TANADA VS.
ANGARA Although the Constitution mandates to develop a self-reliant and independent national
Facts:
This is a case petition by Sen. Wigberto Tanada, together with other lawmakers, taxpayers,
and various NGO’s to nullify the Philippine ratification of the World Trade Organization
(WTO) Agreement.
Petitioners believe that this will be detrimental to the growth of our National Economy and
against to the “Filipino First” policy. The WTO opens access to foreign markets, especially
its major trading partners, through the reduction of tariffs on its exports, particularly
agricultural and industrial products. Thus, provides new opportunities for the service sector
cost and uncertainty associated with exporting and more investment in the country. These are
the predicted benefits as reflected in the agreement and as viewed by the signatory Senators,
a “free market” espoused by WTO.
Petitioners also contends that it is in conflict with the provisions of our constitution, since the
said Agreement is an assault on the sovereign powers of the Philippines because it meant that
Congress could not pass legislation that would be good for national interest and general
welfare if such legislation would not conform to the WTO Agreement.
Issues:
Whether or not the petition present a justiciable controversy.
Whether or not the provisions of the ‘Agreement Establishing the World Trade Organization
and the Agreements and Associated Legal Instruments included in Annexes one (1), two (2)
and three (3) of that agreement’ cited by petitioners directly contravene or undermine the
letter, spirit and intent of Section 19, Article II and Sections 10 and 12, Article XII of the 1987
Constitution.
Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise
of legislative power by Congress.
Whether or not certain provisions of the Agreement impair the exercise of judicial power by
this Honorable Court in promulgating the rules of evidence.
Whether or not the concurrence of the Senate ‘in the ratification by the President of the
Philippines of the Agreement establishing the World Trade Organization’ implied rejection of
the treaty embodied in the Final Act.
Discussions:
1987 Constitution states that Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the government.
economy controlled by Filipinos, does not necessarily rule out the entry of foreign
investments, goods and services. It contemplates neither “economic seclusion” nor
“mendicancy in the international community.” The WTO itself has some built-in advantages
to protect weak and developing economies, which comprise the vast majority of its members.
Unlike in the UN where major states have permanent seats and veto powers in the Security
Council, in the WTO, decisions are made on the basis of sovereign equality, with each
member’s vote equal in weight to that of any other. Hence, poor countries can protect their
common interests more effectively through the WTO than through one-on-one negotiations
with developed countries. Within the WTO, developing countries can form powerful blocs to
push their economic agenda more decisively than outside the Organization. Which is not
merely a matter of practical alliances but a negotiating strategy rooted in law. Thus, the basic
principles underlying the WTO Agreement recognize the need of developing countries like
the Philippines to “share in the growth in international trade commensurate with the needs of
their economic development.”
In its Declaration of Principles and State Policies, the Constitution “adopts the generally
accepted principles of international law as part of the law of the land, and adheres to the policy
of peace, equality, justice, freedom, cooperation and amity, with all nations. By the doctrine
of incorporation, the country is bound by generally accepted principles of international law,
which are considered to be automatically part of our own laws. A state which has contracted
valid international obligations is bound to make in its legislations such modifications as may
be necessary to ensure the fulfillment of the obligations undertaken. Paragraph 1, Article 34
of the General Provisions and Basic Principles of the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) may intrudes on the power of the Supreme Court to
promulgate rules concerning pleading, practice and procedures. With regard to Infringement
of a design patent, WTO members shall be free to determine the appropriate method of
implementing the provisions of TRIPS within their own internal systems and processes.
The alleged impairment of sovereignty in the exercise of legislative and judicial powers is
balanced by the adoption of the generally accepted principles of international law as part of
the law of the land and the adherence of the Constitution to the policy of cooperation and
amity with all nations. The Senate, after deliberation and voting, voluntarily and
overwhelmingly gave its consent to the WTO Agreement thereby making it “a part of the law
of the land” is a legitimate exercise of its sovereign duty and power.
Rulings:
In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the
legislative branch is seriously alleged to have infringed the Constitution, it becomes not only
the right but in fact the duty of the judiciary to settle the dispute. As explained by former Chief
Justice Roberto Concepcion, “the judiciary is the final arbiter on the question of whether or
not a branch of government or any of its officials has acted without jurisdiction or in excess
of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess
of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this
nature.”
While the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino enterprises
only against foreign competition and trade practices that are unfair. In other words, the
Constitution did not intend to pursue an isolationist policy. It did not shut out foreign
investments, goods and services in the development of the Philippine economy. While the
Constitution does not encourage the unlimited entry of foreign goods, services and
investments into the country, it does not prohibit them either. In fact, it allows an exchange
on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.
By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By
their voluntary act, nations may surrender some aspects of their state power in exchange for
greater benefits granted by or derived from a convention or pact. After all, states, like
individuals, live with coequals, and in pursuit of mutually covenanted objectives and benefits,
they also commonly agree to limit the exercise of their otherwise absolute rights. As shown
by the foregoing treaties Philippines has entered, a portion of sovereignty may be waived
without violating the Constitution, based on the rationale that the Philippines “adopts the
generally accepted principles of international law as part of the law of the land and adheres to
the policy of cooperation and amity with all nations.”
The provision in Article 34 of WTO agreement does not contain an unreasonable burden,
consistent as it is with due process and the concept of adversarial dispute settlement inherent
in our judicial system.
The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act
required from its signatories, namely, concurrence of the Senate in the WTO Agreement.
Moreover, the Senate was well-aware of what it was concurring in as shown by the members’
deliberation on August 25, 1994. After reading the letter of President Ramos dated August 11,
1994, the senators of the Republic minutely dissected what the Senate was concurring in.
Miners Association of the Philippines v. Factoran
G.R. No. 98332 January 16, 1995
Facts :
Former President Corazon Aquino issued Executive Order Nos 211 and 279 in the exercise of
her legislative powers. EO No. 211 prescribes the interim procedures in the processing and
approval of applications for the exploration, development and utilization of minerals pursuant
to Section 2, Article XII of the 1987 Constitution. EO No. 279 authorizes the DENR Secretary
to negotiate and conclude joint-venture, co-production, or production- sharing agreements for
the exploration, development, and utilization of mineral resources.
The issuance and the impeding implementation by the DENR of Administrative Order Nos.
57 which declares that all existing mining leases or agreements which were granted after the
effectivity of the 1987 Constitution...shall be converted into production-sharing agreements
within one (1) year from the effectivity of these guidelines.” and Administrative Order No. 82
which provides that a failure to submit Letter of Intent and Mineral Production-Sharing
Agreement within 2 years from the effectivity of the Department Administrative Order No.
57 shall cause the abandonment of the mining, quarry, and sand and gravel claims, after their
respective effectivity dates compelled the Miners Association of the Philippines, Inc., an
organization composed of mining prospectors and claim owners and claim holders, to file the
instant petition assailing their validity and constitutionality before this Court.
Issue :
Are the two Department Administrative Orders valid?
Ruling :
Yes. Petitioner's insistence on the application of Presidential Decree No. 463, as amended,
as the governing law on the acceptance and approval of declarations of location and all other
kinds of applications for the exploration, development, andutilization of mineral resources
pursuant to Executive Order No. 211, is erroneous. Presidential Decree No. 463, as
amended, pertains to the old system of exploration, development and utilization of natural
resources through "license, concession or lease" which, however, has been disallowed by
Article XII, Section 2 of the 1987 Constitution. By virtue of the said constitutional mandate
and its implementing law, Executive Order No. 279 which superseded Executive Order No.
