Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R No. 187167 August 16, 2011

PROF. MERLIN M. MAGALLONA, AKBAYAN PARTY-LIST REP. RISA HONTIVEROS, PROF. HARRY
C. ROQUE, JR., AND UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW STUDENTS, ALITHEA
BARBARA ACAS, VOLTAIRE ALFERES, CZARINA MAY ALTEZ, FRANCIS ALVIN ASILO, SHERYL
BALOT, RUBY AMOR BARRACA, JOSE JAVIER BAUTISTA, ROMINA BERNARDO, VALERIE
PAGASA BUENAVENTURA, EDAN MARRI CAÑETE, VANN ALLEN DELA CRUZ, RENE DELORINO,
PAULYN MAY DUMAN, SHARON ESCOTO, RODRIGO FAJARDO III, GIRLIE FERRER, RAOULLE
OSEN FERRER, CARLA REGINA GREPO, ANNA MARIE CECILIA GO, IRISH KAY KALAW, MARY
ANN JOY LEE, MARIA LUISA MANALAYSAY, MIGUEL RAFAEL MUSNGI, MICHAEL OCAMPO,
JAKLYN HANNA PINEDA, WILLIAM RAGAMAT, MARICAR RAMOS, ENRIK FORT REVILLAS,
JAMES MARK TERRY RIDON, JOHANN FRANTZ RIVERA IV, CHRISTIAN RIVERO, DIANNE MARIE
ROA, NICHOLAS SANTIZO, MELISSA CHRISTINA SANTOS, CRISTINE MAE TABING, VANESSA
ANNE TORNO, MARIA ESTER VANGUARDIA, and MARCELINO VELOSO III, Petitioners,
vs.
HON. EDUARDO ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERTO
ROMULO, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS, HON.
ROLANDO ANDAYA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF BUDGET AND
MANAGEMENT, HON. DIONY VENTURA, IN HIS CAPACITY AS ADMINISTRATOR OF THE
NATIONAL MAPPING & RESOURCE INFORMATION AUTHORITY, and HON. HILARIO DAVIDE, JR.,
IN HIS CAPACITY AS REPRESENTATIVE OF THE PERMANENT MISSION OF THE REPUBLIC OF
THE PHILIPPINES TO THE UNITED NATIONS,Respondents.

DECISION

CARPIO, J.:

The Case

This original action for the writs of certiorari and prohibition assails the constitutionality of Republic Act
No. 95221(RA 9522) adjusting the country’s archipelagic baselines and classifying the baseline regime of
nearby territories.

The Antecedents

In 1961, Congress passed Republic Act No. 3046 (RA 3046)2 demarcating the maritime baselines of the
Philippines as an archipelagic State.3 This law followed the framing of the Convention on the Territorial
Sea and the Contiguous Zone in 1958 (UNCLOS I),4 codifying, among others, the sovereign right of
States parties over their "territorial sea," the breadth of which, however, was left undetermined. Attempts
to fill this void during the second round of negotiations in Geneva in 1960 (UNCLOS II) proved futile.
Thus, domestically, RA 3046 remained unchanged for nearly five decades, save for legislation passed in
1968 (Republic Act No. 5446 [RA 5446]) correcting typographical errors and reserving the drawing of
baselines around Sabah in North Borneo.

In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny. The
change was prompted by the need to make RA 3046 compliant with the terms of the United Nations
Convention on the Law of the Sea (UNCLOS III),5 which the Philippines ratified on 27 February
1984.6 Among others, UNCLOS III prescribes the water-land ratio, length, and contour of baselines of
archipelagic States like the Philippines7 and sets the deadline for the filing of application for the extended
continental shelf.8 Complying with these requirements, RA 9522 shortened one baseline, optimized the
location of some basepoints around the Philippine archipelago and classified adjacent territories, namely,
the Kalayaan Island Group (KIG) and the Scarborough Shoal, as "regimes of islands" whose islands
generate their own applicable maritime zones.

Petitioners, professors of law, law students and a legislator, in their respective capacities as "citizens,
taxpayers or x x x legislators,"9 as the case may be, assail the constitutionality of RA 9522 on two
principal grounds, namely: (1) RA 9522 reduces Philippine maritime territory, and logically, the reach of
the Philippine state’s sovereign power, in violation of Article 1 of the 1987 Constitution, 10 embodying the
terms of the Treaty of Paris11 and ancillary treaties,12 and (2) RA 9522 opens the country’s waters
landward of the baselines to maritime passage by all vessels and aircrafts, undermining Philippine
sovereignty and national security, contravening the country’s nuclear-free policy, and damaging marine
resources, in violation of relevant constitutional provisions.13

In addition, petitioners contend that RA 9522’s treatment of the KIG as "regime of islands" not only results
in the loss of a large maritime area but also prejudices the livelihood of subsistence fishermen. 14 To
buttress their argument of territorial diminution, petitioners facially attack RA 9522 for what it excluded
and included – its failure to reference either the Treaty of Paris or Sabah and its use of UNCLOS III’s
framework of regime of islands to determine the maritime zones of the KIG and the Scarborough Shoal.

Commenting on the petition, respondent officials raised threshold issues questioning (1) the petition’s
compliance with the case or controversy requirement for judicial review grounded on petitioners’ alleged
lack of locus standi and (2) the propriety of the writs of certiorari and prohibition to assail the
constitutionality of RA 9522. On the merits, respondents defended RA 9522 as the country’s compliance
with the terms of UNCLOS III, preserving Philippine territory over the KIG or Scarborough Shoal.
Respondents add that RA 9522 does not undermine the country’s security, environment and economic
interests or relinquish the Philippines’ claim over Sabah.

Respondents also question the normative force, under international law, of petitioners’ assertion that what
Spain ceded to the United States under the Treaty of Paris were the islands and all the waters found
within the boundaries of the rectangular area drawn under the Treaty of Paris.

We left unacted petitioners’ prayer for an injunctive writ.

The Issues

The petition raises the following issues:

1. Preliminarily –

1. Whether petitioners possess locus standi to bring this suit; and

2. Whether the writs of certiorari and prohibition are the proper remedies to assail the
constitutionality of RA 9522.

2. On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court

On the threshold issues, we hold that (1) petitioners possess locus standi to bring this suit as citizens and
(2) the writs of certiorari and prohibition are proper remedies to test the constitutionality of RA 9522. On
the merits, we find no basis to declare RA 9522 unconstitutional.
On the Threshold Issues
Petitioners Possess Locus
Standi as Citizens

Petitioners themselves undermine their assertion of locus standi as legislators and taxpayers because the
petition alleges neither infringement of legislative prerogative15 nor misuse of public funds,16 occasioned
by the passage and implementation of RA 9522. Nonetheless, we recognize petitioners’ locus standi as
citizens with constitutionally sufficient interest in the resolution of the merits of the case which
undoubtedly raises issues of national significance necessitating urgent resolution. Indeed, owing to the
peculiar nature of RA 9522, it is understandably difficult to find other litigants possessing "a more direct
and specific interest" to bring the suit, thus satisfying one of the requirements for granting citizenship
standing.17

The Writs of Certiorari and Prohibition

Are Proper Remedies to Test
the Constitutionality of Statutes

In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict observance
of the offices of the writs of certiorari and prohibition, noting that the writs cannot issue absent any
showing of grave abuse of discretion in the exercise of judicial, quasi-judicial or ministerial powers on the
part of respondents and resulting prejudice on the part of petitioners. 18

Respondents’ submission holds true in ordinary civil proceedings. When this Court exercises its
constitutional power of judicial review, however, we have, by tradition, viewed the writs of certiorari and
prohibition as proper remedial vehicles to test the constitutionality of statutes,19 and indeed, of acts of
other branches of government.20 Issues of constitutional import are sometimes crafted out of statutes
which, while having no bearing on the personal interests of the petitioners, carry such relevance in the life
of this nation that the Court inevitably finds itself constrained to take cognizance of the case and pass
upon the issues raised, non-compliance with the letter of procedural rules notwithstanding. The statute
sought to be reviewed here is one such law.

RA 9522 is Not Unconstitutional

RA 9522 is a Statutory Tool
to Demarcate the Country’s
Maritime Zones and Continental
Shelf Under UNCLOS III, not to
Delineate Philippine Territory

Petitioners submit that RA 9522 "dismembers a large portion of the national territory" 21 because it
discards the pre-UNCLOS III demarcation of Philippine territory under the Treaty of Paris and related
treaties, successively encoded in the definition of national territory under the 1935, 1973 and 1987
Constitutions. Petitioners theorize that this constitutional definition trumps any treaty or statutory provision
denying the Philippines sovereign control over waters, beyond the territorial sea recognized at the time of
the Treaty of Paris, that Spain supposedly ceded to the United States. Petitioners argue that from the
Treaty of Paris’ technical description, Philippine sovereignty over territorial waters extends hundreds of
nautical miles around the Philippine archipelago, embracing the rectangular area delineated in the Treaty
of Paris.22

Petitioners’ theory fails to persuade us.

UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty regulating,
among others, sea-use rights over maritime zones (i.e., the territorial waters [12 nautical miles from the
baselines], contiguous zone [24 nautical miles from the baselines], exclusive economic zone [200 nautical
miles from the baselines]), and continental shelves that UNCLOS III delimits. 23 UNCLOS III was the
culmination of decades-long negotiations among United Nations members to codify norms regulating the
conduct of States in the world’s oceans and submarine areas, recognizing coastal and archipelagic
States’ graduated authority over a limited span of waters and submarine lands along their coasts.

On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to mark-
out specific basepoints along their coasts from which baselines are drawn, either straight or contoured, to
serve as geographic starting points to measure the breadth of the maritime zones and continental shelf.
Article 48 of UNCLOS III on archipelagic States like ours could not be any clearer:

Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive economic
zone and the continental shelf. – The breadth of the territorial sea, the contiguous zone, the exclusive
economic zone and the continental shelf shall be measured from archipelagic baselines drawn in
accordance with article 47. (Emphasis supplied)

Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit with
precision the extent of their maritime zones and continental shelves. In turn, this gives notice to the rest of
the international community of the scope of the maritime space and submarine areas within which States
parties exercise treaty-based rights, namely, the exercise of sovereignty over territorial waters (Article 2),
the jurisdiction to enforce customs, fiscal, immigration, and sanitation laws in the contiguous zone (Article
33), and the right to exploit the living and non-living resources in the exclusive economic zone (Article 56)
and continental shelf (Article 77).

Even under petitioners’ theory that the Philippine territory embraces the islands and all the waters within
the rectangular area delimited in the Treaty of Paris, the baselines of the Philippines would still have to be
drawn in accordance with RA 9522 because this is the only way to draw the baselines in conformity with
UNCLOS III. The baselines cannot be drawn from the boundaries or other portions of the rectangular
area delineated in the Treaty of Paris, but from the "outermost islands and drying reefs of the
archipelago."24

UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as petitioners
claim, diminution of territory. Under traditional international law typology, States acquire (or conversely,
lose) territory through occupation, accretion, cession and prescription,25 not by executing multilateral
treaties on the regulations of sea-use rights or enacting statutes to comply with the treaty’s terms to
delimit maritime zones and continental shelves. Territorial claims to land features are outside UNCLOS III,
and are instead governed by the rules on general international law.26

RA 9522’s Use of the Framework

of Regime of Islands to Determine the
Maritime Zones of the KIG and the
Scarborough Shoal, not Inconsistent
with the Philippines’ Claim of Sovereignty
Over these Areas

Petitioners next submit that RA 9522’s use of UNCLOS III’s regime of islands framework to draw the
baselines, and to measure the breadth of the applicable maritime zones of the KIG, "weakens our
territorial claim" over that area.27Petitioners add that the KIG’s (and Scarborough Shoal’s) exclusion from
the Philippine archipelagic baselines results in the loss of "about 15,000 square nautical miles of territorial
waters," prejudicing the livelihood of subsistence fishermen.28 A comparison of the configuration of the
baselines drawn under RA 3046 and RA 9522 and the extent of maritime space encompassed by each
law, coupled with a reading of the text of RA 9522 and its congressional deliberations, vis-à-vis the
Philippines’ obligations under UNCLOS III, belie this view.1avvphi1

The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely
followed the basepoints mapped by RA 3046, save for at least nine basepoints that RA 9522 skipped to
optimize the location of basepoints and adjust the length of one baseline (and thus comply with UNCLOS
III’s limitation on the maximum length of baselines). Under RA 3046, as under RA 9522, the KIG and the
Scarborough Shoal lie outside of the baselines drawn around the Philippine archipelago. This undeniable
cartographic fact takes the wind out of petitioners’ argument branding RA 9522 as a statutory
renunciation of the Philippines’ claim over the KIG, assuming that baselines are relevant for this purpose.

Petitioners’ assertion of loss of "about 15,000 square nautical miles of territorial waters" under RA 9522 is
similarly unfounded both in fact and law. On the contrary, RA 9522, by optimizing the location of
basepoints, increased the Philippines’ total maritime space (covering its internal waters, territorial sea
and exclusive economic zone) by 145,216 square nautical miles, as shown in the table below:29

Extent of maritime
area using RA 3046, Extent of maritime
as amended, taking area using RA 9522,
into account the taking into account
Treaty of Paris’ UNCLOS III (in
delimitation (in square square nautical miles)
nautical miles)
Internal or
archipelagic
waters 166,858 171,435
Territorial Sea 274,136 32,106
Exclusive
Economic Zone 382,669
TOTAL 440,994 586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522 even
extends way beyond the waters covered by the rectangular demarcation under the Treaty of Paris. Of
course, where there are overlapping exclusive economic zones of opposite or adjacent States, there will
have to be a delineation of maritime boundaries in accordance with UNCLOS III.30
Further, petitioners’ argument that the KIG now lies outside Philippine territory because the baselines that
RA 9522 draws do not enclose the KIG is negated by RA 9522 itself. Section 2 of the law commits to text
the Philippines’ continued claim of sovereignty and jurisdiction over the KIG and the Scarborough Shoal:

SEC. 2. The baselines in the following areas over which the Philippines likewise exercises
sovereignty and jurisdiction shall be determined as "Regime of Islands" under the Republic of the
Philippines consistent with Article 121 of the United Nations Convention on the Law of the Sea
(UNCLOS):

a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and

b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)

Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine
archipelago, adverse legal effects would have ensued. The Philippines would have committed a breach of
two provisions of UNCLOS III. First, Article 47 (3) of UNCLOS III requires that "[t]he drawing of such
baselines shall not depart to any appreciable extent from the general configuration of the archipelago."
Second, Article 47 (2) of UNCLOS III requires that "the length of the baselines shall not exceed 100
nautical miles," save for three per cent (3%) of the total number of baselines which can reach up to 125
nautical miles.31

Although the Philippines has consistently claimed sovereignty over the KIG 32 and the Scarborough Shoal
for several decades, these outlying areas are located at an appreciable distance from the nearest
shoreline of the Philippine archipelago,33 such that any straight baseline loped around them from the
nearest basepoint will inevitably "depart to an appreciable extent from the general configuration of the
archipelago."

The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-Santiago, took pains to
emphasize the foregoing during the Senate deliberations:

What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys and the
Scarborough Shoal are outside our archipelagic baseline because if we put them inside our baselines we
might be accused of violating the provision of international law which states: "The drawing of such
baseline shall not depart to any appreciable extent from the general configuration of the archipelago." So
sa loob ng ating baseline, dapat magkalapit ang mga islands. Dahil malayo ang Scarborough Shoal, hindi
natin masasabing malapit sila sa atin although we are still allowed by international law to claim them as
our own.

This is called contested islands outside our configuration. We see that our archipelago is defined by the
orange line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang maliit na circle doon sa
itaas, that is Scarborough Shoal, itong malaking circle sa ibaba, that is Kalayaan Group or the
Spratlys. Malayo na sila sa ating archipelago kaya kung ilihis pa natin ang dating archipelagic baselines
para lamang masama itong dalawang circles, hindi na sila magkalapit at baka hindi na tatanggapin ng
United Nations because of the rule that it should follow the natural configuration of the
archipelago.34 (Emphasis supplied)

Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS III’s limits.1avvphi1 The need
to shorten this baseline, and in addition, to optimize the location of basepoints using current maps,
became imperative as discussed by respondents:

[T]he amendment of the baselines law was necessary to enable the Philippines to draw the outer limits of
its maritime zones including the extended continental shelf in the manner provided by Article 47 of
[UNCLOS III]. As defined by R.A. 3046, as amended by R.A. 5446, the baselines suffer from some
technical deficiencies, to wit:

1. The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil Point)
is 140.06 nautical miles x x x. This exceeds the maximum length allowed under Article 47(2) of
the [UNCLOS III], which states that "The length of such baselines shall not exceed 100 nautical
miles, except that up to 3 per cent of the total number of baselines enclosing any archipelago
may exceed that length, up to a maximum length of 125 nautical miles."

2. The selection of basepoints is not optimal. At least 9 basepoints can be skipped or deleted
from the baselines system. This will enclose an additional 2,195 nautical miles of water.

3. Finally, the basepoints were drawn from maps existing in 1968, and not established by
geodetic survey methods. Accordingly, some of the points, particularly along the west coasts of
Luzon down to Palawan were later found to be located either inland or on water, not on low-water
line and drying reefs as prescribed by Article 47.35
Hence, far from surrendering the Philippines’ claim over the KIG and the Scarborough Shoal, Congress’
decision to classify the KIG and the Scarborough Shoal as "‘Regime[s] of Islands’ under the Republic of
the Philippines consistent with Article 121"36 of UNCLOS III manifests the Philippine State’s responsible
observance of its pacta sunt servanda obligation under UNCLOS III. Under Article 121 of UNCLOS III,
any "naturally formed area of land, surrounded by water, which is above water at high tide," such as
portions of the KIG, qualifies under the category of "regime of islands," whose islands generate their own
applicable maritime zones.37

Statutory Claim Over Sabah under

RA 5446 Retained

Petitioners’ argument for the invalidity of RA 9522 for its failure to textualize the Philippines’ claim over
Sabah in North Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal, keeps
open the door for drawing the baselines of Sabah:

Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as provided in
this Act is without prejudice to the delineation of the baselines of the territorial sea around the
territory of Sabah, situated in North Borneo, over which the Republic of the Philippines has
acquired dominion and sovereignty. (Emphasis supplied)

UNCLOS III and RA 9522 not

Incompatible with the Constitution’s
Delineation of Internal Waters

As their final argument against the validity of RA 9522, petitioners contend that the law unconstitutionally
"converts" internal waters into archipelagic waters, hence subjecting these waters to the right of innocent
and sea lanes passage under UNCLOS III, including overflight. Petitioners extrapolate that these passage
rights indubitably expose Philippine internal waters to nuclear and maritime pollution hazards, in violation
of the Constitution.38

Whether referred to as Philippine "internal waters" under Article I of the Constitution39 or as "archipelagic
waters" under UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over the body of water
lying landward of the baselines, including the air space over it and the submarine areas underneath.
UNCLOS III affirms this:

Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters and of their bed
and subsoil. –

1. The sovereignty of an archipelagic State extends to the waters enclosed by the

archipelagic baselines drawn in accordance with article 47, described as archipelagic waters,
regardless of their depth or distance from the coast.

2. This sovereignty extends to the air space over the archipelagic waters, as well as to
their bed and subsoil, and the resources contained therein.

xxxx

4. The regime of archipelagic sea lanes passage established in this Part shall not in other
respects affect the status of the archipelagic waters, including the sea lanes, or the exercise
by the archipelagic State of its sovereignty over such waters and their air space, bed and
subsoil, and the resources contained therein. (Emphasis supplied)
The fact of sovereignty, however, does not preclude the operation of municipal and international law
norms subjecting the territorial sea or archipelagic waters to necessary, if not marginal, burdens in the
interest of maintaining unimpeded, expeditious international navigation, consistent with the international
law principle of freedom of navigation. Thus, domestically, the political branches of the Philippine
government, in the competent discharge of their constitutional powers, may pass legislation designating
routes within the archipelagic waters to regulate innocent and sea lanes passage. 40 Indeed, bills drawing
nautical highways for sea lanes passage are now pending in Congress. 41

In the absence of municipal legislation, international law norms, now codified in UNCLOS III, operate to
grant innocent passage rights over the territorial sea or archipelagic waters, subject to the treaty’s
limitations and conditions for their exercise.42 Significantly, the right of innocent passage is a customary
international law,43 thus automatically incorporated in the corpus of Philippine law. 44 No modern State can
validly invoke its sovereignty to absolutely forbid innocent passage that is exercised in accordance with
customary international law without risking retaliatory measures from the international community.

The fact that for archipelagic States, their archipelagic waters are subject to both the right of innocent
passage and sea lanes passage45 does not place them in lesser footing vis-à-vis continental coastal
States which are subject, in their territorial sea, to the right of innocent passage and the right of transit
passage through international straits. The imposition of these passage rights through archipelagic waters
under UNCLOS III was a concession by archipelagic States, in exchange for their right to claim all the
waters landward of their baselines, regardless of their depth or distance from the coast, as archipelagic
waters subject to their territorial sovereignty. More importantly, the recognition of archipelagic States’
archipelago and the waters enclosed by their baselines as one cohesive entity prevents the treatment of
their islands as separate islands under UNCLOS III.46 Separate islands generate their own maritime
zones, placing the waters between islands separated by more than 24 nautical miles beyond the States’
territorial sovereignty, subjecting these waters to the rights of other States under UNCLOS III.47

Petitioners’ invocation of non-executory constitutional provisions in Article II (Declaration of Principles and

State Policies)48 must also fail. Our present state of jurisprudence considers the provisions in Article II as
mere legislative guides, which, absent enabling legislation, "do not embody judicially enforceable
constitutional rights x x x."49 Article II provisions serve as guides in formulating and interpreting
implementing legislation, as well as in interpreting executory provisions of the Constitution.
Although Oposa v. Factoran50 treated the right to a healthful and balanced ecology under Section 16 of
Article II as an exception, the present petition lacks factual basis to substantiate the claimed constitutional
violation. The other provisions petitioners cite, relating to the protection of marine wealth (Article XII,
Section 2, paragraph 251 ) and subsistence fishermen (Article XIII, Section 752 ), are not violated by RA
9522.

In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic zone,
reserving solely to the Philippines the exploitation of all living and non-living resources within such zone.
Such a maritime delineation binds the international community since the delineation is in strict
observance of UNCLOS III. If the maritime delineation is contrary to UNCLOS III, the international
community will of course reject it and will refuse to be bound by it.

UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates a sui
generis maritime space – the exclusive economic zone – in waters previously part of the high seas.
UNCLOS III grants new rights to coastal States to exclusively exploit the resources found within this zone
up to 200 nautical miles.53 UNCLOS III, however, preserves the traditional freedom of navigation of other
States that attached to this zone beyond the territorial sea before UNCLOS III.

RA 9522 and the Philippines’ Maritime Zones

Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not bound to
pass RA 9522.54 We have looked at the relevant provision of UNCLOS III55 and we find petitioners’
reading plausible. Nevertheless, the prerogative of choosing this option belongs to Congress, not to this
Court. Moreover, the luxury of choosing this option comes at a very steep price. Absent an UNCLOS III
compliant baselines law, an archipelagic State like the Philippines will find itself devoid of internationally
acceptable baselines from where the breadth of its maritime zones and continental shelf is measured.
This is recipe for a two-fronted disaster: first, it sends an open invitation to the seafaring powers to freely
enter and exploit the resources in the waters and submarine areas around our archipelago; and second, it
weakens the country’s case in any international dispute over Philippine maritime space. These are
consequences Congress wisely avoided.

The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent areas,
as embodied in RA 9522, allows an internationally-recognized delimitation of the breadth of the
Philippines’ maritime zones and continental shelf. RA 9522 is therefore a most vital step on the part of the
Philippines in safeguarding its maritime zones, consistent with the Constitution and our national interest.

WHEREFORE, we DISMISS the petition.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice

PRESBITERO J. VELASCO, JR. TERESITA J. LEONARDO-DE CASTRO

Associate Justice Associate Justice

ARTURO D. BRION DIOSDADO M. PERALTA

Associate Justice Associate Justice

LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ JOSE C. MENDOZA

Associate Justice Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA
Chief Justice
Footnotes

1Entitled "An Act to Amend Certain Provisions of Republic Act No. 3046, as Amended by
Republic Act No. 5446, to Define the Archipelagic Baselines of the Philippines, and for Other
Purposes."

2 Entitled "An Act to Define the Baselines of the Territorial Sea of the Philippines."

3The third "Whereas Clause" of RA 3046 expresses the import of treating the Philippines as an
archipelagic State:

"WHEREAS, all the waters around, between, and connecting the various islands of the
Philippine archipelago, irrespective of their width or dimensions, have always been
considered as necessary appurtenances of the land territory, forming part of the inland
waters of the Philippines."

4One of the four conventions framed during the first United Nations Convention on the Law of the
Sea in Geneva, this treaty, excluding the Philippines, entered into force on 10 September 1964.

5 UNCLOS III entered into force on 16 November 1994.

6 The Philippines signed the treaty on 10 December 1982.

7 Article 47, paragraphs 1-3, provide:

1. An archipelagic State may draw straight archipelagic baselines joining the outermost
points of the outermost islands and drying reefs of the archipelago provided that within
such baselines are included the main islands and an area in which the ratio of the area of
the water to the area of the land, including atolls, is between 1 to 1 and 9 to 1.

2. The length of such baselines shall not exceed 100 nautical miles, except that up to 3
per cent of the total number of baselines enclosing any archipelago may exceed that
length, up to a maximum length of 125 nautical miles.

3. The drawing of such baselines shall not depart to any appreciable extent from the
general configuration of the archipelago. (Emphasis supplied)

xxxx

8UNCLOS III entered into force on 16 November 1994. The deadline for the filing of application is
mandated in Article 4, Annex II: "Where a coastal State intends to establish, in accordance with
article 76, the outer limits of its continental shelf beyond 200 nautical miles, it shall submit
particulars of such limits to the Commission along with supporting scientific and technical data as
soon as possible but in any case within 10 years of the entry into force of this Convention for that
State. The coastal State shall at the same time give the names of any Commission members who
have provided it with scientific and technical advice." (Underscoring supplied)

In a subsequent meeting, the States parties agreed that for States which became bound
by the treaty before 13 May 1999 (such as the Philippines) the ten-year period will be
 counted from that date. Thus, RA 9522, which took effect on 27 March 2009, barely met
the deadline.

9 Rollo, p. 34.

10Which provides: "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."

11Entered into between the Unites States and Spain on 10 December 1898 following the
conclusion of the Spanish-American War. Under the terms of the treaty, Spain ceded to the
United States "the archipelago known as the Philippine Islands" lying within its technical
description.

12 The Treaty of Washington, between Spain and the United States (7 November 1900),
transferring to the US the islands of Cagayan, Sulu, and Sibutu and the US-Great Britain
Convention (2 January 1930) demarcating boundary lines between the Philippines and North
Borneo.

13 Article II, Section 7, Section 8, and Section 16.

14Allegedly in violation of Article XII, Section 2, paragraph 2 and Article XIII, Section 7 of the
Constitution.

15 Kilosbayan, Inc. v. Morato, 320 Phil. 171, 186 (1995).

16Pascual v. Secretary of Public Works, 110 Phil. 331 (1960); Sanidad v. COMELEC, 165 Phil.
303 (1976).

17Francisco, Jr. v. House of Representatives, 460 Phil. 830, 899 (2003) citing Kilosbayan, Inc. v.
Guingona, Jr., G.R. No. 113375, 5 May 1994, 232 SCRA 110, 155-156 (1995) (Feliciano, J.,
concurring). The two other factors are: "the character of funds or assets involved in the
controversy and a clear disregard of constitutional or statutory prohibition." Id.

18 . Rollo, pp. 144-147.

19See e.g. Aquino III v. COMELEC, G.R. No. 189793, 7 April 2010, 617 SCRA 623 (dismissing a
petition for certiorari and prohibition assailing the constitutionality of Republic Act No. 9716, not
for the impropriety of remedy but for lack of merit); Aldaba v. COMELEC, G.R. No. 188078, 25
January 2010, 611 SCRA 137 (issuing the writ of prohibition to declare unconstitutional Republic
Act No. 9591); Macalintal v. COMELEC, 453 Phil. 586 (2003) (issuing the writs of certiorari and
prohibition declaring unconstitutional portions of Republic Act No. 9189).

20See e.g. Neri v. Senate Committee on Accountability of Public Officers and Investigations, G.R.
No. 180643, 25 March 2008, 549 SCRA 77 (granting a writ of certiorari against the Philippine
Senate and nullifying the Senate contempt order issued against petitioner).

21 Rollo, p. 31.
22Respondents state in their Comment that petitioners’ theory "has not been accepted or
recognized by either the United States or Spain," the parties to the Treaty of Paris. Respondents
add that "no State is known to have supported this proposition." Rollo, p. 179.

23UNCLOS III belongs to that larger corpus of international law of the sea, which petitioner
Magallona himself defined as "a body of treaty rules and customary norms governing the uses of
the sea, the exploitation of its resources, and the exercise of jurisdiction over maritime regimes. x
x x x" (Merlin M. Magallona, Primer on the Law of the Sea 1 [1997]) (Italicization supplied).

24 Following Article 47 (1) of UNCLOS III which provides:

An archipelagic State may draw straight archipelagic baselines joining the outermost
points of the outermost islands and drying reefs of the archipelago provided that
within such baselines are included the main islands and an area in which the ratio of the
area of the water to the area of the land, including atolls, is between 1 to 1 and 9 to 1.
(Emphasis supplied)

25 Under the United Nations Charter, use of force is no longer a valid means of acquiring territory.

26The last paragraph of the preamble of UNCLOS III states that "matters not regulated by this
Convention continue to be governed by the rules and principles of general international law."

27 Rollo, p. 51.

28 Id. at 51-52, 64-66.

29 Based on figures respondents submitted in their Comment (id. at 182).

30 Under Article 74.

31 See note 7.

32 Presidential Decree No. 1596 classifies the KIG as a municipality of Palawan.

33KIG lies around 80 nautical miles west of Palawan while Scarborough Shoal is around 123
nautical west of Zambales.

34 Journal, Senate 14th Congress 44th Session 1416 (27 January 2009).

35 Rollo, p. 159.

36 Section 2, RA 9522.

37 Article 121 provides: "Regime of islands. —

1. An island is a naturally formed area of land, surrounded by water, which is above water
at high tide.

2. Except as provided for in paragraph 3, the territorial sea, the contiguous zone, the
exclusive economic zone and the continental shelf of an island are determined in
accordance with the provisions of this Convention applicable to other land territory.
 3. Rocks which cannot sustain human habitation or economic life of their own shall have
no exclusive economic zone or continental shelf."

38 Rollo, pp. 56-57, 60-64.

39 Paragraph 2, Section 2, Article XII of the Constitution uses the term "archipelagic waters"
separately from "territorial sea." Under UNCLOS III, an archipelagic State may have internal
waters – such as those enclosed by closing lines across bays and mouths of rivers. See Article
50, UNCLOS III. Moreover, Article 8 (2) of UNCLOS III provides: "Where the establishment of a
straight baseline in accordance with the method set forth in article 7 has the effect of enclosing
as internal waters areas which had not previously been considered as such, a right of innocent
passage as provided in this Convention shall exist in those waters." (Emphasis supplied)

40 Mandated under Articles 52 and 53 of UNCLOS III:

Article 52. Right of innocent passage. —

1. Subject to article 53 and without prejudice to article 50, ships of all States
enjoy the right of innocent passage through archipelagic waters, in
accordance with Part II, section 3.

2. The archipelagic State may, without discrimination in form or in fact among

foreign ships, suspend temporarily in specified areas of its archipelagic waters
the innocent passage of foreign ships if such suspension is essential for the
protection of its security. Such suspension shall take effect only after having
been duly published. (Emphasis supplied)

Article 53. Right of archipelagic sea lanes passage. —

1. An archipelagic State may designate sea lanes and air routes thereabove,
suitable for the continuous and expeditious passage of foreign ships and aircraft
through or over its archipelagic waters and the adjacent territorial sea.

2. All ships and aircraft enjoy the right of archipelagic sea lanes passage in
such sea lanes and air routes.

3. Archipelagic sea lanes passage means the exercise in accordance with this
Convention of the rights of navigation and overflight in the normal mode solely for
the purpose of continuous, expeditious and unobstructed transit between one
part of the high seas or an exclusive economic zone and another part of the high
seas or an exclusive economic zone.

4. Such sea lanes and air routes shall traverse the archipelagic waters and the
adjacent territorial sea and shall include all normal passage routes used as
routes for international navigation or overflight through or over archipelagic
waters and, within such routes, so far as ships are concerned, all normal
navigational channels, provided that duplication of routes of similar convenience
between the same entry and exit points shall not be necessary.

5. Such sea lanes and air routes shall be defined by a series of continuous axis
lines from the entry points of passage routes to the exit points. Ships and aircraft
in archipelagic sea lanes passage shall not deviate more than 25 nautical miles
to either side of such axis lines during passage, provided that such ships and
 aircraft shall not navigate closer to the coasts than 10 per cent of the distance
between the nearest points on islands bordering the sea lane.

6. An archipelagic State which designates sea lanes under this article may also
prescribe traffic separation schemes for the safe passage of ships through
narrow channels in such sea lanes.

7. An archipelagic State may, when circumstances require, after giving due

publicity thereto, substitute other sea lanes or traffic separation schemes for any
sea lanes or traffic separation schemes previously designated or prescribed by it.

8. Such sea lanes and traffic separation schemes shall conform to generally
accepted international regulations.

9. In designating or substituting sea lanes or prescribing or substituting traffic

separation schemes, an archipelagic State shall refer proposals to the competent
international organization with a view to their adoption. The organization may
adopt only such sea lanes and traffic separation schemes as may be agreed with
the archipelagic State, after which the archipelagic State may designate,
prescribe or substitute them.

10. The archipelagic State shall clearly indicate the axis of the sea lanes and the
traffic separation schemes designated or prescribed by it on charts to which due
publicity shall be given.

11. Ships in archipelagic sea lanes passage shall respect applicable sea lanes
and traffic separation schemes established in accordance with this article.

12. If an archipelagic State does not designate sea lanes or air routes, the right
of archipelagic sea lanes passage may be exercised through the routes normally
used for international navigation. (Emphasis supplied)

41Namely, House Bill No. 4153 and Senate Bill No. 2738, identically titled "AN ACT TO
ESTABLISH THE ARCHIPELAGIC SEA LANES IN THE PHILIPPINE ARCHIPELAGIC
WATERS, PRESCRIBING THE RIGHTS AND OBLIGATIONS OF FOREIGN SHIPS AND
AIRCRAFTS EXERCISING THE RIGHT OF ARCHIPELAGIC SEA LANES PASSAGE
THROUGH THE ESTABLISHED ARCHIPELAGIC SEA LANES AND PROVIDING FOR THE
ASSOCIATED PROTECTIVE MEASURES THEREIN."

42 The relevant provision of UNCLOS III provides:

Article 17. Right of innocent passage. —

Subject to this Convention, ships of all States, whether coastal or land-locked, enjoy
the right of innocent passage through the territorial sea. (Emphasis supplied)

Article 19. Meaning of innocent passage. —

1. Passage is innocent so long as it is not prejudicial to the peace, good order or

security of the coastal State. Such passage shall take place in conformity with
this Convention and with other rules of international law.
 2. Passage of a foreign ship shall be considered to be prejudicial to the peace,
good order or security of the coastal State if in the territorial sea it engages in any
of the following activities:

(a) any threat or use of force against the sovereignty, territorial integrity
or political independence of the coastal State, or in any other manner in
violation of the principles of international law embodied in the Charter of
the United Nations;

(b) any exercise or practice with weapons of any kind;

(c) any act aimed at collecting information to the prejudice of the defence
or security of the coastal State;

(d) any act of propaganda aimed at affecting the defence or security of

the coastal State;

(e) the launching, landing or taking on board of any aircraft;

(f) the launching, landing or taking on board of any military device;

(g) the loading or unloading of any commodity, currency or person

contrary to the customs, fiscal, immigration or sanitary laws and
regulations of the coastal State;

(h) any act of willful and serious pollution contrary to this Convention;

(i) any fishing activities;

(j) the carrying out of research or survey activities;

(k) any act aimed at interfering with any systems of communication or

any other facilities or installations of the coastal State;

(l) any other activity not having a direct bearing on passage

Article 21. Laws and regulations of the coastal State relating to innocent passage. —

1. The coastal State may adopt laws and regulations, in conformity with the
provisions of this Convention and other rules of international law, relating to
innocent passage through the territorial sea, in respect of all or any of the
following:

(a) the safety of navigation and the regulation of maritime traffic;

(b) the protection of navigational aids and facilities and other facilities or
installations;

(c) the protection of cables and pipelines;

(d) the conservation of the living resources of the sea;

 (e) the prevention of infringement of the fisheries laws and regulations of
the coastal State;

(f) the preservation of the environment of the coastal State and the
prevention, reduction and control of pollution thereof;

(g) marine scientific research and hydrographic surveys;

(h) the prevention of infringement of the customs, fiscal, immigration or

sanitary laws and regulations of the coastal State.

2. Such laws and regulations shall not apply to the design, construction, manning
or equipment of foreign ships unless they are giving effect to generally accepted
international rules or standards.

3. The coastal State shall give due publicity to all such laws and regulations.

4. Foreign ships exercising the right of innocent passage through the territorial
sea shall comply with all such laws and regulations and all generally accepted
international regulations relating to the prevention of collisions at sea.

43 The right of innocent passage through the territorial sea applies only to ships and not to
aircrafts (Article 17, UNCLOS III). The right of innocent passage of aircrafts through the sovereign
territory of a State arises only under an international agreement. In contrast, the right of innocent
passage through archipelagic waters applies to both ships and aircrafts (Article 53 (12), UNCLOS
III).

44Following Section 2, Article II of the Constitution: "Section 2. The Philippines renounces war as
an instrument of national policy, 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." (Emphasis supplied)

45"Archipelagic sea lanes passage is essentially the same as transit passage through straits" to
which the territorial sea of continental coastal State is subject. R.R. Churabill and A.V. Lowe, The
Law of the Sea 127 (1999).

46 Falling under Article 121 of UNCLOS III (see note 37).

47 Within the exclusive economic zone, other States enjoy the following rights under UNCLOS III:

Article 58. Rights and duties of other States in the exclusive economic zone. —

1. In the exclusive economic zone, all States, whether coastal or land-locked,

enjoy, subject to the relevant provisions of this Convention, the freedoms referred
to in article 87 of navigation and overflight and of the laying of submarine cables
and pipelines, and other internationally lawful uses of the sea related to these
freedoms, such as those associated with the operation of ships, aircraft and
submarine cables and pipelines, and compatible with the other provisions of this
Convention.

2. Articles 88 to 115 and other pertinent rules of international law apply to the
exclusive economic zone in so far as they are not incompatible with this Part.
 xxxx

Beyond the exclusive economic zone, other States enjoy the freedom of the high seas,
defined under UNCLOS III as follows:

Article 87. Freedom of the high seas. —

1. The high seas are open to all States, whether coastal or land-locked. Freedom
of the high seas is exercised under the conditions laid down by this Convention
and by other rules of international law. It comprises, inter alia, both for coastal
and land-locked States:

(a) freedom of navigation;

(b) freedom of overflight;

(c) freedom to lay submarine cables and pipelines, subject to Part VI;

(d) freedom to construct artificial islands and other installations permitted

under international law, subject to Part VI;

(e) freedom of fishing, subject to the conditions laid down in section 2;

(f) freedom of scientific research, subject to Parts VI and XIII.

2. These freedoms shall be exercised by all States with due regard for the
interests of other States in their exercise of the freedom of the high seas, and
also with due regard for the rights under this Convention with respect to activities
in the Area.

48 See note 13.

49Kilosbayan, Inc. v. Morato, 316 Phil. 652, 698 (1995); Tañada v. Angara, 338 Phil. 546, 580-
581 (1997).

50 G.R. No. 101083, 30 July 1993, 224 SCRA 792.

51"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."

52 "The State shall protect the rights of subsistence fishermen, especially of local communities, to
the preferential use of the communal marine and fishing resources, both inland and offshore. It
shall provide support to such fishermen through appropriate technology and research, adequate
financial, production, and marketing assistance, and other services. The State shall also protect,
develop, and conserve such resources. The protection shall extend to offshore fishing grounds of
subsistence fishermen against foreign intrusion. Fishworkers shall receive a just share from their
labor in the utilization of marine and fishing resources."

53This can extend up to 350 nautical miles if the coastal State proves its right to claim an
extended continental shelf (see UNCLOS III, Article 76, paragraphs 4(a), 5 and 6, in relation to
Article 77).
 54 Rollo, pp. 67-69.

55Article 47 (1) provides: "An archipelagic State may draw straight archipelagic baselines joining
the outermost points of the outermost islands and drying reefs of the archipelago provided that
within such baselines are included the main islands and an area in which the ratio of the area of
the water to the area of the land, including atolls, is between 1 to 1 and 9 to 1." (Emphasis
supplied) in the Area.

The Lawphil Project - Arellano Law Foundation

CONCURRING OPINION

VELASCO, JR., J.:

I concur with the ponencia and add the following complementary arguments and observations:

A statute is a product of hard work and earnest studies of Congress to ensure that no constitutional
provision, prescription or concept is infringed. Withal, before a law, in an appropriate proceeding, is
nullified, an unequivocal breach of, or a clear conflict with, the Constitution must be demonstrated in such
a way as to leave no doubt in the mind of the Court. 1 In the same token, if a law runs directly afoul of the
Constitution, the Court’s duty on the matter should be clear and simple: Pursuant to its judicial power and
as final arbiter of all legal questions,2 it should strike such law down, however laudable its purpose/s
might be and regardless of the deleterious effect such action may carry in its wake.

Challenged in these proceedings is the constitutionality of Republic Act (RA 9522) entitled "An Act to
Amend Certain Provisions of [RA] 3046, as Amended by [RA] 5446 to Define the Archipelagic Baselines
Of The Philippines and for Other Purposes." For perspective, RA 3046, "An Act to Define the Baselines of
the Territorial Sea of the Philippines, was enacted in 1961 to comply with the United Nations Convention
on the Law of the Sea (UNCLOS) I. Eight years later, RA 5446 was enacted to amend typographical
errors relating to coordinates in RA 3046. The latter law also added a provision asserting Philippine
sovereignty over Sabah.

As its title suggests, RA 9522 delineates archipelagic baselines of the country, amending in the process
the old baselines law, RA 3046. Everybody is agreed that RA 9522 was enacted in response to the
country’s commitment to conform to some 1982 Law of the Sea Convention (LOSC) or UNCLOS III
provisions to define new archipelagic baselines through legislation, the Philippines having signed 3 and
eventually ratified4 this multilateral treaty. The Court can take judicial notice that RA 9522 was registered
and deposited with the UN on April 4, 2009.

As indicated in its Preamble,5 1982 LOSC aims, among other things, to establish, with due regard for the
sovereignty of all States, "a legal order for the seas and oceans which will facilitate international
communication, and will promote the peaceful uses of the seas and oceans." One of the measures to
attain the order adverted to is to have a rule on baselines. Of particular relevance to the Philippines, as an
archipelagic state, is Article 47 of UNCLOS III which deals with baselines:

1. An archipelagic State may draw straight archipelagic baselines joining the outermost points of
the outermost islands and drying reefs of the archipelago provided that within such baselines are
included the main islands and an area in which the ratio of the area of the water to the area of the
land, including atolls, is between 1 to 1 and 9 to 1.
 2. The length of such baseline shall not exceed 100 nautical miles, except that up to 3 per cent of
the total number of baselines enclosing any archipelago may exceed that length, up to a
maximum length of 125 nautical miles.

3. The drawing of such baselines shall not depart to any appreciable extent from the general
configuration of the archipelago.

xxxx

9. The archipelagic State shall give due publicity to such charts or lists of geographical co-
ordinates and shall deposit a copy of each such chart or list with the Secretary-General of the
United Nations.6 (Emphasis added.)

