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G.R. No. 143855 September 21, 2010

REPRESENTATIVES GERARDO S. ESPINA, ORLANDO FUA, JR., PROSPERO AMATONG, ROBERT ACE S. BARBERS, RAUL M. GONZALES,
PROSPERO PICHAY, JUAN MIGUEL ZUBIRI and FRANKLIN BAUTISTA,Petitioners,
vs.
HON. RONALDO ZAMORA, JR. (Executive Secretary), HON. MAR ROXAS (Secretary of Trade and Industry), HON. FELIPE MEDALLA
(Secretary of National Economic and Development Authority), GOV. RAFAEL BUENAVENTURA (Bangko Sentral ng Pilipinas) and HON.
LILIA BAUTISTA (Chairman, Securities and Exchange Commission), Respondents.

DECISION

ABAD, J.:

This case calls upon the Court to exercise its power of judicial review and determine the constitutionality of the Retail Trade Liberalization Act of 2000,
which has been assailed as in breach of the constitutional mandate for the development of a self-reliant and independent national economy effectively
controlled by Filipinos.

The Facts and the Case

On March 7, 2000 President Joseph E. Estrada signed into law Republic Act (R.A.) 8762, also known as the Retail Trade Liberalization Act of 2000. It
expressly repealed R.A. 1180, which absolutely prohibited foreign nationals from engaging in the retail trade business. R.A. 8762 now allows them to do
so under four categories:

Category A Less than Exclusively for Filipino citizens and corporations wholly owned by
US$2,500,000.00 Filipino citizens.

Category B US$2,500,000.00 up but less than For the first two years of R.A. 8762’s effectivity, foreign
US$7,500,000.00 ownership is allowed up to 60%. After the two-year period,
100% foreign equity shall be allowed.

Category C US$7,500,000.00 or more May be wholly owned by foreigners. Foreign investments for
establishing a store in Categories B and C shall not be less than
the equivalent in Philippine Pesos of US$830,000.00.
 Category D US$250,000.00 per store of foreign May be wholly owned by foreigners.
enterprises specializing in high-end or
luxury products

R.A. 8762 also allows natural-born Filipino citizens, who had lost their citizenship and now reside in the Philippines, to engage in the retail trade business
with the same rights as Filipino citizens.

On October 11, 2000 petitioners ***Magtanggol T. Gunigundo I, Michael T. Defensor, Gerardo S. Espina, Benjamin S. Lim, Orlando Fua, Jr., Prospero
Amatong, Sergio Apostol, Robert Ace S. Barbers, Enrique Garcia, Jr., Raul M. Gonzales, Jaime Jacob, Apolinario Lozada, Jr., Leonardo Montemayor, Ma.
Elena Palma-Gil, Prospero Pichay, Juan Miguel Zubiri and Franklin Bautista, all members of the House of Representatives, filed the present petition,
assailing the constitutionality of R.A. 8762 on the following grounds:

First, the law runs afoul of Sections 9, 19, and 20 of Article II of the Constitution which enjoins the State to place the national economy under
the control of Filipinos to achieve equal distribution of opportunities, promote industrialization and full employment, and protect Filipino
enterprise against unfair competition and trade policies.

Second, the implementation of R.A. 8762 would lead to alien control of the retail trade, which taken together with alien dominance of other areas
of business, would result in the loss of effective Filipino control of the economy.

Third, foreign retailers like Walmart and K-Mart would crush Filipino retailers and sari-sari store vendors, destroy self-employment, and bring
about more unemployment.

Fourth, the World Bank-International Monetary Fund had improperly imposed the passage of R.A. 8762 on the government as a condition for the
release of certain loans.

Fifth, there is a clear and present danger that the law would promote monopolies or combinations in restraint of trade.

Respondents Executive Secretary Ronaldo Zamora, Jr., Trade and Industry Secretary Mar Roxas, National Economic and Development Authority (NEDA)
Secretary Felipe Medalla, Bangko Sentral ng Pilipinas Gov. Rafael Buenaventura, and Securities and Exchange Commission Chairman Lilia Bautista
countered that:

First, petitioners have no legal standing to file the petition. They cannot invoke the fact that they are taxpayers since R.A. 8762 does not involve
the disbursement of public funds. Nor can they invoke the fact that they are members of Congress since they made no claim that the law
infringes on their right as legislators.

Second, the petition does not involve any justiciable controversy. Petitioners of course claim that, as members of Congress, they represent the
small retail vendors in their respective districts but the petition does not allege that the subject law violates the rights of those vendors.
 Third, petitioners have failed to overcome the presumption of constitutionality of R.A. 8762. Indeed, they could not specify how the new law
violates the constitutional provisions they cite. Sections 9, 19, and 20 of Article II of the Constitution are not self-executing provisions that are
judicially demandable.

Fourth, the Constitution mandates the regulation but not the prohibition of foreign investments. It directs Congress to reserve to Filipino citizens
certain areas of investments upon the recommendation of the NEDA and when the national interest so dictates. But the Constitution leaves to
the discretion of the Congress whether or not to make such reservation. It does not prohibit Congress from enacting laws allowing the entry of
foreigners into certain industries not reserved by the Constitution to Filipino citizens.

The Issues Presented

Simplified, the case presents two issues:

1. Whether or not petitioner lawmakers have the legal standing to challenge the constitutionality of R.A. 8762; and

2. Whether or not R.A. 8762 is unconstitutional.

The Court’s Ruling

One. The long settled rule is that he who challenges the validity of a law must have a standing to do so. 1 Legal standing or locus standi refers to the
right of a party to come to a court of justice and make such a challenge. More particularly, standing refers to his personal and substantial interest in that
he has suffered or will suffer direct injury as a result of the passage of that law.2 To put it another way, he must show that he has been or is about to be
denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the law he
complains of.3

Here, there is no clear showing that the implementation of the Retail Trade Liberalization Act prejudices petitioners or inflicts damages on them, either
as taxpayers4 or as legislators.5 Still the Court will resolve the question they raise since the rule on standing can be relaxed for nontraditional plaintiffs
like ordinary citizens, taxpayers, and legislators when as in this case the public interest so requires or the matter is of transcendental importance, of
overarching significance to society, or of paramount public interest.6

Two. Petitioners mainly argue that R.A. 8762 violates the mandate of the 1987 Constitution for the State to develop a self-reliant and independent
national economy effectively controlled by Filipinos. They invoke the provisions of the Declaration of Principles and State Policies under Article II of the
1987 Constitution, which read as follows:

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people
from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life
for all.
xxxx

Section 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.

Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed
investments.

Petitioners also invoke the provisions of the National Economy and Patrimony under Article XII of the 1987 Constitution, which reads:

Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of
the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as
Congress may prescribe, certain areas of investments. 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.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and
priorities.

xxxx

Section 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.

Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of
equality and reciprocity.

But, as the Court explained in Tañada v. Angara,7 the provisions of Article II of the 1987 Constitution, the declarations of principles and state policies,
are not self-executing. Legislative failure to pursue such policies cannot give rise to a cause of action in the courts.

The Court further explained in Tañada that Article XII of the 1987 Constitution lays down the ideals of economic nationalism: (1) by expressing
preference in favor of qualified Filipinos in the grant of rights, privileges and concessions covering the national economy and patrimony and in the use of
Filipino labor, domestic materials and locally-produced goods; (2) by mandating the State to adopt measures that help make them competitive; and (3)
by requiring the State to develop a self-reliant and independent national economy effectively controlled by Filipinos.8ten.lihpwal
In other words, while Section 19, Article II of the 1987 Constitution requires the development of a self-reliant and independent national economy
effectively controlled by Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the economic environment. The objective is simply to
prohibit foreign powers or interests from maneuvering our economic policies and ensure that Filipinos are given preference in all areas of development.

Indeed, the 1987 Constitution takes into account the realities of the outside world as it requires 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 speaks of industries which are competitive in
both domestic and foreign markets as well as of the protection of Filipino enterprises against unfair foreign competition and trade practices. Thus, while
the Constitution mandates a bias in favor of Filipino goods, services, labor and enterprises, it also 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.9

In other words, the 1987 Constitution does not rule out the entry of foreign investments, goods, and services. While it does not encourage their
unlimited entry 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.10 The key, as in all economies in the world, is to strike a balance between protecting local businesses and allowing the
entry of foreign investments and services.1avvphi1

More importantly, Section 10, Article XII of the 1987 Constitution gives Congress the discretion to reserve to Filipinos certain areas of investments upon
the recommendation of the NEDA and when the national interest requires. Thus, Congress can determine what policy to pass and when to pass it
depending on the economic exigencies. It can enact laws allowing the entry of foreigners into certain industries not reserved by the Constitution to
Filipino citizens. In this case, Congress has decided to open certain areas of the retail trade business to foreign investments instead of reserving them
exclusively to Filipino citizens. The NEDA has not opposed such policy.

The control and regulation of trade in the interest of the public welfare is of course an exercise of the police power of the State. A person’s right to
property, whether he is a Filipino citizen or foreign national, cannot be taken from him without due process of law. In 1954, Congress enacted the Retail
Trade Nationalization Act or R.A. 1180 that restricts the retail business to Filipino citizens. In denying the petition assailing the validity of such Act for
violation of the foreigner’s right to substantive due process of law, the Supreme Court held that the law constituted a valid exercise of police
power.11 The State had an interest in preventing alien control of the retail trade and R.A. 1180 was reasonably related to that purpose. That law is not
arbitrary.

Here, to the extent that R.A. 8762, the Retail Trade Liberalization Act, lessens the restraint on the foreigners’ right to property or to engage in an
ordinarily lawful business, it cannot be said that the law amounts to a denial of the Filipinos’ right to property and to due process of law. Filipinos
continue to have the right to engage in the kinds of retail business to which the law in question has permitted the entry of foreign investors.

Certainly, it is not within the province of the Court to inquire into the wisdom of R.A. 8762 save when it blatantly violates the Constitution. But as the
Court has said, there is no showing that the law has contravened any constitutional mandate. The Court is not convinced that the implementation of R.A.
8762 would eventually lead to alien control of the retail trade business. Petitioners have not mustered any concrete and strong argument to support its
thesis. The law itself has provided strict safeguards on foreign participation in that business. Thus –
First, aliens can only engage in retail trade business subject to the categories above-enumerated; Second, only nationals from, or juridical entities
formed or incorporated in countries which allow the entry of Filipino retailers shall be allowed to engage in retail trade business; and Third, qualified
foreign retailers shall not be allowed to engage in certain retailing activities outside their accredited stores through the use of mobile or rolling stores or
carts, the use of sales representatives, door-to-door selling, restaurants and sari-sari stores and such other similar retailing activities.

In sum, petitioners have not shown how the retail trade liberalization has prejudiced and can prejudice the local small and medium enterprises since its
implementation about a decade ago.

WHEREFORE, the Court DISMISSES the petition for lack of merit. No costs.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

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G.R. No. 158540. August 3, 2005

SOUTHERN CROSS CEMENT CORPORATION, Petitioners,

vs.
CEMENT MANUFACTURERS ASSOCIATION OF THE PHILIPPINES, THE SECRETARY OF THE DEPARTMENT OF TRADE AND INDUSTRY, THE
SECRETARY OF THE DEPARTMENT OF FINANCE and THE COMMISSIONER OF THE BUREAU OF CUSTOMS, Respondent.

RESOLUTION

TINGA, J.:

Cement is hardly an exciting subject for litigation. Still, the parties in this case have done their best to put up a spirited advocacy of their respective
positions, throwing in everything including the proverbial kitchen sink. At present, the burden of passion, if not proof, has shifted to public respondents
Department of Trade and Industry (DTI) and private respondent Philippine Cement Manufacturers Corporation (Philcemcor),1 who now seek
reconsideration of our Decision dated 8 July 2004 (Decision), which granted the petition of petitioner Southern Cross Cement Corporation (Southern
Cross).

This case, of course, is ultimately not just about cement. For respondents, it is about love of country and the future of the domestic industry in the face
of foreign competition. For this Court, it is about elementary statutory construction, constitutional limitations on the executive power to impose tariffs
and similar measures, and obedience to the law. Just as much was asserted in the Decision, and the same holds true with this present Resolution.
An extensive narration of facts can be found in the Decision.2 As can well be recalled, the case centers on the interpretation of provisions of Republic Act
No. 8800, the Safeguard Measures Act ("SMA"), which was one of the laws enacted by Congress soon after the Philippines ratified the General
Agreement on Tariff and Trade (GATT) and the World Trade Organization (WTO) Agreement.3 The SMA provides the structure and mechanics for the
imposition of emergency measures, including tariffs, to protect domestic industries and producers from increased imports which inflict or could inflict
serious injury on them.4

A brief summary as to how the present petition came to be filed by Southern Cross. Philcemcor, an association of at least eighteen (18) domestic cement
manufacturers filed with the DTI a petition seeking the imposition of safeguard measures on gray Portland cement,5 in accordance with the SMA. After
the DTI issued a provisional safeguard measure,6 the application was referred to the Tariff Commission for a formal investigation pursuant to Section 9 of
the SMA and its Implementing Rules and Regulations, in order to determine whether or not to impose a definitive safeguard measure on imports of gray
Portland cement. The Tariff Commission held public hearings and conducted its own investigation, then on 13 March 2002, issued its Formal
Investigation Report ("Report"). The Report determined as follows:

The elements of serious injury and imminent threat of serious injury not having been established, it is hereby recommended that no definitive general
safeguard measure be imposed on the importation of gray Portland cement.7

The DTI sought the opinion of the Secretary of Justice whether it could still impose a definitive safeguard measure notwithstanding the negative finding
of the Tariff Commission. After the Secretary of Justice opined that the DTI could not do so under the SMA, 8 the DTI Secretary then promulgated
a Decision9 wherein he expressed the DTI’s disagreement with the conclusions of the Tariff Commission, but at the same time, ultimately denying
Philcemcor’s application for safeguard measures on the ground that the he was bound to do so in light of the Tariff Commission’s negative findings. 10

Philcemcor challenged this Decision of the DTI Secretary by filing with the Court of Appeals a Petition for Certiorari, Prohibition and Mandamus11 seeking
to set aside the DTI Decision, as well as the Tariff Commission’s Report. It prayed that the Court of Appeals direct the DTI Secretary to disregard the
Report and to render judgment independently of the Report. Philcemcor argued that the DTI Secretary, vested as he is under the law with the power of
review, is not bound to adopt the recommendations of the Tariff Commission; and, that the Report is void, as it is predicated on a flawed framework,
inconsistent inferences and erroneous methodology.12

The Court of Appeals Twelfth Division, in a Decision13 penned by Court of Appeals Associate Justice Elvi John Asuncion,14 partially granted Philcemcor’s
petition. The appellate court ruled that it had jurisdiction over the petition for certiorari since it alleged grave abuse of discretion. While it refused to
annul the findings of the Tariff Commission,15 it also held that the DTI Secretary was not bound by the factual findings of the Tariff Commission since
such findings are merely recommendatory and they fall within the ambit of the Secretary’s discretionary review. It determined that the legislative intent
is to grant the DTI Secretary the power to make a final decision on the Tariff Commission’s recommendation.16

On 23 June 2003, Southern Cross filed the present petition, arguing that the Court of Appeals has no jurisdiction over Philcemcor’s petition, as the
proper remedy is a petition for review with the CTA conformably with the SMA, and; that the factual findings of the Tariff Commission on the existence
or non-existence of conditions warranting the imposition of general safeguard measures are binding upon the DTI Secretary.

Despite the fact that the Court of Appeals’ Decision had not yet become final, its binding force was cited by the DTI Secretary when he issued a
new Decision on 25 June 2003, wherein he ruled that that in light of the appellate court’s Decision, there was no longer any legal impediment to his
deciding Philcemcor’s application for definitive safeguard measures.17 He made a determination that, contrary to the findings of the Tariff Commission,
the local cement industry had suffered serious injury as a result of the import surges.18 Accordingly, he imposed a definitive safeguard measure on the
importation of gray Portland cement, in the form of a definitive safeguard duty in the amount of ₱20.60/40 kg. bag for three years on imported gray
Portland Cement.19

On 7 July 2003, Southern Cross filed with the Court a "Very Urgent Application for a Temporary Restraining Order and/or A Writ of Preliminary
Injunction" ("TRO Application"), seeking to enjoin the DTI Secretary from enforcing his Decision of 25 June 2003 in view of the pending petition before
this Court. Philcemcor filed an opposition, claiming, among others, that it is not this Court but the CTA that has jurisdiction over the application under
the law.

On 1 August 2003, Southern Cross filed with the CTA a Petition for Review, assailing the DTI Secretary’s 25 June 2003 Decision which imposed the
definite safeguard measure. Yet Southern Cross did not promptly inform this Court about this filing. The first time the Court would learn about
this Petition with the CTA was when Southern Cross mentioned such fact in a pleading dated 11 August 2003 and filed the next day with this Court.20

Philcemcor argued before this Court that Southern Cross had deliberately and willfully resorted to forum-shopping; that the CTA, being a special court of
limited jurisdiction, could only review the ruling of the DTI Secretary when a safeguard measure is imposed; and that the factual findings of the Tariff
Commission are not binding on the DTI Secretary.21

After giving due course to Southern Cross’s Petition, the Court called the case for oral argument on 18 February 2004.22 At the oral argument, attended
by the counsel for Philcemcor and Southern Cross and the Office of the Solicitor General, the Court simplified the issues in this wise: (i) whether
the Decision of the DTI Secretary is appealable to the CTA or the Court of Appeals; (ii) assuming that the Court of Appeals has jurisdiction, whether
its Decision is in accordance with law; and, whether a Temporary Restraining Order is warranted.23

After the parties had filed their respective memoranda, the Court’s Second Division, to which the case had been assigned, promulgated
its Decision granting Southern Cross’s Petition.24 The Decision was unanimous, without any separate or concurring opinion.

The Court ruled that the Court of Appeals had no jurisdiction over Philcemcor’s Petition, the proper remedy under Section 29 of the SMA being a petition
for review with the CTA; and that the Court of Appeals erred in ruling that the DTI Secretary was not bound by the negative determination of the Tariff
Commission and could therefore impose the general safeguard measures, since Section 5 of the SMA precisely required that the Tariff Commission make
a positive final determination before the DTI Secretary could impose these measures. Anent the argument that Southern Cross had committed forum-
shopping, the Court concluded that there was no evident malicious intent to subvert procedural rules so as to match the standard under Section 5, Rule
7 of the Rules of Court of willful and deliberate forum shopping. Accordingly, the Decision of the Court of Appeals dated 5 June 2003 was declared null
and void.

The Court likewise found it necessary to nullify the Decision of the DTI Secretary dated 25 June 2003, rendered after the filing of this present Petition.
This Decision by the DTI Secretary had cited the obligatory force of the null and void Court of Appeals’ Decision, notwithstanding the fact that the
decision of the appellate court was not yet final and executory. Considering that the decision of the Court of Appeals was a nullity to begin with, the
inescapable conclusion was that the new decision of the DTI Secretary, prescinding as it did from the imprimatur of the decision of the Court of Appeals,
was a nullity as well.
After the Decision was reported in the media, there was a flurry of newspaper articles citing alleged negative reactions to the ruling by the counsel for
Philcemcor, the DTI Secretary, and others.25 Both respondents promptly filed their respective motions for reconsideration.

On 21 September 2004, the Court En Banc resolved, upon motion of respondents, to accept the petition and resolve the Motions for
Reconsideration.26 The case was then reheard27 on oral argument on 1 March 2005. During the hearing, the Court elicited from the parties their
arguments on the two central issues as discussed in the assailed Decision, pertaining to the jurisdictional aspect and to the substantive aspect of
whether the DTI Secretary may impose a general safeguard measure despite a negative determination by the Tariff Commission. The Court chose not to
hear argumentation on the peripheral issue of forum-shopping,28 although this question shall be tackled herein shortly. Another point of concern
emerged during oral arguments on the exercise of quasi-judicial powers by the Tariff Commission, and the parties were required by the Court to discuss
in their respective memoranda whether the Tariff Commission could validly exercise quasi-judicial powers in the exercise of its mandate under the SMA.

The Court has likewise been notified that subsequent to the rendition of the Court’s Decision, Philcemcor filed a Petition for Extension of the Safeguard
Measure with the DTI, which has been referred to the Tariff Commission.29 In an Urgent Motion dated 21 December 2004, Southern Cross prayed that
Philcemcor, the DTI, the Bureau of Customs, and the Tariff Commission be directed to "cease and desist from taking any and all actions pursuant to or
under the null and void CA Decision and DTI Decision, including proceedings to extend the safeguard measure.30 In a Manifestation and Motion dated 23
June 2004, the Tariff Commission informed the Court that since no prohibitory injunction or order of such nature had been issued by any court against
the Tariff Commission, the Commission proceeded to complete its investigation on the petition for extension, pursuant to Section 9 of the SMA, but
opted to defer transmittal of its report to the DTI Secretary pending "guidance" from this Court on the propriety of such a step considering this
pending Motion for Reconsideration. In a Resolution dated 5 July 2005, the Court directed the parties to maintain the status quo effective of even date,
and until further orders from this Court. The denial of the pending motions for reconsideration will obviously render the pending petition for extension
academic.

I. Jurisdiction of the Court of Tax Appeals

Under Section 29 of the SMA

The first core issue resolved in the assailed Decision was whether the Court of Appeals had jurisdiction over the special civil action for certiorari filed by
Philcemcor assailing the 5 April 2002 Decision of the DTI Secretary. The general jurisdiction of the Court of Appeals over special civil actions for certiorari
is beyond doubt. The Constitution itself assures that judicial review avails 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. At the same time, the special civil action of
certiorari is available only when there is no plain, speedy and adequate remedy in the ordinary course of law. 31 Philcemcor’s recourse of special civil
action before the Court of Appeals to challenge the Decision of the DTI Secretary not to impose the general safeguard measures is not based on the
SMA, but on the general rule on certiorari. Thus, the Court proceeded to inquire whether indeed there was no other plain, speedy and adequate remedy
in the ordinary course of law that would warrant the allowance of Philcemcor’s special civil action.

The answer hinged on the proper interpretation of Section 29 of the SMA, which reads:

Section 29. Judicial Review. – Any interested party who is adversely affected by the ruling of the Secretary in connection with the imposition of a
safeguard measure may file with the CTA, a petition for review of such ruling within thirty (30) days from receipt thereof. Provided, however, that the
filing of such petition for review shall not in any way stop, suspend or otherwise toll the imposition or collection of the appropriate tariff duties or the
adoption of other appropriate safeguard measures, as the case may be.

The petition for review shall comply with the same requirements and shall follow the same rules of procedure and shall be subject to the same
disposition as in appeals in connection with adverse rulings on tax matters to the Court of Appeals.32 (Emphasis supplied)

The matter is crucial for if the CTA properly had jurisdiction over the petition challenging the DTI Secretary’s ruling not to impose a safeguard measure,
then the special civil action of certiorari resorted to instead by Philcemcor would not avail, owing to the existence of a plain, speedy and adequate
remedy in the ordinary course of law.33 The Court of Appeals, in asserting that it had jurisdiction, merely cited the general rule on certiorari jurisdiction
without bothering to refer to, or possibly even study, the import of Section 29. In contrast, this Court duly considered the meaning and ramifications of
Section 29, concluding that it provided for a plain, speedy and adequate remedy that Philcemcor could have resorted to instead of filing the special civil
action before the Court of Appeals.

Philcemcor still holds on to its hypothesis that the petition for review allowed under Section 29 lies only if the DTI Secretary’s ruling imposes a safeguard
measure. If, on the other hand, the DTI Secretary’s ruling is not to impose a safeguard measure, judicial review under Section 29 could not be resorted
to since the provision refers to rulings "in connection with the imposition" of the safeguard measure, as opposed to the non-imposition. Since
the Decisiondated 5 April 2002 resolved against imposing a safeguard measure, Philcemcor claims that the proper remedial recourse is a petition for
certiorari with the Court of Appeals.

Interestingly, Republic Act No. 9282, promulgated on 30 March 2004, expressly vests unto the CTA jurisdiction over "[d]ecisions of the Secretary of
Trade and Industry, in case of nonagricultural product, commodity or article . . . involving . . . safeguard measures under Republic Act No. 8800,
where either party may appeal the decision to impose or not to impose said duties."34 It is clear that any future attempts to advance the
literalist position of the respondents would consequently fail. However, since Republic Act No. 9282 has no retroactive effect, this Court had to decide
whether Section 29 vests jurisdiction on the CTA over rulings of the DTI Secretary not to impose a safeguard measure. And the Court, in its
assailed Decision, ruled that the CTA is endowed with such jurisdiction.

Both respondents reiterate their fundamentalist reading that Section 29 authorizes the petition for review before the CTA only when the DTI Secretary
decides to impose a safeguard measure, but not when he decides not to. In doing so, they fail to address what the Court earlier pointed out would be
the absurd consequences if their interpretation is followed to its logical end. But in affirming, as the Court now does, its previous holding that the CTA
has jurisdiction over petitions for review questioning the non-imposition of safeguard measures by the DTI Secretary, the Court relies on the plain
reading that Section 29 explicitly vests jurisdiction over such petitions on the CTA.

Under Section 29, there are three requisites to enable the CTA to acquire jurisdiction over the petition for review contemplated therein: (i) there must be
a ruling by the DTI Secretary; (ii) the petition must be filed by an interested party adversely affected by the ruling; and (iii) such ruling must be "in
connection with the imposition of a safeguard measure." Obviously, there are differences between "a ruling for the imposition of a safeguard measure,"
and one issued "in connection with the imposition of a safeguard measure." The first adverts to a singular type of ruling, namely one that imposes a
safeguard measure. The second does not contemplate only one kind of ruling, but a myriad of rulings issued "in connection with the imposition of a
safeguard measure."
Respondents argue that the Court has given an expansive interpretation to Section 29, contrary to the established rule requiring strict construction
against the existence of jurisdiction in specialized courts.35 But it is the express provision of Section 29, and not this Court, that mandates CTA
jurisdiction to be broad enough to encompass more than just a ruling imposing the safeguard measure.

The key phrase remains "in connection with." It has connotations that are obvious even to the layman. A ruling issued "in connection with" the
imposition of a safeguard measure would be one that bears some relation to the imposition of a safeguard measure. Obviously, a ruling imposing a
safeguard measure is covered by the phrase "in connection with," but such ruling is by no means exclusive. Rulings which modify, suspend or terminate
a safeguard measure are necessarily in connection with the imposition of a safeguard measure. So does a ruling allowing for a provisional safeguard
measure. So too, a ruling by the DTI Secretary refusing to refer the application for a safeguard measure to the Tariff Commission. It is clear that there is
an entire subset of rulings that the DTI Secretary may issue in connection with the imposition of a safeguard measure, including those that are
provisional, interlocutory, or dispositive in character.36 By the same token, a ruling not to impose a safeguard measure is also issued in connection with
the imposition of a safeguard measure.

In arriving at the proper interpretation of "in connection with," the Court referred to the U.S. Supreme Court cases of Shaw v. Delta Air Lines,
Inc.37 and New York State Blue Cross Plans v. Travelers Ins.38 Both cases considered the interpretation of the phrase "relates to" as used in a federal
statute, the Employee Retirement Security Act of 1974. Respondents criticize the citations on the premise that the cases are not binding in our
jurisdiction and do not involve safeguard measures. The criticisms are off-tangent considering that our ruling did not call for the application of the
Employee Retirement Security Act of 1974 in the Philippine milieu. The American cases are not relied upon as precedents, but as guides of
interpretation. Certainly, if there are applicable local precedents pertaining to the interpretation of the phrase "in connection with," then these certainly
would have some binding force. But none avail, and neither do the respondents demonstrate a countervailing holding in Philippine jurisprudence.

Yet we should consider the claim that an "expansive interpretation" was favored in Shaw because the law in question was an employee’s benefit law that
had to be given an interpretation favorable to its intended beneficiaries.39 In the next breath, Philcemcor notes that the U.S. Supreme Court itself was
alarmed by the expansive interpretation in Shaw and thus in Blue Cross, the Shaw ruling was reversed and a more restrictive interpretation was applied
based on congressional intent.40

Respondents would like to make it appear that the Court acted rashly in applying a discarded precedent in Shaw, a non-binding foreign precedent
nonetheless. But the Court did make the following observation in its Decisionpertaining to Blue Cross:

Now, let us determine the maximum scope and reach of the phrase "in connection with" as used in Section 29 of the SMA. A literalist reading or linguistic
survey may not satisfy. Even the U.S. Supreme Court in New York State Blue Cross Plans v. Travelers Ins.41 conceded that the phrases "relate to" or "in
connection with" may be extended to the farthest stretch of indeterminacy for, universally, relations or connections are infinite and stop
nowhere.42 Thus, in the case the U.S. High Court, examining the same phrase of the same provision of law involved in Shaw, resorted to
looking at the statute and its objectives as the alternative to an "uncritical literalism." A similar inquiry into the other provisions of the
SMA is in order to determine the scope of review accorded therein to the CTA.43

In the next four paragraphs of the Decision, encompassing four pages, the Court proceeded to inquire into the SMA and its objectives as a means to
determine the scope of rulings to be deemed as "in connection with the imposition of a safeguard measure." Certainly, this Court did not resort to the
broadest interpretation possible of the phrase "in connection with," but instead sought to bring it into the context of the scope and objectives of the
SMA. The ultimate conclusion of the Court was that the phrase includes all rulings of the DTI Secretary which arise from the time an application or motu
proprio initiation for the imposition of a safeguard measure is taken.44 This conclusion was derived from the observation that the imposition of a general
safeguard measure is a process, initiated motu proprioor through application, which undergoes several stages upon which the DTI Secretary is obliged or
may be called upon to issue a ruling.

It should be emphasized again that by utilizing the phrase "in connection with," it is the SMA that expressly vests jurisdiction on the CTA over petitions
questioning the non-imposition by the DTI Secretary of safeguard measures. The Court is simply asserting, as it should, the clear intent of the legislature
in enacting the SMA. Without "in connection with" or a synonymous phrase, the Court would be compelled to favor the respondents’ position that only
rulings imposing safeguard measures may be elevated on appeal to the CTA. But considering that the statute does make use of the phrase, there is little
sense in delving into alternate scenarios.

Respondents fail to convincingly address the absurd consequences pointed out by the Decision had their proposed interpretation been adopted. Indeed,
suffocated beneath the respondents’ legalistic tinsel is the elemental question¾what sense is there in vesting jurisdiction on the CTA over a decision to
impose a safeguard measure, but not on one choosing not to impose. Of course, it is not for the Court to inquire into the wisdom of legislative acts,
hence the rule that jurisdiction must be expressly vested and not presumed. Yet ultimately, respondents muddle the issue by making it appear that
the Decision has uniquely expanded the jurisdictional rules. For the respondents, the proper statutory interpretation of the crucial phrase "in connection
with" is to pretend that the phrase did not exist at all in the statute. The Court, in taking the effort to examine the meaning and extent of the phrase, is
merely giving breath to the legislative will.

The Court likewise stated that the respondents’ position calls for split jurisdiction, which is judicially abhorred. In rebuttal, the public respondents cite
Sections 2313 and 2402 of the Tariff and Customs Code (TCC), which allegedly provide for a splitting of jurisdiction of the CTA. According to public
respondents, under Section 2313 of the TCC, a decision of the Commissioner of Customs affirming a decision of the Collector of Customs adverse to the
government is elevated for review to the Secretary of Finance. However, under Section 2402 of the TCC, a ruling of the Commissioner of the Bureau of
Customs against a taxpayer must be appealed to the Court of Tax Appeals, and not to the Secretary of Finance.

Strictly speaking, the review by the Secretary of Finance of the decision of the Commissioner of Customs is not judicial review, since the Secretary of
Finance holds an executive and not a judicial office. The contrast is apparent with the situation in this case, wherein the interpretation favored by the
respondents calls for the exercise of judicial review by two different courts over essentially the same question¾whether the DTI Secretary should impose
general safeguard measures. Moreover, as petitioner points out, the executive department cannot appeal against itself. The Collector of Customs, the
Commissioner of Customs and the Secretary of Finance are all part of the executive branch. If the Collector of Customs rules against the government,
the executive cannot very well bring suit in courts against itself. On the other hand, if a private person is aggrieved by the decision of the Collector of
Customs, he can have proper recourse before the courts, which now would be called upon to exercise judicial review over the action of the executive
branch.

More fundamentally, the situation involving split review of the decision of the Collector of Customs under the TCC is not apropos to the case at bar. The
TCC in that instance is quite explicit on the divergent reviewing body or official depending on which party prevailed at the Collector of Customs’ level. On
the other hand, there is no such explicit expression of bifurcated appeals in Section 29 of the SMA.
Public respondents likewise cite Fabian v. Ombudsman45 as another instance wherein the Court purportedly allowed split jurisdiction. It is argued that the
Court, in ruling that it was the Court of Appeals which possessed appellate authority to review decisions of the Ombudsman in administrative cases while
the Court retaining appellate jurisdiction of decisions of the Ombudsman in non-administrative cases, effectively sanctioned split jurisdiction between the
Court and the Court of Appeals.46

Nonetheless, this argument is successfully undercut by Southern Cross, which points out the essential differences in the power exercised by the
Ombudsman in administrative cases and non-administrative cases relating to criminal complaints. In the former, the Ombudsman may impose an
administrative penalty, while in acting upon a criminal complaint what the Ombudsman undertakes is a preliminary investigation. Clearly, the capacity in
which the Ombudsman takes on in deciding an administrative complaint is wholly different from that in conducting a preliminary investigation. In
contrast, in ruling upon a safeguard measure, the DTI Secretary acts in one and the same role. The variance between an order granting or denying an
application for a safeguard measure is polar though emanating from the same equator, and does not arise from the distinct character of the putative
actions involved.

Philcemcor imputes intelligent design behind the alleged intent of Congress to limit CTA review only to impositions of the general safeguard measures. It
claims that there is a necessary tax implication in case of an imposition of a tariff where the CTA’s expertise is necessary, but there is no such tax
implication, hence no need for the assumption of jurisdiction by a specialized agency, when the ruling rejects the imposition of a safeguard measure. But
of course, whether the ruling under review calls for the imposition or non-imposition of the safeguard measure, the common question for resolution still
is whether or not the tariff should be imposed — an issue definitely fraught with a tax dimension. The determination of the question will call upon the
same kind of expertise that a specialized body as the CTA presumably possesses.

In response to the Court’s observation that the setup proposed by respondents was novel, unusual, cumbersome and unwise, public respondents invoke
the maxim that courts should not be concerned with the wisdom and efficacy of legislation.47 But this prescinds from the bogus claim that the CTA may
not exercise judicial review over a decision not to impose a safeguard measure, a prohibition that finds no statutory support. It is likewise settled in
statutory construction that an interpretation that would cause inconvenience and absurdity is not favored. Respondents do not address the particular
illogic that the Court pointed out would ensue if their position on judicial review were adopted. According to the respondents, while a ruling by the DTI
Secretary imposing a safeguard measure may be elevated on review to the CTA and assailed on the ground of errors in fact and in law, a ruling denying
the imposition of safeguard measures may be assailed only on the ground that the DTI Secretary committed grave abuse of discretion. As stressed in
the Decision, "[c]ertiorari is a remedy narrow in its scope and inflexible in its character. It is not a general utility tool in the legal workshop." 48

It is incorrect to say that the Decision bars any effective remedy should the Tariff Commission act or conclude erroneously in making its determination
whether the factual conditions exist which necessitate the imposition of the general safeguard measure. If the Tariff Commission makes a negative final
determination, the DTI Secretary, bound as he is by this negative determination, has to render a decision denying the application for safeguard
measures citing the Tariff Commission’s findings as basis. Necessarily then, such negative determination of the Tariff Commission being an integral part
of the DTI Secretary’s ruling would be open for review before the CTA, which again is especially qualified by reason of its expertise to examine the
findings of the Tariff Commission. Moreover, considering that the Tariff Commission is an instrumentality of the government, its actions (as opposed to
those undertaken by the DTI Secretary under the SMA) are not beyond the pale of certiorari jurisdiction. Unfortunately for Philcemcor, it hinged its cause
on the claim that the DTI Secretary’s actions may be annulled on certiorari, notwithstanding the explicit grant of judicial review over that cabinet
member’s actions under the SMA to the CTA.
Finally on this point, Philcemcor argues that assuming this Court’s interpretation of Section 29 is correct, such ruling should not be given retroactive
effect, otherwise, a gross violation of the right to due process would be had. This erroneously presumes that it was this Court, and not Congress, which
vested jurisdiction on the CTA over rulings of non-imposition rendered by the DTI Secretary. We have repeatedly stressed that Section 29 expressly
confers CTA jurisdiction over rulings in connection with the imposition of the safeguard measure, and the reassertion of this point in the Decision was a
matter of emphasis, not of contrivance. The due process protection does not shield those who remain purposely blind to the express rules that ensure
the sporting play of procedural law.

Besides, respondents’ claim would also apply every time this Court is compelled to settle a novel question of law, or to reverse precedent. In such cases,
there would always be litigants whose causes of action might be vitiated by the application of newly formulated judicial doctrines. Adopting their claim
would unwisely force this Court to treat its dispositions in unprecedented, sometimes landmark decisions not as resolutions to the live cases or
controversies, but as legal doctrine applicable only to future litigations.

II. Positive Final Determination

By the Tariff Commission an

Indispensable Requisite to the

Imposition of General Safeguard Measures

The second core ruling in the Decision was that contrary to the holding of the Court of Appeals, the DTI Secretary was barred from imposing a general
safeguard measure absent a positive final determination rendered by the Tariff Commission. The fundamental premise rooted in this ruling is based on
the acknowledgment that the required positive final determination of the Tariff Commission exists as a properly enacted constitutional limitation imposed
on the delegation of the legislative power to impose tariffs and imposts to the President under Section 28(2), Article VI of the Constitution.

Congressional Limitations Pursuant

To Constitutional Authority on the

Delegated Power to Impose

Safeguard Measures

The safeguard measures imposable under the SMA generally involve duties on imported products, tariff rate quotas, or quantitative restrictions on the
importation of a product into the country. Concerning as they do the foreign importation of products into the Philippines, these safeguard measures fall
within the ambit of Section 28(2), Article VI of the Constitution, which states:
The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may
impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national
development program of the Government.49

The Court acknowledges the basic postulates ingrained in the provision, and, hence, governing in this case. They are:

(1) It is Congress which authorizes the President to impose tariff rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts. Thus, the authority cannot come from the Finance Department, the National Economic Development Authority, or the World Trade
Organization, no matter how insistent or persistent these bodies may be.

(2) The authorization granted to the President must be embodied in a law. Hence, the justification cannot be supplied simply by inherent
executive powers. It cannot arise from administrative or executive orders promulgated by the executive branch or from the wisdom or whim of the
President.

(3) The authorization to the President can be exercised only within the specified limits set in the law and is further subject to limitations
and restrictions which Congress may impose. Consequently, if Congress specifies that the tariff rates should not exceed a given amount, the
President cannot impose a tariff rate that exceeds such amount. If Congress stipulates that no duties may be imposed on the importation of corn, the
President cannot impose duties on corn, no matter how actively the local corn producers lobby the President. Even the most picayune of limits or
restrictions imposed by Congress must be observed by the President.

There is one fundamental principle that animates these constitutional postulates. These impositions under Section 28(2), Article VI fall within the
realm of the power of taxation, a power which is within the sole province of the legislature under the Constitution.

Without Section 28(2), Article VI, the executive branch has no authority to impose tariffs and other similar tax levies involving the
importation of foreign goods. Assuming that Section 28(2) Article VI did not exist, the enactment of the SMA by Congress would be voided on the
ground that it would constitute an undue delegation of the legislative power to tax. The constitutional provision shields such delegation from
constitutional infirmity, and should be recognized as an exceptional grant of legislative power to the President, rather than the affirmation of an inherent
executive power.

This being the case, the qualifiers mandated by the Constitution on this presidential authority attain primordial consideration. First, there must be a law,
such as the SMA. Second, there must be specified limits, a detail which would be filled in by the law. And further, Congress is further empowered to
impose limitations and restrictions on this presidential authority. On this last power, the provision does not provide for specified conditions, such as that
the limitations and restrictions must conform to prior statutes, internationally accepted practices, accepted jurisprudence, or the considered opinion of
members of the executive branch.

The Court recognizes that the authority delegated to the President under Section 28(2), Article VI may be exercised, in accordance with legislative
sanction, by the alter egos of the President, such as department secretaries. Indeed, for purposes of the President’s exercise of power to impose tariffs
under Article VI, Section 28(2), it is generally the Secretary of Finance who acts as alter ego of the President. The SMA provides an exceptional instance
wherein it is the DTI or Agriculture Secretary who is tasked by Congress, in their capacities as alter egos of the President, to impose such measures.
Certainly, the DTI Secretary has no inherent power, even as alter ego of the President, to levy tariffs and imports.

Concurrently, the tasking of the Tariff Commission under the SMA should be likewise construed within the same context as part and parcel of the
legislative delegation of its inherent power to impose tariffs and imposts to the executive branch, subject to limitations and restrictions. In that regard,
both the Tariff Commission and the DTI Secretary may be regarded as agents of Congress within their limited respective spheres, as ordained in the
SMA, in the implementation of the said law which significantly draws its strength from the plenary legislative power of taxation. Indeed, even the
President may be considered as an agent of Congress for the purpose of imposing safeguard measures. It is Congress, not the President,
which possesses inherent powers to impose tariffs and imposts. Without legislative authorization through statute, the President has no
power, authority or right to impose such safeguard measures because taxation is inherently legislative, not executive.

When Congress tasks the President or his/her alter egos to impose safeguard measures under the delineated conditions, the President
or the alter egos may be properly deemed as agents of Congress to perform an act that inherently belongs as a matter of right to the
legislature. It is basic agency law that the agent may not act beyond the specifically delegated powers or disregard the restrictions imposed by the
principal. In short, Congress may establish the procedural framework under which such safeguard measures may be imposed, and assign the various
offices in the government bureaucracy respective tasks pursuant to the imposition of such measures, the task assignment including the factual
determination of whether the necessary conditions exists to warrant such impositions. Under the SMA, Congress assigned the DTI Secretary and the
Tariff Commission their respective functions50 in the legislature’s scheme of things.

There is only one viable ground for challenging the legality of the limitations and restrictions imposed by Congress under Section 28(2) Article VI, and
that is such limitations and restrictions are themselves violative of the Constitution. Thus, no matter how distasteful or noxious these limitations and
restrictions may seem, the Court has no choice but to uphold their validity unless their constitutional infirmity can be demonstrated.

What are these limitations and restrictions that are material to the present case? The entire SMA provides for a limited framework under which the
President, through the DTI and Agriculture Secretaries, may impose safeguard measures in the form of tariffs and similar imposts. The limitation most
relevant to this case is contained in Section 5 of the SMA, captioned "Conditions for the Application of General Safeguard Measures," and stating:

The Secretary shall apply a general safeguard measure upon a positive final determination of the [Tariff] Commission that a product is being
imported into the country in increased quantities, whether absolute or relative to the domestic production, as to be a substantial cause of serious injury
or threat thereof to the domestic industry; however, in the case of non-agricultural products, the Secretary shall first establish that the application of
such safeguard measures will be in the public interest.51

Positive Final Determination

By Tariff Commission Plainly

Required by Section 5 of SMA

There is no question that Section 5 of the SMA operates as a limitation validly imposed by Congress on the presidential 52 authority under the SMA to
impose tariffs and imposts. That the positive final determination operates as an indispensable requisite to the imposition of the safeguard measure, and
that it is the Tariff Commission which makes such determination, are legal propositions plainly expressed in Section 5 for the easy comprehension for
everyone but respondents.

