ESPINA v ZAMORA
taxpayers4 or as legislators.
FACTS:
Pres. Estrada signed into law RA 8762, Retail Trade
Liberalization Act. It repealed RA 1180, which absolutely
prohibited foreign nationals from engaging in the retail
trade business. RA 8762 allows them to do so. The said
Act 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 Filipinos.
Petitioners, who are all members of the House of
Representatives, filed the petition assailing the
constitutionality of the said Act on the following grounds:
(a) afoul of Sec 9, 19, 20 of Art II of the Constitution; (b)
the implementation of R.A. 8762 would lead to alien
control of the retail trade; (c) foreign retailers would
crush Filipino retailers and sari-sari store vendors, destroy
self-employment, and bring about more unemployment;
(d) 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; (e) clear and present danger that the law would
promote monopolies or combinations in restraint of
trade.
Respondents countered that petitioners have no legal
standing; petition does not involve any justifiable
controversy; failed to overcome the presumption of
constitutionality; and the Constitution mandates the
regulation but not the prohibition of foreign investments.
ISSUE:
(A) WON petitioners have legal standing to challenge
the said Act
(B) WON RA 8762 is unconstitutional
RULING:
A. Does not have legal standing.
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.
Here, there is no clear showing that the implementation
of the Retail Trade Liberalization Act prejudices
petitioners or inflicts damages on them, either as
B. Constitutional
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.
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.
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.
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.
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.
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.
Provision:
ART II
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.
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.
ART XII
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.
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
G.R. No. 158540             July 8, 2004
SOUTHERN CROSS CEMENT CORPORATION
vs.
THE PHILIPPINE CEMENT MANUFACTURERS CORP.,
THE SECRETARY OF THE DEPARTMENT OF TRADE
& INDUSTRY, THE SECRETARY OF THE
DEPARTMENT OF FINANCE, and THE
COMMISSIONER OF THE BUREAU OF CUSTOMS
TINGA, J.:
FACTS:
The Philippines, enacted laws soon after it joined the
General Agreement on Tariff and Trade (GATT) and the World
Trade Organization (WTO) Agreement. One of these laws is
Rep. Act No. 8800, also known as the Safeguard Measures Act
("SMA"). 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.
Petitioner Southern Cross Cement Corporation
("Southern Cross") is a domestic corporation engaged in the
business of cement manufacturing, production, importation and
exportation. Its principal stockholders are Taiheiyo Cement
Corporation and Tokuyama Corporation, purportedly the largest
cement manufacturers in Japan. Private respondent, on the other
hand, Philippine Cement Manufacturers Corporation
("Philcemcor") is an association of domestic cement
manufacturers. It has eighteen (18) members. However, it
appears that considerable equity holdings, if not controlling
interests in at least twelve (12) of its member-corporations, were
acquired by the three largest cement manufacturers in the
world, 
On 22 May 2001, respondent Department of Trade and
Industry accepted an application from Philcemcor, alleging that
the importation of gray Portland cement in increased quantities
has caused declines in domestic production, capacity utilization,
market share, sales and employment; as well as caused
depressed local prices. Accordingly, Philcemcor sought the
imposition a definitive safeguard measures on the import of
cement pursuant to the Safeguard Measures Act.
 After preliminary investigation, the Bureau of Import
Services of the DTI, determined that critical circumstances
existed justifying the imposition of provisional measures. On
7 November 2001, the DTI issued an Order, imposing a
provisional measure equivalent to Twenty Pesos and Sixty
Centavos (P20.60) per forty (40) kilogram bag on all
importations of gray Portland cement for a period not exceeding
two hundred (200) days from the date of issuance by the Bureau
of Customs (BOC) of the implementing Customs Memorandum
Order.
The Tariff Commission, on 19 November 2001,
received a request from the DTI for a formal investigation to
determine whether or not to impose a definitive safeguard
measure on imports of gray Portland cement, pursuant to
Section 9 of the SMA and its Implementing Rules and
Regulations. The Tariff Commission after arriving at their
conclusions, made a recommendation that 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.
After reviewing the report, then DTI Secretary Manuel
Roxas II disagreed with the conclusion of the Tariff
Commission. In view of this disagreement, the DTI requested an
opinion from the Department of Justice (DOJ) on the DTI
Secretary’s scope of options in acting on the Commission’s
recommendations. DOJ Secretary Hernando Perez rendered an
opinion stating that Section 13 of the SMA precluded a review
by the DTI Secretary of the Tariff Commissions negative
finding, or finding that a definitive safeguard measure should
not be imposed. Hence, DTI then denied application for
safeguard measures against the importation of gray Portland
cement.
