G.R. No.

L-6791
March 29, 1954
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
QUE PO LAY, defendant-appellant.
Prudencio de Guzman for appellant.
First Assistant Solicitor General Ruperto Kapunan, Jr., and Solicitor Lauro G. Marquez for appellee.
MONTEMAYOR, J.:
Que Po Lay is appealing from the decision of the Court of First Instance of Manila, finding him guilty of violating
Central Bank Circular No. 20 in connection with section 34 of Republic Act No. 265, and sentencing him to suffer six
months imprisonment, to pay a fine of P1,000 with subsidiary imprisonment in case of insolvency, and to pay the
costs.
The charge was that the appellant who was in possession of foreign exchange consisting of U.S. dollars, U.S. checks
and U.S. money orders amounting to about $7,000 failed to sell the same to the Central Bank through its agents
within one day following the receipt of such foreign exchange as required by Circular No. 20. the appeal is based on
the claim that said circular No. 20 was not published in the Official Gazette prior to the act or omission imputed to the
appellant, and that consequently, said circular had no force and effect. It is contended that Commonwealth Act. No.,
638 and Act 2930 both require said circular to be published in the Official Gazette, it being an order or notice of
general applicability. The Solicitor General answering this contention says that Commonwealth Act. No. 638 and 2930
do not require the publication in the Official Gazette of said circular issued for the implementation of a law in order to
have force and effect.
We agree with the Solicitor General that the laws in question do not require the publication of the circulars,
regulations and notices therein mentioned in order to become binding and effective. All that said two laws provide is
that laws, resolutions, decisions of the Supreme Court and Court of Appeals, notices and documents required by law
to be of no force and effect. In other words, said two Acts merely enumerate and make a list of what should be
published in the Official Gazette, presumably, for the guidance of the different branches of the Government issuing
same, and of the Bureau of Printing.
However, section 11 of the Revised Administrative Code provides that statutes passed by Congress shall, in the
absence of special provision, take effect at the beginning of the fifteenth day after the completion of the publication of
the statute in the Official Gazette. Article 2 of the new Civil Code (Republic Act No. 386) equally provides that laws
shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is
otherwise provided. It is true that Circular No. 20 of the Central Bank is not a statute or law but being issued for the
implementation of the law authorizing its issuance, it has the force and effect of law according to settled
jurisprudence. (See U.S. vs. Tupasi Molina, 29 Phil., 119 and authorities cited therein.) Moreover, as a rule, circulars
and regulations especially like the Circular No. 20 of the Central Bank in question which prescribes a penalty for its
violation should be published before becoming effective, this, on the general principle and theory that before the
public is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and
the people officially and specifically informed of said contents and its penalties.
Our Old Civil code, ( Spanish Civil Code of 1889) has a similar provision about the effectivity of laws, (Article 1
thereof), namely, that laws shall be binding twenty days after their promulgation, and that their promulgation shall be
understood as made on the day of the termination of the publication of the laws in the Gazette. Manresa, commenting
on this article is of the opinion that the word "laws" include regulations and circulars issued in accordance with the
same. He says:
El Tribunal Supremo, ha interpretado el articulo 1. del codigo Civil en Sentencia de 22 de Junio de 1910, en
el sentido de que bajo la denominacion generica de leyes, se comprenden tambien los Reglamentos,

Reales decretos, Instrucciones, Circulares y Reales ordenes dictadas de conformidad con las mismas por el
Gobierno en uso de su potestad. Tambien el poder ejecutivo lo ha venido entendiendo asi, como lo prueba
el hecho de que muchas de sus disposiciones contienen la advertencia de que empiezan a regir el mismo
dia de su publicacion en la Gaceta, advertencia que seria perfectamente inutil si no fuera de aplicacion al
caso el articulo 1.o del Codigo Civil. (Manresa, Codigo Civil Espaol, Vol. I. p. 52).
In the present case, although circular No. 20 of the Central Bank was issued in the year 1949, it was not published
until November 1951, that is, about 3 months after appellant's conviction of its violation. It is clear that said circular,
particularly its penal provision, did not have any legal effect and bound no one until its publication in the Official
Gazzette or after November 1951. In other words, appellant could not be held liable for its violation, for it was not
binding at the time he was found to have failed to sell the foreign exchange in his possession thereof.
But the Solicitor General also contends that this question of non-publication of the Circular is being raised for the first
time on appeal in this Court, which cannot be done by appellant. Ordinarily, one may raise on appeal any question of
law or fact that has been raised in the court below and which is within the issues made by the parties in their
pleadings. (Section 19, Rule 48 of the Rules of Court). But the question of non-publication is fundamental and
decisive. If as a matter of fact Circular No. 20 had not been published as required by law before its violation, then in
the eyes of the law there was no such circular to be violated and consequently appellant committed no violation of the
circular or committed any offense, and the trial court may be said to have had no jurisdiction. This question may be
raised at any stage of the proceeding whether or not raised in the court below.
In view of the foregoing, we reverse the decision appealed from and acquit the appellant, with costs de oficio.
Paras, C.J., Bengzon, Padilla, Reyes, Bautista Angelo, Labrador, Concepcion and Diokno, JJ., concur.

G.R. No. L-63915

April 24, 1985
LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD,
INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his
capacity as Deputy Executive Assistant to the President , MELQUIADES P. DE LA CRUZ, in his capacity as Director,
Malacaang Records Office, and FLORENDO S. PABLO, in his capacity as Director, Bureau of Printing, respondents.

ESCOLIN, J.:
Invoking the people's right to be informed on matters of public concern, a right recognized in Section 6, Article IV of
the 1973 Philippine Constitution, 1 as well as the principle that laws to be valid and enforceable must be published in
the Official Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus to compel respondent
public officials to publish, and/or cause the publication in the Official Gazette of various presidential decrees, letters of
instructions, general orders, proclamations, executive orders, letter of implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234, 265, 286,
298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445,
447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731,
733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165,

1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 18291840, 1842-1847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155, 161, 173,
180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-245,
248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444445, 473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612,
615, 641, 642, 665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,11491178,1180-1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.
d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532, 1535,
1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 16301649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754,
1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826,
1829, 1831-1832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866,
1868, 1870, 1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 19862028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522,
524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852, 854-857.
f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95,
107, 120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.
The respondents, through the Solicitor General, would have this case dismissed outright on the ground that
petitioners have no legal personality or standing to bring the instant petition. The view is submitted that in the
absence of any showing that petitioners are personally and directly affected or prejudiced by the alleged nonpublication of the presidential issuances in question 2 said petitioners are without the requisite legal personality to
institute this mandamus proceeding, they are not being "aggrieved parties" within the meaning of Section 3, Rule 65
of the Rules of Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or person unlawfully
neglects the performance of an act which the law specifically enjoins as a duty resulting from an
office, trust, or station, or unlawfully excludes another from the use a rd enjoyment of a right or
office to which such other is entitled, and there is no other plain, speedy and adequate remedy in
the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper
court alleging the facts with certainty and praying that judgment be rendered commanding the
defendant, immediately or at some other specified time, to do the act required to be done to Protect
the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the
wrongful acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition concerns a public right and its object is
to compel the performance of a public duty, they need not show any specific interest for their petition to be given due
course.
The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor General, 3 this
Court held that while the general rule is that "a writ of mandamus would be granted to a private individual only in
those cases where he has some private or particular interest to be subserved, or some particular right to be
protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively to

apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when
the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the
people are regarded as the real party in interest and the relator at whose instigation the proceedings are instituted
need not show that he has any legal or special interest in the result, it being sufficient to show that he is a citizen and
as such interested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper party to the
mandamus proceedings brought to compel the Governor General to call a special election for the position of
municipal president in the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said:
We are therefore of the opinion that the weight of authority supports the proposition that the relator
is a proper party to proceedings of this character when a public right is sought to be enforced. If the
general rule in America were otherwise, we think that it would not be applicable to the case at bar
for the reason 'that it is always dangerous to apply a general rule to a particular case without
keeping in mind the reason for the rule, because, if under the particular circumstances the reason
for the rule does not exist, the rule itself is not applicable and reliance upon the rule may well lead
to error'
No reason exists in the case at bar for applying the general rule insisted upon by counsel for the
respondent. The circumstances which surround this case are different from those in the United
States, inasmuch as if the relator is not a proper party to these proceedings no other person could
be, as we have seen that it is not the duty of the law officer of the Government to appear and
represent the people in cases of this character.
The reasons given by the Court in recognizing a private citizen's legal personality in the aforementioned case apply
squarely to the present petition. Clearly, the right sought to be enforced by petitioners herein is a public right
recognized by no less than the fundamental law of the land. If petitioners were not allowed to institute this
proceeding, it would indeed be difficult to conceive of any other person to initiate the same, considering that the
Solicitor General, the government officer generally empowered to represent the people, has entered his appearance
for respondents in this case.
Respondents further contend that publication in the Official Gazette is not a sine qua non requirement for the
effectivity of laws where the laws themselves provide for their own effectivity dates. It is thus submitted that since the
presidential issuances in question contain special provisions as to the date they are to take effect, publication in the
Official Gazette is not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code:
Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the
Official Gazette, unless it is otherwise provided, ...
The interpretation given by respondent is in accord with this Court's construction of said article. In a long line of
decisions, 4 this Court has ruled that publication in the Official Gazette is necessary in those cases where the
legislation itself does not provide for its effectivity date-for then the date of publication is material for determining its
date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for the date
when it goes into effect.
Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws with the fact of
publication. Considered in the light of other statutes applicable to the issue at hand, the conclusion is easily reached
that said Article 2 does not preclude the requirement of publication in the Official Gazette, even if the law itself
provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1] all important legisiative acts and
resolutions of a public nature of the, Congress of the Philippines; [2] all executive and
administrative orders and proclamations, except such as have no general applicability; [3] decisions
or abstracts of decisions of the Supreme Court and the Court of Appeals as may be deemed by
said courts of sufficient importance to be so published; [4] such documents or classes of

documents as may be required so to be published by law; and [5] such documents or classes of
documents as the President of the Philippines shall determine from time to time to have general
applicability and legal effect, or which he may authorize so to be published. ...
The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which
are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no basis for
the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish or otherwise
burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one.
Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital
significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely
by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the
Batasan Pambansaand for the diligent ones, ready access to the legislative recordsno such publicity
accompanies the law-making process of the President. Thus, without publication, the people have no means of
knowing what presidential decrees have actually been promulgated, much less a definite way of informing
themselves of the specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la
denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones,
Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. 5
The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the Official
Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative duty. That duty must be
enforced if the Constitutional right of the people to be informed on matters of public concern is to be given substance
and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing, to our mind,
leaves respondents with no discretion whatsoever as to what must be included or excluded from such publication.
The publication of all presidential issuances "of a public nature" or "of general applicability" is mandated by law.
Obviously, presidential decrees that provide for fines, forfeitures or penalties for their violation or otherwise impose a
burden or. the people, such as tax and revenue measures, fall within this category. Other presidential issuances
which apply only to particular persons or class of persons such as administrative and executive orders need not be
published on the assumption that they have been circularized to all concerned. 6
It is needless to add that the publication of presidential issuances "of a public nature" or "of general applicability" is a
requirement of due process. It is a rule of law that before a person may be bound by law, he must first be officially
and specifically informed of its contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC 7:
In a time of proliferating decrees, orders and letters of instructions which all form part of the law of
the land, the requirement of due process and the Rule of Law demand that the Official Gazette as
the official government repository promulgate and publish the texts of all such decrees, orders and
instructions so that the people may know where to obtain their official and specific contents.
The Court therefore declares that presidential issuances of general application, which have not been published, shall
have no force and effect. Some members of the Court, quite apprehensive about the possible unsettling effect this
decision might have on acts done in reliance of the validity of those presidential decrees which were published only
during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity apply to
P.D.s which had been enforced or implemented prior to their publication. The answer is all too familiar. In similar
situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage
District vs. Baxter Bank 8 to wit:
The courts below have proceeded on the theory that the Act of Congress, having been found to be
unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties,
and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425,
442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such
broad statements as to the effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to such a determination, is an operative fact
and may have consequences which cannot justly be ignored. The past cannot always be erased by
a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be

considered in various aspects-with respect to particular conduct, private and official. Questions of
rights claimed to have become vested, of status, of prior determinations deemed to have finality
and acted upon accordingly, of public policy in the light of the nature both of the statute and of its
previous application, demand examination. These questions are among the most difficult of those
which have engaged the attention of courts, state and federal and it is manifest from numerous
decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be
justified.
Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party under the
Moratorium Law, albeit said right had accrued in his favor before said law was declared unconstitutional by this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is
"an operative fact which may have consequences which cannot be justly ignored. The past cannot always be erased
by a new judicial declaration ... that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be
justified."
From the report submitted to the Court by the Clerk of Court, it appears that of the presidential decrees sought by
petitioners to be published in the Official Gazette, only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and
1937 to 1939, inclusive, have not been so published. 10 Neither the subject matters nor the texts of these PDs can be
ascertained since no copies thereof are available. But whatever their subject matter may be, it is undisputed that
none of these unpublished PDs has ever been implemented or enforced by the government. In Pesigan vs.
Angeles, 11 the Court, through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of the
contents of [penal] regulations and make the said penalties binding on the persons affected thereby. " The cogency of
this holding is apparently recognized by respondent officials considering the manifestation in their comment that "the
government, as a matter of policy, refrains from prosecuting violations of criminal laws until the same shall have been
published in the Official Gazette or in some other publication, even though some criminal laws provide that they shall
take effect immediately.
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential
issuances which are of general application, and unless so published, they shall have no binding force and effect.
SO ORDERED.
Relova, J., concurs.
Aquino, J., took no part.
Concepcion, Jr., J., is on leave.

G.R. No. L-63915 December 29, 1986

LORENZO M. TA;ADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD,
INTEGRITY AND NATIONALISM, INC. (MABINI), petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his
capacity as Deputy Executive Assistant to the President, MELQUIADES P. DE LA CRUZ, ETC., ET AL.,respondents.
RESOLUTION

CRUZ, J.:

Due process was invoked by the petitioners in demanding the disclosure of a number of presidential decrees which
they claimed had not been published as required by law. The government argued that while publication was
necessary as a rule, it was not so when it was "otherwise provided," as when the decrees themselves declared that
they were to become effective immediately upon their approval. In the decision of this case on April 24, 1985, the
Court affirmed the necessity for the publication of some of these decrees, declaring in the dispositive portion as
follows:
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished
presidential issuances which are of general application, and unless so published, they shall have no binding
force and effect.
The petitioners are now before us again, this time to move for reconsideration/clarification of that
decision. 1Specifically, they ask the following questions:
1. What is meant by "law of public nature" or "general applicability"?
2. Must a distinction be made between laws of general applicability and laws which are not?
3. What is meant by "publication"?
4. Where is the publication to be made?
5. When is the publication to be made?
Resolving their own doubts, the petitioners suggest that there should be no distinction between laws of general
applicability and those which are not; that publication means complete publication; and that the publication must be
made forthwith in the Official Gazette. 2
In the Comment 3 required of the then Solicitor General, he claimed first that the motion was a request for an advisory
opinion and should therefore be dismissed, and, on the merits, that the clause "unless it is otherwise provided" in
Article 2 of the Civil Code meant that the publication required therein was not always imperative; that publication,
when necessary, did not have to be made in the Official Gazette; and that in any case the subject decision was
concurred in only by three justices and consequently not binding. This elicited a Reply 4 refuting these arguments.
Came next the February Revolution and the Court required the new Solicitor General to file a Rejoinder in view of the
supervening events, under Rule 3, Section 18, of the Rules of Court. Responding, he submitted that issuances
intended only for the internal administration of a government agency or for particular persons did not have to be
'Published; that publication when necessary must be in full and in the Official Gazette; and that, however, the decision
under reconsideration was not binding because it was not supported by eight members of this Court. 5
The subject of contention is Article 2 of the Civil Code providing as follows:
ART. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official
Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication.
After a careful study of this provision and of the arguments of the parties, both on the original petition and on the
instant motion, we have come to the conclusion and so hold, that the clause "unless it is otherwise provided" refers to
the date of effectivity and not to the requirement of publication itself, which cannot in any event be omitted. This
clause does not mean that the legislature may make the law effective immediately upon approval, or on any other
date, without its previous publication.
Publication is indispensable in every case, but the legislature may in its discretion provide that the usual fifteen-day
period shall be shortened or extended. An example, as pointed out by the present Chief Justice in his separate
concurrence in the original decision, 6 is the Civil Code which did not become effective after fifteen days from its

publication in the Official Gazette but "one year after such publication." The general rule did not apply because it was
"otherwise provided. "
It is not correct to say that under the disputed clause publication may be dispensed with altogether. The reason. is
that such omission would offend due process insofar as it would deny the public knowledge of the laws that are
supposed to govern the legislature could validly provide that a law e effective immediately upon its approval
notwithstanding the lack of publication (or after an unreasonably short period after publication), it is not unlikely that
persons not aware of it would be prejudiced as a result and they would be so not because of a failure to comply with
but simply because they did not know of its existence, Significantly, this is not true only of penal laws as is commonly
supposed. One can think of many non-penal measures, like a law on prescription, which must also be communicated
to the persons they may affect before they can begin to operate.
We note at this point the conclusive presumption that every person knows the law, which of course presupposes that
the law has been published if the presumption is to have any legal justification at all. It is no less important to
remember that Section 6 of the Bill of Rights recognizes "the right of the people to information on matters of public
concern," and this certainly applies to, among others, and indeed especially, the legislative enactments of the
government.
The term "laws" should refer to all laws and not only to those of general application, for strictly speaking all laws
relate to the people in general albeit there are some that do not apply to them directly. An example is a law granting
citizenship to a particular individual, like a relative of President Marcos who was decreed instant naturalization. It
surely cannot be said that such a law does not affect the public although it unquestionably does not apply directly to
all the people. The subject of such law is a matter of public interest which any member of the body politic may
question in the political forums or, if he is a proper party, even in the courts of justice. In fact, a law without any
bearing on the public would be invalid as an intrusion of privacy or as class legislation or as anultra vires act of the
legislature. To be valid, the law must invariably affect the public interest even if it might be directly applicable only to
one individual, or some of the people only, and t to the public as a whole.
We hold therefore that all statutes, including those of local application and private laws, shall be published as a
condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity date is fixed
by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of
legislative powers whenever the same are validly delegated by the legislature or, at present, directly conferred by the
Constitution. administrative rules and regulations must a also be published if their purpose is to enforce or implement
existing law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the so-called
letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their
subordinates in the performance of their duties.
Accordingly, even the charter of a city must be published notwithstanding that it applies to only a portion of the
national territory and directly affects only the inhabitants of that place. All presidential decrees must be published,
including even, say, those naming a public place after a favored individual or exempting him from certain prohibitions
or requirements. The circulars issued by the Monetary Board must be published if they are meant not merely to
interpret but to "fill in the details" of the Central Bank Act which that body is supposed to enforce.
However, no publication is required of the instructions issued by, say, the Minister of Social Welfare on the case
studies to be made in petitions for adoption or the rules laid down by the head of a government agency on the
assignments or workload of his personnel or the wearing of office uniforms. Parenthetically, municipal ordinances are
not covered by this rule but by the Local Government Code.
We agree that publication must be in full or it is no publication at all since its purpose is to inform the public of the
contents of the laws. As correctly pointed out by the petitioners, the mere mention of the number of the presidential

decree, the title of such decree, its whereabouts (e.g., "with Secretary Tuvera"), the supposed date of effectivity, and
in a mere supplement of the Official Gazette cannot satisfy the publication requirement. This is not even substantial
compliance. This was the manner, incidentally, in which the General Appropriations Act for FY 1975, a presidential
decree undeniably of general applicability and interest, was "published" by the Marcos administration. 7 The evident
purpose was to withhold rather than disclose information on this vital law.
Coming now to the original decision, it is true that only four justices were categorically for publication in the Official
Gazette 8 and that six others felt that publication could be made elsewhere as long as the people were sufficiently
informed. 9 One reserved his vote 10 and another merely acknowledged the need for due publication without indicating
where it should be made. 11 It is therefore necessary for the present membership of this Court to arrive at a clear
consensus on this matter and to lay down a binding decision supported by the necessary vote.
There is much to be said of the view that the publication need not be made in the Official Gazette, considering its
erratic releases and limited readership. Undoubtedly, newspapers of general circulation could better perform the
function of communicating, the laws to the people as such periodicals are more easily available, have a wider
readership, and come out regularly. The trouble, though, is that this kind of publication is not the one required or
authorized by existing law. As far as we know, no amendment has been made of Article 2 of the Civil Code. The
Solicitor General has not pointed to such a law, and we have no information that it exists. If it does, it obviously has
not yet been published.
At any rate, this Court is not called upon to rule upon the wisdom of a law or to repeal or modify it if we find it
impractical. That is not our function. That function belongs to the legislature. Our task is merely to interpret and apply
the law as conceived and approved by the political departments of the government in accordance with the prescribed
procedure. Consequently, we have no choice but to pronounce that under Article 2 of the Civil Code, the publication
of laws must be made in the Official Gazett and not elsewhere, as a requirement for their effectivity after fifteen days
from such publication or after a different period provided by the legislature.
We also hold that the publication must be made forthwith or at least as soon as possible, to give effect to the law
pursuant to the said Article 2. There is that possibility, of course, although not suggested by the parties that a law
could be rendered unenforceable by a mere refusal of the executive, for whatever reason, to cause its publication as
required. This is a matter, however, that we do not need to examine at this time.
Finally, the claim of the former Solicitor General that the instant motion is a request for an advisory opinion is
untenable, to say the least, and deserves no further comment.
The days of the secret laws and the unpublished decrees are over. This is once again an open society, with all the
acts of the government subject to public scrutiny and available always to public cognizance. This has to be so if our
country is to remain democratic, with sovereignty residing in the people and all government authority emanating from
them.
Although they have delegated the power of legislation, they retain the authority to review the work of their delegates
and to ratify or reject it according to their lights, through their freedom of expression and their right of suffrage. This
they cannot do if the acts of the legislature are concealed.
Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their dark, deep
secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless their existence and
contents are confirmed by a valid publication intended to make full disclosure and give proper notice to the people.
The furtive law is like a scabbarded saber that cannot feint parry or cut unless the naked blade is drawn.
WHEREFORE, it is hereby declared that all laws as above defined shall immediately upon their approval, or as soon
thereafter as possible, be published in full in the Official Gazette, to become effective only after fifteen days from their
publication, or on another date specified by the legislature, in accordance with Article 2 of the Civil Code.
SO ORDERED.

Teehankee, C.J., Feria, Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., and Paras, JJ., concur.
G.R. No. 78254

April 25, 1991

JOINT MINISTRY OF HEALTH-MINISTRY OF LABOR AND EMPLOYMENT ACCREDITATION COMMITTEE FOR

MEDICAL CLINICS, petitioner,
vs.
COURT OF APPEALS and ERMITA MEDICAL CENTER, respondents.
Ceferino Padua Law Office for private respondent.

CRUZ, J.:
Challenged in this petition for review is the decision of the Court of Appeals dated April 20, 1987, declaring null and
void the decision of the Joint Ministry of Health Ministry of Labor and Employment Accreditation Committee revoking
the accreditation of the Ermita Medical Center, Inc. as a medical clinic for overseas employment and the conduct of
medical examinations.1
The Committee was formed to establish, regulate and upgrade the standards of medical service and/or examination
of workers for overseas employment and to ensure that only occupationally qualified and physically and medically fit
workers participate in the overseas employment program.2
The revocation was made pursuant to the Rules and Regulations promulgated by the Committee on June 1, 1983,
covering all duly licensed and registered hospitals, medical clinics and laboratories desirous of offering their services
to private employment agencies, recruitment entities and manning agencies in the medical examination of workers
being hired for overseas employment.3
Accredited medical clinics were classified into (a) regularly accredited medical clinics, which were allowed to conduct
medical examinations of applicants for overseas employment for all private recruitment firms or agencies, and (b) inhouse clinics, which were allowed to conduct medical examinations of applicants for overseas employment for such
companies only to which they are in-house medical clinics.4
Ermita Medical Center was issued a certificate of accreditation as an in-house medical clinic to service only Builders
and Heavy Equipment Services Corporation (BHESCO), but this was revoked by the Committee on the ground that
the Center was conducting medical examinations of other companies. Reinstated on April 11, 1984, after a motion for
reconsideration, the accreditation was again revoked on November 9, 1984, on the basis of evidence submitted by
the Accredited Medical clinics for Overseas Workers, Inc. of the respondent's violation of the Rules and Regulations.
The Center sent a letter of appeal to the Health and Labor Ministers, but apparently no action was taken thereon. On
January 4, 1985, it filed a petition for certiorari with the Court of Appeals questioning the authority of the Committee to
issue the Rules and Regulations and, assuming their validity, to revoke its accreditation as an in- house medical
clinic.
In its decision, the respondent court sustained the Rules and Regulations as a valid exercise of the police power
intended "to ensure that only medically and physically fit workers will be sent overseas" and "to prevent Filipino
workers from being stranded abroad upon being found to be physically unfit by their overseas employers." It also
affirmed that the Committee was validly authorized to issue the Rules and Regulations under Section 79(B) of the
Revised Administrative Code providing that:
Sec. 79(B) Power to regulate. The Department Head shall have power to promulgate, whenever he may
see fit to do so, all rule regulations, orders, circulars, memorandums and other instructions, not contrary to
law, . . . for the strict enforcement and proper execution of the laws relative to matters under the jurisdiction
of said Department. . . .

However, it held that the Committee had no competence to revoke the accreditation given to the Center because all it
was empowered to do under the Rules and Regulations was to "recommend to appropriate authorities the proper
sanctions to be taken" in case of violation of the said Rules and Regulations. Accordingly, the respondent court set
aside the revocation by the Committee of the accreditation previously issued to the Center.
In the petition at bar, the Solicitor General maintains that the Rules and Regulations were indeed enacted under the
police power pursuant to the above-stated objectives and by virtue of properly delegated authority, as the respondent
court itself had found. However, he disagrees with the ruling that the Committee could not impose the sanction of
revocation but could only recommend the same.
The Solicitor General insists that as an administrative body, the Committee was empowered to impose remedial or
civil sanctions as distinguished from penal sanctions, which require specific legislative authority. Withdrawal of the
accreditation, like revocation of a license, is an administrative sanction the Committee could directly impose. He also
denies that the Committee unjustly revoked the accreditation of the Center while favoring others apparently similary
situated.
The private respondent does not argue too vigorously on the police power issue and practically concedes it. However,
it submits that the Committee had no authority to make the classification between clinics with full accreditation and
those with limited accreditation, as this could be done only by the Joint Ministries of Health and Labor. The Center
also questions the Committee for giving full accreditation to seven clinics even after the cut-off date while denying it a
similar status notwithstanding its tender of the required P30,000.00 cash bond.
In a Supplemental Comment, the respondent called the attention of the Court to a letter from the Director of the
National Printing Office5 reading as follows:
August 10, 1988
NICASIO TUMULAK
Suite 6-D, 6th Floor,
G.E. Antonino Bldg.T.M. Kalaw Street, Ermita
Sir:
This refers to your letter of August 4, 1988 which was received by tills Office on August 5, 1988 requesting a
Certification as to whether the Omnibus Rules implementing the Labor Code issued on February 16, 1976 by then
Labor Minister Blas F. Ople and the Joint Ministry of Health-Ministry of Labor and Employment Rules and Regulations
for the Accreditation of Medical Clinics and the Conduct of Medical Examination for Overseas Employment issued on
June 1, 1983 have been published in the Official Gazette.
Records show that the said aforementioned inquiries were not submitted to this Office for publication in the Official
Gazette.
Very truly yours,
(SGD.) LUIS M. AVECILLA
Director
In his Reply, the Solicitor General, while meeting the other arguments of the private respondent, made no mention of
the above-quoted letter.
On March 15, 1989, the Court gave due course to the petition and required the parties to submit simultaneous
memoranda. The petitioner filed a manifestation adopting as its memorandum its petition dated September 29, 1987,
in which, it said, it had "fully discussed the issues sought to be resolved."
On January 15, 1991, the private respondent filed a Motion to Dismiss and/or for Early Resolution, to which the
petitioner filed on February 7, 1991, an Opposition and/or Comment. There was no refutation again of the argument

of the private respondent that the Rules and Regulations were not enforceable because they had never been
published.
In Taada v. Tuvera,6 this Court declared
We hold therefore that all statutes, including those of local application and private laws, shall be published
as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity
date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the
exercise of legislative powers whenever the same are validly delegated by the legislature or, at present,
directly conferred by the Constitution. Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature that is, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the socalled letters of instructions issued by administrative superiors concerning the rules or guidelines to be
followed by their subordinates in the performance of their duties.
The evidence before us shows that the Rules and Regulations issued by the Committee have never been published.
In the absence of any refutation of this evidence, the Court must conclude that the said Rules and Regulations have
indeed not come into force and so cannot be used as a basis for the resolution of the herein petition.
While it is true that issues not raised in the courts below cannot generally be raised on appeal, the principle obviously
cannot apply to cases like the one at bar where the claim is based on rules and regulations that have not yet become
effective. It is settled that courts can enforce rights and redress wrongs only in accordance with laws existing and in
force at the time the cause of action arose. In the controversy before us, the Rules and Regulations now under
examination by the Court, and earlier by the respondent court, had not yet been published and so were not yet
operating when the accreditation of the Center was revoked. Indeed, they have not been published to date and so
continue to be without any force and effect whatsoever. We therefore cannot interpret and apply them as part of our
laws.
The Court notes that in the private respondent's Motion to Dismiss and/or for Early Resolution, it is contended as
follows:
Apart from the foregoing consideration, the Secretary of Health, Dr. Alfredo Bengzon, on February 22, 1990
has come up with Administrative Order No. 85-A, series of 1990, entitled Revised "Rules and Regulations
covering accreditation of Medical Clinics and Hospitals and the Conduct of Medical Examination for
Overseas Workers and Seafarers" which have substantially corrected and/or amend the original defects of
the old rules as pointed out by the Court of appeals in its decision in C.A. G.R. SP No. 05075 promulgated
on April 20, 1987 in favor of respondent Ermita Medical Center. This significant development has rendered
the present case moot and academic, the new rule not being in issue.
The Solicitor General is correct in observing that these new rules are not applicable to the present controversy,
having been issued in 1990, long after this case arose in 1985. At any rate, it might be useful to verify if these new
rules have already been published as now required by Executive Order No. 200, which was issued in compliance with
the strict doctrine laid down in the Taada case.
WHEREFORE, the petition is DENIED for lack of statutory basis. The challenged decision is SET ASIDE for the same
reason.1wphi1 It is so ordered.
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

G.R. No. 158761

December 4, 2007

NATIONAL ELECTRIFICATION ADMINISTRATION, petitioner,

vs.
VICTORIANO B. GONZAGA, respondent.
DECISION
VELASCO, JR., , J.:
For review under Rule 45 are the March 6, 2003 Decision1 and June 10, 2003 Resolution2 of the Court of Appeals
(CA) in CA-G.R. SP No. 68769, which dismissed petitioners appeal of the July 23, 2001 Order3 of the Pagadian City
Regional Trial Court (RTC), Branch 21 in Civil Case No. 4282-2K, and denied petitioners Motion for Reconsideration,
respectively.
On November 13, 2000, respondent Victoriano B. Gonzaga filed his Certificate of Candidacy for membership in the
Board of Directors of Zamboanga del Sur II Electric Cooperative, Inc., District II (ZAMSURECO). Later that day, the
screening committee resolved to disqualify respondent because his spouse was an incumbent member of
the Sangguniang Bayan of Diplahan, Zamboanga del Sur. Based on the Electric Cooperative Election Code (ECEC),
promulgated by petitioner National Electrification Administration (NEA), a candidate whose spouse occupies an
elective government position higher than Barangay Captain is prohibited to run as director of an electric cooperative.
ZAMSURECOs by-laws, however, do not provide for such ground for disqualification.4
On November 21, 2000, respondent filed a Petition for Prohibition and Damages, docketed as Civil Case No. 42822K with the Pagadian City RTC.
ZAMSURECO filed a Motion to Dismiss and Answer on November 24, 2000, which the RTC denied. However, it
issued a temporary restraining order, ordering ZAMSURECOs officials to refrain from conducting the election for
directorship set on December 2, 2000.
The RTC said that the petition was dismissible because of the failure of respondent to exhaust all administrative
remedies, as required by Section 2, 2.C of the ECEC Guidelines on the Conduct of District Elections for Electric
Cooperative. The section required that "a protest arising from disqualification shall be filed with the screening
committee in not less than FIVE (5) days before the election. The screening committee shall decide the protest within
FORTY-EIGHT (48) hours from receipt thereof. Failure of the applicant to file his/her protest within the above-cited
period shall be deemed a waiver of his right to protest."5
As observed by the RTC, respondent had urgently filed the petition on November 21, 2000 because the election
sought to be restrained was going to be held on December 2, 2000 and November 20 was a holiday. Under the
circumstances, respondent had little time to exhaust the remedy in Sec. 2 of the Guidelines, such that an exception
could be made. More importantly, according to the RTC, the rule on exhaustion of administrative remedies cannot be
invoked in the instant case since the guidelines prescribing the administrative remedy is a subject matter of the
ECEC, which is at issue, and is exactly what is being sought to be invalidated.6
On December 12, 2000, respondent filed a motion to withdraw the amended petition, and to admit a second
amended petition that impleaded NEA as indispensable party. Respondent also averred that the ECEC was null and
void because it had not been published. On December 20, 2000, the RTC admitted the second amended petition,
issued a writ of preliminary injunction to prevent the conduct of election for directorship, issued summons to NEA, and
required NEA to comment if the ECEC was published in any newspaper of general circulation.7
On January 29, 2001, NEA filed a motion for extension of time to file an answer, and subsequently on April 10, 2001,
a Motion for Leave to Admit Pleading to which a Motion to Dismiss was attached. NEA questioned the jurisdiction of
the RTC and alleged that respondent failed to exhaust administrative remedies.8
In its July 23, 2001 Order,9 the RTC denied petitioners Motion to Dismiss for being filed out of time. More importantly,
it noted NEAs failure to state whether the ECEC was indeed published in a newspaper of general circulation as
required by the New Civil Code and the Administrative Code of 1987. The RTC said the failure rendered the ECEC

null and void. As regards the lack of jurisdiction and non-exhaustion of administrative remedies, the RTC noted that
NEA erroneously relied on Sec. 59 of Presidential Decree No. (PD) 269 and misapplied the cases it cited.
According to the RTC, Sec. 59 of PD 269 refers to "order, ruling or decision of the NEA" in the exercise of NEAs
quasi-judicial functions. And the RTC noted that Secs. 51 to 58 refer to hearings, investigations, and procedures. On
the other hand, the validity of the ECEC, subject of the instant petition, was an exercise of NEAs quasi-legislative
function or rule-making authority.
Further, according to the RTC, NEA took Sec. 58 of PD 269 out of context when it said Sec. 58 dealt with the
administrative remedy available to petitioner. It said that Sec. 58 presupposed a ruling or decision of the NEA and
there was none in the case before it. The RTC ruled in favor of Gonzaga, and ordered ZAMSURECO to accept
Gonzagas certificate of candidacy for director.10 The RTC denied NEAs motion for reconsideration.
The CA Ruled that the Courts Have Jurisdiction Over
Issues on Legality of Codes
Aggrieved, petitioner appealed to the CA. The CA denied due course and dismissed the petition. It said that NEA was
not exercising its quasi-judicial powers but its rule-making authority. In the case before the trial court, the CA stressed
that the issue involved the interpretation of the ECEC, and to this extent, NEA had no jurisdiction because the issue is
within the province of the courts.
The CA denied petitioners Motion for Reconsideration in its June 10, 2003 Resolution. Hence, we have this petition.
The Issues
WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT APPLYING SECTION 59 OF P.D. 269
WHETHER OR NOT THE COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURTS
NULLIFICATION OF THE ECEC
Issues Involving NEAs Rule-Making Authority
Are Cognizable by Regular Courts
The petition has no merit.
Sec. 59 of PD 269 provides:
SEC. 59. Court Review.The Supreme Court is hereby given jurisdiction to review any order, ruling or
decision of the NEA and to modify or set aside such order, ruling or decision when it clearly appears that
there is no evidence before the NEA to support reasonably such order, ruling or decision, or that the same is
contrary to law, or that it was without the jurisdiction of the NEA. The evidence presented to the NEA,
together with the record of the proceedings before the NEA, shall be certified by the NEA to the Supreme
Court. Any order, ruling or decision of the NEA may likewise be reviewed by the Supreme Court upon writ of
certiorari in proper case. The procedure for review, except as herein provided, shall be presented by rules of
the Supreme Court. Any order or decision of the NEA may be reviewed on the application of any person or
public service entity aggrieved thereby and who was a party in the subject proceeding, by certiorari in
appropriate cases or by a petition for review, which shall be filed within thirty (30) days from the notification
of the NEA order, decision or ruling on reconsideration. Said petition shall be placed on file in the office of
the Clerk for the Supreme Court who shall furnish copies thereof to the NEA and other interested parties.
Petitioner argues that based on the foregoing provision, only the Supreme Court has the authority to review the "acts"
of NEA as an administrative body with adjudicative and rule-making power. It cited NEA v. Mendoza, using the Courts
pronouncement that:

[T]he power of judicial review of NEAs order or decision pertains to the Supreme Court as decreed in
Section 59 of P.D. 269 which vests specifically on the Supreme Court the jurisdiction to review any order,
ruling or decision of the NEA and to modify or set aside such orders, rulings or decisions.11
It is obvious that Sec. 59 of PD 269 refers to "order, ruling or decision" of NEA. What is being challenged in this case
is the decision of the screening committee of ZAMSURECO to disqualify respondent. Likewise assailed is the validity
of the ECEC, particularly, whether the requirement of publication was complied with. The ECEC was issued by NEA
pursuant to its rule-making authority, not its quasi-judicial function. Hence, the issue regarding the controversy over
respondents disqualification and the question on the ECECs validity are within the inherent jurisdiction of regular
courts to review. Petitioners reliance on NEA is misplaced. The subject in that case was the electricity rates charged
by a cooperative, a matter which is clearly within NEAs jurisdiction. The issue in the present petition, however,
centers on the validity of NEAs rules in light of the publication requirements of the Administrative Code and New Civil
Code. The present issue is cognizable by regular courts.
With regard to the second issue, we find no error in the appellate and trial courts nullification of the ECEC. The CA
correctly observed that while ZAMSURECO complied with the requirements of filing the code with the University of
the Philippines Law Center, it offered no proof of publication in the Official Gazette nor in a newspaper of general
circulation. Without compliance with the requirement of publication, the rules and regulations contained in the ECEC
cannot be enforced and implemented.
Article 2 of the New Civil Code provides that laws shall take effect after fifteen (15) days following the completion of
their publication in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is
otherwise provided.
Executive Order No. 292, otherwise known as the Administrative Code of 1987, reinforced the requirement of
publication and outlined the procedure, as follows:
Sec. 3. Filing. (1) Every Agency shall file with the University of the Philippines Law Center three (3) Certified
copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed
within three (3) months from that date shall not thereafter be the basis of any sanction against any party or
persons.
(2) The Records Officer of the agency, or his equivalent functionary, shall carry out the requirements of this
section under pain of disciplinary action.
(3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public
inspection.
Sec. 4. Effectivity In addition to other rule-making requirements provided by law not inconsistent with this
Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a
different date is fixed by law, or specified in this rule.
Sec. 18. When Laws Take Effect Laws shall take effect after Fifteen (15) days following the completion of
their publication in the Official Gazette or in a newspaper of general circulation, unless it is otherwise
provided.
We have already emphasized and clarified the requirement of publication in this Courts Resolution in Taada v.
Tuvera:
We hold therefore that all statutes, including those of local application and private laws, shall be published
as a condition for their effectivity which shall begin fifteen (15) days after publication unless a different
effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the
exercise of legislative powers whenever the same are validly delegated by the legislature or, at present,

directly conferred by the Constitution. Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the socalled letters of instructions issued by administrative superiors concerning the rules or guidelines to be
followed by their subordinates in the performance of their duties. (Emphasis supplied.) 12
The aforequoted ruling was reiterated in Dadole v. Commission on Audit,13 De Jesus v. Commission on
Audit,14and Philippine International Trading Corporation v. Commission on Audit.15
In the case at bar, the ECEC was issued by petitioner pursuant to its rule-making authority provided in PD 269, as
amended, particularly Sec. 24:
Section 24. Board of Directors. (a) The Management of a Cooperative shall be vested in its Board,
subject to the supervision and control of NEA which shall have the right to be represented and to participate
in all Board meetings and deliberations and to approve all policies and resolutions.
The composition, qualifications, the manner of elections and filling of vacancies, the procedures for holding
meetings and other similar provisions shall be defined in the By-laws of the Cooperative subject to NEA
policies, rules and regulations x x x.
The ECEC applies to all electric cooperatives in the country. It is not a mere internal memorandum, interpretative
regulation, or instruction to subordinates. Thus, the ECEC should comply with the requirements of the Civil Code and
the Administrative Code of 1987. In previous cases involving the election of directors for electric cooperatives, the
validity of the ECEC was not put in issue. The ECEC then enjoyed the presumption of validity. In this case, however,
respondent directly questioned the validity of the ECEC in his second amended petition. The trial court thus required
petitioner to show proof of publication of the ECEC. Petitioner could have easily provided such proof had the ECEC
actually been published in the Official Gazette or newspaper of general circulation in the country. This simple proof
could have immediately laid this case to rest. Petitioners failure to do so only implies that the ECEC was not
published accordingly, a fact supported by the certification from the National Printing Office.
Lastly, petitioner avers that a petition for mandamus and prohibition should not have been resorted to by respondent.
The proper recourse, according to petitioner, is a petition for declaratory relief. Petitioner miserably errs on this point.
Rule 63 on declaratory relief states:
Section 1. Who may file petition.Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other
governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional
Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or
duties thereunder.
As stated above, a requirement under Rule 63 is that the petition for declaratory relief must be filed "before any
breach or violation" the questioned document may cause. In the instant case, it cannot be gainsaid that a breach has
not yet occurred since an actual dispute has already arisen between ZAMSURECO and respondentthe screening
committee of the cooperative on the erroneous implementation of a code whose legality and implementation is being
questioned.
On the other hand, it is familiar and fundamental doctrine that a writ of prohibition or mandamus may issue when "x x
x a board unlawfully excludes another from x x x enjoyment of a right or office to which such other is entitled x x x."16
Considering that the screening committee of the board has excluded respondent from being elected as board
member of ZAMSURECO because of the latters improper implementation of the code, a petition for mandamus and
prohibition is the proper recourse.

