legislative
powers. Petitioners also maintain that the declaration is a subterfuge to avoid congressional scrutiny
into the President's exercise of martial law powers.

Petitioners Sanlakas and PM, and SJS Officers/Members, have no legal standing or locus standi to
bring suit. "Legal standing" or locus standi has been defined as a personal and substantial interest in
the case such that the party has sustained or will sustain direct injury as a result of the governmental
act that is being challenged…. The gist of the question of standing is whether a party alleges "such
personal stake in the outcome of the controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court depends for illumination of difficult
constitutional questions."23

Petitioners Sanlakas and PM assert that:

2. As a basic principle of the organizations and as an important plank in their programs, petitioners
are committed to assert, defend, protect, uphold, and promote the rights, interests, and welfare of
the people, especially the poor and marginalized classes and sectors of Philippine society.
Petitioners are committed to defend and assert human rights, including political and civil rights, of
the citizens.

3. Members of the petitioner organizations resort to mass actions and mobilizations in the exercise
of their Constitutional rights to peaceably assemble and their freedom of speech and of expression
under Section 4, Article III of the 1987 Constitution, as a vehicle to publicly ventilate their
grievances and legitimate demands and to mobilize public opinion to support the same. 24 [Emphasis
in the original.]

Petitioner party-list organizations claim no better right than the Laban ng Demokratikong Pilipino,
whose standing this Court rejected in Lacson v. Perez:

… petitioner has not demonstrated any injury to itself which would justify the resort to the Court.
Petitioner is a juridical person not subject to arrest. Thus, it cannot claim to be threatened by a
warrantless arrest. Nor is it alleged that its leaders, members, and supporters are being threatened
with warrantless arrest and detention for the crime of rebellion. Every action must be brought in the
name of the party whose legal rights has been invaded or infringed, or whose legal right is under
imminent threat of invasion or infringement.
At best, the instant petition may be considered as an action for declaratory relief, petitioner claiming
that it[']s right to freedom of expression and freedom of assembly is affected by the declaration of a
"state of rebellion" and that said proclamation is invalid for being contrary to the Constitution.

However, to consider the petition as one for declaratory relief affords little comfort to petitioner, this
Court not having jurisdiction in the first instance over such a petition. Section 5 [1], Article VIII of the
Constitution limits the original jurisdiction of the court to cases affecting ambassadors, other public
ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.25

Even assuming that petitioners are "people's organizations," this status would not vest them with the
requisite personality to question the validity of the presidential issuances, as this Court made clear in
Kilosbayan v. Morato:26

The Constitution provides that "the State shall respect the role of independent people's organizations
to enable the people to pursue and protect, within the democratic framework, their legitimate and
collective interests and aspirations through peaceful and lawful means," that their right to "effective
and reasonable participation at all levels of social, political, and economic decision-making shall not
be abridged." (Art. XIII, §§15-16)

These provisions have not changed the traditional rule that only real parties in interest or those with
standing, as the case may be, may invoke the judicial power. The jurisdiction of this Court, even in
cases involving constitutional questions, is limited by the "case and controversy" requirement of Art.
VIII, §5. This requirement lies at the very heart of the judicial function. It is what differentiates
decisionmaking in the courts from decisionmaking in the political departments of the government and
bars the bringing of suits by just any party.27

That petitioner SJS officers/members are taxpayers and citizens does not necessarily endow them
with standing. A taxpayer may bring suit where the act complained of directly involves the illegal
disbursement of public funds derived from taxation. 28 No such illegal disbursement is alleged.

On the other hand, a citizen will be allowed to raise a constitutional question only when he can show
that he has personally suffered some actual or threatened injury as a result of the allegedly illegal
conduct of the government; the injury is fairly traceable to the challenged action; and the injury is
likely to be redressed by a favorable action.29 Again, no such injury is alleged in this case.
Even granting these petitioners have standing on the ground that the issues they raise are of
transcendental importance, the petitions must fail.

It is true that for the purpose of exercising the calling out power the Constitution does not require the
President to make a declaration of a state of rebellion. Section 18, Article VII provides:

Sec. 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines and
whenever it becomes necessary, he may call out such armed forces to prevent or suppress
lawless violence, invasion or rebellion. In case of invasion or rebellion, when the public safety
requires it, he may, for a period not exceeding sixty days, suspend the privilege of the writ of habeas
corpus or place the Philippines or any part thereof under martial law. Within forty-eight hours from
the proclamation of martial law or the suspension of the writ of habeas corpus, the President shall
submit a report in person or in writing to the Congress. The Congress, voting jointly, by a vote of at
least a majority of all its Members in regular or special session, may revoke such proclamation or
suspension, which revocation shall not be set aside by the President. Upon the initiative of the
President, the Congress may, in the same manner, extend such proclamation or suspension for a
period to be determined by the Congress, if the invasion or rebellion shall persist and public safety
requires it.

The Congress, if not in session, shall, within twenty-four hours following such proclamation or
suspension, convene in accordance with its rules without need of a call.

The Supreme Court may review, in an appropriate proceeding filed by any citizen, the sufficiency of
the factual basis for the proclamation of martial law or the suspension of the privilege of the writ of
habeas corpus or the extension thereof, and must promulgate its decision thereon within thirty days
from its filing.

A state of martial law does not suspend the operation of the Constitution, nor supplant the
functioning of the civil courts or legislative assemblies, nor authorize the conferment of the
jurisdiction on military courts and agencies over civilians where civil courts are able to function, nor
automatically suspend the privilege of the writ.

The suspension of the privilege of the writ shall apply only to persons judicially charged for rebellion
or offenses inherent in or directly connected with invasion.

During the suspension of the privilege of the writ, any person thus arrested or detained shall be
judicially charged within three days, otherwise he shall be released. [Emphasis supplied.]

The above provision grants the President, as Commander-in-Chief, a "sequence" of "graduated

power[s]."30 From the most to the least benign, these are: the calling out power, the power to
suspend the privilege of the writ of habeas corpus, and the power to declare martial law. In the
exercise of the latter two powers, the Constitution requires the concurrence of two conditions,
namely, an actual invasion or rebellion, and that public safety requires the exercise of such power. 31
However, as we observed in Integrated Bar of the Philippines v. Zamora, 32 "[t]hese conditions are not
required in the exercise of the calling out power. The only criterion is that 'whenever it becomes
necessary,' the President may call the armed forces 'to prevent or suppress lawless violence,
invasion or rebellion.'"

Nevertheless, it is equally true that Section 18, Article VII does not expressly prohibit the President
from declaring a state of rebellion. Note that the Constitution vests the President not only with
Commander-in-Chief powers but, first and foremost, with Executive powers.

Section 1, Article VII of the 1987 Philippine Constitution states: "The executive power shall be vested
in the President…." As if by exposition, Section 17 of the same Article provides: "He shall ensure
that the laws be faithfully executed." The provisions trace their history to the Constitution of the
United States.

The specific provisions of the U.S. Constitution granting the U.S. President executive and
commander-in-chief powers have remained in their original simple form since the Philadelphia
Constitution of 1776, Article II of which states in part:

Section 1. 1. The Executive Power shall be vested in a President of the United States of America . . .
.

....

Section 2. 1. The President shall be Commander in Chief of the Army and Navy of the United States.
...

....
Section 3. … he shall take care that the laws be faithfully executed…. [Article II – Executive Power]

Recalling in historical vignettes the use by the U.S. President of the above-quoted provisions, as
juxtaposed against the corresponding action of the U.S. Supreme Court, is instructive. Clad with the
prerogatives of the office and endowed with sovereign powers, which are drawn chiefly from the
Executive Power and Commander-in-Chief provisions, as well as the presidential oath of office, the
President serves as Chief of State or Chief of Government, Commander-in-Chief, Chief of Foreign
Relations and Chief of Public Opinion.33

First to find definitive new piers for the authority of the Chief of State, as the protector of the people,
was President Andrew Jackson. Coming to office by virtue of a political revolution, Jackson, as
President not only kept faith with the people by driving the patricians from power. Old Hickory, as he
was fondly called, was the first President to champion the indissolubility of the Union by defeating
South Carolina's nullification effort.34

The Federal Tariff Acts of 1828 and 1832 that Congress enacted did not pacify the hotspurs from
South Carolina. Its State Legislature ordered an election for a convention, whose members quickly
passed an Ordinance of Nullification. The Ordinance declared the Tariff Acts unconstitutional,
prohibited South Carolina citizens from obeying them after a certain date in 1833, and threatened
secession if the Federal Government sought to oppose the tariff laws. The Legislature then
implemented the Ordinance with bristling punitive laws aimed at any who sought to pay or collect
customs duties.35

Jackson bided his time. His task of enforcement would not be easy. Technically, the President might
send troops into a State only if the Governor called for help to suppress an insurrection, which would
not occur in the instance. The President could also send troops to see to it that the laws enacted by
Congress were faithfully executed. But these laws were aimed at individual citizens, and provided no
enforcement machinery against violation by a State. Jackson prepared to ask Congress for a force
bill.36

In a letter to a friend, the President gave the essence of his position. He wrote: ". . . when a faction in
a State attempts to nullify a constitutional law of Congress, or to destroy the Union, the balance of
the people composing this Union have a perfect right to coerce them to obedience." Then in a
Proclamation he issued on December 10, 1832, he called upon South Carolinians to realize that
there could be no peaceable interference with the execution of the laws, and dared them, "disunion
by armed force is treason. Are you ready to incur its guilt?" 37

The Proclamation frightened nullifiers, non-nullifiers and tight-rope walkers. Soon, State Legislatures
began to adopt resolutions of agreement, and the President announced that the national voice from
Maine on the north to Louisiana on the south had declared nullification and accession "confined to
contempt and infamy."38

No other President entered office faced with problems so formidable, and enfeebled by personal and
political handicaps so daunting, as Abraham Lincoln.

Lincoln believed the President's power broad and that of Congress explicit and restricted, and
sought some source of executive power not failed by misuse or wrecked by sabotage. He seized
upon the President's designation by the Constitution as Commander-in-Chief, coupled it to the
executive power provision — and joined them as "the war power" which authorized him to do many
things beyond the competence of Congress.39

Lincoln embraced the Jackson concept of the President's independent power and duty under his
oath directly to represent and protect the people. In his Message of July 4, 1861, Lincoln declared
that "the Executive found the duty of employing the war power in defense of the government forced
upon him. He could not but perform the duty or surrender the existence of the Government . . . ."
This concept began as a transition device, to be validated by Congress when it assembled. In less
than two-years, it grew into an independent power under which he felt authorized to suspend the
privilege of the writ of habeas corpus, issue the Emancipation Proclamation, and restore reoccupied
States.40

Lincoln's Proclamation of April 15, 1861, called for 75,000 troops. Their first service, according to the
proclamation, would be to recapture forts, places and property, taking care "to avoid any
devastation, any destruction of or interference with property, or any disturbance of peaceful
citizens."41

Early in 1863, the U.S. Supreme Court approved President Lincoln's report to use the war powers
without the benefit of Congress. The decision was handed in the celebrated Prize Cases42 which
involved suits attacking the President's right to legally institute a blockade. Although his
Proclamation was subsequently validated by Congress, the claimants contended that under
international law, a blockade could be instituted only as a measure of war under the sovereign power
of the State. Since under the Constitution only Congress is exclusively empowered to declare war, it
is only that body that could impose a blockade and all prizes seized before the legislative declaration
were illegal. By a 5 to 4 vote, the Supreme Court upheld Lincoln's right to act as he had. 43

In the course of time, the U.S. President's power to call out armed forces and suspend the privilege
of the writ of habeas corpus without prior legislative approval, in case of invasion, insurrection, or
rebellion came to be recognized and accepted. The United States introduced the expanded
presidential powers in the Philippines through the Philippine Bill of 1902. 44 The use of the power was
put to judicial test and this Court held that the case raised a political question and said that it is
beyond its province to inquire into the exercise of the power. 45 Later, the grant of the power was
incorporated in the 1935 Constitution.46

Elected in 1884, Grover Cleveland took his ascent to the presidency to mean that it made him the
trustee of all the people. Guided by the maxim that "Public office is a public trust," which he practiced
during his incumbency, Cleveland sent federal troops to Illinois to quell striking railway workers who
defied a court injunction. The injunction banned all picketing and distribution of handbills. For leading
the strikes and violating the injunction, Debs, who was the union president, was convicted of
contempt of court. Brought to the Supreme Court, the principal issue was by what authority of the
Constitution or statute had the President to send troops without the request of the Governor of the
State.47

In In Re: Eugene Debs, et al,48 the Supreme Court upheld the contempt conviction. It ruled that it is
not the government's province to mix in merely individual present controversies. Still, so it went on,
"whenever wrongs complained of are such as affect the public at large, and are in respect of matters
which by the Constitution are entrusted to the care of the Nation and concerning which the Nation
owes the duty to all citizens of securing to them their common rights, then the mere fact that the
Government has no pecuniary interest in the controversy is not sufficient to exclude it from the
Courts, or prevent it from taking measures therein to fully discharge those constitutional duties." 49
Thus, Cleveland's course had the Court's attest.

Taking off from President Cleveland, President Theodore Roosevelt launched what political
scientists dub the "stewardship theory." Calling himself "the steward of the people," he felt that the
executive power "was limited only by the specific restrictions and prohibitions appearing in the
Constitution, or impleaded by Congress under its constitutional powers." 50
The most far-reaching extension of presidential power "T.R." ever undertook to employ was his plan
to occupy and operate Pennsylvania's coal mines under his authority as Commander-in-Chief. In the
issue, he found means other than force to end the 1902 hard-coal strike, but he had made detailed
plans to use his power as Commander-in-Chief to wrest the mines from the stubborn operators, so
that coal production would begin again.51

Eventually, the power of the State to intervene in and even take over the operation of vital utilities in
the public interest was accepted. In the Philippines, this led to the incorporation of Section 6, 52 Article
XIII of the 1935 Constitution, which was later carried over with modifications in Section 7, 53 Article
XIV of the 1973 Constitution, and thereafter in Section 18, 54 Article XII of the 1987 Constitution.

The lesson to be learned from the U.S. constitutional history is that the Commander-in-Chief powers
are broad enough as it is and become more so when taken together with the provision on executive
power and the presidential oath of office. Thus, the plenitude of the powers of the presidency equips
the occupant with the means to address exigencies or threats which undermine the very existence of
government or the integrity of the State.

In The Philippine Presidency A Study of Executive Power, the late Mme. Justice Irene R. Cortes,
proposed that the Philippine President was vested with residual power and that this is even greater
than that of the U.S. President. She attributed this distinction to the "unitary and highly centralized"
nature of the Philippine government. She noted that, "There is no counterpart of the several states of
the American union which have reserved powers under the United States constitution." Elaborating
on the constitutional basis for her argument, she wrote:

…. The [1935] Philippine [C]onstitution establishes the three departments of the government in this
manner: "The legislative power shall be vested in a Congress of the Philippines which shall consist
of a Senate and a House of Representatives." "The executive power shall be vested in a President
of the Philippines." The judicial powers shall be vested in one Supreme Court and in such inferior
courts as may be provided by law." These provisions not only establish a separation of powers by
actual division but also confer plenary legislative, executive, and judicial powers. For as the
Supreme Court of the Philippines pointed out in Ocampo v. Cabangis, "a grant of legislative power
means a grant of all the legislative power; and a grant of the judicial power means a grant of all the
judicial power which may be exercised under the government." If this is true of the legislative power
which is exercised by two chambers with a combined membership [at that time] of more than 120
and of the judicial power which is vested in a hierarchy of courts, it can equally if not more
appropriately apply to the executive power which is vested in one official – the president. He
personifies the executive branch. There is a unity in the executive branch absent from the two other
branches of government. The president is not the chief of many executives. He is the executive. His
direction of the executive branch can be more immediate and direct than the United States president
because he is given by express provision of the constitution control over all executive departments,
bureaus and offices.55

The esteemed Justice conducted her study against the backdrop of the 1935 Constitution, the
framers of which, early on, arrived at a general opinion in favor of a strong Executive in the
Philippines."56 Since then, reeling from the aftermath of martial law, our most recent Charter has
restricted the President's powers as Commander-in-Chief. The same, however, cannot be said of the
President's powers as Chief Executive.

In her ponencia in Marcos v. Manglapus, Justice Cortes put her thesis into jurisprudence. There, the
Court, by a slim 8-7 margin, upheld the President's power to forbid the return of her exiled
predecessor. The rationale for the majority's ruling rested on the President's
… unstated residual powers which are implied from the grant of executive power and which are
necessary for her to comply with her duties under the Constitution. The powers of the President are
not limited to what are expressly enumerated in the article on the Executive Department and in
scattered provisions of the Constitution. This is so, notwithstanding the avowed intent of the
members of the Constitutional Commission of 1986 to limit the powers of the President as a reaction
to the abuses under the regime of Mr. Marcos, for the result was a limitation of specific powers of the
President, particularly those relating to the commander-in-chief clause, but not a diminution of the
general grant of executive power.57 [Underscoring supplied. Italics in the original.]

Thus, the President's authority to declare a state of rebellion springs in the main from her powers as
chief executive and, at the same time, draws strength from her Commander-in-Chief powers.
Indeed, as the Solicitor General accurately points out, statutory authority for such a declaration may
be found in Section 4, Chapter 2 (Ordinance Power), Book III (Office of the President) of the Revised
Administrative Code of 1987, which states:

SEC. 4. Proclamations. – Acts of the President fixing a date or declaring a status or condition of
public moment or interest, upon the existence of which the operation of a specific law or
regulation is made to depend, shall be promulgated in proclamations which shall have the force of
an executive order. [Emphasis supplied.]

The foregoing discussion notwithstanding, in calling out the armed forces, a declaration of a state of
rebellion is an utter superfluity.58 At most, it only gives notice to the nation that such a state exists
and that the armed forces may be called to prevent or suppress it. 59 Perhaps the declaration may
wreak emotional effects upon the perceived enemies of the State, even on the entire nation. But this
Court's mandate is to probe only into the legal consequences of the declaration. This Court finds that
such a declaration is devoid of any legal significance. For all legal intents, the declaration is deemed
not written.

Should there be any "confusion" generated by the issuance of Proclamation No. 427 and General
Order No. 4, we clarify that, as the dissenters in Lacson correctly pointed out, the mere declaration
of a state of rebellion cannot diminish or violate constitutionally protected rights. 60 Indeed, if a state of
martial law does not suspend the operation of the Constitution or automatically suspend the privilege
of the writ of habeas corpus, 61 then it is with more reason that a simple declaration of a state of
rebellion could not bring about these conditions. 62 At any rate, the presidential issuances themselves
call for the suppression of the rebellion "with due regard to constitutional rights."

For the same reasons, apprehensions that the military and police authorities may resort to
warrantless arrests are likewise unfounded. In Lacson vs. Perez, supra, majority of the Court held
that "[i]n quelling or suppressing the rebellion, the authorities may only resort to warrantless arrests
of persons suspected of rebellion, as provided under Section 5, Rule 113 of the Rules of Court, 63 if
the circumstances so warrant. The warrantless arrest feared by petitioners is, thus, not based on the
declaration of a 'state of rebellion.'" 64 In other words, a person may be subjected to a warrantless
arrest for the crime of rebellion whether or not the President has declared a state of rebellion, so
long as the requisites for a valid warrantless arrest are present.

It is not disputed that the President has full discretionary power to call out the armed forces and to
determine the necessity for the exercise of such power. While the Court may examine whether the
power was exercised within constitutional limits or in a manner constituting grave abuse of
discretion, none of the petitioners here have, by way of proof, supported their assertion that the
President acted without factual basis.65
The argument that the declaration of a state of rebellion amounts to a declaration of martial law and,
therefore, is a circumvention of the report requirement, is a leap of logic. There is no indication that
military tribunals have replaced civil courts in the "theater of war" or that military authorities have
taken over the functions of civil government. There is no allegation of curtailment of civil or political
rights. There is no indication that the President has exercised judicial and legislative powers. In
short, there is no illustration that the President has attempted to exercise or has exercised martial
law powers.

Nor by any stretch of the imagination can the declaration constitute an indirect exercise of
emergency powers, which exercise depends upon a grant of Congress pursuant to Section 23 (2),
Article VI of the Constitution:

Sec. 23. (1) ….

(2) In times of war or other national emergency, the Congress may, by law, authorize the President,
for a limited period and subject to such restrictions as it may prescribe, to exercise powers
necessary and proper to carry out a declared national policy. Unless sooner withdrawn by resolution
of the Congress, such powers shall cease upon the next adjournment thereof.

The petitions do not cite a specific instance where the President has attempted to or has exercised
powers beyond her powers as Chief Executive or as Commander-in-Chief. The President, in
declaring a state of rebellion and in calling out the armed forces, was merely exercising a wedding of
her Chief Executive and Commander-in-Chief powers. These are purely executive powers, vested
on the President by Sections 1 and 18, Article VII, as opposed to the delegated legislative powers
contemplated by Section 23 (2), Article VI.

WHEREFORE, the petitions are hereby DISMISSED.

SO ORDERED.

Carpio, Corona, and Carpio-Morales, JJ., concur.

Davide, Jr., C.J., in the result.
Puno, J., in the result.
Vitug, J., see separate opinion.
Panganiban, J., see separate opinion.
Quisumbing, J., joins J. Panganiban's Opinion.
Ynares-Santiago, J., see separate opinion.
Sandoval-Gutierrez, J., please see dissenting opinion.
Austria-Martinez, J., concur in the result.
Callejo, Sr., J., concurs in the separate opinion of J. Panganiban.
Azcuna, J., on official leave.

Separate Opinions

PANGANIBAN, J.:

Petitioners challenge the constitutionality of the "state of rebellion" declared by the President through
Proclamation No. 427 and General Order No. 4 in the wake of the so-called "Oakwood Incident."
The questioned issuances, however, were subsequently lifted by her on August 1, 2003, when she
issued Proclamation No. 435. Hence, as of today, there is no more extant proclamation or order that
can be declared valid or void.

For this reason, I believe that the Petitions should be dismissed on the ground of mootness.
The judicial power to declare a law or an executive order unconstitutional, according to Justice Jose
P. Laurel, is "limited to actual cases and controversies to be exercised after full opportunity of
argument by the parties, and limited further to the constitutional question raised or the very lis mota
presented."1 Following this long-held principle, the Court has thus always been guided by these
fourfold requisites in deciding constitutional law issues: 1) there must be an actual case or
controversy involving a conflict of rights susceptible of judicial determination; 2) the constitutional
question must be raised by a proper party; 3) the constitutional question must be raised at the
earliest opportunity; and 4) adjudication of the constitutional question must be indispensable to the
resolution of the case.2

Unquestionably, the first and the forth requirements are absent in the present case.

Absence of Case and Controversy

The first requirement, the existence of a live case or controversy, means that an existing litigation is
ripe for resolution and susceptible of judicial determination; as opposed to one that is conjectural or
anticipatory,3 hypothetical or feigned. 4 A justiciable controversy involves a definite and concrete
dispute touching on the legal relations of parties having adverse legal interests. 5 Hence, it admits of
specific relief through a decree that is conclusive in character, in contrast to an opinion which only
advises what the law would be upon a hypothetical state of facts. 6

As a rule, courts have no authority to pass upon issues through advisory opinions or friendly suits
between parties without real adverse interests. 7 Neither do courts sit to adjudicate academic
questions –– no matter how intellectually challenging 8 –– because without a justiciable controversy,
an adjudication would be of no practical use or value. 9

While the Petitions herein have previously embodied a live case or controversy, they now have been
rendered extinct by the lifting of the questioned issuances. Thus, nothing is gained by breathing life
into a dead issue.

Moreover, without a justiciable controversy, the Petitions 10 have become pleas for declaratory relief,
over which the Supreme Court has no original jurisdiction. Be it remembered that they were filed
directly with this Court and thus invoked its original jurisdiction. 11

On the theory that the "state of rebellion" issue is "capable of repetition yet evading review," I
respectfully submit that the question may indeed still be resolved even after the lifting of the
Proclamation and Order, provided the party raising it in a proper case has been and/or
continue to be prejudiced or damaged as a direct result of their issuance.

In the present case, petitioners have not shown that they have been or continue to be directly and
pecuniarily prejudiced or damaged by the Proclamation and Order. Neither have they shown that this
Court has original jurisdiction over petitions for declaratory relief. I would venture to say that,
perhaps, if this controversy had emanated from an appealed judgment from a lower tribunal, then
this Court may still pass upon the issue on the theory that it is "capable of repetition yet evading
review," and the case would not be an original action for declaratory relief.

In short, the theory of "capable of repetition yet evading review" may be invoked only when this
Court has jurisdiction over the subject matter. It cannot be used in the present controversy for
declaratory relief, over which the Court has no original jurisdiction.

The Resolution of the Case on Other Grounds

The fourth requisite, which relates to the absolute necessity of deciding the constitutional issue,
means that the Court has no other way of resolving the case except by tackling an unavoidable
constitutional question. It is a well-settled doctrine that courts will not pass upon a constitutional
question unless it is the lis mota of the case, or if the case can be disposed on some other grounds. 12

With due respect, I submit that the mootness of the Petitions has swept aside the necessity of ruling
on the validity of Proclamation No. 427 and General order No. 4. In the wake of its mootness, the
constitutionality issue has ceased to be the lis mota of the case or to be an unavoidable question in
the resolution thereof. Hence, the dismissal of the Petitions for mootness is justified. 13

WHEREFORE, I vote to DISMISS the Petitions. On the constitutionality of a "state of rebellion," I

reserve my judgment at the proper time and in the proper case.

YNARES-SANTIAGO, J.:

The fundamental issue in the petitions is the legality of Proclamation No. 427 issued by the
President on July 27, 2003 declaring a "state of rebellion".

The majority affirmed the declaration is legal because the President was only exercising a wedding
of the "Chief Executive" and "Commander-in-Chief" powers. U.S. jurisprudence and commentators
are cited discussing the awesome powers exercised by the U.S. President during moments of crisis 1
and that these powers are also available to the Philippine President. 2 Although the limits cannot be
precisely defined, the majority concluded that there are enough "residual powers" to serve as the
basis to support the Presidential declaration of a "state of rebellion". 3 The majority, however,
emphasized that the declaration cannot diminish or violate constitutionally protected rights. 4 They
affirmed the legality of warrantless arrests of persons who participated in the rebellion, if
circumstances so warrant5 with this clarification: "[i]n other words, a person may be subjected to a
warrantless arrests for the crime of rebellion whether or not the President has declared a state of
rebellion, so long as the requisites for a valid warrantless arrest are present." 6

If the requisites for a warrantless arrests must still be present for an arrest to be made, then the
declaration is a superfluity. I therefore shudder when a blanket affirmation is given to the President
to issue declarations of a "state of rebellion" which in fact may not be the truth or which may be in
affect even after the rebellion has ended.

Proclamation No. 427 was issued at 1:00 p.m. on July 27, 2003, at the height of the occupation of
the Oakwood Premier Apartments in Ayala Center, Makati City, by 323 junior officers and enlisted
men (Oakwood Incident),7 which began in the early morning of July 27, 2003. 8 Shortly after, the
President issued General Order No. 4, ordering the Armed Forces of the Philippines and the
Philippine National Police to use reasonable force, and pay due regard to constitutional rights, in
putting down the rebellion. 9 The Oakwood incident ended peacefully that same evening when the
militant soldiers surrendered after negotiations.

From July 27 to August 1, 2003, "search and recovery" operations were conducted. Throughout the
Oakwood Incident, searches were conducted in the non-occupied areas, 10 and, with the recovery of
evidence, staging points for the Oakwood Incident were found in Cavite, Makati and Mandaluyong. 11
After the soldiers left at around 11:00 in the evening of July 27, a search was conducted around the
Oakwood premises.12 These searches expanded in scope on the basis of recovered evidence. 13

Ramon Cardenas, Assistant Executive Secretary in the previous administration, was arrested,
presented to the media in handcuffs and brought for inquest proceedings before the Department of
Justice ("DOJ") in the morning of July 28. 14 He was initially detained at the Office of the Anti-
Organized Crime Division of the Criminal Investigation and Detection Group ("CIDG"), and brought
to the DOJ in the afternoon of July 28. 15 Cardenas was later charged with the crime of rebellion, 16 but
as of this writing has been allowed bail.

On July 31, 2003, 4 days after the militant group had surrendered peacefully, an official
spokesperson from the DOJ declared that the President's "indefinite" imposition of the "state of
rebellion" would make "warrantless arrests" a valid exercise of executive power.

The Court can take judicial notice that the police authorities were releasing to media "evidence
found" purporting to link personalities in the political opposition, the most prominent of whom was
Senator Gringo Honasan. Even Senator Loi Ejercito and Mayor JV Ejercito's names were being
linked to the attempted uprising.

On August 1, 2003, the President issued Proclamation No. 435, declaring that the Armed Forces of
the Philippines and the Philippine National Police had effectively suppressed and quelled the
rebellion, and, accordingly, that the "state of rebellion" had ceased on that date.

The majority discussed only the abstract nature of the powers exercised by the Chief Executive,
without considering if there was sufficient factual basis for the President's declaration of a "state of
rebellion" and when it ended. In taking this position, the majority is returning, if not expanding, the
doctrine enunciated in Garcia-Padilla v. Enrile, 17 which overturned the landmark doctrine in Lansang
v. Garcia.18 In Lansang, the Supreme Court upheld its authority to inquire into the factual bases for
the suspension of the privilege of the writ of habeas corpus, and held that this inquiry raises a
judicial rather than a political question. In Garcia-Padilla, on the other hand, the ponencia held that
Lansang was no longer authoritative, and that the President's decision to suspend the privilege is
final and conclusive upon the courts and all other persons.

These two cases were decided prior to the 1987 Constitution, which requires this Court not only to
settle actual controversies involving rights which are legally demandable and enforceable, but also to
determine whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of government. 19 This provision in the 1987
Constitution was precisely meant to check abuses of executive power. Martial Law was still fresh in
the minds of the delegates in 1987!lawphi1.nêt

The majority ignored the fact that the "state of rebellion" declared by the President was in effect five
days after the peaceful surrender of the militant group.
The President's proclamation cites Section 18, Article VII of the Constitution as the basis for the
declaration of the "state of rebellion.".

Section 18 authorizes the President, as Commander-in-Chief, to call out the Armed Forces, in order
to suppress one of three conditions: (1) lawless violence, (2) rebellion or (3) invasion. 20 In the latter
two cases, i.e., rebellion or invasion, the President may, when public safety requires, also (1)
suspend the privilege of the writ of habeas corpus, or (2) place the Philippines or any part thereof
under martial law.

The majority made it clear that exercise of the President's Commander-in-Chief powers does not
require the declaration of a "state of rebellion" or a declaration of a "state of lawless violence" or a
"state of invasion". When any of these conditions exist, the President may call out the armed forces
to suppress the danger.

Thus, the declaration of a "state of rebellion" does not have any legal meaning or consequence. This
declaration does not give the President any extra powers. It does not have any good purpose.
If the declaration is used to justify warrantless arrests even after the rebellion has ended, as in the
case of Cardenas, such declaration or, at the least, the warrantless arrests, must be struck down.

Clearly defined in Article 134 of the Revised Penal Code is the crime of rebellion or insurrection, to
wit:

ART. 134. Rebellion or insurrection – How committed. – The crime of rebellion or insurrection is
committed by rising publicly and taking up arms against the Government for the purpose of removing
from the allegiance to said Government or its laws, the territory of the Republic of the Philippines or
any part thereof, of any body of land, naval or other armed forces, or depriving the Chief Executive
or the legislature, wholly or partially, of any of their powers or prerogatives.

On the other hand, a coup d' etat is defined as follows:

ART. 134-A. Coup d' etat. – How committed. – The crime of coup d' etat is a swift attack
accompanied by violence, intimidation, threat, strategy or stealth, directed against the duly
constituted authorities of the Republic of the Philippines, or any military camp or installation,
communications networks, public utilities or other facilities needed for the exercise and continued
possession of power, singly or simultaneously carried out anywhere in the Philippines by any person
or persons, belonging to the military or police or holding any public office or employment, with or
without civilian support or participation, for the purpose of seizing or diminishing state power.

Under these provisions, the crime of rebellion or insurrection is committed only by "rising publicly or
taking up arms against the Government". A coup d' etat, on the other hand, takes place only when
there is a "swift attack accompanied by violence." Once the act of "rising publicly and taking up arms
against the Government" ceases, the commission of the crime of rebellion ceases. Similarly, when
the "swift attack" ceases, the crime of coup d' etat is no longer being committed.

Rebellion has been held to be a continuing crime, 21 and the authorities may resort to warrantless
arrests of persons suspected of rebellion, as provided under Section 5, Rule 113 of the Rules of
Court.22 However, this doctrine should be applied to its proper context – i.e., relating to subversive
armed organizations, such as the New People's Army, the avowed purpose of which is the armed
overthrow of the organized and established government. Only in such instance should rebellion be
considered a continuing crime.

When the soldiers surrendered peacefully in the evening of July 27, the rebellion or the coup d' etat
ended. The President, however, did not lift the declaration of the "state of rebellion" until 5 days later,
on August 1, 2003.

After the peaceful surrender, no person suspected of having conspired with the soldiers or
participated in the Oakwood incident could be arrested without a warrant of arrest. Section 5, Rule
113 of the Revised Rules of Court, which governs arrest without warrant, provides as follows:

SEC. 5. Arrest without warrant; when lawful. – A peace officer or a private person may, without a
warrant, arrest a person:

(a) When, in his presence, the person to be arrested has committed, is actually committing, or is
attempting to commit an offense;

(b) When an offense has just been committed and he has probable cause to believe based on
personal knowledge of facts or circumstances that the person to be arrested has committed it; and

xxxxxxxxx
In cases falling under paragraphs (a) and (b) above, the person arrested without a warrant shall be
forthwith delivered to the nearest police station or jail and shall be proceeded against in accordance
with section 7 of Rule 112.

Rule 113, Section 5, pars. (a) and (b) of the Rules of Court are exceptions to the due process clause
in the Constitution. Section 5, par. (a) relates to a situation where a crime is committed or attempted
in the presence of the arresting officer.

Section 5, par. (b), on the other hand, presents the requirement of "personal knowledge", on the part
of the arresting officer, of facts indicating that an offense had "just been committed", and that the
person to be arrested had committed that offense.

After the peaceful surrender of the soldiers on July 27, 2003, there was no crime that was being
"attempted", "being committed", or "had just been committed." There should, therefore, be no
occasion to effect a valid warrantless arrest in connection with the Oakwood Incident.

The purpose of the declaration and its duration as far as the overeager authorities were concerned
was only to give legal cover to effect warrantless arrests even if the "state of rebellion" or the
instances stated in Rule 113, Section 5 of the Rules are absent or no longer exist.

Our history had shown the dangers when too much power is concentrated in the hands of one
person. Unless specifically defined, it is risky to concede and acknowledge the "residual powers" to
justify the validity of the presidential issuances. This can serve as a blank check for other issuances
and open the door to abuses. The majority cite the exercise of strong executive powers by U.S.
President Andrew Jackson. Was it not President Jackson who is said to have cynically defied the
U.S. Supreme Court's ruling (under Chief Justice Marshall) against the forcible removal of the
American Indians from the tribal lands by saying: "The Chief Justice has issued his Decision, now let
him try to enforce it?" Others quote Madison as having gone further with: "With what army will the
Chief Justice enforce his Decision?"

WHEREFORE, I vote for Proclamation No. 427 and General Order No. 4, issued on July 27, 2003 by
Respondent President Gloria Macapagal-Arroyo, to be declared NULL and VOID for having been
issued with grave abuse of discretion amounting to lack of jurisdiction. All other orders issued and
action taken based on those issuances, especially after the Oakwood incident ended in the evening
of July 27, 2003, e.g., warrantless arrests, should also be declared null and void.

Dissenting Opinion

SANDOVAL-GUTIERREZ, J.:

"Courts will decide a question otherwise moot and academic if it is 'capable of repetition, yet evading
review.'"1 On this premise, I stood apart from my colleagues in dismissing the petition in Lacson vs.
Perez.2 Their reason was that President Gloria Macapagal-Arroyo's lifting of the declaration of a
"state of rebellion" rendered moot and academic the issue of its constitutionality. Looking in
retrospect, my fear then was the repetition of the act sought to be declared unconstitutional.

No more than three (3) years have passed, and here we are again haunted by the same issue.
 I

A brief restatement of the facts is imperative.

In the wee hours of July 27, 2003, three hundred twenty-three (323) junior officers and enlisted men
of the Armed Forces of the Philippines (AFP) took over the Oakwood Premier Apartments, Ayala
Center, Makati City. Introducing themselves as the "Magdalo Group," they claimed that they went to
Oakwood to air their grievances about graft and corruption in the military, the sale of arms and
ammunitions to the "enemies" of the state, the bombings in Davao City allegedly ordered by Gen.
Victor Corpus, then Chief of the Intelligence Service of the Armed Forces of the Philippines (ISAFP),
the increased military assistance from the United States, and "micromanagement" in the AFP by
Gen. Angelo Reyes, then Secretary of the Department of National Defense. 3 The military men
demanded the resignation of the President, the Secretary of National Defense and the Chief of the
Philippine National Police.

At about 9:00 A.M. of the same day, President Arroyo gave the Magdalo Group until 5:00 P.M. to
give up their positions peacefully and return to the barracks. At around 1:00 P.M., she issued
Proclamation No. 427 and General Order No. 4 declaring the existence of a "state of rebellion" and
calling out the AFP to suppress the rebellion.

Shortly before the 5:00 P.M. deadline, President Arroyo announced an extension until 7:00 P.M.
During the two-hour reprieve, negotiations between the Magdalo Group and various personalities
took place. The rebels agreed to return to the barracks. They left the Oakwood premises at 11:00
P.M.

On July 28, 2003, Agents of the National Bureau of Investigation (NBI) searched the house owned
by Ramon Cardenas at 2177 Paraiso St., Dasmariñas Village, Makati City. After the raid and the
recovery of evidence claimed to link him to rebellion, Cardenas, accompanied by Atty. Rene
Saguisag, went to the CIDG in Camp Crame. On the same day, Cardenas was brought to the
Department of Justice for inquest proceeding. He was later charged with the crime of rebellion.

The Mandaluyong City Police likewise searched the townhouses belonging to Laarni Enriquez,
allegedly used as staging areas by the Magdalo Group.

On August 1, 2003, President Arroyo lifted her declaration of a state of rebellion through
Proclamation No. 435.
Meanwhile, on August 4, 2003, Secretary Jose Lina, Jr. of the Department of the Interior and Local
Government, forwarded to the DOJ the affidavit-complaint for coup d'etat of PC Chief
Superintendent Eduardo Matillano against Senator Gregorio Honasan, Ernesto Macahiya, George
Duldulao and several "John and Jane Does" numbering about 1,000.

On August 8, 2003, PNP Chief Inspector Jesus Fernandez of the Eastern Police District referred to
the DOJ an investigation report recommending that Enriquez and a certain Romy Escalona be
prosecuted for rebellion and insurrection.

II

I regret that I cannot give my assent to the ponencia of Mr. Justice Dante O. Tinga even as I admire
it for its lucidity and historical accuracy. The passage of time has not changed my Opinion in Lacson
vs. Perez – that President Arroyo's declaration of a "state of rebellion" is unconstitutional.

I cannot subscribe to the majority's view that the declaration of a "state of rebellion" is justified under
Article VII of the 1987 Constitution granting her "Executive" and "Commander-in-Chief" powers.
 III

Consistent with my previous stand, it is my view that nowhere in the Constitution can be found a
provision which grants to the President the authority to declare a "state of rebellion," or exercise
powers, which may be legally allowed only under a state of martial law. President Arroyo, in
declaring a "state of rebellion," deviated from the following provisions of the Constitution:

"Sec. 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines and
whenever if becomes necessary, he may call out such armed forces to prevent or suppress lawless
violence, invasion or rebellion. In case of invasion or rebellion, when the public safety requires it, he
may, for a period not exceeding sixty days, suspend the privilege of the writ of habeas corpus or
place the Philippines or any part thereof under martial law. Within forty-eight hours from the
proclamation of martial law or the suspension of the privilege of the writ of habeas corpus, the
President shall submit a report in person or in writing to the Congress. The Congress, voting jointly,
by a vote of at least a majority of all its Members in regular or special session, may revoke such
proclamation or suspension, which revocation shall not be set aside by the President. Upon the
initiative of the President, the Congress may, in the same manner, extend such proclamation or
suspension for a period to be determined by the Congress, if the invasion or rebellion shall persist
and public safety requires it.

The Congress, if not in session, shall within twenty-four hours following such proclamation or
suspension, convene in accordance with its rules without need of a call. lawphil.net

The Supreme Court may review, in an appropriate proceeding filed by any citizen, the sufficiency of
the factual bases of the proclamation of martial law or the suspension of the privilege of the writ or
the extension thereof, and must promulgate its decision thereon within thirty days from its filing.

A state of martial law does not suspend the operation of the Constitution, nor supplant the
functioning of the civil courts or legislative assemblies, nor authorize the conferment of jurisdiction on
military courts and agencies over civilians where civil courts are able to function, nor automatically
suspend the privilege of the writ.

The suspension of the privilege of the writ shall apply only to persons judicially charged for rebellion
or offenses inherent in or directly connected with invasion.

During the suspension of the privilege of the writ, any person thus arrested or detained shall be
judicially charged within three days, otherwise he shall be released." 4

The powers of the President when she assumed the existence of rebellion are laid down by the
Constitution. She may (1) call the armed forces to prevent or suppress lawless violence, invasion or
rebellion; (2) suspend the privilege of the writ of habeas corpus; or (3) place the Philippines or any
part thereof under martial law. Now, why did President Arroyo declare a "state of rebellion" when she
has no such power under the Constitution?

If President Arroyo's only purpose was merely to exercise her "calling out power," then she could
have simply ordered the AFP to prevent or suppress what she perceived as an invasion or rebellion.
Such course raises no constitutional objection, it being provided for by the above-quoted provisions.
However, adopting an unorthodox measure unbounded and not canalized by the language of the
Constitution is dangerous. It leaves the people at her mercy and that of the military, ignorant of their
rights under the circumstances and wary of their settled expectations. One good illustration is
precisely in the case of invasion or rebellion. Under such situation, the President has the power to
suspend the privilege of the writ of habeas corpus or to declare martial law. Such power is not a
plenary one, as shown by the numerous limitations imposed thereon by the Constitution, some of
which are: (1) the public safety requires it; (2) it does not exceed sixty (60) days; (3) within forty-eight
(48) hours, she shall submit a report, in writing or in person, to Congress; (4) The Congress, by a
vote of at least a majority of all its members, may revoke such proclamation or suspension. All these
limitations form part of the citizens' settled expectations. If the President exceeds the set limitations,
the citizens know that they may resort to this Court through appropriate proceeding to question the
sufficiency of the factual bases of the proclamation of martial law or the suspension of the privilege
of the writ. In turn, this Court shall promulgate its Decision within thirty days from the filing of the
proper pleading. All the foregoing guarantees and limitations are absent in the declaration of a "state
of rebellion." It is not subject to clear legal restraints. How then can the citizens determine the
propriety of the President's acts committed pursuant to such declaration? How can excess of power
be curtailed at its inception?

Indeed, I see no reason for the President to deviate from the concise and plain provisions of the
Constitution. In a society which adheres to the rule of law, resort to extra-constitutional measures is
unnecessary where the law has provided everything for any emergency or contingency. For even if it
may be proven beneficial for a time, the precedent it sets is pernicious as the law may, in a little
while, be disregarded again on the same pretext but for questionable purposes. Even in time of
emergency, government action may vary in breath and intensity from more normal times, yet it need
not be less constitutional. 5 Extraordinary conditions may call for extraordinary remedies. But it cannot
justify action which lies outside the sphere of constitutional authority. Extraordinary conditions do not
create or enlarge constitutional power.6

I cannot simply close my eyes to the dangers that lurk behind the seemingly harmless declaration of
a "state of rebellion." Still fresh from my memory is the May 1, 2001 civil unrest. On such date,
President Arroyo placed Metro Manila under a "state of rebellion" because of the violent street
clashes involving the loyalists of former President Joseph Estrada and the police authorities.
Presidential Spokesperson Rigoberto Tiglao told reporters, "We are in a state of rebellion. This is not
an ordinary demonstration." 7 Immediately thereafter, there were threats of arrests against those
suspected of instigating the march to Malacañang. At about 3:30 in the afternoon, Senator Juan
Ponce Enrile was arrested in his house in Dasmariñas Village, Makati City by a group led by Gen.
Reynaldo Berroya, Chief of the Philippine National Police Intelligence Group. 8 Thereafter, he and his
men proceeded to hunt re-electionist Senator Gregorio Honasan, former PNP Chief, now Senator
Panfilo Lacson, former Ambassador Ernesto Maceda, Brig. Gen. Jake Malajakan, Senior
Superintendents Michael Ray Aquino and Cesar Mancao II, Ronald Lumbao and Cesar Tanega of
the People's Movement Against Poverty (PMAP).9 Former Justice Secretary Hernando Perez said
that he was "studying" the possibility of placing Senator Miriam Defensor-Santiago "under the
Witness Protection Program." Director Victor Batac, former Chief of the PNP Directorate for Police
Community Relations, and Senior Superintendent Diosdado Valeroso, of the Philippine Center for
Transnational Crime, surrendered to Gen. Berroya. Both denied having plotted the siege. On May 2,
2001, former Ambassador Ernesto Maceda was arrested.

