Presumption of Constitutionality
Lim vs. Pacquing [G.R. No. 115044. January 27, 1995]
FACTS:
The Charter of the City of Manila was enacted by Congress on 18 June 1949 (R.A. No. 409).

On 1 January 1951, EO No. 392 was issued transferring the authority to regulate jai-alais from local government
to the Games and Amusements Board (GAB). However, the Municipal Board of Manila nonetheless passed
Ordinance No. 7065 authorizing the Mayor to allow the Associated Development Corp. (ADC) to establish and
operate a Jai-Alai in The City of Manila.

On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree expressly
revoked all existing franchises and permits issued by local governments including wagers or betting by The
Public On Horse And Dog Races, Jai-Alai, And Other Forms Of Gambling

Associated Development Corporation (ADC) tried to operate a Jai-Alai. The government through Games and
Amusement Board intervened and invoked Presidential Decree No. 771 which expressly revoked all existing
franchises and permits to operate all forms of gambling facilities (including Jai-Alai) by local governments. ADC
assails the constitutionality of P.D. No. 771.
Hence, this petition.
ISSUE:
Whether or not P.D. No. 771 is violative of the equal protection and non-impairment clauses of the Constitution.
HELD:
NO. P.D. No. 771 is valid and constitutional. (Presumption against unconstitutionality.)
The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and constitutional until or
unless otherwise ruled by this Court. Not only this; Article XVIII Section 3 of the Constitution states:
Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and other
executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed
or revoked.
There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered or amended by
any subsequent law or presidential issuance (when the executive still exercised legislative powers).
Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by reason of the
unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Court's First Division in said case,
aside from not being final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since only the Court En
Banc has that power under Article VIII, Section 4(2) of the Constitution.
And on the question of whether or not the government is estopped from contesting ADC's possession of a valid
franchise, the well-settled rule is that the State cannot be put in estoppel by the mistakes or errors, if any, of its officials or
agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we conclude that the republic (in contra distinction to the
City of Manila) may be allowed to intervene in G.R. No. 115044. The Republic is intervening in G.R. No. 115044 in the
exercise, not of its business or proprietary functions, but in the exercise of its governmental functions to protect public
morals and promote the general welfare.
Requisites of Judicial Review:
1. Actual Case or Controversy
Board of Optometry v. Colet, GR 122241, July 30, 1996
FACTS:
R.A. No. 8050,1 entitled "An Act Regulating the Practice of Optometry Education, Integrating Optometrists, and for
Other Purposes," otherwise known as the Revised Optometry Law of 1995 was approved into law. The private
respondents filed with the Regional Trial Court (RTC) of Manila a petition for declaratory relief and for prohibition and
injunction, with a prayer for a temporary restraining order. Private respondents alleged in their petition that:
1. There were surreptitious and unauthorized insertion and addition of provisions in the Reconciled Bill which were
made without the knowledge and conformity of the Senate panel;
2. R.A. No. 8050 derogates and violates the fundamental right of every Filipino to reasonable safeguards against
deprivation of life, liberty and property without due process of law;
3. R.A. No. 8050 derogates and violates the principle against undue delegation of legislative power;
4. R.A. No. 8050 suppresses truthful advertising concerning optical goods and services in violation of the guaranty
of freedom of speech and press; and
5. R.A. No. 8050 employs vague ambiguous terms in defining prohibitions and restrictions, hence, it falls within the
ambit of void-for-vagueness doctrine which safeguards the guaranty of due process of law.
When the petition was examined, it was found out that it merely listed the names of the alleged presidents as well as
their profession and home addresses. They failed to indicate the details as to the juridical personality and addresses of
these alleged associations, except for Acebedo Optical Co., Inc.
Trial Court – granted a writ of preliminary injunction restraining, enjoining, and prohibiting the petitioners herein "from
undertaking in any form of manner, the enforcement or implementation of the Revised Optometry Law [R.A. No. 8050] or
any regulations or Code of Ethics issued thereunder." Hence, this case.
ISSUES:
Whether or not the private respondents have locus standi to question the constitutionality of R.A. No. 8050; and
Whether or not they have a valid cause of action for either declaratory relief or prohibition.
HELD:
1. Only natural and juridical persons or entities authorized by law may be parties in a civil action, and every action must be
prosecuted or defended in the name of the real party in interest. Under Article 44 of the Civil Code, an association is
considered a juridical person if the law grants it a personality separate and distinct from that of its members. By failing to
provide juridical details in their petition, they cannot therefore claim that they are juridical entities. Consequently, they are
deemed to be devoid of legal personality to bring an action.
Section 2, Rule 3 of the Rules of Court - a real party in interest is a party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit.
2. An actual case or controversy means an existing case or controversy that is appropriate or ripe for determination, not
conjectural or anticipatory. It cannot be disputed that there is yet no actual case or controversy involving all or any of the
private respondents on one hand, and all or any of the petitioners on the other, with respect to rights or obligations under
R.A. No. 8050. This is plain because Civil Case No. 95-74770 is for declaratory relief.
The private respondents have not sufficiently established their locus standi to question the validity of R.A. No. 8050. The
conclusion then is inevitable that the respondent Judge acted with grave abuse of discretion when he issued a writ of
preliminary injunction restraining the implementation of R.A. No. 8050.
Mariano v. Comelec, 242 SCRA 211
Facts:
Juanito Mariano Jr., resident of Makati filed a petition for prohibition and declaratory relief, assailing
unconstitutional sections in RA 7854 (“An Act Converting the Municipality of Makati Into a Highly Urbanized City to be
known as the City of Makati”).
Petitioners contend that:
(1) Section 2 Article I of RA 7854 failed to delineate the land areas of Makati by metes and bounds with technical
descriptions,
(2) Section 51 Article X of RA 7854 collides with Section 8 Article X and Section 7 Article VI of the Constitution,
that the new corporate existence of the new city will restart the term of the present municipal elective making it favourable
to incumbent Mayor Jejomar Binay, and
(3) Section 52 Article X of RA 7854 for adding a legislative district is unconstitutional and cannot be made by
special law.
Issue:
Whether or not RA 7854 is unconstitutional.
Decision:
Petition dismissed for lack of merit.
We hold that the existence of a boundary dispute does not per se present an insurmountable difficulty which will
prevent Congress from defining with reasonable certitude the territorial jurisdiction of a local government unit. In the cases
at bench, Congress maintained the existing boundaries of the proposed City of Makati but as an act of fairness, made
them subject to the ultimate resolution by the courts. Considering these peculiar circumstances, we are not prepared to
hold that Section 2 of R.A. No. 7854 is unconstitutional.
We cannot entertain this challenge to the constitutionality of Section 51. The requirements before a litigant can
challenge the constitutionality of a law are well-delineated. They are: (1) there must be an actual case or controversy; (2)
the question of constitutionality must be raised by the proper party; (3) the constitutional question must be raised at the
earliest possible opportunity; and (4) the decision on the constitutional question must be necessary to the determination of
the case itself.
Considering that these contingencies may or may not happen, petitioners merely pose a hypothetical issue which
has yet to ripen to an actual case or controversy.
In Tobias vs Abalos, Court ruled that reapportionment of legislative districts may be made through a special law, such as
in the charter of a new city.
Fernandez v. Torres, 215 SCRA 489, GR No. 102940 November 6 1992
FACTS:
Petitioners seek certiorari and prohibition to prohibit and restrain the Secretary of the DOLE and the Administrator
of the POEA from enforcing and implementing Item No. 1 of DOLE Circular No. 01-91 entitled "Prescribing Additional
Requirements, Conditions and Procedures for the Deployment of Performing Artists."
The promulgation of DOLE Circular No. 01-91 was preceded by public agitation for a total ban on deployment of
Filipino entertainers abroad, in response to the growing number of documented reports and complaints from entertainers
and their relatives about the exploitative working conditions, harassment, forcible detention, physical injuries, rape and
even death suffered by female performing artists and entertainers abroad.
A Conference was held, the consensus among the management and labor representatives which emerged was
that Government should adopt a policy of selective (rather than comprehensive) prohibition of deployment abroad of
Philippine entertainers, to avoid the adverse effects which complete prohibition would impose on the country's manpower
export program. The labor representative recommended that the minimum age for performing artists seeking overseas
deployment be raised from eighteen (18) years to twenty-three (23) years.
Petitioners allege themselves to be "qualified performing artists, mostly singers and dancers," of ages eighteen
(18) to twenty-two (22) years. Through counsel, they challenge the constitutional validity of Item No. 1 of DOLE Circular
No. 01-91 and their arguments may be condensed in the following manner:
(1) it is violative of the equal of the protection clause and the due process clause of the Constitution, and
the state policy on protection of labor because it is arbitrary, oppressive and discriminatory against
performing artists of ages eighteen (18) to twenty-two (22) who would otherwise be qualified for overseas
employment; and
(2) it was promulgated by public respondent DOLE Secretary and POEA Administrator without or in
excess of their jurisdiction or with grave abuse of discretion.
ISSUE:
Whether or not the petitioners have an actual cause or controversy to challenge the constitutionality of the DOLE
Circular.
HELD:
The Court finds that the petition does not present a justiciable controversy. In actions involving constitutional
issues, the firmly settled rule is that a constitutional question will not be heard and resolved by the courts unless the
following requirements of judicial inquiry are met:
(1) the existence of an actual case or controversy;
(2) the party raising the constitutional issue must have a personal and substantial interest in the
resolution thereof;
(3) the controversy must be raised at the earliest reasonable opportunity; and
(4) that the resolution of the constitutional issue must be indispensable for the final determination of the
controversy.
In the first place, Item No. 1 of the challenged DOLE Circular does not establish an absolute and comprehensive
prohibition of deployment abroad of entertainers below twenty-three (23) years of age. Item No. 1 itself provides that "the
Secretary of Labor and Employment may, for justifiable reasons, exempt from performing artists from coverage hereof."
The discretionary authority here asserted by the DOLE Secretary does not purport to be unlimited and arbitrary in nature.
To the contrary, fairly explicit and precisely drawn grounds for exempting particular performing artists from the coverage of
Item No. 1 are set out in a set of "Administrative Guidelines Implementing Department Circular No. 01-91."
Secondly, petitioners have failed to allege or have refrained from alleging, that they had previously applied to
public respondent officials for exemption from the minimum age restriction imposed by Item No. 1 of DOLE Circular No.
01-91. Necessarily, therefore, petitioners also do not allege that public respondent officials have arbitrarily denied their
applications for exemption from the minimum age requirement or from any other requirement establishment by Item No. 1.
Neither have petitioners alleged that public respondents have continually threatened to deny all and sundry applications
for exemption, so as to create a reasonable expectation that their applications would be immediately and arbitrarily
denied, should they in fact file them. Petitioners do assert that the exemption clause of DOLE Circular No. 01-91 is
"practically useless and [constitutes] empty verbiage." They have not, however, attempted to support this assertion.
The Court is not compelled to indulge in speculation that public respondent would deny any and all applications
for exemption from coverage of DOLE Circular No. 01-91. Two (2) important presumptions are here applicable. The first is
that administrative orders and regulations are entitled to the presumption of constitutionality. The second is that official
duty has been or will be regularly performed.
La Bugal-B’laan Tribal Assn. v. DENR Secretary, GR 127882, Jan. 27, 2004
FACTS:
On July 25, 1987, President Corazon C. Aquino issued E.O. No. 279 authorizing the DENR Secretary to accept,
consider and evaluate proposals from foreign-owned corporations or foreign investors for contracts or agreements
involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals,
which, upon appropriate recommendation of the Secretary, the President may execute with the foreign proponent.
President Fidel V. Ramos approved R.A. No. 7942 to “govern the exploration, development, utilization and
processing of all mineral resources.”
R.A. No. 7942 took effect. But shortly before the effectivity of R.A. No. 7942, the President entered into an
Financial and Technical Assistance Agreement (FTAA) with WMC Philippines, Inc. (WMCP) covering 99,387 hectares of
land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. Subsequently, DENR Secretary Victor O.
Ramos issued AO No. 95-23, s. 1995, otherwise known as the Implementing Rules and Regulations of R.A. No. 7942
which was also later repealed by DAO No. 96-40, s. 1996.
Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction in signing and promulgating
DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional.
ISSUE:
Whether or not the requisites for judicial review are present to raise the constitutionality of Republic Act No. 7942.
HELD:
When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if the following
requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the constitutional question;
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
(4) The constitutional question is the lis mota of the case.
Respondents claim that the first three requisites are not present. Section 1, Article VIII of the Constitution states
that “judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable.” The power of judicial review, therefore, is limited to the determination of actual cases and
controversies.
An actual case or controversy means an existing case or controversy that is appropriate or ripe for determination,
not conjectural or anticipatory, lest the decision of the court would amount to an advisory opinion. The power does not
extend to hypothetical questions since any attempt at abstraction could only lead to dialectics and barren legal questions
and to sterile conclusions unrelated to actualities.
“Legal standing” or locus standi has been defined as a personal and substantial interest in the case such that the
party has sustained or will sustain direct injury as a result of the governmental act that is being challenged, alleging more