Philcemcor attributes this Court’s conclusion on the indispensability of the positive final determination to flawed syllogism in that we read the proposition
"if A then B" as if it stated "if A, and only A, then B."53 Translated in practical terms, our conclusion, according to Philcemcor, would have only been
justified had Section 5 read "shall apply a general safeguard measure upon, and only upon, a positive final determination of the Tariff Commission."

Statutes are not designed for the easy comprehension of the five-year old child. Certainly, general propositions laid down in statutes need not be
expressly qualified by clauses denoting exclusivity in order that they gain efficacy. Indeed, applying this argument, the President would, under the
Constitution, be authorized to declare martial law despite the absence of the invasion, rebellion or public safety requirement just because the first
paragraph of Section 18, Article VII fails to state the magic word "only."54

But let us for the nonce pursue Philcemcor’s logic further. It claims that since Section 5 does not allegedly limit the circumstances upon which the DTI
Secretary may impose general safeguard measures, it is a worthy pursuit to determine whether the entire context of the SMA, as discerned by all the
other familiar indicators of legislative intent supplied by norms of statutory interpretation, would justify safeguard measures absent a positive final
determination by the Tariff Commission.

The first line of attack employed is on Section 5 itself, it allegedly not being as clear as it sounds. It is advanced that Section 5 does not relate to the
legal ability of either the Tariff Commission or the DTI Secretary to bind or foreclose review and reversal by one or the other. Such relationship should
instead be governed by domestic administrative law and remedial law. Philcemcor thus would like to cast the proposition in this manner: Does it run
contrary to our legal order to assert, as the Court did in its Decision, that a body of relative junior competence as the Tariff Commission can bind an
administrative superior and cabinet officer, the DTI Secretary? It is easy to see why Philcemcor would like to divorce this DTI Secretary-Tariff
Commission interaction from the confines of the SMA. Shorn of context, the notion would seem radical and unjustifiable that the lowly Tariff Commission
can bind the hands and feet of the DTI Secretary.

It can be surmised at once that respondents’ preferred interpretation is based not on the express language of the SMA, but from implications derived in
a roundabout manner. Certainly, no provision in the SMA expressly authorizes the DTI Secretary to impose a general safeguard measure despite the
absence of a positive final recommendation of the Tariff Commission. On the other hand, Section 5 expressly states that the DTI Secretary "shall apply a
general safeguard measure upon a positive final determination of the [Tariff] Commission." The causal connection in Section 5 between the imposition by
the DTI Secretary of the general safeguard measure and the positive final determination of the Tariff Commission is patent, and even respondents do not
dispute such connection.

As stated earlier, the Court in its Decision found Section 5 to be clear, plain and free from ambiguity so as to render unnecessary resort to the
congressional records to ascertain legislative intent. Yet respondents, on the dubitable premise that Section 5 is not as express as it seems, again latch
on to the record of legislative deliberations in asserting that there was no legislative intent to bar the DTI Secretary from imposing the general safeguard
measure anyway despite the absence of a positive final determination by the Tariff Commission.

Let us take the bait for a moment, and examine respondents’ commonly cited portion of the legislative record. One would presume, given the intense
advocacy for the efficacy of these citations, that they contain a "smoking gun" ¾ express declarations from the legislators that the DTI Secretary may
impose a general safeguard measure even if the Tariff Commission refuses to render a positive final determination. Such "smoking gun," if it exists,
would characterize our Decision as disingenuous for ignoring such contrary expression of intent from the legislators who enacted the SMA. But as with
many things, the anticipation is more dramatic than the truth.

The excerpts cited by respondents are derived from the interpellation of the late Congressman Marcial Punzalan Jr., by then (and still is) Congressman
Simeon Datumanong.55 Nowhere in these records is the view expressed that the DTI Secretary may impose the general safeguard measures if the Tariff
Commission issues a negative final determination or otherwise is unable to make a positive final determination. Instead, respondents hitch on the
observations of Congressman Punzalan Jr., that "the results of the [Tariff] Commission’s findings . . . is subsequently submitted to [the DTI Secretary]
for the [DTI Secretary] to impose or not to impose;" and that "the [DTI Secretary] here is…who would make the final decision on the recommendation
that is made by a more technical body [such as the Tariff Commission]."56

There is nothing in the remarks of Congressman Punzalan which contradict our Decision. His observations fall in accord with the respective roles of the
Tariff Commission and the DTI Secretary under the SMA. Under the SMA, it is the Tariff Commission that conducts an investigation as to whether the
conditions exist to warrant the imposition of the safeguard measures. These conditions are enumerated in Section 5, namely; that a product is being
imported into the country in increased quantities, whether absolute or relative to the domestic production, as to be a substantial cause of serious injury
or threat thereof to the domestic industry. After the investigation of the Tariff Commission, it submits a report to the DTI Secretary which states, among
others, whether the above-stated conditions for the imposition of the general safeguard measures exist. Upon a positive final determination that these
conditions are present, the Tariff Commission then is mandated to recommend what appropriate safeguard measures should be undertaken by the DTI
Secretary. Section 13 of the SMA gives five (5) specific options on the type of safeguard measures the Tariff Commission recommends to the DTI
Secretary.

At the same time, nothing in the SMA obliges the DTI Secretary to adopt the recommendations made by the Tariff Commission. In fact, the SMA requires
that the DTI Secretary establish that the application of such safeguard measures is in the public interest, notwithstanding the Tariff Commission’s
recommendation on the appropriate safeguard measure upon its positive final determination. Thus, even if the Tariff Commission makes a positive final
determination, the DTI Secretary may opt not to impose a general safeguard measure, or choose a different type of safeguard measure other than that
recommended by the Tariff Commission.

Congressman Punzalan was cited as saying that the DTI Secretary makes the decision "to impose or not to impose," which is correct since the DTI
Secretary may choose not to impose a safeguard measure in spite of a positive final determination by the Tariff Commission. Congressman Punzalan also
correctly stated that it is the DTI Secretary who makes the final decision "on the recommendation that is made [by the Tariff Commission]," since the
DTI Secretary may choose to impose a general safeguard measure different from that recommended by the Tariff Commission or not to impose a
safeguard measure at all. Nowhere in these cited deliberations was Congressman Punzalan, or any other member of Congress for that matter, quoted as
saying that the DTI Secretary may ignore a negative determination by the Tariff Commission as to the existence of the conditions warranting the
imposition of general safeguard measures, and thereafter proceed to impose these measures nonetheless. It is too late in the day to ascertain from the
late Congressman Punzalan himself whether he had made these remarks in order to assure the other legislators that the DTI Secretary may impose the
general safeguard measures notwithstanding a negative determination by the Tariff Commission. But certainly, the language of Section 5 is more
resolutory to that question than the recorded remarks of Congressman Punzalan.

Respondents employed considerable effort to becloud Section 5 with undeserved ambiguity in order that a proper resort to the legislative deliberations
may be had. Yet assuming that Section 5 deserves to be clarified through an inquiry into the legislative record, the excerpts cited by the respondents are
far more ambiguous than the language of the assailed provision regarding the key question of whether the DTI Secretary may impose safeguard
measures in the face of a negative determination by the Tariff Commission. Moreover, even Southern Cross counters with its own excerpts of the
legislative record in support of their own view.57

It will not be difficult, especially as to heavily-debated legislation, for two sides with contrapuntal interpretations of a statute to highlight their respective
citations from the legislative debate in support of their particular views.58 A futile exercise of second-guessing is happily avoided if the meaning of the
statute is clear on its face. It is evident from the text of Section 5 that there must be a positive final determination by the Tariff Commission
that a product is being imported into the country in increased quantities (whether absolute or relative to domestic production), as to be
a substantial cause of serious injury or threat to the domestic industry. Any disputation to the contrary is, at best, the product of wishful
thinking.

For the same reason that Section 5 is explicit as regards the essentiality of a positive final determination by the Tariff Commission, there is no need to
refer to the Implementing Rules of the SMA to ascertain a contrary intent. If there is indeed a provision in the Implementing Rules that allows the DTI
Secretary to impose a general safeguard measure even without the positive final determination by the Tariff Commission, said rule is void as it cannot
supplant the express language of the legislature. Respondents essentially rehash their previous arguments on this point, and there is no reason to
consider them anew. The Decision made it clear that nothing in Rule 13.2 of the Implementing Rules, even though captioned "Final Determination by the
Secretary," authorizes the DTI Secretary to impose a general safeguard measure in the absence of a positive final determination by the Tariff
Commission.59 Similarly, the "Rules and Regulations to Govern the Conduct of Investigation by the Tariff Commission Pursuant to Republic Act No. 8800"
now cited by the respondent does not contain any provision that the DTI Secretary may impose the general safeguard measures in the absence of a
positive final determination by the Tariff Commission.

Section 13 of the SMA further bolsters the interpretation as argued by Southern Cross and upheld by the Decision. The first paragraph thereof states
that "[u]pon its positive determination, the [Tariff] Commission shall recommend to the Secretary an appropriate definitive measure…", clearly referring
to the Tariff Commission as the entity that makes the positive determination. On the other hand, the penultimate paragraph of the same provision states
that "[i]n the event of a negative final determination", the DTI Secretary is to immediately issue through the Secretary of Finance, a written instruction
to the Commissioner of Customs authorizing the return of the cash bonds previously collected as a provisional safeguard measure. Since the first
paragraph of the same provision states that it is the Tariff Commission which makes the positive determination, it necessarily follows that it, and not the
DTI Secretary, makes the negative final determination as referred to in the penultimate paragraph of Section 13. 60

The Separate Opinion considers as highly persuasive of former Tariff Commission Chairman Abon, who stated that the Commission’s findings are merely
recommendatory.61 Again, the considered opinion of Chairman Abon is of no operative effect if the statute plainly states otherwise, and Section 5 bluntly
does require a positive final determination by the Tariff Commission before the DTI Secretary may impose a general safeguard measure.62Certainly, the
Court cannot give controlling effect to the statements of any public officer in serious denial of his duties if the law otherwise imposes the duty on the
public office or officer.

Nonetheless, if we are to render persuasive effect on the considered opinion of the members of the Executive Branch, it bears noting that the Secretary
of the Department of Justice rendered an Opinion wherein he concluded that the DTI Secretary could not impose a general safeguard measure if the
Tariff Commission made a negative final determination.63 Unlike Chairman Abon’s impromptu remarks made during a hearing, the DOJ Opinion was
rendered only after a thorough study of the question after referral to it by the DTI. The DOJ Secretary is the alter ego of the President with a stated
mandate as the head of the principal law agency of the government.64 As the DOJ Secretary has no denominated role in the SMA, he was able to render
his Opinion from the vantage of judicious distance. Should not his Opinion, studied and direct to the point as it is, carry greater weight than the
spontaneous remarks of the Tariff Commission’s Chairman which do not even expressly disavow the binding power of the Commission’s positive final
determination?

III. DTI Secretary has No Power of Review

Over Final Determination of the Tariff Commission

We should reemphasize that it is only because of the SMA, a legislative enactment, that the executive branch has the power to impose safeguard
measures. At the same time, by constitutional fiat, the exercise of such power is subjected to the limitations and restrictions similarly enforced by the
SMA. In examining the relationship of the DTI and the Tariff Commission as established in the SMA, it is essential to acknowledge and consider these
predicates.

It is necessary to clarify the paradigm established by the SMA and affirmed by the Constitution under which the Tariff Commission and the DTI operate,
especially in light of the suggestions that the Court’s rulings on the functions of quasi-judicial power find application in this case. Perhaps the reflexive
application of the quasi-judicial doctrine in this case, rooted as it is in jurisprudence, might allow for some convenience in ruling, yet doing so ultimately
betrays ignorance of the fundamental power of Congress to reorganize the administrative structure of governance in ways it sees fit.

The Separate Opinion operates from wholly different premises which are incomplete. Its main stance, similar to that of respondents, is that the DTI
Secretary, acting as alter ego of the President, may modify and alter the findings of the Tariff Commission, including the latter’s negative final
determination by substituting it with his own negative final determination to pave the way for his imposition of a safeguard measure.65 Fatally, this
conclusion is arrived at without considering the fundamental constitutional precept under Section 28(2), Article VI, on the ability of Congress to impose
restrictions and limitations in its delegation to the President to impose tariffs and imposts, as well as the express condition of Section 5 of the SMA
requiring a positive final determination of the Tariff Commission.

Absent Section 5 of the SMA, the President has no inherent, constitutional, or statutory power to impose a general safeguard measure.
Tellingly, the Separate Opinion does not directly confront the inevitable question as to how the DTI Secretary may get away with imposing a general
safeguard measure absent a positive final determination from the Tariff Commission without violating Section 5 of the SMA, which along with Section 13
of the same law, stands as the only direct legal authority for the DTI Secretary to impose such measures. This is a constitutionally guaranteed limitation
of the highest order, considering that the presidential authority exercised under the SMA is inherently legislative.
Nonetheless, the Separate Opinion brings to fore the issue of whether the DTI Secretary, acting either as alter ego of the President or in his capacity as
head of an executive department, may review, modify or otherwise alter the final determination of the Tariff Commission under the SMA. The succeeding
discussion shall focus on that question.

Preliminarily, we should note that none of the parties question the designation of the DTI or Agriculture secretaries under the SMA as the imposing
authorities of the safeguard measures, even though Section 28(2) Article VI states that it is the President to whom the power to impose tariffs and
imposts may be delegated by Congress. The validity of such designation under the SMA should not be in doubt. We recognize that the authorization
made by Congress in the SMA to the DTI and Agriculture Secretaries was made in contemplation of their capacities as alter egos of the President.

Indeed, in Marc Donnelly & Associates v. Agregado66 the Court upheld the validity of a Cabinet resolution fixing the schedule of royalty rates on metal
exports and providing for their collection even though Congress, under Commonwealth Act No. 728, had specifically empowered the President and not
any other official of the executive branch, to regulate and curtail the export of metals. In so ruling, the Court held that the members of the Cabinet were
acting as alter egos of the President.67 In this case, Congress itself authorized the DTI Secretary as alter ego of the President to impose the safeguard
measures. If the Court was previously willing to uphold the alter ego’s tariff authority despite the absence of explicit legislative grant of such authority
on the alter ego, all the more reason now when Congress itself expressly authorized the alter ego to exercise these powers to impose safeguard
measures.

Notwithstanding, Congress in enacting the SMA and prescribing the roles to be played therein by the Tariff Commission and the DTI Secretary did not
envision that the President, or his/her alter ego, could exercise supervisory powers over the Tariff Commission. If truly Congress intended to allow the
traditional "alter ego" principle to come to fore in the peculiar setup established by the SMA, it would have assigned the role now played by the DTI
Secretary under the law instead to the NEDA. The Tariff Commission is an attached agency of the National Economic Development Authority,68 which in
turn is the independent planning agency of the government.69

The Tariff Commission does not fall under the administrative supervision of the DTI.70 On the other hand, the administrative relationship between the
NEDA and the Tariff Commission is established not only by the Administrative Code, but similarly affirmed by the Tariff and Customs Code.

Justice Florentino Feliciano, in his ponencia in Garcia v. Executive Secretary71 , acknowledged the interplay between the NEDA and the Tariff Commission
under the Tariff and Customs Code when he cited the relevant provisions of that law evidencing such setup. Indeed, under Section 104 of the Tariff and
Customs Code, the rates of duty fixed therein are subject to periodic investigation by the Tariff Commission and may be revised by the President upon
recommendation of the NEDA.72 Moreover, under Section 401 of the same law, it is upon periodic investigations by the Tariff Commission and
recommendation of the NEDA that the President may cause a gradual reduction of protection levels granted under the law. 73

At the same time, under the Tariff and Customs Code, no similar role or influence is allocated to the DTI in the matter of imposing tariff duties. In fact,
the long-standing tradition has been for the Tariff Commission and the DTI to proceed independently in the exercise of their respective functions. Only
very recently have our statutes directed any significant interplay between the Tariff Commission and the DTI, with the enactment in 1999 of Republic Act
No. 8751 on the imposition of countervailing duties and Republic Act No. 8752 on the imposition of anti-dumping duties, and of course the promulgation
a year later of the SMA. In all these three laws, the Tariff Commission is tasked, upon referral of the matter by the DTI, to determine whether the factual
conditions exist to warrant the imposition by the DTI of a countervailing duty, an anti-dumping duty, or a general safeguard measure, respectively. In all
three laws, the determination by the Tariff Commission that these required factual conditions exist is necessary before the DTI Secretary may impose
the corresponding duty or safeguard measure. And in all three laws, there is no express provision authorizing the DTI Secretary to reverse the factual
determination of the Tariff Commission.74

In fact, the SMA indubitably establishes that the Tariff Commission is no mere flunky of the DTI Secretary when it mandates that the positive final
recommendation of the former be indispensable to the latter’s imposition of a general safeguard measure. What the law indicates instead is a
relationship of interdependence between two bodies independent of each other under the Administrative Code and the SMA alike. Indeed, even the
ability of the DTI Secretary to disregard the Tariff Commission’s recommendations as to the particular safeguard measures to be imposed evinces the
independence from each other of these two bodies. This is properly so for two reasons – the DTI and the Tariff Commission are independent of each
other under the Administrative Code; and impropriety is avoided in cases wherein the DTI itself is the one seeking the imposition of the general
safeguard measures, pursuant to Section 6 of the SMA.

Thus, in ascertaining the appropriate legal milieu governing the relationship between the DTI and the Tariff Commission, it is imperative to apply
foremost, if not exclusively, the provisions of the SMA. The argument that the usual rules on administrative control and supervision apply between the
Tariff Commission and the DTI as regards safeguard measures is severely undercut by the plain fact that there is no long-standing tradition of
administrative interplay between these two entities.

Within the administrative apparatus, the Tariff Commission appears to be a lower rank relative to the DTI. But does this necessarily mean that the DTI
has the intrinsic right, absent statutory authority, to reverse the findings of the Tariff Commission? To insist that it does, one would have to concede for
instance that, applying the same doctrinal guide, the Secretary of the Department of Science and Technology (DOST) has the right to reverse the rulings
of the Civil Aeronautics Board (CAB) or the issuances of the Philippine Coconut Authority (PCA). As with the Tariff Commission-DTI, there is no statutory
authority granting the DOST Secretary the right to overrule the CAB or the PCA, such right presumably arising only from the position of subordinacy of
these bodies to the DOST. To insist on such a right would be to invite department secretaries to interfere in the exercise of functions by administrative
agencies, even in areas wherein such secretaries are bereft of specialized competencies.

The Separate Opinion notes that notwithstanding above, the Secretary of Department of Transportation and Communication may review the findings of
the CAB, the Agriculture Secretary may review those of the PCA, and that the Secretary of the Department of Environment and Natural Resources may
pass upon decisions of the Mines and Geosciences Board.75 These three officers may be alter egos of the President, yet their authority to review is limited
to those agencies or bureaus which are, pursuant to statutes such as the Administrative Code of 1987, under the administrative control and supervision
of their respective departments. Thus, under the express provision of the Administrative Code expressly provides that the CAB is an attached agency of
the DOTC76 , and that the PCA is an attached agency of the Department of Agriculture.77 The same law establishes the Mines and Geo-Sciences Bureau as
one of the Sectoral Staff Bureaus78 that forms part of the organizational structure of the DENR.79

As repeatedly stated, the Tariff Commission does not fall under the administrative control of the DTI, but under the NEDA, pursuant to the
Administrative Code. The reliance made by the Separate Opinion to those three examples are thus misplaced.

Nonetheless, the Separate Opinion asserts that the SMA created a functional relationship between the Tariff Commission and the DTI Secretary,
sufficient to allow the DTI Secretary to exercise alter ego powers to reverse the determination of the Tariff Commission. Again, considering that the
power to impose tariffs in the first place is not inherent in the President but arises only from congressional grant, we should affirm the congressional
prerogative to impose limitations and restrictions on such powers which do not normally belong to the executive in the first place. Nowhere in the SMA
does it state that the DTI Secretary may impose general safeguard measures without a positive final determination by the Tariff Commission, or that the
DTI Secretary may reverse or even review the factual determination made by the Tariff Commission.

Congress in enacting the SMA and prescribing the roles to be played therein by the Tariff Commission and the DTI Secretary did not envision that the
President, or his/her alter ego could exercise supervisory powers over the Tariff Commission. If truly Congress intended to allow the traditional alter
ego principle to come to fore in the peculiar setup established by the SMA, it would have assigned the role now played by the DTI Secretary under the
law instead to the NEDA, the body to which the Tariff Commission is attached under the Administrative Code.

The Court has no issue with upholding administrative control and supervision exercised by the head of an executive department, but only over those
subordinate offices that are attached to the department, or which are, under statute, relegated under its supervision and control. To declare that a
department secretary, even if acting as alter ego of the President, may exercise such control or supervision over all executive offices below cabinet rank
would lead to absurd results such as those adverted to above. As applied to this case, there is no legal justification for the DTI Secretary to exercise
control, supervision, review or amendatory powers over the Tariff Commission and its positive final determination. In passing, we note that there is,
admittedly, a feasible mode by which administrative review of the Tariff Commission’s final determination could be had, but it is not the procedure
adopted by respondents and now suggested for affirmation. This mode shall be discussed in a forthcoming section.

The Separate Opinion asserts that the President, or his/her alter ego cannot be made a mere rubber stamp of the Tariff Commission since Section 17,
Article VII of the Constitution denominates the Chief Executive exercises control over all executive departments, bureaus and offices.80 But let us be clear
that such "executive control" is not absolute. The definition of the structure of the executive branch of government, and the corresponding degrees of
administrative control and supervision, is not the exclusive preserve of the executive. It may be effectively be limited by the Constitution, by law, or by
judicial decisions.

The Separate Opinion cites the respected constitutional law authority Fr. Joaquin Bernas, in support of the proposition that such plenary power of
executive control of the President cannot be restricted by a mere statute passed by Congress. However, the cited passage from Fr. Bernas actually
states, "Since the Constitution has given the President the power of control, with all its awesome implications, it is the Constitution alone which can
curtail such power."81 Does the President have such tariff powers under the Constitution in the first place which may be curtailed by the executive power
of control? At the risk of redundancy, we quote Section 28(2), Article VI: "The Congress may, by law, authorize the President to fix within specified
limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the national development program of the Government." Clearly the power to impose tariffs belongs to
Congress and not to the President.

It is within reason to assume the framers of the Constitution deemed it too onerous to spell out all the possible limitations and restrictions on this
presidential authority to impose tariffs. Hence, the Constitution especially allowed Congress itself to prescribe such limitations and restrictions itself, a
prudent move considering that such authority inherently belongs to Congress and not the President. Since Congress has no power to amend the
Constitution, it should be taken to mean that such limitations and restrictions should be provided "by mere statute". Then again, even the presidential
authority to impose tariffs arises only "by mere statute." Indeed, this presidential privilege is both contingent in nature and legislative in
origin. These characteristics, when weighed against the aspect of executive control and supervision, cannot militate against Congress’s
exercise of its inherent power to tax.
The bare fact is that the administrative superstructure, for all its unwieldiness, is mere putty in the hands of Congress. The functions and mandates of
the particular executive departments and bureaus are not created by the President, but by the legislative branch through the Administrative Code. 82 The
President is the administrative head of the executive department, as such obliged to see that every government office is managed and maintained
properly by the persons in charge of it in accordance with pertinent laws and regulations, and empowered to promulgate rules and issuances that would
ensure a more efficient management of the executive branch, for so long as such issuances are not contrary to law.83 Yet the legislature has the
concurrent power to reclassify or redefine the executive bureaucracy, including the relationship between various administrative agencies, bureaus and
departments, and ultimately, even the power to abolish executive departments and their components, hamstrung only by constitutional limitations. The
DTI itself can be abolished with ease by Congress through deleting Title X, Book IV of the Administrative Code. The Tariff Commission can similarly be
abolished through legislative enactment. 84

At the same time, Congress can enact additional tasks or responsibilities on either the Tariff Commission or the DTI Secretary, such as their respective
roles on the imposition of general safeguard measures under the SMA. In doing so, the same Congress, which has the putative authority to
abolish the Tariff Commission or the DTI, is similarly empowered to alter or expand its functions through modalities which do not align
with established norms in the bureaucratic structure. The Court is bound to recognize the legislative prerogative to prescribe such modalities, no
matter how atypical they may be, in affirmation of the legislative power to restructure the executive branch of government.

There are further limitations on the "executive control" adverted to by the Separate Opinion. The President, in the exercise of executive control, cannot
order a subordinate to disobey a final decision of this Court or any court’s. If the subordinate chooses to disobey, invoking sole allegiance to the
President, the judicial processes can be utilized to compel obeisance. Indeed, when public officers of the executive department take their oath of office,
they swear allegiance and obedience not to the President, but to the Constitution and the laws of the land. The invocation of executive control must yield
when under its subsumption includes an act that violates the law.

The Separate Opinion concedes that the exercise of executive control and supervision by the President is bound by the Constitution and law. 85 Still, just
three sentences after asserting that the exercise of executive control must be within the bounds of the Constitution and law, the Separate
Opinion asserts, "the control power of the Chief Executive emanates from the Constitution; no act of Congress may validly curtail it."86 Laws are acts of
Congress, hence valid confusion arises whether the Separate Opinion truly believes the first proposition that executive control is bound by law. This is a
quagmire for the Separate Opinion to resolve for itself

The Separate Opinion unduly considers executive control as the ne plus ultra constitutional standard which must govern in this case. But while the
President may generally have the power to control, modify or set aside the actions of a subordinate, such powers may be constricted by the Constitution,
the legislature, and the judiciary. This is one of the essences of the check-and-balance system in our tri-partite constitutional democracy. Not one head
of a branch of government may operate as a Caesar within his/her particular fiefdom.

Assuming there is a conflict between the specific limitation in Section 28 (2), Article VI of the Constitution and the general executive power of control
and supervision, the former prevails in the specific instance of safeguard measures such as tariffs and imposts, and would thus serve to qualify the
general grant to the President of the power to exercise control and supervision over his/her subalterns.

Thus, if the Congress enacted the law so that the DTI Secretary is "bound" by the Tariff Commission in the sense the former cannot impose general
safeguard measures absent a final positive determination from the latter the Court is obliged to respect such legislative prerogative, no matter how such
arrangement deviates from traditional norms as may have been enshrined in jurisprudence. The only ground under which such legislative determination
as expressed in statute may be successfully challenged is if such legislation contravenes the Constitution. No such argument is posed by the
respondents, who do not challenge the validity or constitutionality of the SMA.

Given these premises, it is utterly reckless to examine the interrelationship between the Tariff Commission and the DTI Secretary beyond the context of
the SMA, applying instead traditional precepts on administrative control, review and supervision. For that reason, the Decision deemed inapplicable
respondents’ previous citations of Cariño v. Commissioner on Human Rights and Lamb v. Phipps, since the executive power adverted to in those cases
had not been limited by constitutional restrictions such as those imposed under Section 28(2), Article VI.87

A similar observation can be made on the case of Sharp International Marketing v. Court of Appeals,88 now cited by Philcemcor, wherein the Court
asserted that the Land Bank of the Philippines was required to exercise independent judgment and not merely rubber-stamp deeds of sale entered into
by the Department of Agrarian Reform in connection with the agrarian reform program. Philcemcor attempts to demonstrate that the DTI Secretary, as
with the Land Bank of the Philippines, is required to exercise independent discretion and is not expected to just merely accede to DAR-approved
compensation packages. Yet again, such grant of independent discretion is expressly called for by statute, particularly Section 18 of Rep. Act No. 6657
which specifically requires the joint concurrence of "the landowner and the DAR and the [Land Bank of the Philippines]" on the amount of compensation.
Such power of review by the Land Bank is a consequence of clear statutory language, as is our holding in the Decision that Section 5 explicitly requires a
positive final determination by the Tariff Commission before a general safeguard measure may be imposed. Moreover, such limitations under the SMA
are coated by the constitutional authority of Section 28(2), Article VI of the Constitution.

Nonetheless, is this administrative setup, as envisioned by Congress and enshrined into the SMA, truly noxious to existing legal standards?
The Decision acknowledged the internal logic of the statutory framework, considering that the DTI cannot exercise review powers over an agency such
as the Tariff Commission which is not within its administrative jurisdiction; that the mechanism employed establishes a measure of check and balance
involving two government offices with different specializations; and that safeguard measures are the exception rather than the rule, pursuant to our
treaty obligations.89

We see no reason to deviate from these observations, and indeed can add similarly oriented comments. Corollary to the legislative power to decree
policies through legislation is the ability of the legislature to provide for means in the statute itself to ensure that the said policy is strictly implemented
by the body or office tasked so tasked with the duty. As earlier stated, our treaty obligations dissuade the State for now from implementing default
protectionist trade measures such as tariffs, and allow the same only under specified conditions.90 The conditions enumerated under the GATT
Agreement on Safeguards for the application of safeguard measures by a member country are the same as the requisites laid down in Section 5 of the
SMA.91 To insulate the factual determination from political pressure, and to assure that it be conducted by an entity especially qualified by reason of its
general functions to undertake such investigation, Congress deemed it necessary to delegate to the Tariff Commission the function of ascertaining
whether or not the those factual conditions exist to warrant the atypical imposition of safeguard measures. After all, the Tariff Commission retains a
degree of relative independence by virtue of its attachment to the National Economic Development Authority, "an independent planning agency of the
government,"92 and also owing to its vaunted expertise and specialization.

The matter of imposing a safeguard measure almost always involves not just one industry, but the national interest as it encompasses other industries
as well. Yet in all candor, any decision to impose a safeguard measure is susceptible to all sorts of external pressures, especially if the domestic industry
concerned is well-organized. Unwarranted impositions of safeguard measures may similarly be detrimental to the national interest. Congress could not
be blamed if it desired to insulate the investigatory process by assigning it to a body with a putative degree of independence and traditional expertise in
ascertaining factual conditions. Affected industries would have cause to lobby for or against the safeguard measures. The decision-maker is in the
unenviable position of having to bend an ear to listen to all concerned voices, including those which may speak softly but carry a big stick. Had the law
mandated that the decision be made on the sole discretion of an executive officer, such as the DTI Secretary, it would be markedly easier for safeguard
measures to be imposed or withheld based solely on political considerations and not on the factual conditions that are supposed to predicate the
decision.

Reference of the binding positive final determination to the Tariff Commission is of course, not a fail-safe means to ensure a bias-free determination. But
at least the legislated involvement of the Commission in the process assures some measure of measure of check and balance involving two different
governmental agencies with disparate specializations. There is no legal or constitutional demand for such a setup, but its wisdom as policy should be
acknowledged. As prescribed by Congress, both the Tariff Commission and the DTI Secretary operate within limited frameworks, under which nobody
acquires an undue advantage over the other.

We recognize that Congress deemed it necessary to insulate the process in requiring that the factual determination to be made by an ostensibly
independent body of specialized competence, the Tariff Commission. This prescribed framework, constitutionally sanctioned, is intended to prevent the
baseless, whimsical, or consideration-induced imposition of safeguard measures. It removes from the DTI Secretary jurisdiction over a matter beyond
his putative specialized aptitude, the compilation and analysis of picayune facts and determination of their limited causal relations, and instead vests in
the Secretary the broad choice on a matter within his unquestionable competence, the selection of what particular safeguard measure would assist the
duly beleaguered local industry yet at the same time conform to national trade policy. Indeed, the SMA recognizes, and places primary importance on
the DTI Secretary’s mandate to formulate trade policy, in his capacity as the President’s alter ego on trade, industry and investment-related matters.

At the same time, the statutory limitations on this authorized power of the DTI Secretary must prevail since the Constitution itself demands the
enforceability of those limitations and restrictions as imposed by Congress. Policy wisdom will not save a law from infirmity if the statutory provisions
violate the Constitution. But since the Constitution itself provides that the President shall be constrained by the limits and restrictions imposed by
Congress and since these limits and restrictions are so clear and categorical, then the Court has no choice but to uphold the reins.

Even assuming that this prescribed setup made little sense, or seemed "uncommonly silly,"93 the Court is bound by propriety not to dispute the wisdom
of the legislature as long as its acts do not violate the Constitution. Since there is no convincing demonstration that the SMA contravenes the
Constitution, the Court is wont to respect the administrative regimen propounded by the law, even if it allots the Tariff Commission a higher degree of
puissance than normally expected. It is for this reason that the traditional conceptions of administrative review or quasi-judicial power cannot control in
this case.

Indeed, to apply the latter concept would cause the Court to fall into a linguistic trap owing to the multi-faceted denotations the term "quasi-judicial" has
come to acquire.

Under the SMA, the Tariff Commission undertakes formal hearings,94 receives and evaluates testimony and evidence by interested parties,95 and renders
a decision is rendered on the basis of the evidence presented, in the form of the final determination. The final determination requires a conclusion
whether the importation of the product under consideration is causing serious injury or threat to a domestic industry producing like products or directly
competitive products, while evaluating all relevant factors having a bearing on the situation of the domestic industry.96 This process aligns conformably
with definition provided by Black’s Law Dictionary of "quasi-judicial" as the "action, discretion, etc., of public administrative officers or bodies, who are
required to investigate facts, or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them, as a basis for their
official action, and to exercise discretion of a judicial nature."97

However, the Tariff Commission is not empowered to hear actual cases or controversies lodged directly before it by private parties. It does not have the
power to issue writs of injunction or enforcement of its determination. These considerations militate against a finding of quasi-judicial powers
attributable to the Tariff Commission, considering the pronouncement that "quasi-judicial adjudication would mean a determination of rights privileges
and duties resulting in a decision or order which applies to a specific situation."98

Indeed, a declaration that the Tariff Commission possesses quasi-judicial powers, even if ascertained for the limited purpose of exercising its functions
under the SMA, may have the unfortunate effect of expanding the Commission’s powers beyond that contemplated by law. After all, the Tariff
Commission is by convention, a fact-finding body, and its role under the SMA, burdened as it is with factual determination, is but a mere continuance of
this tradition. However, Congress through the SMA offers a significant deviation from this traditional role by tying the decision by the DTI Secretary to
impose a safeguard measure to the required positive factual determination by the Tariff Commission. Congress is not bound by past traditions, or even
by the jurisprudence of this Court, in enacting legislation it may deem as suited for the times. The sole benchmark for judicial substitution of
congressional wisdom is constitutional transgression, a standard which the respondents do not even attempt to match.

Respondents’ Suggested Interpretation

Of the SMA Transgresses Fair Play

Respondents have belabored the argument that the Decision’s interpretation of the SMA, particularly of the role of the Tariff Commission vis-à-vis the
DTI Secretary, is noxious to traditional notions of administrative control and supervision. But in doing so, they have failed to acknowledge the
congressional prerogative to redefine administrative relationships, a license which falls within the plenary province of Congress under our representative
system of democracy. Moreover, respondents’ own suggested interpretation falls wayward of expectations of practical fair play.

Adopting respondents’ suggestion that the DTI Secretary may disregard the factual findings of the Tariff Commission and investigatory process that
preceded it, it would seem that the elaborate procedure undertaken by the Commission under the SMA, with all the attendant guarantees of due
process, is but an inutile spectacle. As Justice Garcia noted during the oral arguments, why would the DTI Secretary bother with the Tariff Commission
and instead conduct the investigation himself.99

Certainly, nothing in the SMA authorizes the DTI Secretary, after making the preliminary determination, to personally oversee the investigation, hear out
the interested parties, or receive evidence.100 In fact, the SMA does not even require the Tariff Commission, which is tasked with the custody of the
submitted evidence,101 to turn over to the DTI Secretary such evidence it had evaluated in order to make its factual determination.102 Clearly, as
Congress tasked it to be, it is the Tariff Commission and not the DTI Secretary which acquires the necessary intimate acquaintance with the factual
conditions and evidence necessary for the imposition of the general safeguard measure. Why then favor an interpretation of the SMA that leaves the
findings of the Tariff Commission bereft of operative effect and makes them subservient to the wishes of the DTI Secretary, a personage with lesser
working familiarity with the relevant factual milieu? In fact, the bare theory of the respondents would effectively allow the DTI Secretary to adopt, under
the subterfuge of his "discretion", the factual determination of a private investigative group hired by the industry concerned, and reject the investigative
findings of the Tariff Commission as mandated by the SMA. It would be highly irregular to substitute what the law clearly provides for a dubious setup of
no statutory basis that would be readily susceptible to rank chicanery.

Moreover, the SMA guarantees the right of all concerned parties to be heard, an elemental requirement of due process, by the Tariff Commission in the
context of its investigation. The DTI Secretary is not similarly empowered or tasked to hear out the concerns of other interested parties, and if he/she
does so, it arises purely out of volition and not compulsion under law.

Indeed, in this case, it is essential that the position of other than that of the local cement industry should be given due consideration, cement being an
indispensable need for the operation of other industries such as housing and construction. While the general safeguard measures may operate to the
better interests of the domestic cement industries, its deprivation of cheaper cement imports may similarly work to the detriment of these other
domestic industries and correspondingly, the national interest. Notably, the Tariff Commission in this case heard the views on the application of
representatives of other allied industries such as the housing, construction, and cement-bag industries, and other interested parties such as consumer
groups and foreign governments.103 It is only before the Tariff Commission that their views had been heard, and this is because it is only the Tariff
Commission which is empowered to hear their positions. Since due process requires a judicious consideration of all relevant factors, the Tariff
Commission, which is in a better position to hear these parties than the DTI Secretary, is similarly more capable to render a determination conformably
with the due process requirements than the DTI Secretary.

In a similar vein, Southern Cross aptly notes that in instances when it is the DTI Secretary who initiates motu propriothe application for the safeguard
measure pursuant to Section 6 of the SMA, respondents’ suggested interpretation would result in the awkward situation wherein the DTI Secretary would
rule upon his own application after it had been evaluated by the Tariff Commission. Pertinently cited is our ruling in Corona v. Court of Appeals104 that
"no man can be at once a litigant and judge."105 Certainly, this anomalous situation is avoided if it is the Tariff Commission which is tasked with arriving
at the final determination whether the conditions exist to warrant the general safeguard measures. This is the setup provided for by the express
provisions of the SMA, and the problem would arise only if we adopt the interpretation urged upon by respondents.

The Possibility for Administrative Review

Of the Tariff Commission’s Determination

The Court has been emphatic that a positive final determination from the Tariff Commission is required in order that the DTI Secretary may impose a
general safeguard measure, and that the DTI Secretary has no power to exercise control and supervision over the Tariff Commission and its final
determination. These conclusions are the necessary consequences of the applicable provisions of the Constitution, the SMA, and laws such as the
Administrative Code. However, the law is silent though on whether this positive final determination may otherwise be subjected to administrative review.

There is no evident legislative intent by the authors of the SMA to provide for a procedure of administrative review. If ever there is a procedure for
administrative review over the final determination of the Tariff Commission, such procedure must be done in a manner that does not contravene or
disregard legislative prerogatives as expressed in the SMA or the Administrative Code, or fundamental constitutional limitations.

In order that such procedure of administrative review would not contravene the law and the constitutional scheme provided by Section 28(2), Article VI,
it is essential to assert that the positive final determination by the Tariff Commission is indispensable as a requisite for the imposition of a general
safeguard measure. The submissions of private respondents and the Separate Opinion cannot be sustained insofar as they hold that the DTI Secretary
can peremptorily ignore or disregard the determinations made by the Tariff Commission. However, if the mode of administrative review were in such a
manner that the administrative superior of the Tariff Commission were to modify or alter its determination, then such "reversal" may still be valid within
the confines of Section 5 of the SMA, for technically it is still the Tariff Commission’s determination, administratively revised as it may be, that would
serve as the basis for the DTI Secretary’s action.

However, and fatally for the present petitions, such administrative review cannot be conducted by the DTI Secretary. Even if conceding that the Tariff
Commission’s findings may be administratively reviewed, the DTI Secretary has no authority to review or modify the same. We have been emphatic on
the reasons — such as that there is no traditional or statutory basis placing the Commission under the control and supervision of the DTI; that to allow
such would contravene due process, especially if the DTI itself were to apply for the safeguard measures motu proprio. To hold otherwise would destroy
the administrative hierarchy, contravene constitutional due process, and disregard the limitations or restrictions provided in the SMA.

Instead, assuming administrative review were available, it is the NEDA that may conduct such review following the principles of administrative law, and
the NEDA’s decision in turn is reviewable by the Office of the President. The decision of the Office of the President then effectively substitutes as the
determination of the Tariff Commission, which now forms the basis of the DTI Secretary’s decision, which now would be ripe for judicial review by the
CTA under Section 29 of the SMA. This is the only way that administrative review of the Tariff Commission’s determination may be sustained without
violating the SMA and its constitutional restrictions and limitations, as well as administrative law.

In bare theory, the NEDA may review, alter or modify the Tariff Commission’s final determination, the Commission being an attached agency of the
NEDA. Admittedly, there is nothing in the SMA or any other statute that would prevent the NEDA to exercise such administrative review, and
successively, for the President to exercise in turn review over the NEDA’s decision.

Nonetheless, in acknowledging this possibility, the Court, without denigrating the bare principle that administrative officers may exercise control and
supervision over the acts of the bodies under its jurisdiction, realizes that this comes at the expense of a speedy resolution to an application for a
safeguard measure, an application dependent on fluctuating factual conditions. The further delay would foster uncertainty and insecurity within the
industry concerned, as well as with all other allied industries, which in turn may lead to some measure of economic damage. Delay is certain, since
judicial review authorized by law and not administrative review would have the final say. The fact that the SMA did not expressly prohibit administrative
review of the final determination of the Tariff Commission does not negate the supreme advantages of engendering exclusive judicial review over
questions arising from the imposition of a general safeguard measure.

In any event, even if we conceded the possibility of administrative review of the Tariff Commission’s final determination by the NEDA, such would not
deny merit to the present petition. It does not change the fact that the Court of Appeals erred in ruling that the DTI Secretary was not bound by the
negative final determination of the Tariff Commission, or that the DTI Secretary acted without jurisdiction when he imposed general safeguard measures
despite the absence of the statutory positive final determination of the Commission.

IV. Court’s Interpretation of SMA

In Harmony with Other

Constitutional Provisions

In response to our citation of Section 28(2), Article VI, respondents elevate two arguments grounded in constitutional law. One is based on another
constitutional provision, Section 12, Article XIII, which mandates that "[t]he State shall promote the preferential use of Filipino labor, domestic materials
and locally produced goods and adopt measures that help make them competitive." By no means does this provision dictate that the Court favor the
domestic industry in all competing claims that it may bring before this Court. If it were so, judicial proceedings in this country would be rendered a
mockery, resolved as they would be, on the basis of the personalities of the litigants and not their legal positions.

Moreover, the duty imposed on by Section 12, Article XIII falls primarily with Congress, which in that regard enacted the SMA, a law designed to protect
domestic industries from the possible ill-effects of our accession to the global trade order. Inconveniently perhaps for respondents, the SMA also
happens to provide for a procedure under which such protective measures may be enacted. The Court cannot just impose what it deems as the spirit of
the law without giving due regard to its letter.

In like-minded manner, the Separate Opinion loosely states that the purpose of the SMA is to protect or safeguard local industries from increased
importation of foreign products.106 This inaccurately leaves the impression that the SMA ipso facto unravels a protective cloak that shelters all local
industries and producers, no matter the conditions. Indeed, our country has knowingly chosen to accede to the world trade regime, as expressed in the
GATT and WTO Agreements, despite the understanding that local industries might suffer ill-effects, especially with the easier entry of competing foreign
products. At the same time, these international agreements were designed to constrict protectionist trade policies by its member-countries. Hence, the
median, as expressed by the SMA, does allow for the application of protectionist measures such as tariffs, but only after an elaborate process of
investigation that ensures factual basis and indispensable need for such measures. More accurately, the purpose of the SMA is to provide a process for
the protection or safeguarding of domestic industries that have duly established that there is substantial injury or threat thereof directly caused by the
increased imports. In short, domestic industries are not entitled to safeguard measures as a matter of right or influence.

