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CHAPTER 2 THE CONSTITUTION
1. Saguisag v. Executive Secretary (Resolution on the
MR)
The Constitution cannot be viewed solely as a list of prohibitions
and limitations on governmental power, but rather as an instrument
providing the process of structuring government in order that it may
effectively serve the people. It is not simply a set of rules, but an
entire legal framework for Philippine society.
First, executive agreements must remain traceable to an express
or implied authorization under the Constitution, statutes, or treaties.
The absence of these precedents puts the validity and effectivity of
executive agreements under serious question for the main function
of the Executive is to enforce the Constitution and the laws enacted
by the Legislature, not to defeat or interfere in the performance of
these rules. In turn, executive agreements cannot create new
international obligations that are not expressly allowed or
reasonably implied in the law they purport to implement.
Second, treaties are, by their very nature, considered superior to
executive agreements. Treaties are products of the acts of the
Executive and the Senate unlike executive agreements, which are
solely executive actions. Because of legislative participation
through the Senate, a treaty is regarded as being on the same level
as a statute. If there is an irreconcilable conflict, a later law or treaty
takes precedence over one that is prior. An executive agreement
is treated differently. Executive agreements that are inconsistent
with either a law or a treaty are considered ineffective. Both types
of international agreement are nevertheless subject to the
supremacy of the Constitution.
2. Ocampo v. Enriquez
FACTS: During the campaign period for the 2016 Presidential
Election, then candidate Rodrigo R. Duterte (Duterte) publicly
announced that he would allow the burial of former President
Ferdinand E. Marcos (Marcos) at the Libingan Ng Mga Bayani
(LNMB).
Public respondent Secretary of National Defense Delfin N.
Lorenzana issued a Memorandum to the public respondent Chief
of Staff of the Armed Forces of the Philippines (AFP), General
Ricardo R. Visaya, regarding the interment of Marcos at the LNMB.
Respondent AFP Rear Admiral Ernesto C. Enriquez directives.
Dissatisfied with the foregoing issuance, the following were filed by
petitioners:
1. Petition for Certiorari and Prohibition3 filed by Satumino Ocampo
and several others, 4 in their capacities as human rights advocates
or human rights violations victims as defined under Section 3 ( c)
of Republic Act (R.A.) No. 10368 (Human Rights Victims
Reparation and Recognition Act of 2013).
2. Petition for Certiorari-in-Intervention5 filed by Rene A.V.
Saguisag, Sr. and his son, as members of the Bar and human rights
lawyers, and his grandchild.
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3. Petition for Prohibition filed by Representative Edcel C. Lagman,
in his personal capacity, as member of the House of
Representatives and as Honorary Chairperson of Families of
Victims of Involuntary Disappearance (FIND), a duly-registered
corporation and organization of victims and families of enforced
disappearance, mostly during the martial law regime of the former
President Marcos, and several others, in their official capacities as
duly-elected Congressmen of the House of Representatives of the
Philippines.
4. Petition for Prohibition filed by Loretta Ann Pargas-Rosales,
former Chairperson of the Commission on Human Rights, and
several others, suing as victims of State-sanctioned human rights
violations during the martial law regime of Marcos.
5. Petition for Mandamus and Prohibition filed by Heherson T.
Alvarez, former Senator of the Republic of the Philippines, who
fought to oust the dictatorship of Marcos, and several others, as
concerned Filipino citizens and taxpayers.
6. Petition for Certiorari and Prohibition filed by Zaira Patricia B.
Baniaga and several others, as concerned Filipino citizens and
taxpayers.
7. Petition for Certiorari and Prohibition filed by Algamar A. Latiph,
former Chairperson of the Regional Human Rights Commission,
Autonomous Region in Muslim Mindanao, by himself and on behalf
of the Moro who are victims of human rights during the martial law
regime of Marcos.
8. Petition for Certiorari and Prohibition filed by Leila M. De Lima
as member of the Senate of the Republic of the Philippines, public
official and concerned citizen.
ISSUES:
Procedural
1. Whether President Duterte's determination to have the
remains of Marcos interred at the LNMB poses a
justiciable controversy.
2. Whether petitioners have locus standi to file the instant
petitions.
3. Whether petitioners violated the doctrines of exhaustion
of administrative remedies and hierarchy of courts.
Substantive
1. Whether the respondents Secretary of National Defense
and AFP Rear Admiral committed grave abuse of
discretion, amounting to lack or excess of jurisdiction,
when they issued the assailed memorandum and
directive in compliance with the verbal order of President
Duterte to implement his election campaign promise to
have the remains of Marcos interred at the LNMB.
2. Whether the issuance memorandum and directive
international laws
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3. Whether historical facts, laws enacted to recover ill-
gotten wealth from the Marcoses and their cronies, and
the pronouncements of the Court on the Marcos regime
have nullified his entitlement as a soldier and former
President to interment at the LNMB.
4. Whether the Marcos family is deemed to have waived
the burial of the remains of former President Marcos at
the LNMB after they entered into an agreement with the
Government of the Republic of the Philippines as to the
conditions and procedures by which his remains shall be
brought back to and interred in the Philippines.
RULING: (FOR THIS TOPIC ONLY) The fact that the President is
the Commander-in-Chief of the AFP under the 1987 Constitution
only enshrines the principle of supremacy of civilian authority over
the military. Not being a military person who may be prosecuted
before the court martial, the President can hardly be deemed
"dishonorably separated/reverted/discharged from the service" as
contemplated by AFP Regulations G 161-375.
Dishonorable discharge through a successful revolution is an extra-
constitutional and direct sovereign act of the people which is
beyond the ambit of judicial review, let alone a mere administrative
regulation.
It is undeniable that former President Marcos was forced out of
office by the people through the so-called EDSA Revolution. Said
political act of the people should not be automatically given a
particular legal meaning other than its obvious consequence - that
of ousting him as president. To do otherwise would lead the Court
to the treacherous and perilous path of having to make choices
from multifarious inferences or theories arising from the various
acts of the people. It is not the function of the Court, for instance to
divine the exact implications or significance of the number of votes
obtained in elections, or the message from the number of
participants in public assemblies. If the Court is not to fall into the
pitfalls of getting embroiled in political and oftentimes emotional, if
not acrimonious, debates, it must remain steadfast in abiding by its
recognized guiding stars clear constitutional and legal rules - not
by the uncertain, ambiguous and confusing messages from the
actions of the people.
3. Rama v. Moises
FACTS: President Ferdinand E. Marcos issued Presidential
Decree No. 198 (Provincial Water Utilities Act of 1973). By virtue of
P. D. No. 198, Cebu City formed the Metro Cebu Water District
(MCWD) in 1974. Thereafter, the Cities of Mandaue, Lapu-Lapu
and Talisay, and the Municipalities of Liloan, Compostela,
Consolacion, and Cordova turned over their waterworks systems
and services to the MCWD. Since then, the MCWD has distributed
water and sold water services to said cities and municipalities.
From 1974 to 2002, the Cebu City Mayor appointed all the
members of the MCWD Board of Directors in accordance with
Section 3 (b) of P. D. No. 198.
Section 3. Definitions. - As used in this Decree, the
following words and terms shall have the meanings
herein set forth, unless a different meaning clearly
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appears from the context. The definition of a word or
term applies to any of its variants.
(a) Act. This is the Provincial Water Utilities Act of 1973.
(b) Appointing authority. The person empowered to
appoint the members of the board of Directors of a local
water district, depending upon the geographic coverage
and population make-up of the particular district. In the
event that more than seventy-five percent of the total
active water service connections of a local water district
are within the boundary of any city or municipality, the
appointing authority shall be the mayor of that city or
municipality, as the case may be; otherwise, the
appointing authority shall be the governor of the province
within which the district is located. If portions of more
than one province are included within the boundary of
the district, and the appointing authority is to be the
governors then the power to appoint shall rotate between
the governors involved with the initial appointments
made by the governor in whose province the greatest
number of service connections exists.
Cebu Provincial Governor Pablo L. Garcia wrote to the MCWD to
assert his authority and intention to appoint the members of the
MCWD Board of Directors.
MCWD commenced in the Regional Trial Court in Cebu City (RTC)
its action for declaratory relief seeking to declare Section 3(b) of
P.D. No. 198 unconstitutional; or, should the provision be declared
valid, it should be interpreted to mean that the authority to appoint
the members of the MCWD Board of Directors belonged solely to
the Cebu City Mayor. The RTC (Branch 7) dismissed the action for
declaratory relief without any finding and declaration as to the
proper appointing authority for the members of the MCWD Board
of Directors should none of the cities and municipalities reach 75%
of the total water service connections in the areas under the
MCWD.
In the meanwhile, the terms of two members of the MCWD Board
of Directors ended, resulting in two vacancies. To avoid a vacuum
and in the exigency of the service, Provincial Governor Gwendolyn
F. Garcia and Cebu City Mayor Tomas R. Osmefia jointly appointed
Atty. Adelino Sitoy and Leo Pacana to fill the vacancies.4 However,
the position of Atty. Sitoy was deemed vacated upon his election
as the Municipal Mayor of Cordova, Cebu in the 2007 elections.
Consequently, Governor Garcia commenced an action for
declaratory relief to seek the interpretation of Section 3 (b) of P.D.
No. 198 on the proper appointing authority for the members of the
MCWD Board of Directors.
However, Mayor Osmefia appointed Yu as a member of the MCWD
Board of Directors. Accordingly, on May 20, 2008, the RTC
dismissed the action for declaratory relief on the ground that
declaratory relief became improper once there was a breach or
violation of the provision.
Governor Garcia filed a complaint to declare the nullity of the
appointment of Yu as a member of the MCWD Board of Directors.
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ISSUES:
1. Whether the Respondent court abdicated its constitutional duty
in refusing to delve on the issue of constitutionality.
2. Whether the judgment is void on its face because of clear
constitutional violations apparent by a mere reading of the decree.
3. Whether the judgment violates due process and the equal
protection clause of the Constitution.
RULING:
(For this topic only) Political questions refer to "those questions
which, under the Constitution, are to be decided by the people in
their sovereign capacity; or in regard to which full discretionary
authority has been delegated to the legislature or executive branch
of the government." They are "neatly associated with the wisdom"
of a particular act.
The difference between the political and the justiciable questions
has been noted in Sanidad v. Commission on Elections, as follows:
xx x The implementing Presidential Decree Nos. 991, 1031, and
1033, which commonly purport to have the force and effect of
legislation are assailed as invalid, thus the issue of the validity of
said Decrees is plainly a justiciable one, within the competence of
this Court to pass upon. Section 2 (2), Article X of the new
Constitution provides:
"All cases involving the constitutionality of a treaty,
executive agreement, or law may shall be heard and
decided by the Supreme Court en bane and no treaty,
executive agreement, or law may be declared
unconstitutional without the concurrence of at least ten
Members .... "
The Supreme Court has the last word in the construction not only
of treaties and statutes, but also of the Constitution itself. The
amending, like all other powers organized in the Constitution, is in
form a delegated and hence a limited power, so that the Supreme
Court is vested with that authority to determine whether that power
has been discharged within its limits.
The petitioners have averred the unconstitutionality or invalidity of
Section3 (b) of P.D. No 198 based on the provision's arbitrariness
in denying substantive due process and equal protection to the
affected local government units (LGUs). Such issue, being
justiciable, comes within the power of judicial review. As such, the
RTC skirted its duty of judicial review by improperly relying on the
political question doctrine. It should have instead adhered to the
pronouncement in Estrada v. Desierto, to wit:
To a great degree, the 1987 Constitution has narrowed
the reach of the political question doctrine when it
expanded the power of judicial review of this court not
only to settle actual controversies involving rights which
are legally demandable and enforceable but also to
determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of
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government. Heretofore, the judiciary has focused on the
"thou shalt not's" of the Constitution directed against the
exercise of its jurisdiction. With the new provision,
however, courts are given a greater prerogative to
determine what it can do to prevent grave abuse of
discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of government.
Clearly, the new provision did not just grant the Court
power of doing nothing. x x x
CHAPTER 3 THE CONCEPT OF THE STATE
TERRITORY
4. Arigo v. Swift
FACTS: Congress passed Republic Act (R.A.) No. 10067,
otherwise known as the "Tubbataha Reefs Natural Park (TRNP)
Act of 2009" "to ensure the protection and conservation of the
globally significant economic, biological, sociocultural, educational
and scientific values of the Tubbataha Reefs into perpetuity for the
enjoyment of present and future generations." Under the "no-take"
policy, entry into the waters of TRNP is strictly regulated and many
human activities are prohibited and penalized or fined, including
fishing, gathering, destroying and disturbing the resources within
the TRNP. The law likewise created the Tubbataha Protected Area
Management Board (TPAMB) which shall be the sole policy-
making and permit-granting body of the TRNP.
The USS Guardian is an Avenger-class mine countermeasures
ship of the US Navy. In December 2012, the US Embassy in the
Philippines requested diplomatic clearance for the said vessel "to
enter and exit the territorial waters of the Philippines and to arrive
at the port of Subic Bay for the purpose of routine ship
replenishment, maintenance, and crew liberty." On January 6,
2013, the ship left Sasebo, Japan for Subic Bay, arriving on
January 13, 2013 after a brief stop for fuel in Okinawa, Japan.
On January 15, 2013, the USS Guardian departed Subic Bay for
its next port of call in Makassar, Indonesia. On January 17, 2013 at
2:20 a.m. while transiting the Sulu Sea, the ship ran aground on
the northwest side of South Shoal of the Tubbataha Reefs, about
80 miles east-southeast of Palawan. No cine was injured in the
incident, and there have been no reports of leaking fuel or oil.
By March 30, 2013, the US Navy-led salvage team had finished
removing the last piece of the grounded ship from the coral reef.
The above-named petitioners on their behalf and in representation
of their respective sector/organization and others, including minors
or generations yet unborn, filed the present petition agairtst Scott
H. Swift in his capacity as Commander, among others.
Petitioners claim that the grounding, salvaging and post-salvaging
operations of the USS Guardian cause and continue to cause
environmental damage of such magnitude as to affect the
provinces of Palawan, Antique, Aklan, Guimaras, Iloilo, Negros
Occidental, Negros Oriental, Zamboanga del Norte, Basilan, Sulu,
and Tawi-Tawi, which events violate their constitutional rights to a
balanced and healthful ecology. They also seek a directive from
this Court for the institution of civil, administrative and criminal suits
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for acts committed in violation of environmental laws and
regulations in connection with the grounding incident.
Specifically, petitioners cite the following violations committed by
US respondents under R.A. No. 10067: unauthorized entry
(Section 19); non-payment of conservation fees (Section 21);
obstruction of law enforcement officer (Section 30); damages to the
reef (Section 20); and destroying and disturbing resources (Section
26[g]). Furthermore, petitioners assail certain provisions of the
Visiting Forces Agreement (VFA) which they want this Court to
nullify for being unconstitutional.
ISSUE: Whether this Court has jurisdiction over the US
respondents who did not submit any pleading or manifestation in
this case
RULING: The immunity of the State from suit, known also as the
doctrine of sovereign immunity or non-suability of the State, is
expressly provided in Article XVI of the 1987 Constitution which
states:
Section 3. The State may not be sued without its
consent.
In United States of America v. Judge Guinto, we discussed the
principle of state immunity from suit, as follows:
The rule that a state may not be sued without its consent, now
expressed in Article XVI, Section 3, of the 1987 Constitution, is one
of the generally accepted principles of international law that we
have adopted as part of the law of our land under Article II, Section
2. x x x.
Even without such affirmation, we would still be bound by the
generally accepted principles of international law under the
doctrine of incorporation. Under this doctrine, as accepted by the
majority of states, such principles are deemed incorporated in the
law of every civilized state as a condition and consequence of its
membership in the society of nations. Upon its admission to such
society, the state is automatically obligated to comply with these
principles in its relations with other states.
As applied to the local state, the doctrine of state immunity is based
on the justification given by Justice Holmes that ''there can be no
legal right against the authority which makes the law on which the
right depends." [Kawanakoa v. Polybank, 205 U.S. 349] There are
other practical reasons for the enforcement of the doctrine. In the
case of the foreign state sought to be impleaded in the local
jurisdiction, the added inhibition is expressed in the maxim par in
parem, non habet imperium. All states are sovereign equals and
cannot assert jurisdiction over one another. A contrary disposition
would, in the language of a celebrated case, "unduly vex the peace
of nations." [De Haber v. Queen of Portugal, 17 Q. B. 171]
While the doctrine appears to prohibit only suits against the state
without its consent, it is also applicable to complaints filed against
officials of the state for acts allegedly performed by them in the
discharge of their duties. The rule is that if the judgment against
such officials will require the state itself to perform an affirmative
act to satisfy the same,. such as the appropriation of the amount
needed to pay the damages awarded against them, the suit must
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be regarded as against the state itself although it has not been
formally impleaded. [Garcia v. Chief of Staff, 16 SCRA 120] In such
a situation, the state may move to dismiss the comp.taint on the
ground that it has been filed without its consent.19 (Emphasis
supplied.)
Under the American Constitution, the doctrine is expressed in the
Eleventh Amendment which reads:
The Judicial power of the United States shall not be
construed to extend to any suit in law or equity,
commenced or prosecuted against one of the United
States by Citizens of another State, or by Citizens or
Subjects of any Foreign State.
In the case of Minucher v. Court of Appeals, we further expounded
on the immunity of foreign states from the jurisdiction of local
courts, as follows:
The precept that a State cannot be sued in the courts of
a foreign state is a long-standing rule of customary
international law then closely identified with the personal
immunity of a foreign sovereign from suit and, with the
emergence of democratic states, made to attach not just
to the person of the head of state, or his representative,
but also distinctly to the state itself in its sovereign
capacity. If the acts giving rise to a suit arc those of a
foreign government done by its foreign agent, although
not necessarily a diplomatic personage, but acting in his
official capacity, the complaint could be barred by the
immunity of the foreign sovereign from suit without its
consent. Suing a representative of a state is believed to
be, in effect, suing the state itself. The proscription is not
accorded for the benefit of an individual but for the State,
in whose service he is, under the maxim -par in parem,
non habet imperium -that all states are sovereign equals
and cannot assert jurisdiction over one another. The
implication, in broad terms, is that if the judgment against
an official would rec 1uire the state itself to perform an
affirmative act to satisfy the award, such as the
appropriation of the amount needed to pay the damages
decreed against him, the suit must be regarded as being
against the state itself, although it has not been formally
impleaded. (Emphasis supplied.)
In the same case we also mentioned that in the case of diplomatic
immunity, the privilege is not an immunity from the observance of
the law of the territorial sovereign or from ensuing legal liability; it
is, rather, an immunity from the exercise of territorial jurisdiction.
In United States of America v. Judge Guinto, one of the
consolidated cases therein involved a Filipino employed at Clark
Air Base who was arrested following a buy-bust operation
conducted by two officers of the US Air Force, and was eventually
dismissed from his employment when he was charged in court for
violation of R.A. No. 6425. In a complaint for damages filed by the
said employee against the military officers, the latter moved to
dismiss the case on the ground that the suit was against the US
Government which had not given its consent. The RTC denied the
motion but on a petition for certiorari and prohibition filed before
this Court, we reversed the RTC and dismissed the complaint. We
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held that petitioners US military officers were acting in the exercise
of their official functions when they conducted the buy-bust
operation against the complainant and thereafter testified against
him at his trial. It follows that for discharging their duties as agents
of the United States, they cannot be directly impleaded for acts
imputable to their principal, which has not given its consent to be
sued.
This traditional rule of State immunity which exempts a State from
being sued in the courts of another State without the former's
consent or waiver has evolved into a restrictive doctrine which
distinguishes sovereign and governmental acts (Jure imperil") from
private, commercial and proprietary acts (Jure gestionis). Under
the restrictive rule of State immunity, State immunity extends only
to acts Jure imperii. The restrictive application of State immunity is
proper only when the proceedings arise out of commercial
transactions of the foreign sovereign, its commercial activities or
economic affairs.
In Shauf v. Court of Appeals, we discussed the limitations of the
State immunity principle, thus:
It is a different matter where the public official is made to
account in his capacity as such for acts contrary to law
and injurious to the rights of plaintiff. As was clearly set
forth by Justice Zaldivar in Director of the Bureau of
Telecommunications, et al. vs. Aligaen, etc., et al.
"Inasmuch as the State authorizes only legal acts by its
officers, unauthorized acts of government officials or
officers are not acts of the State, and an action against
the officials or officers by one whose rights have been
invaded or violated by such acts, for the protection of his
rights, is not a suit against the State within the rule of
immunity of the State from suit. In the same tenor, it has
been said that an action at law or suit in equity against a
State officer or the director of a State department on the
ground that, while claiming to act for the State, he
violates or invades the personal and property rights of
the plaintiff, under an unconstitutional act or under an
assumption of authority which he does not have, is not a
suit against the State within the constitutional provision
that the State may not be sued without its consent." The
rationale for this ruling is that the doctrine of state
immunity cannot be used as an instrument for
perpetrating an injustice.
xxxx
The aforecited authorities are clear on the matter. They state that
the doctrine of immunity from suit will not apply and may not be
invoked where the public official is being sued in his private and
personal capacity as an ordinary citizen. The cloak of protection
afforded the officers and agents of the government is removed the
moment they are sued in their individual capacity. This situation
usually arises where the public official acts without authority or in
excess of the powers vested in him. It is a well-settled principle of
law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done
with malice and in bad faith, or beyond the scope of his authority or
jurisdiction.26 (Emphasis supplied.)
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In this case, the US respondents were sued in their official capacity
as commanding officers of the US Navy who had control and
supervision over the USS Guardian and its crew. The alleged act
or omission resulting in the unfortunate grounding of the USS
Guardian on the TRNP was committed while they we:re performing
official military duties. Considering that the satisfaction of a
judgment against said officials will require remedial actions and
appropriation of funds by the US government, the suit is deemed
to be one against the US itself. The principle of State immunity
therefore bars the exercise of jurisdiction by this Court over the
persons of respondents Swift, Rice and Robling.
