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G.R. No. 106401 September 29, 2000 SPOUSES FLORENTINO ZARAGOZA AND ERLINDA ENRIQUEZ-ZARAGOZA VS.

THE HONORABLE COURT OF APPEALS Facts: Flavio Zaragoza Cano was the registered owner of certain parcels of land. He had four children namely: Gloria, Zacariaz, Florentino and Alberta, all surnamed Zaragoza. On December 9, 1964, he died without a will and was survived by his four children. On December 28, 1981, private respondent Alberta Zaragoza-Morgan filed a complaint with the Court of First Instance against petitioner-spouses Florentino and Erlinda for delivery of her inheritance share and for payment of damages. She claims that she is a natural-born Filipino citizen and the youngest child of the late Flavio. She further alleged that her father in his lifetime partitioned the properties among his four children. The shares of her brothers and sister were given to them in advance by way of deed of sale, but without valid consideration, while her share was not conveyed by way of deed of sale then. Petitioners denied knowledge of an alleged distribution by way of deeds of sale to them by their father. They denied knowledge of the alleged intention of their father to convey the cited lots to Alberta, much more, the reason for his failure to do so because she became an American citizen. They denied that there was partitioning of the estate of their father during his lifetime. The Regional Trial Court rendered judgment adjudicating Lot 471 in the name of Flavio Zaragoza Cano to Alberta Zaragoza-Morgan as appertaining her share in his estate. Issues: (1) Whether the partition inter vivos by Flavio Zaragoza Cano of his properties is valid. (2) Whether the validity of the deed of sale and consequently, the transfer certificate of title over the lot registered in the name of petitioners can be a valid subject matter of

the entire proceeding for the delivery of inheritance share. Ruling: Both the trial court and the public respondent found that during the lifetime of Flavio, he already partitioned and distributed his properties among his three children, excepting private respondent through deeds of sale. A deed of sale was not executed in favor of private respondent because she had become an American citizen and the Constitution prohibited a sale in her favor. It is basic in the law of succession that a partition inter vivos may be done for as long as legitimes are not prejudiced. Unfortunately, collation cannot be done in this case where the original petition for delivery of inheritance share only impleaded one of the other compulsory heirs. The petition must therefore be dismissed without prejudice to the institution of a new proceeding where all the indispensable parties are present for the rightful determination of their respective legitime and if the legitimes were prejudiced by the partitioning inter vivos. Private respondent, in submitting her petition for the delivery of inheritance share, was in effect questioning the validity of the deed of sale in favor of petitioner and consequently, the transfer of certificate of title issued in the latters name. although the trial court, as an obiter, made a finding of validity of the conveyance of the said lot, since according to it, private respondent did not question the genuineness of the signature of the deceased, nevertheless, when the case was elevated to the Court of Appeals, the latter declared the sale to be fictitious because of finding of marked differences in the signature of Flavio in the deed of sale vis--vis signatures found in earlier documents. Could this be done? The petition is a collateral attack. A certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled except in a direct proceeding in accordance with law.

G.R. No. 113539 March 12, 1998

CELSO R. HALILI petitioners, vs. HELEN MEYERS GUZMAN and respondents

and ARTHUR R. HALILI, COURT OF APPEALS, GUZMAN, DAVID REY EMILIANO CATANIAG,

The factual findings of a trial court, when affirmed by the Court of Appeals, may no longer be reviewed and reversed by this Court in a petition for review under Rule 45 of the Rules of Court. The transfer of an interest in a piece of land to an alien may no longer be assailed on constitutional grounds after the entire parcel has been sold to a qualified citizen. The Case These familiar and long-settled doctrines are applied by this Court in denying this petition under Rule 45 to set aside the Decision[1] of the Court of Appeals[2] in CA-GR CV No. 37829 promulgated on September 14, 1993, the dispositive portion of which states:[3] WHEREFORE, and upon all the foregoing, the Decision of the court below dated March 10, 1992 dismissing the complaint for lack of merit is AFFIRMED without pronouncement as to costs. The Facts The factual antecedents, as narrated by Respondent Court, are not disputed by the parties. We reproduce them in part, as follows: Simeon de Guzman, an American citizen, died sometime in 1968, leaving real properties in the Philippines. His forced heirs were his widow, defendant appellee [herein private respondent] Helen Meyers Guzman, and his son, defendant appellee [also herein private respondent] David Rey Guzman, both of whom are also American citizens. On August 9, 1989, Helen executed a deed of quitclaim (Annex A-Complaint), assigning[,] transferring and conveying to David Rey all her rights, titles and interests in and over six parcels of land which the two of them inherited from Simeon.

Among the said parcels of land is that now in litigation, x x x situated in Bagbaguin, Sta. Maria, Bulacan, containing an area of 6,695 square meters, covered by Transfer Certificate of Title No. T-170514 of the Registry of Deeds of Bulacan. The quitclaim having been registered, TCT No. T-170514 was cancelled and TCT No. T-120259 was issued in the name of appellee David Rey Guzman. On February 5, 1991, David Rey Guzman sold said parcel of land to defendant-appellee [also herein private respondent] Emiliano Cataniag, upon which TCT No. T-120259 was cancelled and TCT No. T-130721(M) was issued in the latters name.[4] Petitioners, who are owners of the adjoining lot, filed a complaint before the Regional Trial Court of Malolos, Bulacan, questioning the constitutionality and validity of the two conveyances -- between Helen Guzman and David Rey Guzman, and between the latter and Emiliano Cataniag -- and claiming ownership thereto based on their right of legal redemption under Art. 1621[5]of the Civil Code. In its decision[6] dated March 10, 1992,[7] the trial court dismissed the complaint. It ruled that Helen Guzmans waiver of her inheritance in favor of her son was not contrary to the constitutional prohibition against the sale of land to an alien, since the purpose of the waiver was simply to authorize David Rey Guzman to dispose of their properties in accordance with the Constitution and the laws of the Philippines, and not to subvert them. On the second issue, it held that the subject land was urban; hence, petitioners had no reason to invoke their right of redemption under Art. 1621 of the Civil Code. The Halilis sought a reversal from the Court of Appeals which, however, denied their appeal. Respondent Court affirmed the factual finding of the trial court that the subject land was urban. Citing Tejido vs. Zamacoma[8] and Yap vs. Grageda,[9] it further held that, although the transfer of the land to David Rey may have been invalid for being contrary to the Constitution, there was no more point in

allowing herein petitioners to recover the property, since it has passed on to and was thus already owned by a qualified person. Hence, this petition. Issues The petition submits the following assignment of errors: x x x the Honorable Court of Appeals 1. Erred in affirming the conclusion of the trial court that the land in question is urban, not rural 2. Erred in denying petitioners right of redemption under Art. 1621 of the Civil Code 3. Having considered the conveyance from Helen Meyers Guzman to her son David Rey Guzman illegal, erred in not declaring the same null and void[.][11] The Courts Ruling The petition has no merit. First Issue: The Land Is Urban; Thus, No Right of Redemption The first two errors assigned by petitioners being interrelated -- the determination of the first being a prerequisite to the resolution of the second -- shall be discussed together. Subject Land Is Urban Whether the land in dispute is rural or urban is a factual question which, as a rule, is not reviewable by this Court.[12] Basic and longsettled is the doctrine that findings of fact of a trial judge, when affirmed by the Court of Appeals, are binding upon the Supreme Court. This admits of only a few exceptions, such as when the findings are grounded entirely on speculation, surmises or conjectures; when an inference made by the appellate court from its factual findings is manifestly mistaken, absurd or impossible; when there is grave abuse of discretion in the appreciation of facts; when the findings of the appellate court go beyond the issues of the

