promulgated under COA considering that it was
**Legal Value of Article II
KILOSBAYAN v MORATO
G.R. No. 118910, July 17, 1995
Mendoza, J.
FACTS
As a result of the decision in GR No. 113375 (Kilosbayan v
Guingona) invalidating the Contract of Lease between the
Philippine Charity Sweepstakes Office (PCSO) and the
Philippine Gaming Management Corp. (PGMC) on the
ground that it had been made in violation of the charter
(description of an organization’s functions) of PCSO, the
parties entered into negotiations for a new agreement that
would be “consistent with the latter’s [PCSO] charter… and
conformable to this Honorable Court’s aforesaid Decision.”
On January 25, 1995, the parties signed and Equipment
Lease Agreement (ELA) whereby the PGMC leased on-line
lottery equipment and accessories to the PCSO in
consideration of a 4.3% rental equivalent of the gross
amount of ticket sales, the annual rental computed at
P35,000 per terminal in commercial operation. It is to be
paid b-weekly, and if they fall short of the annual minimum,
the PCSO agrees to pay the deficiency out of the proceeds of
the current ticket sales.
Under law, 30% of the sales of tickets is allotted to charity.
The term lease is eight (8) years, starting from the
commercial operation of the lottery equipment first
delivered. Upon the expiration of the lease, the PCSO has
the option to purchase the equipment for a sum of P25
million.
On Feb. 21, 1995, this suit was filed seeking to declare the
ELA invalid on the ground that it is substantially the same as
the Contract of Lease nullified in the first case. Petitioners
argue:
1. The amended ELA is null and void since it is basically
or substantially the same as or similar to the old
lease contract as represented and admitted by
respondents PGMC and PCSO.
2. Assuming arguendo, that the amended ELA is
materially different from the old lease contract, the
ELA is nevertheless null and void for being
inconsistent with and violative of PCSO’s charter
and the decision of this honorable court on May 5,
1995.
3. The amended equipment lease agreement is null
and void for being violative of the law on public
bidding of contract for furnishing supplies, materials
and equipment to the government, particularly E.O.
No. 301 dated July 26, 1987 and E.O. No. 298 dated
August 12, 1940 as amended, as well as the “rules
and regulations for the prevention of irregular,
unnecessary, excessive, or extravagant expenditures
awarded and executed without the public bidding
required under said laws and COA rules and
regulations, it has not been approved by the
president of the Philippines, and it is not most
advantageous to the government.
4. The ELA is violative of Section 2(2), Article IX-D of
the 1987 Constitution in Relation to COA Circular
No. 85-55-A.
The petitioners invoke the following Principles and State
Policies set forth in Art. II of the Constitution:
1. Section 5: The maintenance of peace and order, the
protection of life, liberty and property, and the
promotion of the general welfare are essential for
the enjoyment by all the people of the blessing of
democracy.
2. Section 12: The natural and primary right and duty
of parents in the rearing of the youth for civic
efficiency and the development of moral character
shall receive the support of the Government.
3. Section 13: The State recognizes the vital role of the
youth in nation-building and shall promote their
physical, moral, spiritual, intellectual, and social
well-being. It shall inculcate in the youth patriotism
and nationalism, and encourage their involvement
in public and civic affairs.
4. Section 17: The State shall give priority to
education, science and technology, arts, culture and
sports to foster patriotism and nationalism,
accelerate social progress, and promote total
human liberation and development.
ISSUE
1. Whether or not the lease in question should be
struck down for being contrary to the provision of
the constitution in Article II.
2. Whether or not the ELA is the same with the
previous contract held in Kilosbayan v. Guingona.
RULING
1. No. Article II of the Constitution and said sections
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.
Thus, while constitutional policies are invoked, this
case involves basically questions of contract of law.
More specifically, the questions is whether
petitioners have a legal right which has been
violated.
In actions for the annulment of contracts, such as
this action, the real parties are those who are
parties to the agreement or are bound either
principally or subsidiarily or are prejudiced in their
 rights with respect to one of the contracting parties
and can show the detriment which would positively
result to them from the contract even though they
did not intervene in it.
2. In the previous case, the Contract of Lease, which
the PCSO had entered into with the PGMC on
December 17, 1993 for the operation of an on-line
lottery system, was actually a joint venture
agreement, or at least a contract involving
“collaboration or association” with another party
and, for that reason, was void.
(1) The PCSO had neither funds nor expertise to
operate the on-line lottery system so that it
would be dependent on the PGMC for the
