EN BANC

[G.R. No. 139465. October 17, 2000]

SECRETARY OF JUSTICE, petitioner, vs. HON. RALPH C. LANTION,

Presiding Judge, Regional Trial Court of Manila, Branch 25, and
MARK B. JIMENEZ, respondents.

RESOLUTION
PUNO, J.:

On January 18, 2000, by a vote of 9-6, we dismissed the petition at bar

and ordered the petitioner to furnish private respondent copies of the
extradition request and its supporting papers and to grant him a reasonable
period within which to file his comment with supporting evidence .[1]

On February 3, 2000, the petitioner timely filed an Urgent Motion for

Reconsideration. He assails the decision on the following grounds:
"The majority decision failed to appreciate the following facts and points of substance
and of value which, if considered, would alter the result of the case, thus:
I. There is a substantial difference between an evaluation process antecedent to the
filing of an extradition petition in court and a preliminary investigation.
II. Absence of notice and hearing during the evaluation process will not result in a
denial of fundamental fairness.
III. In the evaluation process, instituting a notice and hearing requirement satisfies no
higher objective.
IV. The deliberate omission of the notice and hearing requirement in the Philippine
Extradition Law is intended to prevent flight.
V. There is a need to balance the interest between the discretionary powers of
government and the rights of an individual.
VI. The instances cited in the assailed majority decision when the twin rights of notice
and hearing may be dispensed with in this case results in a non sequitur conclusion.
VII. Jimenez is not placed in imminent danger of arrest by the Executive Branch
necessitating notice and hearing.
VIII. By instituting a 'proceeding' not contemplated by PD No. 1069, the Supreme
Court has encroached upon the constitutional boundaries separating it from the other
two co-equal branches of government.
IX. Bail is not a matter of right in proceedings leading to extradition or in extradition
proceedings." [2]

On March 28, 2000, a 58-page Comment was filed by the private

respondent Mark B. Jimenez, opposing petitioners Urgent Motion for
Reconsideration.
On April 5, 2000, petitioner filed an Urgent Motion to Allow Continuation
and Maintenance of Action and Filing of Reply. Thereafter, petitioner filed on
June 7, 2000 a Manifestation with the attached Note 327/00 from the
Embassy of Canada and Note No. 34 from the Security Bureau of the
Hongkong SAR Government Secretariat. On August 15, 2000, private
respondent filed a Manifestation and Motion for Leave to File Rejoinder in the
event that petitioner's April 5, 2000 Motion would be granted. Private
respondent also filed on August 18, 2000, a Motion to Expunge from the
records petitioner's June 7, 2000 Manifestation with its attached note
verbales. Except for the Motion to Allow Continuation and Maintenance of
Action, the Court denies these pending motions and hereby resolves
petitioner's Urgent Motion for Reconsideration.
The jugular issue is whether or not the private respondent is entitled to the
due process right to notice and hearing during the evaluation stage of the
extradition process.
We now hold that private respondent is bereft of the right to notice and
hearing during the evaluation stage of the extradition process.
First. P.D. No. 1069 which implements the RP-US Extradition
[3]

Treaty provides the time when an extraditee shall be furnished a copy of the
petition for extradition as well as its supporting papers, i.e., after the filing of
the petition for extradition in the extradition court, viz:
"Sec. 6. Issuance of Summons; Temporary Arrest; Hearing; Service of Notices. -
(1) Immediately upon receipt of the petition, the presiding judge of the court shall, as
soon as practicable, summon the accused to appear and to answer the petition on the
day and hour fixed in the order . . . Upon receipt of the answer, or should the accused
after having received the summons fail to answer within the time fixed, the presiding
judge shall hear the case or set another date for the hearing thereof.
(2) The order and notice as well as a copy of the warrant of arrest, if issued, shall be
promptly served each upon the accused and the attorney having charge of the case."
 It is of judicial notice that the summons includes the petition for extradition
which will be answered by the extraditee.
There is no provision in the RP-US Extradition Treaty and in P.D. No.
1069 which gives an extraditee the right to demand from the petitioner
Secretary of Justice copies of the extradition request from the US government
and its supporting documents and to comment thereon while the request is
still undergoing evaluation. We cannot write a provision in the treaty giving
private respondent that right where there is none. It is well-settled that a "court
cannot alter, amend, or add to a treaty by the insertion of any clause, small or
great, or dispense with any of its conditions and requirements or take away
any qualification, or integral part of any stipulation, upon any motion of equity,
or general convenience, or substantial justice." [4]

Second. All treaties, including the RP-US Extradition Treaty, should be

interpreted in light of their intent. Nothing less than the Vienna Convention
on the Law of Treaties to which the Philippines is a signatory provides that "a
treaty shall be interpreted in good faith in accordance with the ordinary
meaning to be given to the terms of the treaty in their context and in light of
its object and purpose." (emphasis supplied) The preambular paragraphs of
[5]

P.D. No. 1069 define its intent, viz:

"WHEREAS, under the Constitution[,] the Philippines adopts the generally accepted
principles of international law as part of the law of the land, and adheres to the policy
of peace, equality, justice, freedom, cooperation and amity with all nations;
WHEREAS, the suppression of crime is the concern not only of the state where it is
committed but also of any other state to which the criminal may have escaped,
because it saps the foundation of social life and is an outrage upon humanity at large,
and it is in the interest of civilized communities that crimes should not go unpunished;
WHEREAS, in recognition of this principle the Philippines recently concluded an
extradition treaty with the Republic of Indonesia, and intends to conclude similar
treaties with other interested countries;
x x x." (emphasis supplied)
It cannot be gainsaid that today, countries like the Philippines forge extradition
treaties to arrest the dramatic rise of international and transnational crimes
like terrorism and drug trafficking.Extradition treaties provide the assurance
that the punishment of these crimes will not be frustrated by the frontiers of
territorial sovereignty. Implicit in the treaties should be the unbending
commitment that the perpetrators of these crimes will not be coddled by any
signatory state.
 It ought to follow that the RP-US Extradition Treaty calls for an
interpretation that will minimize if not prevent the escape of extraditees from
the long arm of the law and expedite their trial. The submission of the private
respondent, that as a probable extraditee under the RP-US Extradition Treaty
he should be furnished a copy of the US government request for his
extradition and its supporting documents even while they are still under
evaluation by petitioner Secretary of Justice, does not meet this
desideratum. The fear of the petitioner Secretary of Justice that the demanded
notice is equivalent to a notice to flee must be deeply rooted on the
experience of the executive branch of our government. As it comes from the
branch of our government in charge of the faithful execution of our laws, it
deserves the careful consideration of this Court. In addition, it cannot be
gainsaid that private respondents demand for advance notice can delay the
summary process of executive evaluation of the extradition request and its
accompanying papers. The foresight of Justice Oliver Wendell Holmes did not
miss this danger. In 1911, he held:
"It is common in extradition cases to attempt to bring to bear all the factitious niceties
of a criminal trial at common law. But it is a waste of time . . . if there is presented,
even in somewhat untechnical form according to our ideas, such reasonable ground to
suppose him guilty as to make it proper that he should be tried, good faith to the
demanding government requires his surrender." (emphasis supplied)
[6]

We erode no right of an extraditee when we do not allow time to stand still on

his prosecution. Justice is best served when done without delay.
Third. An equally compelling factor to consider is the understanding of
the parties themselves to the RP-US Extradition Treaty as well as
the general interpretation of the issue in question by other countries
with similar treaties with the Philippines. The rule is recognized that while
courts have the power to interpret treaties, the meaning given them by the
departments of government particularly charged with their negotiation and
enforcement is accorded great weight. The reason for the rule is laid down
[7]

in Santos III v. Northwest Orient Airlines, et al., where we stressed that a

[8]

treaty is a joint executive-legislative act which enjoys the presumption that "it
was first carefully studied and determined to be constitutional before it was
adopted and given the force of law in the country."
Our executive department of government, thru the Department of Foreign
Affairs (DFA) and the Department of Justice (DOJ), has steadfastly
maintained that the RP-US Extradition Treaty and P.D. No. 1069 do not grant
the private respondent a right to notice and hearing during the evaluation
stage of an extradition process. This understanding of the treaty is shared
[9]
by the US government, the other party to the treaty. This interpretation by
[10]

the two governments cannot be given scant significance. It will be

presumptuous for the Court to assume that both governments did not
understand the terms of the treaty they concluded.
Yet, this is not all. Other countries with similar extradition treaties with
the Philippines have expressed the same interpretation adopted by the
Philippine and US governments. Canadian and Hongkong authorities,
[11] [12]

thru appropriate note verbales communicated to our Department of Foreign

Affairs, stated in unequivocal language that it is not an international practice to
afford a potential extraditee with a copy of the extradition papers during the
evaluation stage of the extradition process. We cannot disregard such a
convergence of views unless it is manifestly erroneous.
Fourth. Private respondent, however, peddles the postulate that he must
be afforded the right to notice and hearing as required by our Constitution. He
buttresses his position by likening an extradition proceeding to a criminal
proceeding and the evaluation stage to a preliminary investigation.
We are not persuaded. An extradition proceeding is sui generis. It is not
a criminal proceeding which will call into operation all the rights of an
accused as guaranteed by the Bill of Rights. To begin with, the process of
extradition does not involve the determination of the guilt or innocence
of an accused. His guilt or innocence will be adjudged in the court of the
[13]

state where he will be extradited. Hence, as a rule, constitutional rights that

are only relevant to determine the guilt or innocence of an accused cannot be
invoked by an extraditee especially by one whose extradition papers are still
undergoing evaluation. As held by the US Supreme Court in United States
[14]

v. Galanis:
"An extradition proceeding is not a criminal prosecution, and the constitutional
safeguards that accompany a criminal trial in this country do not shield an accused
from extradition pursuant to a valid treaty."
[15]

There are other differences between an extradition proceeding and a

criminal proceeding. An extradition proceeding is summary in nature while
criminal proceedings involve a full-blown trial. In contradistinction to a
[16]

criminal proceeding, the rules of evidence in an extradition proceeding allow

admission of evidence under less stringent standards. In terms of the [17]

quantum of evidence to be satisfied, a criminal case requires proof beyond

reasonable doubt for conviction while a fugitive may be ordered extradited
[18]

"upon showing of the existence of a prima facie case." Finally, unlike in a

[19]

criminal case where judgment becomes executory upon being rendered final,
in an extradition proceeding, our courts may adjudge an individual extraditable
but the President has the final discretion to extradite him. The United States
[20]

adheres to a similar practice whereby the Secretary of State exercises wide

discretion in balancing the equities of the case and the demands of the
nation's foreign relations before making the ultimate decision to extradite. [21]

As an extradition proceeding is not criminal in character and the

evaluation stage in an extradition proceeding is not akin to a preliminary
investigation, the due process safeguards in the latter do not
necessarily apply to the former. This we hold for the procedural due
process required by a given set of circumstances "must begin with a
determination of the precise nature of the government function involved
as well as the private interest that has been affected by governmental
action." The concept of due process is flexible for "not all situations calling
[22]

for procedural safeguards call for the same kind of procedure." [23]

Fifth. Private respondent would also impress upon the Court the urgency
of his right to notice and hearing considering the alleged threat to his liberty
"which may be more priceless than life." The supposed threat to private
[24]

respondents liberty is perceived to come from several provisions of the RP-US

Extradition Treaty and P.D. No. 1069 which allow provisional arrest and
temporary detention.
We first deal with provisional arrest. The RP-US Extradition Treaty
provides as follows:
"PROVISIONAL ARREST
1. In case of urgency, a Contracting Party may request the provisional arrest of the
person sought pending presentation of the request for extradition. A request for
provisional arrest may be transmitted through the diplomatic channel or directly
between the Philippine Department of Justice and the United States Department of
Justice.
2. The application for provisional arrest shall contain:
a) a description of the person sought;
b) the location of the person sought, if known;
c) a brief statement of the facts of the case, including, if possible, the time and location of
the offense;
d) a description of the laws violated;
e) a statement of the existence of a warrant of arrest or finding of guilt or judgment of
conviction against the person sought; and
f) a statement that a request for extradition for the person sought will follow.
3. The Requesting State shall be notified without delay of the disposition of its
application and the reasons for any denial.
4. A person who is provisionally arrested may be discharged from custody upon the
expiration of sixty (60) days from the date of arrest pursuant to this Treaty if the
executive authority of the Requested State has not received the formal request for
extradition and the supporting documents required in Article 7." (emphasis supplied)
In relation to the above, Section 20 of P.D. No. 1069 provides:
"Sec. 20. Provisional Arrest.- (a) In case of urgency, the requesting state may,
pursuant to the relevant treaty or convention and while the same remains in force,
request for the provisional arrest of the accused, pending receipt of the request for
extradition made in accordance with Section 4 of this Decree.
(b) A request for provisional arrest shall be sent to the Director of the National Bureau
of Investigation, Manila, either through the diplomatic channels or direct by post or
telegraph.
(c) The Director of the National Bureau of Investigation or any official acting on his
behalf shall upon receipt of the request immediately secure a warrant for the
provisional arrest of the accused from the presiding judge of the Court of First
Instance of the province or city having jurisdiction of the place, who shall issue the
warrant for the provisional arrest of the accused. The Director of the National Bureau
of Investigation through the Secretary of Foreign Affairs shall inform the requesting
state of the result of its request.
(d) If within a period of 20 days after the provisional arrest the Secretary of Foreign
Affairs has not received the request for extradition and the documents mentioned in
Section 4 of this Decree, the accused shall be released from custody." (emphasis
supplied)
Both the RP-US Extradition Treaty and P.D. No. 1069 clearly provide
that private respondent may be provisionally arrested only pending
receipt of the request for extradition.Our DFA has long received the
extradition request from the United States and has turned it over to the DOJ. It
is undisputed that until today, the United States has not requested for private
respondents provisional arrest. Therefore, the threat to private respondents
liberty has passed. It is more imagined than real.
Nor can the threat to private respondents liberty come from Section 6 of
P.D. No. 1069, which provides:
"Sec. 6. Issuance of Summons; Temporary Arrest; Hearing, Service of Notices.-
(1) Immediately upon receipt of the petition, the presiding judge of the court shall, as
soon as practicable, summon the accused to appear and to answer the petition on the
day and hour fixed in the order. [H]e may issue a warrant for the immediate arrest
of the accused which may be served anywhere within the Philippines if it appears to
the presiding judge that the immediate arrest and temporary detention of the
accused will best serve the ends of justice. . .
(2) The order and notice as well as a copy of the warrant of arrest, if issued, shall be
promptly served each upon the accused and the attorney having charge of the case."
(emphasis supplied)
It is evident from the above provision that a warrant of arrest for the
temporary detention of the accused pending the extradition hearing may only
be issued by the presiding judge of the extradition court upon filing of the
petition for extradition. As the extradition process is still in the evaluation
stage of pertinent documents and there is no certainty that a petition for
extradition will be filed in the appropriate extradition court, the threat to
private respondents liberty is merely hypothetical.
Sixth. To be sure, private respondents plea for due process deserves
serious consideration involving as it does his primordial right to liberty. His
plea to due process, however, collides with important state interests
which cannot also be ignored for they serve the interest of the greater
majority. The clash of rights demands a delicate balancing of interests
approach which is a "fundamental postulate of constitutional law." The [25]

approach requires that we "take conscious and detailed consideration of the

interplay of interests observable in a given situation or type
of situation." These interests usually consist in the exercise by an individual
[26]

of his basic freedoms on the one hand, and the governments promotion of
fundamental public interest or policy objectives on the other. [27]

In the case at bar, on one end of the balancing pole is the private
respondents claim to due process predicated on Section 1, Article III of the
Constitution, which provides that "No person shall be deprived of life, liberty,
or property without due process of law . . ." Without a bubble of doubt,
procedural due process of law lies at the foundation of a civilized society
which accords paramount importance to justice and fairness. It has to be
accorded the weight it deserves.
This brings us to the other end of the balancing pole. Petitioner avers that
the Court should give more weight to our national commitment under the RP-
US Extradition Treaty to expedite the extradition to the United States of
persons charged with violation of some of its laws. Petitioner also emphasizes
the need to defer to the judgment of the Executive on matters relating to
foreign affairs in order not to weaken if not violate the principle of separation
of powers.
 Considering that in the case at bar, the extradition proceeding is only
at its evaluation stage, the nature of the right being claimed by the
private respondent is nebulousand the degree of prejudice he will
allegedly suffer is weak, we accord greater weight to the interests
espoused by the government thru the petitioner Secretary of
Justice. In Angara v. Electoral Commission, we held that 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." Under our constitutional scheme, executive power is vested in
[28]

the President of the Philippines. Executive power includes, among others,

[29]

the power to contract or guarantee foreign loans and the power to enter into
treaties or international agreements. The task of safeguarding that these
[30]

treaties are duly honored devolves upon the executive department which has
the competence and authority to so act in the international arena. It is [31]

traditionally held that the President has power and even supremacy over the
countrys foreign relations. The executive department is aptly accorded
[32]

deference on matters of foreign relations considering the Presidents most

comprehensive and most confidential information about the international
scene of which he is regularly briefed by our diplomatic and consular
officials. His access to ultra-sensitive military intelligence data is also
unlimited. The deference we give to the executive department is dictated by
[33]

the principle of separation of powers. This principle is one of the cornerstones

of our democratic government. It cannot be eroded without endangering our
government.
The Philippines also has a national interest to help in suppressing crimes
and one way to do it is to facilitate the extradition of persons covered by
treaties duly entered by our government. More and more, crimes are
becoming the concern of one world. Laws involving crimes and crime
prevention are undergoing universalization. One manifest purpose of this
trend towards globalization is to deny easy refuge to a criminal whose
activities threaten the peace and progress of civilized countries. It is to the
great interest of the Philippines to be part of this irreversible movement in light
of its vulnerability to crimes, especially transnational crimes.
In tilting the balance in favor of the interests of the State, the Court
stresses that it is not ruling that the private respondent has no right to
due process at all throughout the length and breadth of the extrajudicial
proceedings. Procedural due process requires a determination of what
process is due, when it is due, and the degree of what is due. Stated
otherwise, a prior determination should be made as to whether
procedural protections are at all due and when they are due, which in
turn depends on the extent to which an individual will be "condemned to
suffer grievous loss." We have explained why an extraditee has no right to
[34]

notice and hearing during the evaluation stage of the extradition process. As
aforesaid, P.D. No. 1069 which implements the RP-US Extradition Treaty
affords an extraditee sufficient opportunity to meet the evidence against
him once the petition is filed in court. The time for the extraditee to know
the basis of the request for his extradition is merely moved to the filing in
court of the formal petition for extradition. The extraditee's right to know
is momentarily withheld during the evaluation stage of the extradition
process to accommodate the more compelling interest of the State to prevent
escape of potential extraditees which can be precipitated by
premature information of the basis of the request for his extradition. No less
compelling at that stage of the extradition proceedings is the need to be more
deferential to the judgment of a co-equal branch of the government, the
Executive, which has been endowed by our Constitution with greater power
over matters involving our foreign relations. Needless to state, this balance of
interests is not a static but a moving balance which can be adjusted as the
extradition process moves from the administrative stage to the judicial stage
and to the execution stage depending on factors that will come into play. In
sum, we rule that the temporary hold on private respondent's privilege of
notice and hearing is a soft restraint on his right to due process which will not
deprive him of fundamental fairness should he decide to resist the request
for his extradition to the United States. There is no denial of due process as
long as fundamental fairness is assured a party.
We end where we began. A myopic interpretation of the due process
clause would not suffice to resolve the conflicting rights in the case at
bar. With the global village shrinking at a rapid pace, propelled as it is by
technological leaps in transportation and communication, we need to push
further back our horizons and work with the rest of the civilized nations and
move closer to the universal goals of "peace, equality, justice, freedom,
cooperation and amity with all nations." In the end, it is the individual who will
[35]

reap the harvest of peace and prosperity from these efforts.

WHEREFORE, the Urgent Motion for Reconsideration is GRANTED. The
Decision in the case at bar promulgated on January18, 2000 is
REVERSED. The assailed Order issued by the public respondent judge on
August 9, 1999 is SET ASIDE. The temporary restraining order issued by this
Court on August 17, 1999 is made PERMANENT. The Regional Trial Court of
Manila, Branch 25 is enjoined from conducting further proceedings in Civil
Case No. 99-94684.
SO ORDERED.
Secretary of Justice vs Judge
Ralph Lantion
Due Process
Mark Jimenez was charged of multiple crimes ranging from tax evasion to wire tapping to
conspiracy to defraud the USA. Jimenez was then wanted in the US. The US government,
pursuant to the RP-US extradition treaty requested to have Jimenez be extradited there.
Jimenez requested for a copy of the complaint against him as well as the extradition request
by the USA. The DOJ sec refused to provide him copy thereof advising that it is still
premature to give him so and that it is not a preliminary investigation hence he is not
entitled to receive such copies. Jimenez sued the DOJ Sec and the lower court ruled in
favor of Jimenez.
ISSUE: Whether or not Jimenez is deprived of due process.
HELD: The SC affirmed the ruling of the lower court. The case against Jimenez refer to an
impending threat of deprivation of one’s property or property right. No less is this true, but
even more so in the case before us, involving as it does the possible deprivation of liberty,
which, based on the hierarchy of constitutionally protected rights, is placed second only to
life itself and enjoys precedence over property, for while forfeited property can be returned
or replaced, the time spent in incarceration is irretrievable and beyond recompense.
 EN BANC

[G.R. No. 152154. November 18, 2003]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. HONORABLE

SANDIGANBAYAN (SPECIAL FIRST DIVISION), FERDINAND E.
MARCOS (REPRESENTED BY HIS ESTATE/HEIRS: IMELDA R.
MARCOS, MARIA IMELDA [IMEE] MARCOS-MANOTOC, FERDINAND
R. MARCOS, JR. AND IRENE MARCOS-ARANETA), AND IMELDA
ROMUALDEZ MARCOS, respondents.

RESOLUTION
CORONA, J.:

Before us are motions dated August 1, 2003, August 2, 2003 and August
25, 2003 of respondents Imelda R. Marcos, Irene Marcos-Araneta, Ma. Imelda
Marcos and Ferdinand R. Marcos, Jr., respectively, seeking reconsideration of
our decision dated July 15, 2003 which ordered the forfeiture in favor of the
Republic of the Philippines of the Swiss deposits in escrow at the Philippine
National Bank (PNB) in the estimated aggregate amount of
US$658,175,373.60 as of January 31, 2002.
Respondent Imelda Marcos, in her motion for reconsideration, asks this
Court to set aside the aforesaid decision dated July 15, 2003, premised on the
following grounds:
I
THE DECISION OF THIS HONORABLE COURT EFFECTIVELY DEPRIVED
RESPONDENT OF HER CONSTITUTIONALLY ENSHRINED RIGHT TO DUE
PROCESS ON THE FOLLOWING GROUNDS:
A. FORFEITURE PROCEEDINGS UNDER R.A. 1379, IN RELATION TO THE
EXECUTIVE ORDERS ARE CRIMINAL/PENAL IN NATURE, HENCE, RESPONDENT
HAS ALL THE RIGHTS IN FAVOR OF THE ACCUSED UNDER THE
CONSTITUTION; AND THE PROSECUTION HAS THE BURDEN OF PROVING
RESPONDENT'S GUILT BEYOND REASONABLE DOUBT.
B. CONSIDERING THE CRIMINAL/PENAL NATURE OF THE PROCEEDINGS, THE
DENIALS RAISED BY RESPONDENT IN HER ANSWER WERE SUFFICIENT TO
TRAVERSE THE ALLEGATIONS IN THE PETITION FOR FORFEITURE.
 C. THE PROSECUTION HAD FAILED TO ESTABLISH EVEN A PRIMA FACIE CASE
AGAINST RESPONDENT, MUCH LESS PROVEN ITS CASE FOR FORFEITURE
BEYOND REASONABLE DOUBT.
D. EVEN ASSUMING THAT THE PROSECUTION WAS ABLE TO ESTABLISH A PRIMA
FACIE CASE, A SUMMARY JUDGMENT CANNOT BE RENDERED IN FORFEITURE
PROCEEDINGS. RESPONDENT HAS THE RIGHT TO BE GIVEN THE
OPPORTUNITY TO OVERTHROW THE DISPUTABLE PRESUMPTION.
E. THE FACTUAL FINDING THAT THE FOUNDATIONS INVOLVED IN THE INSTANT
FORFEITURE PROCEEDINGS ARE CONSIDERED BUSINESSES, AND WERE
MANAGED BY RESPONDENT TOGETHER WITH HER LATE HUSBAND, WILL
PERNICIOUSLY AFFECT THE CRIMINAL PROCEEDINGS FILED BY THE
REPUBLIC AGAINST RESPONDENT.
II
THE DECISION OF THE SUPREME COURT, WHICH IMPROPERLY CONVERTED
THE SPECIAL CIVIL ACTION INTO A REGULAR APPEAL, DIVESTED
RESPONDENT OF HER RIGHT TO APPEAL THE CASE ON THE MERITS,
THEREBY DEPRIVING HER OF DUE PROCESS.
A. THE RESOLUTION DATED 31 JANUARY 2002 RAISED BEFORE THIS
HONORABLE COURT ON A PETITION FOR CERTIORARI, WAS OBVIOUSLY A
MERE INTERLOCUTORY ORDER. THE DECISION OF THIS
HONORABLE COURT SHOULD NOT HAVE DELVED ON THE MERITS OF THE
CASE, IN DIRECT VIOLATION OF RESPONDENTS RIGHT TO APPEAL, WHICH IS
EXPRESSLY CONFERRED BY THE RULES.

Respondent Imelda Marcos further alleges that our July 15, 2003 decision
will prejudice the criminal cases filed against her.
Respondents Ferdinand, Jr. and Imee Marcos also pray that the said
decision be set aside and the case be remanded to the Sandiganbayan to
give petitioner Republic the opportunity to present witnesses and documents
and to afford respondent Marcoses the chance to present controverting
evidence, based on the following:
I
THE LETTER AND INTENT OF RA 1379 FORBID/PRECLUDE SUMMARY
JUDGMENT AS THE PROCESS TO DECIDE FORFEITURE UNDER RA 1379. THUS,
IT PROVIDES FOR SPECIFIC JURISDICTIONAL ALLEGATIONS IN THE PETITION
AND MANDATES A WELL-DEFINED PROCEDURE TO BE STRICTLY OBSERVED
BEFORE FORFEITURE JUDGMENT MAY BE RENDERED.
II
SUMMARY JUDGMENT IN THE DECISION UNDER RECONSIDERATION
DIMINISHES/MODIFIES OR REPEALS VIA JUDICIAL LEGISLATION
SUBSTANTIVE RIGHTS OF RESPONDENTS GRANTED AND GUARANTEED
BY RA 1379 AND IS THEREFORE UNCONSTITUTIONAL.
 III
THE DECISION IS CONSTITUTIONALLY INVALID FOR FAILURE TO
EXPRESS CLEARLY AND DISTINCTLY THE TRUE/GENUINE STATEMENT
OF FACTS (ADDUCED AFTER TRIAL/ PRESENTATION OF EVIDENCE) ON
WHICH IT IS BASED.
IV
THE LAW(S) ON WHICH THE DECISION IS BASED IS/ARE NOT
APPLICABLE/PROPER AND/OR ARE FORCEFULLY STRAINED TO JUSTIFY
THE UNWARRANTED CONCLUSIONS REACHED, VIOLATIVE OF
CONSTITUTIONAL AND STATUTORY INJUNCTIONS.
V
THERE BEING A DEPRIVATION OF DUE PROCESS, THE COURT
AXIOMATICALLY OUSTED ITSELF OF JURISDICTION. HENCE, THE
DECISION IS VOID.
VI
ASSUMING SUMMARY JUDGMENT IS APPLICABLE AND PROPER, IT IS NOT
WARRANTED UNDER THE PREMISES.
VII
ASSUMING THAT A SUMMARY JUDGMENT IS PROPER, THE AVERMENTS OF
THE PETITION FORFEITURE ARE INCOMPLETE AND INCONCLUSIVE TO
COMPLY WITH THE REQUISITE IMPERATIVES. JUDGMENT VIOLATES THE
CONDITIONS SINE QUA NON TO BE OBSERVED TO RENDER A VALID DECISION
OF FORFEITURE UNDER RA 1379.
VIII
THE STATEMENT OF OPERATIVE FACTS/FACTUAL NARRATION AS WELL AS
THE CONCLUSIONS REACHED IN THE DECISION ARE CONTRADICTED OR
REFUTED BY THE PLEADINGS OF THE PARTIES, THE JUDICIAL ADMISSIONS OF
PETITIONER, THE PROCEEDINGS BEFORE SANDIGANBAYAN AND THE
ORDERS ISSUED.

Respondent Irene Araneta, in her motion for reconsideration, merely

reiterates the arguments previously raised in the pleadings she filed in this
Court and prays that the Courts decision dated July 15, 2003 be set aside.
In its consolidated comment dated September 29, 2003, the Office of the
Solicitor General argues that:
I
THE MOTIONS FOR RECONSIDERATION DO NOT RAISE ANY NEW MATTER AND
WERE FILED MANIFESTLY TO DELAY THE EXECUTION OF THE DECISION
DATED JULY 15, 2003.
 II
SUMMARY JUDGMENT IS APPLICABLE TO A PETITION FOR FORFEITURE, AS
LONG AS THERE IS NO GENUINE FACTUAL ISSUE WHICH WOULD CALL FOR
TRIAL ON THE MERITS.
III
THE DECISION DATED JULY 15, 2003 OF THIS HONORABLE COURT CLEARLY
EXPRESSED THE FACTS ON WHICH IT IS BASED, MOST OF WHICH WERE
ADMITTED BY PRIVATE RESPONDENTS IN THEIR PLEADINGS SUBMITTED TO
THE SANDIGANBAYAN AND IN THE COURSE OF THE PROCEEDINGS.
IV
CERTIORARI IS THE APPROPRIATE AND SPEEDY REMEDY OF PETITIONER
REPUBLIC, GIVEN THE GRAVE ABUSE OF DISCRETION COMMITTED BY
RESPONDENT SANDIGANBAYAN IN TOTALLY REVERSING ITS OWN DECISION
DATED SEPTEMBER 19, 2000 AND IN ISSUING THE SUBJECT RESOLUTION
DATED JANUARY 31, 2002, AND CONSIDERING THAT THE CASE IS IMBUED
WITH IMMENSE PUBLIC INTEREST, PUBLIC POLICY AND DEEP HISTORICAL
REPERCUSSIONS.
V
A FORFEITURE PROCEEDING UNDER REPUBLIC ACT NO. 1379 IS CIVIL AND NOT
CRIMINAL IN NATURE.
VI
THE DECISION DATED JULY 15, 2003 OF THIS HONORABLE COURT WILL NOT
PREJUDICE THE CRIMINAL ACTIONS FILED AGAINST RESPONDENT IMELDA R.
MARCOS FOR VIOLATION OF THE ANTI-GRAFT AND CORRUPT PRACTICES
ACT.

On October 6, 2003, respondents Marcos, Jr. and Imee Marcos filed a

motion for leave to file a reply to petitioner Republic's consolidated comment,
which this Court granted. On October 22, 2003, they filed their reply to the
consolidated comment.
As the aforequoted issues are interwoven, the Court shall discuss them
together.
At the outset, we note that respondents, in their motions for
reconsideration, do not raise any new matters for the Court to resolve. The
arguments in their motions for reconsideration are mere reiterations of their
contentions fully articulated in their previous pleadings, and exhaustively
probed and passed upon by the Court.

SUMMARY JUDGMENT IN FORFEITURE PROCEEDINGS

 Respondent Marcoses argue that the letter and intent of RA 1379 forbid
and preclude summary judgment as the process to decide forfeiture cases
under the law. It provides for specific jurisdictional allegations in the petition
and mandates a well-defined procedure to be strictly observed before a
judgment of forfeiture may be rendered.
According to respondents, Section 5 of RA 1379 requires the court to set a
date for hearing during which respondents shall be given ample opportunity to
explain, to the satisfaction of the court, how they acquired the property. They
contend that the proceedings under RA 1379 are criminal in character, thus
they have all the rights of an accused under the Constitution such as the right
to adduce evidence and the right to a hearing. They claim that it is petitioner
which has the burden of proving respondents' guilt beyond reasonable doubt
and that forfeiture of property should depend not on the weakness of their
evidence but on the strength of petitioner's. Accordingly, respondents maintain
that, due to the criminal nature of forfeiture proceedings, the denials raised by
them were sufficient to traverse all the allegations in the petition for forfeiture.
The issue of the propriety of summary judgment was painstakingly
discussed and settled in our July 15, 2003 decision:
A summary judgment is one granted upon motion of a party for an expeditious
settlement of the case, it appearing from the pleadings, depositions, admissions and
affidavits that there are no important questions or issues of fact posed and, therefore,
the movant is entitled to a judgment as a matter of law. A motion for summary
judgment is premised on the assumption that the issues presented need not be tried
either because these are patently devoid of substance or that there is no genuine issue
as to any pertinent fact. It is a method sanctioned by the Rules of Court for the prompt
disposition of a civil action where there exists no serious controversy. Summary
judgment is a procedural devise for the prompt disposition of actions in which the
pleadings raise only a legal issue, not a genuine issue as to any material fact.
[1]

IS SUMMARY JUDGMENT IN FORFEITURE

PROCEEDINGS A VIOLATION OF DUE PROCESS?

The principal contention now of respondent Marcoses is limited to their

argument that our aforementioned decision effectively deprived them of their
constitutionally enshrined right to due process.
According to respondents, RA 1379 is penal in substance and effect,
hence, they are entitled to the constitutional safeguards enjoyed by an
accused. Respondents further argue that the reinstatement of the decision of
the Sandiganbayan dated September 19, 2000, which ordered the forfeiture of
the properties subject of the instant case by summary judgment, diminished or
repealed, by judicial legislation, respondents rights guaranteed by RA 1379 for
failure to set a date for hearing to benefit respondents.
We disagree.
Due process of law has two aspects: substantive and procedural due
process. In order that a particular act may not be impugned as violative of the
due process clause, there must be compliance with both substantive and the
procedural requirements thereof. [2]

In the present context, substantive due process refers to the intrinsic

validity of a law that interferes with the rights of a person to his property. On [3]

the other hand, procedural due process means compliance with the
procedures or steps, even periods, prescribed by the statute, in conformity
with the standard of fair play and without arbitrariness on the part of those
who are called upon to administer it. [4]

Insofar as substantive due process is concerned, there is no showing that

RA 1379 is unfair, unreasonable or unjust. In other words, respondent
Marcoses are not being deprived of their property through forfeiture for
arbitrary reasons or on flimsy grounds. As meticulously explained in the July
15, 2003 decision of the Court, EO No. 1 created the PCGG primarily to
[5]

assist then President Corazon Aquino in the recovery, pursuant to RA 1379,

of vast government resources amassed and stolen by former President
Ferdinand Marcos, his immediate family, relatives, close associates and other
cronies. These assets were stashed away here and abroad.
A careful study of the provisions of RA 1379 readily discloses that the
forfeiture proceedings in the Sandiganbayan did not violate the substantive
rights of respondent Marcoses. These proceedings are civil in nature, contrary
to the claim of the Marcoses that it is penal in character.
In Almeda Sr., et al. vs. Perez, et al., we suggested a test to determine
[6]

whether the proceeding for forfeiture is civil or criminal:

. . . Forfeiture proceedings may be either civil or criminal in nature, and may be in
rem or in personam. If they are under a statute such that if an indictment is presented
the forfeiture can be included in the criminal case they are criminal in nature, although
they may be civil in form; and where it must be gathered from the statute that the
action is meant to be criminal in its nature it cannot be considered as civil.If, however,
the proceeding does not involve the conviction of the wrongdoer for the offense
charged the proceeding is of a civil nature; and under statutes which specifically so
provide, where the act or omission for which the forfeiture is imposed is not also a
misdemeanor, such forfeiture may be sued for and recovered in a civil action. (37
CJS, Forfeiture, Sec. 5, pp. 15-16)
In the case of Republic vs. Sandiganbayan and Macario Asistio, Jr., this [7]

Court categorically declared that:

The rule is settled that forfeiture proceedings are actions in rem and therefore civil in
nature.
The proceedings under RA 1379 do not terminate in the imposition of a
penalty but merely in the forfeiture of the properties illegally acquired in favor
of the State. Section 6 of said law provides:
x x x If the respondent is unable to show to the satisfaction of the court that he has
lawfully acquired the property in question, then the court shall declare such property
forfeited in favor of the State, and by virtue of such judgment the property aforesaid
shall become property of the State x x x
The procedure outlined in the law leading to forfeiture is that provided for
in a civil action:
xxxxxxxxx
Sec. 3. The petition The petition shall contain the following information:
(a) The name and address of the respondent.
(b) The public office or employment he holds and such other public
offices or employments which he has previously held.
(c) The approximate amount of property he has acquired during his
incumbency in his past and present offices and employments.
(d) A description of said property, or such thereof as has been identified
by the Solicitor General.
(e) The total amount of his government salary and other proper earnings
and incomes from legitimately acquired property, and
(f) Such other information as may enable the court to determine whether
or not the respondent has unlawfully acquired property during his
incumbency.
xxxxxxxxx
Sec. 4. Period for the answer. The respondent shall have a period of fifteen days
within which to present his answer.
In short, there is a petition, then an answer and lastly, a hearing. The
preliminary investigation required prior to the filing of the petition, in
accordance with Section 2 of the Act, is expressly provided to be similar to a
preliminary investigation in a criminal case. The similarity, however, ends
there for, if the investigation were akin to that in a criminal case but all the
other succeeding steps were those for a civil proceeding, then the process as
a whole is definitely not criminal. Were it a criminal proceeding, there would
be, after preliminary investigation, a reading of the information, a plea of guilty
or not guilty, a trial and a reading of judgment in the presence of respondents.
But these steps, as above set forth, are clearly not provided for in the law.
Prescinding from the foregoing discussion, save for annulment of marriage
or declaration of its nullity or for legal separation, summary judgment is
applicable to all kinds of actions. [8]

The proceedings in RA 1379 and EO No. 14 were observed in the

prosecution of the petition for forfeiture. Section 1 of EO No.14-A, dated
August 18, 1986, amending Section 3 of EO No.14, provides that civil suits to
recover unlawfully acquired property under RA 1379 may be proven by
preponderance of evidence. Under RA 1379 and EO Nos. 1 and 2, the
Government is required only to state the known lawful income of respondents
for the prima facie presumption of illegal provenance to attach. As we fully
explained in our July 15, 2003 decision, petitioner Republic was able to
establish this prima facie presumption. Thus, the burden of proof shifted, by
law, to the respondents to show by clear and convincing evidence that the
Swiss deposits were lawfully acquired and that they had other legitimate
sources of income. This, respondent Marcoses did not do. They failed ― or
rather, refused ― to raise any genuine issue of fact warranting a trial for the
reception of evidence therefor. For this reason and pursuant to the State
policy to expedite recovery of ill-gotten wealth, petitioner Republic moved for
summary judgment which the Sandiganbayan appropriately acted on.
Respondents also claim that summary judgment denies them their right to
a hearing and to present evidence purposely granted under Section 5 of RA
1379.
Respondents were repeatedly accorded full opportunity to present their
case, their defenses and their pleadings. Not only did they obstinately refuse
to do so. Respondents time and again tried to confuse the issues and the
Court itself, and to delay the disposition of the case.
Section 5 of RA 1379 provides:
The court shall set a date for a hearing which may be open to the public, and during
which the respondent shall be given ample opportunity to explain, to the satisfaction
of the court, how he has acquired the property in question.
And pursuant to Section 6 of the said law, if the respondent is unable to show
to the satisfaction of the court that he has lawfully acquired the property in
question, then the court shall declare such property forfeited in favor of the
State.
Respondent Marcoses erroneously understood hearing to be synonymous
with trial. The words hearing and trial have different meanings and
connotations. Trial may refer to the reception of evidence and other
processes. It embraces the period for the introduction of evidence by both
parties. Hearing, as known in law, is not confined to trial but embraces the
several stages of litigation, including the pre-trial stage. A hearing does not
necessarily mean presentation of evidence. It does not necessarily imply the
presentation of oral or documentary evidence in open court but that the
parties are afforded the opportunity to be heard.
A careful analysis of Section 5 of RA 1379 readily discloses that the word
hearing does not always require the formal introduction of evidence in a trial,
only that the parties are given the occasion to participate and explain how
they acquired the property in question. If they are unable to show to the
satisfaction of the court that they lawfully acquired the property in question,
then the court shall declare such property forfeited in favor of the State. There
[9]

is no provision in the law that a full blown trial ought to be conducted before
the court declares the forfeiture of the subject property. Thus, even if the
forfeiture proceedings do not reach trial, the court is not precluded from
determining the nature of the acquisition of the property in question even in a
summary proceeding.
Due process, a constitutional precept, does not therefore always and in all
situations require a trial-type proceeding. The essence of due process is
found in the reasonable opportunity to be heard and submit ones evidence in
support of his defense. What the law prohibits is not merely the absence of
previous notice but the absence thereof and the lack of opportunity to be
heard. This opportunity was made completely available to respondents who
[10]

participated in all stages of the litigation.

When the petition for forfeiture was filed at the Sandiganbayan,
respondent Marcoses argued their case and engaged in all of the lengthy
discussions, argumentation, deliberations and conferences, and submitted
their pleadings, documents and other papers. When petitioner Republic
moved for summary judgment, respondent Marcoses filed their demurrer to
evidence.They agreed to submit the case for decision with their opposition to
the motion for summary judgment. They moved for the reconsideration of the
Sandiganbayan resolution dated September 19, 2000 which granted petitioner
Republics motion for summary judgment (which was in fact subsequently
reversed in its January 31, 2002 resolution.) And when the case finally
reached this Court, respondent Marcoses were given, on every occasion, the
chance to file and submit all the pleadings necessary to defend their case.
And even now that the matter has been finally settled and adjudicated, their
motion for reconsideration is being heard by this Court.
For twelve long years, respondent Marcoses tried to stave off this case
with nothing but empty claims of lack of knowledge or information sufficient to
form a belief, or they were not privy to the transactions, or they could not
remember (because the transactions) happened a long time ago or that the
assets were lawfully acquired. And they now allege deprivation of their right to
be heard and present evidence in their defense?
It would be repulsive to our basic concepts of justice and fairness to allow
respondents to further delay the adjudication of this case and defeat the
judgment of this Court which was promulgated only after all the facts, issues
and other considerations essential to a fair and just determination had been
judiciously evaluated.
Petitioner Republic has the right to a speedy disposition of this case. It
would readily be apparent to a reasonable mind that respondent Marcoses
have been deliberately resorting to every procedural device to delay the
resolution hereof. There is justice waiting to be done. The people and the
State are entitled to favorable judgment, free from vexatious, capricious and
oppressive delays, the salutary objective being to restore the ownership of the
Swiss deposits to the rightful owner, the Republic of the Philippines, within the
shortest possible time.
The respondent Marcoses cannot deny that the delays in this case have
all been made at their instance. The records can testify to this incontrovertible
fact. It will be a mockery of justice to allow them to benefit from it. By their own
deliberate acts ― not those of the Republic or anybody else ― they are
deemed to have altogether waived or abandoned their right to proceed to trial.
Respondent Imelda R. Marcos likewise asserts that the factual finding that
the foundations involved in the instant forfeiture proceedings were businesses
managed by her and her late husband, will adversely affect the criminal
proceedings filed by the Republic against her. The contention is bereft of
merit. The criminal cases referred to by said respondent are actions in
personam, directed against her on the basis of her personal liability. In
criminal cases, the law imposes the burden of proving guilt on the prosecution
beyond reasonable doubt, and the trial judge in evaluating the evidence must
find that all the elements of the crime charged have been established by
sufficient proof to convict.
But a forfeiture proceeding is an action in rem, against the thing itself
instead of against the person. Being civil in character, it requires no more than
a preponderance of evidence. And by preponderance of evidence is meant
[11]

that the evidence as a whole adduced by one side is superior to that of the
other. Hence, the factual findings of this Court in its decision dated July 15,
[12]

2003 will, as a consequence, neither affect nor do away with the requirement
of having to prove her guilt beyond reasonable doubt in the criminal cases
against her.
One final note. We take judicial notice of newspaper accounts that a
certain Judge Manuel Real of the US District Court of Hawaii issued a global
freeze order on the Marcos assets, including the Swiss deposits. We reject
this order outrightly because it is a transgression not only of the principle of
territoriality in public international law but also of the jurisdiction of this Court
recognized by the parties-in-interest and the Swiss government itself.
WHEREFORE, the motions for reconsideration are hereby DENIED with
FINALITY.
SO ORDERED.