case, run contrary to the admissions of the parties to the case or fail to notice certain relevant facts which, if properly considered, will justify a different conclusion; when there is a misappreciation of facts; when the findings of fact are conclusions without mention of the specific evidence on which they are based, are premised on the absence of evidence or are contradicted by evidence on record.[13] The instant case does not fall within any of the aforecited exceptions. In fact, the conclusion of the trial court -- that the subject property is urban land -- is based on clear and convincing evidence, as shown in its decision which disposed thus: x x x As observed by the court, almost all the roadsides along the national ghighway [sic] of Bagbaguin, Sta. Maria, Bulacan, are lined up with residential, commercial or industrial establishments. Lined up along the Bagbaguin Road are factories of feeds, woodcrafts [sic] and garments, commercial stores for tires, upholstery materials, feeds supply and spare parts. Located therein likewise were the Pepsi-Cola Warehouse, the Cruz Hospital, three gasoline stations, apartment buildings for commercial purposes and construction firms. There is no doubt, therefore, that the community is a commercial area thriving in business activities. Only a short portion of said road [is] vacant. It is to be noted that in the Tax Declaration in the name of Helen Meyers Guzman[,] the subject land is termed agricultural[,] while in the letter addressed to defendant Emiliano Cataniag, dated October 3, 1991, the Land Regulatory Board attested that the subject property is commercial and the trend of development along the road is commercial. The Boards classification is based on the present condition of the property and the community thereat. Said classification is far more later [sic] than the tax declaration.[14] No Ground to Invoke Right of Redemption In view of the finding that the subject land is urban in character, petitioners have indeed no right to invoke Art. 1621 of the Civil Code, which presupposes that the land sought to be

redeemed is rural. The provision is clearly worded and admits of no ambiguity in construction: ART. 1621. The owners of adjoining lands shall also have the right of redemption when a piece of rural land, the area of which does not exceed one hectare, is alienated, unless the grantee does not own any rural land. xxx xxx xxx

Following a long discourse maintaining that the public agricultural lands mentioned in Section 1, Article XIII of the 1935 Constitution, include residential, commercial and industrial lands, the Court then stated: Under section 1 of Article XIII [now Sec. 2, Art. XII] of the Constitution, natural resources, with the exception of public agricultural land, shall not be alienated, and with respect to public agricultural lands, their alienation is limited to Filipino citizens. But this constitutional purpose conserving agricultural resources in the hands of Filipino citizens may easily be defeated by the Filipino citizens themselves who may alienate their agricultural lands in favor of aliens. It is partly to prevent this result that section 5 is included in Article XIII, and it reads as follows: Sec. 5. Save in cases of hereditary succession, no private agricultural land will be transferred or assigned except to individuals, corporations or associations qualified to acquire or hold lands of the public domain in the Philippines. This constitutional provision closes the only remaining avenue through which agricultural resources may leak into aliens hands. It would certainly be futile to prohibit the alienation of public agricultural lands to aliens if, after all, they may be freely so alienated upon their becoming private agricultural lands in the hands of Filipino citizens. Undoubtedly, as above indicated, section 5 [now Sec. 7] is intended to insure the policy of nationalization contained in section 1 [now Sec. 2]. Both sections must, therefore, be read together for they have the same purpose and the same subject matter. It must be noticed that the persons against whom the prohibition is directed in section 5 [now Sec. 7] are the very same persons who under section 1 [now Sec. 2] are disqualified to acquire or hold lands of the public domain in the Philippines. And the subject matter of both sections is the same, namely, the non transferability of agricultural land to aliens. x x x[18] The Krivenko rule was recently reiterated in Ong Ching Po vs. Court of Appeals,[19]

Under this article, both lands -- that sought to be redeemed and the adjacent lot belonging to the person exercising the right of redemption -- must be rural. If one or both are urban, the right cannot be invoked.[15] The purpose of this provision which is limited in scope to rural lands not exceeding one hectare, is to favor agricultural development. [16] The subject land not being rural and, therefore, not agricultural, this purpose would not be served if petitioners are granted the right of redemption under Art. 1621. Plainly, under the circumstances, they cannot invoke it. Second Issue: Sale to Cataniag Valid Neither do we find any reversible error in the appellate courts holding that the sale of the subject land to Private Respondent Cataniag renders moot any question on the constitutionality of the prior transfer made by Helen Guzman to her son David Rey. True, Helen Guzmans deed of quitclaim -- in which she assigned, transferred and conveyed to David Rey all her rights, titles and interests over the property she had inherited from her husband -- collided with the Constitution, Article XII, Section 7 of which provides: SEC. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. The landmark case of Krivenko vs. Register of Deeds[17] settled the issue as to who are qualified (and disqualified) to own public as well as private lands in the Philippines.

which involves a sale of land to a Chinese citizen. The Court said: The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. Private land may be transferred or conveyed only to individuals or entities qualified to acquire lands of the public domain (II Bernas, The Constitution of the Philippines 439-440 [1988 ed.]). The 1935 Constitution reserved the right to participate in the disposition, exploitation, development and utilization of all lands of the public domain and other natural resources of the Philippines for Filipino citizens or corporations at least sixty percent of the capital of which was owned by Filipinos. Aliens, whether individuals or corporations, have been disqualified from acquiring public lands; hence, they have also been disqualified from acquiring private lands.[20] In fine, non-Filipinos cannot acquire or hold title to private lands or to lands of the public domain, except only by way of legal succession.[21] But what is the effect of a subsequent sale by the disqualified alien vendee to a qualified Filipino citizen? This is not a novel question. Jurisprudence is consistent that if land is invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a citizen, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid.[22] Thus, in United Church Board of World Ministries vs. Sebastian,[23] in which an alien resident who owned properties in the Philippines devised to an American non-stock corporation part of his shares of stock in a Filipino corporation that owned a tract of land in Davao del Norte, the Court sustained the invalidity of such legacy. However, upon proof that ownership of the American corporation has passed on to a 100 percent Filipino corporation, the Court ruled that the defect in the will was rectified by the subsequent transfer of the property.

The present case is similar to De Castro vs. Tan.[24] In that case, a residential lot was sold to a Chinese. Upon his death, his widow and children executed an extrajudicial settlement, whereby said lot was allotted to one of his sons who became a naturalized Filipino. The Court did not allow the original vendor to have the sale annulled and to recover the property, for the reason that the land has since become the property of a naturalized Filipino citizen who is constitutionally qualified to own land. Likewise, in the cases of Sarsosa vs. Cuenco, [25] Godinez vs. Pak Luen,[26] Vasquez vs. Li Seng Giap[27] and Herrera vs. Luy Kim Guan, [28] which similarly involved the sale of land to an alien who thereafter sold the same to a Filipino citizen, the Court again applied the rule that the subsequent sale can no longer be impugned on the basis of the invalidity of the initial transfer. The rationale of this principle was explained in Vasquez vs. Li Seng Giap thus: x x x [I]f the ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court in the Krivenko case, is to preserve the nations lands for future generations of Filipinos, that aim or purpose would not be thwarted but achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization.[29] Accordingly, since the disputed land is now owned by Private Respondent Cataniag, a Filipino citizen, the prior invalid transfer can no longer be assailed. The objective of the constitutional provision -- to keep our land in Filipino hands -- has been served. WHEREFORE, the petition is hereby DENIED. The challenged Decision is AFFIRMED. Costs against petitioner. SO ORDERED.

G.R. No. 143958 July 11, 2003

ALFRED FRITZ FRENZEL, petitioner, vs. EDERLINA P. CATITO, respondent. Facts: Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is an electrical engineer by profession, but worked as a pilot with the New Guinea Airlines. He arrived in the Philippines in 1974, started engaging in business in the country; two years thereafter, he married Teresita Santos, a Filipino citizen. In 1981, Alfred and Teresita separated from bed and board without obtaining a divorce. In 1983, Alfred arrived in Sydney, Australia for a vacation. He went to Kings Cross, a night spot in Sydney, for a massage where he met Ederlina Catito, a Filipina and a native of Bajada, Davao City. Unknown to Alfred, she resided for a time in Germany and was married to Klaus Muller, a German national. She left Germany and tried her luck in Sydney, Australia, where she found employment as a masseuse in the Kings Cross nightclub. Alfred was so enamored with Ederlina that he persuaded her to stop working at Kings Cross, return to the Philippines, and engage in a wholesome business of her own. He also proposed that they meet in Manila, to which she assented. Alfred gave her money for her plane fare to the Philippines. Within two weeks of Ederlinas arrival in Manila, Alfred joined her. Alfred reiterated his proposal for Ederlina to stay in the Philippines and engage in business, even offering to finance her business venture. Ederlina was delighted at the idea and proposed to put up a beauty parlor. Alfred happily agreed. Alfred told Ederlina that he was married but that he was eager to divorce his wife in Australia. Alfred proposed marriage to Ederlina, but she replied that they should wait a little bit longer. Alfred went back to Papua New Guinea to resume his work as a pilot. Since Alfred knew that as an alien he was disqualified from owning lands in the