5. Saguisag v. Executive Secretary (January decision)
FACTS: The petitions before this Court question the
constitutionality of the Enhanced Defense Cooperation Agreement
(EDCA) between the Republic of the Philippines and the United
States of America (U.S.). Petitioners allege that respondents
committed grave abuse of discretion amounting to lack or excess
of jurisdiction when they entered into EDCA with the U.S., claiming
that the instrument violated multiple constitutional provisions.3 In
reply, respondents argue that petitioners lack standing to bring the
suit. To support the legality of their actions, respondents invoke the
1987 Constitution, treaties, and judicial precedents.
ISSUES:
1. Whether the essential requisites for judicial review are present
2. Whether the President may enter into an executive agreement
on foreign military bases, troops, or facilities
3. Whether the provisions under EDCA are consistent with the
Constitution, as well as with existing laws and treaties
RULING: Article I of the 1987 Constitution states:
The national territory comprises the Philippine archipelago, with all
the islands and waters embraced therein, and all other territories
over which the Philippines has sovereignty or jurisdiction,
consisting of its terrestrial, fluvial, and aerial domains, including its
territorial sea, the seabed, the subsoil, the insular shelves, and
other submarine areas. The waters around, between, and
connecting the islands of the archipelago, regardless of their
breadth and dimensions, form part of the internal waters of the
Philippines. (Emphasis supplied)
From the text of EDCA itself, Agreed Locations are territories of the
Philippines that the U.S. forces are allowed to access and use. By
withholding ownership of these areas and retaining unrestricted
access to them, the government asserts sovereignty over its
territory. That sovereignty exists so long as the Filipino people
exist.
Significantly, the Philippines retains primary responsibility for
security with respect to the Agreed Locations. Hence, Philippine
law remains in force therein, and it cannot be said that jurisdiction
has been transferred to the U.S. Even the previously discussed
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necessary measures for operational control and defense over U.S.
forces must be coordinated with Philippine authorities.
Jurisprudence bears out the fact that even under the former legal
regime of the MBA, Philippine laws continue to be in force within
the bases. The difference between then and now is that EDCA
retains the primary jurisdiction of the Philippines over the security
of the Agreed Locations, an important provision that gives it actual
control over those locations. Previously, it was the provost marshal
of the U.S. who kept the peace and enforced Philippine law in the
bases. In this instance, Philippine forces act as peace officers, in
stark contrast to the 1947 MBA provisions on jurisdiction.413
iii. Third standard: must respect national security and territorial
integrity
The last standard this Court must set is that the EDCA provisions
on the Agreed Locations must not impair or threaten the national
security and territorial integrity of the Philippines.
This Court acknowledged in Bayan v. Zamora that the evolution of
technology has essentially rendered the prior notion of permanent
military bases obsolete.
Moreover, military bases established within the territory of another
state is no longer viable because of the alternatives offered by new
means and weapons of warfare such as nuclear weapons, guided
missiles as well as huge sea vessels that can stay afloat in the sea
even for months and years without returning to their home country.
These military warships are actually used as substitutes for a land-
home base not only of military aircraft but also of military personnel
and facilities. Besides, vessels are mobile as compared to a land-
based military headquarters.
The VFA serves as the basis for the entry of U.S. troops in a limited
scope. It does not allow, for instance, the re-establishment of the
Subic military base or the Clark Air Field as U.S. military
reservations. In this context, therefore, this Court has interpreted
the restrictions on foreign bases, troops, or facilities as three
independent restrictions. In accord with this interpretation, each
restriction must have its own qualification.
Petitioners quote from the website http://en.wikipedia.org to define
what a military base is. While the source is not authoritative,
petitioners make the point that the Agreed Locations, by granting
access and use to U.S. forces and contractors, are U.S. bases
under a different name. More important, they claim that the Agreed
Locations invite instances of attack on the Philippines from
enemies of the U.S.
We believe that the raised fear of an attack on the Philippines is
not in the realm of law, but of politics and policy. At the very least,
we can say that under international law, EDCA does not provide a
legal basis for a justified attack on the Philippines.
6. Saguisag v. Executive Secretary (Resolution on the
MR)
FACTS: The Motion for Reconsideration before us seeks to
reverse the Decision of this Court in Saguisag et. al., v. Executive
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Secretary dated 12 January 2016. The petitions in Sasguisag, et.
al. had questioned the constitutionality of the Enhanced Defense
Cooperation Agreement (EDCA) between the Republic of the
Philippines and the United States of America (U.S.). There, this
Court ruled that the petitions be dismissed
At the outset, petitioners questioned the procedural findings of the
Court despite acknowledging the fact that the Court had given them
standing to sue. Therefore this issue is now irrelevant and
academic, and deserves no reconsideration.
As for the substantive grounds, petitioners claim this Court erred
when it ruled that EDCA was not a treaty.5 In connection to this,
petitioners move that EDCA must be in the form of a treaty in order
to comply with the constitutional restriction under Section 25,
Article XVIII of the 1987 Constitution on foreign military bases,
troops, and facilities.6 Additionally, they reiterate their arguments
on the issues of telecommunications, taxation, and nuclear
weapons.
ISSUE:
RULING: No less than the 1987 Constitution demands that the
"State shall protect the nation's marine wealth in its archipelagic
waters, territorial sea, and exclusive economic zone, and reserve
its use and enjoyment exclusively to Filipino citizens."
No less than the 1987 Constitution states that the principal role of
the military under the President as commander-in-chief shall be as
protector of the people and the State to secure the sovereignty of
the State and the integrity of the national territory.
To recall, the Philippines and the U.S. entered into the MDT in 1951
with two things in mind, first, it allowed for mutual assistance in
maintaining and developing their individual and collective
capacities to resist an armed attack; and second, it provided for
their mutual self-defense in the event of an armed attack against
the territory of either party. The treaty was premised on their
recognition that an armed attack on either of them would equally
be a threat to the security of the other.
7. Capitol Wireless, Inc. v. The Provincial Treasurer of
Batangas
FACTS: Petitioner Capwire claims that it is co-owner only of the
so-called "Wet Segment" of the APCN, while the landing stations
or terminals and Segment E of APCN located in Nasugbu,
Batangas are allegedly owned by the Philippine Long Distance
Telephone Corporation (PLDT). Moreover, it alleges that the Wet
Segment is laid in international, and not Philippine, waters.
Capwire claims that as co-owner, it does not own any particular
physical part of the cable system but, consistent with its financial
contributions, it owns the right to use a certain capacity of the said
system. This property right is allegedly reported in its financial
books as "Indefeasible Rights in Cable Systems."
However, for loan restructuring purposes, Capwire claims that "it
was required to register the value of its right," hence, it engaged an
appraiser to "assess the market value of the international
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submarine cable system and the cost to Capwire." Capwire
submitted a Sworn Statement of True Value of Real Properties at
the Provincial Treasurer's Office, Batangas City, Batangas
Province, for the Wet Segment of the system.
The Provincial Assessor had determined that the submarine cable
systems described in Capwire's Sworn Statement of True Value of
Real Properties are taxable real property, a determination that was
contested by Capwire in an exchange of letters between the
company and the public respondent. The reason cited by Capwire
is that the cable system lies outside of Philippine territory, i.e., on
international waters.
Capwire received a Warrant of Levy and a Notice of Auction Sale,
respectively, from the respondent Provincial Treasurer of Batangas
(Provincial Treasurer).
Capwire filed a Petition for Prohibition and Declaration of Nullity of
Warrant of Levy, Notice of Auction Sale and/or Auction Sale with
the Regional Trial Court (RTC) of Batangas City.
ISSUES:
1. Whether the case cognizable by the administrative agencies and
covered by the requirements in Sections 226 and 229 of the Local
Government Code which makes the dismissal of Capwire's petition
by the RTC proper?
2. Whether submarine communications cables may be classified
as taxable real property by the local governments?
RULING: Submarine or undersea communications cables are akin
to electric transmission lines which this Court has recently declared
in Manila Electric Company v. City Assessor and City Treasurer of
Lucena City, as "no longer exempted from real property tax" and
may qualify as "machinery" subject to real property tax under the
Local Government Code. To the extent that the equipment's
location is determinable to be within the taxing authority's
jurisdiction, the Court sees no reason to distinguish between
submarine cables used for communications and aerial or
underground wires or lines used for electric transmission, so that
both pieces of property do not merit a different treatment in the
aspect of real property taxation. Both electric lines and
communications cables, in the strictest sense, are not directly
adhered to the soil but pass through posts, relays or landing
stations, but both may be classified under the term "machinery" as
real property under Article 415(5) of the Civil Code for the simple
reason that such pieces of equipment serve the owner's business
or tend to meet the needs of his industry or works that are on real
estate. Even objects in or on a body of water may be classified as
such, as "waters" is classified as an immovable under Article
415(8) of the Code. A classic example is a boathouse which, by its
nature, is a vessel and, therefore, a personal property but, if it is
tied to the shore and used as a residence, and since it floats on
waters which is immovable, is considered real property. Besides,
the Court has already held that "it is a familiar phenomenon to see
things classed as real property for purposes of taxation which on
general principle might be considered personal property."
Thus, absent any showing from Capwire of any express grant of an
exemption for its lines and cables from real property taxation, then
SAAVEDRA
this interpretation applies and Capwire's submarine cable may be
held subject to real property tax.
Having determined that Capwire is liable, and public respondents
have the right to impose a real property tax on its submarine cable,
the issue that is unresolved is how much of such cable is taxable
based on the extent of Capwire's ownership or co-ownership of it
and the length that is laid within respondents' taxing jurisdiction.
The matter, however, requires a factual determination that is best
performed by the Local and Central Boards of Assessment
Appeals, a remedy which the petitioner did not avail of.
At any rate, given the importance of the issue, it is proper to lay
down the other legal bases for the local taxing authorities' power to
tax portions of the submarine cables of petitioner. It is not in dispute
that the submarine cable system's Landing Station in Nasugbu,
Batangas is owned by PLDT and not by Capwire. Obviously,
Capwire is not liable for the real property tax on this Landing
Station. Nonetheless, Capwire admits that it co-owns the
submarine cable system that is subject of the tax assessed and
being collected by public respondents. As the Court takes judicial
notice that Nasugbu is a coastal town and the surrounding sea falls
within what the United Nations Convention on the Law of the Sea
(UNCLOS) would define as the country's territorial sea (to the
extent of 12 nautical miles outward from the nearest baseline,
under Part II, Sections 1 and 2) over which the country has
sovereignty, including the seabed and subsoil, it follows that indeed
a portion of the submarine cable system lies within Philippine
territory and thus falls within the jurisdiction of the said local taxing
authorities. It easily belies Capwire's contention that the cable
system is entirely in international waters. And even if such portion
does not lie in the 12-nautical-mile vicinity of the territorial sea but
further inward, in Prof. Magallona v. Hon. Ermita, et al. this Court
held that "whether referred to as Philippine 'internal waters' under
Article I of the Constitution44 or as 'archipelagic waters' under
UNCLOS Part III, Article 49(1, 2, 4), the Philippines exercises
sovereignty over the body of water lying landward of (its) baselines,
including the air space over it and the submarine areas
underneath." Further, under Part VI, Article 79 of the UNCLOS, the
Philippines clearly has jurisdiction with respect to cables laid in its
territory that are utilized in support of other installations and
structures under its jurisdiction.
And as far as local government units are concerned, the areas
described above are to be considered subsumed under the term
"municipal waters" which, under the Local Government Code,
includes "not only streams, lakes, and tidal waters within the
municipality, not being the subject of private ownership and not
comprised within the national parks, public forest, timber lands,
forest reserves or fishery reserves, but also marine waters included
between two lines drawn perpendicularly to the general coastline
from points where the boundary lines of the municipality or city
touch the sea at low tide and a third line parallel with the general
coastline and fifteen (15) kilometers from it." Although the term
"municipal waters" appears in the Code in the context of the grant
of quarrying and fisheries privileges for a fee by local governments,
its inclusion in the Code's Book II which covers local taxation
means that it may also apply as guide in determining the territorial
extent of the local authorities' power to levy real property taxation.
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POLITICAL LAW REVIEW CASES
SOVEREIGNTY
8. Saguisag v. Executive Secretary (January decision)
same facts as #5
ISSUE:
RULING: Preliminarily, respondent already claims that the proviso
that the Philippines shall retain ownership of and title to the Agreed
Locations means that EDCA is "consistent with Article II of the VFA
which recognizes Philippine sovereignty and jurisdiction over
locations within Philippine territory.
By this interpretation, respondent acknowledges that the
contention of petitioners springs from an understanding that the
Agreed Locations merely circumvent the constitutional restrictions.
Framed differently, the bone of contention is whether the Agreed
Locations are, from a legal perspective, foreign military facilities or
bases. This legal framework triggers Section 25, Article XVIII, and
makes Senate concurrence a sine qua non.
Article III of EDCA provides for Agreed Locations, in which the U.S.
is authorized by the Philippines to "conduct the following activities:
"training; transit; support and related activities; refueling of aircraft;
bunkering of vessels; temporary maintenance of vehicles, vessels
and aircraft; temporary accommodation of personnel;
communications; prepositioning of equipment, supplies and
materiel; deploying forces and materiel; and such other activities
as the Parties may agree."
This creation of EDCA must then be tested against a proper
interpretation of the Section 25 restriction.
9. Association of Medical Clinics for Overseas
Workers, Inc. v. GCC Approved Medical Centers
Association, Inc.
FACTS: DOH issued Administrative Order No. 5, Series of
20015(AO 5-01) which directed the decking or equal distribution of
migrant workers among the several clinics who are members of
GAMCA.
AO 5-01 was issued to comply with the Gulf Cooperative Countries
(GCC) States' requirement that only GCC-accredited medical
clinics/hospitals' examination results will be honored by the GCC
States' respective embassies. It required an OFW applicant to first
go to a GAMCA Center which, in turn, will refer the applicant to a
GAMCA clinic or hospital.
Subsequently, the DOH issued AO No. 106, Series of 2002 holding
in abeyance the implementation of the referral decking system. The
DOH reiterated its directive suspending the referral decking system
in AO No. 159, Series of 2004.
In 2004, the DOH issued AO No. 167, Series of 2004 repealing AO
5-01, reasoning that the referral decking system did not guarantee
the migrant workers' right to safe and quality health service.
SAAVEDRA
GAMCA questioned the DOH's Memorandum No. 2008-0210
before the Office of the President (OP). In a decision11 dated
January 14, 2010, the OP nullified Memorandum No. 2008-0210.
Republic Act (RA) No. 10022 lapsed into law without the
President's signature. Section 16 of RA No. 10022 amended
Section 23 of RA No. 8042, adding two new paragraphs -
paragraphs (c) and (d).
Pursuant to Section 16 of RA No. 10022, the DOH, through its
August 23, 2010 letter-order, directed GAMCA to cease and desist
from implementing the referral decking system and to wrap up their
operations within three (3) days from receipt thereof. GAMCA
received its copy of the August 23, 2010 letter-order on August 25,
2010.
GAMCA filed with the RTC of Pasig City a petition for certiorari and
prohibition with prayer for a writ of preliminary injunction and/or
temporary restraining order (GAMCA's petition).15 It assailed: (1)
the DOH's August 23, 2010 letter-order on the ground of grave
abuse of discretion; and (2) paragraphs c.3 and c.4, Section 16 of
RA No. 10022, as well as Section 1 (c) and (d), Rule XI of the IRR,
as unconstitutional.
Meanwhile, the DOH reiterated - through its November 2, 2010
order - its directive that GAMCA cease and desist from
implementing the referral decking system.
The RTC upheld the constitutionality of Section 16 of RA No.
10022, amending Section 23 of RA No. 8042, but ruled that Section
16 of RA No. 10022 does not apply to GAMCA.
The RTC reasoned out that the prohibition against the referral
decking system under Section 16 of RA No. 10022 must be
interpreted as applying only to clinics that conduct health
examination on migrant workers bound for countries that do not
require the referral decking system for the issuance of visas to job
applicants.
It noted that the referral decking system is part of the application
procedure in obtaining visas to enter the GCC States, a procedure
made in the exercise of the sovereign power of the GCC States to
protect their nationals from health hazards, and of their diplomatic
power to regulate and screen entrants to their territories. Under the
principle of sovereign equality and independence of States, the
Philippines cannot interfere with this system and, in fact, must
respect the visa-granting procedures of foreign states in the same
way that they respect our immigration procedures.
ISSUE: Whether the prohibition against the referral decking system
against GAMCA violates the principle of sovereign equality and
independence.
RULING: The RTC based its decision to grant the writs of certiorari
and prohibition against the DOH letter-order on the principle of
sovereign equality and independence; applying the referral decking
system prohibition against GAMCA violates this principle.
The RTC reasoned out that the prohibition against the referral
decking system under Section 16 of RA No. 10022 must be
interpreted to apply only to clinics conducting health examinations
 9
POLITICAL LAW REVIEW CASES
on migrant workers bound for countries that do not require the
referral decking system for the issuance of visas to job applicants.
The RTC observed, too, that the refer al decking system is part of
the application procedure in obtaining visas to enter the GCC
States, a procedure made in the exercise of the sovereign power
of the GCC States to protect their nationals from health hazards,
and of their diplomatic power to regulate and screen entrants to
their territories.
It also reasoned out that under the principle of sovereign equality
and independence of States, the Philippines cannot interfere with
this system and in fact must respect the visa-granting procedures
of foreign states in the same way that they respect our immigration
procedures. Moreover, to restrain GAMCA which is a mere adjunct
of HMC (an agent of GCC States) is to restrain the GCC States
themselves.
AMCOW contests the RTC's conclusion, arguing that the principles
of sovereign equality and independence of States do not apply to
the present case. According to AMCOW, the subject matter of this
case pertains to a domestic concern as the law and the regulations
that GAMCA assails relate to the operation of medical clinics in the
Philippines.
It points out that the Philippines gave GAMCA and its members the
privilege of conducting their businesses domestically; hence, their
operations are governed by Philippine laws, specifically by RA No.
10022 which serves as one of the limitations on the privilege
granted to them. GAMCA's right to engage in business should yield
to the State's exercise of police power. In legal contemplation,
therefore, the DOH CDO letters did not prejudice GAMCA's right to
engage in business; nor did they hamper the GAMCA members'
business operations.
AMCOW further insists that the August 23, 2010 and November 2,
2010 orders are consistent with the State's exercise of the police
power to prescribe regulations to promote the health, safety, and
general welfare of the people. Public interest demands State
interference on health matters, since the welfare of migrant workers
is a legitimate public concern. The DOH thus merely performed its
duty of upholding the migrant workers' freedom to choose any of
its accredited or operated clinics that will conduct health
examinations.
The DOH, for its part, adds that the implementation of RA No.
10022 cannot be defeated by agreements entered into by GAMCA
with the GCC States. The GCC States, the DOH points out, are not
empowered to determine the Philippines' courses of action with
respect to the operation, within Philippine territory, of medical
clinics; the conduct of health examinations; and the freedom of
choice of Filipino migrant workers.
GAMCA responds to these arguments by asserting that the referral
decking system is a part of the application procedure for obtaining
visas to enter the GCC States. Hence, it is an exercise of the
sovereign power of the GCC States to protect their nationals from
health hazards, and their diplomatic power to regulate and screen
entrants to their territories. To restrain an agent of the GCC States
under the control and acting in accordance with the direction of
these GCC States, restrains the GCC States.
SAAVEDRA
GAMCA also points out that the OFWs would suffer grave and
irreparable damage and injury if the DOH CDO letters would be
implemented as the GCC States would not issue working visas
without the GAMCA seal attesting that the OFWs had been
medically examined by GAMCA member clinics.
After considering all these arguments, we find that the RTC's
decision misapplied the principle of sovereign independence and
equality to the present case. While the principles of sovereign
independence and equality have been recognized in Philippine
jurisprudence, our recognition of this principle does not extend to
the exemption of States and their affiliates from compliance with
Philippine regulatory laws.
ACT OF STATE
10. Rosas v. Montor
FACTS: Jafar Saketi Taromsari (Taromsari) and Jalal Shokr Pour
Ziveh (Ziveh), both Iranian nationals, arrived in the Philippines at
the Mactan-Cebu International Airport (MCIA). After staying in a
hotel in Cebu City for a few days, they left for Narita, Japan.
Japanese immigration authorities discovered that Taromsari and
Ziveh had counterfeit or tampered Mexican and Italian passports
and used falsified names: "Jaime Humberto Nenciares Garcia" for
Ziveh and "Marco Rabitti" for Taromsari. For using these fraudulent
passports and lack of entry visa, the Japanese immigration
authorities denied entry to Taromsari and Ziveh and sent them
back to the Philippines. Taromsari and Ziveh arrived at MCIA on
the same day at 6:45 p.m. and admitted at the detention cell of the
Bureau of Immigration (BI) Cebu Detention Center.
In a Memorandum dated December 15, 2004 addressed to BI
Commissioner Alipio F. Fernandez, petitioner Geronimo S. Rosas,
Senior Immigration Officer and Alien Control Officer of Cebu
Immigration District Office, who was then also designated as
Regional Director, gave a report.
Thereupon, an Exclusion Order was issued against Taromsari and
Ziveh on grounds of "Not Properly Documented" and "No Entry
Visa."
On December 17, 2004, security guards Elmer Napilot (Napilot)
and Jose Ramon Ugarte (Ugarte) received a written order from
petitioner directing them to escort Taromsari and Ziveh from Bi
Detention, Mandaue City to MCIA pursuant to the aforementioned
exclusion order for violation of Sec. 29 (a) (17) of Commonwealth
No. 613 or the Philippine Immigration Act(PIA)of 1940.
On December 19, 2004, Taromsari and Ziveh were released from
detention and brought by Napilot and Ugarte to the MCIA for
deportation. They were allowed to leave for Tehran, Iran via Kuala
Lumpur, Malaysia on board Malaysian Air Lines.
On January 18, 2005, respondents Imra-Ali Sabdullah and
Dilausan S. Montor, employees of the Bureau of Immigration (BI),
Cebu, filed a Complaint-Affidavit12 before the OMB against
petitioner, Napilot and Ugarte for grave misconduct, violation of
 10
POLITICAL LAW REVIEW CASES
Section 3(e)13 of Republic Act (RA) No. 3019 and conduct
prejudicial to the interest of public service. Respondents alleged
that petitioner irregularly and anomalously handled and disposed
of the case involving two restricted Iranian nationals by allowing
them to leave the country without initiating any proceeding for
violation of immigration laws considering that said aliens were
potential threats to the country's national interest and security. It
was further contended that the Iranian nationals should have been
charged for deportation because they violated Section 37(a)(9), in
relation to Sections 45 and 46 of PI A.
The OMB rendered its Decision finding substantial evidence of
petitioner's grave misconduct. It held that in unduly releasing the
two Iranian nationals, petitioner showed manifest partiality, evident
bad faith and gross inexcusable negligence. It also stated that
petitioner's claim that he had no prior knowledge of the unlawful
entry was belied by his December 17, 2004 Memorandum. Napilot
and Ugarte were acquitted from the charges as they merely acted
on petitioner's orders and no evidence was presented to suggest
that they were in conspiracy with the petitioner.
