Digest on natres cases

1. Director of LMB vs Court of Appeals (2000)

G.R. No. 112567 | 2000-02-07

Subject: No proof of ownership in fee simple; Confirmation of imperfect title; Failure to prove
continuous possession for the required period of 30 years; Possession in concept of owner since June
12, 1945

Facts:

In 1975, Aquilino Carino (respondent) filed a petition with the CFI Laguna for registration of Lot No. 6, a
sugar land with an area of 43,614 square meters, forming part of a bigger tract of land surveyed as Psu-
108952 and situated in Barrio Sala, Cabuyao, Laguna.

Respondent claimed that the land was originally owned by his mother, Teresa Lauchangco, who died in
1911, and later administered by him in behalf of his five brothers and sisters, after the death of their
father in 1934. In 1949, respondent and his brother, Severino Carino, became co-owners of Lot No. 6 by
virtue of an extra-judicial partition of the land. In 1963, through another deed of extrajudicial
settlement, sole ownership of Lot No. 6 was adjudicated to the respondent

On the basis of the evidence on record, the CFI granted respondent's petition for registration, applying
the rules on confirmation of imperfect title. The Land Management Bureau (LMB) Director, as oppositor,
went to the Court of Appeals, which affirmed the CFI decision. Hence, the present Petition.

Held:

No proof of ownership in fee simple

1. The petition for land registration at bar is under the Land Registration Act. Pursuant to said Act, he
who alleges in his petition or application, ownership in fee simple, must present muniments of title since
the Spanish times, such as a titulo real or royal grant, a concession especial or special grant, a
composicion con el estado or adjustment title, or a titulo de compra or title through purchase; and
informacion possessoria or possessory information title, which would become a titulo gratuito or a
gratuitous title.

2. Respondent has not produced a single muniment of title to substantiate his claim of ownership.[11]
The Court has therefore no other recourse, but to dismiss private respondent's petition for the
registration of subject land under Act 496.

Confirmation of imperfect title

3. Even if considered as petition for confirmation of imperfect title under the Public land Act (CA No.
141), as amended, the petition would still be denied for insufficiency of evidence.

4. Section 48 (b) of Commonwealth Act No. 141, as amended by R.A. No. 1942 and R.A. No. 3872, was
the law prevailing at the time the Petition was filed on May 15, 1975. It provides:

"Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or
completed, may apply to the Court of first Instance of the province where the land is located for
confirmation of their claim and the issuance of title therefor, under the Land Registration Act, to wit:

x.................x.................x

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a
bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of
the application for confirmation of title except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall
be entitled to a certificate of title under the provisions of this chapter."

5. Possession of public lands, however long, never confers title upon the possessor, unless the occupant
can prove possession or occupation of the same under claim of ownership for the required period to
constitute a grant from the State.
6. Notwithstanding absence of opposition from the government, the petitioner in land registration
cases is not relieved of the burden of proving the imperfect right or title sought to be confirmed. He
must show, even though there is no opposition, to the satisfaction of the court, that he is the absolute
owner, in fee simple. Courts are not justified in registering property under the Torrens system, simply
because there is no opposition offered. Courts may, even in the absence of any opposition, deny the
registration of the land under the Torrens system, upon the ground that the facts presented did not
show that petitioner is the owner, in fee simple, of the land which he is attempting to have registered

7. The underlying principle is that all lands that were not acquired from the government, either by
purchase or by grant, belong to the state as part of the public domain.

8. The burden is upon him (petitioner) to show that he and/or his predecessor-in-interest has been in
open, continuous, exclusive, and adverse possession and occupation of the land sought for registration,
for at least thirty (30) years immediately preceding the filing of the petition for confirmation of title.

Failure to prove continuous possession for the required period of 30 years

9. In the present case, respondent can only trace his own possession of subject parcel of land to the
year 1949, when the same was adjudicated to him by virtue of an extra-judicial settlement and partition.
Assuming that such a partition was truly effected, respondent has possessed the property thus
partitioned for only twenty-six (26) years as of 1975, when he filed his petition for the registration
thereof. To bridge the gap, he proceeded to tack his possession to what he theorized upon as possession
of the same land by his parents. However, other than his unilateral assertion, respondent has not
introduced sufficient evidence to substantiate his allegation that his late mother possessed the land in
question even prior to 1911. General statements, which are mere conclusions of law and not factual
proof of possession are unavailing and cannot suffice.

10. The earliest tax declaration covering Lot No. 6 was Tax Declaration No. 3214 issued in 1949 under
the names of respondent and his brother, Severino Carino. The Exhibit "E" referred to in the CFI decision
as the tax declaration under the names of the parents is actually Tax Declaration 1921 issued in 1969 in
the name of respondent.
11. Moreover, Tax receipts and tax declarations are not incontrovertible evidence of ownership. They
are mere indicia of claim of ownership.

12. The phrase "adverse, continuous, open, public, peaceful and in concept of owner", by which
characteristics respondent describes his possession and that of his parents, are mere conclusions of law
requiring evidentiary support and substantiation. The burden of proof is on the respondent, as
applicant, to prove by clear, positive and convincing evidence that the alleged possession of his parents
was of the nature and duration required by law. Respondent should have presented specific facts that
would have shown the nature of such possession.

Possession in concept of owner since June 12, 1945

13. Neither can respondent seek refuge under P.D. No. 1073, amending Section 48(b) of
Commonwealth Act No. 141, under which law a certificate of title may issue to any occupant of a public
land, who is a Filipino citizen, upon proof of open, continuous, exclusive, and notorious possession and
occupation since June 12, 1945, or earlier. Failing to prove that his predecessors-in-interest occupied
subject land under the conditions laid down by law, the respondent could only establish his possession
since 1949, four years later than June 12, 1945, as set by law.

14. The Court cannot apply here the juris et de jure presumption that the lot being claimed by the
respondent ceased to be a public land and has become private property. To reiterate, under the
Regalian doctrine all lands belong to the State. Unless alienated in accordance with law, it retains its
basic rights over the same as dominus.

Gamboa vs. Teves (2011)

G.R. No. 176579 | 2011-06-28

Subject: Nationality of Corporations, Definition of ‘Capital’

Facts:
Wilson Gamboa, a stockholder of PLDT, seeks to annul the sale of 111,415 common shares (representing
46.125 percent) of PTIC by the Philippine Government to Metro Pacific.

The majority shares of PTIC (representing about 54 percent) are owned by First Pacific, a Bermuda
company. Notably, First Pacific is a stockholder of Metro Pacific, the entity that acquired the other 46%
from the Philippine Government.

PTIC owns 13.847 percent of PLDT. Hence, the sale by the Philippine Government of 46.125 percent of
PTIC shares is actually an indirect sale of about 6.3 percent of the outstanding common shares of PLDT.
(13.847 percent of 46.125 is 6.38)

Japan's NTT DoCoMo owns 51.56 percent of PLDT common equity. With the sale, First Pacific's common
shareholdings in PLDT increased from 30.7 percent to 37 percent (30.7 plus 6.3).

In effect, the total common shareholdings of foreigners in PLDT has violated Section 11, Article XII of the
1987 Philippine Constitution which limits foreign ownership of the capital of a public utility to not more
than 40 percent.

Foreign ownership of common shares of PLDT:

51.56 percent owned by DoCoMo (Japan)

37 percent owned by PTIC, which is 100 percent owned by First Pacific (Bermuda)

The question posed to the court is whether the term "capital" in Section 11, Article XII of the
Constitution refers to the total common shares only or to the total outstanding capital stock
(combination of common and non-voting preferred shares) of PLDT, a public utility.

Held:
Procedural Issues

1. An action for declaratory relief is not within the original jurisdiction of the Supreme Court. However,
since the issue has far-reaching implications for the country, the Court treats the petition for declaratory
relief as one for mandamus.

2. Petitioner has the requisite locus standi. He is a stockholder of PLDT, whose franchise is in danger of
being revoked for violation of the nationality requirements.

3. The petition also involves matters of transcendental public importance, and as a citizen, petitioner has
standing. When a mandamus proceeding involves the assertion of a public right, the requirement of
personal interest is satisfied by the mere fact that petitioner is a citizen and, therefore, part of the
general 'public' which possesses the right.

Definition of the word ‘capital’

4. Any citizen or juridical entity desiring to operate a public utility must meet the minimum nationality
requirement prescribed in Section 11, Article XII of the Constitution. Hence, for a corporation to be
granted authority to operate a public utility, at least 60 percent of its "capital" must be owned by
Filipino citizens.

5. The term "capital" in Section 11, Article XII of the Constitution refers only to shares of stock entitled
to vote in the election of directors.