Philippines, he agreed that only Ederlinas name would appear in the deed of sale as the buyer of the property, as well as in the title covering the same. After all, he was planning to marry Ederlina and he believed that after their marriage, the two of them would jointly own the property. When Ederlina left for Germany to visit Klaus, she had her father Narciso Catito and her two sisters occupy the property. Alfred decided to stay in the Philippines for good and live with Ederlina. He returned to Australia and sold his fiber glass pleasure boat to John Reid in 1984. He also sold his television and video business in Papua New Guinea. He had his personal properties shipped to the Philippines and stored at San Francisco del Monte, Quezon City. On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter dated December 7, 1983 from Klaus Muller who was then residing in Berlin, Germany. Klaus informed Alfred that he and Ederlina had been married on October 16, 1978 and had a blissful married life until Alfred intruded therein. Klaus stated that he knew of Alfred and Ederlinas amorous relationship, and discovered the same sometime in November 1983 when he arrived in Manila. He also begged Alfred to leave Ederlina alone and to return her to him, saying that Alfred could not possibly build his future on his (Klaus) misfortune. Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He inquired if there was any truth to Klaus statements and Sally confirmed that Klaus was married to Ederlina. When Alfred confronted Ederlina, she admitted that she and Klaus were, indeed, married. But she assured Alfred that she would divorce Klaus. Alfred was appeased. He agreed to continue the amorous relationship and wait for the outcome of Ederlinas petition for divorce. After all, he intended to marry her. He retained the services of Rechtsanwltin Banzhaf with offices in Berlin,

as her counsel who informed her of the progress of the proceedings. Alfred paid for the services of the lawyer. Ederlina often wrote letters to her family informing them of her life with Alfred. In a Letter dated January 21, 1985, she wrote about how Alfred had financed the purchases of some real properties, the establishment of her beauty parlor business, and her petition to divorce Klaus. In the meantime, Ederlinas petition for divorce was denied because Klaus opposed the same. A second petition filed by her met the same fate. Klaus wanted half of all the properties owned by Ederlina in the Philippines before he would agree to a divorce. Worse, Klaus threatened to file a bigamy case against Ederlina. Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the establishment of a corporation, with Ederlina owning 30% of the equity thereof. She initially agreed to put up a corporation and contacted Atty. Armando Dominguez to prepare the necessary documents. Ederlina changed her mind at the last minute when she was advised to insist on claiming ownership over the properties acquired by them during their coverture. Alfred and Ederlinas relationship started deteriorating. Ederlina had not been able to secure a divorce from Klaus. The latter could charge her for bigamy and could even involve Alfred, who himself was still married. To avoid complications, Alfred decided to live separately from Ederlina and cut off all contacts with her. In one of her letters to Alfred, Ederlina complained that he had ruined her life. She admitted that the money used for the purchase of the properties in Davao were his. She offered to convey the properties deeded to her by Atty. Mardoecheo Camporedondo and Rodolfo Morelos, asking Alfred to prepare her affidavit for the said purpose and send it to her for her signature. The last straw for Alfred came on September 2, 1985, when someone smashed the front and rear windshields of Alfreds car and damaged the windows. Alfred thereafter executed an affidavit-complaint charging

Ederlina and Sally MacCarron with malicious mischief. On October 15, 1985, Alfred wrote to Ederlinas father, complaining that Ederlina had taken all his life savings and because of this, he was virtually penniless. He further accused the Catito family of acquiring for themselves the properties he had purchased with his own money. He demanded the return of all the amounts that Ederlina and her family had stolen and turn over all the properties acquired by him and Ederlina during their coverture. Alfred filed a Complaint dated October 28, 1985, against Ederlina, with the Regional Trial Court of Quezon City, for recovery of real and personal properties located in Quezon City and Manila. In his complaint, Alfred alleged, inter alia, that Ederlina, without his knowledge and consent, managed to transfer funds from their joint account in HSBC Hong Kong, to her own account with the same bank. Using the said funds, Ederlina was able to purchase the properties subject of the complaints. He also alleged that the beauty parlor in Ermita was established with his own funds, and that the Quezon City property was likewise acquired by him with his personal funds. Ederlina failed to file her answer and was declared in default. Alfred adduced his evidence ex-parte. Alfred prayed that after hearing, judgment be rendered in his favor.

Issues: a) Whether the Court of Appeals erred in applying the rule of In Pari Delicto since both parties are not equally guilty but rather it was the respondent who employed fraud when she did not inform petitioner that she was already married? b) Whether the intention of the petitioner is not to own real properties in the Philippines but to sell them as public auction to be able

to recover his money used in purchasing them? Ruling: The trial court ruled that based on documentary evidence, the purchaser of the three parcels of land subject of the complaint was Ederlina. The court further stated that even if Alfred was the buyer of the properties, he had no cause of action against Ederlina for the recovery of the same because as an alien, he was disqualified from acquiring and owning lands in the Philippines. The sale of the three parcels of land to the petitioner was null and void ab initio. Applying the pari delicto doctrine, the petitioner was precluded from recovering the properties from the respondent. Alfred appealed the decision to the Court of Appeals in which the petitioner posited the view that although he prayed in his complaint in the court a quo that he be declared the owner of the three parcels of land, he had no intention of owning the same permanently. His principal intention therein was to be declared the transient owner for the purpose of selling the properties at public auction, ultimately enabling him to recover the money he had spent for the purchase thereof. On March 8, 2000, the CA rendered a decision affirming in toto the decision of the RTC. The appellate court ruled that the petitioner knowingly violated the Constitution; hence, was barred from recovering the money used in the purchase of the three parcels of land. It held that to allow the petitioner to recover the money used for the purchase of the properties would embolden aliens to violate the Constitution, and defeat, rather than enhance, the public policy. Even if, as claimed by the petitioner, the sales in question were entered into by him as the real vendee, the said transactions are in violation of the Constitution; hence, are null and void ab initio. A contract that violates the Constitution and the law, is null and void and vests no rights

and creates no obligations. It produces no legal effect at all. The petitioner, being a party to an illegal contract, cannot come into a court of law and ask to have his illegal objective carried out. One who loses his money or property by knowingly engaging in a contract or transaction which involves his own moral turpitude may not maintain an action for his losses. To him who moves in deliberation and premeditation, the law is unyielding. The law will not aid either party to an illegal contract or agreement; it leaves the parties where it finds them. Under Article 1412 of the New Civil Code, the petitioner cannot have the subject properties deeded to him or allow him to recover the money he had spent for the purchase thereof. Equity as a rule will follow the law and will not permit that to be done indirectly which, because of public policy, cannot be done directly. Where the wrong of one party equals that of the other, the defendant is in the stronger position ... it signifies that in such a situation, neither a court of equity nor a court of law will administer a remedy. The rule is expressed in the maxims: EX DOLO MALO NON ORITUR ACTIO and IN PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS. Futile, too, is petitioners reliance on Article 22 of the New Civil Code which reads: Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. The provision is expressed in the maxim: MEMO CUM ALTERIUS DETER DETREMENTO PROTEST (No person should unjustly enrich himself at the expense of another). An action for recovery of what has been paid without just cause has been designated as an accion in rem verso. This provision does not apply if, as in this case, the action is proscribed by the Constitution or by the application of the pari delicto doctrine. It may be unfair and unjust to bar the petitioner from filing an accion in rem verso over the subject properties, or from recovering the money he paid for the said properties, but, as Lord Mansfield stated

in the early case of Holman vs. Johnson: The objection that a contract is immoral or illegal as between the plaintiff and the defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff. IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision of the Court of Appeals is AFFIRMED in toto. Costs against the petitioner. SO ORDERED.

