115. Chavez v.

PEA

Facts: 

On February 4, 1977, then President Ferdinand E. Marcos issued Presidential

Decree No. 1084 creating PEA. PD No. 1084 tasked PEA "to reclaim land, including
foreshore and submerged areas," and "to develop, improve, acquire, lease and sell any
and all kinds of lands." On the same date, then President Marcos issued Presidential
Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore
of the Manila Bay" under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP).

     On January 19, 1988, then President Corazon C. Aquino issued Special Patent No.
3517, granting and transferring to PEA "the parcels of land so reclaimed under the
Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total
area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894)
square meters." Subsequently, on April 9, 1988, the Register of Deeds of the
Municipality of Parañaque issued Transfer Certificates of Title Nos. 7309, 7311, and
7312, in the name of PEA, covering the three reclaimed islands known as the "Freedom
Islands" located at the southern portion of the Manila-Cavite Coastal Road, Parañaque
City.

     PEA and AMARI entered into the JVA through negotiation without public bidding.
On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245, confirmed
the JVA. On June 8, 1995, then President Fidel V. Ramos, through then Executive
Secretary Ruben Torres, approved the JVA. 

     The Senate Committees reported the results of their investigation in Senate
Committee Report No. 560 dated September 16, 1997. Among the conclusions of their
report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are
lands of the public domain which the government has not classified as alienable lands
and therefore PEA cannot alienate these lands; (2) the certificates of title covering the
Freedom Islands are thus void, and (3) the JVA itself is illegal.

     On December 5, 1997, then President Fidel V. Ramos issued Presidential

Administrative Order No. 365 creating a Legal Task Force to conduct a study on the
legality of the JVA in view of Senate Committee Report No. 560. The members of the
Legal Task Force were the Secretary of Justice, the Chief Presidential Legal Counsel,
and the Government Corporate Counsel. The Legal Task Force upheld the legality of
the JVA, contrary to the conclusions reached by the Senate Committees. 

     On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer,
filed the instant Petition for Mandamus with Prayer for the Issuance of a Writ of
Preliminary Injunction and Temporary Restraining Order. Petitioner contends the
government stands to lose billions of pesos in the sale by PEA of the reclaimed lands
to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of
the JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987
Constitution on the right of the people to information on matters of public concern. 

     Due to the approval of the Amended JVA by the Office of the President, petitioner
now prays that on "constitutional and statutory grounds the renegotiated contract be
declared null and void."

Issue:

 The issues raised by petitioner, PEA and AMARI are as follows:

     1. Whether the reliefs prayed for are moot and academic because of subsequent
events; 

     2. Whether the petition should be dismissed for failing to observe the principle of
governing the heirarchy of courts; 

     3. Whether the petition should be dismissed for non-exhaustion of administrative

remedies;

     4. Whether petitioner has locus standi;

     5. Whether the constitutional right to information includes information on on-going

neogtiations BEFORE a final agreement;

     6. Whether the stipulations in the amended joint venture agreement for the transfer
to AMARI of certain lands, reclaimed and still to be reclaimed violate the 1987
Constitution; and

     7. Whether the Court has jurisdiction over the issue whether the amended JVA is
grossly disadvantageous to the government

Held:
1. We rule that the signing and of the Amended JVA by PEA and AMARI and its
approval by the President cannot operate to moot the petition and divest the Court of
its jurisdiction. 

     PEA and AMARI have still to implement the Amended JVA. The prayer to enjoin the
signing of the Amended JVA on constitutional grounds necessarily includes preventing
its implementation if in the meantime PEA and AMARI have signed one in violation of
the Constitution. Petitioner's principal basis in assailing the renegotiation of the JVA is
its violation of the Section 3, Article XII of the Constitution, which prohibits the
government from alienating lands of the public domain to private corporations. The
Amended JVA is not an ordinary commercial contract but one which seeks to transfer
title and ownership to 367.5 hectares of reclaimed lands and submerged areas of
Manila Bay to a single private corporation. 

     Also, the instant petition is a case of first impression being a wholly government
owned corporation performing public as well as proprietary functions. All previous
decisions of the Court involving Section 3, Article XII of the 1987 Constitution, or its
counterpart provision in the 1973 Constitution, covered agricultural lands sold to
private corporations which acquired the lands from private parties. 

     Lastly, there is a need to resolve immediately the constitutional issue raised in this
petition because of the possible transfer at any time by PEA to AMARI of title and
ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is
obligated to transfer to AMARI the latter's seventy percent proportionate share in the
reclaimed areas as the reclamation progresses, The Amended JVA even allows AMARI
to mortgage at any time the entire reclaimed area to raise financing for the reclamation
project. 

     2. The instant case, however, raises constitutional issues of transcendental

importance to the public. The Court can resolve this case without determining any
factual issue related to the case. Also, the instant case is a petition for mandamus
which falls under the original jurisdiction of the Court under Section 5, Article VIII of the
Constitution. We resolve to exercise primary jurisdiction over the instant case.

     3. PEA was under a positive legal duty to disclose to the public the terms and
conditions for the sale of its lands. The law obligated PEA make this public disclosure
even without demand from petitioner or from anyone. PEA failed to make this public
disclosure because the original JVA, like the Amended JVA, was the result of a
negotiated contract, not of a public bidding. Considering that PEA had an affirmative
statutory duty to make the public disclosure, and was even in breach of this legal duty,
petitioner had the right to seek direct judicial intervention.

     The principle of exhaustion of administrative remedies does not apply when the
issue involved is a purely legal or constitutional question. The principal issue in the
instant case is the capacity of AMARI to acquire lands held by PEA in view of the
constitutional ban prohibiting the alienation of lands of the public domain to private
corporations. We rule that the principle of exhaustion of administrative remedies does
not apply in the instant case.

     The petitioner has standing to bring this taxpayer's suit because the petition seeks
to compel PEA to comply with its constitutional duties. There are two constitutional
issues involved here. First is the right of citizens to information on matters of public
concern. Second is the application of a constitutional provision intended to insure the
equitable distribution of alienable lands of the public domain among Filipino Citizens. 

The thrust of the second issue is to prevent PEA from alienating hundreds of hectares
of alienable lands of the public domain in violation of the Constitution, compelling PEA
to comply with a constitutional duty to the nation. 

     4. Ordinary taxpayers have a right to initiate and prosecute actions questioning the
validity of acts or orders of government agencies or instrumentalities, if the issues
raised are of 'paramount public interest,' and if they 'immediately affect the social,
economic and moral well being of the people.'