6. In the present case, ‘capital’ refers only to common shares and not to the total outstanding capital
stock comprising both common and non-voting preferred shares.

7. This interpretation is consistent with the intent of the framers of the Constitution to place in the
hands of Filipino citizens the control and management of public utilities. As revealed in the deliberations
of the Constitutional Commission, "capital" refers to the voting stock or controlling interest of a
corporation.
8. Thus, 60 percent of the "capital" assumes, or should result in, 'controlling interest' in the corporation.
Reinforcing this interpretation of the term "capital," as referring to controlling interest or shares entitled
to vote, is the definition of a "Philippine national" under Section 3(a) of the Foreign Investments Act of
1991, which states:

The term "Philippine national" shall mean a citizen of the Philippines; or a domestic partnership or
association wholly owned by citizens of the Philippines; or a corporation organized under the laws of the
Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is
owned and held by citizens of the Philippines.

9. Furthermore, under the Implementing Rules of the Foreign Investments Act of 1991, it is stated that:

Compliance with the required Filipino ownership of a corporation shall be determined on the basis of
outstanding capital stock whether fully paid or not, but only such stocks which are generally entitled to
vote are considered.

For stocks to be deemed owned and held by Philippine citizens or Philippine nationals, mere legal title is
not enough to meet the required Filipino equity. Full beneficial ownership of the stocks, coupled with
appropriate voting rights is essential. Thus, stocks, the voting rights of which have been assigned or
transferred to aliens cannot be considered held by Philippine citizens or Philippine nationals.

10. The legal and beneficial ownership of 60 percent of the outstanding capital stock must rest in the
hands of Filipino nationals in accordance with the constitutional mandate. Otherwise, the corporation is
considered as non-Philippine national.

11. To construe broadly the term "capital" as the total outstanding capital stock, including both common
and non-voting preferred shares, grossly contravenes the intent and letter of the Constitution that the
"State shall develop a self-reliant and independent national economy effectively controlled by Filipinos."

12. Under PLDT's Articles of Incorporation, only holders of common shares have voting rights for all
purposes, while holders of preferred shares have no voting right for any purpose whatsoever.
13. In PLDT’s case, foreigners hold a majority of the common shares. Since holding a majority of the
common shares equates to control, it is clear that foreigners exercise control over PLDT. Such amount of
control unmistakably exceeds the allowable 40 percent limit on foreign ownership of public utilities
expressly mandated in Section 11, Article XII of the Constitution.

Hacienda Luisita vs PARC (2012) (En banc Resolution)

G.R. No. 171101 (EB Resolution) | 2012-04-24

Subject: A second motion for reconsideration, being a prohibited pleading under the Rules of Court, may
only be granted under exceptional circumstances “in the higher interest of justice”; Notwithstanding the
exclusive jurisdiction of Special Agrarian Courts, the Supreme Court has authority to rule upon matters
that may already be resolved based on the records before it; In determining just compensation, the
price or value of the property “at the time of taking”shall be the basis ; Date of taking is reckoned from
date of approval of the stock distribution plan (November 21, 1989), such approval being akin to a
notice of coverage ordinarily issued under compulsory acquisition; Determination of just compensation
is a judicial function, hence, valuation by DAR is not conclusive and subject to judicial review; Revocation
of the option given to FWB to remain as stockholders of HLI is in line with the policy on agrarian reform
that control over the agricultural land must always be in the hands of the farmers; RA 6657 allows two
modes of land distribution—direct (individual) ownership or indirect (collective) ownership; FWBs
entitled to proceeds of sale of agricultural lots; HLI entitled to just compensation for Homelots
distributed to FWBs

Facts:

Previously, the Supreme Court issued a Decision (aka July 5, 2011 Decision) revoking Presidential
Agrarian Reform Council (PARC) Resolution No. 89-12-2 and affirmed PARC Resolution No. 2005-32-01
and PARC Resolution No. 2006-34 which ruled for the compulsory coverage of the agricultural lands of
Hacienda Luisita, Inc. (HLI) under the land acquisition scheme of the CARP

The Supreme Court likewise ruled that the original 6,296 qualified farmworker-beneficiaries of Hacienda
Luisita (FWBs) shall have the option to remain as stockholders of HLI. In particular, the July 5, 2011
Decision decreed that those FWBs have the option to either (a) remain as HLI stockholders and be
entitled to 18,804.32 shares each, or (b) not to remain as HLI stockholders and instead be given land by
the Department of Agrarian Reform (DAR).

Upon separate motions of the parties for reconsideration, the Court, by Resolution of November 22,
2011, recalled the option granted to the FWBs to remain as stockholders of HLI, while maintaining that
all the benefits and homelots received by all the FWBs shall be respected with no obligation to refund or
return them. Further, the said November 22, 2011 Resolution stated that HLI is entitled to just
compensation for the agricultural land that will be transferred to DAR and that the just compensation
shall be reckoned from November 21, 1989 which is the date of issuance of PARC Resolution No. 89-12-2
approving HLI’s Stock Distribution Plan (SDP) “in view of the fact that this is the time that the FWBs were
considered to own and possess the agricultural lands in Hacienda Luisita”

HLI and Mallari et al filed their respective Motions for Reconsideration/Clarification on the November
22, 2011 Resolution.

Issues:

(1) determination of the date of “taking”

(2) propriety of the revocation of the option on the part of the original FWBs to remain as stockholders
of HLI

(3) propriety of distributing to the qualified FWBs the proceeds from the sale of the converted land and
of the 80.51-hectare Subic-Clark-Tarlac Expressway (SCTEX ) land

(4) just compensation for the homelots given to the FWBs.

Held:

(1) In determining the date of “taking,” the Supreme Court En Banc voted 8-6 to maintain the ruling
fixing November 21, 1989 as the date of “taking,” the value of the affected lands to be determined by
the LBP and the DAR;
(2) On the propriety of the revocation of the option of the FWBs to remain as HLI stockholders, the
Court, by unanimous vote, agreed to reiterate its ruling in its November 22, 2011 Resolution that the
option granted to the FWBs stays revoked;

(3) On the propriety of returning to the FWBs the proceeds of the sale of the 500-hectare converted
land and of the 80.51-hectare SCTEX land, the Court unanimously voted to maintain its ruling to order
the payment of the proceeds of the sale of the said land to the FWBs less the 3% share, taxes and
expenses specified in the fallo of the November 22, 2011 Resolution;

(4) On the payment of just compensation for the homelots to HLI, the Court, by unanimous vote,
resolved to amend its July 5, 2011 Decision and November 22, 2011 Resolution by ordering the
government, through the DAR, to pay to HLI the just compensation for the homelots thus distributed to
the FWBS.

Discussion:

A. Procedural Issues

A second motion for reconsideration, being a prohibited pleading under the Rules of Court, may only be
granted under exceptional circumstances “in the higher interest of justice”

1. Considering that the issue on just compensation has already been passed upon and denied by the
Court in its November 22, 2011 Resolution, a subsequent motion touching on the same issue undeniably
partakes of a second motion for reconsideration, hence, a prohibited pleading, and as such, the motion
or plea must be denied.

2. Sec. 3 of Rule 15 of the Internal Rules of the Supreme Court is clear:

SEC. 3. Second motion for reconsideration. – The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of justice by
the Court en banc upon a vote of at least two-thirds of its actual membership. There is reconsideration
“in the higher interest of justice” when the assailed decision is not only legally erroneous, but is likewise
patently unjust and potentially capable of causing unwarranted and irremediable injury or damage to
the parties. A second motion for reconsideration can only be entertained before the ruling sought to be
reconsidered becomes final by operation of law or by the Court’s declaration.

In the Division, a vote of three Members shall be required to elevate a second motion for
reconsideration to the Court En Banc.

3. Nonetheless, even if we entertain said motion and examine the arguments raised by HLI and Mallari
et al, the result will be the same.

Notwithstanding the exclusive jurisdiction of Special Agrarian Courts, the Supreme Court has authority
to rule upon matters that may already be resolved based on the records before it

4. The vesting on Special Agrarian Courts (SACs) of original and exclusive jurisdiction over all petitions
for the determination of just compensation to landowners will not preclude the [Supreme] Court from
ruling upon a matter that may already be resolved based on the records before [it].

5. Indeed, it is the Office of the DAR Secretary which is vested with the primary and exclusive
jurisdiction over all matters involving the implementation of the agrarian reform program. However, this
will not prevent the Court from assuming jurisdiction over the petition considering that the issues raised
in it may already be resolved on the basis of the records before Us. Besides, to allow the matter to
remain with the Office of the DAR Secretary would only cause unnecessary delay and undue hardship on
the parties. (see Heirs of Dr. Jose Deleste v. LBP)

B. Substantive Issues

In determining just compensation, the price or value of the property “at the time of taking”shall be the
basis
6. Sec. 4, Article XIII of the 1987 Constitution expressly provides that the taking of land for use in the
agrarian reform program of the government is conditioned on the payment of just compensation.