To obviate, however, the possibility that certain UNCLOS III baseline provisions would, in their
implementation, undermine its sovereign and/or jurisdictional interests over what it considers its
territory,7 the Philippines, when it signed UNCLOS III on December 10, 1982, made the following
"Declaration" to said treaty:

The Government of the Republic of the Philippines [GRP] hereby manifests that in signing the 1982
United Nations Convention on the Law of the Sea, it does so with the understandings embodied in this
declaration, made under the provisions of Article 310 of the Convention, to wit:

The signing of the Convention by the [GRP] shall not in any manner impair or prejudice the sovereign
rights of the [RP] under and arising from the Constitution of the Philippines;

Such signing shall not in any manner affect the sovereign rights of the [RP] as successor of the United
States of America [USA], under and arising out of the Treaty of Paris between Spain and the United
States of America of December 10, 1898, and the Treaty of Washington between the [USA] and Great
Britain of January 2, 1930;

xxxx

Such signing shall not in any manner impair or prejudice the sovereignty of the [RP] over any territory
over which it exercises sovereign authority, such as the Kalayaan Islands, and the waters appurtenant
thereto;

The Convention shall not be construed as amending in any manner any pertinent laws and Presidential
Decrees or Proclamations of the Republic of the Philippines. The [GRP] maintains and reserves the right
and authority to make any amendments to such laws, decrees or proclamations pursuant to the
provisions of the Philippine Constitution;

The provisions of the Convention on archipelagic passage through sea lanes do not nullify or impair the
sovereignty of the Philippines as an archipelagic state over the sea lanes and do not deprive it of
authority to enact legislation to protect its sovereignty independence and security;

The concept of archipelagic waters is similar to the concept of internal waters under the Constitution of
the Philippines, and removes straits connecting these waters with the economic zone or high sea from the
rights of foreign vessels to transit passage for international navigation. 8 (Emphasis added.)

Petitioners challenge the constitutionality of RA 9522 on the principal ground that the law violates Section
1, Article I of the 1987 Constitution on national territory which states:
Section 1. 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.)

According to Fr. Joaquin Bernas, S.J., himself a member of the 1986 Constitutional Commission which
drafted the 1987 Constitution, the aforequoted Section 1 on national territory was "in substance a copy of
its 1973 counterpart."9 Art. I of the 1973 Constitution reads:

Section 1. The national territory comprises the Philippine archipelago, with all the islands and waters
embraced therein, and all other territories belonging to the Philippines by historic right or legal title,
including the territorial sea, the air space, the subsoil, the insular shelves, and other submarine areas
over which the Philippines has sovereignty or jurisdiction. 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 added.)

As may be noted both constitutions speak of the "Philippine archipelago," and, via the last sentence of
their respective provisions, assert the country’s adherence to the "archipelagic principle." Both
constitutions divide the national territory into two main groups: (1) the Philippine archipelago and (2) other
territories belonging to the Philippines. So what or where is Philippine archipelago contemplated in the
1973 and 1987 Constitutions then? Fr. Bernas answers the poser in the following wise:

Article I of the 1987 Constitution cannot be fully understood without reference to Article I of the 1973
Constitution. x x x

xxxx

x x x To understand [the meaning of national territory as comprising the Philippine archipelago], one must
look into the evolution of [Art. I of the 1973 Constitution] from its first draft to its final form.

Section 1 of the first draft submitted by the Committee on National Territory almost literally reproduced
Article I of the 1935 Constitution x x x. Unlike the 1935 version, however, the draft designated the
Philippines not simply as the Philippines but as "the Philippine archipelago. 10 In response to the criticism
that the definition was colonial in tone x x x, the second draft further designated the Philippine
archipelago, as the historic home of the Filipino people from its beginning.11

After debates x x x, the Committee reported out a final draft, which became the initially approved version:
"The national territory consists of the Philippine archipelago which is the ancestral home of the Filipino
people and which is composed of all the islands and waters embraced therein…"

What was the intent behind the designation of the Philippines as an "archipelago"? x x x Asked by
Delegate Roselller Lim (Zamboanga) where this archipelago was, Committee Chairman Quintero
answered that it was the area delineated in the Treaty of Paris. He said that objections to the colonial
implication of mentioning the Treaty of Paris was responsible for the omission of the express mention of
the Treaty of Paris.

Report No. 01 of the Committee on National Territory had in fact been explicit in its delineation of the
expanse of this archipelago. It said:

Now if we plot on a map the boundaries of this archipelago as set forth in the Treaty of Paris, a huge or
giant rectangle will emerge, measuring about 600 miles in width and 1,200 miles in length. Inside this
giant rectangle are the 7,100 islands comprising the Philippine Islands. From the east coast of Luzon to
the eastern boundary of this huge rectangle in the Pacific Ocean, there is a distance of over 300 miles.
From the west coast of Luzon to the western boundary of this giant rectangle in the China sea, there is a
distance of over 150 miles.

When the [US] Government enacted the Jones Law, the Hare-Hawes Cutting Law and the Tydings
McDuffie Law, it in reality announced to the whole world that it was turning over to the Government of the
Philippine Islands an archipelago (that is a big body of water studded with islands), the boundaries of
which archipelago are set forth in Article III of the Treaty of Paris. It also announced to the whole world
that the waters inside the giant rectangle belong to the Philippines – that they are not part of the high
seas.

When Spain signed the Treaty of Paris, in effect she announced to the whole world that she was ceding
to the [US] the Philippine archipelago x x x, that this archipelago was bounded by lines specified in the
treaty, and that the archipelago consisted of the huge body of water inside the boundaries and the islands
inside said boundaries.

The delineation of the extent of the Philippine archipelago must be understood in the context of the
modifications made both by the Treaty of Washington of November 7, 1900, and of the Convention of
January 12, 1930, in order to include the Islands of Sibutu and of Cagayan de Sulu and the Turtle and
Mangsee Islands. However, x x x the definition of the archipelago did not include the Batanes group[,
being] outside the boundaries of the Philippine archipelago as set forth in the Treaty of Paris. In literal
terms, therefore, the Batanes islands would come not under the Philippine archipelago but under the
phrase "all other territories belong to the Philippines."12 x x x (Emphasis added.)

From the foregoing discussions on the deliberations of the provisions on national territory, the following
conclusion is abundantly evident: the "Philippine archipelago" of the 1987 Constitution is the same
"Philippine archipelago" referred to in Art. I of the 1973 Constitution which in turn corresponds to the
territory defined and described in Art. 1 of the 1935 Constitution, 13 which pertinently reads:

Section 1. The Philippines comprises all the territory ceded to the [US] by the Treaty of Paris concluded
between the [US] and Spain on the tenth day of December, [1898], the limits of which are set forth in
Article III of said treaty, together with all the islands in the treaty concluded at Washington, between the
[US] and Spain on November [7, 1900] and the treaty concluded between the [US] and Great Britain x x
x.

While the Treaty of Paris is not mentioned in both the 1973 and 1987 Constitutions, its mention, so the
nationalistic arguments went, being "a repulsive reminder of the indignity of our colonial past," 14 it is at
once clear that the Treaty of Paris had been utilized as key reference point in the definition of the national
territory.

On the other hand, the phrase "all other territories over which the Philippines has sovereignty or
jurisdiction," found in the 1987 Constitution, which replaced the deleted phrase "all territories belonging to
the Philippines by historic right or legal title"15 found in the 1973 Constitution, covers areas linked to the
Philippines with varying degrees of certainty. 16 Under this category would fall: (a) Batanes, which then
1971 Convention Delegate Eduardo Quintero, Chairperson of the Committee on National Territory,
described as belonging to the Philippines in all its history; 17 (b) Sabah, over which a formal claim had
been filed, the so-called Freedomland (a group of islands known as Spratleys); and (c) any other territory,
over which the Philippines had filed a claim or might acquire in the future through recognized modes of
acquiring territory.18 As an author puts it, the deletion of the words "by historic right or legal title" is not to
be interpreted as precluding future claims to areas over which the Philippines does not actually exercise
sovereignty.19
Upon the foregoing perspective and going into specifics, petitioners would have RA 9522 stricken down
as unconstitutional for the reasons that it deprives the Philippines of what has long been established as
part and parcel of its national territory under the Treaty of Paris, as supplemented by the aforementioned
1900 Treaty of Washington or, to the same effect, revises the definition on or dismembers the national
territory. Pushing their case, petitioners argue that the constitutional definition of the national territory
cannot be remade by a mere statutory act.20 As another point, petitioners parlay the theory that the law in
question virtually weakens the country’s territorial claim over the Kalayaan Island Group (KIG) and
Sabah, both of which come under the category of "other territories" over the Philippines has sovereignty
or jurisdiction. Petitioners would also assail the law on grounds related to territorial sea lanes and internal
waters transit passage by foreign vessels.

It is remarkable that petitioners could seriously argue that RA 9522 revises the Philippine territory as
defined in the Constitution, or worse, constitutes an abdication of territory.

It cannot be over-emphasized enough that RA 9522 is a baseline law enacted to implement the 1982
LOSC, which in turn seeks to regulate and establish an orderly sea use rights over maritime zones. Or as
the ponencia aptly states, RA 9522 aims to mark-out specific base points along the Philippine coast from
which baselines are drawn to serve as starting points to measure the breadth of the territorial sea and
maritime zones.21 The baselines are set to define the sea limits of a state, be it coastal or archipelagic,
under the UNCLOS III regime. By setting the baselines to conform to the prescriptions of UNCLOS III, RA
9522 did not surrender any territory, as petitioners would insist at every turn, for UNCLOS III is concerned
with setting order in the exercise of sea-use rights, not the acquisition or cession of territory. And let it be
noted that under UNCLOS III, it is recognized that countries can have territories outside their baselines.
Far from having a dismembering effect, then, RA 9522 has in a limited but real sense increased the
country’s maritime boundaries. How this situation comes about was extensively explained by then
Minister of State and head of the Philippine delegation to UNCLOS III Arturo Tolentino in his sponsorship
speech22on the concurrence of the Batasang Pambansa with the LOSC:

xxxx

Then, we should consider, Mr. Speaker, that under the archipelagic principle, the whole area inside the
archipelagic base lines become a unified whole and the waters between the islands which formerly were
regarded by international law as open or international seas now become waters under the complete
sovereignty of the Filipino people. In this light there would be an additional area of 141,800 square
nautical miles inside the base lines that will be recognized by international law as Philippine waters,
equivalent to 45,351,050 hectares. These gains in the waters of the sea, 45,211,225 hectares outside the
base lines and 141,531,000 hectares inside the base lines, total 93,742,275 hectares as a total gain in
the waters under Philippine jurisdiction.

From a pragmatic standpoint, therefore, the advantage to our country and people not only in terms of the
legal unification of land and waters of the archipelago in the light of international law, but also in terms of
the vast resources that will come under the dominion and jurisdiction of the Republic of the Philippines,
your Committee on Foreign Affairs does not hesitate to ask this august Body to concur in the Convention
by approving the resolution before us today.

May I say it was the unanimous view of delegations at the Conference on the Law of the Sea that
archipelagos are among the biggest gainers or beneficiaries under the Convention on the Law of the Sea.

Lest it be overlooked, the constitutional provision on national territory, as couched, is broad enough to
encompass RA 9522’s definition of the archipelagic baselines. To reiterate, the laying down of baselines
is not a mode of acquiring or asserting ownership a territory over which a state exercises sovereignty.
They are drawn for the purpose of defining or establishing the maritime areas over which a state can
exercise sovereign rights. Baselines are used for fixing starting point from which the territorial belt is
measured seawards or from which the adjacent maritime waters are measured. Thus, the territorial sea, a
marginal belt of maritime waters, is measured from the baselines extending twelve (12) nautical miles
outward.23 Similarly, Art. 57 of the 1982 LOSC provides that the Exclusive Economic Zone (EEZ) "shall
not extend beyond 200 nautical miles from the baselines from which the breadth of the territorial sea is
measured."24 Most important to note is that the baselines indicated under RA 9522 are derived from Art.
47 of the 1982 LOSC which was earlier quoted.

Since the 1987 Constitution’s definition of national territory does not delimit where the Philippine’s
baselines are located, it is up to the political branches of the government to supply the deficiency.
Through Congress, the Philippines has taken an official position regarding its baselines to the
international community through RA 3046,25as amended by RA 544626 and RA 9522. When the
Philippines deposited a copy of RA 9522 with the UN Secretary General, we effectively complied in good
faith with our obligation under the 1982 LOSC. A declaration by the Court of the constitutionality of the
law will complete the bona fides of the Philippines vis-a-vis the law of the sea treaty.

It may be that baseline provisions of UNCLOS III, if strictly implemented, may have an imposing impact
on the signatory states’ jurisdiction and even their sovereignty. But this actuality, without more, can hardly
provide a justifying dimension to nullify the complying RA 9522. As held by the Court in Bayan Muna v.
Romulo,27 treaties and international agreements have a limiting effect on the otherwise encompassing
and absolute nature of sovereignty. By their voluntary acts, states may decide to surrender or waive some
aspects of their sovereignty. The usual underlying consideration in this partial surrender may be the
greater benefits derived from a pact or reciprocal undertaking. On the premise that the Philippines has
adopted the generally accepted principles of international law as part of the law of the land, a portion of
sovereignty may be waived without violating the Constitution.

As a signatory of the 1982 LOSC, it behooves the Philippines to honor its obligations thereunder. Pacta
sunt servanda, a basic international law postulate that "every treaty in force is binding upon the parties to
it and must be performed by them in good faith."28 The exacting imperative of this principle is such that a
state may not invoke provisions in its constitution or its laws as an excuse for failure to perform this
duty."29

The allegation that Sabah has been surrendered by virtue of RA 9522, which supposedly repealed the
hereunder provision of RA 5446, is likewise unfounded.

Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as provided in
this Act is without prejudice to the delineation of the baselines of the territorial sea around the territory of
Sabah, situated in North Borneo, over which the Republic of the Philippines has acquired dominion and
sovereignty.

There is nothing in RA 9522 indicating a clear intention to supersede Sec. 2 of RA 5446. Petitioners
obviously have read too much into RA 9522’s amendment on the baselines found in an older law. Aside
from setting the country’s baselines, RA 9522 is, in its Sec. 3, quite explicit in its reiteration of the
Philippines’ exercise of sovereignty, thus:

Section 3. This Act affirms that the Republic of the Philippines has dominion, sovereignty and jurisdiction
over all portions of the national territory as defined in the Constitution and by provisions of applicable laws
including, without limitation, Republic Act No. 7160, otherwise known as the Local Government Code of
1991, as amended.

To emphasize, baselines are used to measure the breadth of the territorial sea, the contiguous zone, the
exclusive economic zone and the continental shelf. Having KIG and the Scarborough Shoal outside
Philippine baselines will not diminish our sovereignty over these areas. Art. 46 of UNCLOS III in fact
recognizes that an archipelagic state, such as the Philippines, is a state "constituted wholly by one or
more archipelagos and may include other islands." (emphasis supplied) The "other islands" referred to in
Art. 46 are doubtless islands not forming part of the archipelago but are nevertheless part of the state’s
territory.

The Philippines’ sovereignty over KIG and Scarborough Shoal are, thus, in no way diminished. Consider:
Other countries such as Malaysia and the United States have territories that are located outside its
baselines, yet there is no territorial question arising from this arrangement. 30

It may well be apropos to point out that the Senate version of the baseline bill that would become RA
9522 contained the following explanatory note: The law "reiterates our sovereignty over the Kalayaan
Group of Islands declared as part of the Philippine territory under Presidential Decree No. 1596. As part
of the Philippine territory, they shall be considered as a ‘regime of islands’ under Article 121 of the
Convention."31 Thus, instead of being in the nature of a "treasonous surrender" that petitioners have
described it to be, RA 9522 even harmonizes our baseline laws with our international agreements, without
limiting our territory to those confined within the country’s baselines.

Contrary to petitioners’ contention, the classification of KIG and the Scarborough Shoal as falling under
the Philippine’s regime of islands is not constitutionally objectionable. Such a classification serves as
compliance with LOSC and the Philippines’ assertion of sovereignty over KIG and Scarborough Shoal. In
setting the baseline in KIG and Scarborough Shoal, RA 9522 states that these are areas "over which the
Philippines likewise exercises sovereignty and jurisdiction." It is, thus, not correct for petitioners to claim
that the Philippines has lost 15,000 square nautical miles of territorial waters upon making this
classification. Having 15,000 square nautical miles of Philippine waters outside of our baselines, to
reiterate, does not translate to a surrender of these waters. The Philippines maintains its assertion of
ownership over territories outside of its baselines. Even China views RA 9522 as an assertion of
ownership, as seen in its Protest32 filed with the UN Secretary-General upon the deposit of RA 9522.

We take judicial notice of the effective occupation of KIG by the Philippines. Petitioners even point out
that national and local elections are regularly held there. The classification of KIG as under a "regime of
islands" does not in any manner affect the Philippines’ consistent position with regard to sovereignty over
KIG. It does not affect the Philippines’ other acts of ownership such as occupation or amend Presidential
Decree No. 1596, which declared KIG as a municipality of Palawan.

The fact that the baselines of KIG and Scarborough Shoal have yet to be defined would not detract to the
constitutionality of the law in question. The resolution of the problem lies with the political departments of
the government.

All told, the concerns raised by the petitioners about the diminution or the virtual dismemberment of the
Philippine territory by the enactment of RA 9522 are, to me, not well grounded. To repeat, UNCLOS III
pertains to a law on the seas, not territory. As part of its Preamble,33 LOSC recognizes "the desirability of
establishing through this Convention, with due regard for the sovereignty of all States, a legal order for
the seas and oceans x x x."

This brings me to the matter of transit passage of foreign vessels through Philippine waters.

Apropos thereto, petitioners allege that RA 9522 violates the nuclear weapons-free policy under Sec. 8, in
relation to Sec. 16, Art. II of the Constitution, and exposes the Philippines to marine pollution hazards,
since under the LOSC the Philippines supposedly must give to ships of all states the right of innocent
passage and the right of archipelagic sea-lane passage.

The adverted Sec. 8, Art. II of the 1987 Constitution declares the adoption and pursuit by the Philippines
of "a policy of freedom from nuclear weapons in its territory." On the other hand, the succeeding Sec. l6
underscores the State’s firm commitment "to protect and advance the right of the people to a balanced
and healthful ecology in accord with the rhythm and harmony of nature." Following the allegations of
petitioners, these twin provisions will supposedly be violated inasmuch as RA 9522 accedes to the right of
innocent passage and the right of archipelagic sea-lane passage provided under the LOSC. Therefore,
ships of all nations––be they nuclear-carrying warships or neutral commercial vessels transporting
goods––can assert the right to traverse the waters within our islands.

A cursory reading of RA 9522 would belie petitioners’ posture. In context, RA 9522 simply seeks to
conform to our international agreement on the setting of baselines and provides nothing about the
designation of archipelagic sea-lane passage or the regulation of innocent passage within our waters.
Again, petitioners have read into the amendatory RA 9522 something not intended.

Indeed, the 1982 LOSC enumerates the rights and obligations of archipelagic party-states in terms of
transit under Arts. 51 to 53, which are explained below:

To safeguard, in explicit terms, the general balance struck by [Articles 51 and 52] between the need for
passage through the area (other than straits used for international navigation) and the archipelagic state’s
need for security, Article 53 gave the archipelagic state the right to regulate where and how ships and
aircraft pass through its territory by designating specific sea lanes. Rights of passage through these
archipelagic sea lanes are regarded as those of transit passage:

(1) An archipelagic State may designate sea lanes and air routes thereabove, suitable for safe,
continuous and expeditious passage of foreign ships and aircraft through or over its archipelagic
waters and the adjacent territorial sea.

(2) All ships and aircraft enjoy the right of archipelagic sea lanes passage in such sea lanes and
air routes.

(3) Archipelagic sea lanes passage is the exercise in accordance with the present Convention of
the rights of navigation and overflight in the normal mode solely for the purpose of continuous,
expeditious and unobstructed transit between one part of the high seas or an exclusive economic
zone and another part of the high seas or an exclusive economic zone. 34

But owing to the geographic structure and physical features of the country, i.e., where it is "essentially a
body of water studded with islands, rather than islands with water around them,"35 the Philippines has
consistently maintained the conceptual unity of land and water as a necessary element for territorial
integrity,36 national security (which may be compromised by the presence of warships and surveillance
ships on waters between the islands),37and the preservation of its maritime resources. As succinctly
explained by Minister Arturo Tolentino, the essence of the archipelagic concept is "the dominion and
sovereignty of the archipelagic State within its baselines, which were so drawn as to preserve the
territorial integrity of the archipelago by the inseparable unity of the land and water domain." 38 Indonesia,
like the Philippines, in terms of geographic reality, has expressed agreement with this interpretation of the
archipelagic concept. So it was that in 1957, the Indonesian Government issued the Djuanda Declaration,
therein stating :

[H]istorically, the Indonesian archipelago has been an entity since time immemorial.1avvphi1 In view of
the territorial entirety and of preserving the wealth of the Indonesian state, it is deemed necessary to
consider all waters between the islands and entire entity.

x x x On the ground of the above considerations, the Government states that all waters around,
between and connecting, the islands or parts of islands belonging to the Indonesian archipelago
irrespective of their width or dimension are natural appurtenances of its land territory and
therefore an integral part of the inland or national waters subject to the absolute sovereignty of
Indonesia.39 (Emphasis supplied.)

Hence, the Philippines maintains the sui generis character of our archipelagic waters as
equivalent to the internal waters of continental coastal states. In other words, the landward waters
 embraced within the baselines determined by RA 9522, i.e., all 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.40Accordingly, such waters are not covered by the
jurisdiction of the LOSC and cannot be subjected to the rights granted to foreign states in
archipelagic waters, e.g., the right of innocent passage,41 which is allowed only in the territorial
seas, or that area of the ocean comprising 12 miles from the baselines of our archipelago;
archipelagic sea-lane passage;42 over flight;43 and traditional fishing rights.44

Our position that all waters within our baselines are internal waters, which are outside the
jurisdiction of the 1982 LOSC,45 was abundantly made clear by the Philippine Declaration at the
time of the signing of the LOSC on December 10, 1982. To reiterate, paragraphs 5, 6 and 7 of the
Declaration state:

5. The Convention shall not be construed as amending in any manner any pertinent laws and
Presidential decrees of Proclamation of the republic of the Philippines; the Government x x x
maintains and reserves the right and authority to make any amendments to such laws, decrees or
proclamations pursuant to the provisions of the Philippine Constitution;

6. The provisions of the Convention on archipelagic passage through sea lanes do not nullify or
impair the sovereignty of the Philippines as an archipelagic State over the sea lanes and do not
deprive it of authority to enact legislation to protect its sovereignty, independence and security;

7. The concept of archipelagic waters is similar to the concept of internal waters under the
Constitution of the Philippines and removes straits connecting this water with the economic zone
or high seas from the rights of foreign vessels to transit passage for international navigation.
(Emphasis supplied.)46

More importantly, by the ratification of the 1987 Constitution on February 2, 1987, the integrity of the
Philippine state as comprising both water and land was strengthened by the proviso in its first article, viz:
"The waters around, between, and connecting the islands of the [Philippine] archipelago, regardless of
their breadth and dimensions, form part of the internal waters of the Philippines. (emphasis supplied)

In effect, contrary to petitioners’ allegations, the Philippines’ ratification of the 1982 LOSC did not matter-
of-factly open our internal waters to passage by foreign ships, either in the concept of innocent passage
or archipelagic sea-lane passage, in exchange for the international community’s recognition of the
Philippines as an archipelagic state. The Filipino people, by ratifying the 1987 Constitution, veritably
rejected the quid pro quo petitioners take as being subsumed in that treaty.