of 51% of the MHC may be hastened by respondent GSIS and consummated with Renong Berhad, petitioner came to this Court on prohibition and mandamus. In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution and submits that the Manila Hotel has been identified with the Filipino nation and has practically become a historical monument which reflects the vibrancy of Philippine heritage and culture. It is a proud legacy of an earlier generation of Filipinos who believed in the nobility and sacredness of independence and its power and capacity to release the full potential of the Filipino people. To all intents and purposes, it has become a part of the national patrimony. 6 Petitioner also argues that since 51% of the shares of the MHC carries with it the ownership of the business of the hotel which is owned by respondent GSIS, a governmentowned and controlled corporation, the hotel business of respondent GSIS being a part of the tourism industry is unquestionably a part of the national economy. Issue: Whether or Not the sale of Manila Hotel to Renong Berhad is violative of the Constitutional provision of Filipino First policy and is therefore null and void. Held: The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be sold to the highest bidder solely for the sake of privatization. The Manila Hotel has played and continues to play a significant role as an authentic repository of twentieth century Philippine history and culture. This is the plain and simple meaning of the Filipino First Policy provision of the Philippine Constitution. And this Court, heeding the clarion call of the Constitution and accepting the duty of being the elderly watchman of the nation, will continue to respect and protect the sanctity of the Constitution. It was thus ordered that GSIS accepts the matching bid of petitioner MANILA PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares of the Manila Hotel Corporation at P44.00 per share

G.R. No. 122156 February 3, 1997 MANILA PRINCE HOTEL VS. GSIS Facts: The controversy arose when respondent Government Service Insurance System (GSIS), pursuant to the privatization program of the Philippine Government under Proclamation No. 50 dated 8 December 1986, decided to sell through public bidding 30% to 51% of the issued and outstanding shares of respondent Manila Hotel Corporation. In a close bidding held on 18 September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipino corporation, which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per share, or P2.42 more than the bid of petitioner. Pending the declaration of Renong Berhad as the winning bidder/strategic partner and the execution of the necessary contracts, matched the bid price of P44.00 per share tendered by Renong Berhad. On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of the matching bid and that the sale

and thereafter to execute the necessary clearances and to do such other acts and deeds as may be necessary for purpose.

G.R. No. 144109 February 17, 2003 ASSOCIATED COMMUNICATIONS & WIRELESS SERVICES UNITED BROADCASTING NETWORKS, petitioner, vs. NATIONAL TELECOMMUNICATIONS COMMISSION, respondent. (The question that has taken a long life is whether the operation of a radio or television station requires a congressional franchise.) Facts: On November 11, 1931, Act No. 3846, entitled "An Act Providing for the Regulation of Radio Stations and Radio Communications in the Philippines and for Other Purposes," was enacted. Sec. 1 of the law reads, viz: "Sec. 1. No person, firm, company, association, or corporation shall construct, install, establish, or operate a radio transmitting station, or a radio receiving station used for commercial purposes, or a radio broadcasting station, without having first obtained a franchise therefor from the Congress of the Philippines..." Pursuant to the above provision, Congress enacted in 1965 R.A. No. 4551, entitled "An Act Granting Marcos J. Villaverde, Jr. and Winfred E. Villaverde a Franchise to Construct, Install, Maintain and Operate Public Radiotelephone and Radiotelegraph Coastal Stations, and Public Fixed and Public Based and Land Mobile Stations within the Philippines It gave the grantees a 50-year franchise. In 1969, the franchise was transferred to petitioner Associated Communications & Wireless Services United Broadcasting Network, Inc. (ACWS for brevity) through Congress Concurrent Resolution No. 58. Petitioner ACWS then engaged in the installation and operation of several radio stations around the country.

In 1974, P.D. No. 576-A, "Regulating the Ownership and Operation of Radio and Television Stations and for other Purposes" was issued, with the following pertinent provisions on franchise of radio and television broadcasting systems: Sec. 1. No radio station or television channel may obtain a franchise unless it has sufficient capital on the basis of equity for its operation for at least one year, including purchase of equipment. Sec. 6. All franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on December 31, 1981. Thereafter, irrespective of any franchise, grant, license, permit, certificate or other forms of authority to operate granted by any office, agency or person, no radio or television station shall be authorized to operate without the authority of the Board of Communications and the Secretary of Public Works and Communications or their successors who have the right and authority to assign to qualified parties frequencies, channels or other means of identifying broadcasting system. A few years later or in 1979, E.O. No. 5464 was issued. It integrated the Board of Communications and the Telecommunications Control Bureau under the Integrated Reorganization Plan of 1972 into the NTC. Among the powers vested in the NTC under Sec. 15 of E.O. No. 546 are the following: a. Issue Certificate of Public Convenience for the operation of communication utilities and services c. Grant permits for the use of radio frequencies for wireless telephone and telegraph systems and radio communication systems Upon termination of petitioners franchise on December 31, 1981 pursuant to P.D. No. 576A, it continued operating its radio stations under permits granted by the NTC.

Issue: Has E.O. No 546 modified the franchising and licensing arrangement for radio and television broadcasting systems under Act No. 3846 and P.D. No. 576-A; consequently, the requirement of obtaining a congressional/legislative franchise can already be dispensed with? Ruling: E.O. No. 546 integrated the Board of Communications and the Telecommunications Bureau into a single entity known as the NTC, and vested the new body with broad powers, among them, the power to issue Certificates of Public Convenience for the operation of communications utilities, including radio and televisions broadcasting systems and the power to grant permits for the use of radio frequencies. Additionally, NTC was vested with broad rule making authority to encourage a larger and more effective use of communications, radio and television broadcasting facilities, and to maintain effective competition among private entities in these activities whenever the Commission finds it reasonably feasible. In the recent case of Albano vs. Reyes (175 SCRA 264), the Supreme Court held that franchises issued by Congress are not required before each and every public utility may operate. Administrative agencies may be empowered by law to grant licenses for or to authorize the operation of certain public utilities. The Supreme Court stated that the provision in the Constitution (Art. XII, Sec. 11) 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 . . . 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.

We believe that E.O. No. 546 is one law which authorizes an administrative agency, the NTC, to issue authorizations for the operation of radio and television broadcasting systems without need of a prior franchise issued by Congress. However, on May 3, 1994, the NTC, the Committee on Legislative Franchises of Congress, and the Kapisanan ng mga Brodkaster sa Pilipinas of which petitioner is a member of good standing, entered into a Memorandum of Understanding (MOU) that requires a congressional franchise to operate radio and television stations. The MOU states in part: The NTC shall continue to issue and grant permits or authorizations to operate radio and television broadcast stations within their mandate under Section 15 of Executive Order No. 546, provided that such temporary permits or authorization to operate shall be valid for two (2) years within which the permittee shall be required to file an application for legislative franchise with Congress not later than December 31, 1994; provided finally, that if the permittee of the temporary permit or authorization to operate fails to secure the legislative franchise with Congress within this period, the NTC shall not extend or renew its permit or authorization to operate any further. Petitioner stresses that Act. No. 3846 covers only the operation of radio and not television stations. the Court of Appeals held that a congressional franchise is required for the operation of radio and television broadcasting stations as this requirement under Act No. 3846 was not expressly repealed by P.D. No. 576-A nor E.O. No. 546. The appellate court correctly ruled that a congressional franchise is necessary for petitioner to operate television Channel. Even assuming that Act No. 3846 applies only to radio stations and not to television stations as petitioner adamantly insists, the subsequent P.D. No. 576-A clearly shows in Section 1 that a franchise is required to operate radio as well as television stations.

There is nothing in P.D. No. 576-A which reveals any intention to do away with the requirement of a franchise for the operation of radio and television stations. Section 6 of P.D. No. 576-A merely identifies the regulatory agencies from whom authorizations, in addition to the required congressional franchise, must be secured after December 31, 1981. Thus, while it is correct to say that specified agencies in the Executive Branch have the power to issue authorization for certain classes of public utilities, this does not mean that the authorization or CPC issued by the NTC dispenses with the requirement of a franchise as this is clearly required under P.D. No. 576-A. The petitioner however insists that the Constitution provides in Art. XII, Sec. 11 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, as petitioner posits, 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. Where there is a law such as P.D. No. 576-A which requires a franchise for the operation of radio and television stations, that law must be followed until subsequently repealed. There is nothing in the subsequent E.O. No. 546 which evinces an intent to dispense with the franchise requirement. Thus, while it is correct to say that specified agencies in the Executive Branch have the power to issue authorization for certain classes of public utilities, this does not mean that the authorization or CPC issued by the NTC dispenses with the requirement of a franchise as this is clearly required under P.D. No. 576A. And whether or not the benefits of the Memorandum Circular extend to petitioner, the fact is, as correctly pointed out by the appellate court, petitioner failed to secure a legislative franchise by December 31, 1999.