ISSUE: Whether there is substantial evidence to sustain the finding
of gross misconduct warranting petitioner's removal from the
service. Otherwise stated, does petitioner's act of releasing the two
Iranian nationals without initiating any case for violation of
immigration laws despite the results of the investigation undertaken
constitute gross misconduct
RULING: YES. It is well-settled that findings of fact and
conclusions by the Office of the Ombudsman are conclusive when
supported by substantial evidence. Substantial evidence is more
than a mere scintilla; it means such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion, even if other minds equally reasonable might
conceivably opine otherwise. The factual findings of the Office of
the Ombudsman are generally accorded great weight and respect,
if not finality by the courts, by reason of their special knowledge
and expertise over matters falling under their jurisdiction.
We agree with the CA that there was sufficient basis to initiate
deportation proceedings under Section 37(a)(9) in relation to
Section 45 of the PIA of 1940. We find no cogent reason to overturn
the CA's findings the question of whether substantial evidence
being a question of fact which is beyond this Court's power of
review for it is not a trier of facts.
PETITIONER HAD TOE DUTY TO INITIATE CRIMINAL
PROCEEDINGS AND DEPORTATION PROCEEDINGS UNDER
SECTION 45 OF THE PIA OF 1940
Every sovereign power has the inherent power to exclude aliens
from its territory upon such grounds as it may deem proper for its
self-preservation or public interest. In the Philippines, aliens may
be expelled or deported from the Philippines on grounds and in the
manner provided for by the Constitution, the PIA of 1940, as
amended, and administrative issuances pursuant thereto.
Section 1028 of the PIA of 1940 requires non-immigrants to present
their unexpired passports and valid passport visas to immigration
officers. Pursuant to their powers as outlined in Section 6 of the PIA
of 1940, the examining immigration officer determines whether the
SAAVEDRA
non-immigrant is qualified to enter the Philippines based on Section
29(a). If the alien holds none of the disqualifications as stated in
Section 29, he may be admitted entry barring other circumstances
that might affect his entry. If, however, the immigration officer
determines that an alien possesses any of the disqualifications
under Section 29, the immigration officer is authorized to issue an
exclusion order.
Exclusion and deportation are formal removal procedures which
ultimately results to an alien's removal from the territory provided
for separately under Section 29 and 37 of the PIA, respectively.
The United States in Ex Parte Domingo Corypus, the Washington
District Court in 1925 differentiated exclusion from deportation.
Under Philippine immigration laws, exclusion is the authorized
removal of an alien by immigration officers, performing primary
inspection, or by the immigration boards of special inquiry, by
secondary inspection, of any foreigner arriving in the Philippines
who, upon inspection and prior to entry or admission, is barred by
immigration laws, rules and regulations from entering or being
admitted to the Philippines. When an alien is excluded he is
immediately sent back to the country where he came from on the
same vessel which transported him, unless in the opinion of the
Commissioner of Immigration such immediate return is not
practicable or proper. Under certain circumstances, when an alien
is excluded, Section 25 of the PIA of 1940 authorizes the alien's
detention until such time it is determined that he is qualified for
entry and/or admission.
Deportation proceedings, on the other hand, are governed by
Sections 37 to 39 of the PIA. We have stated that the power to
deport aliens is an act of State, an act done by or under the
authority of the sovereign power. It is a police measure against
undesirable aliens whose continued presence in the country is
found to be injurious to the public good and the domestic tranquility
of the people.
The two Iranian nationals, Taromsari and Ziveh, confessed to have
knowingly used falsified passports and obtained entry into the
Philippines by using the said fraudulent immigration documents,
both of which are grounds for deportation proceedings. Upon being
questioned why they were sent back from Japan, they admitted that
they entered the Philippines previously using fraudulent passports.
Having admitted that they knowingly entered the country with the
use of fraudulent passports and false representations when they
arrived on December 7 , 2004, Taromsari and Ziveh should have
been ordered arrested and formally charged with violation of
Section 37(a)(9) in relation to Section 45(c) and (d). Deportation
proceedings should have been initiated forthwith against these
aliens.
While the two Iranian nationals were initially held due to lack of
entry visas, after their admission that they used fraudulent
passports in entering the country, the filing of a criminal action
pursuant to Section 45 is proper, together with the initiation of
deportation proceedings. While both exclusion and deportation
ultimately removes a person from our territory, Section 45 imposes
an additional penalty - deportation has an additional penalty in that
it imposes a fine. Indeed, that these aliens were released without
 11
POLITICAL LAW REVIEW CASES
undergoing deportation proceedings as required by law is highly
irregular.
CHAPTER 4 THE DOCTRINE OF STATE IMMUNITY
APPLICATION
11. Rallos v. City of Cebu
FACTS: At the root of the controversy are Lots 485-D and 485-E
of the Banilad Estate, Sambag I, Cebu City, which were
expropriated to be used as a public road in 1963. The Heirs of Fr.
Rallos alleged that the City of Cebu occupied the lots in bad faith
sans the authority of the former's predecessors-in-interest, who
were the registered owners of the subject parcels of land.
The Heirs of Fr. Rallos filed before the RTC a Complaint for
Forfeiture of Improvements or Payment of Fair Market Value with
Moral and Exemplary Damages against the City of Cebu.
In its Answer, the City of Cebu contended that the subject parcels
of land are road lots and are not residential in character. They have
been withdrawn from the commerce of men and were occupied by
the City of Cebu without expropriation proceedings pursuant to
Ordinance No. 416 which was enacted in 1963 or more than 35
years before the Heirs of Fr. Rallos instituted their complaint.
The RTC rendered a Decision, which found the City of Cebu liable
to pay the Heirs of Fr. Rallos just compensation in the amount still
to be determined by a board of three commissioners, one each to
be designated by the contending parties and the court.
The contending parties both moved for the reconsideration of the
Decision rendered on July 24, 2001. The City of Cebu argued that
the reckoning period for the computation of just compensation
should be at least not later than 1963 when the said lots were
initially occupied. On the other hand, the Heirs of Fr. Rallos insisted
that the amount of just compensation payable by the City of Cebu
should be increased from Php 7,500.00 to Php 12,500.00 per sq
m, the latter being the fair market value of the subject lots. They
also prayed for the award of damages in the amount of Php
16,186,520.00, which was allegedly the value of the loss of usage
of the properties involved from 1963 to 1997 as computed by Atty.
Fidel Kwan, the commissioner appointed by the RTC.
On March 21, 2002, the RTC issued a Consolidated Order11
denying the Motion for Reconsideration filed by the City of Cebu,
but modifying the Decision rendered on July 24, 2001. Through the
said order, the RTC increased the amount of just compensation
payable to the Heirs of Fr. Rallos from Php 7,500.00 to Php
9,500.00 per sq m.
The RTC issued another Order directing under pain of contempt
the Cebu branches of Philippine Veterans Bank and Postal Savings
Bank to release to the concerned RTC sheriff certifications
indicating the correct account names and numbers maintained by
the City of Cebu in the said banks. The Order also directed the
Sangguniang Panlungsod to enact an appropriation ordinance
relative to the money judgment. Upon presentment of the
ordinance, the above-mentioned banks were expected to release
SAAVEDRA
the amounts stated therein to satisfy the judgment rendered in
favor of the Heirs of Fr. Rallos. The City of Cebu filed a Motion for
Reconsideration40 against the Order dated February 27, 2012.
Even before the Motion for Reconsideration to the Order dated
February 27, 2012 can be resolved by the RTC, the City of Cebu
filed before the CA a Petition for Annulment of Final Decision/s and
Order/s with prayer for the issuance of injunctive reliefs. The City
of Cebu claimed that the act of the Heirs of Fr. Rallos of
suppressing the existence of the Convenio amounted to extrinsic
fraud which would justify the annulment of the RTC's decisions and
orders.
ISSUE: Whether the City of Cebu, Mayor Rama, the presiding
officer and members of the Sangguniang Panlungsod and the
lawyers from the Office of the City Attorney committed several acts
of indirect contempt all geared towards preventing the execution of
final and executory judgments rendered by this Court in G.R. Nos.
179662 and 194111.
RULING: NO. The Heirs of Fr. Rallos are bent on collecting the
amount allegedly still unpaid by the City of Cebu in accordance with
the computations stated in the decisions and orders in Civil Case
No. CEB-20388. However, the Heirs of Fr. Rallos are impervious
to the requisites laid down by law in enforcing their claims. The
requisites are two-fold as discussed below.
An appropriation ordinance should be passed prior to the
disbursement of public funds.
"Even though the rule as to immunity of a state from suit is relaxed,
the power of the courts ends when the judgment is rendered.
Although the liability of the state has been judicially ascertained,
the state is at liberty to determine for itself whether to pay the
judgment or not, and execution cannot issue on a judgment against
the state. Such statutes do not authorize a seizure of state property
to satisfy judgments recovered, and only convey an implication that
the legislature will recognize such judgment as final and make
provision for the satisfaction thereof."
Section 4(1) of P.D. No. 1445 and Section 305(a) of the Local
Government Code both categorically state that no money shall be
paid out of any public treasury or depository except in pursuance
of an appropriation law or other specific statutory authority. Based
on considerations of public policy, government funds and
properties may not be seized under writs of execution or
garnishment to satisfy judgments rendered by the courts and
disbursements of public funds must be covered by the
corresponding appropriation as required by law.
In the case at bar, no appropriation ordinance had yet been passed
relative to the claims of the Heirs of Fr. Rallos. Such being the case,
the respondents, as public officers, are acting within lawful bounds
in refusing the execution of the decisions and orders in Civil Case
No. CEB-20388.
Despite the rendition of a final and executory judgment validating a
money claim against an agency or instrumentality of the
Government, its filing with the COA is a sine qua non condition
before payment can be effected.
 12
POLITICAL LAW REVIEW CASES
Section 26 of P.D. No. 1445 states that the COA has jurisdiction to
examine, audit and settle all debts and claims of any sort due from
or owing to the Government or any of its subdivisions, agencies
and instrumentalities. Under Section 5(b), Rule II of COA's Revised
Rules of Procedure, local government units are expressly included
as among the entities within the COA's jurisdiction. Section 2, Rule
VIII lays down the procedure in filing money claims against the
Government. Section 4, Rule X provides that any case brought to
the COA shall be decided within 60 days from the date it is
submitted for decision or resolution. Section 1, Rule XII allows the
aggrieved party to file a petition for certiorari before this Court to
assail any decision, order or resolution of the COA within 30 days
from receipt of a copy thereof.
This Court, in the case of University of the Philippines v. Dizon, thus
held that despite the existence of a final and executory judgment
validating the claim against an agency or instrumentality of the
Government, the settlement of the said claim is still subject to the
primary jurisdiction of the COA. Ineluctably, the claimant has to first
seek the COA's approval of the monetary claim.67
Without compliance by Lucena and the Heirs of Fr. Rallos with the
provisions of P.D. No. 1445 and the COA's Revised Rules of
Procedure, their lamentations that the respondents are unjustly
refusing the execution of the decisions and orders in Civil Case No.
CEB-20388 do not hold any water.
12. Roxas v. Republic Real Estate Corp.
FACTS: Republic Real Estate Corporation (RREC) entered into an
agreement with Pasay City for the reclamation of the foreshore
lands along Manila Bay. The agreement was made on the strength
of Pasay City Council Ordinance No. 121, as amended by
Ordinance No. 158, which authorized RREC to reclaim 300
hectares of foreshore lands in the city.
On December 19, 1961, the Republic of the Philippines (Republic)
sued for recovery of possession and damages with writ of
preliminary injunction. The Republic questioned the agreement on
three (3) grounds. First, the subject of the contract is outside the
commerce of man as the reclaimed area is a national park that the
Republic owns. Second, Pasay City Ordinance No. 121, as
amended, in including the reclaimed area, went beyond6 Republic
Act No. 1899, which allows municipalities and chartered cities to
reclaim only "foreshore lands," not "submerged lands." Lastly, the
agreement was executed without approval from national
government and without public bidding.
This Court upheld the Republic's arguments. Both the agreement
and Ordinance No. 121, as amended, were declared null and void
for being ultra vires and contrary to Republic Act No. 1899.
This Court ruled that "RREC had no authority to resume its
reclamation work" and that it failed to reclaim any area within the
reclamation project. Nevertheless, it recognized that RREC
undertook partial work by using the dredge fill of 1,558,395 cubic
meters and mobilizing its equipment, for which it incurred
expenses.
SAAVEDRA
Thus, despite the nullity of the agreement and RREC's failure to
reclaim any land, this Court awarded RREC compensation for the
work it had actually done based on quantum meruit.
This Court also rejected RREC and Pasay City's claims of
ownership over the lands in the reclamation area and reiterated
that the Cultural Center of the Philippines and the Government
Service Insurance System were the rightful title holders of these
lands.
ISSUE: Whether this Court has jurisdiction to hear the case
RULING: NO. The case is premature. The money claim against the
Republic should have been first brought before the Commission on
Audit.
The Writ of Execution and Sheriff De Jesus' Notice violate this
Court's Administrative Circular No. 10-2000150 and Commission
on Audit Circular No. 2001-002,151 which govern the issuance of
writs of execution to satisfy money judgments against government.
Administrative Circular No. 10-2000 dated October 25, 2000 orders
all judges of lower courts to observe utmost caution, prudence, and
judiciousness in the issuance of writs of execution to satisfy money
judgments against government agencies.
Judges should bear in mind that in Commissioner of Public
Highways v. San Diego (31 SCRA 617, 625 [1970]), this Court
explicitly stated:
The universal rule that where the State gives its consent
to be sued by private parties either by general or special
law, it may limit claimant's action 'only up to the
completion of proceedings anterior to the stage of
execution' and that the power of the Court ends when the
judgment is rendered, since government funds and
properties may not be seized under writs of execution or
garnishment to satisfy such judgments, is based on
obvious considerations of public policy. Disbursements
of public funds must be covered by the corresponding
appropriation as required by law. The functions and
public services rendered by the State cannot be allowed
to be paralyzed or disrupted by the diversion of public
funds from their legitimate and specific objects, as
appropriated by law.
Moreover, it is settled jurisprudence that upon determination of
State liability, the prosecution, enforcement or satisfaction thereof
must still be pursued in accordance with the rules and procedures
laid down in P[residential] D[ecree] No. 1445, otherwise known as
the Government Auditing Code of the Philippines (Department of
Agriculture v. NLRC, 227 SCRA 693, 701-02 [1993] citing Republic
vs. Villasor, 54 SCRA 84 [1973]). All money claims against the
Government must first be filed with the Commission on Audit which
must act upon it within sixty days. Rejection of the claim will
authorize the claimant to elevate the matter to the Supreme Court
on certiorari and in effect sue the State thereby (P[residential]
D[ecree] [No.] 1445, Sections 49-50).
For its part, Commission on Audit Circular No. 2001-002 dated July
31, 2001 requires the following to observe this Court's
 13
POLITICAL LAW REVIEW CASES
Administrative Circular No. 10-2000: department heads; bureau,
agency, and office chiefs; managing heads of government-owned
and/or controlled corporations; local chief executives; assistant
commissioners, directors, officers-in-charge, and auditors of the
Commission on Audit; and all others concerned.153chanrobleslaw
Chapter 4, Section 11 of Executive Order No. 292 gives the
Commission on Audit the power and mandate to settle all
government accounts. Thus, the finding that government is liable
in a suit to which it consented does not translate to enforcement of
the judgment by execution.
As a rule, public funds may not be disbursed absent an
appropriation of law or other specific statutory authority.
Commonwealth Act No. 327, as amended by Presidential Decree
No. 1445, requires that all money claims against government must
first be filed before the Commission on Audit, which, in turn, must
act upon them within 60 days.
Only when the Commission on Audit rejects the claim can the
claimant elevate the matter to this Court on certiorari and, in effect,
sue the state. Carabao, Inc. v. Agricultural Productivity
Commission has settled that "claimants have to prosecute their
money claims against the Government under Commonwealth Act
327 . . . and that the conditions provided in Commonwealth Act 327
for filing money claims against the Government must be strictly
observed."
In Star Special Watchman and Detective Agency, Inc. v. Puerto
Princesa City:
Under Commonwealth Act No. 327, as amended by
Section 26 of P.D. No. 1445, it is the C[ommission] o[n]
A[udit] which has primary jurisdiction to examine, audit
and settle "all debts and claims of any sort" due from or
owing the Government or any of its subdivisions,
agencies and instrumentalities, including government-
owned or controlled corporations and their subsidiaries.
RREC's procedural shortcut must be rejected. Any allowance or
disallowance of its money claims is for the Commission on Audit to
decide, subject only to RREC's remedy of appeal via a petition for
certiorari before this Court.
13. AMCOW, Inc. v. GCC AMCA, Inc. same facts as #9
ISSUE: Whether the principle of sovereign equality and
independence of states exempts GAMCA from the referral decking
system prohibition under RA No. 10022.
RULING: The principle of sovereign equality and independence of
states does not exempt GAMCA from the referral decking system
prohibition under RA No. 10022.
In Republic of Indonesia v. Vinzon, we recognized the principle of
sovereign independence and equality as part of the law of the land.
We used this principle to justify the recognition of the principle of
sovereign immunity which exempts the State - both our
Government and foreign governments - from suit. We held:
SAAVEDRA
International law is founded largely upon the principles of
reciprocity, comity, independence, and equality of States which
were adopted as part of the law of our land under Article II, Section
2 of the 1987 Constitution. The rule that a State may not be sued
without its consent is a necessary consequence of the principles of
independence and equality of States. As enunciated in Sanders v.
Veridiano II, the practical justification for the doctrine of sovereign
immunity is that there can be no legal right against the authority
that makes the law on which the right depends. In the case of
foreign States, the rule is derived from the principle of the sovereign
equality of States, as expressed in the maxim par in parem non
habet imperium. All states are sovereign equals and cannot assert
jurisdiction over one another. A contrary attitude would "unduly vex
the peace of nations."
Our recognition of sovereign immunity, however, has never been
unqualified. While we recognized the principles of independence
and equality of States to justify a State's sovereign immunity from
suit, we also restricted state immunity to acts jus imperii, or public
acts. We said that once a State enters into commercial transactions
(jus gestionis), then it descends to the level of a private individual,
and is thus not immune from the resulting liability and
consequences of its actions.104
By this recognition, we acknowledge that a foreign government
acting in its jus imperii function cannot be held liable in a Philippine
court. Philippine courts, as part of the Philippine government,
cannot and should not take jurisdiction over cases involving the
public acts of a foreign government. Taking jurisdiction would
amount to authority over a foreign government, and would thus
violate the principle of sovereign independence and equality.105
This recognition is altogether different from exempting
governments whose agents are in the Philippines from complying
with our domestic laws. We have yet to declare in a case that the
principle of sovereign independence and equality exempts agents
of foreign governments from compliance with the application of
Philippine domestic law.
In the present case, GAMCA has not adduced any evidence in the
court below, nor has it presented any argument before us showing
that the principle of sovereign equality and independence has
developed into an international custom shielding state agents from
compliance with another state's domestic laws. Under this
situation, the Court is in no position to determine whether the
practice that GAMCA alleges has indeed crystallized into an
international custom.
GAMCA has never proven in this case, too, that the GCC has
extended its sovereign immunity to GAMCA. Sovereign immunity
belongs to the State, and it must first be extended to its agents
before the latter may be considered to possess sovereign
immunity.
Significantly, the Court has even adopted a restrictive approach in
recognizing state immunity, by distinguishing between a State's jus
imperii and jus gestionis. It is only when a State acts in its jus
imperii function that we recognize state immunity.
WAIVER OF IMMUNITY
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POLITICAL LAW REVIEW CASES
14. Arigo v. Swift same facts as #4
RULING: In the case of Minucher v. Court of Appeals, we further
expounded on the immunity of foreign states from the jurisdiction
of local courts, as follows:
The precept that a State cannot be sued in the courts of
a foreign state is a long-standing rule of customary
international law then closely identified with the personal
immunity of a foreign sovereign from suit and, with the
emergence of democratic states, made to attach not just
to the person of the head of state, or his representative,
but also distinctly to the state itself in its sovereign
capacity. If the acts giving rise to a suit arc those of a
foreign government done by its foreign agent, although
not necessarily a diplomatic personage, but acting in his
official capacity, the complaint could be barred by the
immunity of the foreign sovereign from suit without its
consent. Suing a representative of a state is believed to
be, in effect, suing the state itself. The proscription is not
accorded for the benefit of an individual but for the State,
in whose service he is, under the maxim -par in parem,
non habet imperium -that all states are sovereign equals
and cannot assert jurisdiction over one another. The
implication, in broad terms, is that if the judgment against
an official would require the state itself to perform an
affirmative act to satisfy the award, such as the
appropriation of the amount needed to pay the damages
decreed against him, the suit must be regarded as being
against the state itself, although it has not been formally
impleaded.
In the same case we also mentioned that in the case of diplomatic
immunity, the privilege is not an immunity from the observance of
the law of the territorial sovereign or from ensuing legal liability; it
is, rather, an immunity from the exercise of territorial jurisdiction.
In United States of America v. Judge Guinto, one of the
consolidated cases therein involved a Filipino employed at Clark
Air Base who was arrested following a buy-bust operation
conducted by two officers of the US Air Force, and was eventually
dismissed from his employment when he was charged in court for
violation of R.A. No. 6425. In a complaint for damages filed by the
said employee against the military officers, the latter moved to
dismiss the case on the ground that the suit was against the US
Government which had not given its consent. The RTC denied the
motion but on a petition for certiorari and prohibition filed before
this Court, we reversed the RTC and dismissed the complaint. We
held that petitioners US military officers were acting in the exercise
of their official functions when they conducted the buy-bust
operation against the complainant and thereafter testified against
him at his trial. It follows that for discharging their duties as agents
of the United States, they cannot be directly impleaded for acts
imputable to their principal, which has not given its consent to be
sued.
This traditional rule of State immunity which exempts a State from
being sued in the courts of another State without the former's
consent or waiver has evolved into a restrictive doctrine which
distinguishes sovereign and governmental acts (Jure imperil") from
private, commercial and proprietary acts (Jure gestionis). Under
SAAVEDRA
the restrictive rule of State immunity, State immunity extends only
to acts Jure imperii. The restrictive application of State immunity is
proper only when the proceedings arise out of commercial
transactions of the foreign sovereign, its commercial activities or
economic affairs.
