Documentos de Académico
Documentos de Profesional
Documentos de Cultura
and granting the plaintiffs ". . . such other reliefs just and equitable under the
premises." 5
The complaint starts off with the general averments that the Philippine
archipelago of 7,100 islands has a land area of thirty million (30,000,000)
hectares and is endowed with rich, lush and verdant rainforests in which
varied, rare and unique species of flora and fauna may be found; these
rainforests contain a genetic, biological and chemical pool which is
irreplaceable; they are also the habitat of indigenous Philippine cultures which
have existed, endured and flourished since time immemorial; scientific
evidence reveals that in order to maintain a balanced and healthful ecology,
the country's land area should be utilized on the basis of a ratio of fifty-four
per cent (54%) for forest cover and forty-six per cent (46%) for agricultural,
residential, industrial, commercial and other uses; the distortion and
disturbance of this balance as a consequence of deforestation have resulted in
a host of environmental tragedies, such as (a) water shortages resulting from
drying up of the water table, otherwise known as the "aquifer," as well as of
rivers, brooks and streams, (b) salinization of the water table as a result of the
intrusion therein of salt water, incontrovertible examples of which may be
found in the island of Cebu and the Municipality of Bacoor, Cavite, (c) massive
erosion and the consequential loss of soil fertility and agricultural productivity,
with the volume of soil eroded estimated at one billion (1,000,000,000) cubic
meters per annum approximately the size of the entire island of
Catanduanes, (d) the endangering and extinction of the country's unique, rare
and varied flora and fauna, (e) the disturbance and dislocation of cultural
communities, including the disappearance of the Filipino's indigenous cultures,
(f) the siltation of rivers and seabeds and consequential destruction of corals
and other aquatic life leading to a critical reduction in marine resource
productivity, (g) recurrent spells of drought as is presently experienced by the
entire country, (h) increasing velocity of typhoon winds which result from the
absence of windbreakers, (i) the floodings of lowlands and agricultural plains
arising from the absence of the absorbent mechanism of forests, (j) the
siltation and shortening of the lifespan of multi-billion peso dams constructed
and operated for the purpose of supplying water for domestic uses, irrigation
and the generation of electric power, and (k) the reduction of the earth's
capacity to process carbon dioxide gases which has led to perplexing and
catastrophic climatic changes such as the phenomenon of global warming,
otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of
continued and deforestation are so capable of unquestionable demonstration
that the same may be submitted as a matter of judicial notice. This
notwithstanding, they expressed their intention to present expert witnesses as
well as documentary, photographic and film evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
On 14 May 1992, We resolved to give due course to the petition and required
the parties to submit their respective Memoranda after the Office of the
Solicitor General (OSG) filed a Comment in behalf of the respondents and the
petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause
of action as it contains sufficient allegations concerning their right to a sound
environment based on Articles 19, 20 and 21 of the Civil Code (Human
Relations), Section 4 of Executive Order (E.O.) No. 192 creating the DENR,
Section 3 of Presidential Decree (P.D.) No. 1151 (Philippine Environmental
Policy), Section 16, Article II of the 1987 Constitution recognizing the right of
the people to a balanced and healthful ecology, the concept of generational
genocide in Criminal Law and the concept of man's inalienable right to selfpreservation and self-perpetuation embodied in natural law. Petitioners
likewise rely on the respondent's correlative obligation per Section 4 of E.O.
No. 192, to safeguard the people's right to a healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave
abuse of discretion in granting Timber License Agreements (TLAs) to cover
more areas for logging than what is available involves a judicial question.
Anent the invocation by the respondent Judge of the Constitution's nonimpairment clause, petitioners maintain that the same does not apply in this
case because TLAs are not contracts. They likewise submit that even if TLAs
may be considered protected by the said clause, it is well settled that they
may still be revoked by the State when the public interest so requires.
On the other hand, the respondents aver that the petitioners failed to allege in
their complaint a specific legal right violated by the respondent Secretary for
which any relief is provided by law. They see nothing in the complaint but
vague and nebulous allegations concerning an "environmental right" which
supposedly entitles the petitioners to the "protection by the state in its
capacity as parens patriae." Such allegations, according to them, do not reveal
a valid cause of action. They then reiterate the theory that the question of
whether logging should be permitted in the country is a political question
which should be properly addressed to the executive or legislative branches of
Government. They therefore assert that the petitioners' resources is not to file
an action to court, but to lobby before Congress for the passage of a bill that
would ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the
same cannot be done by the State without due process of law. Once issued, a
TLA remains effective for a certain period of time usually for twenty-five
(25) years. During its effectivity, the same can neither be revised nor cancelled
unless the holder has been found, after due notice and hearing, to have
violated the terms of the agreement or other forestry laws and regulations.
Sec. 15. The State shall protect and promote the right to
health of the people and instill health consciousness among
them.
While the right to a balanced and healthful ecology is to be found under the
Declaration of Principles and State Policies and not under the Bill of Rights, it
does not follow that it is less important than any of the civil and political rights
enumerated in the latter. Such a right belongs to a different category of rights
altogether for it concerns nothing less than self-preservation and selfperpetuation aptly and fittingly stressed by the petitioners the
advancement of which may even be said to predate all governments and
constitutions. As a matter of fact, these basic rights need not even be written
in the Constitution for they are assumed to exist from the inception of
humankind. If they are now explicitly mentioned in the fundamental charter, it
is because of the well-founded fear of its framers that unless the rights to a
balanced and healthful ecology and to health are mandated as state policies by
the Constitution itself, thereby highlighting their continuing importance and
imposing upon the state a solemn obligation to preserve the first and protect
and advance the second, the day would not be too far when all else would be
lost not only for the present generation, but also for those to come
generations which stand to inherit nothing but parched earth incapable of
sustaining life.
The right to a balanced and healthful ecology carries with it the correlative
duty to refrain from impairing the environment. During the debates on this
right in one of the plenary sessions of the 1986 Constitutional Commission, the
following exchange transpired between Commissioner Wilfrido Villacorta and
Commissioner Adolfo Azcuna who sponsored the section in question:
MR. VILLACORTA:
Does this section mandate the State to
provide sanctions against all forms of
pollution air, water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful
(sic) environment necessarily carries with it
the correlative duty of not impairing the
same and, therefore, sanctions may be
provided for impairment of environmental
balance. 12
The said right implies, among many other things, the judicious management
and conservation of the country's forests.
(2) The State shall likewise recognize and apply a true value
system that takes into account social and environmental cost
implications relative to the utilization, development and
conservation of our natural resources.
The above provision stresses "the necessity of maintaining a sound ecological
balance and protecting and enhancing the quality of the environment." Section
2 of the same Title, on the other hand, specifically speaks of the mandate of
the DENR; however, it makes particular reference to the fact of the agency's
being subject to law and higher authority. Said section provides:
Sec. 2. Mandate. (1) The Department of Environment and
Natural Resources shall be primarily responsible for the
implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge
of carrying out the State's constitutional mandate to control
and supervise the exploration, development, utilization, and
conservation of the country's natural resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives
which will serve as the bases for policy formulation, and have defined the
powers and functions of the DENR.
It may, however, be recalled that even before the ratification of the 1987
Constitution, specific statutes already paid special attention to the
"environmental right" of the present and future generations. On 6 June 1977,
P.D. No. 1151 (Philippine Environmental Policy) and P.D. No. 1152 (Philippine
Environment Code) were issued. The former "declared a continuing policy of
the State (a) to create, develop, maintain and improve conditions under which
man and nature can thrive in productive and enjoyable harmony with each
other, (b) to fulfill the social, economic and other requirements of present and
future generations of Filipinos, and (c) to insure the attainment of an
environmental quality that is conducive to a life of dignity and well-being." 16
As its goal, it speaks of the "responsibilities of each generation as trustee and
guardian of the environment for succeeding generations." 17 The latter statute,
on the other hand, gave flesh to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced
and healthful ecology is as clear as the DENR's duty under its mandate and by
virtue of its powers and functions under E.O. No. 192 and the Administrative
Code of 1987 to protect and advance the said right.
A denial or violation of that right by the other who has the corelative duty or
obligation to respect or protect the same gives rise to a cause of action.
Petitioners maintain that the granting of the TLAs, which they claim was done
with grave abuse of discretion, violated their right to a balanced and healthful
ecology; hence, the full protection thereof requires that no further TLAs should
be renewed or granted.
A cause of action is defined as:
. . . an act or omission of one party in violation of the legal
right or rights of the other; and its essential elements are
legal right of the plaintiff, correlative obligation of the
defendant, and act or omission of the defendant in violation of
said legal right. 18
It is settled in this jurisdiction that in a motion to dismiss based on the ground
that the complaint fails to state a cause of action, 19 the question submitted to
the court for resolution involves the sufficiency of the facts alleged in the
complaint itself. No other matter should be considered; furthermore, the truth
of falsity of the said allegations is beside the point for the truth thereof is
deemed hypothetically admitted. The only issue to be resolved in such a case
is: admitting such alleged facts to be true, may the court render a valid
judgment in accordance with the prayer in the complaint? 20 In Militante vs.
Edrosolano, 21 this Court laid down the rule that the judiciary should "exercise
the utmost care and circumspection in passing upon a motion to dismiss on the
ground of the absence thereof [cause of action] lest, by its failure to manifest
a correct appreciation of the facts alleged and deemed hypothetically
admitted, what the law grants or recognizes is effectively nullified. If that
happens, there is a blot on the legal order. The law itself stands in disrepute."
After careful examination of the petitioners' complaint, We find the statements
under the introductory affirmative allegations, as well as the specific
averments under the sub-heading CAUSE OF ACTION, to be adequate enough to
show, prima facie, the claimed violation of their rights. On the basis thereof,
they may thus be granted, wholly or partly, the reliefs prayed for. It bears
stressing, however, that insofar as the cancellation of the TLAs is concerned,
there is the need to implead, as party defendants, the grantees thereof for
they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise a political
question. Policy formulation or determination by the executive or legislative
branches of Government is not squarely put in issue. What is principally
involved is the enforcement of a right vis-a-vis policies already formulated and
expressed in legislation. It must, nonetheless, be emphasized that the political
question doctrine is no longer, the insurmountable obstacle to the exercise of
judicial power or the impenetrable shield that protects executive and
legislative actions from judicial inquiry or review. The second paragraph of
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
We are not persuaded at all; on the contrary, We are amazed, if not shocked,
by such a sweeping pronouncement. In the first place, the respondent
Secretary did not, for obvious reasons, even invoke in his motion to dismiss the
non-impairment clause. If he had done so, he would have acted with utmost
infidelity to the Government by providing undue and unwarranted benefits and
advantages to the timber license holders because he would have forever bound
the Government to strictly respect the said licenses according to their terms
and conditions regardless of changes in policy and the demands of public
interest and welfare. He was aware that as correctly pointed out by the
petitioners, into every timber license must be read Section 20 of the Forestry
Reform Code (P.D. No. 705) which provides:
. . . Provided, That when the national interest so requires, the
President may amend, modify, replace or rescind any
contract, concession, permit, licenses or any other form of
privilege granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded by
executive action. It is not a contract, property or a property right
protested by the due process clause of the Constitution. In Tan vs.
Director of Forestry, 25 this Court held:
. . . A timber license is an instrument by which the State
regulates the utilization and disposition of forest resources to
the end that public welfare is promoted. A timber license is
not a contract within the purview of the due process clause; it
is only a license or privilege, which can be validly withdrawn
whenever dictated by public interest or public welfare as in
this case.
A license is merely a permit or privilege to do what otherwise
would be unlawful, and is not a contract between the
authority, federal, state, or municipal, granting it and the
person to whom it is granted; neither is it property or a
property right, nor does it create a vested right; nor is it
taxation (37 C.J. 168). Thus, this Court held that the granting
of license does not create irrevocable rights, neither is it
property or property rights (People vs. Ong Tin, 54 O.G. 7576).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy
Executive Secretary: 26
. . . Timber licenses, permits and license agreements are the
principal instruments by which the State regulates the
utilization and disposition of forest resources to the end that
public welfare is promoted. And it can hardly be gainsaid that
they merely evidence a privilege granted by the State to
The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted in
Philippine American Life Insurance Co. vs. Auditor General, 30 to wit:
Under our form of government the use of property and the
making of contracts are normally matters of private and not of
public concern. The general rule is that both shall be free of
governmental interference. But neither property rights nor
ROMERO, J.:
The clash between the responsibility of the City Government of Caloocan to
dispose off the 350 tons of garbage it collects daily and the growing concern
On October 16, 1992, Judge Manuel Jn. Serapio, after hearing the motion to
dismiss, issued in the consolidated cases an order 11 denying LLDA's motion to
dismiss and granting the issuance of a writ of preliminary injunction enjoining
the LLDA, its agent and all persons acting for and on its behalf, from enforcing
or implementing its cease and desist order which prevents plaintiff City of
Caloocan from dumping garbage at the Camarin dumpsite during the pendency
of this case and/or until further orders of the court.
On November 5, 1992, the LLDA filed a petition for certiorari, prohibition and
injunction with prayer for restraining order with the Supreme Court, docketed
as G.R. No. 107542, seeking to nullify the aforesaid order dated October 16,
1992 issued by the Regional Trial Court, Branch 127 of Caloocan City denying its
motion to dismiss.
The Court, acting on the petition, issued a Resolution 12 on November 10, 1992
referring the case to the Court of Appeals for proper disposition and at the
same time, without giving due course to the petition, required the respondents
to comment on the petition and file the same with the Court of Appeals within
ten (10) days from notice. In the meantime, the Court issued a temporary
restraining order, effective immediately and continuing until further orders
from it, ordering the respondents: (1) Judge Manuel Jn. Serapio, Presiding
Judge, Regional Trial Court, Branch 127, Caloocan City to cease and desist from
exercising jurisdiction over the case for declaration of nullity of the cease and
desist order issued by the Laguna Lake Development Authority (LLDA); and (2)
City Mayor of Caloocan and/or the City Government of Caloocan to cease and
desist from dumping its garbage at the Tala Estate, Barangay Camarin,
Caloocan City.
Respondents City Government of Caloocan and Mayor Macario A. Asistio, Jr.
filed on November 12, 1992 a motion for reconsideration and/or to
quash/recall the temporary restraining order and an urgent motion for
reconsideration alleging that ". . . in view of the calamitous situation that
would arise if the respondent city government fails to collect 350 tons of
garbage daily for lack of dumpsite (i)t is therefore, imperative that the issue be
resolved with dispatch or with sufficient leeway to allow the respondents to
find alternative solutions to this garbage problem."
On November 17, 1992, the Court issued a Resolution 13 directing the Court of
Appeals to immediately set the case for hearing for the purpose of determining
whether or not the temporary restraining order issued by the Court should be
lifted and what conditions, if any, may be required if it is to be so lifted or
whether the restraining order should be maintained or converted into a
preliminary injunction.
The Court of Appeals set the case for hearing on November 27, 1992, at 10:00
in the morning at the Hearing Room, 3rd Floor, New Building, Court of Appeals.
14
After the oral argument, a conference was set on December 8, 1992 at 10:00
o'clock in the morning where the Mayor of Caloocan City, the General Manager
of LLDA, the Secretary of DENR or his duly authorized representative and the
Secretary of DILG or his duly authorized representative were required to
appear.
It was agreed at the conference that the LLDA had until December 15, 1992 to
finish its study and review of respondent's technical plan with respect to the
dumping of its garbage and in the event of a rejection of respondent's technical
plan or a failure of settlement, the parties will submit within 10 days from
notice their respective memoranda on the merits of the case, after which the
petition shall be deemed submitted for resolution. 15 Notwithstanding such
efforts, the parties failed to settle the dispute.
On April 30, 1993, the Court of Appeals promulgated its decision holding that:
(1) the Regional Trial Court has no jurisdiction on appeal to try, hear and
decide the action for annulment of LLDA's cease and desist order, including the
issuance of a temporary restraining order and preliminary injunction in relation
thereto, since appeal therefrom is within the exclusive and appellate
jurisdiction of the Court of Appeals under Section 9, par. (3), of Batas
Pambansa Blg. 129; and (2) the Laguna Lake Development Authority has no
power and authority to issue a cease and desist order under its enabling law,
Republic Act No. 4850, as amended by P.D. No. 813 and Executive Order
No. 927, series of 1983.
The Court of Appeals thus dismissed Civil Case No. 15598 and the preliminary
injunction issued in the said case was set aside; the cease and desist order of
LLDA was likewise set aside and the temporary restraining order enjoining the
City Mayor of Caloocan and/or the City Government of Caloocan to cease and
desist from dumping its garbage at the Tala Estate, Barangay Camarin,
Caloocan City was lifted, subject, however, to the condition that any future
dumping of garbage in said area, shall be in conformity with the procedure and
protective works contained in the proposal attached to the records of this case
and found on pages 152-160 of the Rollo, which was thereby adopted by
reference and made an integral part of the decision, until the corresponding
restraining and/or injunctive relief is granted by the proper Court upon LLDA's
institution of the necessary legal proceedings.
Hence, the Laguna Lake Development Authority filed the instant petition for
review on certiorari, now docketed as G.R. No. 110120, with prayer that the
temporary restraining order lifted by the Court of Appeals be re-issued until
after final determination by this Court of the issue on the proper interpretation
of the powers and authority of the LLDA under its enabling law.
On July, 19, 1993, the Court issued a temporary restraining order 16 enjoining
the City Mayor of Caloocan and/or the City Government of Caloocan to cease
and desist from dumping its garbage at the Tala Estate, Barangay Camarin,
Caloocan City, effective as of this date and containing until otherwise ordered
by the Court.
It is significant to note that while both parties in this case agree on the need to
protect the environment and to maintain the ecological balance of the
surrounding areas of the Camarin open dumpsite, the question as to which
agency can lawfully exercise jurisdiction over the matter remains highly open
to question.
The City Government of Caloocan claims that it is within its power, as a local
government unit, pursuant to the general welfare provision of the Local
Government Code, 17 to determine the effects of the operation of the dumpsite
on the ecological balance and to see that such balance is maintained. On the
basis of said contention, it questioned, from the inception of the dispute
before the Regional Trial Court of Caloocan City, the power and authority of
the LLDA to issue a cease and desist order enjoining the dumping of garbage in
the Barangay Camarin over which the City Government of Caloocan has
territorial jurisdiction.
The Court of Appeals sustained the position of the City of Caloocan on the
theory that Section 7 of Presidential Decree No. 984, otherwise known as the
Pollution Control law, authorizing the defunct National Pollution Control
Commission to issue an ex-parte cease and desist order was not incorporated in
Presidential Decree No. 813 nor in Executive Order No. 927, series of
1983. The Court of Appeals ruled that under Section 4, par. (d), of Republic Act
No. 4850, as amended, the LLDA is instead required "to institute the necessary
legal proceeding against any person who shall commence to implement or
continue implementation of any project, plan or program within the Laguna de
Bay region without previous clearance from the Authority."
The LLDA now assails, in this partition for review, the abovementioned ruling of
the Court of Appeals, contending that, as an administrative agency which was
granted regulatory and adjudicatory powers and functions by Republic Act No.
4850 and its amendatory laws, Presidential Decree No. 813 and Executive Order
No. 927, series of 1983, it is invested with the power and authority to issue a
cease and desist order pursuant to Section 4 par. (c), (d), (e), (f) and (g) of
Executive Order No. 927 series of 1983 which provides, thus:
Sec. 4. Additional Powers and Functions. The authority shall
have the following powers and functions:
xxx xxx xxx
(c) Issue orders or decisions to compel compliance with the
provisions of this Executive Order and its implementing rules
and regulations only after proper notice and hearing.
The cease and desist order issued by the LLDA requiring the City Government of
Caloocan to stop dumping its garbage in the Camarin open dumpsite found by
the LLDA to have been done in violation of Republic Act No. 4850, as amended,
and other relevant environment laws, 23 cannot be stamped as an unauthorized
exercise by the LLDA of injunctive powers. By its express terms, Republic Act
No. 4850, as amended by P.D. No. 813 and Executive Order No. 927, series of
1983, authorizes the LLDA to "make, alter or modify order requiring the
discontinuance or pollution." 24 (Emphasis supplied) Section 4, par. (d) explicitly
authorizes the LLDA to make whatever order may be necessary in the exercise
of its jurisdiction.
In the instant case, when the complainant Task Force Camarin Dumpsite of Our
Lady of Lourdes Parish, Barangay Camarin, Caloocan City, filed its lettercomplaint before the LLDA, the latter's jurisdiction under its charter was
validly invoked by complainant on the basis of its allegation that the open
dumpsite project of the City Government of Caloocan in Barangay Camarin was
undertaken without a clearance from the LLDA, as required under Section 4,
par. (d), of Republic Act. No. 4850, as amended by P.D. No. 813 and Executive
Order No. 927. While there is also an allegation that the said project was
without an Environmental Compliance Certificate from the Environmental
Management Bureau (EMB) of the DENR, the primary jurisdiction of the LLDA
over this case was recognized by the Environmental Management Bureau of the
DENR when the latter acted as intermediary at the meeting among the
representatives of the City Government of Caloocan, Task Force Camarin
Dumpsite and LLDA sometime in July 1992 to discuss the possibility of
re-opening the open dumpsite.
Assuming arguendo that the authority to issue a "cease and desist order" were
not expressly conferred by law, there is jurisprudence enough to the effect
that the rule granting such authority need not necessarily be express. 25 While
it is a fundamental rule that an administrative agency has only such powers as
are expressly granted to it by law, it is likewise a settled rule that an
administrative agency has also such powers as are necessarily implied in the
exercise of its express powers. 26 In the exercise, therefore, of its express
powers under its charter as a regulatory and quasi-judicial body with respect to
pollution cases in the Laguna Lake region, the authority of the LLDA to issue a
"cease and desist order" is, perforce, implied. Otherwise, it may well be
reduced to a "toothless" paper agency.
Having thus resolved the threshold question, the inquiry then narrows down to
the following issue: Does the LLDA have the power and authority to issue a
"cease and desist" order under Republic Act No. 4850 and its amendatory laws,
on the basis of the facts presented in this case, enjoining the dumping of
garbage in Tala Estate, Barangay Camarin, Caloocan City.
The irresistible answer is in the affirmative.
To be sure, the LLDA was not expressly conferred the power "to issue and exparte cease and desist order" in a language, as suggested by the City
Government of Caloocan, similar to the express grant to the defunct National
Pollution Control Commission under Section 7 of P.D. No. 984 which,
admittedly was not reproduced in P.D. No. 813 and E.O. No. 927, series of
1983. However, it would be a mistake to draw therefrom the conclusion that
there is a denial of the power to issue the order in question when the power "to
make, alter or modify orders requiring the discontinuance of pollution" is
expressly and clearly bestowed upon the LLDA by Executive Order No. 927,
series of 1983.
On December 29, 1994, the present petition was filed. After careful
deliberation on respondents' comment and petitioners' reply thereto, the Court
resolved on December 12, 1995, to give due course to the petition, and the
parties thereafter filed their respective memoranda. The court also requested
the Honorable Lilia R. Bautista, the Philippine Ambassador to the United
Nations stationed in Geneva, Switzerland, to submit a paper, hereafter
referred to as "Bautista Paper," 9 for brevity, (1) providing a historical
background of and (2) summarizing the said agreements.