WHEREFORE, we DENY the petition, and AFFIRM IN TOTO the March 6, 2003 Decision and June 10, 2003
Resolution in CA-G.R. SP No. 68769. Costs against petitioner.
SO ORDERED.
Quisumbing,Chairperson Carpio, Carpio-Morales, Tinga, JJ., concur.

G.R. No. 158761

December 4, 2007

NATIONAL ELECTRIFICATION ADMINISTRATION, petitioner,

vs.
VICTORIANO B. GONZAGA, respondent.
DECISION
VELASCO, JR., , J.:
For review under Rule 45 are the March 6, 2003 Decision1 and June 10, 2003 Resolution2 of the Court of Appeals
(CA) in CA-G.R. SP No. 68769, which dismissed petitioners appeal of the July 23, 2001 Order3 of the Pagadian City
Regional Trial Court (RTC), Branch 21 in Civil Case No. 4282-2K, and denied petitioners Motion for Reconsideration,
respectively.
On November 13, 2000, respondent Victoriano B. Gonzaga filed his Certificate of Candidacy for membership in the
Board of Directors of Zamboanga del Sur II Electric Cooperative, Inc., District II (ZAMSURECO). Later that day, the
screening committee resolved to disqualify respondent because his spouse was an incumbent member of
the Sangguniang Bayan of Diplahan, Zamboanga del Sur. Based on the Electric Cooperative Election Code (ECEC),
promulgated by petitioner National Electrification Administration (NEA), a candidate whose spouse occupies an
elective government position higher than Barangay Captain is prohibited to run as director of an electric cooperative.
ZAMSURECOs by-laws, however, do not provide for such ground for disqualification.4
On November 21, 2000, respondent filed a Petition for Prohibition and Damages, docketed as Civil Case No. 42822K with the Pagadian City RTC.
ZAMSURECO filed a Motion to Dismiss and Answer on November 24, 2000, which the RTC denied. However, it
issued a temporary restraining order, ordering ZAMSURECOs officials to refrain from conducting the election for
directorship set on December 2, 2000.
The RTC said that the petition was dismissible because of the failure of respondent to exhaust all administrative
remedies, as required by Section 2, 2.C of the ECEC Guidelines on the Conduct of District Elections for Electric
Cooperative. The section required that "a protest arising from disqualification shall be filed with the screening
committee in not less than FIVE (5) days before the election. The screening committee shall decide the protest within
FORTY-EIGHT (48) hours from receipt thereof. Failure of the applicant to file his/her protest within the above-cited
period shall be deemed a waiver of his right to protest."5
As observed by the RTC, respondent had urgently filed the petition on November 21, 2000 because the election
sought to be restrained was going to be held on December 2, 2000 and November 20 was a holiday. Under the
circumstances, respondent had little time to exhaust the remedy in Sec. 2 of the Guidelines, such that an exception
could be made. More importantly, according to the RTC, the rule on exhaustion of administrative remedies cannot be
invoked in the instant case since the guidelines prescribing the administrative remedy is a subject matter of the
ECEC, which is at issue, and is exactly what is being sought to be invalidated.6
On December 12, 2000, respondent filed a motion to withdraw the amended petition, and to admit a second
amended petition that impleaded NEA as indispensable party. Respondent also averred that the ECEC was null and

void because it had not been published. On December 20, 2000, the RTC admitted the second amended petition,
issued a writ of preliminary injunction to prevent the conduct of election for directorship, issued summons to NEA, and
required NEA to comment if the ECEC was published in any newspaper of general circulation.7
On January 29, 2001, NEA filed a motion for extension of time to file an answer, and subsequently on April 10, 2001,
a Motion for Leave to Admit Pleading to which a Motion to Dismiss was attached. NEA questioned the jurisdiction of
the RTC and alleged that respondent failed to exhaust administrative remedies.8
In its July 23, 2001 Order,9 the RTC denied petitioners Motion to Dismiss for being filed out of time. More importantly,
it noted NEAs failure to state whether the ECEC was indeed published in a newspaper of general circulation as
required by the New Civil Code and the Administrative Code of 1987. The RTC said the failure rendered the ECEC
null and void. As regards the lack of jurisdiction and non-exhaustion of administrative remedies, the RTC noted that
NEA erroneously relied on Sec. 59 of Presidential Decree No. (PD) 269 and misapplied the cases it cited.
According to the RTC, Sec. 59 of PD 269 refers to "order, ruling or decision of the NEA" in the exercise of NEAs
quasi-judicial functions. And the RTC noted that Secs. 51 to 58 refer to hearings, investigations, and procedures. On
the other hand, the validity of the ECEC, subject of the instant petition, was an exercise of NEAs quasi-legislative
function or rule-making authority.
Further, according to the RTC, NEA took Sec. 58 of PD 269 out of context when it said Sec. 58 dealt with the
administrative remedy available to petitioner. It said that Sec. 58 presupposed a ruling or decision of the NEA and
there was none in the case before it. The RTC ruled in favor of Gonzaga, and ordered ZAMSURECO to accept
Gonzagas certificate of candidacy for director.10 The RTC denied NEAs motion for reconsideration.
The CA Ruled that the Courts Have Jurisdiction Over
Issues on Legality of Codes
Aggrieved, petitioner appealed to the CA. The CA denied due course and dismissed the petition. It said that NEA was
not exercising its quasi-judicial powers but its rule-making authority. In the case before the trial court, the CA stressed
that the issue involved the interpretation of the ECEC, and to this extent, NEA had no jurisdiction because the issue is
within the province of the courts.
The CA denied petitioners Motion for Reconsideration in its June 10, 2003 Resolution. Hence, we have this petition.
The Issues
WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT APPLYING SECTION 59 OF P.D. 269
WHETHER OR NOT THE COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURTS
NULLIFICATION OF THE ECEC
Issues Involving NEAs Rule-Making Authority
Are Cognizable by Regular Courts
The petition has no merit.
Sec. 59 of PD 269 provides:
SEC. 59. Court Review.The Supreme Court is hereby given jurisdiction to review any order, ruling or
decision of the NEA and to modify or set aside such order, ruling or decision when it clearly appears that
there is no evidence before the NEA to support reasonably such order, ruling or decision, or that the same is
contrary to law, or that it was without the jurisdiction of the NEA. The evidence presented to the NEA,
together with the record of the proceedings before the NEA, shall be certified by the NEA to the Supreme
Court. Any order, ruling or decision of the NEA may likewise be reviewed by the Supreme Court upon writ of

certiorari in proper case. The procedure for review, except as herein provided, shall be presented by rules of
the Supreme Court. Any order or decision of the NEA may be reviewed on the application of any person or
public service entity aggrieved thereby and who was a party in the subject proceeding, by certiorari in
appropriate cases or by a petition for review, which shall be filed within thirty (30) days from the notification
of the NEA order, decision or ruling on reconsideration. Said petition shall be placed on file in the office of
the Clerk for the Supreme Court who shall furnish copies thereof to the NEA and other interested parties.
Petitioner argues that based on the foregoing provision, only the Supreme Court has the authority to review the "acts"
of NEA as an administrative body with adjudicative and rule-making power. It cited NEA v. Mendoza, using the Courts
pronouncement that:
[T]he power of judicial review of NEAs order or decision pertains to the Supreme Court as decreed in
Section 59 of P.D. 269 which vests specifically on the Supreme Court the jurisdiction to review any order,
ruling or decision of the NEA and to modify or set aside such orders, rulings or decisions.11
It is obvious that Sec. 59 of PD 269 refers to "order, ruling or decision" of NEA. What is being challenged in this case
is the decision of the screening committee of ZAMSURECO to disqualify respondent. Likewise assailed is the validity
of the ECEC, particularly, whether the requirement of publication was complied with. The ECEC was issued by NEA
pursuant to its rule-making authority, not its quasi-judicial function. Hence, the issue regarding the controversy over
respondents disqualification and the question on the ECECs validity are within the inherent jurisdiction of regular
courts to review. Petitioners reliance on NEA is misplaced. The subject in that case was the electricity rates charged
by a cooperative, a matter which is clearly within NEAs jurisdiction. The issue in the present petition, however,
centers on the validity of NEAs rules in light of the publication requirements of the Administrative Code and New Civil
Code. The present issue is cognizable by regular courts.
With regard to the second issue, we find no error in the appellate and trial courts nullification of the ECEC. The CA
correctly observed that while ZAMSURECO complied with the requirements of filing the code with the University of
the Philippines Law Center, it offered no proof of publication in the Official Gazette nor in a newspaper of general
circulation. Without compliance with the requirement of publication, the rules and regulations contained in the ECEC
cannot be enforced and implemented.
Article 2 of the New Civil Code provides that laws shall take effect after fifteen (15) days following the completion of
their publication in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is
otherwise provided.
Executive Order No. 292, otherwise known as the Administrative Code of 1987, reinforced the requirement of
publication and outlined the procedure, as follows:
Sec. 3. Filing. (1) Every Agency shall file with the University of the Philippines Law Center three (3) Certified
copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed
within three (3) months from that date shall not thereafter be the basis of any sanction against any party or
persons.
(2) The Records Officer of the agency, or his equivalent functionary, shall carry out the requirements of this
section under pain of disciplinary action.
(3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public
inspection.
Sec. 4. Effectivity In addition to other rule-making requirements provided by law not inconsistent with this
Book, each rule shall become effective fifteen (15) days from the date of filing as above provided unless a
different date is fixed by law, or specified in this rule.

Sec. 18. When Laws Take Effect Laws shall take effect after Fifteen (15) days following the completion of
their publication in the Official Gazette or in a newspaper of general circulation, unless it is otherwise
provided.
We have already emphasized and clarified the requirement of publication in this Courts Resolution in Taada v.
Tuvera:
We hold therefore that all statutes, including those of local application and private laws, shall be published
as a condition for their effectivity which shall begin fifteen (15) days after publication unless a different
effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the
exercise of legislative powers whenever the same are validly delegated by the legislature or, at present,
directly conferred by the Constitution. Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the socalled letters of instructions issued by administrative superiors concerning the rules or guidelines to be
followed by their subordinates in the performance of their duties. (Emphasis supplied.) 12
The aforequoted ruling was reiterated in Dadole v. Commission on Audit,13 De Jesus v. Commission on
Audit,14and Philippine International Trading Corporation v. Commission on Audit.15
In the case at bar, the ECEC was issued by petitioner pursuant to its rule-making authority provided in PD 269, as
amended, particularly Sec. 24:
Section 24. Board of Directors. (a) The Management of a Cooperative shall be vested in its Board,
subject to the supervision and control of NEA which shall have the right to be represented and to participate
in all Board meetings and deliberations and to approve all policies and resolutions.
The composition, qualifications, the manner of elections and filling of vacancies, the procedures for holding
meetings and other similar provisions shall be defined in the By-laws of the Cooperative subject to NEA
policies, rules and regulations x x x.
The ECEC applies to all electric cooperatives in the country. It is not a mere internal memorandum, interpretative
regulation, or instruction to subordinates. Thus, the ECEC should comply with the requirements of the Civil Code and
the Administrative Code of 1987. In previous cases involving the election of directors for electric cooperatives, the
validity of the ECEC was not put in issue. The ECEC then enjoyed the presumption of validity. In this case, however,
respondent directly questioned the validity of the ECEC in his second amended petition. The trial court thus required
petitioner to show proof of publication of the ECEC. Petitioner could have easily provided such proof had the ECEC
actually been published in the Official Gazette or newspaper of general circulation in the country. This simple proof
could have immediately laid this case to rest. Petitioners failure to do so only implies that the ECEC was not
published accordingly, a fact supported by the certification from the National Printing Office.
Lastly, petitioner avers that a petition for mandamus and prohibition should not have been resorted to by respondent.
The proper recourse, according to petitioner, is a petition for declaratory relief. Petitioner miserably errs on this point.
Rule 63 on declaratory relief states:
Section 1. Who may file petition.Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other
governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional
Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or
duties thereunder.

As stated above, a requirement under Rule 63 is that the petition for declaratory relief must be filed "before any
breach or violation" the questioned document may cause. In the instant case, it cannot be gainsaid that a breach has
not yet occurred since an actual dispute has already arisen between ZAMSURECO and respondentthe screening
committee of the cooperative on the erroneous implementation of a code whose legality and implementation is being
questioned.
On the other hand, it is familiar and fundamental doctrine that a writ of prohibition or mandamus may issue when "x x
x a board unlawfully excludes another from x x x enjoyment of a right or office to which such other is entitled x x x."16
Considering that the screening committee of the board has excluded respondent from being elected as board
member of ZAMSURECO because of the latters improper implementation of the code, a petition for mandamus and
prohibition is the proper recourse.
WHEREFORE, we DENY the petition, and AFFIRM IN TOTO the March 6, 2003 Decision and June 10, 2003
Resolution in CA-G.R. SP No. 68769. Costs against petitioner.
SO ORDERED.
Quisumbing,Chairperson Carpio, Carpio-Morales, Tinga, JJ., concur.

G.R. No. 105014

December 18, 2001

PILIPINAS KAO, INC., petitioner,

vs.
THE HONORABLE COURT OF APPEALS and BOARD OF INVESTMENTS, respondents.
KAPUNAN, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court to set aside the decision of the
respondent court in CA-G.R. SP No. 24979, titled "Pilipinas Kao, Inc. vs. Board of Investments."
In that decision, respondent Court of Appeals sustained the reduction of tax credits on net value earned and net local
content applied for by petitioners in 1988 and 1989, an act of respondent Board of Investments (BOI), which
petitioner assailed as invalid for a number of reasons.
The essential facts as found by the respondent court and which are not disputed are quoted hereunder:
Petitioner, Pilipinas Kao, Inc. is a corporation organized and existing under the laws of the Philippines with
principal office at 108-A E. Rodriguez, Jr. Avenue, Libis, Quezon City. It is a corporation engaged in multiple
areas of registered activity, which is to say it has a number of projects registered with respondent Board of
Investments (BOI, for brevity). For each registered project, petitioner was issued Certificates of Registration
as follows:

Project

1.

Certificate of
Registration No.

76-611

Date Issued

Law of Registration

Aug. 24, 1976 R.A. No. 6135

2.

78-725

Mar. 20, 1978 R.A. No. 6135

3.

87-1247

Jan. 08, 1987 P.D. No. 1789, as amended

by B.P. Blg. 391

4.

87-1476

July 29, 1987 P.D. No. 1789 as amended

by B.P. Blg 391

5.

88-0240

Feb. 29, 1988 E.O. No. 226

6.

EP 88-496

July 26, 1988 E.O. No. 226

7.

EP 89-965

Jan. 31, 1990 E.O. No. 226

8.

EP 90-082

Mar. 16, 1990 E.O. No. 226

(pp. 1-2, Comment; pp. 103-104, Rollo).

Each project is entitled to a certain set of incentives depending upon, among others, the law of registration and the
status and type of registration. The present controversy refers only to the tax incentives provided for under Article 48
of P.D. No 1789, as amended by B. P. Blg. 391, which states:
ART. 48. Incentives for Registration New or Expanding Export Producers. All registered export producers,
whether pioneer or non-pioneer, shall be granted the following incentives to the extent engaged in new
capacity or expansion of capacity in a preferred area of investment
xxx

xxx

xxx

" '(c) Tax Credit on Net Value Earned. For the same period and at the same rates provided for in
subparagraph (c), Article 45, a tax credit on net value earned shall be granted to registered export
producers.
" '(d) Tax Credit on Net Local Contents of Exports. For the first five (5) years of commercial operation or
registration, all registered new or expanding export producers shall be entitled to a tax credit equivalent to
ten percent (10%) of net local content without prejudice to the further enjoyment of the incentive for another
period of five (5) years immediately following, the tax credit to be computed on the basis of the increment in
real terms over the average net local content for the immediate preceding three years of enjoyment of this
incentive. For purposes of calculation of the tax credit, 'net local content' shall mean value of export sales
less depreciation of capital equipment and the value of imported raw materials and supplies and indigenous
commodities which the Board may exclude if they are not anyway available under clearly more favorable
terms in the international market."' (Emphasis supplied)
Article 45 (c), in relation to Article 48 (c), in turn provides:

(c) Tax Credit on net value earned. For the first five (5) years of commercial operation. all registered
domestic producers shall be entitled to a tax credit equivalent to five percent (5%) of net value earned.
Those engaged in pioneer projects shall be entitled to this incentive to the extent of ten percent (10%) of net
value earned over the same period or coterminous with the remaining period of availment of the registrant
who first starts commercial operation in case there are several registered pioneer enterprises in the same
activity, regardless of their respective dates of registration.. For raw materials and For purposes of
calculation of the tax credit. net value earned' shall mean value of sales less cost of raw materials and
components. supplies and utilities and depreciation of capital equipment components which are produced by
the registered enterprise, allocated costs may be determined by the Board.' (Emphasis supplied) (pp. 4-5,
Petition; pp. 11-12, Rollo).
These tax incentives apply only to project Nos. 3 and 4 of petitioner. Certificate of Registration No. 87-1476 (Project
No. 4) is that of new export producer, whereas Certificate of Registration No. 87-1247 (Project No. 3) is that of an
expanding export producer (which is an expansion of petitioner's existing projects registered under R.A. No. 6135).
On March 31, 1989, petitioner filed applications for its 1988 tax credits on the Net Value Earned (NVE, for short) for
P8,583,328.00 and on the Net Local Content (NLC, for brevity) for P25,928,673.00 for a grand total of
P34,512,000.00 (Annexes "J" & "K", respectively). The computations are laid down as follows:

"NET VALUE EARNED COMPUTATION

Total Sales for the Taxable Year of Availment

Less
:
Raw Materials and Components

P280,562,286

P155,565,701

Supplies

P15,868,160

Utilities

P20,132,445

Depreciation of Capital
Equipment

Net Value Earned (NVE)

P3,162,698

194,729005

P85,833,281

Tax Credit Computation

1. For Pioneer Tax Credit on Net

Value Earned (10% of NVE)

P8,583,328

NET LOCAL CONTENT COMPUTATION

Export Sales for the Taxable Year of

Availment

Less Imported Raw Materials and

:
Components

P278,369,748

p
align="right">P4,598,62
4

Imported Content of locally

Purchased Raw Materials and
Components

P_________

Imported Supplies

P11,321,699

Imported Content of locally

Purchased Supplies

P_________

Depreciation of Capital
Equipment

Indigenous Commodities
Excluded By the Board ( If
Applicable)

Net Local Content (NLC)

P3,162,698

P_________

P19,083,021

259,286,727

Tax Credit Computation

1. For Pioneer Tax Credit on Net

Local Content (10%) of NLC)

P25,928,673

(pp. 7-8. Petition, pp. 14-15. Rollo)

On May 10, 1990, respondent Issued Board Resolution No 188 S' 90 granting petitioner's application for tax credit but
only in the following reduced amounts:

NVE

P1,512,758.00

NLC

P2,631,018.00

Total

P4,223,776.00

(Annes "9" Comment)

Notified of respondent s decision, petitioner requested for a reconsideration. but before respondent could act thereon,
petitioner again filed on July 3, 1990 its applications for 1989 tax credits on the NVE in the amount of P9,649,459.00
and on the NLC, P25,648,401.00, for a grand total of P35,297,860.00. The computation are as follows:

NET VALUE EARNED COMPUTATION

Total Sales for the Taxable Year of

Availment

Less:

Raw Materials and Components

P282,054,852

P149,817.799

Supplies

P16,051,486

Utilities

P17,652,136

Depreciation of Capital Equipment

Net Value Earned (NVE)

P2,038,846

185,560,267

P96,494,585

Tax Credit Computation

1. For Pioneer
Tax Credit on Net Value Earned (10%
of NVE)

P9,649,459

NET LOCAL CONTENT COMPUTATION

Export Sales for the Taxable Year of Availment

Less:

P280,227,963

Imported Raw Materials and

Components

P11,242,443

Imported Content of local Purchased

Raw Materials and Components

P_________

Imported Supplies

P10,462,669

Imported Content of locally Purchased

Supplies

P_________

Depreciation of Capital Equipment

Indigenous Commodities Excluded by

the Board (If Applicable)

Net Local Content (NLC)

P2,038,846

P_________

P23,743,958

P256,484,005

Tax Credit Computation

1. For Pioneer Tax Credit on Net Local

Content (10% of NLC)

P25,648,401"

(pp. 10-12, Petition; pp. 17-19, Rollo).

On July 27, 1990, respondent denied petitioner's request for reconsideration anent its 1988 tax credit, the denial
being communicated to petitioner in a letter dated August 1, 1990 (Annex "11", Comment) and received by the latter
on August 15, 1990.
On December 17, 1990, petitioner again moved for reconsideration of respondent s letter dated August 1, 1990
(Annex "12", Comment), but the same was denied by respondent in a letter dated March 11, 1991 (copy of which was
received by petitioner on March 15, 1991).(Annex "13", Comment)

On March 11, 1991, respondent also advised petitioner of the approval of its application for the year 1989 tax credit
but only in the following reduced amounts:

NVE

P3,441,473.00

NLC

P649,471.00

Total

P4,090,944.00

(Annex "13", Comment).

Petitioner then filed with the Honorable Supreme Court, by registered mail on April 15, 1991, a motion for extension of
time to file petition pursuant to Article 82 of the Omnibus Investments Code; it likewise filed a second motion for
extension of time to file petition on May 15, 1991, both of which were not acted upon by the Honorable Supreme
Court. However, on May 6, 1991, the Honorable Supreme Court issued a resolution referring the instant petition to
this Court. (p. 5, Rollo).1
Respondent Court dismissed the petition for review "on technical and substantive grounds."
On technical ground, respondent court ruled that the petition for review was filed beyond the thirty-day period of
appeal set in Article 78 of P.D. 1789, as amended by B.P. Blg. 391.
In ruling against the timeliness of the petition for review, respondent court made the following findings:
In the instant case, petitioner received a copy of respondent's letter dated August 1, 1990 (letter denying
petitioner's first request for reconsideration of respondent's decision relative to petitioner's 1988 tax credit on
NVE and NLC) on August 15, 1990 (p. 13, Petition). Yet, it filed its second request for reconsideration only
on December 17, 1990, or more than four (4) months from receipt of the challenged letter-decision. This
clear failure and negligence of petitioner to interpose a timely appeal within the thirty (30) days reglementary
period is fatal to its cause.
The woes of petitioner were compounded when it received a copy of respondent's letter-decision dated
March 11, 1991 (letter denying petitioner's second request for reconsideration, and granting its 1989 tax
credits at reduced amounts) on March 15, 1991, and yet it utterly failed to interpose an appeal in due time as
provided for in P.D. No. 1789. as amended It only filed this petition only on May 30. 1991.2
Two letters of respondent BOI were involved in CA-G.R. SP No. 24979. The first concerns petitioner's application for
tax credits for 1988 and the second its application for tax credits for 1989.
On the second matter concerning the 1989 tax credit, respondent court noted that its letter of March 11, 1991
reducing the tax credit applied for was received by petitioner on March 15, 1991 and as it found:
Petitioner then filed with the Honorable Supreme Court, by registered mail on April 15, 1991, a motion for
extension of time to file petition pursuant to Article 82 of the Omnibus Investments Code; it likewise filed a
second motion for extension of time to file petition on May 15, 1991, both of which were not acted upon by
the Honorable Supreme Court. However on May 6, 1991, the Honorable Supreme Court issued a resolution
referring the instant petition to this Court. x x x3
The first motion for extension of thirty (30) days filed with this Court on April 15, 1991 was on time because April 14,
1991, the last day for appeal, was a Sunday.

The second motion for extension of fifteen (15) days was filed with this Court on May 15, 1991, was also on time
because petitioner received a copy of the Resolution of May 6, 1991 referring this case to the Court of Appeals only
on May 29, 1991. It was in the latter court that the petition for review was filed on May 30. 1991.
Petitioner's judicial recourse from BOI's letter of March 11, 1991 in so far as it dealt with the 1989 tax credit
application was filed within the periods of extension prayed for in two motions seasonably filed with this Court. The
failure of this Court and respondent Court of Appeals to act upon these motions was an oversight not of petitioner's
making and it should not result in any prejudice to it. For this reason, and considering that the motions for extension
were not denied we consider the petition filed on time insofar as it concerns the 1989 tax credit application summarily
resolved in the March 11 letter.
For added measure, this Court cannot ignore the fact, so obvious upon the record, that respondent BOI did not
render a decision in the manner prescribed by its own rules and the law. We take cognizance of the flaw because it
has a bearing on the timeliness of the petition, a key issue involved in this case, which has to be resolved in order to
arrive at a just decision on the merits of the case.4 Moreover, the perceived shortcoming also offers the opportunity to
remind BOI and other quasi-judicial agencies exercising quasi-judicial functions of the prescription of the law and in
the case of BOI, also its own rules, that their decision in contested cases shall be in writing and shall state clearly and
distinctly the facts and the law on which these are based.5 Indeed, a judicious and well-reasoned resolution of the
questions peculiar in their fields of expertise, carries a strong persuasive effect and will go a long way in easing the
courts' burden.
The questioned acts of respondent BOI need to be examined in the light of this mandatory requirement of the law and
its own rules.
In respect to the incentive availment for 1988, respondent BOI substantially reduced the tax credit on net local
content and net value earned applied for by the petition for that year, without explaining the basis or reason for the
reduction .An explanation was in order if only because according to petitioner, and this was not denied. BOI granted
the full incentives for 1987. Yet, for the following year, 1988, BOI simply passed a Resolution on May 10, 1990 which
is contained in the certification of it's Board Secretary, to wit:
CERTIFICATION
Quoted hereunder is an excerpt from the Minutes of the Board Meeting held on May 10, 1990:
"RESOLVED, that PILIPINAS KAO, INC., be, as it is hereby GRANTED tax credits on Net Local Content and
Net Value Earned in the amount of P2,681,018,165 and Pl,542,758.61, respectively (net of E.O. 1045
amortizations for 2 years) in consideration of the foregoing resolutions (Bd. Res. No. 188 S' 90)."
Makati, Metro Manila, 23 July 1991.

CERTIFIED CORRECT:
(Sgd.) JOSEFINA Q. GARCIA
Acting Board Secretary6

The board resolution cited in the certification, bare as it is, is offered by respondent BOI as its decision on the matter
of the 1988 tax incentive availment.
It is not clear from the record how the resolution was communicated to petitioner and when the latter received it. What
is on record is petitioner's Letter dated June 4, 1990 asking for reconsideration and for the full allowance of the tax
credit as applied for.7
In that letter, petitioner contested the reduction which BOI accomplished with the application for the first time, of a
deductible "base figure" equivalent to the highest production volume for a three-year period before the expansion

capacity was registered Petitioner argued that the use of the "base figure" was not sanctioned by the law and
contravened the long standing practice of respondent BOI, as well as the policy and intent of the State in granting the
incentives.
Respondent BOI denied the request for reconsideration in its Letter dated August 1, 1990.8
It is to be noted that in refusing to reconsider, respondent BOI did not address any of the issues presented by the
petitioner, simply saying in its August 1 letter "that the Board in its meeting on July 27, 1990 denied you request for
reconsideration of 1988 net local content and new value earned of tax credit application."
Because of the failure of respondent BOI to resolved the issues, petitioner again asked for reconsideration by a Letter
dated December 17, 1990,9 reiterating that the use of the base figure defeated the very purpose of the law which was
to encourage private domestic and foreign investment and reward performance contributing to economic
development. Further, that the use of the highest attained production in the three (3) years preceding the expansion
as base figure in effect penalized petitioner for its efficiency.
Denying petitioner's last request in the same cavalier fashion, respondent BOI simply informed it "that the Board in its
meeting of March 5. 1991 denied your request for reconsideration of your NLC/NVE tax credit application for 1988."10
In the same Letter of March 11, 1991, respondent BOI informed petitioner that its application for 1989 NLC/NVE tax
credit had been approved in reduced amount stated therein, again without any explanation for the reduction. This
letter is supposed to be the decision of the BOI on the matter.
This brings into focus the question of whether BOI rendered a decision within the meaning of its own rules which
requires that the decision in a contested case shall be in writing and shall state clearly and distinctly the facts and the
law on which it is based. It reads.
Sec. 4. Contents of Decision. The orders, resolutions and decision determining the merits of the case
shall be in writing and shall state clearly and distinctly the facts and the law on which it is based.11
It is readily evident that the issues raised and arguments proffered by petitioner in asking for reconsideration were
weighty enough to deserve a full length decision as prescribed by the rules.
The manner by which BOI brushed off petitioners reiterative protests did not amount to a decision within the mandate
of its own rules, nor that contained in the Administrative Code of 1987 which similarly provides as follows:
SEC. 14. Decision. Every decision rendered by the agency in a contested case shall be in writing and
shall state clearly and distinctly the facts and the law on which it is based.12
We have occasion to rule that the constitutional and statutory mandate that "no decision shall be rendered by any
court of record without expressing therein clearly and distinctly the facts and the law on which it is based.13applies as
well to dispositions by quasi-judicial and administrative bodies.
In Malinao vs. Reyes14 we held that the voting in the Sanggunian in which the majority found the respondent official
guilty of the administrative charge was not a decision contemplated in the law, and had no legal effect as such.
In the context of what the law and its own rules prescribe, as well as our applicable pronouncements, the BOI
Resolution of May 10, 1990, as well as its Letters of August 1, 1990 and March 11, 1991 did not qualify as "decision,"
absent a clear and distinct statement of the facts and the law to support the action.
Lacking the essential attribute of a decision, the acts in question were at best interlocutory orders that did not attain
finality nor acquire the effects of a final judgment despite the lapse of the statutory period of appeal.
Thus, the element of time relied upon by respondents does not bar our inquiry into the substantive merits of the
petition, and that respondent court erred in considering the petition for review filed out of time.

While BOI should first resolve the merits of the case in the proper exercise of its primary jurisdiction, we shall
nevertheless proceed with this review for procedural expediency and consideration of public interest involved in the
questions before us which bear on the certainty and stability of economic policies and proper implementation thereof.
For it cannot be denied that inappropriate and irresolute implementation of our investment incentive laws detracts
from the very purpose of these laws.
The essential facts which gave rise to the substantive issue resolved by respondent court and which is now before
this Court are not disputed.
Petitioner is engaged in the manufacture for export of methyl esters, refined glycerine and fatty alcohols. It initially
registered with respondent BOI on August 24, 1976 and March 20, 1978 as an Export Producer pursuant to Republic
Act No. 6135, as amended, otherwise known as the Export Incentive Act Under this registration approved by BOI,
petitioner's registered production capacity were as follows:

Product

Production Capacity

Methyl Esters

22,000 MTPY

Refined Glycerin

2,700 MTPY

Fatty Alcohols.

Hydrogenated

18,000 MTPY

Fractionated

17,000 MTPY15

Batas Pambansa Blg. 391, otherwise known as the Investment Policy Act of 1983 was enacted in 1983, to amend
P.D. 1789. The new law provided, among others, for tax incentives for new and expanding export producer.
To avail itself of these tax incentives, petitioner applied with BOI for registration of its expanded production capacity,
which together with the then existing registered capacity are detailed below:

Product

Methyl Esters

Refined Glycerin

Original Registered
Capacity

Expanded of
Additional Capacity

22,000 MTPY

13,000 MTPY

2,700 MTPY

1,300 MTPY

Fatty Alcohols

Hydrogenated

18,000 MTPY

9,000 MTPY

Fractionated

17,000 MTPY

8,000 MTPY

None

2,000 MTPY16

Refined Methyl Esters

and or Fractionated
Refined Fatty Alcohols..

BOI approved petitioner's application and consequently issued in its favor on January 8, 1987 a certificate of
registration as an expanding export producer on a pioneer status to the extent of the expanded or additional
capacity.17
As an expanding export producer on a pioneer status, petitioner was entitled to certain incentives granted under that
law. Among such incentives were the "tax credit on net value earned" provided in Article 48(c) in relation to Article
45(c) of the law and the "tax credit on net local content of exports" as provided in Article 48(d), thereof. These
provisions are cited in the decision of respondent court in CA-G.R. SP No. 24979 quoted earlier in this decision.
The initial application by petitioner for tax credit incentives for the year 1987 was approved by BOI substantially as
applied for.
But those applied for in 1988 and onwards were drastically reduced by BOI with the adoption and application of a
deductible "base figure" provided in its Tax Credit on NLC and NVE Manual of Operations, which reads as follows:
xxx

xxx

xxx

VII. COMPUTATION OF APPROPRIATE BASE FIGURE FOR TAX CREDIT ON NLC AND NVE
A. New Producer
No base figure used
B. Expanding Domestic Export Producer With Registered Existing Capacity
1. Base figure for NVE shall be existing registered capacity or highest attained production volume,
whichever is higher. If product is heterogeneous, base figure shall be highest projected value of sales or
highest attained sales value, whichever is higher
2. Base figure for NLC shall be highest projected value of export sales or highest attained export sales
value, whichever is higher.
xxx

xxx

xxx18

The use of the "base figure" precipitated the present controversy because of the considerable diminution of what
petitioner considered to be the fiscal incentives it deserved under the law.

At the core of the present dispute is the validity of BOI's Manual of Operations, which petitioner has assailed as void
for lack of publication and because it effected an impermissible amendment of the law and subverted its purpose and
intent.
Respondent court's discussion and resolution of some of the issues are succinctly stated in its decision in CA-G.R.
SP. No. 24979, thus:
On Substantive Ground
Petitioner maintains that respondent arbitrarily deducted from its (petitioner) total sales a 'base figure"
equivalent to its "highest attained production volume'' in the three-year period preceding registration of its
expanded production capacity under P.D. No. 1789, as amended. According to petitioner, the term "base
figure'' in computing tax credits has no basis in the statute, and therefore, its use in null and void.
Petitioner s posture is more apparent than real, and is not convincing.
As correctly argued by the Solicitor General, the term "base figure'' is simply used to conveniently
separateexisting production capacity on one hand from the registered new and/or expanding production
capacity on the other, as concepts provided for in P.D. No. 1789, as amended by B.P. Blg. 391. The
segregation is material for the purpose of determining which capacity/project is entitled to tax credit on NLC
and/or NVE.
As can be clearly gathered under paragraphs (c) and (d) of Article 48 of P.D. 1789 as amended by B.P. Blg.
391 in relation to paragraph (c) of Article 45 thereof (earlier quoted in this decision) only those new or
expansion production capacity are entitled to NVE and NLC, existing production capacity are not. To
determine therefore the production capacity/project which is entitled to NVE and NLC incentives under
aforesaid law, it is imperative to set apart existing from either new or expanding capacity. It was in this
context that respondent adopted the term "base figure" to call existing capacity or highest attained capacity
from which to reckon the registered expansion capacity. Thus, on respondent's Tax Credit on NLC and NVE
Manual of Operations (Annex 14", Comment) it states:
"VII. COMPUTATION ON APPROPRIATE BASE FIGURE FOR TAX CREDIT ON NLC AND NVE.
A. New Producer
No base figure used.
B. Expanding Domestic/Export Producer With Registered Existing Capacity
1. Base figure for NVE shall be existing registered capacity or highest attained production volume.
whichever is higher. If product is heterogeneous, base figure shall be highest projected value of
sales or highest attained sale value whichever is higher.
2. Base figure for NLC shall be highest projected value of export sales or highest attained export
sales value whichever is higher. (Annex ''14", Comment. Emphasis supplied )
The definition of base figure as aforequoted includes "highest attained production volume" (meaning higher
than its registered capacity) simply because if an existing registered enterprise has attained a capacity
higher than its registered capacity, then it follows that said attained capacity is the capacity existing prior to
expansion. And the capacity in excess of the registered capacity is not entitled to NLC and NVE obviously
because it is not registered.
Indeed, the term "base figure" is nowhere to be found in the law, but the use thereof in the manner already
discussed does not render its adoption without basis. "Base figure" is used to refer to "existing capacity''
which is not entitled to tax credit on NLC and NVE under the law. Contrary therefore to petitioner's
contention, the term "base figure" has basis in law, i.e. the term existing capacity", and said "base figure"

does not subvert the purpose of the law which is to grant tax credit on NVE and NLC to new
and expandingproduction capacity only."19
As admitted by respondent court, the term "base figure" is nowhere to be found in the law. By way of jurisdiction for
its application, respondent court ruled in essence that the "base figure" was simply the capacity existing prior to
expansion which was not entitled to the fiscal incentives reserved for new or additional capacity. It then concluded
that the formulated "base figure" had basis in the law itself.
It is to be conceded that the original registered capacity is not "new capacity" or "expansion of capacity" that the law
intended to encourage and reward In this regard, respondent court is correct. Indeed, when petitioner applied for, and
BOI registered its expanded or additional capacity, it mean, that only this and not the original registered capacity is
entitled to the incentive under B.P. Blg. 391.
But respondent court went further and ruled that "if an existing registered enterprise has attained a capacity higher
than its registered capacity, then it follows that said attained capacity is the capacity existing prior to expansion.20
This simplistic view failed to take into account the policy and intent of the law and overlooked the absurd and unjust
consequence that results from such construction and application of the law.
Thus, in the case of petitioner whose performance exceeded its original registered capacity, the base figure used was
the highest attained production volume before the registration of its new expanded capacity. This meant a bigger
base figure deductible from the net value earned (NVE) and net local content (NLC) entitled to the fiscal incentive,
than another enterprise whose production never reached its registered capacity. In the case of the latter, the base
figure is the registered capacity, nothing more.
The tax credit incentive being a percentage of the net value earned and the net local content the larger the deductible
base figure the smaller the tax credit incentive.
As petitioner correctly lamented, it would have been better off if it did not perform well enough to exceed its original
registered capacity, because the use of the highest attained production volume as a base figure, and not simply the
registered capacity, resulted in penalizing it for producing and exporting more than its official commitment and placing
it in a position inferior in terms of incentives, to a similar enterprise which failed to produce more than its registered
capacity.
There is a sense of irony in penalizing petitioner as BOI did for the excess production when it meant correspondingly,
more foreign exchange earnings from its export, more job opportunities and a host of direct and indirect benefits to
the economy. These are precisely the reasons for the incentives granted by the law.
It is true that the excess in production came about before petitioner registered its expanded capacity in 1987, but it
only means that petitioner began to serve the purpose of the low since its enactment in 1983. While the excess
occurring in the interim was not entitled to fiscal incentive as an expanded capacity, there is no sense in penalizing
petitioner for such excess.
For another cogent reason, the highest attained production capacity is inappropriate as a base figure. It is reasonable
to assume that actual production is affected in large measure by the vagaries of market forces, the law of supply and
demand, and a host of unforeseen and unforeseeable factors that contribute to its lack of constancy. Given these
variants, a circumstantial and temporary peak in production capacity should not be interpreted as the "existing
capacity," in a way disadvantageous to petitioner.
It is thus difficult to accede to respondents' urging that the application of the highest attained production capacity as a
base figure is implicit or has basis in the law itself, or otherwise justiciable.
This is not a correct view. For one, it leads to an unreasonable situation already discussed and rejects the
presumption that absurd or undesirable consequences are never intended by a legislative measure.21 But here,
consequences of the kind were unwittingly read into the law.
To be sure, as respondent court admits, the concept of "base figure'' is "nowhere to be found in the law.'' Nor can it he
considered as being in accord with the purpose and intent of the law, when it is not.