Philcemcor filed with the Court of Appeals a Petition
for Certiorari, Prohibition and Mandamus seeking to set aside
the DTI Decision, as well as the Tariff Commissions Report. On
the other hand, Southern Cross filed its Comment arguing that
the Court of Appeals had no jurisdiction over Philcemcors
Petition, for it is on the Court of Tax Appeals (CTA) that the
SMA conferred jurisdiction to review rulings of the Secretary in
connection with the imposition of a safeguard measure.
COURT OF APPEALS RULING
The appellate court ruled that it had jurisdiction over
the petition for certiorari since it alleged grave abuse of
discretion. It refused to annul the findings of the Tariff
Commission, citing the rule that factual findings of
administrative agencies are binding upon the courts and its
corollary, that courts should not interfere in matters addressed to
the sound discretion and coming under the special technical
knowledge and training of such agencies. Nevertheless, it held
that the DTI Secretary is 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.
Southern Cross filed the present petition, assailing the
appellate court's Decision for departing from the accepted and
usual course of judicial proceedings, and not deciding the
substantial questions in accordance with law and jurisprudence.
The timely filing of Southern Cross's petition before this Court
necessarily prevented the Court of Appeals Decision from
becoming final.
On 25 June 2003, the DTI Secretary issued a
new Decision, 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.
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 P20.60/40 kg. bag for three
years on imported gray Portland Cement.
ISSUE:
Whether or not the DTI Secretary is bound to adopt the
negative recommendation of the Tariff Commission on the
application for safeguard measure.
RULING:
YES.
Undoubtedly, Section 13 prescribes certain limitations and
restrictions before general safeguard measures may be imposed.
However, the most fundamental restriction on the DTI
Secretary's power in that respect is contained in Section 5 of
the SMA that there should first be a positive final
determination of the Tariff Commission.
Sec. 5. Conditions for the Application of General
Safeguard Measures. – 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.
(emphasis supplied)
The plain meaning of Section 5 shows that it is the
Tariff Commission that has the power to make a "positive final
determination." This power lodged in the Tariff Commission,
must be distinguished from the power to impose the general
safeguard measure which is properly vested on the DTI
Secretary.
 All in all, there are two condition precedents that must
be satisfied before the DTI Secretary may impose a general
safeguard measure on grey Portland cement. First, there must
be a positive final determination by the Tariff Commission that
a product is being imported into the country in increased
quantities, as to be a substantial cause of serious injury or
threat to the domestic industry. Second, in the case of non-
agricultural products the Secretary must establish that the
application of such safeguard measures is in the public interest.
Section 5 plainly evinces legislative intent to restrict the DTI
Secretary's power to impose a general safeguard measure by
preconditioning such imposition on a positive determination
by the Tariff Commission. Section 28(2), Article VI of the
1987 Constitution confirms the delegation of legislative power,
yet ensures that the prerogative of Congress to impose
limitations and restrictions on the executive exercise of this
power:
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.
This delegation of the taxation power by the legislative
to the executive is authorized by the Constitution itself. At the
same time, the Constitution also grants the delegating authority
(Congress) the right to impose restrictions and limitations on the
taxation power delegated to the President.  The restrictions and
limitations imposed by Congress take on the mantle of a
constitutional command, which the executive branch is obliged
to observe.
The SMA empowered the DTI Secretary, as alter
ego of the President, to impose definitive general safeguard
measures, which basically are tariff imposts of the type spoken
of in the Constitution. However, the law did not grant him full,
uninhibited discretion to impose such measures. The DTI
Secretary authority is derived from the SMA; it does not flow
from any inherent executive power. Thus, the limitations
imposed by Section 5 are absolute, warranted as they are by a
constitutional fiat.
Moreover, the DTI Secretary does not have the power
to review the findings of the Tariff Commission for it is not
subordinate to the Department of Trade and Industry, but of
the National Economic Development Authority, an
independent planning agency of the government of co-equal
rank as the DTI. DTI Secretary generally cannot exercise
review authority over actions of the Tariff Commission. Neither
does the SMA specifically authorize the DTI Secretary to alter,
amend or modify in any way the determination made by the
Tariff Commission. The most that the DTI Secretary could do to
express displeasure over the Tariff Commission's actions is to
ignore its recommendation, but not its determination.