7. Just compensation has been defined as “the full and fair equivalent of the property taken from its
owner by the expropriator.” The measure is not the taker’s gain, but the owner’s loss. In determining
just compensation, the price or value of the property at the time it was taken from the owner and
appropriated by the government shall be the basis. If the government takes possession of the land
before the institution of expropriation proceedings, the value should be fixed as of the time of the
taking of said possession, not of the filing of the complaint.

8. The ‘time of taking’ is the time when the landowner was deprived of the use and benefit of his
property, such as when title is transferred to the Republic.” It should be noted, however, that “taking”
does not only take place upon the issuance of title either in the name of the Republic or the
beneficiaries of the Comprehensive Agrarian Reform Program (CARP). “Taking” also occurs when
agricultural lands are voluntarily offered by a landowner and approved by PARC for CARP coverage
through the stock distribution scheme, as in the instant case. Thus, HLI’s submitting its SDP for approval
is an acknowledgment on its part that the agricultural lands of Hacienda Luisita are covered by CARP.
However, it was the PARC approval which should be considered as the effective date of “taking” as it
was only during this time that the government officially confirmed the CARP coverage of these lands.

Date of taking is reckoned from date of approval of the stock distribution plan (November 21, 1989),
such approval being akin to a notice of coverage ordinarily issued under compulsory acquisition

9. HLI contends that the “taking” should be reckoned from finality of the Decision of the Court, or at the
very least, the reckoning period may be tacked to January 2, 2006, the date when the Notice of
Coverage was issued by the DAR pursuant to PARC Resolution No. 2006-34-01 recalling/revoking the
approval of the SDP.

10. The Court maintains that the date of “taking” is November 21, 1989, the date when PARC approved
HLI’s Stock Distribution Plan (SDP) per PARC Resolution No. 89-12-2, in view of the fact that this is the
time that the FWBs were considered to own and possess the agricultural lands in Hacienda Luisita. To be
precise, these lands became subject of the agrarian reform coverage through the stock distribution
scheme only upon the approval of the SDP, that is, November 21, 1989. Thus, such approval is akin to a
notice of coverage ordinarily issued under compulsory acquisition.
11. The fact that Sec. 31 of Republic Act No. 6657 (RA 6657) gives corporate landowners the option to
give qualified beneficiaries the right to avail of a stock distribution or, in the phraseology of the law, “the
right to purchase such proportion of the capital stock of the corporation that the agricultural land,
actually devoted to agricultural activities, bears in relation to the company’s total assets,” does not
detract from the avowed policy of the agrarian reform law of equitably distributing ownership of land.
The difference lies in the fact that instead of actually distributing the agricultural lands to the farmer-
beneficiaries, these lands are held by the corporation as part of the capital contribution of the farmer-
beneficiaries, not of the landowners, under the stock distribution scheme. The end goal of equitably
distributing ownership of land is, therefore, undeniable. And since it is only upon the approval of the
SDP that the agricultural lands actually came under CARP coverage, such approval operates and takes
the place of a notice of coverage ordinarily issued under compulsory acquisition.

12. The suggestion that there is “taking” only when the landowner is deprived of the use and benefit of
his property is not incompatible with Our conclusion that “taking” took place on November 21, 1989. As
mentioned in Our July 5, 2011 Decision, even from the start, the stock distribution scheme appeared to
be Tarlac Develeopment Co (Tadeco)’s preferred option in complying with the CARP when it organized
HLI as its spin-off corporation in order to facilitate stock acquisition by the FWBs. For this purpose,
Tadeco assigned and conveyed to HLI the agricultural lands of Hacienda Luisita, set at 4,915.75 hectares,
among others. These agricultural lands constituted as the capital contribution of the FWBs in HLI. In
effect, Tadeco deprived itself of the ownership over these lands when it transferred the same to HLI.

13. It is the official act by the government, that is, the PARC’s approval of the SDP, which should be
considered as the reckoning point for the “taking” of the agricultural lands of Hacienda Luisita. Although
the transfer of ownership over the agricultural lands was made prior to the SDP’s approval, it is this
Court’s consistent view that these lands officially became subject of the agrarian reform coverage
through the stock distribution scheme only upon the approval of the SDP.

14. If the Court adheres to HLI’s view that the Notice of Coverage issued on January 2, 2006 should be
considered as the date of “taking” as this was the only time that the agricultural portion of the hacienda
was placed under compulsory acquisition in view of HLI’s failure to perform certain obligations under
the SDP, this Court would, in effect, be penalizing the qualified FWBs twice for acceding to the adoption
of the stock distribution scheme: first, by depriving the qualified FWBs of the agricultural lands that they
should have gotten early on were it not for the adoption of the stock distribution scheme of which they
only became minority stockholders; and second, by making them pay higher amortizations for the
agricultural lands that should have been given to them decades ago at a much lower cost were it not for
the landowner’s initiative of adopting the stock distribution scheme “for free.”
Determination of just compensation is a judicial function , hence, valuation by DAR is not conclusive and
subject to judicial review

15. The Court, in its November 22, 2011 Resolution, dispositively ordered the Department of Agrarian
Reform (DAR) and the Land Bank of the Philippines (LBP) to determine the compensation due to HLI.
However, the DAR’s land valuation is only preliminary and is not, by any means, final and conclusive
upon the landowner. The landowner can file an original action with the RTC acting as a special agrarian
court to determine just compensation. The court has the right to review with finality the determination
in the exercise of what is admittedly a judicial function.

16. As regards the issue of interest on just compensation, We also leave this matter to the DAR and the
LBP, subject to review by the RTC acting as a Special Agrarian Court.

Revocation of the option given to FWB to remain as stockholders of HLI is in line with the policy on
agrarian reform that control over the agricultural land must always be in the hands of the farmers

17. In its November 22, 2011 Resolution, the Court reconsider its July 5, 2011 ruling that the qualified
FWBs should be given an option to remain as stockholders of HLI. The Court set aside the option based
on its finding that the FWBs will never have control over the agricultural lands for as long as they remain
as stockholders of HLI.

18. The Court agrees that the option given to the qualified FWBs whether to remain as stockholders of
HLI or opt for land distribution is neither iniquitous nor prejudicial to the FWBs. Nonetheless, the Court
is not unmindful of the policy on agrarian reform that control over the agricultural land must always be
in the hands of the farmers.

19. The SDP was approved by PARC even if the qualified FWBs did not and will not have majority
stockholdings in HLI, contrary to the obvious policy by the government on agrarian reform. Such an
adverse situation for the FWBs will not and should not be permitted to stand. For this reason, the Court
maintained its ruling that the qualified FWBs will no longer have the option to remain as stockholders of
HLI.
20. Contrary to the stance of HLI, both the Constitution and RA 6657 intended the farmers, individually
or collectively, to have control over the agricultural lands of HLI. Sec. 2 of RA 6657, pursuant to Sec. 4,
Art. XIII of the 1987 Constitution, provides that, “xxx The agrarian reform program is founded on the
right of farmers and regular farm workers, who are landless, to own directly or collectively the lands
they till or, in the case of other farm workers, to receive a share of the fruits thereof. xxx”

RA 6657 allows two modes of land distribution—direct (individual) ownership OR indirect (collective)
ownership

21. The basic law allows two (2) modes of land distribution—direct and indirect ownership. Direct
transfer to individual farmers is the most commonly used method by DAR and widely accepted. Indirect
transfer through collective ownership of the agricultural land is the alternative to direct ownership of
agricultural land by individual farmers. By using the word ‘collectively,’ the Constitution allows for
indirect ownership of land and not just outright agricultural land transfer. This is in recognition of the
fact that land reform may become successful even if it is done through the medium of juridical entities
composed of farmers.

22. Collective ownership is permitted in two provisions of RA 6657: (a) Sec. 29 allows workers’
cooperatives or associations to collectively own the land, while (b) Sec. 31, 2nd par., allows corporations
or associations to own agricultural land with the farmers becoming stockholders or members.

23. There is collective ownership as long as there is a concerted group work by the farmers on the land,
regardless of whether the landowner is a cooperative, association or corporation composed of farmers.
However, this definition of collective ownership should be read in light of the clear policy of the law on
agrarian reform, which is to emancipate the tiller from the bondage of the soil and empower the
common people. Accordingly, HLI’s insistent view that control need not be in the hands of the farmers
translates to allowing it to run roughshod against the very reason for the enactment of agrarian reform
laws and leave the farmers in their shackles with sheer lip service to look forward to.