On President Arroyo's mere declaration of a "state of rebellion," police authorities arrested without
warrants the above-mentioned personalities. In effect, she placed the Philippines under martial law
without a declaration to that effect and without observing the proper procedure. This is a very
dangerous precedent. The Constitution provides that "the right of the people to be secure in their
persons, houses, papers and effects against unreasonable searches and seizure of whatever nature
and for any purpose shall be inviolable, and no search warrant or warrant of arrest shall issue except
upon probable cause to be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be seized." 10 Obviously, violation of this
constitutional provision cannot be justified by reason of the declaration of a "state of rebellion" for
such declaration, as earlier mentioned, is unconstitutional.

Even under Section 5, Rule 113 of the Revised Rules on Criminal Procedure 11 the warrantless
arrests effected by President Arroyo's men are not justified. The above-mentioned personalities
cannot be considered "to have committed, are actually committing, or are attempting to commit an
offense" at the time they were arrested without warrants. None of them participated in the riot which
took place in the vicinity of the Malacañang Palace. Some of them were in their respective houses
performing innocent acts. The sure fact is –– they were not in the presence of Gen. Berroya. Clearly,
he did not see whether they had committed, were committing or were attempting to commit the crime
of rebellion.12 It bears mentioning that at the time some of the suspected instigators were arrested, a
long interval of time already passed and hence, it cannot be legally said that they had just committed
an offense. Neither can it be said that Gen. Berroya or any of his men had "personal knowledge of
facts or circumstances that the persons to be arrested have committed a crime." That would be far
from reality.1awphil.net

The circumstances that arose from President Arroyo's resort to the declaration of a "state of
rebellion" to suppress what she perceived as the May 1, 2001 rebellion are the very evils that we
should prevent from happening again. This can only be done if we strike such unusual measure as
unconstitutional.

Significantly, while the Oakwood event ended peacefully on the night of July 27, 2003, President
Arroyo's declaration of a "state of rebellion" continued until the lifting thereof on August 1, 2003. This
means that although the alleged rebellion had ceased, the President's declaration continued to be in
effect. As it turned out, several searches and seizures took place during the extended period.

Generally, the power of the President in times of war, invasion or rebellion and during other
emergency situations should be exercised jointly with Congress. This is to insure the correctness
and propriety of authorizing our armed forces to quell such hostilities. Such collective judgment is to
be effected by "heightened consultation" between the President and Congress. Thus, as can be
gleaned from the provisions of the Constitution, when the President proclaims martial law or
suspends the privilege of the writ, he shall "submit a report in person or in writing to the Congress.
The Congress, voting jointly, by a vote of at least a majority of all its Members in regular or special
session, may revoke such proclamation or suspension, which revocation shall not be set aside by
the President." Not only that, Section 23, Article VI of the Constitution provides that: "The Congress,
by a vote of two-thirds of both Houses in joint session assembled, voting separately, shall have the
sole power to declare the existence of a state of war. In times of war or other national emergency,
the Congress may, by law, authorize the President, for a limited period and subject to such
restrictions as it may prescribe, to exercise powers necessary and proper to carry out a declared
national policy." Clearly, the Constitution has not extended excessive authority in military, defense
and emergency matters to the President. Though the President is designated as the Commander-in-
Chief of all armed forces of the Philippines, the textual reed does not suffice to support limitless
authority. Born by the nation's past experiences, the concurrence of the Congress is required as a
measure to ward-off totalitarian rule. By declaring a "state of rebellion," President Arroyo effectively
disregarded such concurrent power of Congress. At this point, let it be stressed that the
accumulation of both the executive and legislative powers in the same hands constitutes the very
definition of tyranny.

By sustaining the unusual course taken by President Arroyo, we are traversing a very dangerous
path. We are opening the way to those who, in the end, would turn our democracy into a totalitarian
rule. While it may not plunge us straightway into dictatorship, however, it is a step towards a wrong
direction. History must not be allowed to repeat itself. Any act which gears towards possible
dictatorship must be severed at its inception. As I have stated in my previous dissent, our nation had
seen the rise of a dictator into power. As a matter of fact, the changes made by the 1986
Constitutional Commission in the martial law text of the Constitution were to a large extent a reaction
against the direction which this Court took during the regime of President Marcos. 13 In ruling that the
declaration of a "state of rebellion" is a prerogative of the President, then, I say, our country is
tracing the same dangerous road of the past.

IV

The majority cited U.S. cases in support of their stand that the President's proclamation of "state of
rebellion" is in accordance with the Constitutional provisions granting her "powers as chief
executive." I find that In re Debs14 and Prize Cases15 illustrate an executive power much larger than is
indicated by the rudimentary constitutional provisions. Clearly, these cases cannot support the
majority's conclusion that: "The lesson to be learned from the U.S. constitutional history is that the
Commander-in-Chief powers are broad enough as it is and become more so when taken together
with the provision on executive power and the presidential oath of office. Thus, the plenitude of the
powers of the presidency equips the occupant with the means to address exigencies or threats
which undermine the very existence of government or the integrity of the State."

There are reasons why I find the above conclusion of the majority naccurate. From a survey of U.S.
jurisprudence, the outstanding fact remains that every specific proposal to confer uncontrollable
power upon the President is rejected. 16 In re Debs,17 the U.S. Supreme Court Decision upheld the
power of President Grover Cleveland to prevent the strike of railway workers on the ground that it
threatened interference with interstate commerce and with the free flow of mail. The basic theory
underlying this case – that the President has inherent power to act for the nation in cases of major
public need – was eroded by the Youngstown Sheet & Tube Co. vs. Sawyer, also known as the
Steel Seizure Case.18 This case aroused great public interest, largely because of its important
implications concerning the boundaries of presidential powers. The seven separate opinions consist
of 128 pages in the Reports and contain a great deal of important date on the powers of the Chief
Executive. The same case demonstrates well that executive powers, even during an alleged
emergency, may still be subject to judicial control. The decision constitutes a "dramatic vindication"
of the American constitutional government. 19 Mr. Justice Andrew Jackson, concurring in the
judgment and opinion of the Court, eloquently expounded on the "executive" and "commander-in-
chief" powers, thus:

"The Solicitor general seeks the power of seizure in three clauses of the Executive Article, the first
reading, 'The executive Power shall be vested in a President of the United States of America.' Lest I
be thought to exaggerate, I quote the interpretation which his brief puts upon it: 'In our view, this
clause constitutes a grant of all the executive powers of which the Government is capable.' If that be
true, it is difficult to see why the forefathers bothered to add several specific items, including some
trifling ones.

The example of such unlimited executive power that must have most impressed the forefathers was
the prerogative exercised by George III, and the description of its evils in the Declaration of
Independence leads me to doubt that they were creating their new Executive in his image.
Continental European examples were no more appealing. And if we seek instruction from our own
times, we can match it only from the executive powers in those governments were disparingly
describe as totalitarian. I cannot accept the view that this clause is a grant in bulk of all conceivable
executive powers but regard it as an allocation to the presidential office of the generic powers
thereafter stated.
The clause on which the Government next relies is that 'The President shall be Commander in Chief
of the Army and Navy of the United States…' These cryptic words have given rise to some of the
most persistent controversies in our constitutional history. Of course, they imply something more
than an empty title. But just what authority goes with the name has plagued presidential advisers
who would not waive or narrow it by non-assertion yet cannot say where it begins or ends.

xxxxxx

The third clause in which the Solicitor General finds seizure powers is that 'he shall take care that
the laws be faithfully executed…' That authority must be matched against words of the Fifth
Amendment that 'No person shall be…deprived of life, liberty or property, without due process of
law…' One gives a governmental authority that reaches so far as there is law, the other gives a
private right that authority shall go no farther. These signify about all there is of the principle that
ours is a governmental of laws, not of men, and that we submit ourselves to rulers only if under
rules."

Further, Mr. Justice Jackson referred to the discussion of inherent executive powers as "loose and
irresponsible use of adjectives." His wrath could be seen as reserved for those who use the word
"inherent" to mean "unlimited."20 Thus:

"The Solicitor General lastly grounds support of the seizure upon nebulous, inherent powers never
expressly granted but said to have accrued to the office from the customs and claims of preceding
administrations. The plea is for a resulting power to deal with a crisis or an emergency according to
the necessities of the case, the unarticulated assumption being that necessity knows no law.

Loose and irresponsible use of adjectives colors all non-legal and much legal discussion of
presidential powers. 'Inherent' powers, 'implied' powers, 'incidental' powers, 'plenary' powers, 'war'
powers and 'emergency' powers are used, often interchangeably and without fixed or ascertainable
meanings.

The vagueness and generality of the clauses that set forth presidential powers afford a plausible
basis for pressures within and without an administration for presidential action beyond that
supported by those whose responsibility it is to defend his actions in court. The claim of inherent and
unrestricted presidential powers has long been a persuasive dialectical weapon in political
controversy. While it is not surprising that counsel should grasp support from such unadjudicated
claims of power, a judge cannot accept self-serving press statements of the attorney for one of the
interested parties as authority in answering a constitutional question, even if the advocate was
himself. But prudence has counseled that actual reliance on such nebulous claims stop short of
provoking a judicial test…"

In re Debs also received a serious blow in United States vs. United States District Court. 21 The
Supreme Court Justices unanimously rejected the inherent executive authority to engage in
warrantless electronic surveillance in domestic security cases. Thus, where a substantial personal
interest in life, liberty or property is threatened by presidential action, In re Debs is regarded more as
an anachronism than authority.

In Prizes Cases, by a vote of 5 to 4, the U.S. Supreme Court upheld President Abraham Lincoln's
authority to impose a blockade. Under the U.S. Constitution, only Congress, empowered to declare a
war, could impose a blockade. It must be emphasized, however, that there is a distinction between
the role of the U.S. President in domestic affairs and in foreign affairs. The patterns in the foreign
and domestic realms are quite different. The federal regulation of domestic affairs has its
constitutional origins in the people and the states, and its initiation is allocated primarily to Congress
(not the Executive). The constitutional role for the executive in domestic matters is thus largely
ancillary to that of Congress.22 Thus, while it is recognized that executive power is predominant in
foreign affairs, it is not so in the domestic sphere. This distinction should be considered in invoking
U.S. jurisprudence.

Clearly, the trail of U.S. jurisprudence does not support the view that the "Executive and
Commander-in-Chief clauses" of the Constitution grant the President such broad power as to give
her the option of disregarding the other restrictive provisions of the Constitution. The purpose of the
Constitution is not only to grant power, but to keep it from getting out of hand. The policy should be
–– where the Constitution has laid down specific procedures on how the President should deal with
a crisis, it is imperative that he must follow those procedures in meeting the crisis. These procedures
serve as limitations to what would otherwise be an unbounded exercise of power.

In fine, may I state that every presidential claim to a power must be scrutinized with caution, for what
is at stake is the equilibrium established by our constitutional system. The powers of the President
are not as particularized as are those of Congress. Enumerated powers do not include undefined
powers, as what the majority would want to point out. I state once more that there is no provision in
our Constitution authorizing the President to declare "a state of rebellion." Not even the constitutional
powers vested upon her include such power.

WHEREFORE, I vote to GRANT the petitions. Proclamation No. 427 and General Order No. 4 are
declared UNCONSTITUTIONAL.
 Republic of the Philippines
SUPREME COURT

EN BANC

G.R. No. 164978 October 13, 2005

AQUILINO Q. PIMENTEL, JR., EDGARDO J. ANGARA, JUAN PONCE ENRILE, LUISA P.

EJERCITO-ESTRADA, JINGGOY E. ESTRADA, PANFILO M. LACSON, ALFREDO S. LIM,
JAMBY A.S. MADRIGAL, and SERGIO R. OSMEÑA III, Petitioners
vs.
EXEC. SECRETARY EDUARDO R. ERMITA, FLORENCIO B. ABAD, AVELINO J. CRUZ, JR.,
MICHAEL T. DEFENSOR, JOSEPH H. DURANO, RAUL M. GONZALEZ, ALBERTO G. ROMULO,
RENE C. VILLA, and ARTHUR C. YAP, Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for certiorari and prohibition1 with a prayer for the issuance of a writ of preliminary
injunction to declare unconstitutional the appointments issued by President Gloria Macapagal-Arroyo
("President Arroyo") through Executive Secretary Eduardo R. Ermita ("Secretary Ermita") to
Florencio B. Abad, Avelino J. Cruz, Jr., Michael T. Defensor, Joseph H. Durano, Raul M. Gonzalez,
Alberto G. Romulo, Rene C. Villa, and Arthur C. Yap ("respondents") as acting secretaries of their
respective departments. The petition also seeks to prohibit respondents from performing the duties
of department secretaries.

Antecedent Facts

The Senate and the House of Representatives ("Congress") commenced their regular session on 26
July 2004. The Commission on Appointments, composed of Senators and Representatives, was
constituted on 25 August 2004.

Meanwhile, President Arroyo issued appointments 2 to respondents as acting secretaries of their

respective departments.

Appointee, Department, Date of Appointment

Arthur C. Yap, Agriculture, 15 August 2004

Alberto G. Romulo, Foreign Affairs, 23 August 2004

Raul M. Gonzalez, Justice, 23 August 2004

Florencio B. Abad, Education, 23 August 2004

Avelino J. Cruz, Jr., National Defense, 23 August 2004

Rene C. Villa, Agrarian Reform, 23 August 2004

Joseph H. Durano, Tourism, 23 August 2004

Michael T. Defensor, Environment and Natural Resources, 23 August 2004

The appointment papers are uniformly worded as follows:

Sir:

Pursuant to the provisions of existing laws, you are hereby appointed ACTING SECRETARY,
DEPARTMENT OF (appropriate department) vice (name of person replaced).

By virtue hereof, you may qualify and enter upon the performance of the duties and functions of the
office, furnishing this Office and the Civil Service Commission with copies of your Oath of Office.

(signed)

Gloria Arroyo

Respondents took their oath of office and assumed duties as acting secretaries.

On 8 September 2004, Aquilino Q. Pimentel, Jr. ("Senator Pimentel"), Edgardo J. Angara ("Senator
Angara"), Juan Ponce Enrile ("Senator Enrile"), Luisa P. Ejercito-Estrada ("Senator Ejercito-
Estrada"), Jinggoy E. Estrada ("Senator Estrada"), Panfilo M. Lacson ("Senator Lacson"), Alfredo S.
Lim ("Senator Lim"), Jamby A.S. Madrigal ("Senator Madrigal"), and Sergio R. Osmeña, III ("Senator
Osmeña") ("petitioners") filed the present petition as Senators of the Republic of the Philippines.

Congress adjourned on 22 September 2004. On 23 September 2004, President Arroyo issued ad

interim appointments3 to respondents as secretaries of the departments to which they were
previously appointed in an acting capacity. The appointment papers are uniformly worded as follows:

Sir:

Pursuant to the provisions of existing laws, you are hereby appointed SECRETARY [AD INTERIM],
DEPARTMENT OF (appropriate department).

By virtue hereof, you may qualify and enter upon the performance of the duties and functions of the
office, furnishing this Office and the Civil Service Commission with copies of your oath of office.

(signed)

Gloria Arroyo

Issue

The petition questions the constitutionality of President Arroyo’s appointment of respondents as

acting secretaries without the consent of the Commission on Appointments while Congress is in
session.

The Court’s Ruling

The petition has no merit.

Preliminary Matters

On the Mootness of the Petition

The Solicitor General argues that the petition is moot because President Arroyo had extended to
respondents ad interim appointments on 23 September 2004 immediately after the recess of
Congress.
As a rule, the writ of prohibition will not lie to enjoin acts already done. 4 However, as an exception to
the rule on mootness, courts will decide a question otherwise moot if it is capable of repetition yet
evading review.5

In the present case, the mootness of the petition does not bar its resolution. The question of the
constitutionality of the President’s appointment of department secretaries in an acting capacity while
Congress is in session will arise in every such appointment.

On the Nature of the Power to Appoint

The power to appoint is essentially executive in nature, and the legislature may not interfere with the
exercise of this executive power except in those instances when the Constitution expressly allows it
to interfere.6 Limitations on the executive power to appoint are construed strictly against the
legislature.7 The scope of the legislature’s interference in the executive’s power to appoint is limited
to the power to prescribe the qualifications to an appointive office. Congress cannot appoint a
person to an office in the guise of prescribing qualifications to that office. Neither may Congress
impose on the President the duty to appoint any particular person to an office. 8

However, even if the Commission on Appointments is composed of members of Congress, the

exercise of its powers is executive and not legislative. The Commission on Appointments does not
legislate when it exercises its power to give or withhold consent to presidential appointments. Thus:

xxx The Commission on Appointments is a creature of the Constitution. Although its membership is
confined to members of Congress, said Commission is independent of Congress. The powers of the
Commission do not come from Congress, but emanate directly from the Constitution. Hence, it is not
an agent of Congress. In fact, the functions of the Commissioner are purely executive in nature. xxx 9

On Petitioners’ Standing

The Solicitor General states that the present petition is a quo warranto proceeding because, with the
exception of Secretary Ermita, petitioners effectively seek to oust respondents for unlawfully
exercising the powers of department secretaries. The Solicitor General further states that petitioners
may not claim standing as Senators because no power of the Commission on Appointments has
been "infringed upon or violated by the President. xxx If at all, the Commission on Appointments as a
body (rather than individual members of the Congress) may possess standing in this case." 10

Petitioners, on the other hand, state that the Court can exercise its certiorari jurisdiction over
unconstitutional acts of the President. 11 Petitioners further contend that they possess standing
because President Arroyo’s appointment of department secretaries in an acting capacity while
Congress is in session impairs the powers of Congress. Petitioners cite Sanlakas v. Executive
Secretary12 as basis, thus:

To the extent that the powers of Congress are impaired, so is the power of each member thereof,
since his office confers a right to participate in the exercise of the powers of that institution.

An act of the Executive which injures the institution of Congress causes a derivative but nonetheless
substantial injury, which can be questioned by a member of Congress. In such a case, any member
of Congress can have a resort to the courts.

Considering the independence of the Commission on Appointments from Congress, it is error for
petitioners to claim standing in the present case as members of Congress. President Arroyo’s
issuance of acting appointments while Congress is in session impairs no power of Congress. Among
the petitioners, only the following are members of the Commission on Appointments of the 13th
Congress: Senator Enrile as Minority Floor Leader, Senator Lacson as Assistant Minority Floor
Leader, and Senator Angara, Senator Ejercito-Estrada, and Senator Osmeña as members.

Thus, on the impairment of the prerogatives of members of the Commission on Appointments, only
Senators Enrile, Lacson, Angara, Ejercito-Estrada, and Osmeña have standing in the present
petition. This is in contrast to Senators Pimentel, Estrada, Lim, and Madrigal, who, though vigilant in
protecting their perceived prerogatives as members of Congress, possess no standing in the present
petition.

The Constitutionality of President Arroyo’s Issuance

of Appointments to Respondents as Acting Secretaries

Petitioners contend that President Arroyo should not have appointed respondents as acting
secretaries because "in case of a vacancy in the Office of a Secretary, it is only an Undersecretary
who can be designated as Acting Secretary." 13 Petitioners base their argument on Section 10,
Chapter 2, Book IV of Executive Order No. 292 ("EO 292"), 14 which enumerates the powers and
duties of the undersecretary. Paragraph 5 of Section 10 reads:

SEC. 10. Powers and Duties of the Undersecretary. - The Undersecretary shall:

xxx

(5) Temporarily discharge the duties of the Secretary in the latter’s absence or inability to discharge
his duties for any cause or in case of vacancy of the said office, unless otherwise provided by law.
Where there are more than one Undersecretary, the Secretary shall allocate the foregoing powers
and duties among them. The President shall likewise make the temporary designation of Acting
Secretary from among them; and

xxx

Petitioners further assert that "while Congress is in session, there can be no appointments, whether
regular or acting, to a vacant position of an office needing confirmation by the Commission on
Appointments, without first having obtained its consent." 15

In sharp contrast, respondents maintain that the President can issue appointments in an acting
capacity to department secretaries without the consent of the Commission on Appointments even
while Congress is in session. Respondents point to Section 16, Article VII of the 1987 Constitution.
Section 16 reads:

SEC. 16. The President shall nominate and, with the consent of the Commission on Appointments,
appoint the heads of the executive departments, ambassadors, other public ministers and consuls,
or officers of the armed forces from the rank of colonel or naval captain, and other officers whose
appointments are vested in him in this Constitution. He shall also appoint all other officers of the
Government whose appointments are not otherwise provided for by law, and those whom he may be
authorized by law to appoint. The Congress may, by law, vest the appointment of other officers lower
in rank in the President alone, in the courts, or in the heads of departments, agencies, commissions,
or boards.

The President shall have the power to make appointments during the recess of the Congress,
whether voluntary or compulsory, but such appointments shall be effective only until disapproval by
the Commission on Appointments or until the next adjournment of the Congress.
Respondents also rely on EO 292, which devotes a chapter to the President’s power of appointment.
Sections 16 and 17, Chapter 5, Title I, Book III of EO 292 read:

SEC. 16. Power of Appointment. — The President shall exercise the power to appoint such
officials as provided for in the Constitution and laws.

SEC. 17. Power to Issue Temporary Designation. — (1) The President may temporarily designate
an officer already in the government service or any other competent person to perform the
functions of an office in the executive branch, appointment to which is vested in him by law,
when: (a) the officer regularly appointed to the office is unable to perform his duties by
reason of illness, absence or any other cause; or (b) there exists a vacancy[.]

(2) The person designated shall receive the compensation attached to the position, unless he is
already in the government service in which case he shall receive only such additional compensation
as, with his existing salary, shall not exceed the salary authorized by law for the position filled. The
compensation hereby authorized shall be paid out of the funds appropriated for the office or agency
concerned.

(3) In no case shall a temporary designation exceed one (1) year. (Emphasis supplied)

Petitioners and respondents maintain two diametrically opposed lines of thought. Petitioners assert
that the President cannot issue appointments in an acting capacity to department secretaries while
Congress is in session because the law does not give the President such power. In contrast,
respondents insist that the President can issue such appointments because no law prohibits such
appointments.

The essence of an appointment in an acting capacity is its temporary nature. It is a stop-gap

measure intended to fill an office for a limited time until the appointment of a permanent occupant to
the office.16 In case of vacancy in an office occupied by an alter ego of the President, such as the
office of a department secretary, the President must necessarily appoint an alter ego of her choice
as acting secretary before the permanent appointee of her choice could assume office.

Congress, through a law, cannot impose on the President the obligation to appoint automatically the
undersecretary as her temporary alter ego. An alter ego, whether temporary or permanent, holds a
position of great trust and confidence. Congress, in the guise of prescribing qualifications to an
office, cannot impose on the President who her alter ego should be.
The office of a department secretary may become vacant while Congress is in session. Since a
department secretary is the alter ego of the President, the acting appointee to the office must
necessarily have the President’s confidence. Thus, by the very nature of the office of a department
secretary, the President must appoint in an acting capacity a person of her choice even while
Congress is in session. That person may or may not be the permanent appointee, but practical
reasons may make it expedient that the acting appointee will also be the permanent appointee.

The law expressly allows the President to make such acting appointment. Section 17, Chapter 5,
Title I, Book III of EO 292 states that "[t]he President may temporarily designate an officer already in
the government service or any other competent person to perform the functions of an office in the
executive branch." Thus, the President may even appoint in an acting capacity a person not yet in
the government service, as long as the President deems that person competent.

Petitioners assert that Section 17 does not apply to appointments vested in the President by the
Constitution, because it only applies to appointments vested in the President by law. Petitioners
forget that Congress is not the only source of law. "Law" refers to the Constitution, statutes or acts of
Congress, municipal ordinances, implementing rules issued pursuant to law, and judicial decisions. 17

Finally, petitioners claim that the issuance of appointments in an acting capacity is susceptible to
abuse. Petitioners fail to consider that acting appointments cannot exceed one year as expressly
provided in Section 17(3), Chapter 5, Title I, Book III of EO 292. The law has incorporated this
safeguard to prevent abuses, like the use of acting appointments as a way to circumvent
confirmation by the Commission on Appointments.

In distinguishing ad interim appointments from appointments in an acting capacity, a noted textbook

writer on constitutional law has observed:

Ad-interim appointments must be distinguished from appointments in an acting capacity. Both of

them are effective upon acceptance. But ad-interim appointments are extended only during a recess
of Congress, whereas acting appointments may be extended any time there is a vacancy. Moreover
ad-interim appointments are submitted to the Commission on Appointments for confirmation or
rejection; acting appointments are not submitted to the Commission on Appointments. Acting
appointments are a way of temporarily filling important offices but, if abused, they can also be a way
of circumventing the need for confirmation by the Commission on Appointments. 18

However, we find no abuse in the present case. The absence of abuse is readily apparent from
President Arroyo’s issuance of ad interim appointments to respondents immediately upon the recess
of Congress, way before the lapse of one year.

WHEREFORE, we DISMISS the present petition for certiorari and prohibition.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

HILARIO G. DAVIDE, JR.

Chief Justice

REYNATO S. PUNOAssociate Justice, ARTEMIO V. PANGANIBANAssociate Justice,

LEONARDO A. QUISUMBINGAssociate Justice, CONSUELO YNARES-SANTIAGOAssociate

Justice,

ANGELINA SANDOVAL-GUTIERREZAssociate Justice, MA. ALICIA AUSTRIA-

MARTINEZAssociate Justice,

RENATO C. CORONAAssociate Justice, CONCHITA CARPIO MORALESAssociate Justice,

ROMEO J. CALLEJO, SR.Associate Justice, ADOLFO S. AZCUNAAssociate Justice,

DANTE O. TINGAAssociate Justice, MINITA V. CHICO-NAZARIOAssociate Justice,

HILARIO G. DAVIDE, JR.

Chief Justice

CANCIO C. GARCIA
 Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in
the above Decision were reached in consultation before the case was assigned to the writer of the
opinion of the Court.

HILARIO G. DAVIDE, JR.

Chief Justice

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 96541 August 24, 1993

DEAN JOSE JOYA, CARMEN GUERRERO NAKPIL, ARMIDA SIGUION REYNA, PROF.
RICARTE M. PURUGANAN, IRMA POTENCIANO, ADRIAN CRISTOBAL, INGRID SANTAMARIA,
CORAZON FIEL, AMBASSADOR E. AGUILAR CRUZ, FLORENCIO R. JACELA, JR., MAURO
MALANG, FEDERICO AGUILAR ALCUAZ, LUCRECIA R. URTULA, SUSANO GONZALES,
STEVE SANTOS, EPHRAIM SAMSON, SOLER SANTOS, ANG KIU KOK, KERIMA POLOTAN,
LUCRECIA KASILAG, LIGAYA DAVID PEREZ, VIRGILIO ALMARIO, LIWAYWAY A. ARCEO,
CHARITO PLANAS, HELENA BENITEZ, ANNA MARIA L. HARPER, ROSALINDA OROSA,
SUSAN CALO MEDINA, PATRICIA RUIZ, BONNIE RUIZ, NELSON NAVARRO, MANDY
NAVASERO, ROMEO SALVADOR, JOSEPHINE DARANG, and PAZ VETO PLANAS, petitioners,
vs.
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), CATALINO MACARAIG, JR.,
in his official capacity, and/or the Executive Secretary, and CHAIRMAN MATEO A.T. CAPARAS,
respondents.

M.M. Lazaro & Associates for petitioners.

The Solicitor General for respondents.

BELLOSILLO, J.:

All thirty-five (35) petitioners in this Special Civil Action for Prohibition and Mandamus with Prayer for
Preliminary Injunction and/or Restraining Order seek to enjoin the Presidential Commission on Good
Government (PCGG) from proceeding with the auction sale scheduled on 11 January 1991 by
Christie's of New York of the Old Masters Paintings and 18th and 19th century silverware seized
from Malacañang and the Metropolitan Museum of Manila and placed in the custody of the Central
Bank.

The antecedents: On 9 August 1990, Mateo A.T. Caparas, then Chairman of PCGG, wrote then
President Corazon C. Aquino, requesting her for authority to sign the proposed Consignment
Agreement between the Republic of the Philippines through PCGG and Christie, Manson and
Woods International, Inc. (Christie's of New York, or CHRISTIE'S) concerning the scheduled sale on
11 January 1991 of eighty-two (82) Old Masters Paintings and antique silverware seized from
Malacañang and the Metropolitan Museum of Manila alleged to be part of the ill-gotten wealth of the
late President Marcos, his relatives and cronies.

On 14 August 1990, then President Aquino, through former Executive Secretary Catalino Macaraig,
Jr., authorized Chairman Caparas to sign the Consignment Agreement allowing Christie's of New
York to auction off the subject art pieces for and in behalf of the Republic of the Philippines.

On 15 August 1990, PCGG, through Chairman Caparas, representing the Government of the
Republic of the Philippines, signed the Consignment Agreement with Christie's of New York.
According to the agreement, PCGG shall consign to CHRISTIE'S for sale at public auction the
eighty-two (82) Old Masters Paintings then found at the Metropolitan Museum of Manila as well as
the silverware contained in seventy-one (71) cartons in the custody of the Central Bank of the
Philippines, and such other property as may subsequently be identified by PCGG and accepted by
CHRISTIE'S to be subject to the provisions of the agreement. 1

On 26 October 1990, the Commission on Audit (COA) through then Chairman Eufemio C. Domingo
submitted to President Aquino the audit findings and observations of COA on the Consignment
Agreement of 15 August 1990 to the effect that: (a) the authority of former PCGG Chairman Caparas
to enter into the Consignment Agreement was of doubtful legality; (b) the contract was highly
disadvantageous to the government; (c) PCGG had a poor track record in asset disposal by auction
in the U.S.; and, (d) the assets subject of auction were historical relics and had cultural significance,
hence, their disposal was prohibited by law. 2

On 15 November 1990, PCGG through its new Chairman David M. Castro, wrote President Aquino
defending the Consignment Agreement and refuting the allegations of COA Chairman Domingo. On 3

the same date, Director of National Museum Gabriel S. Casal issued a certification that the items
subject of the Consignment Agreement did not fall within the classification of protected cultural
properties and did not specifically qualify as part of the Filipino cultural heritage. Hence, this petition
4

originally filed on 7 January 1991 by Dean Jose Joya, Carmen Guerrero Nakpil, Armida Siguion
Reyna, Prof. Ricarte M. Puruganan, Irma Potenciano, Adrian Cristobal, Ingrid Santamaria, Corazon
Fiel, Ambassador E. Aguilar Cruz, Florencio R. Jacela, Jr., Mauro Malang, Federico Aguilar Alcuaz,
Lucrecia R. Urtula, Susano Gonzales, Steve Santos, Ephraim Samson, Soler Santos, Ang Kiu Kok,
Kerima Polotan, Lucrecia Kasilag, Ligaya David Perez, Virgilio Almario and Liwayway A. Arceo.

After the oral arguments of the parties on 9 January 1991, we issued immediately our resolution
denying the application for preliminary injunction to restrain the scheduled sale of the artworks on
the ground that petitioners had not presented a clear legal right to a restraining order and that proper
parties had not been impleaded.

On 11 January 1991, the sale at public auction proceeded as scheduled and the proceeds of
$13,302,604.86 were turned over to the Bureau of Treasury. 5

On 5 February 1991, on motion of petitioners, the following were joined as additional petitioners:
Charito Planas, Helena Benitez, Ana Maria L. Harper, Rosalinda Orosa, Susan Carlo Medina,
Patricia Ruiz, Bonnie Ruiz, Nelson Navarro, Mandy Navasero, Romeo Salvador, Josephine Darang
and Paz Veto Planas.

On the other hand, Catalino Macaraig, Jr., in his capacity as former Executive Secretary, the
incumbent Executive Secretary, and Chairman Mateo A.T. Caparas were impleaded as additional
respondents.

Petitioners raise the following issues: (a) whether petitioners have legal standing to file the instant
petition; (b) whether the Old Masters Paintings and antique silverware are embraced in the phrase
"cultural treasure of the nation" which is under the protection of the state pursuant to the 1987
Constitution and/or "cultural properties" contemplated under R.A. 4846, otherwise known as "The
Cultural Properties Preservation and Protection Act;" (c) whether the paintings and silverware are
properties of public dominion on which can be disposed of through the joint concurrence of the
President and Congress;
(d) whether respondent, PCGG has the jurisdiction and authority to enter into an agreement with
Christie's of New York for the sale of the artworks; (e) whether, PCGG has complied with the due
process clause and other statutory requirements for the exportation and sale of the subject items;
and, (f) whether the petition has become moot and academic, and if so, whether the above issues
warrant resolution from this Court.

The issues being interrelated, they will be discussed jointly hereunder. However, before proceeding,
we wish to emphasize that we admire and commend petitioners' zealous concern to keep and
preserve within the country great works of art by well-known old masters. Indeed, the value of art
cannot be gainsaid. For, by serving as a creative medium through which man can express his
innermost thoughts and unbridled emotions while, at the same time, reflecting his deep-seated
ideals, art has become a true expression of beauty, joy, and life itself. Such artistic creations give us
insights into the artists' cultural heritage — the historic past of the nation and the era to which they
belong — in their triumphant, glorious, as well as troubled and turbulent years. It must be for this
reason that the framers of the 1987 Constitution mandated in Art. XIV, Sec. 14, that is the solemn
duty of the state to "foster the preservation, enrichment, and dynamic evolution of a Filipino national
culture based on the principle of unity in diversity in a climate of free artistic and intellectual
expression." And, in urging this Court to grant their petition, petitioners invoke this policy of the state
on the protection of the arts.

But, the altruistic and noble purpose of the petition notwithstanding, there is that basic legal question
which must first be resolved: whether the instant petition complies with the legal requisites for this
Court to exercise its power of judicial review over this case.

The rule is settled that no question involving the constitutionality or validity of a law or governmental
act may be heard and decided by the court unless there is compliance with the legal requisites for
judicial inquiry, namely: that the question must be raised by the proper party; that there must be an
actual case or controversy; that the question must be raised at the earliest possible opportunity; and,
that the decision on the constitutional or legal question must be necessary to the determination of
the case itself. But the most important are the first two (2) requisites.
6

On the first requisite, we have held that one having no right or interest to protect cannot invoke the
jurisdiction of the court as party-plaintiff in an
action. This is premised on Sec. 2, Rule 3, of the Rules of Court which provides that every action
7

must be prosecuted and defended in the name of the real party-in-interest, and that all persons
having interest in the subject of the action and in obtaining the relief demanded shall be joined as
plaintiffs. The Court will exercise its power of judicial review only if the case is brought before it by a
party who has the legal standing to raise the constitutional or legal question. "Legal standing" means
a personal and substantial interest in the case such that the party has sustained or will sustain direct
injury as a result of the governmental act that is being challenged. The term "interest" is material
interest, an interest in issue and to be affected by the decree, as distinguished from mere interest in
the question involved, or a mere incidental interest. Moreover, the interest of the party plaintiff must
8

be personal and not one based on a desire to vindicate the constitutional right of some third and
related party.9

There are certain instances however when this Court has allowed exceptions to the rule on legal
standing, as when a citizen brings a case for mandamus to procure the enforcement of a public duty
for the fulfillment of a public right recognized by the Constitution, and when a taxpayer questions
10

the validity of a governmental act authorizing the disbursement of public funds. 11

Petitioners claim that as Filipino citizens, taxpayers and artists deeply concerned with the
preservation and protection of the country's artistic wealth, they have the legal personality to restrain
respondents Executive Secretary and PCGG from acting contrary to their public duty to conserve the
artistic creations as mandated by the 1987 Constitution, particularly Art. XIV, Secs. 14 to 18, on Arts
and Culture, and R.A. 4846 known as "The Cultural Properties Preservation and Protection Act,"
governing the preservation and disposition of national and important cultural properties. Petitioners
also anchor their case on the premise that the paintings and silverware are public properties
collectively owned by them and by the people in general to view and enjoy as great works of art.
They allege that with the unauthorized act of PCGG in selling the art pieces, petitioners have been
deprived of their right to public property without due process of law in violation of the Constitution. 12

Petitioners' arguments are devoid of merit. They lack basis in fact and in law. They themselves
allege that the paintings were donated by private persons from different parts of the world to the
Metropolitan Museum of Manila Foundation, which is a non-profit and non-stock corporations
established to promote non-Philippine arts. The foundation's chairman was former First Lady Imelda
R. Marcos, while its president was Bienvenido R. Tantoco. On this basis, the ownership of these
paintings legally belongs to the foundation or corporation or the members thereof, although the
public has been given the opportunity to view and appreciate these paintings when they were placed
on exhibit.

Similarly, as alleged in the petition, the pieces of antique silverware were given to the Marcos couple
as gifts from friends and dignitaries from foreign countries on their silver wedding and anniversary,
an occasion personal to them. When the Marcos administration was toppled by the revolutionary
government, these paintings and silverware were taken from Malacañang and the Metropolitan
Museum of Manila and transferred to the Central Bank Museum. The confiscation of these
properties by the Aquino administration however should not be understood to mean that the
ownership of these paintings has automatically passed on the government without complying with
constitutional and statutory requirements of due process and just compensation. If these properties
were already acquired by the government, any constitutional or statutory defect in their acquisition
and their subsequent disposition must be raised only by the proper parties — the true owners
thereof — whose authority to recover emanates from their proprietary rights which are protected by
statutes and the Constitution. Having failed to show that they are the legal owners of the artworks or
that the valued pieces have become publicly owned, petitioners do not possess any clear legal right
whatsoever to question their alleged unauthorized disposition.

Further, although this action is also one of mandamus filed by concerned citizens, it does not fulfill
the criteria for a mandamus suit. In Legaspi v. Civil Service Commission, this Court laid down the
13

rule that a writ of mandamus may be issued to a citizen only when the public right to be enforced
and the concomitant duty of the state are unequivocably set forth in the Constitution. In the case at
bar, petitioners are not after the fulfillment of a positive duty required of respondent officials under
the 1987 Constitution. What they seek is the enjoining of an official act because it is constitutionally
infirmed. Moreover, petitioners' claim for the continued enjoyment and appreciation by the public of
the artworks is at most a privilege and is unenforceable as a constitutional right in this action for
mandamus.

Neither can this petition be allowed as a taxpayer's suit. Not every action filed by a taxpayer can
qualify to challenge the legality of official acts done by the government. A taxpayer's suit can prosper
only if the governmental acts being questioned involve disbursement of public funds upon the theory
that the expenditure of public funds by an officer of the state for the purpose of administering an
unconstitutional act constitutes a misapplication of such funds, which may be enjoined at the request
of a taxpayer. Obviously, petitioners are not challenging any expenditure involving public funds but
14

the disposition of what they allege to be public properties. It is worthy to note that petitioners admit
that the paintings and antique silverware were acquired from private sources and not with public
money.

Anent the second requisite of actual controversy, petitioners argue that this case should be resolved
by this Court as an exception to the rule on moot and academic cases; that although the sale of the
paintings and silver has long been consummated and the possibility of retrieving the treasure trove is
nil, yet the novelty and importance of the issues raised by the petition deserve this Court's attention.
They submit that the resolution by the Court of the issues in this case will establish future guiding
principles and doctrines on the preservation of the nation's priceless artistic and cultural possessions
for the benefit of the public as a whole.
15

For a court to exercise its power of adjudication, there must be an actual case of controversy — one
which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial
resolution; the case must not be moot or academic or based on extra-legal or other similar
considerations not cognizable by a court of justice. A case becomes moot and academic when its
16
purpose has become stale, such as the case before us. Since the purpose of this petition for
17

prohibition is to enjoin respondent public officials from holding the auction sale of the artworks on a
particular date — 11 January 1991 — which is long past, the issues raised in the petition have
become moot and academic.

At this point, however, we need to emphasize that this Court has the discretion to take cognizance of
a suit which does not satisfy the requirements of an actual case or legal standing when paramount
public interest is involved. We find however that there is no such justification in the petition at bar to
18

warrant the relaxation of the rule.

Section 2 of R.A. 4846, as amended by P.D. 374, declares it to be the policy of the state to preserve
and protect the important cultural properties and national cultural treasures of the nation and to
safeguard their intrinsic value. As to what kind of artistic and cultural properties are considered by
the State as involving public interest which should therefore be protected, the answer can be
gleaned from reading of the reasons behind the enactment of R.A. 4846:

WHEREAS, the National Museum has the difficult task, under existing laws and regulations,
of preserving and protecting the cultural properties of the nation;

WHEREAS, inumerable sites all over the country have since been excavated for cultural relics,
which have passed on to private hands, representing priceless cultural treasure that properly
belongs to the Filipino people as their heritage;

WHEREAS, it is perhaps impossible now to find an area in the Philippines, whether government or
private property, which has not been disturbed by commercially-minded diggers and collectors,
literally destroying part of our historic past;

WHEREAS, because of this the Philippines has been charged as incapable of preserving and
protecting her cultural legacies;

WHEREAS, the commercialization of Philippine relics from the contact period, the Neolithic Age, and
the Paleolithic Age, has reached a point perilously placing beyond reach of savants the study and
reconstruction of Philippine prehistory; and

WHEREAS, it is believed that more stringent regulation on movement and a limited form of
registration of important cultural properties and of designated national cultural treasures is
necessary, and that regardless of the item, any cultural property exported or sold locally must be
registered with the National Museum to control the deplorable situation regarding our national
cultural properties and to implement the Cultural Properties Law (emphasis supplied).

Clearly, the cultural properties of the nation which shall be under the protection of the state are
classified as the "important cultural properties" and the "national cultural treasures." "Important
cultural properties" are cultural properties which have been singled out from among the innumerable
cultural properties as having exceptional historical cultural significance to the Philippines but are not
sufficiently outstanding to merit the classification of national cultural treasures. On the other hand,
19

a "national cultural treasures" is a unique object found locally, possessing outstanding historical,
cultural, artistic and/or scientific value which is highly significant and important to this country and
nation. This Court takes note of the certification issued by the Director of the Museum that the
20

Italian paintings and silverware subject of this petition do not constitute protected cultural properties
and are not among those listed in the Cultural Properties Register of the National Museum.

We agree with the certification of the Director of the Museum. Under the law, it is the Director of the
Museum who is authorized to undertake the inventory, registration, designation or classification, with
the aid of competent experts, of important cultural properties and national cultural treasures. 21

Findings of administrative officials and agencies who have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not only respect but at times even
finality if such findings are supported by substantial evidence and are controlling on the reviewing
authorities because of their acknowledged expertise in the fields of specialization to which they are
assigned. 22

In view of the foregoing, this Court finds no compelling reason to grant the petition. Petitioners have
failed to show that respondents Executive Secretary and PCGG exercised their functions with grave
abuse of discretion or in excess of their jurisdiction.

WHEREFORE, for lack of merit, the petition for prohibition and mandamus is DISMISSED.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon,
Melo, Quiason, Puno and Vitug, JJ., concur.
 EN BANC

G.R. No. 155001 May 5, 2003

DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL

ANTONIO B. BOÑE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON,
CONRADO G. DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C.
HILARIO, MIASCOR WORKERS UNION - NATIONAL LABOR UNION (MWU-NLU), and
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS and
SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the Department of
Transportation and Communications, respondents,
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS
CORPORATION, MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES AIRPORT
SERVICES CORPORATION, MIASCOR CATERING SERVICES CORPORATION, MIASCOR
AIRCRAFT MAINTENANCE CORPORATION, and MIASCOR LOGISTICS CORPORATION,
petitioners-in-intervention,

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

G.R. No. 155547 May 5, 2003

SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners,

vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT
OF PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as
Head of the Department of Transportation and Communications, and SECRETARY SIMEON A.
DATUMANONG, in his capacity as Head of the Department of Public Works and Highways,
respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON
VILLARAMA, PROSPERO C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON,
and BENASING O. MACARANBON, respondents-intervenors,

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

G.R. No. 155661 May 5, 2003

CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V.