operation of the lottery system.
(2) The PGMC would exclusively bear all costs and
expenses for printing tickets, payment of
salaries and wages of personnel, advertising
and promotion and other expenses for the
operation of the lottery system. Mention was
made of the provision, which the Court
considered "unusual in a lessor-lessee
relationship but inherent in a joint venture," for
the payment of the rental not at a fixed amount
but at a certain percentage (4.9%) of the gross
receipts from the sale of tickets, and the
possibility that "nothing may be due or
demandable at all because the PGMC binds
itself to 'bear all risks if the revenue from the
ticket sales, on an annualized basis, are
insufficient to pay the entire prize money.'"
(232 SCRA at 147)
(3) It was only after the term of the contract that
PCSO personnel would be ready to operate the
lottery system themselves because it would
take the entire eight-year term of the contract
for the technology transfer to be completed. In
the view of the Court, this meant that for the
duration of the contract, the PGMC would
actually be the operator of the lottery system,
and not simply the lessor of equipment.
The court considered the Contract of Lease to be
actually a join venture agreement. The ELA removed
all these features that were previously stated in the
old contract. PCSO bears all losses because the
operation is in their hands. Petition dismissed.
TONDO MEDICAL v COURT OF APPEALS
527 SCRA 746, 2010
Chico-Nazario, J.
FACTS
In 1999, the Department of Health launched the Health
Sector Reform Agenda (HSRA), a reform agenda developed
by the HSRA Technical Working Group after a series of
workshops and analyses with inputs from several
consultants, program managers and technical staff
possessing the adequate expertise and experience in the
health sector. It provided for five general areas of reform:
(1) to provide fiscal autonomy to government hospitals; (2)
secure funding for priority public health programs; (3)
promote the development of local health systems and
ensure its effective performance; (4) strengthen the
capacities of health regulatory agencies; and (5) expand the
coverage of the National Health Insurance Program (NHIP).
The Petitioners assailed the issuance of a draft
administrative order issued by the DOH, dated January 5,
2001, entitled Guidelines and Procedure in the
implementation of the Corporate Restructuring of Selected
DOH Hospitals to Achieve Fiscal Autonomy, and Managerial
Flexibility to State by January 2001; and Administrative
Order No. 172 of the DOH, entitled policies and Guidelines
on the Private Practice of Medical and Paramedical
Professionals in Government Health Facilities, dated January
9, 2001, for imposing an added burden to indigent Filipinos,
who cannot afford to pay for medicine and medical services.
Petitioners alleged that the implementation of the reforms
had resulted in making free medicine and free medical
services inaccessible to economically disadvantaged
Filipinos. Thus, they alleged that the HSRA is void for being
in violation of the provisions: Sections 5, 9, 10, 11, 13, 15, 18
of Article II; Section 1 of Article III; Sections 11 and 14 of
Article XIII ; and Sections 1 and 3(2) of Article XV.
On May 24, 1999, then President Joseph Estrada issued E.O.
No. 102, entitled “Redirecting the functions and operations
of the Department of Health”, which provided for the
changes in the roles, functions and organizational processes
of the DOH. The petitioners contended hat a law, such as the
E.O. No. 120, which effects the reorganization of the DOH,
should be enacted by Congress in the exercise of its
legislative function. They argued that EO No. 102 is void, as
this was enacted ultra vires on the part of the President.
The court of appeals denied the petition due to procedural
defects, which proved fatal. The CA also ruled that the HSRA
cannot be declared void for violating the various sections of
Article II, III, XIII and XC of the 1987 Constitution.
ISSUES
1. Whether or not the HSRA is void for violating
various provisions of the Constitution. (The
Honorable CA committed manifest error in ruling
that any question on the wisdom and efficacy of the
HSRA is not a justiciable controversy and that the
 constitutional provisions protecting the health of
the Filipino are not judicially enforceable.
RULING
No. As a general rule, the provisions of the constitution are
considered self-executing, and do not require future
legislation for their enforcement. However, some provisions
have already been categorically declared by this Court and
non self-executing.
(Tanada v. Angara) By its very title, Article II of the
Constitution is a declaration of principles and state policies.
These principles in Article II are not intended to be self-
executing principles ready for enforcement through the
courts. They are used by the judiciary as aids or as guides in
the exercise of its power of judicial review, and by the
legislature in its enactment of laws. As such, they are mere
directives addressed to the executive and the legislative
departments. If unheeded, the remedy will not lie with the
courts; but rather, the electorates displeasure may be
manifested in their vote.