FWBs entitled to proceeds of sale of agricultural lots

24. HLI reiterates its claim over the proceeds of the sales of the 500 hectares and 80.51 hectares of the
land as corporate owner and argues that the return of said proceeds to the FWBs is unfair and violative
of the Corporation Code.
25. It cannot be denied that the adverted 500-hectare converted land and the SCTEX lot once formed
part of what would have been agrarian-distributable lands subject to compulsory CARP coverage. And,
as stated in our July 5, 2011 Decision, were it not for the approval of the SDP by PARC, these large
parcels of land would have been distributed and ownership transferred to the FWBs, subject to payment
of just compensation, given that, as of 1989, the subject 4,915 hectares of Hacienda Luisita were already
covered by CARP. Accordingly, the proceeds realized from the sale and/or disposition thereof should
accrue for the benefit of the FWBs, less deductions of the 3% of the proceeds of said transfers that were
paid to the FWBs, the taxes and expenses relating to the transfer of titles to the transferees, and the
expenditures incurred by HLI and Centennary Holdings, Inc. for legitimate corporate purposes, as
prescribed in our November 22, 2011 Resolution.

HLI entitled to just compensation for Homelots distributed to FWBs

26. HLI insists that since the homelots given to the FWBs do not form part of the 4,915.75 hectares
covered by the SDP, then the value of these homelots should, with the revocation of the SDP, be paid to
Tadeco as the landowner.The Court disagrees.

27. As explained in the July 5, 2011 Decision, the distribution of homelots is required under RA 6657
(Sec 29 and 30) only for corporations or business associations owning or operating farms which opted
for land distribution. Since the provisions did not make any reference to corporations which opted for
stock distribution under Sec. 31 of RA 6657, then it is apparent that said corporations are not obliged to
provide for homelots.

28. Nonetheless, HLI undertook to “subdivide and allocate for free and without charge among the
qualified family-beneficiaries x x x residential or homelots of not more than 240 sq. m. each..” Thus, in
the November 22, 2011 Resolution, the Court declared that the homelots already received by the FWBs
shall be respected with no obligation to refund or to return them.

29. The Court, by a unanimous vote, resolved to maintain its ruling that the FWBs shall retain ownership
of the homelots given to them with no obligation to pay for the value of said lots. However, since the
SDP was already revoked with finality, the Court directs the government through the DAR to pay HLI the
just compensation for said homelots in consonance with Sec. 4, Article XIII of the 1987 Constitution that
the taking of land for use in the agrarian reform program is “subject to the payment of just
compensation.” Just compensation should be paid to HLI instead of Tadeco in view of the Deed of
Assignment and Conveyance dated March 22, 1989 executed between Tadeco and HLI, where Tadeco
transferred and conveyed to HLI the titles over the lots in question. DAR is ordered to compute the just
compensation of the homelots in accordance with existing laws, rules and regulations.

Tano vs. Socrates (1997)

G.R. No. 110249 | 1997-08-21

Subject: Tano et al. certiorari petition dismissable for lack of cause of action; The Supreme Court does
not exercise original jurisdiction over petitions for declaratory relief even if only questions of law are
involved; Petitioners disregarded the hierarchy of courts; Ordinances enjoy a presumption of validity;
Petitioners do not qualify as 'subsistence or marginal fishermen'; Subsistence fishermen and Marginal
fishermen, defined; Section 2 of Article XII does not to bestow any right to subsistence fishermen; Under
Section 7 of Article XIII, the preferential right of subsistence or marginal fishermen to the use of marine
resources is not at all absolute; The right to a balanced and healthful ecology and the General Welfare
Clause under the LGC; Devolution of power to LGUs includes enforcement of fishery laws in municipal
waters by means of local ordinances; Ordinances in question are valid exercises of the power to enforce
of fishery laws in municipal waters granted to LGUs; Sanggunian acted with authority in enacting the
assailed ordinances

Facts:

On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City enacted Ordinance No. 15-
92 which banned the shipment out from Puerto Princesa City, whether via air or water, of all live fish
and lobster except for sea bass, catfish, mudfish, and milkfish fries.

To implement said city ordinance, then Acting City Mayor Amado Lucero issued Office Order No. 23
which authorized the conduct of inspections on cargoes containing live fish and lobster to ascertain
whether the shipper possessed the required Mayor's Permit and clearances, otherwise, the same shall
be held for proper disposition.
The Sangguniang Panlalawigan, Provincial Government of Palawan later enacted Resolution No. 33
prohibiting the catching, gathering, possessing, buying, selling and shipment of live marine coral
dwelling and aquatic organisms. The said Resolution was enacted pursuant to the general welfare
provision of the Local Government Code with the intendtion to protect and conserve the marine
resources of Palawan.

The Sangguniang Panlungsod ng Puerto Princesa enacted Ordinance No. 2 approving and implementing
Resolution No. 33 of the Sangguniang Panlalawigan of Palawan.

Petitioners, without seeking redress from the concerned local government units, directly filed the
present petition for certiorari and prohibition with the Supreme Court. It contended that:

(a) the Ordinances deprived them of due process of law, their livelihood, and unduly restricted them
from the practice of their trade, in violation of Section 2, Article XII and Sections 2 and 7 of Article XIII of
the 1987 Constitution.

(b) Office Order No. 23 contained no regulation nor condition under which the Mayor's permit could be
granted or denied; in other words, the Mayor had the absolute authority to determine whether or not
to issue the permit.

(c) Ordinance No. 2 effectively took away the right of petitioners-fishermen to earn their livelihood in
lawful ways

There are two sets of petitioners in this case. The first set of petitioners (Tano, et al.) were criminally
charged with violating Resolution No. 33, City Ordinance No. 15-92, and Ordinance No. 2. The first set of
petitioners seek to restrain the determination of the criminal cases until the constitutionality of the
Ordinances shall have been resolved.

The second set of petitioners is composed of 77 fishermen who claim that they would be adversely
affected by the ordinances.
Respondents defended the validity of the issuances as a valid exercise of the local government's power
under the general welfare clause (Section 16 of the Local Government Code of 1991). They likewise
maintained that there was no violation of the due process and equal protection clauses of the
Constitution.

Held:

I. Procedural issues

Tano et al. certiorari petition dismissable for lack of cause of action

1. As to the first set of petitioners, this special civil for certiorari must fail on the ground of prematurity
amounting to a lack of cause of action. There is no showing that said petitioners, as the accused in the
criminal cases, have filed motions to quash the informations therein and that the same were denied.
The ground available for such motions is that the facts charged therein do not constitute an offense
because the ordinances in question are unconstitutional. It cannot then be said that the lower courts
acted without or in excess of jurisdiction or with grave abuse of discretion to justify recourse to the
extraordinary remedy of certiorari or prohibition.

2. It must further be stressed that even if petitioners did file motions to quash, the denial thereof would
not forthwith give rise to a cause of action under Rule 65 of the Rules of Court. The general rule is that
where a motion to quash is denied, the remedy therefrom is not certiorari, but for the party aggrieved
thereby to go to trial prejudice to reiterating special defenses involved in said motion, and if, after trial
on the merits an adverse decision is rendered, to appeal therefrom in the manner authorized by law.

3. Even where in an exceptional circumstance such denial may be the subject of a special civil action for
certiorari, a motion for reconsideration must have to be filed to allow the court concerned an
opportunity to correct its errors, unless such motion may be dispensed with because of existing
exceptional circumstances. Finally, even if a motion for reconsideration has been filed and denied, the
remedy under Rule 65 is still unavailable absent any showing of the grounds provided for in Section 1
thereof. For obvious reasons, the petition at bar does not, and could not have, alleged any of such
grounds.
The Supreme Court does not exercise original jurisdiction over petitions for declaratory relief even if
only questions of law are involved

4. As to the second set of petitioners, the instant petition is obviously one for Declaratory Reief, i.e., for
a declaration that the Ordinances in question are a "nullity . . . for being unconstitutional." As such, their
petition must likewise fail, as this Court is not possessed of original jurisdiction over petitions for
declaratory relief even if only questions of law are involved, it being settled that the Court merely
exercises appellate jurisdiction over such petitions.

Petitioners disregarded the hierarchy of courts

5. There is here a clear disregard of the hierarchy of courts, and no special and important reason or
exceptional and compelling circumstance has been adduced why direct recourse to us should be
allowed. While [the Supreme Court] has concurrent jurisdiction with Regional Trial Courts and with the
Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction, such concurrence gives petitioners no unrestricted freedom of choice of court forum. The
judicial policy [is] that this Court will not entertain direct resort to it unless the redress desired cannot
be obtained in the appropriate courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of its primary jurisdiction."