     We rule that since the instant petition, brought by a citizen, involves the
enforcement of constitutional rights — to information and to the equitable diffusion of
natural resources — matters of transcendental public importance, the petitioner has
the requisite locus standi.

     5. The State policy of full transparency in all transactions involving public interest
reinforces the people's right to information on matters of public concern. This State
policy is expressed in Section 28, Article II of the Constitution, thus: “Subject to
reasonable conditions prescribed by law, the State adopts and implements a policy of
full public disclosure of all its transactions involving public interest." 

     Contrary to AMARI's contention, the commissioners of the 1986 Constitutional

Commission understood that the right to information "contemplates inclusion of
negotiations leading to the consummation of the transaction." Certainly, a
consummated contract is not a requirement for the exercise of the right to information.
Otherwise, the people can never exercise the right if no contract is consummated, and
if one is consummated, it may be too late for the public to expose its defects.

     Requiring a consummated contract will keep the public in the dark until the
contract, which may be grossly disadvantageous to the government or even illegal,
becomes a fait accompli. 

     However, the right to information does not compel PEA to prepare lists, abstracts,
summaries and the like relating to the renegotiation of the JVA. 34 The right only
affords access to records, documents and papers, which means the opportunity to
inspect and copy them. One who exercises the right must copy the records,
documents and papers at his expense. The exercise of the right is also subject to
reasonable regulations to protect the integrity of the public records and to minimize
disruption to government operations, like rules specifying when and how to conduct
the inspection and copying. 

     6. Article 339 of the Civil Code of 1889 defined property of public dominion as
follows:

"Art. 339.    Property of public dominion is — 

     1.    That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, riverbanks, shores, roadsteads, and that of a similar
character;

     2.    That belonging exclusively to the State which, without being of general public
use, is employed in some public service, or in the development of the national wealth,
such as walls, fortresses, and other works for the defense of the territory, and mines,
until granted to private individuals.

     Property devoted to public use referred to property open for use by the public. In
contrast, property devoted to public service referred to property used for some specific
public service and open only to those authorized to use the property.Property of public
dominion referred not only to property devoted to public use, but also to property not
so used but employed to develop the national wealth. This class of property
constituted property of public dominion although employed for some economic or
commercial activity to increase the national wealth.

     "Art. 341.    Property of public dominion, when no longer devoted to public use or to
the defense of the territory, shall become a part of the private property of the State."
This provision, however, was not self-executing. The legislature, or the executive
department pursuant to law, must declare the property no longer needed for public use
or territorial defense before the government could lease or alienate the property to
private parties. 

     Act No. 2874 of the Philippine Legislature

     Sec. 55.    Any tract of land of the public domain which, being neither timber nor
mineral land, shall be classified as suitable for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural purposes, and shall be
open to disposition or concession, shall be disposed of under the provisions of this
chapter, and not otherwise.

     The rationale behind this State policy is obvious. Government reclaimed, foreshore
and marshy public lands for non-agricultural purposes retain their inherent potential as
areas for public service. This is the reason the government prohibited the sale, and only
allowed the lease, of these lands to private parties. The State always reserved these
lands for some future public service.

     However, government reclaimed and marshy lands, although subject to

classification as disposable public agricultural lands, could only be leased and not sold
to private parties because of Act No. 2874.

     The 1987 Constitution continues the State policy in the 1973 Constitution banning
private corporations from acquiring any kind of alienable land of the public domain.
Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold
alienable lands of the public domain only through lease. As in the 1935 and 1973
Constitutions, the general law governing the lease to private corporations of reclaimed,
foreshore and marshy alienable lands of the public domain is still CA No. 141.

     Without the constitutional ban, individuals who already acquired the maximum area
of alienable lands of the public domain could easily set up corporations to acquire
more alienable public lands. An individual could own as many corporations as his
means would allow him. An individual could even hide his ownership of a corporation
by putting his nominees as stockholders of the corporation. The corporation is a
convenient vehicle to circumvent the constitutional limitation on acquisition by
individuals of alienable lands of the public domain.

     PD No. 1085, coupled with President Aquino's actual issuance of a special patent
covering the Freedom Islands, is equivalent to an official proclamation classifying the
Freedom Islands as alienable or disposable lands of the public domain. Being neither
timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall
under the classification of agricultural lands of the public domain. Under the 1987
Constitution, agricultural lands of the public domain are the only natural resources that
the State may alienate to qualified private parties. All other natural resources, such as
the seas or bays, are "waters . . . owned by the State" forming part of the public
domain, and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution.

     In short, DENR is vested with the power to authorize the reclamation of areas under
water, while PEA is vested with the power to undertake the physical reclamation of
areas under water whether directly or through private contractors. DENR is also
empowered to classify lands of the public domain into alienable or disposable lands
subject to the approval of the President. On the other hand, PEA is tasked to develop,
sell or lease the reclaimed alienable lands of the public domain.

     Clearly, the mere physical act of reclamation by PEA of foreshore or submerged
areas does not make the reclaimed lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the
National Government of lands of the public domain to PEA does not make the lands
alienable or disposable lands of the public domain, much less patrimonial lands of
PEA.

     There is no express authority under either PD No. 1085 or EO No. 525 for PEA to
sell its reclaimed lands. PD No. 1085 merely transferred "ownership and
administration" of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared
that lands reclaimed by PEA "shall belong to or be owned by PEA." PEA's charter,
however, expressly tasks PEA "to develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands . . .  owned, managed,
controlled and/or operated by the government." 87 (Emphasis supplied) There is,
therefore, legislative authority granted to PEA to sell its lands, whether patrimonial or
alienable lands of the public domain. PEA may sell to private parties its patrimonial
properties in accordance with the PEA charter free from constitutional limitations. The
constitutional ban on private corporations from acquiring alienable lands of the public
domain does not apply to the sale of PEA's patrimonial lands.

     Moreover, under Section 79 of PD No. 1445, otherwise known as the Government
Auditing Code, the government is required to sell valuable government property
through public bidding. Section 79 of PD No. 1445 mandates that:... "In the event that
the public auction fails, the property may be sold at a private sale at such price as may
be fixed by the same committee or body concerned and approved by the
Commission." 

    However, the original JVA dated April 25, 1995 covered not only the Freedom Islands
and the additional 250 hectares still to be reclaimed, it also granted an option to
AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract,
enlarged the reclamation area to 750 hectares. The failure of public bidding on
December 10, 1991, involving only 407.84 hectares, is not a valid justification for a
negotiated sale of 750 hectares, almost double the area publicly auctioned. 