During the Oral Argument held on August 27, 1996, the Court directed:
After receipt of the foregoing documents, the Court said it would consider the
case submitted for resolution. In a Compliance dated September 16, 1996, the
Solicitor General submitted a printed copy of the 36-volume Uruguay Round of
Multilateral Trade Negotiations, and in another Compliance dated October 24,
1996, he listed the various "bilateral or multilateral treaties or international
instruments involving derogation of Philippine sovereignty." Petitioners, on the
other hand, submitted their Compliance dated January 28, 1997, on January
30, 1997.
10
The Issues
In their Memorandum dated March 11, 1996, petitioners summarized the issues
as follows:
A. Whether the petition presents a political question or is
otherwise not justiciable.
B. Whether the petitioner members of the Senate who
participated in the deliberations and voting leading to the
concurrence are estopped from impugning the validity of the
Agreement Establishing the World Trade Organization or of the
validity of the concurrence.
The foregoing text emphasizes the judicial department's duty and power to
strike down grave abuse of discretion on the part of any branch or
instrumentality of government including Congress. It is an innovation in our
political law. 16 As explained by former Chief Justice Roberto Concepcion, 17
"the judiciary is the final arbiter on the question of whether or not a branch of
government or any of its officials has acted without jurisdiction or in excess of
jurisdiction or so capriciously as to constitute an abuse of discretion amounting
to excess of jurisdiction. This is not only a judicial power but a duty to pass
judgment on matters of this nature."
As this Court has repeatedly and firmly emphasized in many cases, 18 it will not
shirk, digress from or abandon its sacred duty and authority to uphold the
Constitution in matters that involve grave abuse of discretion brought before it
in appropriate cases, committed by any officer, agency, instrumentality or
department of the government.
As the petition alleges grave abuse of discretion and as there is no other plain,
speedy or adequate remedy in the ordinary course of law, we have no
hesitation at all in holding that this petition should be given due course and the
vital questions raised therein ruled upon under Rule 65 of the Rules of Court.
Indeed, certiorari, prohibition and mandamus are appropriate remedies to
raise constitutional issues and to review and/or prohibit/nullify, when proper,
acts of legislative and executive officials. On this, we have no equivocation.
We should stress that, in deciding to take jurisdiction over this petition, this
Court will not review the wisdom of the decision of the President and the
Senate in enlisting the country into the WTO, or pass upon the merits of trade
liberalization as a policy espoused by said international body. Neither will it
rule on the propriety of the government's economic policy of
reducing/removing tariffs, taxes, subsidies, quantitative restrictions, and other
import/trade barriers. Rather, it will only exercise its constitutional duty "to
determine whether or not there had been a grave abuse of discretion
amounting to lack or excess of jurisdiction" on the part of the Senate in
ratifying the WTO Agreement and its three annexes.
Second Issue: The WTO Agreement
and Economic Nationalism
This is the lis mota, the main issue, raised by the petition.
Petitioners vigorously argue that the "letter, spirit and intent" of the
Constitution mandating "economic nationalism" are violated by the so-called
"parity provisions" and "national treatment" clauses scattered in various parts
not only of the WTO Agreement and its annexes but also in the Ministerial
Decisions and Declarations and in the Understanding on Commitments in
Financial Services.
Article XII
NATIONAL ECONOMY AND PATRIMONY
xxx xxx xxx
Sec. 10. . . . The Congress shall enact measures that will
encourage the formation and operation of enterprises whose
capital is wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the
national economy and patrimony, the State shall give
preference to qualified Filipinos.
xxx xxx xxx
Sec. 12. The State shall promote the preferential use of
Filipino labor, domestic materials and locally produced goods,
and adopt measures that help make them competitive.
Petitioners aver that these sacred constitutional principles are desecrated by
the following WTO provisions quoted in their memorandum: 19
a) In the area of investment measures related to trade in
goods (TRIMS, for brevity):
Article 2
It is true that in the recent case of Manila Prince Hotel vs. Government Service
Insurance System, et al., 31 this Court held that "Sec. 10, second par., Art. XII
of the 1987 Constitution is a mandatory, positive command which is complete
in itself and which needs no further guidelines or implementing laws or rule for
its enforcement. From its very words the provision does not require any
legislation to put it in operation. It is per se judicially enforceable." However,
as the constitutional provision itself states, it is enforceable only in regard to
"the grants of rights, privileges and concessions covering national economy and
patrimony" and not to every aspect of trade and commerce. It refers to
exceptions rather than the rule. The issue here is not whether this paragraph of
Sec. 10 of Art. XII is self-executing or not. Rather, the issue is whether, as a
rule, there are enough balancing provisions in the Constitution to allow the
Senate to ratify the Philippine concurrence in the WTO Agreement. And we
hold that there are.
All told, while the Constitution indeed mandates a bias in favor of Filipino
goods, services, labor and enterprises, at the same time, it recognizes the need
for business exchange with the rest of the world on the bases of equality and
reciprocity and limits protection of Filipino enterprises only against foreign
competition and trade practices that are unfair. 32 In other words, the
Constitution did not intend to pursue an isolationist policy. It did not shut out
foreign investments, goods and services in the development of the Philippine
economy. While the Constitution does not encourage the unlimited entry of
foreign goods, services and investments into the country, it does not prohibit
them either. In fact, it allows an exchange on the basis of equality and
reciprocity, frowning only on foreign competition that is unfair.
WTO Recognizes Need to
Protect Weak Economies
Upon the other hand, respondents maintain that the WTO itself has some builtin advantages to protect weak and developing economies, which comprise the
vast majority of its members. Unlike in the UN where major states have
permanent seats and veto powers in the Security Council, in the WTO,
decisions are made on the basis of sovereign equality, with each member's vote
equal in weight to that of any other. There is no WTO equivalent of the UN
Security Council.
WTO decides by consensus whenever possible, otherwise,
decisions of the Ministerial Conference and the General
Council shall be taken by the majority of the votes cast,
except in cases of interpretation of the Agreement or waiver
of the obligation of a member which would require three
fourths vote. Amendments would require two thirds vote in
general. Amendments to MFN provisions and the Amendments
provision will require assent of all members. Any member may
Will adherence to the WTO treaty bring this ideal (of favoring the general
welfare) to reality?
Will WTO/GATT succeed in promoting the Filipinos' general welfare because it
will as promised by its promoters expand the country's exports and
generate more employment?
Will it bring more prosperity, employment, purchasing power and quality
products at the most reasonable rates to the Filipino public?
The responses to these questions involve "judgment calls" by our policy makers,
for which they are answerable to our people during appropriate electoral
exercises. Such questions and the answers thereto are not subject to judicial
pronouncements based on grave abuse of discretion.
Constitution Designed to Meet
Future Events and Contingencies
No doubt, the WTO Agreement was not yet in existence when the Constitution
was drafted and ratified in 1987. That does not mean however that the Charter
is necessarily flawed in the sense that its framers might not have anticipated
the advent of a borderless world of business. By the same token, the United
Nations was not yet in existence when the 1935 Constitution became effective.
Did that necessarily mean that the then Constitution might not have
contemplated a diminution of the absoluteness of sovereignty when the
Philippines signed the UN Charter, thereby effectively surrendering part of its
control over its foreign relations to the decisions of various UN organs like the
Security Council?
It is not difficult to answer this question. Constitutions are designed to meet
not only the vagaries of contemporary events. They should be interpreted to
cover even future and unknown circumstances. It is to the credit of its drafters
that a Constitution can withstand the assaults of bigots and infidels but at the
same time bend with the refreshing winds of change necessitated by unfolding
events. As one eminent political law writer and respected jurist 38 explains:
The Constitution must be quintessential rather than
superficial, the root and not the blossom, the base and framework only of the edifice that is yet to rise. It is but the core of
the dream that must take shape, not in a twinkling by
mandate of our delegates, but slowly "in the crucible of
Filipino minds and hearts," where it will in time develop its
sinews and gradually gather its strength and finally achieve its
substance. In fine, the Constitution cannot, like the goddess
Athena, rise full-grown from the brow of the Constitutional
Convention, nor can it conjure by mere fiat an instant Utopia.
It must grow with the society it seeks to re-structure and
march apace with the progress of the race, drawing from the
vicissitudes of history the dynamism and vitality that will
keep it, far from becoming a petrified rule, a pulsing, living
law attuned to the heartbeat of the nation.
Third Issue: The WTO Agreement and Legislative Power
The WTO Agreement provides that "(e)ach Member shall ensure the conformity
of its laws, regulations and administrative procedures with its obligations as
provided in the annexed Agreements." 39 Petitioners maintain that this
undertaking "unduly limits, restricts and impairs Philippine sovereignty,
specifically the legislative power which under Sec. 2, Article VI of the 1987
Philippine Constitution is vested in the Congress of the Philippines. It is an
assault on the sovereign powers of the Philippines because this means that
Congress could not pass legislation that will be good for our national interest
and general welfare if such legislation will not conform with the WTO
Agreement, which not only relates to the trade in goods . . . but also to the
flow of investments and money . . . as well as to a whole slew of agreements
on socio-cultural matters . . . 40
More specifically, petitioners claim that said WTO proviso derogates from the
power to tax, which is lodged in the Congress. 41 And while the Constitution
allows Congress to authorize the President to fix tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts, such
authority is subject to "specified limits and . . . such limitations and
restrictions" as Congress may provide, 42 as in fact it did under Sec. 401 of the
Tariff and Customs Code.
Sovereignty Limited by
International Law and Treaties
This Court notes and appreciates the ferocity and passion by which petitioners
stressed their arguments on this issue. However, while sovereignty has
traditionally been deemed absolute and all-encompassing on the domestic
level, it is however subject to restrictions and limitations voluntarily agreed to
by the Philippines, expressly or impliedly, as a member of the family of
nations. Unquestionably, the Constitution did not envision a hermit-type
isolation of the country from the rest of the world. In its Declaration of
Principles and State Policies, the Constitution "adopts the generally accepted
principles of international law as part of the law of the land, and adheres to
the policy of peace, equality, justice, freedom, cooperation and amity, with all
nations." 43 By the doctrine of incorporation, the country is bound by generally
accepted principles of international law, which are considered to be
automatically part of our own laws. 44 One of the oldest and most fundamental
rules in international law is pacta sunt servanda international agreements
must be performed in good faith. "A treaty engagement is not a mere moral
obligation but creates a legally binding obligation on the parties . . . A state
VII of the Charter. A final example: under Article 103, "(i)n the event of a
conflict between the obligations of the Members of the United Nations under
the present Charter and their obligations under any other international
agreement, their obligation under the present charter shall prevail," thus
unquestionably denying the Philippines as a member the sovereign power
to make a choice as to which of conflicting obligations, if any, to honor.
Apart from the UN Treaty, the Philippines has entered into many other
international pacts both bilateral and multilateral that involve limitations
on Philippine sovereignty. These are enumerated by the Solicitor General in his
Compliance dated October 24, 1996, as follows:
(a) Bilateral convention with the United States regarding taxes
on income, where the Philippines agreed, among others, to
exempt from tax, income received in the Philippines by,
among others, the Federal Reserve Bank of the United States,
the Export/Import Bank of the United States, the Overseas
Private Investment Corporation of the United States. Likewise,
in said convention, wages, salaries and similar remunerations
paid by the United States to its citizens for labor and personal
services performed by them as employees or officials of the
United States are exempt from income tax by the Philippines.
(b) Bilateral agreement with Belgium, providing, among
others, for the avoidance of double taxation with respect to
taxes on income.
(c) Bilateral convention with the Kingdom of Sweden for the
avoidance of double taxation.
(d) Bilateral convention with the French Republic for the
avoidance of double taxation.
(e) Bilateral air transport agreement with Korea where the
Philippines agreed to exempt from all customs duties,
inspection fees and other duties or taxes aircrafts of South
Korea and the regular equipment, spare parts and supplies
arriving with said aircrafts.
(f) Bilateral air service agreement with Japan, where the
Philippines agreed to exempt from customs duties, excise
taxes, inspection fees and other similar duties, taxes or
charges fuel, lubricating oils, spare parts, regular equipment,
stores on board Japanese aircrafts while on Philippine soil.
51
it will be fruitful
Article 34
Process Patents: Burden of Proof
1. For the purposes of civil proceedings in respect of the
infringement of the rights of the owner referred to in
paragraph 1 (b) of Article 28, if the subject matter of a patent
is a process for obtaining a product, the judicial authorities
shall have the authority to order the defendant to prove that
the process to obtain an identical product is different from the
patented process. Therefore, Members shall provide, in at
least one of the following circumstances, that any identical
product when produced without the consent of the patent
owner shall, in the absence of proof to the contrary, be
deemed to have been obtained by the patented process:
(a) if the product obtained by the patented
process is new;
In rendering this Decision, this Court never forgets that the Senate, whose act
is under review, is one of two sovereign houses of Congress and is thus entitled
to great respect in its actions. It is itself a constitutional body independent and
coordinate, and thus its actions are presumed regular and done in good faith.
Unless convincing proof and persuasive arguments are presented to overthrow
such presumptions, this Court will resolve every doubt in its favor. Using the
foregoing well-accepted definition of grave abuse of discretion and the
presumption of regularity in the Senate's processes, this Court cannot find any
cogent reason to impute grave abuse of discretion to the Senate's exercise of
its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article
VII of the Constitution. 64
It is true, as alleged by petitioners, that broad constitutional principles require
the State to develop an independent national economy effectively controlled
by Filipinos; and to protect and/or prefer Filipino labor, products, domestic
materials and locally produced goods. But it is equally true that such principles
while serving as judicial and legislative guides are not in themselves
sources of causes of action. Moreover, there are other equally fundamental
constitutional principles relied upon by the Senate which mandate the pursuit
of a "trade policy that serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and reciprocity" and the
promotion of industries "which are competitive in both domestic and foreign
markets," thereby justifying its acceptance of said treaty. So too, the alleged
impairment of sovereignty in the exercise of legislative and judicial powers is
balanced by the adoption of the generally accepted principles of international
law as part of the law of the land and the adherence of the Constitution to the
policy of cooperation and amity with all nations.
That the Senate, after deliberation and voting, voluntarily and overwhelmingly
gave its consent to the WTO Agreement thereby making it "a part of the law of
the land" is a legitimate exercise of its sovereign duty and power. We find no
"patent and gross" arbitrariness or despotism "by reason of passion or personal
hostility" in such exercise. It is not impossible to surmise that this Court, or at
least some of its members, may even agree with petitioners that it is more
advantageous to the national interest to strike down Senate Resolution No. 97.
But that is not a legal reason to attribute grave abuse of discretion to the
Senate and to nullify its decision. To do so would constitute grave abuse in the
exercise of our own judicial power and duty. Ineludably, what the Senate did
was a valid exercise of its authority. As to whether such exercise was wise,
beneficial or viable is outside the realm of judicial inquiry and review. That is a
matter between the elected policy makers and the people. As to whether the
nation should join the worldwide march toward trade liberalization and
economic globalization is a matter that our people should determine in electing
their policy makers. After all, the WTO Agreement allows withdrawal of
membership, should this be the political desire of a member.
The eminent futurist John Naisbitt, author of the best seller Megatrends,
predicts an Asian Renaissance 65 where "the East will become the dominant
executory; and that the petitioner had not therefor waived the right to a
hearing before the BOI.
In the Court's resolution dated January 17, 1990, we stated:
Does the investor have a "right of final choice" of plant site?
Neither under the 1987 Constitution nor in the Omnibus
Investments Code is there such a 'right of final choice.' In the
first place, the investor's choice is subject to processing and
approval or disapproval by the BOI (Art. 7, Chapter II, Omnibus
Investments Code). By submitting its application and amended
application to the BOI for approval, the investor recognizes
the sovereign prerogative of our Government, through the BOI,
to approve or disapprove the same after determining whether
its proposed project will be feasible, desirable and beneficial
to our country. By asking that his opposition to the LPC's
amended application be heard by the BOI, the petitioner
likewise acknowledges that the BOI, not the investor, has the
last word or the "final choice" on the matter.
Secondly, as this case has shown, even a choice that had been
approved by the BOI may not be 'final', for supervening
circumstances and changes in the conditions of a place may
dictate a corresponding change in the choice of plant site in
order that the project will not fail. After all, our country will
benefit only when a project succeeds, not when it fails.
(Rollo, pp. 538-539)
Nevertheless, the motion for reconsideration of the petitioner was denied.
A minority composed of Justices Melencio-Herrera, Gancayco, Sarmiento and
this ponente voted to grant the motion for reconsideration stating that the
hearing set by the BOI was premature as the decision of the Court was not yet
final and executory; that as contended by the petitioner the Court must first
rule on whether or not the investor has the right of final choice of plant site for
if the ruling is in the affirmative, the hearing would be a useless exercise; that
in the October 19, 1989 resolution, the Court while upholding validity of the
transfer of the plant site did not rule on the issue of who has the final choice;
that they agree with the observation of the majority that "the investor has no
final choice either under the 1987 Constitution or in the Omnibus Investments
Code and that it is the BOI who decides for the government" and that the plea
of the petitioner should be granted to give him the chance to show the justness
of his claim and to enable the BOI to give a second hard look at the matter.
Thus, the herein petition which relies on the ruling of the Court in the
resolution of January 17, 1990 in G.R. No. 88637 that the investor has no right
of final choice under the 1987 Constitution and the Omnibus Investments Code.
Under P.D. No. 1803 dated January 16, 1981, 576 hectares of the public domain
located in Lamao, Limay, Bataan were reserved for the Petrochemical
Industrial Zone under the administration, management, and ownership of the
Philippine National Oil Company (PNOC).
The Bataan Refining Corporation (BRC) is a wholly government owned
corporation, located at Bataan. It produces 60% of the national output of
naphtha.
Taiwanese investors in a petrochemical project formed the Bataan
Petrochemical Corporation (BPC) and applied with BOI for registration as a new
domestic producer of petrochemicals. Its application specified Bataan as the
plant site. One of the terms and conditions for registration of the project was
the use of "naphtha cracker" and "naphtha" as feedstock or fuel for its
petrochemical plant. The petrochemical plant was to be a joint venture with
PNOC. BPC was issued a certificate of registration on February 24, 1988 by BOI.
BPC was given pioneer status and accorded fiscal and other incentives by BOI,
like: (1) exemption from taxes on raw materials, (2) repatriation of the entire
proceeds of liquidation investments in currency originally made and at the
exchange rate obtaining at the time of repatriation; and (3) remittance of
earnings on investments. As additional incentive, the House of Representatives
approved a bill introduced by the petitioner eliminating the 48% ad valorem tax
on naphtha if and when it is used as raw materials in the petrochemical plant.
(G.R. No. 88637, September 7, 1989, pp. 2-3. Rollo, pp. 441-442)
However, in February, 1989, A.T. Chong, chairman of USI Far East Corporation,
the major investor in BPC, personally delivered to Trade Secretary Jose
Concepcion a letter dated January 25, 1989 advising him of BPC's desire to
amend the original registration certification of its project by changing the job
site from Limay, Bataan, to Batangas. The reason adduced for the transfer was
the insurgency and unstable labor situation, and the presence in Batangas of a
huge liquefied petroleum gas (LPG) depot owned by the Philippine Shell
Corporation.
The petitioner vigorously opposed the proposal and no less than President
Aquino expressed her preference that the plant be established in Bataan in a
conference with the Taiwanese investors, the Secretary of National Defense
and The Chief of Staff of the Armed Forces.
Despite speeches in the Senate and House opposing the Transfer of the project
to Batangas, BPC filed on April 11, 1989 its request for approval of the
amendments. Its application is as follows: "(l) increasing the investment
amount from US $220 million to US $320 million; (2) increasing the production
capacity of its naphtha cracker, polythylene plant and polypropylene plant; (3)
changing the feedstock from naphtha only to "naphtha and/or liquefied
petroleum gas;" and (4) transferring the job site from Limay, Bataan, to
Batangas. (Annex B to Petition; Rollo, p. 25)
Notwithstanding opposition from any quarters and the request of the petitioner
addressed to Secretary Concepcion to be furnished a copy of the proposed
amendment with its attachments which was denied by the BOI on May 25, 1989,
BOI approved the revision of the registration of BPC's petrochemical project.
(Petition, Annex F; Rollo, p. 32; See pp. 4 to 6, Decision in G.R. No. 88637;
supra.)
BOI Vice-Chairman Tomas I. Alcantara testifying before the Committee on Ways
and Means of the Senate asserted that:
The BOI has taken a public position preferring Bataan over
Batangas as the site of the petrochemical complex, as this
would provide a better distribution of industries around the
Metro Manila area. ... In advocating the choice of Bataan as
the project site for the petrochemical complex, the BOI,
however, made it clear, and I would like to repeat this that
the BOI made it clear in its view that the BOI or the
government for that matter could only recomend as to where
the project should be located. The BOI recognizes and respect
the principle that the final chouce is still with the proponent
who would in the final analysis provide the funding or risk
capital for the project. (Petition, P. 13; Annex D to the
petition)
This position has not been denied by BOI in its pleadings in G.R. No. 88637 and
in the present petition.
Section 1, Article VIII of the 1987 Constitution provides:
SECTION 1. The judicial power shall be vested in one Supreme
Court and in such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
There is before us an actual controversy whether the petrochemical plant
should remain in Bataan or should be transferred to Batangas, and whether its
feedstock originally of naphtha only should be changed to naphtha and/or
liquefied petroleum gas as the approved amended application of the BPC, now
One can but remember the words of a great Filipino leader who in part said he
would not mind having a government run like hell by Filipinos than one
subservient to foreign dictation. In this case, it is not even a foreign
government but an ordinary investor whom the BOI allows to dictate what we
shall do with our heritage.
adding specifically that "the State shall regulate the acquisition, ownership,
use, enjoyment and disposition of private property and equitably diffuse
property ownership and profits." 2 Significantly, there was also the specific
injunction to "formulate and implement an agrarian reform program aimed at
emancipating the tenant from the bondage of the soil." 3
SO ORDERED.
Association of Small Landowners in the Phils. vs. Sec. of DAR
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged
Hercules for his life on his way to Mycenae after performing his eleventh labor.
The two wrestled mightily and Hercules flung his adversary to the ground
thinking him dead, but Antaeus rose even stronger to resume their struggle.
This happened several times to Hercules' increasing amazement. Finally, as
they continued grappling, it dawned on Hercules that Antaeus was the son of
Gaea and could never die as long as any part of his body was touching his
Mother Earth. Thus forewarned, Hercules then held Antaeus up in the air,
beyond the reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating
touch even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell
of the elemental forces of life and death, of men and women who, like Antaeus
need the sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the
distribution of this precious resource among our people. But it is more than a
slogan. Through the brooding centuries, it has become a battle-cry dramatizing
the increasingly urgent demand of the dispossessed among us for a plot of
earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social
justice to "insure the well-being and economic security of all the people," 1
especially the less privileged. In 1973, the new Constitution affirmed this goal
The petitioners also maintain that in declaring the beneficiaries under P.D. No.