than a generalized grievance. The gist of the question of standing is whether a party alleges “such personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon
which the court depends for illumination of difficult constitutional questions.” Unless a person is injuriously affected in any
of his constitutional rights by the operation of statute or ordinance, he has no standing.
Petitioners traverse a wide range of sectors. Among them are La Bugal B’laan Tribal Association, Inc., a farmers
and indigenous people’s cooperative organized under Philippine laws representing a community actually affected by the
mining activities of WMCP, members of said cooperative, as well as other residents of areas also affected by the mining
activities of WMCP. These petitioners have standing to raise the constitutionality of the questioned FTAA as they allege a
personal and substantial injury. They claim that they would suffer “irremediable displacement” as a result of the
implementation of the FTAA allowing WMCP to conduct mining activities in their area of residence. They thus meet the
appropriate case requirement as they assert an interest adverse to that of respondents who, on the other hand, insist on
the FTAA’s validity.
In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O. No. 279, by
authority of which the FTAA was executed.
Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both contracting
parties to annul it. In other words, they contend that petitioners are not real parties in interest in an action for the
annulment of contract.
Public respondents’ contention fails. The present action is not merely one for annulment of contract but for
prohibition and mandamus. Petitioners allege that public respondents acted without or in excess of jurisdiction in
implementing the FTAA, which they submit is unconstitutional. As the case involves constitutional questions, the Court is
not concerned with whether petitioners are real parties in interest, but with whether they have legal standing.
Misconstruing the application of the third requisite for judicial review – that the exercise of the review is pleaded at
the earliest opportunity – WMCP points out that the petition was filed only almost two years after the execution of the
FTAA, hence, not raised at the earliest opportunity.
The third requisite should not be taken to mean that the question of constitutionality must be raised immediately
after the execution of the state action complained of. That the question of constitutionality has not been raised before is
not a valid reason for refusing to allow it to be raised later. A contrary rule would mean that a law, otherwise
unconstitutional, would lapse into constitutionality by the mere failure of the proper party to promptly file a case to
challenge the same.
City of Los Angeles v. Lyons, 461 US 95, 75 L.Ed.2d 675
Rule:
Past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief if
unaccompanied by any continuing, present adverse effects.
Facts:
A citizen filed a complaint for damages, an injunction, and declaratory relief in the United States District Court for
the Central District of California against the City of Los Angeles and four of its police officers. The complaint alleged that
the officers stopped the citizen for a traffic or vehicle code violation, and although the citizen offered no resistance or
threat, the officers, without provocation or justification, seized the citizen and applied a chokehold, rendering him
unconscious and causing damage to his larynx. In support of the claim for injunctive relief.
The complaint likewise alleged that pursuant to the city's authorization, the city's police officers regularly and
routinely applied the chokeholds in situations where they were not threatened by the use of any deadly force, that the
citizen and others were threatened with irreparable injury in the form of bodily injury and loss of life, and that the citizen
justifiably feared that any contact with the police might result in his being choked or strangled to death without
provocation, justification or other legal excuse.
The District Court entered a preliminary injunction against the use of chokeholds when the police were not
threatened with death or serious bodily injury. The United States Court of Appeals for the Ninth Circuit affirmed, stating
that the District Court had not abused its discretion in granting the preliminary injunction.
Issue:
Does the case present an actual case or controversy?
Ruling: No.
1. The case is not rendered moot even though, while it was pending in this Court, city police authorities prohibited use of a
certain type of chokehold in any circumstances and imposed a 6-month moratorium on the use of another type of
chokehold except under circumstances where deadly force was authorized. The moratorium, by its terms, was not
permanent, and thus intervening events have not irrevocably eradicated the effects of the alleged misconduct.
2. The federal courts are without jurisdiction to entertain respondent's claim for injunctive relief.
(a) To satisfy the "case or controversy" requirement of Art. III, a plaintiff must show that he has sustained or is
immediately in danger of sustaining some direct injury as the result of the challenged official conduct, and the injury or
threat of injury must be "real and immediate," not "conjectural" or "hypothetical."
"Past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief . . . if
unaccompanied by any continuing, present adverse effects."
(b) Respondent has failed to demonstrate a case or controversy with petitioner that would justify the equitable relief
sought. That respondent may have been illegally choked by the police in 1976, while presumably affording him standing to
claim damages against the individual officers and perhaps against petitioner, does not establish a real and immediate
threat that he would again be stopped for a traffic violation, or for any other offense, by an officer who would illegally
choke him into unconsciousness without any provocation. If chokeholds were authorized only to counter resistance to an
arrest by a suspect, or to thwart an effort to escape, any future threat to respondent from petitioner's policy or from the
conduct of police officers would be no more real than the possibility that he would again have an encounter with the police
and that he would either illegally resist arrest or the officers would disobey their instructions and again render him
unconscious without any provocation. The equitable doctrine that cessation of the challenged conduct (here the few
seconds while the chokehold was being applied to respondent) does not bar an injunction is not controlling, since
respondent's lack of standing does not rest on the termination of the police practice, but on the speculative nature of his
claim that he will again experience injury as the result of that practice even if continued. The rule that a claim does not
become moot where it is capable of repetition, yet evades review, is likewise inapposite.
(c) Even assuming that respondent's pending damages suit affords him Art. III standing to seek an injunction as a remedy
for the claim arising out of the 1976 events, nevertheless the equitable remedy is unavailable because respondent failed
to show irreparable injury -- a requirement that cannot be met where there is no showing of any real or immediate threat
that the plaintiff will be wronged again. Nor will respondent's injury allegedly suffered in 1976 go unrecompensed; for that
injury, he has an adequate damages remedy at law. Recognition of the need for a proper balance between state and
federal authority counsels restraint in the issuance of injunctions against state officers engaged in the administration of the
State's criminal laws in the absence of irreparable injury which is both great and immediate.
Hence the decision is reversed.
David v. Macapagal-Arroyo (PP1017), GR 171396, May 3, 2006
FACTS:
This case involve seven (7) consolidated petitions for certiorari and prohibition allege that in issuing Presidential
Proclamation No. 1017 (PP 1017) and General Order No. 5 (G.O. No. 5) declaring a state of national emergency,
President Gloria Macapagal-Arroyo committed grave abuse of discretion. The proximate cause behind the executive
issuances was the conspiracy among some military officers, leftist insurgents of the New People’s Army (NPA), and some
members of the political opposition in a plot to unseat or assassinate President Arroyo.
Petitioners contend that respondent officials of the Government, in their professed efforts to defend and preserve
democratic institutions, are actually trampling upon the very freedom guaranteed and protected by the Constitution.
Hence, such issuances are void for being unconstitutional.
Exactly one week after the declaration of a state of national emergency, the President lifted PP 1017 by issuing
Proclamation No. 1021.
ISSUE:
Whether or not the issuance of PP 1021 renders the petitions moot and academic.
HELD:
Moot and academic case - one that ceases to present a justiciable controversy by virtue of supervening events,
so that a declaration thereon would be of no practical use or value. Generally, courts decline jurisdiction over such case or
dismiss it on ground of mootness.
The Court holds that President Arroyo’s issuance of PP 1021 did not render the present petitions moot and
academic. During the eight (8) days that PP 1017 was operative, the police officers, according to petitioners, committed
illegal acts in implementing it. Are PP 1017 and G.O. No. 5 constitutional or valid? Do they justify these alleged illegal
acts? These are the vital issues that must be resolved in the present petitions. It must be stressed that “an
unconstitutional act is not a law, it confers no rights, it imposes no duties, it affords no protection; it is in legal
contemplation, inoperative.”
The “moot and academic” principle is not a magical formula that can automatically dissuade the courts in
resolving a case. Courts will decide cases, otherwise moot and academic, if: first, there is a grave violation of the
Constitution; second, the exceptional character of the situation and the paramount public interest is involved; third, when
constitutional issue raised requires formulation of controlling principles to guide the bench, the bar, and the public; and
fourth, the case is capable of repetition yet evading review.
All the foregoing exceptions are present here and justify this Court’s assumption of jurisdiction over the instant
petitions. Petitioners alleged that the issuance of PP 1017 and G.O. No. 5 violates the Constitution. There is no question
that the issues being raised affect the public’s interest, involving as they do the people’s basic rights to freedom of
expression, of assembly and of the press. Moreover, the Court has the duty to formulate guiding and controlling
constitutional precepts, doctrines or rules. It has the symbolic function of educating the bench and the bar, and in the
present petitions, the military and the police, on the extent of the protection given by constitutional guarantees. And lastly,
respondents’ contested actions are capable of repetition. Certainly, the petitions are subject to judicial review.
La Bugal-B’laan Tribal Assn. v. DENR Secretary, GR 127882, Dec. 1, 2004
FACTS:
The constitutional provision allowing the President to enter into FTAA is a exception to the rule that participation in
the nation’s natural resources is reserved exclusively to Filipinos. Provision must be construed strictly against their
enjoyment by non-Filipinos.
RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or on March
30, 1995, the President signed a FTAA with WMCP, a corporation organized under Philippine laws, covering close to
100,000 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato.
Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and WMCP be
declared unconstitutional on ground that they allow fully foreign owned corporations like WMCP to exploit, explore and
develop Philippine mineral resources in contravention of Article XII Section 2 paragraphs 2 and 4 of the Charter.
ISSUES:
1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned corporations to exploit the
Philippine mineral resources.
2. Whether or not the FTAA between the government and WMCP is a ―service contract that permits fully foreign owned
companies to exploit the Philippine mineral resources.
HELD:
First Issue: RA 7942 is Unconstitutional
RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned corporations to
exploit the Philippine natural resources.
Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrine which states that ―All lands of the
public domain, waters, minerals, coal, petroleum, and other minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State.
The same section also states that, ―the exploration and development and utilization of natural resources shall be under
the
full
control
and
supervision
of
the
State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution authorizing the State to grant
licenses, concessions, or leases for the exploration, exploitation, development, or utilization of natural resources. By such
omission, the utilization of inalienable lands of the public domain through license, concession or lease is no longer allowed
under the 1987 Constitution.
Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a
particular natural resource within a given area. The concession amounts to complete control by the concessionaire over
the country‘s natural resource, for it is given exclusive and plenary rights to exploit a particular resource at the point of
extraction.
The 1987 Constitution, moreover, has deleted the phrase ―management or other forms of assistance in the 1973
Charter. The present Constitution now allows only ―technical and financial assistance. The management and the
operation of the mining activities by foreign contractors, the primary feature of the service contracts was precisely the evil
the drafters of the 1987 Constitution sought to avoid.
The constitutional provision allowing the President to enter into FTAAs is an exception to the rule that participation
in the nation‘s natural resources is reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly
against their enjoyment by non-Filipinos. Therefore, RA 7942 is invalid insofar as the said act authorizes service
contracts. Although the statute employs the phrase ―financial and technical agreements in accordance with the 1987
Constitution, its pertinent provisions actually treat these agreements as service contracts that grant beneficial ownership
to
foreign
contractors
contrary
to
the
fundamental
law.
The underlying assumption in the provisions of the law is that the foreign contractor manages the mineral resources just
like the foreign contractor in a service contract. By allowing foreign contractors to manage or operate all the aspects of the
mining operation, RA 7942 has, in effect, conveyed beneficial ownership over the nation‘s mineral resources to these
contractors, leaving the State with nothing but bare title thereto.
The same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally ordained
60-40% capitalization requirement for corporations or associations engaged in the exploitation, development and
utilization of Philippine natural resources.
When parts of a statute are so mutually dependent and connected as conditions, considerations, inducements or
compensations for each other as to warrant a belief that the legislature intended them as a whole, then if some parts are
unconstitutional, all provisions that are thus dependent, conditional or connected, must fail with them.
Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to merely technical or financial
assistance to the State for large scale exploration, development and utilization of minerals, petroleum and other mineral
oils.
Second Issue: RP Government-WMCP FTAA is a Service Contract
The FTAA between the WMCP and the Philippine government is likewise unconstitutional since the agreement
itself is a service contract.
Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive right to explore, exploit,
utilize and dispose of all minerals and by-products that may be produced from the contract area. Section 1.2 of the same
agreement provides that EMCP shall provide all financing, technology, management, and personnel necessary for the
Mining Operations.