    Jurisprudence holding that upon the grant of the patent or issuance of the certificate
of title the alienable land of the public domain automatically becomes private land
cannot apply to government units and entities like PEA. 

     The grant of legislative authority to sell public lands in accordance with Section 60
of CA No. 141 does not automatically convert alienable lands of the public domain into
private or patrimonial lands. The alienable lands of the public domain must be
transferred to qualified private parties, or to government entities not tasked to dispose
of public lands, before these lands can become private or patrimonial lands. Otherwise,
the constitutional ban will become illusory if Congress can declare lands of the public
domain as private or patrimonial lands in the hands of a government agency tasked to
dispose of public lands. 

     To allow vast areas of reclaimed lands of the public domain to be transferred to PEA
as private lands will sanction a gross violation of the constitutional ban on private
corporations from acquiring any kind of alienable land of the public domain. This
scheme can even be applied to alienable agricultural lands of the public domain since
PEA can "acquire . . . any and all kinds of lands." 

     The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now
covered by certificates of title in the name of PEA, are alienable lands of the public
domain. PEA may lease these lands to private corporations but may not sell or transfer
ownership of these lands to private corporations. 

     7. Considering that the Amended JVA is null and void ab initio, there is no necessity
to rule on this last issue. Besides, the Court is not the trier of facts, and this last issue
involves a determination of factual matters.

116. Arroyo v. De Lima

I.      THE FACTS

Late last Tuesday, November 15, 2011, the Supreme issued an “immediately
executory” Temporary Restraining Order (TRO) enjoining the implementation of DOJ
Department Circular No.  41 and Watchlist Order and thereby allowing the petitioners
Arroyo spouses to leave the Philippines after complying with the conditions in the
Resolution. The respondent Secretary of Justice Leila De Lime however prevented the
Arroyos from leaving.

The government, through the Office of the Solicitor General, immediately filed a
“Consolidated Urgent Motion for Reconsideration and/or to Lift Temporary Restraining
Order”. Petitioner Gloria Macapagal Arroyo also filed an “Urgent Motion for
Respondents to Cease and Desist from Preventing Petitioner GMA from Leaving the
Country.” She also moved to cite the Respondent Secretary of Justice in contempt for
failure to comply with the TRO.

On November 18, 2011, the Court conducted a special en banc session to tackle the
pending incidents of the consolidated cases.

II.    THE ISSUES

Among the more important issues resolved by the Court during the special en banc
session were as follows:

1.    Should the Resolution granting the prayer for a TRO be reconsidered?

2.    Was there compliance with the 2nd condition of the TRO? If there is none, should
the TRO be suspended in the meantime?

III.   THE RULING

1.    [The Justices maintained their 8-5 vote on the issuance of the TRO. The majority
thus “require[d]” Secretary De Lima to “IMMEDIATELY COMPLY with the said
temporary restraining order by allowing petitioners to leave the country.”]

YES, the Resolution granting the petitioners’ prayer for a TRO should be reconsidered.

[T]his Court cannot ignore a basic constitutional precept: the presumption of validity of

official actions. Especially when the practice of issuing watch list orders, has been
practiced for decades by the Department of Justice, and many other analogous
practices has been observed as well by many other governmental agencies, including
this court, through analogous restrictive practices. This Court cannot turn to a blind eye
what is involved in running a government.  xxx. What this all means is that a full hearing
must be conducted before this Court decides to grant a TRO to petitioners, none of
whom, by their very own documents, are under any life-threatening, emergency,
medical situation. 

   

While in the end we may ultimately strike down the issuance of Watch List Orders by
the Department of Justice or uphold such orders and additionally provide standards
before the power to restrict travel of persons under preliminary investigation can be
exercised, what is at stake this very day is a fundamental question of whether we
should presume that officials can perform the functions they have been performing for
ages – in order that we maintain order in the running of a country. Therefore, with all
due respect, it is completely wrong for this Court to bend over backwards to
accommodate the request of petitioners for a TRO to be issued ex parte without
hearing the side of the government.

117. In Re: Production of Court Records

Facts:
During the Impeachment proceedings against Chief Justice Corona, the Prosecution
Panel manifested that it would present 100 witnesses and almost a thousand
documents to be secured from both public and private officers. The list of proposed
witnesses include SC Justices, Court officials and employees.

Around that time, Hon. Joseph Emilio Abaya, Congressman of 1st Dist. Of Cavite, and
Impeachment Prosecution Panel Manager, in behalf of the House Impeachment Panel,
sent letters to the Supreme Court:

1. Requesting to be permitted to examine the rollo of Flight Attendants and

Stewardess Association of the PH (FASAP) vs. PAL, and the certified true copies of
the Agenda and Minutes of the case of FASAP vs. PAL (presently pending on the
merits)

2. Navarro vs. Ermita, or the Dinagat Case - to permit them to examine the rollo (still
pending)

3. Gutierrez vs. HoR - to permit them to examine the rollo (closed case)

4. League of Cities vs. COMELEC - to examine the rollo (closed case)

The Hon. Impeachment Court then directed the:

1. attendance of witness Clerk of Court Enriqueta Vidal

2. attendance of witness Deputy Clerk of Court Felipe Anama

3. Production of documents per subpoena ad testificandum & duces tecum in FASAP

vs. PAL

Another subpoena ad testificandum was directed to Clerk of Court Vidal in the case of
PGMA and First Gentleman Jose Miguel Arroyo.

The House Impeachment Panel then requested the Impeachment Court for the
issuance of subpoena duces tecum and ad testificandum for the production of the
record cases and the attendance of Justices, officials, and employees of the SC to
testify on the records of the various cases above.

Instead of issuing subpoena, Hon. Presiding Senator Judge Juan Ponce Enrile issued
an order denying the request for subpoena. Thus, the attendance of SC Justices under
compulsory process now appears to be moot and academic.

Atty. Vidal then received commanding her to appear in Court with the CTC of the
documents mentioned above.

The resolution is meant to address the urgent need for court ruling on the compliance
of the subpoena issued and the letters of the Prosecution Impeachment Panel.

Ruling:

1. Separation of Powers

2. Access to court records: General rule is the policy of transparency

Underlying every request for information is the constitutional right to information (Art.
III, Sec. 7). The right to information is not absolute. On the part of individuals, the right
to privacy, is similarly inviolable.

In line with the public’s constitutional right to information, the Court has adopted a
policy of transparency with respect to documents in the custody to maintain the
integrity of its duties to adjudicate disputes. Sec 11, Rule 136 of the RRC also supports
the policy of transparency.