Therefore, as long as the law remains unchanged, the requirement of a franchise to operate a television station must be upheld. The call to dispense with the requisite legislative franchise must, however, be addressed to Congress as the lawmaker of the land for the Courts function is to interpret and not to rewrite the law. So ordered.

[G.R. No. 135992. July 23, 2004] EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and TELECOMMUNICATIONS TECHNOLOGIES, INC., petitioners, vs. INTERNATIONAL COMMUNICATION CORPORATION, respondent. Facts: The role of the telecommunications industry in Philippine progress and development cannot be understated. Time was when the industry was dominated by a few -- an oligarchy of sorts where the elite made the decisions and serfdom had no choice but acquiesce. Sensing the need to abrogate their dominion, the government formulated policies in order to create an environment conducive to the entry of new players. Thus, in October 1990, the National Telecommunications Development Plan 19912010 (NTDP) was formulated and came into being. Designed by the Department of Transportation and Communications (DOTC), the NTDP provides for the framework of government policies, objectives and strategies that will guide the industrys development for the next 20 years. As expected, with it came the increase in the demand for telecommunications services, especially in the area of local exchange carrier service (LECS). Concomitantly, the DOTC issued guidelines for the rationalization of local exchange telecommunications service. In particular, the DOTC issued on September 30, 1991, Department Circular No. 91-260, with the purpose of minimizing or eliminating situations wherein multiple operators provide local exchange service in a given area. Thereafter, on July 12, 1993, then President Fidel V. Ramos issued Executive Order No.

109 entitled Local Exchange Carrier Service. Section 2 thereof provides that all existing International Gateway Facility (IGF) operators[2] are required to provide local exchange carrier services in unserved and underserved areas, including Metro Manila, thereby promoting universal access to basic telecommunications service. Taking advantage of the opportunities brought about by the passage of these laws, several IGF operators applied for CPCN to install, operate and maintain local exchange carrier services in certain areas. Respondent International Communication Corporation, now known as Bayan Telecommunications Corporation or Bayantel,[4] applied for and was given by the NTC a Provisional Authority (PA)[5] on March 3, 1995, to install, operate and provide local exchange service in Quezon City, Malabon and Valenzuela, Metro Manila, and the entire Bicol region. Meanwhile, petitioner Telecommunications Technologies Philippines, Inc. (TTPI), as an affiliate of petitioner Eastern Telecommunications Philippines, Inc. (ETPI), was granted by the NTC a PA on September 25, 1996, to install, operate and maintain a local exchange service in the Provinces of Batanes, Cagayan Valley, Isabela, Kalinga-Apayao, Nueva Vizcaya, Ifugao, Quirino, the cities of Manila and Caloocan, and the Municipality of Navotas, Metro Manila. It appears, however, that before TTPI was able to fully accomplish its rollout obligation, ICC applied for and was given a PA by the NTC on November 10, 1997, to install, operate and maintain a local exchange service in Manila and Navotas,[6] two areas which were already covered by TTPI under its PA dated September 25, 1996. Aggrieved, petitioners filed a petition for review with the Court of Appeals with application for a temporary restraining order and a writ of preliminary injunction, docketed as CA-G.R. SP No. 46047, arguing that the NTC committed grave abuse of discretion in granting a provisional authority to respondent ICC to operate in areas already assigned to TTPI. Issue: Whether or not the Honorable Court of Appeals committed a serious error of law in

upholding the Order of the NTC granting a PA to Respondent to operate LEC services in Manila and Navotas which are areas already assigned to petitioner TTPI under a prior and subsisting PA? Held: After a review of the records of this case, the Court finds no grave abuse of discretion committed by the Court of Appeals in sustaining the NTCs grant of provisional authority to ICC. The power of the NTC to grant a provisional authority has long been settled. As the regulatory agency of the national government with jurisdiction over all telecommunications entities, it is clothed with authority and given ample discretion to grant a provisional permit or authority.[11] It also has the authority to issue Certificates of Public Convenience and Necessity (CPCN) for the installation, operation, and maintenance of communications facilities and services, radio communications systems, telephone and telegraph systems, including the authority to determine the areas of operations of applicants for telecommunications services. [12] In this regard, the NTC is clothed with sufficient discretion to act on matters solely within its competence.[13] In granting ICC the PA to operate a local exchange carrier service in the Manila and Navotas areas, the NTC took into consideration ICCs financial and technical resources and found them to be adequate. The NTC also noted ICCs performance in complying with its rollout obligations under the previous PA granted to it. The Court will not interfere with these findings of the NTC, as these are matters that are addressed to its sound discretion, being the government agency entrusted with the regulation of activities coming under its special and technical forte.[15] Moreover, the exercise of administrative discretion is a policy decision and a matter that can best be discharged by the government agency concerned, and not by the courts. Similarly in this case, the grant of a PA to ICC to operate in areas covered by TTPI is not tainted with any grave abuse of discretion as

it was issued by the NTC after taking into account ICCs technical and financial capabilities, and in keeping with the policy of healthy competition fostered by E.O. No. 109 and R.A. No. 7925. The power of the NTC in granting or denying a provisional authority to operate a local exchange carrier service is a quasi-judicial function,[20] a sphere in which the DOTC cannot intrude upon. If at all, the service area scheme provided in DOTC Dept. Circular No. 91-260 is only one of the factors, but should not in any way, tie down the NTC in its determination of the propriety of a grant of a provisional authority to a qualified applicant for local exchange service. True, NTC MC No. 11-9-93 requires prior consultation with the NTC of the proposed service areas. As petitioners themselves argue, prior consultation allows the NTC to assess the impact of the proposed application on the viability of the local exchange operator in the area desired by the would-be applicant and on the viability of the entire telecommunications industry as well as rationalize the plans to minimize any adverse impact.[21] In this case, prior consultation was substantially complied with and its purpose accomplished, when ICC filed its application and the NTC was given the opportunity to assess ICCs viability to render local exchange service in the Manila and Navotas areas, and its impact on the telecommunications industry. It is also true that NTC MC No. 8-9-95 allows a duly enfranchised entity to maintain a local exchange network if it is shown that an existing authorized local exchange operator fails to satisfy the demand for local exchange service.[22] In this case, the NTC noted the increasing rate in the demand for local lines within the Manila and Navotas areas, and in order for these areas to catch up with its neighboring cities, installation of lines must be sped up.[ This, in fact, is tantamount to a finding that the existing local exchange operator failed to meet the growing demand for local lines. ICCs technical and financial capabilities, as well as the growth rate in the number of lines

in particular areas, are matters within NTCs competence and should be accorded respect. The NTC is given wide latitude in the evaluation of evidence and in the exercise of its adjudicative functions, and this includes the authority to take judicial notice of facts within its special competence. G.R. No. 155001 January 21, 2004

DEMOSTHENES P. AGAN, JR vs. Philippine International Air Terminals Co., Inc. (PIATCO) Facts: Before this Court are the separate Motions for Reconsideration filed by respondent Philippine International Air Terminals Co., Inc. (PIATCO). Briefly, the proceedings. On October 5, 1994, Asias Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal to the Philippine Government through the Department of Transportation and Communication (DOTC) and Manila International Airport Authority (MIAA) for the construction and development of the NAIA IPT III under a build-operate-and-transfer arrangement pursuant to R.A. No. 6957, as amended by R.A. No. 7718 (BOT Law).4 In accordance with the BOT Law and its Implementing Rules and Regulations (Implementing Rules), the DOTC/MIAA invited the public for submission of competitive and comparative proposals to the unsolicited proposal of AEDC. On September 20, 1996 a consortium composed of the Peoples Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium), submitted their competitive proposal to the Prequalification Bids and Awards Committee (PBAC). After finding that the Paircargo Consortium submitted a bid superior to the unsolicited proposal of AEDC and after failure by AEDC to match the said bid, the DOTC issued the notice of award for the NAIA IPT III project to the Paircargo Consortium, which later organized into herein respondent PIATCO.