Ordinances enjoy a presumption of validity

6. It is of course settled that laws (including ordinances enacted by local government units) enjoy the
presumption of constitutionality. 15 To overthrow this presumption, there must be a clear and
unequivocal breach of the Constitution, not merely a doubtful or argumentative contradiction. In short,
the conflict with the Constitution must be shown beyond reasonable doubt. 16 Where doubt exists,
even if well-founded, there can be no finding of unconstitutionality. To doubt is to sustain.

II. Substantive Issues

Petitioners do not qualify as 'subsistence or marginal fishermen'

7. Petitioners specifically point to Section 2, Article XII and Sections 2 and 7, Article XIII of the
Constitution as having been transgressed by the Ordinances. The said provisions pertain to the
protection of the nation's marine wealth and the rights of subsistence fishermen, especially of local
communities, to the preferential use of the communal marine and fishing resources.

8. There is absolutely no showing that any of the petitioners qualifies as a subsistence or marginal
fisherman. In their petition, petitioner Airline Shippers Association of Palawan is self-described as "a
private association composed of Marine Merchants;" petitioners Robert Lim and Virginia Lim, as
"merchants;" while the rest of the petitioners claim to be "fishermen," without any qualification,
however, as to their status.

Subsistence fishermen and Marginal fishermen, defined

9. Since the Constitution does not specifically provide a definition of the terms "subsistence" or
"marginal” fishermen, they should be construed in their general and ordinary sense.

10. A marginal fisherman is an individual engaged in fishing whose margin of return or reward in his
harvest of fish as measured by existing price levels is barely sufficient to yield a profit or cover the cost
of gathering the fish, while a subsistence fisherman is one whose catch yields but the irreducible
minimum for his livelihood.

11. Section 131(p) of the Local Government Code or LGC (R.A. No. 7160) defines a marginal farmer or
fisherman as "an individual engaged in subsistence farming or fishing which shall be limited to the sale,
barter or exchange of agricultural or marine products produced by himself and his immediate family." It
bears repeating that nothing in the record supports a finding that any petitioner falls within these
definitions.

Section 2 of Article XII does not to bestow any right to subsistence fishermen

12. Section 2 of Article XII reads:

SEC. 2. . . .

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 fishworkers in rivers, lakes, bays,
and lagoons.

13. Section 2 of Article XII aims primarily not to bestow any right to subsistence fishermen, but to lay
stress on the duty of the State to protect the nation's marine wealth. What the provision merely
recognizes is that the State may allow, by law, cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays and lagoons.

14. The only provision of law which speaks of a preferential right of marginal fishermen is Section 149 of
the LGC, which speaks of fishery privileges. This case, however, does not involve such fishery right.

Under Section 7 of Article XIII, the preferential right of subsistence or marginal fishermen to the use of
marine resources is not at all absolute

15. Section 7 of Article XIII reads:

SEC. 7. The State shall protect the rights of subsistence fishermen, especially of local communities, to
the preferential use of the communal marine and fishing resources, both inland and offshore. It shall
provide support to such fishermen through appropriate technology and research, adequate financial,
production, and marketing assistance, and other services. The State shall also protect, develop, and
conserve such resources. The protection shall extend to offshore fishing grounds of subsistence
fishermen against foreign intrusion. Fisherworkers shall receive a just share from their labor in the
utilization of marine and fishing resources.
16. The so-called "preferential right" of subsistence or marginal fishermen to the use of marine
resources is not at all absolute. In accordance with the Regalian Doctrine, marine resources belong to
the State, and, pursuant to the first paragraph of Section 2, Article XII of the Constitution, their
"exploration, development and utilization . . . shall be under the full control and supervision of the
State." Moreover, their mandated protection, development and conservation as necessarily recognized
by the framers of the Constitution, imply certain restrictions on whatever right of enjoyment there may
be in favor of anyone.

The right to a balanced and healthful ecology and the General Welfare Clause under the LGC

17. While the right to a balanced and healthful ecology is to be found under the Declaration of
Principles the State Policies and not under the Bill of Rights, it does not follow that it is less important
than any of the civil and political rights enumerated in the latter. Such a right belongs to a different
category of rights altogether for it concerns nothing less than self-preserveration and self-
perpetution...As a matter of fact, these basic rights need not even be written in the Constitution for they
assumed to exist from the inception of humankind. If they are now explicitly mentioned in the
fundamental charter, it is because of the well-founded fear of its framers that unless the rights to a
balanced and healthful ecology and to health are mandated as state policies by the Constitution itself,
thereby highlighting their continuing importance and imposing upon the state a solemn obligation to
preserve the first and protect and advance the second, the day would not be too far when all else would
be lost not only for the present generation, but also for those to come - generations which stand to
inherit nothing but parched earth incapable of sustaining life.

18. The right to a balanced and healthful ecology carries with it a correlative duty to refrain from
impairing the environment. (see Oposa vs Factoran)

19. The General Welfare Clause under Section 16 of the Local Government Code merely seek to give
flesh and blood to the right of the people to a balanced and healthful ecology. In fact, the General
Welfare Clause, expressly mentions this right:

SEC. 16. General Welfare. - Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and safety, enhance
the right of the people to a balanced ecology, encourage and support the development of appropriate
and self-reliant scientific and technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their residents, maintain peace and
order, and preserve the comfort and convenience of their inhabitants.

20. Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare provisions of the LGC
"shall be liberally interpreted to give more powers to the local government units in accelerating
economic development and upgrading the quality of life for the people of the community."

21. Further, the sangguniang bayan, the sangguniang panlungsod and the sangguniang panlalawigan are
directed to enact ordinances for the general welfare of the municipality and its inhabitants, which shall
include, inter alia, ordinances that "[p]rotect the environment and impose appropriate penalties for acts
which endanger the environment such as dynamite fishing and other forms of destructive fishing . . . and
such other activities which result in pollution, acceleration of eutrophication of rivers and lakes, or of
ecological imbalance."

Devolution of power to LGUs includes enforcement of fishery laws in municipal waters by means of local
ordinances

22. The centerpiece of LGC is the system of decentralization as expressly mandated by the Constitution.
Indispensable to decentralization is devolution and the LGC expressly provides that "[a]ny provision on a
power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any
question thereon shall be resolved in favor of devolution of powers and of the lower local government
unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in favor of the
local government unit concerned." Devolution refers to the act by which the National Government
confers power and authority upon the various local government units to perform specific functions and
responsibilities.

23. One of the devolved powers enumerated in the section of the LGC on devolution is the enforcement
of fishery laws in municipal waters including the conservation of mangroves. This necessarily includes
the enactment of ordinances to effectively carry out such fishery laws within the municipal waters.

24. The term "municipal waters" includes not only streams, lakes, and tidal waters within the
municipality, not being the subject of private ownership and not comprised within the national parks,
public forest, timber lands, forest reserves, or fishery reserves, but also marine waters included between
two lines drawn perpendicularly to the general coastline from points where the boundary lines of the
municipality or city touch the sea at low tide and a third line parallel with the general coastline and
fifteen kilometers from it. Under P.D. No. 704, the marine waters included in municipal waters is limited
to three nautical miles from the general coastline using the above perpendicular lines and a third
parallel line.

25. These "fishery laws" which local government units may enforce under Section 17(b) (2) (i) in
municipal waters include: (1) P.D. No. 704; (2) P.D. No. 1015 which, inter alia, authorizes the
establishment of a "closed season" in any Philippine water if necessary for conservation or ecological
purposes; (3) P.D. No. 1219 which provides for the exploration, exploitation, utilization and conservation
of coral resources; (4) R.A. No. 5474, as amended by B.P. Blg. 58, which makes it unlawful for any
person, association or corporation to catch or cause to be caught, sell, offer to sell, purchase, or have in
possession any of the fish specie called gobiidae or "ipon" during closed season; and (5) R.A. No. 6451
which prohibits and punishes electrofishing, as well as various issuances of the BFAR.

Ordinances in question are valid exercises of the power to enforce of fishery laws in municipal waters
granted to LGUs

26. The assailed Ordinances have two principal objectives or purposes: (1) to establish a "closed season"
for the species of fish or aquatic animals covered therein for a period of five years; and (2) to protect the
coral in the marine waters of the City of Puerto Princesa and the Province of Palawan from further
destruction due to illegal fishing activities.