The policy of the law as spelled out in the Investment Policy Act of 1983 is to stimulate private domestic and foreign
investments in industry and other sectors of the economy to achieve among others "increased volume and value of
exports for the economy."
We find in the law the expressed declaration of investment policy, thus:
SECTION 1. This Act shall be known and referred to as the Investment Incentive Policy Act of 1983.
SEC. 2. Declaration of Investment Policy. It is the policy of the state to encourage private domestic and
foreign investments in industry, agriculture, mining and other sectors of the economy which shall: provide
significant employment opportunities relative to the amount of the capital being invested; increase
productivity of the land, minerals, forestry, aquatic and other resources of the country, and improve utilization
of the products thereof; improve technical skills of the people employed in the enterprise; provide a
foundation for the future development of the economy; meet the tests of international competitiveness;
accelerate development of less developed regions of the country, and result in increased volume and value
of exports for the economy.
It is the policy of the State to extend projects which will significantly contribute to the attainment of these
objectives, fiscal incentives without which said projects may not be established in the locales, number and/or
pace required for optimum national economic development. Fiscal incentive systems shall be devised to
compensate for market imperfections. reward performance of making contributions to economic
development, cost-efficient and be simple to administer.
The fiscal incentives shall be extended to stimulate establishment and assist initial operations of the
enterprise, and shall terminate after a period of not more than 10 years from registration or start-up of
operation unless a specific period is otherwise stated.22
In essence, the law intends to encourage and promote an export-led economy through incentives which are
performance-oriented. The same policy and intent can be discerned in P.D. 1789, prior to its amendment by B.P. Blg.
391, evident from its declared purpose to "attain a rising level of production and employment, increase foreign
exchange earnings, hasten the economic development of the nation. and assure that the benefits of development
accrue to the Filipino people: x x x"
In furtherance of the declared statutory policy, the law mandates that all doubts shall be resolved in favor of the grant
of benefits therein provided. This is an emphatic provision of Article 63, P.D. 1789, as amended by B.P. Blg. 391,
which reads:
All doubts concerning the benefits and incentives granted enterprises and investors by this Code shall be
resolved in favor of investors and registered enterprises.
This provision was reproduced in Art. 79 of the Omnibus Investments Code of 1987 (E.O. 226), a clear manifestation
of the continuing policy of the State to liberalize the grant of incentives, as a way to attain the purpose of the law,
which is to encourage investments that tend to "result in increased volume and value of exports for the economy.23
Viewed from the unmistakable statutory purpose, the reduction of the tax incentives petitioner deserved under the law
for producing more than its registered capacity, is against the purpose of investment incentive laws.
As we have consistently ruled, it the statutory purpose is clear, the provisions of the law should be construed so as
not to defeat but to carry out such end and purpose. For a statute derives its vitality from the purpose for which it is
enacted and to construe it in a manner that disregards or defeats such purpose is to nullify or destroy the law.24
An administrative agency may not enlarge, alter or restrict the provisions of the statute being administered. It may not
engraft additional non-contradictory requirements on the statute which were not contemplated by the legislature.25
There is yet a significant issue raised by petitioner but left unresolved by respondent court, one that bears on the
validity or invalidity of the Manual of Operations for lack of publication.

There is no dispute that the Manual of Operations was not published. Without prior notice of it, the "base figure"
therein formulated, was sprung upon petitioner in 1989 and applied to whittle down its tax incentives for 1988. That
was the first time BOI used a "base figure" since the passage of B.P. Blg 391 in 1983.
Section 17 of P.D. 1789, as amended by B.P. Blg. 391, explicitly provides that the rules and regulations implementing
the Investments Code take effect only after due publication:
SEC. 17. The Board [of Investments] shall promulgate rules and regulations to implement the intent and
provisions of this act.... Such rules and regulations shall take effect fifteen days following its publication in a
newspaper of general circulation in the Philippines.
Respondent BOI, having acknowledged that the Manual of Operations in which the "base figure'' was formulated. was
issued to implement the provisions of the Investment Code, its adoption being "in execution of or supplementary . . .
to the law itself"26 cannot ignore the need for publication made imperative in the cited provision.
The absence of publication is a fatal omission that renders the Manual of Operations void and of no effect. as held
in Taada vs. Tuvera.27
We hold therefore that all statutes, including those of local application and private laws, shall be published
as a condition for their effectivity which shall begin fifteen days after publication unless a different effectivity
date is fixed by the legislature.
xxx

xxx

xxx

Administrative rules and regulations must also be published if their purpose is to enforce or implement
existing law pursuant to a valid delegation.28
To save the day, respondent BOI argues that the Manual of Operations is merely internal in nature, designed for use
by its staff in the proper computation of the tax credits, and therefore, need not be published, citing for support our
ruling in Taada, on the exceptions to the requirement of publication, thus
Interpretative regulations and those merely internal in nature, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the socalled letters of instructions issued by administrative superiors concerning the rules and guidelines to be
followed by their subordinates in the performance of their duties.
This Court is not persuaded The Manual of Operations is not just an internal rule affecting only the personnel of BOI.
As implemented by BOI, its effects reach out to petitioner and enterprises similarly situated to diminish considerably
what the law intends to grant by way of incentives.
For the exception to apply, the Manual of Operations must not affect the rights of the public. But it did in a very
substantial way.
Furthermore, as respondent admit, the Manual of Operations was meant to enforce or implement B.P. Blg. 391, a law
of general application.
As we said in Taada:
Administrative rules and regulations must also be published if their purpose is to enforce or implement
existing law pursuant to a valid delegation.29
Clearly then, publication of the Manual of Operations was a mandatory requirement for its effectivity and BOI's failure
to comply with the expressed provision of the law and the teachings in Taada is a fatal omission. As we held:
x x x At the very least, before the said circular under attack may be permitted to substantially reduce their
income, the government officials and employees concerned should be apprised and alerted by the

publication of subject circular in the Official Gazette or in a newspaper of general circulation in the
Philippines - to the end that they be given amplest opportunity to voice out whatever opposition they may
have, and to ventilate their stance on the matter. This approach is more in keeping with democratic precepts
and rudiments of fairness and transparency. (De Jesus v. COA, 294 SCRA 152, 158)
x x x When upon the other hand, the administrative rule goes beyond merely providing for the means that
can facilitate or render least cumbersome the implementation of the law but substantially adds to or
increases the burden of those governed., it behooves the agency to accord at least to those directly
informed, before that new issuance is given the force and effect of law. (Commissioner of Internal Revenue
v. CA, 261 SCRA 236, 247).
We, therefore, rule that the ''Tax Credit on NLC and NVE Manual of Operations" (Manual of Operations) of
respondent Board of Investment (BOI) has no legal effect insofar as it adopts as a "base figure" for net value earned
(NVE) the "highest attained production volume" in the period preceding the registration of petitioner's additional or
expanded capacity.
We rule that only the expanded or additional capacity of petitioner registered under B.P. Blg. 1789, as amended by
B.P. Blg. 391, is entitled to the tax credit provided therein, and not the pre-existing registered capacity.
WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated November 26, 1991 of respondent court in
CA-G.R. SP No. 24979 and its Resolution dated April 8, 1992, denying petitioner's motion for reconsideration, the
Board Resolution of respondent Board of Investments (BOI) dated May 10, 1990, and its Letters dated August 1,
1990 and March 11, 1991, are hereby SET ASIDE.
Respondent BOI is ordered to grant the tax credits due to petitioner for its registered expanded capacity in the year
1988 and onwards, computed strictly in accordance with Articles 48(c ) in relation to 48(c ) of P. D. 1789, as amended
by P.D. 391, subject only to deductions provided in the cited provisions of the law, and without applying the base
figure under the Manual Of Operations of respondent BOI.
SO ORDERED.
Davide, Jr., C .J ., Puno, Pardo and Ynares-Santiago, JJ ., concur.

G.R. No. 109023 August 12, 1998

RODOLFO S. DE JESUS, EDELWINA DE PARUNGAO, VENUS M. POZON AND other similarly situated personnel
of the LOCAL WATER UTILITIES ADMINISTRATION (LWUA), petitioners,
vs.
COMMISSION ON AUDIT AND LEONARDO L. JAMORALIN in his capacity as COA-LWUA Corporate
Auditor, respondents.

PURISIMA, J.:
The pivotal issue raised in this petition is whether or not the petitioners are entitled to the payment of honoraria which
they were receiving prior to the effectivity of Rep. Act 6758.
Petitioners are employees of the Local Water Utilities Administration (LWUA). Prior to July 1, 1989, they were
receiving honoraria as designated members of the LWUA Board Secretariat and the Pre-Qualification, Bids and
Awards Committee.
On July 1, 1989, Republic Act No. 6758 (Rep. Act 6758), entitled "An Act Prescribing A Revised Compensation and
Position Classification System in the Government and For Other Purposes", took effect. Section 12 of said law

provides for the consolidation of allowances and additional compensation into standardized salary rates. Certain
additional compensations, however, were exempted from consolidation.
Sec. 12. Rep. Act 6758, reads
Sec. 12. Consolidation of Allowances and Compensation. Allowances, except for
representation and transportation allowances; clothing and laundry allowances; subsistense
allowance of marine officers and crew on board government vessels and hospital personnel;
hazard pay: allowances of foreign services personnel stationed abroad; and such other additional
compensation not otherwise specified herein as may be determined by the DBM, shall be deemed
included in the standardized salary rules herein prescribed. Such other additional compensation,
whether in cash or in kind, being received by incumbents as of July 1, 1989 no integrated into the
standardized salary rates shall continue to be authorized. 1 (Emphasis supplied)
To implement Rep. Act 6758, the Department of Budget and Management (DBM) issued Corporate Compensation
Circular No. 10 (DBM-CCC No. 10), discontinuing without qualification effective November 1, 1989, all allowances
and fringe benefits granted on top of basic salary.
Paragraph 5.6 of DBM-CCC No. 10 provides:
Payment of other allowances fringe benefits and all other forms of compensation granted on top of
basic salary, whether in cash or in kind, . . . shall be discontinued effective November 1, 1989.
Payment made for such allowances fringe benefits after said date shall be considered as illegal
disbursement of public funds. 2
Pursuant to the aforesaid Law and Circular, respondent Leonardo Jamoralin, as corporate auditor, disallowed on post
audit, the payment of honoraria to the herein petitioners.
Aggrieved, petitioners appealed to the COA, questioning the validity and enforceability of DBM-CCC No. 10. More
specifically, petitioners contend that DBM-CCC No. 10 is inconsistent with the provisions of Rep. Act 6758 (the law it
is supposed to implement) and, therefore, void. And it is without force and effect because it was not published in the
Official Gazette; petitioners stressed.
In its decision dated January 29, 1993, the COA upheld the validity and effectivity of DBM-CCC No. 10 and
sanctioned the disallowance of petitioners' honoraria. 3
Undaunted, petitioners found their way to this court via the present petition, posing the questions:
(1) Whether or not par. 5.6 of DBM-CCC No. 10 can supplant or negate the express provisions of
Sec. 12 of Rep. Act 6758 which it seeks to implement; and
(2) Whether or not DBM-CCC No. 10 is legally effective despite its lack of publication in the Official
Gazette.
Petitioners are of the view that par. 5.6 of DBM-CCC No. 10 prohibiting fringe benefits and allowances effective
November 1, 1989, is violative of Sec. 12 of Rep. Act 6758 which authorizes payment of additional compensation not
integrated into the standardized salary which incumbents were enjoying prior to July 1, 1989.
To buttress petitioners' stance, the Solicitor General presented a Manifestation and Motion in Lieu of Comment,
opining that Sec. 5.6 of DBM-CCC No. 10 is a nullity for being inconsistent with and repugnant to the very law it is
intended to implement. The Solicitor General theorized, that:
. . . following the settled principle that implementing rules must necessarily adhere to and not
depart from the provisions of the statute it seeks to implement, it is crystal clear that Section 5.6 of

DBM-CCC No. 10 is a patient nullity. An implementing rule can only be declared valid if it is in
harmony with the provision of the legislative act and for the sole purpose of carrying into effect its
general provisions. When an implementing rule is inconsistent or repugnant to the provision of the
statute it seeks to interpret, the mandate of the statute must prevail and must be followed. 4
Respondent COA, on the other hand, pointed out that to allow honoraria without statutory, presidential or DBM
authority, as in this case, would run counter to Sec. 8, Article IX-B of the Constitution which proscribes payment of
"additional or double compensation, unless specifically authorized by law." Therefore, the grant of honoraria or like
allowances requires a specific legal or statutory authority. And DBM-CCC No. 10 need not be published for it is
merely an interpretative regulation of a law already published 5; COA concluded.
In his Motion for Leave to intervene, the DBM Secretary asserted that the honoraria in question are considered
included in the basic salary, for the reason that they are not listed as exceptions under Sec. 12 of Rep. Act 6758.
Before resolving the other issue whether or not Paragraph 5.6 of DBM-CCC No. 10 can supplant or negate the
pertinent provisions of Rep. Act 6758 which it seeks to implement, we have to tackle first the other question whether
or not DBM-CCC No. 10 has legal force and effect notwithstanding the absence of publication thereof in the Official
Gazette. This should take precedence because should we rule that publication in the Official Gazette or in a
newspaper of general circulation in the Philippines 6 is sine qua non to the effectiveness or enforceability of DBMCCC No. 10, resolution of the first issue posited by petitioner would not be necessary.
The applicable provision of law requiring publication in the Official Gazette is found in Article 2 of the New Civil Code
of the Philippines, which reads:
Art. 2. Laws shall take effect after fifteen days following the completion of their publications in the
Official Gazette, unless it is otherwise provided. This code shall take effect one year after such
publication.
In Tanada v. Tuvera, 146 SCRA 453, 454, this Court succinctly construed the aforecited provision of law in point, thus:
We hold therefore that all statutes, including those of local application and privates laws, shall be
published as a condition for their effectivity, which shall begin after fifteen days after publication
unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in
the exercise of legislative powers whenever the same are validly delegated by the legislature or, at
present, directly conferred by the Constitution. Administrative rules and regulations must also be
published if their purpose is to enforced or implement existing law pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel
of the administrative agency and not the public, need not be published. Neither is publication
required of the so-called letters of instructions issued by administrative superiors concerning the
rules or guidelines to be followed by their subordinates in the performance of their duties.
Accordingly, even the charter of a city must be published notwithstanding that it applies to only one
portion of the national territory and directly affects only the inhabitants of that place. All presidential
decrees must be published, including, even, say those naming a public place after a favored
individual or exempting him from a certain prohibitions or requirements. The circulars issued by the
Monetary Board must be published if they are meant not merely interpret but to "fill in details" of the
Central Bank Act which that body supposed to enforce. (Emphasis ours)
The same ruling was reiterated in the case of Philippine Association of Service Exporters, Inc. vs. Torres,
212 SCRA 299 [1992].

On the need for publication of subject DBM-CCC No. 10, we rule in the affirmative. Following the doctrine enunciated
in Tanada, publication in the Official Gazette or in a newspaper of general circulation in the Philippines is required
since DBM-CCC No. 10 is in the nature of an administrative circular the purpose of which is to enforce or implement
an existing law. Stated differently, to be effective and enforceable, DBM-CCC No. 10 must go through the requisite
publication in the Official Gazette or in a newspaper of general circulation in the Philippines.
In the present case under scrutiny, it is decisively clear that DBM-CCC No. 10, which completely disallows payment
of allowances and other additional compensation to government officials and employees, starting November 1, 1989,
is not a mere interpretative or internal regulation. It is something more than that. And why not, when it tends to
deprive government workers of their allowances and additional compensation sorely needed to keep body and soul
together. At the very least, before the said circular under attack may be permitted to substantially reduce their income,
the government officials and employees concerned should be apprised and alerted by the publication of subject
circular in the Official Gazette or in a newspaper of general circulation in the Philippines to the end that they be
given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the matter.
This approach is more in keeping with democratic precepts and rudiments of fairness and transparency.
In light of the foregoing disquisition on the ineffectiveness of DBM-CCC No. 10 due to its non-publication in the
Official Gazette or in a newspaper of general circulation in the country, as required by law, resolution of the other
issue at bar is unnecessary.
WHEREFORE, the Petition is hereby GRANTED, the assailed Decision of respondent Commission on Audit is SET
ASIDE, and respondents are ordered to pass on audit the honoraria of petitioners. No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Martinez and Quisumbing, JJ., concur.

G. R. No. 156982

September 8, 2004

NATIONAL AMNESTY COMMISSION, petitioner,

vs.
COMMISSION ON AUDIT, JUANITO G. ESPINO, Director IV, NCR, Commission on Audit, and ERNESTO C.
EULALIA, Resident Auditor, National Amnesty Commission. respondents.
DECISION
CORONA, J.:
This petition for review1 seeks to annul the two decisions of respondent Commission on Audit (COA)2 dated July 26,
20013 and January 30, 2003,4 affirming the September 21, 1998 ruling5 of the National Government Audit Office
(NGAO). The latter in turn upheld Auditor Ernesto C. Eulalia's order disallowing the payment of honoraria to the
representatives of petitioner's ex officio members, per COA Memorandum No. 97-038.
Petitioner National Amnesty Commission (NAC) is a government agency created on March 25, 1994 by then
President Fidel V. Ramos through Proclamation No. 347. The NAC is tasked to receive, process and review amnesty
applications. It is composed of seven members: a Chairperson, three regular members appointed by the President,
and the Secretaries of Justice, National Defense and Interior and Local Government as ex officiomembers.6
It appears that after personally attending the initial NAC meetings, the three ex officio members turned over said
responsibility to their representatives who were paid honoraria beginning December 12, 1994. However, on October
15, 1997, NAC resident auditor Eulalia disallowed on audit the payment of honoraria to these representatives
amounting to P255,750 for the period December 12, 1994 to June 27, 1997, pursuant to COA Memorandum No. 97-

038. On September 1, 1998, the NGAO upheld the auditor's order and notices of disallowance were subsequently
issued to the following:7
REPRESENTATIVES
1.
2.
3.
4.
5.
6.
7.

AMOUNT

Cesar Averilla
Department of National Defense

P 2,500.00

Ramon Martinez
Department of National Defense

73,750.00

Cielito Mindaro,
Department of Justice

18,750.00

Purita Deynata
Department of Justice

62,000.00

Alberto Bernardo
Department of the Interior And Local Government

71,250.00

Stephen Villaflor
Department of the Interior and Local Government

26,250.00

Artemio Aspiras
Department of Justice

1,250.00
P255,750.00

Meanwhile, on April 28, 1999, the NAC passed Administrative Order No. 2 (the new Implementing Rules and
Regulations of Proclamation No. 347), which was approved by then President Joseph Estrada on October 19, 1999.
Section 1, Rule II thereof provides:
Section 1, Composition - The NAC shall be composed of seven (7) members:
a) A Chairperson who shall be appointed by the President;
b) Three (3) Commissioners who shall be appointed by the President;
c) Three (3) Ex-officio Members
1. Secretary of Justice
2. Secretary of National Defense
3. Secretary of the Interior and Local Government
The ex officio members may designate their representatives to the Commission. Said Representatives shall
be entitled to per diems, allowances, bonuses and other benefits as may be authorized by law.(Emphasis
supplied)
Petitioner invoked Administrative Order No. 2 in assailing before the COA the rulings of the resident auditor and the
NGAO disallowing payment of honoraria to the ex officio members' representatives, to no avail.
Hence, on March 14, 2003, the NAC filed the present petition, contending that the COA committed grave abuse of
discretion in: (1) implementing COA Memorandum No. 97-038 without the required notice and publication under
Article 2 of the Civil Code; (2) invoking paragraph 2, Section 7, Article IX-B of the 1987 Constitution to sustain the
disallowance of honoraria under said Memorandum; (3) applying the Memorandum to the NAC ex officiomembers'
representatives who were all appointive officials with ranks below that of an Assistant Secretary; (4) interpreting laws

and rules outside of its mandate and declaring Section 1, Rule II of Administrative Order No. 2 null and void, and (5)
disallowing the payment of honoraria on the ground of lack of authority of representatives to attend the NAC meetings
in behalf of the ex officio members.8
We hold that the position of petitioner NAC is against the law and jurisprudence. The COA is correct that there is no
legal basis to grant per diem, honoraria or any allowance whatsoever to the NAC ex officio members' official
representatives.
The Constitution mandates the Commission on Audit to ensure that the funds and properties of the government are
validly, efficiently and conscientiously used. Thus, Article IX-D of the Constitution ordains the COA to exercise
exclusive and broad auditing powers over all government entities or trustees, without any exception:
Section 2. (1) The Commission on Audit shall have the power, authority and duty to examine, audit, and
settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property,
owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned and controlled corporations with original charters, and on a
post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy
under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or
controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or
equity, directly or indirectly, from or through the government, which are required by law of the granting
institution to submit to such audit as a condition of subsidy or equity. However, where the internal control
system of the audited agencies is inadequate, the Commission may adopt such measures, including
temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the
general accounts of the Government and, for such period as may be provided by law, preserve the vouchers
and other supporting papers pertaining thereto.
(2) The Commission shall have exclusive authority, subject to the limitations in this Article, to define the
scope of its audit and examination, establish the techniques and methods required therefor, and promulgate
accounting and auditing rules and regulations, including those for the prevention and disallowance of
irregular, unnecessary, inexpensive, extravagant, or unconscionable expenditures, or uses of government
funds and properties.
Section 3. No law shall be passed exempting any entity of the Government or its subsidiary in any guise
whatever, or any investment of public funds, from the jurisdiction of the Commission on Audit.(Emphasis
supplied).
It is in accordance with this constitutional mandate that the COA issued Memorandum No. 97-038 on September 19,
1997:
COMMISSION ON AUDIT MEMORANDUM NO. 97-038
SUBJECT: Implementation of Senate Committee Report No. 509, Committee on Accountability of Public
Officers and Investigations and Committee on Civil Service and Government Reorganization.
The Commission received a copy of Senate Committee Report No. 509 urging the Commission on Audit to
immediately cause the disallowance of any payment of any form of additional compensation or remuneration
to cabinet secretaries, their deputies and assistants, or their representatives, in violation of the rule on
multiple positions, and to effect the refund of any and all such additional compensation given to and received
by the officials concerned, or their representatives, from the time of the finality of the Supreme Court ruling
in Civil Liberties Union v. Executive Secretary to the present. In the Civil Liberties Union case, the Supreme
Court ruled that Cabinet Secretaries, their deputies and assistants may not hold any other office or
employment. It declared Executive Order 284 unconstitutional insofar as it allows Cabinet members, their
deputies and assistants to hold other offices in addition to their primary office and to receive compensation
therefor. The said decision became final and executory on August 19, 1991.
In view thereof, all unit heads/auditors/team leaders of the national government agencies and government
owned or controlled corporations which have effected payment of subject allowances, are directed to
implement the recommendation contained in the subject Senate Committee Report by undertaking the
following audit action:

1. On accounts that have not been audited and settled under certificate of settlements and
balances on record from August 19, 1991 to present - to immediately issue the Notices of
disallowance and corresponding certificate of settlements and balances.
2. On accounts that have been audited and settled under certificate of settlements and balances on
record - to review and re-open said accounts, issue the corresponding notices of disallowance, and
certify a new balance thereon. It is understood that the re-opening of accounts shall be limited to
those that were settled within the prescriptive period of three (3) years prescribed in Section 52 of
P.D. 1445.
3. On disallowances previously made on these accounts - to submit a report on the status of the
disallowances indicating whether those have been refunded/settled or have become final and
executory and the latest action taken by the Auditor thereon.
All auditors concerned shall ensure that all documents evidencing the disallowed payments are kept intact
on file in their respective offices.
Any problem/issue arising from the implementation of this Memorandum shall be brought promptly to the
attention of the Committee created under COA Officer Order No. 97-698 thru the Director concerned, for
immediate resolution.
An initial report on the implementation of this Memorandum shall be submitted to the Directors concerned
not later than October 31, 1997. Thereafter, a quarterly progress report on the status of disallowances made
shall be submitted, until all the disallowances shall have been enforced.
The Committee created under COA Office Order No. 97-698, dated September 10, 1997, shall supervise the
implementation of this Memorandum which shall take effect immediately and shall submit a consolidated
report thereon in response to the recommendation of the Senate Committee on Accountability of Public
Officers and Investigation and Committee on Civil Service and Government Reorganization.9(Emphasis
supplied)
Contrary to petitioner's claim, COA Memorandum No. 97-038 does not need, for validity and effectivity, the publication
required by Article 2 of the Civil Code:
Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official
Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication.
We clarified this publication requirement in Taada vs. Tuvera:10
[A]ll statutes, including those of local application and private laws, shall be published as a condition
for their effectivity, which shall begin fifteen days after publication unless a different effectivity date
is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in the
exercise of legislative powers whenever the same are validly delegated by the legislature or, at present,
directly conferred by the Constitution. Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the socalled letters of instructions issued by administrative superiors concerning the rules or guidelines to be
followed by their subordinates in the performance of their duties.(Emphasis supplied.)
COA Memorandum No. 97-038 is merely an internal and interpretative regulation or letter of instruction which does
not need publication to be effective and valid. It is not an implementing rule or regulation of a statute but a directive
issued by the COA to its auditors to enforce the self-executing prohibition imposed by Section 13, Article VII of the
Constitution on the President and his official family, their deputies and assistants, or their representatives from
holding multiple offices and receiving double compensation.

Six years prior to the issuance of COA Memorandum No. 97-038, the Court had the occasion to categorically explain
this constitutional prohibition in Civil Liberties Union vs. The Executive Secretary:11
Petitioners maintain that this Executive Order which, in effect, allows members of the Cabinet, their undersecretaries
and assistant secretaries to hold other government offices or positions in addition to their primary positions, albeit
subject to the limitation therein imposed, runs counter to Section 13, Article VII of the 1987 Constitution, which
provides as follows:
"Sec. 13. The President, Vice-President, the Members of the Cabinet, and their deputies or assistants shall
not, unless otherwise provided in this Constitution, hold any other office or employment during their tenure.
They shall not, during said tenure, directly or indirectly practice any other profession, participate in any
business, or be financially interested in any contract with, or in any franchise, or special privilege granted by
the Government or any subdivision, agency, or instrumentality thereof, including government-owned or
controlled corporations or their subsidiaries. They shall strictly avoid conflict of interest in the conduct of their
office."
xxx

xxx

xxx

[D]oes the prohibition in Section 13, Article VII of the 1987 Constitution insofar as Cabinet members, their
deputies or assistants are concerned admit of the broad exceptions made for appointive officials in general
under Section 7, par. (2), Article IX-B which, for easy reference is quoted anew, thus: "Unless otherwise
allowed by law or by the primary functions of his position, no appointive official shall hold any other office or
employment in the Government or any subdivision, agency or instrumentality thereof, including governmentowned or controlled corporation or their subsidiaries."
We rule in the negative.
xxx

xxx

xxx

But what is indeed significant is the fact that although Section 7, Article IX-B already contains a blanket
prohibition against the holding of multiple offices or employment in the government subsuming both elective
and appointive public officials, the Constitutional Commission should see it fit to formulate another provision,
Sec. 13, Article VII, specifically prohibiting the President, Vice-President, members of the Cabinet, their
deputies and assistants from holding any other office or employment during their tenure, unless otherwise
provided in the Constitution itself.
xxx

xxx

xxx

Thus, while all other appointive officials in the civil service are allowed to hold other office or employment in
the government during their tenure when such is allowed by law or by the primary functions of their
positions, members of the Cabinet, their deputies and assistants may do so only when expressly authorized
by the Constitution itself. In other words, Section 7, Article IX-B is meant to lay down the general rule
applicable to all elective and appointive public officials and employees, while Section 13, Article VII is meant
to be the exception applicable only to the President, the Vice-President, Members of the Cabinet, their
deputies and assistants.
This being the case, the qualifying phrase "unless otherwise provided in this Constitution" in Section 13,
Article VII cannot possibly refer to the broad exceptions provided under Section 7, Article IX-B of the 1987
Constitution. . . .
xxx

xxx

xxx

The prohibition against holding dual or multiple offices or employment under Section 13, Article VII of the
Constitution must not, however, be construed as applying to posts occupied by the Executive officials
specified therein without additional compensation in an ex-officio capacity as provided by law and
as required by the primary functions of said officials' office. The reason is that these posts do no comprise
"any other office" within the contemplation of the constitutional prohibition but are properly an imposition of
additional duties and functions on said officials.

xxx

xxx

xxx

[T]he prohibition under Section 13, Article VII is not to be interpreted as covering positions held without
additional compensation in ex-officio capacities as provided by law and as required by the primary functions
of the concerned official's office. The term ex-officio means "from office; by virtue of office." It refers to an
"authority derived from official character merely, not expressly conferred upon the individual character, but
rather annexed to the official position." Ex-officio likewise denotes an "act done in an official character, or as
a consequence of office, and without any other appointment or authority than that conferred by the office."
An ex-officio member of a board is one who is a member by virtue of his title to a certain office, and without
further warrant or appointment. To illustrate, by express provision of law, the Secretary of Transportation and
Communications is the ex-officio Chairman of the Board of the Philippine Ports Authority, and the Light Rail
Transit Authority.
xxx

xxx

xxx

The ex-officio position being actually and in legal contemplation part of the principal office, it follows that the
official concerned has no right to receive additional compensation for his services in the said position. The
reason is that these services are already paid for and covered by the compensation attached to his principal
office. x x x
xxx

xxx

xxx

[E]x-officio posts held by the executive official concerned without additional compensation as provided by
law and as required by the primary functions of his office do not fall under the definition of "any other office"
within the contemplation of the constitutional prohibition... (Emphasis supplied).
Judicial decisions applying or interpreting the laws or the Constitution, such as the Civil Liberties Union doctrine, form
part of our legal system.12 Supreme Court decisions assume the same authority as valid statutes.13 The Court's
interpretation of the law is part of that law as of the date of enactment because its interpretation merely establishes
the contemporary legislative intent that the construed law purports to carry into effect.14
COA Memorandum No. 97-038 does not, in any manner or on its own, rule against or affect the right of any individual,
except those provided for under the Constitution. Hence, publication of said Memorandum is not required for it to be
valid, effective and enforceable.
In Civil Liberties Union, we elucidated on the two constitutional prohibitions against holding multiple positions in the
government and receiving double compensation: (1) the blanket prohibition of paragraph 2, Section 7, Article IX-B on
all government employees against holding multiple government offices, unless otherwise allowed by law or the
primary functions of their positions, and (2) the stricter prohibition under Section 13, Article VII on the President and
his official family from holding any other office, profession, business or financial interest, whether government or
private, unless allowed by the Constitution.
The NAC ex officio members' representatives who were all appointive officials with ranks below Assistant Secretary
are covered by the two constitutional prohibitions.
First, the NAC ex officio members' representatives are not exempt from the general prohibition because there is no
law or administrative order creating a new office or position and authorizing additional compensation therefor.
Sections 54 and 56 of the Administrative Code of 1987 reiterate the constitutional prohibition against multiple
positions in the government and receiving additional or double compensation:
SEC. 54. Limitation on Appointment. - (1) No elective official shall be eligible for appointment or designation
in any capacity to any public office or position during his tenure.
xxx

xxx

xxx

(3) Unless otherwise allowed by law or by the primary functions of his position, no appointive official shall
hold any other office or employment in the Government or any subdivision, agency or instrumentality
thereof, including government-owned or controlled corporations or their subsidiaries.
xxx

xxx

xxx

SEC. 56. Additional or Double Compensation. -- No elective or appointive public officer or employee shall
receive additional or double compensation unless specifically authorized by law nor accept without the
consent of the President, any present, emolument, office, or title of any kind form any foreign state.
Pensions and gratuities shall not be considered as additional, double or indirect compensation.
RA 6758, the Salary Standardization Law, also bars the receipt of such additional emolument.
The representatives in fact assumed their responsibilities not by virtue of a new appointment but by mere designation
from the ex officio members who were themselves also designated as such.
There is a considerable difference between an appointment and designation. An appointment is the selection by the
proper authority of an individual who is to exercise the powers and functions of a given office; a designation merely
connotes an imposition of additional duties, usually by law, upon a person already in the public service by virtue of an
earlier appointment.15
Designation does not entail payment of additional benefits or grant upon the person so designated the right to claim
the salary attached to the position. Without an appointment, a designation does not entitle the officer to receive the
salary of the position. The legal basis of an employee's right to claim the salary attached thereto is a duly issued and
approved appointment to the position,16 and not a mere designation.
Second, the ex officio members' representatives are also covered by the strict constitutional prohibition imposed on
the President and his official family.
Again, in Civil Liberties Union, we held that cabinet secretaries, including their deputies and assistants, who hold
positions in ex officio capacities, are proscribed from receiving additional compensation because their services are
already paid for and covered by the compensation attached to their principal offices. Thus, in the attendance of the
NAC meetings, the ex officio members were not entitled to, and were in fact prohibited from, collecting extra
compensation, whether it was called per diem, honorarium, allowance or some other euphemism. Such additional
compensation is prohibited by the Constitution.
Furthermore, in de la Cruz vs. COA17 and Bitonio vs. COA,18 we upheld COA's disallowance of the payment
ofhonoraria and per diems to the officers concerned who sat as ex officio members or alternates. The agent, alternate
or representative cannot have a better right than his principal, the ex officio member. The laws, rules, prohibitions or
restrictions that cover the ex officio member apply with equal force to his representative. In short, since the ex
officio member is prohibited from receiving additional compensation for a position held in an ex officiocapacity, so is
his representative likewise restricted.
The Court also finds that the re-opening of the NAC accounts within three years after its settlement is within COA's
jurisdiction under Section 52 of Presidential Decree No. 1445, promulgated on June 11, 1978:
SECTION 52. Opening and revision of settled accounts. (1) At any time before the expiration of three years
after the settlement of any account by an auditor, the Commission may motu propio review and revise the
account or settlement and certify a new balance.
More importantly, the Government is never estopped by the mistake or error on the part of its agents. 19Erroneous
application and enforcement of the law by public officers do not preclude subsequent corrective application of the
statute.
In declaring Section 1, Rule II of Administrative Order No. 2 s. 1999 null and void, the COA ruled that:

Petitioner further contends that with the new IRR issued by the NAC authorizing the ex-officio members to
designate representatives to attend commission meetings and entitling them to receive per diems, honoraria
and other allowances, there is now no legal impediment since it was approved by the President. This
Commission begs to disagree. Said provision in the new IRR is null and void for having been promulgated in
excess of its rule-making authority. Proclamation No. 347, the presidential issuance creating the NAC,
makes no mention that representatives of ex-officio members can take the place of said ex-officio members
during its meetings and can receive per diems and allowances. This being the case, the NAC, in the
exercise of its quasi-legislative powers, cannot add, expand or enlarge the provisions of the issuance it
seeks to implement without committing an ultra vires act.20
We find that, on its face, Section 1, Rule II of Administrative Order No. 2 is valid, as it merely provides that:
The ex officio members may designate their representatives to the Commission. Said Representatives shall
be entitled to per diems, allowances, bonuses and other benefits as may be authorized by law. (Emphasis
supplied).
The problem lies not in the administrative order but how the NAC and the COA interpreted it.
First, the administrative order itself acknowledges that payment of allowances to the representatives must be
authorized by the law, that is, the Constitution, statutes and judicial decisions. However, as already discussed, the
payment of such allowances is not allowed, prohibited even.
Second, the administrative order merely allows the ex officio members to designate their representatives to NAC
meetings but not to decide for them while attending such meetings. Section 4 of the administrative order categorically
states:
Decisions of the NAC shall be arrived at by a majority vote in a meeting where there is a quorum consisting
of at least four members.
Thus, although the administrative order does not preclude the representatives from attending the NAC
meetings, they may do so only as guests or witnesses to the proceedings. They cannot substitute for the ex
officio members for purposes of determining quorum, participating in deliberations and making decisions.
Lastly, we disagree with NAC's position that the representatives are de facto officers and as such are entitled to
allowances, pursuant to our pronouncement in Civil Liberties Union:
"where there is no de jure officer, a de facto officer, who in good faith has had possession of the office and
has discharged the duties pertaining thereto, is legally entitled to the emoluments of the office, and may in
appropriate action recover the salary, fees and other compensation attached to the office."
A de facto officer "derives his appointment from one having colorable authority to appoint, if the office is an
appointive office, and whose appointment is valid on its face. (He is) one who is in possession of an office
and is discharging its duties under color of authority, by which is meant authority derived from an
appointment, however irregular or informal, so that the incumbent be not a mere volunteer."21
The representatives cannot be considered de facto officers because they were not appointed but were merely
designated to act as such. Furthermore, they are not entitled to something their own principals are prohibited from
receiving. Neither can they claim good faith, given the express prohibition of the Constitution and the finality of our
decision in Civil Liberties Union prior to their receipt of such allowances.
WHEREFORE the petition is hereby DISMISSED for lack of merit.
SO ORDERED.
Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez*, Carpio
Morales*, Callejo, Sr., Azcuna, Tinga, Chico-Nazario,

G.R. No. 105364*

June 28, 2001

PHILIPPINE VETERANS BANK EMPLOYEES UNION-N.U.B.E. and PERFECTO V. FERNANDEZ, petitioners,

vs.
HONORABLE BENJAMIN VEGA, Presiding Judge of Branch 39 of the REGIONAL TRIAL COURT of Manila, the
CENTRAL BANK OF THE PHILIPPINES and THE LIQUIDATOR OF THE PHILIPPINE VETERANS
BANK,respondents
KAPUNAN, J.:
May a liquidation court continue with liquidation proceedings of the Philippine Veterans Bank (PVB) when Congress
had mandated its rehabilitation and reopening?
This is the sole issue raised in the instant Petition for Prohibition with Petition for Preliminary Injunction and
application for Ex Parte Temporary Restraining Order.
The antecedent facts of the case are as follows:
Sometime in 1985, the Central Bank of the Philippines (Central Bank, for brevity) filed with Branch 39 of the Regional
Trial Court of Manila a Petition for Assistance in the Liquidation of the Philippine Veterans Bank, the same docketed
as Case No. SP-32311. Thereafter, the Philipppine Veterans Bank Employees Union-N.U.B.E., herein petitioner,
represented by petitioner Perfecto V. Fernandez, filed claims for accrued and unpaid employee wages and benefits
with said court in SP-32311.1
After lengthy proceedings, partial payment of the sums due to the employees were made. However, due to the
piecemeal hearings on the benefits, many remain unpaid.2
On March 8, 1991, petitioners moved to disqualify the respondent judge from hearing the above case on grounds of
bias and hostility towards petitioners.3
On January 2, 1992, the Congress enacted Republic Act No. 7169 providing for the rehabilitation of the Philippine
Veterans Bank.4
Thereafter, petitioners filed with the labor tribunals their residual claims for benefits and for reinstatement upon
reopening of the bank.5
Sometime in May 1992, the Central Bank issued a certificate of authority allowing the PVB to reopen. 6
Despite the legislative mandate for rehabilitation and reopening of PVB, respondent judge continued with the
liquidation proceedings of the bank. Moreover, petitioners learned that respondents were set to order the payment
and release of employee benefits upon motion of another lawyer, while petitioners claims have been frozen to their
prejudice.
Hence, the instant petition.
Petitioners argue that with the passage of R.A. 7169, the liquidation court became functus officio, and no longer had
the authority to continue with liquidation proceedings.
In a Resolution, dated June 8, 1992, the Supreme Court resolved to issue a Temporary Restraining Order enjoining
the trial court from further proceeding with the case.
On June 22, 1992, VOP Security & Detective Agency (VOPSDA) and its 162 security guards filed a Motion for
Intervention with prayer that they be excluded from the operation of the Temporary Restraining Order issued by the
Court. They alleged that they had filed a motion before Branch 39 of the RTC of Manila, in SP-No. 32311, praying that

said court order PVB to pay their backwages and salary differentials by authority of R.A. No 6727, Wage Orders No.
NCR-01 and NCR-01-Ad and Wage Orders No. NCR-02 and NCR-02-A; and, that said court, in an Order dated June
5, 1992, approved therein movants case and directed the bank liquidator or PVB itself to pay the backwages and
differentials in accordance with the computation incorporated in the order. Said intervenors likewise manifested that
there was an error in the computation of the monetary benefits due them.
On August 18, 1992, petitioners, pursuant to the Resolution of this Court, dated July 6, 1992, filed their Comment
opposing the Motion for Leave to File Intervention and for exclusion from the operation of the T.R.O. on the grounds
that the movants have no legal interest in the subject matter of the pending action; that allowing intervention would
only cause delay in the proceedings; and that the motion to exclude the movants from the T.R.O. is without legal
basis and would render moot the relief sought in the petition.
On September 3, 1992, the PVB filed a Petition-In-Intervention praying for the issuance of the writs of certiorari and
prohibition under Rule 65 of the Rules of Court in connection with the issuance by respondent judge of several orders
involving acts of liquidation of PVB even after the effectivity of R.A. No. 7169. PVB further alleges that respondent
judge clearly acted in excess of or without jurisdiction when he issued the questioned orders.
We find for the petitioners.
Republic Act No. 7169 entitled "An Act To Rehabilitate The Philippine Veterans Bank Created Under Republic Act No.
3518, Providing The Mechanisms Therefor, And For Other Purposes", which was signed into law by President
Corazon C. Aquino on January 2, 1992 and which was published in the Official Gazette on February 24, 1992,
provides in part for the reopening of the Philippine Veterans Bank together with all its branches within the period of
three (3) years from the date of the reopening of the head office.7 The law likewise provides for the creation of a
rehabilitation committee in order to facilitate the implementation of the provisions of the same.8
Pursuant to said R.A. No. 7169, the Rehabilitation Committee submitted the proposed Rehabilitation Plan of the PVB
to the Monetary Board for its approval. Meanwhile, PVB filed a Motion to Terminate Liquidation of Philippine Veterans
Bank dated March 13, 1992 with the respondent judge praying that the liquidation proceedings be immediately
terminated in view of the passage of R.A. No. 7169.
On April 10, 1992, the Monetary Board issued Monetary Board Resolution No. 348 which approved the Rehabilitation
Plan submitted by the Rehabilitaion Committee.
Thereafter, the Monetary Board issued a Certificate of Authority allowing PVB to reopen.
On June 3, 1992, the liquidator filed A Motion for the Termination of the Liquidation Proceedings of the Philippine
Veterans Bank with the respondent judge.
As stated above, the Court, in a Resolution dated June 8, 1992, issued a temporary restraining order in the instant
case restraining respondent judge from further proceeding with the liquidation of PVB.
On August 3, 1992, the Philippine Veterans Bank opened its doors to the public and started regular banking
operations.
Clearly, the enactment of Republic Act No. 7169, as well as the subsequent developments has rendered the
liquidation court functus officio. Consequently, respondent judge has been stripped of the authority to issue orders
involving acts of liquidation.
Liquidation, in corporation law, connotes a winding up or settling with creditors and debtors.9 It is the winding up of a
corporation so that assets are distributed to those entitled to receive them. It is the process of reducing assets to
cash, discharging liabilities and dividing surplus or loss.