Access to any person is allowed, but it is not broad because it is still subject to
limitations that the law imposes and the Court’s rules provide.

3. When Court records are considered confidential

Certain information are exempt from disclosure, because of the need to protect the
integrity of the Court’s decision making functions.

Specifically, acc to the Internal Rules of the Supreme Court, it prohibits the disclosure
of:

i. Result of raffle of cases (available only to parties & their counsels, unless involving
bar matters, administrative cases, and criminal cases involving life imprisonment…
such cases are confidential)

ii. The actions taken by the Court on each case included in the agenda of the session
(available only after the release of the resolution; once the envelope containing the
final copy, addressed to the parties, has been transmitted to the process server for
mailing)

iii. The deliberations made by Members in court sessions on cases and matters
pending before it (traditionally recognized as privileged)

i. “deliberative process privilege”- enables the members to freely discuss the

issues without fear of humiliation for one’s comments.

ii. This is not exclusive to the Judiciary; legislative & judicial privilege.

iii. Req of deliberative process privilege:

i. Document is predecisional

i. If it precedes in temporal sequence, the decision to which it relates.

ii. They were made in the attempt to reach a final decision.

ii. It is deliberative

i. If it reflects the give and take of the consultative process

ii. Whether the disclosure of the information would discourage candid

discussion within the agency

Court records that are predicisioal and deliberative are protected, and cannot be the
subject of a subpoena.

The deliberative process can be impaired by undue exposure of the decision-making

process to public scrutiny before or after the decision is made.

Additionally, there are two more grounds in denying access to court records:

1. The disqualification is by reason of privileged communication

2. The pendency of an action or matter

Jurisprudence also implies that justices and judges may not be subject to any
compulsory process in relation to the performance of their adjudicatory functions.

Court officials and employees are barred from disclosing:

1. Result of the raffle of cases;

2. The actions taken by the Court on each case included in the agenda of the session;

3. Deliberations of the Members in court sessions on cases and matters pending

before it.

4. Privileged communication

5. Subjudice Rule - under judicial consideration; regulation of public statements on

ongoing legal proceedings

In sum:

1. Internal deliberations and actions of the Court on the exercise of their adjudicatory
functions and duties - cannot be compelled to testify

2. External deliberations - May be compelled by compulsory process

To summarise the rules, the following are PRIVILEGED DOCUMENTS or

COMMUNICATIONS, NOT subject to diclosure:

1. Court actions, except where party litigants requests information, subject to

limitations of Rule 7, Sec 3 of the IRSC;

2. Court deliberations in pending cases;

3. Court records which are pre-decisional and deliberative in nature;

4. Confidential information secured by justices, judges, in the course of their official

functions;

5. Records of the cases still pending for decision;

6. The principle of comity or inter-departmental courtesy - the highest officials of each

department be exempt from compulsory process of other departments;

7. These privileges belong to the SC as an institution, and not on a personal level to

any judges or justices.

WHEREFORE:

1. Requesting to be permitted to examine the rollo of Flight Attendants and

Stewardess Association of the PH (FASAP) vs. PAL, and the certified true copies of
the Agenda and Minutes of the case of FASAP vs. PAL (presently pending on the
merits) - NO, except for those documents already released to the parties.

2. Navarro vs. Ermita, or the Dinagat Case - to permit them to examine the rollo (still
pending) - NO, except for those documents already released to the parties.

3. Gutierrez vs. HoR - to permit them to examine the rollo (closed case) - NO! It
contains materials that are still covered by privilege or are still confidential.

4. League of Cities vs. COMELEC - to examine the rollo (closed case) - NO, except for
those documents already released to the parties.

118. Senate v. Ermita

Facts:

This case is regarding the railway project of the North Luzon Railways Corporation with
the China National Machinery and Equipment Group as well as the Wiretapping activity
of the ISAFP, and the Fertilizer scam.

The Senate Committees sent invitations to various officials of the Executive

Department and AFP officials for them to appear before Senate on Sept. 29, 2005.
Before said date arrived, Executive Sec. Ermita sent a letter to Senate President Drilon,
requesting for a postponement of the hearing on Sept. 29 in order to “afford said
officials ample time and opportunity to study and prepare for the various issues so that
they may better enlighten the Senate Committee on its investigation.” Senate refused
the request.

On Sept. 28, 2005, the President issued EO 464, effective immediately, which, among
others, mandated that “all heads of departments of the Executive Branch of the
government shall secure the consent of the President prior to appearing before either
House of Congress.” Pursuant to this Order, Executive Sec. Ermita communicated to
the Senate that the executive and AFP officials would not be able to attend the meeting
since the President has not yet given her consent. Despite the lack of consent, Col.
Balutan and Brig. Gen. Gudani, among all the AFP officials invited, attended the
investigation. Both faced court marshal for such attendance.

Issue:

Whether E.O. 464 contravenes the power of inquiry vested in Congress.

Ruling:

To determine the constitutionality of E.O. 464, the Supreme Court discussed the two
different functions of the Legislature: The power to conduct inquiries in aid of
legislation and the power to conduct inquiry during question hour.

Question Hour:

The power to conduct inquiry during question hours is recognized in Article 6, Section
22 of the 1987 Constitution, which reads:

“The heads of departments may, upon their own initiative, with the consent of the
President, or upon the request of either House, as the rules of each House shall
provide, appear before and be heard by such House on any matter pertaining to their
departments. Written questions shall be submitted to the President of the Senate or the
Speaker of the House of Representatives at least three days before their scheduled
appearance. Interpellations shall not be limited to written questions, but may cover
matters related thereto. When the security of the State or the public interest so requires
and the President so states in writing, the appearance shall be conducted in executive
session.”

The objective of conducting a question hour is to obtain information in pursuit of

Congress’ oversight function. When Congress merely seeks to be informed on how
department heads are implementing the statutes which it had issued, the department
heads’ appearance is merely requested. 

The Supreme Court construed Section 1 of E.O. 464 as those in relation to the
appearance of department heads during question hour as it explicitly referred to
Section 22, Article 6 of the 1987 Constitution.

In aid of Legislation:

The Legislature’s power to conduct inquiry in aid of legislation is expressly recognized

in Article 6, section21 of the 1987 Constitution, which reads:

“The Senate or the House of Representatives or any of its respective committees may
conduct inquiries in aid of legislation in accordance with its duly published rules of
procedure. The rights of persons appearing in, or affected by, such inquiries shall be
respected.”