Respondents also make the astounding argument that the imposition of general safeguard measures should not be seen as a taxation measure, but
instead as an exercise of police power. The vain hope of respondents in divorcing the safeguard measures from the concept of taxation is to exclude
from consideration Section 28(2), Article VI of the Constitution.

This argument can be debunked at length, but it deserves little attention. The motivation behind many taxation measures is the implementation of police
power goals. Progressive income taxes alleviate the margin between rich and poor; the so-called "sin taxes" on alcohol and tobacco manufacturers help
dissuade the consumers from excessive intake of these potentially harmful products. Taxation is distinguishable from police power as to the means
employed to implement these public good goals. Those doctrines that are unique to taxation arose from peculiar considerations such as those especially
punitive effects of taxation,107 and the belief that taxes are the lifeblood of the state.108 These considerations necessitated the evolution of taxation as a
distinct legal concept from police power. Yet at the same time, it has been recognized that taxation may be made the implement of the state’s police
power.109

Even assuming that the SMA should be construed exclusively as a police power measure, the Court recognizes that police power is lodged primarily in
the national legislature, though it may also be exercised by the executive branch by virtue of a valid delegation of legislative power.110 Considering these
premises, it is clear that police power, however "illimitable" in theory, is still exercised within the confines of implementing legislation. To declare
otherwise is to sanction rule by whim instead of rule of law. The Congress, in enacting the SMA, has delegated the power to impose general safeguard
measures to the executive branch, but at the same time subjected such imposition to limitations, such as the requirement of a positive final
determination by the Tariff Commission under Section 5. For the executive branch to ignore these boundaries imposed by Congress is to set up an
ignoble clash between the two co-equal branches of government. Considering that the exercise of police power emanates from legislative authority,
there is little question that the prerogative of the legislative branch shall prevail in such a clash.

V. Assailed Decision Consistent

With Ruling in Tañada v. Angara

Public respondents allege that the Decision is contrary to our holding in Tañada v. Angara,111 since the Court noted therein that the GATT itself provides
built-in protection from unfair foreign competition and trade practices, which according to the public respondents, was a reason "why the Honorable
[Court] ruled the way it did." On the other hand, the Decision "eliminates safeguard measures as a mode of defense."

This is balderdash, as with any and all claims that the Decision allows foreign industries to ride roughshod over our domestic enterprises.
The Decision does not prohibit the imposition of general safeguard measures to protect domestic industries in need of protection. All it affirms is that the
positive final determination of the Tariff Commission is first required before the general safeguard measures are imposed and implemented, a neutral
proposition that gives no regard to the nationalities of the parties involved. A positive determination by the Tariff Commission is hardly the
elusive Shangri-la of administrative law. If a particular industry finds it difficult to obtain a positive final determination from the Tariff Commission, it
may be simply because the industry is still sufficiently competitive even in the face of foreign competition. These safeguard measures are designed to
ensure salvation, not avarice.

Respondents well have the right to drape themselves in the colors of the flag. Yet these postures hardly advance legal claims, or nationalism for that
matter. The fineries of the costume pageant are no better measure of patriotism than simple obedience to the laws of the Fatherland. And even
assuming that respondents are motivated by genuine patriotic impulses, it must be remembered that under the setup provided by the SMA, it is the
facts, and not impulse, that determine whether the protective safeguard measures should be imposed. As once orated, facts are stubborn things; and
whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.112

It is our goal as judges to enforce the law, and not what we might deem as correct economic policy. Towards this end, we should not construe the SMA
to unduly favor or disfavor domestic industries, simply because the law itself provides for a mechanism by virtue of which the claims of these industries
are thoroughly evaluated before they are favored or disfavored. What we must do is to simply uphold what the law says. Section 5 says that the DTI
Secretary shall impose the general safeguard measures upon the positive final determination of the Tariff Commission. Nothing in the whereas clauses or
the invisible ink provisions of the SMA can magically delete the words "positive final determination" and "Tariff Commission" from Section 5.

VI. On Forum-Shopping

We remain convinced that there was no willful and deliberate forum-shopping in this case by Southern Cross. The causes of action that animate this
present petition for review and the petition for review with the CTA are distinct from each other, even though they relate to similar factual antecedents.
Yet it also appears that contrary to the undertaking signed by the President of Southern Cross, Hironobu Ryu, to inform this Court of any similar action
or proceeding pending before any court, tribunal or agency within five (5) days from knowledge thereof, Southern Cross informed this Court only on 12
August 2003 of the petition it had filed with the CTA eleven days earlier. An appropriate sanction is warranted for such failure, but not the dismissal of
the petition.

VII. Effects of Court’s Resolution

Philcemcor argues that the granting of Southern Cross’s Petition should not necessarily lead to the voiding of the Decision of the DTI Secretary dated 5
August 2003 imposing the general safeguard measures. For Philcemcor, the availability of appeal to the CTA as an available and adequate remedy would
have made the Court of Appeals’ Decision merely erroneous or irregular, but not void. Moreover, the said Decision merely required the DTI Secretary to
render a decision, which could have very well been a decision not to impose a safeguard measure; thus, it could not be said that the annulled decision
resulted from the judgment of the Court of Appeals.

The Court of Appeals’ Decision was annulled precisely because the appellate court did not have the power to rule on the petition in the first place.
Jurisdiction is necessarily the power to decide a case, and a court which does not have the power to adjudicate a case is one that is bereft of jurisdiction.
We find no reason to disturb our earlier finding that the Court of Appeals’ Decision is null and void.

At the same time, the Court in its Decision paid particular heed to the peculiarities attaching to the 5 August 2003 Decision of the DTI Secretary. In the
DTI Secretary’s Decision, he expressly stated that as a result of the Court of Appeals’ Decision, "there is no legal impediment for the Secretary to decide
on the application." Yet the truth remained that there was a legal impediment, namely, that the decision of the appellate court was not yet final and
executory. Moreover, it was declared null and void, and since the DTI Secretary expressly denominated the Court of Appeals’ Decision as his basis for
deciding to impose the safeguard measures, the latter decision must be voided as well. Otherwise put, without the Court of Appeals’ Decision, the DTI
Secretary’s Decision of 5 August 2003 would not have been rendered as well.

Accordingly, the Court reaffirms as a nullity the DTI Secretary’s Decision dated 5 August 2003. As a necessary consequence, no further action can be
taken on Philcemcor’s Petition for Extension of the Safeguard Measure. Obviously, if the imposition of the general safeguard measure is void as we
declared it to be, any extension thereof should likewise be fruitless. The proper remedy instead is to file a new application for the imposition of safeguard
measures, subject to the conditions prescribed by the SMA. Should this step be eventually availed of, it is only hoped that the parties involved would
content themselves in observing the proper procedure, instead of making a mockery of the rule of law.

WHEREFORE, respondents’ Motions for Reconsideration are DENIED WITH FINALITY.

Respondent DTI Secretary is hereby ENJOINED from taking any further action on the pending Petition for Extension of the Safeguard Measure.

Hironobu Ryu, President of petitioner Southern Cross Cement Corporation, and Angara Abello Concepcion Regala & Cruz, counsel petitioner, are hereby
given FIVE (5) days from receipt of this Resolution to EXPLAIN why they should not be meted disciplinary sanction for failing to timely inform the Court
of the filing of Southern Cross’s Petition for Review with the Court of Tax Appeals, as adverted to earlier in this Resolution.

SO ORDERED.
(3)

G.R. No. 86953 November 6, 1990

MARINE RADIO COMMUNICATIONS ASSOCIATION OF THE PHILIPPINES, INC. (MARCAPI), ROBERTO GAYA, DAVID ZAFRA and SEGUNDO
P. LUSTRE, JR., petitioners,
vs.
HON. RAINERIO O. REYES, in his capacity as Secretary of the Department of Transportation and Communications (DOTC), HON. JOSE
LUIS ALCUAZ, as Commissioner of the National Telecommunications Commission (NTC), and HON. ROSAURO SIBAL, as Chief of the
Telecommunications Office (TELOF) of DOTC, respondents.

F. Reyes Cabigao for petitioners.

SARMIENTO, J.:

The petitioners are self-described "Filipino enterpreneurs deeply involved in the business of marine radio communications in the country. 1 They are also
operators of "shore-to-ship and ship-to-shore public marine coastal radio stations, 2 and are holders of certificates of public convenience duly issued by
the National Telecommunications Commission. Among other things, they handle correspondence between vessel passengers or crew and the public. 3

Sometime in July, 1988, the Department of Transportation and Communications unveiled an P880-million maritime coastal communications system
project, designed to "ensure safety of lives at sea (SOLAS) through the establishment of efficient communication facilities between coast stations and
ship stations and the improvement of safety in navigational routes at sea." 4 It was set out to provide, among other things, ship-to- shore and shore-to-
ship public corresponding, free of charge. 5

On August 1, 1988, Atty. F. Reyes Cabigao, in his capacity as counsel for the petitioner, Marine Radio Communications Association of the Philippines,
Inc., addressed an appeal to then Secretary Rainerio Reyes, in the tenor as follows:

xxx xxx xxx

But you undoubtedly would understand their fears. It was their feeling that entry of the government into their line of business would
certainly spell for them financial ruin as it would put into serious doubt the viability of the entire marine radio communications industry.
They say that, as it is today, the industry is not viable enough. What more, they ask, if the government steps in and eventually dips its
strong fingers into the pie? 6
 xxx xxx xxx

On August 17, 1988, the Secretary forwarded a reply, denying Atty. Cabigao's request, for the following reasons:

xxx xxx xxx

MARCAPI's main business concern is public correspondence. This means that MARCAPI handles only correspondence between passengers
or crew on board ship and their respective offices or residences. On the other hand, the Maritime Coastal Communications System
Project to be implemented by 1989 will offer services in watch and distress signal, medical and meteorological services, port services,
and public correspondence, in their order of priority.

You will note that public correspondence is only fourth in the order of priority of services to be offered by the present maritime project.
Primarily, it will offer distress and safety communications service which is obligatory in the maritime mobile service. This consists of
monitoring by coast stations of distress signal from ships in trouble and relaying the messages to the Philippine Coast Guard which will
undertake the search and rescue operations. It also includes safety communication which refers to weather broadcast and typhoon
signals that will be broadcast by the coast stations regularly. These services are offered to the public for free.

It is worth noting, as it is significant, that the confidence of the public in the competence of private firms to carry out the aforecited
objectives has already been eroded. After that tragic incident of the sinking of MV Dona Paz, the National Telecommunications
Commission and MARINA conducted constant monitoring by sending distress signals. Out of 1,000 licensed private operators only one
(1) responded to the signal. 7

On February 20, 1989, the petitioners brought the instant suit, alleging, in essence, that Secretary Rainerio Reyes had been guilty of a grave abuse of
discretion.

On June 7, 1990, the Court issued a Resolution, in view of the departure of Secretary Rainerio Reyes, requiring the present incumbent, Secretary Oscar
Orbos, to inform the Court whether or not the Department is adopting the action of Secretary Reyes. On August 16, 1990, Assistant Secretary Wilfredo
Trinidad informed us that Secretary Orbos is adopting the action complained of.

The petitioners hold that the Department can not compete in the business of public correspondence, and rely on the provisions of Section 20, of Article
II, of the Constitution, which states:

Sec. 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to
needed investments.

The Solicitor General, on the other hand, submits that in spite of the above provision, the Government "cannot abandon its ministerial functions of
rendering public services to the citizenry which private capital would not ordinarily undertake, or which by its very nature is better equipped to
administer for the public welfare than by any private individual or entity. 8
There is no merit in this petition.

The duty of the State is preeminently "to serve . . . the people, 9 and so also, to "promote a just and dynamic social order . . . through policies that
provide adequate social services. . . . and an improved quality of life for all. 10

The objectives of government, as expressed in the Charter, are, among other things, "a more equitable distribution of opportunities, income, and wealth
. . . [and] a sustained increase in the amount of goods and services produced by the nation for the benefit of the people . . . "11 With respect in
particular to property, the Constitution decrees:

Sec. 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private
groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate
economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so
demands. 12

There can hardly be any valid argument against providing for public corresponding, free of charge. It is compatible with State aims to serve the people
under the Constitution, and certainly, amid these hard times, the State can do no less.

The petitioners can not legitimately rely on the provisions of Section 20, of Article II, of the Constitution, to defeat the act complained of. The mandate
"recogni[zing] the indispensable role of the private sector" is no more than an acknowledgment of the importance of private initiative in building the
nation. However, it is not a call for official abdication of duty to citizenry.

The novel provisions of the Charter prescribing private sector participation, especially in the field of economic activity, 13 come, indeed, no more as
responses to State monopoly of economic forces which has unfairly kept individual initiative from the economic processes and has held back
competitiveness in the market. The Constitution does not bar, however, the Government from undertaking its own initiatives, especially in the domain of
public service, and neither does it repudiate its primacy as chief economic caretaker of the nation.

The principle of laissez faire has long been denied validity in this jurisdiction. In 1969, the Court promulgated Agricultural Credit and Cooperative
Financing Administration v. Confederation of Unions in Government Corporations and offices, 14 where it was held:

xxx xxx xxx

... The areas which used to be left to private enterprise and initiative and which the government was called upon to enter optionally and
only because it was better equipped to administer for the public welfare than in any private individual or group of individuals," continue
to lose their well-defined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity if
it is to meet the increasing social challenges of the times. Here as almost everywhere else the tendency is undoubtedly towards a greater
socialization of economic forces. Here of course this development was envisioned, indeed adopted as a national policy, by the
Constitution itself in its declaration of principle concerning the promotion of social justice. 15
The requirements of social justice and the necessity for a redistribution of the national wealth and economic opportunity find in fact a greater emphasis
in the 1987 Constitution, notwithstanding the novel concepts inscribed there. 16 And two decades after this Court wrote it, ACCFAs message remains the
same and its lesson holds true as ever.

The Court is not of the thinking that the act complained of is equivalent to a taking without just compensation. Albeit we have held that "[w]here the
owner is deprived of the ordinary and beneficial use of his property or of its value by its being diverted to public use, there is taking within the
constitutional sense, 17 it does not seem to us that the Department of Transportation and Communication, by providing for free public correspondence, is
guilty of an uncompensated taking. Rather, the Government merely built a bridge that made the boat obsolete, although not entirely useless. Certainly,
the owner of the boat can not charge the builder of the bridge for lost income. And certainly, the Government has all the right to build the bridge.

WHEREFORE, the petition is DISMISSED. No costs.

SO ORDERED.

(4)

G.R. No. L-49109 December 1, 1987

SANTA ROSA MINING COMPANY, INC., petitioner,

vs.
HON. MINISTER OF NATURAL RESOURCES JOSE J. LEIDO, JR. AND DIRECTOR OF MINES JUANITO C. FERNANDEZ, respondents.

PADILLA, J.:
This is a special civil action for certiorari and prohibition with prayer for a writ of preliminary injunction, to declare Presidential Decree No. 1214
unconstitutional and to enjoin respondent public officials from enforcing it. On 19 October 1978, the Court required the respondents to comment on the
petition and issued a temporary restraining order continuing until otherwise ordered by the Court.

Petitioner Santa Rosa Mining Company, Inc. (petitioner, for short) is a mining corporation duly organized and existing under the laws of the Philippines.
It alleges that it is the holder of fifty (50) valid mining claims situated in Jose Panganiban, Camarines Norte, acquired under the provisions of the Act of
the U.S. Congress dated 1 July 1902 (Philippine Bill of 1902, for short).

On 14 October 1977, Presidential Decree No. 1214 was issued, requiring holders of subsisting and valid patentable mining claims located under the
provisions of the Philippine Bill of 1902 to file a mining lease application within one (1) year from the approval of the Decree. Petitioner accordingly filed
a mining lease application, but "under protest," on 13 October 1978, with a reservation annotated on the back of its application that it is not waiving its
rights over its mining claims until the validity of Presidential Decree No. 1214 shall have been passed upon by this Court. 1

On 10 October 1978, or three (3) days before filing the disputed mining lease application, petitioner filed this special civil action for certiorari and
prohibition, alleging that it has no other plain, speedy and adequate remedy in the ordinary course of law to protect its rights (except by said petition).
Petitioner assails Presidential Decree No. 1214 as unconstitutional in that it amounts to a deprivation of property without due process of law.

Petitioner avers that its fifty (50) mining claims had already been declared as its own private and exclusive property in final judgments rendered by the
Court of First Instance of Camarines Norte (CFI, for short) in land registration proceedings initiated by third persons, such as, a September 1951 land
title application by a certain Gervacio Liwanag, where the Director of Mines opposed the grant of said application because herein petitioner, according to
him (Director of Mines), had already located and perfected its mining claims over the area applied for. Petitioner also cites LRC Case No. 240, filed 11
July 1960, by one Antonio Astudillo and decided in 1974 against said applicant, in which, petitioner's mining claims were described as vested property
outside the jurisdiction of the Director of Mines. 2

In answer, the respondents allege that petitioner has no standing to file the instant petition as it failed to fully exhaust administrative remedies. They
cite the pendency of petitioner's appeal, with the Office of the President, of the ruling of the respondent Secretary of Natural Resources issued on 2 April
1977 in DNR Case No. 4140, which upheld the decision of the Director of Mines finding that forty four (44) out of petitioner's fifty (50) mining claims
were void for lack of valid "tie points" as required under the Philippine Bill of 1902, and that all the mining claims had already been abandoned and
cancelled, for petitioner's non-compliance with the legal requirements of the same Phil. Bill of 1902 and Executive Order No. 141. 3

We agree with respondents' contention that it is premature for the Court to now make a finding on the matter of whether petitioner had abandoned its
mining claims. Until petitioner's appeal shall have been decided by the Office of the President, where it is pending, petitioner's attempt to seek judicial
recognition of the continuing validity of its mining claims, cannot be entertained by the Court. As stated by the Court, through Mr. Justice Sabino Padilla
in Ham v. Bachrach Motor Co., Inc. 4 applying the principle of exhaustion of administrative remedies: "By its own act of appealing from the decision of
the Director of Lands and the Secretary of Agriculture and Natural Resources to the President of the Philippines, and without waiting for the latter's
decision, the defendant cannot complain if the courts do not take action be fore the President has decided its appeal." 5

The decisions of the Court of First Instance of Camarines Norte in applications for land registration filed by third persons covering the area over which
petitioner had located and registered its mining claims, as cited by petitioner, are inapplicable. Said decisions merely denied the applications of such
third persons for land registration over areas already covered by petitioner's mining claims, for failure to show titles that were registrable under the
Torrens system; that was all. While the CFI made a statement in one case declaring that the petitioner's mining claims are its vested property and even
patentable at that time, there is nothing in said CFI decision that squarely passed upon the question of whether petitioner had valid, patentable (but still
unpatented) mining claims which it had continued to maintain, in compliance with the requirements of applicable laws. This question, which involves a
finding of facts, is precisely the issue before the Office of the President in the petitioner's appeal from the decision of the Secretary of Natural Resources
in DNR Case No. 4140 holding that petitioner's mining claims are considered abandoned cancelled for failure of petitioner to comply with the
requirements of the Philippine Bill of 1902 and Executive Order No. 141. In short, the decisions of the Court of First Instance of Camarines Norte, relied
upon by petitioner, do not foreclose a proceeding, such as DNR Case No. 4140, to determine whether petitioner's unpatented mining claims have
remained valid and subsisting.

Respondents further contend that, even assuming arguendo that petitioner's mining claims were valid at the outset, if they are deemed abandoned and
cancelled due to non-compliance with the legal requirements for maintaining a perfected mining claim, under the provisions of the Philippine Bill of
1902, 6 petitioner has no valid and subsisting claim which could be lost through the implementation of Presidential Decree No. 1214, thus giving it no
standing to question the Decree.

Petitioner, on the other hand, would rebut respondents' argument by declaring that it already had a vested right over its mining claims even before
Presidential Decree No. 1214, following the rulings in McDaniel v. Apacible 7 and Gold Creek Mining Corp. v. Rodriguez. 8

The Court is not impressed that this is so.

The cases cited by petitioner, true enough, recognize the right of a locator of a mining claim as a property right. This right, however, is not absolute. It is
merely a possessory right, more so, in this case, where petitioner's claims are still unpatented. They can be lost through abandonment or forfeiture or
they may be revoked for valid legal grounds. The statement in McDaniel v. Apacible that "There is no pretense in the present case that the petitioner has
not complied with all the requirements of the law in making the location of the mineral claims in question, or that the claims in question were ever
abandoned or forfeited by him," 9 confirms that a valid mining claim may still be lost through abandonment or forfeiture.

The petitioner can not successfully plead the ruling in Gold Creek Mining Corp. v. Rodriguez, supra. In that case, what was in issue was Gold
Creek's right to a patent over its mining claim, after compliance with all legal requirements for a patent. In the present case, no application for patent is
in issue, although as a holder of patentable mining claims petitioner could have applied for one during all these years but inexplicably did not do so.
In Gold Creek, no finding of abandonment was ever made against the mining claimant as to deprive it of the initial privilege given by virtue of its
location; on the other hand, such a finding has been made in petitioner's case (although the finding among others is on appeal with the President).

We now come to the question of whether or not Presidential Decree No. 1214 is constitutional. Even assuming arguendo that petitioner was not bound to
exhaust administrative remedies on the question of whether or not its mining claims are still subsisting (not abandoned or cancelled before challenging
the constitutionality of said Decree, we hold that Presidential Decree No. 1214 is not unconstitutional. 10 It is a valid exercise of the sovereign power of
the State, as owner, over lands of the public domain, of which petitioner's mining claims still form a part, and over the patrimony of the nation, of which
mineral deposits are a valuable asset. It may be underscored, in this connection, that the Decree does not cover all mining claims located under the Phil.
Bill of 1902, but only those claims over which their locators had failed to obtain a patent. And even then, such locators may still avail of
the renewable twenty-five year (25) lease prescribed by Pres. Decree No. 463, the Mineral Development Resources Decree of 1974.
Mere location does not mean absolute ownership over the affected land or the mining claim. It merely segregates the located land or area from the
public domain by barring other would-be locators from locating the same and appropriating for themselves the minerals found therein. To rule otherwise
would imply that location is all that is needed to acquire and maintain rights over a located mining claim. This, we cannot approve or sanction because it
is contrary to the intention of the lawmaker that the locator should faithfully and consistently comply with the requirements for annual work and
improvements in the located mining claim.

Presidential Decree No. 1214 is in accord with Sec. 8, Art. XIV of the 1973 Constitution which states:

All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, wildlife,
and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential
and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the
exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five
years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses
other than the development of water power, in which cases, beneficial use may be the measure and the limit of the grant.

The same constitutional mandate is found in Sec. 2, Art. XII of the 1987 Constitution, which declares:

All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests
or timber, wildlife, flora and fauna. and other natural resources are owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control
and supervision of the State. ...

WHEREFORE, premises considered, the petition is hereby DISMISSED. The temporary restraining order issued by the Court on 19 October 1978 is
LIFTED and SET ASIDE. Costs against the petitioner.

SO ORDERED.

Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento and Cortes, JJ., concur.

(5)

G.R. No. 57667 May 28, 1990

SAN MIGUEL CORPORATION, petitioner,

vs.
COURT OF APPEALS and DIRECTOR OF LANDS, respondents.
Ciriaco Lopez, Jr. & Associates for petitioner.

FERNAN, C.J.:

In this petition for review on certiorari, San Miguel Corporation seeks the reversal of the decision of the Court of Appeals 1 denying its application for
registration of a parcel of land in view of its failure to show entitlement thereto.

On December 23, 1975, petitioner San Miguel Corporation (SMC for brevity) purchased from Silverio Perez Lot 684, a 14,531 square-meter parcel of
land located in Sta. Anastacia, Sto. Tomas, Batangas, in consideration of the sum of P133,084.80. 2 On February 21,1977, claiming ownership in fee
simple of the land, SMC filed before the then Court of First Instance, now Regional Trial Court of Batangas an application for its registration under the
Land Registration Act.

The Solicitor General, appearing for the Republic of the Philippines, opposed the application for registration contending that SMC's claim of ownership in
fee simple on the basis of a Spanish title or grant could no longer be availed of by the applicant as the six-month period from February 16, 1976
prescribed by Presidential Decree No. 892 had elapsed; that the parcel of land in question is part of the public domain, and that SMC, being a private
corporation, is disqualified under Section 11, Article XIV of the Constitution from holding alienable lands of the public domain. The Solicitor General
thereafter authorized the Provincial Fiscal of Batangas to appear in said case, subject to his supervision and control.

At the initial and only hearing held on October 12, 197 7, the Court, upon motion of SMC and there being no opposition to the application except that of
the Republic of the Philippines, issued an order of general default. SMC was allowed to mark documentary evidence to establish jurisdictional facts and to
present additional evidence before the Clerk of Court who was appointed Commissioner for that purpose.

On December 12, 1977, the lower court, presided by Judge Eduardo C. Abaya, rendered a decision granting the application for registration and
adjudicating the property in favor of SMC.

The Solicitor General appealed to the Court of Appeals. In its decision of March 23, 1981, said court reversed the decision of the lower court and
declared the parcel of land involved as public land. Hence, the instant petition with SMC submitting the following alleged "grave errors" of the Court of
Appeals for this Court's resolution: (1) the Court of Appeals' failure to hold that "prescription is a mode of acquiring title or ownership of land and that
the title thus acquired is registrable"; (2) the Court of Appeals' disregard of SMC's evidence "not on the basis of controverting evidence but on the basis
of unfounded suppositions and conjectures," and (3) the Court of Appeals' reversal of the factual findings of the trial court which had the opportunity of
observing the demeanor and sincerity of the witnesses. 3

We need not dwell lengthily on the third "error" assigned by petitioner. Suffice it to state that while trial courts may have the opportunity to observe the
demeanor of witnesses, their factual findings may nonetheless be reversed by the Court of Appeals, the appellate court vested by law to resolve both
legal and factual issues, if, by the evidence on record, it appears that the trial court involved erred. What is of primary concern to us in this case is the
issue of whether or not the evidence presented by the petitioner is sufficient to warrant a ruling that SMC and/or its predecessor-in-interest has a
registrable right over Lot 684.

Open, exclusive and undisputed possession of alienable public land for the period prescribed by law creates the legal fiction whereby the land, upon
completion of the requisite period ipso-jure and without the need of judicial or other sanction, ceases to be public land and becomes private
property. 4 Such open, continuous, exclusive and notorious occupation of the disputed properties for more than 30 years must, however,
be conclusively established. 6 This quantum of proof is necessary to avoid the erroneous validation of actually fictitious claims of possession over the
property in dispute.

In this case, petitioner's claim that its predecessor-in-interest had open, exclusive and undisputed possession of Lot 684 for more than thirty years is
anchored on certain documentary and testimonial evidence. Its documentary evidence consist of tax declaration No. 923 wherein it appears that in 1974,
Silverio Perez declared as his own for taxation purposes, a certain riceland with an area of 1.5657 hectares located in Sta. Anastacia, Sto. Tomas,
Batangas, 6 and a certification of the Office of the Treasurer of Sto. Tomas to the effect that in 1977, Silverio Perez paid realty taxes for the land subject
of tax declaration no. 923. 7

Tax declarations and receipts are not conclusive evidence of ownership or right of possession over a piece of land. 8They are merely indicia of a claim of
ownership. 9 Tax declarations only become strong evidence of ownership of land acquired by prescription, a mode of acquisition of ownership relied upon
by petitioner in this case, when accompanied by proof of actual possession. 10

Such proof of actual possession was sought to be provided by the testimony of vendor Silverio Perez that he had been in possession of the property
since 1933 until he sold it to SMC in 1975; that the property was given to him by his parents when he got married; that no document evidenced that
transfer; that it had been in the possession of his parents since 1925; that he had declared the property in his name for taxation purposes; that he had
paid taxes therefor, and that he was in peaceful, continuous and exclusive possession of the property until its sale to SMC. 11

Petitioner did not present other witnesses to corroborate Perez' testimony. Its other witness, Antonio M. de las Alas, Jr., a lawyer of the petitioner,
simply testified that he handled the negotiations for the purchase of the property; that SMC was authorized to own and acquire property as shown by its
articles of incorporation and by-laws; that since its acquisition in 1975, the property had been used as a hatchery farm of SMC; that SMC's possession in
the concept of an owner had been continuous, adverse and against the whole world, and that the land was declared for taxation purposes still in the
name of Silverio Perez .12

We hold that there is paucity of evidence of actual, notorious and exclusive possession of the property on the part of vendor Silverio Perez so as to
attach to it the character of an express grant from the govemment. 13 Indeed, as correctly held by the Court of Appeals, Silverio Perez's testimony, being
uncorroborated, is simply self-serving and hence, undeserving of any weight.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.

(6)

G.R. No. 149927 March 30, 2004

REPUBLIC OF THE PHILIPPINES, Represented by the Department of Environment and Natural Resources (DENR)
Under then Minister ERNESTO R. MACEDA; and Former Government Officials CATALINO MACARAIG, FULGENCIO S. FACTORAN, ANGEL C.
ALCALA, BEN MALAYANG, ROBERTO PAGDANGANAN, MARIANO Z. VALERA and ROMULO SAN JUAN, petitioners,
vs.
ROSEMOOR MINING AND DEVELOPMENT CORPORATION, PEDRO DEL CONCHA, and ALEJANDRO and RUFO DE GUZMAN, respondents.

DECISION

PANGANIBAN, J.:

A mining license that contravenes a mandatory provision of the law under which it is granted is void. Being a mere privilege, a license does not vest
absolute rights in the holder. Thus, without offending the due process and the non-impairment clauses of the Constitution, it can be revoked by the State
in the public interest.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to nullify the May 29, 2001 Decision2 and the September 6, 2001
Resolution3 of the Court of Appeals (CA) in CA-GR SP No. 46878. The CA disposed as follows:
"WHEREFORE, premises considered, the appealed Decision is hereby AFFIRMED in toto."4

The questioned Resolution denied petitioners’ Motion for Reconsideration.

On the other hand, trial court’s Decision, which was affirmed by the CA, had disposed as follows:

"WHEREFORE, judgment is hereby rendered as follows:

‘1. Declaring that the cancellation of License No. 33 was done without jurisdiction and in gross violation of the Constitutional right of the
petitioners against deprivation of their property rights without due process of law and is hereby set aside.

‘2. Declaring that the petitioners’ right to continue the exploitation of the marble deposits in the area covered by License No. 33 is maintained for
the duration of the period of its life of twenty-five (25) years, less three (3) years of continuous operation before License No. 33 was cancelled,
unless sooner terminated for violation of any of the conditions specified therein, with due process.

‘3. Making the Writ of preliminary injunction and the Writ of Preliminary Mandatory Injunction issued as permanent.

‘4. Ordering the cancellation of the bond filed by the Petitioners in the sum of 1 Million.

‘5. Allowing the petitioners to present evidence in support of the damages they claim to have suffered from, as a consequence of the summary
cancellation of License No. 33 pursuant to the agreement of the parties on such dates as maybe set by the Court; and

‘6. Denying for lack of merit the motions for contempt, it appearing that actuations of the respondents were not contumacious and intended to
delay the proceedings or undermine the integrity of the Court.

‘No pronouncement yet as to costs.’"5

The Facts

The CA narrated the facts as follows:

"The four (4) petitioners, namely, Dr. Lourdes S. Pascual, Dr. Pedro De la Concha, Alejandro De La Concha, and Rufo De Guzman, after having been
granted permission to prospect for marble deposits in the mountains of Biak-na-Bato, San Miguel, Bulacan, succeeded in discovering marble deposits of
high quality and in commercial quantities in Mount Mabio which forms part of the Biak-na-Bato mountain range.

"Having succeeded in discovering said marble deposits, and as a result of their tedious efforts and substantial expenses, the petitioners applied with the
Bureau of Mines, now Mines and Geosciences Bureau, for the issuance of the corresponding license to exploit said marble deposits.
xxxxxxxxx

"After compliance with numerous required conditions, License No. 33 was issued by the Bureau of Mines in favor of the herein petitioners.

xxxxxxxxx

"Shortly after Respondent Ernesto R. Maceda was appointed Minister of the Department of Energy and Natural Resources (DENR), petitioners’ License
No. 33 was cancelled by him through his letter to ROSEMOOR MINING AND DEVELOPMENT CORPORATION dated September 6, 1986 for the reasons
stated therein. Because of the aforesaid cancellation, the original petition was filed and later substituted by the petitioners’ AMENDED PETITION dated
August 21, 1991 to assail the same.

"Also after due hearing, the prayer for injunctive relief was granted in the Order of this Court dated February 28, 1992. Accordingly, the corresponding
preliminary writs were issued after the petitioners filed their injunction bond in the amount of ONE MILLION PESOS (₱1,000,000.00).

xxxxxxxxx

"On September 27, 1996, the trial court rendered the herein questioned decision." 6

The trial court ruled that the privilege granted under respondents’ license had already ripened into a property right, which was protected under the due
process clause of the Constitution. Such right was supposedly violated when the license was cancelled without notice and hearing. The cancellation was
said to be unjustified, because the area that could be covered by the four separate applications of respondents was 400 hectares. Finally, according to
the RTC, Proclamation No. 84, which confirmed the cancellation of the license, was an ex post facto law; as such, it violated Section 3 of Article XVIII of
the 1987 Constitution.

On appeal to the Court of Appeals, herein petitioners asked whether PD 463 or the Mineral Resources Development Decree of 1974 had been violated by
the award of the 330.3062 hectares to respondents in accordance with Proclamation No. 2204. They also questioned the validity of the cancellation of
respondents’ Quarry License/Permit (QLP) No. 33.

Ruling of the Court of Appeals

Sustaining the trial court in toto, the CA held that the grant of the quarry license covering 330.3062 hectares to respondents was authorized by law,
because the license was embraced by four (4) separate applications -- each for an area of 81 hectares. Moreover, it held that the limitation under
Presidential Decree No. 463 -- that a quarry license should cover not more than 100 hectares in any given province -- was supplanted by Republic Act
No. 7942,7 which increased the mining areas allowed under PD 463.

It also ruled that the cancellation of respondents’ license without notice and hearing was tantamount to a deprivation of property without due process of
law. It added that under the clause in the Constitution dealing with the non-impairment of obligations and contracts, respondents’ license must be
respected by the State.
Hence, this Petition.8

Issues

Petitioners submit the following issues for the Court’s consideration:

"(1) [W]hether or not QLP No. 33 was issued in blatant contravention of Section 69, P.D. No. 463; and (2) whether or not Proclamation No. 84 issued by
then President Corazon Aquino is valid. The corollary issue is whether or not the Constitutional prohibition against ex post facto law applies to
Proclamation No. 84"9

The Court’s Ruling

The Petition has merit.

First Issue:
Validity of License

Respondents contend that the Petition has no legal basis, because PD 463 has already been repealed. 10 In effect, they ask for the dismissal of the
Petition on the ground of mootness.

PD 463, as amended, pertained to the old system of exploration, development and utilization of natural resources through licenses, concessions or
leases.11 While these arrangements were provided under the 193512 and the 197313 Constitutions, they have been omitted by Section 2 of Article XII of
the 1987 Constitution.14

With the shift of constitutional policy toward "full control and supervision of the State" over natural resources, the Court in Miners Association of the
Philippines v. Factoran Jr. 15 declared the provisions of PD 463 as contrary to or violative of the express mandate of the 1987 Constitution. The said
provisions dealt with the lease of mining claims; quarry permits or licenses covering privately owned or public lands; and other related provisions on
lease, licenses and permits.

RA 7942 or the Philippine Mining Act of 1995 embodies the new constitutional mandate. It has repealed or amended all laws, executive orders,
presidential decrees, rules and regulations -- or parts thereof -- that are inconsistent with any of its provisions.16

It is relevant to state, however, that Section 2 of Article XII of the 1987 Constitution does not apply retroactively to a "license, concession or lease"
granted by the government under the 1973 Constitution or before the effectivity of the 1987 Constitution on February 2, 1987. 17 As noted in Miners
Association of the Philippines v. Factoran Jr., the deliberations of the Constitutional Commission 18 emphasized the intent to apply the said constitutional
provision prospectively.
While RA 7942 has expressly repealed provisions of mining laws that are inconsistent with its own, it nonetheless respects previously issued valid and
existing licenses, as follows:

"SECTION 5. Mineral Reservations. — When the national interest so requires, such as when there is a need to preserve strategic raw materials
for industries critical to national development, or certain minerals for scientific, cultural or ecological value, the President may establish mineral
reservations upon the recommendation of the Director through the Secretary. Mining operations in existing mineral reservations and such other
reservations as may thereafter be established, shall be undertaken by the Department or through a contractor: Provided, That a small scale-
mining cooperative covered by Republic Act No. 7076 shall be given preferential right to apply for a small-scale mining agreement for a
maximum aggregate area of twenty-five percent (25%) of such mineral reservation, subject to valid existing mining/quarrying rights as provided
under Section 112 Chapter XX hereof. All submerged lands within the contiguous zone and in the exclusive economic zone of the Philippines are
hereby declared to be mineral reservations.

"x x x x x x x x x

"SECTION 7. Periodic Review of Existing Mineral Reservations. — The Secretary shall periodically review existing mineral reservations for the
purpose of determining whether their continued existence is consistent with the national interest, and upon his recommendation, the President
may, by proclamation, alter or modify the boundaries thereof or revert the same to the public domain without prejudice to prior existing rights."

"SECTION 18. Areas Open to Mining Operations. — Subject to any existing rights or reservations and prior agreements of all parties, all mineral
resources in public or private lands, including timber or forestlands as defined in existing laws, shall be open to mineral agreements or financial
or technical assistance agreement applications. Any conflict that may arise under this provision shall be heard and resolved by the panel of
arbitrators."

"SECTION 19. Areas Closed to Mining Applications. -- Mineral agreement or financial or technical assistance agreement applications shall not be
allowed:

(a) In military and other government reservations, except upon prior written clearance by the government agency concerned;

(b) Near or under public or private buildings, cemeteries, archeological and historic sites, bridges, highways, waterways, railroads,
reservoirs, dams or other infrastructure projects, public or private works including plantations or valuable crops, except upon written
consent of the government agency or private entity concerned;

(c) In areas covered by valid and existing mining rights;

(d) In areas expressly prohibited by law;

 (e) In areas covered by small-scale miners as defined by law unless with prior consent of the small-scale miners, in which case a royalty
payment upon the utilization of minerals shall be agreed upon by the parties, said royalty forming a trust fund for the socioeconomic
development of the community concerned; and

(f) Old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas, mangrove forests, mossy forests, national
parks, provincial/municipal forests, parks, greenbelts, game refuge and bird sanctuaries as defined by law and in areas expressly
prohibited under the National Integrated Protected Areas System (NIPAS) under Republic Act No. 7586, Department Administrative
Order No. 25, series of 1992 and other laws."

"SECTION 112. Non-impairment of Existing Mining/ Quarrying Rights. — All valid and existing mining lease contracts, permits/licenses, leases
pending renewal, mineral production-sharing agreements granted under Executive Order No. 279, at the date of effectivity of this Act, shall
remain valid, shall not be impaired, and shall be recognized by the Government: Provided, That the provisions of Chapter XIV on government
share in mineral production-sharing agreement and of Chapter XVI on incentives of this Act shall immediately govern and apply to a mining
lessee or contractor unless the mining lessee or contractor indicates his intention to the secretary, in writing, not to avail of said provisions:
Provided, further, That no renewal of mining lease contracts shall be made after the expiration of its term: Provided, finally, That such leases,
production-sharing agreements, financial or technical assistance agreements shall comply with the applicable provisions of this Act and its
implementing rules and regulations.

"SECTION 113. Recognition of Valid and Existing Mining Claims and Lease/Quarry Application. — Holders of valid and existing mining claims,
lease/quarry applications shall be given preferential rights to enter into any mode of mineral agreement with the government within two (2)
years from the promulgation of the rules and regulations implementing this Act." (Underscoring supplied)

Section 3(p) of RA 7942 defines an existing mining/quarrying right as "a valid and subsisting mining claim or permit or quarry permit or any mining
lease contract or agreement covering a mineralized area granted/issued under pertinent mining laws." Consequently, determining whether the license of
respondents falls under this definition would be relevant to fixing their entitlement to the rights and/or preferences under RA 7942. Hence, the present
Petition has not been mooted.

Petitioners submit that the license clearly contravenes Section 69 of PD 463, because it exceeds the maximum area that may be granted. This incipient
violation, according to them, renders the license void ab initio.

Respondents, on the other hand, argue that the license was validly granted, because it was covered by four separate applications for areas of 81
hectares each.

The license in question, QLP No. 33,19 is dated August 3, 1982, and it was issued in the name of Rosemoor Mining Development Corporation. The terms
of the license allowed the corporation to extract and dispose of marbleized limestone from a 330.3062-hectare land in San Miguel, Bulacan. The license
is, however, subject to the terms and conditions of PD 463, the governing law at the time it was granted; as well as to the rules and regulations
promulgated thereunder.20 By the same token, Proclamation No. 2204 -- which awarded to Rosemoor the right of development, exploitation, and
utilization of the mineral site -- expressly cautioned that the grant was subject to "existing policies, laws, rules and regulations." 21
The license was thus subject to Section 69 of PD 463, which reads:

"Section 69. Maximum Area of Quarry License – Notwithstanding the provisions of Section 14 hereof, a quarry license shall cover an area of not
more than one hundred (100) hectares in any one province and not more than one thousand (1,000) hectares in the entire Philippines." (Italics
supplied)

The language of PD 463 is clear. It states in categorical and mandatory terms that a quarry license, like that of respondents, should cover a maximum of
100 hectares in any given province. This law neither provides any exception nor makes any reference to the number of applications for a license. Section
69 of PD 463 must be taken to mean exactly what it says. Where the law is clear, plain, and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation.22

Moreover, the lower courts’ ruling is evidently inconsistent with the fact that QLP No. 33 was issued solely in the name of Rosemoor Mining and
Development Corporation, rather than in the names of the four individual stockholders who are respondents herein. It likewise brushes aside a basic
postulate that a corporation has a separate personality from that of its stockholders.23

The interpretation adopted by the lower courts is contrary to the purpose of Section 69 of PD 463. Such intent to limit, without qualification, the area of
a quarry license strictly to 100 hectares in any one province is shown by the opening proviso that reads: "Notwithstanding the provisions of Section 14
hereof x x x." The mandatory nature of the provision is also underscored by the use of the word shall. Hence, in the application of the 100-hectare-per-
province limit, no regard is given to the size or the number of mining claims under Section 14, which we quote:

"SECTION 14. Size of Mining Claim. -- For purposes of registration of a mining claim under this Decree, the Philippine territory and its shelf are
hereby divided into meridional blocks or quadrangles of one-half minute (1/2) of latitude and longitude, each block or quadrangle containing area
of eighty-one (81) hectares, more or less.

"A mining claim shall cover one such block although a lesser area may be allowed if warranted by attendant circumstances, such as geographical
and other justifiable considerations as may be determined by the Director: Provided, That in no case shall the locator be allowed to register twice
the area allowed for lease under Section 43 hereof." (Italics supplied)

Clearly, the intent of the law would be brazenly circumvented by ruling that a license may cover an area exceeding the maximum by the mere
expediency of filing several applications. Such ruling would indirectly permit an act that is directly prohibited by the law.