On the opposite end of the spectrum is rehabilitation which connotes a reopening or reorganization. Rehabilitation
contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its
former position of successful operation and solvency.10
It is crystal clear that the concept of liquidation is diametrically opposed or contrary to the concept of rehabilitation,
such that both cannot be undertaken at the same time. To allow the liquidation proceedings to continue would
seriously hinder the rehabilitation of the subject bank.
Anent the claim of respondents Central Bank and Liquidator of PVB that R.A. No. 7169 became effective only on
March 10, 1992 or fifteen (15) days after its publication in the Official Gazette; and, the contention of intervenors VOP
Security, et. al. that the effectivity of said law is conditioned on the approval of a rehabilitation plan by the Monetary
Board, among others, the Court is of the view that both contentions are bereft of merit.
While as a rule, laws take effect after fifteen (15) days following the completion of their publication in the Official
Gazette or in a newspaper of general circulation in the Philippines, the legislature has the authority to provide for
exceptions, as indicated in the clause "unless otherwise provided."
In the case at bar, Section 10 of R.A. No. 7169 provides:
Sec. 10. Effectivity. - This Act shall take effect upon its approval.
Hence, it is clear that the legislature intended to make the law effective immediately upon its approval. It is
undisputed that R.A. No. 7169 was signed into law by President Corazon C. Aquino on January 2, 1992. Therefore,
said law became effective on said date.
Assuming for the sake of argument that publication is necessary for the effectivity of R.A. No. 7169, then it became
legally effective on February 24, 1992, the date when the same was published in the Official Gazette, and not on
March 10, 1992, as erroneously claimed by respondents Central Bank and Liquidator.
WHEREFORE, in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE and GRANTED.
Respondent Judge is hereby PERMANENTLY ENJOINED from further proceeding with Civil Case No. SP- 32311.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

G.R. No. 127882

January 27, 2004

La Bugal-BLaan Tribal Assoc., Inc. v. Ramos

CARPIO-MORALES, J.:
The present petition for mandamus and prohibition assails the constitutionality of Republic Act No. 7942,5otherwise
known as the PHILIPPINE MINING ACT OF 1995, along with the Implementing Rules and Regulations issued
pursuant thereto, Department of Environment and Natural Resources (DENR) Administrative Order 96-40, and of the
Financial and Technical Assistance Agreement (FTAA) entered into on March 30, 1995 by the Republic of the
Philippines and WMC (Philippines), Inc. (WMCP), a corporation organized under Philippine laws.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No. 2796 authorizing the DENR
Secretary to accept, consider and evaluate proposals from foreign-owned corporations or foreign investors for
contracts or agreements involving either technical or financial assistance for large-scale exploration, development,
and utilization of minerals, which, upon appropriate recommendation of the Secretary, the President may execute with
the foreign proponent. In entering into such proposals, the President shall consider the real contributions to the

economic growth and general welfare of the country that will be realized, as well as the development and use of local
scientific and technical resources that will be promoted by the proposed contract or agreement. Until Congress shall
determine otherwise, large-scale mining, for purpose of this Section, shall mean those proposals for contracts or
agreements for mineral resources exploration, development, and utilization involving a committed capital investment
in a single mining unit project of at least Fifty Million Dollars in United States Currency (US $50,000,000.00). 7
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern the exploration, development,
utilization and processing of all mineral resources."8 R.A. No. 7942 defines the modes of mineral agreements for
mining operations,9 outlines the procedure for their filing and approval,10 assignment/transfer11and withdrawal,12 and
fixes their terms.13 Similar provisions govern financial or technical assistance agreements.14
The law prescribes the qualifications of contractors15 and grants them certain rights, including timber,16 water17and
easement18 rights, and the right to possess explosives.19 Surface owners, occupants, or concessionaires are
forbidden from preventing holders of mining rights from entering private lands and concession areas.20 A procedure
for the settlement of conflicts is likewise provided for.21
The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It regulates the transport, sale and
processing of minerals,25 and promotes the development of mining communities, science and mining
technology,26 and safety and environmental protection.27
The government's share in the agreements is spelled out and allocated,28 taxes and fees are imposed,29incentives
granted.30 Aside from penalizing certain acts,31 the law likewise specifies grounds for the cancellation, revocation and
termination of agreements and permits.32
On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times, two newspapers of
general circulation, R.A. No. 7942 took effect.33 Shortly before the effectivity of R.A. No. 7942, however, or on March
30, 1995, the President entered into an FTAA with WMCP covering 99,387 hectares of land in South Cotabato, Sultan
Kudarat, Davao del Sur and North Cotabato.34
On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No. 95-23, s.
1995, otherwise known as the Implementing Rules and Regulations of R.A. No. 7942. This was later repealed by
DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding that the DENR stop the
implementation of R.A. No. 7942 and DAO No. 96-40,35 giving the DENR fifteen days from receipt36 to act thereon.
The DENR, however, has yet to respond or act on petitioners' letter.37
Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a temporary restraining
order. They allege that at the time of the filing of the petition, 100 FTAA applications had already been filed, covering
an area of 8.4 million hectares,38 64 of which applications are by fully foreign-owned corporations covering a total of
5.8 million hectares, and at least one by a fully foreign-owned mining company over offshore areas.39
Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:
I
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the
latter being unconstitutional in that it allows fully foreign owned corporations to explore, develop, utilize and exploit
mineral resources in a manner contrary to Section 2, paragraph 4, Article XII of the Constitution;
II
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the
latter being unconstitutional in that it allows the taking of private property without the determination of public use and
for just compensation;
III

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the
latter being unconstitutional in that it violates Sec. 1, Art. III of the Constitution;
IV
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the
latter being unconstitutional in that it allows enjoyment by foreign citizens as well as fully foreign owned corporations
of the nation's marine wealth contrary to Section 2, paragraph 2 of Article XII of the Constitution;
V
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the
latter being unconstitutional in that it allows priority to foreign and fully foreign owned corporations in the exploration,
development and utilization of mineral resources contrary to Article XII of the Constitution;
VI
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the
latter being unconstitutional in that it allows the inequitable sharing of wealth contrary to Sections [sic] 1, paragraph 1,
and Section 2, paragraph 4[,] [Article XII] of the Constitution;
VII
x x x in recommending approval of and implementing the Financial and Technical Assistance Agreement between the
President of the Republic of the Philippines and Western Mining Corporation Philippines Inc. because the same is
illegal and unconstitutional.40
They pray that the Court issue an order:
(a) Permanently enjoining respondents from acting on any application for Financial or Technical Assistance
Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and null and
void;
(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in DENR
Administrative Order No. 96-40 and all other similar administrative issuances as unconstitutional and null
and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining Philippines, Inc.
as unconstitutional, illegal and null and void.41
Impleaded as public respondents are Ruben Torres, the then Executive Secretary, Victor O. Ramos, the then DENR
Secretary, and Horacio Ramos, Director of the Mines and Geosciences Bureau of the DENR. Also impleaded is
private respondent WMCP, which entered into the assailed FTAA with the Philippine Government. WMCP is owned by
WMC Resources International Pty., Ltd. (WMC), "a wholly owned subsidiary of Western Mining Corporation Holdings
Limited, a publicly listed major Australian mining and exploration company."42 By WMCP's information, "it is a 100%
owned subsidiary of WMC LIMITED."43
Respondents, aside from meeting petitioners' contentions, argue that the requisites for judicial inquiry have not been
met and that the petition does not comply with the criteria for prohibition and mandamus. Additionally, respondent
WMCP argues that there has been a violation of the rule on hierarchy of courts.
After petitioners filed their reply, this Court granted due course to the petition. The parties have since filed their
respective memoranda.

WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that on January 23, 2001, WMC sold
all its shares in WMCP to Sagittarius Mines, Inc. (Sagittarius), a corporation organized under Philippine
laws.44 WMCP was subsequently renamed "Tampakan Mineral Resources Corporation."45 WMCP claims that at least
60% of the equity of Sagittarius is owned by Filipinos and/or Filipino-owned corporations while about 40% is owned
by Indophil Resources NL, an Australian company.46 It further claims that by such sale and transfer of shares, "WMCP
has ceased to be connected in any way with WMC."47
By virtue of such sale and transfer, the DENR Secretary, by Order of December 18, 2001, 48 approved the transfer and
registration of the subject FTAA from WMCP to Sagittarius. Said Order, however, was appealed by Lepanto
Consolidated Mining Co. (Lepanto) to the Office of the President which upheld it by Decision of July 23, 2002.49Its
motion for reconsideration having been denied by the Office of the President by Resolution of November 12,
2002,50 Lepanto filed a petition for review51 before the Court of Appeals. Incidentally, two other petitions for review
related to the approval of the transfer and registration of the FTAA to Sagittarius were recently resolved by this
Court.52
It bears stressing that this case has not been rendered moot either by the transfer and registration of the FTAA to a
Filipino-owned corporation or by the non-issuance of a temporary restraining order or a preliminary injunction to stay
the above-said July 23, 2002 decision of the Office of the President.53 The validity of the transfer remains in dispute
and awaits final judicial determination. This assumes, of course, that such transfer cures the FTAA's alleged
unconstitutionality, on which question judgment is reserved.
WMCP also points out that the original claimowners of the major mineralized areas included in the WMCP FTAA,
namely, Sagittarius, Tampakan Mining Corporation, and Southcot Mining Corporation, are all Filipino-owned
corporations,54 each of which was a holder of an approved Mineral Production Sharing Agreement awarded in 1994,
albeit their respective mineral claims were subsumed in the WMCP FTAA;55 and that these three companies are the
same companies that consolidated their interests in Sagittarius to whom WMC sold its 100% equity in
WMCP.56 WMCP concludes that in the event that the FTAA is invalidated, the MPSAs of the three corporations would
be revived and the mineral claims would revert to their original claimants.57
These circumstances, while informative, are hardly significant in the resolution of this case, it involving the validity of
the FTAA, not the possible consequences of its invalidation.
Of the above-enumerated seven grounds cited by petitioners, as will be shown later, only the first and the last need
be delved into; in the latter, the discussion shall dwell only insofar as it questions the effectivity of E. O. No. 279 by
virtue of which order the questioned FTAA was forged.
I
Before going into the substantive issues, the procedural questions posed by respondents shall first be tackled.
REQUISITES FOR JUDICIAL REVIEW
When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if the following
requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the constitutional question;
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
(4) The constitutional question is the lis mota of the case. 58
Respondents claim that the first three requisites are not present.

Section 1, Article VIII of the Constitution states that "(j)udicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable and enforceable." The power of judicial review,
therefore, is limited to the determination of actual cases and controversies.59
An actual case or controversy means an existing case or controversy that is appropriate or ripe for determination, not
conjectural or anticipatory,60 lest the decision of the court would amount to an advisory opinion.61 The power does not
extend to hypothetical questions62 since any attempt at abstraction could only lead to dialectics and barren legal
questions and to sterile conclusions unrelated to actualities.63
"Legal standing" or locus standi has been defined as a personal and substantial interest in the case such that the
party has sustained or will sustain direct injury as a result of the governmental act that is being challenged,64alleging
more than a generalized grievance.65 The gist of the question of standing is whether a party alleges "such personal
stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of
issues upon which the court depends for illumination of difficult constitutional questions."66Unless a person is
injuriously affected in any of his constitutional rights by the operation of statute or ordinance, he has no standing.67
Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal Association, Inc., a farmers and
indigenous people's cooperative organized under Philippine laws representing a community actually affected by the
mining activities of WMCP, members of said cooperative,68 as well as other residents of areas also affected by the
mining activities of WMCP.69 These petitioners have standing to raise the constitutionality of the questioned FTAA as
they allege a personal and substantial injury. They claim that they would suffer "irremediable displacement"70 as a
result of the implementation of the FTAA allowing WMCP to conduct mining activities in their area of residence. They
thus meet the appropriate case requirement as they assert an interest adverse to that of respondents who, on the
other hand, insist on the FTAA's validity.
In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O. No. 279, by
authority of which the FTAA was executed.
Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both contracting
parties to annul it.71 In other words, they contend that petitioners are not real parties in interest in an action for the
annulment of contract.
Public respondents' contention fails. The present action is not merely one for annulment of contract but for prohibition
and mandamus. Petitioners allege that public respondents acted without or in excess of jurisdiction in implementing
the FTAA, which they submit is unconstitutional. As the case involves constitutional questions, this Court is not
concerned with whether petitioners are real parties in interest, but with whether they have legal standing. As held in
Kilosbayan v. Morato:72
x x x. "It is important to note . . . that standing because of its constitutional and public policy underpinnings, is very
different from questions relating to whether a particular plaintiff is the real party in interest or has capacity to sue.
Although all three requirements are directed towards ensuring that only certain parties can maintain an action,
standing restrictions require a partial consideration of the merits, as well as broader policy concerns relating to the
proper role of the judiciary in certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985])
Standing is a special concern in constitutional law because in some cases suits are brought not by parties who have
been personally injured by the operation of a law or by official action taken, but by concerned citizens, taxpayers or
voters who actually sue in the public interest. Hence, the question in standing is whether such parties have "alleged
such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions."
(Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)
As earlier stated, petitioners meet this requirement.
The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills the requisites of
justiciability. Although these laws were not in force when the subject FTAA was entered into, the question as to their
validity is ripe for adjudication.
The WMCP FTAA provides:

14.3 Future Legislation

Any term and condition more favourable to Financial &Technical Assistance Agreement contractors resulting from
repeal or amendment of any existing law or regulation or from the enactment of a law, regulation or administrative
order shall be considered a part of this Agreement.
It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are more favorable to WMCP, hence,
these laws, to the extent that they are favorable to WMCP, govern the FTAA.
In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing agreements.
SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. x x x That the provisions of Chapter XIV on
government share in mineral production-sharing agreement and of Chapter XVI on incentives of this Act shall
immediately govern and apply to a mining lessee or contractor unless the mining lessee or contractor indicates his
intention to the secretary, in writing, not to avail of said provisions x x x Provided, finally, That such leases,
production-sharing agreements, financial or technical assistance agreements shall comply with the applicable
provisions of this Act and its implementing rules and regulations.
As there is no suggestion that WMCP has indicated its intention not to avail of the provisions of Chapter XVI of R.A.
No. 7942, it can safely be presumed that they apply to the WMCP FTAA.
Misconstruing the application of the third requisite for judicial review that the exercise of the review is pleaded at the
earliest opportunity WMCP points out that the petition was filed only almost two years after the execution of the
FTAA, hence, not raised at the earliest opportunity.
The third requisite should not be taken to mean that the question of constitutionality must be raised immediately after
the execution of the state action complained of. That the question of constitutionality has not been raised before is not
a valid reason for refusing to allow it to be raised later.73 A contrary rule would mean that a law, otherwise
unconstitutional, would lapse into constitutionality by the mere failure of the proper party to promptly file a case to
challenge the same.
PROPRIETY OF PROHIBITION AND MANDAMUS
Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2 of Rule 65 read:
SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation, board, or person, whether
exercising functions judicial or ministerial, are without or in excess of its or his jurisdiction, or with grave abuse of
discretion, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying
that judgment be rendered commanding the defendant to desist from further proceeding in the action or matter
specified therein.
Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to desist from continuing with the
commission of an act perceived to be illegal.75
The petition for prohibition at bar is thus an appropriate remedy. While the execution of the contract itself may be fait
accompli, its implementation is not. Public respondents, in behalf of the Government, have obligations to fulfill under
said contract. Petitioners seek to prevent them from fulfilling such obligations on the theory that the contract is
unconstitutional and, therefore, void.
The propriety of a petition for prohibition being upheld, discussion of the propriety of the mandamus aspect of the
petition is rendered unnecessary.
HIERARCHY OF COURTS
The contention that the filing of this petition violated the rule on hierarchy of courts does not likewise lie. The rule has
been explained thus:

Between two courts of concurrent original jurisdiction, it is the lower court that should initially pass upon the issues of
a case. That way, as a particular case goes through the hierarchy of courts, it is shorn of all but the important legal
issues or those of first impression, which are the proper subject of attention of the appellate court. This is a
procedural rule borne of experience and adopted to improve the administration of justice.
This Court has consistently enjoined litigants to respect the hierarchy of courts. Although this Court has concurrent
jurisdiction with the Regional Trial Courts and the Court of Appeals to issue writs of certiorari, prohibition, mandamus,
quo warranto, habeas corpus and injunction, such concurrence does not give a party unrestricted freedom of choice
of court forum. The resort to this Court's primary jurisdiction to issue said writs shall be allowed only where the
redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances
justify such invocation. We held in People v. Cuaresma that:
A becoming regard for judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs
against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the
Court of Appeals. A direct invocation of the Supreme Court's original jurisdiction to issue these writs should be
allowed only where there are special and important reasons therefor, clearly and specifically set out in the petition.
This is established policy. It is a policy necessary to prevent inordinate demands upon the Court's time and attention
which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Court's docket x x x.76 [Emphasis supplied.]
The repercussions of the issues in this case on the Philippine mining industry, if not the national economy, as well as
the novelty thereof, constitute exceptional and compelling circumstances to justify resort to this Court in the first
instance.
In all events, this Court has the discretion to take cognizance of a suit which does not satisfy the requirements of an
actual case or legal standing when paramount public interest is involved.77 When the issues raised are of paramount
importance to the public, this Court may brush aside technicalities of procedure.78
II
Petitioners contend that E.O. No. 279 did not take effect because its supposed date of effectivity came after President
Aquino had already lost her legislative powers under the Provisional Constitution.
And they likewise claim that the WMC FTAA, which was entered into pursuant to E.O. No. 279, violates Section 2,
Article XII of the Constitution because, among other reasons:
(1) It allows foreign-owned companies to extend more than mere financial or technical assistance to the
State in the exploitation, development, and utilization of minerals, petroleum, and other mineral oils, and
even permits foreign owned companies to "operate and manage mining activities."
(2) It allows foreign-owned companies to extend both technical and financial assistance, instead of "either
technical or financial assistance."
To appreciate the import of these issues, a visit to the history of the pertinent constitutional provision, the concepts
contained therein, and the laws enacted pursuant thereto, is in order.
Section 2, Article XII reads in full:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With
the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development,
and utilization of natural resources shall be under the full control and supervision of the State. The State may directly
undertake such activities or it may enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens.
Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure
and limit of the grant.

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.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical or financial
assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real contributions to the economic growth
and general welfare of the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty
days from its execution.
THE SPANISH REGIME AND THE REGALIAN DOCTRINE
The first sentence of Section 2 embodies the Regalian doctrine or jura regalia. Introduced by Spain into these
Islands, this feudal concept is based on the State's power of dominium, which is the capacity of the State to own or
acquire property.79
In its broad sense, the term "jura regalia" refers to royal rights, or those rights which the King has by virtue of his
prerogatives. In Spanish law, it refers to a right which the sovereign has over anything in which a subject has a right
of property or propriedad. These were rights enjoyed during feudal times by the king as the sovereign.
The theory of the feudal system was that title to all lands was originally held by the King, and while the use of lands
was granted out to others who were permitted to hold them under certain conditions, the King theoretically retained
the title. By fiction of law, the King was regarded as the original proprietor of all lands, and the true and only source of
title, and from him all lands were held. The theory of jura regalia was therefore nothing more than a natural fruit of
conquest.80
The Philippines having passed to Spain by virtue of discovery and conquest,81 earlier Spanish decrees declared that
"all lands were held from the Crown."82
The Regalian doctrine extends not only to land but also to "all natural wealth that may be found in the bowels of the
earth."83 Spain, in particular, recognized the unique value of natural resources, viewing them, especially minerals, as
an abundant source of revenue to finance its wars against other nations.84 Mining laws during the Spanish regime
reflected this perspective.85
THE AMERICAN OCCUPATION AND THE CONCESSION REGIME
By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known as the Philippine Islands" to the
United States. The Philippines was hence governed by means of organic acts that were in the nature of charters
serving as a Constitution of the occupied territory from 1900 to 1935.86 Among the principal organic acts of the
Philippines was the Act of Congress of July 1, 1902, more commonly known as the Philippine Bill of 1902, through
which the United States Congress assumed the administration of the Philippine Islands.87 Section 20 of said Bill
reserved the disposition of mineral lands of the public domain from sale. Section 21 thereof allowed the free and
open exploration, occupation and purchase of mineral deposits not only to citizens of the Philippine Islands but to
those of the United States as well:
Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and unsurveyed,
are hereby declared to be free and open to exploration, occupation and purchase, and the land in which they are
found, to occupation and purchase, by citizens of the United States or of said Islands: Provided, That when on any
lands in said Islands entered and occupied as agricultural lands under the provisions of this Act, but not patented,
mineral deposits have been found, the working of such mineral deposits is forbidden until the person, association, or
corporation who or which has entered and is occupying such lands shall have paid to the Government of said Islands
such additional sum or sums as will make the total amount paid for the mineral claim or claims in which said deposits
are located equal to the amount charged by the Government for the same as mineral claims.

Unlike Spain, the United States considered natural resources as a source of wealth for its nationals and saw fit to
allow both Filipino and American citizens to explore and exploit minerals in public lands, and to grant patents to
private mineral lands.88 A person who acquired ownership over a parcel of private mineral land pursuant to the laws
then prevailing could exclude other persons, even the State, from exploiting minerals within his property.89Thus,
earlier jurisprudence90 held that:
A valid and subsisting location of mineral land, made and kept up in accordance with the provisions of the statutes of
the United States, has the effect of a grant by the United States of the present and exclusive possession of the lands
located, and this exclusive right of possession and enjoyment continues during the entire life of the location. x x x.
x x x.
The discovery of minerals in the ground by one who has a valid mineral location perfects his claim and his location
not only against third persons, but also against the Government. x x x. [Italics in the original.]
The Regalian doctrine and the American system, therefore, differ in one essential respect. Under the Regalian theory,
mineral rights are not included in a grant of land by the state; under the American doctrine, mineral rights are included
in a grant of land by the government.91
Section 21 also made possible the concession (frequently styled "permit", license" or "lease")92 system.93 This was the
traditional regime imposed by the colonial administrators for the exploitation of natural resources in the extractive
sector (petroleum, hard minerals, timber, etc.).94
Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a
particular natural resource within a given area.95 Thus, the concession amounts to complete control by the
concessionaire over the country's natural resource, for it is given exclusive and plenary rights to exploit a particular
resource at the point of extraction.96 In consideration for the right to exploit a natural resource, the concessionaire
either pays rent or royalty, which is a fixed percentage of the gross proceeds.97
Later statutory enactments by the legislative bodies set up in the Philippines adopted the contractual framework of
the concession.98 For instance, Act No. 2932,99 approved on August 31, 1920, which provided for the exploration,
location, and lease of lands containing petroleum and other mineral oils and gas in the Philippines, and Act No.
2719,100 approved on May 14, 1917, which provided for the leasing and development of coal lands in the Philippines,
both utilized the concession system.101
THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL RESOURCES
By the Act of United States Congress of March 24, 1934, popularly known as the Tydings-McDuffie Law, the People
of the Philippine Islands were authorized to adopt a constitution.102 On July 30, 1934, the Constitutional Convention
met for the purpose of drafting a constitution, and the Constitution subsequently drafted was approved by the
Convention on February 8, 1935.103 The Constitution was submitted to the President of the United States on March
18, 1935.104 On March 23, 1935, the President of the United States certified that the Constitution conformed
substantially with the provisions of the Act of Congress approved on March 24, 1934.105On May 14, 1935, the
Constitution was ratified by the Filipino people.106
The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources of the Philippines, including
mineral lands and minerals, to be property belonging to the State.107 As adopted in a republican system, the medieval
concept of jura regalia is stripped of royal overtones and ownership of the land is vested in the State.108
Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the 1935 Constitution provided:
SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, and other natural resources of the
Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited
to citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital of
which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the
inauguration of the Government established under this Constitution. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation,

development, or utilization of any of the natural resources shall be granted for a period exceeding twentyfive years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the measure and the limit of the grant.
The nationalization and conservation of the natural resources of the country was one of the fixed and dominating
objectives of the 1935 Constitutional Convention.109 One delegate relates:
There was an overwhelming sentiment in the Convention in favor of the principle of state ownership of natural
resources and the adoption of the Regalian doctrine. State ownership of natural resources was seen as a necessary
starting point to secure recognition of the state's power to control their disposition, exploitation, development, or
utilization. The delegates of the Constitutional Convention very well knew that the concept of State ownership of land
and natural resources was introduced by the Spaniards, however, they were not certain whether it was continued and
applied by the Americans. To remove all doubts, the Convention approved the provision in the Constitution affirming
the Regalian doctrine.
The adoption of the principle of state ownership of the natural resources and of the Regalian doctrine was considered
to be a necessary starting point for the plan of nationalizing and conserving the natural resources of the country. For
with the establishment of the principle of state ownership of the natural resources, it would not be hard to secure the
recognition of the power of the State to control their disposition, exploitation, development or utilization.110
The nationalization of the natural resources was intended (1) to insure their conservation for Filipino posterity; (2) to
serve as an instrument of national defense, helping prevent the extension to the country of foreign control through
peaceful economic penetration; and (3) to avoid making the Philippines a source of international conflicts with the
consequent danger to its internal security and independence.111
The same Section 1, Article XIII also adopted the concession system, expressly permitting the State to grant licenses,
concessions, or leases for the exploitation, development, or utilization of any of the natural resources. Grants,
however, were limited to Filipinos or entities at least 60% of the capital of which is owned by Filipinos.lawph!l.ne+
The swell of nationalism that suffused the 1935 Constitution was radically diluted when on November 1946, the Parity
Amendment, which came in the form of an "Ordinance Appended to the Constitution," was ratified in a
plebiscite.112 The Amendment extended, from July 4, 1946 to July 3, 1974, the right to utilize and exploit our natural
resources to citizens of the United States and business enterprises owned or controlled, directly or indirectly, by
citizens of the United States:113
Notwithstanding the provision of section one, Article Thirteen, and section eight, Article Fourteen, of the foregoing
Constitution, during the effectivity of the Executive Agreement entered into by the President of the Philippines with the
President of the United States on the fourth of July, nineteen hundred and forty-six, pursuant to the provisions of
Commonwealth Act Numbered Seven hundred and thirty-three, but in no case to extend beyond the third of July,
nineteen hundred and seventy-four, the disposition, exploitation, development, and utilization of all agricultural,
timber, and mineral lands of the public domain, waters, minerals, coals, petroleum, and other mineral oils, all forces
and sources of potential energy, and other natural resources of the Philippines, and the operation of public utilities,
shall, if open to any person, be open to citizens of the United States and to all forms of business enterprise owned or
controlled, directly or indirectly, by citizens of the United States in the same manner as to, and under the same
conditions imposed upon, citizens of the Philippines or corporations or associations owned or controlled by citizens of
the Philippines.
The Parity Amendment was subsequently modified by the 1954 Revised Trade Agreement, also known as the LaurelLangley Agreement, embodied in Republic Act No. 1355.114
THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM
In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of 1949, was approved on June 18, 1949.
The Petroleum Act of 1949 employed the concession system for the exploitation of the nation's petroleum resources.
Among the kinds of concessions it sanctioned were exploration and exploitation concessions, which respectively
granted to the concessionaire the exclusive right to explore for116 or develop117 petroleum within specified areas.

Concessions may be granted only to duly qualified persons118 who have sufficient finances, organization, resources,
technical competence, and skills necessary to conduct the operations to be undertaken.119
Nevertheless, the Government reserved the right to undertake such work itself.120 This proceeded from the theory that
all natural deposits or occurrences of petroleum or natural gas in public and/or private lands in the Philippines belong
to the State.121 Exploration and exploitation concessions did not confer upon the concessionaire ownership over the
petroleum lands and petroleum deposits.122 However, they did grant concessionaires the right to explore, develop,
exploit, and utilize them for the period and under the conditions determined by the law.123
Concessions were granted at the complete risk of the concessionaire; the Government did not guarantee the
existence of petroleum or undertake, in any case, title warranty.124
Concessionaires were required to submit information as maybe required by the Secretary of Agriculture and Natural
Resources, including reports of geological and geophysical examinations, as well as production
reports.125 Exploration126 and exploitation127 concessionaires were also required to submit work programs.lavvphi1.net
Exploitation concessionaires, in particular, were obliged to pay an annual exploitation tax,128 the object of which is to
induce the concessionaire to actually produce petroleum, and not simply to sit on the concession without developing
or exploiting it.129 These concessionaires were also bound to pay the Government royalty, which was not less than
12% of the petroleum produced and saved, less that consumed in the operations of the concessionaire.130 Under
Article 66, R.A. No. 387, the exploitation tax may be credited against the royalties so that if the concessionaire shall
be actually producing enough oil, it would not actually be paying the exploitation tax.131
Failure to pay the annual exploitation tax for two consecutive years,132 or the royalty due to the Government within
one year from the date it becomes due,133 constituted grounds for the cancellation of the concession. In case of delay
in the payment of the taxes or royalty imposed by the law or by the concession, a surcharge of 1% per month is
exacted until the same are paid.134
As a rule, title rights to all equipment and structures that the concessionaire placed on the land belong to the
exploration or exploitation concessionaire.135 Upon termination of such concession, the concessionaire had a right to
remove the same.136
The Secretary of Agriculture and Natural Resources was tasked with carrying out the provisions of the law, through
the Director of Mines, who acted under the Secretary's immediate supervision and control.137 The Act granted the
Secretary the authority to inspect any operation of the concessionaire and to examine all the books and accounts
pertaining to operations or conditions related to payment of taxes and royalties.138
The same law authorized the Secretary to create an Administration Unit and a Technical Board.139 The Administration
Unit was charged, inter alia, with the enforcement of the provisions of the law.140 The Technical Board had, among
other functions, the duty to check on the performance of concessionaires and to determine whether the obligations
imposed by the Act and its implementing regulations were being complied with.141
Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy Development, analyzed the benefits and
drawbacks of the concession system insofar as it applied to the petroleum industry:
Advantages of Concession. Whether it emphasizes income tax or royalty, the most positive aspect of the concession
system is that the State's financial involvement is virtually risk free and administration is simple and comparatively low
in cost. Furthermore, if there is a competitive allocation of the resource leading to substantial bonuses and/or greater
royalty coupled with a relatively high level of taxation, revenue accruing to the State under the concession system
may compare favorably with other financial arrangements.
Disadvantages of Concession. There are, however, major negative aspects to this system. Because the
Government's role in the traditional concession is passive, it is at a distinct disadvantage in managing and developing
policy for the nation's petroleum resource. This is true for several reasons. First, even though most concession
agreements contain covenants requiring diligence in operations and production, this establishes only an indirect and
passive control of the host country in resource development. Second, and more importantly, the fact that the host
country does not directly participate in resource management decisions inhibits its ability to train and employ its
nationals in petroleum development. This factor could delay or prevent the country from effectively engaging in the

development of its resources. Lastly, a direct role in management is usually necessary in order to obtain a knowledge
of the international petroleum industry which is important to an appreciation of the host country's resources in relation
to those of other countries.142
Other liabilities of the system have also been noted:
x x x there are functional implications which give the concessionaire great economic power arising from its exclusive
equity holding. This includes, first, appropriation of the returns of the undertaking, subject to a modest royalty;
second, exclusive management of the project; third, control of production of the natural resource, such as volume of
production, expansion, research and development; and fourth, exclusive responsibility for downstream operations,
like processing, marketing, and distribution. In short, even if nominally, the state is the sovereign and owner of the
natural resource being exploited, it has been shorn of all elements of control over such natural resource because of
the exclusive nature of the contractual regime of the concession. The concession system, investing as it does
ownership of natural resources, constitutes a consistent inconsistency with the principle embodied in our Constitution
that natural resources belong to the state and shall not be alienated, not to mention the fact that the concession was
the bedrock of the colonial system in the exploitation of natural resources.143
Eventually, the concession system failed for reasons explained by Dimagiba:
Notwithstanding the good intentions of the Petroleum Act of 1949, the concession system could not have properly
spurred sustained oil exploration activities in the country, since it assumed that such a capital-intensive, high risk
venture could be successfully undertaken by a single individual or a small company. In effect, concessionaires' funds
were easily exhausted. Moreover, since the concession system practically closed its doors to interested foreign
investors, local capital was stretched to the limits. The old system also failed to consider the highly sophisticated
technology and expertise required, which would be available only to multinational companies.144
A shift to a new regime for the development of natural resources thus seemed imminent.
PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE SERVICE CONTRACT SYSTEM
The promulgation on December 31, 1972 of Presidential Decree No. 87,145 otherwise known as The Oil Exploration
and Development Act of 1972 signaled such a transformation. P.D. No. 87 permitted the government to explore for
and produce indigenous petroleum through "service contracts."146
"Service contracts" is a term that assumes varying meanings to different people, and it has carried many names in
different countries, like "work contracts" in Indonesia, "concession agreements" in Africa, "production-sharing
agreements" in the Middle East, and "participation agreements" in Latin America.147 A functional definition of "service
contracts" in the Philippines is provided as follows:
A service contract is a contractual arrangement for engaging in the exploitation and development of petroleum,
mineral, energy, land and other natural resources by which a government or its agency, or a private person granted a
right or privilege by the government authorizes the other party (service contractor) to engage or participate in the
exercise of such right or the enjoyment of the privilege, in that the latter provides financial or technical resources,
undertakes the exploitation or production of a given resource, or directly manages the productive enterprise,
operations of the exploration and exploitation of the resources or the disposition of marketing or resources.148
In a service contract under P.D. No. 87, service and technology are furnished by the service contractor for which it
shall be entitled to the stipulated service fee.149 The contractor must be technically competent and financially capable
to undertake the operations required in the contract.150
Financing is supposed to be provided by the Government to which all petroleum produced belongs.151 In case the
Government is unable to finance petroleum exploration operations, the contractor may furnish services, technology
and financing, and the proceeds of sale of the petroleum produced under the contract shall be the source of funds for
payment of the service fee and the operating expenses due the contractor.152 The contractor shall undertake, manage
and execute petroleum operations, subject to the government overseeing the management of the operations.153 The
contractor provides all necessary services and technology and the requisite financing, performs the exploration work
obligations, and assumes all exploration risks such that if no petroleum is produced, it will not be entitled to

reimbursement.154 Once petroleum in commercial quantity is discovered, the contractor shall operate the field on
behalf of the government.155
P.D. No. 87 prescribed minimum terms and conditions for every service contract.156 It also granted the contractor
certain privileges, including exemption from taxes and payment of tariff duties,157 and permitted the repatriation of
capital and retention of profits abroad.158
Ostensibly, the service contract system had certain advantages over the concession regime.159 It has been opined,
though, that, in the Philippines, our concept of a service contract, at least in the petroleum industry, was basically a
concession regime with a production-sharing element.160
On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification of a new Constitution.161Article
XIV on the National Economy and Patrimony contained provisions similar to the 1935 Constitution with regard to
Filipino participation in the nation's natural resources. Section 8, Article XIV thereof provides:
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential
energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the exception of
agricultural, industrial or commercial, residential and resettlement lands of the public domain, natural resources shall
not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or utilization of
any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than
twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the measure and the limit of the grant.
While Section 9 of the same Article maintained the Filipino-only policy in the enjoyment of natural resources, it also
allowed Filipinos, upon authority of the Batasang Pambansa, to enter into service contracts with any person or entity
for the exploration or utilization of natural resources.
Sec. 9. The disposition, exploration, development, exploitation, or utilization of any of the natural resources of the
Philippines shall be limited to citizens, or to corporations or associations at least sixty per centum of which is owned
by such citizens. The Batasang Pambansa, in the national interest, may allow such citizens, corporations or
associations to enter into service contracts for financial, technical, management, or other forms of assistance with any
person or entity for the exploration, or utilization of any of the natural resources. Existing valid and binding service
contracts for financial, technical, management, or other forms of assistance are hereby recognized as such.
[Emphasis supplied.]
The concept of service contracts, according to one delegate, was borrowed from the methods followed by India,
Pakistan and especially Indonesia in the exploration of petroleum and mineral oils.162 The provision allowing such
contracts, according to another, was intended to "enhance the proper development of our natural resources since
Filipino citizens lack the needed capital and technical know-how which are essential in the proper exploration,
development and exploitation of the natural resources of the country."163
The original idea was to authorize the government, not private entities, to enter into service contracts with foreign
entities.164 As finally approved, however, a citizen or private entity could be allowed by the National Assembly to enter
into such service contract.165 The prior approval of the National Assembly was deemed sufficient to protect the
national interest.166 Notably, none of the laws allowing service contracts were passed by the Batasang Pambansa.
Indeed, all of them were enacted by presidential decree.
On March 13, 1973, shortly after the ratification of the new Constitution, the President promulgated Presidential
Decree No. 151.167 The law allowed Filipino citizens or entities which have acquired lands of the public domain or
which own, hold or control such lands to enter into service contracts for financial, technical, management or other
forms of assistance with any foreign persons or entity for the exploration, development, exploitation or utilization of
said lands.168
Presidential Decree No. 463,169 also known as The Mineral Resources Development Decree of 1974, was enacted on
May 17, 1974. Section 44 of the decree, as amended, provided that a lessee of a mining claim may enter into a
service contract with a qualified domestic or foreign contractor for the exploration, development and exploitation of his
claims and the processing and marketing of the product thereof.

Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16, 1975, allowed Filipinos
engaged in commercial fishing to enter into contracts for financial, technical or other forms of assistance with any
foreign person, corporation or entity for the production, storage, marketing and processing of fish and fishery/aquatic
products.171
Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines), approved on May 19, 1975, allowed
"forest products licensees, lessees, or permitees to enter into service contracts for financial, technical, management,
or other forms of assistance . . . with any foreign person or entity for the exploration, development, exploitation or
utilization of the forest resources."173
Yet another law allowing service contracts, this time for geothermal resources, was Presidential Decree No.
1442,174 which was signed into law on June 11, 1978. Section 1 thereof authorized the Government to enter into
service contracts for the exploration, exploitation and development of geothermal resources with a foreign contractor
who must be technically and financially capable of undertaking the operations required in the service contract.
Thus, virtually the entire range of the country's natural resources from petroleum and minerals to geothermal
energy, from public lands and forest resources to fishery products was well covered by apparent legal authority to
engage in the direct participation or involvement of foreign persons or corporations (otherwise disqualified) in the
exploration and utilization of natural resources through service contracts.175
THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE AGREEMENTS
After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power under a revolutionary
government. On March 25, 1986, President Aquino issued Proclamation No. 3,176 promulgating the Provisional
Constitution, more popularly referred to as the Freedom Constitution. By authority of the same Proclamation, the
President created a Constitutional Commission (CONCOM) to draft a new constitution, which took effect on the date
of its ratification on February 2, 1987.177
The 1987 Constitution retained the Regalian doctrine. The first sentence of Section 2, Article XII states: "All lands of
the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State."
Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second sentence of the same provision,
prohibits the alienation of natural resources, except agricultural lands.
The third sentence of the same paragraph is new: "The exploration, development and utilization of natural resources
shall be under the full control and supervision of the State." The constitutional policy of the State's "full control and
supervision" over natural resources proceeds from the concept of jura regalia, as well as the recognition of the
importance of the country's natural resources, not only for national economic development, but also for its security
and national defense.178 Under this provision, the State assumes "a more dynamic role" in the exploration,
development and utilization of natural resources.179
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions authorizing the State to grant
licenses, concessions, or leases for the exploration, exploitation, development, or utilization of natural resources. By
such omission, the utilization of inalienable lands of public domain through "license, concession or lease" is no longer
allowed under the 1987 Constitution.180
Having omitted the provision on the concession system, Section 2 proceeded to introduce "unfamiliar language":181
The State may directly undertake such activities or it may enter into co-production, joint venture, or productionsharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is
owned by such citizens.
Consonant with the State's "full supervision and control" over natural resources, Section 2 offers the State two
"options."182 One, the State may directly undertake these activities itself; or two, it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or entities at least 60% of whose capital is owned by
such citizens.

A third option is found in the third paragraph of the same section:

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and lagoons.
While the second and third options are limited only to Filipino citizens or, in the case of the former, to corporations or
associations at least 60% of the capital of which is owned by Filipinos, a fourth allows the participation of foreignowned corporations. The fourth and fifth paragraphs of Section 2 provide:
The President may enter into agreements with foreign-owned corporations involving either technical or financial
assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real contributions to the economic growth
and general welfare of the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty
days from its execution.
Although Section 2 sanctions the participation of foreign-owned corporations in the exploration, development, and
utilization of natural resources, it imposes certain limitations or conditions to agreements with such corporations.
First, the parties to FTAAs. Only the President, in behalf of the State, may enter into these agreements, and
only with corporations. By contrast, under the 1973 Constitution, a Filipino citizen, corporation or association
may enter into a service contract with a "foreign person or entity."
Second, the size of the activities: only large-scale exploration, development, and utilization is allowed. The
term "large-scale usually refers to very capital-intensive activities."183
Third, the natural resources subject of the activities is restricted to minerals, petroleum and other mineral
oils, the intent being to limit service contracts to those areas where Filipino capital may not be sufficient.184
Fourth, consistency with the provisions of statute. The agreements must be in accordance with the terms
and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such agreements. The agreements must be
based on real contributions to economic growth and general welfare of the country.
Sixth, the agreements must contain rudimentary stipulations for the promotion of the development and use
of local scientific and technical resources.
Seventh, the notification requirement. The President shall notify Congress of every financial or technical
assistance agreement entered into within thirty days from its execution.
Finally, the scope of the agreements. While the 1973 Constitution referred to "service contracts for financial,
technical, management, or other forms of assistance" the 1987 Constitution provides for "agreements. . .
involving either financial or technical assistance." It bears noting that the phrases "service contracts" and
"management or other forms of assistance" in the earlier constitution have been omitted.
By virtue of her legislative powers under the Provisional Constitution,185 President Aquino, on July 10, 1987, signed
into law E.O. No. 211 prescribing the interim procedures in the processing and approval of applications for the
exploration, development and utilization of minerals. The omission in the 1987 Constitution of the term "service
contracts" notwithstanding, the said E.O. still referred to them in Section 2 thereof:
Sec. 2. Applications for the exploration, development and utilization of mineral resources, including renewal
applications and applications for approval of operating agreements and mining service contracts, shall be accepted
and processed and may be approved x x x. [Emphasis supplied.]

The same law provided in its Section 3 that the "processing, evaluation and approval of all mining applications . . .
operating agreements and service contracts . . . shall be governed by Presidential Decree No. 463, as amended,
other existing mining laws, and their implementing rules and regulations. . . ."
As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279 by authority of which the subject
WMCP FTAA was executed on March 30, 1995.
On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15 thereof declares that the Act "shall
govern the exploration, development, utilization, and processing of all mineral resources." Such declaration
notwithstanding, R.A. No. 7942 does not actually cover all the modes through which the State may undertake the
exploration, development, and utilization of natural resources.
The State, being the owner of the natural resources, is accorded the primary power and responsibility in the
exploration, development and utilization thereof. As such, it may undertake these activities through four modes:
The State may directly undertake such activities.
(2) The State may enter into co-production, joint venture or production-sharing agreements with Filipino
citizens or qualified corporations.
(3) Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens.
(4) For the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils,
the President may enter into agreements with foreign-owned corporations involving technical or financial
assistance.186
Except to charge the Mines and Geosciences Bureau of the DENR with performing researches and surveys,187and a
passing mention of government-owned or controlled corporations,188 R.A. No. 7942 does not specify how the State
should go about the first mode. The third mode, on the other hand, is governed by Republic Act No. 7076189 (the
People's Small-Scale Mining Act of 1991) and other pertinent laws.190 R.A. No. 7942 primarily concerns itself with the
second and fourth modes.
Mineral production sharing, co-production and joint venture agreements are collectively classified by R.A. No. 7942
as "mineral agreements."191 The Government participates the least in a mineral production sharing agreement
(MPSA). In an MPSA, the Government grants the contractor192 the exclusive right to conduct mining operations within
a contract area193 and shares in the gross output.194 The MPSA contractor provides the financing, technology,
management and personnel necessary for the agreement's implementation.195 The total government share in an
MPSA is the excise tax on mineral products under Republic Act No. 7729,196 amending Section 151(a) of the National
Internal Revenue Code, as amended.197
In a co-production agreement (CA),198 the Government provides inputs to the mining operations other than the
mineral resource,199 while in a joint venture agreement (JVA), where the Government enjoys the greatest
participation, the Government and the JVA contractor organize a company with both parties having equity
shares.200 Aside from earnings in equity, the Government in a JVA is also entitled to a share in the gross
output.201 The Government may enter into a CA202 or JVA203 with one or more contractors. The Government's share in
a CA or JVA is set out in Section 81 of the law:
The share of the Government in co-production and joint venture agreements shall be negotiated by the Government
and the contractor taking into consideration the: (a) capital investment of the project, (b) the risks involved, (c)
contribution of the project to the economy, and (d) other factors that will provide for a fair and equitable sharing
between the Government and the contractor. The Government shall also be entitled to compensations for its other
contributions which shall be agreed upon by the parties, and shall consist, among other things, the contractor's
income tax, excise tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from
dividend or interest payments to the said foreign stockholders, in case of a foreign national and all such other taxes,
duties and fees as provided for under existing laws.

All mineral agreements grant the respective contractors the exclusive right to conduct mining operations and to
extract all mineral resources found in the contract area.204 A "qualified person" may enter into any of the mineral
agreements with the Government.205 A "qualified person" is
any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative
organized or authorized for the purpose of engaging in mining, with technical and financial capability to undertake
mineral resources development and duly registered in accordance with law at least sixty per centum (60%) of the
capital of which is owned by citizens of the Philippines x x x.206
The fourth mode involves "financial or technical assistance agreements." An FTAA is defined as "a contract involving
financial or technical assistance for large-scale exploration, development, and utilization of natural resources."207 Any
qualified person with technical and financial capability to undertake large-scale exploration, development, and
utilization of natural resources in the Philippines may enter into such agreement directly with the Government through
the DENR.208 For the purpose of granting an FTAA, a legally organized foreign-owned corporation (any corporation,
partnership, association, or cooperative duly registered in accordance with law in which less than 50% of the capital
is owned by Filipino citizens)209 is deemed a "qualified person."210
Other than the difference in contractors' qualifications, the principal distinction between mineral agreements and
FTAAs is the maximum contract area to which a qualified person may hold or be granted.211 "Large-scale" under R.A.
No. 7942 is determined by the size of the contract area, as opposed to the amount invested (US $50,000,000.00),
which was the standard under E.O. 279.
Like a CA or a JVA, an FTAA is subject to negotiation.212 The Government's contributions, in the form of taxes, in an
FTAA is identical to its contributions in the two mineral agreements, save that in an FTAA:
The collection of Government share in financial or technical assistance agreement shall commence after the financial
or technical assistance agreement contractor has fully recovered its pre-operating expenses, exploration, and
development expenditures, inclusive.213
III
Having examined the history of the constitutional provision and statutes enacted pursuant thereto, a consideration of
the substantive issues presented by the petition is now in order.
THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279
Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was executed, did not come into effect.
E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two days before the opening of
Congress on July 27, 1987.214 Section 8 of the E.O. states that the same "shall take effect immediately." This
provision, according to petitioners, runs counter to Section 1 of E.O. No. 200,215 which provides:
SECTION 1. Laws shall take effect after fifteen days following the completion of their publication either in the Official
Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.216[Emphasis
supplied.]
On that premise, petitioners contend that E.O. No. 279 could have only taken effect fifteen days after its publication at
which time Congress had already convened and the President's power to legislate had ceased.
Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled in Miners Association of the
Philippines v. Factoran, supra. This is of course incorrect for the issue in Miners Association was not the validity of
E.O. No. 279 but that of DAO Nos. 57 and 82 which were issued pursuant thereto.
Nevertheless, petitioners' contentions have no merit.
It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking effect on a date other than even
before the 15-day period after its publication. Where a law provides for its own date of effectivity, such date prevails

over that prescribed by E.O. No. 200. Indeed, this is the very essence of the phrase "unless it is otherwise provided"
in Section 1 thereof. Section 1, E.O. No. 200, therefore, applies only when a statute does not provide for its own date
of effectivity.
What is mandatory under E.O. No. 200, and what due process requires, as this Court held in Taada v. Tuvera,217 is
the publication of the law for without such notice and publication, there would be no basis for the application of the
maxim "ignorantia legis n[eminem] excusat." It would be the height of injustice to punish or otherwise burden a citizen
for the transgression of a law of which he had no notice whatsoever, not even a constructive one.
While the effectivity clause of E.O. No. 279 does not require its publication, it is not a ground for its invalidation since
the Constitution, being "the fundamental, paramount and supreme law of the nation," is deemed written in the
law.218 Hence, the due process clause,219 which, so Taada held, mandates the publication of statutes, is read into
Section 8 of E.O. No. 279. Additionally, Section 1 of E.O. No. 200 which provides for publication "either in the Official
Gazette or in a newspaper of general circulation in the Philippines," finds suppletory application. It is significant to
note that E.O. No. 279 was actually published in the Official Gazette220 on August 3, 1987.
From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and Taada v. Tuvera, this Court holds
that E.O. No. 279 became effective immediately upon its publication in the Official Gazette on August 3, 1987.
That such effectivity took place after the convening of the first Congress is irrelevant. At the time President Aquino
issued E.O. No. 279 on July 25, 1987, she was still validly exercising legislative powers under the Provisional
Constitution.221 Article XVIII (Transitory Provisions) of the 1987 Constitution explicitly states:
Sec. 6. The incumbent President shall continue to exercise legislative powers until the first Congress is convened.
The convening of the first Congress merely precluded the exercise of legislative powers by President Aquino; it did
not prevent the effectivity of laws she had previously enacted.
There can be no question, therefore, that E.O. No. 279 is an effective, and a validly enacted, statute.
THE CONSTITUTIONALITY OF THE WMCP FTAA
Petitioners submit that, in accordance with the text of Section 2, Article XII of the Constitution, FTAAs should be
limited to "technical or financial assistance" only. They observe, however, that, contrary to the language of the
Constitution, the WMCP FTAA allows WMCP, a fully foreign-owned mining corporation, to extend more than mere
financial or technical assistance to the State, for it permits WMCP to manage and operate every aspect of the mining
activity. 222
Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of constitutions that the instrument must
be so construed as to give effect to the intention of the people who adopted it.223 This intention is to be sought in the
constitution itself, and the apparent meaning of the words is to be taken as expressing it, except in cases where that
assumption would lead to absurdity, ambiguity, or contradiction.224 What the Constitution says according to the text of
the provision, therefore, compels acceptance and negates the power of the courts to alter it, based on the postulate
that the framers and the people mean what they say.225 Accordingly, following the literal text of the Constitution,
assistance accorded by foreign-owned corporations in the large-scale exploration, development, and utilization of
petroleum, minerals and mineral oils should be limited to "technical" or "financial" assistance only.
WMCP nevertheless submits that the word "technical" in the fourth paragraph of Section 2 of E.O. No. 279
encompasses a "broad number of possible services," perhaps, "scientific and/or technological in basis."226 It thus
posits that it may also well include "the area of management or operations . . . so long as such assistance requires
specialized knowledge or skills, and are related to the exploration, development and utilization of mineral
resources."227
This Court is not persuaded. As priorly pointed out, the phrase "management or other forms of assistance" in the
1973 Constitution was deleted in the 1987 Constitution, which allows only "technical or financial assistance." Casus
omisus pro omisso habendus est. A person, object or thing omitted from an enumeration must be held to have been
omitted intentionally.228 As will be shown later, the management or operation of mining activities by foreign

contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the 1987
Constitution sought to eradicate.
Respondents insist that "agreements involving technical or financial assistance" is just another term for service
contracts. They contend that the proceedings of the CONCOM indicate "that although the terminology 'service
contract' was avoided [by the Constitution], the concept it represented was not." They add that "[t]he concept is
embodied in the phrase 'agreements involving financial or technical assistance.'"229 And point out how members of
the CONCOM referred to these agreements as "service contracts." For instance:
SR. TAN. Am I correct in thinking that the only difference between these future service contracts and the
past service contracts under Mr. Marcos is the general law to be enacted by the legislature and the
notification of Congress by the President? That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards[?]
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]
WMCP also cites the following statements of Commissioners Gascon, Garcia, Nolledo and Tadeo who
alluded to service contracts as they explained their respective votes in the approval of the draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One, the provision on
service contracts. I felt that if we would constitutionalize any provision on service contracts, this should
always be with the concurrence of Congress and not guided only by a general law to be promulgated by
Congress. x x x.231 [Emphasis supplied.]
x x x.
MR. GARCIA. Thank you.
I vote no. x x x.
Service contracts are given constitutional legitimization in Section 3, even when they have been proven to
be inimical to the interests of the nation, providing as they do the legal loophole for the exploitation of our
natural resources for the benefit of foreign interests. They constitute a serious negation of Filipino control on
the use and disposition of the nation's natural resources, especially with regard to those which are
nonrenewable.232 [Emphasis supplied.]
xxx
MR. NOLLEDO. While there are objectionable provisions in the Article on National Economy and Patrimony,
going over said provisions meticulously, setting aside prejudice and personalities will reveal that the article
contains a balanced set of provisions. I hope the forthcoming Congress will implement such provisions
taking into account that Filipinos should have real control over our economy and patrimony, and if foreign
equity is permitted, the same must be subordinated to the imperative demands of the national interest.
x x x.
It is also my understanding that service contracts involving foreign corporations or entities are resorted to
only when no Filipino enterprise or Filipino-controlled enterprise could possibly undertake the exploration or
exploitation of our natural resources and that compensation under such contracts cannot and should not
equal what should pertain to ownership of capital. In other words, the service contract should not be an

instrument to circumvent the basic provision, that the exploration and exploitation of natural resources
should be truly for the benefit of Filipinos.
Thank you, and I vote yes.233 [Emphasis supplied.]
x x x.
MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.
Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang salitang "imperyalismo."
Ang ibig sabihin nito ay ang sistema ng lipunang pinaghaharian ng iilang monopolyong kapitalista at ang
salitang "imperyalismo" ay buhay na buhay sa National Economy and Patrimony na nating ginawa. Sa
pamamagitan ng salitang "based on," naroroon na ang free trade sapagkat tayo ay mananatiling
tagapagluwas ng hilaw na sangkap at tagaangkat ng yaring produkto. Pangalawa, naroroon pa rin ang parity
rights, ang service contract, ang 60-40 equity sa natural resources. Habang naghihirap ang sambayanang
Pilipino, ginagalugad naman ng mga dayuhan ang ating likas na yaman. Kailan man ang Article on National
Economy and Patrimony ay hindi nagpaalis sa pagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan.
Ang solusyon sa suliranin ng bansa ay dalawa lamang: ang pagpapatupad ng tunay na reporma sa lupa at
ang national industrialization. Ito ang tinatawag naming pagsikat ng araw sa Silangan. Ngunit ang mga
landlords and big businessmen at ang mga komprador ay nagsasabi na ang free trade na ito, ang
kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw ay sisikat sa Kanluran. Kailan man
hindi puwedeng sumikat ang araw sa Kanluran. I vote no.234 [Emphasis supplied.]
This Court is likewise not persuaded.
As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Article on National
Economy and Patrimony. If the CONCOM intended to retain the concept of service contracts under the 1973
Constitution, it could have simply adopted the old terminology ("service contracts") instead of employing new and
unfamiliar terms ("agreements . . . involving either technical or financial assistance"). Such a difference between the
language of a provision in a revised constitution and that of a similar provision in the preceding constitution is viewed
as indicative of a difference in purpose.235 If, as respondents suggest, the concept of "technical or financial
assistance" agreements is identical to that of "service contracts," the CONCOM would not have bothered to fit the
same dog with a new collar. To uphold respondents' theory would reduce the first to a mere euphemism for the
second and render the change in phraseology meaningless.
An examination of the reason behind the change confirms that technical or financial assistance agreements are not
synonymous to service contracts.
[T]he Court in construing a Constitution should bear in mind the object sought to be accomplished by its adoption,
and the evils, if any, sought to be prevented or remedied. A doubtful provision will be examined in light of the history
of the times, and the condition and circumstances under which the Constitution was framed. The object is to ascertain
the reason which induced the framers of the Constitution to enact the particular provision and the purpose sought to
be accomplished thereby, in order to construe the whole as to make the words consonant to that reason and
calculated to effect that purpose.236
As the following question of Commissioner Quesada and Commissioner Villegas' answer shows the drafters intended
to do away with service contracts which were used to circumvent the capitalization (60%-40%) requirement:
MS. QUESADA. The 1973 Constitution used the words "service contracts." In this particular Section 3, is
there a safeguard against the possible control of foreign interests if the Filipinos go into coproduction with
them?
MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts" was our first attempt to avoid
some of the abuses in the past regime in the use of service contracts to go around the 60-40 arrangement.
The safeguard that has been introduced and this, of course can be refined is found in Section 3, lines 25
to 30, where Congress will have to concur with the President on any agreement entered into between a
foreign-owned corporation and the government involving technical or financial assistance for large-scale
exploration, development and utilization of natural resources.237 [Emphasis supplied.]

In a subsequent discussion, Commissioner Villegas allayed the fears of Commissioner Quesada regarding
the participation of foreign interests in Philippine natural resources, which was supposed to be restricted to
Filipinos.
MS. QUESADA. Another point of clarification is the phrase "and utilization of natural resources shall be
under the full control and supervision of the State." In the 1973 Constitution, this was limited to citizens of
the Philippines; but it was removed and substituted by "shall be under the full control and supervision of the
State." Was the concept changed so that these particular resources would be limited to citizens of the
Philippines? Or would these resources only be under the full control and supervision of the State; meaning,
noncitizens would have access to these natural resources? Is that the understanding?
MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence, it states:
Such activities may be directly undertaken by the State, or it may enter into co-production, joint venture, productionsharing agreements with Filipino citizens.
So we are still limiting it only to Filipino citizens.
x x x.
MS. QUESADA. Going back to Section 3, the section suggests that:
The exploration, development, and utilization of natural resources may be directly undertaken by the State, or it
may enter into co-production, joint venture or production-sharing agreement with . . . corporations or associations at
least sixty per cent of whose voting stock or controlling interest is owned by such citizens.
Lines 25 to 30, on the other hand, suggest that in the large-scale exploration, development and utilization of natural
resources, the President with the concurrence of Congress may enter into agreements with foreign-owned
corporations even for technical or financial assistance.
I wonder if this part of Section 3 contradicts the second part. I am raising this point for fear that foreign investors will
use their enormous capital resources to facilitate the actual exploitation or exploration, development and effective
disposition of our natural resources to the detriment of Filipino investors. I am not saying that we should not consider
borrowing money from foreign sources. What I refer to is that foreign interest should be allowed to participate only to
the extent that they lend us money and give us technical assistance with the appropriate government permit. In this
way, we can insure the enjoyment of our natural resources by our own people.
MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investors to participate. It
is only technical or financial assistance they do not own anything but on conditions that have to be determined by
law with the concurrence of Congress. So, it is very restrictive.
If the Commissioner will remember, this removes the possibility for service contracts which we said yesterday were
avenues used in the previous regime to go around the 60-40 requirement.238 [Emphasis supplied.]
The present Chief Justice, then a member of the CONCOM, also referred to this limitation in scope in proposing an
amendment to the 60-40 requirement:
MR. DAVIDE. May I be allowed to explain the proposal?
MR. MAAMBONG. Subject to the three-minute rule, Madam President.
MR. DAVIDE. It will not take three minutes.
The Commission had just approved the Preamble. In the Preamble we clearly stated that the Filipino people are
sovereign and that one of the objectives for the creation or establishment of a government is to conserve and develop
the national patrimony. The implication is that the national patrimony or our natural resources are exclusively

reserved for the Filipino people. No alien must be allowed to enjoy, exploit and develop our natural resources. As a
matter of fact, that principle proceeds from the fact that our natural resources are gifts from God to the Filipino people
and it would be a breach of that special blessing from God if we will allow aliens to exploit our natural resources.
I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the alien corporations but
only for them to render financial or technical assistance. It is not for them to enjoy our natural resources. Madam
President, our natural resources are depleting; our population is increasing by leaps and bounds. Fifty years from
now, if we will allow these aliens to exploit our natural resources, there will be no more natural resources for the next
generations of Filipinos. It may last long if we will begin now. Since 1935 the aliens have been allowed to enjoy to a
certain extent the exploitation of our natural resources, and we became victims of foreign dominance and control. The
aliens are interested in coming to the Philippines because they would like to enjoy the bounty of nature exclusively
intended for Filipinos by God.
And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble "to preserve and
develop the national patrimony for the sovereign Filipino people and for the generations to come," we must at this
time decide once and for all that our natural resources must be reserved only to Filipino citizens.
Thank you.239 [Emphasis supplied.]
The opinion of another member of the CONCOM is persuasive240 and leaves no doubt as to the intention of the
framers to eliminate service contracts altogether. He writes:
Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological undertakings for which the
President may enter into contracts with foreign-owned corporations, and enunciates strict conditions that should
govern such contracts. x x x.
This provision balances the need for foreign capital and technology with the need to maintain the national
sovereignty. It recognizes the fact that as long as Filipinos can formulate their own terms in their own territory, there is
no danger of relinquishing sovereignty to foreign interests.
Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign investors (fully
alien-owned) can NOT participate in Filipino enterprises except to provide: (1) Technical Assistance for highly
technical enterprises; and (2) Financial Assistance for large-scale enterprises.
The intent of this provision, as well as other provisions on foreign investments, is to prevent the practice (prevalent in
the Marcos government) of skirting the 60/40 equation using the cover of service contracts.241[Emphasis supplied.]
Furthermore, it appears that Proposed Resolution No. 496,242 which was the draft Article on National Economy and
Patrimony, adopted the concept of "agreements . . . involving either technical or financial assistance" contained in the
"Draft of the 1986 U.P. Law Constitution Project" (U.P. Law draft) which was taken into consideration during the
deliberation of the CONCOM.243 The former, as well as Article XII, as adopted, employed the same terminology, as
the comparative table below shows:

DRAFT OF THE UP LAW

CONSTITUTION PROJECT

PROPOSED RESOLUTION
NO. 496 OF THE
CONSTITUTIONAL
COMMISSION

ARTICLE XII OF THE 1987

CONSTITUTION

Sec. 1. All lands of the public

domain, waters, minerals, coal,
petroleum and other mineral
oils, all forces of potential

Sec. 3. All lands of the public

domain, waters, minerals, coal,
petroleum and other mineral
oils, all forces of potential

Sec. 2. All lands of the public

domain, waters, minerals, coal,
petroleum, and other mineral
oils, all forces of potential

energy, fisheries, flora and

fauna and other natural
resources of the Philippines
are owned by the State. With
the exception of agricultural
lands, all other natural
resources shall not be
alienated. The exploration,
development and utilization of
natural resources shall be
under the full control and
supervision of the State. Such
activities may be directly
undertaken by the state, or it
may enter into co-production,
joint venture, production
sharing agreements with
Filipino citizens or corporations
or associations sixty per cent of
whose voting stock or
controlling interest is owned by
such citizens for a period of not
more than twenty-five years,
renewable for not more than
twenty-five years and under
such terms and conditions as
may be provided by law. In
case as to water rights for
irrigation, water supply,
fisheries, or industrial uses
other than the development of
water power, beneficial use
may be the measure and limit
of the grant.

energy, fisheries, forests, flora

and fauna, and other natural
resources are owned by the
State. With the exception of
agricultural lands, all other
natural resources shall not be
alienated. The exploration,
development, and utilization of
natural resources shall be
under the full control and
supervision of the State. Such
activities may be directly
undertaken by the State, or it
may enter into co-production,
joint venture, productionsharing agreements with
Filipino citizens or corporations
or associations at least sixty
per cent of whose voting stock
or controlling interest is owned
by such citizens. Such
agreements shall be for a
period of twenty-five years,
renewable for not more than
twenty-five years, and under
such term and conditions as
may be provided by law. In
cases of water rights for
irrigation, water supply,
fisheries or industrial uses
other than the development for
water power, beneficial use
may be the measure and limit
of the grant.

The National Assembly may by

law allow small scale utilization
of natural resources by Filipino
citizens.

The Congress may by law

allow small-scale utilization of
natural resources by Filipino
citizens, as well as cooperative
fish farming in rivers, lakes,
bays, and lagoons.

The National Assembly, may,

by two-thirds vote of all its
members by special law
provide the terms and
conditions under which a
foreign-owned corporation may
enter into agreements with the
government involving either
technical or financial
assistance for large-scale
exploration, development, or
utilization of natural resources.
[Emphasis supplied.]

The President with the

concurrence of Congress, by
special law, shall provide the
terms and conditions under
which a foreign-owned
corporation may enter into
agreements with the
government involving either
technical or financial
assistance for large-scale
exploration, development, and
utilization of natural resources.
[Emphasis supplied.]

energy, fisheries, forests or

timber, wildlife, flora and fauna,
and other natural resources are
owned by the State. With the
exception of agricultural lands,
all other natural resources shall
not be alienated. The
exploration, development, and
utilization of natural resources
shall be under the full control
and supervision of the State.
The State may directly
undertake such activities or it
may enter into co-production,
joint venture, or productionsharing agreements with
Filipino citizens, or
corporations or associations at
least sixty per centum of whose
capital is owned by such
citizens. Such agreements may
be for a period not exceeding
twenty-five years, renewable
for not more than twenty-five
years, and under such terms
and conditions as may be
provided by law. In case of
water rights for irrigation, water
supply, fisheries, or industrial
uses other than the
development of water power,
beneficial use may be the
measure and limit of the grant.
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.
The Congress may, by law,
allow small-scale utilization of
natural resources by Filipino
citizens, as well as cooperative
fish farming, with priority to
subsistence fishermen and
fish-workers in rivers, lakes,
bays, and lagoons.
The President may enter into
agreements with foreign-owned
corporations involving either
technical or financial
assistance for large-scale
exploration, development, and

utilization of minerals,
petroleum, and other mineral
oils according to the general
terms and conditions provided
by law, based on real
contributions to the economic
growth and general welfare of
the country. In such
agreements, the State shall
promote the development and
use of local scientific and
technical resources. [Emphasis
supplied.]
The President shall notify the
Congress of every contract
entered into in accordance with
this provision, within thirty days
from its execution.

The insights of the proponents of the U.P. Law draft are, therefore, instructive in interpreting the phrase "technical or
financial assistance."
In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor Pacifico A. Agabin, who was a
member of the working group that prepared the U.P. Law draft, criticized service contracts for they "lodge exclusive
management and control of the enterprise to the service contractor, which is reminiscent of the old concession
regime. Thus, notwithstanding the provision of the Constitution that natural resources belong to the State, and that
these shall not be alienated, the service contract system renders nugatory the constitutional provisions cited."244 He
elaborates:
Looking at the Philippine model, we can discern the following vestiges of the concession regime, thus:
1. Bidding of a selected area, or leasing the choice of the area to the interested party and then negotiating
the terms and conditions of the contract; (Sec. 5, P.D. 87)
2. Management of the enterprise vested on the contractor, including operation of the field if petroleum is
discovered; (Sec. 8, P.D. 87)
3. Control of production and other matters such as expansion and development; (Sec. 8)
4. Responsibility for downstream operations marketing, distribution, and processing may be with the
contractor (Sec. 8);
5. Ownership of equipment, machinery, fixed assets, and other properties remain with contractor (Sec. 12,
P.D. 87);
6. Repatriation of capital and retention of profits abroad guaranteed to the contractor (Sec. 13, P.D. 87); and
7. While title to the petroleum discovered may nominally be in the name of the government, the contractor
has almost unfettered control over its disposition and sale, and even the domestic requirements of the
country is relegated to a pro rata basis (Sec. 8).

In short, our version of the service contract is just a rehash of the old concession regime x x x. Some people have
pulled an old rabbit out of a magician's hat, and foisted it upon us as a new and different animal.
The service contract as we know it here is antithetical to the principle of sovereignty over our natural resources
restated in the same article of the [1973] Constitution containing the provision for service contracts. If the service
contractor happens to be a foreign corporation, the contract would also run counter to the constitutional provision on
nationalization or Filipinization, of the exploitation of our natural resources.245 [Emphasis supplied. Underscoring in
the original.]
Professor Merlin M. Magallona, also a member of the working group, was harsher in his reproach of the system:
x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the [1973] Charter, but the essence of
nationalism was reduced to hollow rhetoric. The 1973 Charter still provided that the exploitation or development of the
country's natural resources be limited to Filipino citizens or corporations owned or controlled by them. However, the
martial-law Constitution allowed them, once these resources are in their name, to enter into service contracts with
foreign investors for financial, technical, management, or other forms of assistance. Since foreign investors have the
capital resources, the actual exploitation and development, as well as the effective disposition, of the country's natural
resources, would be under their direction, and control, relegating the Filipino investors to the role of second-rate
partners in joint ventures.
Through the instrumentality of the service contract, the 1973 Constitution had legitimized at the highest level of state
policy that which was prohibited under the 1973 Constitution, namely: the exploitation of the country's natural
resources by foreign nationals. The drastic impact of [this] constitutional change becomes more pronounced when it
is considered that the active party to any service contract may be a corporation wholly owned by foreign interests. In
such a case, the citizenship requirement is completely set aside, permitting foreign corporations to obtain actual
possession, control, and [enjoyment] of the country's natural resources.246[Emphasis supplied.]
Accordingly, Professor Agabin recommends that:
Recognizing the service contract for what it is, we have to expunge it from the Constitution and reaffirm ownership
over our natural resources. That is the only way we can exercise effective control over our natural resources.
This should not mean complete isolation of the country's natural resources from foreign investment. Other contract
forms which are less derogatory to our sovereignty and control over natural resources like technical assistance
agreements, financial assistance [agreements], co-production agreements, joint ventures, production-sharing could
still be utilized and adopted without violating constitutional provisions. In other words, we can adopt contract forms
which recognize and assert our sovereignty and ownership over natural resources, and where the foreign entity is just
a pure contractor instead of the beneficial owner of our economic resources.247[Emphasis supplied.]
Still another member of the working group, Professor Eduardo Labitag, proposed that:
2. Service contracts as practiced under the 1973 Constitution should be discouraged, instead the government may be
allowed, subject to authorization by special law passed by an extraordinary majority to enter into either technical or
financial assistance. This is justified by the fact that as presently worded in the 1973 Constitution, a service contract
gives full control over the contract area to the service contractor, for him to work, manage and dispose of the
proceeds or production. It was a subterfuge to get around the nationality requirement of the constitution.248 [Emphasis
supplied.]
In the annotations on the proposed Article on National Economy and Patrimony, the U.P. Law draft summarized the
rationale therefor, thus:
5. The last paragraph is a modification of the service contract provision found in Section 9, Article XIV of the 1973
Constitution as amended. This 1973 provision shattered the framework of nationalism in our fundamental law (see
Magallona, "Nationalism and its Subversion in the Constitution"). Through the service contract, the 1973 Constitution
had legitimized that which was prohibited under the 1935 constitutionthe exploitation of the country's natural
resources by foreign nationals. Through the service contract, acts prohibited by the Anti-Dummy Law were
recognized as legitimate arrangements. Service contracts lodge exclusive management and control of the enterprise
to the service contractor, not unlike the old concession regime where the concessionaire had complete control over

the country's natural resources, having been given exclusive and plenary rights to exploit a particular resource and, in
effect, having been assured of ownership of that resource at the point of extraction (see Agabin, "Service Contracts:
Old Wine in New Bottles"). Service contracts, hence, are antithetical to the principle of sovereignty over our natural
resources, as well as the constitutional provision on nationalization or Filipinization of the exploitation of our natural
resources.
Under the proposed provision, only technical assistance or financial assistance agreements may be entered into, and
only for large-scale activities. These are contract forms which recognize and assert our sovereignty and ownership
over natural resources since the foreign entity is just a pure contractor and not a beneficial owner of our economic
resources. The proposal recognizes the need for capital and technology to develop our natural resources without
sacrificing our sovereignty and control over such resources by the safeguard of a special law which requires twothirds vote of all the members of the Legislature. This will ensure that such agreements will be debated upon
exhaustively and thoroughly in the National Assembly to avert prejudice to the nation.249[Emphasis supplied.]
The U.P. Law draft proponents viewed service contracts under the 1973 Constitution as grants of beneficial
ownership of the country's natural resources to foreign owned corporations. While, in theory, the State owns these
natural resources and Filipino citizens, their beneficiaries service contracts actually vested foreigners with the
right to dispose, explore for, develop, exploit, and utilize the same. Foreigners, not Filipinos, became the beneficiaries
of Philippine natural resources. This arrangement is clearly incompatible with the constitutional ideal of nationalization
of natural resources, with the Regalian doctrine, and on a broader perspective, with Philippine sovereignty.
The proponents nevertheless acknowledged the need for capital and technical know-how in the large-scale
exploitation, development and utilization of natural resources the second paragraph of the proposed draft itself
being an admission of such scarcity. Hence, they recommended a compromise to reconcile the nationalistic
provisions dating back to the 1935 Constitution, which reserved all natural resources exclusively to Filipinos, and the
more liberal 1973 Constitution, which allowed foreigners to participate in these resources through service contracts.
Such a compromise called for the adoption of a new system in the exploration, development, and utilization of natural
resources in the form of technical agreements or financial agreements which, necessarily, are distinct concepts from
service contracts.
The replacement of "service contracts" with "agreements involving either technical or financial assistance," as well
as the deletion of the phrase "management or other forms of assistance," assumes greater significance when note is
taken that the U.P. Law draft proposed other equally crucial changes that were obviously heeded by the CONCOM.
These include the abrogation of the concession system and the adoption of new "options" for the State in the
exploration, development, and utilization of natural resources. The proponents deemed these changes to be more
consistent with the State's ownership of, and its "full control and supervision" (a phrase also employed by the
framers) over, such resources. The Project explained:
3. In line with the State ownership of natural resources, the State should take a more active role in the exploration,
development, and utilization of natural resources, than the present practice of granting licenses, concessions, or
leases hence the provision that said activities shall be under the full control and supervision of the State. There are
three major schemes by which the State could undertake these activities: first, directly by itself; second, by virtue of
co-production, joint venture, production sharing agreements with Filipino citizens or corporations or associations sixty
per cent (60%) of the voting stock or controlling interests of which are owned by such citizens; or third, with a foreignowned corporation, in cases of large-scale exploration, development, or utilization of natural resources through
agreements involving either technical or financial assistance only. x x x.
At present, under the licensing concession or lease schemes, the government benefits from such benefits only
through fees, charges, ad valorem taxes and income taxes of the exploiters of our natural resources. Such benefits
are very minimal compared with the enormous profits reaped by theses licensees, grantees, concessionaires.
Moreover, some of them disregard the conservation of natural resources and do not protect the environment from
degradation. The proposed role of the State will enable it to a greater share in the profits it can also actively
husband its natural resources and engage in developmental programs that will be beneficial to them.
4. Aside from the three major schemes for the exploration, development, and utilization of our natural resources, the
State may, by law, allow Filipino citizens to explore, develop, utilize natural resources in small-scale. This is in
recognition of the plight of marginal fishermen, forest dwellers, gold panners, and others similarly situated who exploit
our natural resources for their daily sustenance and survival.250

Professor Agabin, in particular, after taking pains to illustrate the similarities between the two systems, concluded that
the service contract regime was but a "rehash" of the concession system. "Old wine in new bottles," as he put it. The
rejection of the service contract regime, therefore, is in consonance with the abolition of the concession system.
In light of the deliberations of the CONCOM, the text of the Constitution, and the adoption of other proposed changes,
there is no doubt that the framers considered and shared the intent of the U.P. Law proponents in employing the
phrase "agreements . . . involving either technical or financial assistance."
While certain commissioners may have mentioned the term "service contracts" during the CONCOM deliberations,
they may not have been necessarily referring to the concept of service contracts under the 1973 Constitution. As
noted earlier, "service contracts" is a term that assumes different meanings to different people.251 The commissioners
may have been using the term loosely, and not in its technical and legal sense, to refer, in general, to agreements
concerning natural resources entered into by the Government with foreign corporations. These loose statements do
not necessarily translate to the adoption of the 1973 Constitution provision allowing service contracts.
It is true that, as shown in the earlier quoted portions of the proceedings in CONCOM, in response to Sr. Tan's
question, Commissioner Villegas commented that, other than congressional notification, the only difference between
"future" and "past" "service contracts" is the requirement of a general law as there were no laws previously
authorizing the same.252 However, such remark is far outweighed by his more categorical statement in his exchange
with Commissioner Quesada that the draft article "does not permit foreign investors to participate" in the nation's
natural resources which was exactly what service contracts did except to provide "technical or financial
assistance."253
In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the present charter
prohibits service contracts.254 Commissioner Gascon was not totally averse to foreign participation, but favored
stricter restrictions in the form of majority congressional concurrence.255 On the other hand, Commissioners Garcia
and Tadeo may have veered to the extreme side of the spectrum and their objections may be interpreted as votes
against any foreign participation in our natural resources whatsoever.
WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the Secretary of Justice, expressing the
view that a financial or technical assistance agreement "is no different in concept" from the service contract allowed
under the 1973 Constitution. This Court is not, however, bound by this interpretation. When an administrative or
executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law; and the
administrative interpretation of the law is at best advisory, for it is the courts that finally determine what the law
means.258
In any case, the constitutional provision allowing the President to enter into FTAAs with foreign-owned corporations is
an exception to the rule that participation in the nation's natural resources is reserved exclusively to Filipinos.
Accordingly, such provision must be construed strictly against their enjoyment by non-Filipinos. As Commissioner
Villegas emphasized, the provision is "very restrictive."259 Commissioner Nolledo also remarked that "entering into
service contracts is an exception to the rule on protection of natural resources for the interest of the nation and,
therefore, being an exception, it should be subject, whenever possible, to stringent rules."260Indeed, exceptions
should be strictly but reasonably construed; they extend only so far as their language fairly warrants and all doubts
should be resolved in favor of the general provision rather than the exception.261
With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said Act authorizes
service contracts. Although the statute employs the phrase "financial and technical agreements" in accordance with
the 1987 Constitution, it actually treats these agreements as service contracts that grant beneficial ownership to
foreign contractors contrary to the fundamental law.
Section 33, which is found under Chapter VI (Financial or Technical Assistance Agreement) of R.A. No. 7942 states:
SEC. 33. Eligibility.Any qualified person with technical and financial capability to undertake large-scale exploration,
development, and utilization of mineral resources in the Philippines may enter into a financial or technical assistance
agreement directly with the Government through the Department. [Emphasis supplied.]
"Exploration," as defined by R.A. No. 7942,

means the searching or prospecting for mineral resources by geological, geochemical or geophysical surveys, remote
sensing, test pitting, trending, drilling, shaft sinking, tunneling or any other means for the purpose of determining the
existence, extent, quantity and quality thereof and the feasibility of mining them for profit.262
A legally organized foreign-owned corporation may be granted an exploration permit,263 which vests it with the right to
conduct exploration for all minerals in specified areas,264 i.e., to enter, occupy and explore the same.265Eventually, the
foreign-owned corporation, as such permittee, may apply for a financial and technical assistance agreement.266
"Development" is the work undertaken to explore and prepare an ore body or a mineral deposit for mining, including
the construction of necessary infrastructure and related facilities.267
"Utilization" "means the extraction or disposition of minerals."268 A stipulation that the proponent shall dispose of the
minerals and byproducts produced at the highest price and more advantageous terms and conditions as provided for
under the implementing rules and regulations is required to be incorporated in every FTAA.269
A foreign-owned/-controlled corporation may likewise be granted a mineral processing permit.270 "Mineral processing"
is the milling, beneficiation or upgrading of ores or minerals and rocks or by similar means to convert the same into
marketable products.271
An FTAA contractor makes a warranty that the mining operations shall be conducted in accordance with the
provisions of R.A. No. 7942 and its implementing rules272 and for work programs and minimum expenditures and
commitments.273 And it obliges itself to furnish the Government records of geologic, accounting, and other relevant
data for its mining operation.274
"Mining operation," as the law defines it, means mining activities involving exploration, feasibility, development,
utilization, and processing.275
The underlying assumption in all these provisions is that the foreign contractor manages the mineral resources, just
like the foreign contractor in a service contract.
Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same auxiliary mining rights that it grants
contractors in mineral agreements (MPSA, CA and JV).276 Parenthetically, Sections 72 to 75 use the term "contractor,"
without distinguishing between FTAA and mineral agreement contractors. And so does "holders of mining rights" in
Section 76. A foreign contractor may even convert its FTAA into a mineral agreement if the economic viability of the
contract area is found to be inadequate to justify large-scale mining operations,277provided that it reduces its equity in
the corporation, partnership, association or cooperative to forty percent (40%).278
Finally, under the Act, an FTAA contractor warrants that it "has or has access to all the financing, managerial, and
technical expertise. . . ."279 This suggests that an FTAA contractor is bound to provide some management assistance
a form of assistance that has been eliminated and, therefore, proscribed by the present Charter.
By allowing foreign contractors to manage or operate all the aspects of the mining operation, the above-cited
provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nation's mineral resources to these
contractors, leaving the State with nothing but bare title thereto.
Moreover, the same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally
ordained 60%-40% capitalization requirement for corporations or associations engaged in the exploitation,
development and utilization of Philippine natural resources.
In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article XII of the
Constitution:
(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:
Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person for
purposes of granting an exploration permit, financial or technical assistance agreement or mineral
processing permit.