27 to be the owners of the lands occupied by them, E.O. No. 228 ignored
judicial prerogatives and so violated due process. Worse, the measure would
not solve the agrarian problem because even the small farmers are deprived of
their lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already
been upheld in the earlier cases of Chavez v. Zobel, 7 Gonzales v. Estrella, 8
and Association of Rice and Corn Producers of the Philippines, Inc. v. The
National Land Reform Council. 9 The determination of just compensation by
the executive authorities conformably to the formula prescribed under the
questioned order is at best initial or preliminary only. It does not foreclose
judicial intervention whenever sought or warranted. At any rate, the challenge
to the order is premature because no valuation of their property has as yet
been made by the Department of Agrarian Reform. The petitioners are also not
proper parties because the lands owned by them do not exceed the maximum
retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27
does not provide for retention limits on tenanted lands and that in any event
their petition is a class suit brought in behalf of landowners with landholdings
below 24 hectares. They maintain that the determination of just compensation
by the administrative authorities is a final ascertainment. As for the cases
invoked by the public respondent, the constitutionality of P.D. No. 27 was
merely assumed in Chavez, while what was decided in Gonzales was the
validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D.
No. 27, E.O. Nos. 228 and 229 (except Sections 20 and 21) have been impliedly
repealed by R.A. No. 6657. Nevertheless, this statute should itself also be
declared unconstitutional because it suffers from substantially the same
infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by
Vicente Cruz, owner of a 1. 83- hectare land, who complained that the DAR
was insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite a
compromise agreement he had reached with his tenant on the payment of
rentals. In a subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the above- mentioned
enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill
District, Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc.
is an organization composed of 1,400 planter-members. This petition seeks to
prohibit the implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian
Reform Program as decreed by the Constitution belongs to Congress and not
the President. Although they agree that the President could exercise legislative
power until the Congress was convened, she could do so only to enact
emergency measures during the transition period. At that, even assuming that
the interim legislative power of the President was properly exercised, Proc.
No. 131 and E.O. No. 229 would still have to be annulled for violating the
constitutional provisions on just compensation, due process, and equal
protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as
the Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS
(P50,000,000,000.00) to cover the estimated cost of the Comprehensive
Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts
of sale of ill-gotten wealth received through the Presidential Commission on
Good Government and such other sources as government may deem
appropriate. The amounts collected and accruing to this special fund shall be
considered automatically appropriated for the purpose authorized in this
Proclamation the amount appropriated is in futuro, not in esse. The money
needed to cover the cost of the contemplated expropriation has yet to be
raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of
just compensation as it is traditionally understood, i.e., with money and in full,
but no such payment is contemplated in Section 5 of the E.O. No. 229. On the
contrary, Section 6, thereof provides that the Land Bank of the Philippines
"shall compensate the landowner in an amount to be established by the
government, which shall be based on the owner's declaration of current fair
market value as provided in Section 4 hereof, but subject to certain controls to
be defined and promulgated by the Presidential Agrarian Reform Council." This
compensation may not be paid fully in money but in any of several modes that
may consist of part cash and part bond, with interest, maturing periodically, or
direct payment in cash or bond as may be mutually agreed upon by the
beneficiary and the landowner or as may be prescribed or approved by the
PARC.
The petitioners also argue that in the issuance of the two measures, no effort
was made to make a careful study of the sugar planters' situation. There is no
tenancy problem in the sugar areas that can justify the application of the CARP
to them. To the extent that the sugar planters have been lumped in the same
legislation with other farmers, although they are a separate group with
problems exclusively their own, their right to equal protection has been
violated.
maximum sum appropriated. The word "initial" simply means that additional
amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his
own behalf, assailing the constitutionality of E.O. No. 229. In addition to the
arguments already raised, Serrano contends that the measure is
unconstitutional because:
The petitioner also invokes his rights not to be deprived of his property without
due process of law and to the retention of his small parcels of riceholding as
guaranteed under Article XIII, Section 4 of the Constitution. He likewise argues
that, besides denying him just compensation for his land, the provisions of E.O.
No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary
after October 21, 1972 shall be considered as advance
payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention
that the inclusion of even small landowners in the program along with other
landowners with lands consisting of seven hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature
because the motion for reconsideration filed with the Minister of Agrarian
Reform is still unresolved. As for the validity of the issuance of E.O. Nos. 228
and 229, he argues that they were enacted pursuant to Section 6, Article XVIII
of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the
first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was
promulgated on October 21. 1972, the tenant-farmer of agricultural land was
deemed the owner of the land he was tilling. The leasehold rentals paid after
that date should therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion
he filed was resolved on December 14, 1987. An appeal to the Office of the
President would be useless with the promulgation of E.O. Nos. 228 and 229,
which in effect sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27
to owners of rice and corn lands not exceeding seven hectares as long as they
are cultivating or intend to cultivate the same. Their respective lands do not
exceed the statutory limit but are occupied by tenants who are actually
cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D.
No. 27:
No tenant-farmer in agricultural lands primarily devoted to
rice and corn shall be ejected or removed from his
farmholding until such time as the respective rights of the
tenant- farmers and the landowner shall have been
determined in accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to
enjoy their right of retention because the Department of Agrarian Reform has
so far not issued the implementing rules required under the above-quoted
decree. They therefore ask the Court for a writ of mandamus to compel the
respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been
amended by LOI 474 removing any right of retention from persons who own
other agricultural lands of more than 7 hectares in aggregate area or lands used
for residential, commercial, industrial or other purposes from which they
derive adequate income for their family. And even assuming that the
petitioners do not fall under its terms, the regulations implementing P.D. No.
27 have already been issued, to wit, the Memorandum dated July 10, 1975
(Interim Guidelines on Retention by Small Landowners, with an accompanying
Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81
dated December 29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27
and Retention by Small Landowners), and DAR Administrative Order No. 1,
series of 1985 (Providing for a Cut-off Date for Landowners to Apply for
Retention and/or to Protest the Coverage of their Landholdings under
Operation Land Transfer pursuant to P.D. No. 27). For failure to file the
corresponding applications for retention under these measures, the petitioners
are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely
initiated this case notwithstanding the pendency of their appeal to the
President of the Philippines. Moreover, the issuance of the implementing rules,
assuming this has not yet been done, involves the exercise of discretion which
cannot be controlled through the writ of mandamus. This is especially true if
this function is entrusted, as in this case, to a separate department of the
government.
In their Reply, the petitioners insist that the above-cited measures are not
applicable to them because they do not own more than seven hectares of
agricultural land. Moreover, assuming arguendo that the rules were intended to
cover them also, the said measures are nevertheless not in force because they
have not been published as required by law and the ruling of this Court in
Tanada v. Tuvera. 10 As for LOI 474, the same is ineffective for the additional
reason that a mere letter of instruction could not have repealed the
presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of
the three departments of the government, the judiciary is nonetheless vested
with the power to annul the acts of either the legislative or the executive or of
both when not conformable to the fundamental law. This is the reason for what
some quarters call the doctrine of judicial supremacy. Even so, this power is
not lightly assumed or readily exercised. The doctrine of separation of powers
imposes upon the courts a proper restraint, born of the nature of their
functions and of their respect for the other departments, in striking down the
acts of the legislative and the executive as unconstitutional. The policy,
indeed, is a blend of courtesy and caution. To doubt is to sustain. The theory is
that before the act was done or the law was enacted, earnest studies were
made by Congress or the President, or both, to insure that the Constitution
would not be breached.
In addition, the Constitution itself lays down stringent conditions for a
declaration of unconstitutionality, requiring therefor the concurrence of a
majority of the members of the Supreme Court who took part in the
deliberations and voted on the issue during their session en banc. 11 And as
established by judge made doctrine, the Court will assume jurisdiction over a
constitutional question only if it is shown that the essential requisites of a
judicial inquiry into such a question are first satisfied. Thus, there must be an
actual case or controversy involving a conflict of legal rights susceptible of
judicial determination, the constitutional question must have been opportunely
raised by the proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the
cases before us, we hold that the same is satisfied by the petitioners and
intervenors because each of them has sustained or is in danger of sustaining an
immediate injury as a result of the acts or measures complained of. 13 And
even if, strictly speaking, they are not covered by the definition, it is still
within the wide discretion of the Court to waive the requirement and so
remove the impediment to its addressing and resolving the serious
constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were
allowed to question the constitutionality of several executive orders issued by
President Quirino although they were invoking only an indirect and general
interest shared in common with the public. The Court dismissed the objection
that they were not proper parties and ruled that "the transcendental
importance to the public of these cases demands that they be settled promptly
and definitely, brushing aside, if we must, technicalities of procedure." We
have since then applied this exception in many other cases. 15
The other above-mentioned requisites have also been met in the present
petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not
hesitate to declare a law or act invalid when it is convinced that this must be
done. In arriving at this conclusion, its only criterion will be the Constitution as
God and its conscience give it the light to probe its meaning and discover its
purpose. Personal motives and political considerations are irrelevancies that
cannot influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will
not hesitate to "make the hammer fall, and heavily," to use Justice Laurel's
pithy language, where the acts of these departments, or of any public official,
betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that
... when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act
of the Legislature, but only asserts the solemn and sacred
obligation assigned to it by the Constitution to determine
conflicting claims of authority under the Constitution and to
establish for the parties in an actual controversy the rights
which that instrument secures and guarantees to them. This is
in truth all that is involved in what is termed "judicial
supremacy" which properly is the power of judicial review
under the Constitution. 16
The cases before us categorically raise constitutional questions that this Court
must categorically resolve. And so we shall.
II
case. LOI 474 was published, though, in the Official Gazette dated November
29,1976.)
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229
should be invalidated because they do not provide for retention limits as
required by Article XIII, Section 4 of the Constitution is no longer tenable. R.A.
No. 6657 does provide for such limits now in Section 6 of the law, which in fact
is one of its most controversial provisions. This section declares:
Finally, there is the contention of the public respondent in G.R. No. 78742 that
the writ of mandamus cannot issue to compel the performance of a
discretionary act, especially by a specific department of the government. That
is true as a general proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will lie to compel
the discharge of the discretionary duty itself but not to control the discretion
to be exercised. In other words, mandamus can issue to require action only but
not specific action.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the
limits of the police power in a famous aphorism: "The general rule at least is
that while property may be regulated to a certain extent, if regulation goes too
far it will be recognized as a taking." The regulation that went "too far" was a
law prohibiting mining which might cause the subsidence of structures for
human habitation constructed on the land surface. This was resisted by a coal
company which had earlier granted a deed to the land over its mine but
reserved all mining rights thereunder, with the grantee assuming all risks and
waiving any damage claim. The Court held the law could not be sustained
without compensating the grantor. Justice Brandeis filed a lone dissent in
which he argued that there was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the
exercise of the police power deprives the owner of some right
theretofore enjoyed, and is, in that sense, an abridgment by
the State of rights in property without making compensation.
But restriction imposed to protect the public health, safety or
morals from dangers threatened is not a taking. The
restriction here in question is merely the prohibition of a
noxious use. The property so restricted remains in the
possession of its owner. The state does not appropriate it or
make any use of it. The state merely prevents the owner from
making a use which interferes with paramount rights of the
public. Whenever the use prohibited ceases to be noxious as
it may because of further changes in local or social conditions
the restriction will have to be removed and the owner will
again be free to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the
police power and the power of eminent domain, with the latter being used as
an implement of the former like the power of taxation. The employment of the
taxing power to achieve a police purpose has long been accepted. 26 As for the
power of expropriation, Prof. John J. Costonis of the University of Illinois
College of Law (referring to the earlier case of Euclid v. Ambler Realty Co., 272
US 365, which sustained a zoning law under the police power) makes the
following significant remarks:
Euclid, moreover, was decided in an era when judges located
the Police and eminent domain powers on different planets.
Generally speaking, they viewed eminent domain as
encompassing public acquisition of private property for
improvements that would be available for public use," literally
construed. To the police power, on the other hand, they
assigned the less intrusive task of preventing harmful
externalities a point reflected in the Euclid opinion's reliance
on an analogy to nuisance law to bolster its support of zoning.
So long as suppression of a privately authored harm bore a
plausible relation to some legitimate "public purpose," the
Equal protection simply means that all persons or things similarly situated must
be treated alike both as to the rights conferred and the liabilities imposed. 33
The petitioners have not shown that they belong to a different class and
entitled to a different treatment. The argument that not only landowners but
also owners of other properties must be made to share the burden of
implementing land reform must be rejected. There is a substantial distinction
between these two classes of owners that is clearly visible except to those who
will not see. There is no need to elaborate on this matter. In any event, the
Congress is allowed a wide leeway in providing for a valid classification. Its
decision is accorded recognition and respect by the courts of justice except
only where its discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the
police power only if there is a concurrence of the lawful subject and the lawful
method. Put otherwise, the interests of the public generally as distinguished
from those of a particular class require the interference of the State and, no
less important, the means employed are reasonably necessary for the
attainment of the purpose sought to be achieved and not unduly oppressive
upon individuals. 34 As the subject and purpose of agrarian reform have been
laid down by the Constitution itself, we may say that the first requirement has
been satisfied. What remains to be examined is the validity of the method
employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of
the individual are concerned, the end does not justify the means. It is not
enough that there be a valid objective; it is also necessary that the means
employed to pursue it be in keeping with the Constitution. Mere expediency
will not excuse constitutional shortcuts. There is no question that not even the
strongest moral conviction or the most urgent public need, subject only to a
few notable exceptions, will excuse the bypassing of an individual's rights. It is
no exaggeration to say that a, person invoking a right guaranteed under Article
III of the Constitution is a majority of one even as against the rest of the nation
who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1
of Article III of the Constitution. With regard to his property, the owner enjoys
the added protection of Section 9, which reaffirms the familiar rule that
private property shall not be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables
it to forcibly acquire private lands intended for public use
upon payment of just compensation to the owner. Obviously,
there is no need to expropriate where the owner is willing to
a license for us to reverse the other departments simply because their views
may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to
include in the CARP the redistribution of private landholdings (even as the
distribution of public agricultural lands is first provided for, while also
continuing apace under the Public Land Act and other cognate laws). The Court
sees no justification to interpose its authority, which we may assert only if we
believe that the political decision is not unwise, but illegal. We do not find it
to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 it was held:
Congress having determined, as it did by the Act of March
3,1909 that the entire St. Mary's river between the American
bank and the international line, as well as all of the upland
north of the present ship canal, throughout its entire length,
was "necessary for the purpose of navigation of said waters,
and the waters connected therewith," that determination is
conclusive in condemnation proceedings instituted by the
United States under that Act, and there is no room for judicial
review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled
for us by the Constitution itself No less than the 1987 Charter calls for agrarian
reform, which is the reason why private agricultural lands are to be taken from
their owners, subject to the prescribed maximum retention limits. The
purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an
elaboration of the constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of all agricultural
lands to enable farmers who are landless to own directly or collectively the
lands they till." That public use, as pronounced by the fundamental law itself,
must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a
longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property
taken from its owner by the expropriator. 39 It has been repeatedly stressed by
this Court that the measure is not the taker's gain but the owner's loss. 40 The
word "just" is used to intensify the meaning of the word "compensation" to
convey the idea that the equivalent to be rendered for the property to be
taken shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions contemplate
more than a mere regulation of the use of private lands under the police
power. We deal here with an actual taking of private agricultural lands that has
dispossessed the owners of their property and deprived them of all its
beneficial use and enjoyment, to entitle them to the just compensation
mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable
taking when the following conditions concur: (1) the expropriator must enter a
private property; (2) the entry must be for more than a momentary period; (3)
the entry must be under warrant or color of legal authority; (4) the property
must be devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must
be in such a way as to oust the owner and deprive him of beneficial enjoyment
of the property. All these requisites are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a
deposit upon its taking possession of the condemned property, as "the
compensation is a public charge, the good faith of the public is pledged for its
payment, and all the resources of taxation may be employed in raising the
amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:
xxx
In the present petition, we are once again confronted with the
same question of whether the courts under P.D. No. 1533,
which contains the same provision on just compensation as its
predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated
by the decree and to this effect, to appoint commissioners for
such purpose.
The second and more serious objection to the provisions on just compensation
is not as easily resolved.
(3) Tax credits which can be used against any tax liability;
46
45
the requirement to suit the demands of the project even as it was also felt that
they should "leave it to Congress" to determine how payment should be made
to the landowner and reimbursement required from the farmer-beneficiaries.
Such innovations as "progressive compensation" and "State-subsidized
compensation" were also proposed. In the end, however, no special definition
of the just compensation for the lands to be expropriated was reached by the
Commission. 50
On the other hand, there is nothing in the records either that militates against
the assumptions we are making of the general sentiments and intention of the
members on the content and manner of the payment to be made to the
landowner in the light of the magnitude of the expenditure and the limitations
of the expropriator.
With these assumptions, the Court hereby declares that the content and
manner of the just compensation provided for in the afore- quoted Section 18
of the CARP Law is not violative of the Constitution. We do not mind admitting
that a certain degree of pragmatism has influenced our decision on this issue,
but after all this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its enhancement. The
Court is as acutely anxious as the rest of our people to see the goal of agrarian
reform achieved at last after the frustrations and deprivations of our peasant
masses during all these disappointing decades. We are aware that invalidation
of the said section will result in the nullification of the entire program, killing
the farmer's hopes even as they approach realization and resurrecting the
spectre of discontent and dissent in the restless countryside. That is not in our
view the intention of the Constitution, and that is not what we shall decree
today.
Accepting the theory that payment of the just compensation is not always
required to be made fully in money, we find further that the proportion of cash
payment to the other things of value constituting the total payment, as
determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger
the payment in money, primarily because the small landowner will be needing
it more than the big landowners, who can afford a bigger balance in bonds and
other things of value. No less importantly, the government financial
instruments making up the balance of the payment are "negotiable at any
time." The other modes, which are likewise available to the landowner at his
option, are also not unreasonable because payment is made in shares of stock,
LBP bonds, other properties or assets, tax credits, and other things of value
equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the
landowners, big and small, not a little inconvenience. As already remarked,
this cannot be avoided. Nevertheless, it is devoutly hoped that these
countrymen of ours, conscious as we know they are of the need for their
forebearance and even sacrifice, will not begrudge us their indispensable share
in the attainment of the ideal of agrarian reform. Otherwise, our pursuit of this
elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O.
No. 229 does not seem to be viable any more as it appears that Section 4 of the
said Order has been superseded by Section 14 of the CARP Law. This repeats
the requisites of registration as embodied in the earlier measure but does not
provide, as the latter did, that in case of failure or refusal to register the land,
the valuation thereof shall be that given by the provincial or city assessor for
tax purposes. On the contrary, the CARP Law says that the just compensation
shall be ascertained on the basis of the factors mentioned in its Section 17 and
in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his
property even before actual payment to him in full of just compensation, in
contravention of a well- accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall
pass from the owner to the expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is consistent both here
and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not
vest the condemnor until the judgment fixing just compensation is entered and
paid, but the condemnor's title relates back to the date on which the petition
under the Eminent Domain Act, or the commissioner's report under the Local
Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal is complete
at the time of entry, title to the property taken remains in the owner until
payment is actually made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding
that title to property does not pass to the condemnor until just compensation
had actually been made. In fact, the decisions appear to be uniformly to this
effect. As early as 1838, in Rubottom v. McLure, 54 it was held that "actual
payment to the owner of the condemned property was a condition precedent
to the investment of the title to the property in the State" albeit "not to the
appropriation of it to public use." In Rexford v. Knight, 55 the Court of Appeals
of New York said that the construction upon the statutes was that the fee did
not vest in the State until the payment of the compensation although the
authority to enter upon and appropriate the land was complete prior to the
payment. Kennedy further said that "both on principle and authority the rule is
... that the right to enter on and use the property is complete, as soon as the
property is actually appropriated under the authority of law for a public use,
but that the title does not pass from the owner without his consent, until just
compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes,
56
that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that
the method of expropriation adopted in this jurisdiction is
such as to afford absolute reassurance that no piece of land
can be finally and irrevocably taken from an unwilling owner
until compensation is paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer
as October 21, 1972 and declared that he shall "be deemed the owner" of a
portion of land consisting of a family-sized farm except that "no title to the
land owned by him was to be actually issued to him unless and until he had
become a full-fledged member of a duly recognized farmers' cooperative." It
was understood, however, that full payment of the just compensation also had
to be made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners
as of October 21, 1972 of the land they acquired by virtue of
Presidential Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said
decree, after proof of full-fledged membership in the farmers' cooperatives and
full payment of just compensation. Hence, it was also perfectly proper for the
Order to also provide in its Section 2 that the "lease rentals paid to the
landowner by the farmer- beneficiary after October 21, 1972 (pending transfer
of ownership after full payment of just compensation), shall be considered as
advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership
of the land to the government on receipt by the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash
or LBP bonds with an accessible bank. Until then, title also remains with the
landowner. 57 No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by
arbitrarily transferring title before the land is fully paid for must also be
rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer
under P.D. No. 27, as recognized under E.O. No. 228, are retained by him even
now under R.A. No. 6657. This should counter-balance the express provision in
Section 6 of the said law that "the landowners whose lands have been covered
by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or
direct compulsory heirs who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as they continue to
cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742
that the appeal filed by the petitioners with the Office of the President has
already been resolved. Although we have said that the doctrine of exhaustion
of administrative remedies need not preclude immediate resort to judicial
action, there are factual issues that have yet to be examined on the
administrative level, especially the claim that the petitioners are not covered
by LOI 474 because they do not own other agricultural lands than the subjects
of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that
the petitioners have not yet exercised their retention rights, if any, under P.D.
No. 27, the Court holds that they are entitled to the new retention rights
provided for by R.A. No. 6657, which in fact are on the whole more liberal than
those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases have been
the subject of bitter attack from those who point to the shortcomings of these
measures and ask that they be scrapped entirely. To be sure, these enactments
are less than perfect; indeed, they should be continuously re-examined and
rehoned, that they may be sharper instruments for the better protection of the
farmer's rights. But we have to start somewhere. In the pursuit of agrarian
reform, we do not tread on familiar ground but grope on terrain fraught with
pitfalls and expected difficulties. This is inevitable. The CARP Law is not a
tried and tested project. On the contrary, to use Justice Holmes's words, "it is
an experiment, as all life is an experiment," and so we learn as we venture
forward, and, if necessary, by our own mistakes. We cannot expect perfection
although we should strive for it by all means. Meantime, we struggle as best we
can in freeing the farmer from the iron shackles that have unconscionably, and
for so long, fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the comprehensive
agrarian reform program are removed, to clear the way for the true freedom of
the farmer. We may now glimpse the day he will be released not only from
want but also from the exploitation and disdain of the past and from his own
feelings of inadequacy and helplessness. At last his servitude will be ended
forever. At last the farm on which he toils will be his farm. It will be his portion
of the Mother Earth that will give him not only the staff of life but also the joy
of living. And where once it bred for him only deep despair, now can he see in
it the fruition of his hopes for a more fulfilling future. Now at last can he
banish from his small plot of earth his insecurities and dark resentments and
"rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos.