Second Issue:
Validity of Proclamation No. 84

Petitioners also argue that the license was validly declared a nullity and consequently withdrawn or terminated. In a letter dated September 15, 1986,
respondents were informed by then Minister Ernesto M. Maceda that their license had illegally been issued, because it violated Section 69 of PD 463; and
that there was no more public interest served by the continued existence or renewal of the license. The latter reason, they added, was confirmed by the
language of Proclamation No. 84. According to this law, public interest would be served by reverting the parcel of land that was excluded by
Proclamation No. 2204 to the former status of that land as part of the Biak-na-Bato national park.

They also contend that Section 74 of PD 463 would not apply, because Minister Maceda’s letter did not cancel or revoke QLP No. 33, but merely declared
the latter’s nullity. They further argue that respondents waived notice and hearing in their application for the license.

On the other hand, respondents submit that, as provided for in Section 74 of PD 463, their right to due process was violated when their license was
cancelled without notice and hearing. They likewise contend that Proclamation No. 84 is not valid for the following reasons: 1) it violates the clause on
the non-impairment of contracts; 2) it is an ex post facto law and/or a bill of attainder; and 3) it was issued by the President after the effectivity of the
1987 Constitution.

This Court ruled on the nature of a natural resource exploration permit, which was akin to the present respondents’ license, in Southeast Mindanao Gold
Mining Corporation v. Balite Portal Mining Cooperative,24 which held:

"x x x. As correctly held by the Court of Appeals in its challenged decision, EP No. 133 merely evidences a privilege granted by the State, which
may be amended, modified or rescinded when the national interest so requires. This is necessarily so since the exploration, development and
utilization of the country’s natural mineral resources are matters impressed with great public interest. Like timber permits, mining exploration
permits do not vest in the grantee any permanent or irrevocable right within the purview of the non-impairment of contract and due process
clauses of the Constitution, since the State, under its all-encompassing police power, may alter, modify or amend the same, in accordance with
the demands of the general welfare."25

This same ruling had been made earlier in Tan v. Director of Forestry26 with regard to a timber license, a pronouncement that was reiterated in Ysmael
v. Deputy Executive Secretary,27 the pertinent portion of which reads:

"x x x. 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 qualified entities, and do not vest in the latter a permanent or irrevocable right to the particular concession area and the forest products
therein. They may be validly amended, modified, replaced or rescinded by the Chief Executive when national interests so require. Thus, they are
not deemed contracts within the purview of the due process of law clause [See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended.
Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302]."28 (Italics supplied)

In line with the foregoing jurisprudence, respondents’ license may be revoked or rescinded by executive action when the national interest so requires,
because it is not a contract, property or a property right protected by the due process clause of the Constitution. 29 Respondents themselves acknowledge
this condition of the grant under paragraph 7 of QLP No. 33, which we quote:

"7. This permit/license may be revoked or cancelled at any time by the Director of Mines and Geo-Sciences when, in his opinion public interests
so require or, upon failure of the permittee/licensee to comply with the provisions of Presidential Decree No. 463, as amended, and the rules and
regulations promulgated thereunder, as well as with the terms and conditions specified herein; Provided, That if a permit/license is cancelled, or
 otherwise terminated, the permittee/licensee shall be liable for all unpaid rentals and royalties due up to the time of the termination or
cancellation of the permit/license[.]"30 (Italics supplied)

The determination of what is in the public interest is necessarily vested in the State as owner of all mineral resources. That determination was based on
policy considerations formally enunciated in the letter dated September 15, 1986, issued by then Minister Maceda and, subsequently, by the President
through Proclamation No. 84. As to the exercise of prerogative by Maceda, suffice it to say that while the cancellation or revocation of the license is
vested in the director of mines and geo-sciences, the latter is subject to the former’s control as the department head. We also stress the clear
prerogative of the Executive Department in the evaluation and the consequent cancellation of licenses in the process of its formulation of policies with
regard to their utilization. Courts will not interfere with the exercise of that discretion without any clear showing of grave abuse of discretion.31

Moreover, granting that respondents’ license is valid, it can still be validly revoked by the State in the exercise of police power. 32 The exercise of such
power through Proclamation No. 84 is clearly in accord with jura regalia, which reserves to the State ownership of all natural resources.33 This Regalian
doctrine is an exercise of its sovereign power as owner of lands of the public domain and of the patrimony of the nation, the mineral deposits of which
are a valuable asset.34

Proclamation No. 84 cannot be stigmatized as a violation of the non-impairment clause. As pointed out earlier, respondents’ license is not a contract to
which the protection accorded by the non-impairment clause may extend.35Even if the license were, it is settled that provisions of existing laws and a
reservation of police power are deemed read into it, because it concerns a subject impressed with public welfare. 36 As it is, the non-impairment clause
must yield to the police power of the state.37

We cannot sustain the argument that Proclamation No. 84 is a bill of attainder; that is, a "legislative act which inflicts punishment without judicial
trial."38 Its declaration that QLP No. 33 is a patent nullity39 is certainly not a declaration of guilt. Neither is the cancellation of the license a punishment
within the purview of the constitutional proscription against bills of attainder.

Too, there is no merit in the argument that the proclamation is an ex post facto law. There are six recognized instances when a law is considered as
such: 1) it criminalizes and punishes an action that was done before the passing of the law and that was innocent when it was done; 2) it aggravates a
crime or makes it greater than it was when it was committed; 3) it changes the punishment and inflicts one that is greater than that imposed by the law
annexed to the crime when it was committed; 4) it alters the legal rules of evidence and authorizes conviction upon a less or different testimony than
that required by the law at the time of the commission of the offense; 5) it assumes the regulation of civil rights and remedies only, but in effect
imposes a penalty or a deprivation of a right as a consequence of something that was considered lawful when it was done; and 6) it deprives a person
accused of a crime of some lawful protection to which he or she become entitled, such as the protection of a former conviction or an acquittal or the
proclamation of an amnesty.40 Proclamation No. 84 does not fall under any of the enumerated categories; hence, it is not an ex post facto law.

It is settled that an ex post facto law is limited in its scope only to matters criminal in nature.41 Proclamation 84, which merely restored the area
excluded from the Biak-na-Bato national park by canceling respondents’ license, is clearly not penal in character.

Finally, it is stressed that at the time President Aquino issued Proclamation No. 84 on March 9, 1987, she was still validly exercising legislative powers
under the Provisional Constitution of 1986.42 Section 1 of Article II of Proclamation No. 3, which promulgated the Provisional Constitution, granted her
legislative power "until a legislature is elected and convened under a new Constitution." The grant of such power is also explicitly recognized and
provided for in Section 6 of Article XVII of the 1987 Constitution.43

WHEREFORE, this Petition is hereby GRANTED and the appealed Decision of the Court of Appeals SET ASIDE. No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

(7)

LA BUGAL B’LAAN TRIBAL ASSOCIATION INC., et. al. v. V. O. RAMOS, Secretary Department of Environment and Natural Resources; H.
RAMOS, Director, Mines and Geosciences Bureau (MGB-DENR); R. TORRES, Executive Secretary; and WMC (PHILIPPINES) INC.

The constitutional provision allowing the President to enter into FTAA is a exception to the rule that participation in the nation’s natural resources is
reserved exclusively to Filipinos. Provision must be construed strictly against their enjoyment by non-Filipinos.
RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or on March 30, 1995, the President signed a
Financial and Technical Assistance Agreement (FTAA) with WMCP, a corporation organized under Philippine laws, covering close to 100,000 hectares of
land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, the Environment Secretary Victor Ramos issued DENR
Administrative Order 95-23, which was later repealed by DENR Administrative Order 96-40, adopted on December 20, 1996.
Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and WMCP be declared unconstitutional on ground that
they allow fully foreign owned corporations like WMCP to exploit, explore and develop Philippine mineral resources in contravention of Article XII Section
2 paragraphs 2 and 4 of the Charter.
In January 2001, WMC – a publicly listed Australian mining and exploration company – sold its whole stake in WMCP to Sagittarius Mines, 60% of which
is owned by Filipinos while 40% of which is owned by Indophil Resources, an Australian company. DENR approved the transfer and registration of the
FTAA in Sagittarius‘ name but Lepanto Consolidated assailed the same. The latter case is still pending before the Court of Appeals.
EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to accept, consider and evaluate proposals from foreign owned
corporations or foreign investors for contracts or agreements involving wither technical or financial assistance for large scale exploration, development
and utilization of minerals which upon appropriate recommendation of the (DENR) Secretary, the President may execute with the foreign proponent.
WMCP likewise contended that the annulment of the FTAA would violate a treaty between the Philippines and Australia which provides for the protection
of Australian investments.

ISSUES:
1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned corporations to exploit the Philippine mineral resources.

2. Whether or not the FTAA between the government and WMCP is a ―service contract that permits fully foreign owned companies to exploit the
Philippine mineral resources.

HELD:

First Issue: RA 7942 is Unconstitutional

RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned corporations to exploit the Philippine natural
resources.
Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrinewhich states that ―All lands of the public domain, waters, minerals, coal,
petroleum, and other minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. The same section also states that, ―the exploration and development and utilization of
natural resources shall be under the full control and supervision of the State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution authorizing the State to grant licenses, concessions, or leases for
the exploration, exploitation, development, or utilization of natural resources. By such omission, the utilization of inalienable lands of the public domain
through license, concession or lease is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a particular natural resource within a
given area. The concession amounts to complete control by the concessionaire over the country‘s natural resource, for it is given exclusive and plenary
rights to exploit a particular resource at the point of extraction.
The 1987 Constitution, moreover, has deleted the phrase ―management or other forms of assistance in the 1973 Charter. The present Constitution now
allows only ―technical and financial assistance. The management and the operation of the mining activities by foreign contractors, the primary feature
of the service contracts was precisely the evil the drafters of the 1987 Constitution sought to avoid.
The constitutional provision allowing the President to enter into FTAAs is an exception to the rule that participation in the nation‘s natural resources is
reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their enjoyment by non-Filipinos. Therefore, RA 7942 is
invalid insofar as the said act authorizes service contracts. Although the statute employs the phrase ―financial and technical agreements in accordance
with the 1987 Constitution, its pertinent provisions actually treat these agreements as service contracts that grant beneficial ownership to foreign
contractors contrary to the fundamental law.
The underlying assumption in the provisions of the law is that the foreign contractor manages the mineral resources just like the foreign contractor in a
service contract. By allowing foreign contractors to manage or operate all the aspects of the mining operation, RA 7942 has, in effect, conveyed
beneficial ownership over the nation‘s mineral resources to these contractors, leaving the State with nothing but bare title thereto.
The same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally ordained 60-40% capitalizationrequirement for
corporations or associations engaged in the exploitation, development and utilization of Philippine natural resources.
When parts of a statute are so mutually dependent and connected as conditions, considerations, inducements or compensations for each other as to
warrant a belief that the legislature intended them as a whole, then if some parts are unconstitutional, all provisions that are thus dependent, conditional
or connected, must fail with them.
Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to merely technical or financial assistance to the State for
large scale exploration, development and utilization of minerals, petroleum and other mineral oils
Second Issue: RP Government-WMCP FTAA is a Service Contract
The FTAA between he WMCP and the Philippine government is likewise unconstitutional since the agreement itself is a service contract.
Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive right to explore, exploit, utilize and dispose of all minerals and by-
products that may be produced from the contract area. Section 1.2 of the same agreement provides that EMCP shall provide all financing, technology,
management, and personnel necessary for the Mining Operations.
These contractual stipulations and related provisions in the FTAA taken together, grant WMCP beneficial ownership over natural resources that properly
belong to the State and are intended for the benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices
that the fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down.

G.R. No. 127882 January 27, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., represented by its Chairman F'LONG MIGUEL M. LUMAYONG, WIGBERTO E. TAÑADA,
PONCIANO BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO, JR., F'LONG AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM L. DABIE,
SIMEON H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN, MARCELO L. GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY,
BENITA P. TACUAYAN, minors JOLY L. BUGOY, represented by his father UNDERO D. BUGOY, ROGER M. DADING, represented by his
father ANTONIO L. DADING, ROMY M. LAGARO, represented by his father TOTING A. LAGARO, MIKENY JONG B. LUMAYONG, represented
by his father MIGUEL M. LUMAYONG, RENE T. MIGUEL, represented by his mother EDITHA T. MIGUEL, ALDEMAR L. SAL, represented by
his father DANNY M. SAL, DAISY RECARSE, represented by her mother LYDIA S. SANTOS, EDWARD M. EMUY, ALAN P. MAMPARAIR,
MARIO L. MANGCAL, ALDEN S. TUSAN, AMPARO S. YAP, VIRGILIO CULAR, MARVIC M.V.F. LEONEN, JULIA REGINA CULAR, GIAN CARLO
CULAR, VIRGILIO CULAR, JR., represented by their father VIRGILIO CULAR, PAUL ANTONIO P. VILLAMOR, represented by his parents
JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR, ANA GININA R. TALJA, represented by her father MARIO JOSE B. TALJA, SHARMAINE R.
CUNANAN, represented by her father ALFREDO M. CUNANAN, ANTONIO JOSE A. VITUG III, represented by his mother ANNALIZA A.
VITUG, LEAN D. NARVADEZ, represented by his father MANUEL E. NARVADEZ, JR., ROSERIO MARALAG LINGATING, represented by her
father RIO OLIMPIO A. LINGATING, MARIO JOSE B. TALJA, DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE, SR., SUSAN O. BOLANIO,
OND, LOLITA G. DEMONTEVERDE, BENJIE L. NEQUINTO,1 ROSE LILIA S. ROMANO, ROBERTO S. VERZOLA, EDUARDO AURELIO C. REYES,
LEAN LOUEL A. PERIA, represented by his father ELPIDIO V. PERIA,2 GREEN FORUM PHILIPPINES, GREEN FORUM WESTERN VISAYAS,
(GF-WV), ENVIRONMETAL LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT
REPORMANG PANSAKAHAN (KAISAHAN),3 KAISAHAN TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG PANSAKAHAN
(KAISAHAN), PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP
FOR THE DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA), WOMEN'S LEGAL BUREAU (WLB), CENTER
FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN FOUNDATION,
INC., SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN), LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC.
(LRC), petitioners,
vs.
VICTOR O. RAMOS, SECRETARY, DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), HORACIO RAMOS, DIRECTOR,
MINES AND GEOSCIENCES BUREAU (MGB-DENR), RUBEN TORRES, EXECUTIVE SECRETARY, and WMC (PHILIPPINES), INC.4 respondents.
DECISION

CARPIO-MORALES, J.:

The present petition for mandamus and prohibition assails the constitutionality of Republic Act No. 7942,5 otherwise known as the PHILIPPINE MINING
ACT OF 1995, along with the Implementing Rules and Regulations issued pursuant thereto, Department of Environment and Natural Resources (DENR)
Administrative Order 96-40, and of the Financial and Technical Assistance Agreement (FTAA) entered into on March 30, 1995 by the Republic of the
Philippines and WMC (Philippines), Inc. (WMCP), a corporation organized under Philippine laws.

On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No. 2796 authorizing the DENR Secretary to accept, consider and
evaluate proposals from foreign-owned corporations or foreign investors for contracts or agreements involving either technical or financial assistance for
large-scale exploration, development, and utilization of minerals, which, upon appropriate recommendation of the Secretary, the President may execute
with the foreign proponent. In entering into such proposals, the President shall consider the real contributions to the economic growth and general
welfare of the country that will be realized, as well as the development and use of local scientific and technical resources that will be promoted by the
proposed contract or agreement. Until Congress shall determine otherwise, large-scale mining, for purpose of this Section, shall mean those proposals
for contracts or agreements for mineral resources exploration, development, and utilization involving a committed capital investment in a single mining
unit project of at least Fifty Million Dollars in United States Currency (US $50,000,000.00).7

On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to "govern the exploration, development, utilization and processing of all
mineral resources."8 R.A. No. 7942 defines the modes of mineral agreements for mining operations,9 outlines the procedure for their filing and
approval,10 assignment/transfer11 and withdrawal,12and fixes their terms.13 Similar provisions govern financial or technical assistance agreements.14

The law prescribes the qualifications of contractors15 and grants them certain rights, including timber,16 water17 and easement18 rights, and the right to
possess explosives.19 Surface owners, occupants, or concessionaires are forbidden from preventing holders of mining rights from entering private lands
and concession areas.20 A procedure for the settlement of conflicts is likewise provided for.21

The Act restricts the conditions for exploration,22 quarry23 and other24 permits. It regulates the transport, sale and processing of minerals,25 and
promotes the development of mining communities, science and mining technology,26and safety and environmental protection.27

The government's share in the agreements is spelled out and allocated,28 taxes and fees are imposed,29 incentives granted.30 Aside from penalizing
certain acts,31 the law likewise specifies grounds for the cancellation, revocation and termination of agreements and permits. 32

On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times, two newspapers of general circulation, R.A. No. 7942
took effect.33 Shortly before the effectivity of R.A. No. 7942, however, or on March 30, 1995, the President entered into an FTAA with WMCP covering
99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato.34

On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the
Implementing Rules and Regulations of R.A. No. 7942. This was later repealed by DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding that the DENR stop the implementation of R.A. No. 7942
and DAO No. 96-40,35 giving the DENR fifteen days from receipt36 to act thereon. The DENR, however, has yet to respond or act on petitioners' letter.37

Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a temporary restraining order. They allege that at the time of
the filing of the petition, 100 FTAA applications had already been filed, covering an area of 8.4 million hectares, 38 64 of which applications are by fully
foreign-owned corporations covering a total of 5.8 million hectares, and at least one by a fully foreign-owned mining company over offshore areas.39

Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows fully foreign owned corporations to explore, develop, utilize and exploit mineral resources in a manner contrary to Section 2, paragraph 4, Article
XII of the Constitution;

II

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows the taking of private property without the determination of public use and for just compensation;

III

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it
violates Sec. 1, Art. III of the Constitution;

IV

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows enjoyment by foreign citizens as well as fully foreign owned corporations of the nation's marine wealth contrary to Section 2, paragraph 2 of
Article XII of the Constitution;

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows priority to foreign and fully foreign owned corporations in the exploration, development and utilization of mineral resources contrary to Article XII
of the Constitution;
VI

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No. 7942, the latter being unconstitutional in that it
allows the inequitable sharing of wealth contrary to Sections [sic] 1, paragraph 1, and Section 2, paragraph 4[,] [Article XII] of the Constitution;

VII

x x x in recommending approval of and implementing the Financial and Technical Assistance Agreement between the President of the Republic of the
Philippines and Western Mining Corporation Philippines Inc. because the same is illegal and unconstitutional. 40

They pray that the Court issue an order:

(a) Permanently enjoining respondents from acting on any application for Financial or Technical Assistance Agreements;

(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and null and void;

(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in DENR Administrative Order No. 96-40 and all
other similar administrative issuances as unconstitutional and null and void; and

(d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining Philippines, Inc. as unconstitutional, illegal and null
and void.41

Impleaded as public respondents are Ruben Torres, the then Executive Secretary, Victor O. Ramos, the then DENR Secretary, and Horacio Ramos,
Director of the Mines and Geosciences Bureau of the DENR. Also impleaded is private respondent WMCP, which entered into the assailed FTAA with the
Philippine Government. WMCP is owned by WMC Resources International Pty., Ltd. (WMC), "a wholly owned subsidiary of Western Mining Corporation
Holdings Limited, a publicly listed major Australian mining and exploration company."42 By WMCP's information, "it is a 100% owned subsidiary of WMC
LIMITED."43

Respondents, aside from meeting petitioners' contentions, argue that the requisites for judicial inquiry have not been met and that the petition does not
comply with the criteria for prohibition and mandamus. Additionally, respondent WMCP argues that there has been a violation of the rule on hierarchy of
courts.

After petitioners filed their reply, this Court granted due course to the petition. The parties have since filed their respective memoranda.

WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that on January 23, 2001, WMC sold all its shares in WMCP to Sagittarius
Mines, Inc. (Sagittarius), a corporation organized under Philippine laws.44WMCP was subsequently renamed "Tampakan Mineral Resources
Corporation."45 WMCP claims that at least 60% of the equity of Sagittarius is owned by Filipinos and/or Filipino-owned corporations while about 40% is
owned by Indophil Resources NL, an Australian company.46 It further claims that by such sale and transfer of shares, "WMCP has ceased to be connected
in any way with WMC."47

By virtue of such sale and transfer, the DENR Secretary, by Order of December 18, 2001,48 approved the transfer and registration of the subject FTAA
from WMCP to Sagittarius. Said Order, however, was appealed by Lepanto Consolidated Mining Co. (Lepanto) to the Office of the President which upheld
it by Decision of July 23, 2002.49 Its motion for reconsideration having been denied by the Office of the President by Resolution of November 12,
2002,50 Lepanto filed a petition for review51 before the Court of Appeals. Incidentally, two other petitions for review related to the approval of the
transfer and registration of the FTAA to Sagittarius were recently resolved by this Court.52

It bears stressing that this case has not been rendered moot either by the transfer and registration of the FTAA to a Filipino-owned corporation or by the
non-issuance of a temporary restraining order or a preliminary injunction to stay the above-said July 23, 2002 decision of the Office of the
President.53 The validity of the transfer remains in dispute and awaits final judicial determination. This assumes, of course, that such transfer cures the
FTAA's alleged unconstitutionality, on which question judgment is reserved.

WMCP also points out that the original claimowners of the major mineralized areas included in the WMCP FTAA, namely, Sagittarius, Tampakan Mining
Corporation, and Southcot Mining Corporation, are all Filipino-owned corporations,54 each of which was a holder of an approved Mineral Production
Sharing Agreement awarded in 1994, albeit their respective mineral claims were subsumed in the WMCP FTAA; 55 and that these three companies are the
same companies that consolidated their interests in Sagittarius to whom WMC sold its 100% equity in WMCP. 56 WMCP concludes that in the event that
the FTAA is invalidated, the MPSAs of the three corporations would be revived and the mineral claims would revert to their original claimants.57

These circumstances, while informative, are hardly significant in the resolution of this case, it involving the validity of the FTAA, not the possible
consequences of its invalidation.

Of the above-enumerated seven grounds cited by petitioners, as will be shown later, only the first and the last need be delved into; in the latter, the
discussion shall dwell only insofar as it questions the effectivity of E. O. No. 279 by virtue of which order the questioned FTAA was forged.

Before going into the substantive issues, the procedural questions posed by respondents shall first be tackled.

REQUISITES FOR JUDICIAL REVIEW

When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if the following requisites are present:

(1) The existence of an actual and appropriate case;

(2) A personal and substantial interest of the party raising the constitutional question;
 (3) The exercise of judicial review is pleaded at the earliest opportunity; and

(4) The constitutional question is the lis mota of the case. 58

Respondents claim that the first three requisites are not present.

Section 1, Article VIII of the Constitution states that "(j)udicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable." The power of judicial review, therefore, is limited to the determination of actual cases and
controversies.59

An actual case or controversy means an existing case or controversy that is appropriate or ripe for determination, not conjectural or anticipatory, 60 lest
the decision of the court would amount to an advisory opinion.61 The power does not extend to hypothetical questions62 since any attempt at abstraction
could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities.63

"Legal standing" or locus standi has been defined as a personal and substantial interest in the case such that the party has sustained or will sustain
direct injury as a result of the governmental act that is being challenged,64alleging more than a generalized grievance.65 The gist of the question of
standing is whether a party alleges "such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court depends for illumination of difficult constitutional questions." 66 Unless a person is injuriously affected in any
of his constitutional rights by the operation of statute or ordinance, he has no standing.67

Petitioners traverse a wide range of sectors. Among them are La Bugal B'laan Tribal Association, Inc., a farmers and indigenous people's cooperative
organized under Philippine laws representing a community actually affected by the mining activities of WMCP, members of said cooperative, 68 as well as
other residents of areas also affected by the mining activities of WMCP.69 These petitioners have standing to raise the constitutionality of the questioned
FTAA as they allege a personal and substantial injury. They claim that they would suffer "irremediable displacement" 70 as a result of the implementation
of the FTAA allowing WMCP to conduct mining activities in their area of residence. They thus meet the appropriate case requirement as they assert an
interest adverse to that of respondents who, on the other hand, insist on the FTAA's validity.

In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O. No. 279, by authority of which the FTAA was
executed.

Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both contracting parties to annul it.71 In other words,
they contend that petitioners are not real parties in interest in an action for the annulment of contract.

Public respondents' contention fails. The present action is not merely one for annulment of contract but for prohibition and mandamus. Petitioners allege
that public respondents acted without or in excess of jurisdiction in implementing the FTAA, which they submit is unconstitutional. As the case involves
constitutional questions, this Court is not concerned with whether petitioners are real parties in interest, but with whether they have legal standing. As
held in Kilosbayan v. Morato:72
x x x. "It is important to note . . . that standing because of its constitutional and public policy underpinnings, is very different from questions relating to
whether a particular plaintiff is the real party in interest or has capacity to sue. Although all three requirements are directed towards ensuring that only
certain parties can maintain an action, standing restrictions require a partial consideration of the merits, as well as broader policy concerns relating to
the proper role of the judiciary in certain areas.["] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985])

Standing is a special concern in constitutional law because in some cases suits are brought not by parties who have been personally injured by the
operation of a law or by official action taken, but by concerned citizens, taxpayers or voters who actually sue in the public interest. Hence, the question
in standing is whether such parties have "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." (Baker v. Carr, 369
U.S. 186, 7 L.Ed.2d 633 [1962].)

As earlier stated, petitioners meet this requirement.

The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills the requisites of justiciability. Although these laws were
not in force when the subject FTAA was entered into, the question as to their validity is ripe for adjudication.

The WMCP FTAA provides:

14.3 Future Legislation

Any term and condition more favourable to Financial &Technical Assistance Agreement contractors resulting from repeal or amendment of any existing
law or regulation or from the enactment of a law, regulation or administrative order shall be considered a part of this Agreement.

It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are more favorable to WMCP, hence, these laws, to the extent that they
are favorable to WMCP, govern the FTAA.

In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing agreements.

SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. – x x x That the provisions of Chapter XIV on government share in mineral production-
sharing agreement and of Chapter XVI on incentives of this Act shall immediately govern and apply to a mining lessee or contractor unless the mining
lessee or contractor indicates his intention to the secretary, in writing, not to avail of said provisions x x x Provided, finally, That such leases, production-
sharing agreements, financial or technical assistance agreements shall comply with the applicable provisions of this Act and its implementing rules and
regulations.

As there is no suggestion that WMCP has indicated its intention not to avail of the provisions of Chapter XVI of R.A. No. 7942, it can safely be presumed
that they apply to the WMCP FTAA.
Misconstruing the application of the third requisite for judicial review – that the exercise of the review is pleaded at the earliest opportunity – WMCP
points out that the petition was filed only almost two years after the execution of the FTAA, hence, not raised at the earliest opportunity.

The third requisite should not be taken to mean that the question of constitutionality must be raised immediately after the execution of the state action
complained of. That the question of constitutionality has not been raised before is not a valid reason for refusing to allow it to be raised later.73 A
contrary rule would mean that a law, otherwise unconstitutional, would lapse into constitutionality by the mere failure of the proper party to promptly file
a case to challenge the same.

PROPRIETY OF PROHIBITION AND MANDAMUS

Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2 of Rule 65 read:

SEC. 2. Petition for prohibition. – When the proceedings of any tribunal, corporation, board, or person, whether exercising functions judicial or
ministerial, are without or in excess of its or his jurisdiction, or with grave abuse of discretion, and there is no appeal or any other plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court alleging the facts with
certainty and praying that judgment be rendered commanding the defendant to desist from further proceeding in the action or matter specified therein.

Prohibition is a preventive remedy.74 It seeks a judgment ordering the defendant to desist from continuing with the commission of an act perceived to be
illegal.75

The petition for prohibition at bar is thus an appropriate remedy. While the execution of the contract itself may be fait accompli, its implementation is
not. Public respondents, in behalf of the Government, have obligations to fulfill under said contract. Petitioners seek to prevent them from fulfilling such
obligations on the theory that the contract is unconstitutional and, therefore, void.

The propriety of a petition for prohibition being upheld, discussion of the propriety of the mandamus aspect of the petition is rendered unnecessary.

HIERARCHY OF COURTS

The contention that the filing of this petition violated the rule on hierarchy of courts does not likewise lie. The rule has been explained thus:

Between two courts of concurrent original jurisdiction, it is the lower court that should initially pass upon the issues of a case. That way, as a particular
case goes through the hierarchy of courts, it is shorn of all but the important legal issues or those of first impression, which are the proper subject of
attention of the appellate court. This is a procedural rule borne of experience and adopted to improve the administration of justice.

This Court has consistently enjoined litigants to respect the hierarchy of courts. Although this Court has concurrent jurisdiction with the Regional Trial
Courts and the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does
not give a party unrestricted freedom of choice of court forum. The resort to this Court's primary jurisdiction to issue said writs shall be allowed only
where the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify such invocation. We
held in People v. Cuaresma that:

A becoming regard for judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts
should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's original
jurisdiction to issue these writs should be allowed only where there are special and important reasons therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy necessary to prevent inordinate demands upon the Court's time and attention which are better devoted
to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's docket x x x.76 [Emphasis supplied.]

The repercussions of the issues in this case on the Philippine mining industry, if not the national economy, as well as the novelty thereof, constitute
exceptional and compelling circumstances to justify resort to this Court in the first instance.

In all events, this Court has the discretion to take cognizance of a suit which does not satisfy the requirements of an actual case or legal standing when
paramount public interest is involved.77 When the issues raised are of paramount importance to the public, this Court may brush aside technicalities of
procedure.78

II

Petitioners contend that E.O. No. 279 did not take effect because its supposed date of effectivity came after President Aquino had already lost her
legislative powers under the Provisional Constitution.

And they likewise claim that the WMC FTAA, which was entered into pursuant to E.O. No. 279, violates Section 2, Article XII of the Constitution because,
among other reasons:

(1) It allows foreign-owned companies to extend more than mere financial or technical assistance to the State in the exploitation, development,
and utilization of minerals, petroleum, and other mineral oils, and even permits foreign owned companies to "operate and manage mining
activities."

(2) It allows foreign-owned companies to extend both technical and financial assistance, instead of "either technical or financial assistance."

To appreciate the import of these issues, a visit to the history of the pertinent constitutional provision, the concepts contained therein, and the laws
enacted pursuant thereto, is in order.

Section 2, Article XII reads in full:

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The
State may directly undertake such activities or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water
rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit
of the grant.

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and
enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fish-workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

THE SPANISH REGIME AND THE REGALIAN DOCTRINE

The first sentence of Section 2 embodies the Regalian doctrine or jura regalia. Introduced by Spain into these Islands, this feudal concept is based on the
State's power of dominium, which is the capacity of the State to own or acquire property.79

In its broad sense, the term "jura regalia" refers to royal rights, or those rights which the King has by virtue of his prerogatives. In Spanish law, it refers
to a right which the sovereign has over anything in which a subject has a right of property or propriedad. These were rights enjoyed during feudal times
by the king as the sovereign.

The theory of the feudal system was that title to all lands was originally held by the King, and while the use of lands was granted out to others who were
permitted to hold them under certain conditions, the King theoretically retained the title. By fiction of law, the King was regarded as the original
proprietor of all lands, and the true and only source of title, and from him all lands were held. The theory of jura regalia was therefore nothing more than
a natural fruit of conquest.80

The Philippines having passed to Spain by virtue of discovery and conquest,81 earlier Spanish decrees declared that "all lands were held from the
Crown."82
The Regalian doctrine extends not only to land but also to "all natural wealth that may be found in the bowels of the earth." 83 Spain, in particular,
recognized the unique value of natural resources, viewing them, especially minerals, as an abundant source of revenue to finance its wars against other
nations.84 Mining laws during the Spanish regime reflected this perspective.85

THE AMERICAN OCCUPATION AND THE CONCESSION REGIME

By the Treaty of Paris of December 10, 1898, Spain ceded "the archipelago known as the Philippine Islands" to the United States. The Philippines was
hence governed by means of organic acts that were in the nature of charters serving as a Constitution of the occupied territory from 1900 to
1935.86 Among the principal organic acts of the Philippines was the Act of Congress of July 1, 1902, more commonly known as the Philippine Bill of 1902,
through which the United States Congress assumed the administration of the Philippine Islands. 87 Section 20 of said Bill reserved the disposition of
mineral lands of the public domain from sale. Section 21 thereof allowed the free and open exploration, occupation and purchase of mineral deposits not
only to citizens of the Philippine Islands but to those of the United States as well:

Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and unsurveyed, are hereby declared to be free and
open to exploration, occupation and purchase, and the land in which they are found, to occupation and purchase, by citizens of the United States or of
said Islands: Provided, That when on any lands in said Islands entered and occupied as agricultural lands under the provisions of this Act, but not
patented, mineral deposits have been found, the working of such mineral deposits is forbidden until the person, association, or corporation who or which
has entered and is occupying such lands shall have paid to the Government of said Islands such additional sum or sums as will make the total amount
paid for the mineral claim or claims in which said deposits are located equal to the amount charged by the Government for the same as mineral claims.

Unlike Spain, the United States considered natural resources as a source of wealth for its nationals and saw fit to allow both Filipino and American
citizens to explore and exploit minerals in public lands, and to grant patents to private mineral lands. 88 A person who acquired ownership over a parcel of
private mineral land pursuant to the laws then prevailing could exclude other persons, even the State, from exploiting minerals within his
property.89 Thus, earlier jurisprudence90 held that:

A valid and subsisting location of mineral land, made and kept up in accordance with the provisions of the statutes of the United States, has the effect of
a grant by the United States of the present and exclusive possession of the lands located, and this exclusive right of possession and enjoyment continues
during the entire life of the location. x x x.

x x x.

The discovery of minerals in the ground by one who has a valid mineral location perfects his claim and his location not only against third persons, but
also against the Government. x x x. [Italics in the original.]
The Regalian doctrine and the American system, therefore, differ in one essential respect. Under the Regalian theory, mineral rights are not included in a
grant of land by the state; under the American doctrine, mineral rights are included in a grant of land by the government. 91

Section 21 also made possible the concession (frequently styled "permit", license" or "lease")92 system.93 This was the traditional regime imposed by the
colonial administrators for the exploitation of natural resources in the extractive sector (petroleum, hard minerals, timber, etc.).94

Under the concession system, the concessionaire makes a direct equity investment for the purpose of exploiting a particular natural resource within a
given area.95 Thus, the concession amounts to complete control by the concessionaire over the country's natural resource, for it is given exclusive and
plenary rights to exploit a particular resource at the point of extraction.96 In consideration for the right to exploit a natural resource, the concessionaire
either pays rent or royalty, which is a fixed percentage of the gross proceeds.97

Later statutory enactments by the legislative bodies set up in the Philippines adopted the contractual framework of the concession.98 For instance, Act
No. 2932,99 approved on August 31, 1920, which provided for the exploration, location, and lease of lands containing petroleum and other mineral oils
and gas in the Philippines, and Act No. 2719,100 approved on May 14, 1917, which provided for the leasing and development of coal lands in the
Philippines, both utilized the concession system.101

THE 1935 CONSTITUTION AND THE NATIONALIZATION OF NATURAL RESOURCES

By the Act of United States Congress of March 24, 1934, popularly known as the Tydings-McDuffie Law, the People of the Philippine Islands were
authorized to adopt a constitution.102 On July 30, 1934, the Constitutional Convention met for the purpose of drafting a constitution, and the Constitution
subsequently drafted was approved by the Convention on February 8, 1935.103 The Constitution was submitted to the President of the United States on
March 18, 1935.104 On March 23, 1935, the President of the United States certified that the Constitution conformed substantially with the provisions of
the Act of Congress approved on March 24, 1934.105 On May 14, 1935, the Constitution was ratified by the Filipino people.106

The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources of the Philippines, including mineral lands and minerals, to be
property belonging to the State.107 As adopted in a republican system, the medieval concept of jura regalia is stripped of royal overtones and ownership
of the land is vested in the State.108

Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the 1935 Constitution provided:

SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces
of potential energy, and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or
utilization shall be limited to citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital of which is
owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Government established
under this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or
lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years,
except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases
beneficial use may be the measure and the limit of the grant.
The nationalization and conservation of the natural resources of the country was one of the fixed and dominating objectives of the 1935 Constitutional
Convention.109 One delegate relates:

There was an overwhelming sentiment in the Convention in favor of the principle of state ownership of natural resources and the adoption of the
Regalian doctrine. State ownership of natural resources was seen as a necessary starting point to secure recognition of the state's power to control their
disposition, exploitation, development, or utilization. The delegates of the Constitutional Convention very well knew that the concept of State ownership
of land and natural resources was introduced by the Spaniards, however, they were not certain whether it was continued and applied by the Americans.
To remove all doubts, the Convention approved the provision in the Constitution affirming the Regalian doctrine.

The adoption of the principle of state ownership of the natural resources and of the Regalian doctrine was considered to be a necessary starting point for
the plan of nationalizing and conserving the natural resources of the country. For with the establishment of the principle of state ownership of the natural
resources, it would not be hard to secure the recognition of the power of the State to control their disposition, exploitation, development or utilization.110

The nationalization of the natural resources was intended (1) to insure their conservation for Filipino posterity; (2) to serve as an instrument of national
defense, helping prevent the extension to the country of foreign control through peaceful economic penetration; and (3) to avoid making the Philippines
a source of international conflicts with the consequent danger to its internal security and independence.111

The same Section 1, Article XIII also adopted the concession system, expressly permitting the State to grant licenses, concessions, or leases for the
exploitation, development, or utilization of any of the natural resources. Grants, however, were limited to Filipinos or entities at least 60% of the capital
of which is owned by Filipinos.lawph!l.ne+

The swell of nationalism that suffused the 1935 Constitution was radically diluted when on November 1946, the Parity Amendment, which came in the
form of an "Ordinance Appended to the Constitution," was ratified in a plebiscite.112 The Amendment extended, from July 4, 1946 to July 3, 1974, the
right to utilize and exploit our natural resources to citizens of the United States and business enterprises owned or controlled, directly or indirectly, by
citizens of the United States:113

Notwithstanding the provision of section one, Article Thirteen, and section eight, Article Fourteen, of the foregoing Constitution, during the effectivity of
the Executive Agreement entered into by the President of the Philippines with the President of the United States on the fourth of July, nineteen hundred
and forty-six, pursuant to the provisions of Commonwealth Act Numbered Seven hundred and thirty-three, but in no case to extend beyond the third of
July, nineteen hundred and seventy-four, the disposition, exploitation, development, and utilization of all agricultural, timber, and mineral lands of the
public domain, waters, minerals, coals, petroleum, and other mineral oils, all forces and sources of potential energy, and other natural resources of the
Philippines, and the operation of public utilities, shall, if open to any person, be open to citizens of the United States and to all forms of business
enterprise owned or controlled, directly or indirectly, by citizens of the United States in the same manner as to, and under the same conditions imposed
upon, citizens of the Philippines or corporations or associations owned or controlled by citizens of the Philippines.

The Parity Amendment was subsequently modified by the 1954 Revised Trade Agreement, also known as the Laurel-Langley Agreement, embodied in
Republic Act No. 1355.114

THE PETROLEUM ACT OF 1949 AND THE CONCESSION SYSTEM

In the meantime, Republic Act No. 387,115 also known as the Petroleum Act of 1949, was approved on June 18, 1949.

The Petroleum Act of 1949 employed the concession system for the exploitation of the nation's petroleum resources. Among the kinds of concessions it
sanctioned were exploration and exploitation concessions, which respectively granted to the concessionaire the exclusive right to explore for116 or
develop117 petroleum within specified areas.

Concessions may be granted only to duly qualified persons118 who have sufficient finances, organization, resources, technical competence, and skills
necessary to conduct the operations to be undertaken.119

Nevertheless, the Government reserved the right to undertake such work itself.120 This proceeded from the theory that all natural deposits or
occurrences of petroleum or natural gas in public and/or private lands in the Philippines belong to the State. 121 Exploration and exploitation concessions
did not confer upon the concessionaire ownership over the petroleum lands and petroleum deposits.122 However, they did grant concessionaires the right
to explore, develop, exploit, and utilize them for the period and under the conditions determined by the law. 123

Concessions were granted at the complete risk of the concessionaire; the Government did not guarantee the existence of petroleum or undertake, in any
case, title warranty.124

Concessionaires were required to submit information as maybe required by the Secretary of Agriculture and Natural Resources, including reports of
geological and geophysical examinations, as well as production reports.125Exploration126 and exploitation127 concessionaires were also required to submit
work programs.lavvphi1.net

Exploitation concessionaires, in particular, were obliged to pay an annual exploitation tax,128 the object of which is to induce the concessionaire to
actually produce petroleum, and not simply to sit on the concession without developing or exploiting it. 129 These concessionaires were also bound to pay
the Government royalty, which was not less than 12½% of the petroleum produced and saved, less that consumed in the operations of the
concessionaire.130 Under Article 66, R.A. No. 387, the exploitation tax may be credited against the royalties so that if the concessionaire shall be actually
producing enough oil, it would not actually be paying the exploitation tax.131

Failure to pay the annual exploitation tax for two consecutive years,132 or the royalty due to the Government within one year from the date it becomes
due,133 constituted grounds for the cancellation of the concession. In case of delay in the payment of the taxes or royalty imposed by the law or by the
concession, a surcharge of 1% per month is exacted until the same are paid.134

As a rule, title rights to all equipment and structures that the concessionaire placed on the land belong to the exploration or exploitation
concessionaire.135 Upon termination of such concession, the concessionaire had a right to remove the same.136

The Secretary of Agriculture and Natural Resources was tasked with carrying out the provisions of the law, through the Director of Mines, who acted
under the Secretary's immediate supervision and control.137 The Act granted the Secretary the authority to inspect any operation of the concessionaire
and to examine all the books and accounts pertaining to operations or conditions related to payment of taxes and royalties. 138
The same law authorized the Secretary to create an Administration Unit and a Technical Board.139 The Administration Unit was charged, inter alia, with
the enforcement of the provisions of the law.140 The Technical Board had, among other functions, the duty to check on the performance of
concessionaires and to determine whether the obligations imposed by the Act and its implementing regulations were being complied with.141

Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy Development, analyzed the benefits and drawbacks of the concession system
insofar as it applied to the petroleum industry:

Advantages of Concession. Whether it emphasizes income tax or royalty, the most positive aspect of the concession system is that the State's financial
involvement is virtually risk free and administration is simple and comparatively low in cost. Furthermore, if there is a competitive allocation of the
resource leading to substantial bonuses and/or greater royalty coupled with a relatively high level of taxation, revenue accruing to the State under the
concession system may compare favorably with other financial arrangements.