The Court of Appeals erred in remanding the case back
to the DTI Secretary, with the instruction that the DTI Secretary
may impose a general safeguard measure even if there is no
positive final determination from the Tariff Commission. More
crucially, the Court of Appeals could not have acquired
jurisdiction over Philcemcor's petition for certiorari in the first
place, as Section 29 of the SMA properly vests jurisdiction on
the CTA. Consequently, the assailed Decision is an absolute
nullity, and we declare it as such. It is clear then that the 25 June
2003 Decision of the DTI Secretary is a product of the
void Decision, it being an attempt to carry out such null
judgment.
G.R. No. 86953
MARINE RADIO COMMUNICATIONS ASSOCIATION
OF THE PHILIPPINES, INC. (MARCAPI), et al.,
petitioners,
vs.
RAINERIO O. REYES, in his capacity as Secretary of the
Department of Transportation and Communications (DOTC), et
al., respondents.
SARMIENTO, J.:
FACTS:
The petitioners are Filipino entrepreneurs deeply
involved in the business of marine radio communications in the
country. They are also operators of "shore-to-ship and ship-to-
shore public marine coastal radio stations”, and are holders of
certificates of public convenience issued by the NTC. Among
other things, they handle correspondence between vessel
passengers or crew and the public.
Sometime in 1988, in light of the tragic incident of the
sinking of MV Dona Paz, the DOTC designed an P880-million
maritime coastal communications system project, designed to
provide, among other things, ship-to-shore and shore-to-ship
public corresponding, free of charge.
After a failed “appeal” letter addressed to then-DOTC
Secretary Reyes, the petitioners brought the instant suit, alleging
that Secretary Reyes had been guilty of grave abuse of
discretion. The petitioners hold that the Department cannot
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.
ISSUE:
WoN Section 20, Article II of the Constitutional
operates to prohibit the government from entering the industry
of marine radio communications.
RULING:
NO. The duty of the State is predominantly "to serve
the people”, and to "promote a just and dynamic social order”
through policies that provide adequate social services and an
improved quality of life for all.
The petitioners cannot legitimately rely on the
provisions of Section 20, of Article II, of the Constitution to
defeat the act complained of. The mandate recognizing 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,
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 petition is dismissed.
ADDITIONAL NOTES: The Court is not of the thinking that
the act complained of is equivalent to a taking without just
compensation. While it is true that when 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, it does not seem to mean that the DOTC,
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 cannot charge the builder of the
bridge for lost income. And certainly, the Government has all
the right to build the bridge.
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.
FACTS: 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. Three (3) days before filing the disputed
mining lease application, petitioner filed this special civil action
for certiorari and prohibition. Petitioner assails
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 CFI of Camarines Norte in
land registration proceedings initiated by third persons, such as:
1. September 1951 land title application by a certain
Gervacio Liwanag, where the Director of Mines
opposed the grant of said application because
petitioners had already located and perfected its
mining claims over the area applied for.
2. 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. 
Respondent: Petitioner has no standing to file the instant petition
as it failed to fully exhaust administrative remedies. There is a
pending appeal of the petitioner at the Office of the President, of
the ruling of the respondent Secretary of Natural Resources in a
DNR Case, which upheld the decision 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. 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.
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. 
ISSUE: Whether Presidential Decree No. 1214 is
unconstitutional in that it amounts to a deprivation of property
without due process of law.
RULING:
Certiorari: 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.
Mining Claims:  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.
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.
McDaniel v. Apacible: It confirms that a valid mining claim may
still be lost through abandonment or forfeiture.
Gold Creek Mining Corp. v. Rodriguez: 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.
Constitutionality: Presidential Decree No. 1214 is not
unconstitutional. 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.
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.
SAN MIGUEL CORPORATION v. COURT OF APPEALS
and DIRECTOR OF LANDS
G.R. No. 57667. May 28, 1990
FACTS: This is a petition for review on certiorari where
petitioner San Miguel Corporation who purchased Lot 684
from Silverio Perez, seeks the reversal of the decision of
the Court of Appeals denying its application for registration
of the said land in view of its failure to show entitlement
thereto.
The Solicitor General opposed and appealed the
application contending that the land in question is part of
public domain and that petitioner being a private
corporation, under Section 11, Article XIV of the
Constitution, is disualified from holding alienable lands of
the public domain.