EN BANC

JENNY M. AGABON and G.R. No. 158693

VIRGILIO C. AGABON,
Petitioners, Present:

Davide, Jr., C.J.,

Puno,
Panganiban,
Quisumbing,
Ynares-Santiago,
 Sandoval-Gutierrez,
- versus - Carpio,
Austria-Martinez,
Corona,
Carpio-Morales,
Callejo, Sr.,
Azcuna,
Tinga,
Chico-Nazario, and
Garcia, JJ.
NATIONAL LABOR RELATIONS
COMMISSION (NLRC), RIVIERA
HOME IMPROVEMENTS, INC. Promulgated:
and VICENTE ANGELES,
Respondents. November 17, 2004
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review seeks to reverse the decision of the Court of Appeals
[1]

dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of
National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-
00.

Private respondent Riviera Home Improvements, Inc. is engaged in the business of

selling and installing ornamental and construction materials. It employed
petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 1992 until February 23, 1999 when they were dismissed
[2]

for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money
claims and on December 28, 1999, the Labor Arbiter rendered a decision
[3]

declaring the dismissals illegal and ordered private respondent to pay the monetary
claims. The dispositive portion of the decision states:
 WHEREFORE, premises considered, We find the termination of the
complainants illegal. Accordingly, respondent is hereby ordered to pay
them their backwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93

2. Virgilio C. Agabon - 56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1)
month for every year of service from date of hiring up to November 29,
1999.

Respondent is further ordered to pay the complainants their holiday pay

and service incentive leave pay for the years 1996, 1997 and 1998 as
well as their premium pay for holidays and rest days and Virgilio
Agabons 13 month pay differential amounting to TWO THOUSAND
th

ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of

ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED
SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon,
and ONE HUNDRED TWENTY THREE THOUSAND EIGHT
HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for
Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC,
Research and Computation Unit, NCR.

SO ORDERED. [4]

On appeal, the NLRC reversed the Labor Arbiter because it found that the
petitioners had abandoned their work, and were not entitled to backwages and
separation pay. The other money claims awarded by the Labor Arbiter were also
denied for lack of evidence. [5]

Upon denial of their motion for reconsideration, petitioners filed a petition for
certiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not
illegal because they had abandoned their employment but ordered the payment of
money claims. The dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations
Commission is REVERSED only insofar as it dismissed petitioners
money claims. Private respondents are ordered to pay petitioners holiday
pay for four (4) regular holidays in 1996, 1997, and 1998, as well as
their service incentive leave pay for said years, and to pay the balance of
 petitioner Virgilio Agabons 13 month pay for 1998 in the amount of
th

P2,150.00.

SO ORDERED. [6]

Hence, this petition for review on the sole issue of whether petitioners were
illegally dismissed. [7]

Petitioners assert that they were dismissed because the private respondent
refused to give them assignments unless they agreed to work on a pakyaw basis
when they reported for duty on February 23, 1999. They did not agree on this
arrangement because it would mean losing benefits as Social Security System
(SSS) members. Petitioners also claim that private respondent did not comply with
the twin requirements of notice and hearing. [8]

Private respondent, on the other hand, maintained that petitioners were not
dismissed but had abandoned their work. In fact, private respondent sent two
[9]

letters to the last known addresses of the petitioners advising them to report for
work. Private respondents manager even talked to petitioner Virgilio Agabon by
telephone sometime in June 1999 to tell him about the new assignment at Pacific
Plaza Towers involving 40,000 square meters of cornice installation work.
However, petitioners did not report for work because they had subcontracted to
perform installation work for another company. Petitioners also demanded for an
increase in their wage to P280.00 per day. When this was not granted, petitioners
stopped reporting for work and filed the illegal dismissal case.
[10]

It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are
accorded not only respect but even finality if the findings are supported by
substantial evidence. This is especially so when such findings were affirmed by the
Court of Appeals. However, if the factual findings of the NLRC and the Labor
[11]

Arbiter are conflicting, as in this case, the reviewing court may delve into the
records and examine for itself the questioned findings.[12]

Accordingly, the Court of Appeals, after a careful review of the facts, ruled
that petitioners dismissal was for a just cause. They had abandoned their
employment and were already working for another employer.
To dismiss an employee, the law requires not only the existence of a just and valid
cause but also enjoins the employer to give the employee the opportunity to be
heard and to defend himself. Article 282 of the Labor Code enumerates the just
[13]

causes for termination by the employer: (a) serious misconduct or willful

disobedience by the employee of the lawful orders of his employer or the latters
representative in connection with the employees work; (b) gross and habitual
neglect by the employee of his duties; (c) fraud or willful breach by the employee
of the trust reposed in him by his employer or his duly authorized representative;
(d) commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume
his employment. It is a form of neglect of duty, hence, a just cause for
[14]

termination of employment by the employer. For a valid finding of abandonment,

[15]

these two factors should be present: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever employer-
employee relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the employees has no
more intention to work. The intent to discontinue the employment must be shown
by clear proof that it was deliberate and unjustified.
[16]

In February 1999, petitioners were frequently absent having subcontracted for an

installation work for another company. Subcontracting for another company
clearly showed the intention to sever the employer-employee relationship with
private respondent. This was not the first time they did this. In January 1996, they
did not report for work because they were working for another company. Private
respondent at that time warned petitioners that they would be dismissed if this
happened again. Petitioners disregarded the warning and exhibited a clear intention
to sever their employer-employee relationship. The record of an employee is a
relevant consideration in determining the penalty that should be meted out to
him.[17]

In Sandoval Shipyard v. Clave, we held that an employee who deliberately

[18]

absented from work without leave or permission from his employer, for the
purpose of looking for a job elsewhere, is considered to have abandoned his job.
We should apply that rule with more reason here where petitioners were absent
because they were already working in another company.
The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice and
hearing in the termination of employment. On the other hand, the law also
recognizes the right of the employer to expect from its workers not only good
performance, adequate work and diligence, but also good conduct and loyalty.
[19]

The employer may not be compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his interests.
[20]
After establishing that the terminations were for a just and valid cause, we now
determine if the procedures for dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I,

Section 2(d) of the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. In all cases of

termination of employment, the following standards of due process shall
be substantially observed:

I. For termination of employment based on just causes as defined

in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground

or grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;

(b) A hearing or conference during which the employee

concerned, with the assistance of counsel if the employee so desires, is
given opportunity to respond to the charge, present his evidence or rebut
the evidence presented against him; and

(c) A written notice of termination served on the employee

indicating that upon due consideration of all the circumstances, grounds
have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the

employees last known address.

Dismissals based on just causes contemplate acts or omissions attributable to

the employee while dismissals based on authorized causes involve grounds under
the Labor Code which allow the employer to terminate employees. A termination
for an authorized cause requires payment of separation pay. When the termination
of employment is declared illegal, reinstatement and full backwages are mandated
under Article 279. If reinstatement is no longer possible where the dismissal was
unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282,
the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be heard,
a notice of the decision to dismiss; and (2) if the dismissal is based on authorized
causes under Articles 283 and 284, the employer must give the employee and the
Department of Labor and Employment written notices 30 days prior to the
effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal
is for a just cause under Article 282 of the Labor Code, for an authorized cause
under Article 283, or for health reasons under Article 284, and due process was
observed; (2) the dismissal is without just or authorized cause but due process was
observed; (3) the dismissal is without just or authorized cause and there was no due
process; and (4) the dismissal is for just or authorized cause but due process was
not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not
suffer any liability.

In the second and third situations where the dismissals are illegal, Article
279 mandates that the employee is entitled to reinstatement without loss of
seniority rights and other privileges and full backwages, inclusive of allowances,
and other benefits or their monetary equivalent computed from the time the
compensation was not paid up to the time of actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural
infirmity cannot be cured, it should not invalidate the dismissal. However, the
employer should be held liable for non-compliance with the procedural
requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be
upheld because it was established that the petitioners abandoned their jobs to work
for another company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last known addresses
would have been useless because they did not reside there anymore. Unfortunately
for the private respondent, this is not a valid excuse because the law mandates the
twin notice requirements to the employees last known address. Thus, it should be
[21]

held liable for non-compliance with the procedural requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and

timely to clarify the various rulings on employment termination in the light
of Serrano v. National Labor Relations Commission. [22]
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee
was not given any notice. In the 1989 case of Wenphil Corp. v. National Labor
Relations Commission, we reversed this long-standing rule and held that the
[23]

dismissed employee, although not given any notice and hearing, was not entitled to
reinstatement and backwages because the dismissal was for grave misconduct and
insubordination, a just ground for termination under Article 282. The employee
had a violent temper and caused trouble during office hours, defying superiors who
tried to pacify him. We concluded that reinstating the employee and awarding
backwages may encourage him to do even worse and will render a mockery of the
rules of discipline that employees are required to observe. We further held that:
[24]

Under the circumstances, the dismissal of the private respondent for just
cause should be maintained. He has no right to return to his former
employment.

However, the petitioner must nevertheless be held to account for

failure to extend to private respondent his right to an investigation before
causing his dismissal. The rule is explicit as above discussed. The
dismissal of an employee must be for just or authorized cause and after
due process. Petitioner committed an infraction of the second
requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before
dismissing petitioner from employment. Considering the circumstances
of this case petitioner must indemnify the private respondent the amount
of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer. [25]

The rule thus evolved: where the employer had a valid reason to dismiss an
employee but did not follow the due process requirement, the dismissal may be
upheld but the employer will be penalized to pay an indemnity to the employee.
This became known as the Wenphil or Belated Due Process Rule.

On January 27, 2000, in Serrano, the rule on the extent of the sanction was
changed. We held that the violation by the employer of the notice requirement in
termination for just or authorized causes was not a denial of due process that will
nullify the termination. However, the dismissal is ineffectual and the employer
must pay full backwages from the time of termination until it is judicially declared
that the dismissal was for a just or authorized cause.
 The rationale for the re-examination of the Wenphil doctrine in Serrano was
the significant number of cases involving dismissals without requisite notices. We
concluded that the imposition of penalty by way of damages for violation of the
notice requirement was not serving as a deterrent. Hence, we now required
payment of full backwages from the time of dismissal until the time the Court finds
the dismissal was for a just or authorized cause.

Serrano was confronting the practice of employers to dismiss now and pay
later by imposing full backwages.

We believe, however, that the ruling in Serrano did not consider the full
meaning of Article 279 of the Labor Code which states:

ART. 279. Security of Tenure. In cases of regular employment, the

employer shall not terminate the services of an employee except for a
just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to
the time of his actual reinstatement.

This means that the termination is illegal only if it is not for any of the
justified or authorized causes provided by law. Payment of backwages and other
benefits, including reinstatement, is justified only if the employee was unjustly
dismissed.

The fact that the Serrano ruling can cause unfairness and injustice which
elicited strong dissent has prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution
embodies a system of rights based on moral principles so deeply imbedded in the
traditions and feelings of our people as to be deemed fundamental to a civilized
society as conceived by our entire history. Due process is that which comports with
the deepest notions of what is fair and right and just. It is a constitutional restraint
[26]

on the legislative as well as on the executive and judicial powers of the

government provided by the Bill of Rights.
 Due process under the Labor Code, like Constitutional due process, has two
aspects: substantive, i.e., the valid and authorized causes of employment
termination under the Labor Code; and procedural, i.e., the manner of dismissal.
Procedural due process requirements for dismissal are found in the Implementing
Rules of P.D. 442, as amended, otherwise known as the Labor Code of the
Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9
and 10. Breaches of these due process requirements violate the Labor Code.
[27]

Therefore statutory due process should be differentiated from failure to comply

with constitutional due process.

Constitutional due process protects the individual from the government and
assures him of his rights in criminal, civil or administrative proceedings;
while statutory due process found in the Labor Code and Implementing Rules
protects employees from being unjustly terminated without just cause after notice
and hearing.

In Sebuguero v. National Labor Relations Commission, the dismissal was

[28]

for a just and valid cause but the employee was not accorded due process. The
dismissal was upheld by the Court but the employer was sanctioned. The sanction
should be in the nature of indemnification or penalty, and depends on the facts of
each case and the gravity of the omission committed by the employer.

In Nath v. National Labor Relations Commission, it was ruled that even if

[29]

the employee was not given due process, the failure did not operate to eradicate the
just causes for dismissal. The dismissal being for just cause, albeit without due
process, did not entitle the employee to reinstatement, backwages, damages and
attorneys fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services,
Inc. v. National Labor Relations Commission, which opinion he reiterated
[30]

in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been
properly observed by an employer, it would not be right to order either the
reinstatement of the dismissed employee or the payment of backwages to him. In
failing, however, to comply with the procedure prescribed by law in terminating
the services of the employee, the employer must be deemed to have opted or, in
any case, should be made liable, for the payment of separation pay. It might be
pointed out that the notice to be given and the hearing to be conducted generally
constitute the two-part due process requirement of law to be accorded to the
employee by the employer. Nevertheless, peculiar circumstances might obtain in
 certain situations where to undertake the above steps would be no more than a
useless formality and where, accordingly, it would not be imprudent to apply
the res ipsa loquitur rule and award, in lieu of separation pay, nominal damages to
the employee. x x x.[31]

After carefully analyzing the consequences of the divergent doctrines in the

law on employment termination, we believe that in cases involving dismissals for
cause but without observance of the twin requirements of notice and hearing, the
better rule is to abandon the Serrano doctrine and to follow Wenphil by holding
that the dismissal was for just cause but imposing sanctions on the employer. Such
sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this
Court would be able to achieve a fair result by dispensing justice not just to
employees, but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or authorized

causes but not complying with statutory due process may have far-reaching
consequences.

This would encourage frivolous suits, where even the most notorious violators of
company policy are rewarded by invoking due process. This also creates absurd
situations where there is a just or authorized cause for dismissal but a procedural
infirmity invalidates the termination. Let us take for example a case where the
employee is caught stealing or threatens the lives of his co-employees or has
become a criminal, who has fled and cannot be found, or where serious business
losses demand that operations be ceased in less than a month. Invalidating the
dismissal would not serve public interest. It could also discourage investments that
can generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to

be a sword to oppress employers. The commitment of this Court to the cause of
labor does not prevent us from sustaining the employer when it is in the right, as in
this case. Certainly, an employer should not be compelled to pay employees for
[32]

work not actually performed and in fact abandoned.

The employer should not be compelled to continue employing a person who is

admittedly guilty of misfeasance or malfeasance and whose continued employment
is patently inimical to the employer. The law protecting the rights of the laborer
authorizes neither oppression nor self-destruction of the employer. [33]
It must be stressed that in the present case, the petitioners committed a grave
offense, i.e., abandonment, which, if the requirements of due process were
complied with, would undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not
be protected by the Social Justice Clause of the Constitution. Social justice, as the
term suggests, should be used only to correct an injustice. As the eminent Justice
Jose P. Laurel observed, social justice must be founded on the recognition of the
necessity of interdependence among diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a
combined force in our social and economic life, consistent with the fundamental
and paramount objective of the state of promoting the health, comfort, and quiet of
all persons, and of bringing about the greatest good to the greatest number. [34]

This is not to say that the Court was wrong when it ruled the way it did
in Wenphil, Serrano and related cases. Social justice is not based on rigid
formulas set in stone. It has to allow for changing times and circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced approach
to labor-management relations and dispense justice with an even hand in every
case:

We have repeatedly stressed that social justice or any justice for that
matter is for the deserving, whether he be a millionaire in his mansion or
a pauper in his hovel. It is true that, in case of reasonable doubt, we are
to tilt the balance in favor of the poor to whom the Constitution fittingly
extends its sympathy and compassion. But never is it justified to give
preference to the poor simply because they are poor, or reject the rich
simply because they are rich, for justice must always be served for the
poor and the rich alike, according to the mandate of the law.[35]

Justice in every case should only be for the deserving party. It should not be
presumed that every case of illegal dismissal would automatically be decided in
favor of labor, as management has rights that should be fully respected and
enforced by this Court. As interdependent and indispensable partners in nation-
building, labor and management need each other to foster productivity and
economic growth; hence, the need to weigh and balance the rights and welfare of
both the employee and employer.
 Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights, as ruled in Reta v. National Labor Relations
Commission. The indemnity to be imposed should be stiffer to discourage the
[36]

abhorrent practice of dismiss now, pay later, which we sought to deter in

the Serrano ruling. The sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer.

Under the Civil Code, nominal damages is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him. [37]

As enunciated by this Court in Viernes v. National Labor Relations

Commissions, an employer is liable to pay indemnity in the form of nominal
[38]

damages to an employee who has been dismissed if, in effecting such dismissal,
the employer fails to comply with the requirements of due process. The Court, after
considering the circumstances therein, fixed the indemnity at P2,590.50, which
was equivalent to the employees one month salary. This indemnity is intended not
to penalize the employer but to vindicate or recognize the employees right to
statutory due process which was violated by the employer. [39]

The violation of the petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal damages.
The amount of such damages is addressed to the sound discretion of the court,
taking into account the relevant circumstances. Considering the prevailing
[40]

circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We

believe this form of damages would serve to deter employers from future
violations of the statutory due process rights of employees. At the very least, it
provides a vindication or recognition of this fundamental right granted to the latter
under the Labor Code and its Implementing Rules.

Private respondent claims that the Court of Appeals erred in holding that it failed
to pay petitioners holiday pay, service incentive leave pay and 13 month pay.
th

We are not persuaded.

 We affirm the ruling of the appellate court on petitioners money claims.
Private respondent is liable for petitioners holiday pay, service incentive leave pay
and 13 month pay without deductions.
th

As a general rule, one who pleads payment has the burden of proving it. Even
where the employee must allege non-payment, the general rule is that the burden
rests on the employer to prove payment, rather than on the employee to prove non-
payment. The reason for the rule is that the pertinent personnel files, payrolls,
records, remittances and other similar documents which will show that overtime,
differentials, service incentive leave and other claims of workers have been paid
are not in the possession of the worker but in the custody and absolute control of
the employer. [41]

In the case at bar, if private respondent indeed paid petitioners holiday pay and
service incentive leave pay, it could have easily presented documentary proofs of
such monetary benefits to disprove the claims of the petitioners. But it did not,
except with respect to the 13 month pay wherein it presented cash vouchers
th

showing payments of the benefit in the years disputed. Allegations by private

[42]

respondent that it does not operate during holidays and that it allows its employees
10 days leave with pay, other than being self-serving, do not constitute proof of
payment. Consequently, it failed to discharge the onus probandi thereby making it
liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio
Agabons 13 month pay, we find the same to be unauthorized. The evident
th

intention of Presidential Decree No. 851 is to grant an additional income in the

form of the 13 month pay to employees not already receiving the same so as to
th [43]

further protect the level of real wages from the ravages of world-wide
inflation. Clearly, as additional income, the 13 month pay is included in the
[44] th

definition of wage under Article 97(f) of the Labor Code, to wit:

(f) Wage paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece , or commission basis, or other method of
calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee

from which an employer is prohibited under Article 113 of the same Code from
[45]

making any deductions without the employees knowledge and consent. In the
instant case, private respondent failed to show that the deduction of the SSS loan
and the value of the shoes from petitioner Virgilio Agabons 13 month pay was
th

authorized by the latter. The lack of authority to deduct is further bolstered by the
fact that petitioner Virgilio Agabon included the same as one of his money claims
against private respondent.
The Court of Appeals properly reinstated the monetary claims awarded by
the Labor Arbiter ordering the private respondent to pay each of the petitioners
holiday pay for four regular holidays from 1996 to 1998, in the amount of
P6,520.00, service incentive leave pay for the same period in the amount of
P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in
the amount of P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision

of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding
that petitioners Jenny and Virgilio Agabon abandoned their work, and ordering
private respondent to pay each of the petitioners holiday pay for four regular
holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave
pay for the same period in the amount of P3,255.00 and the balance of Virgilio
Agabons thirteenth month pay for 1998 in the amount of P2,150.00
is AFFIRMED with the MODIFICATION that private respondent Riviera Home
Improvements, Inc. is further ORDERED to pay each of the petitioners the
amount of P30,000.00 as nominal damages for non-compliance with statutory due
process.

No costs.

SO ORDERED.
Agabon vs. NLRC / Riviera Home - GR No. 158693 Case
Digest
FACTS:

Petitioners were employed by Riviera Home as gypsum board and cornice installers from
January 1992 to February 23, 1999 when they were dismissed for abandonment of work.
Petitioners filed a complaint for illegal dismissal and was decided in their favor by the Labor
Arbiter. Riviera appealed to the NLRC contending just cause for the dismissal because of
petitioner’s abandonment of work. NLRC ruled there was just cause and petitioners were not
entitled to backwages and separation pay. The CA in turn ruled that the dismissal was not illegal
because they have abandoned their work but ordered the payment of money claims.

ISSUE:

Whether or not petitioners were illegally dismissed.

RULING:

To dismiss an employee, the law required not only the existence of a just and valid cause but
also enjoins the employer to give the employee the right to be heard and to defend himself.
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. For a valid finding or abandonment, two factors are considered: failure to report for
work without a valid reason; and, a clear intention to sever employer-employee relationship with
the second as the more determinative factor which is manifested by overt acts from which it may
be deduced that the employees has no more intention to work.

Where the employer had a valid reason to dismiss an employee but did not follow the due
process requirement, the dismissal may be upheld but the employer will be penalized to pay an
indemnity to the employee. This became known as the Wenphil Doctrine of the Belated Due
process Rule.

Art. 279 means that the termination is illegal if it is not for any of the justifiable or authorized by
law. Where the dismissal is for a just cause, the lack of statutory due process should not nullify
the dismissal but the employer should indemnify the employee for the violation of his statutory
rights. The indemnity should be stiffer to discourage the abhorrent practice of “dismiss now, pay
later” which we sought to deter in Serrano ruling. The violation of employees’ rights warrants the
payment of nominal damages.

EN BANC
WHITE LIGHT CORPORATION, G.R. No. 122846
TITANIUM CORPORATION and
STA. MESA TOURIST & DEVE- Present:
LOPMENT CORPORATION,
Petitioners, PUNO, C.J.
 QUISUMBING,
YNARES SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
- versus - CORONA,
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
CITY OF MANILA, represented by DE CASTRO,
MAYOR ALFREDO S. LIM, BRION, and
Respondent. PERALTA, JJ.
Promulgated:
January 20, 2009

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

DECISION

TINGA, J.:

With another city ordinance of Manila also principally involving the tourist district
as subject, the Court is confronted anew with the incessant clash between
government power and individual liberty in tandem with the archetypal tension
between law and morality.

In City of Manila v. Laguio, Jr., the Court affirmed the nullification of a city
[1]

ordinance barring the operation of motels and inns, among other establishments,
within the Ermita-Malate area. The petition at bar assails a similarly-motivated city
ordinance that prohibits those same establishments from offering short-time
admission, as well as pro-rated or wash up rates for such abbreviated stays. Our
earlier decision tested the city ordinance against our sacred constitutional rights to
liberty, due process and equal protection of law. The same parameters apply to the
present petition.
This Petition under Rule 45 of the Revised Rules on Civil Procedure, which seeks
[2]

the reversal of the Decision in C.A.-G.R. S.P. No. 33316 of the Court of Appeals,
[3]

challenges the validity of Manila City Ordinance No. 7774 entitled, An Ordinance
Prohibiting Short-Time Admission, Short-Time Admission Rates, and Wash-Up
Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension Houses, and
Similar Establishments in the City of Manila (the Ordinance).

I.

The facts are as follows:

On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law
the Ordinance. The Ordinance is reproduced in full, hereunder:
[4]

SECTION 1. Declaration of Policy. It is hereby the declared

policy of the City Government to protect the best interest, health and
welfare, and the morality of its constituents in general and the youth
in particular.

SEC. 2. Title. This ordinance shall be known as An Ordinance

prohibiting short time admission in hotels, motels, lodging houses,
pension houses and similar establishments in the City of Manila.

SEC. 3. Pursuant to the above policy, short-time admission and rate

[sic], wash-up rate or other similarly concocted terms, are hereby
prohibited in hotels, motels, inns, lodging houses, pension houses and
similar establishments in the City of Manila.

SEC. 4. Definition of Term[s]. Short-time admission shall mean

admittance and charging of room rate for less than twelve (12) hours
at any given time or the renting out of rooms more than twice a day
or any other term that may be concocted by owners or managers of
said establishments but would mean the same or would bear the same
meaning.

SEC. 5. Penalty Clause. Any person or corporation who shall violate

any provision of this ordinance shall upon conviction thereof be
punished by a fine of Five Thousand (P5,000.00) Pesos or
imprisonment for a period of not exceeding one (1) year or both such
 fine and imprisonment at the discretion of the court; Provided, That
in case of [a] juridical person, the president, the manager, or the
persons in charge of the operation thereof shall be liable: Provided,
further, That in case of subsequent conviction for the same offense,
the business license of the guilty party shall automatically be
cancelled.

SEC. 6. Repealing Clause. Any or all provisions of City ordinances

not consistent with or contrary to this measure or any portion hereof
are hereby deemed repealed.

SEC. 7. Effectivity. This ordinance shall take effect immediately

upon approval.

Enacted by the city Council of Manila at its regular session

today, November 10, 1992.

Approved by His Honor, the Mayor on December 3, 1992.

On December 15, 1992, the Malate Tourist and Development Corporation

(MTDC) filed a complaint for declaratory relief with prayer for a writ of
preliminary injunction and/or temporary restraining order ( TRO) with the [5]

Regional Trial Court (RTC) of Manila, Branch 9 impleading as defendant, herein

respondent City of Manila (the City) represented by Mayor Lim. MTDC prayed
[6]

that the Ordinance, insofar as it includes motels and inns as among its prohibited
establishments, be declared invalid and unconstitutional. MTDC claimed that as
owner and operator of the Victoria Court in Malate, Manila it was authorized by
Presidential Decree (P.D.) No. 259 to admit customers on a short time basis as well
as to charge customers wash up rates for stays of only three hours.

On December 21, 1992, petitioners White Light Corporation (WLC),

Titanium Corporation (TC) and Sta. Mesa Tourist and Development Corporation
(STDC) filed a motion to intervene and to admit attached complaint-in-
intervention on the ground that the Ordinance directly affects their business
[7]

interests as operators of drive-in-hotels and motels in Manila. The three[8]

companies are components of the Anito Group of Companies which owns and
operates several hotels and motels in Metro Manila. [9]

On December 23, 1992, the RTC granted the motion to intervene. The [10]

RTC also notified the Solicitor General of the proceedings pursuant to then Rule
64, Section 4 of the Rules of Court. On the same date, MTDC moved to withdraw
as plaintiff.
[11]

On December 28, 1992, the RTC granted MTDC's motion to withdraw. The RTC [12]

issued a TRO on January 14, 1993, directing the City to cease and desist from
enforcing the Ordinance. The City filed an Answer dated January 22,
[13]

1993 alleging that the Ordinance is a legitimate exercise of police power. [14]

On February 8, 1993, the RTC issued a writ of preliminary injunction ordering the
city to desist from the enforcement of the Ordinance. A month later, on March 8,
[15]

1993, the Solicitor General filed his Comment arguing that the Ordinance is
constitutional.

During the pre-trial conference, the WLC, TC and STDC agreed to submit the case
for decision without trial as the case involved a purely legal question. On October
[16]

20, 1993, the RTC rendered a decision declaring the Ordinance null and void. The
dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of

the City of Manila is hereby declared null and void.

Accordingly, the preliminary injunction heretofor issued is hereby

made permanent.

SO ORDERED. [17]

The RTC noted that the ordinance strikes at the personal liberty of the
individual guaranteed and jealously guarded by the Constitution. Reference was
[18]

made to the provisions of the Constitution encouraging private enterprises and the
incentive to needed investment, as well as the right to operate economic
enterprises. Finally, from the observation that the illicit relationships the Ordinance
sought to dissuade could nonetheless be consummated by simply paying for a 12-
hour stay, the RTC likened the law to the ordinance annulled in Ynot v.
Intermediate Appellate Court, where the legitimate purpose of preventing
[19]
indiscriminate slaughter of carabaos was sought to be effected through an inter-
province ban on the transport of carabaos and carabeef.

The City later filed a petition for review on certiorari with the Supreme
Court. The petition was docketed as G.R. No. 112471. However in a resolution
[20]

dated January 26, 1994, the Court treated the petition as a petition
for certiorari and referred the petition to the Court of Appeals.[21]

Before the Court of Appeals, the City asserted that the Ordinance is a valid
exercise of police power pursuant to Section 458 (4)(iv) of the Local Government
Code which confers on cities, among other local government units, the power:

[To] regulate the establishment, operation and maintenance of

cafes, restaurants, beerhouses, hotels, motels, inns, pension houses,
lodging houses and other similar establishments, including tourist
guides and transports.[22]

The Ordinance, it is argued, is also a valid exercise of the power of the City
under Article III, Section 18(kk) of the Revised Manila Charter, thus:

to enact all ordinances it may deem necessary and proper for

the sanitation and safety, the furtherance of the prosperity and the
promotion of the morality, peace, good order, comfort, convenience
and general welfare of the city and its inhabitants, and such others as
be necessary to carry into effect and discharge the powers and duties
conferred by this Chapter; and to fix penalties for the violation of
ordinances which shall not exceed two hundred pesos fine or six
months imprisonment, or both such fine and imprisonment for a
single offense.
[23]

Petitioners argued that the Ordinance is unconstitutional and void since it

violates the right to privacy and the freedom of movement; it is an invalid exercise
of police power; and it is an unreasonable and oppressive interference in their
business.

The Court of Appeals reversed the decision of the RTC and affirmed the
constitutionality of the Ordinance. First, it held that the Ordinance did not violate
[24]

the right to privacy or the freedom of movement, as it only penalizes the owners or
operators of establishments that admit individuals for short time stays. Second, the
virtually limitless reach of police power is only constrained by having a lawful
object obtained through a lawful method. The lawful objective of the Ordinance is
satisfied since it aims to curb immoral activities. There is a lawful method since
the establishments are still allowed to operate. Third, the adverse effect on the
establishments is justified by the well-being of its constituents in general. Finally,
as held in Ermita-Malate Motel Operators Association v. City Mayor
of Manila, liberty is regulated by law.

TC, WLC and STDC come to this Court via petition for review on certiorari. In [25]

their petition and Memorandum, petitioners in essence repeat the assertions they
made before the Court of Appeals. They contend that the assailed Ordinance is an
invalid exercise of police power.

II.

We must address the threshold issue of petitioners standing. Petitioners allege that
as owners of establishments offering wash-up rates, their business is being
unlawfully interfered with by the Ordinance. However, petitioners also allege that
the equal protection rights of their clients are also being interfered with. Thus, the
crux of the matter is whether or not these establishments have the requisite
standing to plead for protection of their patrons' equal protection rights.
Standing or locus standi is the ability of a party to demonstrate to the court
sufficient connection to and harm from the law or action challenged to support that
party's participation in the case. More importantly, the doctrine of standing is built
on the principle of separation of powers, sparing as it does unnecessary
[26]

interference or invalidation by the judicial branch of the actions rendered by its co-
equal branches of government.

The requirement of standing is a core component of the judicial system

derived directly from the Constitution. The constitutional component of standing
[27]

doctrine incorporates concepts which concededly are not susceptible of precise

definition. In this jurisdiction, the extancy of a direct and personal interest
[28]

presents the most obvious cause, as well as the standard test for a petitioner's
standing. In a similar vein, the United States Supreme Court reviewed and
[29]

elaborated on the meaning of the three constitutional standing requirements of

injury, causation, and redressability in Allen v. Wright.
[30]

Nonetheless, the general rules on standing admit of several exceptions such as the
overbreadth doctrine, taxpayer suits, third party standing and, especially in
the Philippines, the doctrine of transcendental importance. [31]
For this particular set of facts, the concept of third party standing as an exception
and the overbreadth doctrine are appropriate. In Powers v. Ohio, the United
[32]

States Supreme Court wrote that: We have recognized the right of litigants to bring
actions on behalf of third parties, provided three important criteria are satisfied: the
litigant must have suffered an injury-in-fact, thus giving him or her a "sufficiently
concrete interest" in the outcome of the issue in dispute; the litigant must have a
close relation to the third party; and there must exist some hindrance to the third
party's ability to protect his or her own interests." Herein, it is clear that the
[33]

business interests of the petitioners are likewise injured by the Ordinance. They
rely on the patronage of their customers for their continued viability which appears
to be threatened by the enforcement of the Ordinance. The relative silence in
constitutional litigation of such special interest groups in our nation such as the
American Civil Liberties Union in the United States may also be construed as a
hindrance for customers to bring suit. [34]

American jurisprudence is replete with examples where parties-in-interest were

allowed standing to advocate or invoke the fundamental due process or equal
protection claims of other persons or classes of persons injured by state action.
In Griswold v. Connecticut, the United States Supreme Court held that physicians
[35]

had standing to challenge a reproductive health statute that would penalize them as
accessories as well as to plead the constitutional protections available to their
patients. The Court held that:

The rights of husband and wife, pressed here, are likely to be diluted
or adversely affected unless those rights are considered in a suit
involving those who have this kind of confidential relation to
them." [36]

An even more analogous example may be found in Craig v. Boren, wherein the
[37]

United States Supreme Court held that a licensed beverage vendor has standing to
raise the equal protection claim of a male customer challenging a statutory scheme
prohibiting the sale of beer to males under the age of 21 and to females under the
age of 18. The United States High Court explained that the vendors had standing
"by acting as advocates of the rights of third parties who seek access to their
market or function." [38]

Assuming arguendo that petitioners do not have a relationship with their patrons
for the former to assert the rights of the latter, the overbreadth doctrine comes into
play. In overbreadth analysis, challengers to government action are in effect
permitted to raise the rights of third parties. Generally applied to statutes infringing
on the freedom of speech, the overbreadth doctrine applies when a statute
needlessly restrains even constitutionally guaranteed rights. In this case, the
[39]

petitioners claim that the Ordinance makes a sweeping intrusion into the right to
liberty of their clients. We can see that based on the allegations in the petition, the
Ordinance suffers from overbreadth.

We thus recognize that the petitioners have a right to assert the constitutional rights
of their clients to patronize their establishments for a wash-rate time frame.

III.

To students of jurisprudence, the facts of this case will recall to mind not only the
recent City of Manila ruling, but our 1967 decision in Ermita-Malate Hotel and
Motel Operations Association, Inc., v. Hon. City Mayor of Manila. Ermita- [40]

Malate concerned the City ordinance requiring patrons to fill up a prescribed form
stating personal information such as name, gender, nationality, age, address and
occupation before they could be admitted to a motel, hotel or lodging house. This
earlier ordinance was precisely enacted to minimize certain practices deemed
harmful to public morals. A purpose similar to the annulled ordinance in City
of Manila which sought a blanket ban on motels, inns and similar establishments in
the Ermita-Malate area. However, the constitutionality of the ordinance in Ermita-
Malate was sustained by the Court.

The common thread that runs through those decisions and the case at bar goes
beyond the singularity of the localities covered under the respective ordinances.
All three ordinances were enacted with a view of regulating public morals
including particular illicit activity in transient lodging establishments. This could
be described as the middle case, wherein there is no wholesale ban on motels and
hotels but the services offered by these establishments have been severely
restricted. At its core, this is another case about the extent to which the State can
intrude into and regulate the lives of its citizens.
The test of a valid ordinance is well established. A long line of decisions
including City of Manila has held that for an ordinance to be valid, it must not only
be within the corporate powers of the local government unit to enact and pass
according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the Constitution or
any statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be general
and consistent with public policy; and (6) must not be unreasonable. [41]

The Ordinance prohibits two specific and distinct business practices, namely
wash rate admissions and renting out a room more than twice a day. The ban is
evidently sought to be rooted in the police power as conferred on local government
units by the Local Government Code through such implements as the general
welfare clause.
A.

Police power, while incapable of an exact definition, has been purposely

veiled in general terms to underscore its comprehensiveness to meet all exigencies
and provide enough room for an efficient and flexible response as the conditions
warrant. Police power is based upon the concept of necessity of the State and its
[42]

corresponding right to protect itself and its people. Police power has been used as
[43]

justification for numerous and varied actions by the State. These range from the
regulation of dance halls, movie theaters, gas stations and cockpits. The
[44] [45] [46] [47]

awesome scope of police power is best demonstrated by the fact that in its hundred
or so years of presence in our nations legal system, its use has rarely been denied.
The apparent goal of the Ordinance is to minimize if not eliminate the use of
the covered establishments for illicit sex, prostitution, drug use and alike. These
goals, by themselves, are unimpeachable and certainly fall within the ambit of the
police power of the State. Yet the desirability of these ends do not sanctify any and
all means for their achievement. Those means must align with the Constitution,
and our emerging sophisticated analysis of its guarantees to the people. The Bill of
Rights stands as a rebuke to the seductive theory of Macchiavelli, and, sometimes
even, the political majorities animated by his cynicism.

Even as we design the precedents that establish the framework for analysis of due
process or equal protection questions, the courts are naturally inhibited by a due
deference to the co-equal branches of government as they exercise their political
functions. But when we are compelled to nullify executive or legislative actions,
yet another form of caution emerges. If the Court were animated by the same
passing fancies or turbulent emotions that motivate many political decisions,
judicial integrity is compromised by any perception that the judiciary is merely the
third political branch of government. We derive our respect and good standing in
the annals of history by acting as judicious and neutral arbiters of the rule of law,
and there is no surer way to that end than through the development of rigorous and
sophisticated legal standards through which the courts analyze the most
fundamental and far-reaching constitutional questions of the day.

B.

The primary constitutional question that confronts us is one of due process,

as guaranteed under Section 1, Article III of the Constitution. Due process evades a
precise definition. The purpose of the guaranty is to prevent arbitrary
[48]

governmental encroachment against the life, liberty and property of individuals.

The due process guaranty serves as a protection against arbitrary regulation or
seizure. Even corporations and partnerships are protected by the guaranty insofar
as their property is concerned.

The due process guaranty has traditionally been interpreted as imposing two
related but distinct restrictions on government, "procedural due process" and
"substantive due process." Procedural due process refers to the procedures that the
government must follow before it deprives a person of life, liberty, or
property. Procedural due process concerns itself with government action adhering
[49]

to the established process when it makes an intrusion into the private sphere.
Examples range from the form of notice given to the level of formality of a
hearing.

If due process were confined solely to its procedural aspects, there would arise
absurd situation of arbitrary government action, provided the proper formalities are
followed. Substantive due process completes the protection envisioned by the due
process clause. It inquires whether the government has sufficient justification for
depriving a person of life, liberty, or property.
[50]

The question of substantive due process, moreso than most other fields of
law, has reflected dynamism in progressive legal thought tied with the expanded
acceptance of fundamental freedoms. Police power, traditionally awesome as it
may be, is now confronted with a more rigorous level of analysis before it can be
upheld. The vitality though of constitutional due process has not been predicated
on the frequency with which it has been utilized to achieve a liberal result for, after
all, the libertarian ends should sometimes yield to the prerogatives of the State.
Instead, the due process clause has acquired potency because of the sophisticated
methodology that has emerged to determine the proper metes and bounds for its
application.

C.

The general test of the validity of an ordinance on substantive due process

grounds is best tested when assessed with the evolved footnote 4 test laid down by
the U.S. Supreme Court in U.S. v. Carolene Products. Footnote 4 of the Carolene
[51]

Products case acknowledged that the judiciary would defer to the legislature unless
there is a discrimination against a discrete and insular minority or infringement of a
fundamental right. Consequently, two standards of judicial review were
[52]

established: strict scrutiny for laws dealing with freedom of the mind or restricting
the political process, and the rational basis standard of review for economic
legislation.

A third standard, denominated as heightened or immediate scrutiny, was

later adopted by the U.S. Supreme Court for evaluating classifications based on
gender and legitimacy. Immediate scrutiny was adopted by the U.S. Supreme
[53] [54]

Court in Craig, after the Court declined to do so in Reed v. Reed. While the test
[55] [56]

may have first been articulated in equal protection analysis, it has in the United
States since been applied in all substantive due process cases as well.

We ourselves have often applied the rational basis test mainly in analysis of
equal protection challenges. Using the rational basis examination, laws or
[57]

ordinances are upheld if they rationally further a legitimate governmental

interest. Under intermediate review, governmental interest is extensively
[58]

examined and the availability of less restrictive measures is considered. Applying

[59]

strict scrutiny, the focus is on the presence of compelling, rather than substantial,
governmental interest and on the absence of less restrictive means for achieving
that interest.

In terms of judicial review of statutes or ordinances, strict scrutiny refers to

the standard for determining the quality and the amount of governmental interest
brought to justify the regulation of fundamental freedoms. Strict scrutiny is used
[60]

today to test the validity of laws dealing with the regulation of speech, gender, or
race as well as other fundamental rights as expansion from its earlier applications
to equal protection. The United States Supreme Court has expanded the scope of
[61]

strict scrutiny to protect fundamental rights such as suffrage, judicial access and
[62] [63]

interstate travel.
[64]

If we were to take the myopic view that an Ordinance should be analyzed

strictly as to its effect only on the petitioners at bar, then it would seem that the
only restraint imposed by the law which we are capacitated to act upon is the injury
to property sustained by the petitioners, an injury that would warrant the
application of the most deferential standard the rational basis test. Yet as earlier
stated, we recognize the capacity of the petitioners to invoke as well the
constitutional rights of their patrons those persons who would be deprived of
availing short time access or wash-up rates to the lodging establishments in
question.

Viewed cynically, one might say that the infringed rights of these customers
were are trivial since they seem shorn of political consequence. Concededly, these
are not the sort of cherished rights that, when proscribed, would impel the people
to tear up their cedulas. Still, the Bill of Rights does not shelter gravitas alone.
Indeed, it is those trivial yet fundamental freedoms which the people reflexively
exercise any day without the impairing awareness of their constitutional
consequence that accurately reflect the degree of liberty enjoyed by the people.
Liberty, as integrally incorporated as a fundamental right in the Constitution, is not
a Ten Commandments-style enumeration of what may or what may not be done;
but rather an atmosphere of freedom where the people do not feel labored under a
Big Brother presence as they interact with each other, their society and nature, in a
manner innately understood by them as inherent, without doing harm or injury to
others.

D.