In Shauf v. Court of Appeals, we discussed the limitations of the
State immunity principle, thus:
It is a different matter where the public official is made to account
in his capacity as such for acts contrary to law and injurious to the
rights of plaintiff. As was clearly set forth by Justice Zaldivar in
Director of the Bureau of Telecommunications, et al. vs. Aligaen,
etc., et al. :
"Inasmuch as the State authorizes only legal acts by its
officers, unauthorized acts of government officials or
officers are not acts of the State, and an action against
the officials or officers by one whose rights have been
invaded or violated by such acts, for the protection of his
rights, is not a suit against the State within the rule of
immunity of the State from suit. In the same tenor, it has
been said that an action at law or suit in equity against a
State officer or the director of a State department on the
ground that, while claiming to act for the State, he
violates or invades the personal and property rights of
the plaintiff, under an unconstitutional act or under an
assumption of authority which he does not have, is not a
suit against the State within the constitutional provision
that the State may not be sued without its consent."
The rationale for this ruling is that the doctrine of state
immunity cannot be used as an instrument for
perpetrating an injustice.
The aforecited authorities are clear on the matter. They state that
the doctrine of immunity from suit will not apply and may not be
invoked where the public official is being sued in his private and
personal capacity as an ordinary citizen. The cloak of protection
afforded the officers and agents of the government is removed the
moment they are sued in their individual capacity. This situation
usually arises where the public official acts without authority or in
excess of the powers vested in him. It is a well-settled principle of
law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done
with malice and in bad faith, or beyond the scope of his authority or
jurisdiction. In this case, the US respondents were sued in their
official capacity as commanding officers of the US Navy who had
control and supervision over the USS Guardian and its crew. The
alleged act or omission resulting in the unfortunate grounding of
the USS Guardian on the TRNP was committed while they were
performing official military duties. Considering that the satisfaction
of a judgment against said officials will require remedial actions and
appropriation of funds by the US government, the suit is deemed
to be one against the US itself. The principle of State immunity
therefore bars the exercise of jurisdiction by this Court over the
persons of respondents Swift, Rice and Robling.
15. Industrial Personnel and Management Services, Inc.
v. De Vera
 15
POLITICAL LAW REVIEW CASES
FACTS: Petitioner Industrial Personnel & Management Services,
Inc. (IPAMS) is a local placement agency duly organized and
existing under Philippine laws, with petitioner Angelito C.
Hernandez as its president and managing director. Petitioner SNC
Lavalin Engineers & Contractors, Inc. (SNC-Lavalin) is the principal
of IPAMS, a Canadian company with business interests in several
countries. On the other hand, respondent Alberto Arriola (Arriola)
is a licensed general surgeon in the Philippines.
Arriola was offered by SNC-Lavalin, through its letter, the position
of Safety Officer in its Ambatovy Project site in Madagascar. The
position offered had a rate of CA$32.00 per hour for forty (40) hours
a week with overtime pay in excess of forty (40) hours. It was for a
period of nineteen (19) months starting from June 9, 2008 to
December 31, 2009.
Arriola was then hired by SNC-Lavalin, through its local manning
agency, IPAMS, and his overseas employment contract was
processed with the Philippine Overseas Employment Agency
(POEA). In a letter of understanding, dated June 5, 2008, SNC-
Lavalin confirmed Arriola's assignment in the Ambatovy Project.
According to Arriola, he signed the contract of employment in the
Philippines. On June 9, 2008, Arriola started working in
Madagascar.
After three months, Arriola received a notice of pre-termination of
employment, dated September 9, 2009, from SNC-Lavalin. It
stated that his employment would be pre-terminated effective
September 11, 2009 due to diminishing workload in the area of his
expertise and the unavailability of alternative assignments.
Consequently, on September 15, 2009, Arriola was repatriated.
SNC-Lavalin deposited in Arriola's bank account his pay amounting
to Two Thousand Six Hundred Thirty Six Dollars and Eight
Centavos (CA$2,636.80), based on Canadian labor law.
Aggrieved, Arriola filed a complaint against the petitioners for illegal
dismissal and non-payment of overtime pay, vacation leave and
sick leave pay before the Labor Arbiter (LA). He claimed that SNC-
Lavalin still owed him unpaid salaries equivalent to the three-month
unexpired portion of his contract, amounting to, more or less, One
Million Sixty-Two Thousand Nine Hundred Thirty-Six Pesos
(P1,062,936.00). He asserted that SNC-Lavalin never offered any
valid reason for his early termination and that he was not given
sufficient notice regarding the same. Arriola also insisted that the
petitioners must prove the applicability of Canadian law before the
same could be applied to his employment contract.
The petitioners denied the charge of illegal dismissal against them.
They claimed that SNC-Lavalin was greatly affected by the global
financial crises during the latter part of 2008. The economy of
Madagascar, where SNC-Lavalin had business sites, also slowed
down. As proof of its looming financial standing, SNC-Lavalin
presented a copy of a news item in the Financial Post, dated March
5, 2009, showing the decline of the value of its stocks. Thus, it had
no choice but to minimize its expenditures and operational
expenses. It re-organized its Health and Safety Department at the
Ambatovy Project site and Arriola was one of those affected.
The petitioners also invoked EDI-Staffbuilders International, Inc. v.
NLRC12 (EDI-Staffbuilders), pointing out that particular labor laws
SAAVEDRA
of a foreign country incorporated in a contract freely entered into
between an OFW and a foreign employer through the latter's agent
was valid. In the present case, as all of Arriola's employment
documents were processed in Canada, not to mention that SNC-
Lavalin's office was in Ontario, the principle of lex loci celebrationis
was applicable. Thus, the petitioners insisted that Canadian laws
governed the contract.
The petitioners continued that the pre-termination of Arriola's
contract was valid for being consistent with the provisions of both
the Expatriate Policy and laws of Canada. The said foreign law did
not require any ground for early termination of employment, and
the only requirement was the written notice of termination. Even
assuming that Philippine laws should apply, Arriola would still be
validly dismissed because domestic law recognized retrenchment
and redundancy as legal grounds for termination.
In their Rejoinder, the petitioners presented a copy of the
Employment Standards Act (ESA) of Ontario, which was duly
authenticated by the Canadian authorities and certified by the
Philippine Embassy.
The NLRC reversed the LA decision and ruled that Arriola was
illegally dismissed by the petitioners. Citing PNB v. Cabansag,16
the NLRC stated that whether employed locally or overseas, all
Filipino workers enjoyed the protective mantle of Philippine labor
and social legislation, contract stipulations to the contrary
notwithstanding. Thus, the Labor Code of the Philippines and
Republic Act (R.A.) No. 8042, or the Migrant Workers Act, as
amended, should be applied. Moreover, the NLRC added that the
overseas employment contract of Arriola was processed in the
POEA.
Applying the Philippine laws, the NLRC found that there was no
substantial evidence presented by the petitioners to show any just
or authorized cause to terminate Arriola. The ground of financial
losses by SNC-Lavalin was not supported by sufficient and credible
evidence. The NLRC concluded that, for being illegally dismissed,
Arriola should be awarded CA$81,920.00 representing sixteen (16)
months of Arriola's purported unpaid salary, pursuant to the
Serrano v. Gallant doctrine.
ISSUE: Whether or not respondent Arriola was validly dismissed
pursuant to the employment contract.
RULING: NO. At present, Filipino laborers, whether skilled or
professional, are enticed to depart from the motherland in search
of greener pastures. There is a distressing reality that the offers of
employment abroad are more lucrative than those found in our own
soils. To reap the promises of the foreign dream, our unsung
heroes must endure homesickness, solitude, discrimination,
mental and emotional struggle, at times, physical turmoil, and,
worse, death. On the other side of the table is the growing number
of foreign employers attracted in hiring Filipino workers because of
their reasonable compensations and globally-competitive skills and
qualifications. Between the dominant foreign employers and the
vulnerable and desperate OFWs, however, there is an inescapable
truth that the latter are in need of greater safeguard and protection.
In order to afford the full protection of labor to our OFWs, the State
has vigorously enacted laws, adopted regulations and policies, and
 16
POLITICAL LAW REVIEW CASES
established agencies to ensure that their needs are satisfied and
that they continue to work in a humane living environment outside
of the country. Despite these efforts, there are still issues left
unsolved in the realm of overseas employment. One existing
question is posed before the Court -when should an overseas labor
contract be governed by a foreign law? To answer this burning
query, a review of the relevant laws and jurisprudence is warranted.
R.A. No. 8042, or the Migrant Workers Act, was enacted to institute
the policies on overseas employment and to establish a higher
standard of protection and promotion of the welfare of migrant
workers.28 It emphasized that while recognizing the significant
contribution of Filipino migrant workers to the national economy
through their foreign exchange remittances, the State does not
promote overseas employment as a means to sustain economic
growth and achieve national development.29 Although it
acknowledged claims arising out of law or contract involving
Filipino workers,30 it does not categorically provide that foreign
laws are absolutely and automatically applicable in overseas
employment contracts.
The issue of applying foreign laws to labor contracts was initially
raised before the Court in Pakistan International. It was stated in
the labor contract therein (1) that it would be governed by the laws
of Pakistan, (2) that the employer have the right to terminate the
employee at any time, and (3) that the one-month advance notice
in terminating the employment could be dispensed with by paying
the employee an equivalent one-month salary. Therein, the Court
elaborated on the parties' right to stipulate in labor contracts, to wit:
A contract freely entered into should, of course, be
respected, as PIA argues, since a contract is the law
between the parties. The principle of party autonomy in
contracts is not, however, an absolute principle. The rule
in Article 1306, of our Civil Code is that the contracting
parties may establish such stipulations as they may
deem convenient, "provided they are not contrary to law,
morals, good customs, public order or public policy."
Thus, counter-balancing the principle of autonomy of
contracting parties is the equally general rule that
provisions of applicable law, especially provisions
relating to matters affected with public policy, are
deemed written into the contract, Put a little differently,
the governing principle is that parties may not contract
away applicable provisions of law especially peremptory
provisions dealing with matters heavily impressed with
public interest. The law relating to labor and employment
is clearly such an area and parties are not at liberty to
insulate themselves and their relationships from the
impact of labor laws and regulations by simply
contracting with each other. x x x
In that case, the Court held that the labor relationship between
OFW and the foreign employer is "much affected with public
interest and that the otherwise applicable Philippine laws and
regulations cannot be rendered illusory by the parties agreeing
upon some other law to govern their relationship." Thus, the Court
applied the Philippine laws, instead of the Pakistan laws. It was
also held that the provision in the employment contract, where the
employer could terminate the employee at any time for any ground
and it could even disregard the notice of termination, violates the
SAAVEDRA
employee's right to security of tenure under Articles 280 and 281
of the Labor Code.
In EDI-Staffbuilders, the case heavily relied on by the petitioners, it
was reiterated that, "[i]n formulating the contract, the parties may
establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy."33 In that
case, the overseas contract specifically stated that Saudi Labor
Laws would govern matters not provided for in the contract. The
employer, however, failed to prove the said foreign law, hence, the
doctrine of processual presumption came into play and the
Philippine labor laws were applied. Consequently, the Court did not
discuss any longer whether the Saudi labor laws were contrary to
Philippine labor laws.
The case of Becmen Service Exporter and Promotion, Inc. v.
Spouses Cuaresma, though not an illegal termination case,
elucidated on the effect of foreign laws on employment. It involved
a complaint for insurance benefits and damages arising from the
death of a Filipina nurse from Saudi Arabia. It was initially found
therein that there was no law in Saudi Arabia that provided for
insurance arising from labor accidents. Nevertheless, the Court
concluded that the employer and the recruiter in that case
abandoned their legal, moral and social obligation to assist the
victim's family in obtaining justice for her death, and so her family
was awarded P5,000,000.00 for moral and exemplary damages.
In ATCI Overseas Corporation v. Echin (ATCI Overseas), the
private recruitment agency invoked the defense that the foreign
employer was immune from suit and that it did not sign any
document agreeing to be held jointly and solidarily liable. Such
defense, however, was rejected because R.A. No. 8042 precisely
afforded the OFWs with a recourse against the local agency and
the foreign employer to assure them of an immediate and sufficient
payment of what was due. Similar to EDI-Staffbuilders, the local
agency therein failed to prove the Kuwaiti law specified in the labor
contract, pursuant to Sections 24 and 25 of Rule 132 of the Revised
Rules of Court.
Also, in the recent case of Sameer Overseas Placement Agency,
Inc. v. Cabiles (Sameer Overseas), it was declared that the security
of tenure for labor was guaranteed by our Constitution and
employees were not stripped of the same when they moved to work
in other jurisdictions. Citing PCL Shipping Phils., Inc. v. NLRC (PCL
Shipping), the Court held that the principle of lex loci contractus
(the law of the place where the contract is made) governed in this
jurisdiction. As it was established therein that the overseas labor
contract was executed in the Philippines, the Labor Code and the
fundamental procedural rights were observed. It must be noted that
no foreign law was specified in the employment contracts in both
cases.
Lastly, in Saudi Arabian Airlines (Saudia) v. Rebesencio, the
employer therein asserted the doctrine of forum non conveniens
because the overseas employment contracts required the
application of the laws of Saudi Arabia, and so, the Philippine
courts were not in a position to hear the case. In striking down such
argument, the Court held that while a Philippine tribunal was called
upon to respect the parties' choice of governing law, such respect
must not be so permissive as to lose sight of considerations of law,
 17
POLITICAL LAW REVIEW CASES
morals, good customs, public order, or public policy that underlie
the contract central to the controversy. As the dispute in that case
related to the illegal termination of the employees due to their
pregnancy, then it involved a matter of public interest and public
policy. Thus, it was ruled that Philippine laws properly found
application and that Philippine tribunals could assume jurisdiction.
Based on the foregoing, the general rule is that Philippine laws
apply even to overseas employment contracts. This rule is rooted
in the constitutional provision of Section 3, Article XIII that the State
shall afford full protection to labor, whether local or overseas.
Hence, even if the OFW has his employment abroad, it does not
strip him of his rights to security of tenure, humane conditions of
work and a living wage under our Constitution.
As an exception, the parties may agree that a foreign law shall
govern the employment contract. A synthesis of the existing laws
and jurisprudence reveals that this exception is subject to the
following requisites:
1) That it is expressly stipulated in the overseas
employment contract that a specific foreign law shall
govern;
2) That the foreign law invoked must be proven before the
courts pursuant to the Philippine rules on evidence;
3) That the foreign law stipulated in the overseas
employment contract must not be contrary to law,
morals, good customs, public order, or public policy of
the Philippines; and
4) That the overseas employment contract must be
processed through the POEA.
The Court is of the view that these four (4) requisites must be
complied with before the employer could invoke the applicability of
a foreign law to an overseas employment contract. With these
requisites, the State would be able to abide by its constitutional
obligation to ensure that the rights and well-being of our OFWs are
fully protected. These conditions would also invigorate the policy
under R.A. No. 8042 that the State shall, at all times, uphold the
dignity of its citizens whether in country or overseas, in general,
and the Filipino migrant workers, in particular.40 Further, these
strict terms are pursuant to the jurisprudential doctrine that "parties
may not contract away applicable provisions of law especially
peremptory provisions dealing with matters heavily impressed with
public interest," such as laws relating to labor. At the same time,
foreign employers are not at all helpless to apply their own laws to
overseas employment contracts provided that they faithfully
comply with these requisites.
If the first requisite is absent, or that no foreign law was expressly
stipulated in the employment contract which was executed in the
Philippines, then the domestic labor laws shall apply in accordance
with the principle of lex loci contractus. This is based on the cases
of Sameer Overseas and PCL Shipping.
If the second requisite is lacking, or that the foreign law was not
proven pursuant to Sections 24 and 25 of Rule 132 of the Revised
Rules of Court, then the international law doctrine of processual
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presumption operates. The said doctrine declares that "[w]here a
foreign law is not pleaded or, even if pleaded, is not proved, the
presumption is that foreign law is the same as ours."42 This was
observed in the cases of EDI-Staffbuilders and ATCI Overseas.
If the third requisite is not met, or that the foreign law stipulated is
contrary to law, morals, good customs, public order or public policy,
then Philippine laws govern. This finds legal bases in the Civil
Code, specifically: (1) Article 17, which provides that laws which
have, for their object, public order, public policy and good customs
shall not be rendered ineffective by laws of a foreign country; and
(2) Article 1306, which states that the stipulations, clauses, terms
and conditions in a contract must not be contrary to law, morals,
good customs, public order, or public policy. The said doctrine was
applied in the case of Pakistan International.
Finally, if the fourth requisite is missing, or that the overseas
employment contract was not processed through the POEA, then
Article 18 of the Labor Code is violated. Article 18 provides that no
employer may hire a Filipino worker for overseas employment
except through the boards and entities authorized by the Secretary
of Labor. In relation thereto, Section 4 of R.A. No. 8042, as
amended, declares that the State shall only allow the deployment
of overseas Filipino workers in countries where the rights of Filipino
migrant workers are protected. Thus, the POEA, through the
assistance of the Department of Foreign Affairs, reviews and
checks whether the countries have existing labor and social laws
protecting the rights of workers, including migrant workers.43
Unless processed through the POEA, the State has no effective
means of assessing the suitability of the foreign laws to our migrant
workers. Thus, an overseas employment contract that was not
scrutinized by the POEA definitely cannot be invoked as it is an
unexamined foreign law.
In other words, lacking any one of the four requisites would
invalidate the application of the foreign law, and the Philippine law
shall govern the overseas employment contract.
As the requisites of the applicability of foreign laws in overseas
labor contract have been settled, the Court can now discuss the
merits of the case at bench.
A judicious scrutiny of the records of the case demonstrates that
the petitioners were able to observe the second requisite, or that
the foreign law must be proven before the court pursuant to the
Philippine rules on evidence. The petitioners were able to present
the ESA, duly authenticated by the Canadian authorities and
certified by the Philippine Embassy, before the LA. The fourth
requisite was also followed because Arriola's employment contract
was processed through the POEA.44
Unfortunately for the petitioners, those were the only requisites that
they complied with. As correctly held by the CA, even though an
authenticated copy of the ESA was submitted, it did not mean that
said foreign law could be automatically applied to this case. The
petitioners miserably failed to adhere to the two other requisites,
which shall be discussed in seratim.
The foreign law was not expressly specified in the employment
contract.
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POLITICAL LAW REVIEW CASES
The petitioners failed to comply with the first requisite because no
foreign law was expressly stipulated in the overseas employment
contract with Arriola. In its pleadings, the petitioners did not directly
cite any specific provision or stipulation in the said labor contract
which indicated the applicability of the Canadian labor laws or the
ESA. They failed to show on the face of the contract that a foreign
law was agreed upon by the parties. Rather, they simply asserted
that the terms and conditions of Arriola's employment were
embodied in the Expatriate Policy, Ambatovy Project - Site, Long
Term. Then, they emphasized provision 8.20 therein, regarding
interpretation of the contract, which provides that said policy would
be governed and construed with the laws of the country where the
applicable SNC-Lavalin, Inc. office was located. Because of this
provision, the petitioners insisted that the laws of Canada, not of
Madagascar or the Philippines, should apply. Then, they finally
referred to the ESA.
It is apparent that the petitioners were simply attempting to stretch
the overseas employment contract of Arriola, by implication, in
order that the alleged foreign law would apply. To sustain such
argument would allow any foreign employer to improperly invoke a
foreign law even if it is not anymore reasonably contemplated by
the parties to control the overseas employment. The OFW, who is
susceptible by his desire and desperation to work abroad, would
blindly sign the labor contract even though it is not clearly
established on its face which state law shall apply. Thus, a better
rule would be to obligate the foreign employer to expressly declare
at the onset of the labor contract that a foreign law shall govern it.
In that manner, the OFW would be informed of the applicable law
before signing the contract.
Further, it was shown that the overseas labor contract was
executed by Arriola at his residence in Batangas and it was
processed at the POEA on May 26, 2008. Considering that no
foreign law was specified in the contract and the same was
executed in the Philippines, the doctrine of lex loci celebrationis
applies and the Philippine laws shall govern the overseas
employment of Arriola.
The foreign law invoked is contrary to the Constitution and the
Labor Code
Granting arguendo that the labor contract expressly stipulated the
applicability of Canadian law, still, Arriola's employment cannot be
governed by such foreign law because the third requisite is not
satisfied. A perusal of the ESA will show that some of its provisions
are contrary to the Constitution and the labor laws of the
Philippines.
First, the ESA does not require any ground for the early termination
of employment. Article 54 thereof only provides that no employer
should terminate the employment of an employee unless a written
notice had been given in advance. Necessarily, the employer can
dismiss any employee for any ground it so desired. At its own
pleasure, the foreign employer is endowed with the absolute power
to end the employment of an employee even on the most whimsical
grounds.
Second, the ESA allows the employer to dispense with the prior
notice of termination to an employee. Article 65(4) thereof indicated
that the employer could terminate the employment without notice
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by simply paying the employee a severance pay computed on the
basis of the period within which the notice should have been given.
The employee under the ESA could be immediately dismissed
without giving him the opportunity to explain and defend himself.
The provisions of the ESA are patently inconsistent with the right
to security of tenure. Both the Constitution51 and the Labor
Code52 provide that this right is available to any employee. In a
host of cases, the Court has upheld the employee's right to security
of tenure in the face of oppressive management behavior and
management prerogative. Security of tenure is a right which cannot
be denied on mere speculation of any unclear and nebulous basis.
Not only do these provisions collide with the right to security of
tenure, but they also deprive the employee of his constitutional right
to due process by denying him of any notice of termination and the
opportunity to be heard. Glaringly, these disadvantageous
provisions under the ESA produce the same evils which the Court
vigorously sought to prevent in the cases of Pakistan International
and Sameer Overseas. Thus, the Court concurs with the CA that
the ESA is not applicable in this case as it is against our
fundamental and statutory laws.
In fine, as the petitioners failed to meet all the four (4) requisites on
the applicability of a foreign law, then the Philippine labor laws must
govern the overseas employment contract of Arriola.
16. DOTC v. Sps. Abecina
FACTS: Respondent spouses Vicente and Maria Cleofe Abecina
(respondents/spouses Abecina) are the registered owners of five
parcels of land in Sitio Paltik, Barrio Sta. Rosa, Jose Panganiban,
Camarines Norte.
The DOTC awarded Digitel Telecommunications Philippines, Inc.
(Digitel) a contract for the management, operation, maintenance,
and development of a Regional Telecommunications Development
Project (RTDP) under the National Telephone Program, Phase I,
Tranche 1 (NTPI-1).
The DOTC and Digitel subsequently entered into several Facilities
Management Agreements (FMA) for Digitel to manage, operate,
maintain, and develop the RTDP and NTPI-1 facilities comprising
local telephone exchange lines in various municipalities in Luzon.
The FMAs were later converted into Financial Lease Agreements
(FLA) in 1995.