27. The accomplishment of the first objective is well within the devolved power to enforce fishery laws
in municipal waters, such as P.D. No. 1015, which allows the establishment of "closed seasons." The
devolution of such power has been expressly confirmed in the Memorandum of Agreement of 5 April
1994 between the Department of Agriculture and the Department of Interior and Local Government.

28. The realization of the second objective clearly falls within both the general welfare clause of the LGC
and the express mandate thereunder to cities and provinces to protect the environment and impose
appropriate penalties for acts which endanger the environment.
29. The nexus then between the activities barred by Ordinance No. 15-92 of the City of Puerto Princesa
and the prohibited acts provided in Ordinance No. 2, Series of 1993 of the Province of Palawan, on one
hand, and the use of sodium cyanide, on the other, is painfully obvious. In sum, the public purpose and
reasonableness of the Ordinances may not then be controverted.

30. As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado Lucero of the City of
Puerto Princesa, we find nothing therein violative of any constitutional or statutory provision. The Order
refers to the implementation of the challenged ordinance and is not the Mayor's Permit.

Sanggunian acted with authority in enacting the assailed ordinances

31. The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of authority on the part
of the Sangguniang Panlungsod of Puerto Princesa to enact Ordinance No. 15-92, on the theory that the
subject thereof is within the jurisdiction and responsibility of the Bureau of Fisheries and Aquatic
Resources (BFAR) under P.D. No. 704, otherwise known as the Fisheries Decree of 1975. In any event,
the Ordinance is unenforceable for lack of approval by the Secretary of the Department of Natural
Resources (DNR), likewise in accordance with P.D. No. 704.

32. The jurisdiction and responsibility of the BFAR under P.D. No. 704, over the management,
conservation, development, protection, utilization and disposition of all fishery and aquatic resources of
the country is not all encompassing. First, Section 4 thereof excludes from such jurisdiction and
responsibility municipal waters, which shall be under the municipal or city government concerned,
except insofar as fishpens and seaweed culture in municipal centers are concerned. This section
provides, however, that all municipal or city ordinances and resolutions affecting fishing and fisheries
and any disposition thereunder shall be submitted to the Secretary of the Department of Natural
Resources for appropriate action and shall have full force and effect only upon his approval.

33. Second, the BFAR is no longer under the Department of Natural Resources (now Department of
Environment and Natural Resources) but was transferred under the control of the Ministry of
Agriculture and Food (MAF) and converted it into a mere staff agency thereof.

34. Therefore, it is incorrect to say that the challenged Ordinance of the City of Puerto Princesa is
invalid or unenforceable because it was not approved by the Secretary of the DENR. If at all, the
approval that should be sought would be that of the Secretary of the Department of Agriculture.
However, the requirement of approval by the Secretary of the Department of Agriculture (not DENR) of
municipal ordinances affecting fishing and fisheries in municipal waters has been dispensed with in view
of (a) the repeal by the LGC of Section 16 and 29 of P.D. No. 704, and (b) authority granted by LGC to
LGUs to enact ordinances to enhance the right of the people to a balanced ecology.

ondo Medical Center Employees Association vs. Court of Appeals (2007)

G.R. No. 167324 | 2007-07-17

Subject: No violation of non-self-executing provisions of the Constitution; The President has authority to
direct the reorganization of the Executive Department; RSP was implemented only after the DBM
approved it; The acts of the DOH Secretary, unless disapproved by the President, are presumptively the
acts of the President; Reorganization was made in good faith; The validity of a statute or ordinance is to
be determined from its general purpose and its efficiency to accomplish the end desired, not from its
effects in a particular case; Petitioners failed to show any present substantial interest (no standing to
raise the constitutional question)

Facts:

In 1999, the DOH launched the Health Sector Reform Agenda (HSRA) Philippines, a reform agenda
developed after a series of workshops and consultations with stakeholders in the health sector. It
provided for five general areas of reform: (1) to provide fiscal autonomy to government hospitals; (2)
secure funding for priority public health programs; (3) promote the development of local health systems
and ensure its effective performance; (4) strengthen the capacities of health regulatory agencies; and (5)
expand the coverage of the National Health Insurance Program (NHIP).

Petitioners questioned the first reform agenda involving the fiscal autonomy of government hospitals,
particularly the collection of socialized user fees and the corporate restructuring of government
hospitals. They alleged that the HSRA is void for being in violation of several constitutional provisions.

Petitioners also assailed the issuance of administrative orders by the DOH implementing the above
agenda, which they claim will make free medicine and free medical services inaccessible to economically
disadvantaged Filipinos.
President Estrada issued Executive Order No. 102, entitled "Redirecting the Functions and Operations of
the Department of Health" under which the DOH refocused its mandate from being the sole provider of
health services to being a provider of specific health services and technical assistance, as a result of the
devolution of basic services to local government units. It tasked the DOH to prepare a Rationalization
and Streamlining Plan (RSP) which shall be the basis of the intended changes.

Petitioners contended that a law, such as EO 102, which effects the reorganization of the DOH, should
be enacted by Congress in the exercise of its legislative function, hence, EO 102 is void, having been
issued in excess of the President's authority.

DOH employees also assailed the validity of EO 102 on the ground that they were likely to lose their
jobs, and that some of them were suffering from the inconvenience of having to travel a longer distance
to get to their new place of work. In addition, new employees were purportedly hired by the DOH and
appointed to positions for which they were not qualified

Petitioners originally filed a Petition for Certiorari, Prohibition and Mandamus under Rule 65 before the
Supreme Court (SC) who referred the petition to the Court of Appeals (CA).

The CA denied the petition due to a number of procedural defects. On the substantial issues, the CA
held that:

(a) the HSRA cannot be declared void for violating the enumerated constitutional provisions — which all
directly or indirectly pertain to the duty of the State to protect and promote the people's right to health
and well-being— as these provisions of the Constitution are not self-executing; they are not judicially
enforceable constitutional rights and can only provide guidelines for legislation.

(b) the assertion that Executive Order No. 102 is detrimental to the health of the people cannot be made
a justiciable issue. The question of whether the HSRA will bring about the development or disintegration
of the health sector is within the realm of the political department.
(c) the President was empowered to issue EO 102, in accordance with Section 17 Article VII of the 1987
Constitution.

(d) the DOH did not implement EO 102 in bad faith or with grave abuse of discretion as the DOH issued
Department Circular No. 275-C, Series of 2000, which created the different committees tasked with the
implementation of the RSP, only after both the DBM and Presidential Committee on Effective
Governance (PCEG) approved the RSP.

Motion for Reconsideration was denied. Hence, the present petition.

Held:

No violation of non-self-executing provisions of the Constitution

1. Petitioners claim that the HSRA's policies of fiscal autonomy, income generation, and revenue
enhancement violate Sections 5, 9, 10, 11, 13, 15 and 18 of Article II, Section 1 of Article III; Sections 11
and 14 of Article XIII; and Sections 1 and 3 of Article XV of the 1987 Constitution. Such policies allegedly
resulted in making inaccessible free medicine and free medical services.

2. As a general rule, the provisions of the Constitution are considered self-executing, and do not require
future legislation for their enforcement. For if they are not treated as self-executing, the mandate of the
fundamental law can be easily nullified by the inaction of Congress.

3. However, some provisions of the Constitution have already been categorically declared by this Court
as non self-executing:

(a) In Tanada v. Angara, the Court specifically set apart the sections found under Article II of the 1987
Constitution as non self-executing and ruled that such broad principles need legislative enactments
before they can be implemented. By its very title, Article II of the Constitution is a "declaration of
principles and state policies." These principles in Article II are not intended to be self-executing
principles ready for enforcement through the courts. They are used by the judiciary as aids or as guides
in the exercise of its power of judicial review, and by the legislature in its enactment of laws.

(b) In Basco v. Philippine Amusement and Gaming Corporation, this Court declared that Sections 11, 12,
and 13 of Article II; Section 13 of Article XIII; and Section 2 of Article XIV of the 1987 Constitution are not
self-executing provisions.

(c) In Tolentino v. Secretary of Finance, the Court referred to Section 1 of Article XIII and Section 2 of
Article XIV of the Constitution as moral incentives to legislation, not as judicially enforceable rights.
These provisions, which merely lay down a general principle, are distinguished from other constitutional
provisions as non self-executing and, therefore, cannot give rise to a cause of action in the courts; they
do not embody judicially enforceable constitutional rights.

4. Some of the constitutional provisions invoked in the present case were taken from Article II of the
Constitution -- specifically, Sections 5, 9, 10, 11, 13, 15 and 18 -- the provisions of which the Court
categorically ruled to be non self-executing.