Harmonized with the Declaration and the Constitution, the designation of baselines made in RA 9522
likewise designates our internal waters, through which passage by foreign ships is not a right, but may be
granted by the Philippines to foreign states but only as a dissolvable privilege.

In view of the foregoing, I vote to DISMISS the Petition.

PRESBITERO J. VELASCO, JR.

Associate Justice

Footnotes
1League of Cities of the Phil. v. COMELEC, G.R. No. 176951, December 21, 2009, 608 SCRA
636.

2 Under Art. VIII, Sec. 5 of the Constitution, the Supreme Court is empowered to review, revise,
reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may provide,
final judgments and orders of lower courts in: all cases in which the Constitutionality or validity of
any treaty, international or executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question. (Emphasis supplied.)

3 December 10, 1982.

4 May 8, 1984.

5 Available on <http://www.un.org/Depts/los/convention_agreements/texts/unclos/closindx.htm>
(visited July 28, 2011).

6 UNCLOS, Art. 47, December 10, 1982.

7 J. Bernas, S.J., The 1987 Constitution of the Republic of the Philippines A Commentary 57
(2003).

8See J. Batongbacal, The Metes and Bounds of the Philippine National Territory, An International
Law and Policy Perspective, Supreme Court of the Philippines, Philippine Judicial Academy Third
Distinguished Lecture, Far Eastern University, June 27, 2008.

9 J. Bernas, supra note 7, at 10.

10 Citing Report No. 01 of the Committee on National Territory.

11 Citing Report No. 02 of the Committee on National Territory.

12 J. Bernas, supra note 7, at 11-14.

13 Id. at 14.

14 Id. at 9; citing Speech, Session February 15, 1972, of Delegates Amanio Sorongon, et al.

15The history of this deleted phrase goes back to the last clause of Art. I of the 1935 Constitution
which included "all territory over which the present Government of the Philippine Islands
exercises jurisdiction. See J. Bernas, supra note 7, at 14.

16 J. Bernas, supra note 7, at 16.

17 Id.; citing deliberations of the February 17, 1972 Session.

18 Id.

19 De Leon, Philippine Constitution 62 (2011).

20 Petition, pp. 4-5.

21Art. 48 of UNCLOS III provides that the breadth of the territorial sea, the contiguous zone, the
exclusive economic zone and the continental shelf shall be measured from the archipelagic
baseline drawn in accordance with Art. 47.

22R.P. Lotilla, The Philippine National Territory: A Collection of Related Documents 513-517
(1995); citing Batasang Pambansa, Acts and Resolution, 6th Regular Session.

23 J. Bernas, supra note 7, at 22.

24 UNCLOS III, Art. 57.

25 June 17, 1961.

26 September 18, 1968.

27G.R. No. 159618, February 1, 2011; citing Tañada v. Angara, G.R. No. 118295, May 2, 1997,
272 SCRA 18.

28 Art. 26, Vienna Convention on the Law of Treaties, 1969.

29Art. 13, Declaration of Rights and Duties of States Adopted by the International Law
Commission, 1949.

30 See J. Batongbacal, supra note 8.

31 Id.

32 The Protest reads in part: "The above-mentioned Philippine Act illegally claims Huangyan
Island (referred as "Bajo de Masinloc" in the Act) of China as "areas over which the Philippines
likewise exercises sovereignty and jurisdiction." The Chinese Government hereby reiterates that
Huangyan Island and Nansha Islands have been part of the territory of China since ancient time.
The People’s Republic of China has indisputable sovereignty over Huangyan Island and Nansha
Islands and their surrounding areas. Any claim to territorial sovereignty over Huangyan Island and
Nansha Islands by any other State is, therefore, null and void." Available on

<http://www.un.org/Depts/los/LEGISLATIONANDTREATIES/PDFFILES/DEPOSIT/
communicationsredeposit/mzn69_2009_chn.pdf> (visited August 9, 2011).

33 Supra note 5.

34C. Ku, The Archipelagic States Concept and Regional Stability in Southeast Asia, Case W.
Res. J. Int’l L., Vol. 23:463, 469; citing 1958 U.N. Conference on the Law of the Sea, Summary
Records 44, Doc. A/Conf. 13/42.

35 Id.

36Hiran W. Jayewardene, The Regime of Islands in International Law, AD Dordrecht: Martinus

Nijhoff Publishers, p. 103 (1990).

37 Id. at 112.
38UNCLOS III Off. Rec., Vol. II, 264, par. 65, and also pars. 61-62 and 66; cited in B.
Kwiatkowska, "The Archipelagic Regime in Practice in the Philippines and Indonesia – Making or
Breaking International Law?", International Journal of Estuarine and Coastal Law, Vol. 6, No. 1,
pp. 6-7.

39 4 Whiteman D.G., International Law 284 (1965); quoted in C. Ku, supra note 34, at 470.

40 1987 Constitution, Art. I.

41 LOSC, Arts. 52 and 54.

42 LOSC, Art. 53, par. 2.

43 LOSC, Art. 53, par. 2.

44 LOSC, Art. 51.

45 LOSC, Art. 8, par. 2.

46Cf. B. Kwiatkowska, supra note 38; citing J.D. Ingles, "The United Nations Convention on the
Law of the Sea: Implications of Philippine Ratification," 9 Philippine Yil (1983) 48-9 and 61-2; and
Congress of the Philippines, First Regular Session, Senate, S. No. 232, Explanatory Note and An
Act to Repeal Section 2 (concerning TS baselines around Sabah disputed with Malaysia) of the
1968 Act No. 5446.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-26379 December 27, 1969

WILLIAM C. REAGAN, ETC., petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.

Quasha, Asperilla, Blanco, Zafra and Tayag for petitioner.

Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete,
Solicitor Lolita O. Gal-lang and Special Attorney Gamaliel H. Mantolino for respondent.

FERNANDO, J.:

A question novel in character, the answer to which has far-reaching implications, is raised by petitioner
William C. Reagan, at one time a civilian employee of an American corporation providing technical
assistance to the United States Air Force in the Philippines. He would dispute the payment of the income
tax assessed on him by respondent Commissioner of Internal Revenue on an amount realized by him on
a sale of his automobile to a member of the United States Marine Corps, the transaction having taken
place at the Clark Field Air Base at Pampanga. It is his contention, seriously and earnestly expressed,
that in legal contemplation the sale was made outside Philippine territory and therefore beyond our
jurisdictional power to tax.

Such a plea, far-fetched and implausible, on its face betraying no kinship with reality, he would justify by
invoking, mistakenly as will hereafter be more fully shown an observation to that effect in a 1951
opinion, 1 petitioner ignoring that such utterance was made purely as a flourish of rhetoric and by way of
emphasizing the decision reached, that the trading firm as purchaser of army goods must respond for the
sales taxes due from an importer, as the American armed forces being exempt could not be taxed as
such under the National Internal Revenue Code.2 Such an assumption, inspired by the commendable aim
to render unavailing any attempt at tax evasion on the part of such vendee, found expression anew in a
1962 decision,3 coupled with the reminder however, to render the truth unmistakable, that "the areas
covered by the United States Military Bases are not foreign territories both in the political and
geographical sense."

As thus clarified, it is manifest that such a view amounts at most to a legal fiction and is moreover obiter.
It certainly cannot control the resolution of the specific question that confronts us. We declare our stand in
an unequivocal manner. The sale having taken place on what indisputably is Philippine territory,
petitioner's liability for the income tax due as a result thereof was unavoidable. As the Court of Tax
Appeals reached a similar conclusion, we sustain its decision now before us on appeal.

In the decision appealed from, the Court of Tax Appeals, after stating the nature of the case, started the
recital of facts thus: "It appears that petitioner, a citizen of the United States and an employee of Bendix
Radio, Division of Bendix Aviation Corporation, which provides technical assistance to the United States
Air Force, was assigned at Clark Air Base, Philippines, on or about July 7, 1959 ... . Nine (9) months
thereafter and before his tour of duty expired, petitioner imported on April 22, 1960 a tax-free 1960
Cadillac car with accessories valued at $6,443.83, including freight, insurance and other charges." 4 Then
came the following: "On July 11, 1960, more than two (2) months after the 1960 Cadillac car was
imported into the Philippines, petitioner requested the Base Commander, Clark Air Base, for a permit to
sell the car, which was granted provided that the sale was made to a member of the United States Armed
Forces or a citizen of the United States employed in the U.S. military bases in the Philippines. On the
same date, July 11, 1960, petitioner sold his car for $6,600.00 to a certain Willie Johnson, Jr. (Private first
class), United States Marine Corps, Sangley Point, Cavite, Philippines, as shown by a Bill of Sale . . .
executed at Clark Air Base. On the same date, Pfc. Willie (William) Johnson, Jr. sold the car to Fred
Meneses for P32,000.00 as evidenced by a deed of sale executed in Manila."5

As a result of the transaction thus made, respondent Commissioner of Internal Revenue, after deducting
the landed cost of the car as well as the personal exemption to which petitioner was entitled, fixed as his
net taxable income arising from such transaction the amount of P17,912.34, rendering him liable for
income tax in the sum of P2,979.00. After paying the sum, he sought a refund from respondent claiming
that he was exempt, but pending action on his request for refund, he filed the case with the Court of Tax
Appeals seeking recovery of the sum of P2,979.00 plus the legal rate of interest.

As noted in the appealed decision: "The only issue submitted for our resolution is whether or not the said
income tax of P2,979.00 was legally collected by respondent for petitioner." 6 After discussing the legal
issues raised, primarily the contention that the Clark Air Base "in legal contemplation, is a base outside
the Philippines" the sale therefore having taken place on "foreign soil", the Court of Tax Appeals found
nothing objectionable in the assessment and thereafter the payment of P2,979.00 as income tax and
denied the refund on the same. Hence, this appeal predicated on a legal theory we cannot accept.
Petitioner cannot make out a case for reversal.

1. Resort to fundamentals is unavoidable to place things in their proper perspective, petitioner apparently
feeling justified in his refusal to defer to basic postulates of constitutional and international law, induced
no doubt by the weight he would accord to the observation made by this Court in the two opinions earlier
referred to. To repeat, scant comfort, if at all is to be derived from such an obiter dictum, one which is
likewise far from reflecting the fact as it is.

Nothing is better settled than that the Philippines being independent and sovereign, its authority may be
exercised over its entire domain. There is no portion thereof that is beyond its power. Within its limits, its
decrees are supreme, its commands paramount. Its laws govern therein, and everyone to whom it applies
must submit to its terms. That is the extent of its jurisdiction, both territorial and personal. Necessarily,
likewise, it has to be exclusive. If it were not thus, there is a diminution of its sovereignty.

It is to be admitted that any state may, by its consent, express or implied, submit to a restriction of its
sovereign rights. There may thus be a curtailment of what otherwise is a power plenary in character. That
is the concept of sovereignty as auto-limitation, which, in the succinct language of Jellinek, "is the
property of a state-force due to which it has the exclusive capacity of legal self-determination and self-
restriction."7 A state then, if it chooses to, may refrain from the exercise of what otherwise is illimitable
competence.

Its laws may as to some persons found within its territory no longer control. Nor does the matter end
there. It is not precluded from allowing another power to participate in the exercise of jurisdictional right
over certain portions of its territory. If it does so, it by no means follows that such areas become
impressed with an alien character. They retain their status as native soil. They are still subject to its
authority. Its jurisdiction may be diminished, but it does not disappear. So it is with the bases under lease
to the American armed forces by virtue of the military bases agreement of 1947. They are not and cannot
be foreign territory.

Decisions coming from petitioner's native land, penned by jurists of repute, speak to that effect with
impressive unanimity. We start with the citation from Chief Justice Marshall, announced in the leading
case of Schooner Exchange v. M'Faddon,8 an 1812 decision: "The jurisdiction of the nation within its own
territory is necessarily exclusive and absolute. It is susceptible of no limitation not imposed by itself. Any
restriction upon it, deriving validity from an external source, would imply a diminution of its sovereignty to
the extent of the restriction, and an investment of that sovereignty to the same extent in that power which
could impose such restriction." After which came this paragraph: "All exceptions, therefore, to the full and
complete power of a nation within its own territories, must be traced up to the consent of the nation itself.
They can flow from no other legitimate source."

Chief Justice Taney, in an 1857 decision,9 affirmed the fundamental principle of everyone within the
territorial domain of a state being subject to its commands: "For undoubtedly every person who is found
within the limits of a government, whether the temporary purposes or as a resident, is bound by its laws."
It is no exaggeration then for Justice Brewer to stress that the United States government "is one having
jurisdiction over every foot of soil within its territory, and acting directly upon each [individual found
therein]; . . ."10

Not too long ago, there was a reiteration of such a view, this time from the pen of Justice Van Devanter.
Thus: "It now is settled in the United States and recognized elsewhere that the territory subject to its
jurisdiction includes the land areas under its dominion and control the ports, harbors, bays, and other in
closed arms of the sea along its coast, and a marginal belt of the sea extending from the coast line
outward a marine league, or 3 geographic miles."11 He could cite moreover, in addition to many American
decisions, such eminent treatise-writers as Kent, Moore, Hyde, Wilson, Westlake, Wheaton and
Oppenheim.

As a matter of fact, the eminent commentator Hyde in his three-volume work on International Law, as
interpreted and applied by the United States, made clear that not even the embassy premises of a foreign
power are to be considered outside the territorial domain of the host state. Thus: "The ground occupied
by an embassy is not in fact the territory of the foreign State to which the premises belong through
possession or ownership. The lawfulness or unlawfulness of acts there committed is determined by the
territorial sovereign. If an attache commits an offense within the precincts of an embassy, his immunity
from prosecution is not because he has not violated the local law, but rather for the reason that the
individual is exempt from prosecution. If a person not so exempt, or whose immunity is waived, similarly
commits a crime therein, the territorial sovereign, if it secures custody of the offender, may subject him to
prosecution, even though its criminal code normally does not contemplate the punishment of one who
commits an offense outside of the national domain. It is not believed, therefore, that an ambassador
himself possesses the right to exercise jurisdiction, contrary to the will of the State of his sojourn, even
within his embassy with respect to acts there committed. Nor is there apparent at the present time any
tendency on the part of States to acquiesce in his exercise of it." 12

2. In the light of the above, the first and crucial error imputed to the Court of Tax Appeals to the effect that
it should have held that the Clark Air Force is foreign soil or territory for purposes of income tax legislation
is clearly without support in law. As thus correctly viewed, petitioner's hope for the reversal of the decision
completely fades away. There is nothing in the Military Bases Agreement that lends support to such an
assertion. It has not become foreign soil or territory. This country's jurisdictional rights therein, certainly
not excluding the power to tax, have been preserved. As to certain tax matters, an appropriate exemption
was provided for.

Petitioner could not have been unaware that to maintain the contrary would be to defy reality and would
be an affront to the law. While his first assigned error is thus worded, he would seek to impart plausibility
to his claim by the ostensible invocation of the exemption clause in the Agreement by virtue of which a
"national of the United States serving in or employed in the Philippines in connection with the
construction, maintenance, operation or defense of the bases and residing in the Philippines only by
reason of such employment" is not to be taxed on his income unless "derived from Philippine source or
sources other than the United States sources."13 The reliance, to repeat, is more apparent than real for as
noted at the outset of this opinion, petitioner places more faith not on the language of the provision on
exemption but on a sentiment given expression in a 1951 opinion of this Court, which would be made to
yield such an unwarranted interpretation at war with the controlling constitutional and international law
principles. At any rate, even if such a contention were more adequately pressed and insisted upon, it is
on its face devoid of merit as the source clearly was Philippine.
In Saura Import and Export Co. v. Meer,14 the case above referred to, this Court affirmed a decision
rendered about seven months previously, 15 holding liable as an importer, within the contemplation of the
National Internal Revenue Code provision, the trading firm that purchased army goods from a United
States government agency in the Philippines. It is easily understandable why. If it were not thus, tax
evasion would have been facilitated. The United States forces that brought in such equipment later
disposed of as surplus, when no longer needed for military purposes, was beyond the reach of our tax
statutes.

Justice Tuason, who spoke for the Court, adhered to such a rationale, quoting extensively from the earlier
opinion. He could have stopped there. He chose not to do so. The transaction having occurred in 1946,
not so long after the liberation of the Philippines, he proceeded to discuss the role of the American
military contingent in the Philippines as a belligerent occupant. In the course of such a dissertion, drawing
on his well-known gift for rhetoric and cognizant that he was making an as if statement, he did say: "While
in army bases or installations within the Philippines those goods were in contemplation of law on foreign
soil."

It is thus evident that the first, and thereafter the controlling, decision as to the liability for sales taxes as
an importer by the purchaser, could have been reached without any need for such expression as that
given utterance by Justice Tuason. Its value then as an authoritative doctrine cannot be as much as
petitioner would mistakenly attach to it. It was clearly obiter not being necessary for the resolution of the
issue before this Court.16 It was an opinion "uttered by the way."17 It could not then be controlling on the
question before us now, the liability of the petitioner for income tax which, as announced at the opening of
this opinion, is squarely raised for the first time.18

On this point, Chief Justice Marshall could again be listened to with profit. Thus: "It is a maxim, not to be
disregarded, that general expressions, in every opinion, are to be taken in connection with the case in
which those expressions are used. If they go beyond the case, they may be respected, but ought not to
control the judgment in a subsequent suit when the very point is presented for decision." 19

Nor did the fact that such utterance of Justice Tuason was cited in Co Po v. Collector of Internal
Revenue,20 a 1962 decision relied upon by petitioner, put a different complexion on the matter. Again, it
was by way of pure embellishment, there being no need to repeat it, to reach the conclusion that it was
the purchaser of army goods, this time from military bases, that must respond for the advance sales taxes
as importer. Again, the purpose that animated the reiteration of such a view was clearly to emphasize that
through the employment of such a fiction, tax evasion is precluded. What is more, how far divorced from
the truth was such statement was emphasized by Justice Barrera, who penned the Co Po opinion, thus:
"It is true that the areas covered by the United States Military Bases are not foreign territories both in the
political and geographical sense."21

Justice Tuason moreover made explicit that rather than corresponding with reality, what was said by him
was in the way of a legal fiction. Note his stress on "in contemplation of law." To lend further support to a
conclusion already announced, being at that a confirmation of what had been arrived at in the earlier
case, distinguished by its sound appreciation of the issue then before this Court and to preclude any tax
evasion, an observation certainly not to be taken literally was thus given utterance.

This is not to say that it should have been ignored altogether afterwards. It could be utilized again, as it
undoubtedly was, especially so for the purpose intended, namely to stigmatize as without support in law
any attempt on the part of a taxpayer to escape an obligation incumbent upon him. So it was quoted with
that end in view in the Co Po case. It certainly does not justify any effort to render futile the collection of a
tax legally due, as here. That was farthest from the thought of Justice Tuason.

What is more, the statement on its face is, to repeat, a legal fiction. This is not to discount the uses of
a fictio juris in the science of the law. It was Cardozo who pointed out its value as a device "to advance
the ends of justice" although at times it could be "clumsy" and even "offensive". 22 Certainly, then, while far
from objectionable as thus enunciated, this observation of Justice Tuason could be misused or
misconstrued in a clumsy manner to reach an offensive result. To repeat, properly used, a legal fiction
could be relied upon by the law, as Frankfurter noted, in the pursuit of legitimate ends.23 Petitioner then
would be well-advised to take to heart such counsel of care and circumspection before invoking not a
legal fiction that would avoid a mockery of the law by avoiding tax evasion but what clearly is a
misinterpretation thereof, leading to results that would have shocked its originator.

The conclusion is thus irresistible that the crucial error assigned, the only one that calls for discussion to
the effect that for income tax purposes the Clark Air Force Base is outside Philippine territory, is utterly
without merit. So we have said earlier.

3. To impute then to the statement of Justice Tuason the meaning that petitioner would fasten on it is, to
paraphrase Frankfurter, to be guilty of succumbing to the vice of literalness. To so conclude is, whether
by design or inadvertence, to misread it. It certainly is not susceptible of the mischievous consequences
now sought to be fastened on it by petitioner.

That it would be fraught with such peril to the enforcement of our tax statutes on the military bases under
lease to the American armed forces could not have been within the contemplation of Justice Tuason. To
so attribute such a bizarre consequence is to be guilty of a grave disservice to the memory of a great
jurist. For his real and genuine sentiment on the matter in consonance with the imperative mandate of
controlling constitutional and international law concepts was categorically set forth by him, not as
an obiter but as the rationale of the decision, in People v. Acierto24 thus: "By the [Military Bases]
Agreement, it should be noted, the Philippine Government merely consents that the United States
exercise jurisdiction in certain cases. The consent was given purely as a matter of comity, courtesy, or
expediency over the bases as part of the Philippine territory or divested itself completely of jurisdiction
over offenses committed therein."

Nor did he stop there. He did stress further the full extent of our territorial jurisdiction in words that do not
admit of doubt. Thus: "This provision is not and can not on principle or authority be construed as a
limitation upon the rights of the Philippine Government. If anything, it is an emphatic recognition and
reaffirmation of Philippine sovereignty over the bases and of the truth that all jurisdictional rights granted
to the United States and not exercised by the latter are reserved by the Philippines for itself." 25

It is in the same spirit that we approach the specific question confronting us in this litigation. We hold, as
announced at the outset, that petitioner was liable for the income tax arising from a sale of his automobile
in the Clark Field Air Base, which clearly is and cannot otherwise be other than, within our territorial
jurisdiction to tax.

4. With the mist thus lifted from the situation as it truly presents itself, there is nothing that stands in the
way of an affirmance of the Court of Tax Appeals decision. No useful purpose would be served by
discussing the other assigned errors, petitioner himself being fully aware that if the Clark Air Force Base
is to be considered, as it ought to be and as it is, Philippine soil or territory, his claim for exemption from
the income tax due was distinguished only by its futility.

There is further satisfaction in finding ourselves unable to indulge petitioner in his plea for reversal. We
thus manifest fealty to a pronouncement made time and time again that the law does not look with favor
on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to
be mistaken and too categorical to be misinterpreted.26 Petitioner had not done so. Petitioner cannot do
so.