The power of inquiry in aid of legislation is inherent in the power to legislate. A

legislative body cannot legislate wisely or effectively in the absence of information
respecting the conditions which the legislation is intended to affect or change. And
where the legislative body does not itself possess the requisite information, recourse
must be had to others who do possess it.

But even where the inquiry is in aid of legislation, there are still recognized exemptions
to the power of inquiry, which exemptions fall under the rubric of “executive privilege”.
This is the power of the government to withhold information from the public, the courts,
and the Congress. This is recognized only to certain types of information of a sensitive
character. When Congress exercise its power of inquiry, the only way for department
heads to exempt themselves therefrom is by a valid claim of privilege. They are not
exempt by the mere fact that they are department heads. Only one official may be
exempted from this power -- the President.

Section 2 & 3 of E.O. 464 requires that all the public officials enumerated in Section
2(b) should secure the consent of the President prior to appearing before either house
of Congress. The enumeration is broad. In view thereof, whenever an official invokes
E.O.464 to justify the failure to be present, such invocation must be construed as a
declaration to Congress that the President, or a head of office authorized by the
President, has determined that the requested information is privileged. 

The letter sent by the Executive Secretary to Senator Drilon does not explicitly invoke
executive privilege or that the matter on which these officials are being requested to be
resource persons falls under the recognized grounds of the privilege to justify their
absence. Nor does it expressly state that in view of the lack of consent from the
President under E.O. 464, they cannot attend the hearing. The letter assumes that the
invited official possesses information that is covered by the executive privilege.
Certainly, Congress has the right to know why the executive considers the requested
information privileged. It does not suffice to merely declare that the President, or an
authorized head of office, has determined that it is so.

The claim of privilege under Section 3 of E.O. 464 in relation to Section 2(b) is thus
invalid per se. It is not asserted. It is merely implied. Instead of providing precise and
certain reasons for the claim, it merely invokes E.O. 464, coupled with an
announcement that the President has not given her consent. 

When an official is being summoned by Congress on a matter which, in his own

judgment, might be covered by executive privilege, he must be afforded reasonable
time to inform the President or the Executive Secretary of the possible need for
invoking the privilege. This is necessary to provide the President or the Executive
Secretary with fair opportunity to consider whether the matter indeed calls for a claim
of executive privilege. If, after the lapse of that reasonable time, neither the President
nor the Executive Secretary invokes the privilege, Congress is no longer bound to
respect the failure of the official to appear before Congress and may then opt to avail of
the necessary legal means to compel his appearance.

Wherefore, the petitions are partly granted. Sections 2(b) and 3 of E.O. 464 are
declared void. Section 1(a) are however valid.

119. Antolin v. Domondon (PDF)

Hazel Ma. C. Antolin vs. Abelardo Domondon, Respondent, G.R. No. 175705; 5 July
2010

Facts:

Hazel Ma. C. Antolin failed the CPA Licensure Exam in October 1997. Convinced she
deserved to pass the Exam, she wrote to the Board of Accountancy, requesting that
her answer sheets be re-corrected. She was shown her answer sheets but since these
showed only shaded marks, she was unable to determine why she failed the Exam.
She asked the Board for copies of the questionnaire, her answer sheets, the answer
keys and an explanation of the grading system (collectively, the Examination Papers).

Her request was denied on two grounds:

(1) Section 36, Article III of the Rules and Regulations Governing the Regulation and
Practice of Professionals, as amended by Professional Regulation Commission
(PRC) Resolution No. 332, series of 1994, only allowed access to her answer
sheets, and reconsideration of the result of her examination can be made only on
grounds of mechanical error in the grading of the answer sheets, or malfeasance;

(2) The Board was precluded from releasing the Examination Papers (other than the
answer sheets) by Section 20, Article IV of PRC Resolution No. 338, series of 1994.

The Board later informed her that her exam was investigated and no mechanical error
was found in the grading.

Petitioner filed a Petition for Mandamus with Damages, with application for preliminary
mandatory injunction, against the Board and its members before the Regional Trial
Court (RTC), praying that the Board provide her with all documents that would show
whether the Board fairly administered the exam and correctly graded her answers, and
if warranted, to issue to her a certificate of registration as a CPA.

She later amended her Petition to clarify that she only wanted access to the
documents requested, not recorrection of her exam, deleting in the process her original
prayer for issuance of a certificate of registration as CPA.

Petitioner passed the May 1998 CPA Licensure Exam and took her oath as a CPA.

Consequently, the RTC denied her application for mandatory injunction for being moot.

She amended her Petition a second time to implead the PRC and to ask, in addition to
access to the documents she had requested, that if warranted, appropriate revisions in
the October 1997 Exam results be made by the Board and the PRC.

The RTC considered the matter moot and dismissed the petition.

On her motion, however, the RTC reconsidered the dismissal, holding that her passing
of the subsequent CPA examination did not render the petition moot because the relief
“and if warranted, to issue to her a certificate of registration as Certified Public
Accountant” was deleted from the original petition.

As regards whether she had the constitutional right to have access to the documents
she requested, the RTC resolved to let the parties first adduce evidence, and to have
PRC air its side of the case. The RTC also ordered the PRC to preserve and safeguard
the questionnaire, petitioner’s answer sheets, and the answer keys for the October
1997 CPA Licensure Exam.

When their motion for reconsideration was denied, respondents brought the case to
the CA which set aside the RTC’s decision and ordered the dismissal of the case
because:

(1) the petition was mooted when petitioner passed the May 1998 CPA exam;

(2) Section 20, Article IV of PRC Resolution No. 338, series of 1994, constituted a valid
limitation on her right to information and access to government documents;

(3) the Examination Documents were not of public concern, because she merely sought
review of her failing marks;

(4) it was not the ministerial or mandatory function of the respondents to review and
reassess the answers to examination questions of a failing examinee;

(5) she failed to exhaust administrative remedies when she did not elevate the matter to
the PRC before seeking judicial intervention. Petitioner, thus, brought the matter to the
Supreme Court.

ISSUE:

(1) Whether or not petitioner may seek judicial intervention to compel the re-correction
of her examination;

(2) Whether or not petitioner failed to exhaust the administrative remedies;

(3) Whether or not the case was mooted by petitioner’s passing the May 1998 CPA
Licensure Examination;

(4) Whether or not petitioner has the constitutionalright to have access to the
Examination Papers.