These contractual stipulations and related provisions in the FTAA taken together, grant WMCP beneficial
ownership over natural resources that properly belong to the State and are intended for the benefit of its citizens. These
stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental law seeks to avoid,
the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down.
DeFunis v. Odegaard, 416 US 312, 40 L.Ed.2d 164
Brief Fact Summary. Marco DeFunis, Jr. applied for admission as a first-year student at the University of Washington
Law School, a state-operated institution. When he was denied admission, he brought suit in a Washington trial court
claiming that the admissions committee procedures were racially discriminatory.
Synopsis of Rule of Law. In federal cases before the Supreme Court, there must be an actual case and controversy
which exists at the stages of appellate or certiorari review, and not simply at the date the action is initiated.
Facts.
Marco DeFunis, Jr. sued the University of Washington Law School, a state operated university. DeFunis argued
that the University’s admissions policies and criteria were racially discriminatory. However, DeFunis was allowed to attend
the law school during the case and was in his third year when the case was heard by the Court. Further, the University
has agreed to let him graduate upon completion of his last year.
Issue.
Does an actual controversy exist between the parties, capable of redress by the United States Supreme Court
(Supreme Court)?
Held.
The Court ordered the parties to address the issue of mootness before they proceeded to any other claims in the
petition. The Court reasoned that “federal courts are without power to decide questions that cannot affect the rights of
litigants in the cases before them.” This requirement stems from Article III of the Constitution, under which the exercise of
judicial power depends upon the existence of a case or controversy. No amount of public interest would be sufficient to
create an actual case or controversy, and the case was rendered moot because DeFunis was going to graduate from the
law school regardless of the Court’s ruling. Thus, the case was rendered moot. “[T]he controversy between the parties
has thus clearly ceased to be definite and concrete.”
Dissent. There were numerous potential litigants who would be affected by a decision on the legal issues presented.
Further, 26 amici curiae briefs were filed by parties in this case. The public interest would be best served by reviewing
these issues now, as they would inevitably find their way back into the federal court system. There was a stronger interest
in litigating these issues immediately to avoid repetitious litigation that would inevitably occur due to the high public
interest
in
this
issue.
Discussion. A case is considered “moot” if a justiciable controversy existed when a case was filed, but circumstances
after filing indicate the litigant no longer has a stake in the controversy. In such a situation, the Supreme Court’s
jurisdiction is not invoked, and the Court will not even hear the other issues presented.
2. Proper Party
Conventional Standing
- Warth v. Seldin, 422 US 490, 45 L.Ed.2d. 343
Brief Fact Summary. Penfield, NY was sued by numerous parties who claimed that the city was enacting rules restricting
the building of low to moderate income housing to the detriment of these parties.
Synopsis of Rule of Law. There is a 2 part test to determine whether a party has standing to bring a claim against a
government entity in the Supreme Court. The party must show that “but for” the action, the claimed injury would not have
occurred AND that a favorable decision by the Court will address the injury sustained.
Facts.
Numerous parties in Penfield, New York (Penfield) contested the town’s zoning rules. Those parties argued that
the rules were enacted to restrict the building of low to moderate income housing. The four main categories of parties
were 1) low-income persons seeking affordable housing, 2) taxpayers from neighboring cities, claiming the lack of housing
in Penfield caused their cities to provide tax incentives for the construction of similar housing, increasing the neighboring
cities’ tax burdens, 3) Metro-Act, a local action group, claiming that the refusal to build low income housing prevented
those with low to moderate incomes from living in the town of Penfield, and 4) real estate developers who missed out on
projects for the construction of low to moderate income housing because of the zoning rules.
Issue.
Have the zoning rules in Penfield, NY caused the injuries of which these plaintiffs complain and if so, what is the
remedy?
Held.
None of the plaintiffs have standing to bring this action against the city of Penfield, NY. None of the plaintiffs
provided evidence sufficient to show that “but for” the city’s zoning rules, their respective injuries would not have occurred.
Further, any redress of potential injury was too vague and not sufficiently concrete to meet the applicable standing
requirements.
Dissent. Lead by Justice William Brennan (J. Brennan), the dissent did not agree with the majority’s ruling as to the
evidence necessary to demonstrate causation. The dissenting judges strongly disagreed with the majority’s requirement
that the plaintiffs show that a specific project had been blocked by the zoning rules. They felt that it was sufficient that the
town would not approve any low to moderate income housing projects. The dissent also argued that the plaintiffs only
needed to show a reasonable probability (as opposed to a substantial probability) of redress to establish standing.
Discussion. The Supreme Court applied a two-part test in analyzing the standing doctrine’s causation requirement when
pursuing a claim against a government entity. First, the moving party must demonstrate that “but for” the challenged
action, there would not have been an injury. Second, the plaintiff(s) must show that a decision by the Court will redress
the injury. Whether the probability of redress must be reasonable or substantial is determined on a case by case basis.
Representative Standing
Jus Tertii standing (third party right)
- Craig v. Boren, 429 US 190, 50 L.Ed.2d. 397
Brief Fact Summary. Oklahoma State maintained different drinking ages between men and women for the consumption
of 3.2% alcohol beer. The Appellant, Craig (Appellant), now alleges that this difference violates the Fourteenth
Amendment of the United States Constitution (Constitution).
Synopsis of Rule of Law. Gender-based classifications must satisfy intermediate scrutiny requirements to pass
constitutional muster.
Facts.
The State of Oklahoma prohibited the sale of “nonintoxicating” 3.2% alcohol beer to men under the age of 21 and
women under the age of 18. Suit was brought against the State, alleging the law violated the Equal Protection clause of
the Fourteenth Amendment of the Constitution.
Issue.
Does the Oklahoma statute violate the Equal Protection clause of the Fourteenth Amendment of the Constitution?
Held.
Yes. Appeals Court ruling reversed and remanded.
Justice William Brennan (J. Brennan) argues that case precedent dictates that an intermediate level of scrutiny
should be applied in analyzing the statute. Specifically, the gender-based classification must serve an important
government objective and be substantially related to the achievement of such objective.
The District Court unequivocally found that the objective to be served by the statute is increased traffic safety. J.
Brennan is not persuaded by the Appellees’, Craig and others (Appellees), statistics that the statute closely serves the
stated objective. As such, it is not constitutional.
Dissent. Justice William Rehnquist (J. Rehnquist) dissents on two levels. He believes that rational basis analysis is the
appropriate level of scrutiny for gender-based classification. Furthermore, he believes that the intermediate scrutiny
applied by the Supreme Court of the United States (Supreme Court) is so “diaphanous and elastic” as to encourage
judicial
prejudice.
Discussion. Craig v. Boren establishes intermediate scrutiny as the appropriate level of review for gender-based
classification. Intermediate scrutiny is distinguished from strict scrutiny at both the objective and means levels. Important
government objectives (intermediate) v. compelling government objectives (strict) and substantially related (intermediate)
v. narrowly tailored (strict).
Transcendental importance to the public
- Tatad v. Garcia, 243 SCRA 436, G.R. No. 114222, 6 April 1995
FACTS:
In 1989, DOTC planned to construct a light railway transit line along EDSA, a major thoroughfare in Metropolitan
Manila. The plan, referred to as EDSA LRT III, was intended to provide a mass transit system along EDSA and alleviate
the congestion and growing transportation problem in the metropolis. RA 6957 was enacted allowing for the financing,
construction and operation of government projects through private initiative and investment.
Accordingly, prequalification and bidding was made and EDSA LRT Corporation (organized under HK laws) was
recommended to be awarded with the contract. The President approved the awarding of the contract. Petitioners are
senators praying for the prohibition of respondents from further implementing and enforcing the contract.
ISSUE:
Whether the agreement granting EDSA LRT Corporation LTD, a foreign corporation, the ownership of EDSA LRT
III, a public utility, violates constitution.
RULING:
No. What private respondent owns are the rail tracks, rolling stocks like the coaches, rail stations, terminals and
the power plant, not a public utility. While a franchise is needed to operate these facilities to serve the public, they do not
by themselves constitute a public utility. What constitutes a public utility is not their ownership but their use to serve the
public (Iloilo Ice & Cold Storage Co. v. Public Service Board, 44 Phil. 551, 557 558 [1923]).
The Constitution, in no uncertain terms, requires a franchise for the operation of a public utility. However, it does
not require a franchise before one can own the facilities needed to operate a public utility so long as it does not operate
them to serve the public.
The right to operate a public utility may exist independently and separately from the ownership of the facilities
thereof. One can own said facilities without operating them as a public utility, or conversely, one may operate a public
utility without owning the facilities used to serve the public. The devotion of property to serve the public may be done by
the owner or by the person in control thereof who may not necessarily be the owner thereof.
In law, there is a clear distinction between the “operation” of a public utility and the ownership of the facilities and
equipment used to serve the public. Ownership is defined as a relation in law by virtue of which a thing pertaining to one
person is completely subjected to his will in everything not prohibited by law or the concurrence with the rights of another.
The exercise of the rights encompassed in ownership is limited by law so that a property cannot be operated and used to
serve the public as a public utility unless the operator has a franchise. The operation of a rail system as a public utility
includes the transportation of passengers from one point to another point, their loading and unloading at designated
places and the movement of the trains at pre-scheduled times.
Even the mere formation of a public utility corporation does not ipso facto characterize the corporation as one
operating a public utility. The moment for determining the requisite Filipino nationality is when the entity applies for a
franchise, certificate or any other form of authorization for that purpose (People v. Quasha, 93 Phil. 333 [1953]).
Kilosbayan v. Guingona, 232 SCRA 110, GR No. 113375
FACTS:
Pursuant to Section 1 of the charter of the PCSO (R.A. No. 1169, as amended by B.P. Blg. 42) which grants it the
authority to hold and conduct "charity sweepstakes races, lotteries and other similar activities," the PCSO decided to
establish an on- line lottery system for the purpose of increasing its revenue base and diversifying its sources of funds.
The Berjaya Group Berhad, "a multinational company who has been long engaged in lottery operations in Asia,
became interested to offer its services and resources to PCSO due to the interest in operating an on-line lottery system.
Philippine Gaming Management Corporation (PGMC) was organized by Berjaya Group Berhad with some Filipino
investors, which was intended to be the medium through which the technical and management services required for the
project would be offered and delivered to PCSO.
The PCSO formally issued a Request for Proposal (RFP) for the Lease Contract of an on-line lottery system for
the PCSO. A bid was conducted and thereafter, the Office of the President announced that respondent PGMC may
operate the country's on-line lottery system and that the corresponding implementing contract would be submitted for final
clearance and approval by the Chief Executive.
KILOSBAYAN sent an open letter to Presidential Fidel V. Ramos strongly opposing the setting up to the on-line
lottery system on the basis of serious moral and ethical considerations. Petitioners also submit that the PCSO cannot
validly enter into the assailed Contract of Lease with the PGMC because it is an arrangement wherein the PCSO would
hold and conduct the on-line lottery system in "collaboration" or "association" with the PGMC, in violation of Section 1(B)
of R.A. No. 1169, as amended by B.P. Blg. 42, which prohibits the PCSO from holding and conducting charity
sweepstakes races, lotteries, and other similar activities "in collaboration, association or joint venture with any person,
association, company or entity, foreign or domestic." However, this protest was denied.
Then, before this court Petitioner seeks to prohibit and restrain the implementation of the "Contract of Lease"
executed by the PCSO and the PGMC in connection with the on- line lottery system, also known as "lotto."
ISSUE:
Whether or not the oppositions made by the petitioner was valid.
HELD:
The Court agrees with the petitioners and the challenged Contract of Lease executed by respondent PCSO and
respondent PGMC is declared to be contrary to law and invalid. The preliminary issue on the locus standi of the
petitioners which was raised by the respondents should be resolved in their favor. The Court finds this petition to be of
transcendental importance to the public. The issues it raised are of paramount public interest and of a category even
higher than those involved in many of the aforecited cases. The ramifications of such issues immeasurably affect the
social, economic, and moral well-being of the people even in the remotest barangays of the country and the counterproductive and retrogressive effects of the envisioned on-line lottery system are as staggering as the billions in pesos it is
expected to raise. The legal standing then of the petitioners deserves recognition and, in the exercise of its sound
discretion, this Court hereby brushes aside the procedural barrier which the respondents tried to take advantage of.
On the substantive issue regarding the provision in Section 1 of R.A. No. 1169, as amending by B.P. Blg. 42, is
indisputably clear with respect to its franchise or privilege "to hold and conduct charity sweepstakes races, lotteries and
other similar activities." Meaning, the PCSO cannot exercise it "in collaboration, association or joint venture" with any
other party. Thus, the challenged Contract of Lease violates the exception provided for in paragraph B, Section 1 of R.A.
No. 1169, as amended by B.P. Blg. 42, and is, therefore, invalid for being contrary to law.
Kilosbayan v. Morato, 246 SCRA 540, July 17, 1995
Facts:
1. GR 113375 (KIlosbayan vs. Guingona) held invalidity of the contract between Philippine Charity Sweepstakes
Office (PCSO) and the privately owned Philippine Gaming Management Corporation (PGMC) for the operation of
a nationwide on-line lottery system. The contract violated the provision in the PCSO Charter which prohibits
PCSO from holding and conducting lotteries through a collaboration, association, or joint venture.
2. Both parties again signed an Equipment Lease Agreement (ELA) for online lottery equipment and accessories on
January 25, 1995. The agreement are as follow:

Rental is 4.3% of gross amount of ticket sales by PCSO at which in no case be less than an
annual rental computed at P35,000 per terminal in commercial operation. Rent is computed biweekly. Term is 8 years. PCSO is to employ its own personnel and responsible for the facilities.
Upon expiration of term, PCSO can purchase the equipment at P25M.
3. Kilosbayan again filed a petition to declare amended ELA invalid because:

It is the same as the old contract of lease and is still violative of PCSO’s charter. It is violative of
the law regarding public bidding. It has not been approved by the President and it is not most
advantageous to the government.
4. PCSO and PGMC filed separate comments

ELA is a different lease contract with none of the vestiges in the prior contract. ELA is not
subject to public bidding because it fell in the exception provided in EO No. 301.

Power to determine if ELA is advantageous vests in the Board of Directors of PCSO. Lack of
funds. PCSO cannot purchase its own online lottery equipment. Petitioners seek to further their
moral crusade. Petitioners do not have a legal standing because they were not parties to the
contract.
Issues:
1. Whether or not petitioner Kilosbayan, Incorporated has a legal standing to sue.
2. Whether or not the ELA between PCSO and PGMC in operating an online lottery is valid.
Rulings:
In the resolution of the case, the Court held that:
1. Petitioners do not have a legal standing to sue.
STARE DECISIS cannot apply. The previous ruling sustaining the standing of the petitioners is a
departure from the settled rulings on real parties in interest because no constitutional issues were actually
involved.
LAW OF THE CASE cannot also apply. Since the present case is not the same one litigated by
theparties before in Kilosbayan vs. Guingona, Jr., the ruling cannot be in any sense be regarded as the
law of this case. The parties are the same but the cases are not.
RULE ON CONCLUSIVENESS cannot still apply. An issue actually and directly passed upon and
determine in a former suit cannot again be drawn in question in any future action between the same
parties involving a different cause of action. But the rule does not apply to issues of law at least when
substantially unrelated claims are involved. When the second proceeding involves an instrument or
transaction identical with, but in a form separable from the one dealt with in the first proceeding, the Court
is free in the second proceeding to make an independent examination of the legal matters at issue. Since
ELA is a different contract, the previous decision does not preclude determination of the petitioner's
standing.
STANDING is a concept in constitutional law and here no constitutional question is actually
involved. The more appropriate issue is whether the petitioners are REAL PARTIES in INTEREST.
The difference between the rule on standing and real party-in-interest has been noted by
authorities thus: "It is important to note . . . that standing because of its constitutional and public policy
underpinnings, is very different from questions relating to whether a particular plaintiff is the real party-ininterest or has capacity to sue. Although all three requirements are directed towards ensuring that only
certain parties can maintain an action, standing restrictions require a partial consideration of the merits,
as well as broader policy concerns relating to the proper role of the judiciary in certain areas.
Standing is a special concern in constitutional law because in some cases suits are brought not
by parties who, have been personally injured by the operation of a law or by official action taken, but by
concerned citizens, taxpayers or voters who actually sue in the public interest. Hence the question in
standing is whether such parties have "alleged such a personal stake in the outcome of the controversy
as to assure that concrete adverseness which sharpens the presentation of issues upon which the court
so largely depends for illumination of difficult constitutional questions." On the other hand, the question as
to "real party-in-interest" is whether he is "the party who would be benefitted or injured by the judgment,
or the ‘party entitled to the avails of the suit."
2. Equipment Lease Agreement (ELA) is valid.
It is different with the prior lease agreement: PCSO now bears all losses because the operation of the
system is completely in its hands.
Fixing the rental rate to a minimum is a matter of business judgment and the Court is not inclined to
review.
Rental rate is within the 15% net receipts fixed by law as a maximum. (4.3% of gross receipt is discussed
in the dissenting opinion of Feliciano, J.)
In the contract, it stated that the parties can change their agreement. Petitioners state that this would
allow PGMC to control and operate the on-line lottery system. The Court held that the claim is
speculative. In any case, in the construction of statutes, the resumption is that in making contracts, the
government has acted in good faith. The doctrine that the possibility of abuse is not a reason for denying
power.
It was held in Kilosbayan Vs. Guingona that PCSO does not have the power to enter into any contract
which would involve it in any form of “collaboration, association, or joint venture” for the holding of
sweepstakes activities. This only mentions that PCSO is prohibited from investing in any activities that
would compete in their own activities.
It is claimed that ELA is a joint venture agreement which does not compete with their own activities. The
Court held that is also based on speculation. Evidence is needed to show that the transfer of technology
would involve the PCSO and its personnel in prohibited association with the PGMC.
O. 301 (on law of public bidding) applies only to contracts for the purchase of supplies, materials and
equipment and not on the contracts of lease. Public bidding for leases are only for privately-owned
buildings or spaces for government use or of government owned buildings or spaces for private use.
Petitioners have no standing. ELA is a valid lease contract. The motion for reconsideration of petitioners is DENIED with
finality.
Kilosbayan v. Morato (Recon.), GR 118910, Nov. 16, 1995
FACTS:
In Jan. 25, 1995, PCSO and PGMC signed an Equipment Lease Agreement (ELA) wherein PGMC leased online
lottery equipment and accessories to PCSO. (Rental of 4.3% of the gross amount of ticket or at least P35,000 per terminal
annually). 30% of the net receipts is allotted to charity. Term of lease is for 8 years. PCSO is to employ its own personnel
and responsible for the facilities. Upon the expiration of lease, PCSO may purchase the equipment for P25 million. Feb.
21, 1995. A petition was filed to declare ELA invalid because it is the same as the Contract of Lease Petitioner's
Contention: ELA was same to the Contract of Lease.
It is still violative of PCSO's charter. It is violative of the law regarding public bidding. It violates Sec. 2(2) of Art. 9D of the 1987 Constitution. Standing can no longer be questioned because it has become the law of the case
Respondent's reply: ELA is different from the Contract of Lease. There is no bidding required. The power to determine if
ELA is advantageous is vested in the Board of Directors of PCSO. PCSO does not have funds. Petitioners seek to further
their moral crusade. Petitioners do not have a legal standing because they were not parties to the contract
ISSUES:
Whether or not the petitioners have standing?
HELD:NO.
It is noteworthy that petitioners do not question the validity of the law allowing lotteries. It is the contract entered into
by the PCSO and the PGMC which they are assailing. This case, therefore, does not raise issues of constitutionality but
only of contract law, which petitioners, not being privies to the agreement, cannot raise.
Nor does Kilosbayan's status as a people's organization give it the requisite personality to question the validity of the
contract in this case. The Constitution provides that "the State shall respect the role of independent people's organizations
to enable the people to pursue and protect, within the democratic framework, their legitimate and collective interests and
aspirations through peaceful and lawful means," that their right to "effective and reasonable participation at all levels of
social, political, and economic decision-making shall not be abridged." (Art. XIII, §§ 15-16)
These provisions have not changed the traditional rule that only real parties in interest or those with standing, as the
case may be, may invoke the judicial power. The jurisdiction of this Court, even in cases involving constitutional
questions, is limited by the "case and controversy" requirement of Art. VIII, §5. This requirement lies at the very heart of
the judicial function. It is what differentiates decision-making in the courts from decision-making in the political
departments of the government and bars the bringing of suits by just any party.
Petitioners quote extensively from the speech of Commissioner Garcia before the Constitutional Commission,
explaining the provisions on independent people's organizations. There is nothing in the speech, however, which supports
their claim of standing. On the contrary, the speech points the way to the legislative and executive branches of the
government, rather than to the courts, as the appropriate fora for the advocacy of petitioners' views.2 Indeed, the
provisions on independent people's organizations may most usefully be read in connection with the provision on initiative
and referendum as a means whereby the people may propose or enact laws or reject any of those passed by Congress.
For the fact is that petitioners' opposition to the contract in question is nothing more than an opposition to the government
policy on lotteries.
It is nevertheless insisted that this Court has in the past accorded standing to taxpayers and concerned citizens in
cases involving "paramount public interest." Taxpayers, voters, concerned citizens and legislators have indeed been
allowed to sue but then only (1) in cases involving constitutional issues and (2) under certain conditions. Petitioners do not
meet these requirements on standing.
Standing of members of Congress
- Philconsa v. Enriquez, 235 SCRA 506, GR No. 113105
FACTS:
When the General Appropriation Bill of 1994 (GAB of 1994), was passed and approved by both houses of
Congress,it imposed conditions and limitations on certain items of appropriations in the proposed budget previously
submitted by the President. It also authorized members of Congress to propose and identify projects in the "pork barrels"
allotted to them and to realign their respective operating budgets.
Then, the President signed the bill into law, making it as Republic Act No. 7663, entitled "AN ACT
APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE PHILIPPINES FROM JANUARY
ONE TO DECEMBER THIRTY ONE, NINETEEN HUNDRED AND NINETY-FOUR, AND FOR OTHER PURPOSES"
(GAA of 1994). On the same day, the President delivered his Presidential Veto Message, specifying the provisions of the
bill he vetoed and on which he imposed certain conditions.
Petitioners contest the constitutionality of (1) the veto on four special provisions added to items in the GAA of
1994 for the AFP and DPWH; and (2) the conditions imposed by the President in the implementation of certain
appropriations for the CAFGU’s, DPWH, and National Highway Authority.
ISSUE:
Whether or not the Congress have the legal standing to question the validity of acts of the Executive.
HELD:
The Court held that the members of Congress have the legal standing to question the validity of acts of the
Executive which injures them in their person or the institution of Congress to which they belong. In the latter case, the acts
cause derivative but nonetheless substantial injury which can be questioned by members of Congress. In the absence of
a claim that the contract in question violated the rights of petitioners or impermissibly intruded into the domain of the
Legislature, petitioners have no legal standing to institute the instant action in their capacity as members of Congress.
Bagatsing v. Committee on Privatization, GR 112399, July 14, 1995
Facts.
Pursuant to the government’s privatization program launched by the Aquino administration, Pres. Ramos