Disadvantages of Concession. There are, however, major negative aspects to this system. Because the Government's role in the traditional concession is
passive, it is at a distinct disadvantage in managing and developing policy for the nation's petroleum resource. This is true for several reasons. First,
even though most concession agreements contain covenants requiring diligence in operations and production, this establishes only an indirect and
passive control of the host country in resource development. Second, and more importantly, the fact that the host country does not directly participate
in resource management decisions inhibits its ability to train and employ its nationals in petroleum development. This factor could delay or prevent the
country from effectively engaging in the development of its resources. Lastly, a direct role in management is usually necessary in order to obtain a
knowledge of the international petroleum industry which is important to an appreciation of the host country's resources in relation to those of other
countries.142

Other liabilities of the system have also been noted:

x x x there are functional implications which give the concessionaire great economic power arising from its exclusive equity holding. This includes, first,
appropriation of the returns of the undertaking, subject to a modest royalty; second, exclusive management of the project; third, control of production
of the natural resource, such as volume of production, expansion, research and development; and fourth, exclusive responsibility for downstream
operations, like processing, marketing, and distribution. In short, even if nominally, the state is the sovereign and owner of the natural resource being
exploited, it has been shorn of all elements of control over such natural resource because of the exclusive nature of the contractual regime of the
concession. The concession system, investing as it does ownership of natural resources, constitutes a consistent inconsistency with the principle
embodied in our Constitution that natural resources belong to the state and shall not be alienated, not to mention the fact that the concession was the
bedrock of the colonial system in the exploitation of natural resources.143

Eventually, the concession system failed for reasons explained by Dimagiba:

Notwithstanding the good intentions of the Petroleum Act of 1949, the concession system could not have properly spurred sustained oil exploration
activities in the country, since it assumed that such a capital-intensive, high risk venture could be successfully undertaken by a single individual or a
small company. In effect, concessionaires' funds were easily exhausted. Moreover, since the concession system practically closed its doors to interested
foreign investors, local capital was stretched to the limits. The old system also failed to consider the highly sophisticated technology and expertise
required, which would be available only to multinational companies.144
A shift to a new regime for the development of natural resources thus seemed imminent.

PRESIDENTIAL DECREE NO. 87, THE 1973 CONSTITUTION AND THE SERVICE CONTRACT SYSTEM

The promulgation on December 31, 1972 of Presidential Decree No. 87, 145 otherwise known as The Oil Exploration and Development Act of 1972 signaled
such a transformation. P.D. No. 87 permitted the government to explore for and produce indigenous petroleum through "service contracts."146

"Service contracts" is a term that assumes varying meanings to different people, and it has carried many names in different countries, like "work
contracts" in Indonesia, "concession agreements" in Africa, "production-sharing agreements" in the Middle East, and "participation agreements" in Latin
America.147 A functional definition of "service contracts" in the Philippines is provided as follows:

A service contract is a contractual arrangement for engaging in the exploitation and development of petroleum, mineral, energy, land and other natural
resources by which a government or its agency, or a private person granted a right or privilege by the government authorizes the other party (service
contractor) to engage or participate in the exercise of such right or the enjoyment of the privilege, in that the latter provides financial or technical
resources, undertakes the exploitation or production of a given resource, or directly manages the productive enterprise, operations of the exploration
and exploitation of the resources or the disposition of marketing or resources.148

In a service contract under P.D. No. 87, service and technology are furnished by the service contractor for which it shall be entitled to the stipulated
service fee.149 The contractor must be technically competent and financially capable to undertake the operations required in the contract. 150

Financing is supposed to be provided by the Government to which all petroleum produced belongs.151 In case the Government is unable to finance
petroleum exploration operations, the contractor may furnish services, technology and financing, and the proceeds of sale of the petroleum produced
under the contract shall be the source of funds for payment of the service fee and the operating expenses due the contractor. 152 The contractor shall
undertake, manage and execute petroleum operations, subject to the government overseeing the management of the operations.153 The contractor
provides all necessary services and technology and the requisite financing, performs the exploration work obligations, and assumes all exploration risks
such that if no petroleum is produced, it will not be entitled to reimbursement.154 Once petroleum in commercial quantity is discovered, the contractor
shall operate the field on behalf of the government.155

P.D. No. 87 prescribed minimum terms and conditions for every service contract.156 It also granted the contractor certain privileges, including exemption
from taxes and payment of tariff duties,157 and permitted the repatriation of capital and retention of profits abroad.158

Ostensibly, the service contract system had certain advantages over the concession regime.159 It has been opined, though, that, in the Philippines, our
concept of a service contract, at least in the petroleum industry, was basically a concession regime with a production-sharing element.160

On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification of a new Constitution.161Article XIV on the National Economy and
Patrimony contained provisions similar to the 1935 Constitution with regard to Filipino participation in the nation's natural resources. Section 8, Article
XIV thereof provides:
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and
other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential and resettlement
lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation,
or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-five years,
except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial
use may be the measure and the limit of the grant.

While Section 9 of the same Article maintained the Filipino-only policy in the enjoyment of natural resources, it also allowed Filipinos, upon authority of
the Batasang Pambansa, to enter into service contracts with any person or entity for the exploration or utilization of natural resources.

Sec. 9. The disposition, exploration, development, exploitation, or utilization of any of the natural resources of the Philippines shall be limited to citizens,
or to corporations or associations at least sixty per centum of which is owned by such citizens. The Batasang Pambansa, in the national interest, may
allow such citizens, corporations or associations to enter into service contracts for financial, technical, management, or other forms of assistance with
any person or entity for the exploration, or utilization of any of the natural resources. Existing valid and binding service contracts for financial, technical,
management, or other forms of assistance are hereby recognized as such. [Emphasis supplied.]

The concept of service contracts, according to one delegate, was borrowed from the methods followed by India, Pakistan and especially Indonesia in the
exploration of petroleum and mineral oils.162 The provision allowing such contracts, according to another, was intended to "enhance the proper
development of our natural resources since Filipino citizens lack the needed capital and technical know-how which are essential in the proper exploration,
development and exploitation of the natural resources of the country."163

The original idea was to authorize the government, not private entities, to enter into service contracts with foreign entities.164 As finally approved,
however, a citizen or private entity could be allowed by the National Assembly to enter into such service contract. 165 The prior approval of the National
Assembly was deemed sufficient to protect the national interest.166 Notably, none of the laws allowing service contracts were passed by the Batasang
Pambansa. Indeed, all of them were enacted by presidential decree.

On March 13, 1973, shortly after the ratification of the new Constitution, the President promulgated Presidential Decree No. 151.167 The law allowed
Filipino citizens or entities which have acquired lands of the public domain or which own, hold or control such lands to enter into service contracts for
financial, technical, management or other forms of assistance with any foreign persons or entity for the exploration, development, exploitation or
utilization of said lands.168

Presidential Decree No. 463,169 also known as The Mineral Resources Development Decree of 1974, was enacted on May 17, 1974. Section 44 of the
decree, as amended, provided that a lessee of a mining claim may enter into a service contract with a qualified domestic or foreign contractor for the
exploration, development and exploitation of his claims and the processing and marketing of the product thereof.

Presidential Decree No. 704170 (The Fisheries Decree of 1975), approved on May 16, 1975, allowed Filipinos engaged in commercial fishing to enter into
contracts for financial, technical or other forms of assistance with any foreign person, corporation or entity for the production, storage, marketing and
processing of fish and fishery/aquatic products.171
Presidential Decree No. 705172 (The Revised Forestry Code of the Philippines), approved on May 19, 1975, allowed "forest products licensees, lessees, or
permitees to enter into service contracts for financial, technical, management, or other forms of assistance . . . with any foreign person or entity for the
exploration, development, exploitation or utilization of the forest resources."173

Yet another law allowing service contracts, this time for geothermal resources, was Presidential Decree No. 1442,174 which was signed into law on June
11, 1978. Section 1 thereof authorized the Government to enter into service contracts for the exploration, exploitation and development of geothermal
resources with a foreign contractor who must be technically and financially capable of undertaking the operations required in the service contract.

Thus, virtually the entire range of the country's natural resources –from petroleum and minerals to geothermal energy, from public lands and forest
resources to fishery products – was well covered by apparent legal authority to engage in the direct participation or involvement of foreign persons or
corporations (otherwise disqualified) in the exploration and utilization of natural resources through service contracts.175

THE 1987 CONSTITUTION AND TECHNICAL OR FINANCIAL ASSISTANCE AGREEMENTS

After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power under a revolutionary government. On March 25, 1986, President
Aquino issued Proclamation No. 3,176 promulgating the Provisional Constitution, more popularly referred to as the Freedom Constitution. By authority of
the same Proclamation, the President created a Constitutional Commission (CONCOM) to draft a new constitution, which took effect on the date of its
ratification on February 2, 1987.177

The 1987 Constitution retained the Regalian doctrine. The first sentence of Section 2, Article XII states: "All lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources
are owned by the State."

Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second sentence of the same provision, prohibits the alienation of natural
resources, except agricultural lands.

The third sentence of the same paragraph is new: "The exploration, development and utilization of natural resources shall be under the full control and
supervision of the State." The constitutional policy of the State's "full control and supervision" over natural resources proceeds from the concept of jura
regalia, as well as the recognition of the importance of the country's natural resources, not only for national economic development, but also for its
security and national defense.178 Under this provision, the State assumes "a more dynamic role" in the exploration, development and utilization of
natural resources.179

Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions authorizing the State to grant licenses, concessions, or leases for
the exploration, exploitation, development, or utilization of natural resources. By such omission, the utilization of inalienable lands of public domain
through "license, concession or lease" is no longer allowed under the 1987 Constitution. 180

Having omitted the provision on the concession system, Section 2 proceeded to introduce "unfamiliar language": 181
The State may directly undertake such activities or it may enter into co-production, joint venture, or production-sharing agreements with Filipino
citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens.

Consonant with the State's "full supervision and control" over natural resources, Section 2 offers the State two "options." 182 One, the State may directly
undertake these activities itself; or two, it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or entities
at least 60% of whose capital is owned by such citizens.

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

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fish-workers in rivers, lakes, bays, and lagoons.

While the second and third options are limited only to Filipino citizens or, in the case of the former, to corporations or associations at least 60% of the
capital of which is owned by Filipinos, a fourth allows the participation of foreign-owned corporations. The fourth and fifth paragraphs of Section 2
provide:

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

Although Section 2 sanctions the participation of foreign-owned corporations in the exploration, development, and utilization of natural resources, it
imposes certain limitations or conditions to agreements with such corporations.

First, the parties to FTAAs. Only the President, in behalf of the State, may enter into these agreements, and only with corporations. By contrast,
under the 1973 Constitution, a Filipino citizen, corporation or association may enter into a service contract with a "foreign person or entity."

Second, the size of the activities: only large-scale exploration, development, and utilization is allowed. The term "large-scale usually refers to
very capital-intensive activities."183

Third, the natural resources subject of the activities is restricted to minerals, petroleum and other mineral oils, the intent being to limit service
contracts to those areas where Filipino capital may not be sufficient.184

Fourth, consistency with the provisions of statute. The agreements must be in accordance with the terms and conditions provided by law.
 Fifth, Section 2 prescribes certain standards for entering into such agreements. The agreements must be based on real contributions to economic
growth and general welfare of the country.

Sixth, the agreements must contain rudimentary stipulations for the promotion of the development and use of local scientific and technical
resources.

Seventh, the notification requirement. The President shall notify Congress of every financial or technical assistance agreement entered into
within thirty days from its execution.

Finally, the scope of the agreements. While the 1973 Constitution referred to "service contracts for financial, technical, management, or other
forms of assistance" the 1987 Constitution provides for "agreements. . . involving either financial or technical assistance." It bears noting that
the phrases "service contracts" and "management or other forms of assistance" in the earlier constitution have been omitted.

By virtue of her legislative powers under the Provisional Constitution,185 President Aquino, on July 10, 1987, signed into law E.O. No. 211 prescribing the
interim procedures in the processing and approval of applications for the exploration, development and utilization of minerals. The omission in the 1987
Constitution of the term "service contracts" notwithstanding, the said E.O. still referred to them in Section 2 thereof:

Sec. 2. Applications for the exploration, development and utilization of mineral resources, including renewal applications and applications for approval of
operating agreements and mining service contracts, shall be accepted and processed and may be approved x x x. [Emphasis supplied.]

The same law provided in its Section 3 that the "processing, evaluation and approval of all mining applications . . . operating agreements and service
contracts . . . shall be governed by Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules and regulations. .
. ."

As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279 by authority of which the subject WMCP FTAA was executed on March
30, 1995.

On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15 thereof declares that the Act "shall govern the exploration, development,
utilization, and processing of all mineral resources." Such declaration notwithstanding, R.A. No. 7942 does not actually cover all the modes through
which the State may undertake the exploration, development, and utilization of natural resources.

The State, being the owner of the natural resources, is accorded the primary power and responsibility in the exploration, development and utilization
thereof. As such, it may undertake these activities through four modes:

The State may directly undertake such activities.

(2) The State may enter into co-production, joint venture or production-sharing agreements with Filipino citizens or qualified corporations.
 (3) Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens.

(4) For the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils, the President may enter into
agreements with foreign-owned corporations involving technical or financial assistance.186

Except to charge the Mines and Geosciences Bureau of the DENR with performing researches and surveys,187 and a passing mention of government-
owned or controlled corporations,188 R.A. No. 7942 does not specify how the State should go about the first mode. The third mode, on the other hand, is
governed by Republic Act No. 7076189(the People's Small-Scale Mining Act of 1991) and other pertinent laws.190 R.A. No. 7942 primarily concerns itself
with the second and fourth modes.

Mineral production sharing, co-production and joint venture agreements are collectively classified by R.A. No. 7942 as "mineral agreements." 191 The
Government participates the least in a mineral production sharing agreement (MPSA). In an MPSA, the Government grants the contractor192 the
exclusive right to conduct mining operations within a contract area193 and shares in the gross output.194 The MPSA contractor provides the financing,
technology, management and personnel necessary for the agreement's implementation.195 The total government share in an MPSA is the excise tax on
mineral products under Republic Act No. 7729,196 amending Section 151(a) of the National Internal Revenue Code, as amended.197

In a co-production agreement (CA),198 the Government provides inputs to the mining operations other than the mineral resource,199 while in a joint
venture agreement (JVA), where the Government enjoys the greatest participation, the Government and the JVA contractor organize a company with
both parties having equity shares.200 Aside from earnings in equity, the Government in a JVA is also entitled to a share in the gross output. 201The
Government may enter into a CA202 or JVA203 with one or more contractors. The Government's share in a CA or JVA is set out in Section 81 of the law:

The share of the Government in co-production and joint venture agreements shall be negotiated by the Government and the contractor taking into
consideration the: (a) capital investment of the project, (b) the risks involved, (c) contribution of the project to the economy, and (d) other factors that
will provide for a fair and equitable sharing between the Government and the contractor. The Government shall also be entitled to compensations for its
other contributions which shall be agreed upon by the parties, and shall consist, among other things, the contractor's income tax, excise tax, special
allowance, withholding tax due from the contractor's foreign stockholders arising from dividend or interest payments to the said foreign stockholders, in
case of a foreign national and all such other taxes, duties and fees as provided for under existing laws.

All mineral agreements grant the respective contractors the exclusive right to conduct mining operations and to extract all mineral resources found in the
contract area.204 A "qualified person" may enter into any of the mineral agreements with the Government. 205 A "qualified person" is

any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or cooperative organized or authorized for the purpose
of engaging in mining, with technical and financial capability to undertake mineral resources development and duly registered in accordance with law at
least sixty per centum (60%) of the capital of which is owned by citizens of the Philippines x x x.206

The fourth mode involves "financial or technical assistance agreements." An FTAA is defined as "a contract involving financial or technical assistance for
large-scale exploration, development, and utilization of natural resources."207 Any qualified person with technical and financial capability to undertake
large-scale exploration, development, and utilization of natural resources in the Philippines may enter into such agreement directly with the Government
through the DENR.208 For the purpose of granting an FTAA, a legally organized foreign-owned corporation (any corporation, partnership, association, or
cooperative duly registered in accordance with law in which less than 50% of the capital is owned by Filipino citizens)209 is deemed a "qualified
person."210

Other than the difference in contractors' qualifications, the principal distinction between mineral agreements and FTAAs is the maximum contract area to
which a qualified person may hold or be granted.211 "Large-scale" under R.A. No. 7942 is determined by the size of the contract area, as opposed to the
amount invested (US $50,000,000.00), which was the standard under E.O. 279.

Like a CA or a JVA, an FTAA is subject to negotiation.212 The Government's contributions, in the form of taxes, in an FTAA is identical to its contributions
in the two mineral agreements, save that in an FTAA:

The collection of Government share in financial or technical assistance agreement shall commence after the financial or technical assistance agreement
contractor has fully recovered its pre-operating expenses, exploration, and development expenditures, inclusive.213

III

Having examined the history of the constitutional provision and statutes enacted pursuant thereto, a consideration of the substantive issues presented
by the petition is now in order.

THE EFFECTIVITY OF EXECUTIVE ORDER NO. 279

Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was executed, did not come into effect.

E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two days before the opening of Congress on July 27, 1987. 214 Section 8 of
the E.O. states that the same "shall take effect immediately." This provision, according to petitioners, runs counter to Section 1 of E.O. No. 200,215 which
provides:

SECTION 1. Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of
general circulation in the Philippines, unless it is otherwise provided.216 [Emphasis supplied.]

On that premise, petitioners contend that E.O. No. 279 could have only taken effect fifteen days after its publication at which time Congress had already
convened and the President's power to legislate had ceased.

Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled in Miners Association of the Philippines v. Factoran, supra. This is
of course incorrect for the issue in Miners Association was not the validity of E.O. No. 279 but that of DAO Nos. 57 and 82 which were issued pursuant
thereto.
Nevertheless, petitioners' contentions have no merit.

It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking effect on a date other than – even before – the 15-day period after
its publication. Where a law provides for its own date of effectivity, such date prevails over that prescribed by E.O. No. 200. Indeed, this is the very
essence of the phrase "unless it is otherwise provided" in Section 1 thereof. Section 1, E.O. No. 200, therefore, applies only when a statute does not
provide for its own date of effectivity.

What is mandatory under E.O. No. 200, and what due process requires, as this Court held in Tañada v. Tuvera,217is the publication of the law for without
such notice and publication, there would be no basis for the application of the maxim "ignorantia legis n[eminem] excusat." It would be the height of
injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one.

While the effectivity clause of E.O. No. 279 does not require its publication, it is not a ground for its invalidation since the Constitution, being "the
fundamental, paramount and supreme law of the nation," is deemed written in the law.218 Hence, the due process clause,219 which, so Tañada held,
mandates the publication of statutes, is read into Section 8 of E.O. No. 279. Additionally, Section 1 of E.O. No. 200 which provides for publication "either
in the Official Gazette or in a newspaper of general circulation in the Philippines," finds suppletory application. It is significant to note that E.O. No. 279
was actually published in the Official Gazette220 on August 3, 1987.

From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and Tañada v. Tuvera, this Court holds that E.O. No. 279 became effective
immediately upon its publication in the Official Gazette on August 3, 1987.

That such effectivity took place after the convening of the first Congress is irrelevant. At the time President Aquino issued E.O. No. 279 on July 25, 1987,
she was still validly exercising legislative powers under the Provisional Constitution. 221 Article XVIII (Transitory Provisions) of the 1987 Constitution
explicitly states:

Sec. 6. The incumbent President shall continue to exercise legislative powers until the first Congress is convened.

The convening of the first Congress merely precluded the exercise of legislative powers by President Aquino; it did not prevent the effectivity of laws she
had previously enacted.

There can be no question, therefore, that E.O. No. 279 is an effective, and a validly enacted, statute.

THE CONSTITUTIONALITY OF THE WMCP FTAA

Petitioners submit that, in accordance with the text of Section 2, Article XII of the Constitution, FTAAs should be limited to "technical or financial
assistance" only. They observe, however, that, contrary to the language of the Constitution, the WMCP FTAA allows WMCP, a fully foreign-owned mining
corporation, to extend more than mere financial or technical assistance to the State, for it permits WMCP to manage and operate every aspect of the
mining activity. 222
Petitioners' submission is well-taken. It is a cardinal rule in the interpretation of constitutions that the instrument must be so construed as to give effect
to the intention of the people who adopted it.223 This intention is to be sought in the constitution itself, and the apparent meaning of the words is to be
taken as expressing it, except in cases where that assumption would lead to absurdity, ambiguity, or contradiction.224 What the Constitution says
according to the text of the provision, therefore, compels acceptance and negates the power of the courts to alter it, based on the postulate that the
framers and the people mean what they say.225 Accordingly, following the literal text of the Constitution, assistance accorded by foreign-owned
corporations in the large-scale exploration, development, and utilization of petroleum, minerals and mineral oils should be limited to "technical" or
"financial" assistance only.

WMCP nevertheless submits that the word "technical" in the fourth paragraph of Section 2 of E.O. No. 279 encompasses a "broad number of possible
services," perhaps, "scientific and/or technological in basis."226 It thus posits that it may also well include "the area of management or operations . . . so
long as such assistance requires specialized knowledge or skills, and are related to the exploration, development and utilization of mineral resources."227

This Court is not persuaded. As priorly pointed out, the phrase "management or other forms of assistance" in the 1973 Constitution was deleted in the
1987 Constitution, which allows only "technical or financial assistance." Casus omisus pro omisso habendus est. A person, object or thing omitted from
an enumeration must be held to have been omitted intentionally.228 As will be shown later, the management or operation of mining activities by foreign
contractors, which is the primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate.

Respondents insist that "agreements involving technical or financial assistance" is just another term for service contracts. They contend that the
proceedings of the CONCOM indicate "that although the terminology 'service contract' was avoided [by the Constitution], the concept it represented was
not." They add that "[t]he concept is embodied in the phrase 'agreements involving financial or technical assistance.'" 229 And point out how members of
the CONCOM referred to these agreements as "service contracts." For instance:

SR. TAN. Am I correct in thinking that the only difference between these future service contracts and the past service contracts under Mr. Marcos
is the general law to be enacted by the legislature and the notification of Congress by the President? That is the only difference, is it not?

MR. VILLEGAS. That is right.

SR. TAN. So those are the safeguards[?]

MR. VILLEGAS. Yes. There was no law at all governing service contracts before.

SR. TAN. Thank you, Madam President.230 [Emphasis supplied.]

WMCP also cites the following statements of Commissioners Gascon, Garcia, Nolledo and Tadeo who alluded to service contracts as they
explained their respective votes in the approval of the draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One, the provision on service contracts. I felt that if we would
constitutionalize any provision on service contracts, this should always be with the concurrence of Congress and not guided only by a general law
to be promulgated by Congress. x x x.231 [Emphasis supplied.]

x x x.

MR. GARCIA. Thank you.

I vote no. x x x.

Service contracts are given constitutional legitimization in Section 3, even when they have been proven to be inimical to the interests of the
nation, providing as they do the legal loophole for the exploitation of our natural resources for the benefit of foreign interests. They constitute a
serious negation of Filipino control on the use and disposition of the nation's natural resources, especially with regard to those which are
nonrenewable.232[Emphasis supplied.]

xxx

MR. NOLLEDO. While there are objectionable provisions in the Article on National Economy and Patrimony, going over said provisions
meticulously, setting aside prejudice and personalities will reveal that the article contains a balanced set of provisions. I hope the forthcoming
Congress will implement such provisions taking into account that Filipinos should have real control over our economy and patrimony, and if
foreign equity is permitted, the same must be subordinated to the imperative demands of the national interest.

x x x.

It is also my understanding that service contracts involving foreign corporations or entities are resorted to only when no Filipino enterprise or
Filipino-controlled enterprise could possibly undertake the exploration or exploitation of our natural resources and that compensation under such
contracts cannot and should not equal what should pertain to ownership of capital. In other words, the service contract should not be an
instrument to circumvent the basic provision, that the exploration and exploitation of natural resources should be truly for the benefit of
Filipinos.

Thank you, and I vote yes.233 [Emphasis supplied.]

x x x.

MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.

 Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang salitang "imperyalismo." Ang ibig sabihin nito ay ang sistema
ng lipunang pinaghaharian ng iilang monopolyong kapitalista at ang salitang "imperyalismo" ay buhay na buhay sa National Economy and
Patrimony na nating ginawa. Sa pamamagitan ng salitang "based on," naroroon na ang free trade sapagkat tayo ay mananatiling tagapagluwas
ng hilaw na sangkap at tagaangkat ng yaring produkto. Pangalawa, naroroon pa rin ang parity rights, ang service contract, ang 60-40 equity sa
natural resources. Habang naghihirap ang sambayanang Pilipino, ginagalugad naman ng mga dayuhan ang ating likas na yaman. Kailan man ang
Article on National Economy and Patrimony ay hindi nagpaalis sa pagkaalipin ng ating ekonomiya sa kamay ng mga dayuhan. Ang solusyon sa
suliranin ng bansa ay dalawa lamang: ang pagpapatupad ng tunay na reporma sa lupa at ang national industrialization. Ito ang tinatawag
naming pagsikat ng araw sa Silangan. Ngunit ang mga landlords and big businessmen at ang mga komprador ay nagsasabi na ang free trade na
ito, ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw ay sisikat sa Kanluran. Kailan man hindi puwedeng sumikat ang
araw sa Kanluran. I vote no.234 [Emphasis supplied.]

This Court is likewise not persuaded.

As earlier noted, the phrase "service contracts" has been deleted in the 1987 Constitution's Article on National Economy and Patrimony. If the CONCOM
intended to retain the concept of service contracts under the 1973 Constitution, it could have simply adopted the old terminology ("service contracts")
instead of employing new and unfamiliar terms ("agreements . . . involving either technical or financial assistance"). Such a difference between the
language of a provision in a revised constitution and that of a similar provision in the preceding constitution is viewed as indicative of a difference in
purpose.235 If, as respondents suggest, the concept of "technical or financial assistance" agreements is identical to that of "service contracts," the
CONCOM would not have bothered to fit the same dog with a new collar. To uphold respondents' theory would reduce the first to a mere euphemism for
the second and render the change in phraseology meaningless.

An examination of the reason behind the change confirms that technical or financial assistance agreements are not synonymous to service contracts.

[T]he Court in construing a Constitution should bear in mind the object sought to be accomplished by its adoption, and the evils, if any, sought to be
prevented or remedied. A doubtful provision will be examined in light of the history of the times, and the condition and circumstances under which the
Constitution was framed. The object is to ascertain the reason which induced the framers of the Constitution to enact the particular provision and the
purpose sought to be accomplished thereby, in order to construe the whole as to make the words consonant to that reason and calculated to effect that
purpose.236

As the following question of Commissioner Quesada and Commissioner Villegas' answer shows the drafters intended to do away with service contracts
which were used to circumvent the capitalization (60%-40%) requirement:

MS. QUESADA. The 1973 Constitution used the words "service contracts." In this particular Section 3, is there a safeguard against the possible
control of foreign interests if the Filipinos go into coproduction with them?

MR. VILLEGAS. Yes. In fact, the deletion of the phrase "service contracts" was our first attempt to avoid some of the abuses in the past regime in
the use of service contracts to go around the 60-40 arrangement. The safeguard that has been introduced – and this, of course can be refined –
is found in Section 3, lines 25 to 30, where Congress will have to concur with the President on any agreement entered into between a foreign-
 owned corporation and the government involving technical or financial assistance for large-scale exploration, development and utilization of
natural resources.237 [Emphasis supplied.]

In a subsequent discussion, Commissioner Villegas allayed the fears of Commissioner Quesada regarding the participation of foreign interests in
Philippine natural resources, which was supposed to be restricted to Filipinos.

MS. QUESADA. Another point of clarification is the phrase "and utilization of natural resources shall be under the full control and supervision of
the State." In the 1973 Constitution, this was limited to citizens of the Philippines; but it was removed and substituted by "shall be under the full
control and supervision of the State." Was the concept changed so that these particular resources would be limited to citizens of the Philippines?
Or would these resources only be under the full control and supervision of the State; meaning, noncitizens would have access to these natural
resources? Is that the understanding?

MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence, it states:

Such activities may be directly undertaken by the State, or it may enter into co-production, joint venture, production-sharing agreements with Filipino
citizens.

So we are still limiting it only to Filipino citizens.

x x x.

MS. QUESADA. Going back to Section 3, the section suggests that:

The exploration, development, and utilization of natural resources… may be directly undertaken by the State, or it may enter into co-production, joint
venture or production-sharing agreement with . . . corporations or associations at least sixty per cent of whose voting stock or controlling interest is
owned by such citizens.

Lines 25 to 30, on the other hand, suggest that in the large-scale exploration, development and utilization of natural resources, the President with the
concurrence of Congress may enter into agreements with foreign-owned corporations even for technical or financial assistance.

I wonder if this part of Section 3 contradicts the second part. I am raising this point for fear that foreign investors will use their enormous capital
resources to facilitate the actual exploitation or exploration, development and effective disposition of our natural resources to the detriment of Filipino
investors. I am not saying that we should not consider borrowing money from foreign sources. What I refer to is that foreign interest should be allowed
to participate only to the extent that they lend us money and give us technical assistance with the appropriate government permit. In this way, we can
insure the enjoyment of our natural resources by our own people.

MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investors to participate. It is only technical or financial
assistance – they do not own anything – but on conditions that have to be determined by law with the concurrence of Congress. So, it is very restrictive.
If the Commissioner will remember, this removes the possibility for service contracts which we said yesterday were avenues used in the previous regime
to go around the 60-40 requirement.238 [Emphasis supplied.]

The present Chief Justice, then a member of the CONCOM, also referred to this limitation in scope in proposing an amendment to the 60-40
requirement:

MR. DAVIDE. May I be allowed to explain the proposal?

MR. MAAMBONG. Subject to the three-minute rule, Madam President.

MR. DAVIDE. It will not take three minutes.

The Commission had just approved the Preamble. In the Preamble we clearly stated that the Filipino people are sovereign and that one of the objectives
for the creation or establishment of a government is to conserve and develop the national patrimony. The implication is that the national patrimony or
our natural resources are exclusively reserved for the Filipino people. No alien must be allowed to enjoy, exploit and develop our natural resources. As a
matter of fact, that principle proceeds from the fact that our natural resources are gifts from God to the Filipino people and it would be a breach of that
special blessing from God if we will allow aliens to exploit our natural resources.

I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the alien corporations but only for them to render financial
or technical assistance. It is not for them to enjoy our natural resources. Madam President, our natural resources are depleting; our population is
increasing by leaps and bounds. Fifty years from now, if we will allow these aliens to exploit our natural resources, there will be no more natural
resources for the next generations of Filipinos. It may last long if we will begin now. Since 1935 the aliens have been allowed to enjoy to a certain extent
the exploitation of our natural resources, and we became victims of foreign dominance and control. The aliens are interested in coming to the Philippines
because they would like to enjoy the bounty of nature exclusively intended for Filipinos by God.

And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble "to preserve and develop the national patrimony for
the sovereign Filipino people and for the generations to come," we must at this time decide once and for all that our natural resources must be reserved
only to Filipino citizens.

Thank you.239 [Emphasis supplied.]

The opinion of another member of the CONCOM is persuasive240 and leaves no doubt as to the intention of the framers to eliminate service contracts
altogether. He writes:

Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological undertakings for which the President may enter into contracts with
foreign-owned corporations, and enunciates strict conditions that should govern such contracts. x x x.
This provision balances the need for foreign capital and technology with the need to maintain the national sovereignty. It recognizes the fact that as long
as Filipinos can formulate their own terms in their own territory, there is no danger of relinquishing sovereignty to foreign interests.

Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign investors (fully alien-owned) can NOT participate in
Filipino enterprises except to provide: (1) Technical Assistance for highly technical enterprises; and (2) Financial Assistance for large-scale enterprises.

The intent of this provision, as well as other provisions on foreign investments, is to prevent the practice (prevalent in the Marcos government) of
skirting the 60/40 equation using the cover of service contracts.241 [Emphasis supplied.]

Furthermore, it appears that Proposed Resolution No. 496,242 which was the draft Article on National Economy and Patrimony, adopted the concept of
"agreements . . . involving either technical or financial assistance" contained in the "Draft of the 1986 U.P. Law Constitution Project" (U.P. Law draft)
which was taken into consideration during the deliberation of the CONCOM.243 The former, as well as Article XII, as adopted, employed the same
terminology, as the comparative table below shows:

DRAFT OF THE UP LAW CONSTITUTION PROPOSED RESOLUTION NO. 496 OF THE ARTICLE XII OF THE 1987 CONSTITUTION
PROJECT CONSTITUTIONAL COMMISSION

Sec. 1. All lands of the public domain,
waters, minerals, coal, petroleum and
other mineral oils, all forces of potential
energy, fisheries, flora and fauna and
other natural resources of the Philippines
are owned by the State. With the
exception of agricultural lands, all other
natural resources shall not be alienated.
The exploration, development and
utilization of natural resources shall be
under the full control and supervision of
the State. Such activities may be directly
undertaken by the state, or it may enter
into co-production, joint venture,
production sharing agreements with
Filipino citizens or corporations or
Sec. 3. All lands of the public domain,
waters, minerals, coal, petroleum and
other mineral oils, all forces of potential
energy, fisheries, forests, flora and fauna,
and other natural resources are owned by
the State. With the exception of
agricultural lands, all other natural
resources shall not be alienated. The
exploration, development, and utilization
of natural resources shall be under the
full control and supervision of the State.
Such activities may be directly
undertaken by the State, or it may enter
into co-production, joint venture,
production-sharing agreements with
Filipino citizens or corporations or
Sec. 2. All lands of the public domain,
waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential
energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural
resources are owned by the State. With
the exception of agricultural lands, all
other natural resources shall not be
alienated. The exploration, development,
and utilization of natural resources shall
be under the full control and supervision
of the State. The State may directly
undertake such activities or it may enter
into co-production, joint venture, or
production-sharing agreements with
Filipino citizens, or corporations or
associations sixty per cent of whose
voting stock or controlling interest is
owned by such citizens for a period of not
more than twenty-five years, renewable
for not more than twenty-five years and
under such terms and conditions as may
be provided by law. In case as to water
rights for irrigation, water supply,
fisheries, or industrial uses other than the
development of water power, beneficial
use may be the measure and limit of the
grant.
The National Assembly may by law allow
small scale utilization of natural resources
by Filipino citizens.
The National Assembly, may, by two-
thirds vote of all its members by special
law provide the terms and conditions
under which a foreign-owned corporation
may enter into agreements with the
government involving either technical
or financial assistance for large-scale
exploration, development, or utilization of
natural resources. [Emphasis supplied.]
associations at least sixty per cent of
whose voting stock or controlling interest
is owned by such citizens. Such
agreements shall be for a period of
twenty-five years, renewable for not more
than twenty-five years, and under such
term and conditions as may be provided
by law. In cases of water rights for
irrigation, water supply, fisheries or
industrial uses other than the
development for water power, beneficial
use may be the measure and limit of the
grant.
The Congress may by law allow small-
scale utilization of natural resources by
Filipino citizens, as well as cooperative
fish farming in rivers, lakes, bays, and
lagoons.
The President with the concurrence of
Congress, by special law, shall provide
the terms and conditions under which a
foreign-owned corporation may enter into
agreements with the government
involving either technical or financial
assistance for large-scale exploration,
development, and utilization of natural
resources. [Emphasis supplied.]
associations at least sixty per centum of
whose capital is owned by such citizens.
Such agreements may be for a period not
exceeding twenty-five years, renewable
for not more than twenty-five years, and
under such terms and conditions as may
be provided by law. In case of water
rights for irrigation, water supply,
fisheries, or industrial uses other than the
development of water power, beneficial
use may be the measure and limit of the
grant.
The State shall protect the nation's
marine wealth in its archipelagic waters,
territorial sea, and exclusive economic
zone, and reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow small-
scale utilization of natural resources by
Filipino citizens, as well as cooperative
fish farming, with priority to subsistence
fishermen and fish-workers in rivers,
lakes, bays, and lagoons.
The President may enter into agreements
with foreign-owned corporations
involving either technical or financial
assistance for large-scale exploration,
development, and utilization of minerals,
petroleum, and other mineral oils
according to the general terms and
conditions provided by law, based on real
contributions to the economic growth and
general welfare of the country. In such
 agreements, the State shall promote the
development and use of local scientific
and technical resources. [Emphasis
supplied.]

The President shall notify the Congress of

every contract entered into in accordance
with this provision, within thirty days
from its execution.

The insights of the proponents of the U.P. Law draft are, therefore, instructive in interpreting the phrase "technical or financial assistance."

In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor Pacifico A. Agabin, who was a member of the working group that
prepared the U.P. Law draft, criticized service contracts for they "lodge exclusive management and control of the enterprise to the service contractor,
which is reminiscent of the old concession regime. Thus, notwithstanding the provision of the Constitution that natural resources belong to the State,
and that these shall not be alienated, the service contract system renders nugatory the constitutional provisions cited." 244 He elaborates:

Looking at the Philippine model, we can discern the following vestiges of the concession regime, thus:

1. Bidding of a selected area, or leasing the choice of the area to the interested party and then negotiating the terms and conditions of the
contract; (Sec. 5, P.D. 87)

2. Management of the enterprise vested on the contractor, including operation of the field if petroleum is discovered; (Sec. 8, P.D. 87)

3. Control of production and other matters such as expansion and development; (Sec. 8)

4. Responsibility for downstream operations – marketing, distribution, and processing may be with the contractor (Sec. 8);

5. Ownership of equipment, machinery, fixed assets, and other properties remain with contractor (Sec. 12, P.D. 87);

6. Repatriation of capital and retention of profits abroad guaranteed to the contractor (Sec. 13, P.D. 87); and

7. While title to the petroleum discovered may nominally be in the name of the government, the contractor has almost unfettered control over its
disposition and sale, and even the domestic requirements of the country is relegated to a pro rata basis (Sec. 8).
In short, our version of the service contract is just a rehash of the old concession regime x x x. Some people have pulled an old rabbit out of a
magician's hat, and foisted it upon us as a new and different animal.

The service contract as we know it here is antithetical to the principle of sovereignty over our natural resources restated in the same article of the
[1973] Constitution containing the provision for service contracts. If the service contractor happens to be a foreign corporation, the contract would also
run counter to the constitutional provision on nationalization or Filipinization, of the exploitation of our natural resources.245 [Emphasis supplied.
Underscoring in the original.]

Professor Merlin M. Magallona, also a member of the working group, was harsher in his reproach of the system:

x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the [1973] Charter, but the essence of nationalism was reduced to hollow
rhetoric. The 1973 Charter still provided that the exploitation or development of the country's natural resources be limited to Filipino citizens or
corporations owned or controlled by them. However, the martial-law Constitution allowed them, once these resources are in their name, to enter into
service contracts with foreign investors for financial, technical, management, or other forms of assistance. Since foreign investors have the capital
resources, the actual exploitation and development, as well as the effective disposition, of the country's natural resources, would be under their
direction, and control, relegating the Filipino investors to the role of second-rate partners in joint ventures.

Through the instrumentality of the service contract, the 1973 Constitution had legitimized at the highest level of state policy that which was prohibited
under the 1973 Constitution, namely: the exploitation of the country's natural resources by foreign nationals. The drastic impact of [this] constitutional
change becomes more pronounced when it is considered that the active party to any service contract may be a corporation wholly owned by foreign
interests. In such a case, the citizenship requirement is completely set aside, permitting foreign corporations to obtain actual possession, control, and
[enjoyment] of the country's natural resources.246 [Emphasis supplied.]

Accordingly, Professor Agabin recommends that:

Recognizing the service contract for what it is, we have to expunge it from the Constitution and reaffirm ownership over our natural resources. That is
the only way we can exercise effective control over our natural resources.

This should not mean complete isolation of the country's natural resources from foreign investment. Other contract forms which are less derogatory to
our sovereignty and control over natural resources – like technical assistance agreements, financial assistance [agreements], co-production agreements,
joint ventures, production-sharing – could still be utilized and adopted without violating constitutional provisions. In other words, we can adopt contract
forms which recognize and assert our sovereignty and ownership over natural resources, and where the foreign entity is just a pure contractor instead of
the beneficial owner of our economic resources.247 [Emphasis supplied.]

Still another member of the working group, Professor Eduardo Labitag, proposed that:

2. Service contracts as practiced under the 1973 Constitution should be discouraged, instead the government may be allowed, subject to authorization
by special law passed by an extraordinary majority to enter into either technical or financial assistance. This is justified by the fact that as presently
worded in the 1973 Constitution, a service contract gives full control over the contract area to the service contractor, for him to work, manage and
dispose of the proceeds or production. It was a subterfuge to get around the nationality requirement of the constitution. 248[Emphasis supplied.]

In the annotations on the proposed Article on National Economy and Patrimony, the U.P. Law draft summarized the rationale therefor, thus:

5. The last paragraph is a modification of the service contract provision found in Section 9, Article XIV of the 1973 Constitution as amended. This 1973
provision shattered the framework of nationalism in our fundamental law (see Magallona, "Nationalism and its Subversion in the Constitution"). Through
the service contract, the 1973 Constitution had legitimized that which was prohibited under the 1935 constitution—the exploitation of the country's
natural resources by foreign nationals. Through the service contract, acts prohibited by the Anti-Dummy Law were recognized as legitimate
arrangements. Service contracts lodge exclusive management and control of the enterprise to the service contractor, not unlike the old concession
regime where the concessionaire had complete control over the country's natural resources, having been given exclusive and plenary rights to exploit a
particular resource and, in effect, having been assured of ownership of that resource at the point of extraction (see Agabin, "Service Contracts: Old Wine
in New Bottles"). Service contracts, hence, are antithetical to the principle of sovereignty over our natural resources, as well as the constitutional
provision on nationalization or Filipinization of the exploitation of our natural resources.

Under the proposed provision, only technical assistance or financial assistance agreements may be entered into, and only for large-scale activities. These
are contract forms which recognize and assert our sovereignty and ownership over natural resources since the foreign entity is just a pure contractor and
not a beneficial owner of our economic resources. The proposal recognizes the need for capital and technology to develop our natural resources without
sacrificing our sovereignty and control over such resources by the safeguard of a special law which requires two-thirds vote of all the members of the
Legislature. This will ensure that such agreements will be debated upon exhaustively and thoroughly in the National Assembly to avert prejudice to the
nation.249 [Emphasis supplied.]

The U.P. Law draft proponents viewed service contracts under the 1973 Constitution as grants of beneficial ownership of the country's natural resources
to foreign owned corporations. While, in theory, the State owns these natural resources – and Filipino citizens, their beneficiaries – service contracts
actually vested foreigners with the right to dispose, explore for, develop, exploit, and utilize the same. Foreigners, not Filipinos, became the beneficiaries
of Philippine natural resources. This arrangement is clearly incompatible with the constitutional ideal of nationalization of natural resources, with the
Regalian doctrine, and on a broader perspective, with Philippine sovereignty.

The proponents nevertheless acknowledged the need for capital and technical know-how in the large-scale exploitation, development and utilization of
natural resources – the second paragraph of the proposed draft itself being an admission of such scarcity. Hence, they recommended a compromise to
reconcile the nationalistic provisions dating back to the 1935 Constitution, which reserved all natural resources exclusively to Filipinos, and the more
liberal 1973 Constitution, which allowed foreigners to participate in these resources through service contracts. Such a compromise called for the adoption
of a new system in the exploration, development, and utilization of natural resources in the form of technical agreements or financial agreements which,
necessarily, are distinct concepts from service contracts.

The replacement of "service contracts" with "agreements… involving either technical or financial assistance," as well as the deletion of the phrase
"management or other forms of assistance," assumes greater significance when note is taken that the U.P. Law draft proposed other equally crucial
changes that were obviously heeded by the CONCOM. These include the abrogation of the concession system and the adoption of new "options" for the
State in the exploration, development, and utilization of natural resources. The proponents deemed these changes to be more consistent with the State's
ownership of, and its "full control and supervision" (a phrase also employed by the framers) over, such resources. The Project explained:

3. In line with the State ownership of natural resources, the State should take a more active role in the exploration, development, and utilization of
natural resources, than the present practice of granting licenses, concessions, or leases – hence the provision that said activities shall be under the full
control and supervision of the State. There are three major schemes by which the State could undertake these activities: first, directly by itself; second,
by virtue of co-production, joint venture, production sharing agreements with Filipino citizens or corporations or associations sixty per cent (60%) of the
voting stock or controlling interests of which are owned by such citizens; or third, with a foreign-owned corporation, in cases of large-scale exploration,
development, or utilization of natural resources through agreements involving either technical or financial assistance only. x x x.