228 and 229 are SUSTAINED against all the constitutional
objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to
the State only upon full payment of compensation to their
respective owners.
3. All rights previously acquired by the tenant- farmers under
P.D. No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of
retention under P.D. No. 27 shall enjoy the retention rights
granted by R.A. No. 6657 under the conditions therein
prescribed.
5. Subject to the above-mentioned rulings all the petitions are
DISMISSED, without pronouncement as to costs.
SO ORDERED.
G.R. No. 171101
July 5, 2011
"Land for the landless," a shibboleth the landed gentry doubtless has received
with much misgiving, if not resistance, even if only the number of agrarian
suits filed serves to be the norm. Through the years, this battle cry and root of
discord continues to reflect the seemingly ceaseless discourse on, and great
disparity in, the distribution of land among the people, "dramatizing the
increasingly urgent demand of the dispossessed x x x for a plot of earth as their
place in the sun."2 As administrations and political alignments change, policies
advanced, and agrarian reform laws enacted, the latest being what is
considered a comprehensive piece, the face of land reform varies and is
masked in myriads of ways. The stated goal, however, remains the same: clear
the way for the true freedom of the farmer.3
Land reform, or the broader term "agrarian reform," has been a government
policy even before the Commonwealth era. In fact, at the onset of the
American regime, initial steps toward land reform were already taken to
address social unrest.4 Then, under the 1935 Constitution, specific provisions
on social justice and expropriation of landed estates for distribution to tenants
as a solution to land ownership and tenancy issues were incorporated.
In 1955, the Land Reform Act (Republic Act No. [RA] 1400) was passed, setting
in motion the expropriation of all tenanted estates.5
On August 8, 1963, the Agricultural Land Reform Code (RA 3844) was enacted,6
abolishing share tenancy and converting all instances of share tenancy into
leasehold tenancy.7 RA 3844 created the Land Bank of the Philippines (LBP) to
provide support in all phases of agrarian reform.
As its major thrust, RA 3844 aimed to create a system of owner-cultivatorship
in rice and corn, supposedly to be accomplished by expropriating lands in
excess of 75 hectares for their eventual resale to tenants. The law, however,
had this restricting feature: its operations were confined mainly to areas in
Central Luzon, and its implementation at any level of intensity limited to the
pilot project in Nueva Ecija.8
Subsequently, Congress passed the Code of Agrarian Reform (RA 6389) declaring
the entire country a land reform area, and providing for the automatic
conversion of tenancy to leasehold tenancy in all areas. From 75 hectares, the
retention limit was cut down to seven hectares.9
Barely a month after declaring martial law in September 1972, then President
Ferdinand Marcos issued Presidential Decree No. 27 (PD 27) for the
"emancipation of the tiller from the bondage of the soil."10 Based on this
issuance, tenant-farmers, depending on the size of the landholding worked on,
can either purchase the land they tilled or shift from share to fixed-rent
leasehold tenancy.11 While touted as "revolutionary," the scope of the agrarian
reform program PD 27 enunciated covered only tenanted, privately-owned rice
and corn lands.12
upon, Tadeco undertook to pay the purchase price for Hacienda Luisita in
pesos, while that for the controlling interest in CAT, in US dollars.19
To facilitate the adverted sale-and-purchase package, the Philippine
government, through the then Central Bank of the Philippines, assisted the
buyer to obtain a dollar loan from a US bank.20 Also, the Government Service
Insurance System (GSIS) Board of Trustees extended on November 27, 1957 a
PhP 5.911 million loan in favor of Tadeco to pay the peso price component of
the sale. One of the conditions contained in the approving GSIS Resolution No.
3203, as later amended by Resolution No. 356, Series of 1958, reads as follows:
That the lots comprising the Hacienda Luisita shall be subdivided by the
applicant-corporation and sold at cost to the tenants, should there be any, and
whenever conditions should exist warranting such action under the provisions
of the Land Tenure Act;21
As of March 31, 1958, Tadeco had fully paid the purchase price for the
acquisition of Hacienda Luisita and Tabacaleras interest in CAT.22
The details of the events that happened next involving the hacienda and the
political color some of the parties embossed are of minimal significance to this
narration and need no belaboring. Suffice it to state that on May 7, 1980, the
martial law administration filed a suit before the Manila Regional Trial Court
(RTC) against Tadeco, et al., for them to surrender Hacienda Luisita to the
then Ministry of Agrarian Reform (MAR, now the Department of Agrarian Reform
[DAR]) so that the land can be distributed to farmers at cost. Responding,
Tadeco or its owners alleged that Hacienda Luisita does not have tenants,
besides which sugar landsof which the hacienda consistedare not covered by
existing agrarian reform legislations. As perceived then, the government
commenced the case against Tadeco as a political message to the family of the
late Benigno Aquino, Jr.23
Eventually, the Manila RTC rendered judgment ordering Tadeco to surrender
Hacienda Luisita to the MAR. Therefrom, Tadeco appealed to the Court of
Appeals (CA).
On March 17, 1988, the Office of the Solicitor General (OSG) moved to
withdraw the governments case against Tadeco, et al. By Resolution of May
18, 1988, the CA dismissed the case the Marcos government initially instituted
and won against Tadeco, et al. The dismissal action was, however, made
subject to the obtention by Tadeco of the PARCs approval of a stock
distribution plan (SDP) that must initially be implemented after such approval
shall have been secured.24 The appellate court wrote:
The defendants-appellants x x x filed a motion on April 13, 1988 joining the x x
x governmental agencies concerned in moving for the dismissal of the case
xxxx
WHEREFORE, the present case on appeal is hereby dismissed without prejudice,
and should be revived if any of the conditions as above set forth is not duly
complied with by the TADECO.25
If within two (2) years from the approval of this Act, the [voluntary] land or
stock transfer envisioned above is not made or realized or the plan for such
stock distribution approved by the PARC within the same period, the
agricultural land of the corporate owners or corporation shall be subject to the
compulsory coverage of this Act. (Emphasis added.)
Like EO 229, RA 6657, under the latters Sec. 31, also provides two (2)
alternative modalities, i.e., land or stock transfer, pursuant to either of which
the corporate landowner can comply with CARP, but subject to well-defined
conditions and timeline requirements. Sec. 31 of RA 6657 provides:
Vis--vis the stock distribution aspect of the aforequoted Sec. 31, DAR issued
Administrative Order No. 10, Series of 1988 (DAO 10),27 entitled Guidelines and
Procedures for Corporate Landowners Desiring to Avail Themselves of the
Stock Distribution Plan under Section 31 of RA 6657.
Upon certification by the DAR, corporations owning agricultural lands may give
their qualified beneficiaries the right to purchase such proportion of the
capital stock of the corporation that the agricultural land, actually devoted
to agricultural activities, bears in relation to the companys total assets,
under such terms and conditions as may be agreed upon by them. In no case
shall the compensation received by the workers at the time the shares of stocks
are distributed be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their
capital stock, equity or participation in favor of their workers or other qualified
beneficiaries under this section shall be deemed to have complied with the
provisions of this Act: Provided, That the following conditions are complied
with:
(a) In order to safeguard the right of beneficiaries who own shares of
stocks to dividends and other financial benefits, the books of the
After a review of the SDP, then DAR Secretary Miriam Defensor-Santiago (Sec.
Defensor-Santiago) addressed a letter dated November 6, 198938 to Pedro S.
Cojuangco (Cojuangco), then Tadeco president, proposing that the SDP be
revised, along the following lines:
1. That over the implementation period of the [SDP], [Tadeco]/HLI
shall ensure that there will be no dilution in the shares of stocks of
individual [FWBs];
4. That the stock distribution plan provide for clear and definite terms
for determining the actual number of seats to be allocated for the
[FWBs] in the HLI Board;
5. That HLI provide guidelines and a timetable for the distribution of
homelots to qualified [FWBs]; and
6. That the 3% cash dividends mentioned in the [SDP] be expressly
provided for [in] the MOA.
In a letter-reply of November 14, 1989 to Sec. Defensor-Santiago, Tadeco/HLI
explained that the proposed revisions of the SDP are already embodied in both
the SDP and MOA.39 Following that exchange, the PARC, under then Sec.
Defensor-Santiago, by Resolution No. 89-12-240 dated November 21, 1989,
approved the SDP of Tadeco/HLI.41
At the time of the SDP approval, HLI had a pool of farmworkers, numbering
6,296, more or less, composed of permanent, seasonal and casual master
list/payroll and non-master list members.
From 1989 to 2005, HLI claimed to have extended the following benefits to the
FWBs:
of the SDOA. They also cited violations by HLI of the SDOAs terms.58 They
prayed for a renegotiation of the SDOA, or, in the alternative, its revocation.
Revocation and nullification of the SDOA and the distribution of the lands in the
hacienda were the call in the second petition, styled as Petisyon (Petition).59
The Petisyon was ostensibly filed on December 4, 2003 by Alyansa ng mga
Manggagawang Bukid ng Hacienda Luisita (AMBALA), where the handwritten
name of respondents Rene Galang as "Pangulo AMBALA" and Noel Mallari as
"Sec-Gen. AMBALA"60 appeared. As alleged, the petition was filed on behalf of
AMBALAs members purportedly composing about 80% of the 5,339 FWBs of
Hacienda Luisita.
HLI would eventually answer61 the petition/protest of the Supervisory Group.
On the other hand, HLIs answer62 to the AMBALA petition was contained in its
letter dated January 21, 2005 also filed with DAR.
Meanwhile, the DAR constituted a Special Task Force to attend to issues
relating to the SDP of HLI. Among other duties, the Special Task Force was
mandated to review the terms and conditions of the SDOA and PARC Resolution
No. 89-12-2 relative to HLIs SDP; evaluate HLIs compliance reports; evaluate
the merits of the petitions for the revocation of the SDP; conduct ocular
inspections or field investigations; and recommend appropriate remedial
measures for approval of the Secretary.63
After investigation and evaluation, the Special Task Force submitted its
"Terminal Report: Hacienda Luisita, Incorporated (HLI) Stock Distribution Plan
(SDP) Conflict"64 dated September 22, 2005 (Terminal Report), finding that HLI
has not complied with its obligations under RA 6657 despite the
implementation of the SDP.65 The Terminal Report and the Special Task Forces
recommendations were adopted by then DAR Sec. Nasser Pangandaman (Sec.
Pangandaman).66
Subsequently, Sec. Pangandaman recommended to the PARC Executive
Committee (Excom) (a) the recall/revocation of PARC Resolution No. 89-12-2
dated November 21, 1989 approving HLIs SDP; and (b) the acquisition of
Hacienda Luisita through the compulsory acquisition scheme. Following review,
the PARC Validation Committee favorably endorsed the DAR Secretarys
recommendation afore-stated.67
On December 22, 2005, the PARC issued the assailed Resolution No. 2005-3201, disposing as follows:
NOW, THEREFORE, on motion duly seconded, RESOLVED, as it is HEREBY
RESOLVED, to approve and confirm the recommendation of the PARC Executive
Committee adopting in toto the report of the PARC ExCom Validation
Committee affirming the recommendation of the DAR to recall/revoke the SDO
plan of Tarlac Development Corporation/Hacienda Luisita Incorporated.
On January 10, 2007, the Supervisory Group79 and the AMBALA-Rene Galang
faction submitted their Comment/Opposition dated December 17, 2006.80
On October 30, 2007, RCBC filed a Motion for Leave to Intervene and to File
and Admit Attached Petition-In-Intervention dated October 18, 2007.81 LIPCO
later followed with a similar motion.82 In both motions, RCBC and LIPCO
contended that the assailed resolution effectively nullified the TCTs under
their respective names as the properties covered in the TCTs were veritably
included in the January 2, 2006 notice of coverage. In the main, they claimed
that the revocation of the SDP cannot legally affect their rights as innocent
purchasers for value. Both motions for leave to intervene were granted and the
corresponding petitions-in-intervention admitted.
On August 18, 2010, the Court heard the main and intervening petitioners on
oral arguments. On the other hand, the Court, on August 24, 2010, heard public
respondents as well as the respective counsels of the AMBALA-MallariSupervisory Group, the AMBALA-Galang faction, and the FARM and its 27
members83 argue their case.
Prior to the oral arguments, however, HLI; AMBALA, represented by Mallari; the
Supervisory Group, represented by Suniga and Andaya; and the United Luisita
Workers Union, represented by Eldifonso Pingol, filed with the Court a joint
submission and motion for approval of a Compromise Agreement (English and
Tagalog versions) dated August 6, 2010.
On August 31, 2010, the Court, in a bid to resolve the dispute through an
amicable settlement, issued a Resolution84 creating a Mediation Panel
composed of then Associate Justice Ma. Alicia Austria-Martinez, as chairperson,
and former CA Justices Hector Hofilea and Teresita Dy-Liacco Flores, as
members. Meetings on five (5) separate dates, i.e., September 8, 9, 14, 20,
and 27, 2010, were conducted. Despite persevering and painstaking efforts on
the part of the panel, mediation had to be discontinued when no acceptable
agreement could be reached.
The Issues
HLI raises the following issues for our consideration:
I.
WHETHER OR NOT PUBLIC RESPONDENTS PARC AND SECRETARY
PANGANDAMAN HAVE JURISDICTION, POWER AND/OR AUTHORITY TO
NULLIFY, RECALL, REVOKE OR RESCIND THE SDOA.
II.
II.
THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF
COVERAGE DATED 02 JANUARY 2006 WERE ISSUED WITHOUT
AFFORDING PETITIONER-INTERVENOR RCBC ITS RIGHT TO DUE PROCESS
AS AN INNOCENT PURCHASER FOR VALUE.
LIPCO, like RCBC, asserts having acquired vested and indefeasible rights over
certain portions of the converted property, and, hence, would ascribe on PARC
the commission of grave abuse of discretion when it included those portions in
the notice of coverage. And apart from raising issues identical with those of
HLI, such as but not limited to the absence of valid grounds to warrant the
rescission and/or revocation of the SDP, LIPCO would allege that the assailed
resolution and the notice of coverage were issued without affording it the right
to due process as an innocent purchaser for value. The government, LIPCO also
argues, is estopped from recovering properties which have since passed to
innocent parties.
Simply formulated, the principal determinative issues tendered in the main
petition and to which all other related questions must yield boil down to the
following: (1) matters of standing; (2) the constitutionality of Sec. 31 of RA
6657; (3) the jurisdiction of PARC to recall or revoke HLIs SDP; (4) the validity
or propriety of such recall or revocatory action; and (5) corollary to (4), the
validity of the terms and conditions of the SDP, as embodied in the SDOA.
Our Ruling
Without doubt, the Corporation Code is the general law providing for the
formation, organization and regulation of private corporations. On the other
hand, RA 6657 is the special law on agrarian reform. As between a general and
special law, the latter shall prevailgeneralia specialibus non derogant.105
Besides, the present impasse between HLI and the private respondents is not
an intra-corporate dispute which necessitates the application of the
Corporation Code. What private respondents questioned before the DAR is the
proper implementation of the SDP and HLIs compliance with RA 6657.
Evidently, RA 6657 should be the applicable law to the instant case.
HLI further contends that the inclusion of the agricultural land of Hacienda
Luisita under the coverage of CARP and the eventual distribution of the land to
the FWBs would amount to a disposition of all or practically all of the corporate
assets of HLI. HLI would add that this contingency, if ever it comes to pass,
requires the applicability of the Corporation Code provisions on corporate
dissolution.
We are not persuaded.
Indeed, the provisions of the Corporation Code on corporate dissolution would
apply insofar as the winding up of HLIs affairs or liquidation of the assets is
concerned. However, the mere inclusion of the agricultural land of Hacienda
Luisita under the coverage of CARP and the lands eventual distribution to the
FWBs will not, without more, automatically trigger the dissolution of HLI. As
stated in the SDOA itself, the percentage of the value of the agricultural land
of Hacienda Luisita in relation to the total assets transferred and conveyed by
Tadeco to HLI comprises only 33.296%, following this equation: value of the
agricultural lands divided by total corporate assets. By no stretch of
imagination would said percentage amount to a disposition of all or practically
all of HLIs corporate assets should compulsory land acquisition and distribution
ensue.
This brings us to the validity of the revocation of the approval of the SDP
sixteen (16) years after its execution pursuant to Sec. 31 of RA 6657 for the
reasons set forth in the Terminal Report of the Special Task Force, as endorsed
by PARC Excom. But first, the matter of the constitutionality of said section.
Constitutional Issue
FARM asks for the invalidation of Sec. 31 of RA 6657, insofar as it affords the
corporation, as a mode of CARP compliance, to resort to stock distribution, an
arrangement which, to FARM, impairs the fundamental right of farmers and
farmworkers under Sec. 4, Art. XIII of the Constitution.106
To a more specific, but direct point, FARM argues that Sec. 31 of RA 6657
permits stock transfer in lieu of outright agricultural land transfer; in fine,
there is stock certificate ownership of the farmers or farmworkers instead of
them owning the land, as envisaged in the Constitution. For FARM, this
modality of distribution is an anomaly to be annulled for being inconsistent
with the basic concept of agrarian reform ingrained in Sec. 4, Art. XIII of the
Constitution.107
Reacting, HLI insists that agrarian reform is not only about transfer of land
ownership to farmers and other qualified beneficiaries. It draws attention in
this regard to Sec. 3(a) of RA 6657 on the concept and scope of the term
"agrarian reform." The constitutionality of a law, HLI added, cannot, as here,
be attacked collaterally.
The instant challenge on the constitutionality of Sec. 31 of RA 6657 and
necessarily its counterpart provision in EO 229 must fail as explained below.
When the Court is called upon to exercise its power of judicial review over, and
pass upon the constitutionality of, acts of the executive or legislative
departments, it does so only when the following essential requirements are
first met, to wit:
(1) there is an actual case or controversy;
(2) that the constitutional question is raised at the earliest possible
opportunity by a proper party or one with locus standi; and
(3) the issue of constitutionality must be the very lis mota of the
case.108
Not all the foregoing requirements are satisfied in the case at bar.
While there is indeed an actual case or controversy, intervenor FARM,
composed of a small minority of 27 farmers, has yet to explain its failure to
challenge the constitutionality of Sec. 3l of RA 6657, since as early as
November 21, l989 when PARC approved the SDP of Hacienda Luisita or at least
within a reasonable time thereafter and why its members received benefits
from the SDP without so much of a protest. It was only on December 4, 2003 or
14 years after approval of the SDP via PARC Resolution No. 89-12-2 dated
November 21, 1989 that said plan and approving resolution were sought to be
revoked, but not, to stress, by FARM or any of its members, but by petitioner
AMBALA. Furthermore, the AMBALA petition did NOT question the
constitutionality of Sec. 31 of RA 6657, but concentrated on the purported
flaws and gaps in the subsequent implementation of the SDP. Even the public
respondents, as represented by the Solicitor General, did not question the
constitutionality of the provision. On the other hand, FARM, whose 27 members
formerly belonged to AMBALA, raised the constitutionality of Sec. 31 only on
May 3, 2007 when it filed its Supplemental Comment with the Court. Thus, it
took FARM some eighteen (18) years from November 21, 1989 before it
It may be well to note at this juncture that Sec. 5 of RA 9700,113 amending Sec.
7 of RA 6657, has all but superseded Sec. 31 of RA 6657 vis--vis the stock
distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700
provides: "[T]hat after June 30, 2009, the modes of acquisition shall be
limited to voluntary offer to sell and compulsory acquisition." Thus, for all
intents and purposes, the stock distribution scheme under Sec. 31 of RA 6657 is
no longer an available option under existing law. The question of whether or
not it is unconstitutional should be a moot issue.
It is true that the Court, in some cases, has proceeded to resolve constitutional
issues otherwise already moot and academic114 provided the following
requisites are present:
x x x 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 the constitutional issue raised requires formulation of
controlling principles to guide the bench, the bar, and the public; fourth, the
case is capable of repetition yet evading review.
These requisites do not obtain in the case at bar.
For one, there appears to be no breach of the fundamental law. Sec. 4, Article
XIII of the Constitution reads:
The State shall, by law, undertake an agrarian reform program founded on the
right of the farmers and regular farmworkers, who are landless, to OWN
directly or COLLECTIVELY THE LANDS THEY TILL or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of all agricultural
lands, subject to such priorities and reasonable retention limits as the Congress
may prescribe, taking into account ecological, developmental, or equity
considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary landsharing. (Emphasis supplied.)
The wording of the provision is unequivocalthe farmers and regular
farmworkers have a right TO OWN DIRECTLY OR COLLECTIVELY THE LANDS
THEY TILL. The basic law allows two (2) modes of land distributiondirect and
indirect ownership. Direct transfer to individual farmers is the most commonly
used method by DAR and widely accepted. Indirect transfer through collective
ownership of the agricultural land is the alternative to direct ownership of
agricultural land by individual farmers. The aforequoted Sec. 4 EXPRESSLY
authorizes collective ownership by farmers. No language can be found in the
1987 Constitution that disqualifies or prohibits corporations or cooperatives of
farmers from being the legal entity through which collective ownership can be
exercised. The word "collective" is defined as "indicating a number of persons
Constitution are in unison with respect to the two (2) modes of ownership of
agricultural lands tilled by farmersDIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase "to own directly," we mean the
principle of direct ownership by the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of "collectively," we mean communal
ownership, stewardship or State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is farmers
cooperatives owning the land, not the State.
MR. NOLLEDO. And when we talk of "collectively," referring to farmers
cooperatives, do the farmers own specific areas of land where they only unite
in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic systems involved:
the "moshave" type of agriculture and the "kibbutz." So are both contemplated
in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na
reporma sa lupa ay ang pagmamay-ari ng lupa na hahatiin sa individual na
pagmamay-ari directly at ang tinatawag na sama-samang gagawin ng mga
magbubukid. Tulad sa Negros, ang gusto ng mga magbubukid ay gawin nila
itong "cooperative or collective farm." Ang ibig sabihin ay sama-sama nilang
sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of "to own directly or collectively the
lands they till," is this land for the tillers rather than land for the landless?
Before, we used to hear "land for the landless," but now the slogan is "land for
the tillers." Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig
sabihin ng "directly" ay tulad sa implementasyon sa rice and corn lands kung
saan inaari na ng mga magsasaka ang lupang binubungkal nila. Ang ibig sabihin
naman ng "collectively" ay sama-samang paggawa sa isang lupain o isang bukid,
katulad ng sitwasyon sa Negros.117 (Emphasis supplied.)
FARM contends that the farmers in the stock distribution scheme under Sec. 31
do not own the agricultural land but are merely given stock certificates. Thus,
the farmers lose control over the land to the board of directors and executive
officials of the corporation who actually manage the land. They conclude that
such arrangement runs counter to the mandate of the Constitution that any
agrarian reform must preserve the control over the land in the hands of the
tiller.
With the view We take of this case, the stock distribution option devised under
Sec. 31 of RA 6657 hews with the agrarian reform policy, as instrument of
social justice under Sec. 4 of Article XIII of the Constitution. Albeit land
ownership for the landless appears to be the dominant theme of that policy,
We emphasize that Sec. 4, Article XIII of the Constitution, as couched, does not
constrict Congress to passing an agrarian reform law planted on direct land
transfer to and ownership by farmers and no other, or else the enactment
suffers from the vice of unconstitutionality. If the intention were otherwise,
the framers of the Constitution would have worded said section in a manner
mandatory in character.