211, the provisions dealing on "license, concession or lease" of mineral resources under
Presidential Decree No. 463, as amended, andother existing mining laws are deemed
repealed and, therefore, ceased to operate as the governing law. In other words, in all other
areas of administration and management of mineral lands,the provisions of Presidential
Decree No. 463, as amended, andother existing mining laws, still govern. Section 7 of
Executive Order No. 279 provides, thus:
Sec. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining
laws, and their implementing rules and regulations, or parts thereof, which are not
inconsistent with the provisions of this Executive Order, shall continue in force and effect.
Well -settled is the rule, however, that regardless of the reservation clause, mining leases or
agreements granted by the State, such as those granted pursuant to Executive Order No. 211
referred to this petition, are subject to alterations through a reasonable exercise of the police
power of the State.Accordingly, the State, in the exercise of its police power in this regard,
may not be precluded by the constitutional restriction on non-impairment of contract from
altering, modifying and amending the mining leases or agreements granted under
Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211. Police
Power, being co-extensive with the necessities of the case and the demands of public
interest; extends to all the vital public needs. The passage of Executive Order No. 279 which
superseded Executive Order No. 211 provided legal basis for the DENR Secretary to carry
into effect the mandate of Article XII, Section 2 of the 1987 Constitution.
WHEREFORE, the petition is DISMISSED for lack of merit.
La Bugal-B’Laan Tribal Association Inc. vs. Ramos
FACTS:
This petition for prohibition and mandamus challenges the constitutionality of
Republic Act No. 7942 (The Philippine Mining Act of 1995), its implementing rules
and regulations and the Financial and Technical Assistance Agreement (FTAA)
dated March 30, 1995 by the government with Western Mining
Corporation(Philippines) Inc. (WMCP).
Accordingly, the FTAA violated the 1987 Constitution in that it is a service contract
and is antithetical to the principle of sovereignty over our natural resources, because
they allowed foreign control over the exploitation of our natural resources, to the
prejudice of the Filipino nation.
ISSUE:
What is the proper interpretation of the phrase “Agreements involving Either
Technical or Financial Assistance” contained in paragraph 4, Section 2, Article XII
of the Constitution.
HELD:
The Supreme Court upheld the constitutionality of the Philippine Mining Law, its
implementing rules and regulations – insofar as they relate to financial and technical
agreements as well as the subject Financial and Technical Assistance Agreement.
Full control is not anathematic to day-to-day management by the contractor,
provided that the State retains the power to direct overall strategy; and to set aside,
reverse or modify plans and actions of the contractor. The idea of full control is
similar to that which is exercised by the board of directors of a private corporation,
the performance of managerial, operational, financial, marketing and other functions
may be delegated to subordinate officers or given to contractual entities, but the
board retains full residual control of the business.
Cruz vs. Secretary of Environment and Natural Resources
FACTS:
Petitioners Isagani Cruz and Cesar Europa filed a suit for prohibition and mandamus
as citizens and taxpayers, assailing the constitutionality of certain provisions of
Republic Act No. 8371, otherwise known as the Indigenous People’s Rights Act of
1997 (IPRA) and its implementing rules and regulations (IRR). The petitioners
assail certain provisions of the IPRA and its IRR on the ground that these amount to
an unlawful deprivation of the State’s ownership over lands of the public domain as
well as minerals and other natural resources therein, in violation of the regalian
doctrine embodied in section 2, Article XII of the Constitution.
ISSUE:
Do the provisions of IPRA contravene the Constitution?
HELD:
No, the provisions of IPRA do not contravene the Constitution. Examining the
IPRA, there is nothing in the law that grants to the ICCs/IPs ownership over the
natural resources within their ancestral domain. Ownership over the natural
resources in the ancestral domains remains with the State and the rights granted by
the IPRA to the ICCs/IPs over the natural resources in their ancestral domains
merely gives them, as owners and occupants of the land on which the resources are
found, the right to the small scale utilization of these resources, and at the same
time, a priority in their large scale development and exploitation.
Additionally, ancestral lands and ancestral domains are not part of the lands of the
public domain. They are private lands and belong to the ICCs/IPs by native title,
which is a concept of private land title that existed irrespective of any royal grant
from the State. However, the right of ownership and possession by the ICCs/IPs of
their ancestral domains is a limited form of ownership and does not include the right
to alienate the same.
Muller vs. Muller
Doctrine:
He who seeks equity must do equity, and he who comes into equity must come with clean
hands.
Facts:
Petitioner Elena Buenaventura Muller and respondent Helmut Muller were married in
Hamburg, Germany on September 22, 1989. The couple resided in Germany at a house owned
by respondent’s parents but decided to move and reside permanently in the Philippines in
1992. By this time, respondent had inherited the house in Germany from his parents which he
sold and used the proceeds for the purchase of a parcel of land in Antipolo, Rizal at the cost
of P528,000.00 and the construction of a house amounting to P2,300,000.00. The Antipolo
property was registered in the name of petitioner, Elena Buenaventura Muller.
Due to incompatibilities and respondents alleged womanizing, drinking, and maltreatment,
the spouses eventually separated.
On September 26, 1994, respondent filed a petition for separation of properties before the
Regional Trial Court of Quezon City. The court granted said petition. It also decreed the
separation of properties between them and ordered the equal partition of personal properties
located within the country, excluding those acquired by gratuitous title during the marriage.
With regard to the Antipolo property, the court held that it was acquired using paraphernal
funds of the respondent. However, it ruled that respondent cannot recover his funds because
the property was purchased in violation of Section 7, Article XII of the Constitution.
The respondent elevated the case to the Court of Appeals, which reversed the decision of the
RTC. It held that respondent merely prayed for reimbursement for the purchase of the
Antipolo property, and not acquisition or transfer of ownership to him. It ordered the
respondent to REIMBURSE the petitioner the amount of P528,000.00 for the acquisition of
the land and the amount of P2,300,000.00 for the construction of the house situated in
Antipolo, Rizal.
Elena Muller then filed a petition for review on certiorari.
Issue:
Whether or not respondent Helmut Muller is entitled to reimbursement.
Ruling:
No, respondent Helmut Muller is not entitled to reimbursement.
Ratio Decidendi:
There is an express prohibition against foreigners owning land in the Philippines.
Art. XII, Sec. 7 of the 1987 Constitution provides: “Save in cases of hereditary succession,
no private lands shall be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain.”
In the case at bar, the respondent willingly and knowingly bought the property despite a
constitutional prohibition. And to get away with that constitutional prohibition, he put the
property under the name of his Filipina wife. He tried to do indirectly what the fundamental
law bars him to do directly.
With this, the Supreme Court ruled that respondent cannot seek reimbursement on the
ground of equity. It has been held that equity as a rule will follow the law and will not
permit that to be done indirectly which, because of public policy, cannot be done directly.
JACOBUS BERNHARD HULST v. PR BUILDERS
FACTS:
The Petitioner and his spouse, both Dutch Nationals,entered into a Contract to Sell
with PR Builders, Inc. to purchase a 210-sq m residential unit in the respondent's
townhouse project in Batanagas. When PR Builder's failed to comply with their
verbalpromise to complete the project, the spouses Hulst filed a complaint for
recession
of contract with interest, damages and attorney's fees before the Housing and LandR
egulatory Board (HLURB), which then was granted. A Writ of Execution was
thenaddressed to the Ex-Officio Sheriff of the RTC of Tanauan, Batangas, but upon
thecomplaint of the respondent, the levy was set aside, leaving only the
respondent'spersonal properties to be levied first. The Sheriff set a public auction of
the said leviedproperties, however, the respondent filed a motion to quash Writ of
levy on the ground
that the sheriff made an over levy since the aggregate appraised value of theproperti
es at P6,500 per sq m is P83,616,000. Instead of resolving the objection of the
respondent's regarding the auction, the Sheriff proceeded with the auction since
there was no restraining order from the HLURB. The 15 parcels of land was then
awarded to Holly Properties Realty at a bid of P5,450,653. On the same day, the
Sheriff remitted the legal fees and submitted to contracts of sale to HLURB,
however, he then received orders to suspend proceedings on the auction for the
reason that the market value of the properties was not fair. There was disparity
between the appraised value and thevalue made by the petitioner and the Sheriff,
which should've been looked into by the Sheriff before making the sale. While an
inadequacy in price is not a ground to annul
such sale, the court is justified to such intervention where the price shocks the
conscience.