GAERLAN, LEONARDO DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN RONALD
SCHLOBOM, ANGELITO SANTOS, MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA
SA PALIPARAN NG PILIPINAS (SMPP), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY
LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and
Communications, respondents.

PUNO, J.:

Petitioners and petitioners-in-intervention filed the instant petitions for prohibition under Rule 65 of
the Revised Rules of Court seeking to prohibit the Manila International Airport Authority (MIAA) and
the Department of Transportation and Communications (DOTC) and its Secretary from implementing
the following agreements executed by the Philippine Government through the DOTC and the MIAA
and the Philippine International Air Terminals Co., Inc. (PIATCO): (1) the Concession Agreement
signed on July 12, 1997, (2) the Amended and Restated Concession Agreement dated November
26, 1999, (3) the First Supplement to the Amended and Restated Concession Agreement dated
August 27, 1999, (4) the Second Supplement to the Amended and Restated Concession Agreement
dated September 4, 2000, and (5) the Third Supplement to the Amended and Restated Concession
Agreement dated June 22, 2001 (collectively, the PIATCO Contracts).

The facts are as follows:

In August 1989, the DOTC engaged the services of Aeroport de Paris (ADP) to conduct a
comprehensive study of the Ninoy Aquino International Airport (NAIA) and determine whether the
present airport can cope with the traffic development up to the year 2010. The study consisted of two
parts: first, traffic forecasts, capacity of existing facilities, NAIA future requirements, proposed master
plans and development plans; and second, presentation of the preliminary design of the passenger
terminal building. The ADP submitted a Draft Final Report to the DOTC in December 1989.

Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun, Henry
Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V. Ramos to
explore the possibility of investing in the construction and operation of a new international airport
terminal. To signify their commitment to pursue the project, they formed the Asia's Emerging Dragon
Corp. (AEDC) which was registered with the Securities and Exchange Commission (SEC) on
September 15, 1993.

On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the
DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT III) under a
build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA 7718 (BOT Law). 1

On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the Prequalification
Bids and Awards Committee (PBAC) for the implementation of the NAIA IPT III project.

On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to the
National Economic and Development Authority (NEDA). A revised proposal, however, was
forwarded by the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA
Investment Coordinating Council (NEDA ICC) – Technical Board favorably endorsed the project to
the ICC – Cabinet Committee which approved the same, subject to certain conditions, on January
19, 1996. On February 13, 1996, the NEDA passed Board Resolution No. 2 which approved the
NAIA IPT III project.

On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an
invitation for competitive or comparative proposals on AEDC's unsolicited proposal, in accordance
with Sec. 4-A of RA 6957, as amended. The alternative bidders were required to submit three (3)
sealed envelopes on or before 5:00 p.m. of September 20, 1996. The first envelope should contain
the Prequalification Documents, the second envelope the Technical Proposal, and the third envelope
the Financial Proposal of the proponent.

On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid Documents
and the submission of the comparative bid proposals. Interested firms were permitted to obtain the
Request for Proposal Documents beginning June 28, 1996, upon submission of a written application
and payment of a non-refundable fee of P50,000.00 (US$2,000).

The Bid Documents issued by the PBAC provided among others that the proponent must have
adequate capability to sustain the financing requirement for the detailed engineering, design,
construction, operation, and maintenance phases of the project. The proponent would be evaluated
based on its ability to provide a minimum amount of equity to the project, and its capacity to secure
external financing for the project.

On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid conference
on July 29, 1996.

On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The
following amendments were made on the Bid Documents:

a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its financial
proposal an additional percentage of gross revenue share of the Government, as follows:

i. First 5 5.0
years %
ii. Next 7.5
10 %
years
iii. Next 10.
10 0
years %
b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price challenge.
Proponent may offer an Annual Guaranteed Payment which need not be of equal amount, but
payment of which shall start upon site possession.

c. The project proponent must have adequate capability to sustain the financing requirement for the
detailed engineering, design, construction, and/or operation and maintenance phases of the project
as the case may be. For purposes of pre-qualification, this capability shall be measured in terms of:

i. Proof of the availability of the project proponent and/or the consortium to provide the
minimum amount of equity for the project; and

ii. a letter testimonial from reputable banks attesting that the project proponent and/or the members
of the consortium are banking with them, that the project proponent and/or the members are of good
financial standing, and have adequate resources.

d. The basis for the prequalification shall be the proponent's compliance with the minimum technical
and financial requirements provided in the Bid Documents and the IRR of the BOT Law. The
minimum amount of equity shall be 30% of the Project Cost.

e. Amendments to the draft Concession Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponent's proposal.
On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications were
made. Upon the request of prospective bidder People's Air Cargo & Warehousing Co., Inc
(Paircargo), the PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and
Regulations of the BOT Law, only the proposed Annual Guaranteed Payment submitted by the
challengers would be revealed to AEDC, and that the challengers' technical and financial proposals
would remain confidential. The PBAC also clarified that the list of revenue sources contained in
Annex 4.2a of the Bid Documents was merely indicative and that other revenue sources may be
included by the proponent, subject to approval by DOTC/MIAA. Furthermore, the PBAC clarified that
only those fees and charges denominated as Public Utility Fees would be subject to regulation, and
those charges which would be actually deemed Public Utility Fees could still be revised, depending
on the outcome of PBAC's query on the matter with the Department of Justice.

In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers to the Queries of
PAIRCARGO as Per Letter Dated September 3 and 10, 1996." Paircargo's queries and the PBAC's
responses were as follows:

1. It is difficult for Paircargo and Associates to meet the required minimum equity requirement as
prescribed in Section 8.3.4 of the Bid Documents considering that the capitalization of each member
company is so structured to meet the requirements and needs of their current respective business
undertaking/activities. In order to comply with this equity requirement, Paircargo is requesting PBAC
to just allow each member of (sic) corporation of the Joint Venture to just execute an agreement that
embodies a commitment to infuse the required capital in case the project is awarded to the Joint
Venture instead of increasing each corporation's current authorized capital stock just for
prequalification purposes.

In prequalification, the agency is interested in one's financial capability at the time of prequalification,
not future or potential capability.

A commitment to put up equity once awarded the project is not enough to establish that "present"
financial capability. However, total financial capability of all member companies of the Consortium, to
be established by submitting the respective companies' audited financial statements, shall be
acceptable.

2. At present, Paircargo is negotiating with banks and other institutions for the extension of a
Performance Security to the joint venture in the event that the Concessions Agreement (sic) is
awarded to them. However, Paircargo is being required to submit a copy of the draft concession as
one of the documentary requirements. Therefore, Paircargo is requesting that they'd (sic) be
furnished copy of the approved negotiated agreement between the PBAC and the AEDC at the
soonest possible time.

A copy of the draft Concession Agreement is included in the Bid Documents. Any material changes
would be made known to prospective challengers through bid bulletins. However, a final version will
be issued before the award of contract.

The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents
(Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the
required Bid Security.

On September 20, 1996, the consortium composed of People's Air Cargo and Warehousing Co., Inc.
(Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank)
(collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On
September 23, 1996, the PBAC opened the first envelope containing the prequalification documents
of the Paircargo Consortium. On the following day, September 24, 1996, the PBAC prequalified the
Paircargo Consortium.

On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the
Paircargo Consortium, which include:

a. The lack of corporate approvals and financial capability of PAIRCARGO;

b. The lack of corporate approvals and financial capability of PAGS;

c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount that
Security Bank could legally invest in the project;

d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for prequalification
purposes; and

e. The appointment of Lufthansa as the facility operator, in view of the Philippine requirement in the
operation of a public utility.

The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues
raised by the latter, and that based on the documents submitted by Paircargo and the established
prequalification criteria, the PBAC had found that the challenger, Paircargo, had prequalified to
undertake the project. The Secretary of the DOTC approved the finding of the PBAC.

The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium
which contained its Technical Proposal.

On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargo's financial
capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and
Sections 1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries.
On October 7, 1996, AEDC again manifested its objections and requested that it be furnished with
excerpts of the PBAC meeting and the accompanying technical evaluation report where each of the
issues they raised were addressed.

On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the Paircargo
Consortium containing their respective financial proposals. Both proponents offered to build the
NAIA Passenger Terminal III for at least $350 million at no cost to the government and to pay the
government: 5% share in gross revenues for the first five years of operation, 7.5% share in gross
revenues for the next ten years of operation, and 10% share in gross revenues for the last ten years
of operation, in accordance with the Bid Documents. However, in addition to the foregoing, AEDC
offered to pay the government a total of P135 million as guaranteed payment for 27 years while
Paircargo Consortium offered to pay the government a total of P17.75 billion for the same period.

Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by the
Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which to
match the said bid, otherwise, the project would be awarded to Paircargo.

As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado
Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDC's
failure to match the proposal.

On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport
Terminals Co., Inc. (PIATCO).
AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its
objections as regards the prequalification of PIATCO.

On April 11, 1997, the DOTC submitted the concession agreement for the second-pass approval of
the NEDA-ICC.

On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for Declaration of
Nullity of the Proceedings, Mandamus and Injunction against the Secretary of the DOTC, the
Chairman of the PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity
as Chairman of the PBAC Technical Committee.

On April 17, 1997, the NEDA-ICC conducted an ad referendum to facilitate the approval, on a no-
objection basis, of the BOT agreement between the DOTC and PIATCO. As the ad referendum
gathered only four (4) of the required six (6) signatures, the NEDA merely noted the agreement.

On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO.

On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO,
through its President, Henry T. Go, signed the "Concession Agreement for the Build-Operate-and-
Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III" (1997
Concession Agreement). The Government granted PIATCO the franchise to operate and maintain
the said terminal during the concession period and to collect the fees, rentals and other charges in
accordance with the rates or schedules stipulated in the 1997 Concession Agreement. The
Agreement provided that the concession period shall be for twenty-five (25) years commencing from
the in-service date, and may be renewed at the option of the Government for a period not exceeding
twenty-five (25) years. At the end of the concession period, PIATCO shall transfer the development
facility to MIAA.

On November 26, 1998, the Government and PIATCO signed an Amended and Restated
Concession Agreement (ARCA). Among the provisions of the 1997 Concession Agreement that
were amended by the ARCA were: Sec. 1.11 pertaining to the definition of "certificate of completion";
Sec. 2.05 pertaining to the Special Obligations of GRP; Sec. 3.02 (a) dealing with the exclusivity of
the franchise given to the Concessionaire; Sec. 4.04 concerning the assignment by Concessionaire
of its interest in the Development Facility; Sec. 5.08 (c) dealing with the proceeds of
Concessionaire's insurance; Sec. 5.10 with respect to the temporary take-over of operations by
GRP; Sec. 5.16 pertaining to the taxes, duties and other imposts that may be levied on the
Concessionaire; Sec. 6.03 as regards the periodic adjustment of public utility fees and charges; the
entire Article VIII concerning the provisions on the termination of the contract; and Sec. 10.02
providing for the venue of the arbitration proceedings in case a dispute or controversy arises
between the parties to the agreement.

Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First
Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and
the Third Supplement on June 22, 2001 (collectively, Supplements).

The First Supplement to the ARCA amended Sec. 1.36 of the ARCA defining "Revenues" or "Gross
Revenues"; Sec. 2.05 (d) of the ARCA referring to the obligation of MIAA to provide sufficient funds
for the upkeep, maintenance, repair and/or replacement of all airport facilities and equipment which
are owned or operated by MIAA; and further providing additional special obligations on the part of
GRP aside from those already enumerated in Sec. 2.05 of the ARCA. The First Supplement also
provided a stipulation as regards the construction of a surface road to connect NAIA Terminal II and
Terminal III in lieu of the proposed access tunnel crossing Runway 13/31; the swapping of
obligations between GRP and PIATCO regarding the improvement of Sales Road; and the changes
in the timetable. It also amended Sec. 6.01 (c) of the ARCA pertaining to the Disposition of Terminal
Fees; Sec. 6.02 of the ARCA by inserting an introductory paragraph; and Sec. 6.02 (a) (iii) of the
ARCA referring to the Payments of Percentage Share in Gross Revenues.

The Second Supplement to the ARCA contained provisions concerning the clearing, removal,
demolition or disposal of subterranean structures uncovered or discovered at the site of the
construction of the terminal by the Concessionaire. It defined the scope of works; it provided for the
procedure for the demolition of the said structures and the consideration for the same which the
GRP shall pay PIATCO; it provided for time extensions, incremental and consequential costs and
losses consequent to the existence of such structures; and it provided for some additional
obligations on the part of PIATCO as regards the said structures.

Finally, the Third Supplement provided for the obligations of the Concessionaire as regards the
construction of the surface road connecting Terminals II and III.

Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I
and II, had existing concession contracts with various service providers to offer international airline
airport services, such as in-flight catering, passenger handling, ramp and ground support, aircraft
maintenance and provisions, cargo handling and warehousing, and other services, to several
international airlines at the NAIA. Some of these service providers are the Miascor Group, DNATA-
Wings Aviation Systems Corp., and the MacroAsia Group. Miascor, DNATA and MacroAsia,
together with Philippine Airlines (PAL), are the dominant players in the industry with an aggregate
market share of 70%.

On September 17, 2002, the workers of the international airline service providers, claiming that they
stand to lose their employment upon the implementation of the questioned agreements, filed before
this Court a petition for prohibition to enjoin the enforcement of said agreements. 2

On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a
motion for intervention and a petition-in-intervention.

On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino Jaraula
filed a similar petition with this Court.3

On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the legality
of the various agreements.4

On December 11, 2002. another group of Congressmen, Hon. Jacinto V. Paras, Rafael P. Nantes,
Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast
Abayon and Benasing O. Macaranbon, moved to intervene in the case as Respondents-Intervenors.
They filed their Comment-In-Intervention defending the validity of the assailed agreements and
praying for the dismissal of the petitions.

During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on
November 29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacañang Palace,
stated that she will not "honor (PIATCO) contracts which the Executive Branch's legal offices have
concluded (as) null and void." 5

Respondent PIATCO filed its Comments to the present petitions on November 7 and 27, 2002. The
Office of the Solicitor General and the Office of the Government Corporate Counsel filed their
respective Comments in behalf of the public respondents.
On December 10, 2002, the Court heard the case on oral argument. After the oral argument, the
Court then resolved in open court to require the parties to file simultaneously their respective
Memoranda in amplification of the issues heard in the oral arguments within 30 days and to explore
the possibility of arbitration or mediation as provided in the challenged contracts.

In their consolidated Memorandum, the Office of the Solicitor General and the Office of the
Government Corporate Counsel prayed that the present petitions be given due course and that
judgment be rendered declaring the 1997 Concession Agreement, the ARCA and the Supplements
thereto void for being contrary to the Constitution, the BOT Law and its Implementing Rules and
Regulations.

On March 6, 2003, respondent PIATCO informed the Court that on March 4, 2003 PIATCO
commenced arbitration proceedings before the International Chamber of Commerce, International
Court of Arbitration (ICC) by filing a Request for Arbitration with the Secretariat of the ICC against
the Government of the Republic of the Philippines acting through the DOTC and MIAA.

In the present cases, the Court is again faced with the task of resolving complicated issues made
difficult by their intersecting legal and economic implications. The Court is aware of the far reaching
fall out effects of the ruling which it makes today. For more than a century and whenever the
exigencies of the times demand it, this Court has never shirked from its solemn duty to dispense
justice and resolve "actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been grave abuse of discretion amounting to
lack or excess of jurisdiction."6 To be sure, this Court will not begin to do otherwise today.

We shall first dispose of the procedural issues raised by respondent PIATCO which they allege will
bar the resolution of the instant controversy.

Petitioners' Legal Standing to File

the present Petitions

a. G.R. Nos. 155001 and 155661

In G.R. No. 155001 individual petitioners are employees of various service providers 7 having
separate concession contracts with MIAA and continuing service agreements with various
international airlines to provide in-flight catering, passenger handling, ramp and ground support,
aircraft maintenance and provisions, cargo handling and warehousing and other services. Also
included as petitioners are labor unions MIASCOR Workers Union-National Labor Union and
Philippine Airlines Employees Association. These petitioners filed the instant action for prohibition as
taxpayers and as parties whose rights and interests stand to be violated by the implementation of
the PIATCO Contracts.

Petitioners-Intervenors in the same case are all corporations organized and existing under Philippine
laws engaged in the business of providing in-flight catering, passenger handling, ramp and ground
support, aircraft maintenance and provisions, cargo handling and warehousing and other services to
several international airlines at the Ninoy Aquino International Airport. Petitioners-Intervenors allege
that as tax-paying international airline and airport-related service operators, each one of them stands
to be irreparably injured by the implementation of the PIATCO Contracts. Each of the petitioners-
intervenors have separate and subsisting concession agreements with MIAA and with various
international airlines which they allege are being interfered with and violated by respondent PIATCO.

In G.R. No. 155661, petitioners constitute employees of MIAA and Samahang Manggagawa sa
Paliparan ng Pilipinas - a legitimate labor union and accredited as the sole and exclusive bargaining
agent of all the employees in MIAA. Petitioners anchor their petition for prohibition on the nullity of
the contracts entered into by the Government and PIATCO regarding the build-operate-and-transfer
of the NAIA IPT III. They filed the petition as taxpayers and persons who have a legitimate interest to
protect in the implementation of the PIATCO Contracts.

Petitioners in both cases raise the argument that the PIATCO Contracts contain stipulations which
directly contravene numerous provisions of the Constitution, specific provisions of the BOT Law and
its Implementing Rules and Regulations, and public policy. Petitioners contend that the DOTC and
the MIAA, by entering into said contracts, have committed grave abuse of discretion amounting to
lack or excess of jurisdiction which can be remedied only by a writ of prohibition, there being no
plain, speedy or adequate remedy in the ordinary course of law.

In particular, petitioners assail the provisions in the 1997 Concession Agreement and the ARCA
which grant PIATCO the exclusive right to operate a commercial international passenger terminal
within the Island of Luzon, except those international airports already existing at the time of the
execution of the agreement. The contracts further provide that upon the commencement of
operations at the NAIA IPT III, the Government shall cause the closure of Ninoy Aquino International
Airport Passenger Terminals I and II as international passenger terminals. With respect to existing
concession agreements between MIAA and international airport service providers regarding certain
services or operations, the 1997 Concession Agreement and the ARCA uniformly provide that such
services or operations will not be carried over to the NAIA IPT III and PIATCO is under no obligation
to permit such carry over except through a separate agreement duly entered into with PIATCO. 8

With respect to the petitioning service providers and their employees, upon the commencement of
operations of the NAIA IPT III, they allege that they will be effectively barred from providing
international airline airport services at the NAIA Terminals I and II as all international airlines and
passengers will be diverted to the NAIA IPT III. The petitioning service providers will thus be
compelled to contract with PIATCO alone for such services, with no assurance that subsisting
contracts with MIAA and other international airlines will be respected. Petitioning service providers
stress that despite the very competitive market, the substantial capital investments required and the
high rate of fees, they entered into their respective contracts with the MIAA with the understanding
that the said contracts will be in force for the stipulated period, and thereafter, renewed so as to
allow each of the petitioning service providers to recoup their investments and obtain a reasonable
return thereon.

Petitioning employees of various service providers at the NAIA Terminals I and II and of MIAA on the
other hand allege that with the closure of the NAIA Terminals I and II as international passenger
terminals under the PIATCO Contracts, they stand to lose employment.

The question on legal standing is whether such parties have "alleged such a personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the presentation
of issues upon which the court so largely depends for illumination of difficult constitutional
questions."9 Accordingly, it has been held that the interest of a person assailing the constitutionality
of a statute must be direct and personal. He must be able to show, not only that the law or any
government act is invalid, but also that he sustained or is in imminent danger of sustaining some
direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite
way. It must appear that the person complaining has been or is about to be denied some right or
privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or
penalties by reason of the statute or act complained of. 10

We hold that petitioners have the requisite standing. In the above-mentioned cases, petitioners have
a direct and substantial interest to protect by reason of the implementation of the PIATCO Contracts.
They stand to lose their source of livelihood, a property right which is zealously protected by the
Constitution. Moreover, subsisting concession agreements between MIAA and petitioners-
intervenors and service contracts between international airlines and petitioners-intervenors stand to
be nullified or terminated by the operation of the NAIA IPT III under the PIATCO Contracts. The
financial prejudice brought about by the PIATCO Contracts on petitioners and petitioners-intervenors
in these cases are legitimate interests sufficient to confer on them the requisite standing to file the
instant petitions.

b. G.R. No. 155547

In G.R. No. 155547, petitioners filed the petition for prohibition as members of the House of
Representatives, citizens and taxpayers. They allege that as members of the House of
Representatives, they are especially interested in the PIATCO Contracts, because the contracts
compel the Government and/or the House of Representatives to appropriate funds necessary to
comply with the provisions therein. 11 They cite provisions of the PIATCO Contracts which require
disbursement of unappropriated amounts in compliance with the contractual obligations of the
Government. They allege that the Government obligations in the PIATCO Contracts which compel
government expenditure without appropriation is a curtailment of their prerogatives as legislators,
contrary to the mandate of the Constitution that "[n]o money shall be paid out of the treasury except
in pursuance of an appropriation made by law."12

Standing is a peculiar concept in constitutional law because in some cases, suits are not brought by
parties who have been personally injured by the operation of a law or any other government act but
by concerned citizens, taxpayers or voters who actually sue in the public interest. Although we are
not unmindful of the cases of Imus Electric Co. v. Municipality of Imus 13 and Gonzales v.
Raquiza14 wherein this Court held that appropriation must be made only on amounts immediately
demandable, public interest demands that we take a more liberal view in determining whether
the petitioners suing as legislators, taxpayers and citizens have locus standi to file the
instant petition. In Kilosbayan, Inc. v. Guingona,15 this Court held "[i]n line with the liberal policy of
this Court on locus standi, ordinary taxpayers, members of Congress, and even association of
planters, and non-profit civic organizations were allowed to initiate and prosecute actions before this
Court to question the constitutionality or validity of laws, acts, decisions, rulings, or orders of various
government agencies or instrumentalities." 16 Further, "insofar as taxpayers' suits are concerned . . .
(this Court) is not devoid of discretion as to whether or not it should be entertained." 17 As such ". . .
even if, strictly speaking, they [the petitioners] are not covered by the definition, it is still within the
wide discretion of the Court to waive the requirement and so remove the impediment to its
addressing and resolving the serious constitutional questions raised." 18 In view of the serious legal
questions involved and their impact on public interest, we resolve to grant standing to the petitioners.

Other Procedural Matters

Respondent PIATCO further alleges that this Court is without jurisdiction to review the instant cases
as factual issues are involved which this Court is ill-equipped to resolve. Moreover, PIATCO alleges
that submission of this controversy to this Court at the first instance is a violation of the rule on
hierarchy of courts. They contend that trial courts have concurrent jurisdiction with this Court with
respect to a special civil action for prohibition and hence, following the rule on hierarchy of courts,
resort must first be had before the trial courts.

After a thorough study and careful evaluation of the issues involved, this Court is of the view that the
crux of the instant controversy involves significant legal questions. The facts necessary to resolve
these legal questions are well established and, hence, need not be determined by a trial court.
The rule on hierarchy of courts will not also prevent this Court from assuming jurisdiction over the
cases at bar. The said rule may be relaxed when the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of this Court's primary jurisdiction. 19

It is easy to discern that exceptional circumstances exist in the cases at bar that call for the
relaxation of the rule. Both petitioners and respondents agree that these cases are of
transcendental importance as they involve the construction and operation of the country's premier
international airport. Moreover, the crucial issues submitted for resolution are of first impression and
they entail the proper legal interpretation of key provisions of the Constitution, the BOT Law and its
Implementing Rules and Regulations. Thus, considering the nature of the controversy before the
Court, procedural bars may be lowered to give way for the speedy disposition of the instant cases.

Legal Effect of the Commencement

of Arbitration Proceedings by

PIATCO

There is one more procedural obstacle which must be overcome. The Court is aware that arbitration
proceedings pursuant to Section 10.02 of the ARCA have been filed at the instance of respondent
PIATCO. Again, we hold that the arbitration step taken by PIATCO will not oust this Court of its
jurisdiction over the cases at bar.

In Del Monte Corporation-USA v. Court of Appeals, 20 even after finding that the arbitration clause in
the Distributorship Agreement in question is valid and the dispute between the parties is arbitrable,
this Court affirmed the trial court's decision denying petitioner's Motion to Suspend Proceedings
pursuant to the arbitration clause under the contract. In so ruling, this Court held that as contracts
produce legal effect between the parties, their assigns and heirs, only the parties to the
Distributorship Agreement are bound by its terms, including the arbitration clause stipulated therein.
This Court ruled that arbitration proceedings could be called for but only with respect to the parties
to the contract in question. Considering that there are parties to the case who are neither parties to
the Distributorship Agreement nor heirs or assigns of the parties thereto, this Court, citing its
previous ruling in Salas, Jr. v. Laperal Realty Corporation, 21 held that to tolerate the splitting of
proceedings by allowing arbitration as to some of the parties on the one hand and trial for the others
on the other hand would, in effect, result in multiplicity of suits, duplicitous procedure and
unnecessary delay.22 Thus, we ruled that the interest of justice would best be served if the trial
court hears and adjudicates the case in a single and complete proceeding.

It is established that petitioners in the present cases who have presented legitimate interests in
the resolution of the controversy are not parties to the PIATCO Contracts. Accordingly, they
cannot be bound by the arbitration clause provided for in the ARCA and hence, cannot be compelled
to submit to arbitration proceedings. A speedy and decisive resolution of all the critical issues in
the present controversy, including those raised by petitioners, cannot be made before an
arbitral tribunal. The object of arbitration is precisely to allow an expeditious determination of a
dispute. This objective would not be met if this Court were to allow the parties to settle the cases by
arbitration as there are certain issues involving non-parties to the PIATCO Contracts which the
arbitral tribunal will not be equipped to resolve.

Now, to the merits of the instant controversy.

I
 Is PIATCO a qualified bidder?

Public respondents argue that the Paircargo Consortium, PIATCO's predecessor, was not a duly
pre-qualified bidder on the unsolicited proposal submitted by AEDC as the Paircargo Consortium
failed to meet the financial capability required under the BOT Law and the Bid Documents. They
allege that in computing the ability of the Paircargo Consortium to meet the minimum equity
requirements for the project, the entire net worth of Security Bank, a member of the consortium,
should not be considered.

PIATCO relies, on the other hand, on the strength of the Memorandum dated October 14, 1996
issued by the DOTC Undersecretary Primitivo C. Cal stating that the Paircargo Consortium is found
to have a combined net worth of P3,900,000,000.00, sufficient to meet the equity requirements of
the project. The said Memorandum was in response to a letter from Mr. Antonio Henson of AEDC to
President Fidel V. Ramos questioning the financial capability of the Paircargo Consortium on the
ground that it does not have the financial resources to put up the required minimum equity of
P2,700,000,000.00. This contention is based on the restriction under R.A. No. 337, as amended or
the General Banking Act that a commercial bank cannot invest in any single enterprise in an amount
more than 15% of its net worth. In the said Memorandum, Undersecretary Cal opined:

The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5, require that financial capability
will be evaluated based on total financial capability of all the member companies of the [Paircargo]
Consortium. In this connection, the Challenger was found to have a combined net worth of
P3,926,421,242.00 that could support a project costing approximately P13 Billion.

It is not a requirement that the net worth must be "unrestricted." To impose that as a requirement
now will be nothing less than unfair.

The financial statement or the net worth is not the sole basis in establishing financial capability. As
stated in Bid Bulletin No. 3, financial capability may also be established by testimonial letters issued
by reputable banks. The Challenger has complied with this requirement.

To recap, net worth reflected in the Financial Statement should not be taken as the amount of the
money to be used to answer the required thirty percent (30%) equity of the challenger but rather to
be used in establishing if there is enough basis to believe that the challenger can comply with the
required 30% equity. In fact, proof of sufficient equity is required as one of the conditions for award
of contract (Section 12.1 IRR of the BOT Law) but not for pre-qualification (Section 5.4 of the same
document).23

Under the BOT Law, in case of a build-operate-and-transfer arrangement, the contract shall be
awarded to the bidder "who, having satisfied the minimum financial, technical, organizational
and legal standards" required by the law, has submitted the lowest bid and most favorable terms of
the project.24 Further, the 1994 Implementing Rules and Regulations of the BOT Law provide:

Section 5.4 Pre-qualification Requirements.

xxx xxx xxx

c. Financial Capability: The project proponent must have adequate capability to sustain the financing
requirements for the detailed engineering design, construction and/or operation and maintenance
phases of the project, as the case may be. For purposes of pre-qualification, this capability shall be
measured in terms of (i) proof of the ability of the project proponent and/or the consortium to
provide a minimum amount of equity to the project, and (ii) a letter testimonial from reputable
banks attesting that the project proponent and/or members of the consortium are banking
with them, that they are in good financial standing, and that they have adequate resources.
The government agency/LGU concerned shall determine on a project-to-project basis and before
pre-qualification, the minimum amount of equity needed. (emphasis supplied)

Pursuant to this provision, the PBAC issued PBAC Bulletin No. 3 dated August 16, 1996 amending
the financial capability requirements for pre-qualification of the project proponent as follows:

6. Basis of Pre-qualification

The basis for the pre-qualification shall be on the compliance of the proponent to the minimum
technical and financial requirements provided in the Bid Documents and in the IRR of the BOT Law,
R.A. No. 6957, as amended by R.A. 7718.

The minimum amount of equity to which the proponent's financial capability will be based shall be
thirty percent (30%) of the project cost instead of the twenty percent (20%) specified in
Section 3.6.4 of the Bid Documents. This is to correlate with the required debt-to-equity ratio of
70:30 in Section 2.01a of the draft concession agreement. The debt portion of the project financing
should not exceed 70% of the actual project cost.

Accordingly, based on the above provisions of law, the Paircargo Consortium or any challenger to
the unsolicited proposal of AEDC has to show that it possesses the requisite financial capability to
undertake the project in the minimum amount of 30% of the project cost through (i) proof of the
ability to provide a minimum amount of equity to the project, and (ii) a letter testimonial from
reputable banks attesting that the project proponent or members of the consortium are banking with
them, that they are in good financial standing, and that they have adequate resources.

As the minimum project cost was estimated to be US$350,000,000.00 or roughly

P9,183,650,000.00,25 the Paircargo Consortium had to show to the satisfaction of the PBAC that it
had the ability to provide the minimum equity for the project in the amount of at least
P2,755,095,000.00.

Paircargo's Audited Financial Statements as of 1993 and 1994 indicated that it had a net worth of
P2,783,592.00 and P3,123,515.00 respectively. 26 PAGS' Audited Financial Statements as of 1995
indicate that it has approximately P26,735,700.00 to invest as its equity for the project. 27 Security
Bank's Audited Financial Statements as of 1995 show that it has a net worth equivalent to its capital
funds in the amount of P3,523,504,377.00. 28
We agree with public respondents that with respect to Security Bank, the entire amount of its net
worth could not be invested in a single undertaking or enterprise, whether allied or non-allied in
accordance with the provisions of R.A. No. 337, as amended or the General Banking Act:

Sec. 21-B. The provisions in this or in any other Act to the contrary notwithstanding, the Monetary
Board, whenever it shall deem appropriate and necessary to further national development objectives
or support national priority projects, may authorize a commercial bank, a bank authorized to
provide commercial banking services, as well as a government-owned and controlled bank,
to operate under an expanded commercial banking authority and by virtue thereof exercise,
in addition to powers authorized for commercial banks, the powers of an Investment House
as provided in Presidential Decree No. 129, invest in the equity of a non-allied undertaking, or
own a majority or all of the equity in a financial intermediary other than a commercial bank or a bank
authorized to provide commercial banking services: Provided, That (a) the total investment in
equities shall not exceed fifty percent (50%) of the net worth of the bank; (b) the equity investment
in any one enterprise whether allied or non-allied shall not exceed fifteen percent (15%) of the
net worth of the bank; (c) the equity investment of the bank, or of its wholly or majority-owned
subsidiary, in a single non-allied undertaking shall not exceed thirty-five percent (35%) of the total
equity in the enterprise nor shall it exceed thirty-five percent (35%) of the voting stock in that
enterprise; and (d) the equity investment in other banks shall be deducted from the investing bank's
net worth for purposes of computing the prescribed ratio of net worth to risk assets.

xxx xxx xxx

Further, the 1993 Manual of Regulations for Banks provides:

SECTION X383. Other Limitations and Restrictions. — The following limitations and restrictions shall
also apply regarding equity investments of banks.

a. In any single enterprise. — The equity investments of banks in any single enterprise shall not
exceed at any time fifteen percent (15%) of the net worth of the investing bank as defined in Sec.
X106 and Subsec. X121.5.

Thus, the maximum amount that Security Bank could validly invest in the Paircargo Consortium is
only P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of the
Paircargo Consortium, after considering the maximum amounts that may be validly invested by
each of its members is P558,384,871.55 or only 6.08% of the project cost, 29 an amount
substantially less than the prescribed minimum equity investment required for the project in the
amount of P2,755,095,000.00 or 30% of the project cost.

The purpose of pre-qualification in any public bidding is to determine, at the earliest opportunity, the
ability of the bidder to undertake the project. Thus, with respect to the bidder's financial capacity at
the pre-qualification stage, the law requires the government agency to examine and determine the
ability of the bidder to fund the entire cost of the project by considering the maximum amounts
that each bidder may invest in the project at the time of pre-qualification.

The PBAC has determined that any prospective bidder for the construction, operation and
maintenance of the NAIA IPT III project should prove that it has the ability to provide equity in the
minimum amount of 30% of the project cost, in accordance with the 70:30 debt-to-equity ratio
prescribed in the Bid Documents. Thus, in the case of Paircargo Consortium, the PBAC should
determine the maximum amounts that each member of the consortium may commit for the
construction, operation and maintenance of the NAIA IPT III project at the time of pre-qualification.
With respect to Security Bank, the maximum amount which may be invested by it would only be
15% of its net worth in view of the restrictions imposed by the General Banking Act. Disregarding the
investment ceilings provided by applicable law would not result in a proper evaluation of whether or
not a bidder is pre-qualified to undertake the project as for all intents and purposes, such ceiling or
legal restriction determines the true maximum amount which a bidder may invest in the project.

Further, the determination of whether or not a bidder is pre-qualified to undertake the project
requires an evaluation of the financial capacity of the said bidder at the time the bid is submitted
based on the required documents presented by the bidder. The PBAC should not be allowed to
speculate on the future financial ability of the bidder to undertake the project on the basis of
documents submitted. This would open doors to abuse and defeat the very purpose of a public
bidding. This is especially true in the case at bar which involves the investment of billions of pesos
by the project proponent. The relevant government authority is duty-bound to ensure that the
awardee of the contract possesses the minimum required financial capability to complete the project.
To allow the PBAC to estimate the bidder's future financial capability would not secure the viability
and integrity of the project. A restrictive and conservative application of the rules and procedures of
public bidding is necessary not only to protect the impartiality and regularity of the proceedings but
also to ensure the financial and technical reliability of the project. It has been held that:

The basic rule in public bidding is that bids should be evaluated based on the required documents
submitted before and not after the opening of bids. Otherwise, the foundation of a fair and
competitive public bidding would be defeated. Strict observance of the rules, regulations, and
guidelines of the bidding process is the only safeguard to a fair, honest and competitive
public bidding.30

Thus, if the maximum amount of equity that a bidder may invest in the project at the time the bids
are submitted falls short of the minimum amounts required to be put up by the bidder, said bidder
should be properly disqualified. Considering that at the pre-qualification stage, the maximum
amounts which the Paircargo Consortium may invest in the project fell short of the minimum
amounts prescribed by the PBAC, we hold that Paircargo Consortium was not a qualified bidder.
Thus the award of the contract by the PBAC to the Paircargo Consortium, a disqualified bidder, is
null and void.

While it would be proper at this juncture to end the resolution of the instant controversy, as the legal
effects of the disqualification of respondent PIATCO's predecessor would come into play and
necessarily result in the nullity of all the subsequent contracts entered by it in pursuance of the
project, the Court feels that it is necessary to discuss in full the pressing issues of the present
controversy for a complete resolution thereof.

II

Is the 1997 Concession Agreement valid?

Petitioners and public respondents contend that the 1997 Concession Agreement is invalid as it
contains provisions that substantially depart from the draft Concession Agreement included in the
Bid Documents. They maintain that a substantial departure from the draft Concession Agreement is
a violation of public policy and renders the 1997 Concession Agreement null and void.

PIATCO maintains, however, that the Concession Agreement attached to the Bid Documents is
intended to be a draft, i.e., subject to change, alteration or modification, and that this intention was
clear to all participants, including AEDC, and DOTC/MIAA. It argued further that said intention is
expressed in Part C (6) of Bid Bulletin No. 3 issued by the PBAC which states:
6. Amendments to the Draft Concessions Agreement

Amendments to the Draft Concessions Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponent's proposal.

By its very nature, public bidding aims to protect the public interest by giving the public the best
possible advantages through open competition. Thus:

Competition must be legitimate, fair and honest. In the field of government contract law, competition
requires, not only `bidding upon a common standard, a common basis, upon the same thing, the
same subject matter, the same undertaking,' but also that it be legitimate, fair and honest; and
not designed to injure or defraud the government.31

An essential element of a publicly bidded contract is that all bidders must be on equal footing. Not
simply in terms of application of the procedural rules and regulations imposed by the relevant
government agency, but more importantly, on the contract bidded upon. Each bidder must be able to
bid on the same thing. The rationale is obvious. If the winning bidder is allowed to later include or
modify certain provisions in the contract awarded such that the contract is altered in any material
respect, then the essence of fair competition in the public bidding is destroyed. A public bidding
would indeed be a farce if after the contract is awarded, the winning bidder may modify the contract
and include provisions which are favorable to it that were not previously made available to the other
bidders. Thus:

It is inherent in public biddings that there shall be a fair competition among the bidders. The
specifications in such biddings provide the common ground or basis for the bidders. The
specifications should, accordingly, operate equally or indiscriminately upon all bidders. 32

The same rule was restated by Chief Justice Stuart of the Supreme Court of Minnesota:

The law is well settled that where, as in this case, municipal authorities can only let a contract for
public work to the lowest responsible bidder, the proposals and specifications therefore must be so
framed as to permit free and full competition. Nor can they enter into a contract with the best
bidder containing substantial provisions beneficial to him, not included or contemplated in
the terms and specifications upon which the bids were invited.33

In fact, in the PBAC Bid Bulletin No. 3 cited by PIATCO to support its argument that the draft
concession agreement is subject to amendment, the pertinent portion of which was quoted above,
the PBAC also clarified that "[s]aid amendments shall only cover items that would not
materially affect the preparation of the proponent's proposal."

While we concede that a winning bidder is not precluded from modifying or amending certain
provisions of the contract bidded upon, such changes must not constitute substantial or material
amendments that would alter the basic parameters of the contract and would constitute a
denial to the other bidders of the opportunity to bid on the same terms. Hence, the
determination of whether or not a modification or amendment of a contract bidded out constitutes a
substantial amendment rests on whether the contract, when taken as a whole, would contain
substantially different terms and conditions that would have the effect of altering the technical and/or
financial proposals previously submitted by other bidders. The alterations and modifications in the
contract executed between the government and the winning bidder must be such as to render such
executed contract to be an entirely different contract from the one that was bidded upon.

In the case of Caltex (Philippines), Inc. v. Delgado Brothers, Inc.,34 this Court quoted with
approval the ruling of the trial court that an amendment to a contract awarded through public bidding,
when such subsequent amendment was made without a new public bidding, is null and void:

The Court agrees with the contention of counsel for the plaintiffs that the due execution of a contract
after public bidding is a limitation upon the right of the contracting parties to alter or amend it without
another public bidding, for otherwise what would a public bidding be good for if after the
execution of a contract after public bidding, the contracting parties may alter or amend the
contract, or even cancel it, at their will? Public biddings are held for the protection of the public,
and to give the public the best possible advantages by means of open competition between the
bidders. He who bids or offers the best terms is awarded the contract subject of the bid, and it is
obvious that such protection and best possible advantages to the public will disappear if the parties
to a contract executed after public bidding may alter or amend it without another previous public
bidding.35

Hence, the question that comes to fore is this: is the 1997 Concession Agreement the same
agreement that was offered for public bidding, i.e., the draft Concession Agreement attached to the
Bid Documents? A close comparison of the draft Concession Agreement attached to the Bid
Documents and the 1997 Concession Agreement reveals that the documents differ in at least two
material respects:

a. Modification on the Public

Utility Revenues and Non-Public

Utility Revenues that may be

collected by PIATCO

The fees that may be imposed and collected by PIATCO under the draft Concession Agreement and
the 1997 Concession Agreement may be classified into three distinct categories: (1) fees which are
subject to periodic adjustment of once every two years in accordance with a prescribed parametric
formula and adjustments are made effective only upon written approval by MIAA; (2) fees other than
those included in the first category which maybe adjusted by PIATCO whenever it deems necessary
without need for consent of DOTC/MIAA; and (3) new fees and charges that may be imposed by
PIATCO which have not been previously imposed or collected at the Ninoy Aquino International
Airport Passenger Terminal I, pursuant to Administrative Order No. 1, Series of 1993, as amended.
The glaring distinctions between the draft Concession Agreement and the 1997 Concession
Agreement lie in the types of fees included in each category and the extent of the supervision and
regulation which MIAA is allowed to exercise in relation thereto.

For fees under the first category, i.e., those which are subject to periodic adjustment in accordance
with a prescribed parametric formula and effective only upon written approval by MIAA, the draft
Concession Agreement includes the following:36

(1) aircraft parking fees;

(2) aircraft tacking fees;

(3) groundhandling fees;

(4) rentals and airline offices;

(5) check-in counter rentals; and

(6) porterage fees.

Under the 1997 Concession Agreement, fees which are subject to adjustment and effective upon
MIAA approval are classified as "Public Utility Revenues" and include: 37

(1) aircraft parking fees;

(2) aircraft tacking fees;

(3) check-in counter fees; and

(4) Terminal Fees.

The implication of the reduced number of fees that are subject to MIAA approval is best appreciated
in relation to fees included in the second category identified above. Under the 1997 Concession
Agreement, fees which PIATCO may adjust whenever it deems necessary without need for consent
of DOTC/MIAA are "Non-Public Utility Revenues" and is defined as "all other income not classified
as Public Utility Revenues derived from operations of the Terminal and the Terminal Complex." 38
Thus, under the 1997 Concession Agreement, ground handling fees, rentals from airline offices and
porterage fees are no longer subject to MIAA regulation.

Further, under Section 6.03 of the draft Concession Agreement, MIAA reserves the right to
regulate (1) lobby and vehicular parking fees and (2) other new fees and charges that may be
imposed by PIATCO. Such regulation may be made by periodic adjustment and is effective only
upon written approval of MIAA. The full text of said provision is quoted below:

Section 6.03. Periodic Adjustment in Fees and Charges. Adjustments in the aircraft parking fees,
aircraft tacking fees, groundhandling fees, rentals and airline offices, check-in-counter rentals and
porterage fees shall be allowed only once every two years and in accordance with the Parametric
Formula attached hereto as Annex F. Provided that adjustments shall be made effective only after
the written express approval of the MIAA. Provided, further, that such approval of the MIAA, shall be
contingent only on the conformity of the adjustments with the above said parametric formula. The
first adjustment shall be made prior to the In-Service Date of the Terminal.