WHEREFORE, the decision of the Court of Tax Appeals of May 12, 1966 denying the refund of
P2,979.00 as the income tax paid by petitioner is affirmed. With costs against petitioner.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Teehankee, JJ., concur.
Reyes, J.B.L., J., concurs in the result.

Barredo, J., took no part.

Footnotes

1Saura Import and Export Co. v. Meer, 88 Phil. 199, 202 affirming Go Cheng Tee v. Meer, 87
Phil. 18 (1950).

2 Sec. 186, National Internal Revenue Code.

3 Co Po v. Collector of Internal Revenue, 5 SCRA 1057.

4 Decision, Annex 4, Brief for Petitioner-Appellant, pp. 20-21.

5 Ibid., p. 21.

6 Ibid., p. 23.

7 Jellinek as quoted in Cohen, Recent Theories of Sovereignty, p. 35 (1937).

8 7 Cranch 116, 136.

9 Brown v. Duchesne, 19 How. 183, 194.

10 In re Debs. 158 US 564 (1894).

11 Cunard Steamship Co. v. Mellon, 262 US 100 (1922).

122 Hyde, International Law Chiefly as Interpreted and Applied by the United States, pp. 1285-
1286 (1947).

13 Act XII of the Military Bases Agreement, par. 2, reads: "No national of the United States serving
in or employed in the Philippines in connection with the construction, maintenance, operation or
defense of the bases and residing in the Philippines by reason only of such employment, or his
spouse and minor children and dependent parents of either spouse, shall be liable to pay income
tax in the Philippines except in respect of income derived from Philippine source or sources other
than the United States sources." (1 Philippine Treaty Series, 357, 362 [1968]).

14 88 Phil. 199 (1951).

15 Go Cheng Tee v. Meer, 87 Phil. 18 (1950).

16Uy Po v. Collector of Customs, 34 Phil. 153 (1916); Morales v. Paredes, 55 Phil. 565 (1930);
Abad v. Carganillo Vda. de Yance, 95 Phil. 51 (1954).

17 People v. Macadaeg, 91 Phil. 410 (1952).

18 Cf. de los Reyes v. de Villa, 48 Phil. 227 (1925).

196 Wheat, 264, 399 (1821) reiterated in Myers v. United States, 272 US 52, (1926). Cf. Northern
Nat. Bank. v. Porter Township, 110 US 608 (1884); Weyerhaeuser v. Hoyt, 219 US 380 (1911);
Osaka Shosen Kaisha Line v. United States, 300 US 98; Wright v. United States, 302 US 583
(1938); Green v. United States, 355 US 184 (1957).

20 25 SCRA 1057.

21 Ibid., p. 1059.

22 Cardozo, The Paradoxes of Legal Science, 34 (1928).

23 Nashville C. St. Louis Ry v. Browning, 310 US 362 (1940).

24 92 Phil. 534, 542 (1953).

25 Ibid., p. 534.

26 Cf. Commissioner of Internal Revenue v. Guerrero, 21 SCRA 180 (1967) and the cases therein
cited. See also E. Rodriguez, Inc. v. Collector of Internal Revenue, 28 SCRA 1119 (1969).
 EN BANC
[G.R. No. L-9657. November 29, 1956.]
LEOPOLDO T. BACANI and MATEO A. MATOTO, Plaintiffs-Appellees, vs. NATIONAL COCONUT
CORPORATION, ET AL., Defendants, NATIONAL COCONUT CORPORATION and BOARD OF
LIQUIDATORS, Defendants-Appellants.

DECISION
BAUTISTA ANGELO, J.:
Plaintiffs herein are court stenographers assigned in Branch VI of the Court of First Instance of Manila.
During the pendency of Civil Case No. 2293 of said court, entitled Francisco Sycip vs. National Coconut
Corporation, Assistant Corporate Counsel Federico Alikpala, counsel for Defendant, requested said
stenographers for copies of the transcript of the stenographic notes taken by them during the
hearing. Plaintiffs complied with the request by delivering to Counsel Alikpala the needed transcript
containing 714 pages and thereafter submitted to him their bills for the payment of their fees. The National
Coconut Corporation paid the amount of P564 to Leopoldo T. Bacani and P150 to Mateo A. Matoto for said
transcript at the rate of P1 per page.
Upon inspecting the books of this corporation, the Auditor General disallowed the payment of these fees
and sought the recovery of the amounts paid. On January 19, 1953, the Auditor General required
the Plaintiffs to reimburse said amounts on the strength of a circular of the Department of Justice wherein
the opinion was expressed that the National Coconut Corporation, being a government entity, was exempt
from the payment of the fees in question. On February 6, 1954, the Auditor General issued an order
directing the Cashier of the Department of Justice to deduct from the salary of Leopoldo T. Bacani the
amount of P25 every payday and from the salary of Mateo A. Matoto the amount of P10 every payday
beginning March 30, 1954. To prevent deduction of these fees from their salaries and secure a judicial
ruling that the National Coconut Corporation is not a government entity within the purview of section 16,
Rule 130 of the Rules of Court, this action was instituted in the Court of First Instance of Manila.
Defendants set up as a defense that the National Coconut Corporation is a government entity within the
purview of section 2 of the Revised Administrative Code of 1917 and, hence, it is exempt from paying the
stenographers’ fees under Rule 130 of the Rules of Court. After trial, the court found for
the Plaintiffs declaring (1) “that Defendant National Coconut Corporation is not a government entity within
the purview of section 16, Rule 130 of the Rules of Court; chan roblesvirtualawlibrary(2) that the payments
already made by said Defendant to Plaintiffs herein and received by the latter from the former in the total
amount of P714, for copies of the stenographic transcripts in question, are valid, just and legal; chan
roblesvirtualawlibraryand (3) that Plaintiffs are under no obligation whatsoever to make a refund of these
payments already received by them.” This is an appeal from said decision.
Under section 16, Rule 130 of the Rules of Court, the Government of the Philippines is exempt from paying
the legal fees provided for therein, and among these fees are those which stenographers may charge for
the transcript of notes taken by them that may be requested by any interested person (section 8). The fees
in question are for the transcript of notes taken during the hearing of a case in which the National Coconut
Corporation is interested, and the transcript was requested by its assistant corporate counsel for the use of
said corporation.
On the other hand, section 2 of the Revised Administrative Code defines the scope of the term “Government
of the Republic of the Philippines” as follows:chanroblesvirtuallawlibrary
“‘The Government of the Philippine Islands’ is a term which refers to the corporate governmental entity
through which the functions of government are exercised throughout the Philippine Islands, including, save
as the contrary appears from the context, the various arms through which political authority is made
effective in said Islands, whether pertaining to the central Government or to the provincial or municipal
branches or other form of local government.”
The question now to be determined is whether the National Coconut Corporation may be considered as
included in the term “Government of the Republic of the Philippines” for the purposes of the exemption of
the legal fees provided for in Rule 130 of the Rules of Court.
As may be noted, the term “Government of the Republic of the Philippines” refers to a government entity
through which the functions of government are exercised, including the various arms through which political
authority is made effective in the Philippines, whether pertaining to the central government or to the
provincial or municipal branches or other form of local government. This requires a little digression on the
nature and functions of our government as instituted in our Constitution.
To begin with, we state that the term “Government” may be defined as “that institution or aggregate of
institutions by which an independent society makes and carries out those rules of action which are
necessary to enable men to live in a social state, or which are imposed upon the people forming that society
by those who possess the power or authority of prescribing them” (U.S. vs. Dorr, 2 Phil., 332). This
institution, when referring to the national government, has reference to what our Constitution has
established composed of three great departments, the legislative, executive, and the judicial, through which
the powers and functions of government are exercised. These functions are
twofold:chanroblesvirtuallawlibrary constitute and ministrant. The former are those which constitute the very
bonds of society and are compulsory in nature; chan roblesvirtualawlibrarythe latter are those that are
undertaken only by way of advancing the general interests of society, and are merely optional. President
Wilson enumerates the constituent functions as follows:chanroblesvirtuallawlibrary
“‘(1) The keeping of order and providing for the protection of persons and property from violence and
robbery.
‘(2) The fixing of the legal relations between man and wife and between parents and children.
‘(3) The regulation of the holding, transmission, and interchange of property, and the determination of its
liabilities for debt or for crime.
‘(4) The determination of contract rights between individuals.
‘(5) The definition and punishment of crime.
‘(6) The administration of justice in civil cases.
‘(7) The determination of the political duties, privileges, and relations of citizens.
‘(8) Dealings of the state with foreign powers:chanroblesvirtuallawlibrary the preservation of the state from
external danger or encroachment and the advancement of its international interests.’“ (Malcolm, The
Government of the Philippine Islands, p. 19.)
The most important of the ministrant functions are:chanroblesvirtuallawlibrary public works, public
education, public charity, health and safety regulations, and regulations of trade and industry. The principles
deter mining whether or not a government shall exercise certain of these optional functions
are:chanroblesvirtuallawlibrary (1) that a government should do for the public welfare those things which
private capital would not naturally undertake and (2) that a government should do these things which by its
very nature it is better equipped to administer for the public welfare than is any private individual or group
of individuals. (Malcolm, The Government of the Philippine Islands, pp. 19-20.)
From the above we may infer that, strictly speaking, there are functions which our government is required
to exercise to promote its objectives as expressed in our Constitution and which are exercised by it as an
attribute of sovereignty, and those which it may exercise to promote merely the welfare, progress and
prosperity of the people. To this latter class belongs the organization of those corporations owned or
controlled by the government to promote certain aspects of the economic life of our people such as the
National Coconut Corporation. These are what we call government-owned or controlled corporations which
may take on the form of a private enterprise or one organized with powers and formal characteristics of a
private corporations under the Corporation Law.
The question that now arises is:chanroblesvirtuallawlibrary Does the fact that these corporation perform
certain functions of government make them a part of the Government of the Philippines?
The answer is simple:chanroblesvirtuallawlibrary they do not acquire that status for the simple reason that
they do not come under the classification of municipal or public corporation. Take for instance the National
Coconut Corporation. While it was organized with the purpose of “adjusting the coconut industry to a
position independent of trade preferences in the United States” and of providing “Facilities for the better
curing of copra products and the proper utilization of coconut by-products”, a function which our government
has chosen to exercise to promote the coconut industry, however, it was given a corporate power separate
and distinct from our government, for it was made subject to the provisions of our Corporation Law in so far
as its corporate existence and the powers that it may exercise are concerned (sections 2 and 4,
Commonwealth Act No. 518). It may sue and be sued in the same manner as any other private corporations,
and in this sense it is an entity different from our government. As this Court has aptly said, “The mere fact
that the Government happens to be a majority stockholder does not make it a public corporation” (National
Coal Co. vs. Collector of Internal Revenue, 46 Phil., 586-587). “By becoming a stockholder in the National
Coal Company, the Government divested itself of its sovereign character so far as respects the transactions
of the corporation cralaw . Unlike the Government, the corporation may be sued without its consent, and is
subject to taxation. Yet the National Coal Company remains an agency or instrumentality of government.”
(Government of the Philippine Islands vs. Springer, 50 Phil., 288.)
To recapitulate, we may mention that the term “Government of the Republic of the Philippines” used in
section 2 of the Revised Administrative Code refers only to that government entity through which the
functions of the government are exercised as an attribute of sovereignty, and in this are included those
arms through which political authority is made effective whether they be provincial, municipal or other form
of local government. These are what we call municipal corporations. They do not include government
entities which are given a corporate personality separate and distinct from the government and which are
governed by the Corporation Law. Their powers, duties and liabilities have to be determined in the light of
that law and of their corporate charters. They do not therefore come within the exemption clause prescribed
in section 16, Rule 130 of our Rules of Court.
“Public corporations are those formed or organized for the government of a portion of the State.” (Section
3, Republic Act No. 1459, Corporation Law).
“‘The generally accepted definition of a municipal corporation would only include organized cities and towns,
and like organizations, with political and legislative powers for the local, civil government and police
regulations of the inhabitants of the particular district included in the boundaries of the corporation.’ Heller
vs. Stremmel, 52 Mo. 309, 312.”
“In its more general sense the phrase ‘municipal corporation’ may include both towns and counties, and
other public corporations created by government for political purposes. In its more common and limited
signification, it embraces only incorporated villages, towns and cities. Dunn vs. Court of County Revenues,
85 Ala. 144, 146, 4 So. 661.” (McQuillin, Municipal Corporations, 2nd ed., Vol. 1, p. 385.)
“We may, therefore, define a municipal corporation in its historical and strict sense to be the incorporation,
by the authority of the government, of the inhabitants of a particular place or district, and authorizing them
in their corporate capacity to exercise subordinate specified powers of legislation and regulation with
respect to their local and internal concerns. This power of local government is the distinctive purpose and
the distinguishing feature of a municipal corporation proper.” (Dillon, Municipal Corporations, 5th ed., Vol.
I, p. 59.)
It is true that under section 8, Rule 130, stenographers may only charge as fees P0.30 for each page of
transcript of not less than 200 words before the appeal is taken and P0.15 for each page after the filing of
the appeal, but in this case the National Coconut Corporation has agreed and in fact has paid P1.00 per
page for the services rendered by the Plaintiffs and has not raised any objection to the amount paid until
its propriety was disputed by the Auditor General. The payment of the fees in question became therefore
contractual and as such is valid even if it goes beyond the limit prescribed in section 8, Rule 130 of the
Rules of Court.
As regards the question of procedure raised by Appellants, suffice it to say that the same is insubstantial,
considering that this case refers not to a money claim disapproved by the Auditor General but to an action
of prohibition the purpose of which is to restrain the officials concerned from deducting from Plaintiffs’
salaries the amount paid to them as stenographers’ fees. This case does not come under section 1, Rule
45 of the Rules of Court relative to appeals from a decision of the Auditor General.
Wherefore, the decision appealed from is affirmed, without pronouncement as to costs.
Paras, C.J., Bengzon, Padilla, Montemayor, Labrador, Concepcion, Reyes, J. B. L., Endencia and
Felix, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-21484 November 29, 1969

THE AGRICULTURAL CREDIT and COOPERATIVE FINANCING ADMINISTRATION

(ACCFA), petitioner,
vs.
ACCFA SUPERVISORS' ASSOCIATION, ACCFA WORKERS' ASSOCIATION, and THE COURT OF
INDUSTRIAL RELATIONS, respondents.

Deogracias E. Lerma and Esmeraldo U. Guloy for petitioner Agricultural Credit and Cooperative
Financing Administration.
Office of the Agrarian Counsel, Department of Justice for petitioner Agricultural Credit Administration
J. C. Espinas and Associates for respendents Confederation of Unions in Government Corporations
Offices, et al. Mariano B. Tuason for respondent Court of Industrial Relations.

MAKALINTAL, J.:

These are two separate appeals by certiorari from the decision dated March 25, 1963 (G.R. No. L-21484)
and the order dated May 21, 1964 (G.R. No. L-23605) as affirmed by the resolutions en banc, of the
Court of Industrial Relations, in Cases Nos. 3450-ULP and 1327-MC, respectively. The parties, except
the Confederation of Unions in Government Corporations and Offices (CUGCO), being practically the
same and the principal issues involved related, only one decision is now rendered in these two cases.

The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a government agency
created under Republic Act No. 821, as amended. Its administrative machinery was reorganized and its
name changed to Agricultural Credit Administration (ACA) under the Land Reform Code (Republic Act
No. 3844). On the other hand, the ACCFA Supervisors' Association (ASA) and the ACCFA Workers'
Association (AWA), hereinafter referred to as the Unions, are labor organizations composed of the
supervisors and the rank-and-file employees, respectively, in the ACCFA (now ACA).

G.R. No. L-21484

On September 4, 1961 a collective bargaining agreement, which was to be effective for a period of one
(1) year from July 1, 1961, was entered into by and between the Unions and the ACCFA. A few months
thereafter, the Unions started protesting against alleged violations and non-implementation of said
agreement. Finally, on October 25, 1962 the Unions declared a strike, which was ended when the strikers
voluntarily returned to work on November 26, 1962.

On October 30, 1962 the Unions, together with its mother union, the Confederation of Unions in
Government Corporations and Offices (CUGCO), filed a complaint with the Court of Industrial Relations
against the ACCFA (Case No. 3450-ULP) for having allegedly committed acts of unfair labor practice,
namely: violation of the collective bargaining agreement in order to discourage the members of the
Unions in the exercise of their right to self-organization, discrimination against said members in the matter
of promotions, and refusal to bargain. The ACCFA denied the charges and interposed as affirmative and
special defenses lack of jurisdiction of the CIR over the case, illegality of the bargaining contract,
expiration of said contract and lack of approval by the office of the President of the fringe benefits
provided for therein. Brushing aside the foregoing defenses, the CIR in its decision dated March 25, 1963
ordered the ACCFA:
 1. To cease and desist from committing further acts tending to discourage the members of
complainant unions in the exercise of their right to self-organization;

2. To comply with and implement the provision of the collective bargaining contract executed on
September 4, 1961, including the payment of P30.00 a month living allowance;

3. To bargain in good faith and expeditiously with the herein complainants.

The ACCFA moved to reconsider but was turned down in a resolution dated April 25, 1963 of the CIR en
banc. Thereupon it brought this appeal by certiorari.

The ACCFA raises the following issues in its petition, to wit:

1. Whether or not the respondent court has jurisdiction over this case, which in turn depends on
whether or not ACCFA exercised governmental or proprietary functions.

2. Whether or not the collective bargaining agreement between the petitioner and the respondent
union is valid; if valid, whether or not it has already lapsed; and if not, whether or not its (sic)
fringe benefits are already enforceable.

3. Whether or not there is a legal and/or factual basis for the finding of the respondent court that
the petitioner had committed acts of unfair labor practice.

4. Whether or not it is within the competence of the court to enforce the collective bargaining
agreement between the petitioner and the respondent unions, the same having already expired.

G.R. No. L-23605

During the pendency of the above mentioned case (G.R. No. L-21484), specifically on August 8, 1963,
the President of the Philippines signed into law the Agricultural Land Reform Code (Republic Act No.
3844), which among other things required the reorganization of the administrative machinery of the
Agricultural Credit and Cooperative Financing Administration (ACCFA) and changed its name to
Agricultural Credit Administration (ACA). On March 17, 1964 the ACCFA Supervisors' Association and the
ACCFA Workers' Association filed a petition for certification election with the Court of Industrial Relations
(Case No. 1327-MC) praying that they be certified as the exclusive bargaining agents for the supervisors
and rank-and-file employees, respectively, in the ACA. The trial Court in its order dated March 30, 1964
directed the Manager or Officer-in-Charge of the ACA to allow the posting of said order "for the
information of all employees and workers thereof," and to answer the petition. In compliance therewith,
the ACA, while admitting most of the allegations in the petition, denied that the Unions represented the
majority of the supervisors and rank-and-file workers, respectively, in the ACA. It further alleged that the
petition was premature, that the ACA was not the proper party to be notified and to answer the petition,
and that the employees and supervisors could not lawfully become members of the Unions, nor be
represented by them. However, in a joint manifestation of the Unions dated May 7, 1964, with the
conformity of the ACA Administrator and of the Agrarian Counsel in his capacity as such and as counsel
for the National Land Reform Council, it was agreed "that the union petitioners in this case represent the
majority of the employees in their respective bargaining units" and that only the legal issues raised would
be submitted for the resolution of the trial Court.

Finding the remaining grounds for ACA's opposition to the petition to be without merit, the trial Court in its
order dated May 21, 1964 certified "the ACCFA Workers' Association and the ACCFA Supervisors'
Association as the sole and exclusive bargaining representatives of the rank-and-file employees and
supervisors, respectively, of the Agricultural Credit Administration." Said order was affirmed by the CIR en
banc in its resolution dated August 24, 1964.
On October 2, 1964 the ACA filed in this Court a petition for certiorari with urgent motion to stay the CIR
order of May 21, 1964. In a resolution dated October 6, 1964, this Court dismissed the petition for "lack of
adequate allegations," but the dismissal was later reconsidered when the ACA complied with the formal
requirement stated in said resolution. As prayed for, this Court ordered the CIR to stay the execution of its
order of May 21, 1964.

In this appeal, the ACA in effect challenges the jurisdiction of the CIR to entertain the petition of the
Unions for certification election on the ground that it (ACA) is engaged in governmental functions. The
Unions join the issue on this single point, contending that the ACA forms proprietary functions.

Under Section 3 of the Agricultural Land Reform Code the ACA was established, among other
governmental agencies,1 to extend credit and similar assistance to agriculture, in pursuance of the policy
enunciated in Section 2 as follows:

SEC. 2. Declaration of Policy. — It is the policy of the State:

(1) To establish owner-cultivatorships and the economic family-size farm as the basis of
Philippine agriculture and, as a consequence, divert landlord capital in agriculture to industrial
development;

(2) To achieve a dignified existence for the small farmers free from pernicious institutional
restraints and practices;

(3) To create a truly viable social and economic structure in agriculture conducive to greater
productivity and higher farm incomes;

(4) To apply all labor laws equally and without discrimination to both industrial and agricultural
wage earners;

(5) To provide a more vigorous and systematic land resettlement program and public land
distribution; and

(6) To make the small farmers more independent, self-reliant and responsible citizens, and a
source of genuine strength in our democratic society.

The implementation of the policy thus enunciated, insofar as the role of the ACA therein is concerned, is
spelled out in Sections 110 to 118, inclusive, of the Land Reform Code. Section 110 provides that "the
administrative machinery of the ACCFA shall be reorganized to enable it to align its activities with the
requirements and objective of this Code and shall be known as the Agricultural Credit Administration."
Under Section 112 the sum of P150,000,000 was appropriated out of national funds to finance the
additional credit functions of the ACA as a result of the land reform program laid down in the Code.
Section 103 grants the ACA the privilege of rediscounting with the Central Bank, the Development Bank
of the Philippines and the Philippine National Bank. Section 105 directs the loaning activities of the ACA
"to stimulate the development of farmers' cooperatives," including those "relating to the production and
marketing of agricultural products and those formed to manage and/or own, on a cooperative basis,
services and facilities, such as irrigation and transport systems, established to support production and/or
marketing of agricultural products." Section 106 deals with the extension by ACA of credit to small
farmers in order to stimulate agricultural production. Sections 107 to 112 lay down certain guidelines to be
followed in connection with the granting of loans, such as security, interest and supervision of credit.
Sections 113 to 118, inclusive, invest the ACA with certain rights and powers not accorded to non-
governmental entities, thus:
 SEC. 113. Auditing of Operations. — For the effective supervision of farmers' cooperatives, the
head of the Agricultural Credit Administration shall have the power to audit their operations,
records and books of account and to issue subpoena and subpoena duces tecum to compel the
attendance of witnesses and the production of books, documents and records in the conduct of
such audit or of any inquiry into their affairs. Any person who, without lawful cause, fails to obey
such subpoena or subpoena duces tecum shall, upon application of the head of Agricultural
Credit Administration with the proper court, be liable to punishment for contempt in the manner
provided by law and if he is an officer of the Association, to suspension or removal from office.