Issues:
This resolves petitioner's Motion for Partial Reconsideration.
Ruling:
Under Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act,
foreign nationals can own Philippine real estate through the purchase of
condominium units or townhouses constituted under the Condominium principle
with Condominium Certificates of Title.
Where the common areas in a condominium project are held by a corporation, no
transfer or conveyance of a unit shall be valid if the concomitant transfer of the
appurtenant... membership or stockholding in the corporation will cause the alien
interest in such corporation to exceed the limits imposed by existing laws.
The law provides that no condominium unit can be sold without at the same time
selling the corresponding amount of rights, shares or other interests in the
condominium management body, the Condominium Corporation; and no one can
buy shares in a Condominium Corporation without at... the same time buying a
condominium unit.
It expressly allows foreigners to acquire condominium units and shares in
condominium corporations up to not more than 40% of the total and outstanding
capital stock of a Filipino-owned or controlled corporation.
Under this set up, the... ownership of the land is legally separated from the unit
itself. The land is owned by a Condominium Corporation and the unit owner is
simply a member in this Condominium Corporation.
Manila Prince Hotel vs. Government Service Insurance System
Facts:
The controversy arose when respondent Government Service Insurance System
(GSIS), pursuant to the privatization program of the Philippine Government, decided
to sell through public bidding 30% to 51% of the issued and outstanding shares of
respondent Manila Hotel Corporation (MHC). The winning bidder, or the eventual
“strategic partner,” will provide management expertise or an international
marketing/reservation system, and financial support to strengthen the profitability and
performance of the Manila Hotel.
In a close bidding held on 18 September 1995 only two (2) bidders participated:
petitioner Manila Prince Hotel Corporation, a Filipino corporation, which offered to
buy 51% of the MHC or 15,300,000 shares at P41.58 per share, and Renong Berhad,
a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same
number of shares at P44.00 per share, or P2.42 more than the bid of petitioner. Prior
to the declaration of Renong Berhard as the winning bidder, petitioner Manila Prince
Hotel matched the bid price and sent a manager’s check as bid security, which GSIS
refused to accept.
Apprehensive that GSIS has disregarded the tender of the matching bid and that the
sale may be consummated with Renong Berhad, petitioner filed a petition before the
Court.
Issues:
Whether or not Sec. 10, second par., Art. XII, of the 1987 Constitution is a self-
executing provision.
Whether or not the Manila Hotel forms part of the national patrimony.
Whether or not the submission of matching bid is premature
Whether or not there was grave abuse of discretion on the part of the respondents in
refusing the matching bid of the petitioner.
Rulings:
In the resolution of the case, the Court held that:
It is a self-executing provision.
Since the Constitution is the fundamental, paramount and supreme law of the nation,
it is deemed written in every statute and contract. A provision which lays down a
general principle, such as those found in Art. II of the 1987 Constitution, is usually
not self-executing. But a provision which is complete in itself and becomes operative
without the aid of supplementary or enabling legislation, or that which supplies
sufficient rule by means of which the right it grants may be enjoyed or protected, is
self-executing.
A constitutional provision is self-executing if the nature and extent of the right
conferred and the liability imposed are fixed by the constitution itself, so that they
can be determined by an examination and construction of its terms, and there is no
language indicating that the subject is referred to the legislature for action. Unless it
is expressly provided that a legislative act is necessary to enforce a constitutional
mandate, the presumption now is that all provisions of the constitution are self-
executing. If the constitutional provisions are treated as requiring legislation instead
of self-executing, the legislature would have the power to ignore and practically
nullify the mandate of the fundamental law.
10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command
which is complete in itself and which needs no further guidelines or implementing
laws or rules for its enforcement. From its very words the provision does not require
any legislation to put it in operation. It is per se judicially enforceable. When our
Constitution mandates that in the grant of rights, privileges, and concessions covering
national economy and patrimony, the State shall give preference to qualified
Filipinos, it means just that – qualified Filipinos shall be preferred. And when our
Constitution declares that a right exists in certain specified circumstances an action
may be maintained to enforce such right notwithstanding the absence of any
legislation on the subject; consequently, if there is no statute especially enacted to
enforce such constitutional right, such right enforces itself by its own inherent
potency and puissance, and from which all legislations must take their bearings.
Where there is a right there is a remedy. Ubi jus ibi remedium.
The Court agree.
In its plain and ordinary meaning, the term patrimony pertains to heritage. When the
Constitution speaks of national patrimony, it refers not only to the natural resources
of the Philippines, as the Constitution could have very well used the term natural
resources, but also to the cultural heritage of the Filipinos.
It also refers to Filipino’s intelligence in arts, sciences and letters. In the present case,
Manila Hotel has become a landmark, a living testimonial of Philippine heritage.
While it was restrictively an American hotel when it first opened in 1912, a concourse
for the elite, it has since then become the venue of various significant events which
have shaped Philippine history.
Verily, Manila Hotel has become part of our national economy and patrimony. For
sure, 51% of the equity of the MHC comes within the purview of the constitutional
shelter for it comprises the majority and controlling stock, so that anyone who
acquires or owns the 51% will have actual control and management of the hotel. In
this instance, 51% of the MHC cannot be disassociated from the hotel and the land
on which the hotel edifice stands.
It is not premature.
In the instant case, where a foreign firm submits the highest bid in a public bidding
concerning the grant of rights, privileges and concessions covering the national
economy and patrimony, thereby exceeding the bid of a Filipino, there is no question
that the Filipino will have to be allowed to match the bid of the foreign entity. And if
the Filipino matches the bid of a foreign firm the award should go to the Filipino. It
must be so if the Court is to give life and meaning to the Filipino First Policy provision
of the 1987 Constitution. For, while this may neither be expressly stated nor
contemplated in the bidding rules, the constitutional fiat is omnipresent to be simply
disregarded. To ignore it would be to sanction a perilous skirting of the basic law.
The Court does not discount the apprehension that this policy may discourage foreign
investors. But the Constitution and laws of the Philippines are understood to be
always open to public scrutiny. These are given factors which investors must consider
when venturing into business in a foreign jurisdiction. Any person therefore desiring
to do business in the Philippines or with any of its agencies or instrumentalities is
presumed to know his rights and obligations under the Constitution and the laws of
the forum.
There was grave abuse of discretion.
To insist on selling the Manila Hotel to foreigners when there is a Filipino group
willing to match the bid of the foreign group is to insist that government be treated as
any other ordinary market player, and bound by its mistakes or gross errors of
judgement, regardless of the consequences to the Filipino people. The
miscomprehension of the Constitution is regrettable. Thus, the Court would rather
remedy the indiscretion while there is still an opportunity to do so than let the
government develop the habit of forgetting that the Constitution lays down the basic
conditions and parameters for its actions.
Since petitioner has already matched the bid price tendered by Renong Berhad
pursuant to the bidding rules, respondent GSIS is left with no alternative but to award
to petitioner the block of shares of MHC and to execute the necessary agreements and
documents to effect the sale in accordance not only with the bidding guidelines and
procedures but with the Constitution as well. The refusal of respondent GSIS to
execute the corresponding documents with petitioner as provided in the bidding rules
after the latter has matched the bid of the Malaysian firm clearly constitutes grave
abuse of discretion.