The MIAA reserves the right to regulate under the foregoing terms and conditions the lobby
and vehicular parking fees and other new fees and charges as contemplated in paragraph 2
of Section 6.01 if in its judgment the users of the airport shall be deprived of a free option for
the services they cover.39

On the other hand, the equivalent provision under the 1997 Concession Agreement reads:

Section 6.03 Periodic Adjustment in Fees and Charges.

xxx xxx xxx

(c) Concessionaire shall at all times be judicious in fixing fees and charges constituting Non-Public
Utility Revenues in order to ensure that End Users are not unreasonably deprived of services. While
the vehicular parking fee, porterage fee and greeter/well wisher fee constitute Non-Public
Utility Revenues of Concessionaire, GRP may intervene and require Concessionaire to
explain and justify the fee it may set from time to time, if in the reasonable opinion of GRP the
said fees have become exorbitant resulting in the unreasonable deprivation of End Users of such
services.40

Thus, under the 1997 Concession Agreement, with respect to (1) vehicular parking fee, (2)
porterage fee and (3) greeter/well wisher fee, all that MIAA can do is to require PIATCO to explain
and justify the fees set by PIATCO. In the draft Concession Agreement, vehicular parking fee is
subject to MIAA regulation and approval under the second paragraph of Section 6.03 thereof while
porterage fee is covered by the first paragraph of the same provision. There is an obvious relaxation
of the extent of control and regulation by MIAA with respect to the particular fees that may be
charged by PIATCO.

Moreover, with respect to the third category of fees that may be imposed and collected by PIATCO,
i.e., new fees and charges that may be imposed by PIATCO which have not been previously
imposed or collected at the Ninoy Aquino International Airport Passenger Terminal I, under Section
6.03 of the draft Concession Agreement MIAA has reserved the right to regulate the same under
the same conditions that MIAA may regulate fees under the first category, i.e., periodic adjustment of
once every two years in accordance with a prescribed parametric formula and effective only upon
written approval by MIAA. However, under the 1997 Concession Agreement, adjustment of fees
under the third category is not subject to MIAA regulation.
With respect to terminal fees that may be charged by PIATCO, 41 as shown earlier, this was included
within the category of "Public Utility Revenues" under the 1997 Concession Agreement. This
classification is significant because under the 1997 Concession Agreement, "Public Utility
Revenues" are subject to an "Interim Adjustment" of fees upon the occurrence of certain
extraordinary events specified in the agreement. 42 However, under the draft Concession
Agreement, terminal fees are not included in the types of fees that may be subject to "Interim
Adjustment."43

Finally, under the 1997 Concession Agreement, "Public Utility Revenues," except terminal fees,
are denominated in US Dollars 44 while payments to the Government are in Philippine Pesos. In the
draft Concession Agreement, no such stipulation was included. By stipulating that "Public Utility
Revenues" will be paid to PIATCO in US Dollars while payments by PIATCO to the Government are
in Philippine currency under the 1997 Concession Agreement, PIATCO is able to enjoy the benefits
of depreciations of the Philippine Peso, while being effectively insulated from the detrimental effects
of exchange rate fluctuations.

When taken as a whole, the changes under the 1997 Concession Agreement with respect to
reduction in the types of fees that are subject to MIAA regulation and the relaxation of such
regulation with respect to other fees are significant amendments that substantially distinguish the
draft Concession Agreement from the 1997 Concession Agreement. The 1997 Concession
Agreement, in this respect, clearly gives PIATCO more favorable terms than what was
available to other bidders at the time the contract was bidded out. It is not very difficult to see
that the changes in the 1997 Concession Agreement translate to direct and concrete financial
advantages for PIATCO which were not available at the time the contract was offered for bidding. It
cannot be denied that under the 1997 Concession Agreement only "Public Utility Revenues" are
subject to MIAA regulation. Adjustments of all other fees imposed and collected by PIATCO are
entirely within its control. Moreover, with respect to terminal fees, under the 1997 Concession
Agreement, the same is further subject to "Interim Adjustments" not previously stipulated in the draft
Concession Agreement. Finally, the change in the currency stipulated for "Public Utility Revenues"
under the 1997 Concession Agreement, except terminal fees, gives PIATCO an added benefit which
was not available at the time of bidding.

b. Assumption by the

Government of the liabilities of

PIATCO in the event of the latter's

default thereof

Under the draft Concession Agreement, default by PIATCO of any of its obligations to creditors
who have provided, loaned or advanced funds for the NAIA IPT III project does not result in the
assumption by the Government of these liabilities. In fact, nowhere in the said contract does default
of PIATCO's loans figure in the agreement. Such default does not directly result in any concomitant
right or obligation in favor of the Government.

However, the 1997 Concession Agreement provides:

Section 4.04 Assignment.

xxx xxx xxx

(b) In the event Concessionaire should default in the payment of an Attendant Liability, and the
default has resulted in the acceleration of the payment due date of the Attendant Liability prior to its
stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in
writing of such default. GRP shall, within one hundred eighty (180) Days from receipt of the joint
written notice of the Unpaid Creditors and Concessionaire, either (i) take over the Development
Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified, to be
substituted as concessionaire and operator of the Development Facility in accordance with the terms
and conditions hereof, or designate a qualified operator acceptable to GRP to operate the
Development Facility, likewise under the terms and conditions of this Agreement; Provided that if at
the end of the 180-day period GRP shall not have served the Unpaid Creditors and Concessionaire
written notice of its choice, GRP shall be deemed to have elected to take over the Development
Facility with the concomitant assumption of Attendant Liabilities.

(c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted as concessionaire,
the latter shall form and organize a concession company qualified to take over the operation of the
Development Facility. If the concession company should elect to designate an operator for the
Development Facility, the concession company shall in good faith identify and designate a qualified
operator acceptable to GRP within one hundred eighty (180) days from receipt of GRP's written
notice. If the concession company, acting in good faith and with due diligence, is unable to designate
a qualified operator within the aforesaid period, then GRP shall at the end of the 180-day period take
over the Development Facility and assume Attendant Liabilities.

The term "Attendant Liabilities" under the 1997 Concession Agreement is defined as:

Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the books of
the Concessionaire as owing to Unpaid Creditors who have provided, loaned or advanced
funds actually used for the Project, including all interests, penalties, associated fees, charges,
surcharges, indemnities, reimbursements and other related expenses, and further including amounts
owed by Concessionaire to its suppliers, contractors and sub-contractors.

Under the above quoted portions of Section 4.04 in relation to the definition of "Attendant Liabilities,"
default by PIATCO of its loans used to finance the NAIA IPT III project triggers the occurrence
of certain events that leads to the assumption by the Government of the liability for the loans.
Only in one instance may the Government escape the assumption of PIATCO's liabilities, i.e., when
the Government so elects and allows a qualified operator to take over as Concessionaire. However,
this circumstance is dependent on the existence and availability of a qualified operator who
is willing to take over the rights and obligations of PIATCO under the contract, a
circumstance that is not entirely within the control of the Government.

Without going into the validity of this provision at this juncture, suffice it to state that Section 4.04 of
the 1997 Concession Agreement may be considered a form of security for the loans PIATCO has
obtained to finance the project, an option that was not made available in the draft Concession
Agreement. Section 4.04 is an important amendment to the 1997 Concession Agreement because it
grants PIATCO a financial advantage or benefit which was not previously made available
during the bidding process. This financial advantage is a significant modification that translates to
better terms and conditions for PIATCO.

PIATCO, however, argues that the parties to the bidding procedure acknowledge that the draft
Concession Agreement is subject to amendment because the Bid Documents permit financing or
borrowing. They claim that it was the lenders who proposed the amendments to the draft
Concession Agreement which resulted in the 1997 Concession Agreement.
We agree that it is not inconsistent with the rationale and purpose of the BOT Law to allow the
project proponent or the winning bidder to obtain financing for the project, especially in this case
which involves the construction, operation and maintenance of the NAIA IPT III. Expectedly,
compliance by the project proponent of its undertakings therein would involve a substantial amount
of investment. It is therefore inevitable for the awardee of the contract to seek alternate sources of
funds to support the project. Be that as it may, this Court maintains that amendments to the contract
bidded upon should always conform to the general policy on public bidding if such procedure is to be
faithful to its real nature and purpose. By its very nature and characteristic, competitive public
bidding aims to protect the public interest by giving the public the best possible advantages through
open competition.45 It has been held that the three principles in public bidding are (1) the offer to the
public; (2) opportunity for competition; and (3) a basis for the exact comparison of bids. A regulation
of the matter which excludes any of these factors destroys the distinctive character of the system
and thwarts the purpose of its adoption. 46 These are the basic parameters which every awardee of a
contract bidded out must conform to, requirements of financing and borrowing notwithstanding.
Thus, upon a concrete showing that, as in this case, the contract signed by the government and the
contract-awardee is an entirely different contract from the contract bidded, courts should not hesitate
to strike down said contract in its entirety for violation of public policy on public bidding. A strict
adherence on the principles, rules and regulations on public bidding must be sustained if only to
preserve the integrity and the faith of the general public on the procedure.

Public bidding is a standard practice for procuring government contracts for public service and for
furnishing supplies and other materials. It aims to secure for the government the lowest possible
price under the most favorable terms and conditions, to curtail favoritism in the award of government
contracts and avoid suspicion of anomalies and it places all bidders in equal footing. 47 Any
government action which permits any substantial variance between the conditions under
which the bids are invited and the contract executed after the award thereof is a grave abuse
of discretion amounting to lack or excess of jurisdiction which warrants proper judicial
action.

In view of the above discussion, the fact that the foregoing substantial amendments were made on
the 1997 Concession Agreement renders the same null and void for being contrary to public
policy. These amendments convert the 1997 Concession Agreement to an entirely different
agreement from the contract bidded out or the draft Concession Agreement. It is not difficult to see
that the amendments on (1) the types of fees or charges that are subject to MIAA regulation or
control and the extent thereof and (2) the assumption by the Government, under certain conditions,
of the liabilities of PIATCO directly translates concrete financial advantages to PIATCO that
were previously not available during the bidding process. These amendments cannot be taken
as merely supplements to or implementing provisions of those already existing in the draft
Concession Agreement. The amendments discussed above present new terms and conditions which
provide financial benefit to PIATCO which may have altered the technical and financial parameters
of other bidders had they known that such terms were available.

III

Direct Government Guarantee

Article IV, Section 4.04(b) and (c), in relation to Article 1.06, of the 1997 Concession Agreement
provides:

Section 4.04 Assignment

xxx xxx xxx

(b) In the event Concessionaire should default in the payment of an Attendant Liability, and the
default resulted in the acceleration of the payment due date of the Attendant Liability prior to its
stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in
writing of such default. GRP shall within one hundred eighty (180) days from receipt of the joint
written notice of the Unpaid Creditors and Concessionaire, either (i) take over the Development
Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if qualified to be
substituted as concessionaire and operator of the Development facility in accordance with the terms
and conditions hereof, or designate a qualified operator acceptable to GRP to operate the
Development Facility, likewise under the terms and conditions of this Agreement; Provided, that if at
the end of the 180-day period GRP shall not have served the Unpaid Creditors and Concessionaire
written notice of its choice, GRP shall be deemed to have elected to take over the Development
Facility with the concomitant assumption of Attendant Liabilities.

(c) If GRP, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the
latter shall form and organize a concession company qualified to takeover the operation of the
Development Facility. If the concession company should elect to designate an operator for the
Development Facility, the concession company shall in good faith identify and designate a qualified
operator acceptable to GRP within one hundred eighty (180) days from receipt of GRP's written
notice. If the concession company, acting in good faith and with due diligence, is unable to designate
a qualified operator within the aforesaid period, then GRP shall at the end of the 180-day period
take over the Development Facility and assume Attendant Liabilities.

….

Section 1.06. Attendant Liabilities

Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the
books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or
advanced funds actually used for the Project, including all interests, penalties, associated fees,
charges, surcharges, indemnities, reimbursements and other related expenses, and further including
amounts owed by Concessionaire to its suppliers, contractors and sub-contractors. 48

It is clear from the above-quoted provisions that Government, in the event that PIATCO defaults
in its loan obligations, is obligated to pay "all amounts recorded and from time to time
outstanding from the books" of PIATCO which the latter owes to its creditors. 49 These amounts
include "all interests, penalties, associated fees, charges, surcharges, indemnities, reimbursements
and other related expenses." 50 This obligation of the Government to pay PIATCO's creditors upon
PIATCO's default would arise if the Government opts to take over NAIA IPT III. It should be noted,
however, that even if the Government chooses the second option, which is to allow PIATCO's
unpaid creditors operate NAIA IPT III, the Government is still at a risk of being liable to PIATCO's
creditors should the latter be unable to designate a qualified operator within the prescribed period. 51
In effect, whatever option the Government chooses to take in the event of PIATCO's failure to
fulfill its loan obligations, the Government is still at a risk of assuming PIATCO's outstanding
loans. This is due to the fact that the Government would only be free from assuming PIATCO's
debts if the unpaid creditors would be able to designate a qualified operator within the period
provided for in the contract. Thus, the Government's assumption of liability is virtually out of its
control. The Government under the circumstances provided for in the 1997 Concession Agreement
is at the mercy of the existence, availability and willingness of a qualified operator. The above
contractual provisions constitute a direct government guarantee which is prohibited by law.

One of the main impetus for the enactment of the BOT Law is the lack of government funds to
construct the infrastructure and development projects necessary for economic growth and
development. This is why private sector resources are being tapped in order to finance these
projects. The BOT law allows the private sector to participate, and is in fact encouraged to do so by
way of incentives, such as minimizing the unstable flow of returns, 52 provided that the government
would not have to unnecessarily expend scarcely available funds for the project itself. As such, direct
guarantee, subsidy and equity by the government in these projects are strictly prohibited. 53 This is
but logical for if the government would in the end still be at a risk of paying the debts
incurred by the private entity in the BOT projects, then the purpose of the law is subverted.

Section 2(n) of the BOT Law defines direct guarantee as follows:

(n) Direct government guarantee — An agreement whereby the government or any of its agencies or
local government units assume responsibility for the repayment of debt directly incurred by the
project proponent in implementing the project in case of a loan default.

Clearly by providing that the Government "assumes" the attendant liabilities, which consists of
PIATCO's unpaid debts, the 1997 Concession Agreement provided for a direct government
guarantee for the debts incurred by PIATCO in the implementation of the NAIA IPT III project. It is of
no moment that the relevant sections are subsumed under the title of "assignment". The provisions
providing for direct government guarantee which is prohibited by law is clear from the terms thereof.

The fact that the ARCA superseded the 1997 Concession Agreement did not cure this fatal defect.
Article IV, Section 4.04(c), in relation to Article I, Section 1.06, of the ARCA provides:

Section 4.04 Security

xxx xxx xxx

(c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate in good faith and enter into
direct agreement with the Senior Lenders, or with an agent of such Senior Lenders (which
agreement shall be subject to the approval of the Bangko Sentral ng Pilipinas), in such form as may
be reasonably acceptable to both GRP and Senior Lenders, with regard, inter alia, to the following
parameters:

xxx xxx xxx

(iv) If the Concessionaire [PIATCO] is in default under a payment obligation owed to the Senior
Lenders, and as a result thereof the Senior Lenders have become entitled to accelerate the Senior
Loans, the Senior Lenders shall have the right to notify GRP of the same, and without prejudice to
any other rights of the Senior Lenders or any Senior Lenders' agent may have (including without
limitation under security interests granted in favor of the Senior Lenders), to either in good faith
identify and designate a nominee which is qualified under sub-clause (viii)(y) below to operate the
Development Facility [NAIA Terminal 3] or transfer the Concessionaire's [PIATCO] rights and
obligations under this Agreement to a transferee which is qualified under sub-clause (viii) below;

xxx xxx xxx

(vi) if the Senior Lenders, acting in good faith and using reasonable efforts, are unable to designate
a nominee or effect a transfer in terms and conditions satisfactory to the Senior Lenders within one
hundred eighty (180) days after giving GRP notice as referred to respectively in (iv) or (v) above,
then GRP and the Senior Lenders shall endeavor in good faith to enter into any other arrangement
relating to the Development Facility [NAIA Terminal 3] (other than a turnover of the Development
Facility [NAIA Terminal 3] to GRP) within the following one hundred eighty (180) days. If no
agreement relating to the Development Facility [NAIA Terminal 3] is arrived at by GRP and the
Senior Lenders within the said 180-day period, then at the end thereof the Development Facility
[NAIA Terminal 3] shall be transferred by the Concessionaire [PIATCO] to GRP or its
designee and GRP shall make a termination payment to Concessionaire [PIATCO] equal to
the Appraised Value (as hereinafter defined) of the Development Facility [NAIA Terminal 3] or
the sum of the Attendant Liabilities, if greater. Notwithstanding Section 8.01(c) hereof, this
Agreement shall be deemed terminated upon the transfer of the Development Facility [NAIA
Terminal 3] to GRP pursuant hereto;

xxx xxx xxx

Section 1.06. Attendant Liabilities

Attendant Liabilities refer to all amounts in each case supported by verifiable evidence from time
to time owed or which may become owing by Concessionaire [PIATCO] to Senior Lenders or
any other persons or entities who have provided, loaned, or advanced funds or provided
financial facilities to Concessionaire [PIATCO] for the Project [NAIA Terminal 3], including,
without limitation, all principal, interest, associated fees, charges, reimbursements, and other
related expenses (including the fees, charges and expenses of any agents or trustees of such
persons or entities), whether payable at maturity, by acceleration or otherwise, and further including
amounts owed by Concessionaire [PIATCO] to its professional consultants and advisers, suppliers,
contractors and sub-contractors.54

It is clear from the foregoing contractual provisions that in the event that PIATCO fails to fulfill its
loan obligations to its Senior Lenders, the Government is obligated to directly negotiate and enter
into an agreement relating to NAIA IPT III with the Senior Lenders, should the latter fail to appoint a
qualified nominee or transferee who will take the place of PIATCO. If the Senior Lenders and the
Government are unable to enter into an agreement after the prescribed period, the Government
must then pay PIATCO, upon transfer of NAIA IPT III to the Government, termination payment equal
to the appraised value of the project or the value of the attendant liabilities whichever is greater.
Attendant liabilities as defined in the ARCA includes all amounts owed or thereafter may be owed by
PIATCO not only to the Senior Lenders with whom PIATCO has defaulted in its loan obligations but
to all other persons who may have loaned, advanced funds or provided any other type of financial
facilities to PIATCO for NAIA IPT III. The amount of PIATCO's debt that the Government would have
to pay as a result of PIATCO's default in its loan obligations -- in case no qualified nominee or
transferee is appointed by the Senior Lenders and no other agreement relating to NAIA IPT III has
been reached between the Government and the Senior Lenders -- includes, but is not limited to, "all
principal, interest, associated fees, charges, reimbursements, and other related expenses . . .
whether payable at maturity, by acceleration or otherwise." 55

It is clear from the foregoing that the ARCA provides for a direct guarantee by the
government to pay PIATCO's loans not only to its Senior Lenders but all other entities who
provided PIATCO funds or services upon PIATCO's default in its loan obligation with its
Senior Lenders. The fact that the Government's obligation to pay PIATCO's lenders for the latter's
obligation would only arise after the Senior Lenders fail to appoint a qualified nominee or transferee
does not detract from the fact that, should the conditions as stated in the contract occur, the ARCA
still obligates the Government to pay any and all amounts owed by PIATCO to its lenders in
connection with NAIA IPT III. Worse, the conditions that would make the Government liable for
PIATCO's debts is triggered by PIATCO's own default of its loan obligations to its Senior Lenders to
which loan contracts the Government was never a party to. The Government was not even given an
option as to what course of action it should take in case PIATCO defaulted in the payment of its
senior loans. The Government, upon PIATCO's default, would be merely notified by the Senior
Lenders of the same and it is the Senior Lenders who are authorized to appoint a qualified nominee
or transferee. Should the Senior Lenders fail to make such an appointment, the Government is then
automatically obligated to "directly deal and negotiate" with the Senior Lenders regarding NAIA IPT
III. The only way the Government would not be liable for PIATCO's debt is for a qualified nominee or
transferee to be appointed in place of PIATCO to continue the construction, operation and
maintenance of NAIA IPT III. This "pre-condition", however, will not take the contract out of the ambit
of a direct guarantee by the government as the existence, availability and willingness of a qualified
nominee or transferee is totally out of the government's control. As such the Government is
virtually at the mercy of PIATCO (that it would not default on its loan obligations to its Senior
Lenders), the Senior Lenders (that they would appoint a qualified nominee or transferee or agree to
some other arrangement with the Government) and the existence of a qualified nominee or
transferee who is able and willing to take the place of PIATCO in NAIA IPT III.

The proscription against government guarantee in any form is one of the policy
considerations behind the BOT Law. Clearly, in the present case, the ARCA obligates the
Government to pay for all loans, advances and obligations arising out of financial facilities extended
to PIATCO for the implementation of the NAIA IPT III project should PIATCO default in its loan
obligations to its Senior Lenders and the latter fails to appoint a qualified nominee or transferee. This
in effect would make the Government liable for PIATCO's loans should the conditions as set forth in
the ARCA arise. This is a form of direct government guarantee.

The BOT Law and its implementing rules provide that in order for an unsolicited proposal for a BOT
project may be accepted, the following conditions must first be met: (1) the project involves a new
concept in technology and/or is not part of the list of priority projects, (2) no direct government
guarantee, subsidy or equity is required, and (3) the government agency or local government unit
has invited by publication other interested parties to a public bidding and conducted the same. 56 The
failure to meet any of the above conditions will result in the denial of the proposal. It is further
provided that the presence of direct government guarantee, subsidy or equity will "necessarily
disqualify a proposal from being treated and accepted as an unsolicited proposal." 57 The BOT Law
clearly and strictly prohibits direct government guarantee, subsidy and equity in unsolicited
proposals that the mere inclusion of a provision to that effect is fatal and is sufficient to deny the
proposal. It stands to reason therefore that if a proposal can be denied by reason of the existence of
direct government guarantee, then its inclusion in the contract executed after the said proposal has
been accepted is likewise sufficient to invalidate the contract itself. A prohibited provision, the
inclusion of which would result in the denial of a proposal cannot, and should not, be allowed to later
on be inserted in the contract resulting from the said proposal. The basic rules of justice and fair play
alone militate against such an occurrence and must not, therefore, be countenanced particularly in
this instance where the government is exposed to the risk of shouldering hundreds of million of
dollars in debt.

This Court has long and consistently adhered to the legal maxim that those that cannot be done
directly cannot be done indirectly.58 To declare the PIATCO contracts valid despite the clear
statutory prohibition against a direct government guarantee would not only make a mockery
of what the BOT Law seeks to prevent -- which is to expose the government to the risk of
incurring a monetary obligation resulting from a contract of loan between the project
proponent and its lenders and to which the Government is not a party to -- but would also
render the BOT Law useless for what it seeks to achieve –- to make use of the resources of
the private sector in the "financing, operation and maintenance of infrastructure and
development projects"59 which are necessary for national growth and development but which
the government, unfortunately, could ill-afford to finance at this point in time.
 IV

Temporary takeover of business affected with public interest

Article XII, Section 17 of the 1987 Constitution provides:

Section 17. In times of national emergency, when the public interest so requires, the State may,
during the emergency and under reasonable terms prescribed by it, temporarily take over or direct
the operation of any privately owned public utility or business affected with public interest.

The above provision pertains to the right of the State in times of national emergency, and in the
exercise of its police power, to temporarily take over the operation of any business affected with
public interest. In the 1986 Constitutional Commission, the term "national emergency" was defined to
include threat from external aggression, calamities or national disasters, but not strikes "unless it is
of such proportion that would paralyze government service." 60 The duration of the emergency itself is
the determining factor as to how long the temporary takeover by the government would last. 61 The
temporary takeover by the government extends only to the operation of the business and not to the
ownership thereof. As such the government is not required to compensate the private entity-
owner of the said business as there is no transfer of ownership, whether permanent or
temporary. The private entity-owner affected by the temporary takeover cannot, likewise, claim just
compensation for the use of the said business and its properties as the temporary takeover by the
government is in exercise of its police power and not of its power of eminent domain.

Article V, Section 5.10 (c) of the 1997 Concession Agreement provides:

Section 5.10 Temporary Take-over of operations by GRP.

….

(c) In the event the development Facility or any part thereof and/or the operations of Concessionaire
or any part thereof, become the subject matter of or be included in any notice, notification, or
declaration concerning or relating to acquisition, seizure or appropriation by GRP in times of war or
national emergency, GRP shall, by written notice to Concessionaire, immediately take over the
operations of the Terminal and/or the Terminal Complex. During such take over by GRP, the
Concession Period shall be suspended; provided, that upon termination of war, hostilities or national
emergency, the operations shall be returned to Concessionaire, at which time, the Concession
period shall commence to run again. Concessionaire shall be entitled to reasonable
compensation for the duration of the temporary take over by GRP, which compensation shall
take into account the reasonable cost for the use of the Terminal and/or Terminal Complex,
(which is in the amount at least equal to the debt service requirements of Concessionaire, if
the temporary take over should occur at the time when Concessionaire is still servicing debts owed
to project lenders), any loss or damage to the Development Facility, and other consequential
damages. If the parties cannot agree on the reasonable compensation of Concessionaire, or on the
liability of GRP as aforesaid, the matter shall be resolved in accordance with Section 10.01
[Arbitration]. Any amount determined to be payable by GRP to Concessionaire shall be offset from
the amount next payable by Concessionaire to GRP.62

PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on

temporary government takeover and obligate the government to pay "reasonable cost for the
use of the Terminal and/or Terminal Complex." 63 Article XII, section 17 of the 1987 Constitution
envisions a situation wherein the exigencies of the times necessitate the government to "temporarily
take over or direct the operation of any privately owned public utility or business affected with public
interest." It is the welfare and interest of the public which is the paramount consideration in
determining whether or not to temporarily take over a particular business. Clearly, the State in
effecting the temporary takeover is exercising its police power. Police power is the "most essential,
insistent, and illimitable of powers." 64 Its exercise therefore must not be unreasonably hampered nor
its exercise be a source of obligation by the government in the absence of damage due to
arbitrariness of its exercise.65 Thus, requiring the government to pay reasonable compensation for
the reasonable use of the property pursuant to the operation of the business contravenes the
Constitution.

Regulation of Monopolies

A monopoly is "a privilege or peculiar advantage vested in one or more persons or companies,
consisting in the exclusive right (or power) to carry on a particular business or trade, manufacture a
particular article, or control the sale of a particular commodity." 66 The 1987 Constitution strictly
regulates monopolies, whether private or public, and even provides for their prohibition if public
interest so requires. Article XII, Section 19 of the 1987 Constitution states:

Sec. 19. The state shall regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed.

Clearly, monopolies are not per se prohibited by the Constitution but may be permitted to exist to aid
the government in carrying on an enterprise or to aid in the performance of various services and
functions in the interest of the public.67 Nonetheless, a determination must first be made as to
whether public interest requires a monopoly. As monopolies are subject to abuses that can inflict
severe prejudice to the public, they are subject to a higher level of State regulation than an ordinary
business undertaking.

In the cases at bar, PIATCO, under the 1997 Concession Agreement and the ARCA, is granted the
"exclusive right to operate a commercial international passenger terminal within the Island of
Luzon" at the NAIA IPT III.68 This is with the exception of already existing international airports in
Luzon such as those located in the Subic Bay Freeport Special Economic Zone ("SBFSEZ"), Clark
Special Economic Zone ("CSEZ") and in Laoag City. 69 As such, upon commencement of PIATCO's
operation of NAIA IPT III, Terminals 1 and 2 of NAIA would cease to function as international
passenger terminals. This, however, does not prevent MIAA to use Terminals 1 and 2 as domestic
passenger terminals or in any other manner as it may deem appropriate except those activities that
would compete with NAIA IPT III in the latter's operation as an international passenger terminal. 70
The right granted to PIATCO to exclusively operate NAIA IPT III would be for a period of twenty-
five (25) years from the In-Service Date 71 and renewable for another twenty-five (25) years at the
option of the government.72 Both the 1997 Concession Agreement and the ARCA further
provide that, in view of the exclusive right granted to PIATCO, the concession contracts of
the service providers currently servicing Terminals 1 and 2 would no longer be renewed and
those concession contracts whose expiration are subsequent to the In-Service Date would
cease to be effective on the said date.73

The operation of an international passenger airport terminal is no doubt an undertaking imbued with
public interest. In entering into a Build–Operate-and-Transfer contract for the construction, operation
and maintenance of NAIA IPT III, the government has determined that public interest would be
served better if private sector resources were used in its construction and an exclusive right to
operate be granted to the private entity undertaking the said project, in this case PIATCO.
Nonetheless, the privilege given to PIATCO is subject to reasonable regulation and supervision by
the Government through the MIAA, which is the government agency authorized to operate the NAIA
complex, as well as DOTC, the department to which MIAA is attached. 74

This is in accord with the Constitutional mandate that a monopoly which is not prohibited must be
regulated.75 While it is the declared policy of the BOT Law to encourage private sector participation
by "providing a climate of minimum government regulations," 76 the same does not mean that
Government must completely surrender its sovereign power to protect public interest in the operation
of a public utility as a monopoly. The operation of said public utility can not be done in an arbitrary
manner to the detriment of the public which it seeks to serve. The right granted to the public utility
may be exclusive but the exercise of the right cannot run riot. Thus, while PIATCO may be
authorized to exclusively operate NAIA IPT III as an international passenger terminal, the
Government, through the MIAA, has the right and the duty to ensure that it is done in accord with
public interest. PIATCO's right to operate NAIA IPT III cannot also violate the rights of third parties.

Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide:

3.01 Concession Period

xxx xxx xxx

(e) GRP confirms that certain concession agreements relative to certain services and operations
currently being undertaken at the Ninoy Aquino International Airport passenger Terminal I have a
validity period extending beyond the In-Service Date. GRP through DOTC/MIAA, confirms that
these services and operations shall not be carried over to the Terminal and the Concessionaire is
under no legal obligation to permit such carry-over except through a separate agreement duly
entered into with Concessionaire. In the event Concessionaire becomes involved in any litigation
initiated by any such concessionaire or operator, GRP undertakes and hereby holds Concessionaire
free and harmless on full indemnity basis from and against any loss and/or any liability resulting from
any such litigation, including the cost of litigation and the reasonable fees paid or payable to
Concessionaire's counsel of choice, all such amounts shall be fully deductible by way of an offset
from any amount which the Concessionaire is bound to pay GRP under this Agreement.

During the oral arguments on December 10, 2002, the counsel for the petitioners-in-intervention for
G.R. No. 155001 stated that there are two service providers whose contracts are still existing and
whose validity extends beyond the In-Service Date. One contract remains valid until 2008 and the
other until 2010.77

We hold that while the service providers presently operating at NAIA Terminal 1 do not have an
absolute right for the renewal or the extension of their respective contracts, those contracts whose
duration extends beyond NAIA IPT III's In-Service-Date should not be unduly prejudiced. These
contracts must be respected not just by the parties thereto but also by third parties. PIATCO cannot,
by law and certainly not by contract, render a valid and binding contract nugatory. PIATCO, by the
mere expedient of claiming an exclusive right to operate, cannot require the Government to break its
contractual obligations to the service providers. In contrast to the arrastre and stevedoring service
providers in the case of Anglo-Fil Trading Corporation v. Lazaro78 whose contracts consist of
temporary hold-over permits, the affected service providers in the cases at bar, have a valid and
binding contract with the Government, through MIAA, whose period of effectivity, as well as the other
terms and conditions thereof, cannot be violated.

In fine, the efficient functioning of NAIA IPT III is imbued with public interest. The provisions of the
1997 Concession Agreement and the ARCA did not strip government, thru the MIAA, of its right to
supervise the operation of the whole NAIA complex, including NAIA IPT III. As the primary
government agency tasked with the job, 79 it is MIAA's responsibility to ensure that whoever by
contract is given the right to operate NAIA IPT III will do so within the bounds of the law and with due
regard to the rights of third parties and above all, the interest of the public.

VI

CONCLUSION

In sum, this Court rules that in view of the absence of the requisite financial capacity of the Paircargo
Consortium, predecessor of respondent PIATCO, the award by the PBAC of the contract for the
construction, operation and maintenance of the NAIA IPT III is null and void. Further, considering
that the 1997 Concession Agreement contains material and substantial amendments, which
amendments had the effect of converting the 1997 Concession Agreement into an entirely different
agreement from the contract bidded upon, the 1997 Concession Agreement is similarly null and void
for being contrary to public policy. The provisions under Sections 4.04(b) and (c) in relation to
Section 1.06 of the 1997 Concession Agreement and Section 4.04(c) in relation to Section 1.06 of
the ARCA, which constitute a direct government guarantee expressly prohibited by, among others,
the BOT Law and its Implementing Rules and Regulations are also null and void. The Supplements,
being accessory contracts to the ARCA, are likewise null and void.

WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession
Agreement and the Supplements thereto are set aside for being null and void.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, Corona, and

Carpio-Morales, JJ., concur.
Vitug, J., see separate (dissenting) opinion.
Panganiban, J., please see separate opinion.
Quisumbing, J., no jurisdiction, please see separate opinion of J. Vitug in which he concurs.
Carpio, J., no part.
Callejo, Sr., J., also concur in the separate opinion of J. Panganiban.
Azcuna, J., joins the separate opinion of J. Vitug.

SEPARATE OPINIONS

VITUG, J.:

This Court is bereft of jurisdiction to hear the petitions at bar. The Constitution provides that the
Supreme Court shall exercise original jurisdiction over, among other actual controversies, petitions
for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.1 The cases in question,
although denominated to be petitions for prohibition, actually pray for the nullification of the PIATCO
contracts and to restrain respondents from implementing said agreements for being illegal and
unconstitutional.

Section 2, Rule 65 of the Rules of Court states:

"When the proceedings of any tribunal, corporation, board, officer or person, whether exercising
judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any
other plain, speedy and adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered commanding the respondent to desist from further proceedings in the action
or matter specified therein, or otherwise granting such incidental reliefs as law and justice may
require."

The rule is explicit. A petition for prohibition may be filed against a tribunal, corporation, board,
officer or person, exercising judicial, quasi-judicial or ministerial functions. What the petitions seek
from respondents do not involve judicial, quasi-judicial or ministerial functions. In prohibition, only
legal issues affecting the jurisdiction of the tribunal, board or officer involved may be resolved on the
basis of undisputed facts.2 The parties allege, respectively, contentious evidentiary facts. It would be
difficult, if not anomalous, to decide the jurisdictional issue on the basis of the contradictory factual
submissions made by the parties.3 As the Court has so often exhorted, it is not a trier of facts.

The petitions, in effect, are in the nature of actions for declaratory relief under Rule 63 of the Rules
of Court. The Rules provide that any person interested under a contract may, before breach or
violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his rights or duties thereunder. 4 The Supreme
Court assumes no jurisdiction over petitions for declaratory relief which are cognizable by regional
trial courts.5

As I have so expressed in Tolentino vs. Secretary of Finance, 6 reiterated in Santiago vs. Guingona,
Jr.7 , the Supreme Court should not be thought of as having been tasked with the awesome
responsibility of overseeing the entire bureaucracy. Pervasive and limitless, such as it may seem to
be under the 1987 Constitution, judicial power still succumbs to the paramount doctrine of separation
of powers. The Court may not at good liberty intrude, in the guise of sovereign imprimatur, into every
affair of government. What significance can still then remain of the time-honored and widely
acclaimed principle of separation of powers if, at every turn, the Court allows itself to pass upon at
will the disposition of a co-equal, independent and coordinate branch in our system of government. I
dread to think of the so varied uncertainties that such an undue interference can lead to.

Accordingly, I vote for the dismissal of the petition.

Quisumbing, and Azcuna, JJ., concur.

PANGANIBAN, J.:

The five contracts for the construction and the operation of Ninoy Aquino International Airport (NAIA)
Terminal III, the subject of the consolidated Petitions before the Court, are replete with outright
violations of law, public policy and the Constitution. The only proper thing to do is declare them all
null and void ab initio and let the chips fall where they may. Fiat iustitia ruat coelum.

The facts leading to this controversy are already well presented in the ponencia. I shall not burden
the readers with a retelling thereof. Instead, I will cut to the chase and directly address the two sets
of gut issues:

1. The first issue is procedural: Does the Supreme Court have original jurisdiction to hear and decide
the Petitions? Corollarily, do petitioners have locus standi and should this Court decide the cases
without any mandatory referral to arbitration?
2. The second one is substantive in character: Did the subject contracts violate the Constitution, the
laws, and public policy to such an extent as to render all of them void and inexistent?

My answer to all the above questions is a firm "Yes."

The Procedural Issue:

Jurisdiction, Standing and Arbitration

Definitely and surely, the issues involved in these Petitions are clearly of transcendental importance
and of national interest. The subject contracts pertain to the construction and the operation of the
country's premiere international airport terminal - an ultramodern world-class public utility that will
play a major role in the country's economic development and serve to project a positive image of our
country abroad. The five build-operate-&-transfer (BOT) contracts, while entailing the investment of
billions of pesos in capital and the availment of several hundred millions of dollars in loans, contain
provisions that tend to establish a monopoly, require the disbursements of public funds sans
appropriations, and provide government guarantees in violation of statutory prohibitions, as well as
other provisions equally offensive to law, public policy and the Constitution. Public interest will
inevitably be affected thereby.

Thus, objections to these Petitions, grounded upon (a) the hierarchy of courts, (b) the need for
arbitration prior to court action, and (c) the alleged lack of sufficient personality, standing or interest,
being in the main procedural matters, must now be set aside, as they have been in past cases. This
Court must be permitted to perform its constitutional duty of determining whether the other agencies
of government have acted within the limits of the Constitution and the laws, or if they have gravely
abused the discretion entrusted to them.1

Hierarchy of Courts

The Court has, in the past, held that questions relating to gargantuan government contracts ought to
be settled without delay. 2 This holding applies with greater force to the instant cases. Respondent
Piatco is partly correct in averring that petitioners can obtain relief from the regional trial courts via
an action to annul the contracts.

Nevertheless, the unavoidable consequence of having to await the rendition and the finality of any
such judgment would be a prolonged state of uncertainty that would be prejudicial to the nation, the
parties and the general public. And, in light of the feared loss of jobs of the petitioning workers,
consequent to the inevitable pretermination of contracts of the petitioning service providers that will
follow upon the heels of the impending opening of NAIA Terminal III, the need for relief is patently
urgent, and therefore, direct resort to this Court through the special civil action of prohibition is thus
justified.3

Contrary to Piatco's argument that the resolution of the issues raised in the Petitions will require
delving into factual questions, 4 I submit that their disposition ultimately turns on questions of law. 5
Further, many of the significant and relevant factual questions can be easily addressed by an
examination of the documents submitted by the parties. In any event, the Petitions raise some novel
questions involving the application of the amended BOT Law, which this Court has seen fit to tackle.

Arbitration

Should the dispute be referred to arbitration prior to judicial recourse? Respondent Piatco claims that
Section 10.02 of the Amended and Restated Concession Agreement (ARCA) provides for arbitration
under the auspices of the International Chamber of Commerce to settle any dispute or controversy
or claim arising in connection with the Concession Agreement, its amendments and supplements.
The government disagrees, however, insisting that there can be no arbitration based on Section
10.02 of the ARCA, since all the Piatco contracts are void ab initio. Therefore, all contractual
provisions, including Section 10.02 of the ARCA, are likewise void, inexistent and inoperative. To
support its stand, the government cites Chavez v. Presidential Commission on Good Government:6
"The void agreement will not be rendered operative by the parties' alleged performance (partial or
full) of their respective prestations. A contract that violates the Constitution and the law is null and
void ab initio and vests no rights and creates no obligations. It produces no legal effect at all."

As will be discussed at length later, the Piatco contracts are indeed void in their entirety; thus, a
resort to the aforesaid provision on arbitration is unavailing. Besides, petitioners and petitioners-in-
intervention have pointed out that, even granting arguendo that the arbitration clause remained a
valid provision, it still cannot bind them inasmuch as they are not parties to the Piatco contracts. And
in the final analysis, it is unarguable that the arbitration process provided for under Section 10.02 of
the ARCA, to be undertaken by a panel of three (3) arbitrators appointed in accordance with the
Rules of Arbitration of the International Chamber of Commerce, will not be able to address,
determine and definitively resolve the constitutional and legal questions that have been raised in the
Petitions before us.

Locus Standi

Given this Court's previous decisions in cases of similar import, no one will seriously doubt that,
being taxpayers and members of the House of Representatives, Petitioners Baterina et al. have
locus standi to bring the Petition in GR No. 155547. In Albano v. Reyes,7 this Court held that the
petitioner therein, suing as a citizen, taxpayer and member of the House of Representatives, was
sufficiently clothed with standing to bring the suit questioning the validity of the assailed contract.
The Court cited the fact that public interest was involved, in view of the important role of the Manila
International Container Terminal (MICT) in the country's economic development and the magnitude
of the financial consideration. This, notwithstanding the fact that expenditure of public funds was not
required under the assailed contract.

In the cases presently under consideration, petitioners' personal and substantial interest in the
controversy is shown by the fact that certain provisions in the Piatco contracts create obligations on
the part of government (through the DOTC and the MIAA) to disburse public funds without prior
congressional appropriations.

Petitioners thus correctly assert that the injury to them has a twofold aspect: (1) they are adversely
affected as taxpayers on account of the illegal disbursement of public funds; and (2) they are
prejudiced qua legislators, since the contractual provisions requiring the government to incur
expenditures without appropriations also operate as limitations upon the exclusive power and
prerogative of Congress over the public purse. As members of the House of Representatives, they
are actually deprived of discretion insofar as the inclusion of those items of expenditure in the budget
is concerned. To prevent such encroachment upon the legislative privilege and obviate injury to the
institution of which they are members, petitioners-legislators have locus standi to bring suit.

Messrs. Agan et al. and Lopez et al., are likewise taxpayers and thus possessed of standing to
challenge the illegal disbursement of public funds. Messrs. Agan et al., in particular, are employees
(or representatives of employees) of various service providers that have (1) existing concession
agreements with the MIAA to provide airport services necessary to the operation of the NAIA and (2)
service agreements to furnish essential support services to the international airlines operating at the
NAIA.
On the other hand, Messrs. Lopez et al. are employees of the MIAA. These petitioners (Messrs.
Agan et al. and Messrs. Lopez et al.) are confronted with the prospect of being laid off from their jobs
and losing their means of livelihood when their employer-companies are forced to shut down or
otherwise retrench and cut back on manpower. Such development would result from the imminent
implementation of certain provisions in the contracts that tend toward the creation of a monopoly in
favor of Piatco, its subsidiaries and related companies.

Petitioners-in-intervention are service providers in the business of furnishing airport-related services

to international airlines and passengers in the NAIA and are therefore competitors of Piatco as far as
that line of business is concerned. On account of provisions in the Piatco contracts, petitioners-in-
intervention have to enter into a written contract with Piatco so as not to be shut out of NAIA
Terminal III and barred from doing business there. Since there is no provision to ensure or safeguard
free and fair competition, they are literally at its mercy. They claim injury on account of their
deprivation of property (business) and of the liberty to contract, without due process of law.

And even if petitioners and petitioners-in-intervention were not sufficiently clothed with legal
standing, I have at the outset already established that, given its impact on the public and on national
interest, this controversy is laden with transcendental importance and constitutional significance.
Hence, I do not hesitate to adopt the same position as was enunciated in Kilosbayan v. Guingona
Jr.8 that "in cases of transcendental importance, the Court may relax the standing requirements and
allow a suit to prosper even when there is no direct injury to the party claiming the right of judicial
review."9

The Substantive Issue:

Violations of the Constitution and the Laws

From the Outset, the Bidding Process Was Flawed and Tainted

After studying the documents submitted and arguments advanced by the parties, I have no doubt
that, right at the outset, Piatco was not qualified to participate in the bidding process for the Terminal
III project, but was nevertheless permitted to do so. It even won the bidding and was helped along by
what appears to be a series of collusive and corrosive acts.

The build-operate-and-transfer (BOT) project for the NAIA Passenger Terminal III comes under the
category of an "unsolicited proposal," which is the subject of Section 4-A of the BOT Law. 10 The
unsolicited proposal was originally submitted by the Asia's Emerging Dragon Corporation (AEDC) to
the Department of Transportation and Communications (DOTC) and the Manila International Airport
Authority (MIAA), which reviewed and approved the proposal.

The draft of the concession agreement as negotiated between AEDC and DOTC/MIAA was
endorsed to the National Economic Development Authority (NEDA-ICC), which in turn reviewed it on
the basis of its scope, economic viability, financial indicators and risks; and thereafter approved it for
bidding.

The DOTC/MIAA then prepared the Bid Documents, incorporating therein the negotiated Draft
Concession Agreement, and published invitations for public bidding, i.e., for the submission of
comparative or competitive proposals. Piatco's predecessor-in-interest, the Paircargo Consortium,
was the only company that submitted a competitive bid or price challenge.

At this point, I must emphasize that the law requires the award of a BOT project to the bidder that
has satisfied the minimum requirements; and met the technical, financial, organizational and legal
standards provided in the BOT Law. Section 5 of this statute states:
"Sec. 5. Public bidding of projects. - . . .