For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer
features, is not inconsistent with the States commitment to farmers and
farmworkers to advance their interests under the policy of social justice. The
legislature, thru Sec. 31 of RA 6657, has chosen a modality for collective
ownership by which the imperatives of social justice may, in its estimation, be
approximated, if not achieved. The Court should be bound by such policy
choice.
While it is true that the farmer is issued stock certificates and does not directly
own the land, still, the Corporation Code is clear that the FWB becomes a
stockholder who acquires an equitable interest in the assets of the corporation,
which include the agricultural lands. It was explained that the "equitable
interest of the shareholder in the property of the corporation is represented by
the term stock, and the extent of his interest is described by the term shares.
The expression shares of stock when qualified by words indicating number and
ownership expresses the extent of the owners interest in the corporate
property."119 A share of stock typifies an aliquot part of the corporations
property, or the right to share in its proceeds to that extent when distributed
according to law and equity and that its holder is not the owner of any part of
the capital of the corporation.120 However, the FWBs will ultimately own the
agricultural lands owned by the corporation when the corporation is eventually
dissolved and liquidated.
Anent the alleged loss of control of the farmers over the agricultural land
operated and managed by the corporation, a reading of the second paragraph
of Sec. 31 shows otherwise. Said provision provides that qualified beneficiaries
have "the right to purchase such proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total assets." The wording of the
formula in the computation of the number of shares that can be bought by the
farmers does not mean loss of control on the part of the farmers. It must be
remembered that the determination of the percentage of the capital stock that
can be bought by the farmers depends on the value of the agricultural land and
the value of the total assets of the corporation.
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657.
The policy on agrarian reform is that control over the agricultural land must
always be in the hands of the farmers. Then it falls on the shoulders of DAR and
PARC to see to it the farmers should always own majority of the common
shares entitled to elect the members of the board of directors to ensure that
the farmers will have a clear majority in the board. Before the SDP is
approved, strict scrutiny of the proposed SDP must always be undertaken by
the DAR and PARC, such that the value of the agricultural land contributed to
the corporation must always be more than 50% of the total assets of the
corporation to ensure that the majority of the members of the board of
directors are composed of the farmers. The PARC composed of the President of
the Philippines and cabinet secretaries must see to it that control over the
board of directors rests with the farmers by rejecting the inclusion of nonagricultural assets which will yield the majority in the board of directors to
non-farmers. Any deviation, however, by PARC or DAR from the correct
application of the formula prescribed by the second paragraph of Sec. 31 of RA
6675 does not make said provision constitutionally infirm. Rather, it is the
application of said provision that can be challenged. Ergo, Sec. 31 of RA 6657
does not trench on the constitutional policy of ensuring control by the farmers.
A view has been advanced that there can be no agrarian reform unless there is
land distribution and that actual land distribution is the essential characteristic
of a constitutional agrarian reform program. On the contrary, there have been
so many instances where, despite actual land distribution, the implementation
of agrarian reform was still unsuccessful. As a matter of fact, this Court may
take judicial notice of cases where FWBs sold the awarded land even to nonqualified persons and in violation of the prohibition period provided under the
law. This only proves to show that the mere fact that there is land distribution
does not guarantee a successful implementation of agrarian reform.
As it were, the principle of "land to the tiller" and the old pastoral model of
land ownership where non-human juridical persons, such as corporations, were
prohibited from owning agricultural lands are no longer realistic under existing
conditions. Practically, an individual farmer will often face greater
disadvantages and difficulties than those who exercise ownership in a
collective manner through a cooperative or corporation. The former is too
often left to his own devices when faced with failing crops and bad weather, or
compelled to obtain usurious loans in order to purchase costly fertilizers or
farming equipment. The experiences learned from failed land reform activities
in various parts of the country are lack of financing, lack of farm equipment,
lack of fertilizers, lack of guaranteed buyers of produce, lack of farm-tomarket roads, among others. Thus, at the end of the day, there is still no
successful implementation of agrarian reform to speak of in such a case.
Although success is not guaranteed, a cooperative or a corporation stands in a
better position to secure funding and competently maintain the agri-business
than the individual farmer. While direct singular ownership over farmland does
offer advantages, such as the ability to make quick decisions unhampered by
interference from others, yet at best, these advantages only but offset the
disadvantages that are often associated with such ownership arrangement.
Thus, government must be flexible and creative in its mode of implementation
to better its chances of success. One such option is collective ownership
through juridical persons composed of farmers.
Aside from the fact that there appears to be no violation of the Constitution,
the requirement that the instant case be capable of repetition yet evading
review is also wanting. It would be speculative for this Court to assume that
the legislature will enact another law providing for a similar stock option.
As a matter of sound practice, the Court will not interfere inordinately with the
exercise by Congress of its official functions, the heavy presumption being that
a law is the product of earnest studies by Congress to ensure that no
constitutional prescription or concept is infringed.121 Corollarily, courts will not
pass upon questions of wisdom, expediency and justice of legislation or its
provisions. Towards this end, all reasonable doubts should be resolved in favor
of the constitutionality of a law and the validity of the acts and processes
taken pursuant thereof.122
Consequently, before a statute or its provisions duly challenged are voided, an
unequivocal breach of, or a clear conflict with the Constitution, not merely a
doubtful or argumentative one, must be demonstrated in such a manner as to
leave no doubt in the mind of the Court. In other words, the grounds for nullity
must be beyond reasonable doubt.123 FARM has not presented compelling
arguments to overcome the presumption of constitutionality of Sec. 31 of RA
6657.
The wisdom of Congress in allowing an SDP through a corporation as an
alternative mode of implementing agrarian reform is not for judicial
determination. Established jurisprudence tells us that it is not within the
province of the Court to inquire into the wisdom of the law, for, indeed, We
are bound by words of the statute.124
II.
The stage is now set for the determination of the propriety under the premises
of the revocation or recall of HLIs SDP. Or to be more precise, the inquiry
should be: whether or not PARC gravely abused its discretion in revoking or
recalling the subject SDP and placing the hacienda under CARPs compulsory
acquisition and distribution scheme.
The findings, analysis and recommendation of the DARs Special Task Force
contained and summarized in its Terminal Report provided the bases for the
assailed PARC revocatory/recalling Resolution. The findings may be grouped
into two: (1) the SDP is contrary to either the policy on agrarian reform, Sec.
31 of RA 6657, or DAO 10; and (2) the alleged violation by HLI of the
conditions/terms of the SDP. In more particular terms, the following are
essentially the reasons underpinning PARCs revocatory or recall action:
(1) Despite the lapse of 16 years from the approval of HLIs SDP, the
lives of the FWBs have hardly improved and the promised increased
income has not materialized;
(2) HLI has failed to keep Hacienda Luisita intact and unfragmented;
(3) The issuance of HLI shares of stock on the basis of number of hours
workedor the so-called "man days"is grossly onerous to the FWBs, as
HLI, in the guise of rotation, can unilaterally deny work to anyone. In
elaboration of this ground, PARCs Resolution No. 2006-34-01, denying
HLIs motion for reconsideration of Resolution No. 2005-32-01, stated
that the man days criterion worked to dilute the entitlement of the
original share beneficiaries;125
(4) The distribution/transfer of shares was not in accordance with the
timelines fixed by law;
(5) HLI has failed to comply with its obligations to grant 3% of the gross
sales every year as production-sharing benefit on top of the workers
salary; and
(6) Several homelot awardees have yet to receive their individual
titles.
Petitioner HLI claims having complied with, at least substantially, all its
obligations under the SDP, as approved by PARC itself, and tags the reasons
given for the revocation of the SDP as unfounded.
Public respondents, on the other hand, aver that the assailed resolution rests
on solid grounds set forth in the Terminal Report, a position shared by AMBALA,
which, in some pleadings, is represented by the same counsel as that appearing
for the Supervisory Group.
FARM, for its part, posits the view that legal bases obtain for the revocation of
the SDP, because it does not conform to Sec. 31 of RA 6657 and DAO 10. And
training its sight on the resulting dilution of the equity of the FWBs appearing
in HLIs masterlist, FARM would state that the SDP, as couched and
implemented, spawned disparity when there should be none; parity when there
should have been differentiation.126
The petition is not impressed with merit.
In the Terminal Report adopted by PARC, it is stated that the SDP violates the
agrarian reform policy under Sec. 2 of RA 6657, as the said plan failed to
enhance the dignity and improve the quality of lives of the FWBs through
greater productivity of agricultural lands. We disagree.
Sec. 2 of RA 6657 states:
Option was Approved by PARC/CARP," detailing what HLI gave their workers
from 1989 to 2005. The sum total, as added up by the Court, yields the
following numbers: Total Direct Cash Out (Salaries/Wages & Cash Benefits) =
PhP 2,927,848; Total Non-Direct Cash Out (Hospital/Medical Benefits) = PhP
303,040. The cash out figures, as stated in the report, include the cost of
homelots; the PhP 150 million or so representing 3% of the gross produce of the
hacienda; and the PhP 37.5 million representing 3% from the proceeds of the
sale of the 500-hectare converted lands. While not included in the report, HLI
manifests having given the FWBs 3% of the PhP 80 million paid for the 80
hectares of land traversed by the SCTEX.128 On top of these, it is worth
remembering that the shares of stocks were given by HLI to the FWBs for free.
Verily, the FWBs have benefited from the SDP.
To address urgings that the FWBs be allowed to disengage from the SDP as HLI
has not anyway earned profits through the years, it cannot be over-emphasized
that, as a matter of common business sense, no corporation could guarantee a
profitable run all the time. As has been suggested, one of the key features of
an SDP of a corporate landowner is the likelihood of the corporate vehicle not
earning, or, worse still, losing money.129
The Court is fully aware that one of the criteria under DAO 10 for the PARC to
consider the advisability of approving a stock distribution plan is the likelihood
that the plan "would result in increased income and greater benefits to
[qualified beneficiaries] than if the lands were divided and distributed to them
individually."130 But as aptly noted during the oral arguments, DAO 10 ought to
have not, as it cannot, actually exact assurance of success on something that is
subject to the will of man, the forces of nature or the inherent risky nature of
business.131 Just like in actual land distribution, an SDP cannot guarantee, as
indeed the SDOA does not guarantee, a comfortable life for the FWBs. The
Court can take judicial notice of the fact that there were many instances
wherein after a farmworker beneficiary has been awarded with an agricultural
land, he just subsequently sells it and is eventually left with nothing in the
end.
In all then, the onerous condition of the FWBs economic status, their life of
hardship, if that really be the case, can hardly be attributed to HLI and its SDP
and provide a valid ground for the plans revocation.
Neither does HLIs SDP, whence the DAR-attested SDOA/MOA is based, infringe
Sec. 31 of RA 6657, albeit public respondents erroneously submit otherwise.
The provisions of the first paragraph of the adverted Sec. 31 are without
relevance to the issue on the propriety of the assailed order revoking HLIs
SDP, for the paragraph deals with the transfer of agricultural lands to the
government, as a mode of CARP compliance, thus:
Paragraph one (1) of the SDOA, which was based on the SDP, conforms to Sec.
31 of RA 6657. The stipulation reads:
that there has been no violation of the statutory prescription under subparagraph (a) on the auditing of HLIs accounts.
The appraised value of the agricultural land is PhP 196,630,000 and of HLIs
other assets is PhP 393,924,220. The total value of HLIs assets is, therefore,
PhP 590,554,220.132 The percentage of the value of the agricultural lands (PhP
196,630,000) in relation to the total assets (PhP 590,554,220) is 33.296%, which
represents the stockholdings of the 6,296 original qualified farmworkerbeneficiaries (FWBs) in HLI. The total number of shares to be distributed to
said qualified FWBs is 118,391,976.85 HLI shares. This was arrived at by getting
33.296% of the 355,531,462 shares which is the outstanding capital stock of HLI
with a value of PhP 355,531,462. Thus, if we divide the 118,391,976.85 HLI
shares by 6,296 FWBs, then each FWB is entitled to 18,804.32 HLI shares. These
shares under the SDP are to be given to FWBs for free.
The Court finds that the determination of the shares to be distributed to the
6,296 FWBs strictly adheres to the formula prescribed by Sec. 31(b) of RA 6657.
Anent the requirement under Sec. 31(b) of the third paragraph, that the FWBs
shall be assured of at least one (1) representative in the board of directors or
in a management or executive committee irrespective of the value of the
equity of the FWBs in HLI, the Court finds that the SDOA contained provisions
making certain the FWBs representation in HLIs governing board, thus:
5. Even if only a part or fraction of the shares earmarked for distribution will
have been acquired from the FIRST PARTY and distributed to the THIRD PARTY,
FIRST PARTY shall execute at the beginning of each fiscal year an irrevocable
proxy, valid and effective for one (1) year, in favor of the farmworkers
appearing as shareholders of the SECOND PARTY at the start of said year which
will empower the THIRD PARTY or their representative to vote in stockholders
and board of directors meetings of the SECOND PARTY convened during the
year the entire 33.296% of the outstanding capital stock of the SECOND PARTY
earmarked for distribution and thus be able to gain such number of seats in the
board of directors of the SECOND PARTY that the whole 33.296% of the shares
subject to distribution will be entitled to.
Also, no allegations have been made against HLI restricting the inspection of its
books by accountants chosen by the FWBs; hence, the assumption may be made
continued operation of the corporation with its agricultural land intact and
unfragmented is viable with potential for growth and increased profitability."
The PARC is wrong.
In the first place, Sec. 5(a)just like the succeeding Sec. 5(b) of DAO 10 on
increased income and greater benefits to qualified beneficiariesis but one of
the stated criteria to guide PARC in deciding on whether or not to accept an
SDP. Said Sec. 5(a) does not exact from the corporate landowner-applicant the
undertaking to keep the farm intact and unfragmented ad infinitum. And there
is logic to HLIs stated observation that the key phrase in the provision of Sec.
5(a) is "viability of corporate operations": "[w]hat is thus required is not the
agricultural land remaining intact x x x but the viability of the corporate
operations with its agricultural land being intact and unfragmented. Corporate
operation may be viable even if the corporate agricultural land does not remain
intact or [un]fragmented."134
It is, of course, anti-climactic to mention that DAR viewed the conversion as
not violative of any issuance, let alone undermining the viability of Hacienda
Luisitas operation, as the DAR Secretary approved the land conversion applied
for and its disposition via his Conversion Order dated August 14, 1996 pursuant
to Sec. 65 of RA 6657 which reads:
especially when they are affirmed by the CA.135 However, such rule is not
absolute. One such exception is when the findings of an administrative agency
are conclusions without citation of specific evidence on which they are
based,136 such as in this particular instance. As culled from its Terminal Report,
it would appear that the Special Task Force rejected HLIs claim of compliance
on the basis of this ratiocination:
Sec. 65. Conversion of Lands.After the lapse of five years from its award
when the land ceases to be economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes, the DAR
upon application of the beneficiary or landowner with due notice to the
affected parties, and subject to existing laws, may authorize the x x x
conversion of the land and its dispositions. x x x
On the 3% Production Share
On the matter of the alleged failure of HLI to comply with sharing the 3% of the
gross production sales of the hacienda and pay dividends from profit, the
entries in its financial books tend to indicate compliance by HLI of the profitsharing equivalent to 3% of the gross sales from the production of the
agricultural land on top of (a) the salaries and wages due FWBs as employees of
the company and (b) the 3% of the gross selling price of the converted land and
that portion used for the SCTEX. A plausible evidence of compliance or noncompliance, as the case may be, could be the books of account of HLI.
Evidently, the cry of some groups of not having received their share from the
gross production sales has not adequately been validated on the ground by the
Special Task Force.
Indeed, factual findings of administrative agencies are conclusive when
supported by substantial evidence and are accorded due respect and weight,
The FWBs do not receive any other benefits under the MOA except the
aforementioned [(viz: shares of stocks (partial), 3% gross production
sale (not all) and homelots (not all)].
Judging from the above statements, the Special Task Force is at best silent on
whether HLI has failed to comply with the 3% production-sharing obligation or
the 3% of the gross selling price of the converted land and the SCTEX lot. In
fact, it admits that the FWBs, though not all, have received their share of the
gross production sales and in the sale of the lot to SCTEX. At most, then, HLI
had complied substantially with this SDP undertaking and the conversion order.
To be sure, this slight breach would not justify the setting to naught by PARC of
the approval action of the earlier PARC. Even in contract law, rescission,
predicated on violation of reciprocity, will not be permitted for a slight or
casual breach of contract; rescission may be had only for such breaches that
are substantial and fundamental as to defeat the object of the parties in
making the agreement.137
Despite the foregoing findings, the revocation of the approval of the SDP is not
without basis as shown below.
On Titles to Homelots
Under RA 6657, the distribution of homelots is required only for corporations or
business associations owning or operating farms which opted for land
distribution. Sec. 30 of RA 6657 states:
SEC. 30. Homelots and Farmlots for Members of Cooperatives.The individual
members of the cooperatives or corporations mentioned in the preceding
section shall be provided with homelots and small farmlots for their family use,
to be taken from the land owned by the cooperative or corporation.
The "preceding section" referred to in the above-quoted provision is as follows:
SEC. 29. Farms Owned or Operated by Corporations or Other Business
Associations.In the case of farms owned or operated by corporations or other
business associations, the following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual workerbeneficiaries.
In case it is not economically feasible and sound to divide the land, then it
shall be owned collectively by the worker-beneficiaries who shall form a
workers cooperative or association which will deal with the corporation or
business association. Until a new agreement is entered into by and between
the workers cooperative or association and the corporation or business
association, any agreement existing at the time this Act takes effect between
the former and the previous landowner shall be respected by both the workers
cooperative or association and the corporation or business association.
Noticeably, the foregoing provisions do not make reference to corporations
which opted for stock distribution under Sec. 31 of RA 6657. Concomitantly,
said corporations are not obliged to provide for it except by stipulation, as in
this case.
Under the SDP, HLI undertook to "subdivide and allocate for free and without
charge among the qualified family-beneficiaries x x x residential or homelots of
not more than 240 sq. m. each, with each family beneficiary being assured of
receiving and owning a homelot in the barrio or barangay where it actually
resides," "within a reasonable time."
More than sixteen (16) years have elapsed from the time the SDP was approved
by PARC, and yet, it is still the contention of the FWBs that not all was given
the 240-square meter homelots and, of those who were already given, some
still do not have the corresponding titles.
During the oral arguments, HLI was afforded the chance to refute the foregoing
allegation by submitting proof that the FWBs were already given the said
homelots:
Justice Velasco: x x x There is also an allegation that the farmer beneficiaries,
the qualified family beneficiaries were not given the 240 square meters each.
So, can you also [prove] that the qualified family beneficiaries were already
provided the 240 square meter homelots.
Atty. Asuncion: We will, your Honor please.138
Other than the financial report, however, no other substantial proof showing
that all the qualified beneficiaries have received homelots was submitted by
HLI. Hence, this Court is constrained to rule that HLI has not yet fully complied
with its undertaking to distribute homelots to the FWBs under the SDP.
On "Man Days" and the Mechanics of Stock Distribution
In our review and analysis of par. 3 of the SDOA on the mechanics and timelines
of stock distribution, We find that it violates two (2) provisions of DAO 10. Par.
3 of the SDOA states:
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY
[HLI] shall arrange with the FIRST PARTY [TDC] the acquisition and distribution
to the THIRD PARTY [FWBs] on the basis of number of days worked and at no
cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital
stock of the SECOND PARTY that are presently owned and held by the FIRST
PARTY, until such time as the entire block of 118,391,976.85 shares shall have
been completely acquired and distributed to the THIRD PARTY.
Based on the above-quoted provision, the distribution of the shares of stock to
the FWBs, albeit not entailing a cash out from them, is contingent on the
number of "man days," that is, the number of days that the FWBs have worked
during the year. This formula deviates from Sec. 1 of DAO 10, which decrees
the distribution of equal number of shares to the FWBs as the minimum ratio of
shares of stock for purposes of compliance with Sec. 31 of RA 6657. As stated in
Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan.The [SDP] submitted by the corporate
landowner-applicant shall provide for the distribution of an equal number of
shares of the same class and value, with the same rights and features as all
other shares, to each of the qualified beneficiaries. This distribution plan in all
cases, shall be at least the minimum ratio for purposes of compliance with
Section 31 of R.A. No. 6657.
On top of the minimum ratio provided under Section 3 of this Implementing
Guideline, the corporate landowner-applicant may adopt additional stock
distribution schemes taking into account factors such as rank, seniority, salary,
position and other circumstances which may be deemed desirable as a matter
of sound company policy. (Emphasis supplied.)
The above proviso gives two (2) sets or categories of shares of stock which a
qualified beneficiary can acquire from the corporation under the SDP. The first
pertains, as earlier explained, to the mandatory minimum ratio of shares of
stock to be distributed to the FWBs in compliance with Sec. 31 of RA 6657. This
minimum ratio contemplates of that "proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural
activities, bears in relation to the companys total assets."139 It is this set of
shares of stock which, in line with Sec. 4 of DAO 10, is supposed to be allocated
"for the distribution of an equal number of shares of stock of the same class
and value, with the same rights and features as all other shares, to each of the
qualified beneficiaries."
On the other hand, the second set or category of shares partakes of a
gratuitous extra grant, meaning that this set or category constitutes an
augmentation share/s that the corporate landowner may give under an
additional stock distribution scheme, taking into account such variables as
rank, seniority, salary, position and like factors which the management, in the
exercise of its sound discretion, may deem desirable.140
Before anything else, it should be stressed that, at the time PARC approved
HLIs SDP, HLI recognized 6,296 individuals as qualified FWBs. And under the
30-year stock distribution program envisaged under the plan, FWBs who came
in after 1989, new FWBs in fine, may be accommodated, as they appear to
have in fact been accommodated as evidenced by their receipt of HLI shares.
Now then, by providing that the number of shares of the original 1989 FWBs
shall depend on the number of "man days," HLI violated the afore-quoted rule
on stock distribution and effectively deprived the FWBs of equal shares of stock
in the corporation, for, in net effect, these 6,296 qualified FWBs, who
theoretically had given up their rights to the land that could have been
distributed to them, suffered a dilution of their due share entitlement. As has
been observed during the oral arguments, HLI has chosen to use the shares
earmarked for farmworkers as reward system chips to water down the shares of
the original 6,296 FWBs.141 Particularly:
Justice Abad: If the SDOA did not take place, the other thing that would have
happened is that there would be CARP?
Justice Abad: So why is it that the rights of those who gave up their lands
would be diluted, because the company has chosen to use the shares as reward
system for new workers who come in? It is not that the new workers, in effect,
become just workers of the corporation whose stockholders were already fixed.
The TADECO who has shares there about sixty six percent (66%) and the five
thousand four hundred ninety eight (5,498) farmers at the time of the SDOA?