Later on, the municipality of Jose Panganiban, Camarines Norte,
donated a one thousand two hundred (1,200) square-meter parcel
of land to the DOTC for the implementation of the RDTP in the
municipality. However, the municipality erroneously included
portions of the respondents property in the donation. Pursuant to
the FLAs, Digitel constructed a telephone exchange on the
property which encroached on the properties of the respondent
spouses.
Sometime in the mid-1990s, the spouses Abecina discovered
Digitels occupation over portions of their properties. They required
Digitel to vacate their properties and pay damages, but the latter
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POLITICAL LAW REVIEW CASES
refused, insisting that it was occupying the property of the DOTC
pursuant to their FLA.
The respondent spouses sent a final demand letter to both the
DOTC and Digitel to vacate the premises and to pay unpaid
rent/damages in the amount of one million two hundred thousand
pesos (1,200,000.00). Neither the DOTC nor Digitel complied with
the demand.
The respondent spouses filed an accion publiciana complaint 6
against the DOTC and Digitel for recovery of possession and
damages.
In its answer, the DOTC claimed immunity from suit and ownership
over the subject properties.7 Nevertheless, during the pre-trial
conference, the DOTC admitted that the Abecinas were the rightful
owners of the properties and opted to rely instead on state
immunity from suit.
The respondent spouses and Digitel executed a Compromise
Agreement and entered into a Contract of Lease. The RTC
rendered a partial decision and approved the Compromise
Agreement on March 22, 2007.9
The RTC rendered its decision against the DOTC. It brushed aside
the defense of state immunity. Citing Ministerio v. Court of First
Instance11and Amigable v. Cuenca, it held that government
immunity from suit could not be used as an instrument to
perpetuate an injustice on a citizen.
The RTC held that as the lawful owners of the properties, the
respondent spouses enjoyed the right to use and to possess them
rights that were violated by the DOTCs unauthorized entry,
construction, and refusal to vacate.
ISSUE: Whether DOTC's Financial Lease Agreement with Digitel
was entered into in pursuit of its governmental functions to promote
and develop networks of communication systems and therefore, it
cannot be interpreted as a waiver of state immunity.
RULING: NO. The State may not be sued without its consent. This
fundamental doctrine stems from the principle that there can be no
legal right against the authority which makes the law on which the
right depends. This generally accepted principle of law has been
explicitly expressed in both the 1973 and the present Constitutions.
But as the principle itself implies, the doctrine of state immunity is
not absolute. The State may waive its cloak of immunity and the
waiver may be made expressly or by implication.
Over the years, the States participation in economic and
commercial activities gradually expanded beyond its sovereign
function as regulator and governor. The evolution of the States
activities and degree of participation in commerce demanded a
parallel evolution in the traditional rule of state immunity. Thus, it
became necessary to distinguish between the States sovereign
and governmental acts (jure imperii) and its private, commercial,
and proprietary acts (jure gestionis). Presently, state immunity
restrictively extends only to acts jure imperii while acts jure
gestionis are considered as a waiver of immunity.
SAAVEDRA
The Philippines recognizes the vital role of information and
communication in nation building. As a consequence, we have
adopted a policy environment that aspires for the full development
of communications infrastructure to facilitate the flow of information
into, out of, and across the country. To this end, the DOTC has
been mandated with the promotion, development, and regulation
of dependable and coordinated networks of communication.
The DOTC encroached on the respondents properties when it
constructed the local telephone exchange in Daet, Camarines
Norte. The exchange was part of the RTDP pursuant to the
National Telephone Program. We have no doubt that when the
DOTC constructed the encroaching structures and subsequently
entered into the FLA with Digitel for their maintenance, it was
carrying out a sovereign function. Therefore, we agree with the
DOTCs contention that these are acts jure imperii that fall within
the cloak of state immunity.
However, as the respondents repeatedly pointed out, this Court
has long established in Ministerio v CFI, Amigable v. Cuenca, the
2010 case Heirs of Pidacan v. ATO, and more recently in Vigilar v.
Aquino that the doctrine of state immunity cannot serve as an
instrument for perpetrating an injustice to a citizen.
The Constitution identifies the limitations to the awesome and near-
limitless powers of the State. Chief among these limitations are the
principles that no person shall be deprived of life, liberty, or
property without due process of law and that private property shall
not be taken for public use without just compensation. These
limitations are enshrined in no less than the Bill of Rights that
guarantees the citizen protection from abuse by the State.
Consequently, our laws require that the States power of eminent
domain shall be exercised through expropriation proceedings in
court. Whenever private property is taken for public use, it becomes
the ministerial duty of the concerned office or agency to initiate
expropriation proceedings. By necessary implication, the filing of a
complaint for expropriation is a waiver of State immunity.
If the DOTC had correctly followed the regular procedure upon
discovering that it had encroached on the respondents property, it
would have initiated expropriation proceedings instead of insisting
on its immunity from suit. The petitioners would not have had to
resort to filing its complaint for reconveyance. As this Court said in
Ministerio:
It is unthinkable then that precisely because there was a
failure to abide by what the law requires, the government
would stand to benefit. It is just as important, if not more
so, that there be fidelity to legal norms on the part of
officialdom if the rule of law were to be maintained. It is
not too much to say that when the government takes any
property for public use, which is conditioned upon the
payment of just compensation, to be judicially
ascertained, it makes manifest that it submits to the
jurisdiction of a court. There is no thought then that the
doctrine of immunity from suit could still be appropriately
invoked.
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POLITICAL LAW REVIEW CASES
We hold, therefore, that the Departments entry into and taking of
possession of the respondents property amounted to an implied
waiver of its governmental immunity from suit.
17. Republic v. Roque
FACTS: Gonzalo Roque, Jr. (Gonzalo), Manuela Almeda-Roque,
Eduvigis A. Paredes, Michael A. Paredes, Purification Almeda,
Jose A. Almeda, Michelle A. Almeda, Michael A. Almeda, Alberto
Delura, and Theresa Almeda (respondents), owned several
parcels of land with a total area of about 9,811 square meters,
located in Constitution Hills, Quezon City. Gonzalo represented the
respondents in the court proceedings.
In 1978, the Republic, through the Department of Public Works and
Highways (DPWH), approached the respondents and asked them
to sell a portion of the land at government-dictated prices lower
than the market value.6 The Republic was supposed to use the
land for President Marcos' National Government Center (NGC)
Project his plan to bring together the various national
government offices in one venue for greater efficiency and to create
additional areas for the expanding needs of the central government
and the people.
The respondents allege that several public hearings regarding the
sale took place between the Republic and the respondents; and
that during these meetings, the Republic made the following
representations:
First, the Republic guaranteed that although the respondents would
get paid a price much lower than the market value of the land, the
construction of the NGC Project would eventually enhance the
value of the surrounding portions of the land that they still own.
Second, the Republic assured the respondents that, in the remote
possibility that it abandons the project, they will have the right to
buy back the land.
The respondents further allege that they were reluctant to sell the
land, but felt compelled to do so because martial law was in force,
and they dared not resist a project of President Marcos. Thus,
relying on the Republic's representations, the respondents signed
the deeds of absolute sale.
The Register of Deeds cancelled the three certificates of title (TCT)
and issued six new titles. Three of these new titles were issued in
the Republic's name.
The Republic did not immediately take possession of all of the land
it had bought from the respondents; thus, the respondents
continued to occupy portions of the sold properties.
After several years, informal settlers began to occupy parts of the
land, and the respondents felt that the Republic was reneging on
its undertaking to develop the land into the NGC Project. Hence,
Gonzalo sent letters dated March 25, 1987, and September 23,
1988, to then DPWH Secretary Vicente R. Jayme (Jayme) offering
to buy back the properties.17 Gonzalo received no response.
SAAVEDRA
The respondents' suspicion was confirmed in December 2003.
Armando A. De Castro (De Castro), then undersecretary of the
Housing and Urban Development Coordinating Council (HUDCC),
wrote a letter to the respondents, requesting them to vacate all
portions of the sold land that they were still occupying, because the
government would use the properties for socialized housing
pursuant to Republic Act (R.A.) No. 9207.18chanrobleslaw
On August 23, 2004, Gonzalo wrote another letter to then HUDCC
Secretary Michael Defensor, offering to buy back the properties.19
He argued that the respondents have the right to repurchase the
properties after the Republic abandoned the NGC Project and
diverted the use of the properties to socialized housing.
Secretary Defensor allegedly found the respondents' position
reasonable and requested a feedback on the possibility of a
repurchase. However, the secretary was transferred to another
department and was unable to further address the situation.
Despite persistent follow-ups, the respondents failed to receive any
action from the Republic on this matter.
Realizing that the Republic had completely abandoned its initial
plan to use the land for the NGC Project, in 2005, the respondents
filed a complaint for the annulment of the sale of the properties on
the grounds of fraud, force, intimidation, or undue influence.24
They also asserted their right to buy back the properties at the
same price at which they sold them since the Republic failed to
develop the land according to the original purpose for which it was
"expropriated." Alternatively, they asked for the payment of
additional compensation in the amount of not less than Five Million
Pesos.
In their answer, the Republic and the HUDCC (defendants) argue
that: (1) they are immune from suit as government
instrumentalities; (2) they agreed to neither the respondents' right
to repurchase the properties in case the government abandons the
NGC Project nor a right to additional compensation in case the
respondents' remaining properties suffer a decrease in market
value; (3) the respondents were not forced, intimidated, or unduly
influenced to sell their properties to the government; and (4) even
assuming that any vice of consent attended the sale, the
respondents' action for the annulment of sale is barred by
prescription and laches.
ISSUE: Whether the Republic is immune from suit
RULING: NO. The Constitution provides that "the State may not be
sued without its consent." One instance when a suit is against the
State is when the Republic is sued by name, as in this case.
A suit against the State is allowed when the State gives its consent,
either expressly or impliedly. Express consent is given through a
statute while implied consent is given when the State enters into a
contract or commences litigation. Although not all contracts entered
into by the government operates as a waiver of its non-suability,
the Court held in the two cases below that the State effectively gave
its consent when it entered into contracts and committed breach.
In Santiago v. The Government of the Republic of the Philippines,
Ildefonso Santiago and his wife donated a parcel of land to the
Republic on the alleged condition that the latter would install
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POLITICAL LAW REVIEW CASES
lighting facilities and a water system and would build an office
building and parking lot on the property on or before December 7,
1974. Santiago filed a complaint for the revocation of the donation
due to the government's breach of the condition. The trial court
dismissed the case based on the State's non-suability. The Court
set aside the dismissal on certiorari, reasoning that the State's
consent to be sued is presumed when the State fails to comply with
the alleged terms of a deed of donation. It essentially held that the
Republic impliedly waived its immunity.
In Republic v. Sandiganbayan, the Court ruled that when the
Republic entered into a compromise agreement with a private
person, it stripped itself of its immunity from suit and placed itself
on the same level as its adversary. When the State enters into a
contract which creates mutual or reciprocal rights and obligations,
the State may be sued even without express consent. Its consent
to be sued is implied from its entry into the contract and the
Republic's breach grants the other party the right to enforce or
repudiate the contract.
In the present case, the Republic entered into deeds of sale with
the respondents to construct the NGC Project on the lots sold. To
facilitate the sale, the Republic created a negotiating team to
discuss the terms of the sale with the respondents. The latter
agreed to the negotiated sale on these alleged conditions: (a) that
they will have the right to repurchase the properties if the NGC
Project does not push through; and (b) that the NGC Project will
increase the market value of their remaining properties.
Following Santiago and Republic, the State's failure to abide by
these conditions constitutes the State's implied waiver of its
immunity. We reiterate that the doctrine of state immunity from suit
cannot serve to perpetrate an injustice on a citizen. If we rule
otherwise, we will be tolerating unfair dealing in contract
negotiation.
SUITS AGAINST GOVERNMENT AGENCIES
18. Buisan v. COA and DPWH
FACTS: The DPWH undertook the construction of the Liguasan
Cut-off hannel (Project) in Tunggol, Pagalungan, Maguindanao, to
minimize the perennial problem of flooding in the area. In April
2001, the DPWH received various claims from land owners for
damages allegedly caused to their properties, crops and
improvements by the premature opening of the Project. Hence, the
Regional Director (RD), DPWH Regional Office (R.O.) No. XII,
Cotabato City, investigated the claims.
The DPWH R.O. No. XII and the Technical Working Group (TWG)
recommended in 2004 to pay just compensation to the claimants.
The TWG, however, noted that since the event occurred in 1989, it
could not account physically the actual quantity of the damaged
crops and properties. In 2006, an ad hoc committee was created to
determine the legality and propriety of the claims. However, due to
the considerable lapse of time and the insufficiency of evidence, no
final resolution was made by the DPWH. The claims were
forwarded to the RD of the DPWH R.O. No. XII to be returned to
the claimants, as such are considered to be under the jurisdiction
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of the COA pursuant to Rule VIII of the 2009 Revised Rules of
Procedure of the COA.
On April 14, 2010, the petitioners, represented by Mayor Bai Annie
C. Montawal (Montawal), filed a petition with the COA, praying that
the DPWH be ordered to pay the petitioners the sum of
122,051,850.00 as compensation for their damaged crops,
properties and improvements. On September 16, 2010, Buisan
filed a Motion to Dismiss the Petition alleging that Montawal was
not authorized to represent them. In fact, Buisan and the other
claimants filed a separate petition with the COA based on that
same money claim.
In its Answer, the DPWH averred that the petitioners failed to
establish that they are the owners of crops and properties allegedly
damaged, and that the damage was caused by the construction of
the Project. Moreover, the DPWH asserted that the petitioners'
cause of action had already prescribed.
ISSUE: Whether COA gravely abused its discretion in finding that
the petitioners' claim was barred by laches and prescription.
RULING: NO. The Doctrine of Non-Suability of State insulates the
DPWH, a governmental entity, from claims of damages.
The fundamental law of the land provides that the State cannot be
sued without its consent. It is a fundamental postulate of
constitutionalism flowing from the juristic concept of sovereignty
that the State, as well as its government, is immune from suit
unless it gives its consent. The rule, in any case, is not absolute for
it does not say that the State may not be sued under any
circumstances. The doctrine only conveys that "the state may not
be sued without its consent;" its clear import then is that the State
may at times be sued. Suits filed against government agencies
may either be against incorporated or unincorporated agencies. In
case of incorporated agencies, its suability depends upon whether
its own organic act specifically provides that it can sue and be sued
in Court.
As the State's engineering and construction arm, the DPWH
exercises governmental functions that effectively insulate it from
any suit, much less from any monetary liability. The construction of
the Project which was for the purpose of minimizing the perennial
problem of flood in the area of Tunggol, Montawal, Maguindanao,
is well within the powers and functions of the DPWH as mandated
by the Administrative Code of 1997.
Hence, the Doctrine of Non-Suability clothes the DPWH from being
held responsible for alleged damages it performed in consonance
with its mandated duty. Nowhere does it appear in the petition that
the State has given its consent, expressly or impliedly, to be sued
before the courts. The failure to allege the existence of the State's
consent to be sued in the complaint is a fatal defect, and on this
basis alone, should cause the dismissal of the complaint.
Absent any showing that COA capriciously, arbitrarily or
whimsically exercised its discretion that would tantamount to
evasion of a positive duty or a virtual refusal to perform the duty or
to act at all in contemplation of law resulting to the prejudice of the
rights of the claimants, the Court believes that COA did not abuse,
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POLITICAL LAW REVIEW CASES
much less gravely, its discretion in denying the claims of the
petitioners.
Thus, the Court finds no grave abuse of discretion on the part of
COA in denying the petitioners' money claims for failure to present
substantial evidence to prove that their properties were damaged
by floods due to the premature opening of the Project of the DPWH.
Without a doubt, the inconsistencies and discrepancies in the
evidence presented by the petitioners backed by the findings of
COA lead only to one inescapable conclusion: that there is no
substantial evidence to prove the petitioners' claims that would
render the DPWH or the State liable for the amount claimed.
In the absence of grave abuse of discretion, the factual findings of
COA, which are undoubtedly supported by the evidence on record,
must be accorded great respect and finality. COA, as the duly
authorized agency to adjudicate money claims against government
agencies and instrumentalities has acquired special knowledge
and expertise in handling matters falling under its specialized
jurisdiction.
Finally, it is the general policy of the Court to sustain the decision
of administrative authorities, especially one that was
constitutionally created like herein respondent COA, not only on
the basis of the doctrine of separation of powers, but also of their
presumed expertise in the laws they are entrusted to enforce. It is,
in fact, an oft-repeated rule that findings of administrative agencies
are accorded not only respect but also finality when the decision
and order are not tainted with unfairness or arbitrariness that would
amount to grave abuse of discretion.
EXEMPTION FROM LEGAL REQUIREMENTS
19. SM Land, Inc. v. Bases Conversion and Development
Authority (March 8, 2015)
FACTS: Pursuant to Republic Act No. (RA) 7227 or the "Bases
Conversion and Development Act of 1992," the BCDA opened for
disposition and development its Bonifacio South Property, located
at Taguig City that was once used as the command center for the
country's military forces. Jumping on the opportunity, petitioner SM
Land, Inc. (SMLI) submitted to the BCDA an unsolicited proposal
for the development of the lot through a public-private joint venture
agreement. The proposal guaranteed the BCDA secured payments
amounting to PhP 15,985/sqm or a total of PhP 8.1 billion.
The initial proposal was followed by a second one with guaranteed
secured payments totaling PhP 20 billion. However, SMLI
submitted its third unsolicited proposal with guaranteed secured
payments amounting to a total of PhP 22.6 billion.
The BCDA created a Joint Venture Selection Committee (JV-SC)
following the procedures prescribed under Annex "C" of the
Detailed Guidelines for Competitive Challenge Procedure for
Public Private Joint Ventures (NEDA JV Guidelines) promulgated
by the National Economic Development Authority(NEDA). The said
committee recommended the acceptance of the unsolicited
proposal, which recommendation was favorablyacted upon by the
BCDA. The BCDA communicated to petitioner its acceptance of the
unsolicited proposal. Despite its acceptance, however, the BCDA
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clarified that its act should not be construed to bind the agency to
enter into a joint venture agreement with the petitioner but only
constitutes an authorization granted to the JV-SC to conduct
detailed negotiations with petitioner SMLI and iron out the terms
and conditions of the agreement.
Pursuant to this authorization, the JV-SC and SMLI embarked on
a series of detailed negotiations, and on July 23, 2010, SMLI
submitted its final revised proposal with guaranteed secured
payments amounting to a total of PhP 25.9 billion. Afterwards, upon
arriving at mutually acceptable terms and conditions, a Certification
of Successful Negotiations (Certification) was issued by the BCDA
and signed by both parties on August 6, 2010. Through the said
Certification, the BCDA undertook to "subject SMLIs Original
Proposal to Competitive Challenge pursuant to Annex C" and
committed itself to "commence the activities for the solicitation for
comparative proposals."
In an attempt to comply with its obligations, the BCDA prepared for
the conduct of a Competitive Challenge to determine whether or
not there are other Private Sector Entities (PSEs) that can match
the proposal of SMLI, and concurrently ensure that the joint venture
contract will be awarded to the party that can offer the most
advantageous terms in favor of the government. In furtherance
thereof, the agency issued Terms of Reference (TOR), which
mapped out the procedure to be followed in connection with the
Competitive Challenge. Consequently, SMLI was required, as it
did, to post a proposalsecurity in the amount of PhP 187 million,
following the prescribed procedure outlined in the TOR and the
NEDA JV Guidelines.
Afterwards, the BCDA set the Pre-eligibility Conference on
September 3, 2010. Invitations to apply for eligibility and to submit
comparative proposals were then duly published on August 12, 16
and 20, 2010. Hence, the pre-eligibility conference was conducted
as scheduled. The companies that participated in the conference
included SMLI, as the Original Proponent, and three (3) PSEs,
namely Ayala Land, Inc., Rockwell Land Corp., and Filinvest Land,
Inc.
On Ayala Land, Inc.s request, the deadline for submission of
Eligibility Documents was scheduled on October 20, 2010 through
Supplemental Notice No. 1. However, the deadline was again
moved to November 19, 2010 to allow the BCDA, in conjunction
with other national agencies, to resolve issues concerning the
relocation and replication of facilities located in the subject
property.For this purpose, the BCDA issued Supplemental Notice
No. 2.
Following a conference, the BCDA, on November 18, 2010, issued
Supplemental Notice No. 3, again rescheduling the submission
deadline this time to an unspecified future date "pending final
results of the policy review by the Office of the President on the
lease versus joint venture/sale mode and other issues."
Henceforth, the BCDA repeatedly postponed the deadline of
eligibility requirements untiltwo (2) years have already elapsed
from the signing of the Certification without the Competitive
Challenge being completed.
Then, instead of proceeding withthe Competitive Challenge, the
BCDA addressed a letter to Jose T. Gabionza, Vice President of
 23
POLITICAL LAW REVIEW CASES
SMLI, stating that it will welcome any "voluntary and unconditional
proposal" to improve the original offer, with the assurance that the
BCDA will nonetheless respect any right which may have accrued
in favor of SMLI. SMLI, through a letter dated December 22, 2011,
replied by increasing the total secured payments to PhP 22.436
billion in over fifteen (15) years with an upfront payment of PhP 3
billion. SMLI likewise proposed to increase the net present value of
the property to PhP 38,500.00/sqm. With this accelerated terms of
payment, the total inflow to be received by the BCDA from the
project after five (5) years would amount to PhP 9.289 billion. In the
same letter, SMLI clarified that its improved offer is tendered on
reliance of the BCDAs previous commitment to respect SMLIs
status as the Original Proponent.
Without responding to SMLIs new proposal, the BCDA sent a
memorandum to the Office of the President (OP) dated February
13, 2012, categorically recommending the termination of the
Competitive Challenge. The memorandum, in part, reads:
In view of the foregoing, may we respectfully recommend the
Presidents approval for BCDA to terminate the proceedings for the
privatization and development of the BNS/PMC/ASCOM/SSU
Properties in Bonifacio South through Competitive Challenge and
proceed with the bidding of the property.
Alarmed by this development, SMLI, in a letter dated August 10,
2012, urged the BCDA to proceed with the Competitive Challenge
as agreed upon. However, the BCDA, via the assailed
Supplemental Notice No. 5, terminated the Competitive Challenge
altogether.
For reconsideration is the Decision of this Court dated August 13,
2014, which granted the petition for certiorari filed by SM Land, Inc.
(SMLI) and directed respondent Bases Conversion Development
Authority (BCDA) and its president to, among other things, subject
SMLIs duly accepted unsolicited proposal for the development of
the Bonifacio South Property to a competitive challenge.
ISSUE: Whether BCDA and SMLI have a contract that would
bestow upon the latter the right to demand that its unsolicited
proposal be subjected to a competitive challenge. Assuming
arguendo the existence of such an agreement between the parties,
respondents contend that the same may be terminated by reasons
of public interest.