Hence, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA
HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF
THE GOVERNMENT CORPORATE COUNSEL are directed to CEASE and
DESIST from selling 51% of the shares of the Manila Hotel Corporation to RENONG
BERHAD, and to ACCEPT the matching bid of petitioner MANILA PRINCE
HOTEL CORPORATION to purchase the subject 51% of the shares of the Manila
Hotel Corporation at P44.00 per share and thereafter to execute the necessary
agreements and documents to effect the sale, to issue the necessary clearances and to
do such other acts and deeds as may be necessary for the purpose.
Tatad vs. Garcia
Facts:
DOTC planned to construct a light railway transit line along EDSA (EDSA LRT III) to
provide a mass transit system and alleviate the congestion and growing transportation
problem in the metropolis. RA 6957 was enacted allowing for the financing, construction
and operation of government projects through private initiative and investment.
Accordingly, prequalification and bidding was made and EDSA LRT Corporation
(organized under HK laws) was recommended to be awarded with the contract. The
President approved the awarding of the contract. Petitioners are senators praying for
the prohibition of respondents from further implementing and enforcing the contract.
Issue:
Whether or not the EDSA LRT III, a public utility, can be owned by a foreign corporation.
Ruling: YES.
The Constitution, in no uncertain terms, requires a franchise for the operation of a public
utility. However, it does not require a franchise before one can own the facilities needed
to operate a public utility so long as it does not operate them to serve the public.
In law, there is a clear distinction between the “operation” of a public utility and the
ownership of the facilities and equipment used to serve the public. Ownership is defined
as a relation in law by virtue of which a thing pertaining to one person is completely
subjected to his will in everything not prohibited by law or the concurrence with the
rights of another. The exercise of the rights encompassed in ownership is limited by law
so that a property cannot be operated and used to serve the public as a public utility
unless the operator has a franchise. The operation of a rail system as a public utility
includes the transportation of passengers from one point to another point, their loading
and unloading at designated places and the movement of the trains at pre-scheduled
times.
In sum, private respondent will not run the light rail vehicles and collect fees from the
riding public. It will have no dealings with the public and the public will have no right to
demand any services from it. Even the mere formation of a public utility corporation
does not ipso facto characterize the corporation as one operating a public utility. The
moment for determining the requisite Filipino nationality is when the entity applies for
a franchise, certificate or any other form of authorization for that purpose.
JG Summit Holdings vs Court of Appeals
Facts: On 27 January 1977, the National Investment and Development Corporation
(NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with
Kawasaki Heavy Industries, Ltd. of Kobe, Japan (Kawasaki) for the construction, operation,
and management of the Subic National Shipyard, Inc. (SNS), which subsequently became the
Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, NIDC and
Kawasaki would maintain a shareholding proportion of 60% - 40%, respectively. One of the
provisions of the JVA accorded the parties the right of first refusal should either party sell,
assign or transfer its interest in the joint venture. On 25 November 1986, NIDC transferred all
its rights, title and interest in PHILSECO to the Philippine National Bank (PNB).
More than two months later or on 3 February 1987, by virtue of Administrative Order 14,
PNB's interest in PHILSECO was transferred to the National Government. Meanwhile, on 8
December 1986, President Corazon C. Aquino issued Proclamation 50 establishing the
Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to and
possession of, conserve, manage and dispose of non-performing assets of the National
Government. On 27 February 1987, a trust agreement was entered into between the National
Government and the APT by virtue of which the latter was named the trustee of the National
Government's share in PHILSECO. In 1989, as a result of a quasi-reorganization of
PHILSECO to settle its huge obligations to PNB, the National Government's shareholdings in
PHILSECO increased to 97.41% thereby reducing Kawasaki's shareholdings to 2.59%.
Exercising their discretion, the COP and the APT deemed it in the best interest of the national
economy and the government to privatize PHILSECO by selling 87.67% of its total
outstanding capital stock to private entities.
After a series of negotiations between the APT and Kasawaki, they agreed that the latter's
right of first refusal under the JVA be "exchanged" for the right to top by 5% the highest bid
for said shares. They further agreed that Kawasaki would be entitled to name a company in
which it was a stockholder, which could exercise the right to top. On 7 September 1990,
Kawasaki informed APT that Philyards Holdings, Inc. (PHI) would exercise its right to top
by 5%. At the pre-bidding conference held on 28 September 1993, interested bidders were
given copies of the JVA between NIDC and Kawasaki, and of the Asset Specific Bidding
Rules (ASBR) drafted for the 87.67% equity (sic) in PHILSECO of the National Government.
The provisions of the ASBR were explained to the interested bidders who were notified that
bidding would be held on 2 December 1993. At the public bidding on said date, the consortium
composed of JG Summit Holdings, Inc. (JGSMI), Sembawang Shipyard Ltd. of Singapore
(Sembawang), and Jurong Shipyard Limited of Malaysia (Jurong), was declared the highest
bidder at P2.03 billion. The following day, the COP approved the sale of 87.67% National
Government shares of stock in PHILSECO to said consortium. It notified JGSMI of said
approval "subject to the right of Kawasaki Heavy Industries, Inc./Philyards Holdings, Inc. to
top JGSMI's bid by 5% as specified in the bidding rules."
On 29 December 1993, JGSMI informed the APT that it was protesting the offer of PHI to
top its bid on the grounds that: (a) the Kawasaki/PHI consortium composed of Kawasaki,
Philyards, Mitsui, Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the
last four (4) companies were the losing bidders (for P1.528 billion) thereby circumventing the
law and prejudicing the weak winning bidder; (b) only Kawasaki could exercise the right to
top; (c) giving the same option to top to PHI constituted unwarranted benefit to a third party;
(d) no right of first refusal can be exercised in a public bidding or auction sale, and (e) the JG
Summit Consortium was not estopped from questioning the proceedings. On 2 February 1994,
JGSMI was notified that PHI had fully paid the balance of the purchase price of the subject
bidding. On 7 February 1994, the APT notified JGSMI that PHI had exercised its option to
top the highest bid and that the COP had approved the same on 6 January 1994. On 24
February 1994, the APT and PHI executed a Stock Purchase Agreement. Consequently,
JGSMI filed with the Supreme Court a petition for mandamus under GR 114057. On 11 May
1994, said petition was referred to the Court of Appeals. On 18 July 1995, the Court of Appeals
"denied" for lack of merit the petition for mandamus. JGSMI filed a motion for the
reconsideration of said Decision which was denied on 15 March 1996. JGSMI filed the
petition for review on certiorari.
Issue: Whether PHILSECO, as a shipyard, is a public utility and, hence, could be operated
only by a corporation at least 60% of whose capital is owned by Filipino citizens, in
accordance with Article XII, Section 10 of the Constitution.
Held: A shipyard such as PHILSECO being a public utility as provided by law, Section 11 of
the Article XII of the Constitution applies. The provision states that "No franchise, certificate,
or any other form of authorization for the operation of a public utility shall be granted except
to citizens of the Philippines or to corporations or associations organized under the laws of
the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall
such franchise, certificate, or authorization be exclusive in character or for a longer period
than fifty years. Neither shall any such franchise or right be granted except under the condition
that it shall be subject to amendment, alteration, or repeal by the Congress when the common
good so requires. The State shall encourage equity participation in public utilities by the
general public. The participation of foreign investors in the governing body of any public
utility enterprise shall be limited to their proportionate share in its capital, and all the executive
and managing officers of such corporation or association shall be citizens of the Philippines."