Explain to me. Why, why will you x x x what right or where did you get that
right to use this shares, to water down the shares of those who should have
been benefited, and to use it as a reward system decided by the company?142
It is evident from the foregoing provision that the implementation, that is, the
distribution of the shares of stock to the FWBs, must be made within three (3)
months from receipt by HLI of the approval of the stock distribution plan by
PARC. While neither of the clashing parties has made a compelling case of the
thrust of this provision, the Court is of the view and so holds that the intent is
to compel the corporate landowner to complete, not merely initiate, the
transfer process of shares within that three-month timeframe. Reinforcing this
conclusion is the 60-day stock transfer recording (with the SEC) requirement
reckoned from the implementation of the SDP.
From the above discourse, it is clear as day that the original 6,296 FWBs, who
were qualified beneficiaries at the time of the approval of the SDP, suffered
from watering down of shares. As determined earlier, each original FWB is
entitled to 18,804.32 HLI shares. The original FWBs got less than the
guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition and
distribution of the HLI shares were based on "man days" or "number of days
worked" by the FWB in a years time. As explained by HLI, a beneficiary needs
to work for at least 37 days in a fiscal year before he or she becomes entitled
to HLI shares. If it falls below 37 days, the FWB, unfortunately, does not get
any share at year end. The number of HLI shares distributed varies depending
on the number of days the FWBs were allowed to work in one year. Worse, HLI
hired farmworkers in addition to the original 6,296 FWBs, such that, as
indicated in the Compliance dated August 2, 2010 submitted by HLI to the
Court, the total number of farmworkers of HLI as of said date stood at 10,502.
All these farmworkers, which include the original 6,296 FWBs, were given
shares out of the 118,931,976.85 HLI shares representing the 33.296% of the
total outstanding capital stock of HLI. Clearly, the minimum individual
allocation of each original FWB of 18,804.32 shares was diluted as a result of
the use of "man days" and the hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA expressly providing
for a 30-year timeframe for HLI-to-FWBs stock transfer is an arrangement
contrary to what Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the
implementation of the approved stock distribution plan within three (3) months
from receipt by the corporate landowner of the approval of the plan by PARC.
In fact, based on the said provision, the transfer of the shares of stock in the
names of the qualified FWBs should be recorded in the stock and transfer books
and must be submitted to the SEC within sixty (60) days from implementation.
As stated:
Section 11. Implementation/Monitoring of Plan.The approved stock
distribution plan shall be implemented within three (3) months from receipt by
the corporate landowner-applicant of the approval thereof by the PARC, and
the transfer of the shares of stocks in the names of the qualified beneficiaries
shall be recorded in stock and transfer books and submitted to the Securities
and Exchange Commission (SEC) within sixty (60) days from the said
implementation of the stock distribution plan. (Emphasis supplied.)
The argument is urged that the thirty (30)-year distribution program is justified
by the fact that, under Sec. 26 of RA 6657, payment by beneficiaries of land
distribution under CARP shall be made in thirty (30) annual amortizations. To
HLI, said section provides a justifying dimension to its 30-year stock
distribution program.
HLIs reliance on Sec. 26 of RA 6657, quoted in part below, is obviously
misplaced as the said provision clearly deals with land distribution.
SEC. 26. Payment by Beneficiaries.Lands awarded pursuant to this Act shall
be paid for by the beneficiaries to the LBP in thirty (30) annual amortizations x
x x.
Then, too, the ones obliged to pay the LBP under the said provision are the
beneficiaries. On the other hand, in the instant case, aside from the fact that
what is involved is stock distribution, it is the corporate landowner who has the
obligation to distribute the shares of stock among the FWBs.
Evidently, the land transfer beneficiaries are given thirty (30) years within
which to pay the cost of the land thus awarded them to make it less
cumbersome for them to pay the government. To be sure, the reason
underpinning the 30-year accommodation does not apply to corporate
landowners in distributing shares of stock to the qualified beneficiaries, as the
shares may be issued in a much shorter period of time.
Taking into account the above discussion, the revocation of the SDP by PARC
should be upheld for violating DAO 10. It bears stressing that under Sec. 49 of
RA 6657, the PARC and the DAR have the power to issue rules and regulations,
substantive or procedural. Being a product of such rule-making power, DAO 10
has the force and effect of law and must be duly complied with.143 The PARC is,
therefore, correct in revoking the SDP. Consequently, the PARC Resolution No.
89-12-2 dated November 21, l989 approving the HLIs SDP is nullified and
voided.
III.
We now resolve the petitions-in-intervention which, at bottom, uniformly pray
for the exclusion from the coverage of the assailed PARC resolution those
portions of the converted land within Hacienda Luisita which RCBC and LIPCO
acquired by purchase.
Both contend that they are innocent purchasers for value of portions of the
converted farm land. Thus, their plea for the exclusion of that portion from
PARC Resolution 2005-32-01, as implemented by a DAR-issued Notice of
Coverage dated January 2, 2006, which called for mandatory CARP acquisition
coverage of lands subject of the SDP.
To restate the antecedents, after the conversion of the 500 hectares of land in
Hacienda Luisita, HLI transferred the 300 hectares to Centennary, while ceding
the remaining 200-hectare portion to LRC. Subsequently, LIPCO purchased the
entire three hundred (300) hectares of land from Centennary for the purpose of
developing the land into an industrial complex.144 Accordingly, the TCT in
Centennarys name was canceled and a new one issued in LIPCOs name.
Thereafter, said land was subdivided into two (2) more parcels of land. Later
on, LIPCO transferred about 184 hectares to RCBC by way of dacion en pago, by
virtue of which TCTs in the name of RCBC were subsequently issued.
Under Sec. 44 of PD 1529 or the Property Registration Decree, "every registered
owner receiving a certificate of title in pursuance of a decree of registration
and every subsequent purchaser of registered land taking a certificate of title
for value and in good faith shall hold the same free from all encumbrances
except those noted on the certificate and enumerated therein."145
It is settled doctrine that one who deals with property registered under the
Torrens system need not go beyond the four corners of, but can rely on what
appears on, the title. He is charged with notice only of such burdens and claims
as are annotated on the title. This principle admits of certain exceptions, such
as when the party has actual knowledge of facts and circumstances that would
impel a reasonably cautious man to make such inquiry, or when the purchaser
has knowledge of a defect or the lack of title in his vendor or of sufficient facts
to induce a reasonably prudent man to inquire into the status of the title of the
property in litigation.146 A higher level of care and diligence is of course
expected from banks, their business being impressed with public interest.147
Millena v. Court of Appeals describes a purchaser in good faith in this wise:
correctness of the certificate of title thus issued, acquire rights over the
property, the court cannot disregard such rights and order the cancellation
of the certificate. The effect of such outright cancellation will be to impair
public confidence in the certificate of title. The sanctity of the Torrens system
must be preserved; otherwise, everyone dealing with the property registered
under the system will have to inquire in every instance as to whether the title
had been regularly or irregularly issued, contrary to the evident purpose of the
law.
Being purchasers in good faith, the Chuas already acquired valid title to the
property. A purchaser in good faith holds an indefeasible title to the
property and he is entitled to the protection of the law.152 x x x (Emphasis
supplied.)
To be sure, the practicalities of the situation have to a point influenced Our
disposition on the fate of RCBC and LIPCO. After all, the Court, to borrow from
Association of Small Landowners in the Philippines, Inc.,153 is not a "cloistered
institution removed" from the realities on the ground. To note, the approval
and issuances of both the national and local governments showing that certain
portions of Hacienda Luisita have effectively ceased, legally and physically, to
be agricultural and, therefore, no longer CARPable are a matter of fact which
cannot just be ignored by the Court and the DAR. Among the
approving/endorsing issuances:154
(a) Resolution No. 392 dated 11 December 1996 of the Sangguniang
Bayan of Tarlac favorably endorsing the 300-hectare industrial estate
project of LIPCO;
(b) BOI Certificate of Registration No. 96-020 dated 20 December 1996
issued in accordance with the Omnibus Investments Code of 1987;
(c) PEZA Certificate of Board Resolution No. 97-202 dated 27 June
1997, approving LIPCOs application for a mixed ecozone and
proclaiming the three hundred (300) hectares of the industrial land as
a Special Economic Zone;
(d) Resolution No. 234 dated 08 August 1997 of the Sangguniang Bayan
of Tarlac, approving the Final Development Permit for the Luisita
Industrial Park II Project;
(e) Development Permit dated 13 August 1997 for the proposed Luisita
Industrial Park II Project issued by the Office of the Sangguniang Bayan
of Tarlac;155
While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC
Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its eyes to
certain "operative facts" that had occurred in the interim. Pertinently, the
"operative fact" doctrine realizes that, in declaring a law or executive action
null and void, or, by extension, no longer without force and effect, undue
harshness and resulting unfairness must be avoided. This is as it should
realistically be, since rights might have accrued in favor of natural or juridical
persons and obligations justly incurred in the meantime.160 The actual
existence of a statute or executive act is, prior to such a determination, an
operative fact and may have consequences which cannot justly be ignored; the
past cannot always be erased by a new judicial declaration.161
The oft-cited De Agbayani v. Philippine National Bank162 discussed the effect to
be given to a legislative or executive act subsequently declared invalid:
x x x It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to be
complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have
acted under it and may have changed their positions. What could be more
fitting than that in a subsequent litigation regard be had to what has been done
while such legislative or executive act was in operation and presumed to be
valid in all respects. It is now accepted as a doctrine that prior to its being
nullified, its existence as a fact must be reckoned with. This is merely to
reflect awareness that precisely because the judiciary is the government organ
which has the final say on whether or not a legislative or executive measure is
valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive
the law of its quality of fairness and justice then, if there be no recognition of
what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence
of a statute, prior to such a determination of [unconstitutionality], is an
operative fact and may have consequences which cannot justly be ignored. The
past cannot always be erased by a new judicial declaration. The effect of the
subsequent ruling as to invalidity may have to be considered in various
aspects,with respect to particular relations, individual and corporate, and
particular conduct, private and official." x x x
Given the above perspective and considering that more than two decades had
passed since the PARCs approval of the HLIs SDP, in conjunction with
numerous activities performed in good faith by HLI, and the reliance by the
FWBs on the legality and validity of the PARC-approved SDP, perforce, certain
rights of the parties, more particularly the FWBs, have to be respected
pursuant to the application in a general way of the operative fact doctrine.
A view, however, has been advanced that the operative fact doctrine is of
minimal or altogether without relevance to the instant case as it applies only in
considering the effects of a declaration of unconstitutionality of a statute, and
not of a declaration of nullity of a contract. This is incorrect, for this view
failed to consider is that it is NOT the SDOA dated May 11, 1989 which was
revoked in the instant case. Rather, it is PARCs approval of the HLIs Proposal
for Stock Distribution under CARP which embodied the SDP that was nullified.
A recall of the antecedent events would show that on May 11, 1989, Tadeco,
HLI, and the qualified FWBs executed the SDOA. This agreement provided the
basis and mechanics of the SDP that was subsequently proposed and submitted
to DAR for approval. It was only after its review that the PARC, through then
Sec. Defensor-Santiago, issued the assailed Resolution No. 89-12-2 approving
the SDP. Considerably, it is not the SDOA which gave legal force and effect to
the stock distribution scheme but instead, it is the approval of the SDP under
the PARC Resolution No. 89-12-2 that gave it its validity.
The above conclusion is bolstered by the fact that in Sec. Pangandamans
recommendation to the PARC Excom, what he proposed is the recall/revocation
of PARC Resolution No. 89-12-2 approving HLIs SDP, and not the revocation of
the SDOA. Sec. Pangandamans recommendation was favorably endorsed by the
PARC Validation Committee to the PARC Excom, and these recommendations
were referred to in the assailed Resolution No. 2005-32-01. Clearly, it is not
the SDOA which was made the basis for the implementation of the stock
distribution scheme.
That the operative fact doctrine squarely applies to executive actsin this
case, the approval by PARC of the HLI proposal for stock distributionis wellsettled in our jurisprudence. In Chavez v. National Housing Authority,163 We
held:
Petitioner postulates that the "operative fact" doctrine is inapplicable to the
present case because it is an equitable doctrine which could not be used to
countenance an inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues that the existence of
the various agreements implementing the SMDRP is an operative fact that can
no longer be disturbed or simply ignored, citing Rieta v. People of the
Philippines.
The argument of the Solicitor General is meritorious.
The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals,
wherein it is stated that a legislative or executive act, prior to its being
declared as unconstitutional by the courts, is valid and must be complied with,
thus:
xxx
xxx
xxx
This doctrine was reiterated in the more recent case of City of Makati v. Civil
Service Commission, wherein we ruled that:
Moreover, we certainly cannot nullify the City Government's order of
suspension, as we have no reason to do so, much less retroactively apply such
nullification to deprive private respondent of a compelling and valid reason for
not filing the leave application. For as we have held, a void act though in law a
mere scrap of paper nonetheless confers legitimacy upon past acts or omissions
done in reliance thereof. Consequently, the existence of a statute or executive
order prior to its being adjudged void is an operative fact to which legal
consequences are attached. It would indeed be ghastly unfair to prevent
private respondent from relying upon the order of suspension in lieu of a formal
leave application. (Citations omitted; Emphasis supplied.)
The applicability of the operative fact doctrine to executive acts was further
explicated by this Court in Rieta v. People,164 thus:
Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order
(ASSO) No. 4754 was invalid, as the law upon which it was predicated
General Order No. 60, issued by then President Ferdinand E. Marcos was
subsequently declared by the Court, in Taada v. Tuvera, 33 to have no force
and effect. Thus, he asserts, any evidence obtained pursuant thereto is
inadmissible in evidence.
We do not agree. In Taada, the Court addressed the possible effects of its
declaration of the invalidity of various presidential issuances. Discussing
therein how such a declaration might affect acts done on a presumption of
their validity, the Court said:
". . .. In similar situations in the past this Court had taken the pragmatic and
realistic course set forth in Chicot County Drainage District vs. Baxter Bank to
wit:
The courts below have proceeded on the theory that the Act of Congress,
having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence affording
no basis for the challenged decree. . . . It is quite clear, however, that such
broad statements as to the effect of a determination of unconstitutionality
must be taken with qualifications. The actual existence of a statute, prior to
[the determination of its invalidity], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects with respect to
particular conduct, private and official. Questions of rights claimed to have
become vested, of status, of prior determinations deemed to have finality and
acted upon accordingly, of public policy in the light of the nature both of the
statute and of its previous application, demand examination. These questions
are among the most difficult of those which have engaged the attention of
courts, state and federal, and it is manifest from numerous decisions that an
all-inclusive statement of a principle of absolute retroactive invalidity cannot
be justified.
xxx
xxx
xxx
We, however, note that HLI has allegedly paid 3% of the proceeds of the sale of
the 500-hectare land and 80.51-hectare SCTEX lot to the FWBs. We also take
into account the payment of taxes and expenses relating to the transfer of the
land and HLIs statement that most, if not all, of the proceeds were used for
legitimate corporate purposes. In order to determine once and for all whether
or not all the proceeds were properly utilized by HLI and its subsidiary,
Centennary, DAR will engage the services of a reputable accounting firm to be
approved by the parties to audit the books of HLI to determine if the proceeds
of the sale of the 500-hectare land and the 80.51-hectare SCTEX lot were
actually used for legitimate corporate purposes, titling expenses and in
compliance with the August 14, 1996 Conversion Order. The cost of the audit
will be shouldered by HLI. If after such audit, it is determined that there
remains a balance from the proceeds of the sale, then the balance shall be
distributed to the qualified FWBs.
A view has been advanced that HLI must pay the FWBs yearly rent for use of
the land from 1989. We disagree. It should not be forgotten that the FWBs are
also stockholders of HLI, and the benefits acquired by the corporation from its
possession and use of the land ultimately redounded to the FWBs benefit
based on its business operations in the form of salaries, and other fringe
benefits under the CBA. To still require HLI to pay rent to the FWBs will result
in double compensation.
For sure, HLI will still exist as a corporation even after the revocation of the
SDP although it will no longer be operating under the SDP, but pursuant to the
Corporation Code as a private stock corporation. The non-agricultural assets
amounting to PhP 393,924,220 shall remain with HLI, while the agricultural
lands valued at PhP 196,630,000 with an original area of 4,915.75 hectares
shall be turned over to DAR for distribution to the FWBs. To be deducted from
said area are the 500-hectare lot subject of the August 14, 1996 Conversion
Order, the 80.51-hectare SCTEX lot, and the total area of 6,886.5 square
meters of individual lots that should have been distributed to FWBs by DAR had
they not opted to stay in HLI.
HLI shall be paid just compensation for the remaining agricultural land that will
be transferred to DAR for land distribution to the FWBs. We find that the date
of the "taking" is November 21, 1989, when PARC approved HLIs SDP per PARC
Resolution No. 89-12-2. DAR shall coordinate with LBP for the determination of
just compensation. We cannot use May 11, 1989 when the SDOA was executed,
since it was the SDP, not the SDOA, that was approved by PARC.
The instant petition is treated pro hac vice in view of the peculiar facts and
circumstances of the case.
WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-01
dated December 22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006,
placing the lands subject of HLIs SDP under compulsory coverage on mandated
land acquisition scheme of the CARP, are hereby AFFIRMED with the
MODIFICATION that the original 6,296 qualified FWBs shall have the option to
remain as stockholders of HLI. DAR shall immediately schedule meetings with
the said 6,296 FWBs and explain to them the effects, consequences and legal or
practical implications of their choice, after which the FWBs will be asked to
manifest, in secret voting, their choices in the ballot, signing their signatures
or placing their thumbmarks, as the case may be, over their printed names.
Of the 6,296 FWBs, he or she who wishes to continue as an HLI stockholder is
entitled to 18,804.32 HLI shares, and, in case the HLI shares already given to
him or her is less than 18,804.32 shares, the HLI is ordered to issue or
distribute additional shares to complete said prescribed number of shares at no
cost to the FWB within thirty (30) days from finality of this Decision. Other
FWBs who do not belong to the original 6,296 qualified beneficiaries are not
entitled to land distribution and shall remain as HLI shareholders. All salaries,
benefits, 3% production share and 3% share in the proceeds of the sale of the
500-hectare converted land and the 80.51-hectare SCTEX lot and homelots
already received by the 10,502 FWBs, composed of 6,296 original FWBs and
4,206 non-qualified FWBs, shall be respected with no obligation to refund or
return them.
Within thirty (30) days after determining who from among the original FWBs
will stay as stockholders, DAR shall segregate from the HLI agricultural land
with an area of 4,915.75 hectares subject of PARCs SDP-approving Resolution
No. 89-12-2 the following: (a) the 500-hectare lot subject of the August 14,
l996 Conversion Order; (b) the 80.51-hectare lot sold to, or acquired by, the
government as part of the SCTEX complex; and (c) the aggregate area of
6,886.5 square meters of individual lots that each FWB is entitled to under the
CARP had he or she not opted to stay in HLI as a stockholder. After the
segregation process, as indicated, is done, the remaining area shall be turned
over to DAR for immediate land distribution to the original qualified FWBs who
opted not to remain as HLI stockholders.
The aforementioned area composed of 6,886.5-square meter lots allotted to
the FWBs who stayed with the corporation shall form part of the HLI assets.
HLI is directed to pay the 6,296 FWBs the consideration of PhP 500,000,000
received by it from Luisita Realty, Inc. for the sale to the latter of 200 hectares
out of the 500 hectares covered by the August 14, 1996 Conversion Order, the
consideration of PhP 750,000,000 received by its owned subsidiary, Centennary
Holdings, Inc. for the sale of the remaining 300 hectares of the aforementioned
500-hectare lot to Luisita Industrial Park Corporation, and the price of PhP
80,511,500 paid by the government through the Bases Conversion Development
Authority for the sale of the 80.51-hectare lot used for the construction of the
SCTEX road network. From the total amount of PhP 1,330,511,500 (PhP
500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP 1,330,511,500) shall be
deducted the 3% of the total gross sales from the production of the agricultural
land and the 3% of the proceeds of said transfers that were paid to the FWBs,
the taxes and expenses relating to the transfer of titles to the transferees, and
the expenditures incurred by HLI and Centennary Holdings, Inc. for legitimate
corporate purposes. For this purpose, DAR is ordered to engage the services of
a reputable accounting firm approved by the parties to audit the books of HLI
and Centennary Holdings, Inc. to determine if the PhP 1,330,511,500 proceeds
of the sale of the three (3) aforementioned lots were used or spent for
legitimate corporate purposes. Any unspent or unused balance as determined
by the audit shall be distributed to the 6,296 original FWBs.
HLI is entitled to just compensation for the agricultural land that will be
transferred to DAR to be reckoned from November 21, 1989 per PARC
Resolution No. 89-12-2. DAR and LBP are ordered to determine the
compensation due to HLI.
DAR shall submit a compliance report after six (6) months from finality of this
judgment. It shall also submit, after submission of the compliance report,
quarterly reports on the execution of this judgment to be submitted within the
first 15 days at the end of each quarter, until fully implemented.
The temporary restraining order is lifted.
SO ORDERED.
G.R. No. 91649
PARAS, J.:
A TV ad proudly announces:
Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to
enable the Government to regulate and centralize all games of chance
public order," monopolistic and tends toward "crony economy", and is violative
of the equal protection clause and local autonomy as well as for running
counter to the state policies enunciated in Sections 11 (Personal Dignity and
Human Rights), 12 (Family) and 13 (Role of Youth) of Article II, Section 1
(Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV
of the 1987 Constitution.
This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and
the most deliberate consideration by the Court, involving as it does the
exercise of what has been described as "the highest and most delicate function
which belongs to the judicial department of the government." (State v. Manuel,
20 N.C. 144; Lozano v. Martinez, 146 SCRA 323).
As We enter upon the task of passing on the validity of an act of a co-equal and
coordinate branch of the government We need not be reminded of the timehonored principle, deeply ingrained in our jurisprudence, that a statute is
presumed to be valid. Every presumption must be indulged in favor of its
constitutionality. This is not to say that We approach Our task with diffidence
or timidity. Where it is clear that the legislature or the executive for that
matter, has over-stepped the limits of its authority under the constitution, We
should not hesitate to wield the axe and let it fall heavily, as fall it must, on
the offending statute (Lozano v. Martinez, supra).
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru
Mr. Justice Zaldivar underscored the
. . . thoroughly established principle which must be followed in all
cases where questions of constitutionality as obtain in the instant
cases are involved. All presumptions are indulged in favor of
constitutionality; one who attacks a statute alleging
unconstitutionality must prove its invalidity beyond a reasonable
doubt; that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived which
supports the statute, it will be upheld and the challenger must negate
all possible basis; that the courts are not concerned with the wisdom,
justice, policy or expediency of a statute and that a liberal
interpretation of the constitution in favor of the constitutionality of
legislation should be adopted. (Danner v. Hass, 194 N.W. 2nd 534, 539;
Spurbeck v. Statton, 106 N.W. 2nd 660, 663; 59 SCRA 66; see also e.g.
Salas v. Jarencio, 46 SCRA 734, 739 [1970]; Peralta v. Commission on
Elections, 82 SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes, 125
SCRA 220, 241-242 [1983] cited in Citizens Alliance for Consumer
Protection v. Energy Regulatory Board, 162 SCRA 521, 540)
Of course, there is first, the procedural issue. The respondents are questioning
the legal personality of petitioners to file the instant petition.