RULING: YES. Article 1305 of the New Civil Code defines a
contract as a meeting of minds between two persons whereby one
binds himself, with respect to the other, to give something or to
render some service. It is a juridical convention manifested in
legal form, by virtue of which one or more persons bind themselves
in favor of another or others, or reciprocally, to the fulfilment of a
prestation to give, to do, or not to do. The succeeding Article 1318
of the Code lays down the essential requisites of a valid contract,
to wit:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract; and
(3) Cause of the obligation which is established.
In the case at bar, there is, between BCDA and SMLI, a perfected
contracta source of rights and reciprocal obligations on the part
SAAVEDRA
of both parties. Consequently, a breach thereof may give rise to a
cause of action against the erring party.
The first requisite, consent, is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are
to constitute the contract.2In the case at bar, when SMLI submitted
the first Unsolicited Proposal to BCDA on December 14, 2009, the
submission constituted an offer to undertake the development of
the subject property. BCDA then entered into negotiations with
SMLI until the BCDA finally accepted the terms of the final
unsolicited proposal.3 Their agreement was thereafter reduced into
writing through the issuance of the Certification of Successful
Negotiations where the meeting of the parties minds was reflected.
Cause, on the other hand, is the essential reason which moves the
parties to enter into the contract. It is the immediate, direct and
proximate reason which justifies the creation of an obligation
through the will of the contracting parties. Complementing this is
Article 1350 of the New Civil Code which provides that [i]n onerous
contracts the cause is understood to be, for each contracting party,
the prestation or promise of a thing or service by the other. As
such, the cause of the agreement in the case at hand is their
interest in the sale or acquisition and development of the property
and their undertaking to perform their respective obligations,
among others, as reflected in the Certificate of Successful
Negotiations and in the Terms of Reference (TOR) issued by
BCDA.
Lastly, object certain refers to the subject matter of the contract. It
is the thing to be delivered or the service to be performed.6 Here,
when the BCDA Board issued, on August 6, 2010, the Certification
of Successful Negotiations, it not only accepted SMLIs Unsolicited
Proposal and declared SMLI eligible to enter into the proposed JV
activity. It also agreed to subject [SMLI]s Original Proposal to
Competitive Challenge pursuant to Annex C [of the NEDA JV
Guidelines], which competitive challenge process shall be
immediately implemented following the [TOR] Volumes 1 and 2.8
Moreover, said Certification provides that the BCDA shall, thus,
commence the activities for the solicitation for comparative
proposals xxx starting on August 10, 2010, on which date [SMLI]
shall post the required Proposal Security xxx.9cralawred
The elements of a valid contract being present, there thus exists
between SMLI and BCDA a perfected contract, embodied in the
Certification of Successful Negotiations, upon which certain rights
and obligations spring forth, including the commencement of
activities for the solicitation for comparative proposals.
This agreement is the law between the contracting parties with
which they are required to comply in good faith. Verily, it is BCDAs
subsequent unilateral cancellation of this perfected contract which
this Court deemed to have been tainted with grave abuse of
discretion. BCDA could not validly renege on its obligation to
subject the unsolicited proposal to a competitive challenge in view
of this perfected contract, and especially so after BCDA gave its
assurance that it would respect the rights that accrued in SMLIs
favor arising from the same.
Aside from the agreement between the parties, the ruling in favor
of SMLI is likewise based on the NEDA JV Guidelines. As
mandated by the rules, the Joint Venture activity, upon the
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POLITICAL LAW REVIEW CASES
successful completion of the detailed negotiation phase, shall be
subjected to a competitive challenge. While it is not disputed that
respondents failed to comply with the pertinent provisions of the
NEDA JV Guidelines, the dissent postulates that it is justifiable
since it is a mere guideline and not law.
We regretfully disagree.
Under the Administrative Code of 1987, acts of the President
providing for rules of a general or permanent character in
implementation or execution of constitutional or statutory powers
shall be promulgated in Executive Orders (EOs). In other words, it
is through these orders that the President ensures that laws are
faithfully executed, by handing out instructions to subordinate
executive officials and the public, in the form of implementing rules
and regulations, on how the law should be executed by subordinate
officials and complied with by the public.
For government contracts and procurement in the Philippines, then
President Gloria Macapagal-Arroyo, adopting the recommendation
of the NEDA, issued EO 109 on May 27, 2002. As its title indicates,
EO 109 streamlined the rules and procedures on the review and
approval of all contracts of departments, bureaus, offices and
agencies of the government, including government-owned and
controlled corporations and their subsidiaries. This executive
issuance was, however, later amended by EO 109-A, to conform
to RA 9184 which was enacted barely two months after the
issuance of EO 109. Two years later, or on April 30, 2005, EO 423
was issued, repealing EO 109-A, and simplifying the procurement
process. Section 4 of EO 423 was later amended by EO 645.
Amidst the changes effected on procurement rules, the NEDAs
duty to issue a JV Guidelines under the said executive orders
remained unaffected. Through Section 5 of EO 109, Section 8 of
EO 109-A and now Section 8 of EO 423, the President effectively
delegated her inherent executive power to issue rules and
regulations on procurement to her subordinate executive officials,
her alter egos.
Section 8. Joint Venture Agreements. The NEDA, in
consultation with the GPPB, shall issue guidelines
regarding joint venture agreements with private entities
with the objective of promoting transparency,
competitiveness, and accountability in government
transactions, and, where applicable, complying with the
requirements of an open and competitive public bidding.
Pursuant to said repeated directives from no less than the Chief
Executive, the NEDA issued the JV Guidelines providing the
procedures for the coagulation of joint ventures between the
government and a private entity. In this regard, attention must be
drawn to the well-established rule that administrative issuances,
such as the NEDA JV Guidelines, duly promulgated pursuant to the
rule-making power granted by statute, have the force and effect of
law.
As elucidated in the August 13, 2014 Decision:
x x x Being an issuance in compliance with an executive
edict, the NEDA JV Guidelines, therefore, has the same
binding effect as if it were issued by the President
SAAVEDRA
himself, who parenthetically is a member of NEDA. As
such, no agency or instrumentality covered by the JV
Guidelines can validly deviate from the mandatory
procedures set forth therein, even if the other party
acquiesced therewith or not.
On this point, it is well to emphasize that the TOR containing the
said provisions details the requirements for eligibility to qualify as a
PSE that may submit its technical and financial proposals for the
JV, and does not encompass the entire Swiss Challenge
procedure. This is bolstered by the provisions perfect consonance
with the procedure for Stage Three per Annex C of the Guidelines.
Pursuant to the above-quoted provisions from the NEDA JV
Guidelines, the interested PSEs, in order to be able to participate
in the competitive challenge, must first post their respective
proposal securities before submitting their comparative proposals
for evaluation and consideration. Consequently, per the
reservation clause, should the government entity (GE) decide to
make material changes in the TORs issued, it must do so before it
accepts the comparative proposals from the interested PSEs. This
deadline is intended to protect the participating PSEs from
alterations in the benchmarks set forth in the TOR after their
proposals have already been seen and reviewed by the GE.
Furthermore, should modifications be validly made, such may
affect the computation for the amount of the proposal security to be
posted by the comparative proponents, hence the need for the GE
to return the PSEs proposal securities should it decide to pre-
terminate the competitive challenge.
As to SMLIs proposal security, suffice it to state that it is not
covered by the clauseshence will not be returned even if the
competitive challenge is terminatedbecause SMLI cannot be
considered as a PSE within the context of the TOR and the JV
Guidelines.
It must be emphasized that while an Original Proponent necessarily
comes from the private sector, the term Private Sector Entity has
a definite meaning in the Swiss Challenge procedure. Under the
TOR, a Private Sector Entity means the party/ies that shall have
submitted proposals in compliance with the requirements specified
in Article V, Volume 1 of these TOR for the privatization and
development of the property. On the other hand, under the same
document, an Original Proponent means SMLI, whose
unsolicited proposal for the development and privatization of [the]
subject Property through JV with BCDA has been accepted by the
latter, subject to certain conditions, and is now being subjected to
a competitive challenge.
To be sure, the Original Proponent, as duly noted in the assailed
Decision herein, is bestowed several rights under the JV
Guidelines, including the right to the conduct and completion of a
competitive challenge and the right to match a superior or more
advantageous offer, among others. As such, it is clear that SMLI,
being the Original Proponent, cannot be considered as a Private
Sector Entity to which the reservation clause applies.
Moreover, pertinent to our reading of the above-cited provisions in
the TOR is Article 1373 of the Civil Code, which provides that [i]f
some stipulation of any contract should admit of several meanings,
it shall be understood as bearing that import which is most
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POLITICAL LAW REVIEW CASES
adequate to render it effectual. For this purpose, an interpretation
which renders every word operative is preferred over that which
makes some words idle and nugatory.
Applying the doctrine in the case at bar, a contrary readingthat
the adverted provisions in the TOR entitle BCDA to cancel the
entire Swiss Challengewould violate the NEDA JV Guidelines,
which, as earlier explained, has the force and effect of law.
20. SM Land, Inc. v. Bases Conversion and Development
Authority (September 7, 2015)
Once again, respondent-movants Bases Conversion
Development Authority (BCDA) and Arnel Paciano D. Casanova,
Esq. (Casanova) urge this Court to reconsider its August 13, 2014
Decision in the case at bar. In their Motion for Leave to file Second
Motion for Reconsideration and to Admit the Attached Second
Motion for Reconsideration (With Motion for the Court en banc to
Take Cognizance of this Case and/to Set the Case for Oral
Argument Before the Court en banc), respondent-movants remain
adamant in claiming that the assailed rulings of the Court would
cause unwarranted and irremediable injury to the government,
specifically to its major beneficiaries, the Department of National
Defense (DND) and the Armed Forces of the Philippines (AFP).
The instant recourse partakes the nature of a second motion for
reconsideration, a prohibited pleading under Section 2, Rule 56, in
relation to Sec. 2, Rule 52 of the Rules of Court. The rule
categorically states: "no second motion for reconsideration of a
judgment or final resolution by the same party shall be entertained."
To recapitulate, there exists between SMLI and BCDA a perfected
agreement, embodied in the Certification of Successful
Negotiations, upon which certain rights and obligations spring forth,
including the commencement of activities for the solicitation for
comparative proposals.
NOW, THEREFORE, for and in consideration of the
foregoing, BCDA and SMLI have, after successful
negotiations pursuant to Stage II of Annex C x x x.
reached an agreement on the purpose, terms and
conditions on the JV development of the subject
property, which shall become the terms for the
Competitive Challenge pursuant to Annex C of the
Guidelines, x x x.
xxxx
BCDA and SMLI have agreed to subject SMLI's Original
Proposal to Competitive Challenge pursuant to Annex C
- Detailed Guidelines for Competitive Challenge
Procedure for Public-Private Joint Ventures of the NEDA
.TV guidelines, which competitive challenge process
shall be immediately implemented following the Terms of
Reference (TOR) Volumes 1 and 2.12 (emphasis added)
Under the agreement and the National Economic Development
Authority Joint Venture Guidelines (NEDA JV Guidelines), the
BCDA is duty-bound to proceed with and complete the competitive
challenge after the detailed negotiations proved successful. Thus,
the Court found that BCDA gravely abused its discretion for having
SAAVEDRA
acted arbitrarily and contrary to its contractual commitment to
SMLI, to the damage and prejudice of the latter, when it cancelled
the competitive challenge prior to its completion.
Respondent-movants' reliance on the Terms of Reference (TOR)
provision on Qualifications and Waivers to cancel the Swiss
Challenge is misplaced for the provision, as couched, focuses only
on the eligibility requirements for Private Sector Entities (PSEs)
who wish to challenge SMLI's proposal, and not to the Swiss
Challenge in its entirety.15 To rule otherwise - that the TOR allows
the BCDA to cancel the competitive challenge at any time - would
contravene the NEDA JV Guidelines, which has the force and
effect of law.
Respondent-movants cannot also find solace in the dictum that the
State is never be barred by estoppel by the perceived mistakes or
errors of its officials or agents. As jurisprudence elucidates, the
doctrine is subject to exceptions, viz:
Estoppels against the public are little favored. They
should not be invoked except in a rare and unusual
circumstances, and may not be invoked where they
would operate to defeat the effective operation of a policy
adopted to protect the public. They must be applied with
circumspection and should be applied only in those
special cases where the interests of justice clearly
require it. Nevertheless, the government must not be
allowed to deal dishonorably or capriciously with its
citizens, and must not play an ignoble part or do a
shabby thing; and subject to limitations x x x, the doctrine
of equitable estoppel may be invoked against public
authorities as well as against private individuals.
Here, despite BCDA's repeated assurances that it would respect
SMLFs rights as an original proponent, and after putting the latter
to considerable trouble and expense, BCDA went back on its word
and instead ultimately cancelled its agreement with SMLI. BCDA's
capriciousness became all the more evident in its conflicting
statements as regards whether or not SMLI's proposal would be
advantageous to the government. The alleged dubiousness of the
proceeding that led to the perfection of the agreement cannot also
be invoked as a ground to cancel the contract for to rule that
irregularities marred the actions of BCDA's former board and
officers, as respondent-movant would have us to believe, would be
tantamount to prematurely exposing them, who are non-parties to
this case, to potential administrative liability without due process of
law.
Respondent-movants would then asseverate that to proceed with
the competitive challenge starting at the floor price of P38,500.00
per square meter is patently unjust and grossly disadvantageous
to the government since the property in issue is allegedly appraised
at P78,000.00 per square meter. However, this alleged adverse
economic impact on the government, in finding for SMLI, remains
speculative. To clarify, Our ruling did not award the project in
petitioner's favor but merely ordered that SMLI's proposal be
subjected to a competitive challenge. And lest it be misunderstood,
the perceived low floor price for the project, based on SMLI's
proposal, remains just that - a floor price. Without first subjecting
SMLI's proposal to a competitive challenge, no bid can yet be
obtained from private sector entities and, corollarily, no
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POLITICAL LAW REVIEW CASES
determination can be made at present as to whether or not the final
bid price for the project is indeed below the property's fair market
value.
Overall, the foregoing goes to show that the BCDA failed to
establish a justifiable reason for its refusal to proceed with the
competitive challenge. We are left to believe that the cancellation
of the competitive challenge, in violation not only of the agreement
between the parties but also of the NEDA JV Guidelines, was only
due to BCDA's whims and caprices, and is correctible by the
extraordinary writ of certiorari.
With the foregoing disquisitions, respondent-movants' second
motion for reconsideration, as its first, is totally bereft of merit.
There exists no argument "in the higher interest of justice" that
would convincingly compel this Court to even admit the prohibited
pleading. It also then goes without saying that this Division does
not find cogent reason to elevate the matter to the Court en banc.
Furthermore, it is well to note that the Court's ruling in this case has
already attained finality and an Entry of Judgment has
correspondingly been issued. The Court, therefore, no longer has
jurisdiction to modify the Decision granting SMLI's petition for its
finality and executoriness consequently rendered it immutable and
unalterable.
The only exceptions to the rule on the immutability of final
judgments are (1) the correction of clerical errors, (2) the so-called
nunc pro tunc entries which cause no prejudice to any party, and
(3) void judgments. Respondent-movants, therefore, question the
validity of the Court's Third Division's rulings and postulate that a
deliberation of the case by the Court en banc is warranted under
Sec. 4(2), Article VIII, of the 1987 Constitution.
In support of their contention, respondent-movants cite the 1953
case of Ykalina v. Oricio, which held that a presidential order may
either be in a written memorandum or merely verbal. They then
argue that the issuance of Supplemental Notice No. 5, effectively
cancelling the Swiss Challenge of petitioner's duly accepted suo
moto proposal, was pursuant to a verbal presidential order or
instruction. And pursuant to the constitutional provision, the
challenge against this presidential directive, so respondent-
movants insist, is within the jurisdiction of Court en banc, not with
its divisions.
We disagree.
Respondent-movants' interpretation of the antiquated 1953
doctrine in Ykalina is highly distorted. In the said case, the Court,
finding for respondent Ananias Oricio (Oricio), sustained his
appointment in spite of having been merely verbally made. As held:
While the appointment of an officer is usually evidenced by a
Commission, as a general rule it is not essential to the validity of
an appointment that a commission issue, and an appointment may
be made by an oral announcement of his determination by the
appointing power.
Based on the Court's reasoning, the presidential order that "may
either be in a written memorandum or merely verbal " adverted to
in Ykalina should therefore be understood as limited specifically to
SAAVEDRA
those pertaining to appointments. Current jurisprudence, however,
no longer recognizes the validity of oral appointments and, in fact,
requires the transmission and receipt of the necessary appointment
papers for their completion.
To further distinguish Ykalina with the extant case, it was observed
in the former that Oricio's verbal appointment was established in
evidence by a communication duly signed by the then Acting
Executive Secretary "by order of the President." Applied in modern
day scenarios, the limited application of the Ykalina doctrine should
only govern those that were similarly verbally given by the
president but were, nevertheless, attested to by the Executive
Secretary. This is in hew with Section 27 (10) of Book III, Title III,
Chapter 9-B of Executive Order No. 292 (EO 292), otherwise
known as the Administrative Code of 1987, which empowers the
Executive Secretary to attest executive orders and other
presidential issuances "by authority of the President." These
"executive orders and presidential issuances," in turn, relate to the
enumeration under Book III, Title I, Chapter 2 of EO 292.
Here, it is well to recall that the President did not issue any said
executive order or presidential issuance in intimating to the BCDA
that he wishes for the competitive challenge to be cancelled. There
was no document offered that was signed by either the Chief
Executive or the Executive Secretary, for the President, to that
effect. The situation, therefore, does not involve a presidential
order or instruction within the contemplation of Sec. 4(2), Article
VIII of the Constitution, and, consequently, does not fall within the
jurisdiction of the Court en banc. Given the glaring differences in
context, the doctrine in Ykalina cannot find application herein, and
cannot operate to divest the Court's division of its jurisdiction over
the instant case.
Anent the joint motion for intervention filed by the DND and AFP,
both agencies claimed therein that they are the statutory
beneficiaries of the proceeds from the conversion, development,
and disposal of the camps transferred to BCDA, which include the
subject property. These expected proceeds that would redound to
their benefit are to be applied in funding the AFP Modernization
Program as per Republic Act No. (RA) 7227 as amended by RA
10349.38 As such, so the applicants claim, they have legal and
financial interests and stakes in the outcome of the subject matter,
and should, therefore, be allowed to intervene.
The argument does not hold merit.
Nevertheless, We underscore Our finding that "the government is
not without protection for it is not precluded from availing of
safeguards and remedies it is entitled to after soliciting comparative
proposals, as provided under the TOR and the NEDA JV
Guidelines". Indeed, there are sufficient safeguards installed in the
guidelines to ensure that the government will not be in the losing
end of the agreement; enough, in fact, to avoid the dreaded
"unwarranted, irreparable injury" that it will allegedly sustain. If only
respondent-movants devoted sufficient time in perusing and
reviewing the NEDA JV guidelines, they would have identified the
remedies BCDA, and ultimately the Philippine government, is
entitled to that would have dispelled any apprehension towards
conducting the competitive challenge, and any fear of the
government ending up with a low price for the lot.
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POLITICAL LAW REVIEW CASES
21. Republic v. Mega Pacific E-Solutions, Inc.
The full implementation of the automation contract was
rendered impossible by the fact that, after a painstaking legal
battle, this Court in its 2004 Decision declared the contract null and
void.6 We held that the COMELEC committed a clear violation of
law and jurisprudence, as well as a reckless disregard of its own
bidding rules and procedure. In addition, the COMELEC entered
into the contract with inexplicable haste, and without adequately
checking and observing mandatory financial, technical, and legal
requirements. In a subsequent Resolution, We summarized the
COMELEC's grave abuse of discretion as having consisted of the
following:
1. By a formal Resolution, it awarded the project to "Mega Pacific
Consortium," an entity that had not participated in the bidding.
Despite this grant, Comelec entered into the actual Contract with
"Mega Pacific eSolutions, Inc." (MPEI), a company that joined the
bidding process but did not meet the eligibility requirements.
2. Comelec accepted and irregularly paid for MPEI's ACMs that had
failed the accuracy requirement of 99.9995 percent set up by the
Comelec bidding rules. Acknowledging that this rating could have
been too steep, the Court nonetheless noted that "the essence of
public bidding is violated by the practice of requiring very high
standards or unrealistic specifications that cannot be met, x x x
only to water them down after the award is made. Such scheme,
which discourages the entry of bona fide bidders, is in fact a sure
indication of fraud in the bidding, designed to eliminate fair
competition."
3. The software program of the counting machines likewise failed
to detect previously downloaded precinct results and to prevent
them from being reentered. This failure, which has not been
corrected x x x, would have allowed unscrupulous persons to
repeatedly feed into the computers the results favorable to a
particular candidate, an act that would have translated into massive
election fraud by just a few key strokes.
4. Neither were the ACMs able to print audit trails without loss of
data - a mandatory requirement under Section 7 of Republic Act
No. 8436. Audit trails would enable the Comelec to document the
identities of the ACM operators responsible for data entry and
downloading, as well as the times when the various data were
processed, in order to forestall fraud and to identify the
perpetrators. The absence of audit trails would have posed a
serious threat to free and credible elections.
5. Comelec failed to explain satisfactorily why it had ignored its own
bidding rules and requirements. It admitted that the software
program used to test the ACMs was merely a "demo" version, and
that the final one to be actually used in the elections was still being
developed. By awarding the Contract and irregularly paying for the
supply of the ACMs without having seen --much less, evaluated --
the final product being purchased, Comelec desecrated the law on
public bidding. It would have allowed the winner to alter its bid
substantially, without any public bidding. All in all, Comelec
subverted the essence of public bidding: to give the public an
opportunity for fair competition and a clear basis for a precise
comparison of bids.8 (Emphasis supplied) As a consequence of the
nullification of the automation contract, We directed the Office of
the Ombudsman to determine the possible criminal liability of
SAAVEDRA
persons responsible for the contract.9 This Court likewise directed
the Office of the Solicitor General to protect the government from
the ill effects of the illegal disbursement of public funds in relation
to the automation contract.
We stress once again that the Contract entered into by the
Comelec for the supply of the ACMs was declared VOID by the
Court in its Decision, because of clear violations of law and
jurisprudence, as well as the reckless disregard by the Commission
of its own bidding rules and procedure. In addition, the poll body
entered into the Contract with inexplicable haste, without
adequately checking and observing mandatory financial, technical
and legal requirements. As explained in our Decision, Comclec's
gravely abusive acts consisted of the following: xx xx To muddle
the issue, Comelec keeps on saying that the "winning" bidder
presented a lower price than the only other bidder. It ignored the
fact that the whole bidding process was VOID and FRAUDULENT.