HELD:

(1) Any claim for re-correction or revision of petitioner’s 1997 examination cannot be
compelled by mandamus. In AgustinRamos vs. Sandoval, where the respondent Judge
was questioned for dismissing therein petitioners’ mandamus action to compel the
Medical Board of Examiners and the Professional Regulation Commission to re-correct
their ratings, the Supreme Court held that “the function of reviewing and re-assessing
the petitioners’ answers to the examination questions, in the light of the facts and
arguments presented by them is a discretionary function of the Medical Board, not a
ministerial and mandatory one, hence, not within the scope of the writ of mandamus.”
For a writ of mandamus to issue, the applicant must have a well-defined, clear,
and certain legal right to the thing demanded. The corresponding duty of the
respondent to perform the required act must be equally clear. No such clarity exists
here. And despite petitioner’s assertion that she did not demand re-correction, the
most cursory perusal of her Second Amended Petition and her prayer that respondents
“make the appropriate revisions on the results of her examination” belied this claim.

(2) Like the claimants in Agustin, petitioner’s remedy from the Board’s refusal to release
the Examination Papers should have been through an appeal to the PRC. Under
Section 5(c) of Presidential Decree No. 223, the PRC has the power to review and
approve the policies, resolutions, rules and regulations, orders and decisions of the
various professional Boards, including the results of their licensure examinations, and
the decisions of the Boards on administrative cases shall be final and executory unless
appealed to the PRC within 30 days from promulgation. Contrary’s to petitioner’s claim,
this power is not limited to administrative investigations but encompasses requests for
documents. And since the PRC itself issued the resolution questioned by petitioner, it
was in the best position to resolve questions addressed to its area of expertise. One of
the reasons for exhaustion of administrative remedies is the well-entrenched doctrine
on separation of powers, which enjoins upon the Judiciary a becoming policy of non-
interference with matters falling primarily (albeit not exclusively) within the competence
of other departments. However, the principle of exhaustion of administrative remedies
is subject to exceptions, among which is when only a question of law is involved.
Whether or not petitioner had a constitutional right to demand access to the
Examination Papers was one such question of law which cannot be resolved with
finality by the administrative officer.

(3) An issue becomes moot and academic when it ceases to present a justiciable
controversy, so that a declaration on the issue would be of no practical use or value. In
this jurisdiction, any citizen may challenge any attempt to obstruct the exercise of his
or her right to information and may seek its enforcement by mandamus. And since
every citizen possesses the inherent right to be informed by the mere fact of
citizenship, petitioner’s belated passing of the CPA Board Exams did not automatically
mean that her interest in the Examination Papers had become mere superfluity.
Undoubtedly, the constitutional question presented, in view of the likelihood that the
issues in this case would be repeated, warranted review.

(4) Like all the constitutional guarantees, the right to information is not absolute; it is
limited to “matters of public concern” and is further “subject to such limitations as may
be provided by law” (Section 7, Article III, 1987 Constitution). Similarly, the State’s
policy of full disclosure is limited to “transactions involving public interest,” and is
“subject to reasonable conditions prescribed by law” (Sec. 28, Art. II, 1987
Constitution).

The Court has always grappled with the meanings of “public interest” and “public
concern” which “embrace a broad spectrum of subjects which the public may want to
know, either because these directly affect their lives, or simply because such matters
naturally arouse the interest of an ordinary citizen,” and which are, in the final analysis,
up to the courts to determine on a case by case basis. National board examinations
such as the CPA Board Exams are matters of public concern. The populace in
general, and the examinees in particular, would understandably be interested in the fair
and competent administration of these exams in order to ensure that only those
qualified are admitted into the accounting profession. And as with all matters
pedagogical, these examinations could be not merely quantitative means of
assessment, but also means to further improve the teaching and learning of the art and
science of accounting. The Court, nonetheless, realizes that there may be valid
reasons to limit access to the Examination Papers in order to properly administer
the exam. More than the mere convenience of the examiner, it may well be that there
exist inherent difficulties in the preparation, generation, encoding, administration, and
checking of these multiple choice exams that require that the questions and answers
remain confidential for a limited duration. The PRC, however, had not been given an
opportunity to explain the reasons behind their regulations or articulate the justification
for keeping the Examination Papers confidential. In view of the far-reaching
implications of this case, which may impact on every board examination administered
by the PRC, and in order that all relevant issues may be ventilated, the Court deemed it
best to remand the case to the RTC for further proceedings.

120. Philippine Savings Bank v. Senate Impeachment Court

I.      THE FACTS

Philippine Savings Bank (PS Bank) and its President, Pascual M. Garcia III, filed before
the Supreme Court an original civil action for certiorari and prohibition with application
for temporary restraining order and/or writ of preliminary injunction. The TRO was
sought to stop the Senate, sitting as impeachment court, from further implementing
the Subpoena Ad Testificandum et Duces Tecum, dated February 6, 2012, that it issued
against the Branch Manager of PS Bank, Katipunan Branch. The subpoena assailed by
petitioners covers the foreign currency denominated accounts allegedly owned by the
impeached Chief Justice Renato Corona of the Philippine Supreme Court.

II.    THE ISSUE

Should a TRO be issued against the impeachment court to enjoin it from further

implementing the subpoena with respect to the alleged foreign currency denominated
accounts of CJ Corona?

III.   THE RULING

[The Court en banc ISSUED A TEMPORARY RESTRAINING ORDER enjoining the

respondents from implementing the subpoena. It also REQUIRED the respondents to
COMMENT on the [merits of the] petition.]

YES, a TRO should be issued against the impeachment court to enjoin it from further
implementing the subpoena with respect to the alleged foreign currency denominated
accounts of CJ Corona.

There are two requisite conditions for the issuance of a preliminary injunction: 

(1) the right to be protected exists prima facie, and 

(2) the acts sought to be enjoined are violative of  that  right.    It must be proven that
the violation sought to be prevented would cause an irreparable injustice.

121. Re: Request for Copy of 2008 SALN of the SC Justices and Officers and
Employees

FACTS:
Rowena Paraan, Research Director of Philippine Centre for Investigative Journalism,
sought copies of the:

1. SALN of the SC Justices for 2008

2. Personal Date Sheet

3. Curriculum Vitae

For purposes of updating their database of information on gov’t officials.

Karol Ilagan, research-write of PCIJ, also sought for copies of SALN and PDS of CA
Justices.

The two requests were consolidated by the Court. On the same day, the Court resolved
to create a special Committee to review the policy on requests for SALN and PDS and
other similar documents.