"In the case of a build-operate-and-transfer arrangement, the contract shall be awarded to the bidder
who, having satisfied the minimum financial, technical, organizational and legal standards
required by this Act, has submitted the lowest bid and most favorable terms for the project, based
on the present value of its proposed tolls, fees, rentals and charges over a fixed term for the facility
to be constructed, rehabilitated, operated and maintained according to the prescribed minimum
design and performance standards, plans and specifications. . . ." (Emphasis supplied.)

The same provision requires that the price challenge via public bidding "must be conducted under a
two-envelope/two-stage system: the first envelope to contain the technical proposal and the second
envelope to contain the financial proposal." Moreover, the 1994 Implementing Rules and
Regulations (IRR) provide that only those bidders that have passed the prequalification stage are
permitted to have their two envelopes reviewed.

In other words, prospective bidders must prequalify by submitting their prequalification documents
for evaluation; and only the pre-qualified bidders would be entitled to have their bids opened,
evaluated and appreciated. On the other hand, disqualified bidders are to be informed of the reason
for their disqualification. This procedure was confirmed and reiterated in the Bid Documents, which I
quote thus: "Prequalified proponents will be considered eligible to move to second stage technical
proposal evaluation. The second and third envelopes of pre-disqualified proponents will be
returned."11

Aside from complying with the legal and technical requirements (track record or experience of the
firm and its key personnel), a project proponent desiring to prequalify must also demonstrate its
financial capacity to undertake the project. To establish such capability, a proponent must prove that
it is able to raise the minimum amount of equity required for the project and to procure the loans or
financing needed for it. Section 5.4(c) of the 1994 IRR provides:

"Sec. 5.4. Prequalification Requirements. - To pre-qualify, a project proponent must comply with the
following requirements:

xxx xxx xxx

"c. Financial Capability. The project proponent must have adequate capability to sustain the
financing requirements for the detailed engineering design, construction, and/or operation and
maintenance phases of the project, as the case may be. For purposes of prequalification, this
capability shall be measured in terms of: (i) proof of the ability of the project proponent and/or the
consortium to provide a minimum amount of equity to the project, and (ii) a letter testimonial from
reputable banks attesting that the project proponent and/or members of the consortium are banking
with them, that they are in good financial standing, and that they have adequate resources. The
government Agency/LGU concerned shall determine on a project-to-project basis, and before
prequalification, the minimum amount of equity needed. . . . ." (Italics supplied)

Since the minimum amount of equity for the project was set at 30 percent 12 of the minimum project
cost of US$350 million, the minimum amount of equity required of any proponent stood at US$105
million. Converted to pesos at the exchange rate then of P26.239 to US$1.00 (as quoted by the
Bangko Sentral ng Pilipinas), the peso equivalent of the minimum equity was P2,755,095,000.

However, the combined equity or net worth of the Paircargo consortium stood at only
P558,384,871.55.13 This amount was only slightly over 6 percent of the minimum project cost and
very much short of the required minimum equity, which was equivalent to 30 percent of the project
cost. Such deficiency should have immediately caused the disqualification of the Paircargo
consortium. This matter was brought to the attention of the Prequalification and Bidding Committee
(PBAC).

Notwithstanding the glaring deficiency, DOTC Undersecretary Primitivo C. Cal, concurrent chair of
the PBAC, declared in a Memorandum dated 14 October 1996 that "the Challenger (Paircargo
consortium) was found to have a combined net worth of P3,926,421,242.00 that could support a
project costing approximately P13 billion." To justify his conclusion, he asserted: "It is not a
requirement that the networth must be `unrestricted'. To impose this as a requirement now will be
nothing less than unfair."

He further opined, "(T)he networth reflected in the Financial Statement should not be taken as the
amount of money to be used to answer the required thirty (30%) percent equity of the challenger but
rather to be used in establishing if there is enough basis to believe that the challenger can comply
with the required 30% equity. In fact, proof of sufficient equity is required as one of the conditions for
award of contract (Sec. 12.1 of IRR of the BOT Law) but not for prequalification (Sec. 5.4 of same
document)."

On the basis of the foregoing dubious declaration, the Paircargo consortium was deemed
prequalified and thus permitted to proceed to the other stages of the bidding process.

By virtue of the prequalified status conferred upon the Paircargo, Undersecretary Cal's findings in
effect relieved the consortium of the need to comply with the financial capability requirement
imposed by the BOT Law and IRR. This position is unmistakably and squarely at odds with the
Supreme Court's consistent doctrine emphasizing the strict application of pertinent rules, regulations
and guidelines for the public bidding process, in order to place each bidder - actual or potential - on
the same footing. Thus, it is unarguably irregular and contrary to the very concept of public bidding
to permit a variance between the conditions under which bids are invited and those under which
proposals are submitted and approved.

Republic v. Capulong,14 teaches that if one bidder is relieved from having to conform to the
conditions that impose some duty upon it, that bidder is not contracting in fair competition with those
bidders that propose to be bound by all conditions. The essence of public bidding is, after all, an
opportunity for fair competition and a basis for the precise comparison of bids. 15 Thus, each bidder
must bid under the same conditions; and be subject to the same guidelines, requirements and
limitations. The desired result is to be able to determine the best offer or lowest bid, all things being
equal.

Inasmuch as the Paircargo consortium did not possess the minimum equity equivalent to 30 percent
of the minimum project cost, it should not have been prequalified or allowed to participate further in
the bidding. The Prequalification and Bidding Committee (PBAC) should therefore not have opened
the two envelopes of the consortium containing its technical and financial proposals; required AEDC
to match the consortium's bid; 16 or awarded the Concession Agreement to the consortium's
successor-in-interest, Piatco.

As there was effectively no public bidding to speak of, the entire bidding process having been flawed
and tainted from the very outset, therefore, the award of the concession to Paircargo's successor
Piatco was void, and the Concession Agreement executed with the latter was likewise void ab initio.
For this reason, Piatco cannot and should not be allowed to benefit from that Agreement. 17

AEDC Was Deprived of the Right to Match PIATCO's Price Challenge

In DOTC PBAC Bid Bulletin No. 4 (par. 3), Undersecretary Cal declared that, for purposes of
matching the price challenge of Piatco, AEDC as originator of the unsolicited proposal would be
permitted access only to the schedule of proposed Annual Guaranteed Payments submitted by
Piatco, and not to the latter's financial and technical proposals that constituted the basis for the price
challenge in the first place. This was supposedly in keeping with Section 11.6 of the 1994 IRR, which
provides that proprietary information is to be respected, protected and treated with utmost
confidentiality, and is therefore not to form part of the bidding/tender and related documents.

This pronouncement, I believe, was a grievous misapplication of the mentioned provision. The
"proprietary information" referred to in Section 11.6 of the IRR pertains only to the proprietary
information of the originator of an unsolicited proposal, and not to those belonging to a challenger.
The reason for the protection accorded proprietary information at all is the fact that, according to
Section 4-A of the BOT Law as amended, a proposal qualifies as an "unsolicited proposal" when it
pertains to a project that involves "a new concept or technology", and/or a project that is not on the
government's list of priority projects.

To be considered as utilizing a new concept or technology, a project must involve the possession of
exclusive rights (worldwide or regional) over a process; or possession of intellectual property rights
over a design, methodology or engineering concept. 18 Patently, the intent of the BOT Law is to
encourage individuals and groups to come up with creative innovations, fresh ideas and new
technology. Hence, the significance and necessity of protecting proprietary information in connection
with unsolicited proposals. And to make the encouragement real, the law also extends to such
individuals and groups what amounts to a "right of first refusal" to undertake the project they
conceptualized, involving the use of new technology or concepts, through the mechanism of
matching a price challenge.

A competing bid is never just any figure conjured from out of the blue; it is arrived at after studying
economic, financial, technical and other, factors; it is likewise based on certain assumptions as to
the nature of the business, the market potentials, the probable demand for the product or service,
the future behavior of cost items, political and other risks, and so on. It is thus self-evident that in
order to be able to intelligently match a bid or price challenge, a bidder must be given access to the
assumptions and the calculations that went into crafting the competing bid.

In this instance, the financial and technical proposals of Piatco would have provided AEDC with the
necessary information to enable it to make a reasonably informed matching bid. To put it more
simply, a bidder unable to access the competitor's assumptions will never figure out how the
competing bid came about; requiring him to "counter-propose" is like having him shoot at a target in
the dark while blindfolded.

By withholding from AEDC the challenger's financial and technical proposals containing the critical
information it needed, Undersecretary Cal actually and effectively deprived AEDC of the ability to
match the price challenge. One could say that AEDC did not have the benefit of a "level playing
field." It seems to me, though, that AEDC was actually shut out of the game altogether.

At the end of the day, the bottom line is that the validity and the propriety of the award to Piatco had
been irreparably impaired.

Delayed Issuance of the Notice of Award Violated the BOT Law and the IRR

Section 9.5 of the IRR requires that the Notice of Award must indicate the time frame within which
the winner of the bidding (and therefore the prospective awardee) shall submit the prescribed
performance security, proof of commitment of equity contributions, and indications of sources of
financing (loans); and, in the case of joint ventures, an agreement showing that the members are
jointly and severally responsible for the obligations of the project proponent under the contract.
The purpose of having a definite and firm timetable for the submission of the aforementioned
requirements is not only to prevent delays in the project implementation, but also to expose and
weed out unqualified proponents, who might have unceremoniously slipped through the earlier
prequalification process, by compelling them to put their money where their mouths are, so to speak.

Nevertheless, this provision can be easily circumvented by merely postponing the actual issuance of
the Notice of Award, in order to give the favored proponent sufficient time to comply with the
requirements. Hence, to avert or minimize the manipulation of the post-bidding process, the IRR not
only set out the precise sequence of events occurring between the completion of the evaluation of
the technical bids and the issuance of the Notice of Award, but also specified the timetables for each
such event. Definite allowable extensions of time were provided for, as were the consequences of a
failure to meet a particular deadline.

In particular, Section 9.1 of the 1994 IRR prescribed that within 30 calendar days from the time the
second-stage evaluation shall have been completed, the Committee must come to a decision
whether or not to award the contract and, within 7 days therefrom, the Notice of Award must be
approved by the head of agency or local government unit (LGU) concerned, and its issuance must
follow within another 7 days thereafter.

Section 9.2 of the IRR set the procedure applicable to projects involving substantial government
undertakings as follows: Within 7 days after the decision to award is made, the draft contract shall be
submitted to the ICC for clearance on a no-objection basis. If the draft contract includes government
undertakings already previously approved, then the submission shall be for information only.

However, should there be additional or new provisions different from the original government
undertakings, the draft shall have to be reviewed and approved. The ICC has 15 working days to act
thereon, and unless otherwise specified, its failure to act on the contract within the specified time
frame signifies that the agency or LGU may proceed with the award. The head of agency or LGU
shall approve the Notice of Award within seven days of the clearance by the ICC on a no-objection
basis, and the Notice itself has to be issued within seven days thereafter.

The highly regulated time-frames within which the agents of government were to act evinced the
intent to impose upon them the duty to act expeditiously throughout the process, to the end that the
project be prosecuted and implemented without delay. This regulated scenario was likewise
intended to discourage collusion and substantially reduce the opportunity for agents of government
to abuse their discretion in the course of the award process.

Despite the clear timetables set out in the IRR, several lengthy and still-unexplained delays occurred
in the award process, as can be observed from the presentation made by the counsel for public
respondents,19 quoted hereinbelow:

"11 Dec. 1996 - The Paircargo Joint Venture was informed by the PBAC that AEDC failed to match
and that negotiations preparatory to Notice of Award should be commenced. This was the decision
to award that should have commenced the running of the 7-day period to approve the Notice of
Award, as per Section 9.1 of the IRR, or to submit the draft contract to the ICC for approval
conformably with Section 9.2.

"01 April 1997 - The PBAC resolved that a copy of the final draft of the Concession Agreement be
submitted to the NEDA for clearance on a no-objection basis. This resolution came more than 3
months too late as it should have been made on the 20th of December 1996 at the latest.

"16 April 1997 - The PBAC resolved that the period of signing the Concession Agreement be
extended by 15 days.
"18 April 1997 - NEDA approved the Concession Agreement. Again this is more than 3 months too
late as the NEDA's decision should have been released on the 16th of January 1997 or fifteen days
after it should have been submitted to it for review.

"09 July 1997 - The Notice of Award was issued to PIATCO. Following the provisions of the IRR, the
Notice of Award should have been issued fourteen days after NEDA's approval, or the 28th of
January 1997. In any case, even if it were to be assumed that the release of NEDA's approval on the
18th of April was timely, the Notice of Award should have been issued on the 9th of May 1997. In
both cases, therefore, the release of the Notice of Award occurred in a decidedly less than timely
fashion."

This chronology of events bespeaks an unmistakable disregard, if not disdain, by the persons in
charge of the award process for the time limitations prescribed by the IRR. Their attitude flies in the
face of this Court's solemn pronouncement in Republic v. Capulong,20 that "strict observance of the
rules, regulations and guidelines of the bidding process is the only safeguard to a fair, honest and
competitive public bidding."

From the foregoing, the only conclusion that can possibly be drawn is that the BOT law and its IRR
were repeatedly violated with unmitigated impunity - and by agents of government, no less! On
account of such violation, the award of the contract to Piatco, which undoubtedly gained time and
benefited from the delays, must be deemed null and void from the beginning.

Further Amendments Resulted in a Substantially Different Contract, Awarded Without Public

Bidding

But the violations and desecrations did not stop there. After the PBAC made its decision on
December 11, 1996 to award the contract to Piatco, the latter negotiated changes to the Contract
bidded out and ended up with what amounts to a substantially new contract without any public
bidding. This Contract was subsequently further amended four more times through negotiation and
without any bidding. Thus, the contract actually executed between Piatco and DOTC/MIAA on July
12, 1997 (the Concession Agreement or "CA") differed from the contract bidded out (the draft
concession agreement or "DCA") in the following very significant respects:

1. The CA inserted stipulations creating a monopoly in favor of Piatco in the business of providing
airport-related services for international airlines and passengers. 21
2. The CA provided that government is to answer for Piatco's unpaid loans and debts (lumped under
the term Attendant Liabilities) in the event Piatco fails to pay its senior lenders. 22

3. The CA provided that in case of termination of the contract due to the fault of government,
government shall pay all expenses that Piatco incurred for the project plus the appraised value of the
Terminal.23

4. The CA imposed new and special obligations on government, including delivery of clean
possession of the site for the terminal; acquisition of additional land at the government's expense for
construction of road networks required by Piatco's approved plans and specifications; and
assistance to Piatco in securing site utilities, as well as all necessary permits, licenses and
authorizations.24

5. Where Section 3.02 of the DCA requires government to refrain from competing with the contractor
with respect to the operation of NAIA Terminal III, Section 3.02(b) of the CA excludes and prohibits
everyone, including government, from directly or indirectly competing with Piatco, with respect to the
operation of, as well as operations in, NAIA Terminal III. Operations in is sufficiently broad to
encompass all retail and other commercial business enterprises operating within Terminal III,
inclusive of the businesses of providing various airport-related services to international airlines,
within the scope of the prohibition.

6. Under Section 6.01 of the DCA, the following fees are subject to the written approval of MIAA:
lease/rental charges, concession privilege fees for passenger services, food services, transportation
utility concessions, groundhandling, catering and miscellaneous concession fees, porterage fees,
greeter/well-wisher fees, carpark fees, advertising fees, VIP facilities fees and others. Moreover,
adjustments to the groundhandling fees, rentals and porterage fees are permitted only once every
two years and in accordance with a parametric formula, per DCA Section 6.03. However, the CA as
executed with Piatco provides in Section 6.06 that all the aforesaid fees, rentals and charges may be
adjusted without MIAA's approval or intervention. Neither are the adjustments to these fees and
charges subject to or limited by any parametric formula. 25

7. Section 1.29 of the DCA provides that the terminal fees, aircraft tacking fees, aircraft parking fees,
check-in counter fees and other fees are to be quoted and paid in Philippine pesos. But per Section
1.33 of the CA, all the aforesaid fees save the terminal fee are denominated in US Dollars.

8. Under Section 8.07 of the DCA, the term attendant liabilities refers to liabilities pertinent to NAIA
Terminal III, such as payment of lease rentals and performance of other obligations under the Land
Lease Agreement; the obligations under the Tenant Agreements; and payment of all taxes, fees,
charges and assessments of whatever kind that may be imposed on NAIA Terminal III or parts
thereof. But in Section 1.06 of the CA, Attendant Liabilities refers to unpaid debts of Piatco: "All
amounts recorded and from time to time outstanding in the books of (Piatco) as owing to Unpaid
Creditors who have provided, loaned or advanced funds actually used for the Project, including all
interests, penalties, associated fees, charges, surcharges, indemnities, reimbursements and other
related expenses, and further including amounts owed by [Piatco] to its suppliers, contractors and
subcontractors."

9. Per Sections 8.04 and 8.06 of the DCA, government may, on account of the contractors breach,
rescind the contract and select one of four options: (a) take over the terminal and assume all its
attendant liabilities; (b) allow the contractor's creditors to assign the Project to another entity
acceptable to DOTC/MIAA; (c) pay the contractor rent for the facilities and equipment the DOTC
may utilize; or (d) purchase the terminal at a price established by independent appraisers.
Depending on the option selected, government may take immediate possession and control of the
terminal and its operations. Government will be obligated to compensate the contractor for the
"equivalent or proportionate contract costs actually disbursed," but only where government is the
one in breach of the contract. But under Section 8.06(a) of the CA, whether on account of Piatco's
breach of contract or its inability to pay its creditors, government is obliged to either (a) take over
Terminal III and assume all of Piatco's debts or (b) permit the qualified unpaid creditors to be
substituted in place of Piatco or to designate a new operator. And in the event of government's
breach of contract, Piatco may compel it to purchase the terminal at fair market value, per Section
8.06(b) of the CA.

10. Under the DCA, any delay by Piatco in the payment of the amounts due the government
constitutes breach of contract. However, under the CA, such delay does not necessarily constitute
breach of contract, since Piatco is permitted to suspend payments to the government in order to first
satisfy the claims of its secured creditors, per Section 8.04(d) of the CA.

It goes without saying that the amendment of the Contract bidded out (the DCA or draft concession
agreement) - in such substantial manner, without any public bidding, and after the bidding process
had been concluded on December 11, 1996 - is violative of public policy on public biddings, as well
as the spirit and intent of the BOT Law. The whole point of going through the public bidding exercise
was completely lost. Its very rationale was totally subverted by permitting Piatco to amend the
contract for which public bidding had already been concluded. Competitive bidding aims to obtain
the best deal possible by fostering transparency and preventing favoritism, collusion and fraud in the
awarding of contracts. That is the reason why procedural rules pertaining to public bidding demand
strict observance.26

In a relatively early case, Caltex v. Delgado Brothers,27 this Court made it clear that substantive
amendments to a contract for which a public bidding has already been finished should only be
awarded after another public bidding:

"The due execution of a contract after public bidding is a limitation upon the right of the contracting
parties to alter or amend it without another public bidding, for otherwise what would a public bidding
be good for if after the execution of a contract after public bidding, the contracting parties may alter
or amend the contract, or even cancel it, at their will? Public biddings are held for the protection of
the public, and to give the public the best possible advantages by means of open competition
between the bidders. He who bids or offers the best terms is awarded the contract subject of the bid,
and it is obvious that such protection and best possible advantages to the public will disappear if the
parties to a contract executed after public bidding may alter or amend it without another previous
public bidding."28

The aforementioned case dealt with the unauthorized amendment of a contract executed after public
bidding; in the situation before us, the amendments were made also after the bidding, but prior to
execution. Be that as it may, the same rationale underlying Caltex applies to the present situation
with equal force. Allowing the winning bidder to renegotiate the contract for which the bidding
process has ended is tantamount to permitting it to put in anything it wants. Here, the winning bidder
(Piatco) did not even bother to wait until after actual execution of the contract before rushing to
amend it. Perhaps it believed that if the changes were made to a contract already won through
bidding (DCA) instead of waiting until it is executed, the amendments would not be noticed or
discovered by the public.

In a later case, Mata v. San Diego,29 this Court reiterated its ruling as follows:

"It is true that modification of government contracts, after the same had been awarded after a public
bidding, is not allowed because such modification serves to nullify the effects of the bidding and
whatever advantages the Government had secured thereby and may also result in manifest injustice
to the other bidders. This prohibition, however, refers to a change in vital and essential particulars of
the agreement which results in a substantially new contract."

Piatco's counter-argument may be summed up thus: There was nothing in the 1994 IRR that
prohibited further negotiations and eventual amendments to the DCA even after the bidding had
been concluded. In fact, PBAC Bid Bulletin No. 3 states: "[A]mendments to the Draft Concession
Agreement shall be issued from time to time. Said amendments will only cover items that would not
materially affect the preparation of the proponent's proposal."

I submit that accepting such warped argument will result in perverting the policy underlying public
bidding. The BOT Law cannot be said to allow the negotiation of contractual stipulations resulting in
a substantially new contract after the bidding process and price challenge had been concluded. In
fact, the BOT Law, in recognition of the time, money and effort invested in an unsolicited proposal,
accords its originator the privilege of matching the challenger's bid.
Section 4-A of the BOT Law specifically refers to a "lower price proposal" by a competing bidder; and
to the right of the original proponent "to match the price" of the challenger. Thus, only the price
proposals are in play. The terms, conditions and stipulations in the contract for which public bidding
has been concluded are understood to remain intact and not be subject to further negotiation.
Otherwise, the very essence of public bidding will be destroyed - there will be no basis for an exact
comparison between bids.

Moreover, Piatco misinterpreted the meaning behind PBAC Bid Bulletin No. 3. The phrase
amendments . . . from time to time refers only to those amendments to the draft concession
agreement issued by the PBAC prior to the submission of the price challenge; it certainly does not
include or permit amendments negotiated for and introduced after the bidding process, has been
terminated.

Piatco's Concession Agreement Was Further Amended, (ARCA) Again Without Public
Bidding

Not satisfied with the Concession Agreement, Piatco - once more without bothering with public
bidding - negotiated with government for still more substantial changes. The result was the Amended
and Restated Concession Agreement (ARCA) executed on November 26, 1998. The following
changes were introduced:

1. The definition of Attendant Liabilities was further amended with the result that the unpaid loans of
Piatco, for which government may be required to answer, are no longer limited to only those loans
recorded in Piatco's books or loans whose proceeds were actually used in the Terminal III project. 30

2. Although the contract may be terminated due to breach by Piatco, it will not be liable to pay the
government any Liquidated Damages if a new operator is designated to take over the operation of
the terminal.31

3. The Liquidated Damages which government becomes liable for in case of its breach of contract
were substantially increased. 32

4. Government's right to appoint a comptroller for Piatco in case the latter encounters liquidity
problems was deleted.33

5. Government is made liable for Incremental and Consequential Costs and Losses in case it fails to
comply or cause any third party under its direct or indirect control to comply with the special
obligations imposed on government. 34

6. The insurance policies obtained by Piatco covering the terminal are now required to be assigned
to the Senior Lenders as security for the loans; previously, their proceeds were to be used to repair
and rehabilitate the facility in case of damage.35

7. Government bound itself to set the initial rate of the terminal fee, to be charged when Terminal III
begins operations, at an amount higher than US$20. 36

8. Government waived its defense of the illegality of the contract and even agreed to be liable to pay
damages to Piatco in the event the contract was declared illegal. 37

9. Even though government may be entitled to terminate the ARCA on account of breach by Piatco,
government is still liable to pay Piatco the appraised value of Terminal III or the Attendant Liabilities,
if the termination occurs before the In-Service Date. 38 This condition contravenes the BOT Law
provision on termination compensation.
10. Government is obligated to take the administrative action required for Piatco's imposition,
collection and application of all Public Utility Revenues. 39 No such obligation existed previously.

11. Government is now also obligated to perform and cause other persons and entities under its
direct or indirect control to perform all acts necessary to perfect the security interests to be created in
favor of Piatco's Senior Lenders.40 No such obligation existed previously.

12. DOTC/MIAA's right of intervention in instances where Piatco's Non-Public Utility Revenues
become exorbitant or excessive has been removed. 41

13. The illegality and unenforceability of the ARCA or any of its material provisions was made an
event of default on the part of government only, thus constituting a ground for Piatco to terminate the
ARCA.42

14. Amounts due from and payable by government under the contract were made payable on
demand - net of taxes, levies, imposts, duties, charges or fees of any kind except as required by
law.43

15. The Parametric Formula in the contract, which is utilized to compute for adjustments/increases to
the public utility revenues (i.e., aircraft parking and tacking fees, check-in counter fee and terminal
fee), was revised to permit Piatco to input its more costly short-term borrowing rates instead of the
longer-terms rates in the computations for adjustments, with the end result that the changes will
redound to its greater financial benefit.

16. The Certificate of Completion simply deleted the successful performance-testing of the terminal
facility in accordance with defined performance standards as a pre-condition for government's
acceptance of the terminal facility.44

In sum, the foregoing revisions and amendments as embodied in the ARCA constitute very material
alterations of the terms and conditions of the CA, and give further manifestly undue advantage to
Piatco at the expense of government. Piatco claims that the changes to the CA were necessitated by
the demands of its foreign lenders. However, no proof whatsoever has been adduced to buttress
this claim.

In any event, it is quite patent that the sum total of the aforementioned changes resulted in
drastically weakening the position of government to a degree that seems quite excessive, even from
the standpoint of a businessperson who regularly transacts with banks and foreign lenders, is
familiar with their mind-set, and understands what motivates them. On the other hand, whatever it
was that impelled government officials concerned to accede to those grossly disadvantageous
changes, I can only hazard a guess.

There is no question in my mind that the ARCA was unauthorized and illegal for lack of public
bidding and for being patently disadvantageous to government.

The Three Supplements Imposed New Obligations on Government, Also Without Prior Public
Bidding

After Piatco had managed to breach the protective rampart of public bidding, it recklessly went on a
rampage of further assaults on the ARCA.

The First Supplement Is as Void as the ARCA

In the First Supplement ("FS") executed on August 27, 1999, the following changes were made to
the ARCA:
1. The amounts payable by Piatco to government were reduced by allowing additional exceptions to
the Gross Revenues in which government is supposed to participate. 45

2. Made part of the properties which government is obliged to construct and/or maintain and keep in
good repair are (a) the access road connecting Terminals II and III - the construction of this access
road is the obligation of Piatco, in lieu of its obligation to construct an Access Tunnel connecting
Terminals II and III; and (b) the taxilane and taxiway - these are likewise part of Piatco's obligations,
since they are part and parcel of the project as described in Clause 1.3 of the Bid Documents . 46

3. The MIAA is obligated to provide funding for the maintenance and repair of the airports and
facilities owned or operated by it and by third persons under its control. It will also be liable to Piatco
for the latter's losses, expenses and damages as well as liability to third persons, in case MIAA fails
to perform such obligations. In addition, MIAA will also be liable for the incremental and
consequential costs of the remedial work done by Piatco on account of the former's default. 47

4. The FS also imposed on government ten (10) "Additional Special Obligations," including the
following:

(a) Working for the removal of the general aviation traffic from the NAIA airport complex 48

(b) Providing through MIAA the land required by Piatco for the taxilane and one taxiway at no cost to
Piatco49

(c) Implementing the government's existing storm drainage master plan 50

(d) Coordinating with DPWH the financing, the implementation and the completion of the following
works before the In-Service Date: three left-turning overpasses (EDSA to Tramo St., Tramo to
Andrews Ave., and Manlunas Road to Sales Ave.); 51 and a road upgrade and improvement program
involving widening, repair and resurfacing of Sales Road, Andrews Avenue and Manlunas Road;
improvement of Nichols Interchange; and removal of squatters along Andrews Avenue. 52

(e) Dealing directly with BCDA and the Phil. Air Force in acquiring additional land or right of way for
the road upgrade and improvement program. 53

5. Government is required to work for the immediate reversion to MIAA of the Nayong Pilipino
National Park.54

6. Government's share in the terminal fees collected was revised from a flat rate of P180 to 36
percent thereof; together with government's percentage share in the gross revenues of Piatco, the
amount will be remitted to government in pesos instead of US dollars. 55 This amendment enables
Piatco to benefit from the further erosion of the peso-dollar exchange rate, while preventing
government from building up its foreign exchange reserves.

7. All payments from Piatco to government are now to be invoiced to MIAA, and payments are to
accrue to the latter's exclusive benefit. 56 This move appears to be in support of the funds MIAA
advanced to DPWH.

I must emphasize that the First Supplement is void in two respects. First, it is merely an amendment
to the ARCA, upon which it is wholly dependent; therefore, since the ARCA is void, inexistent and
not capable of being ratified or amended, it follows that the FS too is void, inexistent and inoperative.
Second, even assuming arguendo that the ARCA is somehow remotely valid, nonetheless the FS, in
imposing significant new obligations upon government, altered the fundamental terms and
stipulations of the ARCA, thus necessitating a public bidding all over again. That the FS was entered
into sans public bidding renders it utterly void and inoperative.
The Second Supplement Is Similarly Void and Inexistent

The Second Supplement ("SS") was executed between the government and Piatco on September 4,
2000. It calls for Piatco, acting not as concessionaire of NAIA Terminal III but as a public works
contractor, to undertake - in the government's stead - the clearing, removal, demolition and disposal
of improvements, subterranean obstructions and waste materials at the project site. 57

The scope of the works, the procedures involved, and the obligations of the contractor are provided
for in Parts II and III of the SS. Section 4.1 sets out the compensation to be paid, listing specific rates
per cubic meter of materials for each phase of the work - excavation, leveling, removal and disposal,
backfilling and dewatering. The amounts collectible by Piatco are to be offset against the Annual
Guaranteed Payments it must pay government.

Though denominated as Second Supplement, it was nothing less than an entirely new public works
contract. Yet it, too, did not undergo any public bidding, for which reason it is also void and
inoperative.

Not surprisingly, Piatco had to subcontract the works to a certain Wintrack Builders, a firm reputedly
owned by a former high-ranking DOTC official. But that is another story altogether.

The Third Supplement Is Likewise Void and Inexistent

The Third Supplement ("TS"), executed between the government and Piatco on June 22, 2001,
passed on to the government certain obligations of Piatco as Terminal III concessionaire, with
respect to the surface road connecting Terminals II and III.

By way of background, at the inception of and forming part of the NAIA Terminal III project was the
proposed construction of an access tunnel crossing Runway 13/31, which. would connect Terminal
III to Terminal II. The Bid Documents in Section 4.1.2.3[B][i] declared that the said access tunnel
was subject to further negotiation; but for purposes of the bidding, the proponent should submit a bid
for it as well. Therefore, the tunnel was supposed to be part and parcel of the Terminal III project.

However, in Section 5 of the First Supplement, the parties declared that the access tunnel was not
economically viable at that time. In lieu thereof, the parties agreed that a surface access road (now
called the T2-T3 Road) was to be constructed by Piatco to connect the two terminals. Since it was
plainly in substitution of the tunnel, the surface road construction should likewise be considered part
and parcel of the same project, and therefore part of Piatco's obligation as well. While the access
tunnel was estimated to cost about P800 million, the surface road would have a price tag in the
vicinity of about P100 million, thus producing significant savings for Piatco.

Yet, the Third Supplement, while confirming that Piatco would construct the T2-T3 Road,
nevertheless shifted to government some of the obligations pertaining to the former, as follows:

1. Government is now obliged to remove at its own expense all tenants, squatters, improvements
and/or waste materials on the site where the T2-T3 road is to be constructed. 58 There was no similar
obligation on the part of government insofar as the access tunnel was concerned.

2. Should government fail to carry out its obligation as above described, Piatco may undertake it on
government's behalf, subject to the terms and conditions (including compensation payments)
contained in the Second Supplement.59

3. MIAA will answer for the operation, maintenance and repair of the T2-T3 Road. 60
The TS depends upon and is intended to supplement the ARCA as well as the First Supplement,
both of which are void and inexistent and not capable of being ratified or amended. It follows that the
TS is likewise void, inexistent and inoperative. And even if, hypothetically speaking, both ARCA and
FS are valid, still, the Third Supplement - imposing as it does significant new obligations upon
government - would in effect alter the terms and stipulations of the ARCA in material respects, thus
necessitating another public bidding. Since the TS was not subjected to public bidding, it is
consequently utterly void as well. At any rate, the TS created new monetary obligations on the part
of government, for which there were no prior appropriations. Hence it follows that the same is void
ab initio.

In patiently tracing the progress of the Piatco contracts from their inception up to the present, I noted
that the whole process was riddled with significant lapses, if not outright irregularity and wholesale
violations of law and public policy. The rationale of beginning at the beginning, so to speak, will
become evident when the question of what to do with the five Piatco contracts is discussed later on.

In the meantime, I shall take up specific, provisions or changes in the contracts and highlight the
more prominent objectionable features.

Government Directly Guarantees Piatco Debts

Certainly the most discussed provision in the parties' arguments is the one creating an unauthorized,
direct government guarantee of Piatco's obligations in favor of the lenders.

Section 4-A of the BOT Law as amended states that unsolicited proposals, such as the NAIA
Terminal III Project, may be accepted by government provided inter alia that no direct government
guarantee, subsidy or equity is required. In short, such guarantee is prohibited in unsolicited
proposals. Section 2(n) of the same legislation defines direct government guarantee as "an
agreement whereby the government or any of its agencies or local government units (will) assume
responsibility for the repayment of debt directly incurred by the project proponent in implementing
the project in case of a loan default."

Both the CA and the ARCA have provisions that undeniably create such prohibited government
guarantee. Section 4.04 (c)(iv) to (vi) of the ARCA, which is similar to Section 4.04 of the CA,
provides thus:

"(iv) that if Concessionaire is in default under a payment obligation owed to the Senior Lenders, and
as a result thereof the Senior Lenders have become entitled to accelerate the Senior Loans, the
Senior Lenders shall have the right to notify GRP of the same . . .;

(v) . . . the Senior Lenders may after written notification to GRP, transfer the Concessionaire's rights
and obligations to a transferee . . .;

(vi) if the Senior Lenders . . . are unable to . . . effect a transfer . . ., then GRP and the Senior
Lenders shall endeavor . . . to enter into any other arrangement relating to the Development Facility .
. . If no agreement relating to the Development Facility is arrived at by GRP and the Senior Lenders
within the said 180-day period, then at the end thereof the Development Facility shall be transferred
by the Concessionaire to GRP or its designee and GRP shall make a termination payment to
Concessionaire equal to the Appraised Value (as hereinafter defined) of the Development Facility or
the sum of the Attendant Liabilities, if greater. . . ."

In turn, the term Attendant Liabilities is defined in Section 1.06 of the ARCA as follows:
"Attendant Liabilities refer to all amounts in each case supported by verifiable evidence from time to
time owed or which may become, owing by Concessionaire to Senior Lenders or any other persons
or entities who have provided, loaned or advanced funds or provided financial facilities to
Concessionaire for the Project, including, without limitation, all principal, interest, associated fees,
charges, reimbursements, and other related expenses (including the fees, charges and expenses of
any agents or trustees of such persons or entities), whether payable at maturity, by acceleration or
otherwise, and further including amounts owed by Concessionaire to its professional consultants and
advisers, suppliers, contractors and sub-contractors."

Government's agreement to pay becomes effective in the event of a default by Piatco on any of its
loan obligations to the Senior Lenders, and the amount to be paid by government is the greater of
either the Appraised Value of Terminal III or the aggregate amount of the moneys owed by
Piatco - whether to the Senior Lenders or to other entities, including its suppliers, contractors and
subcontractors. In effect, therefore, this agreement already constitutes the prohibited assumption by
government of responsibility for repayment of Piatco's debts in case of a loan default. In fine, a direct
government guarantee.

It matters not that there is a roundabout procedure prescribed by Section 4.04(c)(iv), (v) and (vi) that
would require, first, an attempt (albeit unsuccessful) by the Senior Lenders to transfer Piatco's rights
to a transferee of their choice; and, second, an effort (equally unsuccessful) to "enter into any other
arrangement" with the government regarding the Terminal III facility, before government is required
to make good on its guarantee. What is abundantly clear is the fact that, in the devious labyrinthine
process detailed in the aforesaid section, it is entirely within the Senior Lenders' power, prerogative
and control - exercisable via a mere refusal or inability to agree upon "a transferee" or "any other
arrangement" regarding the terminal facility - to push the process forward to the ultimate contractual
cul-de-sac, wherein government will be compelled to abjectly surrender and make good on its
guarantee of payment.

Piatco also argues that there is no proviso requiring government to pay the Senior Lenders in the
event of Piatco's default. This is literally true, in the sense that Section 4.04(c)(vi) of ARCA speaks of
government making the termination payment to Piatco, not to the lenders. However, it is almost a
certainty that the Senior Lenders will already have made Piatco sign over to them, ahead of time, its
right to receive such payments from government; and/or they may already have had themselves
appointed its attorneys-in-fact for the purpose of collecting and receiving such payments.

Nevertheless, as petitioners-in-intervention pointed out in their Memorandum, 61 the termination

payment is to be made to Piatco, not to the lenders; and there is no provision anywhere in the
contract documents to prevent it from diverting the proceeds to its own benefit and/or to ensure that
it will necessarily use the same to pay off the Senior Lenders and other creditors, in order to avert
the foreclosure of the mortgage and other liens on the terminal facility. Such deficiency puts the
interests of government at great risk. Indeed, if the unthinkable were to happen, government would
be paying several hundreds of millions of dollars, but the mortgage liens on the facility may still be
foreclosed by the Senior Lenders just the same.

Consequently, the Piatco contracts are also objectionable for grievously failing to adequately protect
government's interests. More accurately, the contracts would consistently weaken and do away with
protection of government interests. As such, they are therefore grossly lopsided in favor of Piatco
and/or its Senior Lenders.

While on this subject, it is well to recall the earlier discussion regarding a particularly noticeable
alteration of the concept of "Attendant Liabilities." In Section 1.06 of the CA defining the term, the
Piatco debts to be assumed/paid by government were qualified by the phrases recorded and from
time to time outstanding in the books of the Concessionaire and actually used for the project. These
phrases were eliminated from the ARCA's definition of Attendant Liabilities.

Since no explanation has been forthcoming from Piatco as to the possible justification for such a
drastic change, the only conclusion, possible is that it intends to have all of its debts covered by the
guarantee, regardless of whether or not they are disclosed in its books. This has particular reference
to those borrowings which were obtained in violation of the loan covenants requiring Piatco to
maintain a minimum 70:30 debt-to-equity ratio, and even if the loan proceeds were not actually used
for the project itself.

This point brings us back to the guarantee itself. In Section 4.04(c)(vi) of ARCA, the amount which
government has guaranteed to pay as termination payment is the greater of either (i) the Appraised
Value of the terminal facility or (ii) the aggregate of the Attendant Liabilities. Given that the Attendant
Liabilities may include practically any Piatco debt under the sun, it is highly conceivable that their
sum may greatly exceed the appraised value of the facility, and government may end up paying very
much more than the real worth of Terminal III. (So why did government have to bother with public
bidding anyway?)

In the final analysis, Section 4.04(c)(iv) to (vi) of the ARCA is diametrically at odds with the spirit and
the intent of the BOT Law. The law meant to mobilize private resources (the private sector) to take
on the burden and the risks of financing the construction, operation and maintenance of relevant
infrastructure and development projects for the simple reason that government is not in a position to
do so. By the same token, government guarantee was prohibited, since it would merely defeat the
purpose and raison d'être of a build-operate-and-transfer project to be undertaken by the private
sector.

To the extent that the project proponent is able to obtain loans to fund the project, those risks are
shared between the project proponent on the one hand, and its banks and other lenders on the
other. But where the proponent or its lenders manage to cajol or coerce the government into
extending a guarantee of payment of the loan obligations, the risks assumed by the lenders are
passed right back to government. I cannot understand why, in the instant case, government
cheerfully assented to re-assuming the risks of the project when it gave the prohibited guarantee and
thus simply negated the very purpose of the BOT Law and the protection it gives the government.

Contract Termination Provisions in the Piatco Contracts Are Void

The BOT Law as amended provides for contract termination as follows:

"Sec. 7. Contract Termination. - In the event that a project is revoked, cancelled or terminated by the
government through no fault of the project proponent or by mutual agreement, the Government shall
compensate the said project proponent for its actual expenses incurred in the project plus a
reasonable rate of return thereon not exceeding that stated in the contract as of the date of such
revocation, cancellation or termination: Provided, That the interest of the Government in this
instances [sic] shall be duly insured with the Government Service Insurance System or any other
insurance entity duly accredited by the Office of the Insurance Commissioner: Provided, finally, That
the cost of the insurance coverage shall be included in the terms and conditions of the bidding
referred to above.

"In the event that the government defaults on certain major obligations in the contract and such
failure is not remediable or if remediable shall remain unremedied for an unreasonable length of
time, the project proponent/contractor may, by prior notice to the concerned national government
agency or local government unit specifying the turn-over date, terminate the contract. The project
proponent/contractor shall be reasonably compensated by the Government for equivalent or
proportionate contract cost as defined in the contract."

The foregoing statutory provision in effect provides for the following limited instances when
termination compensation may be allowed:

1. Termination by the government through no fault of the project proponent

2. Termination upon the parties' mutual agreement

3. Termination by the proponent due to government's default on certain major contractual obligations

To emphasize, the law does not permit compensation for the project proponent when contract
termination is due to the proponent's own fault or breach of contract.

This principle was clearly violated in the Piatco Contracts. The ARCA stipulates that government is
to pay termination compensation to Piatco even when termination is initiated by government for the
following causes:

"(i) Failure of Concessionaire to finish the Works in all material respects in accordance with the
Tender Design and the Timetable;

(ii) Commission by Concessionaire of a material breach of this Agreement . . .;

(iii) . . . a change in control of Concessionaire arising from the sale, assignment, transfer or other
disposition of capital stock which results in an ownership structure violative of statutory or
constitutional limitations;

(iv) A pattern of continuing or repeated non-compliance, willful violation, or non-performance of other

terms and conditions hereof which is hereby deemed a material breach of this Agreement . . ." 62

As if that were not bad enough, the ARCA also inserted into Section 8.01 the phrase "Subject to
Section 4.04." The effect of this insertion is that in those instances where government may terminate
the contract on account of Piatco's breach, and it is nevertheless required under the ARCA to make
termination compensation to Piatco even though unauthorized by law, such compensation is to be
equivalent to the payment amount guaranteed by government - either a) the Appraised Value of the
terminal facility or (b) the aggregate of the Attendant Liabilities, whichever amount is greater!

Clearly, this condition is not in line with Section 7 of the BOT Law. That provision permits a project
proponent to recover the actual expenses it incurred in the prosecution of the project plus a
reasonable rate of return not in excess of that provided in the contract; or to be compensated for the
equivalent or proportionate contract cost as defined in the contract, in case the government is in
default on certain major contractual obligations.

Furthermore, in those instances where such termination compensation is authorized by the BOT
Law, it is indispensable that the interest of government be duly insured. Section 5.08 the ARCA
mandates insurance coverage for the terminal facility; but all insurance policies are to be assigned,
and all proceeds are payable, to the Senior Lenders. In brief, the interest being secured by such
coverage is that of the Senior Lenders, not that of government. This can hardly be considered
compliance with law.

In essence, the ARCA provisions on termination compensation result in another unauthorized

government guarantee, this time in favor of Piatco.
A Prohibited Direct Government Subsidy, Which at the Same Time Is an Assault on the
National Honor

Still another contractual provision offensive to law and public policy is Section 8.01(d) of the ARCA,
which is a "bolder and badder" version of Section 8.04(d) of the CA.

It will be recalled that Section 4-A of the BOT Law as amended prohibits not only direct government
guarantees, but likewise a direct government subsidy for unsolicited proposals. Section 13.2. b. iii. of
the 1999 IRR defines a direct government subsidy as encompassing "an agreement whereby the
Government . . . will . . . postpone any payments due from the proponent."