The rights at stake herein fall within the same fundamental rights to liberty
which we upheld in City of Manila v. Hon. Laguio, Jr. We expounded on that most
primordial of rights, thus:

Liberty as guaranteed by the Constitution was defined by Justice

Malcolm to include "the right to exist and the right to be free from
arbitrary restraint or servitude. The term cannot be dwarfed into mere
freedom from physical restraint of the person of the citizen, but is
deemed to embrace the right of man to enjoy the facilities with which he
 has been endowed by his Creator, subject only to such restraint as are
necessary for the common welfare."[ ] In accordance with this case, the
[65]

rights of the citizen to be free to use his faculties in all lawful ways; to
live and work where he will; to earn his livelihood by any lawful calling;
and to pursue any avocation are all deemed embraced in the concept of
liberty.[ ]
[66]

The U.S. Supreme Court in the case of Roth v. Board of Regents,

sought to clarify the meaning of "liberty." It said:

While the Court has not attempted to define with

exactness the liberty . . . guaranteed [by the Fifth and
Fourteenth Amendments], the term denotes not merely
freedom from bodily restraint but also the right of the
individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to marry,
establish a home and bring up children, to worship God
according to the dictates of his own conscience, and
generally to enjoy those privileges long recognized . . . as
essential to the orderly pursuit of happiness by free men. In
a Constitution for a free people, there can be no doubt that
the meaning of "liberty" must be broad indeed. [Citations
[67]

omitted]

It cannot be denied that the primary animus behind the ordinance is the
curtailment of sexual behavior. The City asserts before this Court that the subject
establishments have gained notoriety as venue of prostitution, adultery and
fornications in Manila since they provide the necessary atmosphere for clandestine
entry, presence and exit and thus became the ideal haven for prostitutes and thrill-
seekers. Whether or not this depiction of a mise-en-scene of vice is accurate, it
[68]

cannot be denied that legitimate sexual behavior among willing married or

consenting single adults which is constitutionally protected will be curtailed as
[69]

well, as it was in the City of Manila case. Our holding therein retains significance
for our purposes:

The concept of liberty compels respect for the individual whose

claim to privacy and interference demands respect. As the case of Morfe
v. Mutuc, borrowing the words of Laski, so very aptly stated:
 Man is one among many, obstinately refusing
reduction to unity. His separateness, his isolation, are
indefeasible; indeed, they are so fundamental that they are
the basis on which his civic obligations are built. He cannot
abandon the consequences of his isolation, which are,
broadly speaking, that his experience is private, and the will
built out of that experience personal to himself. If he
surrenders his will to others, he surrenders himself. If his
will is set by the will of others, he ceases to be a master of
himself. I cannot believe that a man no longer a master of
himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized

in Morfe, the invasion of which should be justified by a compelling state
interest. Morfe accorded recognition to the right to privacy independently
of its identification with liberty; in itself it is fully deserving of
constitutional protection. Governmental powers should stop short of
certain intrusions into the personal life of the citizen.
[70]

We cannot discount other legitimate activities which the Ordinance would

proscribe or impair. There are very legitimate uses for a wash rate or renting the
room out for more than twice a day. Entire families are known to choose pass the
time in a motel or hotel whilst the power is momentarily out in their homes. In
transit passengers who wish to wash up and rest between trips have a legitimate
purpose for abbreviated stays in motels or hotels. Indeed any person or groups of
persons in need of comfortable private spaces for a span of a few hours with
purposes other than having sex or using illegal drugs can legitimately look to
staying in a motel or hotel as a convenient alternative.

E.

That the Ordinance prevents the lawful uses of a wash rate depriving patrons
of a product and the petitioners of lucrative business ties in with another
constitutional requisite for the legitimacy of the Ordinance as a police power
measure. It must appear that the interests of the public generally, as distinguished
from those of a particular class, require an interference with private rights and the
means must be reasonably necessary for the accomplishment of the purpose and
not unduly oppressive of private rights. It must also be evident that no other
[71]

alternative for the accomplishment of the purpose less intrusive of private rights
can work. More importantly, a reasonable relation must exist between the purposes
of the measure and the means employed for its accomplishment, for even under the
guise of protecting the public interest, personal rights and those pertaining to
private property will not be permitted to be arbitrarily invaded.
[72]

Lacking a concurrence of these requisites, the police measure shall be struck

down as an arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the
exercise of police power is subject to judicial review when life, liberty or property
is affected. However, this is not in any way meant to take it away from the
[73]

vastness of State police power whose exercise enjoys the presumption of validity. [74]

Similar to the Comelec resolution requiring newspapers to donate

advertising space to candidates, this Ordinance is a blunt and heavy
instrument. The Ordinance makes no distinction between places frequented by
[75]

patrons engaged in illicit activities and patrons engaged in legitimate actions. Thus
it prevents legitimate use of places where illicit activities are rare or even unheard
of. A plain reading of section 3 of the Ordinance shows it makes no classification
of places of lodging, thus deems them all susceptible to illicit patronage and
subject them without exception to the unjustified prohibition.

The Court has professed its deep sentiment and tenderness of the Ermita-
Malate area, its longtime home, and it is skeptical of those who wish to depict our
[76]

capital city the Pearl of the Orient as a modern-day Sodom or Gomorrah for
the Third World set. Those still steeped in Nick Joaquin-dreams of the grandeur of
Old Manila will have to accept that Manila like all evolving big cities, will have its
problems. Urban decay is a fact of mega cities such as Manila, and vice is a
common problem confronted by the modern metropolis wherever in the world. The
solution to such perceived decay is not to prevent legitimate businesses from
offering a legitimate product. Rather, cities revive themselves by offering
incentives for new businesses to sprout up thus attracting the dynamism of
individuals that would bring a new grandeur to Manila.

The behavior which the Ordinance seeks to curtail is in fact already

prohibited and could in fact be diminished simply by applying existing laws. Less
intrusive measures such as curbing the proliferation of prostitutes and drug dealers
through active police work would be more effective in easing the situation. So
would the strict enforcement of existing laws and regulations penalizing
prostitution and drug use. These measures would have minimal intrusion on the
businesses of the petitioners and other legitimate merchants. Further, it is apparent
that the Ordinance can easily be circumvented by merely paying the whole day rate
without any hindrance to those engaged in illicit activities. Moreover, drug dealers
and prostitutes can in fact collect wash rates from their clientele by charging their
customers a portion of the rent for motel rooms and even apartments.

IV.
We reiterate that individual rights may be adversely affected only to the
extent that may fairly be required by the legitimate demands of public interest or
public welfare.The State is a leviathan that must be restrained from needlessly
intruding into the lives of its citizens. However well-intentioned the Ordinance
may be, it is in effect an arbitrary and whimsical intrusion into the rights of the
establishments as well as their patrons. The Ordinance needlessly restrains the
operation of the businesses of the petitioners as well as restricting the rights of
their patrons without sufficient justification. The Ordinance rashly equates wash
rates and renting out a room more than twice a day with immorality without
accommodating innocuous intentions.

The promotion of public welfare and a sense of morality among citizens deserves
the full endorsement of the judiciary provided that such measures do not trample
rights this Court is sworn to protect. The notion that the promotion of public
[77]

morality is a function of the State is as old as Aristotle. The advancement of

[78]

moral relativism as a school of philosophy does not de-legitimize the role of

morality in law, even if it may foster wider debate on which particular behavior to
penalize. It is conceivable that a society with relatively little shared morality
among its citizens could be functional so long as the pursuit of sharply variant
moral perspectives yields an adequate accommodation of different interests. [79]

To be candid about it, the oft-quoted American maxim that you

cannot legislate morality is ultimately illegitimate as a matter of law, since as
explained by Calabresi, that phrase is more accurately interpreted as meaning that
efforts to legislate morality will fail if they are widely at variance with public
attitudes about right and wrong. Our penal laws, for one, are founded on age-old
[80]

moral traditions, and as long as there are widely accepted distinctions between
right and wrong, they will remain so oriented.

Yet the continuing progression of the human story has seen not only the
acceptance of the right-wrong distinction, but also the advent of fundamental
liberties as the key to the enjoyment of life to the fullest. Our democracy is
distinguished from non-free societies not with any more extensive elaboration on
our part of what is moral and immoral, but from our recognition that the individual
liberty to make the choices in our lives is innate, and protected by the State.
Independent and fair-minded judges themselves are under a moral duty to uphold
the Constitution as the embodiment of the rule of law, by reason of their expression
of consent to do so when they take the oath of office, and because they are
entrusted by the people to uphold the law. [81]

Even as the implementation of moral norms remains an indispensable

complement to governance, that prerogative is hardly absolute, especially in the
face of the norms of due process of liberty. And while the tension may often be left
to the courts to relieve, it is possible for the government to avoid the constitutional
conflict by employing more judicious, less drastic means to promote morality.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of

Appeals is REVERSED, and the Decision of the Regional Trial Court of Manila,
Branch 9, is REINSTATED. Ordinance No. 7774 is hereby declared
UNCONSTITUTIONAL. No pronouncement as to costs.

SO ORDERED.
White Light Corp., vs City of
Manila
Police Power – Not Validly Exercised – Infringement of Private Rights
On 3 Dec 1992, then Mayor Lim signed into law Ord 7774 entitled “An Ordinance”
prohibiting short time admission in hotels, motels, lodging houses, pension houses and
similar establishments in the City of Manila. White Light Corp is an operator of mini hotels
and motels who sought to have the Ordinance be nullified as the said Ordinance infringes
on the private rights of their patrons. The RTC ruled in favor of WLC. It ruled that the
Ordinance strikes at the personal liberty of the individual guaranteed by the Constitution.
The City maintains that the ordinance is valid as it is a valid exercise of police power. Under
the LGC, the City is empowered to regulate the establishment, operation and maintenance
of cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses
and other similar establishments, including tourist guides and transports. The CA ruled in
favor of the City.
ISSUE: Whether or not Ord 7774 is valid.
HELD: The SC ruled that the said ordinance is null and void as it indeed infringes upon
individual liberty. It also violates the due process clause which serves as a guaranty for
protection against arbitrary regulation or seizure. The said ordinance invades private rights.
Note that not all who goes into motels and hotels for wash up rate are really there for
obscene purposes only. Some are tourists who needed rest or to “wash up” or to freshen
up. Hence, the infidelity sought to be avoided by the said ordinance is more or less
subjected only to a limited group of people. The SC reiterates that individual rights may be
adversely affected only to the extent that may fairly be required by the legitimate demands
of public interest or public welfare.

EN BANC
BRITISH AMERICAN TOBACCO, G.R. No. 163583
Petitioner,
Present:

Puno, C.J.,
Quisumbing,
Ynares-Santiago,
Carpio,
Austria-Martinez,
Corona,
- versus - Carpio Morales,
Tinga,
Chico-Nazario,
Velasco, Jr.,
Nachura,
Leonardo-De Castro,
Brion,
Peralta, and
Bersamin, JJ.
JOSE ISIDRO N. CAMACHO,
in his capacity as Secretary of
the Department of Finance and
GUILLERMO L. PARAYNO, JR.,
in his capacity as Commissioner of
the Bureau of Internal Revenue,
Respondents.
PHILIP MORRIS PHILIPPINES
MANUFACTURING, INC.,
FORTUNE TOBACCO, CORP., Promulgated:
MIGHTY CORPOR.A.TION, and
JT INTERNATIONAL, S.A.,
Respondents-in-Intervention. April 15, 2009

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

RESOLUTION

YNARES-SANTIAGO, J.:

On August 20, 2008, the Court rendered a Decision partially granting the
petition in this case, viz:

WHEREFORE, the petition is PARTIALLY GRANTED and the decision of the

Regional Trial Court of Makati, Branch 61, in Civil Case No. 03-1032,
is AFFIRMED with MODIFICATION. As modified, this Court declares that:
 (1) Section 145 of the NIRC, as amended by Republic Act No. 9334,
is CONSTITUTIONAL; and that

(2) Section 4(B)(e)(c), 2 paragraph of Revenue Regulations No. 1-97, as

nd

amended by Section 2 of Revenue Regulations 9-2003, and Sections II(1)(b), II(4)(b),

II(6), II(7), III (Large Tax Payers Assistance Division II) II(b) of Revenue Memorandum
Order No. 6-2003, insofar as pertinent to cigarettes packed by machine,
are INVALID insofar as they grant the BIR the power to reclassify or update the
classification of new brands every two years or earlier.

SO ORDERED.

In its Motion for Reconsideration, petitioner insists that the assailed

provisions (1) violate the equal protection and uniformity of taxation clauses of
the Constitution, (2) contravene Section 19, Article XII of the Constitution on
[1]

unfair competition, and (3) infringe the constitutional provisions on regressive

and inequitable taxation. Petitioner further argues that assuming the assailed
provisions are constitutional, petitioner is entitled to a downward reclassification
of Lucky Strike from the premium-priced to the high-priced tax bracket.

The Court is not persuaded.

The assailed law does not violate the equal

protection and uniformity of taxation
clauses.

Petitioner argues that the classification freeze provision violates the equal
protection and uniformity of taxation clauses because Annex D brands are taxed
based on their 1996 net retail prices while new brands are taxed based on their
present day net retail prices. Citing Ormoc Sugar Co. v. Treasurer of Ormoc
City, petitioner asserts that the assailed provisions accord a special or privileged
[2]

status to Annex D brands while at the same time discriminate against other
brands.
These contentions are without merit and a rehash of petitioners previous
arguments before this Court. As held in the assailed Decision, the instant case
neither involves a suspect classification nor impinges on a fundamental
right. Consequently, the rational basis test was properly applied to gauge the
constitutionality of the assailed law in the face of an equal protection challenge. It
has been held that in the areas of social and economic policy, a statutory
classification that neither proceeds along suspect lines nor infringes constitutional
rights must be upheld against equal protection challenge if there is any
reasonably conceivable state of facts that could provide a rational basis for the
classification. Under the rational basis test, it is sufficient that the legislative
[3]

classification is rationally related to achieving some legitimate State interest. As

the Court ruled in the assailed Decision, viz:

A legislative classification that is reasonable does not offend the constitutional

guaranty of the equal protection of the laws. The classification is considered valid and
reasonable provided that: (1) it rests on substantial distinctions; (2) it is germane to the
purpose of the law; (3) it applies, all things being equal, to both present and future
conditions; and (4) it applies equally to all those belonging to the same class.

The first, third and fourth requisites are satisfied. The classification freeze
provision was inserted in the law for reasons of practicality and expediency. That is,
since a new brand was not yet in existence at the time of the passage of RA 8240, then
Congress needed a uniform mechanism to fix the tax bracket of a new brand. The
current net retail price, similar to what was used to classify the brands under Annex D as
of October 1, 1996, was thus the logical and practical choice. Further, with the
amendments introduced by RA 9334, the freezing of the tax classifications now
expressly applies not just to Annex D brands but to newer brands introduced after the
effectivity of RA 8240 on January 1, 1997 and any new brand that will be introduced in
the future. (However, as will be discussed later, the intent to apply the freezing
mechanism to newer brands was already in place even prior to the amendments
introduced by RA 9334 to RA 8240.) This does not explain, however, why the
classification is frozen after its determination based on current net retail price and how
this is germane to the purpose of the assailed law. An examination of the legislative
history of RA 8240 provides interesting answers to this question.

xxxx
 From the foregoing, it is quite evident that the classification freeze
provision could hardly be considered arbitrary, or motivated by a hostile or oppressive
attitude to unduly favor older brands over newer brands. Congress was unequivocal in
its unwillingness to delegate the power to periodically adjust the excise tax rate and tax
brackets as well as to periodically resurvey and reclassify the cigarette brands based on
the increase in the consumer price index to the DOF and the BIR. Congress doubted the
constitutionality of such delegation of power, and likewise, considered the ethical
implications thereof. Curiously, the classification freeze provision was put in place of the
periodic adjustment and reclassification provision because of the belief that the latter
would foster an anti-competitive atmosphere in the market. Yet, as it is, this same
criticism is being foisted by petitioner upon the classification freeze provision.

To our mind, the classification freeze provision was in the main the result of
Congresss earnest efforts to improve the efficiency and effectivity of the tax
administration over sin products while trying to balance the same with other State
interests. In particular, the questioned provision addressed Congresss administrative
concerns regarding delegating too much authority to the DOF and BIR as this will open
the tax system to potential areas for abuse and corruption. Congress may have
reasonably conceived that a tax system which would give the least amount of discretion
to the tax implementers would address the problems of tax avoidance and tax evasion.

To elaborate a little, Congress could have reasonably foreseen that, under the
DOF proposal and the Senate Version, the periodic reclassification of brands would
tempt the cigarette manufacturers to manipulate their price levels or bribe the tax
implementers in order to allow their brands to be classified at a lower tax bracket even
if their net retail prices have already migrated to a higher tax bracket after the
adjustment of the tax brackets to the increase in the consumer price index. Presumably,
this could be done when a resurvey and reclassification is forthcoming. As briefly
touched upon in the Congressional deliberations, the difference of the excise tax rate
between the medium-priced and the high-priced tax brackets under RA 8240, prior to its
amendment, was P3.36. For a moderately popular brand which sells around 100 million
packs per year, this easily translates to P336,000,000. The incentive for tax avoidance, if
not outright tax evasion, would clearly be present. Then again, the tax implementers
may use the power to periodically adjust the tax rate and reclassify the brands as a tool
to unduly oppress the taxpayer in order for the government to achieve its revenue
targets for a given year.

Thus, Congress sought to, among others, simplify the whole tax system for sin
products to remove these potential areas of abuse and corruption from both the side of
the taxpayer and the government. Without doubt, the classification freeze provision was
an integral part of this overall plan. This is in line with one of the avowed objectives of
the assailed law to simplify the tax administration and compliance with the tax laws that
are about to unfold in order to minimize losses arising from inefficiencies and tax
 avoidance scheme, if not outright tax evasion. RA 9334 did not alter this classification
freeze provision of RA 8240. On the contrary, Congress affirmed this freezing mechanism
by clarifying the wording of the law. We can thus reasonably conclude, as the
deliberations on RA 9334 readily show, that the administrative concerns in tax
administration, which moved Congress to enact the classification freeze provision in RA
8240, were merely continued by RA 9334. Indeed, administrative concerns may provide
a legitimate, rational basis for legislative classification. In the case at bar, these
administrative concerns in the measurement and collection of excise taxes on sin
products are readily apparent as afore-discussed.

Aside from the major concern regarding the elimination of potential areas for
abuse and corruption from the tax administration of sin products, the legislative
deliberations also show that the classification freeze provision was intended to generate
buoyant and stable revenues for government. With the frozen tax classifications, the
revenue inflow would remain stable and the government would be able to predict with
a greater degree of certainty the amount of taxes that a cigarette manufacturer would
pay given the trend in its sales volume over time. The reason for this is that the
previously classified cigarette brands would be prevented from moving either upward or
downward their tax brackets despite the changes in their net retail prices in the future
and, as a result, the amount of taxes due from them would remain
predictable. The classification freeze provision would, thus, aid in the revenue planning
of the government.

All in all, the classification freeze provision addressed Congresss administrative

concerns in the simplification of tax administration of sin products, elimination of
potential areas for abuse and corruption in tax collection, buoyant and stable revenue
generation, and ease of projection of revenues. Consequently, there can be no denial of
the equal protection of the laws since the rational-basis test is amply satisfied.

Moreover, petitioners contention that the assailed provisions violate the

uniformity of taxation clause is similarly unavailing. In Churchill v. Concepcion, we [4]

explained that a tax is uniform when it operates with the same force and effect in
every place where the subject of it is found. It does not signify an intrinsic but
[5]

simply a geographical uniformity. A levy of tax is not unconstitutional because it

[6]

is not intrinsically equal and uniform in its operation. The uniformity rule does
[7]

not prohibit classification for purposes of taxation. As ruled in Tan v. Del Rosario,
[8]

Jr.:
[9]

Uniformity of taxation, like the kindred concept of equal protection,

merely requires that all subjects or objects of taxation, similarly situated, are to be
 treated alike both in privileges and liabilities (citations omitted). Uniformity does
not forfend classification as long as: (1) the standards that are used therefor are
substantial and not arbitrary, (2) the categorization is germane to achieve the
legislative purpose, (3) the law applies, all things being equal, to both present and
future conditions, and (4) the classification applies equally well to all those
belonging to the same class (citations omitted).[10]

In the instant case, there is no question that the classification freeze

provision meets the geographical uniformity requirement because the assailed
law applies to all cigarette brands in the Philippines. And, for reasons already
adverted to in our August 20, 2008 Decision, the above four-fold test has been
met in the present case.

Petitioners reliance on Ormoc Sugar Co. is misplaced. In said case, the

controverted municipal ordinance specifically named and taxed only the Ormoc
Sugar Company, and excluded any subsequently established sugar central from its
coverage. Thus, the ordinance was found unconstitutional on equal protection
grounds because its terms do not apply to future conditions as well. This is not
the case here. The classification freeze provision uniformly applies to all cigarette
brands whether existing or to be introduced in the market at some future time. It
does not purport to exempt any brand from its operation nor single out a brand
for the purpose of imposition of excise taxes.

At any rate, petitioners real disagreement lies with the legitimate State
interests. Although it concedes that the Court utilized the rationality test and that
the classification freeze provision was necessitated by several legitimate State
interests, however, it refuses to accept the justifications given by Congress for
the classification freeze provision. As we elucidated in our August 20, 2008
Decision, this line of argumentation revolves around the wisdom and expediency
of the assailed law which we cannot inquire into, much less overrule. Equal
protection is not a license for courts to judge the wisdom, fairness, or logic of
legislative choices. We reiterate, therefore, that petitioners remedy is with
[11]

Congress and not this Court.

The assailed provisions do not violate the
constitutional prohibition on unfair
competition.

Petitioner asserts that the Court erroneously applied the rational basis test
allegedly because this test does not apply in a constitutional challenge based on a
violation of Section 19, Article XII of the Constitution on unfair
competition. Citing Tatad v. Secretary of the Department of Energy, it argues
[12]

that the classification freeze provision gives the brands under Annex D a decisive
edge because it constitutes a substantial barrier to the entry of prospective
players; that the Annex D provision is no different from the 4% tariff differential
which we invalidated in Tatad; that some of the new brands, like Astro, Memphis,
Capri, L&M, Bowling Green, Forbes, and Canon, which were introduced into the
market after the effectivity of the assailed law on January 1, 1997, were killed by
Annex D brands because the former brands were reclassified by the BIR to higher
tax brackets; that the finding that price is not the only factor in the market as
there are other factors like consumer preference, active ingredients, etc. is
contrary to the evidence presented and the deliberations in Congress; that
the classification freeze provision will encourage predatory pricing in
contravention of the constitutional prohibition on unfair competition; and that
the cumulative effect of the operation of the classification freeze provision is to
perpetuate the oligopoly of intervenors Philip Morris and Fortune Tobacco in
contravention of the constitutional edict for the State to regulate or prohibit
monopolies, and to disallow combinations in restraint of trade and unfair
competition.

The argument lacks merit. While previously arguing that the rational basis test
was not satisfied, petitioner now asserts that this test does not apply in this case
and that the proper matrix to evaluate the constitutionality of the assailed law is
the prohibition on unfair competition under Section 19, Article XII of the
Constitution. It should be noted that during the trial below, petitioner did not
invoke said constitutional provision as it relied solely on the alleged violation of
the equal protection and uniformity of taxation clauses. Well-settled is the rule
that points of law, theories, issues and arguments not adequately brought to the
attention of the lower court will not be ordinarily considered by a reviewing court
as they cannot be raised for the first time on appeal. At any rate, even if we
[13]

were to relax this rule, as previously stated, the evidence presented before the
trial court is insufficient to establish the alleged violation of the constitutional
proscription against unfair competition.

Indeed, in Tatad we ruled that a law which imposes substantial barriers to the
entry and exit of new players in our downstream oil industry may be struck down
for being violative of Section 19, Article XII of the Constitution. However, we
[14]

went on to say in that case that if they are insignificant impediments, they need
not be stricken down. As we stated in our August 20, 2008 Decision, petitioner
[15]

failed to convincingly prove that there is a substantial barrier to the entry of new
brands in the cigarette market due to the classification freeze provision. We
further observed that several new brands were introduced in the market after the
assailed law went into effect thus negating petitioners sweeping claim that
the classification freeze provision is an insurmountable barrier to the entry of new
brands. We also noted that price is not the only factor affecting competition in
the market for there are other factors such as taste, brand loyalty, etc.

We see no reason to depart from these findings for the following reasons:

First, petitioner did not lay down the factual foundations, as supported by
verifiable documentary proof, which would establish, among others, the cigarette
brands in competition with each other; the current net retail prices of Annex D
brands, as determined through a market survey, to provide a sufficient point of
comparison with those covered by the BIRs market survey of new brands; and the
causal connection with as well as the extent of the impact on the competition in
the cigarette market of the classification freeze provision. Other than petitioners
self-serving allegations and testimonial evidence, no adequate documentary
evidence was presented to substantiate its claims. Absent ample documentary
proof, we cannot accept petitioners claim that the classification freeze provision is
an insurmountable barrier to the entry of new players.
 Second, we cannot lend credence to petitioners claim that it cannot
produce cigarettes that can compete with Marlboro and Philip Morris in the high-
priced tax bracket. Except for its self-serving testimonial evidence, no sufficient
documentary evidence was presented to substantiate this claim. The current net
retail price, which is the basis for determining the tax bracket of a cigarette brand,
more or less consists of the costs of raw materials, labor, advertising and profit
margin. To a large extent, these factors are controllable by the manufacturer, as
such, the decision to enter which tax bracket will depend on the pricing strategy
adopted by the individual manufacturer. The same holds true for its claims that
other new brands, like Astro, Memphis, Capri, L&M, Bowling Green, Forbes, and
Canon, were killed by Annex D brands due to the effects of the operation of
the classification freeze provision over time. The evidence that petitioner
presented before the trial court failed to substantiate the basis for these claims.

Essentially, petitioner would want us to accept its conclusions of law

without first laying down the factual foundations of its arguments. This Court,
which is not a trier of facts, cannot take judicial notice of the factual premises of
these arguments as petitioner now seems to suggest. The evidence should have
been presented before the trial court to allow it to examine and determine for
itself whether such factual premises, as supported by sufficient documentary
evidence, provide reasonable basis for petitioners conclusion that there arose an
unconstitutional unfair competition due to the operation of the classification
freeze provision. Petitioner should be reminded that it appealed this case from
the adverse ruling of the trial court directly to this Court on pure questions of law
instead of resorting to the Court of Appeals.

Third, Tatad is not applicable to the instant case. In Tatad, we found that
the 4% tariff differential between imported crude oil and imported refined
petroleum products erects a high barrier to the entry of new players because (1)
it imposes an undue burden on new players to spend billions of pesos to build
refineries in order to compete with the old players, and (2) new players, who opt
not to build refineries, suffer from the huge disadvantage of increasing their
product cost by 4%. The tariff was imposed on the raw materials uniformly used
[16]

by the players in the oil industry. Thus, the adverse effect on competition arising
from this discriminatory treatment was readily apparent. In contrast, the excise
tax under the assailed law is imposed based on the current net retail price of a
cigarette brand. As previously explained, the current net retail price is determined
by the pricing strategy of the manufacturer. This Court cannot simply speculate
that the reason why a new brand cannot enter a specific tax bracket and compete
with the brands therein was because of the classification freeze provision, rather
than the manufacturers own pricing decision or some other factor solely
attributable to the manufacturer. Again, the burden of proof in this regard is on
petitioner which it failed to muster.

Fourth, the finding in our August 20, 2008 Decision that price is not the only
factor which affects consumer behavior in the cigarette market is based on
petitioners own evidence. On cross-examination, petitioners witness admitted
that notwithstanding the change in price, a cigarette smoker may prefer the old
brand because of its addictive formulation. As a result, even if we were to
[17]

assume that the classification freeze provision distorts the pricing scheme of the
market players, it is not clear whether a substantial barrier to the entry of new
players would thereby be created because of these other factors affecting
consumer behavior.

Last, the claim that the assailed provisions encourage predatory pricing was
never raised nor substantiated before the trial court. It is merely an afterthought
and cannot be given weight.

In sum, the totality of the evidence presented by petitioner before the trial
court failed to convincingly establish the alleged violation of the constitutional
prohibition on unfair competition. It is a basic postulate that the one who
challenges the constitutionality of a law carries the heavy burden of proof for laws
enjoy a strong presumption of constitutionality as it is an act of a co-equal branch
of government. Petitioner failed to carry this burden.

The assailed law does not transgress the

constitutional provisions on regressive and
inequitable taxation.
 Petitioner argues that the classification freeze provision is a form of
regressive and inequitable tax system which is proscribed under Article VI, Section
28(1) of the Constitution. It claims that people in equal positions should be
[18]

treated alike. The use of different tax bases for brands under Annex D vis--vis new
brands is discriminatory, and thus, iniquitous. Petitioner further posits that
the classification freeze provision is regressive in character. It asserts that the
harmonization of revenue flow projections and ease of tax administration cannot
override this constitutional command.

We note that the points raised by petitioner with respect to alleged

inequitable taxation perpetuated by the classification freeze provision are a mere
reformulation of its equal protection challenge. As stated earlier, the assailed
provisions do not infringe the equal protection clause because the four-fold test is
satisfied. In particular, the classification freeze provision has been found to
rationally further legitimate State interests consistent with rationality
review. Petitioners repackaged argument has, therefore, no merit.

Anent the issue of regressivity, it may be conceded that the assailed law
imposes an excise tax on cigarettes which is a form of indirect tax, and thus,
regressive in character. While there was an attempt to make the imposition of the
excise tax more equitable by creating a four-tiered taxation system where higher
priced cigarettes are taxed at a higher rate, still, every consumer, whether rich or
poor, of a cigarette brand within a specific tax bracket pays the same tax rate. To
this extent, the tax does not take into account the persons ability to
pay. Nevertheless, this does not mean that the assailed law may be declared
unconstitutional for being regressive in character because the Constitution does
not prohibit the imposition of indirect taxes but merely provides that Congress
shall evolve a progressive system of taxation. As we explained in Tolentino v.
Secretary of Finance: [19]

[R]egressivity is not a negative standard for courts to enforce. What Congress is required
by the Constitution to do is to "evolve a progressive system of taxation." This is a
directive to Congress, just like the directive to it to give priority to the enactment of laws
 for the enhancement of human dignity and the reduction of social, economic and
political inequalities [Art. XIII, Section 1] or for the promotion of the right to "quality
education" [Art. XIV, Section 1]. These provisions are put in the Constitution as moral
incentives to legislation, not as judicially enforceable rights.
[20]

Petitioner is not entitled to a downward

reclassification of Lucky Strike.

Petitioner alleges that assuming the assailed law is constitutional, its Lucky
Strike brand should be reclassified from the premium-priced to the high-priced
tax bracket. Relying on BIR Ruling No. 018-2001 dated May 10, 2001, it claims that
it timely sought redress from the BIR to have the market survey conducted within
three months from product launch, as provided for under Section 4(B) of [21]

Revenue Regulations No. 1-97, in order to determine the actual current net retail
price of Lucky Strike, and thus, fix its tax classification. Further, the upward
reclassification of Lucky Strike amounts to deprivation of property right without
due process of law. The conduct of the market survey after two years from
product launch constitutes gross neglect on the part of the BIR. Consequently, for
failure of the BIR to conduct a timely market survey, Lucky Strikes classification
based on its suggested gross retail price should be deemed its official tax
classification. Finally, petitioner asserts that had the market survey been timely
conducted sometime in 2001, the current net retail price of Lucky Strike would
have been found to be under the high-priced tax bracket.

These contentions are untenable and misleading.

First, BIR Ruling No. 018-2001 was requested by petitioner for the purpose
of fixing Lucky Strikes initial tax classification based on its suggested gross retail
price relative to its planned introduction of Lucky Strike in the market sometime
in 2001 and not for the conduct of the market survey within three months from
product launch. In fact, the said Ruling contained an express reservation that the
tax classification of Lucky Strike set therein is without prejudice, however, to the
subsequent conduct of a survey x x x in order to determine if the actual gross
retail price thereof is consistent with [petitioners] suggested gross retail price. In
[22]

short, petitioner acknowledged that the initial tax classification of Lucky Strike
may be modified depending on the outcome of the survey which will determine
the actual current net retail price of Lucky Strike in the market.

Second, there was no upward reclassification of Lucky Strike because it was

taxed based on its suggested gross retail price from the time of its introduction in
the market in 2001 until the BIR market survey in 2003. We reiterate that Lucky
Strikes actual current net retail price was surveyed for the first time in 2003 and
was found to be from P10.34 to P11.53 per pack, which is within the premium-
priced tax bracket. There was, thus, no prohibited upward reclassification of Lucky
Strike by the BIR based on its current net retail price.

Third, the failure of the BIR to conduct the market survey within the three-
month period under the revenue regulations then in force can in no way make the
initial tax classification of Lucky Strike based on its suggested gross retail price
permanent. Otherwise, this would contravene the clear mandate of the law which
provides that the basis for the tax classification of a new brand shall be the
current net retail price and not the suggested gross retail price. It is a basic
principle of law that the State cannot be estopped by the mistakes of its agents.

Last, the issue of timeliness of the market survey was never raised before
the trial court because petitioners theory of the case was wholly anchored on the
alleged unconstitutionality of the classification freeze provision. As a
consequence, no documentary evidence as to the actual net retail price of Lucky
Strike in 2001, based on a market survey at least comparable to the one
mandated by law, was presented before the trial court. Evidently, it cannot be
assumed that had the BIR conducted the market survey within three months from
its product launch sometime in 2001, Lucky Strike would have been found to fall
under the high-priced tax bracket and not the premium-priced tax bracket. To so
hold would run roughshod over the States right to due process. Verily, petitioner
prosecuted its case before the trial court solely on the theory that the assailed
law is unconstitutional instead of merely challenging the timeliness of the market
survey. The rule is that a party is bound by the theory he adopts and by the cause
of action he stands on. He cannot be permitted after having lost thereon to
repudiate his theory and cause of action, and thereafter, adopt another and seek
to re-litigate the matter anew either in the same forum or on appeal. Having
[23]

pursued one theory and lost thereon, petitioner may no longer pursue another
inconsistent theory without thereby trifling with court processes and burdening
the courts with endless litigation.

WHEREFORE, the motion for reconsideration is DENIED.

SO ORDERED.

CONSUELO YNARES-SANTIAGO

EN BANC
 [G.R. No. 148560. November 19, 2001]

JOSEPH EJERCITO ESTRADA, petitioner, vs. SANDIGANBAYAN (Third

Division) and PEOPLE OF THE PHILIPPINES, respondents.

DECISION
BELLOSILLO, J.:

JOHN STUART MILL, in his essay On Liberty, unleashes the full fury of his pen in defense
of the rights of the individual from the vast powers of the State and the inroads of societal
pressure. But even as he draws a sacrosanct line demarcating the limits on individuality beyond
which the State cannot tread - asserting that "individual spontaneity" must be allowed to flourish
with very little regard to social interference - he veritably acknowledges that the exercise of
rights and liberties is imbued with a civic obligation, which society is justified in enforcing at all
cost, against those who would endeavor to withhold fulfillment. Thus he says -
The sole end for which mankind is warranted, individually or collectively, in
interfering with the liberty of action of any of their number, is self-protection. The
only purpose for which power can be rightfully exercised over any member of a
civilized community, against his will, is to prevent harm to others.
Parallel to individual liberty is the natural and illimitable right of the State to self-
preservation. With the end of maintaining the integrity and cohesiveness of the body politic, it
behooves the State to formulate a system of laws that would compel obeisance to its collective
wisdom and inflict punishment for non-observance.
The movement from Mill's individual liberalism to unsystematic collectivism wrought
changes in the social order, carrying with it a new formulation of fundamental rights and duties
more attuned to the imperatives of contemporary socio-political ideologies. In the process, the
web of rights and State impositions became tangled and obscured, enmeshed in threads of
multiple shades and colors, the skein irregular and broken. Antagonism, often outright collision,
between the law as the expression of the will of the State, and the zealous attempts by its
members to preserve their individuality and dignity, inevitably followed. It is when individual
rights are pitted against State authority that judicial conscience is put to its severest test.
Petitioner Joseph Ejercito Estrada, the highest-ranking official to be prosecuted under RA
7080 (An Act Defining and Penalizing the Crime of Plunder), as amended by RA 7659, wishes
[1] [2]

to impress upon us that the assailed law is so defectively fashioned that it crosses that thin but
distinct line which divides the valid from the constitutionally infirm. He therefore makes a
stringent call for this Court to subject the Plunder Law to the crucible of constitutionality mainly
because, according to him, (a) it suffers from the vice of vagueness; (b) it dispenses with the
"reasonable doubt" standard in criminal prosecutions; and, (c) it abolishes the element of mens
rea in crimes already punishable under The Revised Penal Code, all of which are purportedly
clear violations of the fundamental rights of the accused to due process and to be informed of the
nature and cause of the accusation against him.
 Specifically, the provisions of the Plunder Law claimed by petitioner to have transgressed
constitutional boundaries are Secs. 1, par. (d), 2 and 4 which are reproduced hereunder:
Section 1. x x x x (d) "Ill-gotten wealth" means any asset, property, business,
enterprise or material possession of any person within the purview of Section Two (2)
hereof, acquired by him directly or indirectly through dummies, nominees, agents,
subordinates and/or business associates by any combination or series of the following
means or similar schemes:
(1) Through misappropriation, conversion, misuse, or malversation of public funds or
raids on the public treasury;
(2) By receiving, directly or indirectly, any commission, gift, share, percentage,
kickbacks or any other form of pecuniary benefit from any person and/or entity in
connection with any government contract or project or by reason of the office or
position of the public office concerned;
(3) By the illegal or fraudulent conveyance or disposition of assets belonging to the
National Government or any of its subdivisions, agencies or instrumentalities, or
government owned or controlled corporations and their subsidiaries;
(4) By obtaining, receiving or accepting directly or indirectly any shares of stock,
equity or any other form of interest or participation including the promise of future
employment in any business enterprise or undertaking;
(5) By establishing agricultural, industrial or commercial monopolies or other
combinations and/or implementation of decrees and orders intended to benefit
particular persons or special interests; or
(6) By taking advantage of official position, authority, relationship, connection or
influence to unjustly enrich himself or themselves at the expense and to the damage
and prejudice of the Filipino people and the Republic of the Philippines.
Section 2. Definition of the Crime of Plunder, Penalties. - Any public officer who, by
himself or in connivance with members of his family, relatives by affinity or
consanguinity, business associates, subordinates or other persons, amasses,
accumulates or acquires ill-gotten wealth through a combination or series of overt or
criminal acts as described in Section 1 (d) hereof, in the aggregate amount or total
value of at least fifty million pesos (P50,000,000.00) shall be guilty of the crime of
plunder and shall be punished by reclusion perpetua to death. Any person who
participated with the said public officer in the commission of an offense contributing
to the crime of plunder shall likewise be punished for such offense. In the imposition
of penalties, the degree of participation and the attendance of mitigating and
extenuating circumstances as provided by the Revised Penal Code shall be considered
by the court. The court shall declare any and all ill-gotten wealth and their interests
and other incomes and assets including the properties and shares of stocks derived
from the deposit or investment thereof forfeited in favor of the State (underscoring
supplied).
Section 4. Rule of Evidence. - For purposes of establishing the crime of plunder, it
shall not be necessary to prove each and every criminal act done by the accused in
furtherance of the scheme or conspiracy to amass, accumulate or acquire ill-gotten
wealth, it being sufficient to establish beyond reasonable doubt a pattern of overt or
criminal acts indicative of the overall unlawful scheme or conspiracy (underscoring
supplied).
On 4 April 2001 the Office of the Ombudsman filed before the Sandiganbayan eight (8)
separate Informations, docketed as: (a) Crim. Case No. 26558, for violation of RA 7080, as
amended by RA 7659; (b) Crim. Cases Nos. 26559 to 26562, inclusive, for violation of Secs. 3,
par. (a), 3, par. (a), 3, par. (e) and 3, par. (e), of RA 3019 (Anti-Graft and Corrupt Practices
Act), respectively; (c) Crim. Case No. 26563, for violation of Sec. 7, par. (d), of RA 6713
(The Code of Conduct and Ethical Standards for Public Officials and Employees); (d) Crim.
Case No. 26564, for Perjury (Art. 183 of The Revised Penal Code); and, (e) Crim. Case No.
26565, for Illegal Use Of An Alias (CA No. 142, as amended by RA 6085).
On 11 April 2001 petitioner filed an Omnibus Motion for the remand of the case to the
Ombudsman for preliminary investigation with respect to specification "d" of the charges in the
Information in Crim. Case No. 26558; and, for reconsideration/reinvestigation of the offenses
under specifications "a," "b," and "c" to give the accused an opportunity to file counter-affidavits
and other documents necessary to prove lack of probable cause. Noticeably, the grounds raised
were only lack of preliminary investigation, reconsideration/reinvestigation of offenses, and
opportunity to prove lack of probable cause. The purported ambiguity of the charges and the
vagueness of the law under which they are charged were never raised in that Omnibus
Motion thus indicating the explicitness and comprehensibility of the Plunder Law.
On 25 April 2001 the Sandiganbayan, Third Division, issued a Resolution in Crim. Case No.
26558 finding that "a probable cause for the offense of PLUNDER exists to justify the issuance
of warrants for the arrest of the accused." On 25 June 2001 petitioner's motion for
reconsideration was denied by the Sandiganbayan.
On 14 June 2001 petitioner moved to quash the Information in Crim. Case No. 26558 on the
ground that the facts alleged therein did not constitute an indictable offense since the law on
which it was based was unconstitutional for vagueness, and that the Amended Information for
Plunder charged more than one (1) offense. On 21 June 2001 the Government filed
its Opposition to the Motion to Quash, and five (5) days later or on 26 June 2001 petitioner
submitted his Reply to the Opposition. On 9 July 2001 the Sandiganbayan denied
petitioner's Motion to Quash.
As concisely delineated by this Court during the oral arguments on 18 September 2001, the
issues for resolution in the instant petition for certiorari are: (a) The Plunder Law is
unconstitutional for being vague; (b) The Plunder Law requires less evidence for proving the
predicate crimes of plunder and therefore violates the rights of the accused to due process; and,
(c) Whether Plunder as defined in RA 7080 is a malum prohibitum, and if so, whether it is within
the power of Congress to so classify it.
 Preliminarily, the whole gamut of legal concepts pertaining to the validity of legislation is
predicated on the basic principle that a legislative measure is presumed to be in harmony with the
Constitution. Courts invariably train their sights on this fundamental rule whenever a legislative
[3]

act is under a constitutional attack, for it is the postulate of constitutional adjudication. This
strong predilection for constitutionality takes its bearings on the idea that it is forbidden for one
branch of the government to encroach upon the duties and powers of another. Thus it has been
said that the presumption is based on the deference the judicial branch accords to its coordinate
branch - the legislature.
If there is any reasonable basis upon which the legislation may firmly rest, the courts must
assume that the legislature is ever conscious of the borders and edges of its plenary powers, and
has passed the law with full knowledge of the facts and for the purpose of promoting what is
right and advancing the welfare of the majority. Hence in determining whether the acts of the
legislature are in tune with the fundamental law, courts should proceed with judicial restraint and
act with caution and forbearance. Every intendment of the law must be adjudged by the courts in
favor of its constitutionality, invalidity being a measure of last resort. In construing therefore the
provisions of a statute, courts must first ascertain whether an interpretation is fairly possible to
sidestep the question of constitutionality.
In La Union Credit Cooperative, Inc. v. Yaranon we held that as [4]

long as there is some basis for the decision of the court, the constitutionality of the challenged
law will not be touched and the case will be decided on other available grounds. Yet the force of
the presumption is not sufficient to catapult a fundamentally deficient law into the safe environs
of constitutionality. Of course, where the law clearly and palpably transgresses the hallowed
domain of the organic law, it must be struck down on sight lest the positive commands of the
fundamental law be unduly eroded.
Verily, the onerous task of rebutting the presumption weighs heavily on the party
challenging the validity of the statute. He must demonstrate beyond any tinge of doubt that there
is indeed an infringement of the constitution, for absent such a showing, there can be no finding
of unconstitutionality. A doubt, even if well-founded, will hardly suffice. As tersely put by
Justice Malcolm, "To doubt is to sustain." And petitioner has miserably failed in the instant
[5]