The progenitor of this constitutional provision, Article XIV, Section 5 of the 1973
Constitution, required the same proportion of 60% - 40% capitalization. The JVA between
NIDC and Kawasaki entered into on 27 January 1977 manifests the intention of the parties to
abide by the constitutional mandate on capitalization of public utilities. The joint venture
created between NIDC and Kawasaki falls within the purview of an "association" pursuant to
Section 5 of Article XIV of the 1973 Constitution and Section 11 of Article XII of the 1987
Constitution. Consequently, a joint venture that would engage in the business of operating a
public utility, such as a shipyard, must observe the proportion of 60%-40% Filipino-foreign
capitalization. Further, paragraph 1.4 of the JVA accorded the parties the right of first refusal
"under the same terms." This phrase implies that when either party exercises the right of first
refusal under paragraph 1.4, they can only do so to the extent allowed them by paragraphs 1.2
and 1.3 of the JVA or under the proportion of 60%-40% of the shares of stock. Thus, should
the NIDC opt to sell its shares of stock to a third party, Kawasaki could only exercise its right
of first refusal to the extent that its total shares of stock would not exceed 40% of the entire
shares of stock of SNS or PHILSECO. The NIDC, on the other hand, may purchase even
beyond 60% of the total shares. As a government corporation and necessarily a 100% Filipino-
owned corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the
capitalization as the Constitution clearly limits only foreign capitalization. Kawasaki was
bound by its contractual obligation under the JVA that limits its right of first refusal to 40%
of the total capitalization of PHILSECO. Thus, Kawasaki cannot purchase beyond 40% of the
capitalization of the joint venture on account of both constitutional and contractual
proscriptions. From the facts on record, it appears that at the outset, the APT and Kawasaki
respected the 60%-40% capitalization proportion in PHILSECO. However, APT subsequently
encouraged Kawasaki to participate in the public bidding of the National Government's
shareholdings of 87.67% of the total PHILSECO shares, definitely over and above the 40%
limit of its shareholdings. In so doing, the APT went beyond the ambit of its authority.
Gamboa vs. Teves
Facts:
The issue started when petitioner Gamboa questioned the indirect sale of shares involving
almost 12 million shares of the Philippine Long Distance Telephone Company (PLDT) owned
by PTIC to First Pacific. Thus, First Pacific’s common shareholdings in PLDT increased from
30.7 percent to 37 percent, thereby increasing the total common shareholdings of foreigners
in PLDT to about 81.47%. The petitioner contends that it violates the Constitutional provision
on filipinazation of public utility, stated in Section 11, Article XII of the 1987 Philippine
Constitution, which limits foreign ownership of the capital of a public utility to not more than
40%. Then, in 2011, the court ruled the case in favor of the petitioner, hence this new case,
resolving the motion for reconsideration for the 2011 decision filed by the respondents.
Issue: Whether or not the Court made an erroneous interpretation of the term ‘capital’ in its
2011 decision?
Held/Reason: The Court said that the Constitution is clear in expressing its State policy of
developing an economy ‘effectively controlled’ by Filipinos. Asserting the ideals that our
Constitution’s Preamble want to achieve, that is – to conserve and develop our patrimony ,
hence, the State should fortify a Filipino-controlled economy. In the 2011 decision, the Court
finds no wrong in the construction of the term ‘capital’ which refers to the ‘shares with voting
rights, as well as with full beneficial ownership’ (Art. 12, sec. 10) which implies that the right
to vote in the election of directors, coupled with benefits, is tantamount to an effective
control. Therefore, the Court’s interpretation of the term ‘capital’ was not erroneous. Thus,
the motion for reconsideration is denied.
Roy III vs. Herbosa
Facts:
Before the Court is the Motion for Reconsideration dated January 19, 2017 (the Motion) filed
by petitioner Jose M. Roy III (movant) seeking the reversal and setting aside of the Decision
dated November 22, 2016 (the Decision) which denied the movant's petition, and declared
that the Securities and Exchange Commission (SEC) did not commit grave abuse of discretion
in issuing Memorandum Circular No. 8, Series of 2013 (SEC-MC No. 8) as the same was in
compliance with, and in fealty to, the decision of the Court in Gamboa v. Finance Secretary
Teves (Gamboa Decision) and the resolution denying the Motion for Reconsideration therein
(Gamboa Resolution).
The Motion presents no compelling and new arguments to justify the reconsideration of the
Decision.
The Decision has already exhaustively discussed and directly passed upon these grounds.
Movant's petition was dismissed based on both procedural and substantive grounds.
Issue:
Whether or not SEC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it issued SEC-MC No. 8.
Held:
SEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction
when it issued SEC-MC No. 8. The Court finds SEC-MC No. 8 to have been issued in fealty
to the Gamboa Decision and Resolution.
Pursuant to the Court's constitutional duty to exercise judicial review, the Court has
conclusively found no grave abuse of discretion on the part of SEC in issuing SEC-MC No.
8.
The Decision has painstakingly explained why it considered as obiter dictum that
pronouncement in the Gamboa Resolution that the constitutional requirement on Filipino
ownership should "apply uniformly and across the board to all classes of shares, regardless of
nomenclature and category, comprising the capital of a corporation." The Court stated that:
The fallo or decretal/dispositive portions of both the Gamboa Decision and Resolution are
definite, clear and unequivocal. While there is a passage in the body of the Gamboa Resolution
that might have appeared contrary to the fallo of the Gamboa Decision, the definiteness and
clarity of the fallo of the Gamboa Decision must control over the obiter dictum in the Gamboa
Resolution regarding the application of the 60-40 Filipino-foreign ownership requirement to
"each class of shares, regardless of differences in voting rights, privileges and restrictions."
To the Court's mind and, as exhaustively demonstrated in the Decision, the dispositive portion
of the Gamboa Decision was in no way modified by the Gamboa Resolution.
The heart of the controversy is the interpretation of Section 11, Article XII of the Constitution,
which provides: "No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to corporations or
associations organized under the laws of the Philippines at least sixty per centum of whose
capital is owned by such citizens."
The Gamboa Decision already held, in no uncertain terms, that what the Constitution requires
is full and legal beneficial ownership of 60 percent of the outstanding capital stock, coupled
with 60 percent of the voting rights must rest in the hands of Filipino nationals. And, precisely
that is what SEC-MC No. 8 provides; For purposes of determining compliance with the
constitutional or statutory ownership, the required percentage of Filipino ownership shall be
applied to both the total number of outstanding shares of stock entitled to vote in the election
of directors; and (b) the total number of outstanding shares of stock, whether or not entitled
to vote.
In conclusion, the basic issues raised in the Motion having been duly considered and passed
upon by the Court in the Decision and no substantial argument having been adduced to warrant
the reconsideration sought, the Court resolves to deny the Motion with finality.
Metropolitan Cebu Water District vs. Adala
The Metropolitan Cebu Water District (MCWD), a public corporation, appealed the decision
rendered in favor of Margarita A. Adala (Adala) by the National Water Resources Board
(NWRB), granting her a franchise permit to supply water to three sitios in Bulacao. MCWD
was the exclusive distributor of water in the district. MCWD contended that the proposed
waterworks would interfere with their water supply which it has the right to protect, and the
water needs of the residents in the subject area was already being well served by petitioner.
They also contend that they were granted by Section 47 of Presidential Decree 198, granting
exclusive franchise only to public utilities. Engineer Paredes, the general manager of MCWD,
filed Certificate of Public Convenience by the National Water Resources Board (NWRB),
which permitted the company to operate and maintain waterworks supply services. MCWD
alleged that the Board of Directors of MCWD did not give consent to the issuance of
the franchiseapplied for.