Despite the statutory ban, Section 8.01 (d) of the ARCA provides thus:

"(d) The provisions of Section 8.01(a) notwithstanding, and for the purpose of preventing a disruption
of the operations in the Terminal and/or Terminal Complex, in the event that at any time
Concessionaire is of the reasonable opinion that it shall be unable to meet a payment obligation
owed to the Senior Lenders, Concessionaire shall give prompt notice to GRP, through DOTC/MIAA
and to the Senior Lenders. In such circumstances, the Senior Lenders (or the Senior Lenders'
Representative) may ensure that after making provision for administrative expenses and
depreciation, the cash resources of Concessionaire shall first be used and applied to meet all
payment obligations owed to the Senior Lenders. Any excess cash, after meeting such payment
obligations, shall be earmarked for the payment of all sums payable by Concessionaire to GRP
under this Agreement. If by reason of the foregoing GRP should be unable to collect in full all
payments due to GRP under this Agreement, then the unpaid balance shall be payable within a 90-
day grace period counted from the relevant due date, with interest per annum at the rate equal to the
average 91-day Treasury Bill Rate as of the auction date immediately preceding the relevant due
date. If payment is not effected by Concessionaire within the grace period, then a spread of five (5%)
percent over the applicable 91-day Treasury Bill Rate shall be added on the unpaid amount
commencing on the expiry of the grace period up to the day of full payment. When the temporary
illiquidity of Concessionaire shall have been corrected and the cash position of Concessionaire
should indicate its ability to meet its maturing obligations, then the provisions set forth under this
Section 8.01(d) shall cease to apply. The foregoing remedial measures shall be applicable only while
there remains unpaid and outstanding amounts owed to the Senior Lenders." (Emphasis supplied)

By any manner of interpretation or application, Section 8.01(d) of the ARCA clearly mandates the
indefinite postponement of payment of all of Piatco's obligations to the government, in order to
ensure that Piatco's obligations to the Senior Lenders are paid in full first. That is nothing more or
less than the direct government subsidy prohibited by the BOT Law and the IRR. The fact that Piatco
will pay interest on the unpaid amounts owed to government does not change the situation or render
the prohibited subsidy any less unacceptable.

But beyond the clear violations of law, there are larger issues involved in the ARCA. Earlier, I
mentioned that Section 8.01(d) of the ARCA completely eliminated the proviso in Section 8.04(d) of
the CA which gave government the right to appoint a financial controller to manage the cash position
of Piatco during situations of financial distress. Not only has government been deprived of any
means of monitoring and managing the situation; worse, as can be seen from Section 8.01(d)
above-quoted, the Senior Lenders have effectively locked in on the right to exercise financial
controllership over Piatco and to allocate its cash resources to the payment of all amounts owed to
the Senior Lenders before allowing any payment to be made to government.

In brief, this particular provision of the ARCA has placed in the hands of foreign lenders the power
and the authority to determine how much (if at all) and when the Philippine government (as grantor
of the franchise) may be allowed to receive from Piatco. In that situation, government will be at the
mercy of the foreign lenders. This is a situation completely contrary to the rationale of the BOT Law
and to public policy.

The aforesaid provision rouses mixed emotions - shame and disgust at the parties'
(especially the government officials') docile submission and abject servitude and surrender
to the imperious and excessive demands of the foreign lenders, on the one hand; and
vehement outrage at the affront to the sovereignty of the Republic and to the national honor,
on the other. It is indeed time to put an end to such an unbearable, dishonorable situation.

The Piatco Contracts Unarguably Violate Constitutional Injunctions

I will now discuss the manner in which the Piatco Contracts offended the Constitution.

The Exclusive Right Granted to Piatco to Operate a Public Utility Is Prohibited by the Constitution

While Section 2.02 of the ARCA spoke of granting to Piatco "a franchise to operate and maintain the
Terminal Complex," Section 3.02(a) of the same ARCA granted to Piatco, for the entire term of the
concession agreement, "the exclusive right to operate a commercial international passenger
terminal within the Island of Luzon" with the exception of those three terminals already existing 63 at
the time of execution of the ARCA.

Section 11 of Article XII of the Constitution prohibits the grant of a "franchise, certificate, or any other
form of authorization for the operation of a public utility" that is "exclusive in character."

In its Opinion No. 078, Series of 1995, the Department of justice held that "the NAIA Terminal III
which . . . is a 'terminal for public use' is a public utility." Consequently, the constitutional prohibition
against the exclusivity of a franchise applies to the franchise for the operation of NAIA Terminal III as
well.

What was granted to Piatco was not merely a franchise, but an "exclusive right" to operate an
international passenger terminal within the "Island of Luzon." What this grant effectively means is
that the government is now estopped from exercising its inherent power to award any other person
another franchise or a right to operate such a public utility, in the event public interest in Luzon
requires it. This restriction is highly detrimental to government and to the public interest. Former
Secretary of Justice Hernando B. Perez expressed this point well in his Memorandum for the
President dated 21 May 2002:
"Section 3.02 on 'Exclusivity'

"This provision gives to PIATCO (the Concessionaire) the exclusive right to operate a commercial
international airport within the Island of Luzon with the exception of those already existing at the time
of the execution of the Agreement, such as the airports at Subic, Clark and Laoag City. In the case
of the Clark International Airport, however, the provision restricts its operation beyond its design
capacity of 850,000 passengers per annum and the operation of new terminal facilities therein until
after the new NAIA Terminal III shall have consistently reached or exceeded its design capacity of
ten (10) million passenger capacity per year for three (3) consecutive years during the concession
period.

"This is an onerous and disadvantageous provision. It effectively grants PIATCO a monopoly in

Luzon and ties the hands of government in the matter of developing new airports which may be
found expedient and necessary in carrying out any future plan for an inter-modal transportation
system in Luzon.
"Additionally, it imposes an unreasonable restriction on the operation of the Clark International
Airport which could adversely affect the operation and development of the Clark Special Economic
Zone to the economic prejudice of the local constituencies that are being benefited by its operation."
(Emphasis supplied)

While it cannot be gainsaid that an enterprise that is a public utility may happen to constitute a
monopoly on account of the very nature of its business and the absence of competition, such a
situation does not however constitute justification to violate the constitutional prohibition and grant an
exclusive franchise or exclusive right to operate a public utility.

Piatco's contention that the Constitution does not actually prohibit monopolies is beside the point. As
correctly argued,64 the existence of a monopoly by a public utility is a situation created by
circumstances that do not encourage competition. This situation is different from the grant of a
franchise to operate a public utility, a privilege granted by government. Of course, the grant of a
franchise may result in a monopoly. But making such franchise exclusive is what is expressly
proscribed by the Constitution.

Actually, the aforementioned Section 3.02 of the ARCA more than just guaranteed exclusivity; it also
guaranteed that the government will not improve or expand the facilities at Clark - and in fact is
required to put a cap on the latter's operations - until after Terminal III shall have been operated at or
beyond its peak capacity for three consecutive years.65 As counsel for public respondents pointed
out, in the real world where the rate of influx of international passengers can fluctuate substantially
from year to year, it may take many years before Terminal III sees three consecutive years'
operations at peak capacity. The Diosdado Macapagal International Airport may thus end up
stagnating for a long time. Indeed, in order to ensure greater profits for Piatco, the economic
progress of a region has had to be sacrificed.

The Piatco Contracts Violate the Time Limitation on Franchises

Section 11 of Article XII of the Constitution also provides that "no franchise, certificate or any other
form of authorization for the operation of a public utility shall be . . . for a longer period than fifty
years." After all, a franchise held for an unreasonably long time would likely give rise to the same
evils as a monopoly.

The Piatco Contracts have come up with an innovative way to circumvent the prohibition and obtain
an extension. This fact can be gleaned from Section 8.03(b) of the ARCA, which I quote thus:

"Sec. 8.03. Termination Procedure and Consequences of Termination. -

a) x x x xxx xxx

b) In the event the Agreement is terminated pursuant to Section 8.01 (b) hereof, Concessionaire
shall be entitled to collect the Liquidated Damages specified in Annex 'G'. The full payment by GRP
to Concessionaire of the Liquidated Damages shall be a condition precedent to the transfer by
Concessionaire to GRP of the Development Facility. Prior to the full payment of the Liquidated
Damages, Concessionaire shall to the extent practicable continue to operate the Terminal and the
Terminal Complex and shall be entitled to retain and withhold all payments to GRP for the purpose
of offsetting the same against the Liquidated Damages. Upon full payment of the Liquidated
Damages, Concessionaire shall immediately transfer the Development Facility to GRP on 'as-is-
where-is' basis."

The aforesaid easy payment scheme is less beneficial than it first appears. Although it enables
government to avoid having to make outright payment of an obligation that will likely run into billions
of pesos, this easy payment plan will nevertheless cost government considerable loss of income,
which it would earn if it were to operate Terminal III by itself. Inasmuch as payments to the
concessionaire (Piatco) will be on "installment basis," interest charges on the remaining unpaid
balance would undoubtedly cause the total outstanding balance to swell. Piatco would thus be
entitled to remain in the driver's seat and keep operating the terminal for an indefinite length of time.

The Contracts Create Two Monopolies for Piatco

By way of background, two monopolies were actually created by the Piatco contracts. The first and
more obvious one refers to the business of operating an international passenger terminal in Luzon,
the business end of which involves providing international airlines with parking space for their
aircraft, and airline passengers with the use of departure and arrival areas, check-in counters,
information systems, conveyor systems, security equipment and paraphernalia, immigrations and
customs processing areas; and amenities such as comfort rooms, restaurants and shops.

In furtherance of the first monopoly, the Piatco Contracts stipulate that the NAIA Terminal III will be
the only facility to be operated as an international passenger terminal; 66 that NAIA Terminals I and II
will no longer be operated as such;67 and that no one (including the government) will be allowed to
compete with Piatco in the operation of an international passenger terminal in the NAIA Complex. 68
Given that, at this time, the government and Piatco are the only ones engaged in the business of
operating an international passenger terminal, I am not acutely concerned with this particular
monopolistic situation.

There was however another monopoly within the NAIA created by the subject contracts for Piatco -
in the business of providing international airlines with the following: groundhandling, in-flight
catering, cargo handling, and aircraft repair and maintenance services. These are lines of business
activity in which are engaged many service providers (including the petitioners-in-intervention), who
will be adversely affected upon full implementation of the Piatco Contracts, particularly Sections
3.01(d)69 and (e)70 of both the ARCA and the CA.

On the one hand, Section 3.02(a) of the ARCA makes Terminal III the only international passenger
terminal at the NAIA, and therefore the only place within the NAIA Complex where the business of
providing airport-related services to international airlines may be conducted. On the other hand,
Section 3.01(d) of the ARCA requires government, through the MIAA, not to allow service providers
with expired MIAA contracts to renew or extend their contracts to render airport-related services to
airlines. Meanwhile, Section 3.01(e) of the ARCA requires government, through the DOTC and
MIAA, not to allow service providers - those with subsisting concession agreements for services and
operations being conducted at Terminal I - to carry over their concession agreements, services and
operations to Terminal III, unless they first enter into a separate agreement with Piatco.

The aforementioned provisions vest in Piatco effective and exclusive control over which service
provider may and may not operate at Terminal III and render the airport-related services needed by
international airlines. It thereby possesses the power to exclude competition. By necessary
implication, it also has effective control over the fees and charges that will be imposed and collected
by these service providers.

This intention is exceedingly clear in the declaration by Piatco that it is "completely within its rights to
exclude any party that it has not contracted with from NAIA Terminal III." 71

Worse, there is nothing whatsoever in the Piatco Contracts that can serve to restrict, control or
regulate the concessionaire's discretion and power to reject any service provider and/or impose any
term or condition it may see fit in any contract it enters into with a service provider. In brief, there is
no safeguard whatsoever to ensure free and fair competition in the service-provider sector.

In the meantime, and not surprisingly, Piatco is first in line, ready to exploit the unique business
opportunity. It announced72 that it has accredited three groundhandlers for Terminal III. Aside from
the Philippine Airlines, the other accredited entities are the Philippine Airport and Ground Services
Globeground, Inc. ("PAGSGlobeground") and the Orbit Air Systems, Inc. ("Orbit").
PAGSGlobeground is a wholly-owned subsidiary of the Philippine Airport and Ground Services, Inc.
or PAGS,73 while Orbit is a wholly-owned subsidiary of Friendship Holdings, Inc., 74 which is in turn
owned 80 percent by PAGS. 75 PAGS is a service provider owned 60 percent by the Cheng Family; 76
it is a stockholder of 35 percent of Piatco 77 and is the latter's designated contractor-operator for NAIA
Terminal III.78

Such entry into and domination of the airport-related services sector appear to be very much in line
with the following provisions contained in the First Addendum to the Piatco Shareholders
Agreement,79 executed on July 6, 1999, which appear to constitute a sort of master plan to create a
monopoly and combinations in restraint of trade:

"11. The Shareholders shall ensure:

a. x x x xxx x x x.;

b. That (Phil. Airport and Ground Services, Inc.) PAGS and/or its designated Affiliates shall, at all
times during the Concession Period, be exclusively authorized by (PIATCO) to engage in the
provision of ground-handling, catering and fueling services within the Terminal Complex.

c. That PAIRCARGO and/or its designated Affiliate shall, during the Concession Period, be the only
entities authorized to construct and operate a warehouse for all cargo handling and related services
within the Site."

Precisely, proscribed by our Constitution are the monopoly and the restraint of trade being fostered
by the Piatco Contracts through the erection of barriers to the entry of other service providers into
Terminal III. In Tatad v. Secretary of the Department of Energy,80 the Court ruled:

". . . [S]ection 19 of Article XII of the Constitution . . . mandates: 'The State shall regulate or prohibit
monopolies when the public interest so requires. No combinations in restraint of trade or unfair
competition shall be allowed.'
"A monopoly is a privilege or peculiar advantage vested in one or more persons or companies,
consisting in the exclusive right or power to carry on a particular business or trade, manufacture a
particular article, or control the sale or the whole supply of a particular commodity. It is a form of
market structure in which one or only a few firms dominate the total sales of a product or service. On
the other hand, a combination in restraint of trade is an agreement or understanding between two or
more persons, in the form of a contract, trust, pool, holding company, or other form of association,
for the purpose of unduly restricting competition, monopolizing trade and commerce in a certain
commodity, controlling its production, distribution and price, or otherwise interfering with freedom of
trade without statutory authority. Combination in restraint of trade refers to the means while
monopoly refers to the end.

"x x x xxx xxx

"Section 19, Article XII of our Constitution is anti-trust in history and in spirit. It espouses competition.
The desirability of competition is the reason for the prohibition against restraint of trade, the reason
for the interdiction of unfair competition, and the reason for regulation of unmitigated monopolies.
Competition is thus the underlying principle of [S]ection 19, Article XII of our Constitution, . . ." 81

Gokongwei Jr. v. Securities and Exchange Commission 82 elucidates the criteria to be employed: "A
'monopoly' embraces any combination the tendency of which is to prevent competition in the broad
and general sense, or to control prices to the detriment of the public. In short, it is the concentration
of business in the hands of a few. The material consideration in determining its existence is not that
prices are raised and competition actually excluded, but that power exists to raise prices or exclude
competition when desired."83 (Emphasis supplied)

The Contracts Encourage Monopolistic Pricing, Too

Aside from creating a monopoly, the Piatco contracts also give the concessionaire virtually limitless
power over the charging of fees, rentals and so forth. What little "oversight function" the government
might be able and minded to exercise is less than sufficient to protect the public interest, as can be
gleaned from the following provisions:

"Sec. 6.06. Adjustment of Non-Public Utility Fees and Charges

"For fees, rentals and charges constituting Non-Public Utility Revenues, Concessionaire may make
any adjustments it deems appropriate without need for the consent of GRP or any government
agency subject to Sec. 6.03(c)."

Section 6.03(c) in turn provides:

"(c) Concessionaire shall at all times be judicious in fixing fees and charges constituting Non-Public
Utility Revenues in order to ensure that End Users are not unreasonably deprived of services. While
the vehicular parking fee, porterage fee and greeter/wellwisher fee constitute Non-Public Utility
Revenues of Concessionaire, GRP may require Concessionaire to explain and justify the fee it may
set from time to time, if in the reasonable opinion of GRP the said fees have become exorbitant
resulting in the unreasonable deprivation of End Users of such services."

It will be noted that the above-quoted provision has no teeth, so the concessionaire can defy the
government without fear of any sanction. Moreover, Section 6.06 - taken together with Section
6.03(c) of the ARCA - falls short of the standard set by the BOT Law as amended, which expressly
requires in Section 2(b) that the project proponent is "allowed to charge facility users appropriate
tolls, fees, rentals and charges not exceeding those proposed in its bid or as negotiated and
incorporated in the contract x x x."

The Piatco Contracts Violate Constitutional Prohibitions Against

Impairment of Contracts and Deprivation of Property Without Due Process

Earlier, I discussed how Section 3.01(e) 84 of both the CA and the ARCA requires government,
through DOTC/MIAA, not to permit the carry-over to Terminal III of the services and operations of
certain service providers currently operating at Terminal I with subsisting contracts.

By the In-Service Date, Terminal III shall be the only facility to be operated as an international
passenger terminal at the NAIA; 85 thus, Terminals I and II shall no longer operate as such, 86 and no
one shall be allowed to compete with Piatco in the operation of an international passenger terminal
in the NAIA.87 The bottom line is that, as of the In-Service Date, Terminal III will be the only terminal
where the business of providing airport-related services to international airlines and passengers may
be conducted at all.
Consequently, government through the DOTC/MIAA will be compelled to cease honoring existing
contracts with service providers after the In-Service Date, as they cannot be allowed to operate in
Terminal III.

In short, the CA and the ARCA obligate and constrain government to break its existing contracts with
these service providers.

Notably, government is not in a position to require Piatco to accommodate the displaced service
providers, and it would be unrealistic to think that these service providers can perform their service
contracts in some other international airport outside Luzon. Obviously, then, these displaced service
providers are - to borrow a quaint expression - up the river without a paddle. In plainer terms, they
will have lost their businesses entirely, in the blink of an eye.

What we have here is a set of contractual provisions that impair the obligation of contracts and
contravene the constitutional prohibition against deprivation of property without due process of law. 88

Moreover, since the displaced service providers, being unable to operate, will be forced to close
shop, their respective employees - among them Messrs. Agan and Lopez et al. - have very grave
cause for concern, as they will find themselves out of employment and bereft of their means of
livelihood. This situation comprises still another violation of the constitution prohibition against
deprivation of property without due process.

True, doing business at the NAIA may be viewed more as a privilege than as a right. Nonetheless,
where that privilege has been availed of by the petitioners-in-intervention service providers for years
on end, a situation arises, similar to that in American Inter-fashion v. GTEB.89 We held therein that a
privilege enjoyed for seven years "evolved into some form of property right which should not be
removed x x x arbitrarily and without due process." Said pronouncement is particularly relevant and
applicable to the situation at bar because the livelihood of the employees of petitioners-intervenors
are at stake.

The Piatco Contracts Violate Constitutional Prohibition

Against Deprivation of Liberty Without Due Process

The Piatco Contracts by locking out existing service providers from entry into Terminal III and
restricting entry of future service providers, thereby infringed upon the freedom - guaranteed to and
heretofore enjoyed by international airlines - to contract with local service providers of their choice,
and vice versa.

Both the service providers and their client airlines will be deprived of the right to liberty, which
includes the right to enter into all contracts, 90 and/or the right to make a contract in relation to one's
business.91

By Creating New Financial Obligations for Government,

Supplements to the ARCA Violate the Constitutional
Ban on Disbursement of Public Funds Without Valid Appropriation

Clearly prohibited by the Constitution is the disbursement of public funds out of the treasury, except
in pursuance of an appropriation made by law. 92 The immediate effect of this constitutional ban is
that all the various agencies of government are constrained to limit their expenditures to the amounts
appropriated by law for each fiscal year; and to carefully count their cash before taking on
contractual commitments. Giving flesh and form to the injunction of the fundamental law, Sections 46
and 47 of Executive Order 292, otherwise known as the Administrative Code of 1987, provide as
follows:
"Sec. 46. Appropriation Before Entering into Contract. - (1) No contract involving the expenditure of
public funds shall be entered into unless there is an appropriation therefor, the unexpended balance
of which, free of other obligations, is sufficient to cover the proposed expenditure; and . .

"Sec. 47. Certificate Showing Appropriation to Meet Contract. - Except in the case of a contract for
personal service, for supplies for current consumption or to be carried in stock not exceeding the
estimated consumption for three (3) months, or banking transactions of government-owned or
controlled banks, no contract involving the expenditure of public funds by any government agency
shall be entered into or authorized unless the proper accounting official of the agency concerned
shall have certified to the officer entering into the obligation that funds have been duly appropriated
for the purpose and that the amount necessary to cover the proposed contract for the current
calendar year is available for expenditure on account thereof, subject to verification by the auditor
concerned. The certificate signed by the proper accounting official and the auditor who verified it,
shall be attached to and become an integral part of the proposed contract, and the sum so certified
shall not thereafter be available for expenditure for any other purpose until the obligation of the
government agency concerned under the contract is fully extinguished."

Referring to the aforequoted provisions, this Court has held that "(I)t is quite evident from the tenor of
the language of the law that the existence of appropriations and the availability of funds are
indispensable pre-requisites to or conditions sine qua non for the execution of government contracts.
The obvious intent is to impose such conditions as a priori requisites to the validity of the proposed
contract."93

Notwithstanding the constitutional ban, statutory mandates and Jurisprudential precedents, the three
Supplements to the ARCA, which were not approved by NEDA, imposed on government the
additional burden of spending public moneys without prior appropriation.

In the First Supplement ("FS") dated August 27, 1999, the following requirements were imposed on
the government:

• To construct, maintain and keep in good repair and operating condition all airport support services,
facilities, equipment and infrastructure owned and/or operated by MIAA, which are not part of the
Project or which are located outside the Site, even though constructed by Concessionaire - including
the access road connecting Terminals II and III and the taxilane, taxiways and runways

• To obligate the MIAA to provide funding for the upkeep, maintenance and repair of the airports and
facilities owned or operated by it and by third persons under its control in order to ensure compliance
with international standards; and holding MIAA liable to Piatco for the latter's losses, expenses and
damages as well as for the latter's liability to third persons, in case MIAA fails to perform such
obligations; in addition, MIAA will also be liable for the incremental and consequential costs of the
remedial work done by Piatco on account of the former's default.

• Section 4 of the FS imposed on government ten (10) "Additional Special Obligations," including the
following:

 Providing thru MIAA the land required by Piatco for the taxilane and one taxiway, at
no cost to Piatco
 Implementing the government's existing storm drainage master plan
 Coordinating with DPWH the financing, implementation and completion of the
following works before the In-Service Date: three left-turning overpasses (Edsa to
Tramo St., Tramo to Andrews Ave., and Manlunas Road to Sales Ave.) and a road
upgrade and improvement program involving widening, repair and resurfacing of
 Sales Road, Andrews Avenue and Manlunas Road; improvement of Nichols
Interchange; and removal of squatters along Andrews Avenue
 Dealing directly with BCDA and the Philippine Air Force in acquiring additional land
or right of way for the road upgrade and improvement program
 Requiring government to work for the immediate reversion to MIAA of the Nayong
Pilipino National Park, in order to permit the building of the second west parallel
taxiway

 • Section 5 of the FS also provides that in lieu of the access tunnel, a surface access road
(T2-T3) will be constructed. This provision requires government to expend funds to purchase
additional land from Nayong Pilipino and to clear the same in order to be able to deliver
clean possession of the site to Piatco, as required in Section 5(c) of the FS.

On the other hand, the Third Supplement ("TS") obligates the government to deliver, within 120 days
from date thereof, clean possession of the land on which the T2-T3 Road is to be constructed.

The foregoing contractual stipulations undeniably impose on government the expenditures of public
funds not included in any congressional appropriation or authorized by any other statute. Piatco
however attempts to take these stipulations out of the ambit of Sections 46 and 47 of the
Administrative Code by characterizing them as stipulations for compliance on a "best-efforts basis"
only.

To determine whether the additional obligations under the Supplements may really be undertaken on
a best-efforts basis only, the nature of each of these obligations must be examined in the context of
its relevance and significance to the Terminal III Project, as well as of any adverse impact that may
result if such obligation is not performed or undertaken on time. In short, the criteria for determining
whether the best-efforts basis will apply is whether the obligations are critical to the success of the
Project and, accordingly, whether failure to perform them (or to perform them on time) could result in
a material breach of the contract.

Viewed in this light, the "Additional Special Obligations" set out in Section 4 of the FS take on a
different aspect. In particular, each of the following may all be deemed to play a major role in the
successful and timely prosecution of the Terminal III Project: the obtention of land required by
PIATCO for the taxilane and taxiway; the implementation of government's existing storm drainage
master plan; and coordination with DPWH for the completion of the three left-turning overpasses
before the In-Service Date, as well as acquisition and delivery of additional land for the construction
of the T2-T3 access road.

Conversely, failure to deliver on any of these obligations may conceivably result in substantial
prejudice to the concessionaire, to such an extent as to constitute a material breach of the Piatco
Contracts. Whereupon, the concessionaire may outrightly terminate the Contracts pursuant to
Section 8.01(b)(i) and (ii) of the ARCA and seek payment of Liquidated Damages in accordance with
Section 8.02(a) of the ARCA; or the concessionaire may instead require government to pay the
Incremental and Consequential Losses under Section 1.23 of the ARCA. 94 The logical conclusion
then is that the obligations in the Supplements are not to be performed on a best-efforts basis only,
but are unarguably mandatory in character.

Regarding MIAA's obligation to coordinate with the DPWH for the complete implementation of the
road upgrading and improvement program for Sales, Andrews and Manlunas Roads (which provide
access to the Terminal III site) prior to the In-Service Date, it is essential to take note of the fact that
there was a pressing need to complete the program before the opening of Terminal III. 95 For that
reason, the MIAA was compelled to enter into a memorandum of agreement with the DPWH in order
to ensure the timely completion of the road widening and improvement program. MIAA agreed to
advance the total amount of P410.11 million to DPWH for the works, while the latter was committed
to do the following:

"2.2.8. Reimburse all advance payments to MIAA including but not limited to interest, fees, plus other
costs of money within the periods CY2004 and CY2006 with payment of no less than One Hundred
Million Pesos (PhP100M) every year.

"2.2.9. Perform all acts necessary to include in its CY2004 to CY2006 budget allocation the
repayments for the advances made by MIAA, to ensure that the advances are fully repaid by
CY2006. For this purpose, DPWH shall include the amounts to be appropriated for reimbursement to
MIAA in the "Not Needing Clearance" column of their Agency Budget Matrix (ABM) submitted to the
Department of Budget and Management."

It can be easily inferred, then, that DPWH did not set aside enough funds to be able to complete the
upgrading program for the crucially situated access roads prior to the targeted opening date of
Terminal III; and that, had MIAA not agreed to lend the P410 Million, DPWH would not have been
able to complete the program on time. As a consequence, government would have been in breach of
a material obligation. Hence, this particular undertaking of government may likewise not be
construed as being for best-efforts compliance only.

They also Infringe on the Legislative Prerogative and Power Over the Public Purse

But the particularly sad thing about this transaction between MIAA and DPWH is the fact that both
agencies were maneuvered into (or allowed themselves to be maneuvered into) an agreement that
would ensure delivery of upgraded roads for Piatco's benefit, using funds not allocated for that
purpose. The agreement would then be presented to Congress as a done deal. Congress would
thus be obliged to uphold the agreement and support it with the necessary allocations and
appropriations for three years, in order to enable DPWH to deliver on its committed repayments to
MIAA. The net result is an infringement on the legislative power over the public purse and a
diminution of Congress' control over expenditures of public funds - a development that would not
have come about, were it not for the Supplements. Very clever but very illegal!

EPILOGUE
What Do We Do Now?
In the final analysis, there remains but one ultimate question, which I raised during the Oral
Argument on December 10, 2002: What do we do with the Piatco Contracts and Terminal III?96
(Feeding directly into the resolution of the decisive question is the other nagging issue: Why should
we bother with determining the legality and validity of these contracts, when the Terminal itself has
already been built and is practically complete?)

Prescinding from all the foregoing disquisition, I find that all the Piatco contracts, without exception,
are void ab initio, and therefore inoperative. Even the very process by which the contracts came into
being - the bidding and the award - has been riddled with irregularities galore and blatant violations
of law and public policy, far too many to ignore. There is thus no conceivable way, as proposed by
some, of saving one (the original Concession Agreement) while junking all the rest.

Neither is it possible to argue for the retention of the Draft Concession Agreement (referred to in the
various pleadings as the Contract Bidded Out) as the contract that should be kept in force and effect
to govern the situation, inasmuch as it was never executed by the parties. What Piatco and the
government executed was the Concession Agreement which is entirely different from the Draft
Concession Agreement.
Ultimately, though, it would be tantamount to an outrageous, grievous and unforgivable mutilation of
public policy and an insult to ourselves if we opt to keep in place a contract - any contract - for to do
so would assume that we agree to having Piatco continue as the concessionaire for Terminal III.

Despite all the insidious contraventions of the Constitution, law and public policy Piatco perpetrated,
keeping Piatco on as concessionaire and even rewarding it by allowing it to operate and profit from
Terminal III - instead of imposing upon it the stiffest sanctions permissible under the laws - is
unconscionable.

It is no exaggeration to say that Piatco may not really mind which contract we decide to keep in
place. For all it may care, we can do just as well without one, if we only let it continue and operate
the facility. After all, the real money will come not from building the Terminal, but from actually
operating it for fifty or more years and charging whatever it feels like, without any competition at all .
This scenario must not be allowed to happen.

If the Piatco contracts are junked altogether as I think they should be, should not AEDC
automatically be considered the winning bidder and therefore allowed to operate the facility? My
answer is a stone-cold 'No'. AEDC never won the bidding, never signed any contract, and never built
any facility. Why should it be allowed to automatically step in and benefit from the greed of another?

Should government pay at all for reasonable expenses incurred in the construction of the Terminal?
Indeed it should, otherwise it will be unjustly enriching itself at the expense of Piatco and, in
particular, its funders, contractors and investors - both local and foreign. After all, there is no
question that the State needs and will make use of Terminal III, it being part and parcel of the critical
infrastructure and transportation-related programs of government.

In Melchor v. Commission on Audit,97 this Court held that even if the contract therein was void, the
principle of payment by quantum meruit was found applicable, and the contractor was allowed to
recover the reasonable value of the thing or services rendered (regardless of any agreement as to
the supposed value), in order to avoid unjust enrichment on the part of government. The principle of
quantum meruit was likewise applied in Eslao v. Commission on Audit,98 because to deny payment
for a building almost completed and already occupied would be to permit government to unjustly
enrich itself at the expense of the contractor. The same principle was applied in Republic v. Court of
Appeals.99

One possible practical solution would be for government - in view of the nullity of the Piatco
contracts and of the fact that Terminal III has already been built and is almost finished - to bid out the
operation of the facility under the same or analogous principles as build-operate-and-transfer
projects. To be imposed, however, is the condition that the winning bidder must pay the builder of
the facility a price fixed by government based on quantum meruit; on the real, reasonable - not
inflated - value of the built facility.

How the payment or series of payments to the builder, funders, investors and contractors will be
staggered and scheduled, will have to be built into the bids, along with the annual guaranteed
payments to government. In this manner, this whole sordid mess could result in something truly
beneficial for all, especially for the Filipino people.

WHEREFORE, I vote to grant the Petitions and to declare the subject contracts NULL and VOID.
 SECOND DIVISION

G.R. No. 155336 November 25, 2004

COMMISSION ON HUMAN RIGHTS EMPLOYEES' ASSOCIATION (CHREA) Represented by its

President, MARCIAL A. SANCHEZ, JR., petitioner,
vs.
COMMISSION ON HUMAN RIGHTS, respondent.

DECISION

CHICO-NAZARIO, J.:

Can the Commission on Human Rights lawfully implement an upgrading and reclassification of
personnel positions without the prior approval of the Department of Budget and Management?

Before this Court is a petition for review filed by petitioner Commission on Human Rights Employees'
Association (CHREA) challenging the Decision dated 29 November 2001 of the Court of Appeals in
1

CA-G.R. SP No. 59678 affirming the Resolutions dated 16 December 1999 and 09 June 2000 of the
2

Civil Service Commission (CSC), which sustained the validity of the upgrading and reclassification of
certain personnel positions in the Commission on Human Rights (CHR) despite the disapproval
thereof by the Department of Budget and Management (DBM). Also assailed is the resolution dated
11 September 2002 of the Court of Appeals denying the motion for reconsideration filed by
petitioner.

The antecedent facts which spawned the present controversy are as follows:

On 14 February 1998, Congress passed Republic Act No. 8522, otherwise known as the General
Appropriations Act of 1998. It provided for Special Provisions Applicable to All Constitutional Offices
Enjoying Fiscal Autonomy. The last portion of Article XXXIII covers the appropriations of the CHR.
These special provisions state:

1. Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits
of their respective appropriations as authorized in this Act, the Constitutional Commissions and
Offices enjoying fiscal autonomy are authorized to formulate and implement the organizational
structures of their respective offices, to fix and determine the salaries, allowances, and other benefits
of their personnel, and whenever public interest so requires, make adjustments in their personal
services itemization including, but not limited to, the transfer of item or creation of new positions in
their respective offices: PROVIDED, That officers and employees whose positions are affected by
such reorganization or adjustments shall be granted retirement gratuities and separation pay in
accordance with existing laws, which shall be payable from any unexpended balance of, or savings
in the appropriations of their respective offices: PROVIDED, FURTHER, That the implementation
hereof shall be in accordance with salary rates, allowances and other benefits authorized under
compensation standardization laws.

2. Use of Savings. The Constitutional Commissions and Offices enjoying fiscal autonomy are hereby
authorized to use savings in their respective appropriations for: (a) printing and/or publication of
decisions, resolutions, and training information materials; (b) repair, maintenance and improvement
of central and regional offices, facilities and equipment; (c) purchase of books, journals, periodicals
and equipment; (d) necessary expenses for the employment of temporary, contractual and casual
employees; (e) payment of extraordinary and miscellaneous expenses, commutable representation
and transportation allowances, and fringe benefits for their officials and employees as may be
authorized by law; and (f) other official purposes, subject to accounting and auditing rules and
regulations. (Emphases supplied)

on the strength of these special provisions, the CHR, through its then Chairperson Aurora P.
Navarette-Reciña and Commissioners Nasser A. Marohomsalic, Mercedes V. Contreras, Vicente P.
Sibulo, and Jorge R. Coquia, promulgated Resolution No. A98-047 on 04 September 1998, adopting
an upgrading and reclassification scheme among selected positions in the Commission, to wit:

WHEREAS, the General Appropriations Act, FY 1998, R.A. No. 8522 has provided special
provisions applicable to all Constitutional Offices enjoying Fiscal Autonomy, particularly on
organizational structures and authorizes the same to formulate and implement the organizational
structures of their respective offices to fix and determine the salaries, allowances and other benefits
of their personnel and whenever public interest so requires, make adjustments in the personnel
services itemization including, but not limited to, the transfer of item or creation of new positions in
their respective offices: PROVIDED, That officers and employees whose positions are affected by
such reorganization or adjustments shall be granted retirement gratuities and separation pay in
accordance with existing laws, which shall be payable from any unexpanded balance of, or savings
in the appropriations of their respective offices;

Whereas, the Commission on Human Rights is a member of the Constitutional Fiscal Autonomy
Group (CFAG) and on July 24, 1998, CFAG passed an approved Joint Resolution No. 49 adopting
internal rules implementing the special provisions heretoforth mentioned;

NOW THEREFORE, the Commission by virtue of its fiscal autonomy hereby approves and
authorizes the upgrading and augmentation of the commensurate amount generated from savings
under Personal Services to support the implementation of this resolution effective Calendar Year
1998;

Let the Human Resources Development Division (HRDD) prepare the necessary Notice of Salary
Adjustment and other appropriate documents to implement this resolution; . . . . (Emphasis supplied)
3

Annexed to said resolution is the proposed creation of ten additional plantilla positions, namely: one
Director IV position, with Salary Grade 28 for the Caraga Regional Office, four Security Officer II with
Salary Grade 15, and five Process Servers, with Salary Grade 5 under the Office of the
Commissioners. 4

On 19 October 1998, CHR issued Resolution No. A98-055 providing for the upgrading or raising of
5

salary grades of the following positions in the Commission:

N Pos S T
 itio al o
n a t
Titl r a
e y l
G S
r a
a l
d a
e r
y

R
e
q
u
i
r
e
m
e
n
t
s
F T FT
r o
o
m
1 AD 22P
ti 2
tr 2
oe 9
rc ,
nt 1
eo 0
yr 4
I .
V V 0
I 0
(
I
n

t
h
e

R
e
g
i
o
n
 a
l
F
i
e
l
d

O
f
f
i
c
e
s
)
4 D D 223
i i 8
r r ,
e e 9
c c 2
t t 8
o o .
r r 0
I 0
I V
I
I
1 F D 223
i i 6
n r ,
a e 7
n c 4
c t 4
i o .
a r 0
l I 0
& V

M
a
n
a
g
e
m
e
n
t
O
f
f
i
 c
e
r

I
I
1 B B 125
u u 1
d d ,
g g 7
e e 5
t t 6
O O .
f f 0
f f 0
i i
c c
e e
r r
I
I V
I
I
1 A C 125
c h 1
c i ,
o e 7
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t c .
a c 0
n o 0
t u
I n
I t
I a
n
t
1 C C 125
a a 1
s s ,
h h 7
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r r .
V 0
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I
I
1 I D 223
n i 6
f r ,
 o e 7
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a o .
t r 0
i I 0
6
o V
n

O
f
f
i
c
e
r

V
It, likewise, provided for the creation and upgrading of the following positions:

A. Creation

N Po S T
u siti a o
m on l t
b Tit a a
e le r l
r y S
o G a
f r l
P a a
o d r
s e y
i R
t e
i q
o u
n ir
s e
m
e
n
t
s
4 Se 1 6
cu 5 8
rit 4
y ,
Of 7
fic 8
er 0
II .
(C 0
 ot 0
er
mi
no
us
)
B. Upgrading

SE
CO
ND
DIV
ISI
ON
G.
R.
No.
155
336
No
ve
mb
er
25,
200
4
CO
MM
ISS
IO
N
ON
HU
MA
N
RI
GH
TS
EM
PL
OY
EE
S'
AS
SO
CIA
TIO
N
(C
HR
EA)
Re
pre
sen
ted
by
its
Pre
sid
ent,
MA
RCI
AL
A.
SA
NC
HE
Z,
JR.
,
peti
tion
er,
vs.
CO
MM
ISS
IO
N
ON
HU
MA
N
RI
GH
TS,
res
pon
den
t.