5. Moreover, the records are devoid of any explanation of how the HSRA supposedly violated the equal
protection and due process clauses that are embodied in Section 1 of Article III of the Constitution.
There were no allegations of discrimination or of the lack of due process in connection with the HSRA.
Since they failed to substantiate how these constitutional guarantees were breached, petitioners are
unsuccessful in establishing the relevance of this provision to the petition, and consequently, in
annulling the HSRA.

6. In the remaining provisions, Sections 11 and 14 of Article XIII and Sections 1 and 3 of Article XV, the
State accords recognition to the protection of working women and the provision for safe and healthful
working conditions; to the adoption of an integrated and comprehensive approach to health; to the
Filipino family; and to the right of children to assistance and special protection, including proper care
and nutrition. Like the provisions that were declared as non self-executory in the above case, they are
mere statements of principles and policies. As such, they are mere directives addressed to the executive
and the legislative departments. If unheeded, the remedy will not lie with the courts; but rather, the
electorate's displeasure may be manifested in their votes.
7. The HSRA cannot be nullified based solely on petitioners' bare allegations that it violates the general
principles expressed in the non self-executing provisions they cite herein. There are two reasons for
denying a cause of action to an alleged infringement of broad constitutional principles: basic
considerations of due process and the limitations of judicial power.

The President has continuing authority to direct the reorganization of the Executive Department

8. Petitioners also claim that Executive Order No. 102 is void on the ground that it was issued by the
President in excess of his authority. They maintain that the structural and functional reorganization of
the DOH is an exercise of legislative functions, which the President usurped when he issued Executive
Order No. 102.

9. This Court has already ruled that the President may, by executive or administrative order, direct the
reorganization of government entities under the Executive Department. This is sanctioned under the
Constitution, as well as other statutes.

(a) Section 17, Article VII of the 1987 Constitution, clearly states: "[T]he president shall have control of
all executive departments, bureaus and offices."

(b) Section 31, Book III, Chapter 10 of Executive Order No. 292 (a.k.a. Administrative Code of 1987)
recognizes the “Continuing Authority of the President to Reorganize his Office”

10. The law grants the President the power to reorganize the Office of the President in recognition of
the recurring need of every President to reorganize his or her office "to achieve simplicity, economy and
efficiency." To remain effective and efficient, it must be capable of being shaped and reshaped by the
President in the manner the Chief Executive deems fit to carry out presidential directives and policies.
(see Domingo v. Zamora)

11. The Administrative Code provides that the Office of the President consists of the Office of the
President Proper and the agencies under it. Agency of the Government refers to any of the various units
of the Government, including a department, bureau, office, instrumentality, or government-owned or
controlled corporation, or a local government or a distinct unit therein. (Section 2(4) of the Introductory
Provisions of the Administrative Code)
12. The DOH is among the cabinet-level departments enumerated under Book IV of the Administrative
Code, mainly tasked with the functional distribution of the work of the President. Indubitably, the DOH
is an agency which is under the supervision and control of the President and, thus, part of the Office of
the President. Consequently, Section 31, Book III, Chapter 10 of the Administrative Code, granting the
President the continued authority to reorganize the Office of the President, extends to the DOH.

13. The power of the President to reorganize the executive department is likewise recognized in general
appropriations laws. In the year when Executive Order No. 102 was issued, "The General Appropriations
Act of Fiscal Year 1999" (Republic Act No. 8745) conceded to the President the power to make any
changes in any of the key positions and organizational units in the executive department.

14. Clearly, Executive Order No. 102 is well within the constitutional power of the President to issue.
The President did not usurp any legislative prerogative in issuing Executive Order No. 102. It is an
exercise of the President's constitutional power of control over the executive department.

RSP was implemented only after the DBM approved it

15. The RSP was allegedly implemented even before the DBM approved it. The facts show otherwise. It
was only after the DBM approved the Notice of Organization, Staffing and Compensation Action on 8
July 2000, and after the Presidential Committee on Effective Governance (PCEG) approved the RSP, that
then DOH Secretary Romualdez issued on 28 July 2000 Department Circular No. 275-C, Series of 2000,
creating the different committees to implement the RSP.

The acts of the DOH Secretary, unless disapproved by the President, are presumptively the acts of the
President

16. Petitioners also maintain that the Office of the President should have issued an administrative order
to carry out the streamlining, but that it failed to do so. Such objection cannot be given any weight
considering that the acts of the DOH Secretary, as an alter ego of the President, are presumed to be the
acts of the President. The members of the Cabinet are subject at all times to the disposition of the
President since they are merely his alter egos. Thus, their acts, performed and promulgated in the
regular course of business, are, unless disapproved by the President, presumptively acts of the
President. Significantly, the acts of the DOH Secretary were clearly authorized by the President, who,
thru the PCEG, issued the aforementioned Memorandum Circular No. 62, sanctioning the
implementation of the RSP.

Reorganization was made in good faith

17. This Court has regarded reorganizations of government units or departments as valid, for so long as
they are pursued in good faith-that is, for the purpose of economy or to make bureaucracy more
efficient. On the other hand, if the reorganization is done for the purpose of defeating security of tenure
or for ill-motivated political purposes, any abolition of position would be invalid. None of these
circumstances are applicable since none of the petitioners (DOH employees) were removed from public
service, nor did they identify any action taken by the DOH that would unquestionably result in their
dismissal. The reorganization that was pursued in the present case was made in good faith. The RSP was
clearly designed to improve the efficiency of the department and to implement the provisions of the
Local Government Code on the devolution of health services to local governments.

18. While this Court recognizes the inconvenience suffered by public servants in their deployment to
distant areas, the executive department's finding of a need to make health services available to these
areas and to make delivery of health services more efficient and more compelling is far from being
unreasonable or arbitrary, a determination which is well within its authority. In all, this Court finds
petitioners' contentions to be insufficient to invalidate Executive Order No. 102.

The validity of a statute or ordinance is to be determined from its general purpose and its efficiency to
accomplish the end desired, not from its effects in a particular case

19. The petition shows that none of the petitioners, who are working in the DOH, were entitled to
receive RATA at the time the petition was filed. Nor was it alleged that they suffered any diminution of
compensation. Secondly, it was claimed that certain unnamed DOH employees were matched with
unidentified positions for which they were supposedly neither qualified nor suited. Petitioners'
allegations are too general and unsubstantiated by the records for the Court to pass upon. The persons
involved are not identified, details of their appointments and transfers - such as position, salary grade,
and the date they were appointed - are not given; and the circumstances which attended the alleged
violations are not specified.
20. Even granting that these alleged errors were adequately proven by the petitioners, they would still
not invalidate Executive Order No. 102. Any serious legal errors in laying down the compensation of the
DOH employees concerned can only invalidate the pertinent provisions of Department Circular No. 312,
Series of 2000. Likewise, any questionable appointments or transfers are properly addressed by an
appeal process provided under Administrative Order No. 94, series of 2000; and if the appeal is
meritorious, such appointment or transfer may be invalidated. The validity of Executive Order No. 102
would, nevertheless, remain unaffected. Settled is the rule that courts are not at liberty to declare
statutes invalid, although they may be abused or misabused, and may afford an opportunity for abuse in
the manner of application. The validity of a statute or ordinance is to be determined from its general
purpose and its efficiency to accomplish the end desired, not from its effects in a particular case.

Petitioners failed to show any present substantial interest (no standing to raise the constitutional
question)

21. In a number of cases, the Court upheld the standing of citizens who filed suits, wherein the
"transcendental importance" of the constitutional question justified the granting of relief. In spite of
these rulings, the Court, in Domingo v. Carague, dismissed the petition when petitioners therein failed
to show any present substantial interest. It demonstrated how even in the cases in which the Court
declared that the matter of the case was of transcendental importance, the petitioners must be able to
assert substantial interest. Present substantial interest, which will enable a party to question the validity
of the law, requires that a party sustained or will sustain direct injury as a result of its enforcement. It is
distinguished from a mere expectancy or future, contingent, subordinate, or inconsequential interest.

22. A citizen is allowed to raise a constitutional question only when he can show that he has personally
suffered some actual or threatened injury as a result of the allegedly illegal conduct of the government;
the injury is fairly traceable to the challenged action; and the injury is likely to be redressed by a
favorable action. This case likewise stressed that the rule on constitutional questions which are of
transcendental importance cannot be invoked where a party's substantive claim is without merit. Thus,
a party's standing is determined by the substantive merit of his case or a preliminary estimate thereof.
(Telecommunications & Broadcast Attorneys of the Philippines, Inc. v. Comelec) After a careful scrutiny
of the petitioners' substantive claims, this Court finds that the petitioners miserably failed to show any
merit to their claims.