case to discharge his burden and overcome the presumption of constitutionality of the Plunder
Law.
As it is written, the Plunder Law contains ascertainable standards and well-defined
parameters which would enable the accused to determine the nature of his violation. Section 2 is
sufficiently explicit inits description of the acts, conduct and conditions required or forbidden,
and prescribes the elements of the crime with reasonable certainty and particularity. Thus -
1. That the offender is a public officer who acts by himself or in connivance with
members of his family, relatives by affinity or consanguinity, business associates,
subordinates or other persons;
2. That he amassed, accumulated or acquired ill-gotten wealth through a combination
or series of the following overt or criminal acts: (a) through misappropriation,
conversion, misuse, or malversation of public funds or raids on the public treasury;
(b) by receiving, directly or indirectly, any commission, gift, share, percentage,
kickback or any other form of pecuniary benefits from any person and/or entity in
connection with any government contract or project or by reason of the office or
position of the public officer; (c) by the illegal or fraudulent conveyance or
disposition of assets belonging to the NationalGovernment or any of its subdivisions,
agencies or instrumentalities of Government owned or controlled corporations or
their subsidiaries; (d) by obtaining, receiving or accepting directly or indirectly any
shares of stock, equity or any other form of interest or participation including the
promise of future employment in any business enterprise or undertaking; (e) by
establishing agricultural, industrial or commercial monopolies or other combinations
and/or implementation of decrees and orders intended to benefit particular persons or
special interests; or (f) by taking advantage of official position, authority,
relationship, connection or influence to unjustly enrich himself or themselves at the
expense and to the damage and prejudice of the Filipino people and the Republic of
the Philippines; and,
3. That the aggregate amount or total value of the ill-gotten wealth amassed,
accumulated or acquired is at least P50,000,000.00.
As long as the law affords some comprehensible guide or rule that would inform those who
are subject to it what conduct would render them liable to its penalties, its validity will be
sustained. It must sufficiently guide the judge in its application; the counsel, in defending one
charged with its violation; and more importantly, the accused, in identifying the realm of the
proscribed conduct. Indeed, it can be understood with little difficulty that what the assailed
statute punishes is the act of a public officer in amassing or accumulating ill-gotten wealth of at
least P50,000,000.00 through a series or combination of acts enumerated in Sec. 1, par. (d), of
the Plunder Law.
In fact, the amended Information itself closely tracks the language of the law, indicating
with reasonable certainty the various elements of the offense which petitioner is alleged to have
committed:
"The undersigned Ombudsman, Prosecutor and OIC-Director, EPIB, Office of the
Ombudsman, hereby accuses former PRESIDENT OF THE REPUBLIC OF THE
PHILIPPINES, Joseph Ejercito Estrada, a.k.a. 'ASIONG SALONGA' and a.k.a.
'JOSE VELARDE,' together with Jose 'Jinggoy' Estrada, Charlie 'Atong' Ang, Edward
Serapio, Yolanda T. Ricaforte, Alma Alfaro, JOHN DOE a.k.a. Eleuterio
Tan OR Eleuterio Ramos Tan or Mr. Uy, Jane Doe a.k.a. Delia Rajas, and
John DOES & Jane Does, of the crime of Plunder, defined and penalized under R.A.
No. 7080, as amended by Sec. 12 of R.A. No. 7659, committed as follows:
That during the period from June, 1998 to January 2001, in the Philippines, and within
the jurisdiction of this Honorable Court, accused Joseph Ejercito Estrada, THEN A
PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES, by
himself AND/OR in CONNIVANCE/CONSPIRACY with his co-accused, WHO
ARE MEMBERS OF HIS FAMILY, RELATIVES BY AFFINITY OR
CONSANGUINITY, BUSINESS ASSOCIATES, SUBORDINATES AND/OR
OTHER PERSONS, BY TAKING UNDUE ADVANTAGE OF HIS OFFICIAL
POSITION, AUTHORITY, RELATIONSHIP, CONNECTION, OR
INFLUENCE, did then and there willfully, unlawfully and criminally amass,
accumulate and acquire BY HIMSELF, DIRECTLY OR INDIRECTLY, ill-gotten
wealth in the aggregate amount or TOTAL VALUE of FOUR BILLION NINETY
SEVEN MILLION EIGHT HUNDRED FOUR THOUSAND ONE HUNDRED
SEVENTY THREE PESOS AND SEVENTEEN
CENTAVOS (P4,097,804,173.17), more or less, THEREBY UNJUSTLY
ENRICHING HIMSELF OR THEMSELVES AT THE EXPENSE AND TO
THE DAMAGE OF THE FILIPINO PEOPLE AND THE REPUBLIC OF THE
PHILIPPINES, through ANY OR A combination OR A series of overt OR criminal
acts, OR SIMILAR SCHEMES OR MEANS, described as follows:
(a) by receiving OR collecting, directly or indirectly, on SEVERAL INSTANCES,
MONEY IN THE AGGREGATE AMOUNT OF FIVE HUNDRED FORTY-
FIVE MILLION PESOS (P545,000,000.00), MORE OR LESS, FROM
ILLEGAL GAMBLING IN THE FORM OF GIFT, SHARE, PERCENTAGE,
KICKBACK OR ANY FORM OF PECUNIARY BENEFIT, BY HIMSELF
AND/OR in connection with co-accused CHARLIE 'ATONG' ANG, Jose 'Jinggoy'
Estrada, Yolanda T. Ricaforte, Edward Serapio, AND JOHN DOES AND JANE
DOES, in consideration OF TOLERATION OR PROTECTION OF ILLEGAL
GAMBLING;
(b) by DIVERTING, RECEIVING, misappropriating,
converting OR misusing DIRECTLY OR INDIRECTLY, for HIS OR THEIR
PERSONAL gain and benefit, public funds in the amount of ONE HUNDRED
THIRTY MILLION PESOS (P130,000,000.00), more or less, representing a portion
of the TWO HUNDRED MILLION PESOS (P200,000,000.00) tobacco excise tax
share allocated for the province of Ilocos Sur under R.A. No. 7171, by himself
and/or in connivance with co-accused Charlie 'Atong' Ang, Alma Alfaro, JOHN
DOE a.k.a. Eleuterio Ramos Tan or Mr. Uy, Jane Doe a.k.a. Delia Rajas, AND
OTHER JOHN DOES & JANE DOES; (italic supplied).
(c) by directing, ordering and compelling, FOR HIS PERSONAL GAIN AND
BENEFIT, the Government Service Insurance System (GSIS) TO PURCHASE
351,878,000 SHARES OF STOCKS, MORE OR LESS, and the Social Security
System (SSS), 329,855,000 SHARES OF STOCK, MORE OR LESS, OF THE
BELLE CORPORATION IN THE AMOUNT OF MORE OR LESS ONE
BILLION ONE HUNDRED TWO MILLION NINE HUNDRED SIXTY FIVE
THOUSAND SIX HUNDRED SEVEN PESOS AND FIFTY CENTAVOS
(P1,102,965,607.50) AND MORE OR LESS SEVEN HUNDRED FORTY FOUR
MILLION SIX HUNDRED TWELVE THOUSAND AND FOUR HUNDRED
FIFTY PESOS (P744,612,450.00), RESPECTIVELY, OR A TOTAL OF MORE
OR LESS ONE BILLION EIGHT HUNDRED FORTY SEVEN MILLION
FIVE HUNDRED SEVENTY EIGHT THOUSAND FIFTY SEVEN PESOS
AND FIFTY CENTAVOS (P1,847,578,057.50); AND BY COLLECTING OR
RECEIVING, DIRECTLY OR INDIRECTLY, BY HIMSELF AND/OR IN
CONNIVANCE WITH JOHN DOES AND JANE DOES, COMMISSIONS OR
PERCENTAGES BY REASON OF SAID PURCHASES OF SHARES OF
STOCK IN THE AMOUNT OF ONE HUNDRED EIGHTY NINE MILLION
SEVEN HUNDRED THOUSAND PESOS (P189,700,000.00) MORE OR LESS,
FROM THE BELLE CORPORATION WHICH BECAME PART OF THE
DEPOSIT IN THE EQUITABLE-PCI BANK UNDER THE ACCOUNT
NAME 'JOSE VELARDE;'
(d) by unjustly enriching himself FROM COMMISSIONS, GIFTS, SHARES,
PERCENTAGES, KICKBACKS, OR ANY FORM OF PECUNIARY
BENEFITS, IN CONNIVANCE WITH JOHN DOES AND JANE DOES, in the
amount of MORE OR LESS THREE BILLION TWO HUNDRED THIRTY THREE
MILLION ONE HUNDRED FOUR THOUSAND ONE HUNDRED SEVENTY
THREE PESOS AND SEVENTEEN CENTAVOS (P3,233,104,173.17) AND
DEPOSITING THE SAME UNDER HIS ACCOUNT NAME 'JOSE
VELARDE' AT THE EQUITABLE-PCI BANK."
We discern nothing in the foregoing that is vague or ambiguous - as there is obviously none
- that will confuse petitioner in his defense. Although subject to proof, these factual assertions
clearly show that the elements of the crime are easily understood and provide adequate contrast
between the innocent and the prohibited acts. Upon such unequivocal assertions, petitioner is
completely informed of the accusations against him as to enable him to prepare for an intelligent
defense.
Petitioner, however, bewails the failure of the law to provide for the statutory definition of
the terms "combination" and "series" in the key phrase "a combination or series of overt or
criminal acts" found in Sec. 1, par. (d), and Sec. 2, and the word "pattern" in Sec.
4. These omissions, according to petitioner, render the Plunder Law unconstitutional for being
impermissibly vague and overbroad and deny him the right to be informed of the nature and
cause of the accusation against him, hence, violative of his fundamental right to due process.
The rationalization seems to us to be pure sophistry. A statute is not rendered uncertain and
void merely because general terms are used therein, or because of the employment of terms
without defining them; much less do we have to define every word we use. Besides, there is no
[6]

positive constitutional or statutory command requiring the legislature to define each and every
word in an enactment. Congress is not restricted in the form of expression of its will, and its
inability to so define the words employed in a statute will not necessarily result in the vagueness
or ambiguity of the law so long as the legislative will is clear, or at least, can be gathered from
the whole act, which is distinctly expressed in the Plunder Law.
Moreover, it is a well-settled principle of legal hermeneutics that words of a statute will be
interpreted in their natural, plain and ordinary acceptation and signification, unless it is evident
[7]
 that the legislature intended a technical or special legal meaning to those words. The intention
[8]

of the lawmakers - who are, ordinarily, untrained philologists and lexicographers - to

use statutory phraseology in such a manner is always presumed. Thus, Webster's New Collegiate
Dictionary contains the following commonly accepted definition of the words
"combination" and "series:"
Combination - the result or product of combining; the act or process of
combining. To combine is to bring into such close relationship as to obscure
individual characters.
Series - a number of things or events of the same class coming one after another in
spatial and temporal succession.
That Congress intended the words "combination" and "series" to be understood in their
popular meanings is pristinely evident from the legislative deliberations on the bill which
eventually became RA 7080 or the Plunder Law:
DELIBERATIONS OF THE BICAMERAL COMMITTEE ON JUSTICE, 7 May
1991
REP. ISIDRO: I am just intrigued again by our definition of plunder. We say
THROUGH A COMBINATION OR SERIES OF OVERT OR CRIMINAL ACTS AS
MENTIONED IN SECTION ONE HEREOF.Now when we say combination, we
actually mean to say, if there are two or more means, we mean to say that number one
and two or number one and something else are included, how about a series of the
same act? For example, through misappropriation, conversion, misuse, will these be
included also?
REP. GARCIA: Yeah, because we say a series.
REP. ISIDRO: Series.
REP. GARCIA: Yeah, we include series.
REP. ISIDRO: But we say we begin with a combination.
REP. GARCIA: Yes.
REP. ISIDRO: When we say combination, it seems that -
REP. GARCIA: Two.
REP. ISIDRO: Not only two but we seem to mean that two of the enumerated means not twice of one
enumeration.
REP. GARCIA: No, no, not twice.
REP. ISIDRO: Not twice?
REP. GARCIA: Yes. Combination is not twice - but combination, two acts.
REP. ISIDRO: So in other words, thats it. When we say combination, we mean, two different acts. It cannot
be a repetition of the same act.
REP. GARCIA: That be referred to series, yeah.
REP. ISIDRO: No, no. Supposing one act is repeated, so there are two.
REP. GARCIA: A series.
REP. ISIDRO: Thats not series. Its a combination. Because when we say combination or series, we seem to
say that two or more, di ba?
REP. GARCIA: Yes, this distinguishes it really from ordinary crimes. That is why, I said, that is a very
good suggestion because if it is only one act, it may fall under ordinary crime but we have here a
combination or series of overt or criminal acts. So x x x x
REP. GARCIA: Series. One after the other eh di....
SEN. TANADA: So that would fall under the term series?
REP. GARCIA: Series, oo.
REP. ISIDRO: Now, if it is a combination, ano, two misappropriations....
REP. GARCIA: Its not... Two misappropriations will not be combination. Series.
REP. ISIDRO: So, it is not a combination?
REP. GARCIA: Yes.
REP. ISIDRO: When you say combination, two different?
REP. GARCIA: Yes.
SEN. TANADA: Two different.
REP. ISIDRO: Two different acts.
REP. GARCIA: For example, ha...
REP. ISIDRO: Now a series, meaning, repetition...
DELIBERATIONS ON SENATE BILL NO. 733, 6 June 1989
SENATOR MACEDA: In line with our interpellations that sometimes one or maybe even two acts may
already result in such a big amount, on line 25, would the Sponsor consider deleting the words a
series of overt or, to read, therefore: or conspiracy COMMITTED by criminal acts such as. Remove
the idea of necessitating a series. Anyway, the criminal acts are in the plural.
SENATOR TANADA: That would mean a combination of two or more of the acts mentioned in this.
THE PRESIDENT: Probably two or more would be....
SENATOR MACEDA: Yes, because a series implies several or many; two or more.
SENATOR TANADA: Accepted, Mr. President x x x x
THE PRESIDENT: If there is only one, then he has to be prosecuted under the particular crime. But when
we say acts of plunder there should be, at least, two or more.
SENATOR ROMULO: In other words, that is already covered by existing laws, Mr. President.
Thus when the Plunder Law speaks of "combination," it is referring to at least two (2) acts
falling under different categories of enumeration provided in Sec. 1, par. (d), e.g., raids on the
public treasury in Sec. 1, par. (d), subpar. (1), and fraudulent conveyance of assets belonging to
the National Government under Sec. 1, par. (d), subpar. (3).
 On the other hand, to constitute a series" there must be two (2) or more overt or criminal
acts falling under the same category of enumeration found in Sec. 1, par. (d), say,
misappropriation, malversation and raids on the public treasury, all of which fall under Sec. 1,
par. (d), subpar. (1). Verily, had the legislature intended a technical or distinctive meaning for
"combination" and "series," it would have taken greater pains in specifically providing for it in
the law.
As for "pattern," we agree with the observations of the Sandiganbayan that this term is
[9]

sufficiently defined in Sec. 4, in relation to Sec. 1, par. (d), and Sec. 2 -

x x x x under Sec. 1 (d) of the law, a 'pattern' consists of at least a combination or
series of overt or criminal acts enumerated in subsections (1) to (6) of Sec. 1
(d). Secondly, pursuant to Sec. 2 of the law, the pattern of overt or criminal acts is
directed towards a common purpose or goal which is to enable the public officer to
amass, accumulate or acquire ill-gotten wealth. And thirdly, there must either be an
'overall unlawful scheme' or 'conspiracy' to achieve said common goal. As commonly
understood, the term 'overall unlawful scheme' indicates a 'general plan of action or
method' which the principal accused and public officer and others conniving with him
follow to achieve the aforesaid common goal. In the alternative, if there is no such
overall scheme or where the schemes or methods used by multiple accused vary, the
overt or criminal acts must form part of a conspiracy to attain a common goal.
Hence, it cannot plausibly be contended that the law does not give a fair warning and
sufficient notice of what it seeks to penalize. Under the circumstances, petitioner's reliance on the
"void-for-vagueness" doctrine is manifestly misplaced. The doctrine has been formulated in
various ways, but is most commonly stated to the effect that a statute establishing a criminal
offense must define the offense with sufficient definiteness that persons of ordinary intelligence
can understand what conduct is prohibited by the statute. It can only be invoked against that
specie of legislation that is utterly vague on its face, i.e., that which cannot be clarified either by
a saving clause or by construction.
A statute or act may be said to be vague when it lacks comprehensible standards that men of
common intelligence must necessarily guess at its meaning and differ in its application. In
such instance, the statute is repugnant to the Constitution in two (2) respects - it violates due
process for failure to accord persons, especially the parties targeted by it, fair notice of what
conduct to avoid; and, it leaves law enforcers unbridled discretion in carrying out its provisions
and becomes an arbitrary flexing of the Government muscle. But the doctrine does not apply as
[10]

against legislations that are merely couched in imprecise language but which nonetheless specify
a standard though defectively phrased; or to those that are apparently ambiguous yet fairly
applicable to certain types of activities. The first may be "saved" by proper construction, while
no challenge may be mounted as against the second whenever directed against such
activities. With more reason, the doctrine cannot be invoked where the assailed statute is clear
[11]

and free from ambiguity, as in this case.

The test in determining whether a criminal statute is void for uncertainty is whether the
language conveys a sufficiently definite warning as to the proscribed conduct when measured by
common understanding and practice. It must be stressed, however, that the "vagueness"
[12]
doctrine merely requires a reasonable degree of certainty for the statute to be upheld - not
absolute precision or mathematical exactitude, as petitioner seems to suggest. Flexibility, rather
than meticulous specificity, is permissible as long as the metes and bounds of the statute are
clearly delineated. An act will not be held invalid merely because it might have been more
explicit in its wordings or detailed in its provisions, especially where, because of the nature of
the act, it would be impossible to provide all the details in advance as in all other statutes.
Moreover, we agree with, hence we adopt, the observations of Mr. Justice Vicente V.
Mendoza during the deliberations of the Court that the allegations that the Plunder Law is vague
and overbroad do not justify a facial review of its validity -
The void-for-vagueness doctrine states that "a statute which either forbids or requires
the doing of an act in terms so vague that men of common intelligence must
necessarily guess at its meaning and differ as to its application, violates the first
essential of due process of law." The overbreadth doctrine, on the other hand, decrees that
[13]

"a governmental purpose may not be achieved by means which sweep unnecessarily broadly and
thereby invade the area of protected freedoms."[14]
A facial challenge is allowed to be made to a vague statute and to one which is
overbroad because of possible "chilling effect" upon protected speech. The theory is
that "[w]hen statutes regulate or proscribe speech and no readily apparent construction
suggests itself as a vehicle for rehabilitating the statutes in a single prosecution, the
transcendent value to all society of constitutionally protected expression is deemed to
justify allowing attacks on overly broad statutes with no requirement that the person
making the attack demonstrate that his own conduct could not be regulated by a
statute drawn with narrow specificity." The possible harm to society in permitting
[15]

some unprotected speech to go unpunished is outweighed by the possibility that the

protected speech of others may be deterred and perceived grievances left to fester
because of possible inhibitory effects of overly broad statutes.
This rationale does not apply to penal statutes. Criminal statutes have general in
terrorem effect resulting from their very existence, and, if facial challenge is allowed
for this reason alone, the State may well be prevented from enacting laws against
socially harmful conduct. In the area of criminal law, the law cannot take chances as
in the area of free speech.
The overbreadth and vagueness doctrines then have special application only to free
speech cases. They are inapt for testing the validity of penal statutes. As the U.S.
Supreme Court put it, in an opinion by Chief Justice Rehnquist, "we have not
recognized an 'overbreadth' doctrine outside the limited context of the First
Amendment." In Broadrick v. Oklahoma, the Court ruled that "claims of facial
[16] [17]

overbreadth have been entertained in cases involving statutes which, by their terms,
seek to regulate only spoken words" and, again, that "overbreadth claims, if
entertained at all, have been curtailed when invoked against ordinary criminal laws
that are sought to be applied to protected conduct." For this reason, it has been held
that "a facial challenge to a legislative act is the most difficult challenge to mount
successfully, since the challenger must establish that no set of circumstances exists
under which the Act would be valid." As for the vagueness doctrine, it is said that a
[18]

litigant may challenge a statute on its face only if it is vague in all its possible
applications. "A plaintiff who engages in some conduct that is clearly proscribed
cannot complain of the vagueness of the law as applied to the conduct of others." [19]

In sum, the doctrines of strict scrutiny, overbreadth, and vagueness are analytical tools
developed for testing "on their faces" statutes in free speech cases or, as they are
called in American law, First Amendment cases. They cannot be made to do service
when what is involved is a criminal statute. With respect to such statute, the
established rule is that "one to whom application of a statute is constitutional will not
be heard to attack the statute on the ground that impliedly it might also be taken as
applying to other persons or other situations in which its application might be
unconstitutional." As has been pointed out, "vagueness challenges in the First
[20]

Amendment context, like overbreadth challenges typically produce facial invalidation,

while statutes found vague as a matter of due process typically are invalidated [only]
'as applied' to a particular defendant." Consequently, there is no basis for petitioner's
[21]

claim that this Court review the Anti-Plunder Law on its face and in its entirety.
Indeed, "on its face" invalidation of statutes results in striking them down entirely on
the ground that they might be applied to parties not before the Court whose activities
are constitutionally protected. It constitutes a departure from the case and
[22]

controversy requirement of the Constitution and permits decisions to be made without

concrete factual settings and in sterile abstract contexts. But, as the U.S. Supreme
[23]

Court pointed out in Younger v. Harris [24]

[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and requiring
correction of these deficiencies before the statute is put into effect, is rarely if ever an
appropriate task for the judiciary.The combination of the relative remoteness of the
controversy, the impact on the legislative process of the relief sought, and above all
the speculative and amorphous nature of the required line-by-line analysis of detailed
statutes, . . . ordinarily results in a kind of case that is wholly unsatisfactory for
deciding constitutional questions, whichever way they might be decided.
For these reasons, "on its face" invalidation of statutes has been described as
"manifestly strong medicine," to be employed "sparingly and only as a last
resort," and is generally disfavored. In determining the constitutionality of a
[25] [26]

statute, therefore, its provisions which are alleged to have been violated in a case must
be examined in the light of the conduct with which the defendant is charged. [27]

In light of the foregoing disquisition, it is evident that the purported ambiguity of the
Plunder Law, so tenaciously claimed and argued at length by petitioner, is more imagined than
real. Ambiguity, where none exists, cannot be created by dissecting parts and words in the statute
to furnish support to critics who cavil at the want of scientific precision in the law. Every
provision of the law should be construed in relation and with reference to every other part. To be
sure, it will take more than nitpicking to overturn the well-entrenched presumption of
constitutionality and validity of the Plunder Law. A fortiori, petitioner cannot feign ignorance of
what the Plunder Law is all about. Being one of the Senators who voted for its passage,
petitioner must be aware that the law was extensively deliberated upon by the Senate and its
appropriate committees by reason of which he even registered his affirmative vote with full
knowledge of its legal implications and sound constitutional anchorage.
The parallel case of Gallego v. Sandiganbayan must be mentioned if only to illustrate and
[28]

emphasize the point that courts are loathed to declare a statute void for uncertainty unless the law
itself is so imperfect and deficient in its details, and is susceptible of no reasonable construction
that will support and give it effect. In that case, petitioners Gallego and Agoncillo challenged the
constitutionality of Sec. 3, par. (e), of The Anti-Graft and Corrupt Practices Act for being
vague. Petitioners posited, among others, that the term "unwarranted" is highly imprecise and
elastic with no common law meaning or settled definition by prior judicial or administrative
precedents; that, for its vagueness, Sec. 3, par. (e), violates due process in that it does not give
fair warning or sufficient notice of what it seeks to penalize.Petitioners further argued that the
Information charged them with three (3) distinct offenses, to wit: (a) giving of "unwarranted"
benefits through manifest partiality; (b) giving of "unwarranted" benefits through evident bad
faith; and, (c) giving of "unwarranted" benefits through gross inexcusable negligence while in
the discharge of their official function and that their right to be informed of the nature and cause
of the accusation against them was violated because they were left to guess which of the three (3)
offenses, if not all, they were being charged and prosecuted.
In dismissing the petition, this Court held that Sec. 3, par. (e), of The Anti-Graft and Corrupt
Practices Act does not suffer from the constitutional defect of vagueness. The phrases "manifest
partiality," "evident bad faith," and "gross and inexcusable negligence" merely describe the
different modes by which the offense penalized in Sec. 3, par. (e), of the statute may be
committed, and the use of all these phrases in the same Information does not mean that the
indictment charges three (3) distinct offenses.
The word 'unwarranted' is not uncertain. It seems lacking adequate or official support;
unjustified; unauthorized (Webster, Third International Dictionary, p. 2514); or
without justification or adequate reason (Philadelphia Newspapers, Inc. v. US Dept. of
Justice, C.D. Pa., 405 F. Supp. 8, 12, cited in Words and Phrases, Permanent Edition,
Vol. 43-A 1978, Cumulative Annual Pocket Part, p. 19).
The assailed provisions of the Anti-Graft and Corrupt Practices Act consider a corrupt
practice and make unlawful the act of the public officer in:
x x x or giving any private party any unwarranted benefits, advantage or preference in
the discharge of his official, administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence, x x x (Section 3 [e], Rep.
Act 3019, as amended).
It is not at all difficult to comprehend that what the aforequoted penal provisions
penalize is the act of a public officer, in the discharge of his official, administrative or
judicial functions, in giving any private party benefits, advantage or preference which
 is unjustified, unauthorized or without justification or adequate reason, through
manifest partiality, evident bad faith or gross inexcusable negligence.
In other words, this Court found that there was nothing vague or ambiguous in the use of the
term "unwarranted" in Sec. 3, par. (e), of The Anti-Graft and Corrupt Practices Act, which was
understood in its primary and general acceptation. Consequently, in that case, petitioners'
objection thereto was held inadequate to declare the section unconstitutional.
On the second issue, petitioner advances the highly stretched theory that Sec. 4 of the
Plunder Law circumvents the immutable obligation of the prosecution to prove beyond
reasonable doubt the predicate acts constituting the crime of plunder when it requires only proof
of a pattern of overt or criminal acts showing unlawful scheme or conspiracy -
SEC. 4. Rule of Evidence. - For purposes of establishing the crime of plunder, it shall
not be necessary to prove each and every criminal act done by the accused in
furtherance of the scheme or conspiracy to amass, accumulate or acquire ill-gotten
wealth, it being sufficient to establish beyond reasonable doubt a pattern of overt or
criminal acts indicative of the overall unlawful scheme or conspiracy.
The running fault in this reasoning is obvious even to the simplistic mind. In a criminal
prosecution for plunder, as in all other crimes, the accused always has in his favor the
presumption of innocence which is guaranteed by the Bill of Rights, and unless the State
succeeds in demonstrating by proof beyond reasonable doubt that culpability lies, the accused is
entitled to an acquittal. The use of the"reasonable doubt" standard is indispensable to command
[29]

the respect and confidence of the community in the application of criminal law. It is critical that
the moral force of criminal law be not diluted by a standard of proof that leaves people in doubt
whether innocent men are being condemned. It is also important in our free society that every
individual going about his ordinary affairs has confidence that his government cannot adjudge
him guilty of a criminal offense without convincing a proper factfinder of his guilt with utmost
certainty. This "reasonable doubt" standard has acquired such exalted stature in the realm of
constitutional law as it gives life to the Due Process Clause which protects the accused against
conviction except upon proof beyond reasonable doubt of every fact necessary to constitute the
crime with which he is charged. The following exchanges between Rep. Rodolfo Albano and
[30]

Rep. Pablo Garcia on this score during the deliberations in the floor of the House of
Representatives are elucidating -
DELIBERATIONS OF THE HOUSE OF REPRESENTATIVES ON RA 7080, 9
October 1990
MR. ALBANO: Now, Mr. Speaker, it is also elementary in our criminal law that what is alleged in the
information must be proven beyond reasonable doubt. If we will prove only one act and find him guilty
of the other acts enumerated in the information, does that not work against the right of the accused
especially so if the amount committed, say, by falsification is less than P100 million, but the totality of
the crime committed is P100 million since there is malversation, bribery, falsification of public
document, coercion, theft?
MR. GARCIA: Mr. Speaker, not everything alleged in the information needs to be proved beyond
reasonable doubt. What is required to be proved beyond reasonable doubt is every element of the
crime charged. For example, Mr. Speaker, there is an enumeration of the things taken by the robber in
the information three pairs of pants, pieces of jewelry. These need not be proved beyond reasonable
 doubt, but these will not prevent the conviction of a crime for which he was charged just because, say,
instead of 3 pairs of diamond earrings the prosecution proved two. Now, what is required to be proved
beyond reasonable doubt is the element of the offense.
MR. ALBANO: I am aware of that, Mr. Speaker, but considering that in the crime of plunder the totality of
the amount is very important, I feel that such a series of overt criminal acts has to be taken singly. For
instance, in the act of bribery, he was able to accumulate only P50,000 and in the crime of extortion,
he was only able to accumulate P1 million. Now, when we add the totality of the other acts as required
under this bill through the interpretation on the rule of evidence, it is just one single act, so how can
we now convict him?
MR. GARCIA: With due respect, Mr. Speaker, for purposes of proving an essential element of the crime,
there is a need to prove that element beyond reasonable doubt. For example, one essential element of
the crime is that the amount involved is P100 million. Now, in a series of defalcations and other acts
of corruption in the enumeration the total amount would be P110 or P120 million, but there are
certain acts that could not be proved, so, we will sum up the amounts involved in those transactions
which were proved. Now, if the amount involved in these transactions, proved beyond reasonable
doubt, is P100 million, then there is a crime of plunder(underscoring supplied).
It is thus plain from the foregoing that the legislature did not in any manner refashion the
standard quantum of proof in the crime of plunder. The burden still remains with the prosecution
to prove beyond any iota of doubt every fact or element necessary to constitute the crime.
The thesis that Sec. 4 does away with proof of each and every component of the crime
suffers from a dismal misconception of the import of that provision. What the prosecution needs
to prove beyond reasonable doubt is only a number of acts sufficient to form a combination or
series which would constitute a pattern and involving an amount of at
least P50,000,000.00. There is no need to prove each and every other act alleged in the
Information to have been committed by the accused in furtherance of the overall unlawful
scheme or conspiracy to amass, accumulate or acquire ill-gotten wealth. To illustrate, supposing
that the accused is charged in an Information for plunder with having committed fifty (50) raids
on the public treasury. The prosecution need not prove all these fifty (50) raids, it being
sufficient to prove by pattern at least two (2) of the raids beyond reasonable doubt provided only
that they amounted to at least P50,000,000.00. [31]

A reading of Sec. 2 in conjunction with Sec. 4, brings us to the logical conclusion

that "pattern of overt or criminal acts indicative of the overall unlawful scheme or conspiracy"
inheres in the very acts of accumulating, acquiring or amassing hidden wealth. Stated otherwise,
such pattern arises where the prosecution is able to prove beyond reasonable doubt the predicate
acts as defined in Sec. 1, par. (d). Pattern is merely a by-product of the proof of the predicate
acts. This conclusion is consistent with reason and common sense. There would be no other
explanation for a combination or series of
overt or criminal acts to stash P50,000,000.00 or more, than "a scheme or conspiracy to amass,
accumulate or acquire ill gotten wealth." The prosecution is therefore not required to make a
deliberate and conscious effort to prove pattern as it necessarily follows with the establishment
of a series or combination of the predicate acts.
Relative to petitioner's contentions on the purported defect of Sec. 4 is his submission that
"pattern" is "a very important element of the crime of plunder;" and that Sec. 4 is "two pronged,
 (as) it contains a rule of evidence and a substantive element of the crime," such that without it the
accused cannot be convicted of plunder -
JUSTICE BELLOSILLO: In other words, cannot an accused be convicted under the Plunder Law without
applying Section 4 on the Rule of Evidence if there is proof beyond reasonable doubt of the
commission of the acts complained of?
ATTY. AGABIN: In that case he can be convicted of individual crimes enumerated in the Revised Penal
Code, but not plunder.
JUSTICE BELLOSILLO: In other words, if all the elements of the crime are proved beyond reasonable
doubt without applying Section 4, can you not have a conviction under the Plunder Law?
ATTY. AGABIN: Not a conviction for plunder, your Honor.
JUSTICE BELLOSILLO: Can you not disregard the application of Sec. 4 in convicting an accused charged
for violation of the Plunder Law?
ATTY. AGABIN: Well, your Honor, in the first place Section 4 lays down a substantive element of the law x
xxx
JUSTICE BELLOSILLO: What I said is - do we have to avail of Section 4 when there is proof beyond
reasonable doubt on the acts charged constituting plunder?
ATTY. AGABIN: Yes, your Honor, because Section 4 is two pronged, it contains a rule of evidence and it
contains a substantive element of the crime of plunder. So, there is no way by which we can avoid
Section 4.
JUSTICE BELLOSILLO: But there is proof beyond reasonable doubt insofar as the predicate crimes
charged are concerned that you do not have to go that far by applying Section 4?
ATTY. AGABIN: Your Honor, our thinking is that Section 4 contains a very important element of the crime
of plunder and that cannot be avoided by the prosecution. [32]

We do not subscribe to petitioner's stand. Primarily, all the essential elements of plunder can
be culled and understood from its definition in Sec. 2, in relation to Sec. 1, par. (d), and "pattern"
is not one of them. Moreover, the epigraph and opening clause of Sec. 4 is clear and
unequivocal:
SEC. 4. Rule of Evidence. - For purposes of establishing the crime of plunder
xxxx
It purports to do no more than prescribe a rule of procedure for the prosecution of a criminal
case for plunder. Being a purely procedural measure, Sec. 4 does not define or establish any
substantive right in favor of the accused but only operates in furtherance of a remedy. It is only a
means to an end, an aid to substantive law. Indubitably, even without invoking Sec. 4, a
conviction for plunder may be had, for what is crucial for the prosecution is to present sufficient
evidence to engender that moral certitude exacted by the fundamental law to prove the guilt of
the accused beyond reasonable doubt. Thus, even granting for the sake of argument that Sec. 4 is
flawed and vitiated for the reasons advanced by petitioner, it may simply be severed from the
rest of the provisions without necessarily resulting in the demise of the law; after all, the existing
rules on evidence can supplant Sec. 4 more than enough. Besides, Sec. 7 of RA 7080 provides
for a separability clause -
Sec. 7. Separability of Provisions. - If any provisions of this Act or the application
thereof to any person or circumstance
is held invalid, the remaining provisions of this Act and the application of such
provisions to other persons or circumstances shall not be affected thereby.
Implicit in the foregoing section is that to avoid the whole act from being declared invalid as
a result of the nullity of some of its provisions, assuming that to be the case although it is not
really so, all the provisions thereof should accordingly be treated independently of each other,
especially if by doing so, the objectives of the statute can best be achieved.
As regards the third issue, again we agree with Justice Mendoza that plunder is a malum in
se which requires proof of criminal intent. Thus, he says, in his Concurring Opinion -
x x x Precisely because the constitutive crimes are mala in se the element of mens
rea must be proven in a prosecution for plunder. It is noteworthy that the amended
information alleges that the crime of plunder was committed "willfully, unlawfully
and criminally." It thus alleges guilty knowledge on the part of petitioner.
In support of his contention that the statute eliminates the requirement of mens
rea and that is the reason he claims the statute is void, petitioner cites the following
remarks of Senator Taada made during the deliberation on S.B. No. 733:
SENATOR TAADA . . . And the evidence that will be required to convict him would
not be evidence for each and every individual criminal act but only evidence sufficient
to establish the conspiracy or scheme to commit this crime of plunder. [33]

However, Senator Taada was discussing 4 as shown by the succeeding portion of the
transcript quoted by petitioner:
SENATOR ROMULO: And, Mr. President, the Gentleman feels that it is contained in
Section 4, Rule of Evidence, which, in the Gentleman's view, would provide for a
speedier and faster process of attending to this kind of cases?
SENATOR TAADA: Yes, Mr. President . . . [34]

Senator Taada was only saying that where the charge is conspiracy to commit plunder,
the prosecution need not prove each and every criminal act done to further the scheme
or conspiracy, it being enough if it proves beyond reasonable doubt a pattern of overt
or ciminal acts indicative of the overall unlawful scheme or conspiracy. As far as the
acts constituting the pattern are concerned, however, the elements of the crime must
be proved and the requisite mens rea must be shown.
Indeed, 2 provides that -
Any person who participated with the said public officer in the commission of an
offense contributing to the crime of plunder shall likewise be punished for such
offense. In the imposition of penalties, the degree of participation and the attendance
of mitigating and extenuating circumstances, as provided by the Revised Penal Code,
shall be considered by the court.
The application of mitigating and extenuating circumstances in the Revised Penal
Code to prosecutions under the Anti-Plunder Law indicates quite clearly that mens
rea is an element of plunder since the degree of responsibility of the offender is
determined by his criminal intent. It is true that 2 refers to "any person who
participates with the said public officer in the commission of an offense contributing
to the crime of plunder." There is no reason to believe, however, that it does not apply
as well to the public officer as principal in the crime. As Justice Holmes said: "We
agree to all the generalities about not supplying criminal laws with what they omit,
but there is no canon against using common sense in construing laws as saying what
they obviously mean." [35]

Finally, any doubt as to whether the crime of plunder is a malum in se must be

deemed to have been resolved in the affirmative by the decision of Congress in 1993
to include it among the heinous crimes punishable by reclusion perpetua to
death. Other heinous crimes are punished with death as a straight penalty in R.A. No.
7659. Referring to these groups of heinous crimes, this Court held in People v.
Echegaray: [36]

The evil of a crime may take various forms. There are crimes that are, by their very
nature, despicable, either because life was callously taken or the victim is treated like
an animal and utterly dehumanized as to completely disrupt the normal course of his
or her growth as a human being . . . . Seen in this light, the capital crimes of
kidnapping and serious illegal detention for ransom resulting in the death of the victim
or the victim is raped, tortured, or subjected to dehumanizing acts; destructive arson
resulting in death; and drug offenses involving minors or resulting in the death of the
victim in the case of other crimes; as well as murder, rape,
parricide, infanticide, kidnapping and serious illegal detention, where the victim is
detained for more than three days or serious physical injuries were inflicted on the
victim or threats to kill him were made or the victim is a minor, robbery with
homicide, rape or intentional mutilation, destructive arson, and carnapping where the
owner, driver or occupant of the carnapped vehicle is killed or raped, which are
penalized by reclusion perpetua to death, are clearly heinous by their very nature.
There are crimes, however, in which the abomination lies in the significance and
implications of the subject criminal acts in the scheme of the larger socio-political and
economic context in which the state finds itself to be struggling to develop and
provide for its poor and underprivileged masses. Reeling from decades of corrupt
tyrannical rule that bankrupted the government and impoverished the population, the
Philippine Government must muster the political will to dismantle the culture of
corruption, dishonesty, greed and syndicated criminality that so deeply entrenched
itself in the structures of society and the psyche of the populace. [With the
government] terribly lacking the money to provide even the most basic services to its
people, any form of misappropriation or misapplication of government funds
translates to an actual threat to the very existence of government, and in turn, the very
survival of the people it governs over. Viewed in this context, no less heinous are the
effects and repercussions of crimes like qualified bribery, destructive arson resulting
in death, and drug offenses involving government officials, employees or officers, that
their perpetrators must not be allowed to cause further destruction and damage to
society.
The legislative declaration in R.A. No. 7659 that plunder is a heinous offense implies
that it is a malum in se. For when the acts punished are inherently immoral or
inherently wrong, they are mala in se and it does not matter that such acts are
[37]

punished in a special law, especially since in the case of plunder the predicate crimes
are mainly mala in se. Indeed, it would be absurd to treat prosecutions for plunder as
though they are mere prosecutions for violations of the Bouncing Check Law (B.P.
Blg. 22) or of an ordinance against jaywalking, without regard to the inherent
wrongness of the acts.
To clinch, petitioner likewise assails the validity of RA 7659, the amendatory law of RA
7080, on constitutional grounds. Suffice it to say however that it is now too late in the day for
him to resurrect thislong dead issue, the same having been eternally consigned by People v.
Echegaray to the archives of jurisprudential history. The declaration of this Court therein that
[38]

RA 7659 is constitutionally valid stands as a declaration of the State, and becomes, by necessary
effect, assimilated in the Constitution now as an integral part of it.
Our nation has been racked by scandals of corruption and obscene profligacy of officials in
high places which have shaken its very foundation. The anatomy of graft and corruption has
become more elaborate in the corridors of time as unscrupulous people relentlessly contrive
more and more ingenious ways to bilk the coffers of the government. Drastic and radical
measures are imperative to fight the increasingly sophisticated, extraordinarily methodical and
economically catastrophic looting of the national treasury. Such is the Plunder Law, especially
designed to disentangle those ghastly tissues of grand-scale corruption which, if left unchecked,
will spread like a malignant tumor and ultimately consume the moral and institutional fiber of
our nation. The Plunder Law, indeed, is a living testament to the will of the legislature to
ultimately eradicate this scourge and thus secure society against the avarice and other venalities
in public office.
These are times that try men's souls. In the checkered history of this nation, few issues of
national importance can equal the amount of interest and passion generated by petitioner's
ignominious fall from the highest office, and his eventual prosecution and trial under a virginal
statute. This continuing saga has driven a wedge of dissension among our people that may linger
for a long time. Only by responding to the clarion call for patriotism, to rise above factionalism
and prejudices, shall we emerge triumphant in the midst of ferment.
PREMISES CONSIDERED, this Court holds that RA 7080 otherwise known as the
Plunder Law, as amended by RA 7659, is CONSTITUTIONAL. Consequently, the petition to
declare the law unconstitutional is DISMISSED for lack of merit.
SO ORDERED.
 Crim Law 1 Consti Crim Pro Case Digest:
Estrada V. Sandiganbayan 2001
Estrada v. Sandiganbayan

G.R. No. 148560 November 19,2001

Lessons Applicable:

· Consti – Overbreadth doctrine, void-for-vagueness doctrine

· Crim Law 1- mala in se

· Crim pro – proof beyond reasonable doubt

Laws Applicable: Art. 3 RPC

FACTS:

 An information is filed against former President Joseph Ejercito Estrada a.k.a. 'Asiong
Salonga' and 'Jose Velarde,' together with Jose 'Jinggoy' Estrada, Charlie 'Atong' Ang,
Edward Serapio, Yolanda T. Ricaforte, Alma Alfaro, John Doe a.k.a. Eleuterio Tan or
Eleuterio Ramos Tan or Mr. Uy, Jane Doe a.k.a. Delia Rajas and John Does & Jane Does of
the crime of Plunder under RA 7080 (An Act Defining and Penalizing the Crime of Plunder)
 June, 1998 to January 2001: Estrada himself and/or in connivance/conspiracy with his co-
accused, who are members of his family, relatives by affinity or consanguinity, business
associates, subordinates and/or other persons, by taking undue advantage of his official
position, authority, relationship, connection, or influence, did then and there willfully,
unlawfully and criminally amass, accumulate and acquire by himself, directly or indirectly, ill-
gotten wealth of P4,097,804,173.17 thereby unjustly enriching himself or themselves at the
expense and to the damage of the Filipino people and the Republic of the Philippines,
through any or a combination or a series of overt or criminal acts, or similar schemes or
means
 Received P545,000,000.00 in the form of gift, share, percentage, kickback or any form of
pecuniary benefit, by himself and/or in connection with co-accused Charlie 'Atong' Ang, Jose
'Jinggoy' Estrada, Yolanda T. Ricaforte, Edward Serapio, and John Does and Jane Does, in
consideration of toleration or protection of illegal gambling
 Diverting, receiving, misappropriating, converting or misusing directly or indirectly, for his or
their personal gain and benefit, public funds of P130,000,000.00, more or less, representing
a portion of P200,000,000.00) tobacco excise tax share allocated for the
province of Ilocos Sur under R.A. No. 7171, by himself and/or in connivance with co-
accused Charlie 'Atong' Ang, Alma Alfaro, John Doe a.k.a. Eleuterio Ramos Tan or Mr. Uy,
Jane Doe a.k.a. Delia Rajas, and other John Does & Jane Does
  For His Personal Gain And Benefit, The Government Service Insurance System (GSIS) To
Purchase 351,878,000 Shares Of Stocks, More Or Less, And The Social Security System
(SSS), 329,855,000 Shares Of Stock, More Or Less, Of The Belle Corporation worth
P1,102,965,607.50 and P744,612,450.00 respectively and by collecting or receiving, directly
or indirectly, by himself and/or in connivance with John Does and Jane Does, commissions
or percentages by reason of said purchases which became part of the deposit in the
equitable-pci bank under the account name “Jose Velarde”
 by unjustly enriching himself from commissions, gifts, shares, percentages, kickbacks, or any
form of pecuniary benefits, in connivance with John Does and Jane Does,
P3,233,104,173.17 and depositing the same under his account name “Jose Velarde” at the
Equitable-Pci Bank
 Estrada questions the constitutionality of the Plunder Law since for him:
1. it suffers from the vice of vagueness

2. it dispenses with the "reasonable doubt" standard in criminal prosecutions

3. it abolishes the element of mens rea in crimes already punishable under The Revised Penal Code

· April 4, 2001: Office of the Ombudsman filed before the Sandiganbayan 8 separate Informations, docketed as:

1. Crim. Case No. 26558, for violation of RA 7080, as amended by RA 7659

2. Crim. Cases Nos. 26559 to 26562, inclusive, for violation of Secs. 3, par. (a), 3, par. (a), 3, par. (e) and 3, par. (e), of
RA 3019 (Anti-Graft and Corrupt Practices Act), respectively

3. Crim. Case No. 26563, for violation of Sec. 7, par. (d), of RA 6713 (The Code of Conduct and Ethical Standards
for Public Officials and Employees)

4. Crim. Case No. 26564, for Perjury (Art. 183 of The Revised Penal Code)

5. Crim. Case No. 26565, for Illegal Use Of An Alias (CA No. 142, as amended by RA 6085)

· April 11, 2001: Estrada filed an Omnibus Motion on the grounds of lack of preliminary investigation,
reconsideration/reinvestigation of offenses and opportunity to prove lack of probable cause. - Denied

· April 25, 2001: Sandiganbayan issued a Resolution in Crim. Case No. 26558 finding that a probable cause for the
offense of plunder exists to justify the issuance of warrants for the arrest of the accused

· June 14, 2001: Estrada moved to quash the Information in Crim. Case No. 26558 on the ground that the facts
alleged therein did NOT constitute an indictable offense since the law on which it was based was unconstitutional
for vagueness and that the Amended Information for Plunder charged more than 1 offense – Denied

· Estrada filed a petition for certiorari are:

1. The Plunder Law is unconstitutional for being vague

2. The Plunder Law requires less evidence for proving the predicate crimes of plunder and therefore violates the rights
of the accused to due process

3. Whether Plunder as defined in RA 7080 is a malum prohibitum, and if so, whether it is within the power of
Congress to so classify it

ISSUES:
1. W/N the Plunder Law is constitutional (consti1)

2. W/N the Plunder Law dispenses with the "reasonable doubt" standard in criminal prosecutions (crim pro)

3. W/N the Plunder Law is a malum prohibitum (crim law 1)

HELD: Petition is dismissed. Plunder Law is constitutional.