Hence, on July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO, through its President, Henry T. Go, signed the "Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III" (1997 Concession Agreement). On November 26, 1998, the 1997 Concession Agreement was superseded by the Amended and Restated Concession Agreement (ARCA) containing certain revisions and modifications from the original contract. A series of supplemental agreements was also entered into by the Government and PIATCO. The First Supplement was signed on August 27, 1999, the Second Supplement on September 4, 2000, and the Third Supplement on June 22, 2001 (collectively, Supplements) (the 1997 Concession Agreement, ARCA and the Supplements collectively referred to as the PIATCO Contracts). On September 17, 2002, various petitions were filed before this Court to annul the 1997 Concession Agreement, the ARCA and the Supplements and to prohibit the public respondents DOTC and MIAA from implementing them. In a decision dated May 5, 2003, this Court granted the said petitions and declared the 1997 Concession Agreement, the ARCA and the Supplements null and void. Respondent PIATCO, respondentCongressmen and respondents-intervenors now seek the reversal of the May 5, 2003 decision and pray that the petitions be dismissed. A. Legal Standing Respondent PIATCO stands pat with its argument that petitioners lack legal personality to file the cases at bar as they are not real parties in interest who are bound principally or subsidiarily to the PIATCO Contracts. Further, respondent PIATCO contends that petitioners failed to show any legally demandable or enforceable right to justify their standing to file the cases at bar.

These arguments are not difficult to deflect. The determination of whether a person may institute an action or become a party to a suit brings to fore the concepts of real party in interest, capacity to sue and standing to sue. To the legally discerning, these three concepts are different although commonly directed towards ensuring that only certain parties can maintain an action.8 As defined in the Rules of Court, a real party in interest is the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit.9 Capacity to sue deals with a situation where a person who may have a cause of action is disqualified from bringing a suit under applicable law or is incompetent to bring a suit or is under some legal disability that would prevent him from maintaining an action unless represented by a guardian ad litem. Legal standing is relevant in the realm of public law. In certain instances, courts have allowed private parties to institute actions challenging the validity of governmental action for violation of private rights or constitutional principles.10 In these cases, courts apply the doctrine of legal standing by determining whether the party has a direct and personal interest in the controversy and whether such party has sustained or is in imminent danger of sustaining an injury as a result of the act complained of, a standard which is distinct from the concept of real party in interest.11 Measured by this yardstick, the application of the doctrine on legal standing necessarily involves a preliminary consideration of the merits of the case and is not purely a procedural issue.12 Considering the nature of the controversy and the issues raised in the cases at bar, this Court affirms its ruling that the petitioners have the requisite legal standing. The petitioners in G.R. Nos. 155001 and 155661 are employees of service providers operating at the existing international airports and employees of MIAA while petitionersintervenors are service providers with existing contracts with MIAA and they will all sustain direct injury upon the implementation of the PIATCO Contracts. The 1997 Concession Agreement and the ARCA both provide that upon the commencement of

operations at the NAIA IPT III, NAIA Passenger Terminals I and II will cease to be used as international passenger terminals.13 Further, the ARCA provides: (d) For the purpose of an orderly transition, MIAA shall not renew any expired concession agreement relative to any service or operation currently being undertaken at the Ninoy Aquino International Airport Passenger Terminal I, or extend any concession agreement which may expire subsequent hereto, except to the extent that the continuation of the existing services and operations shall lapse on or before the In-Service Date.14 Beyond iota of doubt, the implementation of the PIATCO Contracts, which the petitioners and petitioners-intervenors denounce as unconstitutional and illegal, would deprive them of their sources of livelihood. Under settled jurisprudence, one's employment, profession, trade, or calling is a property right and is protected from wrongful interference.15 It is also self evident that the petitioning service providers stand in imminent danger of losing legitimate business investments in the event the PIATCO Contracts are upheld. Over and above all these, constitutional and other legal issues with far-reaching economic and social implications are embedded in the cases at bar, hence, this Court liberally granted legal standing to the petitioning members of the House of Representatives. First, at stake is the build-operate-and transfer contract of the countrys premier international airport with a projected capacity of 10 million passengers a year. Second, the huge amount of investment to complete the project is estimated to be P13,000,000,000.00. Third, the primary issues posed in the cases at bar demand a discussion and interpretation of the Constitution, the BOT Law and its implementing rules which have not been passed upon by this Court in previous cases. They can chart the future inflow of investment under the BOT Law.

Before writing finis to the issue of legal standing, the Court notes the bid of new parties to participate in the cases at bar as respondents-intervenors, namely, (1) the PIATCO Employees and (2) NMTAI (collectively, the New RespondentsIntervenors). After the Courts Decision, the New Respondents-Intervenors filed separate Motions for Reconsideration-In-Intervention alleging prejudice and direct injury. PIATCO employees claim that "they have a direct and personal interest [in the controversy]... since they stand to lose their jobs should the governments contract with PIATCO be declared null and void."16 NMTAI, on the other hand, represents itself as a corporation composed of responsible tax-paying Filipino citizens with the objective of "protecting and sustaining the rights of its members to civil liberties, decent livelihood, opportunities for social advancement, and to a good, conscientious and honest government."17 The Rules of Court govern the time of filing a Motion to Intervene. Section 2, Rule 19 provides that a Motion to Intervene should be filed "before rendition of judgment...." The New Respondents-Intervenors filed their separate motions after a decision has been promulgated in the present cases. They have not offered any worthy explanation to justify their late intervention. Consequently, their Motions for Reconsideration-In-Intervention are denied for the rules cannot be relaxed to await litigants who sleep on their rights. In any event, a sideglance at these late motions will show that they hoist no novel arguments. B. Temporary takeover of business affected with public interest in times of national emergency Section 17, Article XII of the 1987 Constitution grants the State in times of national emergency the right to temporarily take over the operation of any business affected with public interest. This right is an exercise of police power which is one of the inherent powers of the State. Police power has been defined as the "state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare."54 It

consists of two essential elements. First, it is an imposition of restraint upon liberty or property. Second, the power is exercised for the benefit of the common good. Its definition in elastic terms underscores its allencompassing and comprehensive embrace.55 It is and still is the "most essential, insistent, and illimitable"56 of the States powers. It is familiar knowledge that unlike the power of eminent domain, police power is exercised without provision for just compensation for its paramount consideration is public welfare.57 It is also settled that public interest on the occasion of a national emergency is the primary consideration when the government decides to temporarily take over or direct the operation of a public utility or a business affected with public interest. The nature and extent of the emergency is the measure of the duration of the takeover as well as the terms thereof. It is the State that prescribes such reasonable terms which will guide the implementation of the temporary takeover as dictated by the exigencies of the time. As we ruled in our Decision, this power of the State can not be negated by any party nor should its exercise be a source of obligation for the State. Section 5.10(c), Article V of the ARCA provides that respondent PIATCO "shall be entitled to reasonable compensation for the duration of the temporary takeover by GRP, which compensation shall take into account the reasonable cost for the use of the Terminal and/or Terminal Complex."58 It clearly obligates the government in the exercise of its police power to compensate respondent PIATCO and this obligation is offensive to the Constitution. Police power can not be diminished, let alone defeated by any contract for its paramount consideration is public welfare and interest.59 Again, respondent PIATCOs reliance on the case of Heirs of Suguitan v. City of Mandaluyong60 to justify its claim for reasonable compensation for the Governments temporary takeover of NAIA IPT III in times of national emergency is erroneous. What was involved in Heirs of Suguitan is the exercise of the states power