How then could there have been a "winning" bid?
22. Republic v. Galeno
FACTS: Respondent Carmen Santorio Galeno (respondent) filed
a petition6 for correction of the area of Lot No. 2285 covered by
OCT No. 46417, Dingle Cadastre (subject property) before the
RTC. She alleged therein that she is one of the co-owners of the
subject property by virtue of a Deed of Sale dated July 6, 1962. The
survey and subdivision of the subject property was duly approved
by the Department of Environment and Natural Resources (DENR)
per its Approved Subdivision Plan of Lot No. 2285.
Respondent further alleged that when she and her co-owners had
the subject property resurveyed for the purpose of partition, they
discovered a discrepancy in the land area of the subject property
as appearing in OCT No. 46417, in that the title reflects an area of
20,948 square meters, while the Certification issued by the DENR
Office of the Regional Technical Director, Lands Management
Services, shows an area of 21,298 square meters. Hence, she
sought to correct the area of the subject property in order to avoid
further confusion, and claimed to have notified the adjoining
owners.
There being no opposition to the petition, the RTC allowed the
presentation of respondent's evidence ex parte before the Branch
Clerk as well as for the satisfaction of the jurisdictional
requirements.
The RTC granted the petition upon a finding that respondent was
able to substantiate the allegations in her petition to warrant a
correction of the area of the subject property. Hence, it directed the
Register of Deeds of the Province of Iloilo to correct such area in
OCT No. 46417 from 20,948 to 21,298 square meters.
Petitioner Republic of the Philippines (petitioner), through the
Office of the Solicitor General (OSG), filed a motion for
reconsideration claiming that the adjoining owners had not been
notified, stressing that such notice is a jurisdictional requirement.
In the Order16 dated January 22, 2007, the RTC denied the
motion, finding that a Notice of Hearing17 was sent to the adjoining
owners. As such, respondent was able to prove compliance with
the said jurisdictional requirement. The CA affirmed the RTC Order.
 28
POLITICAL LAW REVIEW CASES
ISSUE: Whether or the CA erred in upholding the correction of the
area of the subject property in OCT No. 46417.
RULING: YES. A scrutiny of the evidence marked and formally
offered by respondent before the court a quo shows that the former
failed to prove that there was sufficient basis to allow the correction
of the area of the subject property in OCT No. 46417 from 20,948
square meters to 21,248 square meters.
Unfortunately, the foregoing documentary evidence are not
sufficient to warrant the correction prayed for. The Court cannot
accord probative weight upon them in view of the fact that the public
officers who issued the same did not testify in court to prove the
facts stated therein.
In Republic v. Medida, the Court held that certifications of the
Regional Technical Director, DENR cannot be considered prima
facie evidence of the facts stated therein, holding that:
Public documents are defined under Section 19, Rule 132 of the
Revised Rules on Evidence as follows:
(a) The written official acts, or records of the official acts
of the sovereign authority, official bodies and tribunals,
and public officers, whether of the Philippines, or of a
foreign country;chanrobleslaw
(b) Documents acknowledged before a notary public
except last wills and testaments; and
(c) Public records, kept in the Philippines, of private
documents required by law to be entered therein.
Applying Section 24 of Rule 132, the record of public
documents referred to in Section 19(a), when admissible
for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer
having legal custody of the record, or by his deputy x x
x.
Section 23, Rule 132 of the Revised Rules on Evidence provides:
"Sec. 23. Public documents as evidence. - Documents
consisting of entries in public records made in the
performance of a duty by a public officer are prima facie
evidence of the facts stated therein. All other public
documents are evidence, even against a third person, of
the fact which gave rise to their execution and of the date
of the latter."
The CENRO and Regional Technical Director, FMS-DENR,
certifications [do] not fall within the class of public documents
contemplated in the first sentence of Section 23 of Rule 132. The
certifications do not reflect "entries in public records made in the
performance of a duty by a public officer," such as entries made by
the Civil Registrar in the books of registries, or by a ship captain in
the ship's logbook. The certifications are not the certified copies or
authenticated reproductions of original official records in the legal
custody of a government office. The certifications are not even
records of public documents. x x x
SAAVEDRA
As such, sans the testimonies of Acevedo, Caballero, and the other
public officers who issued respondent's documentary evidence to
confirm the veracity of its contents, the same are bereft of probative
value and cannot, by their mere issuance, prove the facts stated
therein. At best, they may be considered only as prima facie
evidence of their due execution and date of issuance but do not
constitute prima facie evidence of the facts stated therein.
Besides, case law states that the "absence of opposition from
government agencies is of no controlling significance because the
State cannot be estopped by the omission, mistake or error of its
officials or agents. Neither is the Republic barred from assailing the
decision granting the petition for reconstitution [or correction of title,
as in this case] if, on the basis of the law and the evidence on
record, such petition has no merit." Moreover, "in civil cases, the
party having the burden of proof must produce a preponderance of
evidence thereon, with plaintiff having to rely on the strength of his
own evidence and not upon the weakness of the defendant's."
In fine, the Court holds that respondent did not present any
competent evidence to prove that the true and correct area of the
subject property is 21,298 square meters instead of 20,948 square
meters to warrant a correction thereof in OCT No. 46417.
Accordingly, respondent's petition for the correction of the said
Certificate of Title must be denied, and the present petition be
granted.
23. Commissioner of Internal Revenue v. San Miguel
Corp.
FACTS: These consolidated cases consider whether "San Mig
Light" is a new brand or a variant of one of San Miguel
Corporation's existing beer brands, and whether the Bureau of
Internal Revenue may issue notices of discrepancy that effectively
changes "San Mig Light" 's classification from new brand to variant.
The issues involve an application of Section 143 of the 1997
National Internal Revenue Code (Tax Code), as amended, on the
definition of a variant, which is subject to a higher excise tax rate
than a new brand. This case also applies the requirement in Rep.
Act No. 9334 that reclassification of certain fermented liquor
products introduced between January 1, 1997 and December 31,
2003 can only be done by an act of Congress.
Virgilio S. De Guzman (De Guzman), San Miguel Corporation's
Former Assistant Vice President for Finance, wrote the Bureau of
Internal Revenue Excise Tax Services Assistant Commissioner
Leonardo B. Albar (Assistant Commissioner Albar) to request the
registration of and authority to manufacture "San Mig Light," to be
taxed at P12.15 per liter. The letter dated October 27, 1999 granted
this request.
De Guzman advised Assistant Commissioner Albar that "San Mig
Light" would be sold at a suggested net retail price of P21.15 per
liter or P6.98 per bottle, less value-added tax and specific tax. "San
Mig Light" would also be classified under "Medium Priced Brand"
to be taxed at P9.15 per liter.
Alfredo R. Villacorte (Villacorte), San Miguel Corporation's Vice
President and Manager of the Group Tax Services, wrote the
Bureau of Internal Revenue Chief of the Large Taxpayers
 29
POLITICAL LAW REVIEW CASES
Assistance Division II (LTAD II) to request information on the tax
rate and classification of "San Mig Light" and another beer product
named "Gold Eagle King."
LTAD II Acting Chief Conrado P. Item replied to Villacorte's letter.
He confirmed that based on the submitted documents, San Miguel
Corporation was allowed to register, manufacture, and sell "San
Mig Light" as a new brand, had been paying its excise tax for a
considerable length of time, and that the tax classification and rate
of "San Mig Light" as a new brand were in order.
Edwin R. Abella (Assistant Commissioner Abella), Bureau of
Internal Revenue Large Taxpayers Service Assistant
Commissioner, issued a Notice of Discrepancy against San Miguel
Corporation. The Notice stated that "San Mig Light" was a variant
of its existing beer products and must, therefore, be subjected to
the higher excise tax rate for variants. Specifically, for the year
1999, "San Mig Light" should be taxed at the rate of P19.91 per liter
instead of P9.15 per liter; and for the year 2000, the 12% increase
should be based on the rate of P19.91 per liter under Section
143(C)(2) of the Tax Code.16 Hence, the Notice demanded
payments of deficiency excise tax in the amount of
P824,750,204.97, exclusive of increments for years 1999 to April
2002.
The Finance Manager of San Miguel Corporation's Beer Division
wrote a letter-reply requesting the withdrawal of the Notice of
Discrepancy. San Miguel Corporation stated, among other things,
that "San Mig Light" was not a variant of any of its existing beer
brands because of "the distinctive shape, color scheme[,] and
general appearance"; and the "different alcohol content and
innovative low calorie formulation." It also emphasized that the
Escudo logo was not a beer brand logo but a corporate logo.
Assistant Commissioner Abella wrote a letter-rejoinder reiterating
its finding that "San Mig Light Pale Pilsen" was truly a variant of
"San Miguel Pale Pilsen." The letter-rejoinder cited certain
statements in San Miguel Corporation's publication, "Kaunlaran,"
and the corporation's Annual Report as support for its finding.
Villacorte replied by requesting that "San Mig Light be reconfirmed
as a new brand . . . the deficiency assessment be set aside and the
demand for payment be withdrawn."
Subsequently, three (3) conferences were held on the "San Mig
Light" tax classification issue. At the conference held on December
16, 2003, Commissioner Guillermo Parayno, Jr. (Commissioner
Parayno) informed San Miguel Corporation that five (5) members
of the Bureau of Internal Revenue Management Committee voted
that "San Mig Light" was a variant of "Pale Pilsen in can," while two
(2) members voted that it was a variant of "Premium," a high-priced
beer product of San Miguel Corporation.
Commissioner Parayno wrote San Miguel Corporation and
validated the findings that "San Mig Light" was a variant of "San
Miguel Pale Pilsen in can," subject to the same excise tax rate of
the latterthat is, P13.61 per literand that an assessment for
deficiency excise tax against San Miguel Corporation was
forthcoming.
SAAVEDRA
A Preliminary Assessment Notice (PAN) was issued against San
Miguel Corporation for deficiency excise tax in the amount of
P852,039,418.15, inclusive of increments, purportedly for the
removals of "San Mig Pale Pilsen Light," from 1999 to January 7,
2004.
A Notice of Discrepancy was issued against San Miguel
Corporation on an alleged deficiency excise tax in the amount of
P28,876,108.84, from January 8, 2004 to January 29, 2004.
Bureau of Internal Revenue Deputy Commissioner Estelita C.
Aguirre (Deputy Commissioner Aguirre) issued a PAN against San
Miguel Corporation for P29,967,465.37 representing deficiency
excise tax, inclusive of increments, from January 8, 2004 to
January 29, 2004.
Deputy Commissioner Aguirre issued two (2) Formal Letters of
Demand29 to San Miguel Corporation with the accompanying Final
Assessment Notice (FAN) Nos. LTS TF 004-06-02 and LTS TF
129-05-04, respectively, directing San Miguel Corporation to pay
deficiency excise taxes.
San Miguel filed a Protest/Request for Reconsideration against
each FAN.
Former Large Taxpayers Service Officer-in-Charge Deputy
Commissioner Kim S. Jacinto-Henares informed San Miguel
Corporation of the denial of the Protest/Request for
Reconsiderations against the two (2) FANs "for lack of legal and
factual basis.
ISSUES:
1. Whether "San Mig Light" is a new brand or a variant of
one of San Miguel Corporation's existing beer brands
2. Whether the Bureau of Internal Revenue may issue
notices of discrepancy that effectively changes "San Mig
Light's classification from new brand to variant.
RULING: When respondent launched "San Mig Light" in 1999, it
wrote the Bureau of Internal Revenue on October 19, 1999
requesting registration and authority to manufacture "San Mig
Light" to be taxed as P12.15.
The Bureau of Internal Revenue granted this request in its October
27, 1999 letter. Contrary to petitioner's contention, the registration
granted was not merely for intellectual property protection but "for
internal revenue purposes only":
Your request dated October 19, 1999, for the registration
of San Miguel Corporation commercial label for beer
bearing the trade mark "San Mig Light" Pale Pilsen, for
domestic sale or export, 24 bottles in a case, each flint
bottle with contents of 330 ml. is hereby granted.
....
Please follow strictly the requirements of internal
revenue laws, rules and regulations relative to the marks
to be placed on each case, cartons or box used as
secondary containers. It is understood that the said
 30
POLITICAL LAW REVIEW CASES SAAVEDRA

brand be brewed and bottled in the breweries at Polo, unless there is a showing of abuse in the exercise of authority. We
Valenzuela (A-2-21). find no reason to overturn the factual findings of the Court of Tax
Appeals on the amounts allowed for refund.
You are hereby informed that the registration of
commercial labels in this Office is for internal revenue
purposes only and does not give you protection against SUABILITY V. LIABILITY
any person or entity whose rights may be prejudiced by
24. Republic v. NLRC
infringement or unfair competition resulting from your
use of the above indicated trademark.
FACTS: Under Proclamation No. 50, Series of 1986,1 no
employer-employee relationship is created by the acquisition of
Because the Bureau of Internal Revenue granted respondent's
Asset Privatization Trust (now Privatization and Management
request in its October 27, 1999 letter and confirmed this grant in its
Office) of government assets for privatization. It is not obliged to
subsequent letters, respondent cannot be faulted for relying on
pay for any money claims arising from employer-employee
these actions by the Bureau of Internal Revenue.
relations except when it voluntarily holds itself liable to pay. These
money claims, however, must be filed within the three-year period
While estoppel generally does not apply against government,
under Article 2912 of the Labor Code. Once liability is determined,
especially when the case involves the collection of taxes, an
a separate money claim must be brought before the Commission
exception can be made when the application of the rule will cause
on Audit, unless the funds to be used have already been previously
injustice against an innocent party.
appropriated and disbursed.
Respondent had already acquired a vested right on the tax
Asset Privatization Trust was a government entity created under
classification of its San Mig Light as a new brand. To allow
Proclamation No. 50 dated December 8, 1986 for the purpose of
petitioner to change its position will result in deficiency
conserving, provisionally managing, and disposing of assets that
assessments in substantial amounts against respondent to the
have been identified for privatization or disposition.
latter's prejudice.
NACUSIP/BISUDECO Chapter is the exclusive bargaining agent
for the rank-and-file employees of Bicolandia Sugar Development
The authority of the Bureau of Internal Revenue to overrule,
Corporation, a corporation engaged in milling and producing
correct, or reverse the mistakes or errors of its agents is conceded.
sugar.8 Since the 1980s, Bicolandia Sugar Development
However, this authority must be exercised reasonably, i.e., only
Corporation had been incurring heavy losses. It obtained loans
when the action or ruling is patently erroneous or patently contrary
from Philippine Sugar Corporation and Philippine National Bank,
to law.139 For the presumption lies in the regularity of performance
secured by its assets and properties.
of official duty,140 and reasonable care has been exercised by the
revenue officer or agent in evaluating the facts before him or her
Under Proclamation No. 50, as amended, Administrative Order No.
prior to rendering his or her decision or rulingin this case, prior to
14 dated February 3, 1987, the Deed of Transfer dated February
the approval of the registration of San Mig Light as a new brand for
27, 1987, and the Trust Agreement dated February 27, 1987,
excise tax purposes. A contrary view will create disorder and
Philippine National Bank ceded its rights and interests over
confusion in the operations of the Bureau of Internal Revenue and
Bicolandia Sugar Development Corporation's loans to the
open the administrative agency to inconsistencies in the
government through Asset Privatization Trust.
administration and enforcement of tax laws.
Bicolandia Sugar Development Corporation, with the conformity of
In G.R. No. 205045, the Court of Tax Appeals En Banc ruled that
Asset Privatization Trust, entered into a Supervision and Financing
"San Mig Light" is a new brand and not a variant of an existing
Agreement with Philippine Sugar Corporation for the latter to
brand. Accordingly, it ordered the refund of erroneously collected
operate and manage the mill until August 31, 1992.
excise taxes on "San Mig Light" products in the amount of
P926,169,056.74 for the period of December 1, 2005 to July 31,
Due to Bicolandia Sugar Development Corporation's continued
2007.
failure to pay its loan obligations, Asset Privatization Trust filed a
Petition for Extrajudicial Foreclosure of Bicolandia Sugar
In G.R. No. 205723, the Court of Tax Appeals En Banc found
Development Corporation's mortgaged properties on March 26,
proper the refund of erroneously collected excise taxes on
1990. There being no other qualified bidder, Asset Privatization
"San Mig Light" products in the amount of P781,514,772.56 for
Trust was issued a certificate of sale upon payment of
the period of February 2, 2004 to November 30, 2005.144 It
P1,725,063,044.00.
referred to, and agreed with, the findings of the Court-
commissioned Independent Certified Public Accountant Normita L.
NACUSIP/BISUDECO Chapter and Bicolandia Sugar
Villaruz on reaching this amount.145 The Court of Tax Appeals
Development Corporation entered into a Collective Bargaining
also found, from the records, that respondent timely filed its
Agreement to be in effect until December 15, 1996. Asset
administrative claim for refund on December 28, 2005, and its
Privatization Trust and Philippine Sugar Corporation were also
judicial claim on January 31, 2006.
joined as parties.
This Court accords the highest respect to the factual findings of the
Sometime in 1992, the Asset Privatization Trust, pursuant to its
Court of Tax Appeals. We recognize its developed expertise on the
mandate to dispose of government properties for privatization,
subject as it is the court dedicated solely to considering tax issues,
 31
POLITICAL LAW REVIEW CASES
decided to sell the assets and properties of Bicolandia Sugar
Development Corporation. On September 1, 1992, it issued a
Notice of Termination to Bicolandia Sugar Development
Corporation's employees, advising them that their services would
be terminated within 30 days. NASUCIP/BISUDECO Chapter
received the Notice under protest.
After the employees' dismissal from service, Bicolandia Sugar
Development Corporation's assets and properties were sold to
Bicol Agro-Industrial Producers Cooperative, Incorporated-
Peafrancia Sugar Mill.
As a result, several members of the NACUSIP/BISUDECO Chapter
filed a Complaint dated April 24, 1996 charging Asset Privatization
Trust, Bicolandia Sugar Development Corporation, Philippine
Sugar Corporation, and Bicol Agro-Industrial Producers
Cooperative, Incorporated-Peafrancia Sugar Mill with unfair labor
practice, union busting, and claims for labor standard benefits.
On January 14, 2000, the Labor Arbiter rendered the Decision
dismissing the Complaint for lack of merit. The Labor Arbiter found
that there was no union busting when Asset Privatization Trust and
Philippine Sugar Corporation disposed of Bicolandia Sugar
Development Corporation's assets and properties since Asset
Privatization Trust was merely disposing of a non-performing asset
of government, pursuant to its mandate under Proclamation No. 50.
However, the Labor Arbiter found that although Asset Privatization
Trust previously released funds for separation pay, 13th month
pay, and accrued vacation and sick leave credits for 1992, George
Emata, Bienvenido Felina, Domingo Rebancos, Jr., Nelson Berina,
Armando Villote, and Roberto Tirao (Emata, et al.) refused to
receive their checks24 "on account of their protested dismissal."
Their refusal to receive their checks was premised on their
Complaint that Asset Privatization Trust's sale of Bicolandia Sugar
Development Corporation violated their Collective Bargaining
Agreement and was a method of union busting.
While the Labor Arbiter acknowledged that Emata, et al.'s
entitlement to these benefits had already prescribed under Article
29127 of the Labor Code, he nevertheless ordered Asset
Privatization Trust to pay Emata, et al. their benefits since their co-
complainants were able to claim their checks.
ISSUES:
1. Whether there was an employer-employee relationship
between petitioner Privatization and Management Office
(then Asset Privatization Trust) and private respondents
NACUSIP/BISUDECO Chapter employees, and thus,
whether petitioner is liable to pay the separation benefits
of private respondents George Emata, Bienvenido
Felina, Domingo Rebancos, Jr., Nelson Berina,
Armando Villote, and Roberto Tirao;
2. Whether Bicolandia Sugar Development Corporation's
closure could be considered serious business losses
that would exempt petitioner from payment of separation
benefits; and
SAAVEDRA
3. Whether private respondents' claim for labor standard
benefits had already prescribed under Article 291 of the
Labor Code.
RULING: Procedural rules are designed to facilitate the orderly
administration of justice. In labor cases, however, procedural rules
are not to be applied "in a very rigid and technical sense" if its strict
application will frustrate, rather than promote, substantial justice.
Liberality favors the laborer. However, this case is also brought
against a government entity. If the government entity is found
liable, its liability will necessarily entail the dispensation of public
funds. Thus, its basis for liability must be subjected to strict scrutiny.
Even assuming that we grant the plea of liberality, the Petition will
still be denied.
This Court explained in Republic v. National Labor Relations
Commission, et al. that the Asset Privatization Trust is usually
joined as a party respondent due to its role as the conservator of
assets of the corporation undergoing privatization:
A matter that must not be overlooked is the fact that the
inclusion of APT as a respondent in the monetary claims
against [Pantranco North Express, Inc.] is merely the
consequence of its being a conservator of assets, a role
that APT normally plays in, or the relationship that
ordinarily it maintains with, corporations identified for and
while under privatization. The liability of APT under this
particular arrangement, nothing else having been
shown, should be co-extensive with the amount of assets
taken over from the privatized firm.
Pursuant to its mandate under Proclamation No. 50, petitioner
provisionally took possession of assets and properties only for the
purpose of privatization or disposition. Its interest over Bicolandia
Sugar Development Corporation was not the latter's continued
business operations.
The issue of petitioner's role in the money claims of Bicolandia
Sugar Development Corporation's employees was already settled
in Barayoga v. Asset Privatization Trust.
In Barayoga, BISUDECO-PHILSUCOR Corfarm Workers Union
alleged that when Philippine Sugar Corporation took over
Bicolandia Sugar Development Corporation's operations in 1988, it
retained the Corporation's existing employees until the start of the
season sometime in May 1991. At the start of the 1991 season,
Philippine Sugar Corporation failed to recall some of the union's
members back to work. For this reason, it filed a Complaint on July
23, 1991 for unfair labor practice, illegal dismissal, illegal
deduction, and underpayment of wages and other labor standard
benefits against Bicolandia Sugar Development Corporation, Asset
Privatization Trust, and Philippine Sugar Corporation. Of the three
respondents, only Asset Privatization Trust was held liable by the
Labor Arbiter and the National Labor Relations Commission for the
union members' money claims.
The Court of Appeals reversed the Labor Arbiter's and the National
Labor Relations Commission's rulings and held that Asset
Privatization Trust did not become the employer of Bicolandia
 32
POLITICAL LAW REVIEW CASES
Sugar Development Corporation's employees. The terminated
employees appealed to this Court, arguing that their claims against
Asset Privatization Trust were recognized under the law.