The lower court 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.
Petitioner claims that its predecessor-in-interest had open,
exclusive and undisputed possession of the land in
question based on documentary evidence of tax
declarations and receipts, and testimonial evidence of
vendor Silverio Perez.
ISSUE:
(1) Whether or not tax declarations and receipts are
conclusive evidence of ownership or right of
possession over a piece of land.
(2) Whether or not the factual findings of the trial
courts may be reversed by the Court of Appeals.
(3) What is the period prescribed by law to prove the
conclusive ownership over an alienable public
land.
HELD:
(1) No, documentary evidence of tax declarations and
receipts are not conclusive evidence of ownership
or right of possession over a piece of land but
mere indicia of a claim of ownership. They only
become strong evidence of ownership of land
acquired by prescription when accompanied by
proof of actual possession. Also, the testimony of
vendor Silverio Perez as proof of actual
possession is weak and was not corroborated by
other witnesses.
(2) Yes. Suffice it to state that while trial courts may
have the right to observe the demeanor of the
witnesses, their factual findings may nonetheless
be reversed by the Court of Appeals, the appellate
court vested by law to resolve both the legal and
factual issues, if, by the evidence on record, it
appears that the trial court involved erred.
(3) 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. Such open, continuous, exclusive and
notorious occupation of the disputed properties for
more than 30 years must, however, be
conclusively established. This quantum of proof is
necessary to avoid the erroneous validation of
actually fictitious claims of possession over the
property in dispute.
G.R. No. 149927            
March 30, 2004
426 SCRA 517
Republic vs. Rosemoor Mining and Development
Corporation
PRINCIPLE:
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.
FACTS:
Petitioners were granted permission to prospect for
marble deposits in the mountain of Biak-na-Bato in San
Miguel, Bulacan. After succeeding in discovering marble
deposits of high quality and commercial quantities, they
applied with the Mines and Geosciences Bureau for the
issuance of license to exploit said marble deposits.
(Syempre, pera ‘yun besh.)
Since PD 463 limits that a quarry license should cover not
more than 100 hectares in any given province,
respondents applied 4 separate applications, 81 hectares
each, applying therefore for a total of 330.3062 hectares.
(Lusot!)
After compliance with the requirements, License No. 33
was issued. (Yay! Dami kikitain nitong respondent na ‘to.)
(Kaya lang may umepal) 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 a letter to the petitioners
dated September 6, 1986. Because of said cancellation, a
petition was filed to assail the same. (Palag ‘to si
respondent, bali Miners vs. DENR na!)
RULING OF RTC:
1. 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.
2. The cancellation was said to be unjustified, because the
area that could be covered by the four separate
applications of respondents was 400 hectares.
3. 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.
(Syempre appeal ‘to si DENR, di magpapatalo) Petitioner
appealed lower court’s ruling.
RULING OF COURT OF APPEALS:
(Sustained ni CA ang ruling ni RTC)
1. 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.
2. The cancellation of respondents’ license without notice
and hearing was tantamount to a deprivation of property
without due process of law.
3. Under the clause in the Constitution dealing with the
non-impairment of obligations and contracts, respondents’
license must be respected by the State
(Edi ngayon nagpetition na ‘to si petitioner (DENR), talo
siya RTC and CA eh)
ISSUES:
1. Is the license valid?
2. Is Proclamation No. 84 issued by then President
Corazon Aquino is valid. (This is the law reverting lands
back to formal status as part of Biak-na-Bato National
Park.)
SC RULING: The Petition has merit.
SC RULING: VALIDITY OF LICENSE:
Respondents contend that the Petition has no legal basis,
because PD 463 has already been repealed by RA 7942
increasing coverage for explorations. In effect, they ask for
the dismissal of the Petition on the ground of mootness.
PD 463, pertained to the old system of exploration of
natural resources through licenses. While these
arrangements were provided under the 1935 and the
1973 Constitutions, they have been omitted by Section 2
of Article XII of the 1987 Constitution.
With the shift of constitutional policy toward "full control
and supervision of the State" over natural resources,
jurisprudence 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 that are inconsistent with any of its
provisions.
HOWEVER:
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.
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:
1. Mineral reservations are subject to valid existing
mining/quarrying rights. (Section 5, RA 7942)
2. Periodic Review of Existing Mineral Reservations to be
done without prejudice to prior existing rights. (Section 7,
RA 7942)
3. Areas Open to Mining Operations are subject to any
existing rights or reservations and prior agreements of all
parties (Section 18, RA 7942)
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 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.