approved the privatization of PETRON. There were three interested offerors to the bidding: Petroliam Nasional Berhad
(PETRONAS), ARAMCO and WESTMONT.
The PNOC Board of Directors rejected the bid of WESTMONT for not having met the pre-qualification criteria
before even opening the bids. PETRONAS was also later disqualified for submitting a bid below the floor price. ARAMCO
qualified and submitted a bid above floor price. They were thus declared the winning bidder.
Petitioners now claim there is a failure in bidding in view of Circular No. 89-296 of the Commission on Audit
(COA) which provides that “there is failure of bidding" when: (1) there is only one offeror; or (2) when all the offers are
non-complying or unacceptable”
Issue.
Was there a failure in the bidding process for having only one offeror?
Held.
No. In the instant the case, there were 3 offerors. While two offerors were disqualified, not all the offerors were
disqualified. To constitute a failed bidding under the COA Circular, all the offerors must be disqualified. Petitioners urge
that in effect there was only one bidder and that it cannot be said that there was a competition on “an equal footing.” But
the COA Circular does not speak of accepted bids but of offerors, without distinction as to whether they were disqualified.
The COA itself, the agency that adopted the rules on bidding procedure to be followed by government offices and
corporations, had upheld the validity and legality of the questioned bidding. The interpretation of an agency of its own
rules should be given more weight than the interpretation by that agency of the law it is merely tasked to administer.
Standing of Integrated Bar of the Philippines
- IBP v. Zamora, G.R. No. 141284, August 15, 2000
FACTS:
President Joseph Estrada ordered the deployment of the Philippine Marines to join the Philippine National Police
(PNP) in visibility patrols around Metro Manila to stem the tide of rising violence and crime. In response to such order, the
PNP through Police Chief Superintendent Edgar B. Aglipay issued Letter of Intent (LOI) dated 02/2000 which detailed the
joint visibility patrols called Task Force Tulungan. This was confirmed by a memorandum Pres. Estrada issued dated 24
January 2000.
On January 17, 2000, the IBP filed a petition to annul LOI 02/2000 arguing that the deployment of the Marines is
unconstitutional and is an incursion by the military on the civilian functions of government as embodied in Article II, Sec. 3
and Art. XVI, Sec. 5(4) of the 1987 Constitution.
ISSUE:
(1) Does the IBP have legal standing in the case at bar?
(2) Is the president’s factual determination of the necessity of calling the armed forces subject to judicial review?
(3) Is the calling of the armed forces to assist the PNP in joint visibility patrols violate constitutional provisions on
civilian supremacy over the military and the civilian character of the PNP?
RULING:
In the first issue, the IBP has failed to provide the requisites for legal standing in the case at bar in that it has
failed to conclusively prove that such deployment would harm the IBP in any way. It’s contention that it is fighting to
uphold the rule of law and the constitution is insufficient, too general and too vague.
As to the second issue, the Court disagrees with the contention of the Solicitor-General that the president’s act is
a political question beyond the authority of the Court to review when the grant of power is qualified or subject to
limitations, the issue becomes whether the prescribed qualifications have been met, then it becomes a question of legality
and not wisdom, so is not a political question. It is then subject to the Court’s review power.
As to the third issue, the Marines only assist the PNP, the LOI itself provides for this. In fact, the PNP Chief is the
leader of such patrols and in no way places the over-all authority in the Marines.
Standing of the Government to question its own laws
- People v. Vera, 65 Phil. 56, GR No. L-45685, November 16 1937
FACTS:
Petitioners, People of the Philippines and HSBC are respectively the plaintiff and the offended party, and Mariano
Cu Unjieng is one of the defendants, in the criminal case. Hon. Jose O. Vera, is the Judge ad interim who heard the
application of Cu Unjieng for probation. HSBC intervened in the case as private prosecutor.
After a protracted trial, the CFI rendered a judgment of conviction sentencing Cu Unjieng to indeterminate penalty
, and to pay the costs and with reservation of civil action to the offended party, HSBC.
On appeal, the CA modified the sentence to an indeterminate penalty but affirmed the judgment in all other
respects. Cu Unjieng filed a MR and four successive motions for new trial which were denied, and final judgment was
accordingly entered.
Cu Unjieng thereupon sought to have the case elevated on certiorari to the SC of the US but the latter denied the
petition for certiorari. The Supreme Court denied the petition subsequently filed by Cu Unjieng for leave to file a second
alternative motion for reconsideration or new trial and thereafter remanded the case to the court of origin for execution of
the judgment.
ISSUE:
Whether or not the People of the Philippines is a proper party in this case.
HELD:
YES. The People of the Philippines, represented by the Solicitor General and the Fiscal of the City of Manila, is a
proper party in the present proceedings. The unchallenged rule is that the person who impugns the validity of a statute
must have a personal and substantial interest in the case such that he has sustained, or will sustained, direct injury as a
result of its enforcement.
It goes without saying that if Act No. 4221 really violates the constitution, the People of the Philippines, in whose
name the present action is brought, has a substantial interest in having it set aside. Of greater import than the damage
caused by the illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the
enforcement of an invalid statute. Hence, the well-settled rule that the state can challenge the validity of its own laws.
Taxpayer’s Suits
- Bayan v. Zamora, G.R. No. 138570, October 10, 2000
Facts:
The Philippines and the US forged a Military Bases Agreement which formalized, among others, the use of
installations in the Philippine territory by United States military personnel. In view of the impending expiration of the RPUS Military Bases Agreement in 1991, the Philippines and the United States negotiated for a possible extension of the
military bases agreement.
The Philippine Senate rejected the proposed RP-US Treaty of Friendship, Cooperation and Security which, in
effect, would have extended the presence of US military bases in the Philippines.
The United States panel, headed by US Defense Deputy Assistant Secretary for Asia Pacific Kurt Campbell, met
with the Philippine panel, headed by Foreign Affairs Undersecretary Rodolfo Severino Jr., to exchange notes on “the
complementing strategic interests of the United States and the Philippines in the Asia-Pacific region.” Both sides
discussed, among other things, the possible elements of the Visiting Forces Agreement (VFA for brevity).
Thereafter, then President Fidel V. Ramos approved the VFA, which was respectively signed by public
respondent Secretary Siazon and Unites States Ambassador Thomas Hubbard. On October 5, 1998, President Joseph E.
Estrada, through respondent Secretary of Foreign Affairs, ratified the VFA.
Then, the President, acting through respondent Executive Secretary Ronaldo Zamora, officially transmitted to the
Senate of the Philippines, the Instrument of Ratification, the letter of the President and the VFA, for concurrence pursuant
to Section 21, Article VII of the 1987 Constitution
Issues (justiciable controversy):
(1) Whether or not petitioners have legal standing as concerned citizens, taxpayers, or legislators to question the
constitutionality of the VFA;
(2) whether the VFA is governed by the provisions of Section 21, Article VII or of Section 25, Article XVIII of the
Constitution;
(3) and whether or not the Supreme Court has jurisdiction.
Ruling:
(1) No. Petitioners failed to show that they have sustained, or are in danger of sustaining any direct injury as a
result of the enforcement of the VFA. As taxpayers, petitioners have not established that the VFA involves the exercise by
Congress of its taxing or spending powers. On this point, it bears stressing that a taxpayer’s suit refers to a case where
the act complained of directly involves the illegal disbursement of public funds derived from taxation.
(2) Yes.The fact that the President referred the VFA to the Senate under Section 21, Article VII, and that the
Senate extended its concurrence under the same provision, is immaterial. For in either case, whether under Section 21,
Article VII or Section 25, Article XVIII, the fundamental law is crystalline that the concurrence of the Senate is mandatory
to comply with the strict constitutional requirements.
(3) No. In fine, absent any clear showing of grave abuse of discretion on the part of respondents, the Court as the
final arbiter of legal controversies and staunch sentinel of the rights of the people is then without power to conduct an
incursion and meddle with such affairs purely executive and legislative in character and nature. For the Constitution no
less, maps out the distinct boundaries and limits the metes and bounds within which each of the three political branches of
government may exercise the powers exclusively and essentially conferred to it by law.
- Gonzales v. Narvasa, G.R. No. 140835, August 14, 2000
FACTS:
Petitioner Ramon A. Gonzales, in his capacity as a citizen and taxpayer, filed a petition for prohibition and
mandamus filed on December 9, 1999, assailing the constitutionality of the creation of the Preparatory Commission on
Constitutional Reform (PCCR) and of the positions of presidential consultants, advisers and assistants.
The Preparatory Commission on Constitutional Reform (PCCR) was created by President Estrada on November
26, 1998 by virtue of Executive Order No. 43 (E.O. No. 43) in order “to study and recommend proposed amendments
and/or revisions to the 1987 Constitution, and the manner of implementing the same.” Petitioner disputes the
constitutionality of the PCCR based on the grounds that it is a public office which only the legislature can create by way of
a law.
ISSUE:
Whether or not the petitioner has a legal standing to assail the constitutionality of Executive Order No. 43
HELD:
The Court dismissed the petition. A citizen acquires standing only if he can establish that he has 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. Petitioner has not shown that he has
sustained or is in danger of sustaining any personal injury attributable to the creation of the PCCR. If at all, it is only
Congress, not petitioner, which can claim any “injury” in this case since, according to petitioner, the President has
encroached upon the legislature’s powers to create a public office and to propose amendments to the Charter by forming
the PCCR. Petitioner has sustained no direct, or even any indirect, injury.
Neither does he claim that his rights or privileges have been or are in danger of being violated, nor that he shall
be subjected to any penalties or burdens as a result of the PCCR’s activities. Clearly, petitioner has failed to establish his
locus standi so as to enable him to seek judicial redress as a citizen.
Furthermore, a taxpayer is deemed to have the standing to raise a constitutional issue when it is established that
public funds have been disbursed in alleged contravention of the law or the Constitution. It is readily apparent that there is
no exercise by Congress of its taxing or spending power. The PCCR was created by the President by virtue of E.O. No.
43, as amended by E.O. No. 70. Under section 7 of E.O. No. 43, the amount of P3 million is “appropriated” for its
operational expenses “to be sourced from the funds of the Office of the President.” Being that case, petitioner must show
that he is a real party in interest - that he will stand to be benefited or injured by the judgment or that he will be entitled to
the avails of the suit. Nowhere in his pleadings does petitioner presume to make such a representation.