Two reasons for denying a cause of action to an alleged
infringement of broad constitutional principles: basic
considerations of due process and the limitations of judicial
power.
BCDA v COA
GR No. 178160, Feb. 6, 2009
Carpio, J.
FACTS
On March 13, 1992, Congress approved of RA no. 7227
creating the Bases Conversion and Development Authority
(BCDA). Section 9 of RA no. 7227 states that the BCDA Board
of Directors shall exercise the powers and functions of the
BCDA. Under Section 10, the functions of the board include
the determination of the organizational structure and the
adoption of a compensation and benefit scheme at least
equivalent to that of the Bangko Sentral ng Pilipinas (BSP).
On December 20, 1996, the board adopted a new
compensation and benefit scheme which included a P10,000
year-end benefit granted to each contractual employee,
regular permanent employee, and Board Member. In a
memorandum dated August 25, 1997, Board Chairman
Victoriano A. Basco recommended to Fidel V. Ramos the
approval of the new compensation and benefit scheme. The
latter approved it in memorandum.
In 1999, the BSP gave a P30,000 year-end benefit to its
officials and employees. In 2000, the BSP increased the year-
end benefit from P30,000 to P35,000. Pursuant to Section 10
of RA No. 7227 which states that the compensation and
benefit scheme of the BCDA shall be at least equivalent to
that of the BSP, the Board increased the year-end benefit of
BCDA officials and employees from P10,000 to P30,000. Thus
in 2000 and 2001, BCDA officials and employees received a
P30,000 year-end benefit.
Aside from the contractual employees, regular permanent
employees, and Board members, the full-time consultants of
the BCDA also received the year-end benefit
In Decision No. 2007-020, the COA affirmed the
disallowance of the year-end benefit granted to the Board
members and full-time consultants and held that the
presumption of good faith did not apply to them. The COA
stated that:
2.2 Members of the Board of Directors of agencies
are not salaried officials of the government. As non-
salaried officials they are not entitled to PERA,
ADCOM, YEB and retirement benefits unless
expressly provided by law.
2.3 Department Secretaries, Undersecretaries and
Assistant Secretaries who serve as Ex-officio
Members of the Board of Directors are not entitled
to any remuneration in line with the Supreme Court
ruling that their services in the Board are already
paid for and covered by the remuneration attached
to their office.
Clearly, as stated above, the members and ex-officio
members of the Board of Directors are not entitled to YEB,
they being not salaried officials of the government. The
same goes with full time consultants wherein no employer-
employee relationships exist between them and the BCDA.
Thus, the whole amount paid to them totaling P342,000 is
properly disallowed in audit.
ISSUE
Whether or not the Board Members and full-time
consultants of the BCDA are not entitled to the year-end
benefit [No]
The Board’s power to adopt a compensation and benefit
scheme is not unlimited. Section 9 of RA No. 7227 states
that Board members are entitled to a per diem to not more
than 5,000.
Members of the Board of Directors of agencies are not
salaried officials of the government. As non-salaried
officials they are not entitled to PERA, ADCOM, YEB and
retirement benefits unless expressly provided by law. RA
No. 7227 does not state that the Board members are
entitled to a year-end benefit. YEB and retirement benefits,
are personnel benefits granted in addition to salaries. As
fringe benefits, these shall be paid only when the basic
salary is also paid.
BCDA claims that the Board members and full-time
consultants should be granted the year-end benefit because
the granting of year-end benefit is consistent with Sections 5
and 18, Article II of the Constitution. Article II of the
Constitution is entitled Declaration of Principles and State
Policies. By its very title, Article II is a statement of general
ideological principles and policies. It is not a source of
enforceable rights.
Next, BCDA claims that the denial of year-end benefit to the
Board members and full-time consultants violates Section 1,
Article III of the Constitution. More specifically, the BCDA
claims that there is no substantial distinction between
regular officials and employees on one hand, and Board
members and full-time consultants on the other. The BCDA
states that there is here only a distinction, but no difference
because both have undeniably one common goal as humans,
that is to keep body and soul together or, differently put,
both have mouths to feed and stomachs to fill.
OCAMPO v ENRIQUEZ
GR 225972, November 8, 2016
FACTS
During the campaign period for the 2016 Presidential
Election, then candidate Rodrigo R. Duterte publicly
announced that he would allow the burial former President
Ferdinand E. Marcos at the Libingan ng Mga Bayani
("LNMB"). Duterte won the May 9, 2016 elections.
On August 7, 2016, Defense Secretary Delfin N. Lorenzana
issued a Memorandum to AFP Chief of Staff General Ricardo
R. Visaya regarding the interment of former President
Ferdinand E. Marcos at the Libingan ng Mga Bayani.
 