(2) Section 23,280 which specifies the rights and obligations of an exploration permittee, insofar as said
section applies to a financial or technical assistance agreement,
(3) Section 33, which prescribes the eligibility of a contractor in a financial or technical assistance
agreement;
(4) Section 35,281 which enumerates the terms and conditions for every financial or technical assistance
agreement;
(5) Section 39,282 which allows the contractor in a financial and technical assistance agreement to convert
the same into a mineral production-sharing agreement;
(6) Section 56,283 which authorizes the issuance of a mineral processing permit to a contractor in a financial
and technical assistance agreement;
The following provisions of the same Act are likewise void as they are dependent on the foregoing provisions and
cannot stand on their own:
(1) Section 3 (g),284 which defines the term "contractor," insofar as it applies to a financial or technical
assistance agreement.
Section 34,285 which prescribes the maximum contract area in a financial or technical assistance
agreements;
Section 36,286 which allows negotiations for financial or technical assistance agreements;
Section 37,287 which prescribes the procedure for filing and evaluation of financial or technical assistance
agreement proposals;
Section 38,288 which limits the term of financial or technical assistance agreements;
Section 40,289 which allows the assignment or transfer of financial or technical assistance agreements;
Section 41,290 which allows the withdrawal of the contractor in an FTAA;
The second and third paragraphs of Section 81,291 which provide for the Government's share in a financial
and technical assistance agreement; and
Section 90,292 which provides for incentives to contractors in FTAAs insofar as it applies to said contractors;
When the parts of the statute are so mutually dependent and connected as conditions, considerations, inducements,
or compensations for each other, as to warrant a belief that the legislature intended them as a whole, and that if all
could not be carried into effect, the legislature would not pass the residue independently, then, if some parts are
unconstitutional, all the provisions which are thus dependent, conditional, or connected, must fall with them.293
There can be little doubt that the WMCP FTAA itself is a service contract.
Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit, utilise[,] process and dispose of
all Minerals products and by-products thereof that may be produced from the Contract Area."294 The FTAA also
imbues WMCP with the following rights:
(b) to extract and carry away any Mineral samples from the Contract area for the purpose of conducting
tests and studies in respect thereof;

(c) to determine the mining and treatment processes to be utilised during the Development/Operating Period
and the project facilities to be constructed during the Development and Construction Period;
(d) have the right of possession of the Contract Area, with full right of ingress and egress and the right to
occupy the same, subject to the provisions of Presidential Decree No. 512 (if applicable) and not be
prevented from entry into private ands by surface owners and/or occupants thereof when prospecting,
exploring and exploiting for minerals therein;
xxx
(f) to construct roadways, mining, drainage, power generation and transmission facilities and all other types
of works on the Contract Area;
(g) to erect, install or place any type of improvements, supplies, machinery and other equipment relating to
the Mining Operations and to use, sell or otherwise dispose of, modify, remove or diminish any and all parts
thereof;
(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties, easement rights and
the use of timber, sand, clay, stone, water and other natural resources in the Contract Area without cost for
the purposes of the Mining Operations;
xxx
(i) have the right to mortgage, charge or encumber all or part of its interest and obligations under this
Agreement, the plant, equipment and infrastructure and the Minerals produced from the Mining Operations;
x x x. 295
All materials, equipment, plant and other installations erected or placed on the Contract Area remain the property of
WMCP, which has the right to deal with and remove such items within twelve months from the termination of the
FTAA.296
Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, management and personnel
necessary for the Mining Operations." The mining company binds itself to "perform all Mining Operations . . .
providing all necessary services, technology and financing in connection therewith,"297 and to "furnish all materials,
labour, equipment and other installations that may be required for carrying on all Mining Operations."298> WMCP may
make expansions, improvements and replacements of the mining facilities and may add such new facilities as it
considers necessary for the mining operations.299
These contractual stipulations, taken together, grant WMCP beneficial ownership over natural resources that properly
belong to the State and are intended for the benefit of its citizens. These stipulations are abhorrent to the 1987
Constitution. They are precisely the vices that the fundamental law seeks to avoid, the evils that it aims to suppress.
Consequently, the contract from which they spring must be struck down.
In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the Promotion and Protection of
Investments between the Philippine and Australian Governments, which was signed in Manila on January 25, 1995
and which entered into force on December 8, 1995.
x x x. Article 2 (1) of said treaty states that it applies to investments whenever made and thus the fact that [WMCP's]
FTAA was entered into prior to the entry into force of the treaty does not preclude the Philippine Government from
protecting [WMCP's] investment in [that] FTAA. Likewise, Article 3 (1) of the treaty provides that "Each Party shall
encourage and promote investments in its area by investors of the other Party and shall [admit] such investments in
accordance with its Constitution, Laws, regulations and investment policies" and in Article 3 (2), it states that "Each
Party shall ensure that investments are accorded fair and equitable treatment." The latter stipulation indicates that it
was intended to impose an obligation upon a Party to afford fair and equitable treatment to the investments of the
other Party and that a failure to provide such treatment by or under the laws of the Party may constitute a breach of
the treaty. Simply stated, the Philippines could not, under said treaty, rely upon the inadequacies of its own laws to
deprive an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without

likewise nullifying the service contracts entered into before the enactment of RA 7942 such as those mentioned in PD
87 or EO 279.
This becomes more significant in the light of the fact that [WMCP's] FTAA was executed not by a mere Filipino citizen,
but by the Philippine Government itself, through its President no less, which, in entering into said treaty is assumed to
be aware of the existing Philippine laws on service contracts over the exploration, development and utilization of
natural resources. The execution of the FTAA by the Philippine Government assures the Australian Government that
the FTAA is in accordance with existing Philippine laws.300 [Emphasis and italics by private respondents.]
The invalidation of the subject FTAA, it is argued, would constitute a breach of said treaty which, in turn, would
amount to a violation of Section 3, Article II of the Constitution adopting the generally accepted principles of
international law as part of the law of the land. One of these generally accepted principles is pacta sunt servanda,
which requires the performance in good faith of treaty obligations.
Even assuming arguendo that WMCP is correct in its interpretation of the treaty and its assertion that "the Philippines
could not . . . deprive an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's]
FTAA without likewise nullifying the service contracts entered into before the enactment of RA 7942 . . .," the
annulment of the FTAA would not constitute a breach of the treaty invoked. For this decision herein invalidating the
subject FTAA forms part of the legal system of the Philippines.301 The equal protection clause302 guarantees that such
decision shall apply to all contracts belonging to the same class, hence, upholding rather than violating, the "fair and
equitable treatment" stipulation in said treaty.
One other matter requires clarification. Petitioners contend that, consistent with the provisions of Section 2, Article XII
of the Constitution, the President may enter into agreements involving "either technical or financial assistance" only.
The agreement in question, however, is a technical and financial assistance agreement.
Petitioners' contention does not lie. To adhere to the literal language of the Constitution would lead to absurd
consequences.303 As WMCP correctly put it:
x x x such a theory of petitioners would compel the government (through the President) to enter into contract with two
(2) foreign-owned corporations, one for financial assistance agreement and with the other, for technical assistance
over one and the same mining area or land; or to execute two (2) contracts with only one foreign-owned corporation
which has the capability to provide both financial and technical assistance, one for financial assistance and another
for technical assistance, over the same mining area. Such an absurd result is definitely not sanctioned under the
canons of constitutional construction.304 [Underscoring in the original.]
Surely, the framers of the 1987 Charter did not contemplate such an absurd result from their use of "either/or." A
constitution is not to be interpreted as demanding the impossible or the impracticable; and unreasonable or absurd
consequences, if possible, should be avoided.305 Courts are not to give words a meaning that would lead to absurd or
unreasonable consequences and a literal interpretation is to be rejected if it would be unjust or lead to absurd
results.306 That is a strong argument against its adoption.307 Accordingly, petitioners' interpretation must be rejected.
The foregoing discussion has rendered unnecessary the resolution of the other issues raised by the petition.
WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional and void:
(1) The following provisions of Republic Act No. 7942:
(a) The proviso in Section 3 (aq),
(b) Section 23,
(c) Section 33 to 41,
(d) Section 56,
(e) The second and third paragraphs of Section 81, and

(f) Section 90.

(2) All provisions of Department of Environment and Natural Resources Administrative Order 96-40, s. 1996
which are not in conformity with this Decision, and
(3) The Financial and Technical Assistance Agreement between the Government of the Republic of the
Philippines and WMC Philippines, Inc.
SO ORDERED.
G.R. No. 147387

December 10, 2003

RODOLFO C. FARIAS, MANUEL M. GARCIA, FRANCIS G. ESCUDERO, and AGAPITO A. AQUINO, AS

MEMBERS OF THE HOUSE OF REPRESENTATIVES AND ALSO AS TAXPAYERS, IN THEIR OWN BEHALF AND
IN REPRESENTATION OF THE MEMBERS OF THE MINORITY IN THE HOUSE OF
REPRESENTATIVES,petitioners,
vs.
THE EXECUTIVE SECRETARY, COMMISSION ON ELECTIONS, HON. FELICIANO R. BELMONTE, JR.,
SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT, SECRETARY OF THE SENATE, AND SECRETARY
GENERAL OF THE HOUSE OF REPRESENTATIVES, respondents.
x-----------------------x
G.R. No. 152161
CONG. GERRY A. SALAPUDDIN, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
DECISION
CALLEJO, SR., J.:
Before the Court are two Petitions under Rule 65 of the Rules of Court, as amended, seeking to declare as
unconstitutional Section 14 of Republic Act No. 9006 (The Fair Election Act), insofar as it expressly repeals Section
67 of Batas Pambansa Blg. 881 (The Omnibus Election Code) which provides:
SEC. 67. Candidates holding elective office. Any elective official, whether national or local, running for any office
other than the one which he is holding in a permanent capacity, except for President and Vice-President, shall be
considered ipso facto resigned from his office upon the filing of his certificate of candidacy.
The petition for certiorari and prohibition in G.R. No. 147387 was filed by Rodolfo C. Farias, Manuel M. Garcia,
Francis G. Escudero and Agapito A. Aquino. At the time of filing of the petition, the petitioners were members of the
minority bloc in the House of Representatives. Impleaded as respondents are: the Executive Secretary, then Speaker
of the House of Representatives Feliciano R. Belmonte, Jr., the Commission on Elections, the Secretary of the
Department of the Interior and Local Government (DILG), the Secretary of the Senate and the Secretary General of
the House of Representatives.
The petition for prohibition in G.R. No. 152161 was filed by Gerry A. Salapuddin, then also a member of the House of
Representatives. Impleaded as respondent is the COMELEC.
Legislative History of Republic Act No. 9006

Rep. Act No. 9006, entitled "An Act to Enhance the Holding of Free, Orderly, Honest, Peaceful and Credible Elections
through Fair Election Practices," is a consolidation of the following bills originating from the House of Representatives
and the Senate, respectively:
House Bill (HB) No. 9000 entitled "AN ACT ALLOWING THE USE OF MASS MEDIA FOR ELECTION
PROPAGANDA, AMENDING FOR THE PURPOSE BATAS PAMBANSA BILANG 881, OTHERWISE KNOWN AS
THE OMNIBUS ELECTION CODE, AS AMENDED, AND FOR OTHER PURPOSES;" 1

Senate Bill (SB) No. 1742 entitled "AN ACT TO ENHANCE THE HOLDING OF FREE, ORDERLY, HONEST,
PEACEFUL, AND CREDIBLE ELECTIONS THROUGH FAIR ELECTION PRACTICES." 2
A Bicameral Conference Committee, composed of eight members of the Senate3 and sixteen (16) members of the
House of Representatives,4 was formed to reconcile the conflicting provisions of the House and Senate versions of
the bill.
On November 29, 2000, the Bicameral Conference Committee submitted its Report,5 signed by its members,
recommending the approval of the bill as reconciled and approved by the conferees.
During the plenary session of the House of Representatives on February 5, 2001, Rep. Jacinto V. Paras proposed an
amendment to the Bicameral Conference Committee Report. Rep. Didagen P. Dilangalen raised a point of order
commenting that the House could no longer submit an amendment thereto. Rep. Sergio A.F. Apostol thereupon
moved that the House return the report to the Bicameral Conference Committee in view of the proposed amendment
thereto. Rep. Dilangalen expressed his objection to the proposal. However, upon viva voce voting, the majority of the
House approved the return of the report to the Bicameral Conference Committee for proper action.6
In view of the proposed amendment, the House of Representatives elected anew its conferees7 to the Bicameral
Conference Committee.8 Then again, for unclear reasons, upon the motion of Rep. Ignacio R. Bunye, the House
elected another set of conferees9 to the Bicameral Conference Committee.10
On February 7, 2001, during the plenary session of the House of Representatives, Rep. Bunye moved that the House
consider the Bicameral Conference Committee Report on the contrasting provisions of HB No. 9000 and SB No.
1742. Rep. Dilangalen observed that the report had been recommitted to the Bicameral Conference Committee. The
Chair responded that the Bicameral Conference Report was a new one, and was a result of the reconvening of a new
Bicameral Conference Committee. Rep. Dilangalen then asked that he be given time to examine the new report.
Upon motion of Rep. Apostol, the House deferred the approval of the report until the other members were given a
copy thereof.11
After taking up other pending matters, the House proceeded to vote on the Bicameral Conference Committee Report
on the disagreeing provisions of HB No. 9000 and SB No. 1742. The House approved the report with 125 affirmative
votes, 3 negative votes and no abstention. In explaining their negative votes, Reps. Farias and Garcia expressed
their belief that Section 14 thereof was a rider. Even Rep. Escudero, who voted in the affirmative, expressed his
doubts on the constitutionality of Section 14. Prior to casting his vote, Rep. Dilangalen observed that no senator
signed the Bicameral Conference Committee Report and asked if this procedure was regular.12
On the same day, the Senate likewise approved the Bicameral Conference Committee Report on the contrasting
provisions of SB No. 1742 and HB No. 9000.
Thereafter, Rep. Act No. 9006 was duly signed by then Senate President Aquilino Pimentel, Jr. and then Speaker of
the House of Representatives Feliciano R. Belmonte, Jr. and was duly certified by the Secretary of the Senate
Lutgardo B. Barbo and the Secretary General of the House of Representatives Robert P. Nazareno as "the
consolidation of House Bill No. 9000 and Senate Bill No. 1742," and "finally passed by both Houses on February 7,
2001."

President Gloria Macapagal-Arroyo signed Rep. Act No. 9006 into law on February 12, 2001.
The Petitioners Case
The petitioners now come to the Court alleging in the main that Section 14 of Rep. Act No. 9006, insofar as it repeals
Section 67 of the Omnibus Election Code, is unconstitutional for being in violation of Section 26(1), Article VI of the
Constitution, requiring every law to have only one subject which should be expressed in its title.
According to the petitioners, the inclusion of Section 14 repealing Section 67 of the Omnibus Election Code in Rep.
Act No. 9006 constitutes a proscribed rider. They point out the dissimilarity in the subject matter of Rep. Act No. 9006,
on the one hand, and Section 67 of the Omnibus Election Code, on the other. Rep. Act No. 9006 primarily deals with
the lifting of the ban on the use of media for election propaganda and the elimination of unfair election practices, while
Section 67 of the Omnibus Election Code imposes a limitation on elective officials who run for an office other than the
one they are holding in a permanent capacity by considering them as ipso facto resigned therefrom upon filing of the
certificate of candidacy. The repeal of Section 67 of the Omnibus Election Code is thus not embraced in the title, nor
germane to the subject matter of Rep. Act No. 9006.
The petitioners also assert that Section 14 of Rep. Act No. 9006 violates the equal protection clause of the
Constitution because it repeals Section 67 only of the Omnibus Election Code, leaving intact Section 66 thereof which
imposes a similar limitation to appointive officials, thus:
SEC. 66. Candidates holding appointive office or position. Any person holding a public appointive office or position,
including active members of the Armed Forces of the Philippines, and officers and employees in government-owned
or controlled corporations, shall be considered ipso facto resigned from his office upon the filing of his certificate of
candidacy.
They contend that Section 14 of Rep. Act No. 9006 discriminates against appointive officials. By the repeal of Section
67, an elective official who runs for office other than the one which he is holding is no longer considered ipso facto
resigned therefrom upon filing his certificate of candidacy. Elective officials continue in public office even as they
campaign for reelection or election for another elective position. On the other hand, Section 66 has been retained;
thus, the limitation on appointive officials remains - they are still considered ipso facto resigned from their offices upon
the filing of their certificates of candidacy.
The petitioners assert that Rep. Act No. 9006 is null and void in its entirety as irregularities attended its enactment
into law. The law, not only Section 14 thereof, should be declared null and void. Even Section 16 of the law which
provides that "[t]his Act shall take effect upon its approval" is a violation of the due process clause of the Constitution,
as well as jurisprudence, which require publication of the law before it becomes effective.
Finally, the petitioners maintain that Section 67 of the Omnibus Election Code is a good law; hence, should not have
been repealed. The petitioners cited the ruling of the Court in Dimaporo v. Mitra, Jr.,13 that Section 67 of the Omnibus
Election Code is based on the constitutional mandate on the "Accountability of Public Officers:"14
Sec. 1. Public office is a public trust. Public officers and employees must at all times be accountable to the people,
serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest
lives.
Consequently, the respondents Speaker and Secretary General of the House of Representatives acted with grave
abuse of discretion amounting to excess or lack of jurisdiction for not considering those members of the House who
ran for a seat in the Senate during the May 14, 2001 elections as ipso facto resigned therefrom, upon the filing of
their respective certificates of candidacy.
The Respondents Arguments
For their part, the respondents, through the Office of the Solicitor General, urge this Court to dismiss the petitions
contending, preliminarily, that the petitioners have no legal standing to institute the present suit. Except for the fact

that their negative votes were overruled by the majority of the members of the House of Representatives, the
petitioners have not shown that they have suffered harm as a result of the passage of Rep. Act No. 9006. Neither do
petitioners have any interest as taxpayers since the assailed statute does not involve the exercise by Congress of its
taxing or spending power.
Invoking the "enrolled bill" doctrine, the respondents refute the petitioners allegations that "irregularities" attended the
enactment of Rep. Act No. 9006. The signatures of the Senate President and the Speaker of the House, appearing
on the bill and the certification signed by the respective Secretaries of both houses of Congress, constitute proof
beyond cavil that the bill was duly enacted into law.
The respondents contend that Section 14 of Rep. Act No. 9006, as it repeals Section 67 of the Omnibus Election
Code, is not a proscribed rider nor does it violate Section 26(1) of Article VI of the Constitution. The title of Rep. Act
No. 9006, "An Act to Enhance the Holding of Free, Orderly, Honest, Peaceful and Credible Elections through Fair
Election Practices," is so broad that it encompasses all the processes involved in an election exercise, including the
filing of certificates of candidacy by elective officials.
They argue that the repeal of Section 67 is germane to the general subject of Rep. Act No. 9006 as expressed in its
title as it eliminates the effect of prematurely terminating the term of an elective official by his filing of a certificate of
candidacy for an office other than the one which he is permanently holding, such that he is no longer considered ipso
facto resigned therefrom. The legislature, by including the repeal of Section 67 of the Omnibus Election Code in Rep.
Act No. 9006, has deemed it fit to remove the "unfairness" of considering an elective official ipso facto resigned from
his office upon the filing of his certificate of candidacy for another elective office. With the repeal of Section 67, all
elective officials are now placed on equal footing as they are allowed to finish their respective terms even if they run
for any office, whether the presidency, vice-presidency or other elective positions, other than the one they are holding
in a permanent capacity.
The respondents assert that the repeal of Section 67 of the Omnibus Election Code need not be expressly stated in
the title of Rep. Act No. 9006 as the legislature is not required to make the title of the act a complete index of its
contents. It must be deemed sufficient that the title be comprehensive enough reasonably to include the general
subject which the statute seeks to effect without expressing each and every means necessary for its accomplishment.
Section 26(1) of Article VI of the Constitution merely calls for all the parts of an act relating to its subject to find
expression in its title. Mere details need not be set forth.
According to the respondents, Section 14 of Rep. Act No. 9006, insofar as it repeals Section 67, leaving Section 66 of
the Omnibus Election Code intact and effective, does not violate the equal protection clause of the Constitution.
Section 67 pertains to elective officials while Section 66 pertains to appointive officials. A substantial distinction exists
between these two sets of officials; elective officials occupy their office by virtue of their mandate based upon the
popular will, while the appointive officials are not elected by popular will. The latter cannot, therefore, be similarly
treated as the former. Equal protection simply requires that all persons or things similarly situated are treated alike,
both as to rights conferred and responsibilities imposed.
Further, Section 16, or the "Effectivity" clause, of Rep. Act No. 9006 does not run afoul of the due process clause of
the Constitution as it does not entail any arbitrary deprivation of life, liberty and property. Specifically, the section
providing for penalties in cases of violations thereof presume that the formalities of the law would be observed, i.e.,
charges would first be filed, and the accused would be entitled to a hearing before judgment is rendered by a court
having jurisdiction. In any case, the issue about lack of due process is premature as no one has, as yet, been
charged with violation of Rep. Act No. 9006.
Finally, the respondents submit that the respondents Speaker and Secretary General of the House of
Representatives did not commit grave abuse of discretion in not excluding from the Rolls those members thereof who
ran for the Senate during the May 14, 2001 elections. These respondents merely complied with Rep. Act No. 9006,
which enjoys the presumption of validity until declared otherwise by the Court.
The Courts Ruling

Before resolving the petitions on their merits, the Court shall first rule on the procedural issue raised by the
respondents, i.e., whether the petitioners have the legal standing or locus standi to file the petitions at bar.
The petitions were filed by the petitioners in their capacities as members of the House of Representatives, and as
taxpayers and registered voters.
Generally, a party who impugns the validity of a statute must have a personal and substantial interest in the case
such that he has sustained, or will sustain, direct injury as a result of its enforcement.15 The rationale for requiring a
party who challenges the constitutionality of a statute to allege such a personal stake in the outcome of the
controversy is "to assure that concrete adverseness which sharpens the presentation of issues upon which the court
so largely depends for illumination of difficult constitutional questions."16
However, being merely a matter of procedure, this Court, in several cases involving issues of "overarching
significance to our society,"17 had adopted a liberal stance on standing. Thus, in Tatad v. Secretary of the Department
of Energy,18 this Court brushed aside the procedural requirement of standing, took cognizance of, and subsequently
granted, the petitions separately filed by then Senator Francisco Tatad and several members of the House of
Representatives assailing the constitutionality of Rep. Act No. 8180 (An Act Deregulating the Downstream Oil
Industry and For Other Purposes).
The Court likewise took cognizance of the petition filed by then members of the House of Representatives which
impugned as unconstitutional the validity of a provision of Rep. Act No. 6734 (Organic Act for the Autonomous Region
in Muslim Mindanao) in Chiongbian v. Orbos.19 Similarly, the Court took cognizance of the petition filed by then
members of the Senate, joined by other petitioners, which challenged the validity of Rep. Act No. 7716 (Expanded
Value Added Tax Law) in Tolentino v. Secretary of Finance.20
Members of Congress, such as the petitioners, were likewise allowed by this Court to challenge the validity of acts,
decisions, rulings, or orders of various government agencies or instrumentalities in Del Mar v. Philippine Amusement
and Gaming Corporation,21 Kilosbayan, Inc. v. Guingona, Jr.,22 Philippine Constitution Association v.
Enriquez,23 Albano v. Reyes,24 and Bagatsing v. Committee on Privatization.25
Certainly, the principal issue posed by the petitions, i.e., whether Section 67 of the Omnibus Election Code, which this
Court had declared in Dimaporo26 as deriving its existence from the constitutional provision on accountability of public
officers, has been validly repealed by Section 14 of Rep. Act No. 9006, is one of "overarching significance" that
justifies this Courts adoption of a liberal stance vis--vis the procedural matter on standing. Moreover, with the
national elections barely seven months away, it behooves the Court to confront the issue now and resolve the same
forthrightly. The following pronouncement of the Court is quite apropos:
... All await the decision of this Court on the constitutional question. Considering, therefore, the importance which the
instant case has assumed and to prevent multiplicity of suits, strong reasons of public policy demand that [its]
constitutionality . . . be now resolved. It may likewise be added that the exceptional character of the situation that
confronts us, the paramount public interest, and the undeniable necessity for a ruling, the national elections beings
barely six months away, reinforce our stand.27
Every statute is presumed valid.28 The presumption is that the legislature intended to enact a valid, sensible and just
law and one which operates no further than may be necessary to effectuate the specific purpose of the law.29
It is equally well-established, however, that the courts, as guardians of the Constitution, have the inherent authority to
determine whether a statute enacted by the legislature transcends the limit imposed by the fundamental law.30 And
where the acts of the other branches of government run afoul of the Constitution, it is the judiciarys solemn and
sacred duty to nullify the same.31
Proceeding from these guideposts, the Court shall now resolve the substantial issues raised by the petitions.
Section 14 of Rep. Act No. 9006 Is Not a Rider32

At the core of the controversy is Section 14, the repealing clause of Rep. Act No. 9006, which provides:
Sec. 14. Sections 67 and 85 of the Omnibus Election Code (Batas Pambansa Blg. 881) and Sections 10 and 11 of
Republic Act No. 6646 are hereby repealed. As a consequence, the first proviso in the third paragraph of Section 11
of Republic Act No. 8436 is rendered ineffective. All laws, presidential decrees, executive orders, rules and
regulations, or any part thereof inconsistent with the provisions of this Act are hereby repealed or modified or
amended accordingly.
The repealed provision, Section 67 of the Omnibus Election Code, quoted earlier, reads:
SEC. 67. Candidates holding elective office. Any elective official, whether national or local, running for any office
other than the one which he is holding in a permanent capacity, except for President and Vice-President, shall be
considered ipso facto resigned from his office upon the filing of his certificate of candidacy.
Section 26(1), Article VI of the Constitution provides:
SEC. 26 (1). Every bill passed by the Congress shall embrace only one subject which shall be expressed in the title
thereof.
The proscription is aimed against the evils of the so-called omnibus bills and log-rolling legislation as well as
surreptitious and/or unconsidered encroaches. The provision merely calls for all parts of an act relating to its subject
finding expression in its title.33
To determine whether there has been compliance with the constitutional requirement that the subject of an act shall
be expressed in its title, the Court laid down the rule that
Constitutional provisions relating to the subject matter and titles of statutes should not be so narrowly construed as to
cripple or impede the power of legislation. The requirement that the subject of an act shall be expressed in its title
should receive a reasonable and not a technical construction. It is sufficient if the title be comprehensive enough
reasonably to include the general object which a statute seeks to effect, without expressing each and every end and
means necessary or convenient for the accomplishing of that object. Mere details need not be set forth. The title need
not be an abstract or index of the Act.34
The title of Rep. Act No. 9006 reads: "An Act to Enhance the Holding of Free, Orderly, Honest, Peaceful and Credible
Elections through Fair Election Practices." Section 2 of the law provides not only the declaration of principles but also
the objectives thereof:
Sec. 2. Declaration of Principles. The State shall, during the election period, supervise or regulate the enjoyment or
utilization of all franchises or permits for the operation of media of communication or information to guarantee or
ensure equal opportunity for public service, including access to media time and space, and the equitable right to
reply, for public information campaigns and fora among candidates and assure free, orderly, honest, peaceful and
credible elections.
The State shall ensure that bona fide candidates for any public office shall be free from any form of harassment and
discrimination.35
The Court is convinced that the title and the objectives of Rep. Act No. 9006 are comprehensive enough to include
the repeal of Section 67 of the Omnibus Election Code within its contemplation. To require that the said repeal of
Section 67 of the Code be expressed in the title is to insist that the title be a complete index of its content. 36
The purported dissimilarity of Section 67 of the Omnibus Election Code, which imposes a limitation on elective
officials who run for an office other than the one they are holding, to the other provisions of Rep. Act No. 9006, which
deal with the lifting of the ban on the use of media for election propaganda, does not violate the "one subject-one title"
rule. This Court has held that an act having a single general subject, indicated in the title, may contain any number of

provisions, no matter how diverse they may be, so long as they are not inconsistent with or foreign to the general
subject, and may be considered in furtherance of such subject by providing for the method and means of carrying out
the general subject.37
The deliberations of the Bicameral Conference Committee on the particular matter are particularly instructive:
SEN. LEGARDA-LEVISTE:
Yes, Mr. Chairman, I just wanted to clarify.
So all were looking for now is an appropriate title to make it broader so that it would cover this provision [referring to
the repeal of Section 67 of the Omnibus Election Code], is that correct? Thats all. Because I believe ...
THE CHAIRMAN (REP. SYJUCO):
We are looking for an appropriate coverage which will result in the nomenclature or title.
SEN. LEGARDA-LEVISTE:
Because I really do not believe that it is out of place. I think that even with the term "fair election practice," it really
covers it, because as expressed by Senator Roco, those conditions inserted earlier seemed unfair and it is an
election practice and, therefore, I think, Im very comfortable with the title "Fair Election Practice" so that we can get
over with these things so that we dont come back again until we find the title. I mean, its one provision which I think
is fair for everybody. It may seem like a limitation but this limitation actually provides for fairness in election practices
as the title implies.
THE CHAIRMAN (REP. SYJUCO):
Yes.
SEN. LEGARDA-LEVISTE:
So I would want to beg the House contingent, lets get it over with. To me, ha, its not a very touchy issue. For me, its
even a very correct provision. I feel very comfortable with it and it was voted in the Senate, at least, so I would like to
appeal to the ... para matapos na, then we come back as a Bicam just for the title Is that what youre ...?
THE CHAIRMAN (REP. SYJUCO):
Its not the title per se, its the coverage. So if you will just kindly bear with us. Im happy that there is already one
comfortable senator there among ... several of us were also comfortable with it. But it would be well that when we rise
from this Bicam that were all comfortable with it.
THE CHAIRMAN (SEN. ROCO):
Yes. Anyway, lets listen to Congressman Marcos.
REP. MARCOS:
Mr. Chairman, may I just make the observation that although it is true that the bulk of provisions deals with the area of
propaganda and political advertising, the complete title is actually one that indulge full coverage. It says "An Act to
enhance the holding of free, orderly, honest ... elections through fair election practices." But as you said, we will put
that aside to discuss later one.

Secondly, I think the Declaration of Principles contained in Section 2, paragraph 2 is perfectly adequate in that it says
that it shall ensure candidates for public office that may be free from any form of harassment and discrimination.
Surely this provision in Section 67 of the old Election Code of the existing Omnibus Election Code is a form of
harassment or discrimination. And so I think that in the effort at leveling the playing field, we can cover this and it
should not be considered a rider.
SEN. LEGARDA-LEVISTE:
I agree, Mr. Chairman. I think the Congresswoman from Ilocos had very clearly put it, that it is covered in the
Declaration of Principles and in the objective of this bill. And therefore, I hope that the House contingent would agree
to this so that we can finish it now. And it expressly provides for fair election practices because ...
THE CHAIRMAN (SEN. ROCO):
Yeah, I think what is on the table is that we are not disputing this, but we are looking for a title that is more generic so
that then we have less of an objection on constitutionality. I think thats the theory. So, there is acceptance of this.
Maybe we should not call it na limitation on elected officials. Maybe we should say the special provision on elected
officials. So how is that? Alam mo ito ...
REP. MARCOS:
I think we just change the Section 1, the short title.
THE CHAIRMAN (SEN. ROCO):
Also, Then we say - - on the short title of the Act, we say ...
REP. MARCOS:
What if we say fair election practices? Maybe that should be changed...
THE CHAIRMAN (SEN. ROCO):
O, sige, fine, fine. Lets a brainstorm. Equal...
REP. PADILLA:
Mr. Chairman, why dont we use "An Act rationalizing the holding of free, orderly, honest, peaceful and credible
elections, amending for the purpose Batasang Pambansa known as the Omnibus Election Code?"
THE CHAIRMAN (SEN. ROCO):
Why dont we remove "fair" and then this shall be cited as Election Practices Act?"
REP. PICHAY:
Thats not an election practice. Thats a limitation.
THE CHAIRMAN (SEN. ROCO):

Ah - - - ayaw mo iyong practice. O, give me another noun.

REP. MARCOS:
The Fair Election.
THE CHAIRMAN (SEN. ROCO):
O, Fair Election Act.
REP. MACARAMBON:
Nagbi-brainstorm tayo dito, eh. How about if we change the title to enhance the holding of free, orderly, honest,
peaceful and ensure equal opportunity for public service through fair election practices?
REP. PICHAY:
Fair election practices?
REP. MACARAMBON:
Yeah. To ensure equal opportunity for public service through fair ...
THE CHAIRMAN (SEN. ROCO):
Wala nang practices nga.
REP. PICHAY:
Wala nang practices.
THE CHAIRMAN (SEN. ROCO):
It shall be cited as Fair Election Act.
(Informal discussions)
REP. PICHAY:
Approve na iyan.
THE CHAIRMAN (SEN. ROCO):
Done. So, okay na iyon. The title will be "Fair Election Act."
The rest wala nang problema ano?
VOICES:
Wala na.

REP. MACARAMBON:
Wala na iyong practices?
THE CHAIRMAN (SEN. ROCO):
Wala na, wala na. Mahina tayo sa practice, eh.
O, wala na? We will clean up.
REP. MARCOS:
Title?
THE CHAIRMAN (SEN. ROCO):
The short title, "This Act ..."
THE CHAIRMAN (REP. SYJUCO):
Youre back to your No. 21 already.
REP. MARCOS:
The full title, the same?
THE CHAIRMAN (SEN. ROCO):
Iyon na nga. The full title is "An Act to enhance the holding ..." Thats the House version, eh, dahil pareho, hindi ba?
Then the short title "This Act shall be known as the Fair Election Act." 38
The legislators considered Section 67 of the Omnibus Election Code as a form of harassment or discrimination that
had to be done away with and repealed. The executive department found cause with Congress when the President of
the Philippines signed the measure into law. For sure, some sectors of society and in government may believe that
the repeal of Section 67 is bad policy as it would encourage political adventurism. But policy matters are not the
concern of the Court. Government policy is within the exclusive dominion of the political branches of the
government.39 It is not for this Court to look into the wisdom or propriety of legislative determination. Indeed, whether
an enactment is wise or unwise, whether it is based on sound economic theory, whether it is the best means to
achieve the desired results, whether, in short, the legislative discretion within its prescribed limits should be exercised
in a particular manner are matters for the judgment of the legislature, and the serious conflict of opinions does not
suffice to bring them within the range of judicial cognizance.40 Congress is not precluded from repealing Section 67 by
the ruling of the Court in Dimaporo v. Mitra41 upholding the validity of the provision and by its pronouncement in the
same case that the provision has a laudable purpose. Over time, Congress may find it imperative to repeal the law on
its belief that the election process is thereby enhanced and the paramount objective of election laws the fair, honest
and orderly election of truly deserving members of Congress is achieved.
Moreover, the avowed purpose of the constitutional directive that the subject of a bill should be embraced in its title is
to apprise the legislators of the purposes, the nature and scope of its provisions, and prevent the enactment into law
of matters which have not received the notice, action and study of the legislators and the public.42 In this case, it
cannot be claimed that the legislators were not apprised of the repeal of Section 67 of the Omnibus Election Code as
the same was amply and comprehensively deliberated upon by the members of the House. In fact, the petitioners, as
members of the House of Representatives, expressed their reservations regarding its validity prior to casting their
votes. Undoubtedly, the legislators were aware of the existence of the provision repealing Section 67 of the Omnibus
Election Code.