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.
The license was thus subject to Section 69 of PD 463,
which limits that 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.
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.
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.
SC RULING: 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.
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 states that
permits/licenses may be revoked or cancelled at any time
by the Director of Mines and Geo-Sciences when, in his  RA 7942 (The Philippine Mining Act) took effect on April
opinion public interests so require.
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.
Moreover, granting that respondents’ license is valid, it
can still be validly revoked by the State in the exercise of
police power.
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.
The court did not sustain the argument that Proclamation
No. 84 is a bill of attainder; that is, a "legislative act which
inflicts punishment without judicial trial." Its declaration that
QLP No. 33 is a patent nullity 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
and 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. 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.
PETITION WAS GRANTED. RULIGN OF CA WAS SET
ASIDE.
La Bugal-B’Laan Tribal Association, Inc. vs. Ramos
445 SCRA 1, G.R. No. 127882 December 1, 2004
FACTS:
The constitutional provision allowing the President to
enter into FTAA is a exception to the rule that
participation in the nation’s natural resources is reserved
exclusively to Filipinos. Provision must be construed
strictly against their enjoyment by non-Filipinos.
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.
ISSUE/S
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.
RULING:
(FIRST ISSUE) RA 7942 or the Philippine Mining Act of
1995 is unconstitutional for permitting fully foreign
owned corporations to exploit the Philippine natural
resources.
Article XII Section 2 of the 1987 Constitution retained the
Regalian Doctrine which states that ―All lands of the
public domain, waters, minerals, coal, petroleum, and
other minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are
owned by the State. The same section also states that, ―the
exploration and development and utilization of natural
resources shall be under the full control and supervision
of the State.
Conspicuously absent in Section 2 is the provision in the
1935 and 1973 Constitution authorizing the State to grant
licenses, concessions, or leases for the exploration,
exploitation, development, or utilization of natural
resources. By such omission, the utilization of inalienable
lands of the public domain through license, concession or
lease is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a
direct equity investment for the purpose of exploiting a
particular natural resource within a given area. The
concession amounts to complete control by the
concessionaire over the country‘s natural resource, for it is
given exclusive and plenary rights to exploit a particular
resource at the point of extraction.
The 1987 Constitution, moreover, has deleted the phrase
―management or other forms of assistance in the 1973
Charter. The present Constitution now allows only
―technical and financial assistance. The management and
the operation of the mining activities by foreign
contractors, the primary feature of the service contracts
was precisely the evil the drafters of the 1987 Constitution
sought to avoid.
The constitutional provision allowing the President to
enter into FTAAs is an exception to the rule that
participation in the nation‘s natural resources is reserved
exclusively to Filipinos. Accordingly, such provision must
be construed strictly against their enjoyment by non-
Filipinos. Therefore, RA 7942 is invalid insofar as the
said act authorizes service contracts. Although the statute
employs the phrase ―financial and
technical agreements in accordance with the 1987
Constitution, its pertinent provisions actually treat
these agreements as service contracts that grant beneficial
ownership to foreign contractors contrary to the
fundamental law.
The underlying assumption in the provisions of the law is
that the foreign contractor manages the mineral resources
just like the foreign contractor in a service contract. By
allowing foreign contractors to manage or operate all the
aspects of the mining operation, RA 7942 has, in effect,
conveyed beneficial ownership over the nation‘s mineral
resources to these contractors, leaving the State with
nothing but bare title thereto.
The same provisions, whether by design or inadvertence,
permit a circumvention of the constitutionally ordained
60-40% capitalization requirement for corporations or
associations engaged in the exploitation, development and
utilization of Philippine natural resources.
When parts of a statute are so mutually dependent and
connected as conditions, considerations, inducements or
compensations for each other as to warrant a belief that
the legislature intended them as a whole, then if some
parts are unconstitutional, all provisions that are thus
dependent, conditional or connected, must fail with them.
Under Article XII Section 2 of the 1987 Charter, foreign
owned corporations are limited only to merely technical
or financial assistance to the State for large scale
exploration, development and utilization of minerals,
petroleum and other mineral oils.