ISSUES:
Whether or not Section 47 of Presidential Decree 198 grants exclusive franchise to public
utilities
HELD:
MWCD‘s position that an overly strict construction of the term ―franchise as used in Section
47 of P.D. 198 would lead to an absurd result impresses. If franchises, in this context, were
strictly understood to mean an authorization issuing directly from the legislature, it would
follow that, while Congress cannot issue franchises for operating waterworks systems without
the water district‘s consent, the NWRB may keep on issuing CPCs authorizing the very
same act even without such consent. In effect, not only would the NWRB be subject to less
constraints than Congress in issuing franchises. The exclusive character of
the franchise provided for by Section 47 would be illusory. While the prohibition in Section
47 of P.D. 198 applies to the issuance of CPCs for the reasons discussed above, the same
provision must be deemed void ab initio for being irreconcilable with Article XIV Section 5
of the 1973 Constitution which was ratified on January 17, 1973 – the constitution in force
when P.D. 198 was issued on May 25, 1973. That the legislative authority – in this instance,
then President Marcos – intended to delegate its power to issue franchisesin the case of water
districts is clear from the fact that, pursuant to the procedure outlined in P.D. 198, it no longer
plays a direct role in authorizing the formation and maintenance of water districts, it having
vested the same to local legislative bodies and the Local Water Utilities Administration
(LWUA).
Manila International Airport Authority vs CA
Facts:
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino
International Airport (NAIA)
As operator of the international airport, MIAA administers the land, improvements and
equipment within the NAIA Complex. The MIAA Charter transferred to MIAA
approximately 600 hectares of land,... The MIAA Charter further provides that no portion of
the land transferred to MIAA shall be disposed of through sale or any other mode unless
specifically approved by the President of the
Philippines.
The OGCC opined that the Local Government Code of 1991 withdrew the exemption from
real estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA
negotiated with... respondent City of Parañaque to pay the real estate tax imposed by the City.
MIAA then paid some of the real estate tax already due.
MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque
The Mayor of the City of Parañaque threatened to sell at public auction the Airport Lands and
Buildings should MIAA fail to pay the... real estate tax delinquency.
MIAA filed with the Court of Appeals an original petition for prohibition and injunction
The petition sought to restrain the City of Parañaque from imposing real estate tax on,
levying... against, and auctioning for public sale the Airport Lands and Buildings.
Court of Appeals dismissed the petition because MIAA filed it beyond the 60-day
reglementary period.
Court of Appeals also denied... motion for reconsideration... the present petition for review.
MIAA insists that it is... exempt from real estate tax under Section 234 of the Local
Government Code because the Airport Lands and Buildings are owned by... the Republic.
To justify the exemption, MIAA invokes the principle that the government cannot tax itself.
Respondents invoke Section 193 of the Local Government Code, which expressly withdrew
the tax exemption privileges of "government-owned and-controlled corporations" upon the
effectivity of the Local Government Code.
Issues:
whether the Airport Lands and Buildings of MIAA are exempt from real estate tax under
existing laws.
Ruling:
We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by
local governments.
First, MIAA is not a government-owned or controlled corporation but an instrumentality of
the National Government and thus exempt from local taxation. Second, the real properties of
MIAA are owned by the Republic of the Philippines and thus... exempt from real estate tax.
There is no dispute that a government-owned or controlled corporation is not exempt from
real estate tax. However, MIAA is not a government-owned or controlled corporation.
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a
government-owned or controlled corporation.
MIAA is a government instrumentality vested with corporate powers to perform efficiently
its governmental functions. MIAA is like any other government instrumentality, the only
difference is that MIAA is vested with corporate powers.
When the law vests in a government instrumentality corporate powers, the instrumentality
does not become a corporation. Unless the government instrumentality is organized as a stock
or non-stock corporation, it remains a government instrumentality exercising not only...
governmental but also corporate powers. Thus, MIAA exercises the governmental powers of
eminent domain,... police authority... and the levying of fees and charges.
At the same time, MIAA exercises "all the... powers of a corporation under the Corporation
Law, insofar as these powers are not inconsistent with the provisions of this Executive Order."
When local governments invoke the power to tax on national government instrumentalities,
such power is construed strictly against local governments. The rule is that a tax is never
presumed and there must be clear language in the law imposing the tax. Any doubt whether a
person,... article or activity is taxable is resolved against taxation. This rule applies with
greater force when local governments seek to tax national government instrumentalities.
Another rule is that a tax exemption is strictly construed against the taxpayer claiming the
exemption. However, when Congress grants an exemption to a national government
instrumentality from local taxation, such exemption is construed liberally in favor of the
national... government instrumentality.
There must be express language in the law empowering local governments to tax national
government instrumentalities. Any doubt whether such power exists is resolved against local...
governments.
Liban vs. Gordon
I. THE FACTS
Petitioners Liban, et al., who were officers of the Board of Directors of the Quezon
City Red Cross Chapter, filed with the Supreme Court what they styled as “Petition to Declare
Richard J. Gordon as Having Forfeited His Seat in the Senate” against respondent Gordon,
who was elected Chairman of the Philippine National Red Cross (PNRC) Board of Governors
during his incumbency as Senator.
Petitioners alleged that by accepting the chairmanship of the PNRC Board of
Governors, respondent Gordon ceased to be a member of the Senate pursuant to Sec. 13,
Article VI of the Constitution, which provides that “[n]o Senator . . . may hold any other
office or employment in the Government, or any subdivision, agency, or instrumentality
thereof, including government-owned or controlled corporations or their subsidiaries, during
his term without forfeiting his seat.” Petitioners cited the case of Camporedondo vs.
NLRC, G.R. No. 129049, decided August 6, 1999, which held that the PNRC is a GOCC, in
supporting their argument that respondent Gordon automatically forfeited his seat in the
Senate when he accepted and held the position of Chairman of the PNRC Board of Governors.
 Formerly, in its Decision dated July 15, 2009, the Court, voting 7-5,[1] held that the
office of the PNRC Chairman is NOT a government office or an office in a GOCC for
purposes of the prohibition in Sec. 13, Article VI of the 1987 Constitution. The PNRC
Chairman is elected by the PNRC Board of Governors; he is not appointed by the President
or by any subordinate government official. Moreover, the PNRC is NOT a GOCC because it
is a privately-owned, privately-funded, and privately-run charitable organization and because
it is controlled by a Board of Governors four-fifths of which are private sector
individuals. Therefore, respondent Gordon did not forfeit his legislative seat when he was
elected as PNRC Chairman during his incumbency as Senator.
The Court however held further that the PNRC Charter, R.A. 95, as amended
by PD 1264 and 1643, is void insofar as it creates the PNRC as a private corporation
since Section 7, Article XIV of the 1935 Constitution states that “[t]he Congress shall not,
except by general law, provide for the formation, organization, or regulation of private
corporations, unless such corporations are owned or controlled by the Government or any
subdivision or instrumentality thereof.” The Court thus directed the PNRC to incorporate
under the Corporation Code and register with the Securities and Exchange Commission if it
wants to be a private corporation. The fallo of the Decision read:
WHEREFORE, we declare that the office of the Chairman of the Philippine National
Red Cross is not a government office or an office in a government-owned or controlled
corporation for purposes of the prohibition in Section 13, Article VI of the 1987 Constitution.
We also declare that Sections 1, 2, 3, 4(a), 5, 6, 7, 8, 9, 10, 11, 12, and 13 of the Charter of the
Philippine National Red Cross, or Republic Act No. 95, as amended by Presidential Decree
Nos. 1264 and 1643, are VOID because they create the PNRC as a private corporation or grant
it corporate powers.
Respondent Gordon filed a Motion for Clarification and/or for Reconsideration of
the Decision. The PNRC likewise moved to intervene and filed its own Motion for Partial
Reconsideration. They basically questioned the second part of the Decision with regard to the
pronouncement on the nature of the PNRC and the constitutionality of some provisions of
the PNRC Charter.