SEC. 114. Prosecution of officials. — The Agricultural Credit Administration, through the
appropriate provincial or city fiscal, shall have the power to file and prosecute any and all actions
which it may have against any and all officials or employees of farmers' cooperatives arising from
misfeasance or malfeasance in office.

SEC. 115. Free Notarial Service. — Any justice of the peace, in his capacity as notary ex-officio,
shall render service free of charge to any person applying for a loan under this Code either in
administering the oath or in the acknowledgment of instruments relating to such loan.

SEC. 116. Free Registration of Deeds. — Any register of deeds shall accept for registration, free
of charge any instrument relative to a loan made under this Code.

SEC. 117. Writing-off Unsecured and Outstanding Loans. — Subject to the approval of the
President upon recommendation of the Auditor General, the Agricultural Credit Administration
may write-off from its books, unsecured and outstanding loans and accounts receivable which
may become uncollectible by reason of the death or disappearance of the debtor, should there be
no visible means of collecting the same in the foreseeable future, or where the debtor has been
verified to have no income or property whatsoever with which to effect payment. In all cases, the
writing-off shall be after five years from the date the debtor defaults.

SEC. 118. Exemption from Duties, Taxes and Levies. — The Agricultural Credit Administration is
hereby exempted from the payment of all duties, taxes, levies, and fees, including docket and
sheriff's fees, of whatever nature or kind, in the performance of its functions and in the exercise of
its powers hereunder.

The power to audit the operations of farmers' cooperatives and otherwise inquire into their affairs, as
given by Section 113, is in the nature of the visitorial power of the sovereign, which only a government
agency specially delegated to do so by the Congress may legally exercise.

On March 19, 1964 Executive Order No. 75 was promulgated. It is entitled: "Rendering in Full Force and
Effect the Plan of Reorganization Proposed by the Special Committee on Reorganization of Agencies for
Land Reform for the Administrative Machinery of the Agricultural Land Reform Code," and contains the
following pertinent provisions:

Section 3. The Land Reform Project Administration2 shall be considered a single organization and
the personnel complement of the member agencies including the legal officers of the Office of the
Agrarian Counsel which shall provide legal services to the LRPA shall be regarded as one
personnel pool from which the requirements of the operations shall be drawn and subject only to
the civil service laws, rules and regulations, persons from one agency may be freely assigned to
positions in another agency within the LRPA when the interest of the service so demands.

Section 4. The Land Reform Project Administration shall be considered as one organization with
respect to the standardization of job descriptions position classification and wage and salary
structures to the end that positions involving the same or equivalent qualifications and equal
responsibilities and effort shall have the same remuneration.
 Section 5. The Civil Service laws, rules and regulations with respect to promotions, particularly in
the consideration of person next in rank, shall be made applicable to the Land Reform Project
Administration as a single agency so that qualified individuals in one member agency must be
considered in considering promotion to higher positions in another member agency.

The implementation of the land reform program of the government according to Republic Act No. 3844 is
most certainly a governmental, not a proprietary, function; and for that purpose Executive Order No. 75
has placed the ACA under the Land Reform Project Administration together with the other member
agencies, the personnel complement of all of which are placed in one single pool and made available for
assignment from one agency to another, subject only to Civil Service laws, rules and regulations, position
classification and wage structures.

The appointing authority in respect of the officials and employees of the ACA is the President of the
Philippines, as stated in a 1st indorsement by his office to the Chairman of the National Reform Council
dated May 22, 1964, as follows:

Appointments of officials and employees of the National Land Reform Council and its agencies
may be made only by the President, pursuant to the provisions of Section 79(D) of the Revised
Administrative Code. In accordance with the policy and practice, such appointments should be
prepared for the signature of the Executive Secretary, "By Authority ofthe President". 3

When the Agricultural Reform Code was being considered by the Congress, the nature of the ACA was
the subject of the following exposition on the Senate floor:

Senator Tolentino: . . . . "The ACA is not going to be a profit making institution. It is supposed to
be a public service of the government to the lessees and farmer-owners of the lands that may be
bought after expropriation from owners. It is the government here that is the lender. The
government should not exact a higher interest than what we are telling a private landowner now
in his relation to his tenants if we give to their farmers a higher rate of interest . . . ." (pp. 17 & 18,
Senate Journal No. 16, July 3, 1963)

The reason is obvious, to pinpoint responsibility for many losses in the government, in order to avoid
irresponsible lending of government money — to pinpoint responsibility for many losses . . . .

Senator Manglapus: ". . . But assuming that hypothesis, that is the reason why we are
appropriating P150,000,000.00 for the Agricultural Credit Administration which will go to
intensified credit operations on the barrio level . . ." (p. 3, Senate Journal No. 7).

That it is the reason why we are providing for the expansion of the ACCFA and the weeding out of the
cooperative activity of the ACCFA and turning this over to the Agricultural Productivity Commission, so
that the Agricultural Credit Administration will concentrate entirely on the facilitation of credit on the barrio
level with the massive support of 150 million provided by the government. . . . (pp. 4 & 5 of Senate
Journal No. 7, July 3, 1963)

. . . But by releasing them from this situation, we feel that we are putting them in a much better condition
than that in which they are found by providing them with a business-like way of obtaining credit, not
depending on a paternalistic system but one which is business-like — that is to say, a government office,
which on the barrio level will provide them that credit directly . . . . (p. 40, Senate Journal No. 7, July 3,
1963) (emphasis supplied).

The considerations set forth above militate quite strongly against the recognition of collective bargaining
powers in the respondent Unions within the context of Republic Act No. 875, and hence against the grant
of their basic petition for certification election as proper bargaining units. The ACA is a government office
or agency engaged in governmental, not proprietary functions. These functions may not be strictly what
President Wilson described as "constituent" (as distinguished from "ministrant"), 4 such as those relating to
the maintenance of peace and the prevention of crime, those regulating property and property rights,
those relating to the administration of justice and the determination of political duties of citizens, and
those relating to national defense and foreign relations. Under this traditional classification, such
constituent functions are exercised by the State as attributes of sovereignty, and not merely to promote
the welfare, progress and prosperity of the people — these letter functions being ministrant he exercise of
which is optional on the part of the government.

The growing complexities of modern society, however, have rendered this traditional classification of the
functions of government quite unrealistic, not to say obsolete. The areas which used to be left to private
enterprise and initiative and which the government was called upon to enter optionally, and only "because
it was better equipped to administer for the public welfare than is any private individual or group of
individuals,"5 continue to lose their well-defined boundaries and to be absorbed within activities that the
government must undertake in its sovereign capacity if it is to meet the increasing social challenges of the
times. Here as almost everywhere else the tendency is undoubtedly towards a greater socialization of
economic forces. Here of course this development was envisioned, indeed adopted as a national policy,
by the Constitution itself in its declaration of principle concerning the promotion of social justice.

It was in furtherance of such policy that the Land Reform Code was enacted and the various agencies,
the ACA among them, established to carry out its purposes. There can be no dispute as to the fact that
the land reform program contemplated in the said Code is beyond the capabilities of any private
enterprise to translate into reality. It is a purely governmental function, no less than, say, the
establishment and maintenance of public schools and public hospitals. And when, aside from the
governmental objectives of the ACA, geared as they are to the implementation of the land reform program
of the State, the law itself declares that the ACA is a government office, with the formulation of policies,
plans and programs vested no longer in a Board of Governors, as in the case of the ACCFA, but in the
National Land Reform Council, itself a government instrumentality; and that its personnel are subject to
Civil Service laws and to rules of standardization with respect to positions and salaries, any vestige of
doubt as to the governmental character of its functions disappears.

In view of the foregoing premises, we hold that the respondent Unions are not entitled to the certification
election sought in the Court below. Such certification is admittedly for purposes of bargaining in behalf of
the employees with respect to terms and conditions of employment, including the right to strike as a
coercive economic weapon, as in fact the said unions did strike in 1962 against the ACCFA (G.R. No. L-
21824).6 This is contrary to Section 11 of Republic Act No. 875, which provides:

SEC. 11. Prohibition Against Strike in the Government — The terms and conditions of
employment in the Government, including any political subdivision or instrumentality thereof, are
governed by law and it is declared to be the policy of this Act that employees therein shall not
strike for the purposes of securing changes or modification in their terms and conditions of
employment. Such employees may belong to any labor organization which does not impose the
obligation to strike or to join in strike: Provided, However, that this section shall apply only to
employees employed in governmental functions of the Government including but not limited to
governmental corporations.7

With the reorganization of the ACCFA and its conversion into the ACA under the Land Reform Code and
in view of our ruling as to the governmental character of the functions of the ACA, the decision of the
respondent Court dated March 25, 1963, and the resolution en banc affirming it, in the unfair labor
practice case filed by the ACCFA, which decision is the subject of the present review in G. R. No. L-
21484, has become moot and academic, particularly insofar as the order to bargain collectively with the
respondent Unions is concerned.

What remains to be resolved is the question of fringe benefits provided for in the collective bargaining
contract of September 4, 1961. The position of the ACCFA in this regard is that the said fringe benefits
have not become enforceable because the condition that they should first be approved by the Office of
the President has not been complied with. The Unions, on the other hand, contend that no such condition
existed in the bargaining contract, and the respondent Court upheld this contention in its decision.

It is to be listed that under Section 3, Article XIV, of the agreement, the same "shall not become effective
unless and until the same is duly ratified by the Board of Governors of the Administration." Such approval
was given even before the formal execution of the agreement, by virtue of "Resolution No. 67, Regular
Meeting No. 7, FY 1960-61, held on August 17, 1961," but with the proviso that "the fringe benefits
contained therein shall take effect only if approved by the office of the President." The condition is,
therefore, deemed to be incorporated into the agreement by reference.

On October 23, 1962 the Office of the President, in a letter signed by the Executive Secretary, expressed
its approval of the bargaining contract "provided the salaries and benefits therein fixed are not in conflict
with applicable laws and regulations, are believed to be reasonable considering the exigencies of the
service and the welfare of the employees, and are well within the financial ability of the particular
corporation to bear."

On July 1, 1963 the ACCFA management and the Unions entered into an agreement for the
implementation of the decision of the respondent Court concerning the fringe benefits, thus:

In the meantime, only Cost of Living Adjustment, Longevity Pay, and Night Differential Benefits
accruing from July 1, 1961 to June 30, 1963 shall be paid to all employees entitled thereto, in the
following manner:

A) The sum of P180,000 shall be set aside for the payment of:

1) Night differential benefits for Security Guards.

2) Cost of Living Adjustment and Longevity Pay.

3) The unpaid balance due employees on Item A (1) and (2) this paragraph shall be paid in
monthly installments as finances permit but not beyond December 20, 1963.

3. All benefits accruing after July 1, 1963, shall be allowed to accumulate but payable only after
all benefits accruing up to June 30, 1963, as per CIR decision hereinabove referred to shall have
been settled in full; provided, however, that commencing July 1, 1963 and for a period of only two
(2) months thereafter (during which period the ACCFA and the Unions shall negotiate a new
Collective Bargaining Agreement) the provisions of the September 4, 1961 Collective Bargaining
Agreement shall be temporarily suspended, except as to Cost of Living Adjustment and "political"
or non-economic privileges and benefits thereunder.

On July 24, 1963 the ACCFA Board of Governors ratified the agreement thus entered into, pursuant to
the provision thereof requiring such ratification, but with the express qualification that the same was
"without prejudice to the pending appeal in the Supreme Court . . . in Case No. 3450-ULP." The payment
of the fringe benefits agreed upon, to our mind, shows that the same were within the financial capability of
the ACCFA then, and hence justifies the conclusion that this particular condition imposed by the Office of
the President in its approval of the bargaining contract was satisfied.

We hold, therefore, that insofar as the fringe benefits already paid are concerned, there is no reason to
set aside the decision of the respondent Court, but that since the respondent Unions have no right to the
certification election sought by them nor, consequently, to bargain collectively with the petitioner, no
further fringe benefits may be demanded on the basis of any collective bargaining agreement.
The decisions and orders appealed from are set aside and/or modified in accordance with the foregoing
pronouncements. No costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez, Castro, Teehankee and Barredo, JJ., concur.
Zaldivar, J., concurs in the result.

Separate Opinions

FERNANDO, J., concurring:

The decision reached by this Court so ably given expression in the opinion of Justice Makalintal,
characterized with vigor, clarity and precision, represents what for me is a clear tendency not to be
necessarily bound by our previous pronouncements on what activities partake of a nature that is
governmental.1 Of even greater significance, there is a definite rejection of the "constituent-ministrant"
criterion of governmental functions, followed in Bacani v. National Coconut Corporation.2 That indeed is
cause for gratification. For me at least, there is again full adherence to the basic philosophy of the
Constitution as to the extensive and vast power lodged in our government to cope with the social and
economic problems that even now sorely beset us. There is therefore full concurrence on my part to the
opinion of the Court, distinguished by its high quality of juristic craftsmanship. I feel however that the
matter is of such vital importance that a separate concurring opinion is not inappropriate. It will also serve
to give expression to my view, which is that of the Court likewise, that our decision today does not pass
upon the rights of labor employed in instrumentalities of the state discharging governmental functions.

1. In the above Bacani decision, governmental functions are classified into constituent and ministrant.
"The former are those which constitute the very bonds of society and are compulsory in nature; the latter
are those that are undertaken only by way of advancing the general interests of society, and are merely
optional. President Wilson enumerates the constituent functions as follows: '(1) The keeping of order and
providing for the protection of persons and property from violence and robbery. (2) The fixing of the legal
relations between man and wife and between parents and children. (3) The regulation of the holding,
transmission, and interchange of property, and the determination of its liabilities for debt or for crime. (4)
The determination of contract rights between individuals. (5) The definition and punishment of crime. (6)
The administration of justice in civil cases. (7) The determination of the political duties, privileges, and
relations of citizens. (8) Dealings of the state with foreign powers: the preservation of the state from
external danger or encroachment and the advancement of its international interests.' " 3

The ministrant functions were then enumerated, followed by a statement of the basis that would justify
engaging in such activities. Thus: "The most important of the ministrant functions are: public works, public
education, public charity, health and safety regulations, and regulations of trade and industry. The
principles determining whether or not a government shall exercise certain of these optional functions are:
(1) that a government should do for the public welfare those things which private capital would not
naturally undertake and (2) that a government should do these things which by its very nature it is better
equipped to administer for the public welfare than is any private individual or group of individuals." 4

Reference is made in the Bacani decision to the first of the many publications of Justice Malcolm on the
Philippine government, which appeared in 1916,5 adopting the formulation of the then Professor, later
President, Woodrow Wilson of the United States, in a textbook on political science the first edition of
which was published in 1898. The Wilson classification reflected the primacy of the dominant laissez-
faire concept carried into the sphere of government.

A most spirited defense of such a view was given by former President Hadley of Yale in a series of three
lectures delivered at Oxford University in 1914. According to President Hadley: "I shall begin with a
proposition which may sound somewhat startling, but which I believe to be literally true. The whole
American political and social system is based on industrial property right, far more completely than has
ever been the case in any European country. In every nation of Europe there has been a certain amount
of traditional opposition between the government and the industrial classes. In the United States no such
tradition exists. In the public law of European communities industrial freeholding is a comparatively recent
development. In the United States, on the contrary, industrial freeholding is the foundation on which the
whole social order has been established and built up."6

The view is widely accepted that such a fundamental postulate did influence American court decisions on
constitutional law. As was explicitly stated by Justice Cardozo, speaking of that era: "Laissez-faire was
not only a counsel of caution which statesmen would do well to heed. It was a categorical imperative
which statesmen as well as judges, must obey."7 For a long time, legislation tending to reduce economic
inequality foundered on the rock that was the due process clause, enshrining as it did the liberty of
contract. To cite only one instance, the limitation of employment in bakeries to sixty hours a week and ten
hours a day under a New York statute was stricken down for being tainted with a due process objection in
Lochner v. New York.8 It provoked one of the most vigorous dissents of Justice Holmes, who was
opposed to the view that the United States Constitution did embody laissez-faire. Thus: "General
propositions do not decide concrete cases. The decision will depend on a judgment or intuition more
subtle than any articulate major premise. But I think that the proposition just stated, if it is accepted, will
carry us far toward the end. Every opinion tends to become a law. I think that the word 'liberty,' in the 14th
Amendment, is perverted when it is held to prevent the natural outcome of a dominant opinion, unless it
can be said that a rational and fair man necessarily would admit that the statute proposed would infringe
fundamental principles as they have been understood by the traditions of our people and our law. It does
not need research to show that no such sweeping condemnation can be passed upon the statute before
us. A reasonable man might think it a proper measure on the score of health. Men whom I certainly could
not pronounce unreasonable would uphold it as a first installment of a general regulation of the hours of
work. Whether in the latter aspect it would be open to the charge of inequality I think it unnecessary to
discuss." It was not until 1908, in Muller v. Oregon,9 that the American Supreme Court held valid a ten-
hour maximum for women workers in laundries and not until 1917 in Bunting v. Oregon10 that such a
regulatory ten-hour law applied to men and women passed the constitutional test.

Similarly, state legislation fixing minimum wages was deemed offensive to the due process clause in a
1923 decision in Adkins v. Children's Hospital.11 Only in 1937, in the leading case of West Coast Hotel v.
Parrish,12 was the Adkins case overruled and a minimum wage law New York statute upheld. The same
unsympathetic attitude arising from the laissez-faire concept was manifest in decisions during such
period, there being the finely-spun distinctions in the Wolff Packing Co. v. Court of Industrial
Relations13 decision, as to when certain businesses could be classified as affected with public interest to
justify state regulation as to prices. After eleven years, in 1934, in Nebbia v. New York,14 the air of
unreality was swept away by this explicit pronouncement from the United States Supreme Court: "The
phrase 'affected with a public interest' can, in the nature of things, mean no more than that an industry, for
adequate reason, is subject to control for the public good."

It is thus apparent that until the administration of President Roosevelt, the laissez-faire principle resulted
in the contraction of the sphere where governmental entry was permissible. The object was to protect
property even if thereby the needs of the general public would be left unsatisfied. This was emphatically
put forth in a work of former Attorney General, later Justice, Jackson, citing an opinion of Judge Van
Orsdel. Thus: "It should be remembered that of the three fundamental principles which underlie
government, and for which government exists, the protection of life, liberty, and property, the chief of
these is property . . . ."15 The above excerpt from Judge Van Orsdel forms part of his opinion in Children's
Hospital v. Adkins, when decided by the Circuit Court of Appeals.16

Nonetheless, the social and economic forces at work in the United States to which the new deal
administration of President Roosevelt was most responsive did occasion, as of 1937, greater receptivity
by the American Supreme Court to a philosophy less rigid in its obeisance to property rights. Earlier
legislation deemed offensive to the laissez-faire concept had met a dismal fate. Their nullity during his
first term could, more often than not, be expected.17

As a matter of fact, even earlier, in 1935, Professor Coker of Yale, speaking as a historian, could already
discern a contrary drift. Even then he could assert that the range of governmental activity in the United
States had indeed expanded. According to him: "Thus both liberals and conservatives approve wide and
varied governmental intervention; the latter condemning it, it is true, when the former propose it, but
endorsing it, after it has become a fixed part of the status quo, as so beneficial in its effects that no more
of it is needed. Our history for the last half-century shows that each important governmental intervention
we have adopted has been called socialistic or communistic by contemporary conservatives, and has
later been approved by equally conservative men who now accept it both for its proved benefits and for
the worthy traditions it has come to represent. Both liberal and conservative supporters of our large-scale
business under private ownership advocate or concede the amounts and kinds of governmental limitation
and aid which they regard as necessary to make the system work efficiently and humanely. Sooner or
later, they are willing to have government intervene for the purpose of preventing the system from being
too oppressive to the masses of the people, protecting it from its self-destructive errors, and coming to its
help in other ways when it appears not to be able to take care of itself."18

At any rate, by 1943, the United States was reconciled to laissez-faire having lost its dominance. In the
language of Justice Jackson in the leading case of West Virginia State Board of Education v.
Barnette:19 "We must transplant these rights to a soil in which the laissez-faire concept or principle of non-
interference has withered at least as to economic affairs, and social advancements are increasingly
sought through closer integration of society and through expanded and strengthened governmental
controls."

2. The influence exerted by American constitutional doctrines unavoidable when the Philippines was still
under American rule notwithstanding, an influence that has not altogether vanished even after
independence, the laissez-faire principle never found full acceptance in this jurisdiction, even during the
period of its full flowering in the United States. Moreover, to erase any doubts, the Constitutional
Convention saw to it that our fundamental law embodies a policy of the responsibility thrust on
government to cope with social and economic problems and an earnest and sincere commitment to the
promotion of the general welfare through state action. It would thus follow that the force of any legal
objection to regulatory measures adversely affecting property rights or to statutes organizing public
corporations that may engage in competition with private enterprise has been blunted. Unless there be a
clear showing of any invasion of rights guaranteed by the Constitution, their validity is a foregone
conclusion. No fear need be entertained that thereby spheres hitherto deemed outside government
domain have been enchroached upon. With our explicit disavowal of the "constituent-ministrant" test, the
ghost of the laissez-faire concept no longer stalks the juridical stage.

As early as 1919, in the leading case of Rubi V. Provincial Board of Mindoro,20 Justice Malcolm already
had occasion to affirm: "The doctrines of laissez-faire and of unrestricted freedom of the individual, as
axioms of economic and political theory, are of the past. The modern period has shown a widespread
belief in the amplest possible demonstration of governmental activity. The Courts unfortunately have
sometimes seemed to trail after the other two branches of the Government in this progressive march."

It was to be expected then that when he spoke for the Court in Government of the Philippine Islands v.
Springer,21 a 1927 decision, he found nothing objectionable in the government itself organizing and
investing public funds in such corporations as the National Coal Co., the Phil. National Bank, the National
Petroleum Co., the National Development Co., the National Cement Co. and the National Iron Co. There
was not even a hint that thereby the laissez-faire concept was not honored at all. It is true that Justice
Malcolm concurred with the majority in People v. Pomar,22 a 1924 opinion, which held invalid under the
due process clause a provision providing for maternity leave with pay thirty days before and thirty days
after confinement. It could be that he had no other choice as the Philippines was then under the United
States, and only recently the year before, the above-cited case of Adkins v. Children's Hospital,23 in line
with the laissez-faire principle, did hold that a statute providing for minimum wages was constitutionally
infirm on the same ground.