1. YES

· Miserably failed in the instant case to discharge his burden and overcome the presumption of constitutionality of
the Plunder Law

· Plunder Law contains ascertainable standards and well-defined parameters which would enable the accused to
determine the nature of his violation.

· Combination- at least two (2) acts falling under different categories of enumeration

· series - must be two (2) or more overt or criminal acts falling under the same category of enumeration

· pattern - at least a combination or series of overt or criminal acts enumerated in subsections (1) to (6) of Sec. 1 (d)

· Void-For-Vagueness Doctrine - a statute which either forbids or requires the doing of an act in terms so vague that
men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first
essential of due process of law

o The test in determining whether a criminal statute is void for uncertainty is whether the language conveys a
sufficiently definite warning as to the proscribed conduct when measured by common understanding and practice

o can only be invoked against that specie of legislation that is utterly vague on its face, i.e., that which cannot be
clarified either by a saving clause or by construction

o a statute or act may be said to be vague when it lacks comprehensible standards that men of common intelligence
must necessarily guess at its meaning and differ in its application.

o the statute is repugnant to the Constitution in 2 respects:

a. it violates due process for failure to accord persons, especially the parties targeted by it, fair notice of what conduct
to avoid

b. it leaves law enforcers unbridled discretion in carrying out its provisions and becomes an arbitrary flexing of the
Government muscle

o As for the vagueness doctrine, it is said that a litigant may challenge a statute on its face only if it is vague in all its
possible applications

· Overbreadth Doctrine - a governmental purpose may NOT be achieved by means which sweep unnecessarily
broadly and thereby invade the area of protected freedoms

o overbreadth claims, if entertained at all, have been curtailed when invoked against ordinary criminal laws that are
sought to be applied to protected conduct

· A facial challenge is allowed to be made to a vague statute and to one which is overbroad because of possible
"chilling effect" upon protected speech.
· Criminal statutes have general in terrorem effect resulting from their very existence, and, if facial challenge is
allowed for this reason alone, the State may well be prevented from enacting laws against socially harmful
conduct. In the area of criminal law, the law cannot take chances as in the area of free speech.

· The overbreadth and vagueness doctrines then have special application only to free speech cases.

2. NO.

· The use of the "reasonable doubt" standard is indispensable to command the respect and confidence of the
community in the application of criminal law.

o has acquired such exalted stature in the realm of constitutional law as it gives life to the Due Process Clause which
protects the accused against conviction except upon proof beyond reasonable doubt of every fact necessary to
constitute the crime with which he is charged

· What the prosecution needs to prove beyond reasonable doubt is only a number of acts sufficient to form a
combination or series which would constitute a pattern and involving an amount of at least P50,000,000.00. There
is no need to prove each and every other act alleged in the Information to have been committed by the accused in
furtherance of the overall unlawful scheme or conspiracy to amass, accumulate or acquire ill-gotten wealth

o Pattern is merely a by-product of the proof of the predicate acts. This conclusion is consistent with reason and
common sense. There would be no other explanation for a combination or series of overt or criminal acts to stash
P50,000,000.00 or more, than "a scheme or conspiracy to amass, accumulate or acquire ill gotten wealth."

3. NO

· plunder is a malum in se which requires proof of criminal intent (mens rea)

o Any person who participated with the said public officer in the commission of an offense contributing to the crime
of plunder shall likewise be punished for such offense.

o In the imposition of penalties, the degree of participation and the attendance of mitigating and extenuating
circumstances, as provided by the Revised Penal Code, shall be considered by the court.

§ indicates quite clearly that mens rea is an element of plunder since the degree of responsibility of the offender is
determined by his criminal intent

o The legislative declaration in R.A. No. 7659 that plunder is a heinous offense implies that it is a malum in se. For
when the acts punished are inherently immoral or inherently wrong, they are mala in se and it does not matter that
such acts are punished in a special law, especially since in the case of plunder the predicate crimes are mainly mala
in se

Republic of the Philippines

Supreme Court
 Manila

EN BANC

PHILIPPINE GUARDIANS BROTHERHOOD, INC. (PGBI), G.R.

represented by its Secretary-General GEORGE FGBF No. 190529
GEORGE DULDULAO,
Petitioner,
Present:
PUNO, C.J.,
CARPIO,
CORONA,
CARPIO
MORALES,
VELASCO, JR.,
- versus - NACHURA,
LEONARDO-DE
CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
COMMISSION ON ELECTIONS,
VILLARAMA, JR.,
Respondent.
 PEREZ, and
MENDOZA, JJ.
Promulgated:

April 29, 2010

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

RESOLUTION

BRION, J.:

The Philippine Guardians Brotherhood, Inc. (PGBI) seeks in this petition

for certiorari and in the motion for reconsideration it subsequently filed to nullify
[1]

Commission on Elections (COMELEC) Resolution No. 8679 dated October 13, 2009
insofar as it relates to PGBI, and the Resolution dated December 9, 2009 denying
PGBIs motion for reconsideration in SPP No. 09-004 (MP). Via these resolutions,
the COMELEC delisted PGBI from the roster of registered national, regional or
sectoral parties, organizations or coalitions under the party-list system.

BACKGROUND
 Section 6(8) of Republic Act No. 7941 (RA 7941), otherwise known as the
Party-List System Act, provides:

Section 6. Removal and/or Cancellation of Registration. The

COMELEC may motu proprio or upon verified complaint of any
interested party, remove or cancel, after due notice and hearing, the
registration of any national, regional or sectoral party, organization or
coalition on any of the following grounds:

xxxx

(8) It fails to participate in the last two (2) preceding

elections or fails to obtain at least two per centum (2%) of the votes
cast under the party-list system in the two (2) preceding elections for
the constituency in which it has registered.[Emphasis supplied.]

The COMELEC replicated this provision in COMELEC Resolution No. 2847 the Rules
and Regulations Governing the Election of the Party-List Representatives through
the Party-List System which it promulgated on June 25, 1996.

For the upcoming May 2010 elections, the COMELEC en banc issued on October
13, 2009 Resolution No. 8679 deleting several party-list groups or organizations
from the list of registered national, regional or sectoral parties, organizations or
coalitions. Among the party-list organizations affected was PGBI; it was delisted
because it failed to get 2% of the votes cast in 2004 and it did not participate in
the 2007 elections. Nevertheless, the COMELEC stated in this Resolution that any
national, regional sectoral party or organizations or coalitions adversely affected
can personally or through its authorized representative file a verified opposition
on October 26, 2009.
PGBI filed its Opposition to Resolution No. 8679, but likewise sought, through its
pleading, the admission ad cautelam of its petition for accreditation as a party-list
organization under the Party-List System Act. Among other arguments, PGBI
asserted that:

(1) The assailed resolution negates the right of movant and those similarly
situated to invoke Section 4 of R.A. No. 7941, which allows any party,
organization and coalition already registered with the Commission to no
longer register anew; the party though is required to file with the
Commission, not later than ninety (90) days before the election, a
manifestation of its desire to participate in the party-list system; since
PGBI filed a Request/Manifestation seeking a deferment of its
participation in the 2007 elections within the required period prior to
the 2007 elections, it has the option to choose whether or not to
participate in the next succeeding election under the same conditions
as to rights conferred and responsibilities imposed;

(2) The Supreme Courts ruling in G.R. No. 177548 Philippine Mines Safety
Environment Association, also known as MINERO v. Commission on
Elections cannot apply in the instant controversy for two reasons: (a)
the factual milieu of the cited case is removed from PGBIs; (b)
MINERO, prior to delisting, was afforded the opportunity to be heard,
while PGBI and the 25 others similarly affected by Resolution No. 8679
were not. Additionally, the requirement of Section 6(8) has been
relaxed by the Courts ruling in G.R. No. 179271 (Banat v. COMELEC) and
the exclusion of PGBI and the 25 other party-list is a denial of the equal
protection of the laws;

(3) The implementation of the challenged resolution should be suspended

and/or aborted to prevent a miscarriage of justice in view of the failure
to notify the parties in accordance with the same Section 6(8) or R.A.
No. 7941. [2]

The COMELEC denied PGBIs motion/opposition for lack of merit.

 First, the COMELEC observed that PGBI clearly misunderstood the import of
Section 4 of R.A. 7941. The provision simply means that without the required
[3]

manifestation or if a party or organization does not participate, the exemption

from registration does not arise and the party, organization or coalition must go
through the process again and apply for requalification; a request for deferment
would not exempt PGBI from registering anew.

Second, the MINERO ruling is squarely in point, as MINERO failed to get 2%

of the votes in 2001 and did not participate at all in the 2004 elections.

Third, PGBI was given an opportunity to be heard or to seek the

reconsideration of the action or ruling complained of the essence of due process;
this is clear from Resolution No. 8679 which expressly gave the adversely affected
parties the opportunity to file their opposition.

As regards the alternative relief of application for accreditation, the COMELEC

found the motion to have been filed out of time, as August 17, 2009 was the
deadline for accreditation provided in Resolution 8646. The motion was obviously
filed months after the deadline.

PGBI came to us in its petition for certiorari, arguing the same positions it raised
with the COMELEC when it moved to reconsider its delisting.
We initially dismissed the petition in light of our ruling in Philippine Mines Safety
Environment Association, also known as MINERO v. Commission on
Elections (Minero); we said that no grave abuse of discretion exists in a ruling
[4]

that correctly applies the prevailing law and jurisprudence. Applying Section 6(8)
of RA 7941, the Court disqualified MINERO under the following reasoning:
 Since petitioner by its own admission failed to get 2% of the votes in
2001 and did not participate at all in the 2004 elections, it necessarily
failed to get at least two per centum (2%) of the votes cast in the two
preceding elections. COMELEC, therefore, is not duty bound to certify it.

PGBI subsequently moved to reconsider the dismissal of its petition. Among

other arguments, PGBI claimed that the dismissal of the petition was contrary to
law, the evidence and existing jurisprudence. Essentially, PGBI asserts that Section
6(8) of RA 7941 does not apply if one is to follow the tenor and import of the
deliberations inclusive of the interpellations in Senate Bill No. 1913 on October
19, 1994. It cited the following excerpts from the Records of the Senate:

Senator Gonzales: On the other hand, Mr. President, under ground no.
(7), Section 5 there are actually two grounds it states: Failure to
participate in the last two (2) preceding elections or its failure to obtain
at least ten percent (10%) of the votes case under the party-list system
in either of the last two (2) preceding elections for the constituency in
which it has registered

In short, the first ground is that, it failed to participate in the last two (2)
preceding elections. The second is, failure to obtain at least 10 percent
of the votes cast under the party-list system in either of the last two
preceding elections, Mr. President,

Senator Tolentino: Actually, these are two separate grounds.

Senator Gonzales: There are actually two grounds, Mr. President.

Senator Tolentino: Yes, Mr. President. [Underscoring supplied.]

[5]
 PGBI thus asserts that Section 6(8) does not apply to its situation, as it is obvious
that it failed to participate in one (1) but not in the two (2) preceding
elections. Implied in this is that it also failed to secure the required percentage in
one (1) but not in the two (2) preceding elections.

Considering PGBIs arguments, we granted the motion and reinstated the petition
in the courts docket.

THE ISSUES
We are called upon to resolve: (a) whether there is legal basis for delisting
PGBI; and (b) whether PGBIs right to due process was violated.

OUR RULING

We find the petition partly impressed with merit.

a. The Minero Ruling

Our Minero ruling is an erroneous application of Section 6(8) of RA 7941; hence, it

cannot sustain PGBIs delisting from the roster of registered national, regional or
sectoral parties, organizations or coalitions under the party-list system.
 First, the law is clear the COMELEC may motu proprio or upon verified
complaint of any interested party, remove or cancel, after due notice and hearing,
the registration of any national, regional or sectoral party, organization or
coalition if it: (a) fails to participate in the last two (2) preceding
elections; or (b) fails to obtain at least two per centum (2%) of the votes cast
under the party-list system in the two (2) preceding elections for the constituency
in which it has registered. The word or is a disjunctive term signifying
[6]

disassociation and independence of one thing from the other things enumerated;
it should, as a rule, be construed in the sense in which it ordinarily implies, as a
disjunctive word. Thus, the plain, clear and unmistakable language of the law
[7]

provides for two (2) separate reasons for delisting.

Second, Minero is diametrically opposed to the legislative intent of Section

6(8) of RA 7941, as PGBIs cited congressional deliberations clearly show.

Minero therefore simply cannot stand. Its basic defect lies in its
characterization of the non-participation of a party-list organization in an
election as similar to a failure to garner the 2% threshold party-list
vote. What Minero effectively holds is that a party list organization that does not
participate in an election necessarily gets, by default, less than 2% of the party-list
votes. To be sure, this is a confused interpretation of the law, given the laws clear
and categorical language and the legislative intent to treat the two scenarios
differently. A delisting based on a mixture or fusion of these two different and
separate grounds for delisting is therefore a strained application of the law in
jurisdictional terms, it is an interpretation not within the contemplation of the
framers of the law and hence is a gravely abusive interpretation of the law. [8]

What we say here should of course take into account our ruling in Barangay
Association for Advancement and National Transparency v. COMELEC (Banat) [9]

where we partly invalidated the 2% party-list vote requirement provided in RA

7941 as follows:
 We rule that, in computing the allocation of additional seats, the
continued operation of the two percent threshold for the distribution of
the additional seats as found in the second clause of Section 11(b) of
R.A. No. 7941 is unconstitutional. This Court finds that the two percent
threshold makes it mathematically impossible to achieve the maximum
number of available party list seats when the number of available party
list seats exceeds 50. The continued operation of the two percent
threshold in the distribution of the additional seats frustrates the
attainment of the permissive ceiling that 20% of the members of the
House of Representatives shall consist of party-list representatives.
The disqualification for failure to get 2% party-list votes in two (2) preceding
elections should therefore be understood in light of the Banat ruling that party-
list groups or organizations garnering less than 2% of the party-list votes may yet
qualify for a seat in the allocation of additional seats.

We need not extensively discuss Banats significance, except to state that a party-
list group or organization which qualified in the second round of seat
allocation cannot now validly be delisted for the reason alone that it garnered less
than 2% in the last two elections. In other words, the application of this
disqualification should henceforth be contingent on the percentage of party-list
votes garnered by the last party-list organization that qualified for a seat in the
House of Representatives, a percentage that is less than the 2% threshold
invalidated in Banat. The disqualification should now necessarily be read to apply
to party-list groups or organizations that did not qualify for a seat in the two
preceding elections for the constituency in which it registered.

To reiterate, (a) Section 6(8) of RA 7941 provides for two separate grounds for
delisting; these grounds cannot be mixed or combined to support delisting; and
(b) the disqualification for failure to garner 2% party-list votes in two preceding
elections should now be understood, in light of the Banat ruling, to mean failure
to qualify for a party-list seat in two preceding elections for the constituency in
which it has registered. This, we declare, is how Section 6(8) of RA 7941 should be
understood and applied. We do so under our authority to state what the law
is, and as an exception to the application of the principle of stare decisis.
[10]
 The doctrine of stare decisis et non quieta movere (to adhere to precedents
and not to unsettle things which are established) is embodied in Article 8 of the
Civil Code of the Philippines which provides, thus:

ART. 8. Judicial decisions applying or interpreting the laws or the

Constitution shall form a part of the legal system of the Philippines.

The doctrine enjoins adherence to judicial precedents. It requires courts in a

country to follow the rule established in a decision of its Supreme Court. That
decision becomes a judicial precedent to be followed in subsequent cases by all
courts in the land. The doctrine of stare decisis is based on the principle that once
a question of law has been examined and decided, it should be deemed settled
and closed to further argument. The doctrine is grounded on the necessity for
[11]

securing certainty and stability of judicial decisions, thus:

Time and again, the court has held that it is a very desirable and
necessary judicial practice that when a court has laid down a principle
of law as applicable to a certain state of facts, it will adhere to that
principle and apply it to all future cases in which the facts are
substantially the same. Stare decisis et non quieta movere. Stand by the
decisions and disturb not what is settled. Stare decisis simply means
that for the sake of certainty, a conclusion reached in one case should
be applied to those that follow if the facts are substantially the same,
even though the parties may be different. It proceeds from the first
principle of justice that, absent any powerful countervailing
considerations, like cases ought to be decided alike. Thus, where the
same questions relating to the same event have been put forward by
the parties similarly situated as in a previous case litigated and decided
by a competent court, the rule of stare decisis is a bar to any attempt
to relitigate the same issue.[12]
 The doctrine though is not cast in stone for upon a showing that
circumstances attendant in a particular case override the great benefits derived
by our judicial system from the doctrine of stare decisis, the Court is justified in
setting it aside.
[13]

As our discussion above shows, the most compelling reason to

abandon Minero exists; it was clearly an erroneous application of the law an
application that the principle of stability or predictability of decisions alone
cannot sustain. Minero did unnecessary violence to the language of the law, the
intent of the legislature, and to the rule of law in general. Clearly, we cannot allow
PGBI to be prejudiced by the continuing validity of an erroneous ruling. Thus, we
now abandon Minero and strike it out from our ruling case law.

We are aware that PGBIs situation a party list group or organization that failed to
garner 2% in a prior election and immediately thereafter did not participate in the
preceding election is something that is not covered by Section 6(8) of RA
7941. From this perspective, it may be an unintended gap in the law and as such is
a matter for Congress to address. We cannot and do not address matters over
which full discretionary authority is given by the Constitution to the legislature; to
do so will offend the principle of separation of powers. If a gap indeed exists, then
the present case should bring this concern to the legislatures notice.
b. The Issue of Due Process
On the due process issue, we agree with the COMELEC that PGBIs right to due
process was not violated for PGBI was given an opportunity to seek, as it did seek,
a reconsideration of Resolution No. 8679. The essence of due process, we have
consistently held, is simply the opportunity to be heard; as applied to
administrative proceedings, due process is the opportunity to explain ones side or
the opportunity to seek a reconsideration of the action or ruling complained of. A
formal or trial-type hearing is not at all times and in all instances essential. The
requirement is satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand. What is frowned upon
is absolute lack of notice and hearing x x x. We find it obvious under the
[14]

attendant circumstances that PGBI was not denied due process. In any case, given
the result of this Resolution, PGBI has no longer any cause for complaint on due
process grounds.
WHEREFORE, premises considered, we GRANT the petition and
accordingly ANNUL COMELEC Resolution No. 8679 dated October 13, 2009
insofar as the petitioner PGBI is concerned, and the Resolution dated December
9, 2009 which denied PGBIs motion for reconsideration in SPP No. 09-004
(MP). PGBI is qualified to be voted upon as a party-list group or organization in
the coming May 2010 elections.

SO ORDERED.

Case Digest: PGBI v. COMELEC

G.R. No.190529 : April 29, 2010

PHILIPPINE GUARDIANS BROTHERHOOD, INC. (PGBI), represented by its Secretary-General

GEORGE FGBF GEORGE DULDULAO, Petitioner, v.COMMISSION ON ELECTIONS, Respondent.

BRION,J.:

FACTS:

For the upcoming May 2010 elections, the COMELECen banc issued on October 13, 2009 Resolution
No. 8679 deleting several party-list groups or organizations from the list of registered national, regional or
sectoral parties, organizations or coalitions.Among the party-list organizations affected was PGBI; it was
delisted because it failed to get 2% of the votes cast in 2004 and it did not participate in the 2007
elections.PGBI filed its Opposition to Resolution No. 8679, but likewise sought, through its pleading, the
admission ad cautelam of its petition for accreditation as a party-list organization under the Party-List
System Act. The COMELEC denied PGBIs motion/opposition for lack of merit.

ISSUE: Whether or not there is legal basis for delisting PGBI.

HELD: COMELEC's decision is annulled.

POLITICAL LAW: delisting of any national, regional or sectoral party

The law is clear the COMELEC may motu proprio or upon verified complaint of any interested party,
remove or cancel, after due notice and hearing, the registration of any national, regional or sectoral party,
organization or coalition if it: (a)fails to participate in the last two (2) preceding elections;or(b)fails to obtain
at least two per centum (2%) of the votes cast under the party-list system in the two (2) preceding
elections for the constituency in which it has registered. The word or is a disjunctive term signifying
disassociation and independence of one thing from the other things enumerated; it should, as a rule, be
construed in the sense in which it ordinarily implies,as a disjunctive word. Thus, the plain, clear and
unmistakable language of the law provides for two (2) separate reasons for delisting.

To reiterate, (a) Section 6(8) of RA 7941 provides for two separate grounds for delisting; these grounds
cannot be mixed or combined to support delisting; and (b) the disqualification for failure to garner 2%
party-list votes in two preceding elections should now be understood to mean failure to qualify for a party-
list seat in two preceding elections for the constituency in which it has registered.This is how Section 6(8)
of RA 7941 should be understood and applied.

PGBIs situation a party list group or organization that failed to garner 2% in a prior election and
immediately thereafter did not participate in the preceding election is something that is not covered by
Section 6(8) of RA 7941.From this perspective, it may be an unintended gap in the law and as such is a
matter for Congress to address.The Court cannot and do not address matters over which full
discretionary authority is given by the Constitution to the legislature; to do so will offend the principle of
separation of powers.If a gap indeed exists, then the present case should bring this concern to the
legislatures notice.

On the due process issue, PGBI's right to due process was not violated for PGBI was given an
opportunity to seek, as it did seek, a reconsideration of Resolution No. 8679.The essence of due process
is simply the opportunity to be heard; as applied to administrative proceedings, due process is the
opportunity to explain ones side or the opportunity to seek a reconsideration of the action or ruling
complained of.A formal or trial-type hearing is not at all times and in all instances essential.The
requirement is satisfied where the parties are afforded fair and reasonable opportunity to explain their
side of the controversy at hand. What is frowned upon is absolute lack of notice and hearing. PGBI was
not denied due process.In any case, given the result of this Resolution, PGBI has no longer any cause for
complaint on due process grounds.

The petition for review is GRANTED.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

ERNESTO B. FRANCISCO, JR. and JOSE MA. O. G.R. No. 166910

HIZON,
Petitioners, Present:

- versus - CORONA, CJ,

CARPIO,
TOLL REGULATORY BOARD, PHILIPPINE CARPIO-
NATIONAL CONSTRUCTION CORPORATION, MORALES, ∗

MANILA NORTH TOLLWAYS CORPORATION, VELASCO, JR.,

BENPRES HOLDINGS CORPORATION, FIRST NACHURA,
PHILIPPINE INFRASTRUCTURE DEVELOPMENT LEONARDO-DE
CORPORATION, TOLLWAY MANAGEMENT CASTRO,
CORPORATION, PNCC SKYWAY CORPORATION, BRION,
CITRA METRO MANILA TOLLWAYS PERALTA,
CORPORATION and HOPEWELL CROWN BERSAMIN,
INFRASTRUCTURE, INC., DEL CASTILLO,
Respondents. ABAD, *

x-------------------------------------------x VILLARAMA,
HON. IMEE R. MARCOS, RONALDO B. ZAMORA, JR.,
CONSUMERS UNION OF THE PHILIPPINES, INC., PEREZ,
QUIRINO A. MARQUINEZ, HON. LUIS A. ASISTIO, MENDOZA, and
HON. ERICO BASILIO A. FABIAN, HON. RENATO KA SERENO, JJ.
RENE B. MAGTUBO, HON. RODOLFO G. PLAZA,
HON. ANTONIO M. SERAPIO, HON. EMMANUEL
JOEL J. VILLANUEVA, HON. ANIBAN NG MGA
MANGGAGAWA SA AGRIKULTURA (AMA), INC.,
ANIBAN NG MGA MAGSASAKA, MANGINGISDA AT
MANGGAGAWA SA AGRIKULTURA-KATIPUNAN,
INC., KAISAHAN NG MGA MAGSASAKA SA
AGRIKULTURA, INC., KILUSAN NG G.R. No. 169917
MANGAGAWANG MAKABAYAN,
Petitioners,

- versus -

The REPUBLIC OF THE PHILIPPINES, acting by and

through the TOLL REGULATORY BOARD, MANILA
NORTH TOLLWAYS CORPORATION, PHILIPPINE
NATIONAL CONSTRUCTION CORPORATION, and
FIRST PHILIPPINE INFRASTRUCTURE
DEVELOPMENT CORP.,
Respondents.
x-------------------------------------------x
GISING KABATAAN MOVEMENT, INC., BARANGAY
COUNCIL OF SAN
ANTONIO,MUNICIPALITY OF SANPEDRO, LAGUNA
[as Represented by COUNCILOR CARLON G.
AMBAYEC], and YOUNG PROFESSIONALS AND
ENTREPRENEURS OF SAN PEDRO, LAGUNA
Petitioners,

- versus -

THE REPUBLIC OF THE PHILIPPINES, acting through

the TOLL REGULATORY BOARD (TRB), PHILIPPINE
NATIONAL CONSTRUCTION CORPORATION
(PNCC),
Respondents.
x-------------------------------------------x
THE REPUBLIC OF THE PHILIPPINES, represented by
the TOLL REGULATORY BOARD,
Petitioner,

- versus -

YOUNG PROFESSIONALS AND ENTREPRENEURS

OF SAN PEDRO, LAGUNA,
Respondent.
G.R. No. 173630
 G.R. No. 183599

Promulgated:

October 19, 2010

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

DECISION

VELASCO, JR., J.:

Before us are four petitions; the first three are special civil actions under
Rule 65, assailing and seeking to nullify certain statutory provisions, presidential
actions and implementing orders, toll operation-related contracts and issuances on
the construction, maintenance and operation of the major tollway systems in
Luzon. The petitions likewise seek to restrain and permanently prohibit the
implementation of the allegedly illegal toll fee rate hikes for the use of the North
Luzon Expressway (NLEX), South Luzon Expressway (SLEX) and the South
Metro Manila Skyway (SMMS). The fourth, a petition for review under Rule 45,
seeks to annul and set aside the decision dated June 23, 2008 of the Regional Trial
Court (RTC) of Pasig, in SCA No. 3138-PSG, enjoining the original toll operating
franchisee from collecting toll fees in the SLEX.

By Resolution of March 20, 2007, the Court ordered the consolidation of the
first three petitions, docketed as G.R. Nos. 166910,
169917 and 173630, respectively. The fourth petition, G.R. No.
183599, would later be ordered consolidated with the earlier three petitions.
THE FACTS

The antecedent facts are as follows

On March 31, 1977, then President Ferdinand E. Marcos issued Presidential
Decree No. (P.D.) 1112, authorizing the establishment of toll facilities on public
improvements. This issuance, in its preamble, explicitly acknowledged the huge
[1]

financial requirements and the necessity of tapping the resources of the private
sector to implement the governments infrastructure programs. In order to attract
private sector involvement, P.D. 1112 allowed the collection of toll fees for the use
of certain public improvements that would allow a reasonable rate of return on
investments. The same decree created the Toll Regulatory Board (TRB) and
invested it under Section 3 (a) (d) and (e) with the power to enter, for the Republic,
into contracts for the construction, maintenance and operation of tollways, grant
authority to operate a toll facility, issue therefor the necessary Toll Operation
Certificate (TOC) and fix initial toll rates, and, from time to time, adjust the same
after due notice and hearing.

On the same date, P.D. 1113 was issued, granting to the Philippine National
Construction Corporation (PNCC), then known as the Construction and
Development Corporation of the Philippines (CDCP), for a period of thirty years
from May 1977 or up to May 2007 a franchise to construct, maintain and operate
toll facilities in the North Luzon and South Luzon Expressways, with the right to
collect toll fees at such rates as the TRB may fix and/or authorize. Particularly,
Section 1 of P.D. 1113 delineates the coverage of the expressways
from Balintawak, Caloocan City to Carmen, Rosales, Pangasinan and from
Nichols, Pasay City to Lucena, Quezon. And because the franchise is not self-
executing, as it was in fact made subject, under Section 3 of P.D. 1113, to such
conditions as may be imposed by the Board in an appropriate contract to be
executed for such purpose, TRB and PNCC signed in October 1977, a Toll
Operation Agreement (TOA) on the North Luzon and South Luzon Tollways,
providing for the detailed terms and conditions for the construction, maintenance
and operation of the expressway. [2]

On December 22, 1983, P.D. 1894 was issued therein further granting PNCC
a franchise over the Metro Manila Expressway (MMEX), and the expanded and
delineated NLEX and SLEX. Particularly, PNCC was granted the right, privilege
and authority to construct, maintain and operate any and all such extensions,
linkages or stretches, together with the toll facilities appurtenant thereto, from any
part of the North Luzon Expressway, South Luzon Expressway and/or Metro
Manila Expressway and/or to divert the original route and change the original
end-points of the North Luzon Expressway and/or South Luzon Expressway as may
be approved by the [TRB]. Under Section 2 of P.D. 1894, the franchise granted
[3]

the [MMEX] and all extensions, linkages, stretches and diversions after the
approval of the decree that may be constructed after the approval of this decree
[on December 22, 1983] shall likewise have a term of thirty (30) years,
commencing from the date of completion of the project.

As expressly set out in P.D. 1113 and reiterated in P.D. 1894, PNCC may
sell or assign its franchise thereunder granted or cede the usufruct thereof upon
[4]

the Presidents approval. This same provision on franchise transfer and cession of
[5]

usufruct is likewise found in P.D. 1112. [6]

Then came the 1987 Constitution with its franchise provision. [7]

In 1993, the Government Corporate Counsel (GCC), acting on PNCCs

request, issued Opinion No. 224, s. 1993, later affirmed by the Secretary of
[8]

Justice, holding that PNCC may, subject to certain clearance and approval
[9]

requirements, enter into a joint venture (JV) agreement (JVA) with private entities
without going into public bidding in the selection of its JV partners. PNCCs query
was evidently prompted by the need to seek out alternative sources of financing for
expanding and improving existing expressways, and to link them to economic
zones in the north and to the CALABARZON area in the south.

MOU FOR THE CONSTRUCTION, REHABILITATION

AND EXPANSION OF EXPRESSWAYS

On February 8, 1994, the Department of Public Works and Highways

(DPWH), TRB, PNCC, Benpres Holdings Corporation (Benpres) and First
Philippine Holdings Corporation (FPHC), among other private and government
entities/agencies, executed a Memorandum of Understanding (MOU) envisaged to
open the door for the entry of private capital in the rehabilitation, expansion (to
Subic and Clark) and extension, as flagship projects, of the expressways north of
Manila, over which PNCC has a franchise. To carry out their undertakings under
the MOU, Benpres and FPHC formed, as their infrastructure holding arm, the First
Philippine Infrastructure and Development Corporation (FPIDC).

Consequent to the MOU execution, PNCC entered into financial and/or

technical JVAs with private entities/investors for the toll operation of its franchised
areas following what may be considered as a standard pattern, viz.: (a) after a JVA
is concluded and the usual government approval of the assignment by PNCC of the
usufruct in the franchise under P.D. 1113, as amended, secured, a new JV company
is specifically formed to undertake a defined toll road project; (b) the Republic of
the Philippines, through the TRB, as grantor, PNCC, as operator, and the new
corporation, as investor/concessionaire, with its lender, as the case may be, then
execute a Supplemental Toll Operation Agreement (STOA) to implement the TOA
previously issued; and (c) once the requisite STOA approval is given, project
prosecution starts and upon the completion of the toll road project or of a divisible
phase thereof, the TRB fixes or approves the initial toll rate after which, it passes a
board resolution prescribing the periodic toll rate adjustment.

The STOA defines the scope of the road project coverage, the terminal
date of the concession, and includes provisions on initial toll rate and a built-in
formula for adjustment of toll rates, investment recovery clauses and contract
termination in the event of the concessionaires, PNCCs or TRBs default, as the
case may be.

The following events or transactions, involving the personalities as

indicated, transpired with respect to the following projects:

THE SOUTH METRO MANILA SKYWAY (SMMS)

(BUENDIA BICUTAN ELEVATED STRETCH) PROJECT

PNCC entered into a JV partnership arrangement with P.T. Citra, an

Indonesian company, and created, for the SMMS project, the Citra Metro Manila
Tollways Corporation (CMMTC).

On November 27, 1995, TRB, PNCC and CMMTC executed a STOA for
the SMMS project (CITRA STOA). And on April 7, 1996, then President Fidel V.
Ramos approved the CITRA STOA.
 Phase I of the SMMS project the Bicutan to Buendia elevated expressway
stretch was completed in December 1998, and the consequent initial toll rates for
its use implemented a month after. On November 26, 2004, the TRB
passed Resolution No. 2004-53, approving the periodic toll rate adjustment for the
SMMS.

THE NLEX EXPANSION PROJECT (REHABILITATED AND WIDENED

NLEX, SUBIC EXPRESSWAY, CIRCUMFERENTIAL ROAD C-5)
In reply to the query of the then TRB Chairman, the Department of Justice
(DOJ) issued DOJ Opinion No. 79, s. of 1994, echoing an earlier opinion of the
GCC, that the TRB can implement the NLEX expansion project through a JV
scheme with private investors possessing the requisite technical and financial
capabilities.
On May 16, 1995, then President Ramos approved the assignment of PNCCs
usufructuary rights as franchise holder to a JV company to be formed by PNCC
and FPIDC.PNCC and FPIDC would later ink a JVA for the rehabilitation and
modernization of the NLEX referred in certain pleadings as the North Luzon
Tollway project. The Manila North Tollways Corporation (MNTC) was formed
[10]

for the purpose.

On April 30, 1998, the Republic, through the TRB, PNCC and MNTC,
executed a STOA for the North Luzon Tollway project (MNTC STOA) in which
MNTC was authorized, inter alia, to subcontract the operation and maintenance of
the project, provided that the majority of the outstanding shares of the contractor
shall be owned by MNTC. The MNTC STOA covers three phases comprising of
ten segments, including the rehabilitated and widened NLEX, the Subic
Expressway and the circumferential Road C-5. The STOA is to be effective for
[11]

thirty years, reckoned from the issuance of the toll operation permit for the last
completed phase or until December 31, 2030, whichever is earlier. The Office of
the President (OP) approved the STOA on June 15, 1998.
On August 2, 2000, pursuant to the MNTC STOA, the Tollways
Management Corporation (TMC)formerly known as the Manila North Tollways
Operation and Maintenance Corporationwas created to undertake the operation and
maintenance of the NLEX tollway facilities, interchanges and related works.

On January 27, 2005, the TRB issued Resolution No. 2005-04 approving the
initial authorized toll rates for the closed and flat toll systems applicable to the new
NLEX.

THE SOUTH LUZON EXPRESSWAY PROJECT (NICHOLS TO LUCENA CITY)

 For the SLEX expansion project, PNCC and Hopewell Holdings Limited
(HHL), as JV partners, executed a Memorandum of Agreement (MOA), which [12]

eventually led to the formation of a JV company Hopewell Crown Infrastructure,

Inc. (HCII), now MTD Manila Expressways, Inc., (MTDME). And pursuant to the
PNCC-MTDME JVA, the South Luzon Tollway Corporation (SLTC) and the
Manila Toll Expressway Systems, Inc. (MATES) were incorporated to undertake
the financing, construction, operation and maintenance of the resulting Project Toll
Roads forming part of the SLEX. The toll road projects are divisible toll sections
or segments, each segment defined as to its starting and end points and each with
the corresponding distance coverage. The proposed JVA, as later amended,
between PNCC and MTDME was approved by the OP on June 30, 2000.
Eventually, or on February 1, 2006, a STOA for the financing, design,
[13]

construction, lane expansion and maintenance of the Project Toll Roads (PTR) of
the rehabilitated and improved SLEX was executed by and among the Republic,
PNCC, SLTC, as investor, and MATES, as operator. To be precise, the PTRs,
under the STOA, comprise and contemplated the full rehabilitation and/or roadway
widening of the following existing toll roads or facilities: PTR 1 that portion of the
tollway commencing at the end of South MM Skyway to the Filinvest exit at
Alabang (1-242 km); PTR 2 the tollway from Alabang to Calamba, Laguna (27.28
km); PTR 3 the tollway from Calamba to Sto. Tomas, Batangas (7.6 km) and PTR
4 the tollway from Sto. Tomas to Lucena City (54.27 km). [14]

Under Clause 6.03 of the STOA, the Operator, after substantially completing
a TPR, shall file an application for a Toll Operation Permit over the relevant
completed TPR or segment, which shall include a request for a review and
approval by the TRB of the calculation of the new current authorized toll rate.

G.R. NO. 166910

Petitioners Francisco and Hizon, as taxpayers and expressway users, seek to

nullify the various STOAs adverted to above and the corresponding TRB
resolutions, i.e. Res. Nos. 2004-53 and 2005-04, fixing initial rates and/or
approving periodic toll rate adjustments therefor. To the petitioners, the STOAs
and the toll rate-fixing resolutions violate the Constitution in that they veritably
impose on the public the burden of financing tollways by way of exorbitant fees
and thus depriving the public of property without due process.These STOAs are
also alleged to be infirm as they effectively awarded purported build-operate-
transfer (BOT) projects without public bidding in violation of the BOT Law (R.A.
6957, as amended by R.A. 7718).
 Petitioners likewise assail the constitutionality of Sections 3 (a) and (d) of
P.D. 1112 in relation to Section 8 (b) of P.D. 1894 insofar as they vested the TRB,
on one hand, toll operation awarding power while, on the other hand, granting it
also the power to issue, modify and promulgate toll rate charges. The TRB, so
petitioners bemoan, cannot be an awarding party of a TOA and, at the same time,
be the regulator of the tollway industry and an adjudicator of rate exactions
disputes.

Additionally, petitioners also seek to nullify certain provisions of P.D. 1113

and P.D. 1894, which uniformly grant the President the power to approve the
transfer or assignment of usufruct or the rights and privileges thereunder by the
tollway operator to third parties, particularly the transfer effected by PNCC to
MNTC. As argued, the authority to approve partakes of an exercise of legislative
power under Article VI, Section 1 of the Constitution.[15]

In the meantime, or on April 8, 2010, the TRB issued a Certificate of

Substantial Completion with respect to PTR 1 (Alabang-Filinvest stretch) and
[16]

PTR 2 (Alabang-Calamba segments) of SLEX, signifying the completion of the

full rehabilitation/expansion of both segments and the linkages/interchanges in
between pursuant to the requirements of the corresponding STOA. TRB on even
date issued a Toll Operation Permit in favor of MATES over said PTRs 1 and
2. Accordingly, upon due application, the TRB approved the publication of the
[17]

toll rate matrix for PTRs 1 and 2, the rate to take effect on June 30, 2010. The
[18]

implementation of the published rate would, however, be postponed to August

2010.

On July 5, 2010, petitioner Francisco filed a Supplemental Petition with

prayer for the issuance of a temporary restraining order (TRO) and/or status
quo order focused on the impending collection of what was perceived to be toll
rate increases in the SLEX. The assailed adjustments were made public in a TRB
notice of toll rate increases for the SLEX from Alabang to Calamba on June 6,
2010, and were supposed to have been implemented on June 30, 2010. On August
13, 2010, the Court granted the desired TRO, enjoining the respondents in the
consolidated cases from implementing the toll rate increases in the SLEX.

In their Consolidated Comment/Opposition to the Supplemental Petition,

respondents SLTC et al., aver that the disputed rates are actually initial and
opening rates, not an increase or adjustment of the prevailing rate, for the new
expanded and rehabilitated SLEX. In fine, the new toll rates are, per SLTC, for a
new and upgraded facility, i.e. the aforementioned Project Toll Roads 1 and 2 put
up pursuant to the 2006 Republic-PNCC-SLTC-MATES STOA adverted to.
G.R. NO. 169917

While they raise, for the most part, the same issues articulated in G.R. No.
166910, such as the public bidding requirement, the power of the President to
approve the assignment of PNCCs usufructuary rights to cover (as petitioners Imee
R. Marcos, et al., would stress) even the assignment of the expressway from
Balintawak to Tabang, the virtual amendment and extension of a statutory
franchise by way of administrative action (e.g., the execution of a STOA or
issuance of a TOC), petitioners in G.R. No. 169917 some of them then and still are
members of the House of Representatives have, as their main focus, the North
Luzon Tollway project and the agreements and devices entered in relation
therewith.

Petitioners also assail the MNTC STOA on the ground that it granted the
lenders (Asian Development Bank/World Bank) of MNTC, as project
concessionaire, the unrestricted rights to appoint a substitute entity to replace
MNTC in case of an MNTC Default before prepayment of the loans, while also
granting said lenders, in appropriate cases, the option to extend the concession or
franchise for a period not exceeding fifty years coinciding with the full payment of
the loans.

G.R. NO. 173630

Apart from those taken up in the other petitions for certiorari and
prohibition, petitioners, in G.R. No. 173630, whose members and constituents
allegedly traverse SLEX daily, aver that TRB ought to have applied the provisions
of R.A. 6957 [BOT Law] and R.A. 9184 [Government Procurement Reform Act],
which require public bidding for the prosecution of the SLEX project.

G.R. NO. 183599

CIVIL CASE SCA NO. 3138-PSG BEFORE THE RTC

On September 14, 2007, the Young Professionals and Entrepreneurs of San

Pedro, Laguna (YPES), one of the petitioners in G.R. No. 173630, filed before the
RTC, Branch 155, in Pasig City, a special civil action for certiorari, etc., against
the TRB, docketed as SCA No. 3138-PSG, containing practically identical issues
raised in G.R. No. 173630.Like its petition in G.R. No. 173630, YPES, before the
RTC, assailed and sought to nullify the April 27, 2007 TOC, which TRB issued to
PNCC inasmuch as the TOC worked to extend PNCCs tollway operation franchise
for the SLEX. As YPES argued, only the Congress can extend the term of PNCCs
franchise which expired on May 1, 2007.

RULING OF THE RTC IN SCA NO. 3138-PSG

By Decision dated June 23, 2008, the RTC, for the main stated reason that
[19]

the authority to grant or renew franchises belongs only to Congress, granted YPES
petition, disposing as follows:
ACCORDINGLY, the instant Petition for Certiorari, Prohibition
and Mandamus is hereby GRANTED and the questioned Toll Operation
Certificate (TOC) covering the [SLEX] issued by respondent TRB in
April, 2007, is hereby ordered ANNULLED and SET ASIDE.

FURTHER, respondent PNCC is hereby immediately

PROHIBITED from collecting toll fess along the SLEX facilities as it no
longer has the power and authority to do so.