II. THE ISSUE
Was it correct for the Court to have passed upon and decided on the issue of the
constitutionality of the PNRC charter? Corollarily: What is the nature of the PNRC?
III. THE RULING
[The Court GRANTED reconsideration and MODIFIED the dispositive portion of
the Decision by deleting the second sentence thereof.]
NO, it was not correct for the Court to have decided on the constitutional issue
because it was not the very lis mota of the case. The PNRC is sui generis in nature; it is
neither strictly a GOCC nor a private corporation.
The issue of constitutionality of R.A. No. 95 was not raised by the parties, and was
not among the issues defined in the body of the Decision; thus, it was not the very lis mota of
the case. We have reiterated the rule as to when the Court will consider the issue of
constitutionality in Alvarez v. PICOP Resources, Inc., thus:
This Court will not touch the issue of unconstitutionality unless it is the very lis mota.
It is a well-established rule that a court should not pass upon a constitutional question and
decide a law to be unconstitutional or invalid, unless such question is raised by the parties and
that when it is raised, if the record also presents some other ground upon which the court may
[rest] its judgment, that course will be adopted and the constitutional question will be left for
consideration until such question will be unavoidable.
[T]his Court should not have declared void certain sections of . . . the PNRC
Charter. Instead, the Court should have exercised judicial restraint on this matter, especially
since there was some other ground upon which the Court could have based its
judgment. Furthermore, the PNRC, the entity most adversely affected by this declaration of
unconstitutionality, which was not even originally a party to this case, was being compelled,
as a consequence of the Decision, to suddenly reorganize and incorporate under the
Corporation Code, after more than sixty (60) years of existence in this country.
Since its enactment, the PNRC Charter was amended several times, particularly on
June 11, 1953, August 16, 1971, December 15, 1977, and October 1, 1979, by virtue of R.A.
No. 855, R.A. No. 6373, P.D. No. 1264, and P.D. No. 1643, respectively. The passage of
several laws relating to the PNRC’s corporate existence notwithstanding the effectivity of the
constitutional proscription on the creation of private corporations by law is a recognition that
the PNRC is not strictly in the nature of a private corporation contemplated by the aforesaid
constitutional ban.
A closer look at the nature of the PNRC would show that there is none like it[,] not
just in terms of structure, but also in terms of history, public service and official status
accorded to it by the State and the international community. There is merit in PNRC’s
contention that its structure is sui generis. It is in recognition of this sui generis character of
the PNRC that R.A. No. 95 has remained valid and effective from the time of its enactment in
March 22, 1947 under the 1935 Constitution and during the effectivity of the 1973
Constitution and the 1987 Constitution. The PNRC Charter and its amendatory laws have not
been questioned or challenged on constitutional grounds, not even in this case before the Court
now.
[T]his Court [must] recognize the country’s adherence to the Geneva Convention and
respect the unique status of the PNRC in consonance with its treaty obligations. The Geneva
Convention has the force and effect of law. Under the Constitution, the Philippines adopts the
generally accepted principles of international law as part of the law of the land. This
constitutional provision must be reconciled and harmonized with Article XII, Section 16 of
the Constitution, instead of using the latter to negate the former. By requiring the PNRC to
organize under the Corporation Code just like any other private corporation, the Decision of
July 15, 2009 lost sight of the PNRC’s special status under international humanitarian law and
as an auxiliary of the State, designated to assist it in discharging its obligations under the
Geneva Conventions.

The PNRC, as a National Society of the International Red Cross and Red Crescent
Movement, can neither “be classified as an instrumentality of the State, so as not to lose its
character of neutrality” as well as its independence, nor strictly as a private corporation since
it is regulated by international humanitarian law and is treated as an auxiliary of the State.

Although [the PNRC] is neither a subdivision, agency, or instrumentality of the

government, nor a GOCC or a subsidiary thereof . . . so much so that respondent, under the
Decision, was correctly allowed to hold his position as Chairman thereof concurrently while
he served as a Senator, such a conclusion does not ipso facto imply that the PNRC is a
“private corporation” within the contemplation of the provision of the Constitution, that must
be organized under the Corporation Code. [T]he sui generis character of PNRC requires us
to approach controversies involving the PNRC on a case-to-case basis.

In sum, the PNRC enjoys a special status as an important ally and auxiliary of the
government in the humanitarian field in accordance with its commitments under international
law. This Court cannot all of a sudden refuse to recognize its existence, especially since the
issue of the constitutionality of the PNRC Charter was never raised by the parties. It bears
emphasizing that the PNRC has responded to almost all national disasters since 1947, and is
widely known to provide a substantial portion of the country’s blood requirements. Its
humanitarian work is unparalleled. The Court should not shake its existence to the core in an
untimely and drastic manner that would not only have negative consequences to those who
depend on it in times of disaster and armed hostilities but also have adverse effects on the
image of the Philippines in the international community. The sections of the PNRC Charter
that were declared void must therefore stay.

[Thus, R.A. No. 95 remains valid and constitutional in its entirety. The Court
MODIFIED the dispositive portion of the Decision by deleting the second sentence, to now
read as follows:

WHEREFORE, we declare that the office of the Chairman of the Philippine

National Red Cross is not a government office or an office in a government-owned or
controlled corporation for purposes of the prohibition in Section 13, Article VI of the 1987
Constitution.

Crisostomo vs. SEC

179 SCRA 146 – Legal Ethics – Duty Against Forum Shopping
Crisostomo is a minority stockholder of the United Doctors Medical Center. He is also the
director and legal counsel of UDMC. The said hospital was unable to pay its P55 million debt
incurred from the Development Bank of the Philippines hence it faced foreclosure. In order
to avoid foreclosure, Crisostomo and some others were able to convince Japanese doctors to
invest in the hospital. Eventually, these Japanese doctors invested P57 million in said hospital.
Pursuant to the Memorandum in lieu of the investment, the Japanese doctors were promised to
be part of the hospital’s board of directors. But then, instead of holding an election for the new
board of directors, Crisostomo opposed the same citing constitutional grounds. The issue
reached the Securities and Exchange Commission which ordered UDMC to hold the election.
Meanwhile, Crisostomo filed an action to annul the Memorandum agreed with the Japanese
doctors before the Regional Trial Court of Makati. The said RTC denied Crisostomo’s
petition.
Crisostomo then appealed the two decisions (SEC’s and the RTC’s) before the Court of
Appeals. Not only that, while the two cases were pending appeal, he also filed a petition for
certiorari directly to the Supreme Court.
ISSUE: Whether or not Crisostomo is guilty of forum shopping.
HELD: Yes. All three actions he filed raise the same issues that he raised in the different
tribunals. There is forum-shopping whenever, as a result of an adverse opinion in one forum,
a party seeks a favorable opinion (other than by appeal or certiorari) in another. The principle
applies not only with respect to suits filed in the courts but also in connection with litigations
commenced in the courts while an administrative proceeding is pending, as in this case, in
order to defeat administrative processes and in anticipation of an unfavorable administrative
ruling and a favorable court ruling.
Forum-shopping makes the Crisostomo subject to disciplinary action and renders his petitions
in the Supreme Court and in the Court of Appeals dismissible. He and his counsel are guilty
of contempt. Crisosotmo is ordered by the Supreme Court to pay double the costs of the suit.
Petition for leave to Resume Practice of law, Benjamin Dacanay
In 1998, Atty. Benjamin Dacanay went to Canada to seek medical help. In order for him to
take advantage of Canada’s free medical aid program he became a Canadian citizen in 2004.