Our constitution which took effect in 1935, upon the inauguration of the Commonwealth of the Philippines,
erased whatever doubts there might be on that score. Its philosophy is antithetical to the laissez-
faire concept. Delegate, later President, Manuel Roxas, one of the leading members of the Constitutional
Convention, in answer precisely to an objection of Delegate Jose Reyes of Sorsogon, who noted the "vast
extensions in the sphere of governmental functions" and the "almost unlimited power to interfere in the
affairs of industry and agriculture as well as to compete with existing business" as "reflections of the
fascination exerted by [the then] current tendencies" in other jurisdictions, 24 spoke thus: "My answer is
that this constitution has a definite and well defined philosophy, not only political but social and economic.
A constitution that in 1776 or in 1789 was sufficient in the United States, considering the problems they
had at that time, may not now be sufficient with the growing and ever-widening complexities of social and
economic problems and relations. If the United States of America were to call a constitutional convention
today to draft a constitution for the United States, does any one doubt that in the provisions of that
constitution there will be found definite declarations of policy as to economic tendencies; that there will be
matters which are necessary in accordance with the experience of the American people during these
years when vast organizations of capital and trade have succeeded to a certain degree to control the life
and destiny of the American people? If in this constitution the gentleman will find declarations of
economic policy, they are there because they are necessary to safeguard the interests and welfare of the
Filipino people because we believe that the days have come when in self-defense, a nation may provide
in its constitution those safeguards, the patrimony, the freedom to grow, the freedom to develop national
aspirations and national interests, not to be hampered by the artificial boundaries which a constitutional
provision automatically imposes."25

Delegate Roxas continued further: "The government is the creature of the people and the government
exercises its powers and functions in accordance with the will and purposes of the people. That is the first
principle, the most important one underlying this document. Second, the government established in this
document is, in its form, in our opinion, the most adapted to prevailing conditions, circumstances and the
political outlook of the Filipino people. Rizal said, 'Every people has the kind of government that they
deserve.' That is just another form of expressing the principle in politics enunciated by the French
philosophers when they said: 'Every people has the right to establish the form of government which they
believe is most conducive to their welfare and their liberty.' Why have we preferred the government that is
established in this draft? Because it is the government with which we are familiar. It is the form of
government fundamentally such as it exists today; because it is the only kind of government that our
people understand; it is the kind of government we have found to be in consonance with our experience,
with the necessary modification, capable of permitting a fair play of social forces and allowing the people
to conduct the affairs of that government."26

One of the most prominent delegates, a leading intellectual, former President Rafael Palma of the
University of the Philippines, stressed as a fundamental principle in the draft of the Constitution the
limitation on the right to property. He pointed out that the then prevailing view allowed the accumulation of
wealth in one family down to the last remote descendant, resulting in a grave disequilibrium and bringing
in its wake extreme misery side by side with conspicuous luxury. He did invite attention to the few
millionaires at one extreme with the vast masses of Filipinos deprived of the necessities of life at the
other. He asked the Convention whether the Filipino people could long remain indifferent to such a
deplorable situation. For him to speak of a democracy under such circumstances would be nothing but an
illusion. He would thus emphasize the urgent need to remedy the grave social injustice that had produced
such widespread impoverishment, thus recognizing the vital role of government in this sphere. 27

Another delegate, Tomas Confesor of Iloilo, was quite emphatic in his assertion for the need of a social
justice provision which is a departure from the laissez-faire principle. Thus: "Take the case of the tenancy
system in the Philippines. You have a tenant. There are hundreds of thousands of tenants working day in
and day out, cultivating the fields of their landlords. He puts all his time, all his energy, the labor and the
assistance of his wife and children, in cultivating a piece of ground for his landlord but when the time
comes for the partition of the products of his toil what happens? If he produces 25 cavanes of rice, he
gets only perhaps five and the twenty goes to the landlord. Now can he go to court? Has he a chance to
go to court in order to secure his just share of the products of his toil? No. Under our present regime of
law, under our present regime of justice, you do not give that to the poor tenant. Gentlemen, you go to the
Cagayan Valley and see the condition under which those poor farmers are being exploited day in and day
out. Can they go to court under our present regime of justice, of liberty, or democracy? The other day,
workmen were shot by the police just because they wanted to increase or they desired that their wages
be increased from thirty centavos a day to forty or fifty centavos. Is it necessary to spill human blood just
to secure an increase of ten centavos in the daily wages of an ordinary laborer? And yet under our
present regime of social justice, liberty and democracy, these things are happening; these things, I say,
are happening. Are those people getting any justice? No. They cannot get justice now from our courts.
For this reason, I say it is necessary that we insert 'social justice' here and that social justice must be
established by law. Proper legal provisions, proper legal facilities must be provided in order that there be
a regime not of justice alone, because we have that now and we are seeing the oppression arising from
such a regime. Consequently, we must emphasize the term 'social justice'."28

Delegate Ventenilla of Pangasinan reflected the attitude of the Convention as to why laissez-faire was no
longer acceptable. After speaking of times having changed, he proceeded: "Since then new problems
have arisen. The spiritual mission of government has descended to the level of the material. Then its
function was primarily to soothe the aching spirit. Now, it appears, it must also appease hunger. Now that
we may read history backwards, we know for instance, that the old theory of 'laissez-faire' has
degenerated into 'big business affairs' which are gradually devouring the rights of the people — the same
rights intended to be guarded and protected by the system of constitutional guaranties. Oh, if the Fathers
were now alive to see the changes that the centuries have wrought in our life! They might contemplate
the sad spectacle of organized exploitation greedily devouring the previous rights of the individual. They
might also behold the gradual disintegration of society, the fast disappearance of the bourgeois — the
middle class, the backbone of the nation — and the consequent drifting of the classes toward the
opposite extremes — the very rich and the very poor."29

Shortly after the establishment of the Commonwealth, the then Justice Jose P. Laurel, himself one of the
foremost delegates of the Constitutional Convention, in a concurring opinion, later quoted with approval in
the leading case of Antamok Goldfields Mining Co. v. Court of Industrial Relations,30 decided in 1940,
explained clearly the need for the repudiation of the laissez-faire doctrine. Thus: "It should be observed at
the outset that our Constitution was adopted in the midst of surging unrest and dissatisfaction resulting
from economic and social distress which was threatening the stability of governments the world over.
Alive to the social and economic forces at work, the framers of our Constitution boldly met the problems
and difficulties which faced them and endeavored to crystallize, with more or less fidelity, the political,
social and economic propositions of their age, and this they did, with the consciousness that the political
and philosophical aphorism of their generation will, in the language of a great jurist, 'be doubted by the
next and perhaps entirely discarded by the third.' . . . Embodying the spirit of the present epoch, general
provisions were inserted in the Constitution which are intended to bring about the needed social and
economic equilibrium between component elements of society through the application of what may be
termed as the justitia communis advocated by Grotius and Leibnits many years ago to be secured
through the counterbalancing of economic and social forces and opportunities which should be regulated,
if not controlled, by the State or placed, as it were, in custodia societatis. 'The promotion of social justice
to insure the well-being and economic security of all the people' was thus inserted as vital principle in our
Constitution. ... ."31 In the course of such concurring opinion and after noting the changes that have taken
place stressing that the policy of laissez-faire had indeed given way to the assumption by the government
of the right to intervene although qualified by the phrase "to some extent", he made clear that the doctrine
in People v. Pomar no longer retain, "its virtuality as a living principle."32

3. It must be made clear that the objection to the "constituent-ministrant" classification of governmental
functions is not to its formulation as such. From the standpoint of law as logic, it is not without merit. It has
neatness and symmetry. There are hardly any loose ends. It has the virtue of clarity. It may be said in its
favor likewise that it reflects all-too-faithfully the laissez-faire notion that government cannot extend its
operation outside the maintenance of peace and order, protection against external security, and the
administration of justice, with private rights, especially so in the case of property, being safeguarded and
a hint that the general welfare is not to be entirely ignored.

It must not be lost sight of though that logic and jural symmetry while undoubtedly desirable are not the
prime consideration. This is especially so in the field of public law. What was said by Holmes, almost nine
decades ago, carry greater conviction now. "The life of the law has not been logic; it has been
experience. The felt necessities of the time, the prevalent moral and political theories, intuitions of public
policy avowed or unconscious, even the prejudices which judges share with their fellow-men, have had a
good deal more to do than the syllogism in determining the rules by which men should be
governed."33 Then too, there was the warning of Geny cited by Cardozo that undue stress or logic may
result in confining the entire system of positive law, "within a limited number of logical categories,
predetermined in essence, immovable in basis, governed by inflexible dogmas," thus rendering it
incapable of responding to the ever varied and changing exigencies of life. 34,

It is cause enough for concern if the objection to the Bacani decision were to be premised on the score
alone that perhaps there was fidelity to the requirements of logic and jural symmetry carried to excess.
What appears to me much more deplorable is that it did fail to recognize that there was a repudiation of
the laissez-faire concept in the Constitution. As was set forth in the preceding pages, the Constitution is
distinguished precisely by a contrary philosophy. The regime of liberty if provided for, with the realization
that under the then prevalent social and economic conditions, it may be attained only through a
government with its sphere of activity ranging far and wide, not excluding matters hitherto left to the
operation of free enterprise. As rightfully stressed in our decision today in line with what was earlier
expressed by Justice Laurel, the government that we have established has as a fundamental principle the
promotion of social justice.35 The same jurist gave it a comprehensive and enduring definition as the
"promotion of the welfare of all the people, the adoption by the government of measures calculated to
insure economic stability of all the component elements of society, through the maintenance of a proper
economic and social equilibrium in the interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of
powers underlying the existence of all governments in the time honored principle of salus populi
estsuprema lex."36

There is thus from the same distinguished pen, this time writing for the Court, a reiteration of the view of
the laissez-faire doctrine being repugnant to the fundamental law. It must be added though that the
reference to extra-constitutional measures being allowable must be understood in the sense that there is
no infringement of specific constitutional guarantees. Otherwise, the judiciary will be hard put to sustain
their validity if challenged in an appropriate legal proceeding.

The regime of liberty contemplated in the Constitution with social justice as a fundamental principle to
reinforce the pledge in the preamble of promoting the general welfare reflects traditional concepts of a
democratic policy infused with an awareness of the vital and pressing need for the government to assume
a much more active and vigorous role in the conduct of public affairs. The framers of our fundamental law
were as one in their strongly-held belief that thereby the grave and serious infirmity then confronting our
body-politic, on the whole still with us now, of great inequality of wealth and mass poverty, with the great
bulk of our people ill-clad, ill-housed, ill-fed, could be remedied. Nothing else than communal effort,
massive in extent and earnestly engaged in, would suffice.

To paraphrase Laski, with the necessary modification in line with such worthy constitutional ends, we look
upon the state as an organization to promote the happiness of individuals, its authority as a power bound
by subordination to that purpose, liberty while to be viewed negatively as absence of restraint impressed
with a positive aspect as well to assure individual self-fulfillment in the attainment of which greater
responsibility is thrust on government; and rights as boundary marks defining areas outside its
domain.37 From which it would follow as Laski so aptly stated that it is the individual's "happiness and not
its well-being [that is] the criterion by which its behavior [is] to be judged. His interests, and not its power,
set the limits to the authority it [is] entitled to exercise."38 We have under such a test enlarged its field of
competence. 4. With the decision reached by us today, the government is freed from the compulsion
exerted by the Bacani doctrine of the "constituent-ministrant" test as a criterion for the type of activity in
which it may engage. Its constricting effect is consigned to oblivion. No doubts or misgivings need assail
us that governmental efforts to promote the public weal, whether through regulatory legislation of vast
scope and amplitude or through the undertaking of business activities, would have to face a searching
and rigorous scrutiny. It is clear that their legitimacy cannot be challenged on the ground alone of their
being offensive to the implications of the laissez-faire concept. Unless there be a repugnancy then to the
limitations expressly set forth in the Constitution to protect individual rights, the government enjoys a
much wider latitude of action as to the means it chooses to cope with grave social and economic
problems that urgently press for solution. For me, at least, that is to manifest deference to the philosophy
of our fundamental law. Hence my full concurrence, as announced at the outset.

5. The opinion of Justice Makalintal contains this footnote: "It must be stated, however, that we do not
here decide the question — not at issue in this case — of whether or not a labor organization composed
employees discharging governmental functions, which is allowed under the legal provision just quoted,
provided such organization does not impose the obligation to strike or to join in strike, may petition for a
certification election and compel the employer to bargain collectively with it for purposes other than to
secure changes or conditions in the terms and conditions of employment."

With such an affirmation as to the scope of our decision there being no holding on the vexing question of
the effects on the rights of labor in view of the conclusion reached that the function engaged in is
governmental in character, I am in full agreement. The answer to such a vital query must await another
day.

Footnotes

1Land Authority, Land Bank, Agricultural Productivity Commission; Office of the Agrarian
Counsel.

2The Land Reform Project Administration is the organization through which the field operations of
member agencies (of which the ACA is one) shall be undertaken by their respective personnel
under a unified administration. (Section 2 of Article 1, Executive Order No. 75)

3Section 79 (D) of the Revised Administrative Code provides in part: "The Department Head,
upon the recommendation of the Chief of bureaus or office concerned, shall appoint all
subordinate officers and employees whose appointment is not expressly vested by law in the
President of the Philippines. . . . ."

4 Bacani vs. National Coconut Corporation, G.R. No. L-9657, Nov. 29, 1956, 53 O.G. p. 2800.

5Malcolm, The Government of the Philippines, pp. 19-20; Bacani vs. National Coconut
Corporation, supra.

6 It must be stated, however, that we do not here decide the question — not at issue in this case
— of whether or not a labor organization composed of employees discharging governmental
functions, which is allowed under the legal provision just quoted provided such organization does
not impose the obligation to strike or to join in strike, may petition for a certification election and
compel the employer to bargain collectively with it for purposes other than to secure changes or
modifications in the terms and conditions of their employment. Withal, it may not be amiss to
observe, albeit obiter, that the right to organize thus allowed would be meaningless unless there
is a correlative right on the part of the organization to be recognized as the proper representative
 of the employees and to bargain in their behalf in relation to matters outside the limitations
imposed by the statute, such as those provided for in Section 28 (b) of Republic Act No. 2260,
concerning complaints and grievances of the employees.

7 Reenacted in Sec. 28 (c) of the Civil Service Act of 1959, R.A. No. 2260.

FERNANDO, J., CONCURRING:

 THIRD DIVISION

[G.R. No. 143377. February 20, 2001.]

SHIPSIDE INCORPORATED, Petitioner, v. THE HON. COURT OF APPEALS [Special Former Twelfth
Division], HON. REGIONAL TRIAL COURT, BRANCH 26 (San Fernando City, La Union) & The
REPUBLIC OF THE PHILIPPINES, Respondents.

DECISION

MELO, J.:

Before the Court is a petition for certiorari filed by Shipside Incorporated under Rule 65 of the 1997 Rules
on Civil Procedure against the resolutions of the Court of Appeals promulgated on November 4, 1999 and
May 23, 2000, which respectively, dismissed a petition for certiorari and prohibition and thereafter denied
a motion for reconsideration.chanrob1es virtua1 1aw 1ibrary

The antecedent facts are undisputed:chanrob1es virtual 1aw library

On October 29, 1958, Original Certificate of Title No. 0-381 was issued in favor of Rafael Galvez, over
four parcels of land — Lot 1 with 6, 571 square meters; Lot 2, with 16,777 square meters; Lot 3 with
1,583 square meters; and Lot 4, with 508 square meters.

On April 11, 1960, Lots No. 1 and 4 were conveyed by Rafael Galvez in favor of Filipina Mamaril,
Cleopatra Llana, Regina Bustos, and Erlinda Balatbat in a deed of sale which was inscribed as Entry No.
9115 OCT No. 0-381 on August 10, 1960. Consequently, Transfer Certificate No. T-4304 was issued in
favor of the buyers covering Lots No. 1 and 4.

Lot No. 1 is described as:chanrob1es virtua1 1aw 1ibrary

A parcel of land (Lot 1, Plan PSU-159621, L.R. Case No. N-361; L.R.C. Record No. N-14012, situated in
the Barrio of Poro, Municipality of San Fernando, Province of La Union, bounded on the NE, by the
Foreshore; on the SE, by Public Land and property of the Benguet Consolidated Mining Company; on the
SW, by properties of Rafael Galvez (US Military Reservation Camp Wallace) and Policarpio Munar; and
on the NW, by an old Barrio Road. Beginning at a point marked "1" on plan, being S. 74 deg. 11’W.,
2670.36 from B.L.L.M. 1, San Fernando, thence

S. 66 deg. 19’E., 134.95 m. to point 2; S. 14 deg. 57’W., 11.79 m. to point 3;

S. 12 deg. 45’W., 27.00 m. to point 4; S. 12 deg. 45’W, 6.90 m. to point 5;

N. 69 deg., 32’W., 106.00 m. to point 6; N. 52 deg., 21’W., 36.85 m. to point 7;

N. 21 deg. 31’E., 42.01 m. to the point of beginning; containing an area of SIX THOUSAND FIVE
HUNDRED AND SEVENTY-ONE (6,571) SQUARE METERS, more or less. All points referred to are
indicated on the plan; and marked on the ground; bearings true, date of survey, February 4-21, 1957.

Lot No. 4 has the following technical description:chanrob1es virtual 1aw library
A parcel of land (Lot 4, Plan PSU-159621, L.R. Case No. N-361 L.R.C. Record No. N-14012), situated in
the Barrio of Poro, Municipality of San Fernando, La Union. Bounded on the SE by the property of the
Benguet Consolidated Mining Company; on the S. by property of Pelagia Carino; and on the NW by the
property of Rafael Galvez (US Military Reservation, Camp Wallace). Beginning at a point marked "1" on
plan, being S. deg. 24’W. 2591.69 m. from B.L.L.M. 1, San Fernando, thence S. 12 deg. 45’W., 73.03 m.
to point 2; N. 79 deg. 59’W., 13.92 m. to point 3; N. 23 deg. 26’E., 75.00 m. to the point of beginning;
containing an area of FIVE HUNDRED AND EIGHT (508) SQUARE METERS, more or less. All points
referred to are indicated in the plan and marked on the ground; bearings true, date of survey, February 4-
21, 1957.

On August 16, 1960, Mamaril, Et. Al. sold Lots No. 1 and 4 to Lepanto Consolidated Mining Company.
The deed of sale covering the aforesaid property was inscribed as Entry No. 9173 on TCT No. T-4304.
Subsequently, Transfer Certificate No. T-4314 was issued in the name of Lepanto Consolidated Mining
Company as owner of Lots No. 1 and 4.

On February 1, 1963, unknown to Lepanto Consolidated Mining Company, the Court of First Instance of
La Union, Second Judicial District, issued an Order in Land Registration Case No. N-361 (LRC Record
No. N-14012) entitled "Rafael Galvez, Applicant, Eliza Bustos, Et Al., Parties-In-Interest; Republic of the
Philippines, Movant" declaring OCT No. 0-381 of the Registry of Deeds for the Province of La Union
issued in the name of Rafael Galvez, null and void, and ordered the cancellation thereof.

The Order pertinently provided:chanrob1es virtual 1aw library

Accordingly, with the foregoing, and without prejudice on the rights of incidental parties concerned herein
to institute their respective appropriate actions compatible with whatever cause they may have, it is
hereby declared and this court so holds that both proceedings in Land Registration Case No. N-361 and
Original Certificate No. 0-381 of the Registry of Deeds for the province of La Union issued in virtue
thereof and registered in the name of Rafael Galvez, are null and void; the Register of Deeds for the
Province of La Union is hereby ordered to cancel the said original certificate and/or such other certificates
of title issued subsequent thereto having reference to the same parcels of land; without pronouncement
as to costs.chanrob1es virtua1 1aw 1ibrary

On October 28, 1963, Lepanto Consolidated Mining Company sold to herein petitioner Lots No. 1 and 4,
with the deed being entered in TCT NO. 4314 as entry No. 12381. Transfer Certificate of Title No. T-5710
was thus issued in favor of the petitioner which starting since then exercised proprietary rights over Lots
No. 1 and 4.

In the meantime, Rafael Galvez filed his motion for reconsideration against the order issued by the trial
court declaring OCT No. 0-381 null and void. The motion was denied on January 25, 1965. On appeal,
the Court of Appeals ruled in favor of the Republic of the Philippines in a Resolution promulgated on
August 14, 1973 in CA-G.R. No. 36061-R.

Thereafter, the Court of Appeals issued an Entry of Judgment, certifying that its decision dated August
14, 1973 became final and executory on October 23, 1973.

On April 22, 1974, the trial court in L.R.C. Case No. N-361 issued a writ of execution of the judgment
which was served on the Register of Deeds, San Fernando, La Union on April 29, 1974.

Twenty four long years thereafter, on January 14, 1999, the Office of the Solicitor General received a
letter dated January 11, 1999 from Mr. Victor G. Floresca, Vice-President, John Hay Poro Point
Development Corporation, stating that the aforementioned orders and decision of the trial court in L.R.C.
No. N-361 have not been executed by the Register of Deeds, San Fernando, La Union despite receipt of
the writ of execution.

On April 21, 1999, the Office of the Solicitor General filed a complaint for revival of judgment and
cancellation of titles before the Regional Trial Court of the First Judicial Region (Branch 26, San
Fernando, La Union) docketed therein as Civil Case No. 6346 entitled, "Republic of the Philippines,
Plaintiff, versus Heirs of Rafael Galvez, represented by Teresita Tan, Reynaldo Mamaril, Elisa Bustos,
Erlinda Balatbat, Regina Bustos, Shipside Incorporated and the Register of Deeds of La Union,
Defendants."cralaw virtua1aw library

The evidence shows that the impleaded defendants (except the Register of Deeds of the province of La
Union) are the successors-in-interest of Rafael Galvez (not Reynaldo Galvez as alleged by the Solicitor
General) over the property covered by OCT No. 0-381, namely: (a) Shipside Inc. which is presently the
registered owner in fee simple of Lots No. 1 and 4 covered by TCT No. T-5710, with a total area of 7,079
square meters; (b) Elisa Bustos, Jesusito Galvez, and Teresita Tan who are the registered owners of Lot
No. 2 of OCT No. 0-381; and (c) Elisa Bustos, Filipina Mamaril, Regina Bustos and Erlinda Balatbat who
are the registered owners of Lot No. 3 of OCT No. 0-381, now covered by TCT No. T-4916, with an area
of 1,583 square meters.