3. Question must be raised at the earliest possible opportunity
4. Constitutional question must the very "lis mota" of the case
Doctrine of Purposeful Hesitation
- Drilon v. Lim, GR 112497, Aug. 4, 1994
Facts:
The principal issue in this case is the constitutionality of Section 187 of the Local Government Code1. The
Secretary of Justice (on appeal to him of four oil companies and a taxpayer) declared Ordinance No. 7794 (Manila
Revenue Code) null and void for non-compliance with the procedure in the enactment of tax ordinances and for containing
certain provisions contrary to law and public policy.
The RTC revoked the Secretary’s resolution and sustained the ordinance. It declared Sec 187 of the LGC as
unconstitutional because it vests on the Secretary the power of control over LGUs in violation of the policy of local
autonomy mandated in the Constitution. The Secretary argues that the annulled Section 187 is constitutional and that the
procedural requirements for the enactment of tax ordinances as specified in the Local Government Code had indeed not
been observed. (Petition originally dismissed by the Court due to failure to submit certified true copy of the decision, but
reinstated it anyway.)
Issue:
1. WON the lower court has jurisdiction to consider the constitutionality of Sec 187 of the LGC
2. WON Section 187 of the LGC is unconstitutional
Held:
1. Yes. BP 129 vests in the regional trial courts jurisdiction over all civil cases in which the subject of the
litigation is incapable of pecuniary estimation. Moreover, Article X, Section 5(2), of the Constitution vests in
the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which
the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree,
proclamation, order, instruction, ordinance, or regulation is in question.
In the exercise of this jurisdiction, lower courts are advised to act with the utmost circumspection, bearing in mind
the consequences of a declaration of unconstitutionality upon the stability of laws, no less than on the doctrine of
separation of powers. It is also emphasized that every court, including this Court, is charged with the duty of a purposeful
hesitation before declaring a law unconstitutional, on the theory that the measure was first carefully studied by the
executive and the legislative departments and determined by them to be in accordance with the fundamental law before it
was finally approved. To doubt is to sustain. The presumption of constitutionality can be overcome only by the clearest
showing that there was indeed an infraction of the Constitution.
2. Yes. Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax
ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or modifies or sets
aside a tax ordinance, he is not also permitted to substitute his own judgment for the judgment of the local
government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did
not replace it with his own version of what the Code should be.. What he found only was that it was illegal. All
he did in reviewing the said measure was determine if the petitioners were performing their functions in
accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and the grant
of powers to the city government under the Local Government Code. As we see it, that was an act not of
control but of mere supervision.
An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion,
order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover
such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay
down such rules, nor does he have the discretion to modify or replace them.
Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act. That section allowed the
Secretary of Finance to suspend the effectivity of a tax ordinance if, in his opinion, the tax or fee levied was unjust,
excessive, oppressive or confiscatory. Determination of these flaws would involve the exercise of judgment or discretion
and not merely an examination of whether or not the requirements or limitations of the law had been observed; hence, it
would smack of control rather than mere supervision. That power was never questioned before this Court but, at any rate,
the Secretary of Justice is not given the same latitude under Section 187. All he is permitted to do is ascertain the
constitutionality or legality of the tax measure, without the right to declare that, in his opinion, it is unjust, excessive,
oppressive or confiscatory. He has no discretion on this matter. In fact, Secretary Drilon set aside the Manila Revenue
Code only on two grounds, to with, the inclusion therein of certain ultra vires provisions and non-compliance with the
prescribed procedure in its enactment. These grounds affected the legality, not the wisdom or reasonableness, of the tax
measure.
The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code is
another matter. (allegations: No written notices of public hearing, no publication of the ordinance, no minutes of public
hearing, no posting, no translation into Tagalog)
Judge Palattao however found that all the procedural requirements had been observed in the enactment of the
Manila Revenue Code and that the City of Manila had not been able to prove such compliance before the Secretary only
because he had given it only five days within which to gather and present to him all the evidence (consisting of 25
exhibits) later submitted to the trial court. We agree with the trial court that the procedural requirements have indeed been
observed. Notices of the public hearings were sent to interested parties as evidenced. The minutes of the hearings are
found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the proposed ordinances were published in the Balita
and the Manila Standard on April 21 and 25, 1993, respectively, and the approved ordinance was published in the July 3,
4, 5, 1993 issues of the Manila Standard and in the July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q3.
The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity,
considering that its publication in three successive issues of a newspaper of general circulation will satisfy due process. It
has also not been shown that the text of the ordinance has been translated and disseminated, but this requirement
applies to the approval of local development plans and public investment programs of the local government unit and not to
tax ordinances.
Functions of Judicial Review
Effects of Declaration of Unconstitutionality
Doctrine of Operative Fact
- Republic v. CA, GR 79732, Nov. 8, 1993
FACTS:
The Republic of the Philippines has sought the expropriation of certain portions of land owned by the private
respondents for the widening and concreting of the Nabua-Bato-Agos Section, Philippine-Japan Highway Loan (PJHL)
road. While the right of the Republic is not now disputed, the private respondents, however, demand that the just
compensation for the property should be based on fair market value and not that set by Presidential Decree No. 76, as
amended, which fixes payment on the basis of the assessment by the assessor or the declared valuation by the owner,
whichever is lower. The Regional Trial Court ruled in favor to the private respondents and subsequently affirmed by the
Court of Appeals.
In Export Processing Zone Authority ("EPZA") vs. Dulay, etc. et al., this Court held the determination of just
compensation in eminent domain to be a judicial function and it thereby declared Presidential Decree No. 76, as well as
related decrees, including Presidential Decree No. 1533, to the contrary extent, as unconstitutional and as an
impermissible encroachment of judicial prerogatives. The ruling, now conceded by the Republic was reiterated in
subsequent cases.
ISSUE:
Whether or not the declaration of nullity of the law in question should have prospective, not retroactive,
application.
HELD:
The strict view considers a legislative enactment which is declared unconstitutional as being, for all legal intents
and purposes, a total nullity, and it is deemed as if had never existed. Here, of course, we refer to the law itself being per
se repugnant to the Constitution. It is not always the case, however, that a law is constitutionally faulty per se. Thus, it
may well be valid in its general import. but invalid in its application to certain factual situations. To exemplify, an otherwise
valid law may be held unconstitutional only insofar as it is allowed to operate retrospectively such as, in pertinent cases,
when it vitiates contractually vested rights. To that extent, its retroactive application may be so declared invalid as
impairing the obligations of contracts.
A judicial declaration of invalidity, it is also true, may not necessarily obliterate all the effects and consequences of
a void act occurring prior to such a declaration. Thus, in our decisions on the moratorium laws, we have been constrained
to recognize the interim effects of said laws prior to their declaration of unconstitutionality, but there we have likewise
been unable to simply ignore strong considerations of equity and fair play. So also, even as a practical matter, a situation
that may aptly be described as fait accompli may no longer be open for further inquiry, let alone to be unsettled by a
subsequent declaration of nullity of a governing statute.
Doctrine of Operative Fact - as an exception to the general rule (an unconstitutional law is void), only applies as a
matter of equity and fair play.
CIR vs. San Roque Power, G.R. No. 187485, October 8, 2013
(NO CASE DIGEST FOUND)
FACTS:
This Resolution resolves the Motion for Reconsideration and the Supplemental Motion for Reconsideration filed
by San Roque Power Corporation (San Roque) in G.R. No. 187485, the Comment to the Motion for Reconsideration filed
by the Commissioner of Internal Revenue (CIR) in G.R. No. 187485, the Motion for Reconsideration filed by the CIR in
G.R. No. 196113, and the Comment to the Motion for Reconsideration filed by Taganito Mining Corporation (Taganito) in
G.R. No. 196113.
San Roque prays that the rule established in our 12 February 2013 Decision be given only a prospective effect,
arguing that "the manner by which the Bureau of Internal Revenue (BIR) and the Court of Tax Appeals (CTA) actually
treated the 120 + 30 day periods constitutes an operative fact the effects and consequences of which cannot be erased or
undone."[1]
The CIR, on the other hand, asserts that Taganito Mining Corporation's (Taganito) judicial claim for tax credit or
refund was prematurely filed before the CTA and should be disallowed because BIR Ruling No. DA-489-03 was issued by
a Deputy Commissioner, not by the Commissioner of Internal Revenue.
We deny both motions.
RULING:
The Doctrine of Operative Fact
The general rule is that a void law or administrative act cannot be the source of legal rights or duties. Article 7 of
the Civil Code enunciates this general rule, as well as its exception: "Laws are repealed only by subsequent ones, and
their violation or non-observance shall not be excused by disuse, or custom or practice to the contrary. When the courts
declared a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative
or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution."
The doctrine of operative fact is an exception to the general rule, such that a judicial declaration of invalidity may
not necessarily obliterate all the effects and consequences of a void act prior to such declaration
Clearly, for the operative fact doctrine to apply, there must be a "legislative or executive measure," meaning a law
or executive issuance, that is invalidated by the court. From the passage of such law or promulgation of such executive
issuance until its invalidation by the court, the effects of the law or executive issuance, when relied upon by the public in
good faith, may have to be recognized as valid. In the present case, however, there is no such law or executive issuance
that has been invalidated by the Court except BIR Ruling No. DA-489-03.
To justify the application of the doctrine of operative fact as an exemption, San Roque asserts that "the BIR and
the CTA in actual practice did not observe and did not require refund seekers to comply with the 120+30 day periods."[4]
This is glaring error because an administrative practice is neither a law nor an executive issuance. Moreover, in the