Considering however the importance to the public of the case at bar, and in
keeping with the Court's duty, under the 1987 Constitution, to determine
whether or not the other branches of government have kept themselves within
the limits of the Constitution and the laws and that they have not abused the
discretion given to them, the Court has brushed aside technicalities of
procedure and has taken cognizance of this petition. (Kapatiran ng mga
Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371)
With particular regard to the requirement of proper party as applied in
the cases before us, We hold that the same is satisfied by the
petitioners and intervenors because each of them has sustained or is in
danger of sustaining an immediate injury as a result of the acts or
measures complained of. And even if, strictly speaking they are not
covered by the definition, it is still within the wide discretion of the
Court to waive the requirement and so remove the impediment to its
addressing and resolving the serious constitutional questions raised.
P.D. 1869 was enacted pursuant to the policy of the government to "regulate
and centralize thru an appropriate institution all games of chance authorized
by existing franchise or permitted by law" (1st whereas clause, PD 1869). As
was subsequently proved, regulating and centralizing gambling operations in
one corporate entity the PAGCOR, was beneficial not just to the Government
but to society in general. It is a reliable source of much needed revenue for the
cash strapped Government. It provided funds for social impact projects and
subjected gambling to "close scrutiny, regulation, supervision and control of
the Government" (4th Whereas Clause, PD 1869). With the creation of PAGCOR
and the direct intervention of the Government, the evil practices and
corruptions that go with gambling will be minimized if not totally eradicated.
Public welfare, then, lies at the bottom of the enactment of PD 1896.
Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City
of Manila to impose taxes and legal fees; that the exemption clause in P.D.
1869 is violative of the principle of local autonomy. They must be referring to
Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as the franchise
holder from paying any "tax of any kind or form, income or otherwise, as well
as fees, charges or levies of whatever nature, whether National or Local."
(2) Income and other taxes. a) Franchise Holder: No tax of any kind
or form, income or otherwise as well as fees, charges or levies of
whatever nature, whether National or Local, shall be assessed and
collected under this franchise from the Corporation; nor shall any form
or tax or charge attach in any way to the earnings of the Corporation,
except a franchise tax of five (5%) percent of the gross revenues or
earnings derived by the Corporation from its operations under this
franchise. Such tax shall be due and payable quarterly to the National
Government and shall be in lieu of all kinds of taxes, levies, fees or
The power to tax which was called by Justice Marshall as the "power to
destroy" (Mc Culloch v. Maryland, supra) cannot be allowed to defeat an
instrumentality or creation of the very entity which has the inherent power to
wield it.
(e) Petitioners also argue that the Local Autonomy Clause of the Constitution
will be violated by P.D. 1869. This is a pointless argument. Article X of the 1987
Constitution (on Local Autonomy) provides:
Sec. 5. Each local government unit shall have the power to create its
own source of revenue and to levy taxes, fees, and other charges
subject to such guidelines and limitation as the congress may provide,
consistent with the basic policy on local autonomy. Such taxes, fees
and charges shall accrue exclusively to the local government.
(emphasis supplied)
The power of local government to "impose taxes and fees" is always subject to
"limitations" which Congress may provide by law. Since PD 1869 remains an
"operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987
Constitution), its "exemption clause" remains as an exception to the exercise of
the power of local governments to impose taxes and fees. It cannot therefore
be violative but rather is consistent with the principle of local autonomy.
We, likewise, find no valid ground to sustain this contention. The petitioners'
posture ignores the well-accepted meaning of the clause "equal protection of
the laws." The clause does not preclude classification of individuals who may
be accorded different treatment under the law as long as the classification is
not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A law
does not have to operate in equal force on all persons or things to be
conformable to Article III, Section 1 of the Constitution (DECS v. San Diego,
G.R. No. 89572, December 21, 1989).
Besides, the principle of local autonomy under the 1987 Constitution simply
means "decentralization" (III Records of the 1987 Constitutional Commission,
pp. 435-436, as cited in Bernas, The Constitution of the Republic of the
Philippines, Vol. II, First Ed., 1988, p. 374). It does not make local governments
sovereign within the state or an "imperium in imperio."
The "equal protection clause" does not prohibit the Legislature from
establishing classes of individuals or objects upon which different rules shall
operate (Laurel v. Misa, 43 O.G. 2847). The Constitution does not require
situations which are different in fact or opinion to be treated in law as though
they were the same (Gomez v. Palomar, 25 SCRA 827).
Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the
Cory Government away from monopolies and crony economy and toward free
enterprise and privatization" suffice it to state that this is not a ground for this
Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to the government's
policies then it is for the Executive Department to recommend to Congress its
repeal or amendment.
The judiciary does not settle policy issues. The Court can only declare
what the law is and not what the law should be.1wphi1 Under our
system of government, policy issues are within the domain of the
political branches of government and of the people themselves as the
repository of all state power. (Valmonte v. Belmonte, Jr., 170 SCRA
256).
Constitution, not merely a doubtful and equivocal one. In other words, the
grounds for nullity must be clear and beyond reasonable doubt. (Peralta v.
Comelec, supra) Those who petition this Court to declare a law, or parts
thereof, unconstitutional must clearly establish the basis for such a
declaration. Otherwise, their petition must fail. Based on the grounds raised by
petitioners to challenge the constitutionality of P.D. 1869, the Court finds that
petitioners have failed to overcome the presumption. The dismissal of this
petition is therefore, inevitable. But as to whether P.D. 1869 remains a wise
legislation considering the issues of "morality, monopoly, trend to free
enterprise, privatization as well as the state principles on social justice, role of
youth and educational values" being raised, is up for Congress to determine.
As this Court held in Citizens' Alliance for Consumer Protection v. Energy
Regulatory Board, 162 SCRA 521
SARMIENTO, J.:
The acts of the Sangguniang Pampook of Region XII are assailed in this petition.
The antecedent facts are as follows:
1. On September 24, 1986, petitioner Sultan Alimbusar
Limbona was appointed as a member of the Sangguniang
Pampook, Regional Autonomous Government, Region XII,
representing Lanao del Sur.
2. On March 12, 1987 petitioner was elected Speaker of the
Regional Legislative Assembly or Batasang Pampook of Central
Mindanao (Assembly for brevity).
3. Said Assembly is composed of eighteen (18) members. Two
of said members, respondents Acmad Tomawis and Pakil
Dagalangit, filed on March 23, 1987 with the Commission on
Elections their respective certificates of candidacy in the May
11, 1987 congressional elections for the district of Lanao del
Sur but they later withdrew from the aforesaid election and
thereafter resumed again their positions as members of the
Assembly.
4. On October 21, 1987 Congressman Datu Guimid Matalam,
Chairman of the Committee on Muslim Affairs of the House of
Representatives, invited Mr. Xavier Razul, Pampook Speaker of
Region XI, Zamboanga City and the petitioner in his capacity
as Speaker of the Assembly, Region XII, in a letter which
reads:
The Committee on Muslim Affairs well
undertake consultations and dialogues with
local government officials, civic, religious
organizations and traditional leaders on the
1. Sali, Salic
9. Ortiz, Jesus
10 Palomares, Diego
3. Dagalangit, Rakil
5. Mangelen, Conte
6. Ortiz, Jesus
7. Palomares, Diego
8. Sinsuat, Bimbo
9. Tomawis, Acmad
10. Tomawis, Jerry
After declaring the presence of a quorum, the Speaker ProTempore was authorized to preside in the session. On Motion
to declare the seat of the Speaker vacant, all Assemblymen in
attendance voted in the affirmative, hence, the chair declared
said seat of the Speaker vacant. 8. On November 5, 1987, the
session of the Assembly resumed with the following
Assemblymen present:
1. Mangelen Conte-Presiding Officer
2. Ali Salic
3. Ali Salindatu
4. Aratuc, Malik
5. Cajelo, Rene
7. Dagalangit, Rakil
has not set foot at the Sangguniang Pampook." 9 "To be sure, the private
respondents aver that "[t]he Assemblymen, in a conciliatory gesture, wanted
him to come to Cotabato City," 10 but that was "so that their differences could
be threshed out and settled." 11 Certainly, that avowed wanting or desire to
thresh out and settle, no matter how conciliatory it may be cannot be a
substitute for the notice and hearing contemplated by law.
While we have held that due process, as the term is known in administrative
law, does not absolutely require notice and that a party need only be given the
opportunity to be heard, 12 it does not appear herein that the petitioner had,
to begin with, been made aware that he had in fact stood charged of graft and
corruption before his collegues. It cannot be said therefore that he was
accorded any opportunity to rebut their accusations. As it stands, then, the
charges now levelled amount to mere accusations that cannot warrant
expulsion.
In the second place, (the resolution) appears strongly to be a bare act of
vendetta by the other Assemblymen against the petitioner arising from what
the former perceive to be abduracy on the part of the latter. Indeed, it (the
resolution) speaks of "a case [having been filed] [by the petitioner] before the
Supreme Court . . . on question which should have been resolved within the
confines of the Assemblyman act which some members claimed unnecessarily
and unduly assails their integrity and character as representative of the people"
13
an act that cannot possibly justify expulsion. Access to judicial remedies is
guaranteed by the Constitution, 14 and, unless the recourse amounts to
malicious prosecution, no one may be punished for seeking redress in the
courts.
We therefore order reinstatement, with the caution that should the past acts
of the petitioner indeed warrant his removal, the Assembly is enjoined, should
it still be so minded, to commence proper proceedings therefor in line with the
most elementary requirements of due process. And while it is within the
discretion of the members of the Sanggunian to punish their erring colleagues,
their acts are nonetheless subject to the moderating band of this Court in the
event that such discretion is exercised with grave abuse.
It is, to be sure, said that precisely because the Sangguniang Pampook(s) are
"autonomous," the courts may not rightfully intervene in their affairs, much
less strike down their acts. We come, therefore, to the second issue: Are the
so-called autonomous governments of Mindanao, as they are now constituted,
subject to the jurisdiction of the national courts? In other words, what is the
extent of self-government given to the two autonomous governments of Region
IX and XII?
The autonomous governments of Mindanao were organized in Regions IX and XII
by Presidential Decree No. 1618 15 promulgated on July 25, 1979. Among other
things, the Decree established "internal autonomy" 16 in the two regions
21
time the petitioner called the "recess," it was not a settled matter whether or
not he could. do so. In the second place, the invitation tendered by the
Committee on Muslim Affairs of the House of Representatives provided a
plausible reason for the intermission sought. Thirdly, assuming that a valid
recess could not be called, it does not appear that the respondents called his
attention to this mistake. What appears is that instead, they opened the
sessions themselves behind his back in an apparent act of mutiny. Under the
circumstances, we find equity on his side. For this reason, we uphold the
"recess" called on the ground of good faith.
It does not appear to us, moreover, that the petitioner had resorted to the
aforesaid "recess" in order to forestall the Assembly from bringing about his
ouster. This is not apparent from the pleadings before us. We are convinced
that the invitation was what precipitated it.
In holding that the "recess" in question is valid, we are not to be taken as
establishing a precedent, since, as we said, a recess can not be validly declared
without a session having been first opened. In upholding the petitioner herein,
we are not giving him a carte blanche to order recesses in the future in
violation of the Rules, or otherwise to prevent the lawful meetings thereof.
Neither are we, by this disposition, discouraging the Sanggunian from
reorganizing itself pursuant to its lawful prerogatives. Certainly, it can do so at
the proper time. In the event that be petitioner should initiate obstructive
moves, the Court is certain that it is armed with enough coercive remedies to
thwart them. 39
In view hereof, we find no need in dwelling on the issue of quorum.
WHEREFORE, premises considered, the petition is GRANTED. The Sangguniang
Pampook, Region XII, is ENJOINED to (1) REINSTATE the petitioner as Member,
Sangguniang Pampook, Region XII; and (2) REINSTATE him as Speaker thereof.
No costs.
SO ORDERED.
G.R. No. 161872
Petitioner Rev. Elly Velez Pamatong filed his Certificate of Candidacy for
President on December 17, 2003. Respondent Commission on Elections
(COMELEC) refused to give due course to petitioners Certificate of Candidacy
in its Resolution No. 6558 dated January 17, 2004. The decision, however, was
not unanimous since Commissioners Luzviminda G. Tancangco and Mehol K.
Sadain voted to include petitioner as they believed he had parties or
movements to back up his candidacy.
On January 15, 2004, petitioner moved for reconsideration of Resolution No.
6558. Petitioners Motion for Reconsideration was docketed as SPP (MP) No.
04-001. The COMELEC, acting on petitioners Motion for Reconsideration and
on similar motions filed by other aspirants for national elective positions,
denied the same under the aegis of Omnibus Resolution No. 6604 dated
February 11, 2004. The COMELEC declared petitioner and thirty-five (35) others
nuisance candidates who could not wage a nationwide campaign and/or are not
nominated by a political party or are not supported by a registered political
party with a national constituency. Commissioner Sadain maintained his vote
for petitioner. By then, Commissioner Tancangco had retired.
In this Petition For Writ of Certiorari, petitioner seeks to reverse the
resolutions which were allegedly rendered in violation of his right to "equal
access to opportunities for public service" under Section 26, Article II of the
1987
Constitution,1 by limiting the number of qualified candidates only to those who
can afford to wage a nationwide campaign and/or are nominated by political
parties. In so doing, petitioner argues that the COMELEC indirectly amended
the constitutional provisions on the electoral process and limited the power of
the sovereign people to choose their leaders. The COMELEC supposedly erred in
disqualifying him since he is the most qualified among all the presidential
candidates, i.e., he possesses all the constitutional and legal qualifications for
the office of the president, he is capable of waging a national campaign since
he has numerous national organizations under his leadership, he also has the
capacity to wage an international campaign since he has practiced law in other
countries, and he has a platform of government. Petitioner likewise attacks the
validity of the form for the Certificate of Candidacy prepared by the COMELEC.
Petitioner claims that the form does not provide clear and reasonable
guidelines for determining the qualifications of candidates since it does not ask
for the candidates bio-data and his program of government.
First, the constitutional and legal dimensions involved.
Implicit in the petitioners invocation of the constitutional provision ensuring
"equal access to opportunities for public office" is the claim that there is a
constitutional right to run for or hold public office and, particularly in his case,
to seek the presidency. There is none. What is recognized is merely a privilege
subject to limitations imposed by law. Section 26, Article II of the Constitution
neither bestows such a right nor elevates the privilege to the level of an
enforceable right. There is nothing in the plain language of the provision which
suggests such a thrust or justifies an interpretation of the sort.
The "equal access" provision is a subsumed part of Article II of the Constitution,
entitled "Declaration of Principles and State Policies." The provisions under the
Article are generally considered not self-executing,2 and there is no plausible
reason for according a different treatment to the "equal access" provision. Like
the rest of the policies enumerated in Article II, the provision does not contain
any judicially enforceable constitutional right but merely specifies a guideline
for legislative or executive action.3 The disregard of the provision does not give
rise to any cause of action before the courts.4
An inquiry into the intent of the framers5 produces the same determination
that the provision is not self-executory. The original wording of the present
Section 26, Article II had read, "The State shall broaden opportunities to public
office and prohibit public dynasties."6 Commissioner (now Chief Justice) Hilario
Davide, Jr. successfully brought forth an amendment that changed the word
"broaden" to the phrase "ensure equal access," and the substitution of the word
"office" to "service." He explained his proposal in this wise:
I changed the word "broaden" to "ENSURE EQUAL ACCESS TO" because
what is important would be equal access to the opportunity. If you
broaden, it would necessarily mean that the government would be
mandated to create as many offices as are possible to accommodate
as many people as are also possible. That is the meaning of
broadening opportunities to public service. So, in order that we
should not mandate the State to make the government the number
one employer and to limit offices only to what may be necessary
and expedient yet offering equal opportunities to access to it, I
change the word "broaden."7 (emphasis supplied)
Obviously, the provision is not intended to compel the State to enact positive
measures that would accommodate as many people as possible into public
office. The approval of the "Davide amendment" indicates the design of the
framers to cast the provision as simply enunciatory of a desired policy
objective and not reflective of the imposition of a clear State burden.
Moreover, the provision as written leaves much to be desired if it is to be
regarded as the source of positive rights. It is difficult to interpret the clause
as operative in the absence of legislation since its effective means and reach
are not properly defined. Broadly written, the myriad of claims that can be
subsumed under this rubric appear to be entirely open-ended.8 Words and
phrases such as "equal access," "opportunities," and "public service" are
susceptible to countless interpretations owing to their inherent impreciseness.
Certainly, it was not the intention of the framers to inflict on the people an
and honest elections.17 Moreover, the Constitution guarantees that only bona
fide candidates for public office shall be free from any form of harassment and
discrimination.18 The determination of bona fide candidates is governed by the
statutes, and the concept, to our mind is, satisfactorily defined in the Omnibus
Election Code.
Now, the needed factual premises.
However valid the law and the COMELEC issuance involved are, their proper
application in the case of the petitioner cannot be tested and reviewed by this
Court on the basis of what is now before it. The assailed resolutions of the
COMELEC do not direct the Court to the evidence which it considered in
determining that petitioner was a nuisance candidate. This precludes the Court
from reviewing at this instance whether the COMELEC committed grave abuse
of discretion in disqualifying petitioner, since such a review would necessarily
take into account the matters which the COMELEC considered in arriving at its
decisions.
Petitioner has submitted to this Court mere photocopies of various documents
purportedly evincing his credentials as an eligible candidate for the presidency.
Yet this Court, not being a trier of facts, can not properly pass upon the
reproductions as evidence at this level. Neither the COMELEC nor the Solicitor
General appended any document to their respective Comments.
The question of whether a candidate is a nuisance candidate or not is both
legal and factual. The basis of the factual determination is not before this
Court. Thus, the remand of this case for the reception of further evidence is in
order.
A word of caution is in order. What is at stake is petitioners aspiration and
offer to serve in the government. It deserves not a cursory treatment but a
hearing which conforms to the requirements of due process.
As to petitioners attacks on the validity of the form for the certificate of
candidacy, suffice it to say that the form strictly complies with Section 74 of
the Omnibus Election Code. This provision specifically enumerates what a
certificate of candidacy should contain, with the required information tending
to show that the candidate possesses the minimum qualifications for the
position aspired for as established by the Constitution and other election laws.
IN VIEW OF THE FOREGOING, COMELEC Case No. SPP (MP) No. 04-001 is hereby
remanded to the COMELEC for the reception of further evidence, to determine
the question on whether petitioner Elly Velez Lao Pamatong is a nuisance
candidate as contemplated in Section 69 of the Omnibus Election Code.
The COMELEC is directed to hold and complete the reception of evidence and
report its findings to this Court with deliberate dispatch.
SO ORDERED.
G.R. No. L-72119 May 29, 1987
VALENTIN L. LEGASPI, petitioner,
vs.
CIVIL SERVICE COMMISSION, respondent.
CORTES, J.:
The fundamental right of the people to information on matters of public
concern is invoked in this special civil action for mandamus instituted by
petitioner Valentin L. Legaspi against the Civil Service Commission. The
respondent had earlier denied Legaspi's request for information on the civil
service eligibilities of certain persons employed as sanitarians in the Health
Department of Cebu City. These government employees, Julian Sibonghanoy
and Mariano Agas, had allegedly represented themselves as civil service
eligibles who passed the civil service examinations for sanitarians.
Claiming that his right to be informed of the eligibilities of Julian Sibonghanoy
and Mariano Agas, is guaranteed by the Constitution, and that he has no other
plain, speedy and adequate remedy to acquire the information, petitioner
prays for the issuance of the extraordinary writ of mandamus to compel the
respondent Commission to disclose said information.
This is not the first tune that the writ of mandamus is sought to enforce the
fundamental right to information. The same remedy was resorted to in the case
of Tanada et. al. vs. Tuvera et. al., (G.R. No. L-63915, April 24,1985,136 SCRA
27) wherein the people's right to be informed under the 1973 Constitution
(Article IV, Section 6) was invoked in order to compel the publication in the
Official Gazette of various presidential decrees, letters of instructions and
other presidential issuances. Prior to the recognition of the right in said
Constitution the statutory right to information provided for in the Land
Registration Act (Section 56, Act 496, as amended) was claimed by a newspaper
editor in another mandamus proceeding, this time to demand access to the
records of the Register of Deeds for the purpose of gathering data on real
estate transactions involving aliens (Subido vs. Ozaeta, 80 Phil. 383 [1948]).
The constitutional right to information on matters of public concern first
gained recognition in the Bill of Rights, Article IV, of the 1973 Constitution,
which states:
right. (Ant;-Chinese League of the Philippines vs. Felix, 77 Phil. 1012 [1947]).
The petitioner in every case must therefore be an "aggrieved party" in the
sense that he possesses a clear legal right to be enforced and a direct interest
in the duty or act to be performed.
In the case before Us, the respondent takes issue on the personality of the
petitioner to bring this suit. It is asserted that, the instant Petition is bereft of
any allegation of Legaspi's actual interest in the civil service eligibilities of
Julian Sibonghanoy and Mariano Agas, At most there is a vague reference to an
unnamed client in whose behalf he had allegedly acted when he made inquiries
on the subject (Petition, Rollo, p. 3).
But what is clear upon the face of the Petition is that the petitioner has firmly
anchored his case upon the right of the people to information on matters of
public concern, which, by its very nature, is a public right. It has been held
that:
* * * when the question is one of public right and the object of
the mandamus is to procure the enforcement of a public duty,
the people are regarded as the real party in interest and the
relator at whose instigation the proceedings are instituted
need not show that he has any legal or special interest in the
result, it being sufficient to show that he is a citizen and as
such interested in the execution of the laws * * * (Tanada et.
al. vs. Tuvera, et. al., G.R. No. L- 63915, April 24, 1985, 136
SCRA 27, 36).
From the foregoing, it becomes apparent that when a mandamus proceeding
involves the assertion of a public right, the requirement of personal interest is
satisfied by the mere fact that the petitioner is a citizen, and therefore, part
of the general "public" which possesses the right.
The Court had opportunity to define the word "public" in the Subido case,
supra, when it held that even those who have no direct or tangible interest in
any real estate transaction are part of the "public" to whom "(a)ll records
relating to registered lands in the Office of the Register of Deeds shall be open
* * *" (Sec. 56, Act No. 496, as amended). In the words of the Court:
* * * "Public" is a comprehensive, all-inclusive term. Properly
construed, it embraces every person. To say that only those
who have a present and existing interest of a pecuniary
character in the particular information sought are given the
right of inspection is to make an unwarranted distinction. ***
(Subido vs. Ozaeta, supra at p. 387).
The petitioner, being a citizen who, as such is clothed with personality to seek
redress for the alleged obstruction of the exercise of the public right. We find
no cogent reason to deny his standing to bring the present suit.
2. For every right of the people recognized as fundamental, there lies a
corresponding duty on the part of those who govern, to respect and protect
that right. That is the very essence of the Bill of Rights in a constitutional
regime. Only governments operating under fundamental rules defining the
limits of their power so as to shield individual rights against its arbitrary
exercise can properly claim to be constitutional (Cooley, supra, at p. 5).