At present, under the licensing concession or lease schemes, the government benefits from such benefits only through fees, charges, ad valorem taxes
and income taxes of the exploiters of our natural resources. Such benefits are very minimal compared with the enormous profits reaped by theses
licensees, grantees, concessionaires. Moreover, some of them disregard the conservation of natural resources and do not protect the environment from
degradation. The proposed role of the State will enable it to a greater share in the profits – it can also actively husband its natural resources and engage
in developmental programs that will be beneficial to them.

4. Aside from the three major schemes for the exploration, development, and utilization of our natural resources, the State may, by law, allow Filipino
citizens to explore, develop, utilize natural resources in small-scale. This is in recognition of the plight of marginal fishermen, forest dwellers, gold
panners, and others similarly situated who exploit our natural resources for their daily sustenance and survival.250

Professor Agabin, in particular, after taking pains to illustrate the similarities between the two systems, concluded that the service contract regime was
but a "rehash" of the concession system. "Old wine in new bottles," as he put it. The rejection of the service contract regime, therefore, is in consonance
with the abolition of the concession system.

In light of the deliberations of the CONCOM, the text of the Constitution, and the adoption of other proposed changes, there is no doubt that the framers
considered and shared the intent of the U.P. Law proponents in employing the phrase "agreements . . . involving either technical or financial assistance."

While certain commissioners may have mentioned the term "service contracts" during the CONCOM deliberations, they may not have been necessarily
referring to the concept of service contracts under the 1973 Constitution. As noted earlier, "service contracts" is a term that assumes different meanings
to different people.251 The commissioners may have been using the term loosely, and not in its technical and legal sense, to refer, in general, to
agreements concerning natural resources entered into by the Government with foreign corporations. These loose statements do not necessarily translate
to the adoption of the 1973 Constitution provision allowing service contracts.

It is true that, as shown in the earlier quoted portions of the proceedings in CONCOM, in response to Sr. Tan's question, Commissioner Villegas
commented that, other than congressional notification, the only difference between "future" and "past" "service contracts" is the requirement of a
general law as there were no laws previously authorizing the same.252 However, such remark is far outweighed by his more categorical statement in his
exchange with Commissioner Quesada that the draft article "does not permit foreign investors to participate" in the nation's natural resources – which
was exactly what service contracts did – except to provide "technical or financial assistance."253
In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the present charter prohibits service
contracts.254 Commissioner Gascon was not totally averse to foreign participation, but favored stricter restrictions in the form of majority congressional
concurrence.255 On the other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of the spectrum and their objections may be
interpreted as votes against any foreign participation in our natural resources whatsoever.

WMCP cites Opinion No. 75, s. 1987,256 and Opinion No. 175, s. 1990257 of the Secretary of Justice, expressing the view that a financial or technical
assistance agreement "is no different in concept" from the service contract allowed under the 1973 Constitution. This Court is not, however, bound by
this interpretation. When an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing
law; and the administrative interpretation of the law is at best advisory, for it is the courts that finally determine what the law means. 258

In any case, the constitutional provision allowing the President to enter into FTAAs with foreign-owned corporations is an exception to the rule that
participation in the nation's natural resources is reserved exclusively to Filipinos. Accordingly, such provision must be construed strictly against their
enjoyment by non-Filipinos. As Commissioner Villegas emphasized, the provision is "very restrictive."259 Commissioner Nolledo also remarked that
"entering into service contracts is an exception to the rule on protection of natural resources for the interest of the nation and, therefore, being an
exception, it should be subject, whenever possible, to stringent rules."260 Indeed, exceptions should be strictly but reasonably construed; they extend
only so far as their language fairly warrants and all doubts should be resolved in favor of the general provision rather than the exception.261

With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said Act authorizes service contracts. Although the statute
employs the phrase "financial and technical agreements" in accordance with the 1987 Constitution, it actually treats these agreements as service
contracts that grant beneficial ownership to foreign contractors contrary to the fundamental law.

Section 33, which is found under Chapter VI (Financial or Technical Assistance Agreement) of R.A. No. 7942 states:

SEC. 33. Eligibility.—Any qualified person with technical and financial capability to undertake large-scale exploration, development, and utilization of
mineral resources in the Philippines may enter into a financial or technical assistance agreement directly with the Government through the Department.
[Emphasis supplied.]

"Exploration," as defined by R.A. No. 7942,

means the searching or prospecting for mineral resources by geological, geochemical or geophysical surveys, remote sensing, test pitting, trending,
drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quantity and quality thereof and the feasibility
of mining them for profit.262

A legally organized foreign-owned corporation may be granted an exploration permit,263 which vests it with the right to conduct exploration for all
minerals in specified areas,264 i.e., to enter, occupy and explore the same.265Eventually, the foreign-owned corporation, as such permittee, may apply for
a financial and technical assistance agreement.266
"Development" is the work undertaken to explore and prepare an ore body or a mineral deposit for mining, including the construction of necessary
infrastructure and related facilities.267

"Utilization" "means the extraction or disposition of minerals."268 A stipulation that the proponent shall dispose of the minerals and byproducts produced
at the highest price and more advantageous terms and conditions as provided for under the implementing rules and regulations is required to be
incorporated in every FTAA.269

A foreign-owned/-controlled corporation may likewise be granted a mineral processing permit.270 "Mineral processing" is the milling, beneficiation or
upgrading of ores or minerals and rocks or by similar means to convert the same into marketable products.271

An FTAA contractor makes a warranty that the mining operations shall be conducted in accordance with the provisions of R.A. No. 7942 and its
implementing rules272 and for work programs and minimum expenditures and commitments.273 And it obliges itself to furnish the Government records of
geologic, accounting, and other relevant data for its mining operation.274

"Mining operation," as the law defines it, means mining activities involving exploration, feasibility, development, utilization, and processing.275

The underlying assumption in all these provisions is that the foreign contractor manages the mineral resources, just like the foreign contractor in a
service contract.

Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same auxiliary mining rights that it grants contractors in mineral agreements
(MPSA, CA and JV).276 Parenthetically, Sections 72 to 75 use the term "contractor," without distinguishing between FTAA and mineral agreement
contractors. And so does "holders of mining rights" in Section 76. A foreign contractor may even convert its FTAA into a mineral agreement if the
economic viability of the contract area is found to be inadequate to justify large-scale mining operations,277 provided that it reduces its equity in the
corporation, partnership, association or cooperative to forty percent (40%). 278

Finally, under the Act, an FTAA contractor warrants that it "has or has access to all the financing, managerial, and technical expertise. . . ."279 This
suggests that an FTAA contractor is bound to provide some management assistance – a form of assistance that has been eliminated and, therefore,
proscribed by the present Charter.

By allowing foreign contractors to manage or operate all the aspects of the mining operation, the above-cited provisions of R.A. No. 7942 have in effect
conveyed beneficial ownership over the nation's mineral resources to these contractors, leaving the State with nothing but bare title thereto.

Moreover, the same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally ordained 60%-40% capitalization
requirement for corporations or associations engaged in the exploitation, development and utilization of Philippine natural resources.

In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article XII of the Constitution:

(1) The proviso in Section 3 (aq), which defines "qualified person," to wit:
 Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person for purposes of granting an exploration permit,
financial or technical assistance agreement or mineral processing permit.

(2) Section 23,280 which specifies the rights and obligations of an exploration permittee, insofar as said section applies to a financial or technical
assistance agreement,

(3) Section 33, which prescribes the eligibility of a contractor in a financial or technical assistance agreement;

(4) Section 35,281 which enumerates the terms and conditions for every financial or technical assistance agreement;

(5) Section 39,282 which allows the contractor in a financial and technical assistance agreement to convert the same into a mineral production-
sharing agreement;

(6) Section 56,283 which authorizes the issuance of a mineral processing permit to a contractor in a financial and technical assistance agreement;

The following provisions of the same Act are likewise void as they are dependent on the foregoing provisions and cannot stand on their own:

(1) Section 3 (g),284 which defines the term "contractor," insofar as it applies to a financial or technical assistance agreement.

Section 34,285 which prescribes the maximum contract area in a financial or technical assistance agreements;

Section 36,286 which allows negotiations for financial or technical assistance agreements;

Section 37,287 which prescribes the procedure for filing and evaluation of financial or technical assistance agreement proposals;

Section 38,288 which limits the term of financial or technical assistance agreements;

Section 40,289 which allows the assignment or transfer of financial or technical assistance agreements;

Section 41,290 which allows the withdrawal of the contractor in an FTAA;

The second and third paragraphs of Section 81,291 which provide for the Government's share in a financial and technical assistance agreement;
and

Section 90,292 which provides for incentives to contractors in FTAAs insofar as it applies to said contractors;
When the parts of the statute are so mutually dependent and connected as conditions, considerations, inducements, or compensations for each other, as
to warrant a belief that the legislature intended them as a whole, and that if all could not be carried into effect, the legislature would not pass the
residue independently, then, if some parts are unconstitutional, all the provisions which are thus dependent, conditional, or connected, must fall with
them.293

There can be little doubt that the WMCP FTAA itself is a service contract.

Section 1.3 of the WMCP FTAA grants WMCP "the exclusive right to explore, exploit, utilise[,] process and dispose of all Minerals products and by-
products thereof that may be produced from the Contract Area."294 The FTAA also imbues WMCP with the following rights:

(b) to extract and carry away any Mineral samples from the Contract area for the purpose of conducting tests and studies in respect thereof;

(c) to determine the mining and treatment processes to be utilised during the Development/Operating Period and the project facilities to be
constructed during the Development and Construction Period;

(d) have the right of possession of the Contract Area, with full right of ingress and egress and the right to occupy the same, subject to the
provisions of Presidential Decree No. 512 (if applicable) and not be prevented from entry into private ands by surface owners and/or occupants
thereof when prospecting, exploring and exploiting for minerals therein;

xxx

(f) to construct roadways, mining, drainage, power generation and transmission facilities and all other types of works on the Contract Area;

(g) to erect, install or place any type of improvements, supplies, machinery and other equipment relating to the Mining Operations and to use,
sell or otherwise dispose of, modify, remove or diminish any and all parts thereof;

(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties, easement rights and the use of timber, sand, clay,
stone, water and other natural resources in the Contract Area without cost for the purposes of the Mining Operations;

xxx

(i) have the right to mortgage, charge or encumber all or part of its interest and obligations under this Agreement, the plant, equipment and
infrastructure and the Minerals produced from the Mining Operations;

x x x. 295
All materials, equipment, plant and other installations erected or placed on the Contract Area remain the property of WMCP, which has the right to deal
with and remove such items within twelve months from the termination of the FTAA.296

Pursuant to Section 1.2 of the FTAA, WMCP shall provide "[all] financing, technology, management and personnel necessary for the Mining Operations."
The mining company binds itself to "perform all Mining Operations . . . providing all necessary services, technology and financing in connection
therewith,"297 and to "furnish all materials, labour, equipment and other installations that may be required for carrying on all Mining Operations."298>
WMCP may make expansions, improvements and replacements of the mining facilities and may add such new facilities as it considers necessary for the
mining operations.299

These contractual stipulations, taken together, grant WMCP beneficial ownership over natural resources that properly belong to the State and are
intended for the benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental law
seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down.

In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the Promotion and Protection of Investments between the Philippine and
Australian Governments, which was signed in Manila on January 25, 1995 and which entered into force on December 8, 1995.

x x x. Article 2 (1) of said treaty states that it applies to investments whenever made and thus the fact that [WMCP's] FTAA was entered into prior to the
entry into force of the treaty does not preclude the Philippine Government from protecting [WMCP's] investment in [that] FTAA. Likewise, Article 3 (1) of
the treaty provides that "Each Party shall encourage and promote investments in its area by investors of the other Party and shall [admit] such
investments in accordance with its Constitution, Laws, regulations and investment policies" and in Article 3 (2), it states that "Each Party shall ensure
that investments are accorded fair and equitable treatment." The latter stipulation indicates that it was intended to impose an obligation upon a Party to
afford fair and equitable treatment to the investments of the other Party and that a failure to provide such treatment by or under the laws of the Party
may constitute a breach of the treaty. Simply stated, the Philippines could not, under said treaty, rely upon the inadequacies of its own laws to deprive
an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without likewise nullifying the service contracts
entered into before the enactment of RA 7942 such as those mentioned in PD 87 or EO 279.

This becomes more significant in the light of the fact that [WMCP's] FTAA was executed not by a mere Filipino citizen, but by the Philippine Government
itself, through its President no less, which, in entering into said treaty is assumed to be aware of the existing Philippine laws on service contracts over
the exploration, development and utilization of natural resources. The execution of the FTAA by the Philippine Government assures the Australian
Government that the FTAA is in accordance with existing Philippine laws.300 [Emphasis and italics by private respondents.]

The invalidation of the subject FTAA, it is argued, would constitute a breach of said treaty which, in turn, would amount to a violation of Section 3,
Article II of the Constitution adopting the generally accepted principles of international law as part of the law of the land. One of these generally
accepted principles is pacta sunt servanda, which requires the performance in good faith of treaty obligations.

Even assuming arguendo that WMCP is correct in its interpretation of the treaty and its assertion that "the Philippines could not . . . deprive an
Australian investor (like [WMCP]) of fair and equitable treatment by invalidating [WMCP's] FTAA without likewise nullifying the service contracts entered
into before the enactment of RA 7942 . . .," the annulment of the FTAA would not constitute a breach of the treaty invoked. For this decision herein
invalidating the subject FTAA forms part of the legal system of the Philippines.301 The equal protection clause302 guarantees that such decision shall apply
to all contracts belonging to the same class, hence, upholding rather than violating, the "fair and equitable treatment" stipulation in said treaty.

One other matter requires clarification. Petitioners contend that, consistent with the provisions of Section 2, Article XII of the Constitution, the President
may enter into agreements involving "either technical or financial assistance" only. The agreement in question, however, is a technical and financial
assistance agreement.

Petitioners' contention does not lie. To adhere to the literal language of the Constitution would lead to absurd consequences.303 As WMCP correctly put it:

x x x such a theory of petitioners would compel the government (through the President) to enter into contract with two (2) foreign-owned corporations,
one for financial assistance agreement and with the other, for technical assistance over one and the same mining area or land; or to execute two (2)
contracts with only one foreign-owned corporation which has the capability to provide both financial and technical assistance, one for financial assistance
and another for technical assistance, over the same mining area. Such an absurd result is definitely not sanctioned under the canons of constitutional
construction.304 [Underscoring in the original.]

Surely, the framers of the 1987 Charter did not contemplate such an absurd result from their use of "either/or." A constitution is not to be interpreted as
demanding the impossible or the impracticable; and unreasonable or absurd consequences, if possible, should be avoided. 305 Courts are not to give
words a meaning that would lead to absurd or unreasonable consequences and a literal interpretation is to be rejected if it would be unjust or lead to
absurd results.306 That is a strong argument against its adoption.307 Accordingly, petitioners' interpretation must be rejected.

The foregoing discussion has rendered unnecessary the resolution of the other issues raised by the petition.

WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional and void:

(1) The following provisions of Republic Act No. 7942:

(a) The proviso in Section 3 (aq),

(b) Section 23,

(c) Section 33 to 41,

(d) Section 56,

(e) The second and third paragraphs of Section 81, and

(f) Section 90.

 (2) All provisions of Department of Environment and Natural Resources Administrative Order 96-40, s. 1996 which are not in conformity with this
Decision, and

(3) The Financial and Technical Assistance Agreement between the Government of the Republic of the Philippines and WMC Philippines, Inc.

SO ORDERED.

Davide, Jr., C.J., Puno, Quisumbing, Carpio, Corona, Callejo, Sr., and Tinga. JJ., concur.
Vitug, J., see Separate Opinion.
Panganiban, J., see Separate Opinion.
Ynares-Santiago, Sandoval-Gutierrez and Austria-Martinez, JJ., joins J., Panganiban's separate opinion.
Azcuna, no part, one of the parties was a client.

(9)

THIRD DIVISION

[G.R. No. 151212. September 10, 2003]

TEN FORTY REALTY AND DEVELOPMENT CORP., Represented by its President, VERONICA G. LORENZANA,, Petitioner, v. MARINA
CRUZ, respondent.

DECISION

PANGANIBAN, J.:

In an ejectment suit, the question of ownership may be provisionally ruled upon for the sole purpose of determining who is entitled to possession de
facto. In the present case, both parties base their alleged right to possess on their right to own. Hence, the Court of Appeals did not err in passing upon
the question of ownership to be able to decide who was entitled to physical possession of the disputed land.
The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to nullify the August 31, 2001 Decision2 and December 19, 2001
Resolution3 of the Court of Appeals (CA) in CA- GR SP No. 64861. The dispositive portion of the assailed Decision is as follows:

WHEREFORE, premises considered, the petition is hereby DISMISSED and the Decision dated May 4, 2001 is hereby AFFIRMED.4cräläwvirtualibräry

The assailed Resolution denied petitioner's Motion for Reconsideration.

The Facts

The facts of the case are narrated by the CA as follows:

A complaint for ejectment was filed by [Petitioner Ten Forty Realty and Development Corporation] against x x x [Respondent Marina Cruz] before the
Municipal Trial Court in Cities (MTCC) of Olongapo City, docketed as Civil Case 4269, which alleged that: petitioner is the true and absolute owner of a
parcel of lot and residential house situated in #71 18th Street, E.B.B. Olongapo City, particularly described as:

A parcel of residential house and lot situated in the above-mentioned address containing an area of 324 square meters more or less bounded on the
Northeast by 041 (Lot 255, Ts-308); on the Southeast by 044 (Lot 255, Ts-308); on the Southwest by 043 (Lot 226-A & 18th street) and on the
Northwest by 045 (Lot 227, Ts-308) and declared for taxation purposes in the name of [petitioner] under T.D. No. 002-4595-R and 002-4596.

having acquired the same on December 5, 1996 from Barbara Galino by virtue of a Deed of Absolute Sale; the sale was acknowledged by said Barbara
Galino through a 'Katunayan'; payment of the capital gains tax for the transfer of the property was evidenced by a Certification Authorizing Registration
issued by the Bureau of Internal Revenue; petitioner came to know that Barbara Galino sold the same property on April 24, 1998 to Cruz, who
immediately occupied the property and which occupation was merely tolerated by petitioner; on October 16, 1998, a complaint for ejectment was filed
with the Barangay East Bajac-Bajac, Olongapo City but for failure to arrive at an amicable settlement, a Certificate to File Action was issued; on April 12,
1999 a demand letter was sent to [respondent] to vacate and pay reasonable amount for the use and occupation of the same, but was ignored by the
latter; and due to the refusal of [respondent] to vacate the premises, petitioner was constrained to secure the services of a counsel for an agreed fee
of P5,000.00 as attorneys fee and P500.00 as appearance fee and incurred an expense of P5,000.00 for litigation.

In respondents Answer with Counterclaim, it was alleged that: petitioner is not qualified to own the residential lot in dispute, being a public land;
according to Barbara Galino, she did not sell her house and lot to petitioner but merely obtained a loan from Veronica Lorenzana; the payment of the
capital gains tax does not necessarily show that the Deed of Absolute Sale was at that time already in existence; the court has no jurisdiction over the
subject matter because the complaint was filed beyond the one (1) year period after the alleged unlawful deprivation of possession; there is no
allegation that petitioner had been in prior possession of the premises and the same was lost thru force, stealth or violence; evidence will show that it
was Barbara Galino who was in possession at the time of the sale and vacated the property in favor of respondent; never was there an occasion when
petitioner occupied a portion of the premises, before respondent occupied the lot in April 1998, she caused the cancellation of the tax declaration in the
name of Barbara Galino and a new one issued in respondents name; petitioner obtained its tax declaration over the same property on November 3,
1998, seven (7) months [after] the respondent [obtained hers]; at the time the house and lot [were] bought by respondent, the house was not
habitable, the power and water connections were disconnected; being a public land, respondent filed a miscellaneous sales application with the
Community Environment and Natural Resources Office in Olongapo City; and the action for ejectment cannot succeed where it appears that respondent
had been in possession of the property prior to the petitioner.5cräläwvirtualibräry

In a Decision6 dated October 30, 2000, the Municipal Trial Court in Cities (MTCC) ordered respondent to vacate the property and surrender to petitioner
possession thereof. It also directed her to pay, as damages for its continued unlawful use, P500 a month from April 24, 1999 until the property was
vacated, P5,000 as attorneys fees, and the costs of the suit.

On appeal, the Regional Trial Court7 (RTC) of Olongapo City (Branch 72) reversed the MTCC. The RTC ruled as follows: 1) respondents entry into the
property was not by mere tolerance of petitioner, but by virtue of a Waiver and Transfer of Possessory Rights and Deed of Sale in her favor; 2) the
execution of the Deed of Sale without actual transfer of the physical possession did not have the effect of making petitioner the owner of the property,
because there was no delivery of the object of the sale as provided for in Article 1428 of the Civil Code; and 3) being a corporation, petitioner was
disqualified from acquiring the property, which was public land.

Ruling of the Court of Appeals

Sustaining the RTC, the CA held that petitioner had failed to make a case for unlawful detainer, because no contract -- express or implied -- had been
entered into by the parties with regard to possession of the property. It ruled that the action should have been for forcible entry, in which prior physical
possession was indispensable -- a circumstance petitioner had not shown either.

The appellate court also held that petitioner had challenged the RTCs ruling on the question of ownership for the purpose of compensating for the latters
failure to counter such ruling. The RTC had held that, as a corporation, petitioner had no right to acquire the property which was alienable public land.

Hence, this Petition.8

Issues

Petitioner submits the following issues for our consideration:

1. The Honorable Court of Appeals had clearly erred in not holding that [r]espondents occupation or possession of the property in question was merely
through the tolerance or permission of the herein [p]etitioner;

[2.] The Honorable Court of Appeals had likewise erred in holding that the ejectment case should have been a forcible entry case where prior physical
possession is indispensable; and

[3.] The Honorable Court of Appeals had also erred when it ruled that the herein [r]espondents possession or occupation of the said property is in the
nature of an exercise of ownership which should put the herein [p]etitioner on guard.9
The Courts Ruling

The Petition has no merit.

First Issue:

Alleged Occupation by Tolerance

Petitioner faults the CA for not holding that the former merely tolerated respondents occupation of the subject property. By raising this issue, petitioner
is in effect asking this Court to reassess factual findings. As a general rule, this kind of reassessment cannot be done through a petition for review on
certiorari under Rule 45 of the Rules of Court, because this Court is not a trier of facts; it reviews only questions of law. 10 Petitioner has not given us
ample reasons to depart from the general rule.

On the basis of the facts found by the CA and the RTC, we find that petitioner failed to substantiate its case for unlawful detainer. Admittedly, no express
contract existed between the parties. Not shown either was the corporations alleged tolerance of respondents possession.

While possession by tolerance may initially be lawful, it ceases to be so upon the owners demand that the possessor by tolerance vacate the
property.11 To justify an action for unlawful detainer, the permission or tolerance must have been present at the beginning of the
possession.12Otherwise, if the possession was unlawful from the start, an action for unlawful detainer would be an improper remedy. Sarona v.
Villegas13elucidates thus:

A close assessment of the law and the concept of the word tolerance confirms our view heretofore expressed that such tolerance must be present right
from the start of possession sought to be recovered, to categorize a cause of action as one of unlawful detainer not of forcible entry. Indeed, to hold
otherwise would espouse a dangerous doctrine. And for two reasons. First. Forcible entry into the land is an open challenge to the right of the possessor.
Violation of that right authorizes the speedy redress in the inferior court provided for in the rules. If one year from the forcible entry is allowed to lapse
before suit is filed, then the remedy ceases to be speedy; and the possessor is deemed to have waived his right to seek relief in the inferior court.
Second, if a forcible entry action in the inferior court is allowed after the lapse of a number of years, then the result may well be that no action for
forcible entry can really prescribe. No matter how long such defendant is in physical possession, plaintiff will merely make a demand, bring suit in the
inferior court upon a plea of tolerance to prevent prescription to set in and summarily throw him out of the land. Such a conclusion is unreasonable.
Especially if we bear in mind the postulates that proceedings of forcible entry and unlawful detainer are summary in nature, and that the one year time
bar to suit is but in pursuance of the summary nature of the action.14cräläwvirtualibräry

In this case, the Complaint and the other pleadings do not recite any averment of fact that would substantiate the claim of petitioner that it permitted or
tolerated the occupation of the property by Respondent Cruz. The Complaint contains only bare allegations that 1) respondent immediately occupied the
subject property after its sale to her, an action merely tolerated by petitioner;15 and 2) her allegedly illegal occupation of the premises was by mere
tolerance.16cräläwvirtualibräry
These allegations contradict, rather than support, petitioners theory that its cause of action is for unlawful detainer. First, these arguments advance the
view that respondents occupation of the property was unlawful at its inception. Second, they counter the essential requirement in unlawful detainer
cases that petitioners supposed act of sufferance or tolerance must be present right from the start of a possession that is later sought to be
recovered.17cräläwvirtualibräry

As the bare allegation of petitioners tolerance of respondents occupation of the premises has not been proven, the possession should be deemed illegal
from the beginning. Thus, the CA correctly ruled that the ejectment case should have been for forcible entry -- an action that had already prescribed,
however, when the Complaint was filed on May 12, 1999. The prescriptive period of one year for forcible entry cases is reckoned from the date of
respondents actual entry into the land, which in this case was on April 24, 1998.

Second Issue:

Nature of the Case

Much of the difficulty in the present controversy stems from the legal characterization of the ejectment Complaint filed by petitioner. Specifically, was it
for unlawful detainer or for forcible entry?

The answer is given in Section 1 of Rule 70 of the Rules of Court, which we reproduce as follows:

SECTION 1. Who may institute proceedings, and when. - Subject to the provisions of the next succeeding section, a person deprived of the possession of
any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any
land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or
the legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such unlawful
deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or
depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.

While both causes of action deal only with the sole issue of physical or de facto possession,18 the two cases are really separate and distinct, as explained
below:

x x x. In forcible entry, one is deprived of physical possession of land or building by means of force, intimidation, threat, strategy, or stealth. In unlawful
detainer, one unlawfully withholds possession thereof after the expiration or termination of his right to hold possession under any contract, express or
implied. In forcible entry, the possession is illegal from the beginning and the basic inquiry centers on who has the prior possession de facto. In unlawful
detainer, the possession was originally lawful but became unlawful by the expiration or termination of the right to possess, hence the issue of rightful
possession is decisive for, in such action, the defendant is in actual possession and the plaintiffs cause of action is the termination of the defendants
right to continue in possession.
What determines the cause of action is the nature of defendants entry into the land. If the entry is illegal, then the action which may be filed against the
intruder within one year therefrom is forcible entry. If, on the other hand, the entry is legal but the possession thereafter became illegal, the case is one
of unlawful detainer which must be filed within one year from the date of the last demand.19cräläwvirtualibräry

It is axiomatic that what determines the nature of an action as well as which court has jurisdiction over it are the allegations in the complaint 20and the
character of the relief sought.21cräläwvirtualibräry

In its Complaint, petitioner alleged that, having acquired the subject property from Barbara Galino on December 5, 1996,[22 it was the true and
absolute owner[23 thereof; that Galino had sold the property to Respondent Cruz on April 24, 1998;[24 that after the sale, the latter immediately
occupied the property, an action that was merely tolerated by petitioner;[25and that, in a letter given to respondent on April 12, 1999,[26 petitioner had
demanded that the former vacate the property, but that she refused to do so.27 Petitioner thereupon prayed for judgment ordering her to vacate the
property and to pay reasonable rentals for the use of the premises, attorneys fees and the costs of the suit. 28cräläwvirtualibräry

The above allegations appeared to show the elements of unlawful detainer. They also conferred initiatory jurisdiction on the MTCC, because the case was
filed a month after the last demand to vacate -- hence, within the one-year prescriptive period.

However, what was actually proven by petitioner was that possession by respondent had been illegal from the beginning. While the Complaint was
crafted to be an unlawful detainer suit, petitioners real cause of action was for forcible entry, which had already prescribed. Consequently, the MTCC had
no more jurisdiction over the action.

The appellate court, therefore, did not err when it ruled that petitioners Complaint for unlawful detainer was a mere subterfuge or a disguised substitute
action for forcible entry, which had already prescribed. To repeat, to maintain a viable action for forcible entry, plaintiff must have been in prior physical
possession of the property; this is an essential element of the suit.29

Third Issue:

Alleged Acts of Ownership

Petitioner next questions the CAs pronouncement that respondents occupation of the property was an exercise of a right flowing from a claim of
ownership. It submits that the appellate court should not have passed upon the issue of ownership, because the only question for resolution in an
ejectment suit is that of possession de facto.
Clearly, each of the parties claimed the right to possess the disputed property because of alleged ownership of it. Hence, no error could have been
imputed to the appellate court when it passed upon the issue of ownership only for the purpose of resolving the issue of possession de facto.30 The CAs
holding is moreover in accord with jurisprudence and the law.

Execution of a Deed of Sale

Not Sufficient as Delivery

In a contract of sale, the buyer acquires the thing sold only upon its delivery in any of the ways specified in Articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the vendor to the vendee.31 With respect to incorporeal property, Article 1498
lays down the general rule: the execution of a public instrument shall be equivalent to the delivery of the thing that is the object of the contract if, from
the deed, the contrary does not appear or cannot be clearly inferred.

However, ownership is transferred not by contract but by tradition or delivery.32 Nowhere in the Civil Code is it provided that the execution of a Deed of
Sale is a conclusive presumption of delivery of possession of a piece of real estate.33cräläwvirtualibräry

This Court has held that the execution of a public instrument gives rise only to a prima facie presumption of delivery. Such presumption is destroyed
when the delivery is not effected because of a legal impediment.34 Pasagui v. Villablanca35 had earlier ruled that such constructive or symbolic delivery,
being merely presumptive, was deemed negated by the failure of the vendee to take actual possession of the land sold.

It is undisputed that petitioner did not occupy the property from the time it was allegedly sold to it on December 5, 1996 or at any time thereafter.
Nonetheless, it maintains that Galinos continued stay in the premises from the time of the sale up to the time respondents occupation of the same on
April 24, 1998, was possession held on its behalf and had the effect of delivery under the law. 36cräläwvirtualibräry

Both the RTC and the CA disagreed. According to the RTC, petitioner did not gain control and possession of the property, because Galino had continued
to exercise ownership rights over the realty. That is, she had remained in possession, continued to declare it as her property for tax purposes and sold it
to respondent in 1998.

For its part, the CA found it highly unbelievable that petitioner -- which claims to be the owner of the disputed property -- would tolerate possession of
the property by respondent from April 24, 1998 up to October 16, 1998. How could it have been so tolerant despite its knowledge that the property had
been sold to her, and that it was by virtue of that sale that she had undertaken major repairs and improvements on it?

Petitioner should have likewise been put on guard by respondents declaration of the property for tax purposes on April 23, 1998,37 as annotated in the
tax certificate filed seven months later.38 Verily, the tax declaration represented an adverse claim over the unregistered property and was inimical to the
right of petitioner.

Indeed, the above circumstances derogated its claim of control and possession of the property.

Order of Preference in Double

Sale of Immovable Property

The ownership of immovable property sold to two different buyers at different times is governed by Article 1544 of the Civil Code, which reads as
follows:

Article 1544. x x x

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof, to the
person who presents the oldest title, provided there is good faith.

Galino allegedly sold the property in question to petitioner on December 5, 1996 and, subsequently, to respondent on April 24, 1998. Petitioner thus
argues that being the first buyer, it has a better right to own the realty. However, it has not been able to establish that its Deed of Sale was recorded in
the Registry of Deeds of Olongapo City.39 Its claim of an unattested and unverified notation on its Deed of Absolute Sale40 is not equivalent to
registration. It admits that, indeed, the sale has not been recorded in the Registry of Deeds. 41cräläwvirtualibräry

In the absence of the required inscription, the law gives preferential right to the buyer who in good faith is first in possession. In determining the
question of who is first in possession, certain basic parameters have been established by jurisprudence.

First, the possession mentioned in Article 1544 includes not only material but also symbolic possession. 42 Second, possessors in good faith are those who
are not aware of any flaw in their title or mode of acquisition.43 Third, buyers of real property that is in the possession of persons other than the seller
must be wary -- they must investigate the rights of the possessors.44 Fourth, good faith is always presumed; upon those who allege bad faith on the part
of the possessors rests the burden of proof.45cräläwvirtualibräry

Earlier, we ruled that the subject property had not been delivered to petitioner; hence, it did not acquire possession either materially or symbolically. As
between the two buyers, therefore, respondent was first in actual possession of the property.

Petitioner has not proven that respondent was aware that her mode of acquiring the property was defective at the time she acquired it from Galino. At
the time, the property -- which was public land -- had not been registered in the name of Galino; thus, respondent relied on the tax declarations
thereon. As shown, the formers name appeared on the tax declarations for the property until its sale to the latter in 1998. Galino was in fact occupying
the realty when respondent took over possession. Thus, there was no circumstance that could have placed the latter upon inquiry or required her to
further investigate petitioners right of ownership.

Disqualification from Ownership

of Alienable Public Land
Private corporations are disqualified from acquiring lands of the public domain, as provided under Section 3 of Article XII of the Constitution, which we
quote:

Sec. 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public
domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding
twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may not lease not more than five hundred hectares, or
acquire not more than twelve hectares thereof by purchase, homestead, or grant. x x x. (Italics supplied)

While corporations cannot acquire land of the public domain, they can however acquire private land. 46 Hence, the next issue that needs to be resolved is
the determination of whether the disputed property is private land or of the public domain.

According to the certification by the City Planning and Development Office of Olongapo City, the contested property in this case is alienable and
disposable public land.47 It was for this reason that respondent filed a miscellaneous sales application to acquire it.48cräläwvirtualibräry

On the other hand, petitioner has not presented proof that, at the time it purchased the property from Galino, the property had ceased to be of the
public domain and was already private land. The established rule is that alienable and disposable land of the public domain held and occupied by a
possessor -- personally or through predecessors-in-interest, openly, continuously, and exclusively for 30 years -- is ipso jure converted to private
property by the mere lapse of time.49cräläwvirtualibräry

In view of the foregoing, we affirm the appellate courts ruling that respondent is entitled to possession de facto. This determination, however, is only
provisional in nature.50 Well-settled is the rule that an award of possession de facto over a piece of property does not constitute res judicata as to the
issue of its ownership.51cräläwvirtualibräry

WHEREFORE, this Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioner.

SO ORDERED.

Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

Puno, (Chairman), on official leave.

(10)

(11)
G.R. No. 122156 February 3, 1997

MANILA PRINCE HOTEL petitioner,

vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL, respondents.

BELLOSILLO, J.:

The FiIipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos,1 is in oked by petitioner in its bid to acquire 51% of the shares of the Manila Hotel
Corporation (MHC) which owns the historic Manila Hotel. Opposing, respondents maintain that the provision is not self-executing but requires an
implementing legislation for its enforcement. Corollarily, they ask whether the 51% shares form part of the national economy and patrimony covered by
the protective mantle of the Constitution.

The controversy arose when respondent Government Service Insurance System (GSIS), pursuant to the privatization program of the Philippine
Government under Proclamation No. 50 dated 8 December 1986, decided to sell through public bidding 30% to 51% of the issued and outstanding
shares of respondent MHC. The winning bidder, or the eventual "strategic partner," is to provide management expertise and/or an international
marketing/reservation system, and financial support to strengthen the profitability and performance of the Manila Hotel.2 In a close bidding held on 18
September 1995 only two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipino corporation, which offered to buy 51% of the
MHC or 15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same
number of shares at P44.00 per share, or P2.42 more than the bid of petitioner.

Pertinent provisions of the bidding rules prepared by respondent GSIS state —

I. EXECUTION OF THE NECESSARY CONTRACTS WITH GSIS/MHC —

1. The Highest Bidder must comply with the conditions set forth below by October 23, 1995 (reset to November 3, 1995) or the Highest
Bidder will lose the right to purchase the Block of Shares and GSIS will instead offer the Block of Shares to the other Qualified Bidders:

a. The Highest Bidder must negotiate and execute with the GSIS/MHC the Management Contract, International
Marketing/Reservation System Contract or other type of contract specified by the Highest Bidder in its strategic plan for
the Manila Hotel. . . .

b. The Highest Bidder must execute the Stock Purchase and Sale Agreement with GSIS . . . .
 K. DECLARATION OF THE WINNING BIDDER/STRATEGIC PARTNER —

The Highest Bidder will be declared the Winning Bidder/Strategic Partner after the following conditions are met:

a. Execution of the necessary contracts with GSIS/MHC not later than October 23, 1995 (reset to November 3, 1995);
and

b. Requisite approvals from the GSIS/MHC and COP (Committee on Privatization)/OGCC (Office of the Government
Corporate Counsel) are obtained.3

Pending the declaration of Renong Berhad as the winning bidder/strategic partner and the execution of the necessary contracts, petitioner in a letter to
respondent GSIS dated 28 September 1995 matched the bid price of P44.00 per share tendered by Renong Berhad. 4 In a subsequent letter dated 10
October 1995 petitioner sent a manager's check issued by Philtrust Bank for Thirty-three Million Pesos (P33.000.000.00) as Bid Security to match the bid
of the Malaysian Group, Messrs. Renong Berhad . . .5 which respondent GSIS refused to accept.

On 17 October 1995, perhaps apprehensive that respondent GSIS has disregarded the tender of the matching bid and that the sale of 51% of the MHC
may be hastened by respondent GSIS and consummated with Renong Berhad, petitioner came to this Court on prohibition and mandamus. On 18
October 1995 the Court issued a temporary restraining order enjoining respondents from perfecting and consummating the sale to the Malaysian firm.

On 10 September 1996 the instant case was accepted by the Court En Banc after it was referred to it by the First Division. The case was then set for oral
arguments with former Chief Justice Enrique M. Fernando and Fr. Joaquin G. Bernas, S.J., as amici curiae.

In the main, petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution and submits that the Manila Hotel has been identified with the
Filipino nation and has practically become a historical monument which reflects the vibrancy of Philippine heritage and culture. It is a proud legacy of an
earlier generation of Filipinos who believed in the nobility and sacredness of independence and its power and capacity to release the full potential of the
Filipino people. To all intents and purposes, it has become a part of the national patrimony.6 Petitioner also argues that since 51% of the shares of the
MHC carries with it the ownership of the business of the hotel which is owned by respondent GSIS, a government-owned and controlled corporation, the
hotel business of respondent GSIS being a part of the tourism industry is unquestionably a part of the national economy. Thus, any transaction involving
51% of the shares of stock of the MHC is clearly covered by the term national economy, to which Sec. 10, second par., Art. XII, 1987 Constitution,
applies.7

It is also the thesis of petitioner that since Manila Hotel is part of the national patrimony and its business also unquestionably part of the national
economy petitioner should be preferred after it has matched the bid offer of the Malaysian firm. For the bidding rules mandate that if for any reason, the
Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that
these Qualified Bidders are willing to match the highest bid in terms of price per share.8
Respondents except. They maintain that: First, Sec. 10, second par., Art. XII, of the 1987 Constitution is merely a statement of principle and policy
since it is not a self-executing provision and requires implementing legislation(s) . . . Thus, for the said provision to Operate, there must be existing laws
"to lay down conditions under which business may be done."9

Second, granting that this provision is self-executing, Manila Hotel does not fall under the term national patrimony which only refers to lands of the
public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna and all marine wealth in its territorial sea, and exclusive marine zone as cited in the first and second paragraphs of Sec. 2, Art. XII, 1987
Constitution. According to respondents, while petitioner speaks of the guests who have slept in the hotel and the events that have transpired therein
which make the hotel historic, these alone do not make the hotel fall under the patrimony of the nation. What is more, the mandate of the Constitution
is addressed to the State, not to respondent GSIS which possesses a personality of its own separate and distinct from the Philippines as a State.

Third, granting that the Manila Hotel forms part of the national patrimony, the constitutional provision invoked is still inapplicable since what is being
sold is only 51% of the outstanding shares of the corporation, not the hotel building nor the land upon which the building stands. Certainly, 51% of the
equity of the MHC cannot be considered part of the national patrimony. Moreover, if the disposition of the shares of the MHC is really contrary to the
Constitution, petitioner should have questioned it right from the beginning and not after it had lost in the bidding.

Fourth, the reliance by petitioner on par. V., subpar. J. 1., of the bidding rules which provides that if for any reason, the Highest Bidder cannot be
awarded the Block of Shares, GSIS may offer this to the other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders
are willing to match the highest bid in terms of price per share, is misplaced. Respondents postulate that the privilege of submitting a matching bid has
not yet arisen since it only takes place if for any reason, the Highest Bidder cannot be awarded the Block of Shares. Thus the submission by petitioner of
a matching bid is premature since Renong Berhad could still very well be awarded the block of shares and the condition giving rise to the exercise of the
privilege to submit a matching bid had not yet taken place.

Finally, the prayer for prohibition grounded on grave abuse of discretion should fail since respondent GSIS did not exercise its discretion in a capricious,
whimsical manner, and if ever it did abuse its discretion it was not so patent and gross as to amount to an evasion of a positive duty or a virtual refusal
to perform a duty enjoined by law. Similarly, the petition for mandamus should fail as petitioner has no clear legal right to what it demands and
respondents do not have an imperative duty to perform the act required of them by petitioner.

We now resolve. A constitution is a system of fundamental laws for the governance and administration of a nation. It is supreme, imperious, absolute
and unalterable except by the authority from which it emanates. It has been defined as the fundamental and paramount law of the nation. 10 It
prescribes the permanent framework of a system of government, assigns to the different departments their respective powers and duties, and
establishes certain fixed principles on which government is founded. The fundamental conception in other words is that it is a supreme law to which all
other laws must conform and in accordance with which all private rights must be determined and all public authority administered. 11 Under the doctrine
of constitutional supremacy, if a law or contract violates any norm of the constitution that law or contract whether promulgated by the legislative or by
the executive branch or entered into by private persons for private purposes is null and void and without any force and effect. Thus, since the
Constitution is the fundamental, paramount and supreme law of the nation, it is deemed written in every statute and contract.

Admittedly, some constitutions are merely declarations of policies and principles. Their provisions command the legislature to enact laws and carry out
the purposes of the framers who merely establish an outline of government providing for the different departments of the governmental machinery and
securing certain fundamental and inalienable rights of citizens. 12 A provision which lays down a general principle, such as those found in Art. II of the
1987 Constitution, is usually not self-executing. But a provision which is complete in itself and becomes operative without the aid of supplementary or
enabling legislation, or that which supplies sufficient rule by means of which the right it grants may be enjoyed or protected, is self-executing. Thus a
constitutional provision is self-executing if the nature and extent of the right conferred and the liability imposed are fixed by the constitution itself, so
that they can be determined by an examination and construction of its terms, and there is no language indicating that the subject is referred to the
legislature for action. 13

As against constitutions of the past, modern constitutions have been generally drafted upon a different principle and have often become in effect
extensive codes of laws intended to operate directly upon the people in a manner similar to that of statutory enactments, and the function of
constitutional conventions has evolved into one more like that of a legislative body. Hence, unless it is expressly provided that a legislative act is
necessary to enforce a constitutional mandate, the presumption now is that all provisions of the constitution are self-executing If the constitutional
provisions are treated as requiring legislation instead of self-executing, the legislature would have the power to ignore and practically nullify the mandate
of the fundamental law.14 This can be cataclysmic. That is why the prevailing view is, as it has always been, that —

. . . in case of doubt, the Constitution should be considered self-executing rather than non-self-executing . . . . Unless the contrary is
clearly intended, the provisions of the Constitution should be considered self-executing, as a contrary rule would give the legislature
discretion to determine when, or whether, they shall be effective. These provisions would be subordinated to the will of the lawmaking
body, which could make them entirely meaningless by simply refusing to pass the needed implementing statute. 15

Respondents argue that Sec. 10, second par., Art. XII, of the 1987 Constitution is clearly not self-executing, as they quote from discussions on the floor
of the 1986 Constitutional Commission —

MR. RODRIGO. Madam President, I am asking this question as the Chairman of the Committee on Style. If the wording of
"PREFERENCE" is given to QUALIFIED FILIPINOS," can it be understood as a preference to qualified Filipinos vis-a-
vis Filipinos who are not qualified. So, why do we not make it clear? To qualified Filipinos as against aliens?