Section 14 of Rep. Act No. 9006

Is Not Violative of the Equal
Protection Clause of the Constitution43
The petitioners contention, that the repeal of Section 67 of the Omnibus Election Code pertaining to elective officials
gives undue benefit to such officials as against the appointive ones and violates the equal protection clause of the
constitution, is tenuous.
The equal protection of the law clause in the Constitution is not absolute, but is subject to reasonable classification. If
the groupings are characterized by substantial distinctions that make real differences, one class may be treated and
regulated differently from the other.44 The Court has explained the nature of the equal protection guarantee in this
manner:
The equal protection of the law clause is against undue favor and individual or class privilege, as well as hostile
discrimination or the oppression of inequality. It is not intended to prohibit legislation which is limited either in the
object to which it is directed or by territory within which it is to operate. It does not demand absolute equality among
residents; it merely requires that all persons shall be treated alike, under like circumstances and conditions both as to
privileges conferred and liabilities enforced. The equal protection clause is not infringed by legislation which applies
only to those persons falling within a specified class, if it applies alike to all persons within such class, and reasonable
grounds exist for making a distinction between those who fall within such class and those who do not.45
Substantial distinctions clearly exist between elective officials and appointive officials. The former occupy their office
by virtue of the mandate of the electorate. They are elected to an office for a definite term and may be removed
therefrom only upon stringent conditions.46 On the other hand, appointive officials hold their office by virtue of their
designation thereto by an appointing authority. Some appointive officials hold their office in a permanent capacity and
are entitled to security of tenure47 while others serve at the pleasure of the appointing authority.48
Another substantial distinction between the two sets of officials is that under Section 55, Chapter 8, Title I, Subsection
A. Civil Service Commission, Book V of the Administrative Code of 1987 (Executive Order No. 292), appointive
officials, as officers and employees in the civil service, are strictly prohibited from engaging in any partisan political
activity or take part in any election except to vote. Under the same provision, elective officials, or officers or
employees holding political offices, are obviously expressly allowed to take part in political and electoral activities.49
By repealing Section 67 but retaining Section 66 of the Omnibus Election Code, the legislators deemed it proper to
treat these two classes of officials differently with respect to the effect on their tenure in the office of the filing of the
certificates of candidacy for any position other than those occupied by them. Again, it is not within the power of the
Court to pass upon or look into the wisdom of this classification.
Since the classification justifying Section 14 of Rep. Act No. 9006, i.e., elected officials vis-a-vis appointive officials, is
anchored upon material and significant distinctions and all the persons belonging under the same classification are
similarly treated, the equal protection clause of the Constitution is, thus, not infringed.
The Enrolled Bill Doctrine
Is Applicable In this Case
Not content with their plea for the nullification of Section 14 of Rep. Act No. 9006, the petitioners insist that the entire
law should be nullified. They contend that irregularities attended the passage of the said law particularly in the House
of Representatives catalogued thus:
a. Creation of two (2) sets of BCC (Bicameral Conference Committee) members by the House during its
session on February 5, 2001;
b. No communication from the Senate for a conference on the compromise bill submitted by the BCC on
November 29, 2000;

c. The new Report submitted by the 2nd/3rd BCC was presented for approval on the floor without copies
thereof being furnished the members;
d. The 2nd/3rd BCC has no record of its proceedings, and the Report submitted by it was not signed by the
Chairman (Sen. Roco) thereof as well as its senator-members at the time it was presented to and rammed
for approval by the House;
e. There was no meeting actually conducted by the 2nd/3rd BCC and that its alleged Report was instantly
made and passed around for the signature of the BCC members;
f. The Senate has no record of the creation of a 2nd BCC but only of the first one that convened on
November 23, 2000;
g. The "Effectivity" clauses of SB No. 1741 and HB No. 9000, as well as that of the compromise bill
submitted by the BCC that convened on November 20, 2000, were couched in terms that comply with the
publication required by the Civil Code and jurisprudence, to wit:
...
However, it was surreptitiously replaced in its final form as it appears in 16, R.A. No. 9006, with the provision that
"This Act shall take effect immediately upon its approval;"
h. The copy of the compromise bill submitted by the 2nd/3rd BCC that was furnished the members during its
consideration on February 7, 2001, did not have the same 16 as it now appears in RA No. 9006, but 16
of the compromise bill, HB 9000 and SB 1742, reasons for which no objection thereto was made;
i. The alleged BCC Report presented to the House on February 7, 2001, did not "contain a detailed,
sufficiently explicit statement of the changes in or amendments to the subject measure;" and
j. The disappearance of the "Cayetano amendment," which is Section 12 of the compromise bill submitted
by the BCC. In fact, this was the subject of the purported proposed amendment to the compromise bill of
Member Paras as stated in paragraph 7 hereof. The said provision states, thusly:
Sec. 12. Limitation on Elected Officials. Any elected official who runs for president and vice-president shall be
considered ipso facto resigned from his office upon the filing of the certificate of candidacy.50
The petitioners, thus, urge the Court to go behind the enrolled copy of the bill. The Court is not persuaded. Under the
"enrolled bill doctrine," the signing of a bill by the Speaker of the House and the Senate President and the certification
of the Secretaries of both Houses of Congress that it was passed are conclusive of its due enactment. A review of
cases51 reveals the Courts consistent adherence to the rule. The Court finds no reason to deviate from the salutary
rule in this case where the irregularities alleged by the petitioners mostly involved the internal rules of Congress, e.g.,
creation of the 2nd or 3rd Bicameral Conference Committee by the House. This Court is not the proper forum for the
enforcement of these internal rules of Congress, whether House or Senate. Parliamentary rules are merely
procedural and with their observance the courts have no concern.52 Whatever doubts there may be as to the formal
validity of Rep. Act No. 9006 must be resolved in its favor. The Court reiterates its ruling in Arroyo v. De
Venecia,53 viz.:
But the cases, both here and abroad, in varying forms of expression, all deny to the courts the power to inquire into
allegations that, in enacting a law, a House of Congress failed to comply with its own rules, in the absence of showing
that there was a violation of a constitutional provision or the rights of private individuals. In Osmea v. Pendatun, it
was held: "At any rate, courts have declared that the rules adopted by deliberative bodies are subject to revocation,
modification or waiver at the pleasure of the body adopting them. And it has been said that Parliamentary rules are
merely procedural, and with their observance, the courts have no concern. They may be waived or disregarded by
the legislative body. Consequently, mere failure to conform to parliamentary usage will not invalidate the action
(taken by a deliberative body) when the requisite number of members have agreed to a particular measure."

The Effectivity Clause

Is Defective
Finally, the "Effectivity" clause (Section 16) of Rep. Act No. 9006 which provides that it "shall take effect immediately
upon its approval," is defective. However, the same does not render the entire law invalid. In Taada v. Tuvera,54 this
Court laid down the rule:
... the clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement of publication
itself, which cannot in any event be omitted. This clause does not mean that the legislator may make the law effective
immediately upon approval, or on any other date without its previous publication.
Publication is indispensable in every case, but the legislature may in its discretion provide that the usual fifteen-period
shall be shortened or extended.55
Following Article 2 of the Civil Code56 and the doctrine enunciated in Taada, Rep. Act No. 9006, notwithstanding its
express statement, took effect fifteen days after its publication in the Official Gazette or a newspaper of general
circulation.
In conclusion, it bears reiterating that one of the firmly entrenched principles in constitutional law is that the courts do
not involve themselves with nor delve into the policy or wisdom of a statute. That is the exclusive concern of the
legislative branch of the government. When the validity of a statute is challenged on constitutional grounds, the sole
function of the court is to determine whether it transcends constitutional limitations or the limits of legislative
power.57 No such transgression has been shown in this case.
WHEREFORE, the petitions are DISMISSED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 125982 January 22, 1999
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,
vs.
COMMISSION ON AUDIT and MARIANO C. GABORNE, respondents.

PARDO, J.:
The case before the Court is a special civil action of certiorari seeking to review the decision of the Commission on
Audit that affirmed the ruling of Corporate Auditor Mariano C. Gaborne disallowing in audit the payment of death
benefits in the amount of P43,107.19, to the heirs of the late Brig. General Arturo T. Asuncion, who died on November
16, 1987, in a helicopter crash, for the reason that a reserve officer like him of the Armed Forces of the Philippines
was not at that time a compulsory member of the Government Service Insurance System.
The facts may be succinctly related as follows:
In November 1936, Congress enacted Commonwealth Act No. 186, creating the Government Service Insurance
System (hereafter GSIS) to provide insurance coverage and retirement benefits to government officials and
employees, replacing the existing pension systems established in prior laws.
Sec. 4 ofCom. Act No. 186 provided that:
Sec. 4. Scope of application of System. Regular membership in the system shall be compulsory
upon

xxx xxx xxx

d) All officers and enlisted men of the Regular Force, Philippine Army;
The original act has undergone various amendments that increased its coverage and the insurance benefits granted
to members of the System.
On December 2, 1986, President Corazon C. Aquino, exercising legislative powers enacted Executive Order No. 79,
Section 1 (c) of which provides:
Sec. 1 (c). A reserve officer who has satisfactorily rendered a total of ten (10) years continuous
active commissioned military service shall not be reverted to inactive status, except upon his own
request or for cause, up to the time he reaches the compulsory retirement of thirty (30) years of
service or-fifty six (56) years of age, whichever comes later but not later than sixty (60) years of
age.
On November 16, 1987, Brig. General Arturo T. Asuncion met his untimely death in a helicopter crash.
On December 11, 1987, the board of trustees of the GSIS in resolution No. 566, approved the compulsory insurance
coverage of reserve officers of the Armed Forces of the Philippines (hereafter AFP) falling under the provisions of
Executive Order No.79.
In time, the heirs of the late General Asuncion filed a claim with the GSIS for payment of death benefits due to him as
a member of the System.
On January 12, 1987, GSIS Deputy General Counsel Meynardo A. Tiro gave an opinion that "Reserve Officers with
ten (10) years of continuous service have now the same status as regular members of the AFP under Executive
Order No. 79 of President Aquino and are therefore, entitled to the same insurance coverage and benefits as regular
officers of the AFP." 1
On September 4, 1990, Melanio D. Fabia, vice-president, Legal Services Group, GSIS, also gave an opinion that
compulsory coverage of reserve officers AFP took effect on December 23, 1986, the day following E. O. 79's
publication in the Official Gazette. 2
On the basis of the aforesaid legal opinion, on January 4, 1991, the GSIS Quezon City Branch (military) paid the
claim of the heirs of Brig. General Asuncion.
In the course of audit of the account, Auditor Mariano C. Gaborne, then corporate auditor's office officer in charge,
GSIS, disallowed in audit the payment of the claim, pointing out that at the time of his death, General Asuncion was
not a member of the GSIS despite E. O. 79.
The Manager, GSIS, Quezon City Branch I (Military) elevated the case on appeal to the Commission on Audit en
banc.
On January 24, 1995, the Commission on Audit (en banc) denied the appeal and affirmed the decision of the local
auditor.
On August 5, 1996, the Legal Services Group of the GSIS received copy of the COA decision duly transmitted by
letter dated July 26, 1996 of Assistant Commissioner Sofronio L. Flores of the Commission on Audit.
Hence, this petition for certiorari. We grant the petition.
The disallowance of the payment of death benefits to the heirs of the late Brig. General Arturo T. Asuncion was based
on the ruling that he was not a member of the GSIS at the time of his death on November 15, 1987, in a helicopter

crash. According to auditor Gaborne, Executive Order No. 79, dated December 2, 1986, was effective only on its
implementation by resolution (No. 566) of the GSIS board of trustees adopted on December 11, 1987, which was
after the death of Gen. Asuncion.
We do not agree. The aforecited executive order provides for compulsory membership in the GSIS of qualified
reserve officers of the AFP like General Asuncion. It was effective at the time of the death of General Asuncion.
Hence, it becomes the duty of the auditor to approve and pass in audit the valid claim of his heirs for death benefits.
The Commission on Audit's disallowance amounts to a grave abuse of discretion.
Commonwealth Act No. 186, enacted on November 14, 1936, as amended, provides that membership in the system
shall be compulsory upon all regular officers and enlisted men of the Armed Forces of the Philippines.
Executive Order No. 79, issued on December 2, 1986, has the force of law. 3
By the terms of this enactment, qualified reserve officers, meaning, those who have satisfactorily rendered a total of
ten (10) years of continuous active duty commissioned service in the AFP shall not be reverted to inactive status
except upon their own request, or for cause.
Thus, they have the same status as regular commissioned officers of the AFP, who are unquestionably compulsory
members of the System.
The question that arises is when is the executive order effective? The President issued the executive order on
December 2, 1986. It was published in the Official Gazette on December 22, 1986.
Thus, E. O. No. 79 is effective fifteen (15) days following its publication in the Official Gazette, or on January 07,
1987. 4 At that time, the late General Asuncion was a reserve officer who had rendered a total of ten (10) years of
continuous active duty service commission in the AFP. Hence, he was compulsorily covered as a member of the
GSIS on the date he died on November 15, 1987, in line of duty in a helicopter crash. Consequently, his heirs are
entitled to payment of death benefits.
Next, according to auditor Gaborne, the optional insurance policy issued to the late General Asuncion had lapsed on
April 30, 1984, due to non-payment of premiums. The optional insurance policy referred to, however, is distinct from
the compulsory coverage membership in the GSIS. The optional insurance policy was issued on the basis of a
voluntary application under existing regulations and lapsed in April, 1984, due to non-payment of premiums. On the
other hand, qualified reserve officers were covered by compulsory membership in the GSIS under Executive Order
No. 79 effective on January 07, 1987, regardless of whether or not the premiums were paid. Of course, the unpaid
premiums, if any, may be deducted from the proceeds of the policy.1wphi1.nt
WHEREFORE, the Court hereby GRANTS the petition for certiorari. We SET ASIDE the Commission on Audit's
decision dated January 24, 1995, and direct the latter to allow in audit the payment of death benefits to the heirs of
the late Brig. General Arturo T. Asuncion.
No costs.
SO ORDERED.
G.R. No. 117383 March 6, 1995
RIZAL COMMERCIAL BANKING CORPORATION (RCBC), petitioner,
vs.
HON. LUCIA V. ISNANI, PRESIDING JUDGE OF BRANCH 59, RTC, MAKATI, HON. FELICIDAD Y. NAVARROQUIAMBAO, PRESIDING JUDGE, BRANCH 65, MTC, MAKATI, AND LOLITA ENCELAN, respondents.
RESOLUTION

VITUG, J.:
This Court has resolved to reconsider its Resolution, dated 07 November 1994, dismissing the instant petition for
failure to comply with requirement numbered (4) of Revised Circular No. 1-88 (verified statement of material dates),
which it now hereby dispenses with, in the interest of an early guidance on the question posed and in order not to
perpetuate an apparent misapplication by the courts below relative to one particular aspect of Republic Act ("R.A.")
No. 7691 (expanding the jurisdiction of municipal and metropolitan trial courts).
It would appear that in a complaint filed, on 27 April 1994 (a few days after the effectivity of Republic Act No. 7691,
amending Batas Pambansa Blg. 129), with the Makati Regional Trial Court ("RTC"), private respondent Lolita
Encelan sought to recover from petitioner Rizal Commercial Banking Corporation actual damages of $5,000.00 or its
Philippine peso equivalent of approximately P137,675.00. Petitioner thereupon moved to dismiss the case for lack of
jurisdiction on the ground that the complaint was cognizable by the metropolitan trial court (in Metro Manila), not the
RTC, the principal demand prayed for not being in excess of Two Hundred Thousand Pesos (P200,000.00).
Respondent RTC Judge Lucia V. Isnani, instead of dismissing the complaint, transferred, on 08 July 1994, the entire
records of the case to the Metropolitan Trial Court ("MTC"). The case was assigned to the sala of MTC Judge
Felicidad Navarro-Quiambao. Upon learning of the transfer, petitioner sought (with the MTC) a reconsideration
thereof. On 16 September 1994, respondent MTC Judge Navarro-Quiambao issued an Order denying the motion.
Hence, this petition.
The pertinent provisions of R.A. No. 7691 provide:
Sec. 3. Section 33 of the same law is hereby amended to read as follows:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate,
including the grant of provisional remedies in proper cases, where the value of the personal
property, estate, or amount of the demand does not exceed One hundred thousand pesos
(P100,000.00) or, in Metro Manila where such personal property, estate, or amount of the demand
does not exceed Two hundred thousand pesos (P200,000.00), exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses, and costs, the amount of which must be
specifically alleged:Provided, That interest, damages of whatever kind, attorney's fees, litigation
expenses, and costs shall be included in the determination of the filing fees: Provided further, That
where there are several claims or causes of actions between the same or different parties,
embodied in the same complaint, the amount of the demand shall be the totality of the claims in all
the causes of action, irrespective of whether the causes of action arose out of the same or different
transactions.
xxx xxx xxx
Sec. 7. The provisions of this Act shall apply to all civil cases that have not yet reached the pretrial
stage. However, by agreement of all the parties, civil cases cognizable by municipal and
metropolitan courts by the provisions of this Act may be transferred from the Regional Trial Courts
to the latter. The executive judge of the appropriate Regional Trial Court shall define the
administrative procedure of transferring the cases affected by the redefinition of jurisdiction to the
Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts.
The above rules, in easy graphic presentation, may be restated thusly:

A. Civil actions and settlement of estate proceedings, testate or intestate, including the grant of
provisional remedies when warranted, where the value of the personal property, estate, or amount
of the demand does not exceed One Hundred Thousand Pesos (P100,000.00), or Two Hundred
Thousand Pesos (P200,000.00) in Metro Manila, exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses, and costs (the amount of which must be specifically alleged),
shall, after the effectivity of R.A. 7691, be filed with the metropolitan and municipal trial courts.
B. Civil actions or a settlement of estate proceedings, aforesaid, pending with regional trial courts
which have already reached the pretrial stage at the time of the effectivity of R.A. 7691 shall remain
with said courts for proper disposition. The transfer of pending cases (which have already reached
the pretrial stage) to metropolitan or municipal trial courts may be allowed, however, provided the
following conditions concur; viz.:
(a) the case is cognizable by the municipal or metropolitan trial court under the
present provisions of the Act; and
(b) the parties agree to the transfer of the case from the regional trial court to the
municipal or metropolitan trial court.
C. R.A. 7691 took effect on 15 April 1994 or fifteen (15) days after its publication on 30 March 1994.
Cases filed on or after such effectivity date must accord with the new jurisdictional mandate; a
disregard thereof shall constitute a ground for the dismissal of the action or proceeding for lack of
jurisdiction.
In the instant case, the principal demand prayed for in the complaint filed on 27 April 1994, or after R.A. 7691 had
already become effective, with the Makati RTC, is only for US$5,000.00, or approximately P137,675.00 in Philippine
currency, and thusly within the exclusive jurisdiction of the Metro Manila MTCs. Instead of ordering the transfer of the
complaint to the MTC, respondent RTC judge, therefore, should have dismissed the case prayed for by petitioner for
lack of jurisdiction.
WHEREFORE, the motion for reconsideration is GRANTED. The appealed order of RTC Judge Lucia V. Isnani
denying petitioner's motion to dismiss and transferring the case instead to the MTC and the order issued by MTC
Judge Felicidad Y. Navarro-Quiambao (to whom the case was transferred), denying petitioner's motion for
reconsideration, are hereby set aside. The complaint in RTC Civil Case No. 94-1633 against petitioner is hereby
ordered DISMISSED without prejudice, however, to petitioner's instituting an original action with the court of proper
jurisdiction. No costs.
SO ORDERED.
G.R. No. 140920

November 19, 2001

JUAN LORENZO B. BORDALLO, RESTITUTO G. DE CASTRO and NOEL G. OLARTE, petitioners,

vs.
THE PROFESSIONAL REGULATIONS COMMISSION and THE BOARD OF MARINE DECK
OFFICERS,respondents.
KAPUNAN, J.:
On February 24, 1998, President Fidel V. Ramos approved Republic Act No. 8544 entitled "An Act Regulating the
Practice of the Merchant Marine Profession in the Philippines," otherwise known as the "Philippine Merchant Marine
Officers Act of 1998." The law took effect on March 25, 1998, after fifteen (15) days following its publication in the
Malaya.1
Section 2 of R.A. No. 8544 declares it the policy of the State to "institutionalize radical changes as required by
international and national standards to insure that only qualified, competent and globally competitive Marine

Deck/Engineer Officers as determined through licensure examinations shall be allowed entry to the practice of the
Merchant Marine profession." The law provides for, and governs, among others, "the examination, registration and
issuance of Certificate of Competency to Merchant Marine Officers."2 Article V (Examination, Registration and
Certificate of Competency) of the law contains provisions requiring examinations (Section 13), prescribing
qualifications of applicants for examination (Section 14) and defining the scope of the examination (Section 15). In
addition, Section 17 lays down the requirements for an examinee to be qualified as having passed the examination:
Rating in the Board Examinations. -To be qualified as having passed the board examination for Marine
Deck/Engineer Officer, a candidate must obtain a weighted general average of seventy percent (70%), with
no grade lower than sixty percent (60%) in any given subject. An examinee who obtains a weighted general
average rating of seventy (70%) but obtains a rating below sixty percent (60%) in any given subject must
take the examination in the subject or subjects where he obtained a grade below sixty percent (60%).
Significantly, the passing rating prescribed by the above provision (70%) is lower than that prescribed by Presidential
Decree No. 97 (Regulating the Practice of the Marine Professions in the Philippines), otherwise known as the
Philippine Merchant Marine Officers Law. Section 9 thereof sets a passing rating of seventy-five percent (75%) thus:
Examination rating. - An examinee having obtained a general weighted average of seventy-five per cent or
above with no rating below 60% in any subject; Provided, however, any examinee failing to get the general
weighted average of seventy-five per cent shall be required to take a re-examination in all the subjects
prescribed by the Board.
R.A. No. 8544 also provides for the creation of the Board of Marine Desk Officers. Among the Board's powers and
duties, as set forth in Section 10, are:
xxx
(k) In accordance with the STCW '78 Convention and its amendments, to prepare, adopt and issue the
syllabi of the subjects for examinations by determining and preparing the questions which shall strictly be
within the scope of the syllabus of the subjects for examination;
(I) To promulgate, administer and enforce rules and regulations necessary for carrying out the provisions of
this Act, in accordance with the charter of the Professional Regulation Commission and the STCW '78
Convention, as amended: Provided, That in case of subsequent or future amendments to any international
convention(s)/conference of which the Philippines is a signatory, the Board is empowered to amend/revise
its rules and regulations to conform with the amendments of said convention(s) without the need of
amending this enabling Act;
xxx
The Board is also empowered to adopt and promulgate the law's Implementing Rules and Regulations:
SEC. 34. Implementing Rules and Regulations. - Subject to the approval of the commission, the Board shall
adopt and promulgate such rules and regulations, including the Code of Ethics for Marine Deck/Engineer
Officers, to carry out the provisions of this Act, which shall be effective after thirty (30) days following their
publication in the Official Gazette or in a major daily newspaper of general circulation.
On April 25, 26 and 27, 1998, respondent Board of Marine Deck Officers conducted the examination for deck officers.
Petitioner Juan Lorenzo Bordallo took the examination for Chief Mate, petitioner Restituto de Castro for Second Mate,
and petitioner Noel Olarte for Third Mate. At that time, the Board had not yet issued the syllabi and the rules and
regulations pursuant to Republic Act No. 8455.
Subsequently, petitioners received notices from respondent Professional Regulatory Commission (PRC) that they
failed in their respective examinations. Petitioners secured certifications from the PRC their respective ratings. None

of the petitioners obtained a general weighted average of 75%, although all of them had general weighted averages
of more than 70%. None of them had a rating of less than 60% in any of the subjects.
On May 21, 1998, petitioners filed a petition before the Board of Marine Deck Officers claiming that, in accordance
with Section 17 of R.A. No. 8544, they should be considered as having passed the April 1998 Examination for Deck
Officers.1wphi1.nt
In the meantime, the PRC issued in relation to the July 1998 examinations PRC Resolution No. 569, Series of 1998,
stating:
Considering that the "syllabi of the subjects for examination" have not as yet been prepared, adopted and
issued pursuant to Section 10(k) in r~lation to Section 16 of R.A. No. 8544, the Boards for Marine Deck and
Engine Officers shall issue programs of examinations which shall contain the subjects for examination and
considering, further, that the weights of the subjects for examination remain the same, the grading system
adopted by the Boards under P .D. No.9 7 shall continue to be used in the said examinations.
The Board, on June 9, 1998, promulgated Board Resolution No. 1, Series of 1998 (the Rules and Regulations
Implementing Republic Act No. 8544).3
On January 22, 1999, the Board of Marine Deck Officers issued an Order denying the petition, ratiocinating:
The Board is guided by a directive issued by the Professional Regulation Commission under PRC
Resolution No. 569, Series of 1998, x x x.
x xx
While, admittedly, the above-quoted Resolution was issued for the licensure examinations given in July
1998, subsequent to the licensure examination taken by petitioners, it undoubtedly applies to the previous
examination given in April 1998.
Republic Act No. 8455 may have been given effect, under its own provisions, "after fifteen [15] days
following its publication in the Official Gazette or in any major newspaper of general circulation, whichever
comes earlier ." However, the same law allows time for transition between the former Philippine Merchant
Marine Officers Law (Presidential Decree No. 97), and the current Philippine Merchant Marine Officers Act of
1998 (Republic Act No. 8544). This is the tenor of PRC Resolution No. 569, which also states that ["](t)he
present Boards for Marine Deck and Engine Officers which where created under P.D. No. 97 are allowed to
[']continue to function in the interim until such time as the new Boards shall be duly constituted['] under
Section 33 (2) of R.A. 8544.["]
Aside from the directive given under PRC Resolution No. 569, the non-adoption of the new rating was also
premised on the fact that the Implementing Rules and Regulations promulgated by the Board was not yet
effective during the licensure examinations given in April 1998 and July 1998. The new rating system under
the new law was only implemented in the licensure examinations given in October 1998.
Petitioners received a copy of the Board's Order on February 9, 1999. On February 25, 1999, petitioners filed before
the Court of Appeals a petition for mandamus, naming the PRC and the Board of Marine Deck Officers as
respondents. The Court of Appeals, however, denied the petition, prompting petitioners to seek relief in this Court.
The Court of Appeals denied the petition on two grounds. First, petitioners did not appeal from the adverse order of
the Board of Marine Deck Officers to the PRC but went straight to the Court of Appeals on mandamus, in
contravention of Section 10 of R.A. No. 8544, which states:

The policies, resolutions, rules and regulations, issued or promulgated by the Board shall be subject to
review and approval of the Commission. The decisions, resolutions or orders rendered by the Board shall be
final and executory unless appealed to the Commission within fifteen (15) days from receipt of the decision.
The Court of Appeals ruled that the 15-day period within which petitioners could appeal to the PRC had already
lapsed and that the petition for mandamus could not be used as a substitute for the lost appeal.
We do not agree that the resort to mandamus in the Court of Appeals was unwarranted. As a rule, where the law
provides for the remedies against the action of an administrative board, body, or officer, relief to courts can be sought
only after exhausting all remedies provided.5 The rule on exhaustion of administrative remedies is not absolute but
admits of exceptions. One of these exceptions is when the question is purely legal,6 such as the one presented in the
case at bar. The failure of petitioners to appeal to the PRC, therefore, is not fatal to petitioners' cause.
Second, the Court of Appeals held that even if it disregarded "the inappropriateness of Petitioners' recourse," "the
ratings provided for in [Section 17 of] Republic Act 8544 cannot be applied." According to said court, "[t]he approval of
the Rules and Regulations implementing Republic Act 8544 [pursuant to Section 10 (1)] and the requisite syllabi
[under Section 10 (k)] are conditions sine qua non" for the application of Section 17. As these conditions were not
satisfied at the time petitioners took the examination, they cannot be deemed to have passed the same. .
The flaw in both the rulings of the Board of Marine Deck Officers and the Court of Appeals is that they apply the
passing rating decreed by P .D. No. 97 even when the latter had already lost its effectivity, having been expressly
repealed by Section 38 of R.A. No. 8544, thus:
SEC. 38. Repealing Clause. -Presidential Decree No. 97, as amended, and all other laws, decrees,
executive orders, rules and regulations and other administrative issuances and parts thereof which are
inconsistent with the provisions of this Act are hereby repealed.
Upon the effectivity of the repealing statute, R.A. No. 8544, the repealed statute, P .D. No. 97, in regard to its
operative effect, is considered as if it had never existed. Courts, or administrative agencies for that matter, have no
power to perpetuate a rule of law that the legislature has repealed.7
The Board rationalized its application of the 75% passing rating under P.D. No. 97 on the ground that the syllabi8of
the subjects had not yet been "prepared, adopted and issued" and the implementing rules and regulations had not
been promulgated. The Board's predicament is understandable, considering that the law had just taken effect on
March 25, 1998 and the examination was scheduled to take place on April 25, 26 and 27, 1998. It would appear to us,
however, that the solution was to postpone the examination rather than to apply a law that had already been rendered
non-existent.9
Neither is there anything in Section 33 (2), R.A. No. 8544 that justifies the Board's action. Said provision simply
reads:
SEC.33. Transitory Provision. (1) xxx
(2) The present Boards shall continue to function in the interim until such time as the new Board shall be
duly constituted pursuant to this Act.
It does not provide for the continued application of Section 9, P.D. No. 97 pending the Board's adoption of the new
syllabi and the rules and regulations.
It may be true that R.A. No. 8544, in its intent to raise the standards of the marine profession, prescribes a scope of
examination different from that provided for under P D. No. 97 and its implementing rules. It may also be true that the
syllabi and the subsequent examination on April 25-27, 1998 do not conform to the standards laid down by the new

law and its own implementing rules. The examinees, however, had a right to assume that respondents had performed
their' functions in accordance with the applicable law and they should not be prejudiced by the agencies' mistakes in
its implementation.
WHEREFORE, the petition is GIVEN DUE COURSE and is GRANTED. Petitioners are held to be qualified as having
passed the Board Examination for Marine Deck Officers conducted on April 25-27, 1998.
Davide, Jr., C.J., Puno, Pardo, Ynares-Santiago, JJ., concur.
G.R. No. 173976

February 27, 2009

METROPOLITAN BANK AND TRUST COMPANY, INC., Petitioner,

vs.
EUGENIO PEAFIEL, for himself and as Attorney-in-Fact of ERLINDA PEAFIEL, Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) dated July 29, 2005 and
Resolution dated July 31, 2006. The assailed decision nullified the extrajudicial foreclosure sale of respondents
properties because the notice of sale was published in a newspaper not of general circulation in the place where the
properties were located.
Respondent Erlinda Peafiel and the late Romeo Peafiel are the registered owners of two parcels of land covered
by Transfer Certificate of Title (TCT) No. (350937) 6195 and TCT No. 0085, both issued by the Register of Deeds of
Mandaluyong City. On August 1, 1991, the Peafiel spouses mortgaged their properties in favor of petitioner
Metropolitan Bank and Trust Company, Inc. The mortgage deed was amended on various dates as the amount of the
loan covered by said deed was increased.
The spouses defaulted in the payment of their loan obligation. On July 14, 1999, petitioner instituted an extrajudicial
foreclosure proceeding under Act No. 3135 through Diego A. Allea, Jr., a notary public. Respondent Erlinda Peafiel
received the Notice of Sale, stating that the public auction was to be held on September 7, 1999 at ten oclock in the
morning, at the main entrance of the City Hall of Mandaluyong City. The Notice of Sale was published in Maharlika
Pilipinas on August 5, 12 and 19, 1999, as attested to by its publisher in his Affidavit of Publication.2 Copies of the
said notice were also posted in three conspicuous places in Mandaluyong City.3
At the auction sale, petitioner emerged as the sole and highest bidder. The subject lots were sold to petitioner
forP6,144,000.00. A certificate of sale4 was subsequently issued in its favor.
On August 8, 2000, respondent Erlinda Peafiel, through her attorney-in-fact, Eugenio Peafiel, filed a
Complaint5praying that the extrajudicial foreclosure of the properties be declared null and void. They likewise sought
(a) to enjoin petitioner and the Register of Deeds from consolidating ownership, (b) to enjoin petitioner from taking
possession of the properties, and (c) to be paid attorneys fees.
On June 30, 2003, the Regional Trial Court (RTC) rendered judgment in favor of petitioner:
ACCORDINGLY, judgment is hereby rendered as follows:
1. The extrajudicial foreclosure of real estate mortgage instituted by defendants Metrobank and Notary
Public Diego A. Allea, Jr. over the two parcels of land covered by TCT Nos. (350937) 6195 and TCT No.
0085 is hereby declared VALID; and
2. The counterclaim of herein defendants are hereby DISMISSED for insufficiency of evidence.

SO ORDERED.6
Respondents appealed to the CA, raising, among others, the issue of whether petitioner complied with the publication
requirement for an extrajudicial foreclosure sale under Act No. 3135.
On this issue, the CA agreed with respondents. The CA noted that the law requires that publication be made in a
newspaper of general circulation in the municipality or city where the property is situated. Based on the testimony of
the publisher of Maharlika Pilipinas, it concluded that petitioner did not comply with this requirement, since the
newspaper was not circulated in Mandaluyong City where the subject properties were located. Thus, in its Decision
dated July 29, 2005, the CA reversed the RTC Decision, thus:
WHEREFORE, the appealed decision is REVERSED and SET ASIDE. A new one is hereby entered declaring the
extrajudicial foreclosure sale of the properties covered by TCT Nos. (350937) 6195 and 0085 NULL and VOID.
SO ORDERED.7
Petitioner filed a motion for reconsideration8 of the decision which the CA denied on July 31, 2006.
Petitioner now brings before us this petition for review on certiorari, raising the following issues:
I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT RULED TO APPLY
THE PROVISIONS ON THE PUBLICATION OF JUDICIAL NOTICES UNDER SECTION 1 OF P.D. NO. 1079 TO
THE EXTRAJUDICIAL FORECLOSURE OF THE MORTGAGE BY NOTARY PUBLIC OVER THE PROPERTIES
COVERED BY TCT NO. (350927) 6195 AND TCT NO. 0085.
II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT RULED THAT
"MAHARLIKA PILIPINAS" IS NOT A NEWSPAPER OF GENERAL CIRCULATION IN MANDALUYONG CITY.
III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT REVERSED AND
SET ASIDE THE DECISION DATED JUNE 30, 2003 ISSUED BY THE REGIONAL TRIAL COURT OF
MANDALUYONG CITY, BRANCH 208 AND DECLARED THE EXTRAJUDICIAL FORECLOSURE SALE OF THE
PROPERTIES COVERED BY TCT NO. (350937) 6195 AND TCT NO. 0085 NULL AND VOID.9
This controversy boils down to one simple issue: whether or not petitioner complied with the publication requirement
under Section 3, Act No. 3135, which provides:
SECTION 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public
places of the municipality or city where the property is situated, and if such property is worth more than four hundred
pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of
general circulation in the municipality or city.10
We hold in the negative.
Petitioner insists that Maharlika Pilipinas is a newspaper of general circulation since it is published for the
dissemination of local news and general information, it has a bona fide subscription list of paying subscribers, and it is
published at regular intervals. It asserts that the publishers Affidavit of Publication attesting that Maharlika Pilipinas is
a newspaper of general circulation is sufficient evidence of such fact.11 Further, the absence of subscribers in
Mandaluyong City does not necessarily mean that Maharlika Pilipinas is not circulated therein; on the contrary, as
testified to by its publisher, the said newspaper is in fact offered to persons other than its subscribers. Petitioner
stresses that the publishers statement that Maharlika Pilipinas is also circulated in Rizal and Cavite was in response
to the question as to where else the newspaper was circulated; hence, such testimony does not conclusively show
that it is not circulated in Mandaluyong City.12

Petitioner entreats the Court to consider the fact that, in an Order13 dated April 27, 1998, the Executive Judge of the
RTC of Mandaluyong City approved the application for accreditation of Maharlika Pilipinas as one of the newspapers
authorized to participate in the raffle of judicial notices/orders effective March 2, 1998. Nonetheless, petitioner admits
that this was raised for the first time only in its Motion for Reconsideration with the CA.14
The accreditation of Maharlika Pilipinas by the Presiding Judge of the RTC is not decisive of whether it is a
newspaper of general circulation in Mandaluyong City. This Court is not bound to adopt the Presiding Judges
determination, in connection with the said accreditation, that Maharlika Pilipinas is a newspaper of general circulation.
The court before which a case is pending is bound to make a resolution of the issues based on the evidence on
record.1avvphi1
To prove that Maharlika Pilipinas was not a newspaper of general circulation in Mandaluyong City, respondents
presented the following documents: (a) Certification15 dated December 7, 2001 of Catherine de Leon Arce, Chief of
the Business Permit and Licensing Office of Mandaluyong City, attesting that Maharlika Pilipinas did not have a
business permit in Mandaluyong City; and (b) List of Subscribers16 of Maharlika Pilipinas showing that there were no
subscribers from Mandaluyong City.
In addition, respondents also presented Mr. Raymundo Alvarez, publisher of Maharlika Pilipinas, as a witness. During
direct examination, Mr. Alvarez testified as follows:
Atty. Mendoza: And where is your principal place of business? Where you actually publish.
Witness: At No. 80-A St. Mary Avenue, Provident Village, Marikina City.
Atty. Mendoza: Do you have any other place where you actually publish Maharlika Pilipinas?
Witness: At No. 37 Ermin Garcia Street, Cubao, Quezon City.
Atty. Mendoza: And you have a mayors permit to operate?
Witness: Yes.
Atty. Mendoza: From what city?
Witness: Originally, it was from Quezon City, but we did not change anymore our permit.
Atty. Mendoza: And for the year 1996, what city issued you a permit?
Witness: Quezon City.
Atty. Mendoza: What about this current year?
Witness: Still from Quezon City.
Atty. Mendoza: So, you have no mayors permit from Marikina City?
Witness: None, its only our residence there.
Atty. Mendoza: What about for Mandaluyong City?
Witness: We have no office in Mandaluyong City.
Atty. Mendoza: Now, you said that you print and publish Maharlika Pilipinas in Marikina and Quezon City?