present case, there is even no such administrative practice by the BIR as claimed by San Roque.
We reiterate our pronouncements in our Decision as follows:
At the time San Roque filed its petition for review with the CTA, the 120+30 day mandatory periods were already in the
law. Section 112(C) expressly grants the Commissioner 120 days within which to decide the taxpayer's claim. The law is
clear, plain, and unequivocal: "x x x the Commissioner shall grant a refund or issue the tax credit certificate for creditable
input taxes within one hundred twenty (120) days from the date of submission of complete documents." Following the
verba legis doctrine, this law must be applied exactly as worded since it is clear, plain, and unequivocal. The taxpayer
cannot simply file a petition with the CTA without waiting for the Commissioner's decision within the 120-day mandatory
and jurisdictional period. The CTA will have no jurisdiction because there will be no "decision" or "deemed a denial"
decision of the Commissioner for the CTA to review. In San Roque's case, it filed its petition with the CTA a mere 13 days
after it filed its administrative claim with the Commissioner. Indisputably, San Roque knowingly violated the mandatory
120-day period, and it cannot blame anyone but itself.
San Roque's argument must, therefore, fail. The doctrine of operative fact is an argument for the application of
equity and fair play. In the present case, we applied the doctrine of operative fact when we recognized simultaneous filing
during the period between 10 December 2003, when BIR Ruling No. DA-489-03 was issued, and 6 October 2010, when
this Court promulgated Aichi declaring the 120+30 day periods mandatory and jurisdictional, thus reversing BIR Ruling
No. DA-489-03.
The doctrine of operative fact is in fact incorporated in Section 246 of the Tax Code, which provides:
SEC. 246. Non-Retroactivity of Rulings. - Any revocation, modification or reversal of any of the rules and
regulations promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by the
Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to the
taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or any document required of him
by the Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on
which the ruling is based; or
(c) Where the taxpayer acted in bad faith. (Emphasis supplied)
Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the rule or
ruling is issued up to its reversal by the Commissioner or this Court. The reversal is not given retroactive effect. This, in
essence, is the doctrine of operative fact. There must, however, be a rule or ruling issued by the Commissioner that is
relied upon by the taxpayer in good faith. A mere administrative practice, not formalized into a rule or ruling, will not suffice
because such a mere administrative practice may not be uniformly and consistently applied. An administrative practice, if
not formalized as a rule or ruling, will not be known to the general public and can be availed of only by those with informal
contacts with the government agency.
Since the law has already prescribed in Section 246 of the Tax Code how the doctrine of operative fact should be
applied, there can be no invocation of the doctrine of operative fact other than what the law has specifically provided in
Section 246. In the present case, the rule or ruling subject of the operative fact doctrine is BIR Ruling No. DA-489-03
dated 10 December 2003. Prior to this date, there is no such rule or ruling calling for the application of the operative fact
doctrine in Section 246. Section 246, being an exemption to statutory taxation, must be applied strictly against the
taxpayer claiming such exemption.
V. CONCEPT OF STATE
Elements of the State
1. People
2. Territory
Philippine Archipelago
Archipelago Doctrine
UN Convention on the Law of the Sea
The Baselines Law
R.A 3046
R.A. 5446
R.A. 9522
Magallona v. Ermita, August 16, 2011
Facts:
In 1961, Congress passed R.A. 3046 demarcating the maritime baselines of the Philippines as an Archepelagic
State pursuant to UNCLOS I of 9158, codifying the sovereignty of State parties over their territorial sea. Then in 1968, it
was amended by R.A. 5446, correcting some errors in R.A. 3046 reserving the drawing of baselines around Sabah.
In 2009, it was again amended by R.A. 9522, to be compliant with the UNCLOS III of 1984. The requirements
complied with are: to shorten one baseline, to optimize the location of some base points and classify KIG and
Scarborough Shoal as ‘regime of islands’.
Petitioner now assails the constitutionality of the law for three main reasons:
1. it reduces the Philippine maritime territory under Article 1;
2. it opens the country’s waters to innocent and sea lanes passages hence undermining our sovereignty and
security; and
3. treating KIG and Scarborough as ‘regime of islands’ would weaken our claim over those territories.
Issue:
Whether R.A. 9522 is constitutional?
Ruling:
1. UNCLOS III has nothing to do with acquisition or loss of territory. it is just a codified norm that regulates
conduct of States. On the other hand, RA 9522 is a baseline law to mark out basepoints along coasts, serving as
geographic starting points to measure. it merely notices the international community of the scope of our maritime space.
2. If passages is the issue, domestically, the legislature can enact legislation designating routes within the
archipelagic waters to regulate innocent and sea lanes passages. but in the absence of such, international law norms
operate.
the fact that for archipelagic states, their waters are subject to both passages does not place them in lesser footing vis a
vis continental coastal states. Moreover, RIOP is a customary international law, no modern state can invoke its
sovereignty to forbid such passage.
3. On the KIG issue, RA 9522 merely followed the basepoints mapped by RA 3046 and in fact, it increased the
Phils.’ total maritime space. Moreover, the itself commits the Phils.’ continues claim of sovereignty and jurisdiction over
KIG.
If not, it would be a breach to 2 provisions of the UNCLOS III:
Art. 47 (3): ‘drawing of basepoints shall not depart to any appreciable extent from the general configuration of the
archipelago’.
Art 47 (2): the length of baselines shall not exceed 100 mm.
KIG and SS are far from our baselines, if we draw to include them, we’ll breach the rules: that it should follow the
natural configuration of the archipelago.
REPUBLIC OF THE PHILIPPINES vs. PEOPLE’S REPUBLIC OF CHINA, July 12, 2016
FACTS:
When a dispute exists between two states concerning the interpretation or application of the 1982 United
Nations Convention on the Law of the Sea (UNCLOS), they have a number of dispute settling mechanisms at
their disposal. Apart from negotiations, or procedures established by general, regional, bilateral or other
agreements, Part XV of the UNCLOS itself provides for conciliation, and several compulsory procedures entailing
binding decisions. Among these compulsory procedures are judicial proceedings before the International Tribunal
for the Law of the Sea (ITLOS) or the International Court of Justice (ICJ); special arbitration, where the dispute
relates to provisions on fisheries, the marine environment, marine scientific research, or navigation; and
arbitration, governed by Annex VII of the UNCLOS.
After having exhausted political and diplomatic avenues for a peaceful negotiated settlement of its disputes
with China over entitlements in the West Philippine Sea, which came to a boil in 2012 with the Scarborough Shoal
standoff, the Republic of the Philippines initiated arbitration in January 2013. Arbitration was also seen as the
most efficacious means of ensuring that the Rule of Law is preserved across the South China Sea, particularly
since China’s highly likely non-participation in legal proceedings will not preclude an arbitral tribunal from ruling on
the merits of an issue.
The Case for the Philippines
The Philippines, in 15 specific submissions, sought rulings in respect of the following:
1.
Declarations that the Philippines’ and China’s respective rights and obligations in regard to the waters,
seabed, and maritime features of the South china Sea are governed by the UNCLOS; and that China’s
claims based on “historic rights” encompassed within its so-called “Nine-dash Line” are inconsistent with
the UNCLOS and therefore invalid;
2.
Determinations as to whether, under the UNCLOS, certain maritime features claimed by both states
are properly characterized as islands, rocks, low tide elevations, or submerged banks. The Philippines
claims in particular that Scarborough Shoal and eight of such features in the Spratlys are low -tide
elevations or submerged banks that merely generate a territorial sea (TS), not an exclusive economic
zone (EEZ) or continental shelf (CS);
3.
Declarations that China has violated the UNCLOS by interfering with the Philippines’ sovereign rights
and freedoms, through construction and fishing activities that have harmed the marine environment.
China’s Position Paper
China contested the Tribunal’s jurisdiction on the following grounds:
-
That the essence of the subject-matter of the arbitration is the territorial sovereignty over several
maritime features in the SCS, which is beyond the scope of the Convention, and does not concern the
interpretation or application of the Convention;
-
That the two countries have agreed, through bilateral instruments and the Declaration on the
Conduct of Parties in the SCS, to settle their relevant disputes through negotiations. Thus, the
Philippines’ resort to arbitration is a breach of its obligations under international law;
-
Even assuming, arguendo, that the subject-matter of the arbitration were concerned with the
interpretation or application of the Convention, that subject-matter would constitute an integral part of
maritime delimitation, which is covered by China’s 2006 declaration excluding maritime delimitation
from its acceptance of compulsory dispute settlement procedures under the UNCLOS
Award on Jurisdiction and Admissibility
The Tribunal found that the submissions of the Philippines did not per se involve disputes concerning
sovereignty or maritime boundary delimitation, which are among the issues that may be excluded by States from
the subject-matter jurisdiction of compulsory dispute settlement procedures entailing binding decision s under the
UNCLOS. However, this exclusion of the issue of sovereignty or maritime boundary delimitation is premised on the
Philippines’ position that the features claimed by China belong to the Philippines; are low-tide elevations or rocks
only that do not generate either a TS, EEZ, or a CS, or EEZ or a CS only; and that as such, in the case that
any/some/all of these features are found to belong to China, the maritime entitlements they will generate, if at all,
will not overlap with the Philippines’ own maritime entitlements.
The above reasoning will also determine whether China acted unlawfully with respect to the enjoyment of
the Philippines of its rights, and the obligation to protect and preserve the marine environment, within the disputed
areas. The Tribunal also acknowledged that other findings on the merits may preclude its jurisdiction, where fishing
and fisheries related law enforcement, and military activities, may be in issue. With respect to the Scarborough
Shoal, however, the Tribunal found that the exceptions under Article 297 and 298 cannot oust it of jurisdiction,
given that the activities complained of involve traditional fishing rights and other events occurring in the territorial
sea, a maritime area over which the said provisions have no application.
Finally, the Tribunal asked the Philippines to clarify the content and narrow the scope of its last submission,
requesting a declaration that “China shall desist from further unlawful claims and activities.”
RULING:
The Tribunal’s Decisions on the Merits of the Philippines’ Claim 12 July 2016
1. The ‘nine-dash line’ and China’s claim to historic rights in the maritime areas of the South China Sea
Whether China has historic rights to resources in the South China Sea beyond the limits of the maritime zones
that it is entitled to pursuant to the Convention