FINALLY, as mandated under Section 9 of PD No. 1113,

respondent PNCC is hereby COMMANDED to turn over without further
delay the physical assets and facilities of the SLEX including
improvements thereon, together with the equipment and appurtenances
directly related to their operations, without any cost, to the Government
through the Toll Regulatory Board x x x.[20]

Thus, the instant petition for review on certiorari under Rule 45, filed by the
TRB on pure questions of law, docketed as G.R. No. 183599.

In their separate comments, public and private respondents uniformly seek

the dismissal of the three special civil actions on the threshold issue of the absence
of a justiciable case and lack of locus standi on the part of the petitioners
therein. Other grounds raised range from the impropriety of certiorari to nullify
toll operation agreements; the inapplicability of the public bidding rules in the
selection by PNCC of its JV partners and the authority of the President to approve
TOAs and the transfer of usufructuary rights. PNCC argues, in esse, that its
continuous toll operations did not constitute an extension of its franchise, its
authority to operate after the expiry date thereof in May 2007 being based on the
valid authority of TRB to issue TOC.
 THE ISSUES

The principal consolidated but interrelated issues tendered before the Court,
most of which with constitutional undertones, may be reduced into six (6) and
formulated in the following wise: first, whether or not an actual case or
controversy exists and, relevantly, whether petitioners in the first three petitions
have locus standi; second, whether the TRB is vested with the power and authority
to grant what amounts to a franchise over tollway facilities; third, corollary to the
second, whether the TRB can enter into TOAs and, at the same time, promulgate
toll rates and rule on petitions for toll rate adjustments; fourth, whether the
President is duly authorized to approve contracts, inclusive of assignment of
contracts, entered into by the TRB relative to tollway operations; fifth, whether the
subject STOAs covering the NLEX, SLEX and SMMS and their respective
extensions, linkages, etc. are valid; sixth, whether a public bidding is required or
mandatory for these tollway projects.

Expressly prayed, if not subsumed, in the first three petitions, is to prohibit

TRB and its concessionaires from collecting toll fees along the Skyway and Luzon
Tollways.

PRELIMINARY ISSUES
EXISTENCE OF AN ACTUAL CONTROVERSY, ITS RIPENESS AND
THE LOCUS STANDI TO SUE

The power of judicial review can only be exercised in connection with

a bona fide controversy involving a statute, its implementation or a government
action. Withal, courts will decline to pass upon constitutional issues through
[21]

advisory opinions, bereft as they are of authority to resolve hypothetical or moot

questions. The limitation on the power of judicial review to actual cases and
[22]

controversies defines the role assigned to the judiciary in a tripartite allocation of

power, to assure that the courts will not intrude into areas committed to the other
branches of government. [23]

In The Province of North Cotabato v. The Government of the Republic of

the Philippines Peace Panel on Ancestral Domain (GRP), the Court has
expounded anew on the concept of actual case or controversy and the requirement
of ripeness for judicial review, thus:
 An actual case or controversy involves a conflict of legal rights, an
assertion of opposite legal claims, susceptible of judicial resolution as
distinguished from a hypothetical or abstract difference or dispute. There must be
a contrariety of legal rights x x x. The Court can decide the constitutionality of an
act x x x only when a proper case between opposing parties is submitted for
judicial determination.

Related to the requirement of an actual case or controversy is the

requirement of ripeness. A question is ripe for adjudication when the act
being challenged has had a direct adverse effect on the individual
challenging it. x x x [I]t is a prerequisite that something had then been
accomplished or performed by either branch before a court may come
into the picture, and the petitioner must allege the existence of an
immediate or threatened injury to itself as a result of the challenged
action. He must show that he has sustained or is immediately in danger
of sustaining some direct injury as a result of the act complained of.[24]

But even with the presence of an actual case or controversy, the Court may
refuse judicial review unless the constitutional question or the assailed illegal
government act is brought before it by a party who possesses what in Latin is
technically called locus standi or the standing to challenge it. To have standing,
[25]

one must establish that he has a personal and substantial interest in the case such
that he has sustained, or will sustain, direct injury as a result of its
enforcement. Particularly, he must show that (1) he has suffered some actual or
[26]

threatened injury as a result of the allegedly illegal conduct of the government; (2)
the injury is fairly traceable to the challenged action; and (3) the injury is likely to
be redressed by a favorable action. [27]

Petitions for certiorari and prohibition are, as here, appropriate remedies to

raise constitutional issues and to review and/or prohibit or nullify, when proper,
acts of legislative and executive officials. The present petitions allege that then
[28]

President Ramos had exercised vis--vis an assignment of franchise, a function

legislative in character. As alleged, too, the TRB, in the guise of entering into
contracts or agreements with PNCC and other juridical entities, virtually enlarged,
modified to the core and/or extended the statutory franchise of PNCC, thereby
usurping a legislative prerogative. The usurpation came in the form of executing
the assailed STOAs and the issuance of TOCs. Grave abuse of discretion is also
laid on the doorstep of the TRB for its act of entering into these same contracts or
agreements without the required public bidding mandated by law, specifically the
BOT Law (R.A. 6957, as amended) and the Government Procurement Reform Act
(R.A. 9184).
 In fine, the certiorari petitions impute on then President Ramos and the TRB,
the commission of acts that translate inter alia into usurpation of the congressional
authority to grant franchises and violation of extant statutes. The petitions make
a prima facie case for certiorari and prohibition; an actual case or controversy ripe
for judicial review exists. Verily, when an act of a branch of government 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 doing so, the judiciary
merely defends the sanctity of its duties and powers under the Constitution. [29]

In any case, the rule on standing is a matter of procedural technicality, which

may be relaxed when the subject in issue or the legal question to be resolved is of
transcendental importance to the public. Hence, even absent any direct injury to
[30]

the suitor, the Court can relax the application of legal standing or altogether set it
aside for non-traditional plaintiffs, like ordinary citizens, when the public interest
so requires. There is no doubt that individual petitioners, Marcos, et al., in G.R.
[31]

No. 169917, as then members of the House of Representatives, possess the

requisite legal standing since they assail acts of the executive they perceive to
injure the institution of Congress. On the other hand, petitioners Francisco, Hizon,
and the other petitioning associations, as taxpayers and/or mere users of the
tollways or representatives of such users, would ordinarily not be clothed with the
requisite standing. While this is so, the Court is wont to presently relax the rule
on locus standi owing primarily to the transcendental importance and the
paramount public interest involved in the implementation of the laws on
the Luzon tollways, a roadway complex used daily by hundreds of thousands of
motorists. What we said a century ago in Severino v. Governor General is just as
apropos today:
When the relief is sought merely for the protection of private rights, x x x
[the relators] right must clearly appear. On the other hand, when the question is
one of public right and the object of the mandamus is to procure the
enforcement of a public duty, the people are regarded as the real party in
interest, and the relator at whose instigation the proceedings are
instituted need not show that he has any legal or special interest in the result,
it being sufficient to show that he is a citizen and as such interested in the
execution of the laws.[32] (Words in bracket and emphasis added.)
Accordingly, We take cognizance of the present case on account of its
transcendental importance to the public.

SECOND ISSUE: TRB EMPOWERED TO GRANT AUTHORITY TO OPERATE

TOLL FACILITY /SYSTEM
 It is abundantly clear that Sections 3 (a) and (e) of P.D. 1112 in relation to
Section 4 of P.D. 1894 have invested the TRB with sufficient power to grant a
qualified person or entity with authority to construct, maintain, and operate a toll
facility and to issue the corresponding toll operating permit or TOC.

Sections 3 (a) and (e) of P.D. 1112 and Section 4 of P.D. 1894 amply
provide the power to grant authority to operate toll facilities:

Section 3. Powers and Duties of the Board. The Board shall have in addition to
its general powers of administration the following powers and duties:

(a) Subject to the approval of the President of the Philippines, to enter into
contracts in behalf of the Republic of the Philippines with persons, natural or
juridical, for the construction, operation and maintenance of toll facilities such as
but not limited to national highways, roads, bridges, and public thoroughfares.
Said contract shall be open to citizens of the Philippines and/or to corporations or
associations qualified under the Constitution and authorized by law to engage in
toll operations;

xxxx

(e) To grant authority to operate a toll facility and to issue therefore the necessary
Toll Operation Certificate subject to such conditions as shall be imposed by the
Board including inter alia the following:

(1) That the Operator shall desist from collecting toll upon the expiration of the
Toll Operation Certificate.

(2) That the entire facility operated as a toll system including all operation and
maintenance equipment directly related thereto shall be turned over to the
government immediately upon the expiration of the Toll Operation Certificate.

(3) That the toll operator shall not lease, transfer, grant the usufruct of, sell or
assign the rights or privileges acquired under the Toll Operation Certificate to
any person, firm, company, corporation or other commercial or legal entity,
nor merge with any other company or corporation organized for the same
purpose, without the prior approval of the President of the Philippines. In the
event of any valid transfer of the Toll Operation Certificate, the Transferee
shall be subject to all the conditions, terms, restrictions and limitations of this
Decree as fully and completely and to the same extent as if the Toll Operation
Certificate has been granted to the same person, firm, company, corporation or
other commercial or legal entity.

(4) That in time of war, rebellion, public peril, emergency, calamity, disaster or
disturbance of peace and order, the President of the Philippines may cause the
 total or partial closing of the toll facility or order to take over thereof by the
Government without prejudice to the payment of just compensation.

(5) That no guarantee, Certificate of Indebtedness, collateral, securities, or bonds

shall be issued by any government agency or government-owned or controlled
corporation on any financing program of the toll operator in connection with
his undertaking under the Toll Operation Certificate.

(6) The Toll Operation Certificate may be amended, modified or revoked

whenever the public interest so requires.

(a) The Board shall promulgate rules and regulations governing the
procedures for the grant of Toll Certificates. The rights and privileges of a
grantee under a Toll Operation Certificate shall be defined by the Board.

(b) To issue rules and regulations to carry out the purposes of this Decree.

SECTION 4. The Toll Regulatory Board is hereby given jurisdiction and

supervision over the GRANTEE with respect to the Expressways, the toll
facilities necessarily appurtenant thereto and, subject to the provisions of Section
8 and 9 hereof, the toll that the GRANTEE will charge the users thereof.

By explicit provision of law, the TRB was given the power to grant
administrative franchise for toll facility projects.

The concerned petitioners would argue, however, that PNCCs [then CDCPs]
franchise, as toll operator, was granted via P.D. 1113, on the same day P.D. 1112,
creating the TRB, was issued. It is thus pointed out that P.D. 1112 could not have
plausibly granted the TRB with the power and jurisdiction to issue a similar
franchise. Pushing the point, they maintain that only Congress has, under the 1987
Constitution, the exclusive prerogative to grant franchise to operate public utilities.

We are unable to agree with petitioners stance and their undue reliance
on Article XII, Section 11 of the Constitution, which states that:

SEC. 11. No franchise, certificate, or any other form of

authorization for the operation of a public utility shall be granted except
to citizens of the Philippines or to corporations or associations organized
under the laws of the Philippines at least sixty per centum of whose
capital is owned by such citizens, nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than fifty
years. Neither shall any such franchise or right be granted except under
 the condition that it shall be subject to amendment, alteration, or repeal
by the Congress when the common good so requires x x x.

The limiting thrust of the foregoing constitutional provision on the grant of

franchise or other forms of authorization to operate public utilities may, in context,
be stated as follows: (a) the grant shall be made only in favor of qualified Filipino
citizens or corporations; (b) Congress can impair the obligation of franchises, as
contracts; and (c) no such authorization shall be exclusive or exceed fifty years.

A franchise is basically a legislative grant of a special privilege to a

person. Particularly, the term, franchise, includes not only authorizations issuing
[33]

directly from Congress in the form of statute, but also those granted by
administrative agencies to which the power to grant franchise has been delegated
by Congress. The power to authorize and control a public utility is admittedly a
[34]

prerogative that stems from the Legislature. Any suggestion, however, that only
Congress has the authority to grant a public utility franchise is less than
accurate. As stressed in Albano v. Reyesa case decided under the aegis of the 1987
Constitutionthere is nothing in the Constitution remotely indicating the necessity of
a congressional franchise before each and every public utility may operate, thus:

That the Constitution provides x x x that the issuance of a franchise,

certificate or other form of authorization for the operation of a public utility shall
be subject to amendment, alteration or repeal by Congress does not necessarily
imply x x x that only Congress has the power to grant such
authorization. Our statute books are replete with laws granting specified
agencies in the Executive Branch the power to issue such authorization for
certain classes of public utilities.[35] (Emphasis ours.)

In such a case, therefore, a special franchise directly emanating from

Congress is not necessary if the law already specifically authorizes an
administrative body to grant a franchise or to award a contract. This is the same
[36]

view espoused by the Secretary of Justice in his opinion dated January 9, 2006,
when he stated:

That the administrative agencies may be vested with the authority

to grant administrative franchises or concessions over the operation of
public utilities under their respective jurisdiction and regulation, without
need of the grant of a separate legislative franchise, has been upheld by
the Supreme Court x x x. [37]
 Under the 1987 Constitution, Congress has an explicit authority to grant a
public utility franchise. However, it may validly delegate its legislative authority,
under the power of subordinate legislation, to issue franchises of certain public
[38]

utilities to some administrative agencies. In Kilusang Mayo Uno Labor Center v.

Garcia, Jr., We explained the reason for the validity of subordinate legislation,
thus:

Such delegation of legislative power to an administrative agency is

permitted in order to adapt to the increasing complexity of modern life. As
subjects for governmental regulation multiply, so does the difficulty of
administering the laws. Hence, specialization even in legislation has become
necessary. (Emphasis ours.)
[39]

As aptly pointed out by the TRB and other private respondents, the Land
Transportation Franchising and Regulatory Board (LTFRB), the Civil Aeronautics
Board (CAB), the National Telecommunications Commission (NTC), and the
Philippine Ports Authority (PPA), to name a few, have been such delegates. The
TRB may very well be added to the growing list, having been statutorily endowed,
as earlier indicated, the power to grant to qualified persons, authority to construct
road projects and operate thereon toll facilities. Such grant, as evidenced by the
corresponding TOC or set out in a TOA, may be amended, modified, or revoked
[by the TRB] whenever the public interest so requires. [40]

In Philippine Airlines, Inc. v. Civil Aeronautics Board, the Court reiterated

[41]

its holding in Albano that the CAB, like the PPA, has sufficient statutory powers
under R.A. 776 to issue a Certificate of Public Convenience and Necessity, or
Temporary Operating Permit to a domestic air transport operator who, although
not possessing a legislative franchise, meets all the other requirements prescribed
by law. We held therein that there is nothing in the law nor in the Constitution
which indicates that a legislative franchise is an indispensable requirement for an
entity to operate as a domestic air transport operator. We further explicated:
[42]

Congress has granted certain administrative agencies the

power to grant licenses for, or to authorize the operation of certain
public utilities. With the growing complexity of modern life, the
multiplication of the subjects of governmental regulation, and the
increased difficulty of administering the laws, there is a constantly
growing tendency towards the delegation of greater powers by the
legislature, and towards the approval of the practice by the courts. It is
generally recognized that a franchise may be derived indirectly from
the state through a duly designated agency, and to this extent, even
 the power to grant franchises has frequently been delegated, even to
agencies other than those of a legislative nature. In pursuance of
this, it has been held that privileges conferred by grant by local
authorities as agents for the state constitute as much a legislative
franchise as though the grant had been made by an act of the
Legislature. (Emphasis ours.)
[43]

The validity of the delegation by Congress of its franchising prerogative is

beyond cavil. So it was that in Tatad v. Secretary of the Department of
Energy, We again ruled that the delegation of legislative power to administrative
[44]

agencies is valid. In the instant case, the certiorari petitioners assume and harp on
the lack of authority of PNCC to continue with its NLEX, SLEX, MMEX
operations, in joint venture with private investors, after the lapse of its P.D. 1113
franchise. None of these petitioners seemed to have taken due stock of and
appreciated the valid delegation of the appropriate power to TRB under P.D. 1112,
as enlarged in P.D. 1894. To be sure, a franchise may be derived indirectly from
the state through a duly designated agency, and to this extent, the power to grant
franchises has frequently been delegated, even to agencies other than those of a
legislative nature. Consequently, it has been held that privileges conferred by
[45]

grant by administrative agencies as agents for the state constitute as much a

legislative franchise as though the grant had been made by an act of the
Legislature. [46]

While it may be, as held in Strategic Alliance Development Corporation v.

Radstock Securities Limited, that PNCCs P.D. 1113 franchise had already expired
[47]

effective May 1, 2007, this fact of expiration did not, however, carry with it the
cancellation of PNCCs authority and that of its JV partners granted under P.D.
1112 in relation to Section 1 of P.D. 1894 to construct, operate and
maintain any and all such extensions, linkages or stretches, together with the toll
facilities appurtenant thereto, from any part of the North Luzon Expressway, South
Luzon Expressway and/or Metro Manila Expressway and/or to divert the original
route and change the original end-points of the [NLEX]and/or [SLEX] as may be
approved by the [TRB]. And to highlight the point, the succeeding Section 2 of
P.D. 1894 specifically provides that the franchise for the extension and toll road
projects constructed after the approval of P.D. 1894 shall be thirty years, counted
from project completion. Indeed, prior to the expiration of PNCCs original
franchise in May 2007, the TRB, in the exercise of its special powers under P.D.
1112, signed supplemental TOAs with PNCC and its JV partners. These STOAs
covered the expansion and rehabilitation of NLEX and SLEX, as the case may be,
and/or the construction, operation and maintenance of toll road projects
contemplated in P.D.1894. And there can be no denying that the corresponding toll
operation permits have been issued.

In fine, the STOAs TRB entered with PNCC and its JV partners had the
[48]

effect of granting authorities to construct, operate and maintain toll facilities, but
with the injection of additional private sector investments consistent with the intent
of P.D. Nos. 1112, 1113 and 1894. The execution of these STOAs came in 1995,
[49]

1998 and 2006, or before the expiration of PNCCs original franchise on May 1,
2007. In accordance with applicable laws, these transactions have actually been
authorized and approved by the President of the Philippines. And as a measure to
[50]

ensure the legality of the said transactions and in line with due diligence
requirements, a review thereof was secured from the GCC and the DOJ, prior to
their execution.

Inasmuch as its charter empowered the TRB to authorize the PNCC and like
entities to maintain and operate toll facilities, it may be stated as a corollary that
the TRB, subject to certain qualifications, infra, can alter the conditions of such
authorization. Well settled is the rule that a legislative franchise cannot be
modified or amended by an administrative body with general delegated powers to
grant authorities or franchises. However, in the instant case, the law granting a
direct franchise to PNCC evidently and specifically conferred upon the TRB the
[51]

power to impose conditions in an appropriate contract. And to reiterate, Section 3

[52]

of P.D. 1113 provides that [t]his [PNCC] franchise is granted subject to such
conditions as may be imposed by the [TRB] in an appropriate contract to be
executed for this purpose, and with the understanding and upon the condition
that it shall be subject to amendment, alteration or repeal when public
interest so requires. A similarly worded proviso is found in Section 6 of P.D.
[53]

1894. It is in this light that the TRB entered into the subject STOAs in order to
allow the infusion of additional investments in the subject infrastructure
projects. Prior to the expiration of PNCCs franchise on May 1, 2007, the STOAs
merely imposed additional conditionalities, or as aptly pointed out by SLTC et al.,
obviously having in mind par. 16.06 of its STOA with TRB, served as [54]

supplement, to the existing TOA of PNCC with TRB. We have carefully gone over
the different STOAs and discovered that the tollway projects covered thereby were
all undertaken under the P.D. 1113 franchise of PNCC. And it cannot be over-
emphasized that the respective STOAs of MNTC and SLTC each contain
provisions addressing the eventual expiration of PNCCs P.D. 1113 franchise and
authorizing, thru the issuance by the TRB of a TOC, the implementation of a given
toll project even after May 1, 2007. Thus:

MNTC STOA

2.6 CONCESSION PERIOD. In order to sustain the financial

viability and integrity of the Project, GRANTOR [TRB] hereby grants
MNTC the CONCESSION for the PROJECT ROADS for a period
commencing upon the date that this [STOA] comes into effect under
Clause 4.1 until 31 December 2030 or thirty years after the issuance of
the corresponding TOLL OPERATION PERMIT for the last completed
phase. Accordingly, unless the PNCC FRANCHISE is further extended
beyond its expiry on 01 May 2007, GRANTOR undertakes to issue the
necessary [TOC] for the rehabilitated and refurbished [NLEX] six
months prior to the expiry of the PNCC FRANCHISE on 01 May 2007.

SLTC STOA

2.03 Authority of Investor and Operator to Undertake the Project

(1) The GRANTOR [TRB] has determined that the Project Toll Roads are
within the existing SLEX and are thus covered by the PNCC Franchise
that is due to expire on May 1, 2007. PNCC has committed to exert its
best efforts to obtain an extension x x x It is understood and agreed that
in the event the PNCC Franchise is not renewed beyond the said expiry
date, this [STOA] and the Concession granted x x x will stand in place
of the PNCC Franchise and serve as a new concession, or authority,
pursuant to Section 3 (a) of the TRB Charter, for the Investor to
undertake the Project and for the Operator to Operate and Maintain the
Project Toll Roads immediately upon the expiration of the PNCC
Franchise, without need of the execution x x x of any other document to
effect the same.

(2) x x x in the event it is subsequently decreed by competent authority that

the issuance by the Grantor of a [TOC] is necessary x x x the Grantor
shall x x x cause the TRB x x x to issue such [TOC] in favor of the
Operator, embodying the terms and conditions of this Agreement.

The foregoing notwithstanding, there are to be sure certain aspects in

PNCCs legislative franchise beyond the altering reach of TRB. We refer to the
coverage area of the tollways and the expiry date of PNCCs original franchise,
which is May 1, 2007, as expressly stated under Sections 1 and 2 of P.D. 1894,
respectively. The fact that these two items were specifically and expressly defined
by law, i.e. P.D. 1113, indicates an intention that any alteration, modification or
repeal thereof should only be done through the same medium. We said as much
in Radstock, thus: [T]he term of the x x x franchise, which is 30 years from 1
May 1977, shall remain the same, as expressly provided in the first sentence of
x x x Section 2 of P.D. 1894. It is likewise worth noting what We further held in
[55]

that case:

The TRB does not have the power to give back to PNCC the
toll assets and facilities which were automatically turned over to the
Government, by operation of law, upon the expiration of the
franchise of the PNCC on 1 May 2007. Whatever power the TRB may
have to grant authority to operate a toll facility or to issue a [TOC], such
power does not obviously include the authority to transfer back to PNCC
ownership of National Government assets, like the toll assets and
facilities, which have become National Government property upon the
expiry of PNCCs franchise x x x. (Emphasis in the original.)
[56]

Verily, upon the expiration of PNCCs legislative franchise on May 1, 2007,

the new authorities to construct, maintain and operate the subject tollways and toll
facilities granted by the TRB pursuant to the validly executed STOAs and TOCs,
shall begin to operate and be treated as administrative franchises or authorities.
Pursuant to Section 3 (e) P.D. 1112, TRB possesses the power and duty, inter
alia to:

x x x grant authority to operate a toll facility and to issue therefore the

necessary Toll Operation Certificate subject to such conditions as shall
be imposed by the [TRB] including inter alia x x x.

This is likewise consistent with the position of the Secretary of Justice in

Opinion No. 122 on November 24, 1995, thus: [57]

TRB has no authority to extend the legislative franchise of PNCC over

the existing NSLE (North and South Luzon Expressways). However,
TRB is not precluded under Section 3 (e) of P.D. No. 1112 (TRB
Charter) to grant PNCC and its joint venture partner the authority to
operate the existing toll facility of the NSLE and to issue therefore the
necessary Toll Operation Certificate x x x.
 It should be noted that the existing franchise of PNCC over the NSLE,
which will expire on May 1, 2007, gives it the right, privilege and
authority to construct, maintain and operate the NSLE.The Toll
Operation Certificate which TRB may issue to the PNCC and its
joint venture partner after the expiration of its franchise on May 1,
2007 is an entirely new authorization, this time for the operation and
maintenance of the NSLE x x x. In other words, the right of PNCC
and its joint venture partner, after May 7, 2007 [sic] to operate and
maintain the existing NSLE will no longer be founded on its
legislative franchise which is not thereby extended, but on the new
authorization to be granted by the TRB pursuant to Section 3 (e),
above quoted, of P.D. No. 1112. (Emphasis ours.)

The same opinion was thereafter made by the Secretary of Justice on

January 9, 2006, in Opinion No. 1, stating that:
[58]

The existing franchise of PNCC over the NSLE, which will expire
on May 1, 2007, gives it the right, privilege and authority to construct,
maintain and operate the NSLE. The Toll Operation Certificate which
the TRB may issue to the PNCC and its joint venture partner after the
expiration of its franchise on May 1, 2007 is an entirely new
authorization, this time for the operation and maintenance of the
NSLE. [T]he right of PNCC and its joint venture partner, after May 1,
2007, to operate and maintain the existing NSLE will no longer be
founded on its legislative franchise which is not thereby extended, but on
the new authorization to be granted by the TRB pursuant to Section 3 (e)
of PD No. 1112.

It appears therefore, that the effect of the STOA is not to extend

the Franchise of PNCC, but rather, to grant a new Concession over the
SLEX Project and the OMCo., entities which are separate and distinct
from PNCC. While initially, the authority of SLTC and OMCo. to enter
into the STOA with the TRB and thereby become grantees of the
Concession, will stem from and be based on the JVA and the assignment
by PNCC to the OMCo. of the Usufruct in the Franchise, we submit that
upon the execution by SLTC and the TRB of the STOA, the right to the
Concession will emanate from the STOA itself and from the authority of
the TRB under Section 3 (a) of the TRB Charter. Such being the case,
the expiration of the Franchise on 1 May 2007, since such Concession is
 an entirely new and distinct concession from the Franchise and is, as
stated, granted to entities other than PNCC.

Finally, with regards (sic) the authority of the TRB this Office in
Secretary of Justice Opinion No. 92, s. 2000, stated that:

Suffice it to say that official acts of the President enjoy full faith and
confidence of the Government of the Republic of the Philippines which he
represents. Furthermore, considering that the queries raised herein relates to the
exercise by the TRB of its regulatory powers over toll road project, the same
falls squarely within the exclusive jurisdiction of TRB pursuant to P.D. No.
1112. Consequently, it is, therefore, solely within TRBs prerogative and
determination as to what rule shall govern and is made applicable to a specific
toll road project proposal.

The STOA is an explicit grant of the Concession by the Republic of

the Philippines, through the TRB pursuant to P.D. (No.) 1112 and as approved
by the President xxx. The foregoing grant is in full accord with the provisions of
P.D. (No.) 1112 which authorizes TRB to enter into contracts on behalf of the
Republic of the Philippines for the construction, operation and maintenance of
toll facilities. Such being the case, we opine that no other legal requirement is
necessary to make the STOA effective of to confirm MNTCs (In this case,
SLTC and the OMCO) rights and privileges granted therein. (Emphasis in the
original.)

Considering, however, that all toll assets and facilities pertaining to PNCC
pursuant to its P.D. 1113 franchise are deemed to have already been turned over to
the National Government on May 1, 2007, whatever participation that PNCC
[59]

may have in the new authorities to construct, maintain and operate the subject
tollways, shall be limited to doing the same in trust for the National
Government. In Radstock, the Court held that [w]ith the expiration of PNCCs
franchise, [its] assets and facilities were automatically turned over, by operation of
law, to the government at no cost. The Court went on further to state that the
[60]

Governments ownership of PNCCs toll assets inevitably resulted in its owning too
of the toll fees and the net income derived, after May 1, 2007, from the toll assets
and facilities. But as We have earlier discussed, the tollways and toll facilities
[61]

should remain functioning in accordance with the validly executed STOAs and
TOCs. However, PNCCs assets and facilities, or, in short, its very
share/participation in the JVAs and the STOAs, inclusive of its percentage share in
the toll fees collected by the JV companies currently operating the tollways shall
likewise automatically accrue to the Government.

In fine, petitioners claim about PNCCs franchise being amenable to an

amendment only by an act of Congress, or, what practically amounts to the same
thing, that the TRB is without authority at all to modify the terms and conditions of
PNCCs franchise, i.e. by amending its TOA/TOC, has to be rejected. Their lament
then that the TRB, through the instrumentality of mere contracts and an
administrative operating certificate, or STOAs and TOC, to be precise, effectively,
but invalidly amended PNCC legislative franchise, are untenable. For, the bottom
line is, the TRB has, through the interplay of the pertinent provisions of P.D. Nos.
1112, 1113 and 1894, the power to grant the authority to construct and operate toll
road projects and toll facilities by way of a TOA and the corresponding
TOC. What is otherwise a legislative power to grant or renew a franchise is not
usurped by the issuance by the TRB of a TOC. But to emphasize, the case of the
TRB is quite peculiarly unique as the special law conferring the legislative
franchise likewise vested the TRB with the power to impose conditions on the
franchise, albeit in a limited sense, by excluding from the investiture the power to
amend or modify the stated lifetime of the franchise, its coverage and the
ownership arrangement of the toll assets following the expiration of the legislative
franchise.
[62]

At this juncture, the Court wishes to express the observation that P.D. Nos.
1112, 1113 and 1894, as couched and considered as a package, very well endowed
the TRB with extraordinary powers. For, subject to well-defined limitations and
approval requirements, the TRB can, by way of STOAs, allow and authorize, as it
has allowed and authorized, a legislative franchisee, PNCC, to share its concession
with another entity or JV partners, the authorization effectively covering periods
beyond May 2007. However, this unpalatable reality, a leftover of the martial law
regime, presents issues on the merits and the wisdom of the economic programs,
which properly belong to the legislature or the executive to address. The TRB is
not precluded from granting PNCC and its joint venture partners authority, through
a TOC for a period following the term of the proposed SMMS, with the said TOC
serving as an entirely new authorization upon the expiration of PNCCs franchise
on May 1, 2007. In short, after May 1, 2007, the operation and maintenance of the
NLEX and the other subject tollways will no longer be founded on P.D. 1113 or
portions of P.D. 1894 (PNCCs original franchise) but on an entirely new
authorization, i.e. a TOC, granted by the TRB pursuant to its statutory authority
under Sections 3 (a) and (e) of P.D. 1112.
Likewise needing no extended belaboring, in the light of the foregoing
dispositions, is the untenable holding of the RTC in SCA No. 3138-PSG that the
TRB is without power to issue a TOC to PNCC, amend or renew its authority over
the SLEX tollways without separate legislative enactment. And lest it be
overlooked, the TRB may validly issue an entirely new authorization to a JV
company after the lapse of PNCCs franchise under P.D. 1113. Its thirty-year
concession under P.D. 1894, however, does not have the quality of definiteness as
to its start, as by the terms of the issuance, it commences and is to be counted from
the date of approval of the project, the term project obviously referring to Metro
Manila Expressways and all extensions, linkages, stretches and diversions
refurbishing and rehabilitation of the existing NLEX and SLEX constructed after
the approval of the decree in December 1983. The suggestion, therefore, of the
petitioners in G.R. No. 169917, citing a 1989 Court of Appeals (CA) decision in
CA-G.R. 13235 (Republic v. Guerrero, et al.), that the Balintawak to Tabang
portion of the expressway no longer forms part of PNCCs franchise and, therefore,
PNCC is without any right to assign the same to MNTC via a JVA, is
specious. Firstly, in its Decision in G.R. No. 89557, a certiorari proceeding
[63]

commenced by PNCC to nullify the CA decision adverted to, the Court approved a
compromise agreement, which referred to (1) the PNCCs authority to collect toll
and maintenance fees; and (2) the supervision, approval and control by the
DPWH of the construction of additional facilities, on the questioned portion of
[64]

the NLEX. And still in another Decision, the Court ruled that the Balintawak to
[65] [66]

Tabang stretch was recognized as part of the franchise of, or otherwise restored as
toll facilities to be operated by x x x PNCC. Once stamped with [67]

judicial imprimatur, and unless amended, modified or revoked by the parties, a

compromise agreement becomes more than a mere binding contract; as thus
sanctioned, the agreement constitutes the courts determination of the controversy,
enjoining the parties to faithfully comply thereto. Verily, like any other judgment,
[68]

it has the effect and authority of res judicata. [69]

At any rate, the PNCC was likewise granted temporary or interim authority
by the TRB to operate the SLEX, to ensure the continued development,
[70]

operations and progress of the projects. We have ruled in Oroport Cargohandling

Services, Inc. v. Phividec Industrial Authority that an administrative agency vested
by law with the power to grant franchises or authority to operate can validly grant
the same in the interim when it is necessary, temporary and beneficial to the
public. The grant by the TRB to PNCC as interim operator of the SLEX was
[71]

certainly intended to guarantee the continued operation of the said tollway facility,
and to ensure the want of any delay and inconvenience to the motoring public.

All given, the cited CA holding is not a binding precedent. The time
limitation on PNCCs franchise under either P.D. 1113 or P.D. 1894 does not
detract from or diminish the TRBs delegated authority under P.D. 1112 to enter
into separate toll concessions apart and distinct from PNCCs original legislative
franchise.

THIRD ISSUE: TRBS POWER TO ENTER INTO CONTRACTS; ISSUE,

 MODIFY AND PROMULGATE TOLL RATES; AND TO RULE ON PETITIONS
RELATIVE TO TOLL RATES LEVEL AND INCREASES VALID

The petitioners in the special civil actions cases would have the Court
declare as invalid (a) Section 3 (a) and (d) of P.D. 1112 (which accord the TRB, on
one hand, the power to enter into contracts for the construction, and operation of
toll facilities, while, on the other hand, granting it the power to issue and
promulgate toll rates) and (b) Section 8 (b) of P.D. 1894 (granting TRB
adjudicatory jurisdiction over matters involving toll rate movements). As
submitted, granting the TRB the power to award toll contracts is inconsistent with
its quasi-judicial function of adjudicating petitions for initial toll and periodic toll
rate adjustments. There cannot, so petitioners would postulate, be impartiality in
such a situation.

The assailed provisions of P.D. 1112 and P.D. 1894 read:

P.D. 1112
Section 3. Powers and Duties of the Board. The Board shall have in addition to
its general powers of administration the following powers and duties:

(a) Subject to the approval of the President of the Philippines, to enter into
contracts in behalf of the Republic of the Philippines with persons, natural or
juridical, for the construction, operation and maintenance of toll facilities such as
but not limited to national highways, roads, bridges, and public thoroughfares.
Said contract shall be open to citizens of the Philippines and/or to corporations or
associations qualified under the Constitution and authorized by law to engage in
toll operations;

(d) Issue, modify and promulgate from time to time the rates of toll that will be
charged the direct users of toll facilities and upon notice and hearing, to approve
or disapprove petitions for the increase thereof. Decisions of the Board on
petitions for the increase of toll rate shall be appealable to the Office of the
President within ten (10) days from the promulgation thereof. Such appeal shall
not suspend the imposition of the new rates, provided however, that pending the
resolution of the appeal, the petitioner for increased rates in such case shall
deposit in a trust fund such amounts as may be necessary to reimburse toll payers
affected in case a reversal of the decision. (Emphasis ours.)

P.D. 1894
SECTION 8. x x x
 (b) For the Metro Manila Expressway and such extensions, linkages,
stretches and diversions of the Expressways which may henceforth be
constructed, maintained and operated by the GRANTEE, the GRANTEE shall
collect toll at such rates as shall initially be approved by the Toll Regulatory
Board. The Toll Regulatory Board shall have the authority to approve such initial
toll rates without the necessity of any notice and hearing, except as provided in
the immediately succeeding paragraph of this Section. For such purpose, the
GRANTEE shall submit for the approval of the Toll Regulatory Board the toll
proposed to be charged the users. After approval of the toll rate(s) by the Toll
Regulatory Board and publication thereof by the GRANTEE once in a newspaper
of general circulation, the toll shall immediately be enforceable and collectible
upon opening of the expressway to traffic use.

Any interested Expressways users shall have the right to file, within a
period of ninety (90) days after the date of publication of the initial toll rate, a
petition with the Toll Regulatory Board for a review of the initial toll rate;
provided, however, that the filing of such petition and the pendency of the
resolution thereof shall not suspend the enforceability and collection of the toll in
question. The Toll Regulatory Board, at a public hearing called for the purpose
after due notice, shall then conduct a review of the initial toll shall be appealable
(sic) to the Office of the President within ten (10) days from the promulgation
thereof. The GRANTEE may be required to post a bond in such amount and from
such surety or sureties and under such terms and conditions as the Toll Regulatory
Board shall fix in case of any petition for review of, or appeal from, decisions of
the Toll Regulatory Board.

In case it is finally determined, after a review by the Toll Regulatory

Board or appeal therefrom, that the GRANTEE is not entitled, in whole or in part,
to the initial toll, the GRANTEE shall deposit in the escrow account the amount
collected under the approved initial toll fee and such amount shall be refunded to
Expressways users who had paid said toll in accordance with the procedure as
may be prescribed or promulgated by the Toll Regulatory Board. (Emphasis
ours.)

The petitioners are indulging in gratuitous, if not unfair, conclusion as to the

capacity of the TRB to act as a fair and objective tribunal on matters of toll fee
fixing.

Administrative bodies have expertise in specific matters within the purview

of their respective jurisdictions. Accordingly, the law concedes to them the power
to promulgate implementing rules and regulations (IRR) to carry out declared
statutory policies provided that the IRR conforms to the terms and standards
prescribed by that statute. [72]
 The Court does not perceive an irreconcilable clash in the enumerated TRBs
statutory powers, such that the exercise of one negates another. The ascription of
impartiality on the part of the TRB cannot, under the premises, be accorded
cogency. Petitioners have not shown that the TRB lacks the expertise, competence
and capacity to implement its mandate of balancing the interests of the toll-paying
motoring public and the imperative of allowing the concessionaires to recoup their
investment with reasonable profits. As it were, Section 9 of P.D. 1894 provides a
parametric formula for adjustment of toll rates that takes into account the Peso-US
Dollar exchange rate, interest rate and construction materials price index, among
other verifiable and quantifiable variables.

While not determinative of the issue immediately at hand, the grant to and
the exercise by an administrative agency of regulating and allowing the operation
of public utilities and, at the same time, fixing the fees that they may charge their
customers is now commonplace. It must be presumed that the Congress, in creating
said agencies and clothing them with both adjudicative powers and contract-
making prerogatives, must have carefully studied such dual authority and found the
same not breaching any constitutional principle or concept. So must it be for P.D.
[73]

Nos. 1112 and 1894.

The Court can take judicial cognizance of the exercise by the LTFRB and
NTC both spin-off agencies of the now defunct Public Service Commission of
similar concurrent powers. The LTFRB, under Executive Order No. (E.O.)
202, series of 1987, is empowered, among others, to regulate the operation of
[74] [75]

public utilities or for hire vehicles and to grant franchises or certificates of public
convenience (CPC); and to fix rates or fares, to approve petitions for fare rate
increases and to resolve oppositions to such petitions.
The NTC, on the other hand, has been granted similar powers of granting
franchises, allocating areas of operations, rate-fixing and to rule on petitions for
rate increases under E.O. 546, s. of 1979.
[76]

The Energy Regulatory Commission (ERC) likewise enjoys on the one hand, the
power (a) to grant, modify or revoke an authority to operate facilities used in the
generation of electricity, and on the other, (b) to determine, fix and approve rates
and tariffs of transmission, and distribution retail wheeling charges and tariffs of
franchise electric utilities and all electric power rates including that which is
charged to end-users. In Chamber of Real Estate and Builders Association, Inc. v.
[77]

ERC, We even categorically stated that the ERC is a quasi-judicial and quasi-
legislative regulatory body created under Section 38 of the EPIRA, [and] x x x an
administrative agency vested with broad regulatory and monitoring
functions over the Philippine electric industry to ensure its successful restructuring
and modernization x x x. [78]

To summarize, the fact that an administrative agency is exercising its

administrative or executive functions (such as the granting of franchises or
awarding of contracts) and at the same time exercising its quasi-legislative (e.g.
rule-making) and/or quasi-judicial functions (e.g. rate-fixing), does not support a
finding of a violation of due process or the Constitution. In C.T. Torres
Enterprises, Inc. v. Hibionada, We explained the rationale, thus:
[79]

It is by now commonplace learning that many administrative agencies

exercise and perform adjudicatory powers and functions, though to a limited
extent only. Limited delegation of judicial or quasi-judicial authority to
administrative agencies (e.g. the Securities and Exchange Commission and the
National Labor Relations Commission) is well recognized in our jurisdiction,
basically because the need for special competence and experience has been
recognized as essential in the resolution of questions of complex or specialized
character and because of a companion recognition that the dockets of our
regular courts have remained crowded and clogged.

xxxx

As a result of the growing complexity of the modern society, it has become

necessary to create more and more administrative bodies to help in the regulation
of its ramified activities. Specialized in the particular fields assigned to them,
they can deal with the problems thereof with more expertise and dispatch
than can be expected from the legislature or the courts of justice. This is the
reason for the increasing vesture of quasi-legislative and quasi-judicial
powers in what is now not unquestionably called the fourth department of the
government.

xxxx

There is no question that a statute may vest exclusive original jurisdiction in an

administrative agency over certain disputes and controversies falling within the
agency's special expertise. The very definition of an administrative agency
includes its being vested with quasi-judicial powers. The ever increasing
variety of powers and functions given to administrative agencies recognizes
the need for the active intervention of administrative agencies in matters
calling for technical knowledge and speed in countless controversies which
cannot possibly be handled by regular courts. (Emphasis ours.)

FOURTH ISSUE: PRESIDENT AMPLY VESTED WITH STATUTORY

POWER TO APPROVE TRB CONTRACTS
 Just like their parallel stance on the grant to TRB of the power to enter into
toll agreements, e.g., TOAs or STOAs, the petitioners in the first three petitions
would assert that the grant to the President of the power to peremptorily authorize
the assignment by PNCC, as franchise holder, of its franchise or the usufruct in its
franchise is unconstitutional. It is unconstitutional, so petitioners would claim, for
being an encroachment of legislative power.

As earlier indicated, Section 3 (a) of P.D. 1112 requires approval by the

President of any contract TRB may have entered into or effected for the
construction and operation of toll facilities. Complementing Section 3 (a) is 3 (e)
(3) of P.D. 1112 enjoining the transfer of the usufruct of PNCCs franchise without
the Presidents prior approval. For perspective, Section 3 (e) (3) of P.D. 1112
provides:

That the toll operator shall not lease, transfer, grant the usufruct
of, sell or assign the rights or privileges acquired under the [TOC] to any
person x x x or legal entity nor merge with any other company or
corporation organized for the same purpose without the prior approval of
the President of the Philippines. In the event of any valid transfer of the
TOC, the Transferee shall be subject to all the conditions, terms,
restrictions and limitations of this Decree x x x.[80]

The Presidents approving authority is of statutory origin. To us, there is

nothing illegal, let alone unconstitutional, with the delegation to the President of
the authority to approve the assignment by PNCC of its rights and interest in its
franchise, the assignment and delegation being circumscribed by restrictions in the
delegating law itself. As the Court stressed in Kilosbayan v. Guingona, Jr., the [81]

rights and privileges conferred under a franchise may be assigned if authorized by

a statute, subject to such restrictions as may be provided by law, such as the prior
approval of the grantor or a government agency. [82]

There can, therefore, be no serious challenge to this presidential- approving

prerogative. Should grave abuse of discretion in some way infect the exercise of
the prerogative, then the approval action may be nullified for that reason, but not
on the ground that the underlying authority is constitutionally doubtful. If the TRB
may validly be empowered to grant private entities the authority to operate toll
facilities, would a delegation of a lesser authority to approve the grant to the head
of the administrative machinery of the government be objectionable?
 The fact that P.D. 1112 partakes of a martial law issuance does
not per se provide an objectionable feature to the decree, albeit it may be argued
with some plausibility that then President Marcos intended to have the final say as
to who shall act as the toll operators of the Luzon expressways. Be that as it may,
all proclamations, orders, decrees, instructions, and acts promulgated, issued, or
done by the former President (Ferdinand E. Marcos) are part of the law of the land,
and shall remain valid, legal, binding, and effective, unless modified, revoked or
superseded by subsequent proclamations, orders, decrees, instructions, or other acts
of the President. To emphasize, Padua v. Ranada cited Association of Small
[83]

Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, quoting that:

The Court wryly observes that during the past dictatorship, every
presidential issuance, by whatever name it was called, had the force and
effect of law because it came from President Marcos. Such are the ways
of despots. Hence, it is futile to argue that LOI 474 could not have
repealed P.D. No. 27 because the former was only a letter of
instruction. The important thing is that it was issued by President
Marcos, whose word was law during that time. [84]

FIFTH ISSUE: ASSAILED STOAS VALIDLY ENTERED

This brings us to the issue of the validity of certain provisions of the STOAs
and related agreements entered into by the TRB, as duly approved by the President.