(SECOND ISSUE) We do not see how a verba legis
approach leads to the conclusion that “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.” Nowhere in the above-quoted
Section can be discerned the objective to keep out of
foreign hands the management or operation of mining
activities or the plan to eradicate service contracts as these
were understood in the 1973 Constitution. Still, petitioners
maintain that the deletion or omission from the 1987
Constitution of the term “service contracts” found in the
1973 Constitution sufficiently proves the drafters’ intent to
exclude foreigners from the management of the affected
enterprises. To our mind, however, such intent cannot be
definitively and conclusively established from the mere
failure to carry the same expression or term over to the
new Constitution, absent a more specific, explicit and
unequivocal statement to that effect. What petitioners seek
(a complete ban on foreign participation in the
management of mining operations, as previously allowed
by the earlier Constitutions) is nothing short of bringing
about a momentous sea change in the economic and
developmental policies; and the fundamentally capitalist,
free-enterprise philosophy of our government. We cannot
imagine such a radical shift being undertaken by our
government, to the great prejudice of the mining sector in
particular and our economy in general, merely on the
basis of the omission of the terms service contract from or
the failure to carry them over to the new Constitution.
There has to be a much more definite and even
unarguable basis for such a drastic reversal of policies.
PHILIPPINE GEOTHERMAL INC. VS NATIONAL
POWER CORPORATION
G.R. NO. 144302
May 27,2004
FACTS: On September 10, 1971, the National Power
Corporation (NPC) entered into a service contract with
Philippine Geothermal, Inc. (PGI), a corporation organized
and existing under the laws of California, United States of
America, for the exploration and exploitation of geothermal
resources covering the Tiwi and Mak-Ban Geothermal
Fields. The contract was to expire on 1996 but
negotiations were underway as early as 1994. NPC,
however, was doubtful whether a renewal would be
constitutional in light of Section 2, Article XII of the 1987
Constitution that: The exploration, development, and
utilization of natural resources shall be under the full
control and supervision of the state.
PGI filed a request for arbitration with the International
Court of Arbitration while NPC filed a petition for
declaratory relief against PGI praying for the determination
of the constitutionality of the service contract. PGI sought
the dismissal of the declaratory relief petition based on
lack of jurisdiction over it in light of the pending arbitration
proceedings it instituted but its motion was denied. The
RTC denied the motion to dismiss.
The CA ruled that the petition for declaratory relief should
have been dismissed by the RTC as well as by the court
of appeals in view of the pending arbitration proceedings
over the same subject matter in view of a breach of the
contract subject of the petition.
During thependency of the case with the SC, PGI and the
NPC filed several joint motions to suspend proceedings
upon the ground that they were negotiating for the
settlement of the case. The motions were granted.
The parties subsequently filed a Joint Motion to Approve
Compromise Agreement and to Dismiss based on
Compromise Agreement. The compromise agreement
provided that they have: agreed to terminate the Service
Contract subject matter of the dispute, in favor of a
new Geothermal Sales Contract and a PD 1442
Geothermal Service Contract, and PGI has committed
to form a Philippine company for the development and
operation of the Tiwi and Mak-Ban steamfields (Sec. 6.1
thereof) on a going-forward basis, thereby effectively
erasing any doubt as to the legality of the
compromise.
ISSUE: Whether or not the court can approve the
Compromise Agreement.
HELD: No. The assailed decision of the Court of Appeals
dwells on the issue of jurisdiction of the RTC over the
NPC petition for declaratory relief on the constitutionality
of the service contract.
Since only the issue of jurisdiction over the
constitutionality of a contract was elevated to this Court, it
is beyond its jurisdiction to pass upon and approve the
Compromise Agreement of the parties.
In light of the foregoing development, while this Court
denies the parties’ Joint Motion to Approve the
Compromise Agreement, it finds the Motion to Dismiss
well-taken.
TEN FORTY REALTY AND LORENZANA vs CRUZ
GR NO 151212 SEPTEMBER 10 2013
FACTS:
Ten Forty Realty filed a complaint of ejectment against Marina
Cruz who has allegedly occupied the residential lot in Olongapo
City, which they bought from Barbara Galino, by virtue of a
Deed of Absolute Sale. It appears that Barbara sold the same lot
to Marina who immediately occupied the land. Ten Forty is
saying the occupation by Marina was merely tolerated by them.