Based on the history of the Convention and its provisions concerning maritime zones, the Convention was
intended to comprehensively allocate the rights of States to maritime areas

The question of pre-existing rights to resources was considered during the negotiations on the creation of
exclusive economic zone and a number of States wished to preserve historic fishing rights in the new
zone: this position was rejected; the final text of the Convention gives other States only a limited right of
access to fisheries in the exclusive economic zone and no rights to petroleum or mineral resources

China’s claim to historic rights to resources was incompatible with the detailed allocation of rights and
maritime zones in the Convention: that China had historic rights to resources in South China Sea waters,
such rights were extinguished when the Convention entered into force to the extent that they were
incompatible with the Convention’s system of maritime zones
Whether China actually had historic rights to resources in the South China Sea prior to the entry into force of the
Convention
2.

Prior to the Convention, the waters of the South China Sea beyond the territorial sea were legally
considered part of the high seas where vessels from any State can fish and navigate

Historical navigation and fishing by China in the waters of the South China Sea were an exercise of high
sea freedoms rather than a historic right; there is no evidence that China had historically exercised
exclusive control over the waters of the South China Sea or prevented other States from exploiting their
resources

Between the Philippines and China, there was no legal basis for China to claim historic rights to
resources, in excess of the rights provided by the Convention, within the sea areas falling within the ‘ninedash line’
The status of features in the South China Sea
Whether certain coral reefs claimed by China are or are not above water at high tide

Articles 13 and 121: features that are above water at high tide generate an entitlement to at least a 12nautical mile territorial sea; features that are submerged at high tide generate no entitlement to maritime
zones

Many of the reefs in the South China Sea have been heavily modified by recent land reclamation and
construction; the Convention classifies features on the basis of their natural condition

Evaluation of features based on the assistance of an expert hydrographer and archival materials and
historical hydrographic surveys
o
Scarborough Shoal, Johnson Reef, Cuarteron Reef, and Fiery Cross Reef are high-tide features,
and
o
Subi Reef, Hughes Reef, Mischief Reef, and Second Thomas Shoal were submerged at high tide
in their natural condition
o
But Gaven Reef (North) and McKennan Reef are high-tide features
Whether any of the features claimed by China could generate an entitlement to maritime zones beyond 12 nautical
miles

Article 121 of the Convention: islands generate an entitlement to an exclusive economic zone of 200
nautical miles and to a continental shelf, but rocks which cannot sustain human habitation or economic life
of their own shall have no exclusive economic zone or continental shelf — closely linked to the expansion
of coastal State jurisdiction and intended to prevent insignificant features from generating large
entitlements to maritime zones that would infringe on entitlements of inhabited territory or on high seas
and the area of the seabed reserved for the common heritage of mankind

Entitlements of a feature depend on the a) objective capacity of a feature, b) its natural conditions to
sustain either c) a stable community of people or d) economic activity that is neither dependent on outside
resources nor purely extractive in nature

Even if many of the features are currently controlled by one or other of the littoral States, which have
constructed installations and maintained personnel there and have been modified to improve their
habitability (by land reclamation and construction of infrastructure), the current pre sence of official
personnel on many of the features does not establish their capacity, in their natural condition, to sustain a
stable community of people and considered that historical evidence of habitation or economic life was
more relevant to the objective capacity of the features

Temporary of use of features (as in by small groups of Chinese fishermen and from other states in the
Spratly Islands and Japanese fishing and guano mining enterprises) did not amount to inhabitation by a
stable community and that all historical economic activity had been extractive in nature

All high-tide features in the Spratly Islands are legally “rocks” that do not generate an exclusive economic
zone or continental shelf

3.
The Convention does not provide for a group of islands (such as the Spratly Islands) to generate maritime
zones collectively as a unit
Chinese activities in the South China Sea
Lawfulness of various Chinese actions in the South China Sea under the Convention

Because Mischief Reef, Second Thomas Shoal and Reed Bank are submerged at high tide and are not
overlapped by any possible entitlement of China, they from part of the exclusive economic zone and
continental shelf of the Philippines; the Convention is clear in allocating sovereign rights to the Philippines
with respect to sea areas in its exclusive economic zone

China had violated the Philippines’ sovereign rights with respect to its exclusive economic zone and
continental shelf: China had a) interfered with Philippine petroleum exploration at Reed Bank, b) purported
to prohibit fishing by Philippine vessels within the Philippines’ exclusive economic zone, c) protected and
failed to prevent Chinese fishermen from fishing within the Philippines’ exclusive economic zone at
Mischief Reef and Second Thomas Shoal, and d) constructed installations and artificial islands as
Mischief Reef without the authorization of the Philippines
Traditional fishing at Scarborough Shoal

Fishermen from both China and the Philippines and from other countries had long fished at the
Scarborough Shoal and had traditional fishing rights in the area

Scarborough Shoal is above water at high tide so it generates an entitlement to a territorial sea, its
surrounding waters do not form part of the exclusive economic zone, and traditional fishing rights were not
extinguished by the Convention

China had violated its duty to respect the traditional fishing rights of Philippine fishermen by halting access
to the Shoal after May 2012
Effect of China’s actions on the marine environment

Chinas’s large scale land reclamation and construction of artificial islands at seven features in the Spratly
Islands has caused severe harm to the coral reef environment

China violated its obligations under Articles 192 and 194 of the Convention to preserve and protect the
marine environment with respect to fragile ecosystems and the habitat of depleted, threatened, or
endangered species

Chinese fishermen were engaged in the harvesting of endangered sea turtles, corals and giant clams on a
substantial scale in the South China Sea using methods that inflicted severe damage on the coral reef
environment; Chinese authorities were aware of these and failed to fulfill their due diligence obligation
under the Convention to stop them
Lawfulness of conduct of Chinese law enforcement vessels at Scarborough Shoal in April and May 2012
(Chinese vessels sought to physically obstruct Philippine vessels from approaching or gaining entrance to the
Shoal)
4.

Assisted by an independent expert on navigational safety and expert evidence on navigational safety
provided by the Philippines

Chinese law enforcement vessels had repeatedly approached the Philippine vessels at high speed and to
cross ahead of them at close distances, creating serious risk of collision and danger to Philippine ships
and personnel

China breached its obligations under the Convention on the International Regulations for Preventing
Collisions at Sea (1972), and Article 94 of the Convention concerning maritime safety
Aggravation of the dispute between the parties
Whether China’s recent large-scale land reclamation and construction of artificial islands at seven features in the
Spratly Islands since the commencement of the arbitration had aggravated the dispute between the Parties

Parties engaged in a dispute settlement procedure have a duty to refrain from aggravating or
extending the dispute or disputes at issue during the pendency of the settlement process
5.

China has a) build a large artificial island on Mischief Reef which is within the exclusive economic zo ne
of the Philippines, b) caused permanent harm to the coral reef ecosystem, and c) permanently destroyed
evidence of the natural condition of the features in question

China violated its obligations to refrain from aggravating or extending the Parties’ disputes during
the pendency of the settlement process
Future conduct of the parties
Philippines request for declaration that China shall respect the rights and freedoms of the Philippines and comply
with its duties under the Convention

Both the Philippines and China have accepted the Convention and general obligations of good faith define
and regulate their conduct
The root of the disputes at issue in this arbitration lies not in any intention of any Party to infringe on the legal rights
of the other but in the fundamentally different understandings of their respective rights under the Convention in the
waters of the South China Sea.