Relying on Clause 17.4.1 of the MNTC STOA that the lenders have the
[85]

unrestricted right to appoint a substitute entity in case of default of MNTC or of the

occurrence of an event of default in respect of the loans, petitioners argue that
since MNTC is the assignee or transferee of PNCCs franchise, then it steps into the
shoes of PNCC. They contend that the act of replacing MNTC as grantee is
tantamount to an amendment or alteration of the PNCCs original franchise and
hence unconstitutional, considering that the constitutional power to appoint a new
franchise holder is reserved to Congress. [86]

This contention is bereft of merit.

Petitioners presupposition that only Congress has the power to directly grant
franchises is misplaced. Time and again, We have held that administrative agencies
may be empowered by the Legislature by means of a law to grant franchises or
similar authorizations. And this, We have sufficiently addressed in the present
[87]

case. To reiterate, We discussed in Albano that our statute books are replete with
[88]
laws granting administrative agencies the power to issue authorizations. This [89]

delegation of legislative power to administrative agencies is allowed in order to

adapt to the increasing complexity of modern life. Consequently, We have held
[90]

that the privileges conferred by grant by local authorities as agents for the state
constitute as much a legislative franchise as though the grant had been made by an
act of the Legislature.
[91]

In this case, the TRBs charter itself, or Section 3 (e) of P.D. 1112,
specifically empowers it to grant authority to operate a toll facility and to issue
therefore the necessary Toll Operation Certificate subject to such conditions as
shall be imposed by the [TRB]x x x. Section 3 (a) of the same law permits the
[92]

TRB to enter into contracts for the construction, operation and maintenance of toll
facilities. Clearly, there is no question that the TRB is vested by the Legislature,
through P.D. 1112, with the power not only to grant an authority to operate a toll
facility, but also to enter into contracts for the construction, operation and
maintenance thereof.

Petitioners also contend that substituting MNTC as the grantee in case of its
default with respect to its loans is tantamount to an amendment of PNCCs original
franchise and is hence, unconstitutional. We also find this assertion to be without
merit. Besides holding that the Legislature may properly empower administrative
agencies to grant franchises pursuant to a law, We have also earlier explained in
this case that P.D. 1113 and the amendatory P.D. 1894 both vested the TRB with
the power to impose conditions on PNCCs franchise in an appropriate contract and
may therefore amend or alter the same when public interest so requires; save for
[93]

the conditions stated in Sections 1 and 2 of P.D. 1894, which relates to the
coverage area of the tollways and the expiration of PNCCs original
franchise. P.D. 1112 provided further that the TRB has the power to amend or
[94]

modify a Toll Operation Certificate that it issued when public interest so

requires. Accordingly, to Our mind, there is nothing infirm much less
[95]

questionable about the provision in the STOA, allowing the substitution of MNTC
in case it defaults in its loans.

Furthermore, in the subject provision (Clause 17.4.1 ), the unrestricted right

[96]

of the lender to appoint a substituted entity is never intended to afford such lender
a plenary power to do so. The subject clause states:

17.4.1 The PARTIES acknowledge that following a Notice of

Substitution under clauses 17.2 or 17.3 the LENDERS have, subject
to the provisions of Clause 17.4.3, the unrestricted right to appoint a
 SUBSTITUTED ENTITY in place of MNTC following the declaration
of the occurrence of a MNTC DEFAULT prior to full repayment of
the LOANS or of an event of default in respect of the
LOANS. GRANTOR shall extend all reasonable assistance to the
AGENT to put in place a SUBSTITUTED ENTITY. MNTC shall make
available all necessary information to potential SUBSTITUTED
ENTITY to enable such entity to evaluate the Project. (Emphasis ours.)

It is clear from the above-quoted provision that Clause 17.4.1 should always
be construed and read in conjunction with Clauses 17.2, 17.3, 17.4.2, 17.4.3 and
20.12.Clauses 17.2 and 17.3 discuss the procedures that must be followed and
undertaken in case of MNTCs default prior to the full repayment of the loans, and
before the substitution under Clause 17.4.1 could take place. These clauses provide
the following process:

Prior to Full Repayment of the LOANS:

17.2 Upon occurrence of an MNTC DEFAULT under Clause 17.1(a) and

(e) prior to full repayment of the LOANS, GRANTOR shall serve a
written Notice of Default to MNTC with copy to the AGENT giving a
reasonable period of time to cure the MNTC DEFAULT, such
period being three (3) months from receipt of the notice or such
longer period as may be approved by GRANTOR, taking due
consideration of the nature of the default and of the repair works
required. If MNTC fails to remedy such default during such three (3)
month or [sic] curing period, GRANTOR may issue a Notice of
Substitution on MNTC, copy furnished to the AGENT, which shall
take effect upon the assumption and take over by the SUBSTITUTED
ENTITY pursuant to the provisions of Clause 17.4 hereof; Provided,
However, that prior to such assumption and take over by the
SUBSTITUTED ENTITY, MNTC shall continue to OPERATE AND
MAINTAIN the PROJECT ROADS and shall place in an escrow
account the TOLL revenues, save such amounts as may be needed to
primarily cover the OPERATING COSTS and as may be owing and due
to the lenders under the LOANS and, secondarily, to cover the PNCC
Gross Toll Revenue Share, Provided, Further, that upon the assumption
and take over by the SUBSTITUTED ENTITY, such assumption and
take over shall have the effect of revoking the rights, privileges and
obligations of MNTC under this AGREEMENT in favor of the
SUBSTITUTED ENTITY and MNTC shall cease to be a PARTY to this
AGREEMENT.
 17.3 If prior to full repayment of the LOANS MNTC fails to remedy
MNTC DEFAULT under Clause 17.1 (b) or an MNTC DEFAULT
occurs under Clause 17.1 (c), (d) or (f) prior to full repayment of the
LOANS, GRANTOR shall serve a Notice of Substitution on MNTC,
copy furnished to the AGENT, as provided under Clause
17.4. (Emphasis ours)
[97]

It is apparent from the above-quoted provision that it is the TRB

representing the Republic of the Philippines as Grantor which has control over the
situation before Clause 17.4.1 could come into place. To stress, following the
condition under Clause 17.4.1, it is only when Clauses 17.2 and 17.3 have been
complied with that the entire Clause 17.4 could begin to materialize.

Clauses 17.4.2 and 17.4.3 also provide for certain parameters as to when a
substituted entity could be considered acceptable, and enumerate the conditions
that should be undertaken and complied with. Particularly, the subject provisions
[98]

state:

17.4.2 The SUBSTITUTED ENTITY shall be required to provide evidence to

GRANTOR that at the time of substitution:

(i) it is legally and validly nominated by the AGENT as MNTCs substitute to

continue the implementation of the PROJECT.

(ii) it is legally and validly constituted and has the capability to enter into
such agreement as may be required to give effect to the substitution;

17.4.3 The AGENT shall have one (1) year to effect a substitution under Clause
17.4; Provided, However, that during this time the AGENT shall not take
any action which may jeopardize the continuity of the service and shall
take the necessary action to ensure its continuation. To effect such
substitution, the AGENT shall notify its intention to GRANTOR and
shall, at the same time, give all necessary information to
GRANTOR. GRANTOR shall, within one (1) month following such
notification, inform the AGENT of its acceptance of the substitution,
if the conditions set forth in Clause 17.4.2 have been satisfied. The
SUBSTITUTED ENTITY shall be permitted a reasonable period to cure
any MNTC DEFAULT under Clause 17.1 (a), (b) or (e).
 From the foregoing, it is clear that the lenders do not actually have an
absolute or unrestricted right to appoint the SUBSTITUTED ENTITY in view of
TRBs right to accept or reject the substitution within one (1) month from notice
and such right to appoint comes into force only if and when the TRB decides to
effectuate the substitution of MNTC as allowed in Clause 17.2 of the MNTC
STOA.

At the same time, Clause 17.4.4 particularizes the conditions upon which the
substitution shall become effective, to wit:

17.4.4 The Substitution shall be effective upon:

(a) the appointment of a SUBSTITUTED ENTITY in accordance

with the provisions of this Clause 17.4; and,

(b) assumption by the SUBSTITUTED ENTITY of all of the rights

and obligations of MNTC under this AGREEMENT, including
the payment of PNCCs Gross Toll Revenue Share under the
JOINT VENTURE AGREEMENT dated 29 August 1995 and all
other agreements in connection with this agreement signed and
executed by and between PNCC and MNTC.

The afore-quoted Section (a) of Clause 17.4.4 reiterates the necessity of

compliance by the substituted entity with all the conditions provided under Clause
17.4.Furthermore, following the above-quoted conditions veritably protects the
interests of the Government. As previously discussed supra, PNCCs assets with
respect to its legislative franchise under P.D. 1113, as amended, has already been
automatically turned over to the Government. And whatever share PNCC has in
relation to the currently implemented administrative authority granted by the TRB
is merely being held in trust by it in favor of the Government. Accordingly, the fact
that Section b of Clause 17.4.4 ensures that the obligation to pay PNCCs Gross
Toll Revenue Share is assumed by the substituted entity, necessarily means that the
Governments Gross Toll Revenue Share is safeguarded and kept intact.

The MNTC STOA also states that only in case no substituted entity is
established in accordance with Clause 17.4 that Clause 17.5 shall be
applied. Clause 17.5 grants the lenders the power to extend the concession in case
the Grantor (Republic of the Philippines) takes over the same, for a period not
exceeding fifty years, until full payment of the loans. Petitioners contend that the
[99]

option to extend the concession for that stated period is, however, unconstitutional.

This assertion is impressed with merit. At the outset, Clause 17.5 does not
actually grant the lenders of the defaulting concessionaire, the power to unilaterally
extend the concession for a period not exceeding fifty years. For reference, the
pertinent provision states:

17.5 Only if no SUBSTITUTE ENTITY is established shall the

GRANTOR [TRB] be entitled to take-over the CONCESSION with no
commitment on the LOANS in which case the OPERATION AND
MAINTENANCE CONTRACT shall be assigned to any entity that the
AGENT may designate provided such entity has a sufficient legal and
[100]

technical capacity to perform and assume the obligations of the

OPERATION AND MAINTENANCE CONTRACT under this
AGREEMENT. The LENDERS shall receive all TOLL, excepting
PNCCs revenue share provided for under the JOINT INVESTMENT
PROPOSAL (vide: Annex C hereof), for as long as required until full
repayment of the LOANS including if necessary an extension of the
CONCESSION PERIOD which in no case shall exceed fifty (50)
years; Provided that the LENDERS support all amounts payable under
the OPERATION AND MAINTENANCE CONTRACT. For avoidance
of doubt, the GRANTOR will have no obligation in relation to liabilities
incurred by MNTC prior to such take-over. (Emphasis supplied)
[101]

The afore-quoted provision should be read in conjunction with Clause 20.12,

which expressly provides that the MNTC STOA is made under and shall be
governed by and construed in accordance with the laws of the Philippines, and
particularly, by the provisions of P.D. Nos. 1112, 1113 and 1894. Under the
applicable laws, the TRB may very well amend, modify, alter or revoke the
authority/franchise whenever the public interest so requires. In a word, the power
[102]

to determine whether or not to continue or extend the authority granted to a

concessionaire to operate and maintain a tollway is vested to the TRB by the
applicable laws. The necessity of whether or not to extend the concession or the
authority to construct, operate and maintain a tollway rests, by operation of law,
with the TRB. As such, the lenders cannot unilaterally extend the concession
period, or, with like effect, impose upon or demand that the TRB agree to extend
such concession.
 Be that as it may, it must be noted, however, that while the TRB is vested by
law with the power to extend the administrative franchise or authority that it
granted, nevertheless, it cannot do so for an accumulated period exceeding fifty
years. Otherwise, it would violate the proscription under Article XII, Section 11 of
the 1987 Constitution, which states that: [103]

Sec. 11. No franchise, certificate, or any other form of

authorization for the operation of a public utility shall be granted except
to citizens of the Philippines or to corporations or associations organized
under the laws of the Philippines at least sixty per centum of whose
capital is owned by such citizens, nor shall such franchise, certificate,
or authorization be exclusive in character or for a longer period
than fifty years. Neither shall any such franchise or right be granted
except under the condition that it shall be subject to amendment,
alteration or repeal by the Congress when the common good so
requires. The State shall encourage equity participation in public utilities
by the general public. The participation of foreign investors in the
governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing
officers of such corporation or associations must be citizens of
the Philippines. (Emphasis Ours)

In this case, the MNTC STOA already has an original stipulated period of
thirty years. Clause 17.5 allows the extension of this period if necessary to fully
[104]

repay the loans made by MNTC to the lenders, thus:

x x x The LENDERS shall receive all TOLL, excepting PNCCs

revenue share provided for under the JOINT INVESTMENT
PROPOSAL (vide: Annex C hereof), for as long as required until full
repayment of the LOANS including if necessary an extension of the
CONCESSION PERIOD which in no case shall exceed a maximum
period of fifty (50) years; x x x (Emphasis ours.)

If the maximum extension as provided for in Clause 17.5, i.e. fifty years,
shall be utilized, the accumulated concession period that would be granted in this
case would effectively be eighty years. To Us, this is a clear violation of the fifty-
year franchise threshold set by the Constitution. It is in this regard that we strike
down the above-quoted clause, including if necessary an extension of the
CONCESSION PERIOD which in no case shall exceed a maximum period of
fifty (50) years in Clause 17.5 as void for being violative of the Constitution. It [105]
must be made abundantly clear, however, that the nullity shall be limited to such
extension beyond the 50-year constitutional limit.
All told, petitioners allegations that the TRB acted with grave abuse of
discretion and with gross disadvantage to the Government with respect to Clauses
17.4.1 and 17.5 of the MNTC STOA are unfounded and speculative.
Petitioners also allege that the MNTC STOA is grossly disadvantageous to
the Government since under Clause 11.7 thereof, the Government, through the
TRB, guarantees the viability of the financing program of a toll operator. Under
Clause 11.7 of the MNTC STOA, the TRB agreed to pay monthly, the difference
in the toll fees actually collected by MNTC and that which it could have realized
under the STOA. The pertinent provisions states:

11.7 To insure the viability and integrity of the Project, the Parties
recognize the necessity for adjustments of the AUTHORIZED TOLL
RATE . In the event that said adjustment are not effected as provided
under this Agreement for reasons not attributable to MNTC, the
GRANTOR [TRB] warrants and so undertakes to compensate, on a
monthly basis, the resulting loss of revenue due to the difference
between the AUTHORIZED TOLL RATE actually collected and the
AUTHORIZED TOLL RATE which MNTC would have been able
to collect had the adjustments been implemented. (Emphasis ours)

As set out in the preamble of P.D. 1112, the need to encourage the infusion
of private capital in tollway projects is the underlying rationale behind the
enactment of said decree. Owing to the scarce capital available to bankroll a huge
capital-intensive project, such as the North Luzon Tollway project, it is well-nigh
inevitable that the financing of these types of projects is sourced from private
investors. Quite naturally, the investors expect the regularity of the cash flow. It is
perhaps in this broad context that the obligation of the Grantor under Clause 11.7
of the MNTC STOA was included in the STOA. To Us, Clause 11.7 is not only
grossly disadvantageous to the Government but a manifest violation of the
Constitution.

Section 3 (e) (5) of P.D. 1112 explicitly states:

[t]hat no guarantee, Certificate of Indebtedness, collateral

securities, or bonds shall be issued by any government agency or
government-owned or controlled corporation on any financing program
of the toll operator in connection with his undertaking under the Toll
Operation Certificate.
 What the law seeks to prevent in this situation is the eventuality that the
Government, through any of its agencies, could be obligated to pay or secure,
whether directly or indirectly, the financing by the private investor of the
project. In this case, under Clause 11.7 of the MNTC STOA, the Republic of the
Philippines (through the TRB) guaranteed the security of the project against
revenue losses that could result, in case the TRB, based on its determination of a
just and reasonable toll fee, decides not to effect a toll fee adjustment under the
STOAs periodic/interim adjustment formula. The OSG, in its Comment, admitted
that the amounts the government undertook to pay in case of Clause 11.7 violation
is an undertaking to pay compensatory damage for something akin to a breach of
contract. As P.D. 1112 itself expressly prohibits the guarantee of a security in the
[106]

financing of the toll operator pursuant to its tollway project, Clause 11.7 cannot be
a valid stipulation in the STOA.

This is more so for being in violation of the Constitution. Article VI, Section
29 (1) of the Constitution mandates that [n]o money shall be paid out of the
Treasury except in pursuance of an appropriation made by law. We have held [107]

in Radstock that government funds or property shall be spent or used solely for
public purposes, as expressly mandated by Section 4 (2) of PD 1445 or the
Government Auditing Code. Particularly, We held in Radstock case that:
[108]

[t]he power to appropriate money from the General Funds of the

Government belongs exclusively to the Legislature. Any act in violation
of this iron-clad rule is unconstitutional.

Reinforcing this Constitutional mandate, Sections 84 and 85 of

PD 1445 require that before a government agency can enter into a
contract involving the expenditure of government funds, there must
be an appropriation law for such expenditure, thus:

Section 84. Disbursement of government funds.

1. Revenue funds shall not be paid out of any public treasury or depository except in
pursuance of an appropriation law or other specific statutory authority.

xxxx

Section 85. Appropriation before entering into contract.

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.
 xxxx

Section 86 of PD 1445, on the other hand, requires that the proper

accounting official must certify that funds have been appropriated for the
purpose. Section 87 of PD 1445 provides that any contract entered into
contrary to the requirements of Sections 85 and 86 shall be
void. (Emphasis ours.)
[109]

In the instant case, the TRB, by warranting to compensate MNTC with the
loss of revenue resulting from the non-implementation of the periodic and interim
toll fee adjustments, violates the very constitutionally guaranteed power of the
Legislature, to exclusively appropriate money for public purpose from the General
Funds of the Government. The TRB veritably accorded unto itself the exclusive
authority granted to Congress to appropriate money that comes from the General
Funds, by making a warranty to compensate a revenue loss under Clause 11.7 of
the MNTC STOA. There is not even a badge of indication that the aforementioned
requisites under the Constitution and P.D. 1445 in respect of appropriation of
money from the General Funds of the Government have been properly complied
with. Worse, P.D. 1112 expressly prohibits the guarantee of security of the
financing of a toll operator in connection with his undertaking under the Toll
Operation Certificate. Accordingly, Clause 11.7 of the MNTC STOA, under which
the TRB warrants and undertakes to compensate MNTCs loss of revenue resulting
from the non-implementation of the periodic and interim toll fee adjustments, is
illegal, unconstitutional and hence void.

Parenthetically, We also find a similar provision in the SLTC STOA under

Clause 8.08 thereof, which states that: [110]

(2) In the event the Authorized Toll Rate and adjustments thereto are not
implemented or made effective in accordance with the provisions of this
Agreement, for reasons not attributable to the fault of the Investor and/or the
Operator, including the reversal by the TRB or by any competent court or
authority of any such adjustment in the Authorized Toll Rate previously approved
by the TRB, except where such reversal is by reason of a determination of the
misapplication of the Authorized Toll Rates, the Grantor shall compensate the
Operator, on a monthly basis and within thirty (30) days of submission by the
Operator of a notice thereof, without interest, for the resulting loss of revenue
computed as the difference between:

(a) the actual traffic volume for the month in question multiplied by the Current
Authorized Toll Rate as escalated and/or adjusted, that should be in effect;
and
 (b) the Gross Toll Revenue for the month in question.

(3) The obligation of the Grantor to compensate the Operator shall continue until the
applicable Current Authorized Toll Rate is implemented.

Akin to what is contemplated in Clause 11.7 of the MNTC STOA, Clauses

8.08 (2) and (3) of the SLTC STOA, under which the TRB warrants or is obligated
to compensate the Operator for its loss of revenue resulting from the non-
implementation of the calculation/formula of authorized toll price and toll rate
adjustments found in Clause 8 thereof, are illegal, unconstitutional and, hence,
void. This ruling is consistent with the TRBs power to determine, without any
influence or compulsion direct or indirect as to whether a change in the toll fee
rates is warranted. We will discuss the same below.

Petitioners argue that the CITRA, SLTC and MNTC STOAs tie the hands of
the TRB as it is bound by the stipulated periodic and interim toll rate adjustments
provided therein. Petitioners contend that the SMMS (CITRA STOA), the SLTC
and the MNTC STOAs provisions on initial toll rates and periodic/interim toll rate
adjustments, by using a built-in automatic toll rate adjustment formula, allegedly
[111]

guaranteed fixed returns for the investors and negated the public hearing
requirement.
This contention is erroneous. The requisite public hearings under Section 3
(d) of P.D. 1112 and Section 8 (b) of P.D. 1894 are not negated by the fixing of the
initial toll rates and the periodic adjustments under the STOA.

Prefatorily, a clear distinction must be made between the statutory

prescription on the fixing of initial toll rates, on the one hand, and
of periodic/interim or subsequent toll rates, on the other. First, the hearing required
under the said provisos refers to notice and hearing for the approval or denial of
petitions for toll rate adjustments or the subsequent toll rates, not to the fixing of
initial toll rates. By express legal provision, the TRB is authorized to approve the
initial toll rates without the necessity of a hearing. It is only when a challenge on
the initial toll rates fixed ensues that public hearings are required. Section 8 of P.D.
1894 says so:

x x x the GRANTEE shall collect toll at such rates as shall initially be approved
by the [TRB]. The [TRB] shall have the authority to approve such initial toll
rates without the necessity of any notice and hearing, except as provided in
the immediately succeeding paragraph of this Section. For such purpose, the
GRANTEE shall submit for the approval of the [TRB] the toll proposed to be
 charged the users. After approval of the toll rate(s) by the [TRB] and publication
thereof by the GRANTEE once in a newspaper of general circulation, the toll
shall immediately be enforceable and collectible upon opening of the expressway
to traffic use.

Any interested Expressways users shall have the right to file,

within x x x (90) days after the date of publication of the initial toll
rate, a petition with the [TRB] for a review of the initial toll rate;
provided, however, that the filing of such petition and the pendency of
the resolution thereof shall not suspend the enforceability and collection
of the toll in question. The [TRB], at a public hearing called for the
purpose shall then conduct a review of the initial toll (sic) shall be
appealable to the [OP] within ten (10) days from the promulgation
thereof.(Emphasis ours.)

Of the same tenor is Section 3 (d) of P.D. 1112 stating that the TRB has the
power and duty to:

[i]ssue, modify and promulgate from time to time the rates of toll
that will be charged the direct users of toll facilities and upon notice
and hearing, to approve or disapprove petitions for the increase
thereof. Decisions of the [TRB] on petitions for the increase of toll rate
shall be appealable to the [OP] within ten (10) days from the
promulgation thereof. Such appeal shall not suspend the imposition of
the new rates, provided however, that pending the resolution of the
appeal, the petitioner for increased rates in such case shall deposit in a
trust fund such amounts as may be necessary to reimburse toll payers
affected in case a (sic) reversal of the decision. (Emphasis Ours.)
[112]

Similarly in Padua v. Ranada, the fixing of provisional toll rates by the TRB
without a public hearing was held to be valid, such procedure being expressly
provided by law. To be very clear, it is only the fixing of the initial and the
[113]

provisional toll rates where a public hearing is not a vitiating

requirement. Accordingly, subsequent toll rate adjustments are mandated by law
to undergo both the requirements of public hearing and publication.

In Manila International Airport Authority (MIAA) v. Blancaflor, the Court

expounded on the necessity of a public hearing in rate fixing/increases
scenario. There, the Court ruled that the MIAA, being an agency attached to the
Department of Transportation and Communications (DOTC), is governed by
Administrative Code of 1987, Book VII, Section 9 of which specifically
[114]
mandates the conduct of a public hearing. Accordingly, the MIAAs resolutions,
[115]

which increased the rates and charges for the use of its facilities without the
required hearing, were struck down as void. Similarly, as We do concede, the
[116]

TRB, being likewise an agency attached to the DOTC, is governed by the same [117]

Code and consequently requires public hearing in appropriate cases. It is, therefore,
imperative that in implementing and imposing new, i.e. subsequent toll rates
arrived at using the toll rate adjustment formula, the subject tollway operators and
the TRB must necessarily comply not only with the requirement of publication but
also with the equally important public hearing. Accordingly, any fixing of the toll
rate, which did not or does not comply with the twin requirements of public
hearing and publication, must therefore be struck down as void. In such case, the
previously valid toll rate shall consequently apply, pending compliance with the
twin requirements for the new toll rate.

In the instant consolidated cases, the fixing of the initial toll rates may have
indeed come to pass without any public hearing. Unfortunately for petitioners,
[118]

and notwithstanding its presumptive validity, they did not assail the initial toll rates
within the timeframe provided in P.D. 1112 and P.D. 1894. Besides, as earlier [119]

explicated, the STOA provisions on periodic rate adjustments are not a bar to a
public hearing as the formula set forth therein remains constant, serving only as a
guide in the determination of the level of toll rates that may be allowed.

It is apropos to state at this juncture that, in determining the reasonableness

of the subsequent toll rate increases, it behooves the TRB to seek out the
Commission on Audit (COA) for assistance in examining and auditing the
financial books of the public utilities concerned. Section 22, Chapter 4, Subtitle B,
Title 1, Book V of the Administrative Code of 1987 expressly authorizes the COA
to examine the aforementioned documents in connection with the fixing of rates of
every nature, including as in this case, the fixing of toll fees. We have on certain[120]

occasions applied this provision. Manila Electric Company, Inc. v. Lualhati easily
comes to mind where this Court tasked the Energy Regulatory Commission to seek
the assistance of the COA in determining the reasonableness of the rate increases
that MERALCO intended to implement. We have consistently held that the law
[121]

is deemed written into every contract. Being a provision of law, this authority of
[122]

the COA under the Administrative Code should therefore be deemed written in the
subject contracts i.e. the STOAs.

In this regard, during the examination and audit, the public utilities
concerned are mandated to produce all the reports, records, books of accounts and
such other papers as may be required, and the COA is empowered to examine
under oath any official or employee of the said public utilit[ies]. Any public [123]

utility unreasonably denying COA access to the aforementioned documents,

unnecessarily obstructs the examination and audit and may be adjudged liable of
concealing any material information concerning its financial status, shall be subject
to the penalties provided by law. Finally, the TRB is further obliged to take the
[124]

appropriate action on the COA Report with respect to its finding of reasonableness
of the proposed rate increases. [125]

Furthermore, while the periodic, interim and other toll rate adjustment
formulas are indicated in the STOAs, it does not necessarily mean that the TRB
[126]

should accept a rate adjustment predicated on the economic data, references or

assumptions adopted by the toll operator. At the end of the day, the final figures
should be those of the TRB based on its appreciation of the relevant rate-
influencing data. In fine, the TRB should exercise its rate-fixing powers vested to it
by law within the context of the agreed formula, but always having in mind that the
rates should be just and reasonable. Conversely, it is very well within the power
of the TRB under the law to approve the change in the current toll
fees. Section 3 (d) of P.D. 1112 grants the TRB the power to [i]ssue, modify and
[127]

promulgate from time to time the rates of toll that will be charged the direct users
of toll facilities. But the reasonableness of a possible increase in the fees must first
be clearly and convincingly established by the petitioning entities, i.e. the toll
operators.Otherwise, the same should not be granted by the approving authority
concerned. In Philippine Communications Satellite Corporation v. Alcuaz, the [128]

Court had the opportunity to explain what is meant by a just and reasonable fixing
of rates, thus:

Hence, the inherent power and authority of the State, or its authorized agent, to
regulate the rates charged by public utilities should be subject always to the
requirement that the rates so fixed shall be reasonable and just. A
commission has no power to fix rates which are unreasonable or to regulate them
arbitrarily. This basic requirement of reasonableness comprehends such rates
which must not be so low as to be confiscatory, or too high as to be oppressive.
What is a just and reasonable rate is not a question of formula but of sound
business judgment based upon the evidence it is a question of fact calling for
the exercise of discretion, good sense, and a fair, enlightened and
independent judgment. In determining whether a rate is confiscatory, it is
essential also to consider the given situation, requirements and opportunities of
the utility. A method often employed in determining reasonableness is the fair
return upon the value of the property to the public utility x x x. (Emphasis ours.)

If in case the TRB finds the change in the rates to be reasonable and
therefore merited, the increase shall then be implemented after the formalities of
public hearing and publication are complied with. In this case, it is clear that the
change in the toll fees is immediately effective and implementable. This is
notwithstanding that, in case of an increase in the toll fees, an appeal thereon is
filed. The law is clear. Thus:

x x x Decisions of the [TRB] on petitions for the increase of toll rate shall be
appealable to the Office of the President within ten (10) days from the
promulgation thereof. Such appeal shall not suspend the imposition of the new
rates, provided however, that pending the resolution of the appeal, the petitioner
for increased rates in such case shall deposit in a trust fund such amounts as may
be necessary to reimburse toll payers affected in case a reversal of the
decision. (Emphasis ours.)
[129]

Besides the settled rule under Section 3 (d) of P.D. 1112 that the power to
issue, modify and promulgate toll fees rests with the TRB, it must also be
underscored that the periodic and the interim adjustments found in Clauses 11.4 to
11.6 of the MNTC STOA do not necessarily guarantee an increase in the toll
fees. To stress, the formula is based on many variable factors that could mean
either an increase or a decrease in the toll fees, depending, inter alia, on how well
certain economies are doing; and on the projections and figures published by the
Bangko Sentral ng Pilipinas (BSP). It is therefore arduous to contemplate
[130]

a grossness in a disadvantage that could only possibly arise in case of a non-

implementation of a change particularly, an increase in the toll rates.

Petitioners have not incidentally shown that it is the traveling public, the
users of the expressways, who shouldered or will shoulder the completion of the
projects by way of exorbitant fees payment, with the investors ending up with a
killing therefrom. This conclusion, for all its factual dimension, is too simplistic for
acceptance. And it does not consider the reality that the Court is not a trier of facts.
Neither does it take stock of the nature and function of toll roads and toll fees paid
by motorists, as aptly elucidated inNorth Negros Sugar Co., Inc. v.
Hidalgo, thus:
[131]

Toll is the price of the privilege to travel over that particular highway,
and it is a quid pro quo. It rests on the principle that he who, receives the toll
does or has done something as an equivalent to him who pays it. Every traveler
has the right to use the turnpike as any other highway, but he must pay the toll.
[132]

A toll road is a public highway, differing from the ordinary public

highways chiefly in this: that the cost of its construction in the first instance
is borne by individuals, or by a corporation, having authority from the state
 to build it, and, further, in the right of the public to use the road after
completion, subject only to the payment of toll.
[133]

Toll roads are in a limited sense public roads, and are highways
for travel, but we do not regard them as public roads in a just sense,
since there is in them a private proprietary right x x x. (Emphasis
[134]

ours.)

Parenthetically, our review of Section 7 of the SMMS STOA readily yields

the information that the level of the initial toll rates hinges on a mix of factors. Tax
holidays that may be granted and the tax treatment of dividends may be
mentioned. On the other hand, the subsequent periodic adjustments are provided to
address factors that usually weigh on the financial condition of any business
endeavor, such as currency devaluation, inflation and the usual increases in
maintenance and operational costs incorporated into the formula provided
therefor. Even with the existence of an automatic toll rate adjustment formula,
compliance by the TRB and the other respondents with the twin requirements of
public hearing and publication is still mandatory. To reiterate, laws always occupy
a plane higher than mere contract provisions. In case the minimum statutory
requirements are stiffer than that of a contract, or when the contract does not
expressly stipulate the minimum requirements of the law, then We rule that
compliance with such minimum legal requirements should be done. To summarize,
any toll fee increase should comply with the legal twin requirements of publication
and public hearing, the absence of which will nullify the imposition and collection
of the new toll fees.

In all, the initial toll rates and periodic adjustments appear to Us as simply
predicated on the basic rationale for investing in a toll project, which to repeat is: a
reasonable rate of return for the investment. Section 2 (o) of the BOT Law, as
amended, provides for a definition for a reasonable rate of return on investments
and operating and maintenance cost. Running through the gamut of our statutes
[135]

providing for and encouraging partnership of the public and private sector is the
paramount common good for infrastructure projects and the equally important
factor of giving a reasonable rate of return to private sectors investments. The
viability of any infrastructure project depends on the returns which should be
reasonable of the investment coming from the private sector.

While the interests of the public are ideally to be accorded primacy in

considering government contracts, the reality on the ground is that the tollway
projects may not at all be possible or would be difficult to realize without the
involvement of the investing private sector, which expects its usual share of
profit. Thus, the Court is at a loss to understand how the level of the initial toll
rates, which depended on several factors indicated above, and the subsequent
adjustments resulted in the charging of exorbitant toll fees that, to petitioners,
enabled the investors to shift the burden of financing the completion of the projects
on the motoring public.

Neither does the alleged drasticif we may characterize it as suchsteep

increase in the level of toll rates for NLEX constitute a killing for PNCC and its
partner MNTC.Petitioners make much of the amount of the toll fees vis--vis the
then prevailing minimum wage. These plays of figures detract from the essential
concern on the propriety of the level of the toll rates vis--vis the investments sunk
in the NLEX project with a view, on the part of private investors, to a reasonable
return on their investment. Where no substantial figures were provided on the
investments, the projected operating and maintenance costs vis--vis the projected
revenue from the toll fees, no substantial conclusions may reasonably be deduced
therefrom. Besides, to be taken into account in relation to the costs of the
construction and rehabilitation of the NLEX is the length of the tollway and for
which motorists have to pay the corresponding toll. Certainly, the allegations and
conclusions of petitioners as to the unreasonable increase of the toll rates are
without adequate factual mooring.

The use of a tollway is a privilege that comes at a cost. The toll is a price
paid for the use of a privilege. There are to be sure alternative roads and routes,
which motorists may fall back on if they are unwilling to pay the toll. The toll, as
might be expected, is pegged at a level that makes the developmental projects and
their maintenance viable; otherwise, no investment can be expected for the
furtherance of the projects.

Petitioners Francisco and Hizon alleged that, per the minutes of the TRB
meetings, the Board deliberately refrained, particularly with respect to the Skyway
project, from conducting public hearings for the grant of the initial toll rates and on
the rate adjustment formula to be used in order to accelerate the implementation of
the projects. The allegation is far from correct. A perusal of the pertinent minutes
of the TRB meetings, particularly that held on August 17, 1995, in fact would
[136]

disclose a picture different from that depicted by said petitioners. Nothing in the
minutes of said meeting tends to indicate that the TRB resolved to dispense with
public hearings. We, therefore, find petitioners Francisco and Hizons attempt to
mislead the Court by falsely citing supposed portions of the August 17, 1995
[137]
TRB meeting very unfortunate. They quoted a correction on the minutes of the
Special Board Meeting No. 95-05 held on July 26, 1995, which was taken up in the
August 17, 1995 meeting for the approval of the minutes of the previous
meeting. In said special meeting of July 26, 1995, the Board deliberated on the
[138]

recommendation of ADG Santos for the conduct of a public hearing or soliciting

the endorsement of the Metro Manila Development Authority (MMDA). But the [139]

TRB did not resolve to omit a public hearing with respect to the toll rates. In fact,
the deliberations used the words in the event the Board decides and if the Board
conducts, clearly conveying the notion that the TRB had not decided or resolved
the issue of public hearings. Be that as it may, We rule that the TRB is mandated to
comply with the twin requirements of public hearing and publication.

Petitioners Francisco and Hizons lament about the TRB merely relying on, if
not yielding to, the recommendation and findings of the Technical Working Group
(TWG) of the DPWH on matters relative to STOA stipulations and toll-rate fixing
cannot be accorded cogency. In the area involving big finance and complex project
planning, banking on the data supplied by technicians and experts is at once
practical as it is inevitable. The Court cannot see its way clear to understand why
petitioners would begrudge the TRB for tapping the technical know-how of
others. And it cannot be overemphasized that a recommendation is no more than an
exhortation or an urging as to what is advisable or expedient, not binding on the
person to which it is being made. To recommend involves the idea that another
[140]

has the final decision. The ultimate decision still rests with the TRB whether or
[141]

not to accept the findings of the TWG. The minutes of the TRB meetings show that
its members went through the tedious process of deliberating on the formula to be
used in computing the toll rates. The fact that the TRB might have adopted the
TWGs recommendation would not, on that ground alone, vitiate the bona fides of
the formers decision nor stain the proceedings leading to such decision. In any
case, as earlier held, the toll rate adjustment formula does not and cannot
contravene the legal twin requirements of public hearing and publication.

In another bid to nullify the STOAs in question, petitioners would foist on

the Court the arguments that, firstly, President Ramos twisted the arms of the TRB
towards entering into the agreements in question and, secondly, that the CITRA
STOA contained restrictive confidentiality provisions barring the public from
knowing their contents and the details of the negotiations related thereto.

We are not persuaded by the first ground, not necessarily because the
pressure brought to bear on TRB rendered the STOAs infirm, but because the
allegations on pressure-tactics allegedly employed by President Ramos are too
speculative for acceptance.

On the second ground, We fail to see how the insertion of the alleged
confidentiality clause in the CITRA STOA translates into grave abuse of discretion
or a violation of the Constitution, particularly Article III, Section 7 thereof. First
[142]

off, the Court can take judicial notice that most commercial contracts, including
finance-related project agreements carry the standard confidentiality clause to
protect proprietary data and/or intellectual property rights. This protection angle
appears to be the intent of Clause 14.04(l) of the CITRA STOA. And as may be
[143]

noted, the succeeding Clause 14.04 (2) removes from the ambit of the
[144]

confidentiality restriction the following: disclosure of any information: (a) not

otherwise done by the parties; (b) which is required by law to be disclosed to
any person who is authorized by law to receive the same; (c) to a tribunal
hearing pertinent proceedings relative to the contract or agreement; and (d) to
confidential entities and persons relative to the disclosing party like its banks,
consultants, financiers and advisors. The second (item b) exception provides a
reasonable dimension to the assailed confidentiality clause.

Needless to stress, the obligation of the government to make information

available cannot be exaggerated. The constitutional right to information does not
[145]

mean that every day and every hour is open house in government offices having
custody of the desired documents. Petitioners have not sufficiently shown, thus
[146]

cannot really be heard to complain, that they had been unreasonably denied access
to information with regard to the MNTC or SMMS STOA. Besides, the remedy for
unreasonable denial of information that is a matter of public concern is by way of
mandamus. [147]

Finally, as to petitioners catch-all claim that the STOAs are disadvantageous

to the government, as therein represented by the TRB, suffice it to state for the
nonce that behind these agreements are the Boards expertise and policy
determination on technical, financial and operational matters involving
expressways and tollways. It is not for courts to look into the wisdom and
practicalities behind the exercise by the TRB of its contract-making prerogatives
under P.D. Nos. 1112, 1113 and 1894, absent proof of grave abuse of discretion
which would justify judicial review. In this regard, the Court recalls what it wrote
in G & S Transport Corporation v. Court of Appeals, to wit: [148]

x x x courts, as a rule, refuse to interfere with proceedings

undertaken by administrative bodies or officials in the exercise of
 administrative functions. This is because such bodies are generally better
equipped technically to decide administrative questions and that non-
legal factors, such as government policy on the matter are usually
involved in the decision.

SIXTH ISSUE: PUBLIC BIDDING NOT REQUIRED

Private petitioners would finally maintain that public bidding is required for
the SMMS and the North Luzon/South Luzon Tollways, partaking as these projects
allegedly do of the nature of a BOT infrastructure undertaking under the BOT
Law. Prescinding from this premise, they would conclude that the STOAs in
question and related preliminary and post-STOA agreements are null and void for
want of the necessary public bidding required for government infrastructure
projects.

The contention is patently flawed.

The BOT Law does not squarely apply to the peculiar case of PNCC, which
exercised its prerogatives and obligations under its franchise to pursue the
construction, rehabilitation and expansion of the tollways with chosen partners.
The tollway projects may very well qualify as a build-operate-transfer
undertaking. However, given that the projects in the instant case have been
undertaken by PNCC in the exercise of its franchise under P.D. Nos. 1113 and
1894, in joint partnership with its chosen partners at the time when it was held
valid to do so by the OGCC and the DOJ, the public bidding provisions under the
BOT Law do not strictly apply. For, as aptly noted by the OSG, the subject STOAs
are not ordinary contracts for the construction of government infrastructure
projects, which requires under the Government Procurement Reform Act or the
now-repealed P.D. 1594, public bidding as the preferred mode of contract
[149]

award. Neither are they contracts where financing or financial guarantees for the
project are obtained from the government. Rather, the STOAs actually constitute a
statutorily-authorized transfer or assignment of usufruct of PNCCs existing
franchise to construct, maintain and operate expressways. [150]

The conclusion would perhaps be different if the tollway projects were to be

prosecuted by an outfit completely different from, and not related to, PNCC. In
such a scenario, the entity awarded the winning bid in a BOT-scheme
infrastructure project will have to construct, operate and maintain the tollways
through an automatic grant of a franchise or TOC, in which case, public bidding is
required under the law.
 Where, in the instant case, a franchisee undertakes the tollway projects of
construction, rehabilitation and expansion of the tollways under its franchise, there
is no need for a public bidding. In pursuing the projects with the vast resource
requirements, the franchisee can partner with other investors, which it may choose
in the exercise of its management prerogatives. In this case, no public bidding is
required upon the franchisee in choosing its partners as such process was done in
the exercise of management prerogatives and in pursuit of its right of delectus
personae. Thus, the subject tollway projects were undertaken by companies,
[151]

which are the product of the joint ventures between PNCC and its chosen partners.

Petitioners Francisco and Hizons assertions about the TRB awarding the
tollway projects to favored companies, unsubstantiated as they are, need no
belaboring. Suffice it to state that the discretion to choose who shall stand as
critical JV partners remained all along with PNCC, at least theoretically. Needless
to say, the records do not show that the TRB committed an oversight as an
administrative body over any aspect of tollway operations with regard to PNCCs
selection of partners.

The foregoing disquisitions considered, there is no more point in passing

upon the propriety of prohibiting or enjoining, on the ground of unconstitutionality
or grave abuse of discretion, the implementation of the initial toll rates and/or the
adjusted toll rates for the SMSS, expanded NLEX and SLEX, as authorized by the
separate TRB resolutions, subject of and originally challenged in these
proceedings.

These TRB resolutions and the STOAs upon which they are predicated have
long been in effect. The parties have acted on these issuances and contracts whose
existence, as an operative fact, cannot be ignored, let alone erased, even if the
charge of unconstitutionality is given currency.

While not exactly of governing applicability in this case, what the Court
wrote in De Agbayani v. Philippine National Bank, on the operative fact doctrine
[152]

is apropos:

x x x 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 of the Constitution. .
 Such a view has support in logic and possesses the merit of simplicity. It
may not however be sufficiently realistic. It does not admit of doubt that prior
to the declaration of nullity such challenged legislative or executive act must
have been in force and had to be complied with. This is so as until after the
judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience
and respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent litigation regard be
had to what has been done while such legislative or executive act was in operation
and presumed to be valid in all respects. It is now accepted as a doctrine that
prior to its being nullified, its existence as a fact must be reckoned with. This
is merely to reflect awareness that precisely because the judiciary is the
governmental organ which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have elapsed before it can
exercise the power of judicial review that may lead to a declaration of nullity.
It would be to deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: The actual

existence of a statute, prior to such a determination [of constitutionality], is
an operative fact and may have consequences which cannot justly be ignored.
The past cannot always be erased by a new judicial declaration x x
x. (Emphasis in the original.)