of eminent domain and not of police power, hence, just compensation was awarded. The cases at bar will not involve the exercise of the power of eminent domain. C. Monopoly Section 19, Article XII of the 1987 Constitution mandates that the State prohibit or regulate monopolies when public interest so requires. Monopolies are not per se prohibited. Given its susceptibility to abuse, however, the State has the bounden duty to regulate monopolies to protect public interest. Such regulation may be called for, especially in sensitive areas such as the operation of the countrys premier international airport, considering the public interest at stake. By virtue of the PIATCO contracts, NAIA IPT III would be the only international passenger airport operating in the Island of Luzon, with the exception of those already operating in Subic Bay Freeport Special Economic Zone ("SBFSEZ"), Clark Special Economic Zone ("CSEZ") and in Laoag City. Undeniably, the contracts would create a monopoly in the operation of an international commercial passenger airport at the NAIA in favor of PIATCO. The grant to respondent PIATCO of the exclusive right to operate NAIA IPT III should not exempt it from regulation by the government. The government has the right, indeed the duty, to protect the interest of the public. Part of this duty is to assure that respondent PIATCOs exercise of its right does not violate the legal rights of third parties. We reiterate our ruling that while the service providers presently operating at NAIA Terminals I and II do not have the right to demand for the renewal or extension of their contracts to continue their services in NAIA IPT III, those who have subsisting contracts beyond the In-Service Date of NAIA IPT III can not be arbitrarily or unreasonably treated. Finally, the Respondent Congressmen assert that at least two (2) committee reports by the House of Representatives found the PIATCO contracts valid and contend that this Court, by taking cognizance of the cases at bar,

reviewed an action of a co-equal body.61 They insist that the Court must respect the findings of the said committees of the House of Representatives.62 With due respect, we cannot subscribe to their submission. There is a fundamental difference between a case in court and an investigation of a congressional committee. The purpose of a judicial proceeding is to settle the dispute in controversy by adjudicating the legal rights and obligations of the parties to the case. On the other hand, a congressional investigation is conducted in aid of legislation.63 Its aim is to assist and recommend to the legislature a possible action that the body may take with regard to a particular issue, specifically as to whether or not to enact a new law or amend an existing one. Consequently, this Court cannot treat the findings in a congressional committee report as binding because the facts elicited in congressional hearings are not subject to the rigors of the Rules of Court on admissibility of evidence. The Court in assuming jurisdiction over the petitions at bar simply performed its constitutional duty as the arbiter of legal disputes properly brought before it, especially in this instance when public interest requires nothing less. [G.R. No. 113079. April 20, 2001] ENERGY REGULATORY BOARD, petitioner, vs. COURT OF APPEALS and PETROLEUM DISTRIBUTORS AND SERVICES CORPORATION, respondents. Facts: Petitioner Pilipinas Shell Petroleum Corporation (Shell) is engaged in the business of importing crude oil, refining the same and selling various petroleum products through a network of service stations throughout the country. Private respondent Petroleum Distributors and Service Corporation (PDSC) owns and operates a Caltex service station at the corner of the MIA and Domestic Roads in Pasay City. On June 30,1983, Shell filed with the quondam Bureau of Energy Utilization (BEU) an application for authority to relocate its

Shell Service Station at Tambo, Paraaque, Metro Manila, to Imelda Marcos Avenue of the same municipality. The application, which was docketed as BEU Case No. 83-09-1319, was initially rejected by the BEU because Shells old site had been closed for five (5) years such that the relocation of the same to a new site would amount to a new construction of a gasoline outlet, which construction was then the subject of a moratorium. Subsequently, however, BEU relaxed its position and gave due course to the application. PDSC filed an opposition to the application on the grounds that: 1.] there are adequate service stations attending to the motorists requirements in the trading area covered by the application; 2.] ruinous competition will result from the establishment of the proposed new service station; and 3.] there is a decline not an increase in the volume of sales in the area. Two other companies, namely Petrophil and Caltex, also opposed the application on the ground that Shell failed to comply with the jurisdictional requirements. In a Resolution dated March 6, 1984, the BEU dismissed the application on jurisdictional grounds and for lack of full title of the lessor over the proposed site. However, on May 7, 1984, the BEU reinstated the same application and thereafter conducted a hearing thereon. On June 3, 1986, the BEU rendered a decision denying Shells application on a finding that there was no necessity for an additional petroleum products retail outlet in Imelda Marcos Avenue, Paraaque. Dissatisfied, Shell appealed to the Office of Energy Affairs (OEA). Meanwhile, on May 8, 1987, Executive Order No. 172 was issued creating the Energy Regulatory Board (ERB) and transferring to it the regulatory and adjudicatory functions of the BEU. On May 9, 1988, the OEA rendered a decision denying the appeal of Shell and affirming the BEU decision. Shell moved for reconsideration and prayed for a new hearing or the remand of the case for further

proceedings. In a supplement to said motion, Shell submitted a new feasibility study to justify its application. The OEA issued an order on July 11, 1988, remanding the case to the ERB for further evaluation and consideration, noting therein that the updated survey conducted by Shell cited new developments such as the accessibility of Imelda Marcos Avenue, now Benigno Aquino, Jr. Avenue, to Paraaque residents along Sucat Road and the population growth in the trading area. After the records of BEU Case No. 83-09-1319 was remanded to the ERB, Shell filed on March 3, 1989 an amended application, intended for the same purpose as its original application, which was docketed as ERB Case No. 89-57. This amended application was likewise opposed by PDSC. On September 17, 1991, the ERB rendered a Decision allowing Shell to establish the service station in Benigno Aquino, Jr. Avenue. PDSC filed a motion for reconsideration of the foregoing Decision. The motion was, however, denied by ERB in an Order dated February 14, 1992. Aggrieved, PDSC elevated its cause on April 1, 1992 to the Court of Appeals, where the same was docketed as CA-G.R. SP No. 27661. Thereafter, in a Decision dated November 8, 1993, the appellate courts Tenth Division reversed the ERB judgment. ] Dissatisfied, both Shell and ERB elevated the matter to this Court by way of these petitions, which were ordered consolidated by the Court in a Resolution dated July 25,1994. It appears, however, from the record that even as the proceedings in CA-G.R. SP No. 27661 were pending in the appellate court, Caltex filed on January 24, 1992 a similar application for the construction of a service station in the same area with the ERB, docketed as ERB Case No. 87-393. This application was likewise opposed by respondent PDSC, citing the same grounds it raised in opposing Shells application in ERB Case No. 89-57.

In the aforesaid case, petitioner ERB thereafter rendered a Decision dated June 19, 1992 approving the application of Caltex. This ERB Decision was challenged by PDSC, again on the same grounds it raised in CAG.R. SP No. 27661, in a petition for review filed with the Court of Appeals, where the same was docketed as CA-G.R. SP No. 29099. Subsequently, the appellate courts Sixteenth Division dismissed PDSCs petition in a Decision dated May 14, 1993 Issue: WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN PASSING JUDGMENT AND MAKING PRONOUNCEMENTS ON PURELY ECONOMIC AND POLICY ISSUES ON PETROLEUM BUSINESS WHICH ARE WITHIN THE REALM OF THE ENERGY REGULATORY BOARD WHICH HAS A RECOGNIZED EXPERTISE IN OIL ECONOMICS? Held: (Sec. 19 Art. XII) The provision is a statement of public policy on monopolies and on combinations in restraint of trade. Sec. 19 is anti-trust in history and spirit. It espouses competition. Only competition which is fair can release the creative forces of the market. Competition underlies the provision. The objective of anti-trust law is to assure a competitive economy based upon the belief that through competition producers will strive to satisfy consumer wants at the lowest price with the sacrifice of the fewest resources. Competition among producers allows consumers to bid for goods and services and, thus matches their desires with societys opportunity costs. Additionally, there is a reliance upon the operation of the market system (free enterprise) to decide what shall be produced, how resources shall be allocated in the production process, and to whom various products will be distributed. The market system relies on the consumer to decide what and how much shall be produced, and on competition, among producers who will manufacture it. G.R. No. 132451 December 17, 1999