Without a government's acceptance of the limitations imposed upon it by the
Constitution in order to uphold individual liberties, without an acknowledgment
on its part of those duties exacted by the rights pertaining to the citizens, the
Bill of Rights becomes a sophistry, and liberty, the ultimate illusion.
In recognizing the people's right to be informed, both the 1973 Constitution and
the New Charter expressly mandate the duty of the State and its agents to
afford access to official records, documents, papers and in addition,
government research data used as basis for policy development, subject to
such limitations as may be provided by law. The guarantee has been further
enhanced in the New Constitution with the adoption of a policy of full public
disclosure, this time "subject to reasonable conditions prescribed by law," in
Article 11, Section 28 thereof, to wit:
Subject to reasonable conditions prescribed by law, the State
adopts and implements a policy of full public disclosure of all
its transactions involving public interest. (Art. 11, Sec. 28).
In the Tanada case, supra, the constitutional guarantee was bolstered by what
this Court declared as an imperative duty of the government officials
concerned to publish all important legislative acts and resolutions of a public
nature as well as all executive orders and proclamations of general
applicability. We granted mandamus in said case, and in the process, We found
occasion to expound briefly on the nature of said duty:
* * * That duty must be enforced if the Constitutional right of
the people to be informed on matters of public concern is to
be given substance and reality. The law itself makes a list of
what should be published in the Official Gazette. Such listing,
to our mind, leaves respondents with no discretion whatsoever
as to what must be in included or excluded from such
publication. (Tanada v. Tuvera, supra, at 39). (Emphasis
supplied).
The absence of discretion on the part of government agencia es in allowing the
examination of public records, specifically, the records in the Office of the
Register of Deeds, is emphasized in Subido vs. Ozaeta, supra:
information sought, which only the Legislature may impose (Art. III, Sec. 6,
1987 Constitution). The second pertains to the government agency charged
with the custody of public records. Its authority to regulate access is to be
exercised solely to the end that damage to, or loss of, public records may be
avoided, undue interference with the duties of said agencies may be
prevented, and more importantly, that the exercise of the same constitutional
right by other persons shall be assured (Subido vs. Ozaetal supra).
Thus, while the manner of examining public records may be subject to
reasonable regulation by the government agency in custody thereof, the duty
to disclose the information of public concern, and to afford access to public
records cannot be discretionary on the part of said agencies. Certainly, its
performance cannot be made contingent upon the discretion of such agencies.
Otherwise, the enjoyment of the constitutional right may be rendered nugatory
by any whimsical exercise of agency discretion. The constitutional duty, not
being discretionary, its performance may be compelled by a writ of mandamus
in a proper case.
But what is a proper case for Mandamus to issue? In the case before Us, the
public right to be enforced and the concomitant duty of the State are
unequivocably set forth in the Constitution. The decisive question on the
propriety of the issuance of the writ of mandamus in this case is, whether the
information sought by the petitioner is within the ambit of the constitutional
guarantee.
3. The incorporation in the Constitution of a guarantee of access to information
of public concern is a recognition of the essentiality of the free flow of ideas
and information in a democracy (Baldoza v. Dimaano, Adm. Matter No. 1120MJ, May 5, 1976, 17 SCRA 14). In the same way that free discussion enables
members of society to cope with the exigencies of their time (Thornhill vs.
Alabama, 310 U.S. 88,102 [1939]), access to information of general interest
aids the people in democratic decision-making (87 Harvard Law Review 1505
[1974]) by giving them a better perspective of the vital issues confronting the
nation.
But the constitutional guarantee to information on matters of public concern is
not absolute. It does not open every door to any and all information. Under the
Constitution, access to official records, papers, etc., are "subject to limitations
as may be provided by law" (Art. III, Sec. 7, second sentence). The law may
therefore exempt certain types of information from public scrutiny, such as
those affecting national security (Journal No. 90, September 23, 1986, p. 10;
and Journal No. 91, September 24, 1986, p. 32, 1986 Constitutional
Commission). It follows that, in every case, the availability of access to a
particular public record must be circumscribed by the nature of the
information sought, i.e., (a) being of public concern or one that involves public
interest, and, (b) not being exempted by law from the operation of the
all times accountable to the people even as to their eligibilities for their
respective positions.
b. But then, it is not enough that the information sought is of public interest.
For mandamus to lie in a given case, the information must not be among the
species exempted by law from the operation of the constitutional guarantee.
In the instant, case while refusing to confirm or deny the claims of eligibility,
the respondent has failed to cite any provision in the Civil Service Law which
would limit the petitioner's right to know who are, and who are not, civil
service eligibles. We take judicial notice of the fact that the names of those
who pass the civil service examinations, as in bar examinations and licensure
examinations for various professions, are released to the public. Hence, there
is nothing secret about one's civil service eligibility, if actually possessed.
Petitioner's request is, therefore, neither unusual nor unreasonable. And when,
as in this case, the government employees concerned claim to be civil service
eligibles, the public, through any citizen, has a right to verify their professed
eligibilities from the Civil Service Commission.
The civil service eligibility of a sanitarian being of public concern, and in the
absence of express limitations under the law upon access to the register of civil
service eligibles for said position, the duty of the respondent Commission to
confirm or deny the civil service eligibility of any person occupying the position
becomes imperative. Mandamus, therefore lies.
WHEREFORE, the Civil Service Commission is ordered to open its register of
eligibles for the position of sanitarian, and to confirm or deny, the civil service
eligibility of Julian Sibonghanoy and Mariano Agas, for said position in the
Health Department of Cebu City, as requested by the petitioner Valentin L.
Legaspi.
G.R. No. 74930 February 13, 1989
RICARDO VALMONTE, OSWALDO CARBONELL, DOY DEL CASTILLO, ROLANDO
BARTOLOME, LEO OBLIGAR, JUN GUTIERREZ, REYNALDO BAGATSING, JUN
"NINOY" ALBA, PERCY LAPID, ROMMEL CORRO and ROLANDO FADUL,
petitioners,
vs.
FELICIANO BELMONTE, JR., respondent.
Ricardo C. Valmonte for and in his own behalf and his co-petitioners.
The Solicitor General for respondent.
CORTES, J.:
Petitioners in this special civil action for mandamus with preliminary injunction
invoke their right to information and pray that respondent be directed:
[Rollo, p. 7.]
On June 26, 1986, Valmonte, joined by the other petitioners, filed the instant
suit.
To the aforesaid letter, the Deputy General Counsel of the GSIS replied:
June 17, 1986
Atty. Ricardo C. Valmonte
108 E. Benin Street
Caloocan City
Dear Compaero:
Possibly because he must have thought that it contained
serious legal implications, President & General Manager
Feliciano Belmonte, Jr. referred to me for study and reply
your letter to him of June 4, 1986 requesting a list of the
opposition members of Batasang Pambansa who were able to
secure a clean loan of P2 million each on guaranty of Mrs.
Imelda Marcos.
My opinion in this regard is that a confidential relationship
exists between the GSIS and all those who borrow from it,
whoever they may be; that the GSIS has a duty to its
customers to preserve this confidentiality; and that it would
not be proper for the GSIS to breach this confidentiality unless
so ordered by the courts.
As a violation of this confidentiality may mar the image of the
GSIS as a reputable financial institution, I regret very much
that at this time we cannot respond positively to your request.
Very truly yours,
(Sgd.) MEYNARDO A. TIRO
Deputy General Counsel
[Rollo, p. 40.]
On June 20, 1986, apparently not having yet received the reply of the
Government Service and Insurance System (GSIS) Deputy General Counsel,
petitioner Valmonte wrote respondent another letter, saying that for failure to
receive a reply, "(W)e are now considering ourselves free to do whatever action
necessary within the premises to pursue our desired objective in pursuance of
public interest." [Rollo, p. 8.]
On July 19, 1986, the Daily Express carried a news item reporting that 137
former members of the defunct interim and regular Batasang Pambansa,
including ten (10) opposition members, were granted housing loans by the GSIS
[Rollo, p. 41.]
Separate comments were filed by respondent Belmonte and the Solicitor
General. After petitioners filed a consolidated reply, the petition was given
due course and the parties were required to file their memoranda. The parties
having complied, the case was deemed submitted for decision.
In his comment respondent raises procedural objections to the issuance of a
writ of mandamus, among which is that petitioners have failed to exhaust
administrative remedies.
Respondent claims that actions of the GSIS General Manager are reviewable by
the Board of Trustees of the GSIS. Petitioners, however, did not seek relief
from the GSIS Board of Trustees. It is therefore asserted that since
administrative remedies were not exhausted, then petitioners have no cause of
action.
To this objection, petitioners claim that they have raised a purely legal issue,
viz., whether or not they are entitled to the documents sought, by virtue of
their constitutional right to information. Hence, it is argued that this case falls
under one of the exceptions to the principle of exhaustion of administrative
remedies.
Among the settled principles in administrative law is that before a party can be
allowed to resort to the courts, he is expected to have exhausted all means of
administrative redress available under the law. The courts for reasons of law,
comity and convenience will not entertain a case unless the available
administrative remedies have been resorted to and the appropriate authorities
have been given opportunity to act and correct the errors committed in the
administrative forum. However, the principle of exhaustion of administrative
remedies is subject to settled exceptions, among which is when only a question
of law is involved [Pascual v. Provincial Board, 106 Phil. 466 (1959); Aguilar v.
Valencia, et al., G.R. No. L-30396, July 30, 1971, 40 SCRA 210; Malabanan v.
Ramento, G.R. No. L-2270, May 21, 1984, 129 SCRA 359.] The issue raised by
petitioners, which requires the interpretation of the scope of the constitutional
right to information, is one which can be passed upon by the regular courts
more competently than the GSIS or its Board of Trustees, involving as it does a
purely legal question. Thus, the exception of this case from the application of
the general rule on exhaustion of administrative remedies is warranted. Having
disposed of this procedural issue, We now address ourselves to the issue of
We shall deal first with the second and third alternative acts sought to be
done, both of which involve the issue of whether or not petitioners are entitled
to access to the documents evidencing loans granted by the GSIS.
Petitioners are practitioners in media. As such, they have both the right to
gather and the obligation to check the accuracy of information the
disseminate. For them, the freedom of the press and of speech is not only
critical, but vital to the exercise of their professions. The right of access to
information ensures that these freedoms are not rendered nugatory by the
government's monopolizing pertinent information. For an essential element of
these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of
the State that the channels for free political discussion be maintained to the
end that the government may perceive and be responsive to the people's will.
Yet, this open dialogue can be effective only to the extent that the citizenry is
informed and thus able to formulate its will intelligently. Only when the
participants in the discussion are aware of the issues and have access to
information relating thereto can such bear fruit.
This is not the first time that the Court is confronted with a controversy
directly involving the constitutional right to information. In Taada v. Tuvera,
G.R. No. 63915, April 24,1985, 136 SCRA 27 and in the recent case of Legaspi v.
Civil Service Commission, G.R. No. 72119, May 29, 1987,150 SCRA 530, the
Court upheld the people's constitutional right to be informed of matters of
public interest and ordered the government agencies concerned to act as
prayed for by the petitioners.
The pertinent provision under the 1987 Constitution is Art. 111, Sec. 7 which
states:
The right of the people to information on matters of public
concern shall be recognized. Access to official records, and to
documents, and papers pertaining to official acts,
transactions, or decisions, as well as to government research
data used as basis for policy development, shall be afforded
the citizen, subject to such limitations as may be provided by
law.
The right of access to information was also recognized in the 1973 Constitution,
Art. IV Sec. 6 of which provided:
The right of the people to information on 'matters of public
concern shall be recognized. Access to official records, and to
documents and papers pertaining to official acts, transactions,
or decisions, shall be afforded the citizen subject to such
limitations as may be provided by law.
An informed citizenry with access to the diverse currents in political, moral and
artistic thought and data relative to them, and the free exchange of ideas and
discussion of issues thereon, is vital to the democratic government envisioned
under our Constitution. The cornerstone of this republican system of
government is delegation of power by the people to the State. In this system,
governmental agencies and institutions operate within the limits of the
authority conferred by the people. Denied access to information on the inner
workings of government, the citizenry can become prey to the whims and
caprices of those to whom the power had been delegated. The postulate of
public office as a public trust, institutionalized in the Constitution (in Art. XI,
Sec. 1) to protect the people from abuse of governmental power, would
certainly be were empty words if access to such information of public concern
When the information requested from the government intrudes into the privacy
of a citizen, a potential conflict between the rights to information and to
privacy may arise. However, the competing interests of these rights need not
be resolved in this case. Apparent from the above-quoted statement of the
Court in Morfe is that the right to privacy belongs to the individual in his
private capacity, and not to public and governmental agencies like the GSIS.
Moreover, the right cannot be invoked by juridical entities like the GSIS. As
held in the case of Vassar College v. Loose Wills Biscuit Co. [197 F. 982 (1912)],
a corporation has no right of privacy in its name since the entire basis of the
right to privacy is an injury to the feelings and sensibilities of the party and a
corporation would have no such ground for relief.
Neither can the GSIS through its General Manager, the respondent, invoke the
right to privacy of its borrowers. The right is purely personal in nature [Cf.
Atkinson v. John Doherty & Co., 121 Mich 372, 80 N.W. 285, 46 L.RA. 219
(1899); Schuyler v. Curtis, 147 N.Y. 434, 42 N.E. 22, 31 L.R.A. 286 (1895)), and
hence may be invoked only by the person whose privacy is claimed to be
violated.
It may be observed, however, that in the instant case, the concerned
borrowers themselves may not succeed if they choose to invoke their right to
privacy, considering the public offices they were holding at the time the loans
were alleged to have been granted. It cannot be denied that because of the
interest they generate and their newsworthiness, public figures, most
especially those holding responsible positions in government, enjoy a more
limited right to privacy as compared to ordinary individuals, their actions being
subject to closer public scrutiny [Cf. Ayer Productions Pty. Ltd. v. Capulong,
G.R. Nos. 82380 and 82398, April 29, 1988; See also Cohen v. Marx, 211 P. 2d
321 (1949).]
Respondent next asserts that the documents evidencing the loan transactions
of the GSIS are private in nature and hence, are not covered by the
Constitutional right to information on matters of public concern which
guarantees "(a)ccess to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions" only.
It is argued that the records of the GSIS, a government corporation performing
proprietary functions, are outside the coverage of the people's right of access
to official records.
It is further contended that since the loan function of the GSIS is merely
incidental to its insurance function, then its loan transactions are not covered
by the constitutional policy of full public disclosure and the right to
information which is applicable only to "official" transactions.
First of all, the "constituent ministrant" dichotomy characterizing
government function has long been repudiated. In ACCFA v. Confederation of
Unions and Government Corporations and Offices (G.R. Nos. L-21484 and L23605, November 29, 1969, 30 SCRA 6441, the Court said that the government,
whether carrying out its sovereign attributes or running some business,
discharges the same function of service to the people.
Consequently, that the GSIS, in granting the loans, was exercising a proprietary
function would not justify the exclusion of the transactions from the coverage
and scope of the right to information.
Moreover, the intent of the members of the Constitutional Commission of 1986,
to include government-owned and controlled corporations and transactions
entered into by them within the coverage of the State policy of fun public
disclosure is manifest from the records of the proceedings:
xxx xxx xxx
THE PRESIDING OFFICER (Mr. Colayco).
Commissioner Suarez is recognized.
MR. SUAREZ. Thank you. May I ask the Gentleman a few
question?
MR. OPLE. Very gladly.
MR. SUAREZ. Thank you.
When we declare a "policy of full public
disclosure of all its transactions" referring
to the transactions of the State and when
we say the "State" which I suppose would
include all of the various agencies,
departments, ministries and instrumentalities
of the government....
MR. OPLE. Yes, and individual public officers, Mr. Presiding
Officer.
MR. SUAREZ. Including government-owned and controlled
corporations.
MR. OPLE. That is correct, Mr. Presiding Officer.
MR. SUAREZ. And when we
say "transactions" which
BIDIN, J.:p
At issue in this petition is the citizen's right of access to official records as
guaranteed by the constitution.
In February 1989, petitioner, herself a member of respondent Movie and
Television Review and Classification Board (MTRCB), wrote its records officer
requesting that she be allowed to examine the board's records pertaining to the
voting slips accomplished by the individual board members after a review of
the movies and television productions. It is on the basis of said slips that films
are either banned, cut or classified accordingly.
Acting on the said request, the records officer informed petitioner that she has
to secure prior clearance from respondent Manuel Morato, as chairman of
MTRCB, to gain access to the records sought to be examined.
Petitioner's request was eventually denied by respondent Morato on the ground
that whenever the members of the board sit in judgment over a film, their
decisions as reflected in the individual voting slips partake the nature of
conscience votes and as such, are purely and completely private and personal.
It is the submission of respondents that the individual voting slips is the
exclusive property of the member concerned and anybody who wants access
thereto must first secure his (the member's) consent, otherwise, a request
therefor may be legally denied.
Petitioner argues, on the other hand, that the records she wishes to examine
are public in character and other than providing for reasonable conditions
regulating the manner and hours of examination, respondents Morato and the
classification board have no authority to deny any citizen seeking examination
of the board's records.
On February 27, 1989, respondent Morato called an executive meeting of the
MTRCB to discuss, among others, the issue raised by petitioner. In said
meeting, seventeen (17) members of the board voted to declare their
individual voting records as classified documents which rendered the same
inaccessible to the public without clearance from the chairman. Thereafter,
respondent Morato denied petitioner's request to examine the voting slips.
However, it was only much later, i.e., on July 27, 1989, that respondent Board
issued Resolution No. 10-89 which declared as confidential, private and
personal, the decision of the reviewing committee and the voting slips of the
members.
Petitioner brought the matter to the attention of the Executive Secretary,
which in turn, referred the same to respondent Morato for appropriate
comment.
Another incident which gave rise to this petition occurred in a board meeting
held on June 22, 1989. In that meeting, respondent Morato told the board that
he has ordered some deletions on the movie "Mahirap ang Magmahal"
notwithstanding the fact that said movie was earlier approved for screening by
the Board with classification "R-18 without cuts". He explained that his power
to unilaterally change the decision of the Review Committee is authorized by
virtue of MTRCB Resolution No. 88-1-25 (dated June 22,1988) which allows the
chairman of the board "to downgrade a film (already) reviewed especially those
which are controversial."
Petitioner informed the Board, however, that respondent Morato possesses no
authority to unilaterally reverse a decision of the review committee under PD
1986 (Creating the Movie and Television Review and Classification Board).
After the matter was referred by the Deputy Executive Secretary to the Justice
Secretary, the latter opined that PD 1896 does not vest respondent Morato any
authority to unilaterally reverse the decision of the review committee but
declined to comment on the constitutionality of Res. No. 10-89 on the ground
that the resolution thereof is a judicial prerogative (Rollo, pp. 38-42).
The Justice Secretary's opinion to the contrary notwithstanding, respondent
Morato opted to ignore it.
Hence, this petition anchored on the following:
A. MORATO AND THE MTRCB BY APPROVING AND ENFORCING RESOLUTION NO.
10-89 ACTED WITH GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OF
JURISDICTION BECAUSE THE SAME VIOLATES ARTICLE III SECTION 7 OF THE 1987
CONSTITUTION.
B. MTRCB RESOLUTION NO. 88-1-25 HAS NO LEGAL BASIS AND CONSTITUTES AN
UNLAWFUL DELEGATION OF DISCRETIONARY POWERS.
C. MORATO AND THE MTRCB BY REFUSING TO ABIDE BY OPINION NO. 1 SERIES
OF 1990 OF THE SECRETARY OF JUSTICE AND BY INSISTING ON THE VALIDITY OF
RESOLUTION NO. 88-1-25 ACTED CAPRICIOUSLY, ARBITRARILY, IN BAD FAITH, IN
EXCESS OF THEIR JURISDICTION, AND WITH GRAVE ABUSE OF DISCRETION.
Petitioner therefore seeks the nullification of 1) MTRCB Resolution No. 88-1-25
which allows the Chairman of the Board to unilaterally downgrade a film
(already) reviewed especially those which are controversial and 2) MTRCB
RESOLUTION No. 10-89 (dated July 27, 1989) declaring as strictly confidential,
private and personal a) the decision of a reviewing committee which previously
reviewed a certain film and b) the individual voting slips of the members of the
committee that reviewed the film.
Respondents argue at the outset that the instant petition should be dismissed
outright for having failed to comply with the doctrine of exhaustion of
administrative remedies.
As We held in Legaspi v. Civil Service Commission (150 SCRA 530 [1987]), this
constitutional provision is self-executory and supplies "the rules by means of
which the right to information may be enjoyed (Cooley, A Treatise on
Constitutional Limitations 167 [1927]) by guaranteeing the right and mandating
the duty to afford access to sources of information. Hence, the fundamental
right therein recognized may be asserted by the people upon the ratification of
the constitution without need for any ancillary act of the Legislature (Id. at
165). What may be provided for by the Legislature are reasonable conditions
and limitations upon the access to be afforded which must, of necessity, be
consistent with the declared State Policy of full public disclosure of all
transactions involving public interest (Constitution, Art. II, Sec. 28)." (See also
Taada v. Tuvera, 136 SCRA 27 [1985]; Valmonte v. Belmonte, Jr., 170 SCRA
256 [1989]).
Respondents contend, however, that what is rendered by the members of the
board in reviewing films and reflected in their individual voting slip is their
individual vote of conscience on the motion picture or television program and
as such, makes the individual voting slip purely private and personal; an
exclusive property of the member concerned.
The term private has been defined as "belonging to or concerning, an individual
person, company, or interest"; whereas, public means "pertaining to, or
belonging to, or affecting a nation, state, or community at large" (People v.
Powell, 274 NW 372 [1937]). May the decisions of respondent Board and the
individual members concerned, arrived at in an official capacity, be considered
private? Certainly not. As may be gleaned from the decree (PD 1986) creating
the respondent classification board, there is no doubt that its very existence is
public is character; it is an office created to serve public interest. It being the
case, respondents can lay no valid claim to privacy. The right to privacy
belongs to the individual acting in his private capacity and not to a
governmental agency or officers tasked with, and acting in, the discharge of
public duties (See Valmonte v. Belmonte, Jr., supra.) There can be no invasion
of privacy in the case at bar since what is sought to be divulged is a product of
action undertaken in the course of performing official functions. To declare
not with the Chairman thereof (Sec. 3 [e], PD 1986). As Chief Executive
Officer, respondent Morato's function as Chairman of the Board calls for the
implementation and execution, not modification or reversal, of the decisions or
orders of the latter (Sec. 5 [a], Ibid.). The power of classification having been
reposed by law exclusively with the respondent Board, it has no choice but to
exercise the same as mandated by law, i.e., as a collegial body, and not
transfer it elsewhere or discharge said power through the intervening mind of
another. Delegata potestas non potest delegari a delegated power cannot be
delegated. And since the act of classification involves an exercise of the Board's
discretionary power with more reason the Board cannot, by way of the assailed
resolution, delegate said power for it is an established rule in administrative
law that discretionary authority cannot be a subject of delegation.
WHEREFORE, the instant petition is GRANTED. Resolution Nos. 10-89 and 88-125 issued by the respondent Board are hereby declared null and void.
SO ORDERED.