This Court, however, denied their Petition and held that the Asset
Privatization Trust could not be held liable for any money claims
arising from an employer-employee relationship. Asset
Privatization Trust, being a mere transferee of Bicolandia Sugar
Development Corporation's assets for the purpose of conservation,
never became the union's employer. Hence, it could not be liable
for their money claims:
The duties and liabilities of BISUDECO, including its monetary
liabilities to its employees, were not all automatically assumed by
APT as purchaser of the foreclosed properties at the auction sale.
Any assumption of liability must be specifically and categorically
agreed upon. In Sundowner Development Corp. v. Drilon, the Court
ruled that, unless expressly assumed, labor contracts like collective
bargaining agreements are not enforceable against the transferee
of an enterprise. Labor contracts are in personam and thus binding
only between the parties.
No succession of employment rights and obligations can be said to
have taken place between the two. Between the employees of
BISUDECO and APT, there is no privity of contract that would make
the latter a substitute employer that should be burdened with the
obligations of the corporation. To rule otherwise would result in
unduly imposing upon APT an unwarranted assumption of
accounts not contemplated in Proclamation No. 50 or in the Deed
of Transfer between the national government and PNB.
For petitioner to be liable for private respondents' money claims
arising from an employer-employee relationship, it must specifically
and categorically agree to be liable for these claims.
25. Phil. Coconut Producers Federation, Inc. v. Republic
FACTS: The Coconut Industry Investment Fund Holding
Companies ("CIIF") sold 33,133,266 SMC common shares to
Andres Soriano III of the SMC Group for P3,313,326,600.00,
payable in four (4) installments. On April 1, 1986, the SMC Group
paid the initial purchase price of P500 million to the UCPB as
administrator of the CIIF (the "UCPB Group"). The sale was
transacted through the stock exchange and the shares were then
registered in the name of Anscor-Hagedom Securities, Inc. (AHSI).
The Presidential Commission on Good Government (PCGG)
sequestered the shares of stock. Due to the sequestration, the
SMC Group suspended payment of the balance of the purchase
price of the subject stocks. In retaliation, the UCPB Group
attempted to rescind the sale by filing a complaint with the Regional
Trial Court of Makati. The complaint, however, was eventually
ordered dismissed for lack of jurisdiction.
Early 1989 developments saw the SMC and UCPB groups
successfully threshing out their dispute over the aborted sale of the
over 33.1 million SMC shares which have meanwhile ballooned to
175,274,960 as a consequence of dividends and stock splits. But
because any settlement required PCGG's intervention, Andres
Soriano III, for SMC, and Ramon Y. Sy, for UCPB, in a joint letter
SAAVEDRA
of October 31, 1989, informed the PCGG about a proposal which
would have the two groups give PCGG an "arbitration fee" in the
form of 5,500,000 SMC shares to support the Comprehensive
Agrarian Reform Program (CARP).
PCGG approved the proposal. Thus, on March 20 and 22, 1990,
SMC and UCPB representing the CIIF signed a Compromise
Agreement and Amicable Settlement ("Compromise Agreement").
The SMC and the UCPB Groups filed with the Sandiganbayan a
Joint Petition for Approval of the Compromise Agreement and
Amicable Settlement ('Joint Petition"), docketed as CC No. 0102.
The PCGG joined the OSG in praying that the SMC and UCPB
Groups' Joint Petition be treated as an incident of Civil Case (CC)
No. 0033, a case for the recovery of ill-gotten wealth instituted by
the PCGG with the Sandiganbayan against former President
Ferdinand Marcos, Eduardo Cojuangco, Jr. ("Cojuangco"), et al. on
July 31, 1987. PCGG, however, interposed no objection to the
implementation of the Compromise Agreement subject to some
conditions.
SMC and UCPB Groups filed a Joint Manifestation of
Implementation of Compromise Agreement and of Withdrawal of
Petition therein stating that they have implemented the
Compromise Agreement with the conditions set by the PCGG and,
accordingly, withdrawing their Joint Petition.
In a Resolution, the Sandiganbayan admitted the eight subdivided
complaints on March 24, 1999. Meanwhile, respondent Republic
filed in CC No. 0033-A a Motion for Partial Summary Judgment,
which the Sandiganbayan granted on 1 July 11, 2003 via a Partial
Summary Judgment (PSJ) holding that the coco levy fund is public
in nature.
SMC filed in CC No. 0033-F a Complaint- in-Intervention praying
that any judgment forfeiting the CIIF block of shares should exclude
the "treasury shares." Herein respondent opposed the SMC's
motion to intervene in said case. By Resolution of May 6, 2004, the
graft court denied the desired intervention.
The next day, the Sandiganbayan granted the Republic's Motion
for Judgment on the Pleadings and/or Partial Summary Judgment
in CC No. 0033-F in its May 7, 2004 PSJ, holding that "[t]he CIIF
Companies having been acquired with public funds, the 14 CIIF-
Holding Companies and all their assets, including the CIIF Block of
SMC Shares, being public in character, belong. to the government."
In so ruling, the Sandiganbayan declared the 33,133,266
sequestered SMC shares subject of the stock purchase agreement
by the CIIF Holding Companies and Andres Soriano III as owned
by the Republic in trust for the coconut farmers.
In its Resolution of May 11, 2007 in CC No. 0033-F, the
Sandiganbayan held that there is no need for further trial on the
issue regarding the actual percentage of the sequestered CIIF
Block of SMC shares vis-a-vis the outstanding capital stock of
SMC, effectively deleting the last paragraph of the dispositive
portion of its May 7, 2004 PSJ.
ISSUE: Whether estoppel against the Government herein applies
 33
POLITICAL LAW REVIEW CASES
RULING: YES. There is nothing on record that says that the
government offered to return the P500 million to the SMC Group.
That is to say, while the respondent Republic is asking for the
delivery and reconveyance of the 25.45 million shares, it has not
intimated its intention to return the P500 million it received (through
the CIIF Companies now declared as government-owned) for the
same shares. The inevitable conclusion that can be made is the
Republic plans to keep the P500 million along with the 25.45 million
shares. Such retention and acquisition of the P500 million would,
in context, amount to a flagrant and arbitrary deprivation of SMC's
property in violation of the company's due process right. This act
definitely trenches on the sacred Constitutional guarantee of due
process.
Elementary rules against unjust enrichment, if not the sporting idea
of fair play, forbid the Republic to retain the P500 million with the
over 25.45 million shares it now claims. At the very least, everyone
has a reasonable expectation that the Republic follow its own laws,
foremost of which is the Constitution.
In sum, by keeping the P500-million first installment, approving
through that; PCGG the Compromise Agreement, and even taking
and keeping an "arbitration fee," the government descended to the
level of an ordinary citlizen and stripped itself of the vestiges of
immunity that is otherwise available to it in the performance of
governmental acts. Clearly, it is now vulnerable to the application
of the principle of estoppel which militates against the grant of
respondent's motion.
While the general rule is that the State cannot be put in estoppel
by the mistakes or errors of its officials or agents, it is established
that "[t]he rule on non-estoppel of the government is not designed
to perpetrate an injustice. Thus, several exceptions to the
Republic's non-estoppel have been recognized. In Republic of the
Philippines v. Court of Appeals, the Court held:
The general rule is that the State cannot be put in
estoppel by the mistaks or errors of its officials or agents.
However, like all general rules, this is also subject to
exceptions, viz.:
"Estoppel against the public are little favored. They
should not be invoked except in rare and unusual
circumstances and may not be invqked where they
would operate to defeat the effective operation of a polity
adopted to protect the public. They must be applied with
circlimspection and should be applied only in those
special cases where the interests of justice clearly
require it. Nevertheless, the government must not be
allowed to deal dishonorably or capriciously with its
citizens, and must not play an ignoble part or do a
shabby thing; andi subject to limitations ..., the doctrine
of equitable estoppel mall be invoked against public
authorities as well as against private individuals."
In Republic v. Sandiganbayan, the government, in its effort to
recover ill-gotten wealth, tried to skirt the application of estoppel
against it by invoking a specific constitutional provision. The Court
countered:
SAAVEDRA
"We agree with the statement that the State is immune
from estoppel, but this concept is understood to refer to
acts and mistakes of its officials especially those which
are irregular (Sharp International Marketing vs. Court of
Appeals, 201 SCRA 299; 306 [1991]; Republic v. Aquino,
120 SCRA 186 [1983]), which peculiar circumstances
are absent in the case at bar. Although the State's right
of action to recover ill-gotten wealth is not vulnerable to
estoppel[;] it is non sequitur to suggest that a contract,
freely and in good faith executed between the parties
thereto is susceptible to disturbance ad infinitum. A
different interpretation will lead to the absurd scenario of
permitting a party to unilaterally jettison a compromise
agreement which is supposed to have the authority of res
judicata (Article 2037, New Civil Code), and like any
other contract, has the force of law between parties
thereto (Article 1159, New Civil Code; Hernaez vs. Kao,
17 SCRA 296 [1966]; 6 Padilla, Civil Code Annotated,
7th ed., 1987, p. 711; 3 Aquino, Civil Code, 1990 ed., p.
463) ..."
The Court further declared that "(t)he real office of the
equitable norm of estoppel is limited to supfly[ing]
deficiency in the law, but it should not supplant positive
law."
The exception established in the foregoing cases is appropriate in
the present case since the Compromise Agreement partook of the
nature of a bonafide proprietary business transaction of the
government and was not undertaken as an incident to any of its
governmental functions.
Clearly, issues regarding SMC's right over the 25.45 million
treasury shares or the entitlement to the alleged dividends on said
shares or to the interests and increase in value of the PSOO million
remain unresolved. These issues are better ventilated and
threshed out in a proper proceeding before the right forum where
SMC will be accorded due process.
26. Republic v. Hachero
FACTS: Amor Hachero (Hachero) filed his Free Patent Application
No. 045307-969 covering Lot No. 1514, CAD-1150-D (subject land)
before the Community Environment and Natural Resources Office
(CENRO) of Palawan.
The said application for free patent was later approved by the
Provincial Environment and Natural Resources Officer (PENRO) of
Palawan.
Free Patent No. 045307-98-9384 was issued to Hachero and the
subject land was registered under Original Certificate of Title (OCT)
No. E-18011 on May 7, 1999.
After an inspection and verification were conducted by the CENRO
in 2000, it was discovered that the subject land, covered by OCT
No. E-18011, was still classified as timberland and so not
susceptible of private ownership under the Free Patent provision of
the Public Land Act.6
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POLITICAL LAW REVIEW CASES
Consequently, on November 26, 2002, the Republic, represented
by the Regional Executive Director, Department of Environment
and Natural Resources (DENR)-Region IV, Manila, filed the
Complaint for the Cancellation of Free Patent No. 045307-98-9384
and OCT No. E-18011 and for Reversion, which was docketed as
Civil Case No. 3726.
Despite personal receipt of the summons and the complaint,
however, Hachero did not file any responsive pleading within the
period required by law. Upon the Republic's motion, the RTC
declared Hachero in default. Thereafter, the Republic was allowed
to present its evidence ex-parte.
The RTC rendered its decision in favor of Hachero.The RTC
explained that the free patent and title had already been issued
after Hachero was found to have complied with all the
requirements; that it was the Republic itself thru the DENR-
CENRO, Coron, which brought the subject land under the
operation of the Torrens System; that it could not understand the
complete turnabout made by the same office and its officials who
certified before that the subject land was alienable and disposable
and who approved Hachero's application; that the Republic failed
to show the document which stated that the subject land was still
timberland as indicated under Project No. 2A L.C. Map No. 839,
released on December 9, 1929, despite the fact that said document
was already available at the CENRO office at the time of the
application for free patent; that the lands adjacent to the subject
land were already alienable and disposable; that the free patent
and the title itself were public documents entitled to the
presumption of regularity; and that the verification and inspection
report of one Sim Luto together with the other CENRO officials
presented by the Republic were insufficient to defeat Hachero's
patent and title.
The CA affirmed the RTC decision, stating that the verification
presented by the Republic could not be given probative value
because L.C. Map No. 839, dated December 9, 1929, which served
as basis for the verification, was not presented before the RTC.
According to the CA, the Inspection Report, standing alone, was
not sufficient to overcome the burden imposed upon the Republic
and could not serve as basis of the reversion of the subject land.
The CA doubted the subsequent findings of the land investigator
that the subject land was still timberland because he was the same
land investigator who previously evaluated the subject land and
certified that it was alienable and disposable.
ISSUE: Whether the previous factual misappreciation committed
by the DENR employees cannot and should not bind the
government, especially when, as in this case, the mistake or error
refers to immutable matters such as alienability of a portion of
public domain.
RULING: The Court would have wanted to study Hachero's
position on the matter, but he did not file an answer or responsive
pleading to the complaint filed by the Republic before the RTC. It
appears from the records, however, that he was duly served with
the summons together with a copy of the complaint. He, apparently,
opted to ignore it, in effect, waived his right to rebut the allegations
thereof at the first opportunity.
SAAVEDRA
There being a controversion, the presumption of regularity in the
performance of official duties applies favorably to the Republic.
This means that the DENR's inspection report and the verification
stating that the subject land is still inalienable has become
conclusive. The doctrine in Bustillo vs. People,
xxx In sum, the petitioners have in their favor the
presumption of regularity in the performance of official
duties which the records failed to rebut. The presumption
of regularity of official acts may be rebutted by affirmative
evidence of irregularity or failure to perform a duty. The
presumption, however, prevails until it is overcome by no
less than clear and convincing evidence to the contrary.
Thus, unless the presumption is rebutted, it becomes
conclusive. Every reasonable intendment will be made in
support of the presumption and in case of doubt as to an
officer's act being lawful or unlawful, construction should
be in favor of its lawfulness.
and in Farolan v. Solmac Marketing Corp.,
In the same vein, the presumption, disputable though it
may be, that an official duty has been regularly
performed applies in favor of the petitioners. Omnia
praesumuntur rite et solemniter esse acta. (All things are
presumed to be correctly and solemnly done.) It was
private respondent's burden to overcome this juris
tantum presumption. We are not persuaded that it has
been able to do so.
are both instructive.
Cancellation of title and reversion proper where there exists a
mistake or oversight in granting free patent over inalienable
land
Reversion is an action where the ultimate relief sought is to revert
the land back to the government under the Regalian doctrine.
Considering that the land subject of the action originated from a
grant by the government, its cancellation therefore is a matter
between the grantor and the grantee. In Republic v. Guerrero, the
Court gave a more general statement that "this remedy of reversion
can only be availed of in cases of fraudulent or unlawful inclusion
of the land in patents or certificates of title." Nonetheless, the Court
recognized in Republic v. Mangotara, that there were instances
when it granted reversion for reasons other than fraud:
xxx. In Estate of the Late Jesus S. Yujuico v. Republic
(Yujuico case), reversion was defined as an action which
seeks to restore public land fraudulently awarded and
disposed of to private individuals or corporations to the
mass of public domain. It bears to point out, though, that
the Court also allowed the resort by the Government to
actions for reversion to cancel titles that were void for
reasons other than fraud, i.e., violation by the grantee of
a patent of the conditions imposed by law; and lack of
jurisdiction of the Director of Lands to grant a patent
covering inalienable forest land or portion of a river, even
when such grant was made through mere oversight.
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POLITICAL LAW REVIEW CASES
In the case at bench, although the Republic's action for cancellation
of patent and title and for reversion was not based on fraud or
misrepresentation on the part of Hachero, his title could still be
cancelled and the subject land reverted back to the State because
the grant was made through mistake or oversight. This could
probably be the reason why, shortly after one (1) year from the
issuance of OCT No. E-18011 to Hachero, the DENR personnel
conducted another investigation and verification on the subject
land. It would appear that they suspected that a mistake was made
in their issuance of the patent as the subject land had not been
reclassified or released as alienable or disposable land. It remained
plotted within the timberland classification zone. This time, they
supported their findings with maps prepared by the NAMRIA. The
Republic also followed the proper legal procedure for cancellation
of patent and title and for reversion. They filed a complaint in court
and notified Hachero through summons. They gave Hachero an
opportunity to be heard in court. For unknown reasons, however,
he disregarded the summons, allowed himself to be declared in
default, and forfeited his right to adduce evidence in his defense.
Prescription and estoppel cannot lie against the State
Contrary to the observation of the courts below, there is nothing
incomprehensible or puzzling or suspicious about the complete
turnaround made by the DENR after its re-investigation. The Court
has carefully reviewed the records and found nothing anomalous.
At any rate, it is a time-honored principle that the statute of
limitations or the lapse of time does not run against the State.
Jurisprudence also recognizes the State's immunity from estoppel
as a result of the mistakes or errors of its officials and agents.
These well-established principles apply in the case at bench. The
Court in Republic v. Roxas elucidated:
It is true that once a homestead patent granted in
accordance with the Public Land Act is registered
pursuant to Act 496, otherwise known as The Land
Registration Act, or Presidential Decree No. 1529,
otherwise known as The Property Registration Decree,
the certificate of title issued by virtue of said patent has
the force and effect of a Torrens title issued under said
registration laws.
We expounded in Ybafiez v. Intermediate Appellate Court that:
The certificate of title serves as evidence of an
indefeasible title to the property in favor of the person
whose name appears therein. After the expiration of the
one (1) year period from the issuance of the decree of
registration upon which it is based, it becomes
incontrovertible. The settled rule is that a decree of
registration and the certificate of title issued pursuant
thereto may be attacked on the ground of actual fraud
within one (1) year from the date of its entry and such an
attack must be direct and not by a collateral proceeding.
The validity of the certificate of title in this regard can be
threshed out only in an action expressly filed for the
purpose.
It must be emphasized that a certificate of title issued under an
administrative proceeding pursuant to a homestead patent, as in
SAAVEDRA
the instant case, is as indefeasible as a certificate of title issued
under a judicial registration proceeding, provided the land covered
by said certificate is a disposable public land within the
contemplation of the Public Land Law.
There is no specific provision in the Public Land Law (C.A. No. 141,
as amended) or the Land Registration Act (Act 496), now P.D.
1529, fixing the one (1) year period within which the public land
patent is open to review on the ground of actual fraud as in Section
38 of the Land Registration Act, now Section 32 of P.D. 1529, and
clothing a public land patent certificate of title with indefensibility.
Nevertheless, the pertinent pronouncements in the aforecited
cases clearly reveal that Section 38 of the Land Registration Act,
now Section 32 of P.D. 1529 was applied by implication by this
Court to the patent issued by the Director of Lands duly approved
by the Secretary of Natural Resources, under the signature of the
President of the Philippines in accordance with law. The date of
issuance of the patent, therefore, corresponds to the date of the
issuance of the decree in ordinary registration cases because the
decree finally awards the land applied for registration to the party
entitled to it, and the patent issued by the Director of Lands equally
and finally grants, awards, and conveys the land applied for to the
applicant. This, to our mind, is in consonance with the intent and
spirit of the homestead laws, i.e., conservation of a family home,
and to encourage the settlement, residence and cultivation and
improvement of the lands of the public domain. If the title to the
land grant in favor of the homesteader would be subjected to
inquiry, contest and decision after it has been given by the
Government thru the process of proceedings in accordance with
the Public Land Law, there would arise uncertainty, confusion and
suspicion on the government's system of distributing public
agricultural lands pursuant to the "Land for the Landless" policy of
the State. (Emphases ours, citations omitted.)
Yet, we emphasize that our statement in the aforequoted case that
a certificate of title issued pursuant to a homestead patent
becomes indefeasible after one year, is subject to the proviso that
"the land covered by said certificate is a disposable public land
within the contemplation of the Public Land Law." As we have ruled
herein, the subject property is part of the Matchwood Forest
Reserve and is inalienable and not subject to disposition. Being
contrary to the Public Land Law, Homestead Patent No. 111598
and OCT No. P-5885 issued in respondent Roxas's name are void;
and the right of petitioner Republic to seek cancellation of such void
patent/title and reversion of the subject property to the State is
imprescriptible.
We have addressed the same questions on indefensibility of title
and prescription in Mangotara, thus:
It is evident from the foregoing jurisprudence that despite the lapse
of one year from the entry of a decree of registration/certificate of
title, the State, through the Solicitor General, may still institute an
action for reversion when said decree/certificate was acquired by
fraud or misrepresentation. Indefeasibility of a title does not attach
to titles secured by fraud and misrepresentation. Well-settled is the
doctrine that the registration of a patent under the Torrens system
does not by itself vest title; it merely confirms the registrant's
already existing one. Verily, registration under the Torrens system
is not a mode of acquiring ownership.
 36
POLITICAL LAW REVIEW CASES SAAVEDRA

But then again, the Court had several times in the past recognized
the right of the State to avail itself of the remedy of reversion in
other instances when the title to the land is void for reasons other
than having been secured by fraud or misrepresentation. One such
case is Spouses Morandarte v. Court of Appeals, where the Bureau
of Lands (BOL), by mistake and oversight, granted a patent to the
spouses Morandarte which included a portion of the Miputak River.
The Republic instituted an action for reversion 10 years after the
issuance of an OCT in the name of the spouses Morandarte. The
Court ruled:

Be that as it may, the mistake or error of the officials or agents of

the BOL in this regard cannot be invoked against the government
with regard to property of the public domain. It has been said that
the State cannot be estopped by the omission, mistake or error of
its officials or agents.

It is well-recognized that if a person obtains a title under the Public

Land Act which includes, by oversight, lands which cannot be
registered under the Torrens system, or when the Director of Lands
did not have jurisdiction over the same because it is a public
domain, the grantee does not, by virtue of the said certificate of title
alone, become the owner of the land or property illegally included.
Otherwise stated, property of the public domain is incapable of
registration and its inclusion in a title nullifies that title.

Neither can respondent Roxas successfully invoke the doctrine of

estoppel against petitioner Republic. While it is true that
respondent Roxas was granted Homestead Patent No. 111598 and
OCT No. P-5885 only after undergoing appropriate administrative
proceedings, the Government is not now estopped from
questioning the validity of said homestead patent and certificate of
title. It is, after all, hornbook law that the principle of estoppel does
not operate against the Government for the act of its agents. And
while there may be circumstances when equitable estoppel was
applied against public authorities, i.e., when the Government did
not undertake any act to contest the title for an unreasonable length
of time and the lot was already alienated to innocent buyers for
value, such are not present in this case. More importantly, we
cannot use the equitable principle of estoppel to defeat the law.
Under the Public Land Act and Presidential Proclamation No. 678
dated February 5, 1941, the subject property is part of the
Matchwood Forest Reserve which is inalienable and not subject to
disposition.