Committee Chair Nazario then wrote a recommendation for creation of Committee on

Public Disclosure that would take over the functions of the Office of the Court
Administrator with respect to requests for copies of SALN & other personal documents
of Judiciary members.

Several requests for copies of SALN of Judges of the SC, CA and SB were filed:

1. Subpoena duces tecum for SALN of Assoc. Justice Jurado (SB)

2. Letter of Phil. Public Transparency Reporting Project - SALN of official and

employees of the lower courts

3. Letter of Marvin Lim - SALN of CJ Corona, AJ Carpio, AJ Velasco, AJ De Castro, AJ

Brio, AJ Peralta, AJ Bersamin, AJ Del Castillo, AJ Abad, AJ Villarama, AJ Perez, AJ
mendoza, and AJ Sereno.

4. Letter of Rawna Crisostomo of GMA News - SALN of CJ and AJ’s for producing a
story on transparency and governance, and to update database

5. Letter of Bala Tamayo - 2010 SALN of any SC Justice, and a copy of JDF for
purposes of Consti 1 Examination in San Beda Alabang

6. Letter of Harvey Keh, Lead Covenor of KAya Natin Movement for Good
Governance,

7. etc.

ISSUE:

W/N the SC Justices are mandated by law to release their SALN to the public?

RULING:

Sec. 7, Art. III of the Constitution is relevant in the issue of public disclosure of SALN
and other documents of public officials, which provides for the right of the people to
information on matters of public concern. Access to official records, and to documents,
and papers pertaining to official acts, transactions, or decisions, as well as government
research data used as basis for policy development, shall be afforded to the citizens,
subject to such limitations as may be provided by law.

Emphasising the import and meaning of the foregoing Constitutional provision, the
Court in Valmonte vs. Belmont elucidated that the right to information goes hand in
hand with the constitutional policies of full public disclosure and honesty in the public
service. It is meant to enhance the widening role of citizenry in governmental decision-
making as well as checking for abuse in the government. However, restrictions on
access to certain records may be imposed by law.

Limitations to right of information as provided by jurisprudence:

1. National security matters and intelligence information;

2. Trade secrets and banking transactions;

3. Criminal matters;

4. Other confidential information such as confidential or classified information officially

known to public officers and employees by reason of their office and not made
available to the public as well as diplomatic correspondence.

Thus, while “public concern” like “public interest” eludes exact definition and has been
said to embrace a broad spectrum of subjects which the public may want to now,
either because such matters directly affect their lives or simply because such matters
naturally arouse the interest of an ordinary citizen, the Constitution itself has classified
the information disclosed in the SALN as a matter of public concern and interest.
Hence, there is a duty on part of gov’t members to disclose their SALN to the public.

In the case at bar, the Court notes the valid concern of the magistrates regarding the
possible illicit motives of some individuals in the requests for access to such
information and their publication. However, custodians of public documents must not
concern themselves with the motives, reasons, and objects of the persons seeking
access to the records. The moral or material injury which their misuse might inflict on
others is the requestor’s responsibility and lookout. While public office in the custody or
control of public records have the discretion to regulate the manner in which records
my be inspected, such discretion does not carry with it the authority to prohibit access
of the records. After all, public office is a public trust.

WHEREFORE:

1. The Court grants the requests, subject to limitations and prohibitions provided in RA
No. 6713.

RIGHT TO ASSOCIATION

122. People vs. Ferrer (48 SCRA 382)

Facts:
On March 10, 1970, a prima facie case was filed against Feliciano Co in the Court of
First Instance in Tarlac concerning the Anti-Subversion Act. He was accused of being
an officer or a ranked leader of the Communist Party of the Philippines, an outlawed
and illegal organization aimed to overthrow the government of the Philippines by
means of force, violence, deceit, subversion or any other illegal means. Co claimed that
the Anti-Subversion Act is a bill of attainder. On May 25, 1970, Nilo Tayag and five
others were also charged in the same court with subversion. Tayag copied Co’s attack
on the law. The court ruled the statute void on the grounds that it is a bill of attainder
and that it is vague overbroad. Government appealed to the SC as a special civil action
for certiorari.

Issues:
Relevant: WoN the Anti-Subversion Act is a bill of attainder

Irrelevant: WoN it is vague and overbroad

Irrelevant: WoN it denies the defendants the due process of the law

Held And Ratio:

Relevant: No. Only when a statute applies either to named individuals or to easily
ascertainable members of a group in such a way as to inflict punishment on them
without a judicial trial does it become a bill of attainder. (US v. Lovett 328 US 303 1946)

Irrelevant: No. The contention about the word “overthrow” regarding the government
(peaceful overthrowing) is clarified by the provision of the clause: by means of force,
violence, deceit, subversion or any other illegal means.

Irrelevant: No. The freedom of expression and freedom of association is superseded

by the right of the state to self-preservation.

123. Ang Ladlad LGBT Party vs. COMELEC

FACTS: 

Ang Ladlad is an organization composed of men and women who identify themselves as
lesbians, gays, bisexuals, or trans-gendered individuals (LGBTs). Incorporated in 2003, Ang
Ladlad first applied for registration with the COMELEC in 2006.  The application for
accreditation was denied on the ground that the organization had no substantial membership
base. On August 17, 2009, Ang Ladlad again filed a Petition for registration with the
COMELEC.

COMELEC dismissed the petition on moral grounds stating that the party’s definition of the
LGBT sector makes it crystal clear that petitioner tolerates immorality which offends religious
beliefs.  Upon its seeking reconsideration, the COMELEC again denied its application
mentioning that:

1. The party has not proven that its interests are also the nation’s.

2. There is no substantial differentiation – they are granted the same rights as others as
men and women.

3. The party espouses values contrary to public morals.

4. The RPC prohibits immoral doctrines, etc.

Ang Ladlad filed this petition to annul the COMELEC’s resolutions.

ISSUE:

Wherther the COMELEC’s resolutions denying registration to Ang Ladlad is justified – NO.

RATIO: 

Compliance with the Requirements of the Constitution and RA  7941

The COMELEC denied Ang Ladlad’s application for registration on the ground that the LGBT
sector is neither enumerated in the Constitution and RA 7941, nor is it associated with or
related to any of the sectors in the enumeration.

The crucial element is not whether a sector is specifically enumerated, but whether a
particular organization complies with the requirements of the Constitution and RA 7941.

Nonetheless, we find that there has been no misrepresentation. A cursory perusal of Ang
Ladlad’s initial petition shows that it never claimed to exist in each province of the Philippines.