THE PRESIDENT. What is the question of Commissioner Rodrigo? Is it to remove the word "QUALIFIED?".

MR. RODRIGO. No, no, but say definitely "TO QUALIFIED FILIPINOS" as against whom? As against aliens or over aliens?

MR. NOLLEDO. Madam President, I think that is understood. We use the word "QUALIFIED" because the existing laws or
prospective laws will always lay down conditions under which business may be done. For example, qualifications on the
setting up of other financial structures, et cetera (emphasis supplied by respondents)

MR. RODRIGO. It is just a matter of style.

MR. NOLLEDO Yes, 16

Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as not to make it appear that it is non-self-executing but simply for purposes
of style. But, certainly, the legislature is not precluded from enacting other further laws to enforce the constitutional provision so long as the
contemplated statute squares with the Constitution. Minor details may be left to the legislature without impairing the self-executing nature of
constitutional provisions.

In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the exercise of powers directly granted by the
constitution, further the operation of such a provision, prescribe a practice to be used for its enforcement, provide a convenient remedy for the
protection of the rights secured or the determination thereof, or place reasonable safeguards around the exercise of the right. The mere fact that
legislation may supplement and add to or prescribe a penalty for the violation of a self-executing constitutional provision does not render such a
provision ineffective in the absence of such legislation. The omission from a constitution of any express provision for a remedy for enforcing a right or
liability is not necessarily an indication that it was not intended to be self-executing. The rule is that a self-executing provision of the constitution does
not necessarily exhaust legislative power on the subject, but any legislation must be in harmony with the constitution, further the exercise of
constitutional right and make it more available. 17 Subsequent legislation however does not necessarily mean that the subject constitutional provision is
not, by itself, fully enforceable.

Respondents also argue that the non-self-executing nature of Sec. 10, second par., of Art. XII is implied from the tenor of the first and third paragraphs
of the same section which undoubtedly are not self-executing. 18 The argument is flawed. If the first and third paragraphs are not self-executing because
Congress is still to enact measures to encourage the formation and operation of enterprises fully owned by Filipinos, as in the first paragraph, and the
State still needs legislation to regulate and exercise authority over foreign investments within its national jurisdiction, as in the third paragraph, then
a fortiori, by the same logic, the second paragraph can only be self-executing as it does not by its language require any legislation in order to give
preference to qualified Filipinos in the grant of rights, privileges and concessions covering the national economy and patrimony. A constitutional provision
may be self-executing in one part and non-self-executing in another. 19

Even the cases cited by respondents holding that certain constitutional provisions are merely statements of principles and policies, which are basically
not self-executing and only placed in the Constitution as moral incentives to legislation, not as judicially enforceable rights — are simply not in
point. Basco v. Philippine Amusements and Gaming Corporation 20 speaks of constitutional provisions on personal dignity, 21 the sanctity of family
life, 22 the vital role of the youth in nation-building 23 the promotion of social justice, 24 and the values of education. 25 Tolentino v. Secretary of
Finance 26 refers to the constitutional provisions on social justice and human rights 27 and on education. 28 Lastly, Kilosbayan, Inc. v. Morato 29 cites
provisions on the promotion of general welfare, 30 the sanctity of family life, 31 the vital role of the youth in nation-building 32 and the promotion of total
human liberation and development. 33A reading of these provisions indeed clearly shows that they are not judicially enforceable constitutional rights but
merely guidelines for legislation. The very terms of the provisions manifest that they are only principles upon which the legislations must be based. Res
ipsa loquitur.

On the other hand, Sec. 10, second par., Art. XII of the of the 1987 Constitution is a mandatory, positive command which is complete in itself and which
needs no further guidelines or implementing laws or rules 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 When our Constitution mandates that [i]n the grant of rights, privileges, and concessions covering national
economy and patrimony, the State shall give preference to qualified Filipinos, it means just that — qualified Filipinos shall be preferred. And when our
Constitution declares that a right exists in certain specified circumstances an action may be maintained to enforce such right notwithstanding the
absence of any legislation on the subject; consequently, if there is no statute especially enacted to enforce such constitutional right, such right enforces
itself by its own inherent potency and puissance, and from which all legislations must take their bearings. Where there is a right there is a remedy. Ubi
jus ibi remedium.

As regards our national patrimony, a member of the 1986 Constitutional Commission 34 explains —

The patrimony of the Nation that should be conserved and developed refers not only to out rich natural resources but also to the cultural
heritage of out race. It also refers to our intelligence in arts, sciences and letters. Therefore, we should develop not only our lands,
forests, mines and other natural resources but also the mental ability or faculty of our people.

We agree. In its plain and ordinary meaning, the term patrimony pertains to heritage. 35 When the Constitution speaks of national patrimony, it refers
not only to the natural resources of the Philippines, as the Constitution could have very well used the term natural resources, but also to the cultural
heritage of the Filipinos.

Manila Hotel has become a landmark — a living testimonial of Philippine heritage. While it was restrictively an American hotel when it first opened in
1912, it immediately evolved to be truly Filipino, Formerly a concourse for the elite, it has since then become the venue of various significant events
which have shaped Philippine history. It was called the Cultural Center of the 1930's. It was the site of the festivities during the inauguration of the
Philippine Commonwealth. Dubbed as the Official Guest House of the Philippine Government. it plays host to dignitaries and official visitors who are
accorded the traditional Philippine hospitality. 36

The history of the hotel has been chronicled in the book The Manila Hotel: The Heart and Memory of a City. 37During World War II the hotel was
converted by the Japanese Military Administration into a military headquarters. When the American forces returned to recapture Manila the hotel was
selected by the Japanese together with Intramuros as the two (2) places fro their final stand. Thereafter, in the 1950's and 1960's, the hotel became the
center of political activities, playing host to almost every political convention. In 1970 the hotel reopened after a renovation and reaped numerous
international recognitions, an acknowledgment of the Filipino talent and ingenuity. In 1986 the hotel was the site of a failed coup d' etat where an
aspirant for vice-president was "proclaimed" President of the Philippine Republic.

For more than eight (8) decades Manila Hotel has bore mute witness to the triumphs and failures, loves and frustrations of the Filipinos; its existence is
impressed with public interest; its own historicity associated with our struggle for sovereignty, independence and nationhood. Verily, Manila Hotel has
become part of our national economy and patrimony. For sure, 51% of the equity of the MHC comes within the purview of the constitutional shelter for it
comprises the majority and controlling stock, so that anyone who acquires or owns the 51% will have actual control and management of the hotel. In
this instance, 51% of the MHC cannot be disassociated from the hotel and the land on which the hotel edifice stands. Consequently, we cannot sustain
respondents' claim that the Filipino First Policy provision is not applicable since what is being sold is only 51% of the outstanding shares of the
corporation, not the Hotel building nor the land upon which the building stands. 38

The argument is pure sophistry. The term qualified Filipinos as used in Our Constitution also includes corporations at least 60% of which is owned by
Filipinos. This is very clear from the proceedings of the 1986 Constitutional Commission

THE PRESIDENT. Commissioner Davide is recognized.

 MR. DAVIDE. I would like to introduce an amendment to the Nolledo amendment. And the amendment would consist in
substituting the words "QUALIFIED FILIPINOS" with the following: "CITIZENS OF THE PHILIPPINES OR CORPORATIONS
OR ASSOCIATIONS WHOSE CAPITAL OR CONTROLLING STOCK IS WHOLLY OWNED BY SUCH CITIZENS.

xxx xxx xxx

MR. MONSOD. Madam President, apparently the proponent is agreeable, but we have to raise a question. Suppose it is a
corporation that is 80-percent Filipino, do we not give it preference?

MR. DAVIDE. The Nolledo amendment would refer to an individual Filipino. What about a corporation wholly owned by
Filipino citizens?

MR. MONSOD. At least 60 percent, Madam President.

MR. DAVIDE. Is that the intention?

MR. MONSOD. Yes, because, in fact, we would be limiting it if we say that the preference should only be 100-percent
Filipino.

MR: DAVIDE. I want to get that meaning clear because "QUALIFIED FILIPINOS" may refer only to individuals and not to
juridical personalities or entities.

MR. MONSOD. We agree, Madam President. 39

xxx xxx xxx

MR. RODRIGO. Before we vote, may I request that the amendment be read again.

MR. NOLLEDO. The amendment will read: "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE
NATIONAL ECONOMY AND PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS." And the word
"Filipinos" here, as intended by the proponents, will include not only individual Filipinos but also Filipino-controlled
entities or entities fully-controlled by Filipinos. 40

The phrase preference to qualified Filipinos was explained thus —

MR. FOZ. Madam President, I would like to request Commissioner Nolledo to please restate his amendment so that I can
ask a question.
 MR. NOLLEDO. "IN THE GRANT OF RIGHTS, PRIVILEGES AND CONCESSIONS COVERING THE NATIONAL ECONOMY AND
PATRIMONY, THE STATE SHALL GIVE PREFERENCE TO QUALIFIED FILIPINOS."

MR FOZ. In connection with that amendment, if a foreign enterprise is qualified and a Filipino enterprise is also qualified,
will the Filipino enterprise still be given a preference?

MR. NOLLEDO. Obviously.

MR. FOZ. If the foreigner is more qualified in some aspects than the Filipino enterprise, will the Filipino still be preferred?

MR. NOLLEDO. The answer is "yes."

MR. FOZ. Thank you, 41

Expounding further on the Filipino First Policy provision Commissioner Nolledo continues —

MR. NOLLEDO. Yes, Madam President. Instead of "MUST," it will be "SHALL — THE STATE SHALL GlVE PREFERENCE TO QUALIFIED
FILIPINOS. This embodies the so-called "Filipino First" policy. That means that Filipinos should be given preference in the grant of
concessions, privileges and rights covering the national patrimony. 42

The exchange of views in the sessions of the Constitutional Commission regarding the subject provision was still further clarified by Commissioner
Nolledo 43 —

Paragraph 2 of Section 10 explicitly mandates the "Pro-Filipino" bias in all economic concerns. It is better known as the FILIPINO FIRST
Policy . . . This provision was never found in previous Constitutions . . . .

The term "qualified Filipinos" simply means that preference shall be given to those citizens who can make a viable contribution to the
common good, because of credible competence and efficiency. It certainly does NOT mandate the pampering and preferential treatment
to Filipino citizens or organizations that are incompetent or inefficient, since such an indiscriminate preference would be counter
productive and inimical to the common good.

In the granting of economic rights, privileges, and concessions, when a choice has to be made between a "qualified foreigner" end a
"qualified Filipino," the latter shall be chosen over the former."

Lastly, the word qualified is also determinable. Petitioner was so considered by respondent GSIS and selected as one of the qualified bidders. It was pre-
qualified by respondent GSIS in accordance with its own guidelines so that the sole inference here is that petitioner has been found to be possessed of
proven management expertise in the hotel industry, or it has significant equity ownership in another hotel company, or it has an overall management
and marketing proficiency to successfully operate the Manila Hotel. 44

The penchant to try to whittle away the mandate of the Constitution by arguing that the subject provision is not self-executory and requires
implementing legislation is quite disturbing. The attempt to violate a clear constitutional provision — by the government itself — is only too distressing.
To adopt such a line of reasoning is to renounce the duty to ensure faithfulness to the Constitution. For, even some of the provisions of the Constitution
which evidently need implementing legislation have juridical life of their own and can be the source of a judicial remedy. We cannot simply afford the
government a defense that arises out of the failure to enact further enabling, implementing or guiding legislation. In fine, the discourse of Fr. Joaquin G.
Bernas, S.J., on constitutional government is apt —

The executive department has a constitutional duty to implement laws, including the Constitution, even before Congress acts — provided
that there are discoverable legal standards for executive action. When the executive acts, it must be guided by its own understanding of
the constitutional command and of applicable laws. The responsibility for reading and understanding the Constitution and the laws is not
the sole prerogative of Congress. If it were, the executive would have to ask Congress, or perhaps the Court, for an interpretation every
time the executive is confronted by a constitutional command. That is not how constitutional government operates. 45

Respondents further argue that the constitutional provision is addressed to the State, not to respondent GSIS which by itself possesses a separate and
distinct personality. This argument again is at best specious. It is undisputed that the sale of 51% of the MHC could only be carried out with the prior
approval of the State acting through respondent Committee on Privatization. As correctly pointed out by Fr. Joaquin G. Bernas, S.J., this fact alone
makes the sale of the assets of respondents GSIS and MHC a "state action." In constitutional jurisprudence, the acts of persons distinct from the
government are considered "state action" covered by the Constitution (1) when the activity it engages in is a "public function;" (2) when the government
is so significantly involved with the private actor as to make the government responsible for his action; and, (3) when the government has approved or
authorized the action. It is evident that the act of respondent GSIS in selling 51% of its share in respondent MHC comes under the second and third
categories of "state action." Without doubt therefore the transaction. although entered into by respondent GSIS, is in fact a transaction of the State and
therefore subject to the constitutional command. 46

When the Constitution addresses the State it refers not only to the people but also to the government as elements of the State. After all, government is
composed of three (3) divisions of power — legislative, executive and judicial. Accordingly, a constitutional mandate directed to the State is
correspondingly directed to the three(3) branches of government. It is undeniable that in this case the subject constitutional injunction is addressed
among others to the Executive Department and respondent GSIS, a government instrumentality deriving its authority from the State.

It should be stressed that while the Malaysian firm offered the higher bid it is not yet the winning bidder. The bidding rules expressly provide that the
highest bidder shall only be declared the winning bidder after it has negotiated and executed the necessary contracts, and secured the requisite
approvals. Since the "Filipino First Policy provision of the Constitution bestows preference on qualified Filipinos the mere tending of the highest bid is not
an assurance that the highest bidder will be declared the winning bidder. Resultantly, respondents are not bound to make the award yet, nor are they
under obligation to enter into one with the highest bidder. For in choosing the awardee respondents are mandated to abide by the dictates of the 1987
Constitution the provisions of which are presumed to be known to all the bidders and other interested parties.
Adhering to the doctrine of constitutional supremacy, the subject constitutional provision is, as it should be, impliedly written in the bidding rules issued
by respondent GSIS, lest the bidding rules be nullified for being violative of the Constitution. It is a basic principle in constitutional law that all laws and
contracts must conform with the fundamental law of the land. Those which violate the Constitution lose their reason for being.

Paragraph V. J. 1 of the bidding rules provides that [if] for any reason the Highest Bidder cannot be awarded the Block of Shares, GSIS may offer this to
other Qualified Bidders that have validly submitted bids provided that these Qualified Bidders are willing to match the highest bid in terms of price per
share. 47 Certainly, the constitutional mandate itself is reason enough not to award the block of shares immediately to the foreign bidder notwithstanding
its submission of a higher, or even the highest, bid. In fact, we cannot conceive of a stronger reason than the constitutional injunction itself.

In the instant case, where a foreign firm submits the highest bid in a public bidding concerning the grant of rights, privileges and concessions covering
the national economy and patrimony, thereby exceeding the bid of a Filipino, there is no question that the Filipino will have to be allowed to match the
bid of the foreign entity. And if the Filipino matches the bid of a foreign firm the award should go to the Filipino. It must be so if we are to give life and
meaning to the Filipino First Policy provision of the 1987 Constitution. For, while this may neither be expressly stated nor contemplated in the bidding
rules, the constitutional fiat is, omnipresent to be simply disregarded. To ignore it would be to sanction a perilous skirting of the basic law.

This Court does not discount the apprehension that this policy may discourage foreign investors. But the Constitution and laws of the Philippines are
understood to be always open to public scrutiny. These are given factors which investors must consider when venturing into business in a foreign
jurisdiction. Any person therefore desiring to do business in the Philippines or with any of its agencies or instrumentalities is presumed to know his rights
and obligations under the Constitution and the laws of the forum.

The argument of respondents that petitioner is now estopped from questioning the sale to Renong Berhad since petitioner was well aware from the
beginning that a foreigner could participate in the bidding is meritless. Undoubtedly, Filipinos and foreigners alike were invited to the bidding. But
foreigners may be awarded the sale only if no Filipino qualifies, or if the qualified Filipino fails to match the highest bid tendered by the foreign entity. In
the case before us, while petitioner was already preferred at the inception of the bidding because of the constitutional mandate, petitioner had not yet
matched the bid offered by Renong Berhad. Thus it did not have the right or personality then to compel respondent GSIS to accept its earlier bid.
Rightly, only after it had matched the bid of the foreign firm and the apparent disregard by respondent GSIS of petitioner's matching bid did the latter
have a cause of action.

Besides, there is no time frame for invoking the constitutional safeguard unless perhaps the award has been finally made. To insist on selling the Manila
Hotel to foreigners when there is a Filipino group willing to match the bid of the foreign group is to insist that government be treated as any other
ordinary market player, and bound by its mistakes or gross errors of judgment, regardless of the consequences to the Filipino people. The
miscomprehension of the Constitution is regrettable. Thus we would rather remedy the indiscretion while there is still an opportunity to do so than let
the government develop the habit of forgetting that the Constitution lays down the basic conditions and parameters for its actions.

Since petitioner has already matched the bid price tendered by Renong Berhad pursuant to the bidding rules, respondent GSIS is left with no alternative
but to award to petitioner the block of shares of MHC and to execute the necessary agreements and documents to effect the sale in accordance not only
with the bidding guidelines and procedures but with the Constitution as well. The refusal of respondent GSIS to execute the corresponding documents
with petitioner as provided in the bidding rules after the latter has matched the bid of the Malaysian firm clearly constitutes grave abuse of discretion.
The Filipino First Policy is a product of Philippine nationalism. It is embodied in the 1987 Constitution not merely to be used as a guideline for future
legislation but primarily to be enforced; so must it be enforced. This Court as the ultimate guardian of the Constitution will never shun, under any
reasonable circumstance, the duty of upholding the majesty of the Constitution which it is tasked to defend. It is worth emphasizing that it is not the
intention of this Court to impede and diminish, much less undermine, the influx of foreign investments. Far from it, the Court encourages and welcomes
more business opportunities but avowedly sanctions the preference for Filipinos whenever such preference is ordained by the Constitution. The position
of the Court on this matter could have not been more appropriately articulated by Chief Justice Narvasa —

As scrupulously as it has tried to observe that it is not its function to substitute its judgment for that of the legislature or the executive
about the wisdom and feasibility of legislation economic in nature, the Supreme Court has not been spared criticism for decisions
perceived as obstacles to economic progress and development . . . in connection with a temporary injunction issued by the Court's First
Division against the sale of the Manila Hotel to a Malaysian Firm and its partner, certain statements were published in a major daily to
the effect that injunction "again demonstrates that the Philippine legal system can be a major obstacle to doing business here.

Let it be stated for the record once again that while it is no business of the Court to intervene in contracts of the kind referred to or set
itself up as the judge of whether they are viable or attainable, it is its bounden duty to make sure that they do not violate the
Constitution or the laws, or are not adopted or implemented with grave abuse of discretion amounting to lack or excess of jurisdiction. It
will never shirk that duty, no matter how buffeted by winds of unfair and ill-informed criticism. 48

Privatization of a business asset for purposes of enhancing its business viability and preventing further losses, regardless of the character of the asset,
should not take precedence over non-material values. A commercial, nay even a budgetary, objective should not be pursued at the expense of national
pride and dignity. For the Constitution enshrines higher and nobler non-material values. Indeed, the Court will always defer to the Constitution in the
proper governance of a free society; after all, there is nothing so sacrosanct in any economic policy as to draw itself beyond judicial review when the
Constitution is involved. 49

Nationalism is inherent, in the very concept of the Philippines being a democratic and republican state, with sovereignty residing in the Filipino people
and from whom all government authority emanates. In nationalism, the happiness and welfare of the people must be the goal. The nation-state can
have no higher purpose. Any interpretation of any constitutional provision must adhere to such basic concept. Protection of foreign investments, while
laudible, is merely a policy. It cannot override the demands of nationalism. 50

The Manila Hotel or, for that matter, 51% of the MHC, is not just any commodity to be sold to the highest bidder solely for the sake of privatization. We
are not talking about an ordinary piece of property in a commercial district. We are talking about a historic relic that has hosted many of the most
important events in the short history of the Philippines as a nation. We are talking about a hotel where heads of states would prefer to be housed as a
strong manifestation of their desire to cloak the dignity of the highest state function to their official visits to the Philippines. Thus the Manila Hotel has
played and continues to play a significant role as an authentic repository of twentieth century Philippine history and culture. In this sense, it has become
truly a reflection of the Filipino soul — a place with a history of grandeur; a most historical setting that has played a part in the shaping of a country. 51

This Court cannot extract rhyme nor reason from the determined efforts of respondents to sell the historical landmark — this Grand Old Dame of hotels
in Asia — to a total stranger. For, indeed, the conveyance of this epic exponent of the Filipino psyche to alien hands cannot be less than mephistophelian
for it is, in whatever manner viewed, a veritable alienation of a nation's soul for some pieces of foreign silver. And so we ask: What advantage, which
cannot be equally drawn from a qualified Filipino, can be gained by the Filipinos Manila Hotel — and all that it stands for — is sold to a non-Filipino? How
much of national pride will vanish if the nation's cultural heritage is entrusted to a foreign entity? On the other hand, how much dignity will be preserved
and realized if the national patrimony is safekept in the hands of a qualified, zealous and well-meaning Filipino? This is the plain and simple meaning of
the Filipino First Policy provision of the Philippine Constitution. And this Court, heeding the clarion call of the Constitution and accepting the duty of being
the elderly watchman of the nation, will continue to respect and protect the sanctity of the Constitution.

WHEREFORE, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE
OF THE GOVERNMENT CORPORATE COUNSEL are directed to CEASE and DESIST from selling 51% of the shares of the Manila Hotel Corporation to
RENONG BERHAD, and to ACCEPT the matching bid of petitioner MANILA PRINCE HOTEL CORPORATION to purchase the subject 51% of the shares of
the Manila Hotel Corporation at P44.00 per share and thereafter to execute the necessary clearances and to do such other acts and deeds as may be
necessary for purpose.

SO ORDERED.

Regalado, Davide, Jr., Romero, Kapunan, Francisco and Hermosisima, Jr., JJ., concur.

case digest

Manila Prince Hotel v GSIS (DIGEST)

MANILA PRINCE HOTEL, petitioner v GSIS, respondent (DIGEST)

G.R. No. 122156; February 3, 1997

TOPIC: Non-Self Executing v Self Executing Constitutional Provisions

FACTS:

The Government Service Insurance System (GSIS) decided to sell through public bidding 30% to 51% of the issued and outstanding shares of the Manila
Hotel (MHC).
In a close bidding, two bidders participated: Manila Prince Hotel Corporation (MPHC), a Filipino corporation, which offered to buy 51% of the MHC at
P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per
share, or P2.42 more than the bid of petitioner.

Pending the declaration of Renong Berhard as the winning bidder and the execution of the contracts, the MPHC matched the bid price in a letter to
GSIS. MPHC sent a manager’s check to the GSIS in a subsequent letter, which GSIS refused to accept. On 17 October 1995, perhaps apprehensive that
GSIS has disregarded the tender of the matching bid, MPHC came to the Court on prohibition and mandamus.

Petitioner invokes Sec. 10, second par., Art. XII, of the 1987 Constitution and submits that the Manila Hotel has been identified with the Filipino nation
and has practically become a historical monument which reflects the vibrancy of Philippine heritage and culture.

Respondents assert that Sec. 10, second par., Art. XII, of the 1987 Constitution is merely a statement of principle and policy since it is not a self-
executing provision and requires implementing legislation(s).

ISSUE:

Whether the provisions of the Constitution, particularly Article XII Section 10, are self-executing.

RULING:

Yes. Sec 10, Art. XII of the 1987 Constitution is a self-executing provision.

A provision which lays down a general principle, such as those found in Article II of the 1987 Constitution, is usually not self-executing. But a provision
which is complete in itself and becomes operative without the aid of supplementary or enabling legislation, or that which supplies sufficient rule by
means of which the right it grants may be enjoyed or protected, is self-executing.

Hence, unless it is expressly provided that a legislative act is necessary to enforce a constitutional mandate, the presumption now is that all provisions of
the constitution are self-executing. If the constitutional provisions are treated as requiring legislation instead of self-executing, the legislature would
have the power to ignore and practically nullify the mandate of the fundamental law.

In fine, Section 10, second paragraph, 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 rules for its enforcement. From its very words the provision does not require any legislation to put it in
operation.
EN BANC

[G.R. No. 118295. May 2, 1997.]

WIGBERTO E. TAÑADA and ANNA DOMINIQUE COSETENG, as members of the Philippine Senate and as taxpayers; GREGORIO ANDOLANA
and JOKER ARROYO as members of the House of Representatives and as taxpayers; NICANOR P. PERLAS and HORACIO R. MORALES, both
as taxpayers: CIVIL LIBERTIES UNION, NATIONAL ECONOMIC PROTECTIONISM ASSOCIATION, CENTER FOR ALTERNATIVE
DEVELOPMENT INITIATIVES, LIKAS-KAYANG KAUNLARAN FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION MOVEMENT,
DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG PILIPINAS, INC., and PHILIPPINE PEASANT INSTITUTE, in representation of various
taxpayers and as non-governmental organizations, Petitioners, v. EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI,
HEHERSON ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI GONZALES, ERNESTO HERRERA, JOSE LINA, GLORIA MACAPAGAL-
ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEÑA, SANTANINA RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO TATAD and
FREDDIE WEBB, in their respective capacities as members of the Philippine Senate who concurred in the ratification by the President of
the Philippines of the Agreement Establishing the World Trade Organization; SALVADOR ENRIQUEZ, in his capacity as Secretary of
Budget and Management; CARIDAD VALDEHUESA, in her capacity as National Treasurer; RIZALINO NAVARRO, in his capacity as
Secretary of Trade and Industry; ROBERTO SEBASTIAN, in his capacity as Secretary of Agriculture; ROBERTO DE OCAMPO, in his capacity
as Secretary of Finance; ROBERTO ROMULO, in his capacity as Secretary of Foreign Affairs; and TEOFISTO T. GUINGONA, in his capacity
as Executive Secretary, Respondents.

Abelardo T . Domondon, for Petitioners.

The Solicitor General for Respondents.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; ESTOPPEL, SUBJECT TO WAIVER. — The matter of estoppel will not be taken up because this defense is waivable and the
respondents have effectively, waived it by not pursuing it in any of their pleadings; in any event, this issue, even if ruled in respondents’ favor, will not
cause the petition’s dismissal as there are petitioners other than the two senators, who are not vulnerable to the defense of estoppel.

2. ID.; ID.; PARTIES; LOCUS PROBANDI; SUBJECT TO WAIVER. — During its deliberations on the case, the Court noted that the respondents did not
question the locus standi of petitioners. Hence, they are also deemed to have waived the benefit of such issue. They probably realized that grave
constitutional issues, expenditures of public funds and serious international commitments of the nation are involved here, and that transcendental public
interest requires that the substantive issues be met head on and decided on the merits, rather than skirted or deflected by procedural matters.

3. ID.; ID.; PETITION SEEKING TO NULLIFY ACT OF SENATE ON GROUND THAT IT CONTRAVENES THE CONSTITUTION, A JUSTICIABLE QUESTION. — In
seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the
duty of the judiciary to settle the dispute. "The question thus posed is judicial rather than political. The duty (to adjudicate) remains to assure that the
supremacy of the Constitution is upheld." Once a "controversy as to the application or interpretation of a constitutional provision is raised before this
Court (as in the instant case), it becomes a legal issue which the Court is bound by constitutional mandate to decide."cralaw virtua1aw library

4. ID.; SUPREME COURT; JUDICIAL POWER; SCOPE. — The jurisdiction of this Court to adjudicate the matters raised in the petition is clearly set out in
the 1987 Constitution, as follows: "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." 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. As
explained by former Chief Justice Roberto Concepcion, "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, 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.

5. ID.; SPECIAL CIVIL ACTIONS; CERTIORARI, PROHIBITION AND MANDAMUS; APPROPRIATE REMEDIES TO REVIEW ACTS OF LEGISLATIVE AND
EXECUTIVE OFFICIALS. — 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.

6. POLITICAL LAW; CONSTITUTION; DECLARATION OF PRINCIPLES AND STATE POLICIES; AIDS OR GUIDES IN THE EXERCISE OF JUDICIAL AND
LEGISLATIVE POWERS. — By its very title, Article II of the Constitution is a "declaration of principles and state policies." The counterpart of this article in
the 1935 Constitution is called the "basic political creed of the nation" by Dean Vicente Sinco. These principles in Article II are not intended to be self-
executing principles ready for enforcement through the courts. They are used by the judiciary as aids or as guides in the exercise of its power of judicial
review, and by the legislature in its enactment of laws. As held in the leading case of Kilosbayan, Incorporated v. Morato, the principles and state policies
enumerated in Article II and some sections of Article XII are not "self-executing provisions, the disregard of which can give rise to a cause of action in
the courts. They do not embody judicially enforceable constitutional rights but guidelines for legislation."cralaw virtua1aw library

7. ID.; ID.; THOUGH IT MANDATES A BIAS IN FAVOR OF FILIPINO GOODS, SERVICES, LABOR AND ENTERPRISES, IT RECOGNIZES THE NEED FOR
BUSINESS EXCHANGE WITH THE REST OF THE WORLD. — 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. 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.
8. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; JOINING THE WORLD TRADE ORGANIZATION, NOT A GRAVE ABUSE OF DISCRETION. — The
basic principles underlying the WTO Agreement recognize the need of developing countries like the Philippines to "share in the growth in international
trade commensurate with the needs of their economic development." GATT has provided built-in protection from unfair foreign competition and trade
practices including anti-dumping measures, countervailing measures and safeguards against import surges. Where local businesses are jeopardized by
unfair foreign competition, the Philippines can avail of these measures. There is hardly therefore any basis for the statement that under the WTO, local
industries and enterprises will all be wiped out and that Filipinos will be deprived of control of the economy. Quite the contrary, the weaker situations of
developing nations like the Philippines have been taken into account; thus, there would be no basis to say that in joining the WTO, the respondents have
gravely abused their discretion. True, they have made a bold decision to steer the ship of state into the yet uncharted sea of economic liberalization. But
such decision cannot be set aside on the ground of grave abuse of discretion simply because we disagree with it or simply because we believe only in
other economic policies. As earlier stated, the Court in taking jurisdiction of this case will not pass upon the advantages and disadvantages of trade
liberalization as an economic policy. It will only, perform its constitutional duty of determining whether the Senate committed grave abuse of discretion.

9. POLITICAL LAW; CONSTITUTION; DECLARATION OF PRINCIPLES AND STATE POLICIES; POLICE OF "SELF-RELIANT AND INDEPENDENT NATIONAL
ECONOMY" DOES NOT RULE OUT ENTRY OF FOREIGN INVESTMENTS, GOODS AND SERVICES. — The constitutional policy of a "self-reliant and
independent national economy" does not necessarily rule out the entry, of foreign investments, goods and services. It contemplates neither "economic
seclusion" nor "mendicancy in the international community."cralaw virtua1aw library

10. POLITICAL LAW; INTERNATIONAL LAW; WORLD TRADE LAW ORGANIZATION/GENERAL AGREEMENT ON TARIFFS AND TRADE; RELIANCE ON "MOST
FAVORED NATIONS", CONSTITUTIONAL. — The WTO reliance on "most favored nation", "national treatment", and "trade without discrimination" cannot
be struck down as unconstitutional as in fact they are rules of equality and reciprocity, that apply to all WTO members. Aside from envisioning a trade
policy based on "equality and reciprocal", the fundamental law encourages industries that are "competitive in both domestic and foreign markets,"
thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual development of robust industries
that can compete with the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete
internationally. And given a free trade environment, Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow
and to prosper against the best offered under a policy of laissez faire.

11. REMEDIAL LAW; ACTIONS; QUESTIONS INVOLVING "JUDGMENT CALLS", NOT SUBJECT TO JUDICIAL REVIEW. — 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.

12. POLITICAL LAW; SOVEREIGNTY; SUBJECT TO RESTRICTIONS AND LIMITATIONS VOLUNTARILY AGREED TO BY THE STATE; CASE AT BAR. — 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. 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." 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. 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 which has contracted valid international obligations is bound to make in its legislations such
modifications as may be necessary to ensure the fulfillment of the obligations undertaken."cralaw virtua1aw library

13. ID.; ID.; ID.; ID. — When the Philippines joined the United Nations as one of its 51 charter members, it consented to restrict its sovereign rights
under the "concept of sovereignty as auto-limitation." Under Article 2 of the UN Charter," (a)ll members shall give the United Nations every assistance in
any action it takes in accordance with the present Charter, and shall refrain from giving assistance to any state against which the United Nations is
taking preventive or enforcement action." Apart from the UN Treaty, the Philippines has entered into many other international pacts — both bilateral and
multilateral — that involve limitations on Philippine sovereignty the Philippines has effectively agreed to limit the exercise of its sovereign powers of
taxation, eminent domain and police power. The underlying consideration in this partial surrender of sovereignty is the reciprocal commitment of the
other contracting states in granting the same privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity characterizes
the Philippine commitments under WTO-GATT. The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived without
violating the Constitution, based on the rationale that the Philippines "adopts the generally accepted principles of international law as part of the law of
the land and adheres to the policy of . . . cooperation and amity with all nations."cralaw virtua1aw library

14. ID.; ID.; ID.; WORLD TRADE ORGANIZATION; PARAGRAPH 1, ARTICLE 34 OF THE GENERAL PROVISIONS AND BASIC PRINCIPLES OF THE
AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS); DOES NOT INTRUDE ON THE POWER OF THE SUPREME
COURT TO PROMULGATE RULES ON PLEADING, PRACTICE AND PROCEDURES. — Petitioners aver that paragraph 1, Article 34 (Process Patents: Burden
of Proof) of the General Provisions and Basic Principles of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) intrudes on
the power of the Supreme Court to promulgate rules concerning pleading, practice and procedures. A WTO Member is required to provide a rule of
disputable (note the words "in the absence of proof to the contrary") presumption that a product shown to be identical to one produced with the use of a
patented process shall be deemed to have been obtained by the (illegal) use of the said patented process, (1) where such product obtained by the
patented product is new, or (2) where there is "substantial likelihood" that the identical product was made with the use of the said patented process but
the owner of the patent could not determine the exact process used in obtaining such identical product. Hence, the "burden of proof" contemplated by
Article 34 should actually be understood as the duty of the alleged patent infringer to overthrow such presumption. Such burden, properly understood,
actually refers to the "burden of evidence" (burden of going forward) placed on the producer of the identical (or fake) product to show that his product
was produced without the use of the patented process. The foregoing notwithstanding, the patent owner still has the "burden of proof" since, regardless
of the presumption provided under paragraph 1 of Article 34, such owner still has to introduce evidence of the existence of the alleged identical product,
the fact that it is "identical" to the genuine one produced by the patented process and the fact of "newness" of the genuine product was made by the
patented process. Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption applies only if (1) the product
obtained by the patented process is NEW or (2) there is a substantial likelihood that the identical product was made by the process and the process
owner has not been able through reasonable effort to determine the process used. Where either of these two provisos does not obtain, members shall be
free to determine the appropriate method of implementing the provisions of TRIPS within their own internal systems and processes. By and large, the
arguments adduced in connection with our disposition of the third issue — derogation of a legislative power — will apply to this fourth issue also. Suffice
it to say that the reciprocity clause more than justifies such intrusion, if any actually exists. Besides, Article 34 does not contain an unreasonable burden,
consistent as it is with due process and the concept of adversarial dispute settlement inherent in our judicial system. So too, since the Philippine is a
signatory to most international conventions on patents, trademarks and copyrights, the adjustments in legislation and rules of procedure will not be
substantial.

15. ID.; ID.; ID.; ID.; MINISTERIAL DECLARATION AND DECISIONS AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES, NOT
SUBJECT TO CONCURRENCE BY THE SENATE. — "A final act, sometimes called protocol de cloture, is an instrument which records the winding up of the
proceedings of a diplomatic conference and usually includes a reproduction of the texts of treaties, conventions, recommendations and other acts agreed
upon and signed by the plenipotentiaries attending the conference." It is not the treaty itself. It is rather a summary of the proceedings of a protracted
conference which may have taken place over several years. The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act
required from its signatories, namely, concurrence of the Senate in the WTO Agreement. The Ministerial Declarations and Decisions were deemed
adopted without need for ratification. They were approved by the ministers by virtue of Article XXV: 1 of GATT which provides that representatives of the
members can meet "to give effect to those provision of this Agreement which invoke joint action, and generally with a view to facilitating the operation
and furthering the objectives of this Agreement." The Understanding on Commitments in Financial Services also approved in Marrakesh does not apply to
the Philippines. It applies only to those 27 Members which "have indicated in their respective schedules of commitments on standstill, elimination of
monopoly, expansion of operation of existing financial service suppliers, temporary entry of personnel, free transfer and processing of information, and
national treatment with respect to access to payment, clearing systems and refinancing available in the normal course of business."cralaw virtua1aw
library

16. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; RESORT THERETO ON GROUND OF GRAVE ABUSE OF DISCRETION AVAILABLE ONLY
WHERE THERE IS NO PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW. — Procedurally. a writ of certiorari grounded on
grave abuse of discretion may be issued by the Court under Rule 65 of the Rules of Court when it is amply shown that petitioners have no other plain,
speedy and adequate remedy in the ordinary course of law.

17. ID.; ID.; ID.; GRAVE ABUSE OF DISCRETION, CONSTRUED. — By grave abuse of discretion is meant such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion
of a positive duty or to a virtual refusal to perform the duty, enjoined or to act at all in contemplation of law. Failure on the part of the petitioner to show
grave abuse of discretion will result in the dismissal of the petition.

18. ID.; ID.; ID.; CONCURRENCE BY THE SENATE IN THE WORLD TRADE ORGANIZATION, NOT A GRAVE ABUSE OF DISCRETION. — 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. 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.

DECISION
PANGANIBAN, J.:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership thereto of the vast majority of countries, has
revolutionized international business and economic relations amongst states. It has irreversibly propelled the world towards trade liberalization and
economic globalization. Liberalization, globalization, deregulation and privatization, the third-millennium buzz words, are ushering in a new borderless
world of business by sweeping away as mere historical relics the heretofore traditional modes of promoting and protecting national economies like tariffs,
export subsidies, import quotas, quantitative restrictions, tax exemptions and currency controls. Finding market niches and becoming the best in specific
industries in a market-driven and export-oriented global scenario are replacing age-old "beggar-thy-neighbor" policies that unilaterally protect weak and
inefficient domestic producers of goods and services. In the words of Peter Drucker, the well-known management guru, "Increased participation in the
world economy has become the key to domestic economic growth and prosperity." chanrobles.com : virtual law library

Brief Historical Background

To hasten worldwide recovery from the devastation wrought by the Second World War, plans for the establishment of three multilateral institutions —
inspired by that grand political body, the United Nations — were discussed at Dumbarton Oaks and Bretton Woods. The first was the World Bank (WB)
which was to address the rehabilitation and reconstruction of war-ravaged and later developing countries; the second, the International Monetary Fund
(IMF) which was to deal with currency problems; and the third, the International Trade Organization (ITO), which was to foster order and predictability
in world trade and to minimize unilateral protectionist policies that invite challenge, even retaliation, from other states. However, for a variety of
reasons, including its non-ratification by the United States, the ITO, unlike the IMF and WB, never took off. What remained was only GATT — the General
Agreement on Tariffs and Trade. GATT was a collection of treaties governing access to the economies of treaty adherents with no institutionalized body
administering the agreements or dependable system of dispute settlement.

After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the Tokyo Round and the Uruguay Round, the world
finally gave birth to that administering body — the World Trade Organization — with the signing of the "Final Act" in Marrakesh, Morocco and the
ratification of the WTO Agreement by its members. 1 1a 1b 1c

Like many other developing countries, the Philippines joined WTO as a founding member with the goal, as articulated by President Fidel V. Ramos in two
letters to the Senate (infra), of improving "Philippine access to foreign markets, especially its major trading partners, through the reduction of tariffs on
its exports, particularly agricultural and industrial products." The President also saw in the WTO the opening of "new opportunities for the services sector
. . ., (the reduction of) costs and uncertainty associated with exporting . . ., and (the attraction of) more investments into the country." Although the
Chief Executive did not expressly mention it in his letter, the Philippines — and this is of special interest to the legal profession — will benefit from the
WTO system of dispute settlement by judicial adjudication through the independent WTO settlement bodies called (1) Dispute Settlement Panels and (2)
Appellate Tribunal. Heretofore, trade disputes were settled mainly through negotiations where solutions were arrived at frequently on the basis of
relative bargaining strengths, and where naturally, weak and underdeveloped countries were at a disadvantage.

The Petition in Brief

Arguing mainly (1) that the WTO requires the Philippines "to place nationals and products of member-countries on the same footing as Filipinos and local
products" and (2) that the WTO "intrudes, limits and/or impairs" the constitutional powers of both Congress and the Supreme Court, the instant petition
before this Court assails the WTO Agreement for violating the mandate of the 1987 Constitution to "develop a self-reliant and independent national
economy effectively controlled by Filipinos . . . (to) give preference to qualified Filipinos (and to) promote the preferential use of Filipino labor, domestic
materials and locally produced goods."cralaw virtua1aw library

Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade liberalization and economic globalization? Does it
proscribe Philippine integration into a global economy that is liberalized, deregulated and privatized? These are the main questions raised in this petition
for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for the nullification, on constitutional grounds, of the
concurrence of the Philippine Senate in the ratification by the President of the Philippines of the Agreement Establishing the World Trade Organization
(WTO Agreement, for brevity) and (2) for the prohibition of its implementation and enforcement through the release and utilization of public funds, the
assignment of public officials and employees, as well as the use of government properties and resources by respondent-heads of various executive
offices concerned therewith. This concurrence is embodied in Senate Resolution No. 97, dated December 14, 1994.

The Facts

On April 15, 1994, Respondent Rizalino Navarro, then Secretary of the Department of Trade and Industry (Secretary Navarro, for brevity), representing
the Government of the Republic of the Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the Results of the Uruguay Round of
Multilateral Negotiations (Final Act, for brevity).