On August 9, 2016, AFP Rear Admiral Ernesto C. Enriquez
issued a directive to the Philippine Army on the Funeral
Honors and Service for President Marcos.
 
Dissatisfied with the foregoing issuance, various parties filed
several petitions for certiorari, prohibition and mandamus,
essentially arguing that the decision to have the remains of
former President Marcos interred at the LNMB violated
various laws; that Marcos is not entitled to be interred at
the LNMB; and that the Marcos family has already waived
such burial.
ISSUE
Did the issuance of the assailed memorandum and directive
violate the Constitution, domestic and international laws?
RULING
No. The President's decision to bury Marcos at the LNMB is
in accordance with the Constitution, the law and
jurisprudence.
 
While the Constitution is a product of our collective history
as a people, its entirety should not be interpreted as
providing guiding principles to just about anything remotely
related to the Martial Law period such as the proposed
Marcos burial at the LNMB.
 
Section 1 of Article XI of the Constitution is not a self-
executing provision considering that a law should be passed
by the Congress to clearly define and effectuate the principle
embodied therein. Pursuant thereto, Congress enacted the
Code of Conduct on Ethical Standards for Public Officials and
Employees, the Ombudsman Act of 1989, Plunder Act, and
Anti-Red Tape Act of 2007. To complement these statutes,
the Executive Branch has issued various orders, memoranda,
and instructions relative to the norms of behavior/code of
conduct/ethical standards of officials and employees;
workflow charts/public transactions; rules and policies on
gifts and benefits; whistle blowing and reporting; and client
feedback program
Petitioners' reliance on Sec. 3(2) of Art. XIV and Sec. 26 of Ar
t. XVIII of the Constitution is also misplaced. Sec. 3(2) of Art.
XIV refers to the constitutional duty of educational
institutions in teaching the values of patriotism and
nationalism and respect for human rights, while Sec. 26 of
Art. XVIII is a transitory provision on sequestration or freeze
orders in relation to the recovery of Marcos' ill-gotten
wealth. Clearly, with respect to these provisions, there is no
direct or indirect prohibition to Marcos' interment at the
LNMB.
 