Rather, petitioner alleged that the LGBT community in the Philippines was estimated to
constitute at least 670,000 persons; that it had 16,100 affiliates and members around the
country, and 4,044 members in its electronic discussion group.

Ang Ladlad also represented itself to be “a national LGBT umbrella organization with affiliates
around the Philippines.

Religion as the Basis for Refusal to Accept Ang Ladlad’s Petition for Registration
Our Constitution provides in Article III, Section 5 that “No law shall be made respecting an
establishment of religion, or prohibiting the free exercise thereof.” At bottom, what our non-
establishment clause calls for is “government neutrality in religious matters.” We thus find that
it was grave violation of the non-establishment clause for the COMELEC to utilize the Bible and
the Koran to justify the exclusion of Ang Ladlad.

Public Morals as a Ground to Deny Ang Ladlad’s Petition for Registration

We are not blind to the fact that, through the years, homosexual conduct, and perhaps
homosexuals themselves, have borne the brunt of societal disapproval.  It is not difficult to
imagine the reasons behind this censure – religious beliefs, convictions about the preservation
of marriage, family, and procreation, even dislike or distrust of homosexuals themselves and
their perceived lifestyle. Nonetheless, we recall that the Philippines has not seen fit to
criminalize homosexual conduct. Evidently, therefore, these “generally accepted public morals”
have not been convincingly transplanted into the realm of law.

Equal Protection
It bears stressing that our finding that COMELEC’s act of differentiating LGBTs from
heterosexuals insofar as the party-list system is concerned does not imply that any other law
distinguishing between heterosexuals and homosexuals under different circumstances would
similarly fail.

We disagree with the OSG’s position that homosexuals are a class in themselves for the
purposes of the equal protection clause. We are not prepared to single out homosexuals as a
separate class meriting special or differentiated treatment. We have not received sufficient
evidence to this effect, and it is simply unnecessary to make such a ruling today.

Petitioner itself has merely demanded that it be recognized under the same basis as all other
groups similarly situated, and that the COMELEC made “an unwarranted and impermissible
classification not justified by the circumstances of the case.”

Freedom of Expression and Association

We do not doubt that a number of our citizens may believe that homosexual conduct is
distasteful, offensive, or even defiant. They are entitled to hold and express that view.

On the other hand, LGBTs and their supporters, in all likelihood, believe with equal fervor that
relationships between individuals of the same sex are morally equivalent to heterosexual
relationships. They, too, are entitled to hold and express that view.

However, as far as this Court is concerned, our democracy precludes using the religious or
moral views of one part of the community to exclude from consideration the values of other
members of the community.

Non-Discrimination and International Law

At this time, we are not prepared to declare that these Yogyakarta Principles contain norms
that are obligatory on the Philippines. There are declarations and obligations outlined in said
Principles which are not reflective of the current state of international law, and do not find basis
in any of the sources of international law enumerated under Article 38(1) of the Statute of the
International Court of Justice.  Petitioner has not undertaken any objective and rigorous
analysis of these alleged principles of international law to ascertain their true status.

WHEREFORE:

Petition is granted. The COMELEC is directed to grant petitioner’s application for PL

accreditation.

124. BPI v. BPI Employees Union

FACTS:

Bangko Sentral ng Pilipinas approved the Articles of Merger executed by and between
BPI, herein petitioner, and Far East Bank and Trust Company (FEBTC) and was
approved by the Securities and Exchange Commission.  The Articles of Merger and
Plan of Merger did not contain any specific stipulation with respect to the employment
contracts of existing personnel of the non-surviving entity which is FEBTC. Pursuant to
the said Article and Plan of Merger, all the assets and liabilities of FEBTC were
transferred to and absorbed by BPI as the surviving corporation. FEBTC employees,
including those in its different branches across the country, were hired by petitioner as
its own employees, with their status and tenure recognized and salaries and benefits
maintained.

ISSUE

Whether or not employees are ipso jure absorbed in a merger of the two corporations?

RULING

NO. Human beings are never embraced in the term “assets and liabilities.”Moreover,
BPI’s absorption of former FEBTC employees was neither by operation of law nor by
legal consequence of contract.  There was no government regulation or law that
compelled the merger of the two banks or the absorption of the employees of the
dissolved corporation by the surviving corporation.  Had there been such law or
regulation, the absorption of employees of the non-surviving entities of the merger
would have been mandatory on the surviving corporation. In the present case, the
merger was voluntarily entered into by both banks presumably for some mutually
acceptable consideration.  In fact, the Corporation Code does not also mandate the
absorption of the employees of the non-surviving corporation by the surviving
corporation in the case of a merger.

The Court cannot uphold the reasoning that the general stipulation regarding transfer of
FEBTC assets and liabilities to BPI as set forth in the Articles of Merger necessarily
includes the transfer of all FEBTC employees into the employ of BPI and neither BPI
nor the FEBTC employees allegedly could do anything about it.  Even if it is so, it does
not follow that the absorbed employees should not be subject to the terms and
conditions of employment obtaining in the surviving corporation.

Furthermore, The Court believes that it is contrary to public policy to declare the former
FEBTC employees as forming part of the assets or liabilities of FEBTC that were
transferred and absorbed by BPI in the Articles of Merger.  Assets and liabilities, in this
instance, should be deemed to refer only to property rights and obligations of FEBTC
and do not include the employment contracts of its personnel.  A corporation cannot
unilaterally transfer its employees to another employer like chattel. Certainly, if BPI as
an employer had the right to choose who to retain among FEBTC’s employees, FEBTC
employees had the concomitant right to choose not to be absorbed by BPI.  Even
though FEBTC employees had no choice or control over the merger of their employer
with BPI, they had a choice whether or not they would allow themselves to be
absorbed by BPI.  Certainly nothing prevented the FEBTC’s employees from resigning
or retiring and seeking employment elsewhere instead of going along with the
proposed absorption.

Employment is a personal consensual contract and absorption by BPI of a former

FEBTC employee without the consent of the employee is in violation of an individual’s
freedom to contract.  It would have been a different matter if there was an express
provision in the articles of merger that as a condition for the merger, BPI was being
required to assume all the employment contracts of all existing FEBTC employees with
the conformity of the employees.  In the absence of such a provision in the articles of
merger, then BPI clearly had the business management decision as to whether or not
employ FEBTC’s employees. FEBTC employees likewise retained the prerogative to
allow themselves to be absorbed or not; otherwise, that would be tantamount to
involuntary servitude.

[Note: The decision as to absorption of employees upon merger is reversed in the

Resolution of MR dated October 19, 2011]