By signing the Final Act, 2 Secretary Navarro on behalf of the Republic of the Philippines, agreed:jgc:chanrobles.com.ph

"(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent authorities, with a view to seeking approval of
the Agreement in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions."cralaw virtua1aw library

On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994 from the President of the Philippines, 3 stating
among others that "the Uruguay Round Final Act is hereby submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the
Constitution."cralaw virtua1aw library

On August 13, 1994, the members of the Philippine Senate received another letter from the President of the Philippines 4 likewise dated August 11,
1994, which stated among others that "the Uruguay Round Final Act, the Agreement Establishing the World Trade Organization, the Ministerial
Declarations and Decisions, and the Understanding on Commitments in Financial Services are hereby submitted to the Senate for its concurrence
pursuant to Section 21, Article VII of the Constitution."cralaw virtua1aw library

On December 9, 1994, the President of the Philippines certified the necessity of the immediate adoption of P.S. 1083, a resolution entitled "Concurring in
the Ratification of the Agreement Establishing the World Trade Organization." 5

On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which "Resolved, as it is hereby resolved, that the Senate concur, as it hereby
concurs, in the ratification by the President of the Philippines of the Agreement Establishing the World Trade Organization." 6 The text of the WTO
Agreement is written on pages 137 et seq. of Volume I of the 36-volume Uruguay Round of Multilateral Trade Negotiations and includes various
agreements and associated legal instruments (identified in the said Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as Multilateral
Trade Agreements, for brevity) as follows:jgc:chanrobles.com.ph

"ANNEX I

Annex 1A: Multilateral Agreement on Trade in Goods

General Agreement on Tariffs and Trade 1994

Agreement on Agriculture

Agreement on the Application of Sanitary and Phytosanitary

Measures

Agreement on Textiles and Clothing

Agreement on Technical Barriers to Trade

Agreement on Trade-Related Investment Measures

Agreement on Implementation of Article VI of the General

Agreement on Tariffs and Trade 1994

Agreement on Implementation of Article VII of the General

on Tariffs and Trade 1994

Agreement on Pre-Shipment Inspection

Agreement on Rules of Origin

Agreement on Imports Licensing Procedures

Agreement on Subsidies and Coordinating Measures

Agreement on Safeguards

Annex 1B: General Agreement on Trade in Services and Annexes

Annex 1C: Agreement on Trade-Related Aspects of Intellectual

Property Rights

ANNEX 2

Understanding on Rules and Procedures Governing the

Settlement of Disputes

ANNEX 3

Trade Policy Review Mechanism"

On December 16, 1994, the President of the Philippines signed 7 the Instrument of Ratification, declaring:jgc:chanrobles.com.ph

"NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of the Philippines, after having seen and considered the
aforementioned Agreement Establishing the World Trade Organization and the agreements and associated legal instruments included in Annexes one (1),
two (2) and three (3) of that Agreement which are integral parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do hereby ratify and confirm
the same and every Article and Clause thereof."cralaw virtua1aw library

To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the Agreement Proper and "the associated legal
instruments included in Annexes one (1), two (2) and three (3) of that Agreement which are integral parts thereof."cralaw virtua1aw library

On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO Agreement (and its integral annexes aforementioned) but also
(1) the Ministerial Declarations and Decisions and (2) the Understanding on Commitments in Financial Services. In his Memorandum dated May 13,
1996, 8 the Solicitor General describes these two latter documents as follows:jgc:chanrobles.com.ph

"The Ministerial Decisions and Declarations are twenty-five declarations and decisions on a wide range of matters, such as measures in favor of least
developed countries, notification procedures, relationship of WTO with the International Monetary Fund (IMF), and agreements on technical barriers to
trade and on dispute settlement.

The Understanding on Commitments in Financial Services dwell on, among other things, standstill or limitations and qualifications of commitments to
existing non-conforming measures, market access, national treatment, and definitions of non-resident supplier of financial services, commercial presence
and new financial service." cdti

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:jgc:chanrobles.com.ph
"(a) the petitioners to submit the (1) Senate Committee Report on the matter in controversy and (2) the transcript of proceedings/hearings in the
Senate; and

(b) the Solicitor General, as counsel for respondents, to file (1) a list of Philippine treaties signed prior to the Philippine adherence to the WTO
Agreement, which derogate from Philippine sovereignty and (2) copies of the multi-volume WTO Agreement and other documents mentioned in the Final
Act, as soon as possible."cralaw virtua1aw library

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.

The Issues

In their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:jgc:chanrobles.com.ph

"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 or of the concurrence.

C. Whether the provisions of the Agreement Establishing the World Trade Organization contravene the provisions of Sec. 19, Article II, and Secs. 10 and
12, Article XII, all of the 1987 Philippine Constitution.

D. Whether provisions of the Agreement Establishing the World Trade Organization unduly limit, restrict and impair Philippine sovereignty specifically the
legislative power which, under Sec. 2, Article VI, 1987 Philippine Constitution is ‘vested in the Congress of the Philippines’;

E. Whether provisions of the Agreement Establishing the World Trade Organization interfere with the exercise of judicial power.

F. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or excess of jurisdiction when they voted for
concurrence in the ratification of the constitutionally-infirm Agreement Establishing the World Trade Organization.

G. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or excess of jurisdiction when they concurred
only in the ratification of the Agreement Establishing the World Trade Organization, and not with the Presidential submission which included the Final
Act, Ministerial Declaration and Decisions, and the Understanding on Commitments in Financial Services."cralaw virtua1aw library

On the other hand, the Solicitor General as counsel for respondents "synthesized the several issues raised by petitioners into the following" : 10

"1. Whether or not the provisions of the ‘Agreement Establishing the World Trade Organization and the Agreements and Associated Legal Instruments
included in Annexes one (1), two (2) and three (3) of that agreement’ cited by petitioners directly contravene or undermine the letter, spirit and intent
of Section 19, Article II and Sections 10 and 12, Article XII of the 1987 Constitution.

2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise of legislative power by Congress.

3. Whether or not certain provisions of the Agreement impair the exercise of judicial power by this Honorable Court in promulgating the rules of
evidence.

4. Whether or not the concurrence of the Senate ‘in the ratification by the President of the Philippines of the Agreement establishing the World Trade
Organization’ implied rejection of the treaty embodied in the Final Act."cralaw virtua1aw library

By raising and arguing only four issues against the seven presented by petitioners, the Solicitor General has effectively ignored three, namely: (1)
whether the petition presents a political question or is otherwise not justiciable; (2) whether petitioner-members of the Senate (Wigberto E. Tañada and
Anna Dominique Coseteng) are estopped from joining this suit; and (3) whether the respondent-members of the Senate acted in grave abuse of
discretion when they voted for concurrence in the ratification of the WTO Agreement. The foregoing notwithstanding, this Court resolved to deal with
these three issues thus:chanroblesvirtuallawlibrary

(1) The "political question" issue — being very fundamental and vital, and being a matter that probes into the very jurisdiction of this Court to hear and
decide this case — was deliberated upon by the Court and will thus be ruled upon as the first issue;

(2) The matter of estoppel will not be taken up because this defense is waivable and the respondents have effectively waived it by not pursuing it in any
of their pleadings; in any event, this issue, even if ruled in respondents’ favor, will not cause the petition’s dismissal as there are petitioners other than
the two senators, who are not vulnerable to the defense of estoppel; and

(3) The issue of alleged grave abuse of discretion on the part of the respondent senators will be taken up as an integral part of the disposition of the four
issues raised by the Solicitor General.

During its deliberations on the case, the Court noted that the respondents did not question the locus standi of petitioners. Hence, they are also deemed
to have waived the benefit of such issue. They probably realized that grave constitutional issues, expenditures of public funds and serious international
commitments of the nation are involved here, and that transcendental public interest requires that the substantive issues be met head on and decided
on the merits, rather than skirted or deflected by procedural matters. 11

To recapitulate, the issues that will be ruled upon shortly are:chanrob1es virtual 1aw library

(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY? OTHERWISE STATED, DOES THE PETITION INVOLVE A POLITICAL QUESTION OVER
WHICH THIS COURT HAS NO JURISDICTION?

(2) DO THE PROVISIONS OF THE WTO AGREEMENT AND ITS THREE ANNEXES CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE XII,
OF THE PHILIPPINE CONSTITUTION?

(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT, RESTRICT, OR IMPAIR THE EXERCISE OF LEGISLATIVE POWER BY
CONGRESS?

(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE EXERCISE OF JUDICIAL POWER BY THIS COURT IN PROMULGATING RULES ON
EVIDENCE?

(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND ITS ANNEXES SUFFICIENT AND/OR VALID, CONSIDERING THAT IT DID
NOT INCLUDE THE FINAL ACT, MINISTERIAL DECLARATIONS AND DECISIONS, AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL
SERVICES?

The First Issue: Does the Court Have Jurisdiction Over the Controversy?

In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the
duty of the judiciary to settle the dispute. "The question thus posed is judicial rather than political. The duty (to adjudicate) remains to assure that the
supremacy of the Constitution is upheld." 12 Once a "controversy as to the application or interpretation of a constitutional provision is raised before this
Court (as in the instant case), it becomes a legal issue which the Court is bound by constitutional mandate to decide." 13

The jurisdiction of this Court to adjudicate the matters 14 raised in the petition is clearly set out in the 1987 Constitution, 15 as
follows:jgc:chanrobles.com.ph

"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."cralaw virtua1aw library

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."cralaw virtua1aw library

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.chanrobles.com:cralaw:red

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.

Specifically, the "flagship" constitutional provisions referred to are Sec. 19, Article II, and Secs. 10 and 12, Article XII, of the Constitution, which are
worded as follows:jgc:chanrobles.com.ph

"Article II

DECLARATION OF PRINCIPLES AND STATE POLICIES

x x x

Sec. 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.

x x x

Article XII

NATIONAL ECONOMY AND PATRIMONY

x x x

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.

x x x
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."cralaw virtua1aw library

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):jgc:chanrobles.com.ph

"Article 2

National Treatment and Quantitative Restrictions.

1. Without prejudice to other rights and obligations under GATT 1994. No Member shall apply any TRIM that is inconsistent with the provisions of Article
III or Article XI of GATT 1994.

2. An Illustrative list of TRIMS that are inconsistent with the obligations of general elimination of quantitative restrictions provided for in paragraph I of
Article XI of GATT 1994 is contained in the Annex to this Agreement." (Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay Round,
Legal Instruments, p. 22121, Emphasis supplied).

The Annex referred to reads as follows:jgc:chanrobles.com.ph

"ANNEX

Illustrative List

1. TRIMS that are inconsistent with the obligation of national treatment provided for in paragraph 4 of Article III of GATT 1994 include those which are
mandatory or enforceable under domestic law or under administrative rulings, or compliance with which is necessary to obtain an advantage, and which
require:chanrob1es virtual 1aw library

(a) the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in
terms of volume or value of products, or in terms of proportion of volume or value of its local production; or

(b) that an enterprise’s purchases or use of imported products be limited to an amount related to the volume or value of local products that it
exports.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

2. TRIMS that are inconsistent with the obligations of general elimination of quantitative restrictions provided for in paragraph 1 of Article XI of GATT
1994 include those which are mandatory or enforceable under domestic laws or under administrative rulings, or compliance with which is necessary to
obtain an advantage, and which restrict:chanrob1es virtual 1aw library

(a) the importation by an enterprise of products used in or related to the local production that it exports;
(b) the importation by an enterprise of products used in or related to its local production by restricting its access to foreign exchange inflows attributable
to the enterprise; or

(c) the exportation or sale for export specified in terms of particular products, in terms of volume or value of products, or in terms of a preparation of
volume or value of its local production." (Annex to the Agreement on Trade-Related Investment Measures, Vol. 27, Uruguay Round Legal Documents, p.
22125, Emphasis supplied).

The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:chanrob1es virtual 1aw library

The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less
favorable than that accorded to like products of national origin in respect of laws, regulations and requirements affecting their internal sale, offering for
sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application of differential internal transportation
charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product." (Article III, GATT
1947, as amended by the Protocol Modifying Part II, and Article XXVI of GATT, 14 September 1948, 62 UMTS 82-84 in relation to paragraph 1 (a) of the
General Agreement on Tariffs and Trade 1994, Vol. 1, Uruguay Round, Legal Instruments p. 177, Emphasis supplied).

"b) In the area of trade-related aspects of intellectual property rights (TRIPS, for brevity):chanrob1es virtual 1aw library

Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the
protection of intellectual property . . . (par. 1, Article 3, Agreement on Trade-Related Aspect of Intellectual Property rights, Vol. 31, Uruguay Round,
Legal Instruments, p. 25432 (Emphasis supplied)

"(c) In the area of the General Agreement on Trade in Services:chanrob1es virtual 1aw library

National Treatment

1. In the sectors inscribed in its schedule, and subject to any conditions and qualifications set out therein, each Member shall accord to services and
service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favourable than it accords to its own
like services and service suppliers.

2. A Member may meet the requirement of paragraph I by according to services and service suppliers of any other Member, either formally identical
treatment or formally different treatment to that it accords to its own like services and service suppliers.

3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of completion in favour of
services or service suppliers of the Member compared to like services or service suppliers of any other Member. (Article XVII, General Agreement on
Trade in Services, Vol. 28, Uruguay Round Legal Instruments, p. 22610 Emphasis supplied)."cralaw virtua1aw library

It is petitioners’ position that the foregoing "national treatment" and "parity provisions" of the WTO Agreement "place nationals and products of member
countries on the same footing as Filipinos and local products," in contravention of the "Filipino First" policy of the Constitution. They allegedly render
meaningless the phrase "effectively controlled by Filipinos." The constitutional conflict becomes more manifest when viewed in the context of the clear
duty imposed on the Philippines as a WTO member to ensure the conformity of its laws, regulations and administrative procedures with its obligations as
provided in the annexed agreements. 20 Petitioners further argue that these provisions contravene constitutional limitations on the role exports play in
national development and negate the preferential treatment accorded to Filipino labor, domestic materials and locally produced goods.

On the other hand, respondents through the Solicitor General counter (1) that such Charter provisions are not self-executing and merely set out general
policies; (2) that these nationalistic portions of the Constitution invoked by petitioners should not be read in isolation but should be related to other
relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read properly, the cited WTO clauses do not conflict with the Constitution;
and (4) that the WTO Agreement contains sufficient provisions to protect developing countries like the Philippines from the harshness of sudden trade
liberalization.chanrobles law library

We shall now discuss and rule on these arguments.

Declaration of Principles Not Self-Executing

By its very title, Article II of the Constitution is a "declaration of principles and state policies." The counterpart of this article in the 1935 Constitution 21
is called the "basic political creed of the nation" by Dean Vicente Sinco. 22 These principles in Article II are not intended to be self-executing principles
ready for enforcement through the courts. 23 They are used by the judiciary as aids or as guides in the exercise of its power of judicial review, and by
the legislature in its enactment of laws. As held in the leading case of Kilosbayan, Incorporated v. Morato, 24 the principles and state policies
enumerated in Article II and some sections of Article XII are not "self-executing provisions, the disregard of which can give rise to a cause of action in
the courts. They do not embody judicially enforceable constitutional rights but guidelines for legislation."cralaw virtua1aw library

In the same light, we held in Basco v. Pagcor 25 that broad constitutional principles need legislative enactments to implement them,
thus:jgc:chanrobles.com.ph

"On petitioners’ allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12 (Family) and 13 (Role of Youth) of Article II; Section 13 (Social
Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merely statements
of principles and policies. As such, they are basically not self-executing, meaning a law should be passed by Congress to clearly define and effectuate
such principles.

‘In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for enforcement through the courts. They were rather
directives addressed to the executive and to the legislature. If the executive and the legislature failed to heed the directives of the article, the available
remedy was not judicial but political. The electorate could express their displeasure with the failure of the executive and the legislature through the
language of the ballot. (Bernas, Vol. II, p. 2)."cralaw virtua1aw library

The reasons for denying a cause of action to an alleged infringement of broad constitutional principles are sourced from basic considerations of due
process and the lack of judicial authority to wade "into the uncharted ocean of social and economic policy making." Mr. Justice Florentino P. Feliciano in
his concurring opinion in Oposa v. Factoran, Jr., 26 explained these reasons as follows:jgc:chanrobles.com.ph

"My suggestion is simply that petitioners must, before the trial court, show a more specific legal right — a right cast in language of a significantly lower
order of generality than Article II (15) of the Constitution — that is or may be violated by the actions, or failures to act, imputed to the public respondent
by petitioners so that the trial court can validly render judgment granting all or part of the relief prayed for. To my mind, the court should be understood
as simply saying that such a more specific legal right or rights may well exist in our corpus of law, considering the general policy principles found in the
Constitution and the existence of the Philippine Environment Code, and that the trial court should have given petitioners an effective opportunity so to
demonstrate, instead of aborting the proceedings on a motion to dismiss.

It seems to me important that the legal right which is an essential component of a cause of action be a specific, operable legal right, rather than a
constitutional or statutory policy, for at least two (2) reasons. One is that unless the legal right claimed to have been violated or disregarded is given
specification in operational terms, defendants may well be unable to defend themselves intelligently and effectively; in other words, there are due
process dimensions to this matter.

The second is a broader-gauge consideration — where a specific violation of law or applicable regulation is not alleged or proved, petitioners can be
expected to fall back on the expanded conception of judicial power in the second paragraph of Section 1 of Article VIII of the Constitution which
reads:chanrob1es virtual 1aw library

‘Section 1. . . .

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.’ (Emphasis supplied)

When substantive standards as general as ‘the right to a balanced and healthy ecology’ and ‘the right to health’ are combined with remedial standards as
broad ranging as ‘a grave abuse of discretion amounting to lack or excess of jurisdiction,’ the result will be, it is respectfully submitted, to propel courts
into the uncharted ocean of social and economic policy making. At least in respect of the vast area of environmental protection and management, our
courts have no claim to special technical competence and experience and professional qualification. Where no specific, operable norms and standards are
shown to exist, then the policy making departments — the legislative and executive departments — must be given a real and effective opportunity to
fashion and promulgate those norms and standards, and to implement them before the courts should intervene." chanroblesvirtuallawlibrary

Economic Nationalism Should Be Read with Other Constitutional Mandates to Attain Balanced Development of Economy

On the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles relating to the national economy and patrimony,
should be read and understood in relation to the other sections in said article, especially Secs. 1 and 13 thereof which read:jgc:chanrobles.com.ph

"Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount
of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all,
especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that
make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall
protect Filipino enterprises against unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. . .
x x x

Sec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of
equality and reciprocity."cralaw virtua1aw library

As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic development, as follows:chanrob1es virtual 1aw library

1. A more equitable distribution of opportunities, income and wealth;

2. A sustained increase in the amount of goods and services provided by the nation for the benefit of the people; and

3. An expanding productivity as the key to raising the quality of life for all especially the underprivileged.

With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by expressing preference in favor of qualified Filipinos
"in the grant of rights, privileges and concessions covering the national economy and patrimony" 27 and in the use of "Filipino labor, domestic materials
and locally-produced goods" ; (2) by mandating the State to "adopt measures that help make them competitive; 28 and (3) by requiring the State to
"develop a self-reliant and independent national economy effectively controlled by Filipinos." 29 In similar language, the Constitution takes into account
the realities of the outside world as it requires 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" ; 30 and speaks of industries "which are competitive in both domestic and foreign markets" as well as
of the protection of "Filipino enterprises against unfair foreign competition and trade practices."cralaw virtua1aw library

It is true that in the recent case of Manila Prince Hotel v. 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 rules 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 built-in 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.chanrobles.com : virtual lawlibrary

"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 withdraw from the Agreement upon the expiration of six months from the date of notice of withdrawals." 33

Hence, poor countries can protect their common interests more effectively through the WTO than through one-on-one negotiations with developed
countries. Within the WTO, developing countries can form powerful blocs to push their economic agenda more decisively than outside the Organization.
This is not merely a matter of practical alliances but a negotiating strategy rooted in law. Thus, the basic principles underlying the WTO Agreement
recognize the need of developing countries like the Philippines to "share in the growth in international trade commensurate with the needs of their
economic development." These basic principles are found in the preamble 34 of the WTO Agreement as follows:jgc:chanrobles.com.ph

"The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full
employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and
services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect
and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels
of economic development,

Recognizing further that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them,
secure a share in the growth in international trade commensurate with the needs of their economic development,

Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial
reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations,

Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system encompassing the General Agreement on Tariffs and
Trade, the results of past trade liberalization efforts, and all of the results of the Uruguay Round of Multilateral Trade Negotiations,

Determined to preserve the basic principles and to further the objectives underlying this multilateral trading system, . . ." (Emphasis supplied.)

Specific WTO Provisos Protect Developing Countries

So too, the Solicitor General points out that pursuant to and consistent with the foregoing basic principles, the WTO Agreement grants developing
countries a more lenient treatment, giving their domestic industries some protection from the rush of foreign competition. Thus, with respect to tariffs in
general, preferential treatment is given to developing countries in terms of the amount of tariff reduction and the period within which the reduction is to
be spread out. Specifically, GATT requires an average tariff reduction rate of 36% for developed countries to be effected within a period of six (6) years
while developing countries — including the Philippines — are required to effect an average tariff reduction of only 24% within ten (10) years.
In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to agricultural products by 20% over six (6) years, as
compared to only 13% for developing countries to be effected within ten (10) years.

In regard to export subsidy for agricultural products, GATT requires developed countries to reduce their budgetary outlays for export subsidy by 36%
and export volumes receiving export subsidy by 21% within a period of six (6) years. For developing countries, however, the reduction rate is only two-
thirds of that prescribed for developed countries and a longer period of ten (10) years within which to effect such reduction.

Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade practices including anti-dumping measures,
countervailing measures and safeguards against import surges. Where local businesses are jeopardized by unfair foreign competition, the Philippines can
avail of these measures. There is hardly therefore any basis for the statement that under the WTO, local industries and enterprises will all be wiped out
and that Filipinos will be deprived of control of the economy. Quite the contrary, the weaker situations of developing nations like the Philippines have
been taken into account; thus, there would be no basis to say that in joining the WTO, the respondents have gravely abused their discretion. True, they
have made a bold decision to steer the ship of state into the yet uncharted sea of economic liberalization. But such decision cannot be set aside on the
ground of grave abuse of discretion, simply because we disagree with it or simply because we believe only in other economic policies. As earlier stated,
the Court in taking jurisdiction of this case will not pass upon the advantages and disadvantages of trade liberalization as an economic policy. It will only
perform its constitutional duty of determining whether the Senate committed grave abuse of discretion.chanroblesvirtual|awlibrary

Constitution Does Not Rule Out Foreign Competition

Furthermore, the constitutional policy of a "self-reliant and independent national economy" 35 does not necessarily rule out the entry of foreign
investments, goods and services. It contemplates neither "economic seclusion" nor "mendicancy in the international community." As explained by
Constitutional Commissioner Bernardo Villegas, sponsor of this constitutional policy:jgc:chanrobles.com.ph

"Economic self reliance is a primary objective of a developing country that is keenly aware of overdependence on external assistance for even its most
basic needs. It does not mean autarky or economic seclusion; rather, it means avoiding mendicancy in the international community. Independence
refers to the freedom from undue foreign control of the national economy, especially in such strategic industries as in the development of natural
resources and public utilities." 36

The WTO reliance on "most favored nation," "national treatment," and "trade without discrimination" cannot be struck down as unconstitutional as in fact
they are rules of equality and reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on "equality and reciprocity," 37
the fundamental law encourages industries that are "competitive in both domestic and foreign markets," thereby demonstrating a clear policy against a
sheltered domestic trade environment, but one in favor of the gradual development of robust industries that can compete with the best in the foreign
markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete internationally. And given a free trade
environment, Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered
under a policy of laissez faire.

Constitution Favors Consumers, Not Industries or Enterprises

The Constitution has not really shown any unbalanced bias in favor of any business or enterprise, nor does it contain any specific pronouncement that
Filipino companies should be pampered with a total proscription of foreign competition. On the other hand, respondents claim that WTO/GATT aims to
make available to the Filipino consumer the best goods and services obtainable anywhere in the world at the most reasonable prices. Consequently, the
question boils down to whether WTO/GATT will favor the general welfare of the public at large.

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:jgc:chanrobles.com.ph

"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." cdtech

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 which
has contracted valid international obligations is bound to make in its legislations such modifications as may be necessary to ensure the fulfillment of the
obligations undertaken." 45

By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary act, nations may surrender some aspects of
their state power in exchange for greater benefits granted by or derived from a convention or pact. After all, states, like individuals, live with coequals,
and in pursuit of mutually covenanted objectives and benefits, they also commonly agree to limit the exercise of their otherwise absolute rights. Thus,
treaties have been used to record agreements between States concerning such widely diverse matters as, for example, the lease of naval bases, the sale
or cession of territory, the termination of war, the regulation of conduct of hostilities, the formation of alliances, the regulation of commercial relations,
the settling of claims, the laying down of rules governing conduct in peace and the establishment of international organizations. 46 The sovereignty of a
state therefore cannot in fact and in reality be considered absolute. Certain restrictions enter into the picture: (1) limitations imposed by the very nature
of membership in the family of nations and (2) limitations imposed by treaty stipulations. As aptly put by John F. Kennedy, "Today, no nation can build
its destiny alone. The age of self-sufficient nationalism is over. The age of interdependence is here." 47

UN Charter and Other Treaties Limit Sovereignty

Thus, when the Philippines joined the United Nations as one of its 51 charter members, it consented to restrict its sovereign rights under the "concept of
sovereignty as auto-limitation." 47-A Under Article 2 of the UN Charter," (a)ll members shall give the United Nations every assistance in any action it
takes in accordance with the present Charter, and shall refrain from giving assistance to any state against which the United Nations is taking preventive
or enforcement action." Such assistance includes payment of its corresponding share not merely in administrative expenses but also in expenditures for
the peace-keeping operations of the organization. In its advisory opinion of July 20, 1961, the International Court of Justice held that money used by the
United Nations Emergency Force in the Middle East and in the Congo were "expenses of the United Nations" under Article 17, paragraph 2, of the UN
Charter. Hence, all its members must bear their corresponding share in such expenses. In this sense, the Philippine Congress is restricted in its power to
appropriate. It is compelled to appropriate funds whether it agrees with such peace-keeping expenses or not. So too, under Article 105 of the said
Charter, the UN and its representatives enjoy diplomatic privileges and immunities, thereby limiting again the exercise of sovereignty of members within
their own territory. Another example: although "sovereign equality" and "domestic jurisdiction" of all members are set forth as underlying principles in
the UN Charter, such provisos are however subject to enforcement measures decided by the Security Council for the maintenance of international peace
and security under Chapter 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.chanroblesvirtuallawlibrary:red

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:jgc:chanrobles.com.ph

"(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.

(g) Bilateral air service agreement with Belgium where the Philippines granted Belgian air carriers the same privileges as those granted to Japanese and
Korean air carriers under separate air service agreements.

(h) Bilateral notes with Israel for the abolition of transit and visitor visas where the Philippines exempted Israeli nationals from the requirement of
obtaining transit or visitor visas for a sojourn in the Philippines not exceeding 59 days.

(i) Bilateral agreement with France exempting French nationals from the requirement of obtaining transit and visitor visa for a sojourn not exceeding 59
days.

(j) Multilateral Convention on Special Missions, where the Philippines agreed that premises of Special Missions in the Philippines are inviolable and its
agents can not enter said premises without consent of the Head of Mission concerned. Special Missions are also exempted from customs duties, taxes
and related charges.

(k) Multilateral Convention on the Law of Treaties. In this convention, the Philippines agreed to be governed by the Vienna Convention on the Law of
Treaties.
(l) Declaration of the President of the Philippines accepting compulsory jurisdiction of the International Court of Justice. The International Court of Justice
has jurisdiction in all legal disputes concerning the interpretation of a treaty, any question of international law, the existence of any fact which, if
established, would constitute a breach of international obligation."cralaw virtua1aw library

In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign powers of taxation, eminent domain and police
power. The underlying consideration in this partial surrender of sovereignty is the reciprocal commitment of the other contracting states in granting the
same privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity characterizes the Philippine commitments under WTO-
GATT.

"International treaties, whether relating to nuclear disarmament, human rights, the environment, the law of the sea, or trade, constrain domestic
political sovereignty through the assumption of external obligations. But unless anarchy in international relations is preferred as an alternative, in most
cases we accept that the benefits of the reciprocal obligations involved outweigh the costs associated with any loss of political sovereignty. (T)rade
treaties that structure relations by reference to durable, well-defined substantive norms and objective dispute resolution procedures reduce the risks of
larger countries exploiting raw economic power to bully smaller countries, by subjecting power relations to some form of legal ordering. In addition,
smaller countries typically stand to gain disproportionately from trade liberalization. This is due to the simple fact that liberalization will provide access to
a larger set of potential new trading relationship than in case of the larger country gaining enhanced success to the smaller country’s market." 48

The point is that, as shown by the foregoing treaties, a portion of sovereignty may be waived without violating the Constitution, based on the rationale
that the Philippines "adopts the generally accepted principles of international law as part of the law of the land and adheres to the policy of . . .
cooperation and amity with all nations." casia

Fourth Issue: The WTO Agreement and Judicial Power

Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) 49 intrudes on the power of the Supreme Court to promulgate rules concerning pleading, practice and procedures. 50

To understand the scope and meaning of Article 34, TRIPS, 51 it will be fruitful to restate its full text as follows:jgc:chanrobles.com.ph

"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:chanrob1es virtual 1aw library

(a) if the product obtained by the patented process is new;

(b) if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through
reasonable efforts to determine the process actually used.

2. Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on the alleged infringer only if the condition referred to
in subparagraph (a) is fulfilled or only if the condition referred to in subparagraph (b) is fulfilled.

3. In the adduction of proof to the contrary, the legitimate interests of defendants in protecting their manufacturing and business secrets shall be taken
into account."cralaw virtua1aw library

From the above, a WTO Member is required to provide a rule of disputable (note the words "in the absence of proof to the contrary") presumption that a
product shown to be identical to one produced with the use of a patented process shall be deemed to have been obtained by the (illegal) use of the said
patented process, (1) where such product obtained by the patented product is new, or (2) where there is "substantial likelihood" that the identical
product was made with the use of the said patented process but the owner of the patent could not determine the exact process used in obtaining such
identical product. Hence, the "burden of proof" contemplated by Article 34 should actually be understood as the duty of the alleged patent infringer to
overthrow such presumption. Such burden, properly understood, actually refers to the "burden of evidence" (burden of going forward) placed on the
producer of the identical (or fake) product to show that his product was produced without the use of the patented process.

The foregoing notwithstanding, the patent owner still has the "burden of proof" since, regardless of the presumption provided under paragraph 1 of
Article 34, such owner still has to introduce evidence of the existence of the alleged identical product, the fact that it is "identical" to the genuine one
produced by the patented process and the fact of "newness" of the genuine product or the fact of "substantial likelihood" that the identical product was
made by the patented process.

The foregoing should really present no problem in changing the rules of evidence as the present law on the subject, Republic Act No. 165, as amended,
otherwise known as the Patent Law, provides a similar presumption in cases of infringement of patented design or utility model,
thus:jgc:chanrobles.com.ph

"SEC. 60. Infringement. — Infringement of a design patent or of a patent for utility model shall consist in unauthorized copying of the patented design or
utility model for the purpose of trade or industry in the article or product and in the making, using or selling of the article or product copying the
patented design or utility model. Identity or substantial identity with the patented design or utility model shall constitute evidence of copying."
(Emphasis supplied)

Moreover, it should be noted that the requirement of Article 34 to provide a disputable presumption applies only if (1) the product obtained by the
patented process is NEW or (2) there is a substantial likelihood that the identical product was made by the process and the process owner has not been
able through reasonable effort to determine the process used. Where either of these two provisos does not obtain, members shall be free to determine
the appropriate method of implementing the provisions of TRIPS within their own internal systems and processes.

By and large, the arguments adduced in connection with our disposition of the third issue — derogation of legislative power — will apply to this fourth
issue also. Suffice it to say that the reciprocity clause more than justifies such intrusion, if any actually exists. Besides, Article 34 does not contain an
unreasonable burden, consistent as it is with due process and the concept of adversarial dispute settlement inherent in our judicial system.

So too, since the Philippine is a signatory to most international conventions on patents, trademarks and copyrights, the adjustment in legislation and
rules of procedure will not be substantial. 52

Fifth Issue: Concurrence Only in the WTO Agreement and Not in Other Documents Contained in the Final Act

Petitioners allege that the Senate concurrence in the WTO Agreement and its annexes — but not in the other documents referred to in the Final Act,
namely the Ministerial Declaration and Decisions and the Understanding on Commitments in Financial Services — is defective and insufficient and thus
constitutes abuse of discretion. They submit that such concurrence in the WTO Agreement alone is flawed because it is in effect a rejection of the Final
Act, which in turn was the document signed by Secretary Navarro, in representation of the Republic upon authority of the President. They contend that
the second letter of the President to the Senate 53 which enumerated what constitutes the Final Act should have been the subject of concurrence of the
Senate.chanroblesvirtuallawlibrary

"A final act, sometimes called protocol de clôture, is an instrument which records the winding up of the proceedings of a diplomatic conference and
usually includes a reproduction of the texts of treaties, conventions, recommendations and other acts agreed upon and signed by the plenipotentiaries
attending the conference." 54 It is not the treaty itself. It is rather a summary of the proceedings of a protracted conference which may have taken place
over several years. The text of the "Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations" is contained in just one
page 55 in Vol. I of the 36-volume Uruguay Round of Multilateral Trade Negotiations. By signing said Final Act, Secretary Navarro as representative of
the Republic of the Philippines undertook:jgc:chanrobles.com.ph

"(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent authorities with a view to seeking approval of the
Agreement in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions."cralaw virtua1aw library

The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required from its signatories, namely, concurrence of the
Senate in the WTO Agreement.

The Ministerial Declarations and Decisions were deemed adopted without need for ratification. They were approved by the ministers by virtue of Article
XXV: 1 of GATT which provides that representatives of the members can meet "to give effect to those provisions of this Agreement which invoke joint
action, and generally with a view to facilitating the operation and furthering the objectives of this Agreement." 56

The Understanding on Commitments in Financial Services also approved in Marrakesh does not apply to the Philippines. It applies only to those 27
Members which "have indicated in their respective schedules of commitments on standstill, elimination of monopoly, expansion of operation of existing
financial service suppliers, temporary entry of personnel, free transfer and processing of information, and national treatment with respect to access to
payment, clearing systems and refinancing available in the normal course of business." 57

On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed included as its integral parts, 58 as
follows:jgc:chanrobles.com.ph

"Article II

Scope of the WTO

1. The WTO shall provide the common institutional framework for the conduct of trade relations among its Members in matters to the agreements and
associated legal instruments included in the Annexes to this Agreement.

2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3 (hereinafter referred to as "Multilateral Agreements") are integral
parts of this Agreement, binding on all Members.

3. The Agreements and associated legal instruments included in Annex 4 (hereinafter referred to as "Plurilateral Trade Agreements") are also part of this
Agreement for those Members that have accepted them, and are binding on those Members. The Plurilateral Trade Agreements do not create either
obligation or rights for Members that have not accepted them.

4. The General Agreement on Tariffs and Trade 1994 as specified in annex 1A (hereinafter referred to as "GATT 1994") is legally distinct from the
General Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act adopted at the conclusion of the Second Session of the
Preparatory Committee of the United Nations Conference on Trade and Employment, as subsequently rectified, amended or modified (hereinafter
referred to as "GATT 1947").

It should be added that the Senate was well-aware of what it was concurring in as shown by the members’ deliberation on August 25, 1994. After
reading the letter of President Ramos dated August 11, 1994, 59 the senators of the Republic minutely dissected what the Senate was concurring in, as
follows: 60

"THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in the first day hearing of this Committee yesterday. Was the
observation made by Senator Tañada that what was submitted to the Senate was not the agreement on establishing the World Trade Organization by
the final act of the Uruguay Round which is not the same as the agreement establishing the World Trade Organization? And on that basis, Senator
Tolentino raised a point of order which, however, he agreed to withdraw upon understanding that his suggestion for an alternative solution at that time
was acceptable. That suggestion was to treat the proceedings of the Committee as being in the nature of briefings for Senators until the question of the
submission could be clarified.

And so, Secretary Romulo, in effect, is the President submitting a new. . . is he making a new submission which improves on the clarity of the first
submission?

MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no misunderstanding, it was his intention to clarify all matters by
giving this letter.

THE CHAIRMAN: Thank you.

Can this Committee hear from Senator Tañada and later on Senator Tolentino since they were the ones that raised this question yesterday?

Senator Tañada, please.

SEN. TAÑADA: Thank you, Mr. Chairman.

Based on what Secretary Romulo has read, it would now clearly appear that what is being submitted to the Senate for ratification is not the Final Act of
the Uruguay Round, but rather the Agreement on the World Trade Organization as well as the Ministerial Declarations and Decisions, and the
Understanding and Commitments in Financial Services.

I am now satisfied with the wording of the new submission of President Ramos.

SEN. TAÑADA. . . . of President Ramos, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tañada. Can we hear from Senator Tolentino? And after him Senator Neptali Gonzales and Senator Lina.

SEN. TOLENTINO, Mr. Chairman, I have not seen the new submission actually transmitted to us but I saw the draft of his earlier, and I think it now
complies with the provisions of the Constitution, and with the Final Act itself . The Constitution does not require us to ratify the Final Act. It requires us
to ratify the Agreement which is now being submitted. The Final Act itself specifies what is going to be submitted to with the governments of the
participants.chanrobles.com : virtual law library

In paragraph 2 of the Final Act, we read and I quote:chanrob1es virtual 1aw library

‘By signing the present Final Act, the representatives agree: (a) to submit as appropriate the WTO Agreement for the consideration of the respective
competent authorities with a view of seeking approval of the Agreement in accordance with their procedures.’

In other words, it is not the Final Act that was agreed to be submitted to the governments for ratification or acceptance as whatever their constitutional
procedures may provide but it is the World Trade Organization Agreement. And if that is the one that is being submitted now, I think it satisfies both the
Constitution and the Final Act itself .

Thank you, Mr. Chairman.

THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.

SEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of record. And they had been adequately reflected in the journal of
yesterday’s session and I don’t see any need for repeating the same.

Now, I would consider the new submission as an act ex abudante cautela.

THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make any comment on this?

SEN. LINA, Mr. President, I agree with the observation just made by Senator Gonzales out of the abundance of question. Then the new submission is, I
believe, stating the obvious and therefore I have no further comment to make."cralaw virtua1aw library

Epilogue

In praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are invoking this Court’s constitutionally imposed duty "to
determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction" on the part of the Senate in giving its
concurrence therein via Senate Resolution No. 97. Procedurally, a writ of certiorari grounded on grave abuse of discretion may be issued by the Court
under Rule 65 of the Rules of Court when it is amply shown that petitioners have no other plain, speedy and adequate remedy in the ordinary course of
law.

By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. 61 Mere abuse of
discretion is not enough. It must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined
or to act at all in contemplation of law. 62 Failure on the part of the petitioner to show grave abuse of discretion will result in the dismissal of the
petition. 63

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.chanroblesvirtuallawlibrary

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
region of the world economically, politically and culturally in the next century." He refers to the "free market" espoused by WTO as the "catalyst" in this
coming Asian ascendancy. There are at present about 31 countries including China, Russia and Saudi Arabia negotiating for membership in the WTO.
Notwithstanding objections against possible limitations on national sovereignty, the WTO remains as the only viable structure for multilateral trading and
the veritable forum for the development of international trade law. The alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly
enriched with original membership, keenly aware of the advantages and disadvantages of globalization with its on-line experience, and endowed with a
vision of the future, the Philippines now straddles the crossroads of an international strategy for economic prosperity and stability in the new millennium.
Let the people, through their duly authorized elected officers, make their free choice.

WHEREFORE, the petition is DISMISSED for lack of merit.chanroblesvirtuallawlibrary:red

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan, Mendoza, Francisco, Hermosisima, Jr., and Torres, Jr., JJ., concur.

Padilla and Vitug, JJ., concur in the result.

CASE DIGEST

TANADA VS ANGARA

Facts:

This is a case petition by Sen. Wigberto Tanada, together with other lawmakers, taxpayers, and various NGO’s to nullify the Philippine ratification of the
World Trade Organization (WTO) Agreement.

Petitioners believe that this will be detrimental to the growth of our National Economy and against to the “Filipino First” policy. The WTO opens access to
foreign markets, especially its major trading partners, through the reduction of tariffs on its exports, particularly agricultural and industrial products.
Thus, provides new opportunities for the service sector cost and uncertainty associated with exporting and more investment in the country. These are
the predicted benefits as reflected in the agreement and as viewed by the signatory Senators, a “free market” espoused by WTO.

Petitioners also contends that it is in conflict with the provisions of our constitution, since the said Agreement is an assault on the sovereign powers of
the Philippines because it meant that Congress could not pass legislation that would be good for national interest and general welfare if such legislation
would not conform to the WTO Agreement.

Issues:

1. Whether or not the petition present a justiciable controversy.

2. Whether or not the provisions of the ‘Agreement Establishing the World Trade Organization and the Agreements and Associated Legal Instruments
included in Annexes one (1), two (2) and three (3) of that agreement’ cited by petitioners directly contravene or undermine the letter, spirit and
intent of Section 19, Article II and Sections 10 and 12, Article XII of the 1987 Constitution.
3. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise of legislative power by Congress.
4. Whether or not certain provisions of the Agreement impair the exercise of judicial power by this Honorable Court in promulgating the rules of
evidence.
5. Whether or not the concurrence of the Senate ‘in the ratification by the President of the Philippines of the Agreement establishing the World Trade
Organization’ implied rejection of the treaty embodied in the Final Act.

Discussions:

 1987 Constitution states that Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, 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.
 Although the Constitution mandates to develop a self-reliant and independent national economy controlled by Filipinos, does not necessarily rule out
the entry of foreign investments, goods and services. It contemplates neither “economic seclusion” nor “mendicancy in the international
community.” The WTO itself has some built-in 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. Hence, poor countries can protect their common
interests more effectively through the WTO than through one-on-one negotiations with developed countries. Within the WTO, developing countries
can form powerful blocs to push their economic agenda more decisively than outside the Organization. Which is not merely a matter of practical
alliances but a negotiating strategy rooted in law. Thus, the basic principles underlying the WTO Agreement recognize the need of developing
countries like the Philippines to “share in the growth in international trade commensurate with the needs of their economic development.”
 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. 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. A state which
 has contracted valid international obligations is bound to make in its legislations such modifications as may be necessary to ensure the fulfillment of
the obligations undertaken. Paragraph 1, Article 34 of the General Provisions and Basic Principles of the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) may intrudes on the power of the Supreme Court to promulgate rules concerning pleading, practice and
procedures. With regard to Infringement of a design patent, WTO members shall be free to determine the appropriate method of implementing the
provisions of TRIPS within their own internal systems and processes.
 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. 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.

Rulings:

1. In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises a justiciable
controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact
the duty of the judiciary to settle the dispute. As explained by former Chief Justice Roberto Concepcion, “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.”
2. 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. 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.
3. By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary act, nations may surrender some aspects
of their state power in exchange for greater benefits granted by or derived from a convention or pact. After all, states, like individuals, live with
coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly agree to limit the exercise of their otherwise absolute
 rights. As shown by the foregoing treaties Philippines has entered, a portion of sovereignty may be waived without violating the Constitution, based
on the rationale that the Philippines “adopts the generally accepted principles of international law as part of the law of the land and adheres to the
policy of cooperation and amity with all nations.”
4. The provision in Article 34 of WTO agreement does not contain an unreasonable burden, consistent as it is with due process and the concept of
adversarial dispute settlement inherent in our judicial system.
5. The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required from its signatories, namely, concurrence of the
Senate in the WTO Agreement. Moreover, the Senate was well-aware of what it was concurring in as shown by the members’ deliberation on August
25, 1994. After reading the letter of President Ramos dated August 11, 1994, the senators of the Republic minutely dissected what the Senate was
concurring in.