The petitioners in the first three (3) petitions and the respondent in the fourth
have not so said explicitly, but their brief is against the issuance of P.D. Nos. 1112,
1113 and 1894, which conferred a package of express and implied powers and
discretion to the TRB and the President resulting in the execution of what is
perceived to be offending STOAs and the runaway collection of illegal toll fees.
And they have come to the Court to strike down all these issuances, agreements
and exactions. While the Court is not insensitive to their concerns, the rule is that
all reasonable doubts should be resolved in favor of the constitutionality of a
statute, and the validity of the acts taken in pursuant thereof. It follows,
[153]

therefore, that the Court will not set aside a law as violative of the Constitution
except in a clear case of breach and only as a last resort. And as the theory of
[154] [155]

separation of powers prescribes, the Court does not pass upon questions of
wisdom, expediency and justice of legislation. To Us, petitioners and respondent
YPES in the fourth petition have not discharged the heavy burden of demonstrating
in a clear and convincing manner the unconstitutionality of the decrees challenged
or the invalidity of assailed acts of the President and the TRB. Because they failed
to do so, the Court must uphold the presumptive constitutionality and validity of
the provisions of the three decrees in question, and the subject contracts and TOCs.
Regarding petitioner Franciscos Supplemental Petition, the toll rates, the collection
of which in the amount based on the formula and assumptions set forth in the law,
and the adverted STOA dated February 1, 2006 and subject of the TRO issued on
August 13, 2010, has been duly published and approved by the TRB, as required
[156]

by Section 5 of P.D. 1112. And the party-concessionaires have adequately

[157]

demonstrated, and the TRB has virtually acknowledged that the said rates subject
[158]

of the TRO partake of the nature of opening or initial toll rates, which have not yet
been implemented since the time the SLTC STOA took effect. To note, the toll
[159]

rates subject of the TRO were approved and are to be implemented in connection
with the new facility, such as Project Toll Roads 1 and 2 pursuant to the new SLTC
STOA and the expanded and rehabilitated SLEX. As earlier discussed, public
[160]

hearing is not required in the fixing and implementation of initial toll rates. But an
interested party aggrieved by the initial rates imposed is not without any resource
as he may, within the time frame provided by Section 8 (b) of P.D. 1894, repair to
the TRB for review and thereafter to the OP. As expressly provided in the same
[161]

section, however, the pendency of the petition for review, if there be any, shall not
suspend the enforceability and collection of the toll in question. In net effect, the
challenge before the Court of the SLEX toll rate imposition is
premature. However, the Court treats this Supplemental Petition assailing the toll
rates covered by the TRB Notice of Toll Rates published on June 6, 2010 as a
petition for review filed under P.D. 1894, and hereby remands the same to the TRB
for a review of the questioned rates to determine the propriety thereof.

WHEREFORE, the petitions in G.R. Nos. 166910 and 173630 are

hereby DENIED for lack of merit. Accordingly, We declare as VALID AND
CONSTITUTIONAL the following:

1. the Supplemental Toll Operation Agreement dated April 30, 1998 covering
the North Luzon Tollway Project and the TRB Board Resolution No. 2005-4
issued pursuant thereto;

2. the Supplemental Toll Operation Agreement dated November 27, 1995

covering the South Metro Manila Skyway and the TRB Board Resolution
No. 2004-53 and previous TRB resolutions issued pursuant thereto;

3. the Supplemental Toll Operation Agreement covering the South Luzon

Tollway Project or South Luzon Expressway and the TRB Board resolutions
issued pursuant to the said agreement, particularly the TRB Board
resolutions allowing the toll rate increases that are supposed to have been
implemented on June 30, 2010;
4. Section 3, paragraph (a) of Presidential Decree No. 1112, otherwise known
as the Toll Operation Decree, in relation to Section 3, paragraph (d) thereof
and Section 8, paragraph (b) of Presidential Decree No. 1894; and

5. Section 3, paragraph (e) 3 of P.D. No. 1112 and Section 13 of P.D. No.
1894.

We however declare Clause 11.7 of the Supplemental Toll Operation

Agreement between the Republic of the Philippines, represented by respondent
TRB, as grantor, the Philippine National Construction Corporation, as franchisee,
and the Manila North Tollways Corporation (MNTC) dated April 30, 1998; and the
clause including if necessary an extension of the CONCESSION PERIOD which
in no case shall exceed a maximum period of fifty (50) years in Clause 17.5 of the
same STOA, as VOID andUNCONSTITUTIONAL for being contrary to Section
2, Article XII of the 1987 Constitution. We likewise declare Clauses 8.08 (2) & (3)
of the Supplemental Toll Operation Agreement between the Republic of the
Philippines, represented by respondent TRB, as grantor, the Philippine National
Construction Corporation as franchisee, the South Luzon Tollway Corporation as
investor, and the Manila Toll Expressway Systems, Inc. as operator, dated
February 1, 2006, as VOID and UNCONSTITUTIONAL.

The petition in G.R. No. 169917 is likewise hereby DENIED for lack of
merit. We declare as VALID and CONSTITUTIONAL the following:

1. Notice of Approval dated May 16, 1995 by former President Fidel V.

Ramos on the assignment of PNCCs usufructuary rights;

2. the Joint Venture Agreement dated August 29, 1995;

3. the Joint Investment Proposal, etc. dated June 16, 1996;

4. the Supplemental Toll Operation Agreement (STOA) dated April 30, 1998
and the Notice of Approval of said STOA dated June 15, 1998 by former
President Fidel V. Ramos; and

5. the provisional toll rate increases published February 9, 2005, granted by

the TRB.
 The petition in G.R. No. 183599 is GRANTED. Accordingly, the Decision
dated June 23, 2008 of the Regional Trial Court, Branch 155 in Pasig City,
docketed as SCA No. 3138-PSG, annulling the TOC covering the SLEX, enjoining
the original toll operating franchisee from collecting toll fees in the SLEX, and
ordering the turnover of related assets to the Government, is
hereby REVERSED and SET ASIDE, and the petition filed therein by the Young
Professionals and Entrepreneurs of San Pedro, Laguna with the RTC of Pasig
is DISMISSED for lack of merit.

In view of the foregoing dispositions in the petitions at bar, the TRO issued
by the Court on August 13, 2010 is hereby ordered LIFTED, with respect to the
petitions in G.R. Nos. 166910, 169917, 173630 and 183599.

The challenge contained in the Supplemental Petition in G.R. No. 166910

against the toll rates subject of the TRB Notice of Toll Rates published on June 6,
2010, for the SLEX projects, Toll Road Projects 1 and 2 of the new SLTC STOA,
and the expanded and rehabilitated SLEX, is REMANDED to the TRB for a
review of the assailed toll rates to determine whether SLTC and MATES are
entitled to the toll fees.

No Cost.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 187854 November 12, 2013
RAY PETER O. VIVO, Petitioner,
vs.
PHILIPPINE AMUSEMENT AND GAME CORPORATION (PAGCOR), Respondent.
DECISION
BERSAMIN, J.:
By petition for review on certiorari the petitioner seeks the review and reversal of the decision
promulgated on February 27, 2009, whereby the Court of Appeals CA) reversed and set aside the
1

resolutions of the Civil Service Commission CSC) dated April 2007 and August 1, 2007.
2 3

Also under review is the denial by the CA of the petitioner’s motion for reconsideration through the
resolution promulgated May 11, 2009. 4

Antecedents
The petitioner was employed by respondent Philippine Amusement and Gaming Corporation
(PAGCOR) on September 9, 1986, and was PAGCOR’s Managing Head of its Gaming Department
at the time of his dismissal from office. On February 21, 2002, he received a letter from Teresita S.
5

Ela, the Senior Managing Head of PAGCOR’s Human Resources Department, advising that he was
being administratively charged with gross misconduct, rumor-mongering, conduct prejudicial to the
interest of the company, and loss of trust and confidence; that he should submit a written
6

explanation of the charges; and that he was at the same time being placed under preventive
suspension. 7

On February 26, 2002, the petitioner’s counsel, replying to Ela’s letter, assailed the propriety of the
show-cause memorandum as well as the basis for placing the petitioner under preventive
suspension.
On March 14, 2002, the petitioner received the summons for him to attend an administrative inquiry,
instructing him to appear before PAGCOR’s Corporate Investigation Unit (CIU) on March 15,
2002. At the petitioner’s request, however, the inquiry was conducted at his residence on said date.
8

His statement was taken in a question-and-answer format. He was also furnished the memorandum
of charges that recited the accusations against him and indicated the acts and omissions constituting
his alleged offenses. The memorandum of charges was based on the statements of PAGCOR
personnel who had personal knowledge of the accusations against him. However, when his counsel
requested to be furnished copies of the statements, PAGCOR rejected the request on the ground
that he had already been afforded the sufficient opportunity to confront, hear, and answer the
charges against him during the administrative inquiry. The petitioner was then allowed to submit his
answer on March 26, 2002.
Thereafter, the CIU tendered its investigation report to PAGCOR’s Adjudication Committee. 9

The Adjudication Committee summoned the petitioner to appear before it on May 8, 2002 in order to
address questions regarding his case. His counsel moved for the re-scheduling of the meeting
because he would not be available on said date, but the Adjudication Committee denied the request
upon the reason that the presence of counsel was not necessary in the proceedings. His counsel
moved for the reconsideration of the denial of the request.10

The petitioner received the letter dated May 15, 2002 from Ela informing him of the resolution of the
PAGCOR Board of Directors in its May 14, 2002 meeting to the effect that he was being dismissed
from the service.11

After the petitioner’s motion for reconsideration vis-à-vis the resolution of the PAGCOR Board of
Directors dismissing him from the service was denied, he appealed his dismissal to the CSC.
In its resolution dated April 11, 2007, the CSC ruled that PAGCOR had violated the petitioner’s right
to due process, and accordingly set aside his dismissal from the service, viz:
In fine, the Commission finds that the right of Vivo to due process was violated when he was ousted
from his office without the corresponding Board Resolution that should have set out the collegial
decision of the PAGCOR Board of Directors.
WHEREFORE, foregoing premises considered, the appeal of Ray Peter O. Vivo is hereby
GRANTED. The letters dated May 15, 2002 and June 5, 2002 issued by Teresita S. Ela, Senior
Managing Head, Human Resource Department, Philippine Amusement and Gaming Corporation
(PAGCOR), are SET ASIDE. 12

xxxx
The CSC remanded the case to PAGCOR with the instruction for PAGCOR to complete its
reinvestigation within three months from receipt of the resolution.
After the CSC denied its motion for reconsideration, PAGCOR elevated the case to the CA.
On February 27, 2009, the CA promulgated its decision reversing and setting aside the decision of
the CSC upon its finding that the petitioner had been accorded procedural due process. The CA
remanded the case to the CSC for the determination of the appeal of the petitioner on the merits,
specifically the issue of whether the dismissal had been for cause.13

Hence, this appeal.

Issue
The petitioner raises the following issues, namely:
1. The conclusion of the Court of Appeals that Petitioner’s right for (sic) due process was not
violated transgressed (sic) the fundamental rules in administrative due process.
2. The Court of Appeals decision in setting aside CSC Resolutions Nos. 070732, dated 01
April 2007, and 071485, dated 01 August 2007, is contrary to the Uniform Rules on
Administrative Cases in the Civil Service and settled jurisprudence. 14

The petitioner would have the Court hold that PAGCOR’s failure to furnish him a copy of the Board
Resolutions authorizing his dismissal and denying his motion for reconsideration was a fatal and
irreparable defect in the administrative proceedings that ultimately resulted in the illegality of his
dismissal from the service. He further argues that he was denied due process by PAGCOR’s refusal
to re-schedule the Adjudication Committee meeting in order to enable his counsel to attend the
meeting with him, because the refusal constituted a violation of his right to be represented by
counsel.
Ruling
The petition for review lacks merit.
The observance of fairness in the conduct of any investigation is at the very heart of procedural due
process. The essence of due process is to be heard, and, as applied to administrative proceedings,
this means a fair and reasonable opportunity to explain one’s side, or an opportunity to seek a
reconsideration of the action or ruling complained of. Administrative due process cannot be fully
15

equated with due process in its strict judicial sense, for in the former a formal or trial-type hearing is
not always necessary, and technical rules of procedure are not strictly applied. Ledesma v. Court of
16

Appeals elaborates on the well-established meaning of due process in administrative proceedings in

17

this wise:
x x x Due process, as a constitutional precept, does not always and in all situations require a trial-
type proceeding. Due process is satisfied when a person is notified of the charge against him and
given an opportunity to explain or defend himself. In administrative proceedings, the filing of charges
and giving reasonable opportunity for the person so charged to answer the accusations against him
constitute the minimum requirements of due process. The essence of due process is simply to be
heard, or as applied to administrative proceedings, an opportunity to explain one’s side, or an
opportunity to seek a reconsideration of the action or ruling complained of. 18

The petitioner actively participated in the entire course of the investigation and hearings conducted
by PAGCOR. He received the letter from Ela apprising him of his being administratively charged for
several offenses, and directing him to submit an explanation in writing. He was later on properly
summoned to appear before the CIU, which conducted its proceedings in his own residence upon
his request. During the administrative inquiry, the CIU served him a copy of the memorandum of
charges, which detailed the accusations against him and specified the acts and omissions
constituting his alleged offenses. He was also given the opportunity to appear before the
Adjudication Committee to answer clarificatory questions. Lastly, he was informed through a
memorandum of the decision of the Board of Directors dismissing him from the service.
In contrast, the petitioner could not dispute the observance of his right to due process by PAGCOR
as set forth herein. He made no credible showing of the supposed violation of his right to due
process. He was heard through the written statement he submitted in response to the memorandum
of the charges against him. He actively participated in the administrative inquiry conducted by the
CIU at his own residence. He was afforded the opportunity to clarify his position in the proceedings
before the Adjudication Committee. He was also able to appeal the adverse decision to dismiss him
from the service to the CSC. There is also no question that PAGCOR complied with the twin-notice
requirement prior to the termination of his employment, the first notice being made through Ela’s
letter dated February 21, 2002 informing him on his being administratively charged for the offenses
mentioned, and the second being through the letter dated May 15, 2002 advising him that
PAGCOR’s Board of Directors had resolved to dismiss him from the service. It is settled that there is
no denial of procedural due process where the opportunity to be heard either through oral arguments
or through pleadings is accorded. 19

The petitioner takes the CA to task for not considering: (1) PAGCOR’s failure to furnish him copies of
the Board Resolutions referred to by Ela in the memorandum served on him, and (2) the refusal of
PAGCOR to have him be represented by counsel.
The petitioner cannot be sustained.
As the CA found, and correctly so, the petitioner’s pleadings explicitly admitted that his dismissal had
been effected through board resolutions. That he was not furnished copies of the board resolutions
did not negate the existence of the resolutions, and did not invalidate the contents of the board
resolutions. It is beyond question that he was duly informed of the subject-matter of the board
resolutions. Consequently, the CSC’s conclusion that his dismissal had been unauthorized was
unfounded. In any case, even assuming for the sake of argument that there was no board resolution
approving his dismissal, the lapse did not render his dismissal illegal but unauthorized. However, as
the CA succinctly put it, an unauthorized act could be the subject of ratification.20
As regards the supposed denial of the petitioner’s right to counsel, it is underscored that PAGCOR
denied his request to re-schedule the conference before the Adjudication Committee because his
counsel would not be available on the day fixed for that purpose. In its letter denying the request, the
Adjudication Committee asserted that the presence of counsel was not indispensable in the conduct
of its proceedings. We find nothing objectionable in the denial of the request. In an administrative
proceeding like that conducted against the petitioner, a respondent has the option of engaging the
services of counsel. As such, the right to counsel is not imperative because administrative
investigations are themselves inquiries conducted only to determine whether there are facts that
merit disciplinary measures against erring public officers and employees, with the purpose of
maintaining the dignity of government service. 21

It is noteworthy, however, that the petitioner was actually assisted by his counsel from the outset of
the administrative case against him. That counsel, Atty. Cesar B. Jimenea Jr. of the Jimenea and
Associates, ensured that the petitioner’s every concern reached PAGCOR, and that he was clarified
of any matter affecting his rights all throughout the investigation and hearings. As the records
indicate, his counsel sent to Ela a letter calling attention to supposedly palpable violations of his
client’s right to due process, and objecting to Ela’s right to place his client under preventive
suspension. The same counsel filed in behalf of the petitioner the letter-requests to be furnished
certain documents and records of the investigation, his answer to the memorandum of charges, the
22 23

letter-request for the re-setting of the conference before the Adjudication Committee, the
24

reconsideration of the letter denying the request, and the motion to reconsider the decision of the
25

Board of Directors to dismiss him from the service. 26

In any event, any procedural defect in the proceedings taken against the petitioner was cured by his
filing of the motion for reconsideration and by his appealing the adverse result to the CSC. The
1âwphi1

Court held in Gonzales v. Civil Service Commission that any defect in the observance of due
27

process is cured by the filing of a motion for reconsideration, and that denial of due process cannot
be successfully invoked by a party who was afforded the opportunity to be heard. In Autencio v.
Mañara, the Court observed that defects in procedural due process may be cured when the party
28

has been afforded the opportunity to appeal or to seek reconsideration of the action or ruling
complained of.
The petitioner was not denied due process of law, for he was afforded the fair and reasonable
opportunity to explain his side. That, to us, was sufficient to meet the requirements of due
process. In Casimiro v. Tandog, the Court pronounced:
29 30

The essence of procedural due process is embodied in the basic requirement of notice and a real
opportunity to be heard. In administrative proceedings, such as in the case at bar, procedural due
process simply means the opportunity to explain one’s side or the opportunity to seek a
reconsideration of the action or ruling complained of. "To be heard" does not mean only verbal
arguments in court; one may be heard also thru pleadings. Where opportunity to be heard, either
through oral arguments or pleadings, is accorded, there is no denial of procedural due process.
In administrative proceedings, procedural due process has been recognized to include the following:
(1) the right to actual or constructive notice of the institution of proceedings which may affect a
respondent’s legal rights; (2) a real opportunity to be heard personally or with the assistance of
counsel, to present witnesses and evidence in one’s favor, and to defend one’s rights; (3) a tribunal
vested with competent jurisdiction and so constituted as to afford a person charged administratively
a reasonable guarantee of honesty as well as impartiality; and (4) a finding by said tribunal which is
supported by substantial evidence submitted for consideration during the hearing or contained in the
records or made known to the parties affected.
In fine, the CA committed no reversible error in holding that P AGCOR had properly observed the
requirements of due process in its administrative proceedings against the petitioner. WHEREFORE,
the Court DENIES the petition for review on certiorari AFFIRMS the decision promulgated on
February 27, 2009 by the Court of Appeals; REQUIRES the Civil Service Commission to determine
the petitioner's appeal on the merits, particularly the issue of whether the dismissal was for cause;
and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.

Ray Peter O. Vivo

Versus
Philippine Amusement and Game Corporation (PAGCOR)

G.R. No. 187854

November 12, 2013
Facts:
The petitioner was employed by respondent Philippine Amusement and Gaming
Corporation (PAGCOR) on September 9, 1986, and was PAGCOR’s Managing Head of
its Gaming Department. On February 21, 2002, he received a letter from Teresita S.
Ela, the Senior Managing Head of PAGCOR’s Human Resources Department, advising
that he was being administratively charged with gross misconduct, rumor-mongering,
conduct prejudicial to the interest of the company, and loss of trust and confidence; that
he should submit a written explanation of the charges; and that he was at the same time
being placed under preventive suspension.

On February 26, 2002, the petitioner’s counsel, replying to Ela’s letter, assailed
the propriety of the show-cause memorandum as well as the basis for placing the
petitioner under preventive suspension. On March 14, 2002, the petitioner received the
 summons for him to attend an administrative inquiry, instructing him to appear before
PAGCOR’s Corporate Investigation Unit (CIU) on March 15, 2002. At the petitioner’s
request, however, the inquiry was conducted at his residence on said date. His
statement was taken in a question-and-answer format. He was also furnished the
memorandum of charges that recited the accusations against him and indicated the acts
and omissions constituting his alleged offenses. Thereafter, the CIU tendered its
investigation report to PAGCOR’s Adjudication Committee. The Adjudication Committee
summoned the petitioner to appear before it on May 8, 2002 in order to address
questions regarding his case. His counsel moved for the re-scheduling of the meeting
because he would not be available on said date, but the Adjudication Committee denied
the request upon the reason that the presence of counsel was not necessary in the
proceedings. His counsel moved for the reconsideration of the denial of the request.

The petitioner received the letter dated May 15, 2002 from Ela informing him of
the resolution of the PAGCOR Board of Directors in its May 14, 2002 meeting to the
effect that he was being dismissed from the service. In its resolution dated April 11,
2007, the CSC ruled that PAGCOR had violated the petitioner’s right to due process,
and accordingly set aside his dismissal from the service. On February 27, 2009, the CA
promulgated its decision reversing and setting aside the decision of the CSC upon its
finding that the petitioner had been accorded procedural due process.
Issues:

1. The conclusion of the Court of Appeals that Petitioner’s right for due process was not
violated transgressed the fundamental rules in administrative due process.

2. The Court of Appeals decision in setting aside CSC Resolutions Nos. 070732, dated 01 April 2007,
and 071485, dated 01 August 2007, is contrary to the Uniform Rules on Administrative Cases in the
Civil Service and settled jurisprudence.

Ruling:

The petition for review lacks merit.

The petitioner actively participated in the entire course of the investigation and
hearings conducted by PAGCOR. He received the letter from Ela apprising him of his
being administratively charged for several offenses, and directing him to submit an
explanation in writing. He was later on properly summoned to appear before the CIU,
which conducted its proceedings in his own residence upon his request. During the
administrative inquiry, the CIU served him a copy of the memorandum of charges,
which detailed the accusations against him and specified the acts and omissions
constituting his alleged offenses. He was also given the opportunity to appear before
the Adjudication Committee to answer clarificatory questions. Lastly, he was informed
through a memorandum of the decision of the Board of Directors dismissing him from
the service.
In contrast, the petitioner could not dispute the observance of his right to due
process by PAGCOR as set forth herein. He made no credible showing of the supposed
violation of his right to due process. He was heard through the written statement he
submitted in response to the memorandum of the charges against him. He actively
participated in the administrative inquiry conducted by the CIU at his own residence. He
was afforded the opportunity to clarify his position in the proceedings before the
Adjudication Committee. He was also able to appeal the adverse decision to dismiss
him from the service to the CSC. There is also no question that PAGCOR complied with
the twin-notice requirement prior to the termination of his employment, the first notice
being made through Ela’s letter dated February 21, 2002 informing him on his being
administratively charged for the offenses mentioned, and the second being through the
letter dated May 15, 2002 advising him that PAGCOR’s Board of Directors had resolved
to dismiss him from the service. It is settled that there is no denial of procedural due
process where the opportunity to be heard either through oral arguments or through
pleadings is accorded. The right to counsel is not imperative because administrative
investigations are themselves inquiries conducted only to determine whether there are
facts that merit disciplinary measures against erring public officers and employees, with
the purpose of maintaining the dignity of government service. It is noteworthy, however,
that the petitioner was actually assisted by his counsel from the outset of the
administrative case against him.
 SECOND DIVISION

G.R. No. 191411, July 15, 2013

RAFAEL L. COSCOLLUELA, Petitioner, v. SANDIGANBAYAN (FIRST DIVISION) AND PEOPLE OF THE

PHILIPPINES, Respondents.

RESOLUTION

[G.R. NO. 191871]

RESOLUTION

EDWIN N. NACIONALES, ERNESTO P. MALVAS, AND JOSE MA. G.

AMUGOD, Petitioners, v. SANDIGANBAYAN (FIRST DIVISION) AND PEOPLE OF THE PHILIPPINES,
REPRESENTED BY THE OFFICE OF THE SPECIAL PROSECUTOR, OFFICE OF THE
OMBUDSMAN, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in these consolidated Petitions for Certiorari are the October 6, 2009 and February 10,
1 2

2010 Resolutions of public respondent First Division of Sandiganbayan (SB), denying the Motion to
3

Quash dated July 8, 2009 filed by petitioner Rafael L. Coscolluela (Coscolluela). The said motion was adopted
4

by petitioners Edwin N. Nacionales (Nacionales), Dr. Ernesto P. Malvas (Malvas), and Jose Ma. G. Amugod
(Amugod), praying for the dismissal of Crim. Case No. SB-09-CRM-0154 for violation of their right to speedy
disposition of cases.

The Facts

Coscolluela served as governor of the Province of Negros Occidental (Province) for three (3) full terms which
ended on June 30, 2001. During his tenure, Nacionales served as his Special Projects Division Head,
Amugod as Nacionales’ subordinate, and Malvas as Provincial Health Officer. 5

On November 9, 2001, the Office of the Ombudsman for the Visayas (Office of the Ombudsman) received a
letter-complaint dated November 7, 2001 from People’s Graftwatch, requesting for assistance to investigate
6

the anomalous purchase of medical and agricultural equipment for the Province in the amount of
P20,000,000.00 which allegedly happened around a month before Coscolluela stepped down from office.

Acting on the letter-complaint, the Case Building Team of the Office of the Ombudsman conducted its
investigation, resulting in the issuance of a Final Evaluation Report dated April 16, 2002 which upgraded the
7

complaint into a criminal case against petitioners. Consequently, petitioners filed their respective counter-
8

affidavits. 9

On March 27, 2003, the assigned Graft Investigation Officer Butch E. Cañares (Cañares) prepared a
Resolution (March 27, 2003 Resolution), finding probable cause against petitioners for violation of Section
3(e) of Republic Act No. (RA) 3019, otherwise known as the “Anti-Graft and Corrupt Practices Act,” and
recommended the filing of the corresponding information. On even date, the Information was prepared and
10

signed by Cañares and submitted to Deputy Ombudsman for the Visayas Primo C. Miro (Miro) for
recommendation. Miro recommended the approval of the Information on June 5, 2003. However, the final
approval of Acting Ombudsman Orlando C. Casimiro (Casimiro), came only on May 21, 2009, and on June
19, 2009, the Information was filed before the SB.

Petitioners alleged that they learned about the March 27, 2003 Resolution and Information only when they
received a copy of the latter shortly after its filing with the SB. 11

On July 9, 2009, Coscolluela filed a Motion to Quash, arguing, among others, that his constitutional right to
12

speedy disposition of cases was violated as the criminal charges against him were resolved only after almost
eight (8) years since the complaint was instituted. Nacionales, Malvas, and Amugod later adopted
Coscolluela’s motion.

In reply, the respondents filed their Opposition to Motion to Quash dated August 7, 2009, explaining that
13

although the Information was originally dated March 27, 2003, it still had to go through careful review and
revision before its final approval. It also pointed out that petitioners never raised any objections regarding
the purported delay in the proceedings during the interim. 14

The Ruling of the Sandiganbayan

In a Resolution dated October 6, 2009, the SB denied petitioners’ Motion to Quash for lack of merit. It held
15

that the preliminary investigation against petitioners was actually resolved by Cañares on March 27, 2003,
one (1) year and four (4) months from the date the complaint was filed, or in November 9, 2001. Complying
with internal procedure, Cañares then prepared the March 27, 2003 Resolution and Information for the
recommendation of the Miro and eventually, the final approval of the Casimiro. As these issuances had to
undergo careful review and revision through the various levels of the said office, the period of delay – i.e.,
from March 27, 2003 to May 21, 2009, or roughly over six (6) years – cannot be deemed as inordinate and 16

as such, petitioners’ constitutional right to speedy disposition of cases was not violated. 17

Aggrieved, petitioners filed their respective Motions for Reconsideration dated November 9, 2009 and
18

November 6, 2009, similarly arguing that the SB erred in making a distinction between two time periods,
namely: (a) from the filing of the complaint up to the time Cañares prepared the resolution finding probable
cause against petitioners; and (b) from the submission of the said resolution to the Acting Ombudsman for
review and approval up to the filing of the Information with the SB. In this regard, petitioners averred that
the aforementioned periods should not be compartmentalized and thus, treated as a single period.
Accordingly, the delay of eight (8) years of the instant case should be deemed prejudicial to their right to
speedy disposition of cases. 19

The SB, however, denied the foregoing motions in its Resolution dated February 10, 2010 for lack of merit.
20

Hence, the instant petitions.

The Issue Before the Court

The sole issue raised for the Court’s resolution is whether the SB gravely abused its discretion in finding that
petitioners’ right to speedy disposition of cases was not violated.

The Court’s Ruling

The petitions are meritorious.

A person’s right to the speedy disposition of his case is guaranteed under Section 16, Article III of the 1987
Philippine Constitution (Constitution) which provides: cralavvonlinelawlibrary

SEC. 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.

This constitutional right is not limited to the accused in criminal proceedings but extends to all parties in all
cases, be it civil or administrative in nature, as well as all proceedings, either judicial or quasi-judicial. In
this accord, any party to a case may demand expeditious action to all officials who are tasked with the
administration of justice.21

It must be noted, however, that the right to speedy disposition of cases should be understood to be a
relative or flexible concept such that a mere mathematical reckoning of the time involved would not be
sufficient. Jurisprudence dictates that the right is deemed violated only when the proceedings are attended
22

by vexatious, capricious, and oppressive delays; or when unjustified postponements of the trial are asked
for and secured; or even without cause or justifiable motive, a long period of time is allowed to elapse
without the party having his case tried. 23
Hence, in the determination of whether the defendant has been denied his right to a speedy disposition of a
case, the following factors may be considered and balanced: (1) the length of delay; (2) the reasons for the
delay; (3) the assertion or failure to assert such right by the accused; and (4) the prejudice caused by the
delay.24

Examining the incidents in the present case, the Court holds that petitioners’ right to a speedy disposition of
their criminal case had been violated.

First, it is observed that the preliminary investigation proceedings took a protracted amount of time to
complete.

In this relation, the Court does not lend credence to the SB’s position that the conduct of preliminary
investigation was terminated as early as March 27, 2003, or the time when Cañares prepared the Resolution
recommending the filing of the Information. This is belied by Section 4, Rule II of the Administrative Order
No. 07 dated April 10, 1990, otherwise known as the “Rules of Procedure of the Office of the Ombudsman,”
which provides: cralavvonlinelawlibrary

SEC. 4. Procedure – The preliminary investigation of cases falling under the jurisdiction of the
Sandiganbayan and Regional Trial Courts shall be conducted in the manner prescribed in Section 3, Rule 112
of the Rules of Court, subject to the following provisions:cralavvonlinelawlibrary

xxxx

No information may be filed and no complaint may be dismissed without the written authority or approval of
the Ombudsman in cases falling within the jurisdiction of the Sandiganbayan, or of the proper Deputy
Ombudsman in all other cases. (Emphasis and underscoring supplied)

The above-cited provision readily reveals that there is no complete resolution of a case under preliminary
investigation until the Ombudsman approves the investigating officer’s recommendation to either file an
Information with the SB or to dismiss the complaint. Therefore, in the case at bar, the preliminary
investigation proceedings against the petitioners were not terminated upon Cañares’ preparation of the
March 27, 2003 Resolution and Information but rather, only at the time Casimiro finally approved the same
for filing with the SB. In this regard, the proceedings were terminated only on May 21, 2009, or almost eight
(8) years after the filing of the complaint.

Second, the above-discussed delay in the Ombudsman’s resolution of the case largely remains unjustified.

To this end, the Court equally denies the SB’s ratiocination that the delay in proceedings could be excused
by the fact that the case had to undergo careful review and revision through the different levels in the Office
of the Ombudsman before it is finally approved, in addition to the steady stream of cases which it had to
resolve.

Verily, the Office of the Ombudsman was created under the mantle of the Constitution, mandated to be the
“protector of the people” and as such, required to “act promptly on complaints filed in any form or manner
against officers and employees of the Government, or of any subdivision, agency or instrumentality thereof,
in order to promote efficient service.” This great responsibility cannot be simply brushed aside by
25

ineptitude. Precisely, the Office of the Ombudsman has the inherent duty not only to carefully go through
the particulars of case but also to resolve the same within the proper length of time. Its dutiful performance
should not only be gauged by the quality of the assessment but also by the reasonable promptness of its
dispensation. Thus, barring any extraordinary complication, such as the degree of difficulty of the questions
involved in the case or any event external thereto that effectively stymied its normal work activity – any of
which have not been adequately proven by the prosecution in the case at bar – there appears to be no
justifiable basis as to why the Office of the Ombudsman could not have earlier resolved the preliminary
investigation proceedings against the petitioners.

Third, the Court deems that petitioners cannot be faulted for their alleged failure to assert their right to
speedy disposition of cases.

Records show that they could not have urged the speedy resolution of their case because they were
unaware that the investigation against them was still on-going. They were only informed of the March 27,
2003 Resolution and Information against them only after the lapse of six (6) long years, or when they
received a copy of the latter after its filing with the SB on June 19, 2009. In this regard, they could have
26

reasonably assumed that the proceedings against them have already been terminated. This serves as a
plausible reason as to why petitioners never followed-up on the case altogether. Instructive on this point is
the Court’s observation in Duterte v. Sandiganbayan, to wit: 27
cralavvonlinelawlibrary

Petitioners in this case, however, could not have urged the speedy resolution of their case
because they were completely unaware that the investigation against them was still on-going.
Peculiar to this case, we reiterate, is the fact that petitioners were merely asked to comment, and not file
counter-affidavits which is the proper procedure to follow in a preliminary investigation. After giving their
explanation and after four long years of being in the dark, petitioners, naturally, had reason to
assume that the charges against them had already been dismissed.

On the other hand, the Office of the Ombudsman failed to present any plausible, special or even novel
reason which could justify the four-year delay in terminating its investigation. Its excuse for the delay — the
many layers of review that the case had to undergo and the meticulous scrutiny it had to entail — has lost
its novelty and is no longer appealing, as was the invocation in the Tatad case. The incident before us does
not involve complicated factual and legal issues, specially (sic) in view of the fact that the subject
computerization contract had been mutually cancelled by the parties thereto even before the Anti-Graft
League filed its complaint. (Emphasis and underscoring supplied)

Being the respondents in the preliminary investigation proceedings, it was not the petitioners’ duty to follow
up on the prosecution of their case. Conversely, it was the Office of the Ombudsman’s responsibility to
expedite the same within the bounds of reasonable timeliness in view of its mandate to promptly act on all
complaints lodged before it. As pronounced in the case of Barker v. Wingo: 28

A defendant has no duty to bring himself to trial; the State has that duty as well as the duty of insuring that
the trial is consistent with due process.

Fourth, the Court finally recognizes the prejudice caused to the petitioners by the lengthy delay in the
proceedings against them.

Lest it be misunderstood, the right to speedy disposition of cases is not merely hinged towards the objective
of spurring dispatch in the administration of justice but also to prevent the oppression of the citizen by
holding a criminal prosecution suspended over him for an indefinite time. Akin to the right to speedy trial,
29

its “salutary objective” is to assure that an innocent person may be free from the anxiety and expense of
litigation or, if otherwise, of having his guilt determined within the shortest possible time compatible with
the presentation and consideration of whatsoever legitimate defense he may interpose. This looming unrest
30

as well as the tactical disadvantages carried by the passage of time should be weighed against the State and
in favor of the individual. In the context of the right to a speedy trial, the Court in Corpuz v.
Sandiganbayan (Corpuz) illumined:
31
cralavvonlinelawlibrary

A balancing test of applying societal interests and the rights of the accused necessarily compels the court to
approach speedy trial cases on an ad hoc basis.

x x x Prejudice should be assessed in the light of the interest of the defendant that the speedy trial was
designed to protect, namely: to prevent oppressive pre-trial incarceration; to minimize anxiety and concerns
of the accused to trial; and to limit the possibility that his defense will be impaired. Of these, the most
serious is the last, because the inability of a defendant adequately to prepare his case skews the
fairness of the entire system. There is also prejudice if the defense witnesses are unable to recall
accurately the events of the distant past. Even if the accused is not imprisoned prior to trial, he is
still disadvantaged by restraints on his liberty and by living under a cloud of anxiety, suspicion
and often, hostility. His financial resources may be drained, his association is curtailed, and he is
subjected to public obloquy.

Delay is a two-edge sword. It is the government that bears the burden of proving its case beyond
reasonable doubt. The passage of time may make it difficult or impossible for the government to carry its
burden. The Constitution and the Rules do not require impossibilities or extraordinary efforts, diligence or
exertion from courts or the prosecutor, nor contemplate that such right shall deprive the State of a
reasonable opportunity of fairly prosecuting criminals. As held in Williams v. United States, for the
government to sustain its right to try the accused despite a delay, it must show two things: (a) that the
accused suffered no serious prejudice beyond that which ensued from the ordinary and inevitable delay; and
(b) that there was no more delay than is reasonably attributable to the ordinary processes of justice.
Closely related to the length of delay is the reason or justification of the State for such delay. Different
weights should be assigned to different reasons or justifications invoked by the State. For instance, a
deliberate attempt to delay the trial in order to hamper or prejudice the defense should be weighted heavily
against the State. Also, it is improper for the prosecutor to intentionally delay to gain some tactical
advantage over the defendant or to harass or prejudice him. On the other hand, the heavy case load of the
prosecution or a missing witness should be weighted less heavily against the State. x x x (Emphasis and
underscoring supplied; citations omitted)

As the right to a speedy disposition of cases encompasses the broader purview of the entire proceedings of
which trial proper is but a stage, the above-discussed effects in Corpuz should equally apply to the case at
bar. As held in Dansal v. Fernandez, Sr.: 32

Sec. 16, Article III of the 1987 Constitution, reads: cralavvonlinelawlibrary

“Sec. 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.”

Initially embodied in Section 16, Article IV of the 1973 Constitution, the aforesaid constitutional provision is
one of three provisions mandating speedier dispensation of justice. It guarantees the right of all
persons to “a speedy disposition of their case”; includes within its contemplation the periods
before, during and after trial, and affords broader protection than Section 14(2), which
guarantees just the right to a speedy trial. It is more embracing than the protection under Article VII,
Section 15, which covers only the period after the submission of the case. The present constitutional
provision applies to civil, criminal and administrative cases. (Emphasis and underscoring supplied; citations
omitted)

Thus, in view of the unjustified length of time miring the Office of the Ombudsman’s resolution of the case
as well as the concomitant prejudice that the delay in this case has caused, it is undeniable that petitioners’
constitutional right to due process and speedy disposition of cases had been violated. As the institutional
vanguard against corruption and bureaucracy, the Office of the Ombudsman should create a system of
accountability in order to ensure that cases before it are resolved with reasonable dispatch and to equally
expose those who are responsible for its delays, as it ought to determine in this case.

Corollarily, for the SB’s patent and utter disregard of the existing laws and jurisprudence surrounding the
matter, the Court finds that it gravely abused its discretion when it denied the quashal of the Information.
Perforce, the assailed resolutions must be set aside and the criminal case against petitioners be dismissed.

While the foregoing pronouncement should, as matter of course, result in the acquittal of the petitioners, it
does not necessarily follow that petitioners are entirely exculpated from any civil liability, assuming that the
same is proven in a subsequent case which the Province may opt to pursue.

Section 2, Rule 111 of the Rules of Court provides that an acquittal in a criminal case does not bar the
private offended party from pursuing a subsequent civil case based on the delict, unless the judgment of
acquittal explicitly declares that the act or omission from which the civil liability may arise did
not exist. As explained in the case of Abejuela v. People, citing Banal v. Tadeo, Jr.:
33 34 35

The Rules provide: “The extinction of the penal action does not carry with it extinction of the civil,
unless the extinction proceeds from a declaration in a final judgment that the fact from which the
civil might arise did not exist. In other cases, the person entitled to the civil action may institute
it in the jurisdiction and in the manner provided by law against the person who may be liable for
restitution of the thing and reparation or indemnity for the damage suffered.”

xxxx

In Banal vs. Tadeo, Jr., we declared: cralavvonlinelawlibrary

“While an act or omission is felonious because it is punishable by law, it gives rise to civil liability not so
much because it is a crime but because it caused damage to another. Viewing things pragmatically, we can
readily see that what gives rise to the civil liability is really the obligation and moral duty of
everyone to repair or make whole the damage caused to another by reason of his own act or
omission, done intentionally or negligently, whether or not the same be punishable by
law.”(Emphasis and underscoring supplied)

Based on the violation of petitioners’ right to speedy disposition of cases as herein discussed, the present
case stands to be dismissed even before either the prosecution or the defense has been given the chance to
present any evidence. Thus, the Court is unable to make a definite pronouncement as to whether petitioners
indeed committed the acts or omissions from which any civil liability on their part might arise as prescribed
under Section 2, Rule 120 of the Rules of Court. Consequently, absent this pronouncement, the Province is
36

not precluded from instituting a subsequent civil case based on the delict if only to recover the amount of
P20,000,000.00 in public funds attributable to petitioners’ alleged malfeasance.

WHEREFORE, the petitions are hereby GRANTED. The assailed Resolutions dated October 6, 2009 and
February 10, 2010 of the First Division of the Sandiganbayan are ANNULLED and SET ASIDE. The
Sandiganbayan is likewise ordered to DISMISS Crim. Case No. SB-09-CRM-0154 for violation of the
Constitutional right to speedy disposition of cases of petitioners Rafael L. Coscolluela, Edwin N. Nacionales,
Dr. Ernesto P. Malvas, and Jose Ma. G. Amugod, without prejudice to any civil action which the Province of
Negros Occidental may file against petitioners.

SO ORDERED.

G.R. No. 191411 July 15, 2013

Rafael L. Coscolluela, petitioner,
vs.
Sandiganbayan and People of the Philippines, respondents

Facts

Coscolluela served as governor of the Province of Negros Occidental for three (3) full
terms which ended on June 30, 2001. During his tenure, Nacionales served as his Special
Projects Division Head, Amugod as Nacionales’ subordinate, and Malvas as Provincial Health
Officer.
On November 9, 2001, the Office of the Ombudsman for the Visayas received a letter-
complaint dated November 7, 2001 from People’s Graftwatch, requesting for assistance to
investigate the anomalous purchase of medical and agricultural equipment for the Province in
the amount of P20,000,000.00 which allegedly happened around a month before Coscolluela
stepped down from office.
Acting on the letter-complaint, the Case Building Team of the Office of the Ombudsman
conducted its investigation, resulting in the issuance of a Final Evaluation Report dated April 16,
2002 which upgraded the complaint into a criminal case against petitioners. Consequently,
petitioners filed their respective counter-affidavits.
On March 27, 2003, the assigned Graft Investigation Officer Butch E. Cañares prepared a
Resolution, finding probable cause against petitioners for violation of Section 3(e) of Republic
Act No. (RA) 3019, otherwise known as the “Anti-Graft and Corrupt Practices Act,” and
recommended the filing of the corresponding information. On even date, the Information was
prepared and signed by Cañares and submitted to Deputy Ombudsman for the Visayas Primo
C. Miro for recommendation. Miro recommended the approval of the Information on June 5,
2003. However, the final approval of Acting Ombudsman Orlando C. Casimiro, came only on
May 21, 2009, and on June 19, 2009, the Information was filed before the SB.
Petitioners alleged that they learned about the March 27, 2003 Resolution and
Information only when they received a copy of the latter shortly after its filing with the SB.
On July 9, 2009, Coscolluela filed a Motion to Quash, arguing, among others, that his
constitutional right to speedy disposition of cases was violated as the criminal charges against
him were resolved only after almost eight (8) years since the complaint was instituted.
Nacionales, Malvas, and Amugod later adopted Coscolluela’s motion.
In reply, the respondents filed their Opposition to Motion to Quash dated August 7, 2009,
explaining that although the Information was originally dated March 27, 2003, it still had to go
through careful review and revision before its final approval. It also pointed out that petitioners
never raised any objections regarding the purported delay in the proceedings during the interim.

Issues

Whether or not the constitutional right to speedy disposition of cases of the petitioner
was violated.

Ruling

The petitions are meritorious.

First, it is observed that the preliminary investigation proceedings took a
protracted amount of time to complete. Second, the above-discussed delay in the
Ombudsman’s resolution of the case largely remains unjustified. Third, the Court deems
that petitioners cannot be faulted for their alleged failure to assert their right to speedy
disposition of cases. Fourth, the Court finally recognizes the prejudice caused to the
petitioners by the lengthy delay in the proceedings against them.
A person’s right to the speedy disposition of his case is guaranteed under
Section 16, Article III of the 1987 Philippine Constitution which provides “All persons
shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies”.
 Examining the incidents in the present case, the Court holds that petitioners’ right
to a speedy disposition of their criminal case had been violated.