In 2006 however, he re-acquired his Philippine citizenship pursuant to Republic Act 9225 of
the Citizenship Retention and Re-Acquisition Act of 2003. In the same year, he returned to
the Philippines and he now intends to resume his practice of law.
ISSUE: Whether or not Benjamin Dacanay may still resume his practice of law.
HELD: Yes. As a rule, the practice of law and other professions in the Philippines are
reserved and limited only to Filipino citizens. Philippine citizenship is a requirement for
admission to the bar. So when Dacanay became a Canadian citizen in 2004, he ceased to have
the privilege to practice law in the Philippines. However, under RA 9225, a Filipino lawyer
who becomes a citizen of another country is deemed never to have lost his Philippine
citizenship if he reacquires his Filipino citizenship in accordance with RA 9225. Hence,
when Dacanay reacquires his Filipino citizenship in 2006, his membership to the Philippine
bar was deemed to have never been terminated.
But does this also mean that he can automatically resume his practice of law right after
reacquisition?
No. Dacanay must still comply with several conditions before he can resume his practice of
law, to wit:
(a) the updating and payment in full of the annual membership dues in the IBP;
(b) the payment of professional tax;
(c) the completion of at least 36 credit hours of mandatory continuing legal education; this is
especially significant to refresh the applicant/petitioner’s knowledge of Philippine laws and
update him of legal developments and
(d) the retaking of the lawyer’s oath which will not only remind him of his duties and
responsibilities as a lawyer and as an officer of the Court, but also renew his pledge to maintain
allegiance to the Republic of the Philippines.
Compliance with these conditions will restore his good standing as a member of the Philippine
bar.
Santiago vs. Comelec
Political Law – Revision vs Amendment to the Constitution
On 6 Dec 1996, Atty. Jesus S. Delfin filed with COMELEC a “Petition to Amend the
Constitution to Lift Term Limits of elective Officials by People’s Initiative” The COMELEC
then, upon its approval, a.) set the time and dates for signature gathering all over the
country, b.) caused the necessary publication of the said petition in papers of general
circulation, and c.) instructed local election registrars to assist petitioners and volunteers in
establishing signing stations. On 18 Dec 1996, MD Santiago et al filed a special civil action
for prohibition against the Delfin Petition. Santiago argues among others that the People’s
Initiative is limited to amendments to the Constitution NOT a revision thereof. The extension
or the lifting of the term limits of those in power (particularly the President) constitutes
revision and is therefore beyond the power of people’s initiative.
ISSUE: Whether the proposed Delfin petition constitutes amendment to the constitution or
does it constitute a revision.
HELD: The Delfin proposal does not involve a mere amendment to, but a revision of, the
Constitution because, in the words of Fr. Joaquin Bernas, SJ., it would involve a change from
a political philosophy that rejects unlimited tenure to one that accepts unlimited tenure; and
although the change might appear to be an isolated one, it can affect other provisions, such as,
on synchronization of elections and on the State policy of guaranteeing equal access to
opportunities for public service and prohibiting political dynasties. A revision cannot be done
by initiative which, by express provision of Section 2 of Article XVII of the Constitution, is
limited to amendments. The prohibition against reelection of the President and the limits
provided for all other national and local elective officials are based on the philosophy of
governance, “to open up the political arena to as many as there are Filipinos qualified to handle
the demands of leadership, to break the concentration of political and economic powers in the
hands of a few, and to promote effective proper empowerment for participation in policy and
decision-making for the common good”; hence, to remove the term limits is to negate and
nullify the noble vision of the 1987 Constitution.
Lambino vs. Comelec
On 25 August 2006, Lambino et al filed a petition with the COMELEC to hold a plebiscite
that will ratify their initiative petition to change the 1987 Constitution under Section 5(b)
and (c)2 and Section 73 of Republic Act No. 6735 or the Initiative and Referendum Act.
The Lambino Group alleged that their petition had the support of 6,327,952 individuals
constituting at least twelve per centum (12%) of all registered voters, with each legislative
district represented by at least three per centum (3%) of its registered voters. The Lambino
Group also claimed that COMELEC election registrars had verified the signatures of the 6.3
million individuals.
The Lambino Group’s initiative petition changes the 1987 Constitution by modifying
Sections 1-7 of Article VI (Legislative Department)4 and Sections 1-4 of Article VII
(Executive Department) and by adding Article XVIII entitled “Transitory Provisions.” These
proposed changes will shift the present Bicameral-Presidential system to a Unicameral-
Parliamentary form of government.
On 30 August 2006, the Lambino Group filed an Amended Petition with the COMELEC
indicating modifications in the proposed Article XVIII (Transitory Provisions) of their
initiative.
The COMELEC denied the petition citing Santiago v. COMELEC declaring RA 6735
inadequate to implement the initiative clause on proposals to amend the Constitution.
ISSUES:
1. Whether the Lambino Group’s initiative petition complies with Section 2, Article XVII of
the Constitution on amendments to the Constitution through a people’s initiative;
2. Whether this Court should revisit its ruling in Santiago declaring RA 6735 “incomplete,
inadequate or wanting in essential terms and conditions” to implement the initiative clause
on proposals to amend the Constitution; and
HELD:
1. The Initiative Petition Does Not Comply with Section 2, Article XVII of the
Constitution on Direct Proposal by the People
Section 2, Article XVII of the Constitution is the governing constitutional provision that
allows a people’s initiative to propose amendments to the Constitution. This section states:
Sec. 2. Amendments to this Constitution may likewise be directly proposed by the people
through initiative upon a petition of at least twelve per centum of the total number of
registered voters of which every legislative district must be represented by at least three per
centum of the registered voters therein. x x x x (Emphasis supplied)
The framers of the Constitution intended that the “draft of the proposed constitutional
amendment” should be “ready and shown” to the people “before” they sign such proposal.
The framers plainly stated that “before they sign there is already a draft shown to them.” The
framers also “envisioned” that the people should sign on the proposal itself because the
proponents must “prepare that proposal and pass it around for signature.”
The essence of amendments “directly proposed by the people through initiative upon a
petition” is that the entire proposal on its face is a petition by the people. This means two
essential elements must be present. First, the people must author and thus sign the entire
proposal. No agent or representative can sign on their behalf. Second, as an initiative upon a
petition, the proposal must be embodied in a petition.
These essential elements are present only if the full text of the proposed amendments is first
shown to the people who express their assent by signing such complete proposal in a
petition. Thus, an amendment is “directly proposed by the people through initiative upon a
petition” only if the people sign on a petition that contains the full text of the proposed
amendments.
There is no presumption that the proponents observed the constitutional requirements in
gathering the signatures. The proponents bear the burden of proving that they complied with
the constitutional requirements in gathering the signatures – that the petition contained, or
incorporated by attachment, the full text of the proposed amendments.
The Lambino Group did not attach to their present petition with this Court a copy of the
paper that the people signed as their initiative petition. The Lambino Group submitted to this
Court a copy of a signature sheet after the oral arguments of 26 September 2006 when they
filed their Memorandum on 11 October 2006.
2. A Revisit of Santiago v. COMELEC is Not Necessary
The present petition warrants dismissal for failure to comply with the basic requirements of
Section 2, Article XVII of the Constitution on the conduct and scope of a people’s initiative
to amend the Constitution. There is no need to revisit this Court’s ruling in Santiago declaring
RA 6735 “incomplete, inadequate or wanting in essential terms and conditions” to cover the
system of initiative to amend the Constitution. An affirmation or reversal of Santiago will not
change the outcome of the present petition. Thus, this Court must decline to revisit Santiago
which effectively ruled that RA 6735 does not comply with the requirements of the
Constitution to implement the initiative clause on amendments to the Constitution.