Witness: Yes.
Atty. Mendoza: Where else do you circulate your newspaper?
Witness: In Rizal and in Cavite.
Atty. Mendoza: In the subpoena[,] you were ordered to bring the list of subscribers.
Witness: Yes.
xxxx
Atty. Mendoza: How do these subscribers listed here in this document became (sic) regular subscribers?
Witness: They are friends of our friends and I offered them to become subscribers.
Atty. Mendoza: Other than this list of subscribers, you have no other subscribers?
Witness: No more.
Atty. Mendoza: Do you offer your newspaper to other persons other than the subscribers listed here?
Witness: Yes, but we do not just offer it to anybody.17 (Emphasis supplied.)
It bears emphasis that, for the purpose of extrajudicial foreclosure of mortgage, the party alleging non-compliance
with the requisite publication has the burden of proving the same.18 Petitioner correctly points out that neither the
publishers statement that Maharlika Pilipinas is being circulated in Rizal and Cavite, nor his admission that there are
no subscribers in Mandaluyong City proves that said newspaper is not circulated in Mandaluyong City.
Nonetheless, the publishers testimony that they "do not just offer [Maharlika Pilipinas] to anybody" implies that the
newspaper is not available to the public in general. This statement, taken in conjunction with the fact that there are no
subscribers in Mandaluyong City, convinces us that Maharlika Pilipinas is, in fact, not a newspaper of general
circulation in Mandaluyong City.
The object of a notice of sale is to inform the public of the nature and condition of the property to be sold, and of the
time, place and terms of the sale. Notices are given for the purpose of securing bidders and to prevent a sacrifice of
the property.19 The goal of the notice requirement is to achieve a "reasonably wide publicity" of the auction sale. This
is why publication in a newspaper of general circulation is required. The Court has previously taken judicial notice of
the "far-reaching effects" of publishing the notice of sale in a newspaper of general circulation.20
True, to be a newspaper of general circulation, it is enough that it is published for the dissemination of local news and
general information, that it has a bona fide subscription list of paying subscribers, and that it is published at regular
intervals.21 Over and above all these, the newspaper must be available to the public in general, and not just to a
select few chosen by the publisher. Otherwise, the precise objective of publishing the notice of sale in the newspaper
will not be realized.
In fact, to ensure a wide readership of the newspaper, jurisprudence suggests that the newspaper must also be
appealing to the public in general. The Court has, therefore, held in several cases that the newspaper must not be
devoted solely to the interests, or published for the entertainment, of a particular class, profession, trade, calling,
race, or religious denomination. The newspaper need not have the largest circulation so long as it is of general
circulation.22

Thus, the Court doubts that the publication of the notice of sale in Maharlika Pilipinas effectively caused widespread
publicity of the foreclosure sale.
Noticeably, in the Affidavit of Publication, Mr. Alvarez attested that he was the "Publisher of Maharlika Pilipinas, a
newspaper of general circulation, published every Thursday." Nowhere is it stated in the affidavit that Maharlika
Pilipinas is in circulation in Mandaluyong City. To recall, Sec. 3 of Act No. 3135 does not only require that the
newspaper must be of general circulation; it also requires that the newspaper be circulated in the municipality or city
where the property is located. Indeed, in the cases23 wherein the Court held that the affidavit of the publisher was
sufficient proof of the required publication, the affidavit of the publisher therein distinctly stated that the newspaper
was generally circulated in the place where the property was located.
Finally, petitioner argues that the CA, in effect, applied P.D. No. 107924 when it cited Fortune Motors (Phils.) Inc. v.
Metropolitan Bank and Trust Company,25 which involved an extrajudicial foreclosure sale by a sheriff. Petitioner avers
that the general reference to "judicial notices" in P.D. No. 1079, particularly Section 226 thereof, clearly shows that the
law applies only to extrajudicial foreclosure proceedings conducted by a sheriff, and not by a notary public.27 P.D. No.
1079 allegedly applies only to notices and announcements that arise from court litigation.28
The Court does not agree with petitioner that the CA applied P.D. 1079 to the present case. The appellate court cited
Fortune Motors merely to emphasize that what is important is that the newspaper is actually in general circulation in
the place where the properties to be foreclosed are located.
In any case, petitioners concern that the CA may have applied P.D. 1079 to the present case is trifling. While P.D.
No. 1079 requires the newspaper to be "published, edited and circulated in the same city and/or province where the
requirement of general circulation applies," the Court, in Fortune Motors, did not make a literal interpretation of the
provision. Hence, it brushed aside the argument that New Record, the newspaper where the notice of sale was
published, was not a newspaper of general circulation in Makati since it was not published and edited therein, thus:
The application given by the trial court to the provisions of P.D. No. 1079 is, to our mind, too narrow and restricted
and could not have been the intention of the said law. Were the interpretation of the trial court (sic) to be followed,
even the leading dailies in the country like the "Manila Bulletin," the "Philippine Daily Inquirer," or "The Philippine Star"
which all enjoy a wide circulation throughout the country, cannot publish legal notices that would be honored outside
the place of their publication. But this is not the interpretation given by the courts. For what is important is that a paper
should be in general circulation in the place where the properties to be foreclosed are located in order that publication
may serve the purpose for which it was intended.29
Therefore, as it stands, there is no distinction as to the publication requirement in extrajudicial foreclosure sales
conducted by a sheriff or a notary public. The key element in both cases is still general circulation of the newspaper in
the place where the property is located.
WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated July 29, 2005 and
Resolution dated July 31, 2006 in CA-G.R. CV No. 79862 are AFFIRMED.
SO ORDERED.
G.R. No. 147096

January 15, 2002

REPUBLIC OF THE PHILIPPINES, represented by NATIONAL TELECOMMUNICATIONS

COMMISSION,petitioner,
vs.
EXPRESS TELECOMMUNICATION CO., INC. and BAYAN TELECOMMUNICATIONS CO., INC., respondents.
x---------------------------------------------------------x
G.R. No. 147210

January 15, 2002

BAYAN TELECOMMUNICATIONS (Bayantel), INC., petitioner,

vs.
EXPRESS TELECOMMUNICATION CO., INC. (Extelcom), respondent.
YNARES-SANTIAGO, J.:
On December 29, 1992, International Communications Corporation (now Bayan Telecommunications, Inc. or
Bayantel) filed an application with the National Telecommunications Commission (NTC) for a Certificate of Public
Convenience or Necessity (CPCN) to install, operate and maintain a digital Cellular Mobile Telephone
System/Service (CMTS) with prayer for a Provisional Authority (PA). The application was docketed as NTC Case No.
92-486.1
Shortly thereafter, or on January 22, 1993, the NTC issued Memorandum Circular No. 4-1-93 directing all interested
applicants for nationwide or regional CMTS to file their respective applications before the Commission on or before
February 15, 1993, and deferring the acceptance of any application filed after said date until further orders.2
On May 6, 1993, and prior to the issuance of any notice of hearing by the NTC with respect to Bayantel's original
application, Bayantel filed an urgent ex-parte motion to admit an amended application.3 On May 17, 1993, the notice
of hearing issued by the NTC with respect to this amended application was published in the Manila Chronicle. Copies
of the application as well as the notice of hearing were mailed to all affected parties. Subsequently, hearings were
conducted on the amended application. But before Bayantel could complete the presentation of its evidence, the NTC
issued an Order dated December 19, 1993 stating:
In view of the recent grant of two (2) separate Provisional Authorities in favor of ISLACOM and GMCR, Inc.,
which resulted in the closing out of all available frequencies for the service being applied for by herein
applicant, and in order that this case may not remain pending for an indefinite period of time, AS PRAYED
FOR, let this case be, as it is, hereby ordered ARCHIVED without prejudice to its reinstatement if and when
the requisite frequency becomes available.
SO ORDERED.4
On June 18, 1998, the NTC issued Memorandum Circular No. 5-6-98 re-allocating five (5) megahertz (MHz) of the
radio frequency spectrum for the expansion of CMTS networks. The re-allocated 5 MHz were taken from the following
bands: 1730-1732.5 / 1825-1827.5 MHz and 1732.5-1735 / 1827.5-1830 MHz.5
Likewise, on March 23, 1999, Memorandum Circular No. 3-3-99 was issued by the NTC re-allocating an additional
five (5) MHz frequencies for CMTS service, namely: 1735-1737.5 / 1830-1832.5 MHz; 1737.5-1740 / 1832.5-1835
MHz; 1740-1742.5 / 1835-1837.5 MHz; and 1742.5-1745 / 1837.5-1840 MHz.6
On May 17, 1999, Bayantel filed an Ex-Parte Motion to Revive Case,7 citing the availability of new frequency bands
for CMTS operators, as provided for under Memorandum Circular No. 3-3-99.
On February 1, 2000, the NTC granted BayanTel's motion to revive the latter's application and set the case for
hearings on February 9, 10, 15, 17 and 22, 2000.8 The NTC noted that the application was ordered archived without
prejudice to its reinstatement if and when the requisite frequency shall become available.
Respondent Express Telecommunication Co., Inc. (Extelcom) filed in NTC Case No. 92-486 an Opposition (With
Motion to Dismiss) praying for the dismissal of Bayantel's application.9 Extelcom argued that Bayantel's motion
sought the revival of an archived application filed almost eight (8) years ago. Thus, the documentary evidence and
the allegations of respondent Bayantel in this application are all outdated and should no longer be used as basis of
the necessity for the proposed CMTS service. Moreover, Extelcom alleged that there was no public need for the
service applied for by Bayantel as the present five CMTS operators --- Extelcom, Globe Telecom, Inc., Smart
Communication, Inc., Pilipino Telephone Corporation, and Isla Communication Corporation, Inc. --- more than
adequately addressed the market demand, and all are in the process of enhancing and expanding their respective
networks based on recent technological developments. 1wphi1.nt

Extelcom likewise contended that there were no available radio frequencies that could accommodate a new CMTS
operator as the frequency bands allocated in NTC Memorandum Circular No. 3-3-99 were intended for and had in
fact been applied for by the existing CMTS operators. The NTC, in its Memorandum Circular No. 4-1-93, declared it
its policy to defer the acceptance of any application for CMTS. All the frequency bands allocated for CMTS use under
the NTC's Memorandum Circular No. 5-11-88 and Memorandum Circular No. 2-12-92 had already been allocated to
the existing CMTS operators. Finally, Extelcom pointed out that Bayantel is its substantial stockholder to the extent of
about 46% of its outstanding capital stock, and Bayantel's application undermines the very operations of Extelcom.
On March 13, 2000, Bayantel filed a Consolidated Reply/Comment,10 stating that the opposition was actually a motion
seeking a reconsideration of the NTC Order reviving the instant application, and thus cannot dwell on the material
allegations or the merits of the case. Furthermore, Extelcom cannot claim that frequencies were not available
inasmuch as the allocation and assignment thereof rest solely on the discretion of the NTC.
In the meantime, the NTC issued on March 9, 2000 Memorandum Circular No. 9-3-2000, re-allocating the following
radio frequency bands for assignment to existing CMTS operators and to public telecommunication entities which
shall be authorized to install, operate and maintain CMTS networks, namely: 1745-1750MHz / 1840-1845MHz; 17501775MHz / 1845-1850MHz; 1765-1770MHz / 1860-1865MHz; and 1770-1775MHz / 1865-1870MHz.11
On May 3, 2000, the NTC issued an Order granting in favor of Bayantel a provisional authority to operate CMTS
service.12 The Order stated in pertinent part:
On the issue of legal capacity on the part of Bayantel, this Commission has already taken notice of the
change in name of International Communications Corporation to Bayan Telecommunications, Inc. Thus, in
the Decision entered in NTC Case No. 93-284/94-200 dated 19 July 1999, it was recognized that Bayan
Telecommunications, Inc., was formerly named International Communications Corp. Bayantel and ICC
Telecoms, Inc. are one and the same entity, and it necessarily follows that what legal capacity ICC Telecoms
has or has acquired is also the legal capacity that Bayantel possesses.
On the allegation that the Commission has committed an error in allowing the revival of the instant
application, it appears that the Order dated 14 December 1993 archiving the same was anchored on the
non-availability of frequencies for CMTS. In the same Order, it was expressly stated that the archival hereof,
shall be without prejudice to its reinstatement "if and when the requisite frequency becomes available."
Inherent in the said Order is the prerogative of the Commission in reviving the same, subject to prevailing
conditions. The Order of 1 February 2001, cited the availability of frequencies for CMTS, and based thereon,
the Commission, exercising its prerogative, revived and reinstated the instant application. The fact that the
motion for revival hereof was made ex-parte by the applicant is of no moment, so long as the oppositors are
given the opportunity to be later heard and present the merits of their respective oppositions in the
proceedings.
On the allegation that the instant application is already obsolete and overtaken by developments, the issue
is whether applicant has the legal, financial and technical capacity to undertake the proposed project. The
determination of such capacity lies solely within the discretion of the Commission, through its applicable
rules and regulations. At any rate, the oppositors are not precluded from showing evidence disputing such
capacity in the proceedings at hand. On the alleged non-availability of frequencies for the proposed service
in view of the pending applications for the same, the Commission takes note that it has issued Memorandum
Circular 9-3-2000, allocating additional frequencies for CMTS. The eligibility of existing operators who
applied for additional frequencies shall be treated and resolved in their respective applications, and are not
in issue in the case at hand.
Accordingly, the Motions for Reconsideration filed by SMARTCOM and GLOBE TELECOMS/ISLACOM and
the Motion to Dismiss filed by EXTELCOM are hereby DENIED for lack of merit.13
The grant of the provisional authority was anchored on the following findings:
COMMENTS:

1. Due to the operational mergers between Smart Communications, Inc. and Pilipino Telephone Corporation
(Piltel) and between Globe Telecom, Inc. (Globe) and Isla Communications, Inc. (Islacom), free and effective
competition in the CMTS market is threatened. The fifth operator, Extelcom, cannot provide good
competition in as much as it provides service using the analog AMPS. The GSM system dominates the
market.
2. There are at present two applicants for the assignment of the frequencies in the 1.7 Ghz and 1.8 Ghz
allocated to CMTS, namely Globe and Extelcom. Based on the number of subscribers Extelcom has, there
appears to be no congestion in its network - a condition that is necessary for an applicant to be assigned
additional frequencies. Globe has yet to prove that there is congestion in its network considering its
operational merger with Islacom.
3. Based on the reports submitted to the Commission, 48% of the total number of cities and municipalities
are still without telephone service despite the more than 3 million installed lines waiting to be subscribed.
CONCLUSIONS:
1. To ensure effective competition in the CMTS market considering the operational merger of some of the
CMTS operators, new CMTS operators must be allowed to provide the service.
2. The re-allocated frequencies for CMTS of 3 blocks of 5 Mhz x 2 is sufficient for the number of applicants
should the applicants be qualified.
3. There is a need to provide service to some or all of the remaining cities and municipalities without
telephone service.
4. The submitted documents are sufficient to determine compliance to the technical requirements. The
applicant can be directed to submit details such as channeling plans, exact locations of cell sites, etc. as the
project implementation progresses, actual area coverage ascertained and traffic data are made available.
Applicant appears to be technically qualified to undertake the proposed project and offer the proposed
service.
IN VIEW OF THE FOREGOING and considering that there is prima facie evidence to show that Applicant is
legally, technically and financially qualified and that the proposed service is technically feasible and
economically viable, in the interest of public service, and in order to facilitate the development of
telecommunications services in all areas of the country, as well as to ensure healthy competition among
authorized CMTS providers, let a PROVISIONAL AUTHORITY (P.A.) be issued to Applicant BAYAN
TELECOMMUNICATIONS, INC. authorizing it to construct, install, operate and maintain a Nationwide
Cellular Mobile Telephone Systems (CMTS), subject to the following terms and conditions without
prejudice to a final decision after completion of the hearing which shall be called within thirty (30) days from
grant of authority, in accordance with Section 3, Rule 15, Part IV of the Commission's Rules of Practice and
Procedure. xxx.14
Extelcom filed with the Court of Appeals a petition for certiorari and prohibition,15 docketed as CA-G.R. SP No. 58893,
seeking the annulment of the Order reviving the application of Bayantel, the Order granting Bayantel a provisional
authority to construct, install, operate and maintain a nationwide CMTS, and Memorandum Circular No. 9-3-2000
allocating frequency bands to new public telecommunication entities which are authorized to install, operate and
maintain CMTS.
On September 13, 2000, the Court of Appeals rendered the assailed Decision,16 the dispositive portion of which
reads:
WHEREFORE, the writs of certiorari and prohibition prayed for are GRANTED. The Orders of public
respondent dated February 1, 2000 and May 3, 2000 in NTC Case No. 92-486 are hereby ANNULLED and
SET ASIDE and the Amended Application of respondent Bayantel is DISMISSED without prejudice to the

filing of a new CMTS application. The writ of preliminary injunction issued under our Resolution dated
August 15, 2000, restraining and enjoining the respondents from enforcing the Orders dated February 1,
2000 and May 3, 2000 in the said NTC case is hereby made permanent. The Motion for Reconsideration of
respondent Bayantel dated August 28, 2000 is denied for lack of merit.
SO ORDERED.17
Bayantel filed a motion for reconsideration of the above decision.18 The NTC, represented by the Office of the
Solicitor General (OSG), also filed its own motion for reconsideration.19 On the other hand, Extelcom filed a Motion for
Partial Reconsideration, praying that NTC Memorandum Circular No. 9-3-2000 be also declared null and void.20
On February 9, 2001, the Court of Appeals issued the assailed Resolution denying all of the motions for
reconsideration of the parties for lack of merit.21
Hence, the NTC filed the instant petition for review on certiorari, docketed as G.R. No. 147096, raising the following
issues for resolution of this Court:
A. Whether or not the Order dated February 1, 2000 of the petitioner which revived the application of
respondent Bayantel in NTC Case No. 92-486 violated respondent Extelcom's right to procedural due
process of law;
B. Whether or not the Order dated May 3, 2000 of the petitioner granting respondent Bayantel a provisional
authority to operate a CMTS is in substantial compliance with NTC Rules of Practice and Procedure and
Memorandum Circular No. 9-14-90 dated September 4, 1990.22
Subsequently, Bayantel also filed its petition for review, docketed as G.R. No. 147210, assigning the following errors:
I. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE PRINCIPLE OF
"EXHAUSTION OF ADMINISTRATIVE REMEDIES" WHEN IT FAILED TO DISMISS HEREIN
RESPONDENT'S PETITION FOR CERTIORARI DESPITE ITS FAILURE TO FILE A MOTION FOR
RECONSIDERATION.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE REVIVAL OF NTC CASE
NO. 92-486 ANCHORED ON A EX-PARTE MOTION TO REVIVE CASE WAS TANTAMOUNT TO GRAVE
ABUSE OF DISCRETION ON THE PART OF THE NTC.
III. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DENIED THE MANDATE OF THE NTC AS
THE AGENCY OF GOVERNMENT WITH THE SOLE DISCRETION REGARDING ALLOCATION OF
FREQUENCY BAND TO TELECOMMUNICATIONS ENTITIES.
IV. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION OF THE LEGAL
PRINCIPLE THAT JURISDICTION ONCE ACQUIRED CANNOT BE LOST WHEN IT DECLARED THAT
THE ARCHIVED APPLICATION SHOULD BE DEEMED AS A NEW APPLICATION IN VIEW OF THE
SUBSTANTIAL CHANGE IN THE CIRCUMSTANCES ALLEGED IN ITS AMENDMENT APPLICATION.
V. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF THE BAYANTEL
APPLICATION WAS A VALID ACT ON THE PART OF THE NTC EVEN IN THE ABSENCE OF A SPECIFIC
RULE ON ARCHIVING OF CASES SINCE RULES OF PROCEDURE ARE, AS A MATTER OF COURSE,
LIBERALLY CONSTRUED IN PROCEEDINGS BEFORE ADMINISTRATIVE BODIES AND SHOULD GIVE
WAY TO THE GREATER HIERARCHY OF PUBLIC WELFARE AND PUBLIC INTEREST.
VI. CONTRARY TO THE FINDING OF THE COURT OF APPEALS, THE ARCHIVING OF BAYANTEL'S
APPLICATION WAS NOT VIOLATIVE OF THE SUMMARY NATURE OF THE PROCEEDINGS IN THE NTC
UNDER SEC. 3, RULE 1 OF THE NTC REVISED RULES OF PROCEDURE.

VII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE ARCHIVING OF
BAYANTEL'S APPLICATION WAS VIOLATIVE OF THE ALLEGED DECLARED POLICY OF THE
GOVERNMENT ON THE TRANSPARENCY AND FAIRNESS OF ADMINISTRATIVE PROCESS IN THE
NTC AS LAID DOWN IN SEC 4(1) OF R.A. NO. 7925.
VIII. THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE NTC VIOLATED THE
PROVISIONS OF THE CONSTITUTION PERTAINING TO DUE PROCESS OF LAW.
IX. THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT THE MAY 3, 2000 ORDER
GRANTING BAYANTEL A PROVISIONAL AUTHORITY SHOULD BE SET ASIDE AND REVERSED.
i. Contrary to the finding of the Court of Appeals, there was no violation of the NTC Rule that the legal,
technical, financial and economic documentations in support of the prayer for provisional authority should
first be submitted.
ii. Contrary to the finding of the Court of Appeals, there was no violation of Sec. 3, Rule 15 of the NTC Rules
of Practice and Procedure that a motion must first be filed before a provisional authority could be issued.
iii. Contrary to the finding of the Court of Appeals that a plea for provisional authority necessitates a notice
and hearing, the very rule cited by the petitioner (Section 5, Rule 4 of the NTC Rules of Practice and
Procedure) provides otherwise.
iv. Contrary to the finding of the Court of Appeals, urgent public need is not the only basis for the grant of a
provisional authority to an applicant;
v. Contrary to the finding of the Court of Appeals, there was no violation of the constitutional provision on the
right of the public to information when the Common Carrier Authorization Department (CCAD) prepared its
evaluation report.23
Considering the identity of the matters involved, this Court resolved to consolidate the two petitions.24
At the outset, it is well to discuss the nature and functions of the NTC, and analyze its powers and authority as well as
the laws, rules and regulations that govern its existence and operations.
The NTC was created pursuant to Executive Order No. 546, promulgated on July 23, 1979. It assumed the functions
formerly assigned to the Board of Communications and the Telecommunications Control Bureau, which were both
abolished under the said Executive Order. Previously, the NTC's functions were merely those of the defunct Public
Service Commission (PSC), created under Commonwealth Act No. 146, as amended, otherwise known as the Public
Service Act, considering that the Board of Communications was the successor-in-interest of the PSC. Under
Executive Order No. 125-A, issued in April 1987, the NTC became an attached agency of the Department of
Transportation and Communications.
In the regulatory telecommunications industry, the NTC has the sole authority to issue Certificates of Public
Convenience and Necessity (CPCN) for the installation, operation, and maintenance of communications facilities and
services, radio communications systems, telephone and telegraph systems. Such power includes the authority to
determine the areas of operations of applicants for telecommunications services. Specifically, Section 16 of the Public
Service Act authorizes the then PSC, upon notice and hearing, to issue Certificates of Public Convenience for the
operation of public services within the Philippines "whenever the Commission finds that the operation of the public
service proposed and the authorization to do business will promote the public interests in a proper and suitable
manner."25 The procedure governing the issuance of such authorizations is set forth in Section 29 of the said Act, the
pertinent portion of which states:
All hearings and investigations before the Commission shall be governed by rules adopted by the
Commission, and in the conduct thereof, the Commission shall not be bound by the technical rules of legal
evidence. xxx.

In granting Bayantel the provisional authority to operate a CMTS, the NTC applied Rule 15, Section 3 of its 1978
Rules of Practice and Procedure, which provides:
Sec. 3. Provisional Relief. --- Upon the filing of an application, complaint or petition or at any stage
thereafter, the Board may grant on motion of the pleader or on its own initiative, the relief prayed for, based
on the pleading, together with the affidavits and supporting documents attached thereto, without prejudice to
a final decision after completion of the hearing which shall be called within thirty (30) days from grant of
authority asked for. (underscoring ours)
Respondent Extelcom, however, contends that the NTC should have applied the Revised Rules which were filed with
the Office of the National Administrative Register on February 3, 1993. These Revised Rules deleted the phrase "on
its own initiative;" accordingly, a provisional authority may be issued only upon filing of the proper motion before the
Commission.
In answer to this argument, the NTC, through the Secretary of the Commission, issued a certification to the effect that
inasmuch as the 1993 Revised Rules have not been published in a newspaper of general circulation, the NTC has
been applying the 1978 Rules.
The absence of publication, coupled with the certification by the Commissioner of the NTC stating that the NTC was
still governed by the 1978 Rules, clearly indicate that the 1993 Revised Rules have not taken effect at the time of the
grant of the provisional authority to Bayantel. The fact that the 1993 Revised Rules were filed with the UP Law Center
on February 3, 1993 is of no moment. There is nothing in the Administrative Code of 1987 which implies that the filing
of the rules with the UP Law Center is the operative act that gives the rules force and effect. Book VII, Chapter 2,
Section 3 thereof merely states:
Filing. --- (1) Every agency shall file with the University of the Philippines Law Center three (3) certified
copes of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed
within three (3) months from the date shall not thereafter be the basis of any sanction against any party or
persons.
(2) The records officer of the agency, or his equivalent functionary, shall carry out the requirements of this
section under pain or disciplinary action.
(3) A permanent register of all rules shall be kept by the issuing agency and shall be open to public
inspection.
The National Administrative Register is merely a bulletin of codified rules and it is furnished only to the Office of the
President, Congress, all appellate courts, the National Library, other public offices or agencies as the Congress may
select, and to other persons at a price sufficient to cover publication and mailing or distribution costs.26 In a similar
case, we held:
This does not imply however, that the subject Administrative Order is a valid exercise of such quasilegislative power. The original Administrative Order issued on August 30, 1989, under which the respondents
filed their applications for importations, was not published in the Official Gazette or in a newspaper of
general circulation. The questioned Administrative Order, legally, until it is published, is invalid within the
context of Article 2 of Civil Code, which reads:
"Article 2. Laws shall take effect after fifteen days following the completion of their publication in the
Official Gazette (or in a newspaper of general circulation in the Philippines), unless it is otherwise
provided. x x x"
The fact that the amendments to Administrative Order No. SOCPEC 89-08-01 were filed with, and published
by the UP Law Center in the National Administrative Register, does not cure the defect related to the
effectivity of the Administrative Order.

This Court, in Taada vs. Tuvera (G.R. No. L-63915, December 29, 1986, 146 SCRA 446) stated, thus:
"We hold therefore that all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after publication unless a
different effectivity is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the President in
the exercise of legislative power or, at present, directly conferred by the Constitution. Administrative
Rules and Regulations must also be published if their purpose is to enforce or implement existing
law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the personnel
of the administrative agency and not the public, need not be published. Neither is publication
required of the so-called letters of instructions issued by administrative superiors concerning the
rules or guidelines to be followed by their subordinates in the performance of their duties.
xxx
We agree that the publication must be in full or it is no publication at all since its purpose is to
inform the public of the contents of the laws."
The Administrative Order under consideration is one of those issuances which should be published for its
effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation, i.e.,
P.D. 1071, in relation to LOI 444 and EO 133.27
Thus, publication in the Official Gazette or a newspaper of general circulation is a condition sine qua non before
statutes, rules or regulations can take effect. This is explicit from Executive Order No. 200, which repealed Article 2 of
the Civil Code, and which states that:
Laws shall take effect after fifteen days following the completion of their publication either in the Official
Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.28
The Rules of Practice and Procedure of the NTC, which implements Section 29 of the Public Service Act (C.A. 146,
as amended), fall squarely within the scope of these laws, as explicitly mentioned in the case Taada v. Tuvera.29
Our pronouncement in Taada vs. Tuvera is clear and categorical. Administrative rules and regulations must
be published if their purpose is to enforce or implement existing law pursuant to a valid delegation. The only
exceptions are interpretative regulations, those merely internal in nature, or those so-called letters of
instructions issued by administrative superiors concerning the rules and guidelines to be followed by their
subordinates in the performance of their duties.30
Hence, the 1993 Revised Rules should be published in the Official Gazette or in a newspaper of general circulation
before it can take effect. Even the 1993 Revised Rules itself mandates that said Rules shall take effect only after their
publication in a newspaper of general circulation.31 In the absence of such publication, therefore, it is the 1978 Rules
that governs.
In any event, regardless of whether the 1978 Rules or the 1993 Revised Rules should apply, the records show that
the amended application filed by Bayantel in fact included a motion for the issuance of a provisional authority. Hence,
it cannot be said that the NTC granted the provisional authority motu proprio. The Court of Appeals, therefore, erred
when it found that the NTC issued its Order of May 3, 2000 on its own initiative. This much is acknowledged in the
Decision of the Court of Appeals:

As prayer, ICC asked for the immediate grant of provisional authority to construct, install, maintain and
operate the subject service and to charge the proposed rates and after due notice and hearing, approve the
instant application and grant the corresponding certificate of public convenience and necessity.32
The Court of Appeals also erred when it declared that the NTC's Order archiving Bayantel's application was null and
void. The archiving of cases is a widely accepted measure designed to shelve cases in which no immediate action is
expected but where no grounds exist for their outright dismissal, albeit without prejudice. It saves the petitioner or
applicant from the added trouble and expense of re-filing a dismissed case. Under this scheme, an inactive case is
kept alive but held in abeyance until the situation obtains wherein action thereon can be taken.
In the case at bar, the said application was ordered archived because of lack of available frequencies at the time, and
made subject to reinstatement upon availability of the requisite frequency. To be sure, there was nothing irregular in
the revival of the application after the condition therefor was fulfilled.
While, as held by the Court of Appeals, there are no clear provisions in the Rules of the NTC which expressly allow
the archiving of any application, this recourse may be justified under Rule 1, Section 2 of the 1978 Rules, which
states:
Sec. 2. Scope.--- These rules govern pleadings, practice and procedure before the Board of
Communications (now NTC) in all matters of hearing, investigation and proceedings within the jurisdiction of
the Board. However, in the broader interest of justice and in order to best serve the public interest, the Board
may, in any particular matter, except it from these rules and apply such suitable procedure to improve the
service in the transaction of the public business. (underscoring ours)
The Court of Appeals ruled that the NTC committed grave abuse of discretion when it revived Bayantel's application
based on an ex-parte motion. In this regard, the pertinent provisions of the NTC Rules:
Sec. 5. Ex-parte Motions. --- Except for motions for provisional authorization of proposed services and
increase of rates, ex-parte motions shall be acted upon by the Board only upon showing of urgent necessity
therefor and the right of the opposing party is not substantially impaired.33
Thus, in cases which do not involve either an application for rate increase or an application for a provisional authority,
the NTC may entertain ex-parte motions only where there is an urgent necessity to do so and no rights of the
opposing parties are impaired.1wphi1.nt
The Court of Appeals ruled that there was a violation of the fundamental right of Extelcom to due process when it was
not afforded the opportunity to question the motion for the revival of the application. However, it must be noted that
said Order referred to a simple revival of the archived application of Bayantel in NTC Case No. 92-426. At this stage,
it cannot be said that Extelcom's right to procedural due process was prejudiced. It will still have the opportunity to be
heard during the full-blown adversarial hearings that will follow. In fact, the records show that the NTC has scheduled
several hearing dates for this purpose, at which all interested parties shall be allowed to register their opposition. We
have ruled that there is no denial of due process where full-blown adversarial proceedings are conducted before an
administrative body.34 With Extelcom having fully participated in the proceedings, and indeed, given the opportunity to
file its opposition to the application, there was clearly no denial of its right to due process.
In Zaldivar vs. Sandiganbayan (166 SCRA 316 [1988]), we held that the right to be heard does not only refer
to the right to present verbal arguments in court. A party may also be heard through his pleadings. where
opportunity to be heard is accorded either through oral arguments or pleadings, there is no denial of
procedural due process. As reiterated in National Semiconductor (HK) Distribution, Ltd. vs. NLRC (G.R. No.
123520, June 26, 1998), the essence of due process is simply an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain one's side. Hence, in Navarro III vs. Damaso (246
SCRA 260 [1995]), we held that a formal or trial-type hearing is not at all times and not in all instances
essential. Plainly, petitioner was not denied due process.35

Extelcom had already entered its appearance as a party and filed its opposition to the application. It was neither
precluded nor barred from participating in the hearings thereon. Indeed, nothing, not even the Order reviving the
application, bars or prevents Extelcom and the other oppositors from participating in the hearings and adducing
evidence in support of their respective oppositions. The motion to revive could not have possibly caused prejudice to
Extelcom since the motion only sought the revival of the application. It was merely a preliminary step towards the
resumption of the hearings on the application of Bayantel. The latter will still have to prove its capability to undertake
the proposed CMTS. Indeed, in its Order dated February 1, 2000, the NTC set several hearing dates precisely
intended for the presentation of evidence on Bayantel's capability and qualification. Notice of these hearings were
sent to all parties concerned, including Extelcom.
As regards the changes in the personal circumstances of Bayantel, the same may be ventilated at the hearings
during Bayantel's presentation of evidence. In fact, Extelcom was able to raise its arguments on this matter in the
Opposition (With Motion to Dismiss) anent the re-opening and re-instatement of the application of Bayantel. Extelcom
was thus heard on this particular point.
Likewise, the requirements of notice and publication of the application is no longer necessary inasmuch as the
application is a mere revival of an application which has already been published earlier. At any rate, the records show
that all of the five (5) CMTS operators in the country were duly notified and were allowed to raise their respective
oppositions to Bayantel's application through the NTC's Order dated February 1, 2000.
It should be borne in mind that among the declared national policies under Republic Act No. 7925, otherwise known
as the Public Telecommunications Policy Act of the Philippines, is the healthy competition among telecommunications
carriers, to wit:
A healthy competitive environment shall be fostered, one in which telecommunications carriers are free to
make business decisions and to interact with one another in providing telecommunications services, with the
end in view of encouraging their financial viability while maintaining affordable rates.36
The NTC is clothed with sufficient discretion to act on matters solely within its competence. Clearly, the need for a
healthy competitive environment in telecommunications is sufficient impetus for the NTC to consider all those
applicants who are willing to offer competition, develop the market and provide the environment necessary for greater
public service. This was the intention that came to light with the issuance of Memorandum Circular 9-3-2000,
allocating new frequency bands for use of CMTS. This memorandum circular enumerated the conditions prevailing
and the reasons which necessitated its issuance as follows:
- the international accounting rates are rapidly declining, threatening the subsidy to the local exchange
service as mandated in EO 109 and RA 7925;
- the public telecommunications entities which were obligated to install, operate and maintain local
exchange network have performed their obligations in varying degrees;
- after more than three (3) years from the performance of the obligations only 52% of the total number of
cities and municipalities are provided with local telephone service.
- there are mergers and consolidations among the existing cellular mobile telephone service (CMTS)
providers threatening the efficiency of competition;
-

there is a need to hasten the installation of local exchange lines in unserved areas;

- there are existing CMTS operators which are experiencing congestion in the network resulting to low
grade of service;
- the consumers/customers shall be given the freedom to choose CMTS operators from which they could
get the service.37

Clearly spelled out is the need to provide enhanced competition and the requirement for more landlines and
telecommunications facilities in unserved areas in the country. On both scores, therefore, there was sufficient
showing that the NTC acted well within its jurisdiction and in pursuance of its avowed duties when it allowed the
revival of Bayantel's application.
We now come to the issue of exhaustion of administrative remedies. The rule is well-entrenched that a party must
exhaust all administrative remedies before resorting to the courts. The premature invocation of the intervention of the
court is fatal to one's cause of action. This rule would not only give the administrative agency an opportunity to decide
the matter by itself correctly, but would also prevent the unnecessary and premature resort to courts.38 In the case
of Lopez v. City of Manila,39 we held:
As a general rule, where the law provides for the remedies against the action of an administrative board,
body or officer, relief to courts can be sought only after exhausting all remedies provided. The reason rests
upon the presumption that the administrative body, if given the chance to correct its mistake or error, may
amend its decision on a given matter and decide it properly. Therefore, where a remedy is available within
the administrative machinery, this should be resorted to before resort can be made to the courts, not only to
give the administrative agency the opportunity to decide the matter by itself correctly, but also to prevent
unnecessary and premature resort to courts.
Clearly, Extelcom violated the rule on exhaustion of administrative remedies when it went directly to the Court of
Appeals on a petition for certiorari and prohibition from the Order of the NTC dated May 3, 2000, without first filing a
motion for reconsideration. It is well-settled that the filing of a motion for reconsideration is a prerequisite to the filing
of a special civil action for certiorari.
The general rule is that, in order to give the lower court the opportunity to correct itself, a motion for
reconsideration is a prerequisite to certiorari. It also basic that petitioner must exhaust all other available
remedies before resorting to certiorari. This rule, however, is subject to certain exceptions such as any of the
following: (1) the issues raised are purely legal in nature, (2) public interest is involved, (3) extreme urgency
is obvious or (4) special circumstances warrant immediate or more direct action.40
This case does not fall under any of the recognized exceptions to this rule. Although the Order of the NTC dated May
3, 2000 granting provisional authority to Bayantel was immediately executory, it did not preclude the filing of a motion
for reconsideration. Under the NTC Rules, a party adversely affected by a decision, order, ruling or resolution may
within fifteen (15) days file a motion for reconsideration. That the Order of the NTC became immediately executory
does not mean that the remedy of filing a motion for reconsideration is foreclosed to the petitioner.41
Furthermore, Extelcom does not enjoy the grant of any vested interest on the right to render a public service. The
Constitution is quite emphatic that the operation of a public utility shall not be exclusive. Thus:
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be
granted to citizens of the Philippines or to corporations organized under the laws of the Philippines at least
sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or
authorization be exclusive in character or for a longer period than fifty years. Neither shall any such
franchise or right be granted except under the condition that it shall be subject to amendment, alteraion, or
repeal by the Congress when the common good so requires. xxx xxx xxx.42
In Radio Communications of the Phils., Inc. v. National Telecommunications Commission,43 we held:
It is well within the powers of the public respondent to authorize the installation by the private respondent
network of radio communications systems in Catarman, Samar and San Jose, Mindoro. Under the
circumstances, the mere fact that the petitioner possesses a franchise to put up and operate a radio
communications system in certain areas is not an insuperable obstacle to the public respondent's issuing
the proper certificate to an applicant desiring to extend the same services to those areas. The Constitution
mandates that a franchise cannot be exclusive in nature nor can a franchise be granted except that it must
be subject to amendment, alteration, or even repeal by the legislature when the common good so requires.

(Art. XII, sec. 11 of the 1986 Constitution). There is an express provision in the petitioner's franchise which
provides compliance with the above mandate (RA 2036, sec. 15).
Even in the provisional authority granted to Extelcom, it is expressly stated that such authority is not exclusive. Thus,
the Court of Appeals erred when it gave due course to Extelcom's petition and ruled that it constitutes an exception to
the rule on exhaustion of administrative remedies.
Also, the Court of Appeals erred in annulling the Order of the NTC dated May 3, 2000, granting Bayantel a provisional
authority to install, operate and maintain CMTS. The general rule is that purely administrative and discretionary
functions may not be interfered with by the courts. Thus, in Lacuesta v. Herrera,44 it was held:
xxx (T)he powers granted to the Secretary of Agriculture and Commerce (natural resources) by law
regarding the disposition of public lands such as granting of licenses, permits, leases and contracts, or
approving, rejecting, reinstating, or canceling applications, are all executive and administrative in nature. It is
a well recognized principle that purely administrative and discretionary functions may not be interfered with
by the courts. (Coloso vs. Board of Accountancy, G.R. No. L-5750, April 20, 1953) In general, courts have no
supervising power over the proceedings and actions of the administrative departments of the government.
This is generally true with respect to acts involving the exercise of judgement or discretion and findings of
fact. (54 Am. Jur. 558-559) xxx.
The established exception to the rule is where the issuing authority has gone beyond its statutory authority, exercised
unconstitutional powers or clearly acted arbitrarily and without regard to his duty or with grave abuse of
discretion.45 None of these obtains in the case at bar.
Moreover, in petitions for certiorari, evidentiary matters or matters of fact raised in the court below are not proper
grounds nor may such be ruled upon in the proceedings. As held in National Federation of Labor v. NLRC:46
At the outset, it should be noted that a petition for certiorari under Rule 65 of the Rules of Court will prosper
only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part
of the National Labor Relations Commission. It does not include an inquiry as to the correctness of the
evaluation of evidence which was the basis of the labor official or officer in determining his conclusion. It is
not for this Court to re-examine conflicting evidence, re-evaluate the credibility of witnesses nor substitute
the findings of fact of an administrative tribunal which has gained expertise in its special field. Considering
that the findings of fact of the labor arbiter and the NLRC are supported by evidence on record, the same
must be accorded due respect and finality.
This Court has consistently held that the courts will not interfere in matters which are addressed to the sound
discretion of the government agency entrusted with the regulation of activities coming under the special and technical
training and knowledge of such agency.47 It has also been held that the exercise of administrative discretion is a
policy decision and a matter that can best be discharged by the government agency concerned, and not by the
courts.48 In Villanueva v. Court of Appeals,49 it was held that findings of fact which are supported by evidence and the
conclusion of experts should not be disturbed. This was reiterated in Metro Transit Organization, Inc. v. National
Labor Relations Commission,50 wherein it was ruled that factual findings of quasi-judicial bodies which have acquired
expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even
finality and are binding even upon the Supreme Court if they are supported by substantial evidence.1wphi1.nt
Administrative agencies are given a wide latitude in the evaluation of evidence and in the exercise of its adjudicative
functions. This latitude includes the authority to take judicial notice of facts within its special competence.
In the case at bar, we find no reason to disturb the factual findings of the NTC which formed the basis for awarding
the provisional authority to Bayantel. As found by the NTC, Bayantel has been granted several provisional and
permanent authorities before to operate various telecommunications services.51 Indeed, it was established that
Bayantel was the first company to comply with its obligation to install local exchange lines pursuant to E.O. 109 and
R.A. 7925. In recognition of the same, the provisional authority awarded in favor of Bayantel to operate Local
Exchange Services in Quezon City, Malabon, Valenzuela and the entire Bicol region was made permanent and a

CPCN for the said service was granted in its favor. Prima facie evidence was likewise found showing Bayantel's legal,
financial and technical capacity to undertake the proposed cellular mobile telephone service.
Likewise, the May 3, 2000 Order did not violate NTC Memorandum Circular No. 9-14-90 dated September 4, 1990,
contrary to the ruling of the Court of Appeals. The memorandum circular sets forth the procedure for the issuance of
provisional authority thus:
EFFECTIVE THIS DATE, and as part of the Commission's drive to streamline and fast track action on
applications/petitions for CPCN other forms of authorizations, the Commission shall be evaluating
applications/petitions for immediate issuance of provisional authorizations, pending hearing and final
authorization of an application on its merit.
For this purpose, it is hereby directed that all applicants/petitioners seeking for provisional authorizations,
shall submit immediately to the Commission, either together with their application or in a Motion all their
legal, technical, financial, economic documentations in support of their prayer for provisional authorizations
for evaluation. On the basis of their completeness and their having complied with requirements, the
Commission shall be issuing provisional authorizations.
Clearly, a provisional authority may be issued even pending hearing and final determination of an application on its
merits.
Finally, this Court finds that the Manifestations of Extelcom alleging forum shopping on the part of the NTC and
Bayantel are not impressed with merit. The divisions of the Supreme Court are not to be considered as separate and
distinct courts. The Supreme Court remains a unit notwithstanding that it works in divisions. Although it may have
three divisions, it is but a single court. Actions considered in any of these divisions and decisions rendered therein
are, in effect, by the same Tribunal. The divisions of this Court are not to be considered as separate and distinct
courts but as divisions of one and the same court.52
Moreover, the rules on forum shopping should not be literally interpreted. We have stated thus:
It is scarcely necessary to add that Circular No. 28-91 must be so interpreted and applied as to achieve the
purposes projected by the Supreme Court when it promulgated that circular. Circular No. 28-91 was
designed to serve as an instrument to promote and facilitate the orderly administration of justice and should
not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objection or the
goal of all rules of procedure which is to achieve substantial justice as expeditiously as possible.53
Even assuming that separate actions have been filed by two different parties involving essentially the same subject
matter, no forum shopping was committed as the parties did not resort to multiple judicial remedies. The Court,
therefore, directed the consolidation of the two cases because they involve essentially the same issues. It would also
prevent the absurd situation wherein two different divisions of the same court would render altogether different rulings
in the cases at bar.
We rule, likewise, that the NTC has legal standing to file and initiate legal action in cases where it is clear that its
inaction would result in an impairment of its ability to execute and perform its functions. Similarly, we have previously
held in Civil Service Commission v. Dacoycoy54 that the Civil Service Commission, as an aggrieved party, may appeal
the decision of the Court of Appeals to this Court.
As correctly stated by the NTC, the rule invoked by Extelcom is Rule 65 of the Rules of Civil Procedure, which
provides that public respondents shall not appear in or file an answer or comment to the petition or any pleading
therein.55 The instant petition, on the other hand, was filed under Rule 45 where no similar proscription exists.
WHEREFORE, in view of the foregoing, the consolidated petitions are GRANTED. The Court of Appeals' Decision
dated September 13, 2000 and Resolution dated February 9, 2001 are REVERSED and SET ASIDE. The permanent
injunction issued by the Court of Appeals is LIFTED. The Orders of the NTC dated February 1, 2000 and May 3, 2000
are REINSTATED. No pronouncement as to costs.

SO ORDERED.