DE
CI
SI
O
N

CHI
CO
-
NA
ZA
RI
O,
J.:
Ca
n
the
Co
mm
issi
on
on
Hu
ma
n
Rig
hts
law
full
y
imp
lem
ent
an
upg
radi
ng
and
recl
ass
ific
atio
n of
per
son
nel
pos
itio
ns
wit
hou
t
the
prio
r
app
rov
al
 of
the
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent
?
Bef
ore
this
Co
urt
is a
peti
tion
for
revi
ew
file
d
by
peti
tion
er
Co
mm
issi
on
on
Hu
ma
n
Rig
hts
Em
plo
yee
s'
Ass
oci
atio
n
(C
HR
EA)
cha
llen
gin
g
the
De
cisi
on1
dat
ed
29
No
ve
mb
er
200
1 of
the
Co
urt
of
Ap
pea
ls
in
CA-
G.
R.
SP
No.
596
78
affir
min
g
the
Re
sol
utio
ns2
dat
ed
16
De
ce
mb
er
199
9
and
09
Jun
e
200
0 of
the
Civi
l
Ser
vic
e
Co
mm
issi
on
(CS
C),
whi
ch
sus
tain
ed
the
vali
dity
of
the
upg
radi
ng
and
recl
ass
ific
atio
n of
cert
ain
per
son
nel
pos
itio
ns
in
the
Co
mm
issi
on
on
Hu
ma
n
Rig
hts
(C
HR
)
des
pite
the
dis
app
rov
al
ther
eof
 by
the
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent
(DB
M).
Als
o
ass
aile
d is
the
res
olut
ion
dat
ed
11
Se
pte
mb
er
200
2 of
the
Co
urt
of
Ap
pea
ls
den
yin
g
the
mot
ion
for
rec
ons
ider
atio
n
file
d
by
peti
tion
er.
The
ant
ece
den
t
fact
s
whi
ch
spa
wn
ed
the
pre
sen
t
con
trov
ers
y
are
as
foll
ow
s:
On
 14
Feb
rua
ry
199
8,
Co
ngr
ess
pas
sed
Re
pub
lic
Act
No.
852
2,
oth
erw
ise
kno
wn
as
the
Ge
ner
al
Ap
pro
pria
tion
s
Act
of
199
8. It
pro
vid
ed
for
Sp
eci
al
Pro
visi
ons
Ap
plic
abl
e to
All
Co
nsti
tuti
ona
l
Offi
ces
Enj
oyi
ng
Fis
cal
Aut
ono
my.
The
last
port
ion
of
Arti
cle
XX
XIII
cov
ers
the
app
rop
riati
ons
of
the
CH
 R.
The
se
spe
cial
pro
visi
ons
stat
e:
1.
Org
ani
zati
ona
l
Str
uct
ure.
Any
pro
visi
on
of
law
to
the
con
trar
y
not
wit
hst
and
ing
and
wit
hin
the
limi
ts
of
thei
r
res
pec
tive
app
rop
riati
ons
as
aut
hori
zed
in
this
Act,
the
Co
nsti
tuti
ona
l
Co
mm
issi
ons
and
Offi
ces
enj
oyi
ng
fisc
al
aut
ono
my
are
aut
hori
zed
to
for
mul
ate
and
imp
lem
ent
the
org
ani
zati
ona
l
stru
ctur
es
of
thei
r
res
pec
tive
offi
ces
, to
fix
and
det
erm
ine
the
sal
arie
s,
allo
wa
nce
s,
and
oth
er
ben
efit
s of
thei
r
per
son
nel,
and
wh
ene
ver
pub
lic
inte
rest
so
req
uire
s,
ma
ke
adj
ust
me
nts
in
thei
r
per
son
al
ser
vic
es
ite
miz
atio
n
incl
udi
ng,
but
not
limi
ted
to,
the
tran
sfer
of
ite
m
or
cre
atio
n of
ne
w
pos
itio
ns
in
thei
r
res
pec
tive
offi
ces
:
PR
OVI
DE
D,
Tha
t
offi
cer
s
and
em
plo
yee
s
wh
ose
pos
itio
ns
are
affe
cte
d
by
suc
h
reo
rga
niz
atio
n or
adj
ust
me
nts
sha
ll
be
gra
nte
d
retir
em
ent
grat
uiti
es
and
sep
arat
ion
pay
in
acc
ord
anc
e
wit
h
exi
stin
g
law
s,
whi
ch
sha
ll
be
pay
abl
e
fro
m
any
une
xpe
nde
d
bal
anc
e
of,
or
sav
ing
s in
the
app
rop
riati
ons
of
thei
r
res
pec
tive
offi
ces
:
PR
OVI
DE
D,
FU
RT
HE
R,
Tha
t
the
imp
lem
ent
atio
n
her
eof
sha
ll
be
in
acc
ord
anc
e
wit
h
sal
ary
rate
s,
allo
wa
nce
s
and
oth
er
ben
efit
s
aut
hori
zed
und
er
 co
mp
ens
atio
n
sta
nda
rdiz
atio
n
law
s.
2.
Us
e of
Sav
ing
s.
The
Co
nsti
tuti
ona
l
Co
mm
issi
ons
and
Offi
ces
enj
oyi
ng
fisc
al
aut
ono
my
are
her
eby
aut
hori
zed
to
use
sav
ing
s in
thei
r
res
pec
tive
app
rop
riati
ons
for:
(a)
prin
ting
and
/or
pub
lica
tion
of
dec
isio
ns,
res
olut
ion
s,
and
trai
nin
g
info
rma
tion
mat
eria
ls;
 (b)
rep
air,
mai
nte
nan
ce
and
imp
rov
em
ent
of
cen
tral
and
regi
ona
l
offi
ces
,
faci
litie
s
and
equ
ipm
ent;
(c)
pur
cha
se
of
boo
ks,
jour
nal
s,
peri
odi
cal
s
and
equ
ipm
ent;
(d)
nec
ess
ary
exp
ens
es
for
the
em
plo
ym
ent
of
tem
por
ary,
con
trac
tual
and
cas
ual
em
plo
yee
s;
(e)
pay
me
nt
of
extr
aor
din
ary
and
mis
cell
ane
ous
exp
ens
es,
co
mm
uta
ble
rep
res
ent
atio
n
and
tran
spo
rtati
on
allo
wa
nce
s,
and
frin
ge
ben
efit
s
for
thei
r
offi
cial
s
and
em
plo
yee
s
as
ma
y
be
aut
hori
zed
by
law
;
and
(f)
oth
er
offi
cial
pur
pos
es,
sub
ject
to
acc
oun
ting
and
aud
itin
g
rule
s
and
reg
ulat
ion
s.
(E
mp
has
es
sup
plie
d)
on
the
stre
ngt
h of
the
se
spe
cial
pro
visi
ons
,
the
CH
R,
thro
ugh
its
the
n
Ch
airp
ers
on
Aur
ora
P.
Na
var
ette
-
Re
ciñ
a
and
Co
mm
issi
one
rs
Na
sse
r A.
Mar
oho
ms
alic
,
Mer
ced
es
V.
Co
ntre
ras,
Vic
ent
e
P.
Sib
ulo,
and
Jor
ge
R.
Co
qui
a,
pro
mul
gat
ed
Re
sol
utio
n
No.
A9
8-
047
on
04
Se
pte
mb
er
199
8,
ado
ptin
g
an
upg
radi
ng
and
recl
ass
ific
atio
n
sch
em
e
am
ong
sel
ect
ed
pos
itio
ns
in
the
Co
mm
issi
on,
to
wit:
WH
ER
EA
S,
the
Ge
ner
al
Ap
pro
pria
tion
s
Act,
FY
199
8,
R.A
.
No.
852
2
has
pro
vid
ed
spe
cial
pro
visi
ons
app
lica
ble
to
all
Co
nsti
tuti
ona
l
Offi
ces
enj
oyi
ng
Fis
cal
Aut
ono
my,
part
icul
arly
 on
org
ani
zati
ona
l
stru
ctur
es
and
aut
hori
zes
the
sa
me
to
for
mul
ate
and
imp
lem
ent
the
org
ani
zati
ona
l
stru
ctur
es
of
thei
r
res
pec
tive
offi
ces
to
fix
and
det
erm
ine
the
sal
arie
s,
allo
wa
nce
s
and
oth
er
ben
efit
s of
thei
r
per
son
nel
and
wh
ene
ver
pub
lic
inte
rest
so
req
uire
s,
ma
ke
adj
ust
me
nts
in
the
per
son
nel
ser
vic
es
ite
miz
atio
n
incl
udi
ng,
but
not
limi
ted
to,
the
tran
sfer
of
ite
m
or
cre
atio
n of
ne
w
pos
itio
ns
in
thei
r
res
pec
tive
offi
ces
:
PR
OVI
DE
D,
Tha
t
offi
cer
s
and
em
plo
yee
s
wh
ose
pos
itio
ns
are
affe
cte
d
by
suc
h
reo
rga
niz
atio
n or
adj
ust
me
nts
sha
ll
be
gra
nte
d
retir
em
ent
grat
uiti
es
and
sep
arat
ion
pay
in
acc
ord
anc
e
wit
h
exi
stin
g
law
s,
whi
ch
sha
ll
be
pay
abl
e
fro
m
any
une
xpa
nde
d
bal
anc
e
of,
or
sav
ing
s in
the
app
rop
riati
ons
of
thei
r
res
pec
tive
offi
ces
;
Wh
ere
as,
the
Co
mm
issi
on
on
Hu
ma
n
Rig
hts
is a
me
mb
er
of
the
Co
nsti
tuti
ona
l
Fis
cal
Aut
ono
my
Gro
up
(CF
AG
)
and
on
Jul
y
24,
199
8,
CF
AG
pas
sed
an
app
rov
ed
Joi
nt
Re
sol
utio
n
No.
49
ado
ptin
g
inte
rnal
rule
s
imp
lem
enti
ng
the
spe
cial
pro
visi
ons
her
etof
orth
me
ntio
ned
;
NO
W
TH
ER
EF
OR
E,
the
Co
mm
issi
on
by
virt
ue
of
its
fisc
al
aut
ono
my
her
eby
app
rov
es
and
aut
hori
zes
the
upg
radi
ng
and
aug
me
ntat
ion
of
the
co
mm
ens
urat
e
am
oun
t
gen
erat
ed
fro
m
sav
ing
s
und
er
Per
son
al
Ser
vic
es
to
sup
port
the
imp
lem
ent
atio
n of
this
res
olut
ion
effe
ctiv
e
Cal
end
ar
Ye
ar
199
8;
Let
the
Hu
ma
n
Re
sou
rce
s
De
vel
op
me
nt
Divi
sio
n
(H
RD
D)
pre
par
e
the
nec
ess
ary
Not
ice
of
Sal
ary
Adj
ust
me
nt
and
oth
er
app
rop
riat
e
doc
um
ent
s to
imp
lem
ent
this
res
olut
ion;
...
.3
(E
mp
has
is
sup
plie
d)
An
nex
ed
to
sai
d
res
olut
ion
is
the
pro
pos
ed
cre
atio
n of
ten
add
itio
nal
pla
ntill
a
pos
itio
ns,
na
mel
y:
one
Dir
ect
or
IV
pos
itio
n,
wit
h
Sal
ary
Gra
de
28
for
the
Car
aga
Re
gio
nal
Offi
ce,
four
Sec
urit
y
Offi
cer
II
wit
h
Sal
ary
Gra
de
15,
and
five
Pro
ces
s
Ser
ver
s,
wit
h
Sal
ary
Gra
de
5
und
er
the
Offi
ce
of
the
Co
mm
issi
one
rs.
4
On
19
Oct
obe
r
199
8,
CH
R
iss
ued
Re
sol
utio
n
No.
A9
8-
055
5
pro
vidi
ng
for
the
upg
radi
ng
or
rais
ing
of
sal
ary
gra
des
of
the
foll
owi
ng
pos
itio
 ns
in
the
Co
mm
issi
on:
Nu
mb
er
of
Pos
itio
ns,
Pos
itio
nTit
le, ,
Sal
ary
Gra
de,
,
Tot
al
Sal
ary
Re
quir
em
ent
s
,
Fro
m,
To,
Fro
m,
To,
12,
Att
orn
ey
VI
(In
the
Re
gio
nal
Fiel
d
Offi
ces
),
Dir
ect
or
IV,
26,
28,
P2
29,
104
.00
4,
Dir
ect
or
III,
Dir
ect
or
IV,
27,
28,
38,
928
.00
1,
Fin
anc
ial
&
Ma
nag
em
ent
Offi
cer
II,
Dir
ect
or
IV,
24,
28,
36,
744
.00
1,
Bu
dge
t
Offi
cer
III,
Bu
dge
t
Offi
cer
IV,
18,
24,
51,
756
.00
1,
Acc
oun
tant
III,
Chi
ef
Acc
oun
tant
,
18,
24,
51,
756
.00
1,
Ca
shi
er
III,
Ca
shi
er
V,
18,
24,
51,
756
.00
1,
Info
rma
tion
Offi
cer
V,
Dir
ect
or
IV,
24,
28,
36,
744
.00
6
It,
like
wis
e,
pro
vid
ed
for
the
cre
atio
n
and
upg
radi
ng
of
the
foll
owi
ng
pos
itio
ns:
A.
Cre
atio
n
Nu
mb
er
of
Pos
itio
ns,
Pos
itio
n
Titl
e,
Sal
ary
Gra
de,
Tot
al
Sal
ary
Re
quir
em
ent
s
4,
Sec
urit
y
Offi
cer
II
(Co
ter
min
ous
),
15,
684
,78
0.0
0
B.
Up
gra
din
g
Nu
mb
er
of
Pos
itio
ns,
Pos
itio
n
Titl
e, ,
Sal
ary
Gra
de,
,
Tot
al
Sal
ary
Re
quir
em
ent
s
,
Fro
m,
To,
Fro
m,
To,
1,
Att
orn
ey
V,
Dir
ect
or
IV,
25,
28,
P2
8,0
92.
00
2,
Sec
urit
y
Offi
cer
I,
Sec
urit
y
Offi
cer
II,
11,
15,
57,
456
.00
, ,
, ,
,
-----
-----
-----
-
Tot
al
3, ,
, ,
,P
85,
548
.00
7
To
sup
port
the
imp
lem
ent
atio
n of
suc
h
sch
em
e,
the
CH
R,
in
the
sa
me
res
olut
ion,
aut
hori
zed
the
aug
me
ntat
ion
of a
co
mm
ens
urat
e
am
oun
t
gen
erat
ed
fro
m
sav
ing
s
und
er
Per
son
nel
Ser
vic
es.
By
virt
ue
of
Re
sol
utio
n
No.
A9
8-
062
dat
ed
17
No
ve
mb
er
199
8,
the
CH
R
"col
lap
sed
"
the
vac
ant
pos
itio
ns
in
the
bod
y to
pro
vid
e
add
itio
nal
sou
rce
of
fun
din
g
for
sai
 d
staf
fing
mo
difi
cati
on.
Am
ong
the
pos
itio
ns
coll
aps
ed
wer
e:
one
Att
orn
ey
III,
four
Att
orn
ey
IV,
one
Ch
emi
st
III,
thre
e
Sp
eci
al
Inv
esti
gat
or I,
one
Cle
rk
III,
and
one
Acc
oun
ting
Cle
rk
II.8
The
CH
R
for
war
ded
sai
d
staf
fing
mo
difi
cati
on
and
upg
radi
ng
sch
em
e to
the
DB
M
wit
ha
req
ues
t for
its
app
rov
 al,
but
the
the
n
DB
M
sec
reta
ry
Be
nja
min
Dio
kno
den
ied
the
req
ues
t on
the
foll
owi
ng
just
ific
atio
n:
…
Bas
ed
on
the
eva
luat
ion
s
ma
de
the
req
ues
t
wa
s
not
fav
ora
bly
con
sid
ere
d
as
it
effe
ctiv
ely
inv
olv
ed
the
ele
vati
on
of
the
fiel
d
unit
s
fro
m
divi
sio
ns
to
ser
vic
es.
The
pre
sen
t
pro
pos
al
see
ks
furt
her
to
upg
rad
e
the
twe
lve
(12
)
pos
itio
ns
of
Att
orn
ey
VI,
SG
-26
to
Dir
ect
or
IV,
SG
-28.
Thi
s
wo
uld
ele
vat
e
the
fiel
d
unit
s to
a
bur
eau
or
regi
ona
l
offi
ce,
a
lev
el
eve
n
hig
her
tha
n
the
one
pre
vio
usl
y
den
ied.
The
req
ues
t to
upg
rad
e
the
thre
e
(3)
pos
itio
ns
of
Dir
 ect
or
III,
SG
-27
to
Dir
ect
or
IV,
SG
-28,
in
the
Ce
ntra
l
Offi
ce
in
effe
ct
wo
uld
ele
vat
e
the
ser
vic
es
to
Offi
ce
and
cha
nge
the
con
text
fro
m
sup
port
to
sub
sta
ntiv
e
wit
hou
t
act
ual
cha
nge
in
fun
ctio
ns.
In
the
abs
enc
e of
a
spe
cific
pro
visi
on
of
law
whi
ch
ma
y
be
use
d
as
a
leg
al
bas
is
 to
ele
vat
e
the
lev
el
of
divi
sio
ns
to a
bur
eau
or
regi
ona
l
offi
ce,
and
the
ser
vic
es
to
offi
ces
,
we
reit
erat
e
our
pre
vio
us
sta
nd
den
yin
g
the
upg
radi
ng
of
the
twe
lve
(12
)
pos
itio
ns
of
Att
orn
ey
VI,
SG
-26
to
Dir
ect
or
III,
SG
-27
or
Dir
ect
or
IV,
SG
-28,
in
the
Fiel
d
Op
erat
ion
s
Offi
ce
(FO
O)
and
thre
e
(3)
Dir
ect
or
III,
SG
-27
to
Dir
ect
or
IV,
SG
-28
in
the
Ce
ntra
l
Offi
ce.
As
rep
res
ent
ed,
Pre
sid
ent
Ra
mo
s
the
n
iss
ued
a
Me
mor
and
um
to
the
DB
M
Sec
reta
ry
dat
ed
10
De
ce
mb
er
199
7,
dire
ctin
g
the
latt
er
to
incr
eas
e
the
nu
mb
er
of
Pla
ntill
a
pos
itio
ns
in
the
CH
 R
bot
h
Ce
ntra
l
and
Re
gio
nal
Offi
ces
to
imp
lem
ent
the
Phil
ippi
ne
De
cad
e
Pla
n
on
Hu
ma
n
Rig
hts
Ed
uca
tion
,
the
Phil
ippi
ne
Hu
ma
n
Rig
hts
Pla
n
and
Bar
ang
ay
Rig
hts
Acti
ons
Ce
nter
in
acc
ord
anc
e
wit
h
exi
stin
g
law
s.
(E
mp
has
is
in
the
orig
inal
)
Pur
sua
nt
to
Sec
tion
78
of
the
Ge
ner
al
Pro
visi
ons
of
the
Ge
ner
al
Ap
pro
pria
tion
s
Act
(G
AA)
FY
199
8,
no
org
ani
zati
ona
l
unit
or
cha
nge
s in
key
pos
itio
ns
sha
ll
be
aut
hori
zed
unl
ess
pro
vid
ed
by
law
or
dire
cte
d
by
the
Pre
sid
ent,
thu
s,
the
cre
atio
n of
a
Fin
anc
e
Ma
nag
em
ent
Offi
ce
and
a
Pu
blic
Aff
airs
Offi
ce
can
not
be
 giv
en
fav
ora
ble
rec
om
me
nda
tion
.
Mor
eov
er,
as
pro
vid
ed
und
er
Sec
tion
2 of
RA
No.
675
8,
oth
erw
ise
kno
wn
as
the
Co
mp
ens
atio
n
Sta
nda
rdiz
atio
n
La
w,
the
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent
is
dire
cte
d to
est
abli
sh
and
ad
min
iste
ra
unif
ied
co
mp
ens
atio
n
and
pos
itio
n
cla
ssifi
cati
 on
sys
tem
in
the
gov
ern
me
nt.
The
Su
pre
me
Co
urt
rule
d in
the
cas
e of
Vict
orin
a
Cru
z
vs.
Co
urt
of
Ap
pea
ls,
G.
R.
No.
119
155
,
dat
ed
Jan
uar
y
30,
199
6,
that
this
De
part
me
nt
has
the
sol
e
po
wer
and
dis
cret
ion
to
ad
min
iste
r
the
co
mp
ens
atio
n
and
pos
itio
n
cla
ssifi
cati
on
sys
tem
of
the
Nat
ion
al
Go
ver
nm
ent.
Bei
ng
a
me
mb
er
of
the
fisc
al
aut
ono
my
gro
up
doe
s
not
ves
t
the
age
ncy
wit
h
the
aut
hori
ty
to
recl
ass
ify,
upg
rad
e,
and
cre
ate
pos
itio
ns
wit
hou
t
app
rov
al
of
the
DB
M.
Whi
le
the
me
mb
ers
of
the
Gro
up
are
aut
hori
zed
to
for
mul
ate
and
imp
lem
ent
the
org
ani
zati
ona
l
stru
ctur
es
of
thei
r
res
pec
tive
offi
ces
and
det
erm
ine
the
co
mp
ens
atio
n of
thei
r
per
son
nel,
suc
h
aut
hori
ty
is
not
abs
olut
e
and
mu
st
be
exe
rcis
ed
wit
hin
the
par
am
eter
s of
the
Uni
fied
Pos
itio
n
Cla
ssifi
cati
on
and
Co
mp
ens
atio
n
Sys
tem
est
abli
she
d
und
er
RA
675
8
mor
e
pop
ular
ly
kno
wn
as
the
 Co
mp
ens
atio
n
Sta
nda
rdiz
atio
n
La
w.
We
ther
efor
e
reit
erat
e
our
pre
vio
us
sta
nd
on
the
mat
ter.
9
(E
mp
has
es
sup
plie
d)
In
ligh
t of
the
DB
M's
dis
app
rov
al
of
the
pro
pos
ed
per
son
nel
mo
difi
cati
on
sch
em
e,
the
CS
C-
Nat
ion
al
Ca
pita
l
Re
gio
n
Offi
ce,
thro
ugh
a
me
mor
and
um
dat
ed
29
Mar
ch
199
9,
rec
om
me
nde
d to
the
CS
C-
Ce
ntra
l
Offi
ce
that
the
sub
ject
app
oint
me
nts
be
reje
cte
d
owi
ng
to
the
DB
M's
dis
app
rov
al
of
the
pla
ntill
a
recl
ass
ific
atio
n.
Me
an
whil
e,
the
offi
cer
s of
peti
tion
er
CH
RE
A,
in
rep
res
ent
atio
n of
the
ran
k
and
file
em
plo
yee
s of
the
CH
R,
req
ues
ted
the
CS
 C-
Ce
ntra
l
Offi
ce
to
affir
m
the
rec
om
me
nda
tion
of
the
CS
C-
Re
gio
nal
Offi
ce.
CH
RE
A
sto
od
its
gro
und
in
say
ing
that
the
DB
M
is
the
onl
y
age
ncy
wit
h
app
rop
riat
e
aut
hori
ty
ma
nda
ted
by
law
to
eva
luat
e
and
app
rov
e
mat
ters
of
recl
ass
ific
atio
n
and
upg
radi
ng,
as
well
as
cre
atio
n of
pos
 itio
ns.
The
CS
C-
Ce
ntra
l
Offi
ce
den
ied
CH
RE
A's
req
ues
t in
a
Re
sol
utio
n
dat
ed
16
De
ce
mb
er
199
9,
and
rev
ers
ed
the
rec
om
me
nda
tion
of
the
CS
C-
Re
gio
nal
Offi
ce
that
the
upg
radi
ng
sch
em
e
be
cen
sur
ed.
The
dec
reta
l
port
ion
of
whi
ch
rea
ds:
WH
ER
EF
OR
E,
the
req
ues
t of
Ro
nni
e
 N.
Ro
ser
o,
Hu
bert
V.
Rui
z,
Flor
deli
za
A.
Bri
one
s,
Ge
org
e
Q.
Du
mla
o
[an
d],
Cor
azo
n
A.
Sa
nto
s-
Tiu,
is
her
eby
den
ied.
10
CH
RE
A
file
da
mot
ion
for
rec
ons
ider
atio
n,
but
the
CS
C-
Ce
ntra
l
Offi
ce
den
ied
the
sa
me
on
09
Jun
e
200
0.
Giv
en
the
cac
oph
ony
of
jud
gm
ent
s
bet
we
en
the
DB
M
and
the
CS
C,
peti
tion
er
CH
RE
A
ele
vat
ed
the
mat
ter
to
the
Co
urt
of
Ap
pea
ls.
The
Co
urt
of
Ap
pea
ls
affir
me
d
the
pro
nou
nce
me
nt
of
the
CS
C-
Ce
ntra
l
Offi
ce
and
uph
eld
the
vali
dity
of
the
upg
radi
ng,
retit
ling
,
and
recl
ass
ific
atio
n
sch
em
e in
the
CH
R
on
the
just
ific
atio
n
that
suc
 h
acti
on
is
wit
hin
the
am
bit
of
CH
R's
fisc
al
aut
ono
my.
The
fall
o of
the
Co
urt
of
Ap
pea
ls
dec
isio
n
pro
vid
es:
IN
VIE
W
OF
AL
L
TH
E
FO
RE
GO
IN
G,
the
inst
ant
peti
tion
is
ord
ere
d
DIS
MI
SS
ED
and
the
que
stio
ned
Civi
l
Ser
vic
e
Co
mm
issi
on
Re
sol
utio
n
No.
99-
280
0
dat
ed
De
ce
mb
 er
16,
199
9
as
well
as
No.
001
354
dat
ed
Jun
e 9,
200
0,
are
her
eby
AF
FIR
ME
D.
No
cos
t.11
Un
pert
urb
ed,
peti
tion
er
file
d
this
peti
tion
in
this
Co
urt
con
ten
din
g
that
:
A.
…
TH
E
CO
UR
T
OF
AP
PE
AL
S
GR
AV
EL
Y
ER
RE
D
WH
EN
IT
HE
LD
TH
AT
UN
DE
R
TH
E
198
7
CO
NS
TIT
UTI
ON
 ,
TH
E
CO
MM
ISS
IO
N
ON
HU
MA
N
RI
GH
TS
EN
JO
YS
FIS
CA
L
AU
TO
NO
MY
.
B.
…
TH
E
CO
UR
T
OF
AP
PE
AL
S
SE
RI
OU
SL
Y
ER
RE
D
IN
UP
HO
LDI
NG
TH
E
CO
NS
TR
UC
TIO
N
OF
TH
E
CO
MM
ISS
IO
N
ON
HU
MA
N
RI
GH
TS
OF
RE
PU
BLI
C
AC
T
NO
.
852
2
(TH
 E
GE
NE
RA
L
AP
PR
OP
RIA
TIO
NS
AC
T
FO
R
TH
E
FIS
CA
L
YE
AR
199
8)
DE
SPI
TE
ITS
BEI
NG
IN
SH
AR
P
CO
NF
LIC
T
WI
TH
TH
E
198
7
CO
NS
TIT
UTI
ON
AN
D
TH
E
ST
AT
UT
E
ITS
EL
F.
C.
…
TH
E
CO
UR
T
OF
AP
PE
AL
S
SE
RI
OU
SL
Y
AN
D
GR
AV
EL
Y
ER
RE
D
 IN
AF
FIR
MI
NG
TH
E
VA
LID
ITY
OF
TH
E
CIV
IL
SE
RVI
CE
CO
MM
ISS
IO
N
RE
SO
LU
TIO
N
NO
S.
992
800
AN
D
001
354
AS
WE
LL
AS
TH
AT
OF
TH
E
OPI
NI
ON
OF
TH
E
DE
PA
RT
ME
NT
OF
JU
STI
CE
IN
ST
ATI
NG
TH
AT
TH
E
CO
MM
ISS
IO
N
ON
HU
MA
N
RI
GH
TS
EN
JO
YS
FIS
CA
L
AU
TO
NO
MY
UN
DE
R
TH
E
198
7
CO
NS
TIT
UTI
ON
AN
D
TH
AT
THI
S
FIS
CA
L
AU
TO
NO
MY
INC
LU
DE
S
TH
E
AC
TIO
N
TA
KE
N
BY
IT
IN
CO
LL
AP
SIN
G,
UP
GR
ADI
NG
AN
D
RE
CL
AS
SIF
ICA
TIO
N
OF
PO
SIT
IO
NS
TH
ER
EIN
.12
The
cen
tral
que
stio
n
we
mu
st
ans
wer
in
ord
er
to
res
olv
e
this
cas
e
is:
Ca
n
the
Co
mm
issi
on
on
Hu
ma
n
Rig
hts
vali
dly
imp
lem
ent
an
upg
radi
ng,
recl
ass
ific
atio
n,
cre
atio
n,
and
coll
aps
ing
of
pla
ntill
a
pos
itio
ns
in
the
Co
mm
issi
on
wit
hou
t
the
prio
r
app
rov
al
of
the
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent
?
Peti
tion
er
CH
RE
A
gro
use
s
that
the
Co
urt
of
Ap
pea
ls
and
the
CS
C-
Ce
ntra
l
Offi
ce
bot
h
err
ed
in
san
ctio
nin
g
the
CH
R's
alle
ged
bla
nke
t
aut
hori
ty
to
upg
rad
e,
recl
ass
ify,
and
cre
ate
pos
itio
ns
ina
sm
uch
as
the
app
rov
al
of
the
DB
M
rela
tive
to
suc
h
sch
em
e is
still
indi
spe
nsa
ble.
Peti
tion
er
be
wail
s
that
the
CS
 C
and
the
Co
urt
of
Ap
pea
ls
err
one
ous
ly
ass
um
ed
that
CH
R
enj
oys
fisc
al
aut
ono
my
ins
ofar
as
fina
nci
al
mat
ters
are
con
cer
ned
,
part
icul
arly
wit
h
reg
ard
to
the
upg
radi
ng
and
recl
ass
ific
atio
n of
pos
itio
ns
ther
ein.
Re
spo
nde
nt
CH
R
sha
rply
reto
rts
that
peti
tion
er
has
no
loc
us
sta
ndi
con
sid
erin
g
that
ther
e
exi
sts
no
offi
cial
writ
ten
rec
ord
in
the
Co
mm
issi
on
rec
ogn
izin
g
peti
tion
er
as
a
bon
a
fide
org
ani
zati
on
of
its
em
plo
yee
s
nor
is
ther
e
any
thin
g in
the
rec
ord
s to
sho
w
that
its
pre
sid
ent,
Mar
cial
A.
Sa
nch
ez,
Jr.,
has
the
aut
hori
ty
to
sue
the
CH
R.
The
CH
R
con
ten
ds
that
it
has
the
aut
hori
ty
to
cau
se
the
upg
radi
ng,
recl
ass
ific
atio
n,
pla
ntill
a
cre
atio
n,
and
coll
aps
ing
sch
em
e
san
s
the
app
rov
al
of
the
DB
M
bec
aus
e it
enj
oys
fisc
al
aut
ono
my.
Aft
er a
thor
oug
h
con
sid
erat
ion
of
the
arg
um
ent
s of
bot
h
part
ies
and
an
ass
idu
ous
scr
utin
y of
the
rec
ord
s in
the
cas
e at
bar,
it is
the
Co
urt'
 s
opi
nio
n
that
the
pre
sen
t
peti
tion
is
imb
ued
wit
h
mer
it.
On
peti
tion
er's
per
son
alit
y to
brin
g
this
suit
,
we
hel
d in
a
mul
titu
de
of
cas
es
that
a
pro
per
part
y is
one
wh
o
has
sus
tain
ed
or
is
in
im
me
diat
e
dan
ger
of
sus
tain
ing
an
inju
ry
as
a
res
ult
of
the
act
co
mpl
ain
ed
of.1
3
Her
e,
peti
tion
er,
whi
ch
con
sist
s of
ran
k
and
file
em
plo
yee
s of
res
pon
den
t
CH
R,
prot
est
s
that
the
upg
radi
ng
and
coll
aps
ing
of
pos
itio
ns
ben
efit
ed
onl
ya
sel
ect
few
in
the
upp
er
lev
el
pos
itio
ns
in
the
Co
mm
issi
on
res
ulti
ng
to
the
de
mor
aliz
atio
n of
the
ran
k
and
file
em
plo
yee
s.
Thi
s
suff
icie
ntly
me
ets
the
inju
ry
test
.
Ind
eed
,
the
CH
R's
upg
radi
ng
sch
em
e, if
fou
nd
to
be
vali
d,
pot
enti
ally
ent
ails
eati
ng
up
the
Co
mm
issi
on'
s
sav
ing
s or
that
port
ion
of
its
bud
get
ary
pie
oth
erw
ise
allo
cat
ed
for
Per
son
nel
Ser
vic
es,
fro
m
whi
ch
the
ben
efit
s of
the
em
plo
yee
s,
incl
udi
ng
tho
se
in
the
ran
k
and
file,
are
deri
ved
.
Fur
ther
,
the
per
son
alit
y of
peti
tion
er
to
file
this
cas
e
wa
s
rec
ogn
ize
d
by
the
CS
C
wh
en
it
too
k
cog
niz
anc
e of
the
CH
RE
A's
req
ues
t to
affir
m
the
rec
om
me
nda
tion
of
the
CS
C-
Nat
ion
al
Ca
pita
l
Re
gio
n
Offi
ce.
CH
RE
A's
per
son
alit
y to
brin
g
the
suit
wa
sa
non
-
iss
ue
 in
the
Co
urt
of
Ap
pea
ls
wh
en
it
pas
sed
upo
n
the
mer
its
of
this
cas
e.
Thu
s,
neit
her
sho
uld
our
han
ds
be
tied
by
this
tec
hni
cal
con
cer
n.
Ind
eed
, it
is
sett
led
juri
spr
ude
nce
that
an
iss
ue
that
wa
s
neit
her
rais
ed
in
the
co
mpl
aint
nor
in
the
cou
rt
bel
ow
can
not
be
rais
ed
for
the
first
tim
e
on
app
eal,
as
to
do
so
wo
uld
be
offe
nsi
ve
to
the
bas
ic
rule
s of
fair
pla
y,
just
ice,
and
due
pro
ces
s.1
4
We
no
w
del
ve
into
the
mai
n
iss
ue
of
wh
eth
er
or
not
the
app
rov
al
by
the
DB
M
is a
con
diti
on
pre
ced
ent
to
the
ena
ctm
ent
of
an
upg
radi
ng,
recl
ass
ific
atio
n,
cre
atio
n
and
coll
aps
ing
of
pla
ntill
a
pos
itio
ns
in
the
CH
R.
Ger
ma
ne
to
our
dis
cus
sio
n is
Re
p.
Act
No.
675
8,
An
Act
Pre
scri
bin
ga
Re
vis
ed
Co
mp
ens
atio
n
and
Pos
itio
n
Cla
ssifi
cati
on
Sys
tem
in
the
Go
ver
nm
ent
and
For
Oth
er
Pur
pos
es,
or
the
Sal
ary
Sta
nda
rdiz
atio
n
La
w,
dat
ed
01
Jul
y
198
9,
whi
ch
pro
vid
es
in
Sec
tion
s2
and
4
ther
eof
that
it is
the
DB
M
that
sha
ll
est
abli
sh
and
ad
min
iste
ra
unif
ied
Co
mp
ens
atio
n
and
Pos
itio
n
Cla
ssifi
cati
on
Sys
tem
.
Thu
s:
SE
C.
2.
Sta
tem
ent
of
Poli
cy.
-- It
is
her
eby
dec
lare
d
the
poli
cy
of
the
Sta
te
to
pro
vid
e
equ
al
pay
for
sub
sta
ntia
lly
equ
al
wor
k
and
to
bas
e
diff
ere
nce
s in
pay
upo
n
sub
sta
ntiv
e
diff
ere
nce
s in
duti
es
and
res
pon
sibil
itie
s,
and
qua
lific
atio
n
req
uire
me
nts
of
the
pos
itio
ns.
In
det
erm
inin
g
rate
s of
pay
,
due
reg
ard
sha
ll
be
giv
en
to,
am
ong
oth
ers,
pre
vaili
ng
rate
s in
the
priv
ate
sec
tor
for
co
mp
ara
ble
wor
k.
For
this
pur
pos
e,
the
De
part
me
nt
of
Bu
dge
 t
and
Ma
nag
em
ent
(DB
M)
is
her
eby
dire
cte
d to
est
abli
sh
and
ad
min
iste
ra
unif
ied
Co
mp
ens
atio
n
and
Pos
itio
n
Cla
ssifi
cati
on
Sys
tem
,
her
ein
afte
r
refe
rre
d to
as
the
Sys
tem
as
pro
vid
ed
for
in
Pre
sid
enti
al
De
cre
e
No.
985
, as
am
end
ed,
that
sha
ll
be
app
lied
for
all
gov
ern
me
nt
enti
ties
, as
ma
nda
ted
by
the
Co
nsti
tuti
on.
(E
mp
has
is
sup
plie
d.)
SE
C.
4.
Co
ver
age
.–
The
Co
mp
ens
atio
n
and
Pos
itio
n
Cla
ssifi
cati
on
Sys
tem
her
ein
pro
vid
ed
sha
ll
app
ly
to
all
pos
itio
ns,
app
oint
ive
or
ele
ctiv
e,
on
full
or
part
-
tim
e
bas
is,
no
w
exi
stin
g or
her
eaft
er
cre
ate
d in
the
gov
ern
me
nt,
incl
udi
 ng
gov
ern
me
nt-
ow
ned
or
con
troll
ed
cor
por
atio
ns
and
gov
ern
me
nt
fina
nci
al
inst
ituti
ons
.
The
ter
m
"go
ver
nm
ent
"
refe
rs
to
the
Exe
cuti
ve,
the
Leg
isla
tive
and
the
Jud
icial
Bra
nch
es
and
the
Co
nsti
tuti
ona
l
Co
mm
issi
ons
and
sha
ll
incl
ude
all,
but
sha
ll
not
be
limi
ted
to,
dep
art
me
nts,
bur
eau
s,
offi
ces
,
boa
rds,
co
mm
issi
ons
,
cou
rts,
trib
una
ls,
cou
ncil
s,
aut
hori
ties
,
ad
min
istr
atio
ns,
cen
ters
,
inst
itut
es,
stat
e
coll
ege
s
and
uni
ver
siti
es,
loc
al
gov
ern
me
nt
unit
s,
and
the
arm
ed
forc
es.
The
ter
m
"go
ver
nm
ent-
ow
ned
or
con
troll
ed
cor
por
atio
ns
and
fina
nci
al
inst
ituti
ons
"
sha
ll
incl
ude
all
cor
por
atio
ns
and
fina
nci
al
inst
ituti
ons
ow
ned
or
con
troll
ed
by
the
Nat
ion
al
Go
ver
nm
ent,
wh
eth
er
suc
h
cor
por
atio
ns
and
fina
nci
al
inst
ituti
ons
perf
orm
gov
ern
me
ntal
or
pro
prie
tary
fun
ctio
ns.
(E
mp
has
is
sup
plie
d.)
The
dis
put
atio
n of
the
Co
urt
of
Ap
pea
ls
that
the
CH
R is
exe
mpt
fro
m
the
lon
g
arm
 of
the
Sal
ary
Sta
nda
rdiz
atio
n
La
w is
fla
we
d
con
sid
erin
g
that
the
cov
era
ge
ther
eof,
as
defi
ned
abo
ve,
enc
om
pas
ses
the
enti
re
ga
mut
of
gov
ern
me
nt
offi
ces
,
san
s
qua
lific
atio
n.
Thi
s
po
wer
to
"ad
min
iste
r" is
not
pur
ely
min
iste
rial
in
cha
ract
er
as
err
one
ous
ly
hel
d
by
the
Co
urt
of
Ap
pea
 ls.
The
wor
d to
ad
min
iste
r
me
ans
to
con
trol
or
reg
ulat
e in
beh
alf
of
oth
ers;
to
dire
ct
or
sup
erin
ten
d
the
exe
cuti
on,
app
lica
tion
or
con
duc
t of;
and
to
ma
nag
e or
con
duc
t
pub
lic
affa
irs,
as
to
ad
min
iste
r
the
gov
ern
me
nt
of
the
stat
e.1
5
The
reg
ulat
ory
po
wer
of
the
DB
M
on
mat
ters
of
co
mp
ens
atio
n is
enc
rypt
ed
not
onl
y in
law
,
but
in
juri
spr
ude
nce
as
well
. In
the
rec
ent
cas
e of
Phil
ippi
ne
Ret
ire
me
nt
Aut
hori
ty
(PR
A)
v.
Jes
usit
o L.
Bu
ñag
,16
this
Co
urt,
spe
aki
ng
thro
ugh
Mr.
Jus
tice
Re
yna
to
Pu
no,
rule
d
that
co
mp
ens
atio
n,
allo
wa
nce
s,
and
oth
er
ben
efit
s
rec
eiv
ed
by
PR
A
offi
cial
s
and
em
plo
yee
s
wit
hou
t
the
req
uisi
te
app
rov
al
or
aut
hori
ty
of
the
DB
M
are
una
uth
oriz
ed
and
irre
gul
ar.
In
the
wor
ds
of
the
Co
urt
–
De
spit
e
the
po
wer
gra
nte
d to
the
Bo
ard
of
Dir
ect
ors
of
PR
A
to
est
abli
sh
and
fix
a
co
mp
ens
atio
n
and
ben
efit
s
sch
em
e
for
its
em
plo
yee
s,
the
 sa
me
is
sub
ject
to
the
revi
ew
of
the
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent.
Ho
we
ver,
in
vie
w
of
the
exp
res
s
po
wer
s
gra
nte
d to
PR
A
und
er
its
cha
rter
,
the
ext
ent
of
the
revi
ew
aut
hori
ty
of
the
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent
is
limi
ted.
As
stat
ed
in
Inti
a,
the
tas
k of
the
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent
is
sim
ply
to
revi
ew
the
co
mp
ens
atio
n
and
ben
efit
s
pla
n of
the
gov
ern
me
nt
age
ncy
or
enti
ty
con
cer
ned
and
det
erm
ine
if
the
sa
me
co
mpl
ies
wit
h
the
pre
scri
bed
poli
cie
s
and
gui
deli
nes
iss
ued
in
this
reg
ard.
The
role
of
the
De
part
me
nt
of
Bu
dge
 t
and
Ma
nag
em
ent
is
sup
ervi
sori
al
in
nat
ure,
its
mai
n
dut
y
bei
ng
to
asc
erta
in
that
the
pro
pos
ed
co
mp
ens
atio
n,
ben
efit
s
and
oth
er
inc
enti
ves
to
be
giv
en
to
PR
A
offi
cial
s
and
em
plo
yee
s
adh
ere
to
the
poli
cie
s
and
gui
deli
nes
iss
ued
in
acc
ord
anc
e
wit
h
app
lica
ble
law
s.
In
Vict
orin
a
Cru
z v.
Co
urt
of
Ap
pea
ls,1
7
we
hel
d
that
the
DB
M
has
the
sol
e
po
wer
and
dis
cret
ion
to
ad
min
iste
r
the
co
mp
ens
atio
n
and
pos
itio
n
cla
ssifi
cati
on
sys
tem
of
the
nati
ona
l
gov
ern
me
nt.
In
Inti
a,
Jr.
v.
Co
mm
issi
on
on
Au
dit,
18
the
Co
urt
hel
d
that
alth
oug
h
the
cha
rter
19
of
the
Phil
ippi
ne
Pos
tal
Cor
por
atio
n
(PP
C)
gra
nts
it
the
po
wer
to
fix
the
co
mp
ens
atio
n
and
ben
efit
s of
its
em
plo
yee
s
and
exe
mpt
s
PP
C
fro
m
the
cov
era
ge
of
the
rule
s
and
reg
ulat
ion
s of
the
Co
mp
ens
atio
n
and
Pos
itio
n
Cla
ssifi
cati
on
Offi
ce,
by
virt
ue
of
Sec
tion
6 of
P.D
.
No.
159
7,
the
co
mp
ens
atio
n
sys
tem
est
abli
she
d
by
the
PP
C
is,
non
eth
ele
ss,
sub
ject
to
the
revi
ew
of
the
DB
M.
Thi
s
Co
urt
into
ned
:
It
sho
uld
be
em
pha
siz
ed
that
the
revi
ew
by
the
DB
M
of
any
PP
C
res
olut
ion
affe
ctin
g
the
co
mp
ens
atio
n
stru
ctur
e of
its
per
son
nel
sho
uld
not
be
inte
rpr
ete
d to
me
an
that
the
DB
M
can
dict
ate
upo
n
the
PP
C
Bo
ard
of
Dir
ect
ors
and
dep
rive
the
latt
er
of
its
dis
cret
ion
on
the
mat
ter.
Rat
her,
the
DB
M's
fun
ctio
n is
mer
ely
to
ens
ure
that
the
acti
on
tak
en
by
the
Bo
ard
of
Dir
ect
ors
co
mpl
ies
wit
h
the
req
uire
me
nts
of
the
law
,
spe
cific
ally
,
that
PP
C's
co
mp
ens
atio
n
sys
tem
"co
nfor
ms
as
clo
sel
y
as
pos
sibl
e
wit
h
that
pro
vid
ed
for
und
er
R.A
.
No.
675
8."
(E
mp
has
is
sup
plie
d.)
As
me
asu
red
by
the
fore
goi
ng
leg
al
and
juri
spr
ude
ntia
l
yar
dsti
cks
,
the
imp
rim
atur
of
the
DB
M
mu
st
first
be
sou
ght
prio
r to
imp
lem
ent
atio
n of
any
recl
ass
ific
atio
n or
upg
radi
ng
of
pos
itio
 ns
in
gov
ern
me
nt.
Thi
s is
con
son
ant
to
the
ma
nda
te
of
the
DB
M
und
er
the
Re
vis
ed
Ad
min
istr
ativ
e
Co
de
of
198
7,
Sec
tion
3,
Ch
apt
er
1,
Titl
e
XVI
I, to
wit:
SE
C.
3.
Po
wer
s
and
Fun
ctio
ns.
–
The
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent
sha
ll
ass
ist
the
Pre
sid
ent
in
the
pre
par
atio
n of
a
nati
ona
l
res
our
ces
and
exp
end
itur
es
bud
get,
pre
par
atio
n,
exe
cuti
on
and
con
trol
of
the
Nat
ion
al
Bu
dge
t,
pre
par
atio
n
and
mai
nte
nan
ce
of
acc
oun
ting
sys
tem
s
ess
enti
al
to
the
bud
get
ary
pro
ces
s,
ach
iev
em
ent
of
mor
e
eco
no
my
and
effi
cie
ncy
in
the
ma
nag
em
ent
of
gov
ern
me
nt
ope
rati
ons
,
ad
min
istr
atio
n of
co
mp
ens
atio
n
and
pos
itio
n
cla
ssifi
cati
on
sys
tem
s,
ass
ess
me
nt
of
org
ani
zati
ona
l
effe
ctiv
ene
ss
and
revi
ew
and
eva
luat
ion
of
legi
slat
ive
pro
pos
als
hav
ing
bud
get
ary
or
org
ani
zati
ona
l
imp
lica
tion
s.
(E
mp
has
is
sup
plie
d.)
Irre
frag
abl
y, it
is
wit
hin
the
turf
of
the
DB
 M
Sec
reta
ry
to
dis
allo
w
the
upg
radi
ng,
recl
ass
ific
atio
n,
and
cre
atio
n of
add
itio
nal
pla
ntill
a
pos
itio
ns
in
the
CH
R
bas
ed
on
its
find
ing
that
suc
h
sch
em
e
lac
ks
leg
al
just
ific
atio
n.
Not
abl
y,
the
CH
R
itse
lf
rec
ogn
ize
s
the
aut
hori
ty
of
the
DB
M
to
den
y or
app
rov
e
the
pro
pos
ed
recl
ass
 ific
atio
n of
pos
itio
ns
as
evi
den
ced
by
its
thre
e
lett
ers
to
the
DB
M
req
ues
ting
app
rov
al
ther
eof.
As
suc
h, it
is
no
w
est
opp
ed
fro
m
no
w
clai
min
g
that
the
nod
of
app
rov
al it
has
pre
vio
usl
y
sou
ght
fro
m
the
DB
M
is a
sup
erfl
uity
.
The
Co
urt
of
Ap
pea
ls
inc
orr
ectl
y
reli
ed
on
the
pro
nou
nce
me
nt
of
the
CS
C-
Ce
ntra
l
Offi
ce
that
the
CH
R is
a
con
stit
utio
nal
co
mm
issi
on,
and
as
suc
h
enj
oys
fisc
al
aut
ono
my.
20
Pal
pab
ly,
the
Co
urt
of
Ap
pea
ls'
De
cisi
on
wa
s
bas
ed
on
the
mis
tak
en
pre
mis
e
that
the
CH
R
bel
ong
s to
the
spe
cie
s of
con
stit
utio
nal
co
mm
issi
ons
.
But
,
Arti
cle
IX
 of
the
Co
nsti
tuti
on
stat
es
in
no
unc
erta
in
ter
ms
that
onl
y
the
CS
C,
the
Co
mm
issi
on
on
Ele
ctio
ns,
and
the
Co
mm
issi
on
on
Au
dit
sha
ll
be
tag
ged
as
Co
nsti
tuti
ona
l
Co
mm
issi
ons
wit
h
the
app
urte
nan
t
righ
t to
fisc
al
aut
ono
my.
Thu
s:
Sec
. 1.
The
Co
nsti
tuti
ona
l
Co
mm
issi
ons
,
whi
ch
sha
 ll
be
ind
epe
nde
nt,
are
the
Civi
l
Ser
vic
e
Co
mm
issi
on,
the
Co
mm
issi
on
on
Ele
ctio
ns,
and
the
Co
mm
issi
on
on
Au
dit.
Sec
. 5.
The
Co
mm
issi
on
sha
ll
enj
oy
fisc
al
aut
ono
my.
The
ir
app
rov
ed
ann
ual
app
rop
riati
ons
sha
ll
be
aut
om
atic
ally
and
reg
ular
ly
rele
ase
d.
Alo
ng
the
sa
me
vei
n,
the
Ad
min
istr
ativ
e
Co
de,
in
Ch
apt
er
5,
Sec
tion
s
24
and
26
of
Bo
ok
II
on
Dist
ribu
tion
of
Po
wer
s of
Go
ver
nm
ent,
the
con
stit
utio
nal
co
mm
issi
ons
sha
ll
incl
ude
onl
y
the
Civi
l
Ser
vic
e
Co
mm
issi
on,
the
Co
mm
issi
on
on
Ele
ctio
ns,
and
the
Co
mm
issi
on
on
Au
dit,
whi
ch
are
gra
nte
d
ind
epe
nde
nce
and
fisc
al
aut
ono
my.
In
con
tras
t,
Ch
apt
er
5,
Sec
tion
29
ther
eof,
is
sile
nt
on
the
gra
nt
of
sim
ilar
po
wer
s to
the
oth
er
bod
ies
incl
udi
ng
the
CH
R.
Thu
s:
SE
C.
24.
Co
nsti
tuti
ona
l
Co
mm
issi
ons
.–
The
Co
nsti
tuti
ona
l
Co
mm
issi
ons
,
whi
ch
sha
ll
be
ind
epe
nde
nt,
are
the
Civi
l
Ser
vic
e
Co
mm
issi
on,
the
Co
mm
issi
on
on
Ele
ctio
ns,
and
the
Co
mm
issi
on
on
Au
dit.
SE
C.
26.
Fis
cal
Aut
ono
my.
–
The
Co
nsti
tuti
ona
l
Co
mm
issi
ons
sha
ll
enj
oy
fisc
al
aut
ono
my.
The
app
rov
ed
ann
ual
app
rop
riati
ons
sha
ll
be
aut
om
atic
ally
and
reg
ular
ly
rele
ase
d.
SE
C.
29.
Oth
er
Bo
die
s. –
The
re
sha
ll
be
in
acc
ord
anc
e
wit
h
the
Co
nsti
tuti
on,
an
Offi
ce
of
the
Om
bud
sm
an,
a
Co
mm
issi
on
on
Hu
ma
n
Rig
hts,
and
ind
epe
nde
nt
cen
tral
mo
net
ary
aut
hori
ty,
and
a
nati
ona
l
poli
ce
co
mm
issi
on.
Lik
ewi
se,
as
pro
vid
ed
in
the
Co
nsti
tuti
on,
Co
ngr
ess
ma
y
est
abli
sh
an
ind
epe
nde
nt
eco
no
mic
and
pla
nni
ng
age
ncy
.
(E
mp
has
is
our
s.)
Fro
m
the
198
7
Co
nsti
tuti
on
and
the
Ad
min
istr
ativ
e
Co
de,
it is
abu
nda
ntly
cle
ar
that
the
CH
R is
not
am
ong
the
cla
ss
of
Co
nsti
tuti
ona
l
Co
mm
issi
ons
. As
exp
res
sed
in
the
oft-
rep
eat
ed
ma
xim
exp
res
sio
uni
us
est
exc
lusi
o
alte
rius
,
the
exp
res
s
me
ntio
n of
one
per
son
,
thin
g,
act
or
con
seq
uen
ce
exc
lud
es
all
oth
ers.
Sta
ted
oth
erw
ise,
exp
res
siu
m
faci
t
ces
sar
e
taci
tum
–
wh
at
is
exp
res
sed
put
s
an
end
to
wh
at
is
imp
lied
.21
Nor
is
ther
e
any
leg
al
bas
is
to
sup
port
the
con
tent
ion
that
the
CH
R
enj
oys
fisc
al
aut
ono
my.
In
ess
enc
e,
fisc
al
aut
ono
my
ent
ails
free
do
m
fro
m
out
sid
e
con
trol
and
limi
tati
ons
,
oth
er
tha
n
tho
se
pro
vid
ed
by
law
. It
is
the
free
do
m
to
allo
cat
e
and
utili
ze
fun
ds
gra
nte
d
by
law
, in
acc
ord
anc
e
wit
h
law
,
and
pur
sua
nt
to
the
wis
do
m
and
dis
pat
ch
its
nee
ds
ma
y
req
uire
fro
m
tim
e to
tim
e.2
2 In
Bla
que
ra
v.
Alc
ala
and
Be
ngz
on
v.
Dril
on,
23
it is
und
erst
ood
that
it is
onl
y
the
Jud
icia
ry,
the
Civi
l
Ser
vic
e
Co
mm
issi
on,
the
Co
mm
issi
on
on
Au
dit,
the
Co
mm
issi
on
on
Ele
ctio
ns,
and
the
Offi
ce
of
the
Om
bud
sm
an,
whi
ch
enj
oy
fisc
al
aut
ono
my.
Thu
s,
in
Be
ngz
on,
24
we
exp
lain
ed:
As
env
isio
ned
in
the
Co
nsti
tuti
on,
the
fisc
al
aut
ono
my
enj
oye
d
by
the
Jud
icia
ry,
the
Civi
l
Ser
vic
e
Co
mm
issi
on,
the
Co
mm
issi
on
on
Au
dit,
the
Co
mm
issi
on
on
Ele
ctio
ns,
and
the
Offi
ce
of
the
Om
bud
sm
an
con
tem
plat
es
a
gua
rant
ee
of
full
flex
ibilit
y to
allo
cat
e
and
utili
ze
thei
r
res
our
ces
wit
h
the
wis
 do
m
and
dis
pat
ch
that
thei
r
nee
ds
req
uire
. It
rec
ogn
ize
s
the
po
wer
and
aut
hori
ty
to
lev
y,
ass
ess
and
coll
ect
fee
s,
fix
rate
s of
co
mp
ens
atio
n
not
exc
eed
ing
the
hig
hes
t
rate
s
aut
hori
zed
by
law
for
co
mp
ens
atio
n
and
pay
pla
ns
of
the
gov
ern
me
nt
and
allo
cat
e
and
dis
bur
se
suc
h
su
ms
 as
ma
y
be
pro
vid
ed
by
law
or
pre
scri
bed
by
the
m
in
the
cou
rse
of
the
dis
cha
rge
of
thei
r
fun
ctio
ns.
...
The
Jud
icia
ry,
the
Co
nsti
tuti
ona
l
Co
mm
issi
ons
,
and
the
Om
bud
sm
an
mu
st
hav
e
the
ind
epe
nde
nce
and
flex
ibilit
y
nee
ded
in
the
dis
cha
rge
of
thei
r
con
stit
utio
nal
duti
es.
The
imp
osit
ion
 of
rest
ricti
ons
and
con
stra
ints
on
the
ma
nne
r
the
ind
epe
nde
nt
con
stit
utio
nal
offi
ces
allo
cat
e
and
utili
ze
the
fun
ds
app
rop
riat
ed
for
thei
r
ope
rati
ons
is
ana
the
ma
to
fisc
al
aut
ono
my
and
viol
ativ
e
not
onl
y of
the
exp
res
s
ma
nda
te
of
the
Co
nsti
tuti
on
but
esp
eci
ally
as
reg
ard
s
the
Su
pre
me
Co
urt,
of
the
ind
epe
nde
nce
and
sep
arat
ion
of
po
wer
s
upo
n
whi
ch
the
enti
re
fabr
ic
of
our
con
stit
utio
nal
sys
tem
is
bas
ed.
In
the
inte
rest
of
co
mit
y
and
coo
per
atio
n,
the
Su
pre
me
Co
urt,
[the
]
Co
nsti
tuti
ona
l
Co
mm
issi
ons
,
and
the
Om
bud
sm
an
hav
e
so
far
limi
ted
thei
r
obj
ecti
ons
to
con
sta
 nt
rem
ind
ers.
We
no
w
agr
ee
wit
h
the
peti
tion
ers
that
this
gra
nt
of
aut
ono
my
sho
uld
cea
se
to
be
a
me
ani
ngl
ess
pro
visi
on.
(E
mp
has
is
sup
plie
d.)
Nei
ther
doe
s
the
fact
that
the
CH
R
wa
s
ad
mitt
ed
as
a
me
mb
er
by
the
Co
nsti
tuti
ona
l
Fis
cal
Aut
ono
my
Gro
up
(CF
AG
)
ips
o
fact
o
clot
hed
it
wit
h
fisc
al
aut
ono
my.
Fis
cal
aut
ono
my
is a
con
stit
utio
nal
gra
nt,
not
a
tag
obt
ain
abl
e
by
me
mb
ers
hip.
We
not
e
wit
h
inte
rest
that
the
spe
cial
pro
visi
on
und
er
Re
p.
Act
No.
852
2,
whil
e
cite
d
und
er
the
hea
din
g of
the
CH
R,
did
not
spe
cific
ally
me
ntio
n
CH
R
as
am
ong
tho
se
offi
ces
to
whi
ch
the
spe
cial
pro
visi
on
to
for
mul
ate
and
imp
lem
ent
org
ani
zati
ona
l
stru
ctur
es
app
ly,
but
mer
ely
stat
es
its
cov
era
ge
to
incl
ude
Co
nsti
tuti
ona
l
Co
mm
issi
ons
and
Offi
ces
enj
oyi
ng
fisc
al
aut
ono
my.
In
con
tras
t,
the
Sp
eci
al
Pro
visi
on
Ap
plic
abl
e to
the
Jud
icia
ry
und
er
Arti
cle
XX
VIII
of
the
Ge
ner
al
Ap
pro
pria
tion
s
Act
of
199
8
spe
cific
ally
me
ntio
ns
that
suc
h
spe
cial
pro
visi
on
app
lies
to
the
judi
ciar
y
and
had
cat
ego
rica
lly
aut
hori
zed
the
Chi
ef
Jus
tice
of
the
Su
pre
me
Co
urt
to
for
mul
ate
and
imp
lem
ent
the
org
ani
zati
ona
l
stru
ctur
e of
the
Jud
icia
ry,
to
wit:
1.
Org
ani
zati
ona
l
Str
uct
ure.
Any
pro
visi
on
of
law
to
the
con
trar
y
not
wit
hst
and
ing
and
wit
hin
the
limi
ts
of
thei
r
res
pec
tive
app
rop
riati
ons
aut
hori
zed
in
this
Act,
the
Chi
ef
Jus
tice
of
the
Su
pre
me
Co
urt
is
aut
hori
zed
to
for
mul
ate
and
imp
lem
ent
org
ani
zati
ona
l
stru
ctur
e of
the
Jud
icia
ry,
to
fix
and
det
erm
ine
the
sal
arie
s,
allo
wa
nce
 s,
and
oth
er
ben
efit
s of
thei
r
per
son
nel,
and
wh
ene
ver
pub
lic
inte
rest
so
req
uire
s,
ma
ke
adj
ust
me
nts
in
the
per
son
al
ser
vic
es
ite
miz
atio
n
incl
udi
ng,
but
not
limi
ted
to,
the
tran
sfer
of
ite
m
or
cre
atio
n of
ne
w
pos
itio
ns
in
the
Jud
icia
ry;
PR
OVI
DE
D,
Tha
t
offi
cer
s
and
em
plo
yee
s
wh
ose
pos
itio
ns
are
affe
cte
d
by
suc
h
reo
rga
niz
atio
n or
adj
ust
me
nts
sha
ll
be
gra
nte
d
retir
em
ent
grat
uiti
es
and
sep
arat
ion
pay
in
acc
ord
anc
e
wit
h
exi
stin
g
law
,
whi
ch
sha
ll
be
pay
abl
e
fro
m
any
une
xpe
nde
d
bal
anc
e
of,
or
sav
ing
s in
the
app
rop
riati
ons
of
thei
r
res
pec
tive
offi
ces
:
PR
OVI
DE
D,
FU
RT
HE
R,
Tha
t
the
imp
lem
ent
atio
n
her
eof
sha
ll
be
in
acc
ord
anc
e
wit
h
sal
ary
rate
s,
allo
wa
nce
s
and
oth
er
ben
efit
s
aut
hori
zed
und
er
co
mp
ens
atio
n
sta
nda
rdiz
atio
n
law
s.
(E
mp
has
is
sup
plie
d.)
All
told
,
the
CH
R,
alth
oug
h
ad
mitt
edl
ya
con
stit
utio
nal
cre
atio
n
is,
non
eth
ele
ss,
not
incl
ude
d in
the
gen
us
of
offi
ces
acc
ord
ed
fisc
al
aut
ono
my
by
con
stit
utio
nal
or
legi
slat
ive
fiat.
Eve
n
ass
umi
ng
en
arg
uen
do
that
the
CH
R
enj
oys
fisc
al
aut
ono
my,
we
sha
re
the
sta
nce
of
the
DB
M
that
the
gra
nt
of
fisc
al
aut
ono
my
not
wit
hst
and
ing,
all
gov
ern
me
nt
offi
ces
mu
st,
 all
the
sa
me,
ko
wto
w
to
the
Sal
ary
Sta
nda
rdiz
atio
n
La
w.
We
are
of
the
sa
me
min
d
wit
h
the
DB
M
on
its
sta
ndp
oint
,
thu
s-
Bei
ng
a
me
mb
er
of
the
fisc
al
aut
ono
my
gro
up
doe
s
not
ves
t
the
age
ncy
wit
h
the
aut
hori
ty
to
recl
ass
ify,
upg
rad
e,
and
cre
ate
pos
itio
ns
wit
hou
t
app
rov
 al
of
the
DB
M.
Whi
le
the
me
mb
ers
of
the
Gro
up
are
aut
hori
zed
to
for
mul
ate
and
imp
lem
ent
the
org
ani
zati
ona
l
stru
ctur
es
of
thei
r
res
pec
tive
offi
ces
and
det
erm
ine
the
co
mp
ens
atio
n of
thei
r
per
son
nel,
suc
h
aut
hori
ty
is
not
abs
olut
e
and
mu
st
be
exe
rcis
ed
wit
hin
the
par
am
eter
s of
the
Uni
fied
Pos
itio
n
Cla
ssifi
cati
on
and
Co
mp
ens
atio
n
Sys
tem
est
abli
she
d
und
er
RA
675
8
mor
e
pop
ular
ly
kno
wn
as
the
Co
mp
ens
atio
n
Sta
nda
rdiz
atio
n
La
w.2
5
(E
mp
has
is
sup
plie
d.)
The
mo
st
luci
d
arg
um
ent
aga
inst
the
sta
nd
of
res
pon
den
t,
ho
we
ver,
is
the
pro
visi
on
of
Re
p.
Act
No.
852
2
 "th
at
the
imp
lem
ent
atio
n
her
eof
sha
ll
be
in
acc
ord
anc
e
wit
h
sal
ary
rate
s,
allo
wa
nce
s
and
oth
er
ben
efit
s
aut
hori
zed
und
er
co
mp
ens
atio
n
sta
nda
rdiz
atio
n
law
s."2
6
Ind
eed
,
the
law
upo
n
whi
ch
res
pon
den
t
hea
vily
anc
hor
s
its
cas
e
upo
n
has
exp
res
sly
pro
vid
ed
that
any
for
m
 of
adj
ust
me
nt
in
the
org
ani
zati
ona
l
stru
ctur
e
mu
st
be
wit
hin
the
par
am
eter
s of
the
Sal
ary
Sta
nda
rdiz
atio
n
La
w.
The
Sal
ary
Sta
nda
rdiz
atio
n
La
w
has
gai
ned
imp
etu
s in
add
res
sin
g
one
of
the
bas
ic
cau
ses
of
dis
con
tent
of
ma
ny
civil
ser
van
ts.2
7
For
this
pur
pos
e,
Co
ngr
ess
has
del
ega
ted
 to
the
DB
M
the
po
wer
to
ad
min
iste
r
the
Sal
ary
Sta
nda
rdiz
atio
n
La
w
and
to
ens
ure
that
the
spir
it
beh
ind
it is
obs
erv
ed.
Thi
s
po
wer
is
part
of
the
sys
tem
of
che
cks
and
bal
anc
es
or
sys
tem
of
rest
rain
ts
in
our
gov
ern
me
nt.
The
DB
M's
exe
rcis
e of
suc
h
aut
hori
ty
is
not
in
itse
lf
an
arr
oga
tion
ina
sm
uch
as
it is
pur
sua
nt
to
the
par
am
oun
t
law
of
the
lan
d,
the
Sal
ary
Sta
nda
rdiz
atio
n
La
w
and
the
Ad
min
istr
ativ
e
Co
de.
In
line
wit
h
its
role
to
bre
ath
e
life
into
the
poli
cy
beh
ind
the
Sal
ary
Sta
nda
rdiz
atio
n
La
w
of
"pr
ovi
din
g
equ
al
pay
for
sub
sta
ntia
lly
equ
al
wor
k
and
to
bas
e
 diff
ere
nce
s in
pay
upo
n
sub
sta
ntiv
e
diff
ere
nce
s in
duti
es
and
res
pon
sibil
itie
s,
and
qua
lific
atio
n
req
uire
me
nts
of
the
pos
itio
ns,"
the
DB
M,
in
the
cas
e
und
er
revi
ew,
ma
de
a
det
erm
inat
ion,
afte
ra
thor
oug
h
eva
luat
ion,
that
the
recl
ass
ific
atio
n
and
upg
radi
ng
sch
em
e
pro
pos
ed
by
the
CH
R
lac
ks
 leg
al
rati
ona
liza
tion
.
The
DB
M
exp
oun
ded
that
Sec
tion
78
of
the
gen
eral
pro
visi
ons
of
the
Ge
ner
al
Ap
pro
pria
tion
s
Act
FY
199
8,
whi
ch
the
CH
R
hea
vily
reli
es
upo
n to
just
ify
its
recl
ass
ific
atio
n
sch
em
e,
exp
licitl
y
pro
vid
es
that
"no
org
ani
zati
ona
l
unit
or
cha
nge
s in
key
pos
itio
ns
sha
ll
be
aut
hori
zed
unl
ess
pro
vid
ed
by
law
or
dire
cte
d
by
the
Pre
sid
ent.
"
Her
e,
the
DB
M
dis
cer
ned
that
ther
e is
no
law
aut
hori
zin
g
the
cre
atio
n of
a
Fin
anc
e
Ma
nag
em
ent
Offi
ce
and
a
Pu
blic
Aff
airs
Offi
ce
in
the
CH
R.
An
ent
CH
R's
pro
pos
al
to
upg
rad
e
twe
lve
pos
itio
ns
of
Att
orn
ey
VI,
SG
-26
to
 Dir
ect
or
IV,
SG
-28,
and
four
pos
itio
ns
of
Dir
ect
or
III,
SG
-27
to
Dir
ect
or
IV,
SG
-28,
in
the
Ce
ntra
l
Offi
ce,
the
DB
M
den
ied
the
sa
me
as
this
wo
uld
cha
nge
the
con
text
fro
m
sup
port
to
sub
sta
ntiv
e
wit
hou
t
act
ual
cha
nge
in
fun
ctio
ns.
Thi
s
vie
w
of
the
DB
M,
as
the
law'
s
des
ign
ate
d
bod
y to
imp
lem
ent
and
ad
min
iste
ra
unif
ied
co
mp
ens
atio
n
sys
tem
, is
bey
ond
cav
il.
The
inte
rpr
etat
ion
of
an
ad
min
istr
ativ
e
gov
ern
me
nt
age
ncy
,
whi
ch
is
tas
ked
to
imp
lem
ent
a
stat
ute
is
acc
ord
ed
gre
at
res
pec
t
and
ordi
nari
ly
con
trol
s
the
con
stru
ctio
n of
the
cou
rts.
In
En
erg
y
Re
gul
ator
y
 Bo
ard
v.
Co
urt
of
Ap
pea
ls,2
8
we
ech
oed
the
bas
ic
rule
that
the
cou
rts
will
not
inte
rfer
e in
mat
ters
whi
ch
are
add
res
sed
to
the
sou
nd
dis
cret
ion
of
gov
ern
me
nt
age
nci
es
entr
ust
ed
wit
h
the
reg
ulat
ion
of
acti
viti
es
co
min
g
und
er
the
spe
cial
tec
hni
cal
kno
wle
dge
and
trai
nin
g of
suc
h
age
nci
es.
To
 be
sur
e,
con
sid
erin
g
his
exp
erti
se
on
mat
ters
affe
ctin
g
the
nati
on'
s
coff
ers,
the
Sec
reta
ry
of
the
DB
M,
as
the
Pre
sid
ent'
s
alte
r
ego
,
kno
ws
fro
m
wh
ere
he
spe
aks
ina
sm
uch
as
he
has
the
fron
t
sea
t
vie
w
of
the
adv
ers
e
effe
cts
of
an
un
war
rant
ed
upg
radi
ng
or
cre
atio
n of
pos
itio
ns
 in
the
CH
R
in
part
icul
ar
and
in
the
enti
re
gov
ern
me
nt
in
gen
eral
.
WH
ER
EF
OR
E,
the
peti
tion
is
GR
AN
TE
D,
the
De
cisi
on
dat
ed
29
No
ve
mb
er
200
1 of
the
Co
urt
of
Ap
pea
ls
in
CA-
G.
R.
SP
No.
596
78
and
its
Re
sol
utio
n
dat
ed
11
Se
pte
mb
er
200
2
are
her
eby
RE
VE
RS
ED
and
SE
 T
ASI
DE.
The
ruli
ng
dat
ed
29
Mar
ch
199
9 of
the
Civi
l
Ser
vic
e
Co
mm
isio
n-
Nat
ion
al
Ca
pita
l
Re
gio
n is
REI
NS
TA
TE
D.
The
Co
mm
issi
on
on
Hu
ma
n
Rig
hts
Re
sol
utio
n
No.
A9
8-
047
dat
ed
04
Se
pte
mb
er
199
8,
Re
sol
utio
n
No.
A9
8-
055
dat
ed
19
Oct
obe
r
199
8
and
Re
sol
utio
n
 No.
A9
8-
062
dat
ed
17
No
ve
mb
er
199
8
wit
hou
t
the
app
rov
al
of
the
De
part
me
nt
of
Bu
dge
t
and
Ma
nag
em
ent
are
dis
allo
we
d.
No
pro
nou
nce
me
nt
as
to
cos
ts.
SO
OR
DE
RE
D.
Pu
no,
Acti
ng
C.J
.,
Aus
tria-
Mar
tine
z,
Call
ejo,
Sr.,
and
Tin
ga,
JJ.,
con
cur.