The second sentence of Sec. 17 of Art. VII is likewise not
violated by public respondents. Being the Chief Executive,
the President represents the government as a whole and
sees to it that all laws are enforced by the officials and
employees of his or her department.  Under the Faithful
Execution Clause, the President has the power to take
"necessary and proper steps" to carry into execution the
law. The mandate is self-executory by virtue of its being
inherently executive in nature and is intimately related to
the other executive functions. It is best construed as an
imposed obligation, not a separate grant of power. The
provision simply underscores the rule of law and, corollarily,
the cardinal principle that the President is not above the
laws but is obliged to obey and execute them.
The nation's history will not be instantly revised by a single
resolve of President Duterte, acting through the public
respondents, to bury Marcos at the LNMB. Whether
petitioners admit it or not, the lessons of Martial Law are
already engraved, albeit in varying degrees, in the hearts
and minds of the present generation of Filipinos. As to the
unborn, it must be said that the preservation and
popularization of our history is not the sole responsibility of
the Chief Executive; it is a joint and collective endeavor of
every freedom-loving citizen of this country.
 
Notably, complementing the statutory powers and functions
of the Human Rights Victims' Claims Board and the HRVV
Memorial Commission in the memorialization of HRVV s, the
National Historical Commission of the Philippines (NHCP),
formerly known as the National Historical Institute (NHJ), is
mandated to act as the primary government agency
responsible for history and is authorized to determine all
factual matters relating to official Philippine history.
 