Philippine Health Care Providers vs. CIR (2009)

G.R. No. 167330 | 2009-09-18

Subject:

Statutory Construction on Surplusages; Health Maintenance Organization (HMO); Nature of Insurance

Business; HMOs not Subject to Documentary Stamp Tax (DST)

Facts:

This is a Motion for Reconsideration (MR) of the Supreme Court’s decision.

Petitioner Philippine Health Care Providers (PHCP) is a domestic corporation whose primary purpose is
“[t]o establish, maintain, conduct and operate a prepaid group practice health care delivery system or a
health maintenance organization to take care of the sick and disabled persons enrolled in the health
care plan and to provide for the administrative, legal, and financial responsibilities of the organization.”
Its members pay an annual membership fee and are entitled to various preventive, diagnostic and
curative medical services.
Commissioner of Internal Revenue (CIR) assessed PHCP deficiency documentary stamp taxes (DST) for
the years 1996 and 1997 and these were imposed on the health care agreement with its members. VAT
was also assessed. PHCP protested but because the CIR did not act on it, petitioner filed a petition for
review with the Court of Tax Appeals (CTA) seeking cancellation of the deficiency VAT and DST.

CTA ruled that PHCP was liable for VAT but DST was cancelled. CIR appealed in so far as the cancellation
of the DST claiming that PHCP’s health care agreement was a contract of insurance subject to DST under
Sec. 185 of the 1997 Tax Code.

SC ruled that petitioner’s health care agreement during the pertinent period was in the nature of non-
life insurance which is a contract of indemnity, and that it is liable for DST, because DST is not a tax on
the business transacted but an excise on the privilege, opportunity or facility offered at exchanges for
the transaction of the business.

In its MR, petitioner reveals for the first time that it availed of a tax amnesty under RA 9480.

Held:

Statutory Construction; Surplusages

1. It is a cardinal rule in statutory construction that no word, clause, sentence, provision or part of a
statute shall be considered surplusage or superfluous, meaningless, void and insignificant. To this end, a
construction which renders every word operative is preferred over that which makes some words idle
and nugatory. This principle is expressed in the maxim Ut magis valeat quam pereat, that is, we choose
the interpretation which gives effect to the whole of the statute – its every word.

Health Maintenance Organization (HMO) is not engaged in the insurance business

2. Applying the “principal object and purpose test,” there is significant American case law supporting the
argument that a corporation (such as an HMO, whether or not organized for profit), whose main object
is to provide the members of a group with health services, is not engaged in the insurance business.

3. The functions of such an organization are not identical with those of insurance or indemnity
companies. The latter are concerned primarily, if not exclusively, with risk and the consequences of its
descent, not with service, or its extension in kind, quantity or distribution; with the unusual occurrence,
not the daily routine of living. Hazard is predominant. On the other hand, the cooperative is concerned
principally with getting service rendered to its members and doing so at lower prices made possible by
quantity purchasing and economies in operation. Its primary purpose is to reduce the cost rather than
the risk of medical care; to broaden the service to the individual in kind and quantity; to enlarge the
number receiving it; to regularize it as an everyday incident of living, like purchasing food and clothing or
oil and gas, rather than merely protecting against the financial loss caused by extraordinary and unusual
occurrences, such as death, disaster at sea, fire and tornado. It is, in this instance, to take care of colds,
ordinary aches and pains, minor ills and all the temporary bodily discomforts as well as the more serious
and unusual illness. To summarize, the distinctive features of the cooperative (HMO) are the rendering
of service, its extension, the bringing of physician and patient together, the preventive features, the
regularization of service as well as payment, the substantial reduction in cost by quantity purchasing in
short, getting the medical job done and paid for; not, except incidentally to these features, the
indemnification for cost after the services is rendered. Except the last, these are not distinctive or
generally characteristic of the insurance arrangement. There is, therefore, a substantial difference
between contracting in this way for the rendering of service, even on the contingency that it be needed,
and contracting merely to stand its cost when or after it is rendered.

4. American courts have pointed out that the main difference between an HMO and an insurance
company is that HMOs undertake to provide or arrange for the provision of medical services through
participating physicians while insurance companies simply undertake to indemnify the insured for
medical expenses incurred up to a pre-agreed limit.

Concept of Insurance

5. Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage or liability arising from an
unknown or contingent event. An insurance contract exists where the following elements concur:

(a) The insured has an insurable interest;

(b) The insured is subject to a risk of loss by the happening of the designed peril;

(c) The insurer assumes the risk;

(d) Such assumption of risk is part of a general scheme to distribute actual losses among a large group of
persons bearing a similar risk and

(e) In consideration of the insurer’s promise, the insured pays a premium

6. Not all the necessary elements of a contract of insurance are present in petitioner’s agreements. To
begin with, there is no loss, damage or liability on the part of the member that should be indemnified by
petitioner as an HMO. Under the agreement, the member pays petitioner a predetermined
consideration in exchange for the hospital, medical and professional services rendered by the
petitioner’s physician or affiliated physician to him.

Documentary Stamp Tax (DST)

7. From the language of Section 185 of the Tax Code, it is evident that two requisites must concur before
the DST can apply, namely: (1) the document must be a policy of insurance or an obligation in the nature
of indemnity and (2) the maker should be transacting the business of accident, fidelity, employer’s
liability, plate, glass, steam boiler, burglar, elevator, automatic sprinkler, or other branch of insurance
(except life, marine, inland, and fire insurance).

8. When the law imposing the DST was first passed, HMOs were yet unknown in the Philippines.
However, when the various amendments to the DST law were enacted, they were already in existence in
the Philippines and the term had in fact already been defined by RA 7875. The fact that the NIRC
contained no specific provision on the DST liability of health care agreements of HMOs at a time they
were already known as such, belies any legislative intent to impose it on them.

Del Monte Philippines, Inc. v. Velasco (2007)

G.R. No. 153477 | 2007-03-06

Subject:

Terminating an employee on account of her pregnancy is a prohibited act and amounts to illegal
dismissal

Facts:
Lolita M. Velasco was a Field Laborer with Del Monte Philippines. She was warned severally in writing
due to her absences. After notice and hearing, she was terminated for violating the Absence Without
Official Leave rule.

Feeling aggrieved, Velasco filed a case for illegal dismissal against Del Monte asserting that her dismissal
was illegal because she was on the family way suffering from urinary tract infection, a pregnancy-borne,
at the time she committed the alleged absences. She explained that she had sent an application for
leave to her supervisor. She declared she did not file the adequate leave of absence because a medical
certificate was already sufficient per company policy.

In defense, Del Monte argued that Velasco was absent without permission on several other days which
were not supported by any other proof of illness and amount to gross and habitual neglect of duties. It
also contended that under the rationale in the case of Filflex Industrial and Manufacturing Co. vs. NLRC,
if the medical certificate fails to refer to the specific period of the employee’s absence, then such
absences, attributable to chronic asthmatic bronchitis, are not supported by competent proof and,
hence, they are unjustified. Also, Velasco’s pregnancy had no bearing on the decision to terminate her
employment.

The Labor Arbiter dismissed the Complaint and held that Velasco was an incorrigible absentee. The NLRC
reversed the decision of the LA and ordered reinstatement of Velasco. The Court of Appeals affirmed
the decision of the NLRC.
Held:

Terminating an employee on account of her pregnancy is a prohibited act and amounts to illegal
dismissal

1. The Court takes judicial notice of the fact that the condition of asthmatic bronchitis may be
intermittent as ruled in the case of Filflex Industrial and Manufacturing Co., in contrast to pregnancy
which is a continuing condition accompanied by an assortment of related illnesses.

2. In this case, by the measure of substantial evidence, Velasco was pregnant and suffered from related
ailments. It would be unreasonable to isolate such condition strictly to the dates stated in the Medical
Certificate or the Discharge Summary due to the continuing condition of pregnancy and related illnesses.
Hence, are justified absences. In fact, it was no less than the company doctor who advised Velasco to
have “rest-in-quarters” for four days on account of a pregnancy-related sickness.

3. Velasco’s sickness was pregnancy-related and, therefore, Del Monte cannot terminate her services
because in doing so, Del Montel will, in effect, be violating the Labor Code which prohibits an employer
to discharge an employee on account of the latter’s pregnancy. (See Art. 137[b] of the Labor Code)
4. Velasco was able to subsequently justify her absences in accordance with company rules and policy;
that Velasco was pregnant at the time she incurred the absences; that this fact of pregnancy and its
related illnesses had been duly proven through substantial evidence; that Velasco attempted to file
leaves of absence but the Del Monte’s supervisor refused to receive them; that she could not have filed
prior leaves due to her continuing condition; and that Del Monte dismissed the Velasco on account of
her pregnancy, a prohibited act.