To support the implementation of such scheme, the CHR, in the same resolution, authorized the
augmentation of a commensurate amount generated from savings under Personnel Services.

By virtue of Resolution No. A98-062 dated 17 November 1998, the CHR "collapsed" the vacant
positions in the body to provide additional source of funding for said staffing modification. Among the
positions collapsed were: one Attorney III, four Attorney IV, one Chemist III, three Special
Investigator I, one Clerk III, and one Accounting Clerk II.
8
The CHR forwarded said staffing modification and upgrading scheme to the DBM with a request for
its approval, but the then DBM secretary Benjamin Diokno denied the request on the following
justification:

… Based on the evaluations made the request was not favorably considered as it effectively
involved the elevation of the field units from divisions to services.

The present proposal seeks further to upgrade the twelve (12) positions of Attorney VI, SG-26 to
Director IV, SG-28. This would elevate the field units to a bureau or regional office, a level even
higher than the one previously denied.

The request to upgrade the three (3) positions of Director III, SG-27 to Director IV, SG-28, in the
Central Office in effect would elevate the services to Office and change the context from support to
substantive without actual change in functions.

In the absence of a specific provision of law which may be used as a legal basis to elevate the level
of divisions to a bureau or regional office, and the services to offices, we reiterate our previous stand
denying the upgrading of the twelve (12) positions of Attorney VI, SG-26 to Director III, SG-27 or
Director IV, SG-28, in the Field Operations Office (FOO) and three (3) Director III, SG-27 to Director
IV, SG-28 in the Central Office.

As represented, President Ramos then issued a Memorandum to the DBM Secretary dated 10
December 1997, directing the latter to increase the number of Plantilla positions in the CHR both
Central and Regional Offices to implement the Philippine Decade Plan on Human Rights Education,
the Philippine Human Rights Plan and Barangay Rights Actions Center in accordance with existing
laws. (Emphasis in the original)

Pursuant to Section 78 of the General Provisions of the General Appropriations Act (GAA) FY 1998,
no organizational unit or changes in key positions shall be authorized unless provided by law or
directed by the President, thus, the creation of a Finance Management Office and a Public Affairs
Office cannot be given favorable recommendation.

Moreover, as provided under Section 2 of RA No. 6758, otherwise known as the Compensation
Standardization Law, the Department of Budget and Management is directed to establish and
administer a unified compensation and position classification system in the government. The
Supreme Court ruled in the case of Victorina Cruz vs. Court of Appeals, G.R. No. 119155, dated
January 30, 1996, that this Department has the sole power and discretion to administer the
compensation and position classification system of the National Government.

Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of the
Group are authorized to formulate and implement the organizational structures of their respective
offices and determine the compensation of their personnel, such authority is not absolute and must
be exercised within the parameters of the Unified Position Classification and Compensation System
established under RA 6758 more popularly known as the Compensation Standardization Law. We
therefore reiterate our previous stand on the matter. (Emphases supplied)
9

In light of the DBM's disapproval of the proposed personnel modification scheme, the CSC-National
Capital Region Office, through a memorandum dated 29 March 1999, recommended to the CSC-
Central Office that the subject appointments be rejected owing to the DBM's disapproval of the
plantilla reclassification.
Meanwhile, the officers of petitioner CHREA, in representation of the rank and file employees of the
CHR, requested the CSC-Central Office to affirm the recommendation of the CSC-Regional Office.
CHREA stood its ground in saying that the DBM is the only agency with appropriate authority
mandated by law to evaluate and approve matters of reclassification and upgrading, as well as
creation of positions.

The CSC-Central Office denied CHREA's request in a Resolution dated 16 December 1999, and
reversed the recommendation of the CSC-Regional Office that the upgrading scheme be censured.
The decretal portion of which reads:

WHEREFORE, the request of Ronnie N. Rosero, Hubert V. Ruiz, Flordeliza A. Briones, George Q.
Dumlao [and], Corazon A. Santos-Tiu, is hereby denied. 10

CHREA filed a motion for reconsideration, but the CSC-Central Office denied the same on 09 June
2000.

Given the cacophony of judgments between the DBM and the CSC, petitioner CHREA elevated the
matter to the Court of Appeals. The Court of Appeals affirmed the pronouncement of the CSC-
Central Office and upheld the validity of the upgrading, retitling, and reclassification scheme in the
CHR on the justification that such action is within the ambit of CHR's fiscal autonomy. The fallo of
the Court of Appeals decision provides:

IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED and the questioned
Civil Service Commission Resolution No. 99-2800 dated December 16, 1999 as well as No. 001354
dated June 9, 2000, are hereby AFFIRMED. No cost. 11

Unperturbed, petitioner filed this petition in this Court contending that:

A.

…THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT UNDER THE 1987
CONSTITUTION, THE COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL AUTONOMY.

B.

…THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE CONSTRUCTION OF

THE COMMISSION ON HUMAN RIGHTS OF REPUBLIC ACT NO. 8522 (THE GENERAL
APPROPRIATIONS ACT FOR THE FISCAL YEAR 1998) DESPITE ITS BEING IN SHARP
CONFLICT WITH THE 1987 CONSTITUTION AND THE STATUTE ITSELF.

C.

…THE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN AFFIRMING THE VALIDITY
OF THE CIVIL SERVICE COMMISSION RESOLUTION NOS. 992800 AND 001354 AS WELL AS
THAT OF THE OPINION OF THE DEPARTMENT OF JUSTICE IN STATING THAT THE
COMMISSION ON HUMAN RIGHTS ENJOYS FISCAL AUTONOMY UNDER THE 1987
CONSTITUTION AND THAT THIS FISCAL AUTONOMY INCLUDES THE ACTION TAKEN BY IT IN
COLLAPSING, UPGRADING AND RECLASSIFICATION OF POSITIONS THEREIN. 12

The central question we must answer in order to resolve this case is: Can the Commission on
Human Rights validly implement an upgrading, reclassification, creation, and collapsing of plantilla
positions in the Commission without the prior approval of the Department of Budget and
Management?
Petitioner CHREA grouses that the Court of Appeals and the CSC-Central Office both erred in
sanctioning the CHR's alleged blanket authority to upgrade, reclassify, and create positions
inasmuch as the approval of the DBM relative to such scheme is still indispensable. Petitioner
bewails that the CSC and the Court of Appeals erroneously assumed that CHR enjoys fiscal
autonomy insofar as financial matters are concerned, particularly with regard to the upgrading and
reclassification of positions therein.

Respondent CHR sharply retorts that petitioner has no locus standi considering that there exists no
official written record in the Commission recognizing petitioner as a bona fide organization of its
employees nor is there anything in the records to show that its president, Marcial A. Sanchez, Jr.,
has the authority to sue the CHR. The CHR contends that it has the authority to cause the
upgrading, reclassification, plantilla creation, and collapsing scheme sans the approval of the DBM
because it enjoys fiscal autonomy.

After a thorough consideration of the arguments of both parties and an assiduous scrutiny of the
records in the case at bar, it is the Court's opinion that the present petition is imbued with merit.

On petitioner's personality to bring this suit, we held in a multitude of cases that a proper party is one
who has sustained or is in immediate danger of sustaining an injury as a result of the act complained
of. Here, petitioner, which consists of rank and file employees of respondent CHR, protests that the
13

upgrading and collapsing of positions benefited only a select few in the upper level positions in the
Commission resulting to the demoralization of the rank and file employees. This sufficiently meets
the injury test. Indeed, the CHR's upgrading scheme, if found to be valid, potentially entails eating up
the Commission's savings or that portion of its budgetary pie otherwise allocated for Personnel
Services, from which the benefits of the employees, including those in the rank and file, are derived.

Further, the personality of petitioner to file this case was recognized by the CSC when it took
cognizance of the CHREA's request to affirm the recommendation of the CSC-National Capital
Region Office. CHREA's personality to bring the suit was a non-issue in the Court of Appeals when it
passed upon the merits of this case. Thus, neither should our hands be tied by this technical
concern. Indeed, it is settled jurisprudence that an issue that was neither raised in the complaint nor
in the court below cannot be raised for the first time on appeal, as to do so would be offensive to the
basic rules of fair play, justice, and due process.
14

We now delve into the main issue of whether or not the approval by the DBM is a condition
precedent to the enactment of an upgrading, reclassification, creation and collapsing of plantilla
positions in the CHR.

Germane to our discussion is Rep. Act No. 6758, An Act Prescribing a Revised Compensation and
Position Classification System in the Government and For Other Purposes, or the Salary
Standardization Law, dated 01 July 1989, which provides in Sections 2 and 4 thereof that it is the
DBM that shall establish and administer a unified Compensation and Position Classification System.
Thus:

SEC. 2. Statement of Policy. -- It is hereby declared the policy of the State to provide equal pay for
substantially equal work and to base differences in pay upon substantive differences in duties and
responsibilities, and qualification requirements of the positions. In determining rates of pay, due
regard shall be given to, among others, prevailing rates in the private sector for comparable work.
For this purpose, the Department of Budget and Management (DBM) is hereby directed to establish
and administer a unified Compensation and Position Classification System, hereinafter referred to as
the System as provided for in Presidential Decree No. 985, as amended, that shall be applied for all
government entities, as mandated by the Constitution. (Emphasis supplied.)
SEC. 4. Coverage. – The Compensation and Position Classification System herein provided shall
apply to all positions, appointive or elective, on full or part-time basis, now existing or hereafter
created in the government, including government-owned or controlled corporations and government
financial institutions.

The term "government" refers to the Executive, the Legislative and the Judicial Branches and the
Constitutional Commissions and shall include all, but shall not be limited to, departments, bureaus,
offices, boards, commissions, courts, tribunals, councils, authorities, administrations, centers,
institutes, state colleges and universities, local government units, and the armed forces. The term
"government-owned or controlled corporations and financial institutions" shall include all
corporations and financial institutions owned or controlled by the National Government, whether
such corporations and financial institutions perform governmental or proprietary functions.
(Emphasis supplied.)

The disputation of the Court of Appeals that the CHR is exempt from the long arm of the Salary
Standardization Law is flawed considering that the coverage thereof, as defined above,
encompasses the entire gamut of government offices, sans qualification.

This power to "administer" is not purely ministerial in character as erroneously held by the Court of
Appeals. The word to administer means to control or regulate in behalf of others; to direct or
superintend the execution, application or conduct of; and to manage or conduct public affairs, as to
administer the government of the state. 15

The regulatory power of the DBM on matters of compensation is encrypted not only in law, but in
jurisprudence as well. In the recent case of Philippine Retirement Authority (PRA) v. Jesusito L.
Buñag, this Court, speaking through Mr. Justice Reynato Puno, ruled that compensation,
16

allowances, and other benefits received by PRA officials and employees without the requisite
approval or authority of the DBM are unauthorized and irregular. In the words of the Court –

Despite the power granted to the Board of Directors of PRA to establish and fix a compensation and
benefits scheme for its employees, the same is subject to the review of the Department of Budget
and Management. However, in view of the express powers granted to PRA under its charter, the
extent of the review authority of the Department of Budget and Management is limited. As stated in
Intia, the task of the Department of Budget and Management is simply to review the compensation
and benefits plan of the government agency or entity concerned and determine if the same complies
with the prescribed policies and guidelines issued in this regard. The role of the Department of
Budget and Management is supervisorial in nature, its main duty being to ascertain that the
proposed compensation, benefits and other incentives to be given to PRA officials and employees
adhere to the policies and guidelines issued in accordance with applicable laws.

In Victorina Cruz v. Court of Appeals, we held that the DBM has the sole power and discretion to
17

administer the compensation and position classification system of the national government.

In Intia, Jr. v. Commission on Audit, the Court held that although the charter of the Philippine Postal
18 19

Corporation (PPC) grants it the power to fix the compensation and benefits of its employees and
exempts PPC from the coverage of the rules and regulations of the Compensation and Position
Classification Office, by virtue of Section 6 of P.D. No. 1597, the compensation system established
by the PPC is, nonetheless, subject to the review of the DBM. This Court intoned:

It should be emphasized that the review by the DBM of any PPC resolution affecting the
compensation structure of its personnel should not be interpreted to mean that the DBM can dictate
upon the PPC Board of Directors and deprive the latter of its discretion on the matter. Rather, the
DBM's function is merely to ensure that the action taken by the Board of Directors complies with the
requirements of the law, specifically, that PPC's compensation system "conforms as closely as
possible with that provided for under R.A. No. 6758." (Emphasis supplied.)

As measured by the foregoing legal and jurisprudential yardsticks, the imprimatur of the DBM must
first be sought prior to implementation of any reclassification or upgrading of positions in
government. This is consonant to the mandate of the DBM under the Revised Administrative Code
of 1987, Section 3, Chapter 1, Title XVII, to wit:

SEC. 3. Powers and Functions. – The Department of Budget and Management shall assist the
President in the preparation of a national resources and expenditures budget, preparation, execution
and control of the National Budget, preparation and maintenance of accounting systems essential to
the budgetary process, achievement of more economy and efficiency in the management of
government operations, administration of compensation and position classification systems,
assessment of organizational effectiveness and review and evaluation of legislative proposals
having budgetary or organizational implications. (Emphasis supplied.)

Irrefragably, it is within the turf of the DBM Secretary to disallow the upgrading, reclassification, and
creation of additional plantilla positions in the CHR based on its finding that such scheme lacks legal
justification.

Notably, the CHR itself recognizes the authority of the DBM to deny or approve the proposed
reclassification of positions as evidenced by its three letters to the DBM requesting approval thereof.
As such, it is now estopped from now claiming that the nod of approval it has previously sought from
the DBM is a superfluity.

The Court of Appeals incorrectly relied on the pronouncement of the CSC-Central Office that the
CHR is a constitutional commission, and as such enjoys fiscal autonomy. 20

Palpably, the Court of Appeals' Decision was based on the mistaken premise that the CHR belongs
to the species of constitutional commissions. But, Article IX of the Constitution states in no uncertain
terms that only the CSC, the Commission on Elections, and the Commission on Audit shall be
tagged as Constitutional Commissions with the appurtenant right to fiscal autonomy. Thus:

Sec. 1. The Constitutional Commissions, which shall be independent, are the Civil Service
Commission, the Commission on Elections, and the Commission on Audit.
Sec. 5. The Commission shall enjoy fiscal autonomy. Their approved annual appropriations shall be
automatically and regularly released.

Along the same vein, the Administrative Code, in Chapter 5, Sections 24 and 26 of Book II on
Distribution of Powers of Government, the constitutional commissions shall include only the Civil
Service Commission, the Commission on Elections, and the Commission on Audit, which are
granted independence and fiscal autonomy. In contrast, Chapter 5, Section 29 thereof, is silent on
the grant of similar powers to the other bodies including the CHR. Thus:

SEC. 24. Constitutional Commissions. – The Constitutional Commissions, which shall be

independent, are the Civil Service Commission, the Commission on Elections, and the Commission
on Audit.

SEC. 26. Fiscal Autonomy. – The Constitutional Commissions shall enjoy fiscal autonomy. The
approved annual appropriations shall be automatically and regularly released.
SEC. 29. Other Bodies. – There shall be in accordance with the Constitution, an Office of the
Ombudsman, a Commission on Human Rights, and independent central monetary authority, and a
national police commission. Likewise, as provided in the Constitution, Congress may establish an
independent economic and planning agency. (Emphasis ours.)

From the 1987 Constitution and the Administrative Code, it is abundantly clear that the CHR is not
among the class of Constitutional Commissions. As expressed in the oft-repeated maxim expressio
unius est exclusio alterius, the express mention of one person, thing, act or consequence excludes
all others. Stated otherwise, expressium facit cessare tacitum – what is expressed puts an end to
what is implied.21

Nor is there any legal basis to support the contention that the CHR enjoys fiscal autonomy. In
essence, fiscal autonomy entails freedom from outside control and limitations, other than those
provided by law. It is the freedom to allocate and utilize funds granted by law, in accordance with
law, and pursuant to the wisdom and dispatch its needs may require from time to time. In Blaquera
22

v. Alcala and Bengzon v. Drilon, it is understood that it is only the Judiciary, the Civil Service
23

Commission, the Commission on Audit, the Commission on Elections, and the Office of the
Ombudsman, which enjoy fiscal autonomy. Thus, in Bengzon, we explained:
24

As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil Service
Commission, the Commission on Audit, the Commission on Elections, and the Office of the
Ombudsman contemplates a guarantee of full flexibility to allocate and utilize their resources with the
wisdom and dispatch that their needs require. It recognizes the power and authority to levy, assess
and collect fees, fix rates of compensation not exceeding the highest rates authorized by law for
compensation and pay plans of the government and allocate and disburse such sums as may be
provided by law or prescribed by them in the course of the discharge of their functions.

...

The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence
and flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and
constraints on the manner the independent constitutional offices allocate and utilize the funds
appropriated for their operations is anathema to fiscal autonomy and violative not only of the express
mandate of the Constitution but especially as regards the Supreme Court, of the independence and
separation of powers upon which the entire fabric of our constitutional system is based. In the
interest of comity and cooperation, the Supreme Court, [the] Constitutional Commissions, and the
Ombudsman have so far limited their objections to constant reminders. We now agree with the
petitioners that this grant of autonomy should cease to be a meaningless provision. (Emphasis
supplied.)

Neither does the fact that the CHR was admitted as a member by the Constitutional Fiscal
Autonomy Group (CFAG) ipso facto clothed it with fiscal autonomy. Fiscal autonomy is a
constitutional grant, not a tag obtainable by membership.

We note with interest that the special provision under Rep. Act No. 8522, while cited under the
heading of the CHR, did not specifically mention CHR as among those offices to which the special
provision to formulate and implement organizational structures apply, but merely states its coverage
to include Constitutional Commissions and Offices enjoying fiscal autonomy. In contrast, the Special
Provision Applicable to the Judiciary under Article XXVIII of the General Appropriations Act of 1998
specifically mentions that such special provision applies to the judiciary and had categorically
authorized the Chief Justice of the Supreme Court to formulate and implement the organizational
structure of the Judiciary, to wit:
1. Organizational Structure. Any provision of law to the contrary notwithstanding and within the limits
of their respective appropriations authorized in this Act, the Chief Justice of the Supreme Court is
authorized to formulate and implement organizational structure of the Judiciary, to fix and determine
the salaries, allowances, and other benefits of their personnel, and whenever public interest so
requires, make adjustments in the personal services itemization including, but not limited to, the
transfer of item or creation of new positions in the Judiciary; PROVIDED, That officers and
employees whose positions are affected by such reorganization or adjustments shall be granted
retirement gratuities and separation pay in accordance with existing law, which shall be payable from
any unexpended balance of, or savings in the appropriations of their respective offices: PROVIDED,
FURTHER, That the implementation hereof shall be in accordance with salary rates, allowances and
other benefits authorized under compensation standardization laws. (Emphasis supplied.)

All told, the CHR, although admittedly a constitutional creation is, nonetheless, not included in the
genus of offices accorded fiscal autonomy by constitutional or legislative fiat.

Even assuming en arguendo that the CHR enjoys fiscal autonomy, we share the stance of the DBM
that the grant of fiscal autonomy notwithstanding, all government offices must, all the same, kowtow
to the Salary Standardization Law. We are of the same mind with the DBM on its standpoint, thus-

Being a member of the fiscal autonomy group does not vest the agency with the authority to
reclassify, upgrade, and create positions without approval of the DBM. While the members of the
Group are authorized to formulate and implement the organizational structures of their respective
offices and determine the compensation of their personnel, such authority is not absolute and must
be exercised within the parameters of the Unified Position Classification and Compensation System
established under RA 6758 more popularly known as the Compensation Standardization Law. 25

(Emphasis supplied.)

The most lucid argument against the stand of respondent, however, is the provision of Rep. Act No.
8522 "that the implementation hereof shall be in accordance with salary rates, allowances and other
benefits authorized under compensation standardization laws." 26

Indeed, the law upon which respondent heavily anchors its case upon has expressly provided that
any form of adjustment in the organizational structure must be within the parameters of the Salary
Standardization Law.

The Salary Standardization Law has gained impetus in addressing one of the basic causes of
discontent of many civil servants. For this purpose, Congress has delegated to the DBM the power
27

to administer the Salary Standardization Law and to ensure that the spirit behind it is observed. This
power is part of the system of checks and balances or system of restraints in our government. The
DBM's exercise of such authority is not in itself an arrogation inasmuch as it is pursuant to the
paramount law of the land, the Salary Standardization Law and the Administrative Code.

In line with its role to breathe life into the policy behind the Salary Standardization Law of "providing
equal pay for substantially equal work and to base differences in pay upon substantive differences in
duties and responsibilities, and qualification requirements of the positions," the DBM, in the case
under review, made a determination, after a thorough evaluation, that the reclassification and
upgrading scheme proposed by the CHR lacks legal rationalization.

The DBM expounded that Section 78 of the general provisions of the General Appropriations Act FY
1998, which the CHR heavily relies upon to justify its reclassification scheme, explicitly provides that
"no organizational unit or changes in key positions shall be authorized unless provided by law or
directed by the President." Here, the DBM discerned that there is no law authorizing the creation of a
Finance Management Office and a Public Affairs Office in the CHR. Anent CHR's proposal to
upgrade twelve positions of Attorney VI, SG-26 to Director IV, SG-28, and four positions of Director
III, SG-27 to Director IV, SG-28, in the Central Office, the DBM denied the same as this would
change the context from support to substantive without actual change in functions.

This view of the DBM, as the law's designated body to implement and administer a unified
compensation system, is beyond cavil. The interpretation of an administrative government agency,
which is tasked to implement a statute is accorded great respect and ordinarily controls the
construction of the courts. In Energy Regulatory Board v. Court of Appeals, we echoed the basic
28

rule that the courts will not interfere in matters which are addressed to the sound discretion of
government agencies entrusted with the regulation of activities coming under the special technical
knowledge and training of such agencies.

To be sure, considering his expertise on matters affecting the nation's coffers, the Secretary of the
DBM, as the President's alter ego, knows from where he speaks inasmuch as he has the front seat
view of the adverse effects of an unwarranted upgrading or creation of positions in the CHR in
particular and in the entire government in general.

WHEREFORE, the petition is GRANTED, the Decision dated 29 November 2001 of the Court of
Appeals in CA-G.R. SP No. 59678 and its Resolution dated 11 September 2002 are hereby
REVERSED and SET ASIDE. The ruling dated 29 March 1999 of the Civil Service Commision-
National Capital Region is REINSTATED. The Commission on Human Rights Resolution No. A98-
047 dated 04 September 1998, Resolution No. A98-055 dated 19 October 1998 and Resolution No.
A98-062 dated 17 November 1998 without the approval of the Department of Budget and
Management are disallowed. No pronouncement as to costs.

SO ORDERED.

Puno, Acting C.J., Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.