**Section 1: Unincorporated
ACCFA v CUGCO
GR L-21484, Nov. 29, 1969
Makalintal
FACTS
These are two separate appeals by certiorari from the
decision dated March 25, 1963 (G.R. No. L-21484) and the
order dated May 21, 1964 (G.R. No. L-23605).
G.R. No. L-21484: On September 4, 1961 a collective
bargaining agreement, which was to be effective for a period
of one year from July 1, 1961, was entered into by and
between ACCFA and the Unions [ACCFA Supervisors'
Association (ASA) and the ACCFA Workers' Association
(AWA)].
A few months thereafter, the Unions started protesting
against alleged violations and non-implementation of said
agreement. On October 30, 1962 the Unions, together with
its mother union, the Confederation of Unions in
Government Corporations and Offices (CUGCO), filed a
complaint with the Court of Industrial Relations against the
ACCFA (Case No. 3450-ULP) for having allegedly committed
acts of unfair labor practice, namely: violation of the
collective bargaining agreement in order to discourage the
members of the Unions in the exercise of their right to self-
organization, discrimination against said members in the
matter of promotions, and refusal to bargain.
ACCFA denied the charges and interposed as affirmative and
special defenses lack of jurisdiction of the CIR over the case,
illegality of the bargaining contract, expiration of said
Contract and lack of approval by the office of the President
of the fringe benefits provided for therein.
G.R. No. L-23605: During the pendency of the above
mentioned case (G.R. No. L-21484), specifically on August 8,
1963, the President of the Philippines signed into law the
Agricultural Land Reform Code (Republic Act No. 3844),
which among other things required the reorganization of the
administrative machinery of the Agricultural Credit and
Cooperative Financing Administration (ACCFA) and changed
its name to Agricultural Credit Administration (ACA).
On March 17, 1964 the Unions filed a petition for
certification election with the Court of Industrial Relations
praying that they be certified as the exclusive bargaining
agents for the supervisors and rank-and-file employees,
respectively, in the ACA. the trial Court in its order dated
May 21, 1964 certified "the ACCFA Workers' Association and
the ACCFA Supervisors' Association as the sole and exclusive
bargaining representatives of the rank-and-file employees
and supervisors, respectively, of the Agricultural Credit
Administration." Said order was affirmed by the CIR en banc
in its resolution dated August 24, 1964.
ISSUE
Whether or not the CIR has jurisdiction to entertain the
petition of the Unions for certification election on the
ground that it (ACA) is engaged in governmental functions.
[No]
RULING
Under Section 3 of the Agricultural Land Reform Code the
ACA was established, among other governmental agencies,
to extend credit and similar assistance to agriculture.
The power to audit the operations of farmers' cooperatives
and otherwise inquire into their affairs, as given by Section
113, is in the nature of the visitorial power of the sovereign,
which only a government agency specially delegated to do
so by the Congress may legally exercise. The implementation
of the land reform program of the government according to
Republic Act No. 3844 is most certainly a governmental, not
a proprietary, function; and for that purpose Executive
Order No. 75 has placed the ACA under the Land Reform
When the Agricultural Reform Code was being considered by
the Congress, Senator Tolentino said "The ACA is not going
to be a profit making institution. It is supposed to be a public
service of the government to the lessees and farmer-owners
of the lands that may be bought after expropriation from
owners.
We hold that the respondent Unions are not entitled to the
certification election sought in the Court below. Such
certification is admittedly for purposes of bargaining in
behalf of the employees with respect to terms and
conditions of employment, including the right to strike as a
coercive economic weapon, as in fact the said unions did
strike in 1962 against the ACCFA (G.R. No. L-21824). This is
contrary to Section 11 of Republic Act No. 875 (Prohibition
Against Strike in the Government)
With the reorganization of the ACCFA and its conversion into
the ACA under the Land Reform Code and in view of our
ruling as to the governmental character of the functions of
the ACA, the decision of the respondent Court dated March
25, 1963, and the resolution en banc affirming it, in the
unfair labor practice case filed by the ACCFA, which decision
is the subject of the present review in G. R. No. L-21484, has
become moot and academic
Doctrine:The ACA is a government office or agency engaged Yes. Petitioner is a public corporation. In Laurel v. Desierto,
in governmental, not proprietary functions. These functions public office is defined as the right, authority and duty,
may not be strictly what President Wilson described as created and conferred by law, by which for a given period, is
"constituent" (as distinguished from "ministrant"), such as invested with some portion of the sovereign functions of the
those relating to the maintenance of peace and the government, to be exercised for the benefit of the public.
prevention of crime, those regulating property and property
rights, those relating to the administration of justice and the In the instant case, the functions of VFP—the protection of
determination of political duties of citizens, and those the interests of war veterans which promotes social justice
relating to national defense and foreign relations. Under this and reward patriotism, certainly fall within the category of
traditional classification, such constituent functions are sovereign functions. The fact that VFP has no budgetary
exercised by the State as attributes of sovereignty, and not appropriation is only a product of erroneous application of
merely to promote the welfare, progress and prosperity of the law by public officers in the DBM which will not bar
the people — these letter functions being ministrant, the subsequent correct application.
exercise of which is optional on the part of the government.
Hence, placing it under the control and supervision of DND is
The growing complexities of modern society, however, have proper.
rendered this traditional classification of the functions of
government quite unrealistic, not to say obsolete. 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 is 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.

**Examples of government exercising its functions through

corporations or instrumentalities
VFP v REYES
483 SCRA 526, 2006

FACTS
Petitioner Veterans Federation of the Philippines (VFP) is a
corporate body organized under RA no. 2640. Sometimes in
August 2002, petitioner received a letter from
undersecretary of the Department of National Defense
(DND) to conduct managements Audit of VFP pursuant to RA
2460, where it stated that VFP is under the supervision and
control of the Secretary of National Defense. Petitioner
complained about the broadness of audit and request the
suspension until issues are threshed out, which was
subsequently denied by DND. As a result, petitioner sought
relief under Rule 65 assailing that it is a private non-
government corporation.

ISSUE
Whether or not veterans federation created by law is a
public office, considering that it does not possess a portion
of the sovereign functions of the government and
considering further that, it has no budgetary appropriation
from DBM and that its funds come from membership dues.

RULING