In its complaint in Civil Case No. 6346, the Solicitor General argued that since the trial court in LRC Case
No. 361 had ruled and declared OCT No. 0-381 to be null and void, which ruling was subsequently
affirmed by the Court of Appeals, the defendants-successors-in-interest of Rafael Galvez have no valid
title over the property covered by OCT No. 0-381, and the subsequent Torrens titles issued in their names
should be consequently cancelled.

On July 22, 1999, petitioner Shipside, Inc. filed its Motion to Dismiss, based on the following grounds: (1)
the complaint stated no cause of action because only final and executory judgments may be subject of an
action for revival of judgment; (2) the plaintiff is not the real party-in-interest because the real property
covered by the Torrens titles sought to be cancelled, allegedly part of Camp Wallace (Wallace Air
Station), were under the ownership and administration of the Bases Conversion Development Authority
(BCDA) under Republic Act No. 7227; (3) plaintiff’s cause of action is barred by prescription; (4) twenty-
five years having lapsed since the issuance of the writ of execution, no action for revival of judgment may
be instituted because under Paragraph 3 of Article 1144 of the Civil Code, such action may be brought
only within ten (10) years from the time the judgment had been rendered.

An opposition to the motion to dismiss was filed by the Solicitor General on August 23, 1999, alleging
among others, that: (1) the real party-in-interest is the Republic of the Philippines; and (2) prescription
does not run against the State.

On August 31, 1999, the trial court denied petitioner’s motion to dismiss and on October 14, 1999, its
motion for reconsideration was likewise turned down.

On October 21, 1999, petitioner instituted a petition for certiorari and prohibition with the Court of
Appeals, docketed therein as CA-G.R. SP No. 55535, on the ground that the orders of the trial court
denying its motion to dismiss and its subsequent motion for reconsideration were issued in excess of
jurisdiction.

On November 4, 1999, the Court of Appeals dismissed the petition in CA-G.R. SP No. 55535 on the
ground that the verification and certification in the petition, under the signature of Lorenzo Balbin, Jr., was
made without authority, there being no proof therein that Balbin was authorized to institute the petition for
and in behalf and of petitioner.chanrob1es virtua1 1aw 1ibrary

On May 23, 2000, the Court of Appeals denied petitioner’s motion for reconsideration on the grounds that:
(1) a complaint filed on behalf of a corporation can be made only if authorized by its Board of Directors,
and in the absence thereof, the petition cannot prosper and be granted due course; and (2) petitioner was
unable to show that it had substantially complied with the rule requiring proof of authority to institute an
action or proceeding.

Hence, the instant petition.

In support of its petition, Shipside, Inc. asseverates that:chanrob1es virtual 1aw library

1. The Honorable Court of Appeals gravely abused its discretion in dismissing the petition when it made a
conclusive legal presumption that Mr. Balbin had no authority to sign the petition despite the clarity of
laws, jurisprudence and Secretary’s certificate to the contrary;

2. The Honorable Court of Appeals abused its discretion when it dismissed the petition, in effect affirming
the grave abuse of discretion committed by the lower court when it refused to dismiss the 1999 Complaint
for Revival of a 1973 judgment, in violation of clear laws and jurisprudence.

Petitioner likewise adopted the arguments it raised in the petition and comment/reply it filed with the Court
of Appeals, attached to its petition as Exhibit "L" and "N", respectively.

In his Comment, the Solicitor General moved for the dismissal of the instant petition based on the
following considerations: (1) Lorenzo Balbin, who signed for and in behalf of petitioner in the verification
and certification of non-forum shopping portion of the petition, failed to show proof of his authorization to
institute the petition for certiorari and prohibition with the Court of Appeals, thus the latter court acted
correctly in dismissing the same; (2) the real party-in-interest in the case at bar being the Republic of the
Philippines, its claims are imprescriptible.

In order to preserve the rights of herein parties, the Court issued a temporary restraining order on June
26, 2000 enjoining the trial court from conducting further proceedings in Civil Case No. 6346.

The issues posited in this case are: (1) whether or not an authorization from petitioner’s Board of
Directors is still required in order for its resident manager to institute or commence a legal action for and
in behalf of the corporation; and (2) whether or not the Republic of the Philippines can maintain the action
for revival of judgment herein.

We find for Petitioner.

Anent the first issue:chanrob1es virtual 1aw library

The Court of Appeals dismissed the petition for certiorari on the ground that Lorenzo Balbin, the resident
manager for petitioner, who was the signatory in the verification and certification on non-forum shopping,
failed to show proof that he was authorized by petitioner’s board of directors to file such a petition.

A corporation, such as petitioner, has no power except those expressly conferred on it by the Corporation
Code and those that are implied or incidental to its existence. In turn, a corporation exercises said powers
through its board of directors and/or its duly authorized officers and agents. Thus, it has been observed
that the power of a corporation to sue and be sued in any court is lodged with the board of directors that
exercises its corporate powers (Premium Marble Resources, Inc. v. CA, 264 SCRA 11 [1996]). In turn,
physical acts of the corporation, like the signing of documents, can be performed only by natural persons
duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors.

It is undisputed that on October 21, 1999, the time petitioner’s Resident Manager Balbin filed the petition,
there was no proof attached thereto that Balbin was authorized to sign the verification and non-forum
shopping certification therein, as a consequence of which the petition was dismissed by the Court of
Appeals. However, subsequent to such dismissal, petitioner filed a motion for reconsideration, attaching
to said motion a certificate issued by its board secretary stating that on October 11, 1999, or ten days
prior to the filing of the petition, Balbin had been authorized by petitioner’s board of directors to file said
petition.

The Court has consistently held that the requirement regarding verification of a pleading is formal, not
jurisdictional (Uy v. LandBank, G.R. No. 136100, July 24, 2000). Such requirement is simply a condition
affecting the form of the pleading, non-compliance with which does not necessarily render the pleading
fatally defective. Verification is simply intended to secure an assurance that the allegations in the pleading
are true and correct and not the product of the imagination or a matter of speculation, and that the
pleading is filed in good faith. The court may order the correction of the pleading if verification is lacking or
act on the pleading although it is not verified, if the attending circumstances are such that strict
compliance with the rules may be dispensed with in order that the ends of justice may thereby be served.

On the other hand, the lack of certification against forum shopping is generally not curable by the
submission thereof after the filing of the petition. Section 5, Rule 45 of the 1997 Rules of Civil Procedure
provides &t the failure of the petitioner to submit the required documents that should accompany the
petition, including the certification against forum shopping, shall be sufficient ground for the dismissal
thereof. The same rule applies to certifications against forum shopping signed by a person on behalf of a
corporation which are unaccompanied by proof that said signatory is authorized to file a petition on behalf
of the corporation.

In certain exceptional circumstances, however, the Court has allowed the belated filing of the certification.
In Loyola v. Court of Appeals, et. al. (245 SCRA 477 [1995]), the Court considered the filing of the
certification one day after the filing of an election protest as substantial compliance with the requirement.
In Roadway Express, Inc. v. Court of Appeals, et. al. (264 SCRA 696 [1996]), the Court allowed the filing
of the certification 14 days before the dismissal of the petition. In Uy v. Landbank, supra, the Court had
dismissed Uy’s petition for lack of verification and certification against non-forum shopping. However, it
subsequently reinstated the petition after Uy submitted a motion to admit certification and non-forum
shopping certification. In all these cases, there were special circumstances or compelling reasons that
justified the relaxation of the rule requiring verification and certification on non-forum shopping.

In the instant case, the merits of petitioner’s case should be considered special circumstances or
compelling reasons that justify tempering the requirement in regard to the certificate of non-forum
shopping. Moreover, in Loyola, Roadway, and Uy, the Court excused non-compliance with the
requirement as to the certificate of non-forum shopping. With more reason should we allow the instant
petition since petitioner herein did submit a certification on non-forum shopping, failing only to show proof
that the signatory was authorized to do so. That petitioner subsequently submitted a secretary’s certificate
attesting that Balbin was authorized to file an action on behalf of petitioner likewise mitigates this
oversight.

It must also be kept in mind that while the requirement of the certificate of non-forum shopping is
mandatory, nonetheless the requirements must not be interpreted too literally and thus defeat the
objective of preventing the undesirable practice of forum-shopping (Bernardo v. NLRC, 255 SCRA 108
[1996]). Lastly, technical rules of procedure should be used to promote, not frustrate justice. While the
swift unclogging of court dockets is a laudable objective, the granting of substantial justice is an even
more urgent ideal.

Now to the second issue:chanrob1es virtual 1aw library

The action instituted by the Solicitor General in the trial court is one for revival of judgment which is
governed by Article 1144(3) of the Civil Code and Section 6, Rule 39 of the 1997 Rules on Civil
Procedure. Article 1144(3) provides that an action upon a judgment "must be brought within 10 years
from the time the right of action accrues." On the other hand, Section 6, Rule 39 provides that a final and
executory judgment or order may be executed on motion within five (5) years from the date of its entry,
but that after the lapse of such time, and before it is barred by the statute of limitations, a judgment may
be enforced by action. Taking these two provisions into consideration, it is plain that an action for revival
of judgment must be brought within ten years from the time said judgment becomes final.

From the records of this case, it is clear that the judgment sought to be revived became final on October
23, 1973. On the other hand, the action for revival of judgment was instituted only in 1999, or more than
twenty-five (25) years after the judgment had become final. Hence, the action is barred by extinctive
prescription considering that such an action can be instituted only within ten (10) years from the time the
cause of action accrues.
The Solicitor General, nonetheless, argues that the State’s cause of action in the cancellation of the land
title issued to petitioner’s predecessor-in-interest is imprescriptible because it is included in Camp
Wallace, which belongs to the government.

The argument is misleading.

While it is true that prescription does not run against the State, the same may not be invoked by the
government in this case since it is no longer interested in the subject matter. While Camp Wallace may
have belonged to the government at the time Rafael Galvez’s title was ordered cancelled in Land
Registration Case No. N-361, the same no longer holds true today.

Republic Act No. 7227, otherwise known as the Bases Conversion and Development Act of 1992, created
the Bases Conversion and Development Authority. Section 4 pertinently provides:chanrob1es virtua1 1aw
1ibrary

SECTION 4. Purposes of the Conversion Authority. — The Conversion Authority shall have the following
purposes:chanrob1es virtual 1aw library

(a) To own, hold and/or administer the military reservations of John Hay Air Station, Wallace Air Station,
O’Donnell Transmitter Station, San Miguel Naval Communications Station, Mt. Sta. Rita Station
(Hermosa, Bataan) and those portions of Metro Manila military camps which may be transferred to it by
the President;

Section 2 of Proclamation No. 216, issued on July 27, 1993, also provides:chanrob1es virtual 1aw library

SECTION 2. Transfer of Wallace Air Station Areas to the Bases Conversion and Development Authority.
— All areas covered by the Wallace Air Station as embraced and defined by the 1947 Military Bases
Agreement between the Philippines and the United States of America, as amended, excluding those
covered by Presidential Proclamations and some 25-hectare area for the radar and communication
station of the Philippine Air Force, are hereby transferred to the Bases Conversion Development Authority
...

With the transfer of Camp Wallace to the BCDA, the government no longer has a right or interest to
protect. Consequently, the Republic is not a real party in interest and it may not institute the instant
action. Nor may it raise the defense of imprescriptibility, the same being applicable only in cases where
the government is a party in interest. Under Section 2 of Rule 3 of the 1997 Rules of Civil Procedure,
"every action must be prosecuted or defended in the name of the real party in interest." To qualify a
person to be a real party in interest in whose name an action must be prosecuted, he must appear to be
the present real owner of the right sought to enforced (Pioneer Insurance v. CA, 175 SCRA 668 [1989]).
A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the
party entitled to the avails of the suit. And by real interest is meant a present substantial interest, as
distinguished from a mere expectancy, or a future, contingent, subordinate or consequential interest
(Ibonilla v. Province of Cebu, 210 SCRA 526 [1992]). Being the owner of the areas covered by Camp
Wallace, it is the Bases Conversion and Development Authority, not the Government, which stands to be
benefited if the land covered by TCT No. T-5710 issued in the name of petitioner is cancelled.

Nonetheless, it has been posited that the transfer of military reservations and their extensions to the
BCDA is basically for the purpose of accelerating the sound and balanced conversion of these military
reservations into alternative productive uses and to enhance the benefits to be derived from such
property as a measure of promoting the economic and social development, particularly of Central Luzon
and, in general, the country’s goal for enhancement (Section 2, Republic Act No. 7227). It is contended
that the transfer of these military reservations to the Conversion Authority does not amount to an
abdication on the part of the Republic of its interests, but simply a recognition of the need to create a
body corporate which will act as its agent for the realization of its program. It is consequently asserted
that the Republic remains to be the real party in interest and the Conversion Authority merely its agent.
We, however, must not lose sight of the fact that the BCDA is an entity invested with a personality
separate and distinct from the government. Section 3 of Republic Act No. 7227 reads:chanrob1es virtual
1aw library

SECTION 3. Creation of the Bases Conversion and Development Authority. — There is hereby created a
body corporate to be known as the Conversion Authority which shall have the attribute of perpetual
succession and shall be vested with the powers of a corporation.

It may not be amiss to state at this point that the functions of government have been classified into
governmental or constituent and proprietary or ministrant. While public benefit and public welfare,
particularly, the promotion of the economic and social development of Central Luzon, may be attributable
to the operation of the BCDA, yet it is certain that the functions performed by the BCDA are basically
proprietary in nature. The promotion of economic and social development of Central Luzon, in particular,
and the country’s goal for enhancement, in general, do not make the BCDA equivalent to the
Government. Other corporations have been created by government to act as its agents for the realization
of its programs, the SSS, GSIS, NAWASA and the NIA, to count a few, and yet, the Court has ruled that
these entities, although performing functions aimed at promoting public interest and public welfare, are
not government-function corporations invested with governmental attributes. It may thus be said that the
BCDA is not a mere agency of the Government but a corporate body performing proprietary functions.

Moreover, Section 5 of Republic Act No. 7227 provides:chanrob1es virtual 1aw library

SECTION 5. Powers of the Conversion Authority. — To carry out its objectives under this Act, the
Conversion Authority is hereby vested with the following powers:chanrob1es virtual 1aw library

(a) To succeed in its corporate name, to sue and be sued in such corporate name and to adopt, alter and
use a corporate seal which shall be judicially noticed;cralawred

Having the capacity to sue or be sued, it should thus be the BCDA which may file an action to cancel
petitioner’s title, not the Republic, the former being the real party in interest. One having no right or
interest to protect cannot invoke the jurisdiction of the court as a party plaintiff in an action (Ralla v. Ralla,
199 SCRA 495 [1991]). A suit may be dismissed if the plaintiff or the defendant is not a real party in
interest. If the suit is not brought in the name of the real party in interest, a motion to dismiss may be filed,
as was done by petitioner in this case, on the ground that the complaint states no cause of action
(Tanpingco v. IAC, 207 SCRA 652 [1992]).

However, E.B. Marcha Transport Co., Inc. v. IAC (147 SCRA 276 [1987]) is cited as authority that the
Republic is the proper party to sue for the recovery of possession of property which at the time of the
institution of the suit was no longer held by the national government but by the Philippine Ports Authority.
In E.B. Marcha, the Court ruled:chanrob1es virtual 1aw library

It can be said that in suing for the recovery of the rentals, the Republic of the Philippines, acted as
principal of the Philippine Ports Authority, directly exercising the commission it had earlier conferred on
the latter as its agent. We may presume that, by doing so, the Republic of the Philippines did not intend to
retain the said rentals for its own use, considering that by its voluntary act it had transferred the land in
question to the Philippine Ports Authority effective July 11, 1974. The Republic of the Philippines had
simply sought to assist, not supplant, the Philippine Ports Authority, whose title to the disputed property it
continues to recognize. We may expect then that the said rentals, once collected by the Republic of the
Philippines, shall be turned over by it to the Philippine Ports Authority conformably to the purposes of P.D.
No. 857.

E.B. Marcha is, however, not on all fours with the case at bar. In the former, the Court considered the
Republic a proper party to sue since the claims of the Republic and the Philippine Ports Authority against
the petitioner therein were the same. To dismiss the complaint in E.B. Marcha would have brought
needless delay in the settlement of the matter since the PPA would have to refile the case on the same
claim already litigated upon. Such is not the case here since to allow the government to sue herein
enables it to raise the issue of imprescriptibility, a claim which is not available to the BCDA. The rule that
prescription does not run against the State does not apply to corporations or artificial bodies created by
the State for special purposes, it being said that when the title of the Republic has been divested, its
grantees, although artificial bodies of its own creation, are in the same category as ordinary persons
(Kingston v. LeHigh Valley Coal Co., 241 Pa 469). By raising the claim of imprescriptibility, a claim which
cannot be raised by the BCDA, the Government not only assists the BCDA, as it did in E.B. Marcha, it
even supplants the latter, a course of action proscribed by said case.

Moreover, to recognize the Government as a proper party to sue in this case would set a bad precedent
as it would allow the Republic to prosecute, on behalf of government-owned or controlled corporations,
causes of action which have already prescribed, on the pretext that the Government is the real party in
interest against whom prescription does not run, said corporations having been created merely as agents
for the realization of government programs.

Parenthetically, petitioner was not a party to the original suit for cancellation of title commenced by the
Republic twenty-seven years for which it is now being made to answer, nay, being made to suffer
financial losses.

It should also be noted that petitioner is unquestionably a buyer in good faith and for value, having
acquired the property in 1963, or 5 years after the issuance of the original certificate of title, as a third
transferee. If only not to do violence and to give some measure of respect to the Torrens System,
petitioner must be afforded some measure of protection.chanrob1es virtua1 1aw 1ibrary

One more point.

Since the portion in dispute now forms part of the property owned and administered by the Bases
Conversion and Development Authority, it is alienable and registerable real property.

We find it unnecessary to rule on the other matters raised by the herein parties.

WHEREFORE, the petition is hereby granted and the orders dated August 31, 1999 and October 4, 1999
of the Regional Trial Court of the First National Judicial Region (Branch 26, San Fernando, La Union) in
Civil Case No. 6346 entitled "Republic of the Philippines, Plaintiff, versus Heirs of Rafael Galvez, et. al.,
Defendants" as well as the resolutions promulgated on November 4, 1999 and May 23, 2000 by the Court
of Appeals (Twelfth Division) in CA-G.R. SP No. 55535 entitled "Shipside, Inc., Petitioner versus Hon.
Alfredo Cajigal, as Judge, RTC, San Fernando, La Union, Branch 26, and the Republic of the Philippines,
Respondents" are hereby reversed and set aside. The complaint in Civil Case No. 6346, Regional Trial
Court, Branch 26, San Fernando City, La Union entitled "Republic of the Philippines, Plaintiff, versus
Heirs of Rafael Galvez, Et. Al." is ordered dismissed, without prejudice to the filing of an appropriate
action by the Bases Development and Conversion Authority.

SO ORDERED.chanrob1es virtua1 1aw 1ibrary

Panganiban, Gonzaga-Reyes and Sandoval-Gutierrez, JJ., concur.

Separate Opinions

VITUG, J.:

I find no doctrinal difficulty in adhering to the draft ponencia written by our esteemed Chairman, Mr.
Justice JARM, insofar as it declares that an action for revival of judgment is barred by extinctive
prescription, if not brought within ten (10) years from the time the right of action accrues, pursuant to
Article 1144(3) of the New Civil Code. It appears that the judgment in the instant case has become final
on 23 October 1973 or well more than two decades prior to the action for its revival instituted only in
1999.

With due respect, however, I still am unable to subscribe to the idea that prescription may not be invoked
by the government in this case upon the thesis that the transfer of Camp Wallace to the Bases
Conversion Development Authority renders the Republic with no right or interest to protect and thus
unqualified under the rules of procedure to be the real party-in-interest. While it is true that Republic Act
7227, otherwise known as the Bases Conversion and Development Act of 1992, authorizes the transfer of
the military reservations and their extensions to the Conversion Authority, the same, however, is basically
for the purpose of accelerating the sound and balanced conversion of these military reservations into
alternative productive uses and to enhance the benefits to be derived from such property as a measure of
promoting the economic and social development, particularly, of Central Luzon and, in general, the
country’s goal for enhancement. 1 The transfer of these military reservations to the Conversion Authority
does not amount to an abdication on the part of the Republic of its interests but simply a recognition of
the need to create a body corporate which will act as its agent for the realization of its program specified
in the Act. It ought to follow that the Republic remains to be the real party-in-interest and the Conversion
Authority being merely its agent.

In E.B. Marcha Transport Co., Inc. v. Intermediate Appellate Court, 2 the Court succinctly resolved the
issue of whether or not the Republic of the Philippines would be a proper party to sue for the recovery of
possession of property which at the time of the institution of the suit was no longer being held by the
national government but by the Philippine Ports Authority. The Court ruled:chanrob1es virtua1 law library

"More importantly, as we see it, dismissing the complaint on the ground that the Republic of the
Philippines is not the proper party would result in needless delay in the settlement of this matter and also
in derogation of the policy against multiplicity of suits. Such a decision would require the Philippine Ports
Authority to refile the very same complaint already proved by the Republic of the Philippines and bring
back the parties as it were to square one.

"It can be said that in suing for the recovery of the rentals, the Republic of the Philippines, acted as
principal of the Philippine Ports Authority, directly exercising the commission it had earlier conferred on
the latter as its agent. We may presume that, by doing so, the Republic of the Philippines did not intend to
retain the said rentals for its own use, considering that by its voluntary act it had transferred the land in
question to the Philippine Ports Authority effective July 11, 1974. The Republic of the Philippines had
simply sought to assist, not supplant, the Philippine Ports Authority, whose title to the disputed property it
continues to recognize. We may expect then that the said rentals, once collected by the Republic of the
Philippines, shall be turned over by it to the Philippine Ports Authority conformably to the purposes of P.D.
No. 857."cralaw virtua1aw library

There would seem to be no cogent reason for ignoring that rationale specially when taken in light of the
fact that the original suit for cancellation of title of petitioner’s predecessor-in-interest was commenced by
the Republic itself, and it was only in 1992 that the subject military camp was transferred to the
Conversion Authority.chanrob1es virtua1 1aw 1ibrary