CONGRESSMAN ENRIQUE T. GARCIA, petitioner, vs. HON. RENATO C. CORONA, in his capacity as the Executive Secretary, HON. FRANCISCO VIRAY, in his capacity as the Secretary of Energy, CALTEX PHILIPPINES INC., PILIPINAS SHELL PETROLEUM CORP. and PETRON CORP., respondents. Facts: R.A. 8180 was struck down as invalid because three key provisions intended to promote free competition were shown to achieve the opposite result. More specifically, this Court ruled that its provisions on tariff differential, stocking of inventories, and predatory pricing inhibit fair competition, encourage monopolistic power, and interfere with the free interaction of the market forces. While R.A. 8180 contained a separability clause, it was declared unconstitutional in its entirety since the three (3) offending provisions so permeated the law that they were so intimately the esse of the law. Thus, the whole statute had to be invalidated. As a result of the Tatad decision, Congress enacted Republic Act No. 8479, a new deregulation law without the offending provisions of the earlier law. Petitioner Enrique T. Garcia, a member of Congress, has now brought this petition seeking to declare Section 19 thereof, which sets the time of full deregulation, unconstitutional. After failing in his attempts to have Congress incorporate in the law the economic theory he espouses, petitioner now asks us, in the name of upholding the Constitution, to undo a violation which he claims Congress has committed. The assailed Section 19 of R.A. 8479 states in full: Sec. 19. Start of Full Deregulation. Full deregulation of the Industry shall start five (5) months following the effectivity of this Act: Provided, however, That when the public interest so requires, the President may accelerate the start of full deregulation upon

the recommendation of the DOE and the Department of Finance (DOF) when the prices of crude oil and petroleum products in the world market are declining and the value of the peso in relation to the US dollar is stable, taking into account relevant trends and prospects; Provided, further, That the foregoing provision notwithstanding, the five (5)-month Transition Phase shall continue to apply to LPG, regular gasoline and kerosene as socially-sensitive petroleum products and said petroleum products shall be covered by the automatic pricing mechanism during the said period. Upon the implementation of full deregulation as provided herein, the Transition Phase is deemed terminated and the following laws are repealed: a) Republic Act No. 6173, as amended; b) Section 5 of Executive Order No. 172, as amended; c) Letter of Instruction No. 1431, dated October 15, 1984; d) Letter of Instruction No. 1441, dated November 20, 1984, as amended; e) Letter of Instruction No. 1460, dated May 9, 1985; f) Presidential Decree No. 1889; and g) Presidential Decree No. 1956, as amended by Executive Order No. 137: Provided, however, That in case full deregulation is started by the President in the exercise of the authority provided in this Section, the foregoing laws shall continue to be in force and effect with respect to LPG, regular gasoline and kerosene for the rest of the five (5)-month period. Petitioner contends that Section 19 of R.A. 8479, which prescribes the period for the removal of price control on gasoline and other finished products and for the full deregulation of the local downstream oil industry, is patently contrary to public interest and therefore unconstitutional

because within the short span of five months, the market is still dominated and controlled by an oligopoly of the three (3) private respondents, namely, Shell, Caltex and Petron. The objective of the petition is deceptively simple. It states that if the constitutional mandate against monopolies and combinations in restraint of trade 2 is to be obeyed, there should be indefinite and open-ended price controls on gasoline and other oil products for as long as necessary. This will allegedly prevent the "Big 3" Shell, Caltex and Petron from pricefixing and overpricing. Petitioner calls the indefinite retention of price controls as "partial deregulation". Issues: Are the method and the manner chosen by Government to accomplish its cherished goal offensive to the Constitution? Is indefinite price control in the manner proposed by petitioner the only feasible and legal way to achieve it? Held: Petition is dismisse. The provisions on tariff differential, stocking of inventories, and predatory pricing inhibited fair competition, encouraged monopolistic power and interfered with the free interaction of the market forces. The most important part of deregulation is freedom from price control. Indeed, the free play of market forces through deregulation and when to implement it represent one option to solve the problems of the oilconsuming public. R.A. 8479, the present deregulation law, was enacted to implement Article XII, Section 19 of the Constitution which provides: >The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.

This is so because the Government believes that deregulation will eventually prevent monopoly. The simplest form of monopoly exists when there is only one seller or producer of a product or service for which there are no substitutes. In its more complex form, monopoly is defined as the joint acquisition or maintenance by members of a conspiracy, formed for that purpose, of the power to control and dominate trade and commerce in a commodity to such an extent that they are able, as a group, to exclude actual or potential competitors from the field, accompanied with the intention and purpose to exercise such power. Where two or three or a few companies act in concert to control market prices and resultant profits, the monopoly is called an oligopoly or cartel. It is a combination in restraint of trade. Our ruling in Tatad is categorical that the Constitution's Article XII, Section 19, is antitrust in history and spirit. It espouses competition. We have stated that only competition which is fair can release the creative forces of the market. In his recital of the antecedent circumstances, petitioner repeats in abbreviated form the factual findings and conclusions which led the Court to declare R.A. 8180 unconstitutional. The foreign oligopoly or cartel formed by respondents Shell, Caltex and Petron, their indulging in price-fixing and overpricing, their blockade tactics which effectively obstructed the entry of genuine competitors, the dangers posed by the oil cartel to national security and economic development, and other prevailing sentiments are stated as axiomatic truths. They are repeated in capsulized context as the current background facts of the present petition. The empirical existence of this deplorable situation was precisely the reason why Congress enacted the oil deregulation law. The evils arising from conspiratorial acts of monopoly are recognized as clear and present. But the enumeration of the evils by our Tatad decision was not for the purpose of justifying continued government control, especially price control. The objective was,

rather, the opposite. The evils were emphasized to show the need for free competition in a deregulated industry. And to be sure, the measures to address these evils are for Congress to determine, but they have to meet the test of constitutional validity. The Court respects the legislative finding that deregulation is the policy answer to the problems. It bears stressing that R.A. 8180 was declared invalid not because deregulation is unconstitutional. The law was struck down because, as crafted, three key provisions plainly encouraged the continued existence if not the proliferation of the constitutionally proscribed evils of monopoly and restraint of trade. In sharp contrast, the present petition lacks a factual foundation specifically highlighting the need to declare the challenged provision unconstitutional. There is a dearth of relevant, reliable, and substantial evidence to support petitioner's theory that price control must continue even as Government is trying its best to get out of regulating the oil industry. The facts of the petition are, in the main, a general dissertation on the evils of monopoly. Petitioner overlooks the fact that Congress enacted the deregulation law exactly because of the monopoly evils he mentions in his petition. Congress instituted the lifting of price controls in the belief that free and fair competition was the best remedy against monopoly power. In other words, petitioner's facts are also the reasons why Congress lifted price controls and why the President accelerated the process. The facts adduced in favor of continued and indefinite price control are the same facts which supported what Congress believes is an exercise of wisdom and discretion when it chose the path of speedy deregulation and rejected Congressman Garcia's economic theory. The petition states that it is using the very thoughts and words of the Court in its Tatad decision. Those thoughts and words, however, were directed against the tariff differential, the inventory requirement, and predatory pricing, not against deregulation as

a policy and not against the lifting of price controls. Petitioner, therefore, engages in a legal paradox. He fails to show how there can be deregulation while retaining government price control. Deregulation means the lifting of control, governance and direction through rule or regulation. It means that the regulated industry is freed from the controls, guidance, and restrictions to which it used to be subjected. The use of the word "partial" to qualify deregulation is sugar-coating. Petitioner is really against deregulation at this time.

GR 47800 December 2, 1940 Calalang vs Williams (Social Justice as the aim of Labor Laws) Facts: The National Traffic Commission, in its resolution of 17 July 1940, resolved to recommend to the Director of Public Works and to the Secretary of Public Works and Communications that animal-drawn vehicles be prohibited from passing along Rosario Street extending from Plaza Calderon de la Barca to Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the date of the opening of the Colgante Bridge to traffic. The Chairman of the National Traffic Commission, on 18 July 1940, recommended to the Director of Public Works the adoption of the measure proposed in the resolution, in pursuance of the provisions of Commonwealth Act 548, which authorizes said Director of Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate rules and regulations to regulate and control the use of and traffic on national roads. On 2 August 1940, the Director of Public Works, in his first indorsement to the Secretary of Public Works

and Communications, recommended to the latter the approval of the recommendation made by the Chairman of the National Traffic Commission, with the modification that the closing of Rizal Avenue to traffic to animaldrawn vehicles be limited to the portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street. On 10 August 1940, the Secretary of Public Works and Communications, in his second indorsement addressed to the Director of Public Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and during the hours as indicated, for a period of 1 year from the date of the opening of the Colgante Bridge to traffic. The Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulations thus adopted. Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before the Supreme court the petition for a writ of prohibition against A. D. Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila. Issue: Whether the rules and regulations promulgated by the Director of Public Works infringe upon the constitutional precept regarding the promotion of social justice to insure the well-being and economic security of all the people. Held: The promotion of social justice is to be achieved not through a mistaken sympathy towards any given group. Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic forces by the State so that justice

in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the timehonored principle of salus populi est suprema lex. Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and 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."

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