Marina’s defense: (1) Ten Forty, being a corporation, is not
qualified to own the property which is a public land. (2) Barbara
Galino did not sell her property to Ten Forty but merely
obtained a loan. (3) Ten Forty never occupied the property
before she did. Barbara Galino was in possession at the time of
the sale, and vacated the lot in favor of Marina. (4) She was the
one who caused the cancellation of the tax declaration in the
name of Barbara and a new one was issued in her name. (5) Ten
Forty only obtained its tax declaration 7 months after she did.
MTCC ruled in favor of Ten Forty and ordered Marina to
vacate.
RTC reversed. The RTC ruled as follows: 1) respondent’s 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.
CA affirmed: Case cannot be unlawful detainer because there
has been no prior contract between the parties. Neither can it be
forcibly entry because there is no showing that there was prior
physical possession by the petitioner.
ISSUE: WON Marina may be validly ejected from the property
RULING: No.
1. In a contract of sale, the buyer acquires the thing sold
only upon its delivery. The execution of a public
instrument gives rise to a presumption of delivery, but
this presumption is destroyed when delivery is not
effected because of a legal impediment. Constructive
delivery is deemed negated upon failure of vendee to
take actual possession of the land. Ten Forty was not
able to take possession and the SC found it highly
unlikely that they allowed occupation of Marina by
mere tolerance.
2. In cases of double sale, the person who first recorded it
in the Registry of Property shall be considered the
lawful owner. In this case, however, petitioner was
unable to establish that the Deed was recorded in the
Registry of Deeds of Olongapo. An unverified notation
on the Deed is not equivalent to a registration. In the
absence of this requirement, the law gives preferential
right to the buyer who in good faith is first in
possession.
3. To determine who is first in possession, the following
parameters have been established:
a. Possession includes not only material but also
symbolic possession
b. Possessors in good faith are not aware of any
flaw in their title or mode of acquisition
c. Buyers of property that is in possession of
persons other than the seller must be wary –
they must investigate
d. Good faith is always presumed. Burden of
proof rests on the one alleging bad faith.
Property has not been delivered, hence Ten Forty did not
acquire possession either materially or symbolically. Petitioner
has not proven that respondent was aware of any defect to her
title. At the time, the property had not been registered which
was why Marina relied on tax declarations. Galino was actually
occupying the property when respondent took possession. Thus,
there was no circumstance that could have required her to
investigate further.
4. Private corporations are disqualified from acquiring
lands of public domain. At the time of the sale, there is
no evidence that the property had already ceased to be
of public domain.
G.R. No. 92024 November 9, 1990
CONGRESSMAN ENRIQUE T. GARCIA (Second
District of Bataan), petitioner,
vs.
THE BOARD OF INVESTMENTS, THE DEPARTMENT
OF TRADE AND INDUSTRY, LUZON
PETROCHEMICAL CORPORATION, and PILIPINAS
SHELL CORPORATION, respondents.
GUTIERREZ, JR., J.: This is a petition to annul and set
aside the decision of the Board of Investments
(BOI)/Department of Trade and Industry (DTI) approving
the transfer of the site of the proposed petrochemical
plant from Bataan to Batangas and the shift of feedstock
for that plant from naphtha only to naphtha and/or
liquefied petroleum gas (LPG).
FACTS: Former Bataan Petrochemical Corporation (BPC),
now Luzon Petrochemical Corporation, formed by a
group of Taiwanese investors, was granted by the BOI for
the transfer of its proposed plant site from Bataan to
Batangas and the shift of the plant’s feedstock or fuel for
its petrochemical plant from “naphta only” to “naptha
and/or liquefied petroleum gas. The reason adduced for
the transfer was the insurgency and unstable labor
situation, and the presence in Batangas of a huge
liquefied petroleum gas (LPG) depot owned by the
Philippine Shell Corporation. In February 1989, one year
after the BPC began its production in Bataan, the
corporation applied to the BOI to have its plant site
transferred from Bataan to Batangas. Despite vigorous
opposition from petitioner Cong. Enrique Garcia and
others, the BOI granted private respondent BPC’s
application, stating that the investors have the final
choice as to where to have their plant site because they
are the ones who risk capital for the project.
ISSUE:
1. Whether or not the foreign investor has the right of final
choice of plant site.
2. Whether it constitutes a grave abuse of discretion for
the BOI to yield to the wishes of the investor without
considering the national interest
Ruling:
1.Does the investor have a "right of final choice" of plant
site? Neither under the 1987 Constitution nor in the
Omnibus Investments Code is there such a 'right
of final choice.' In the first place, the investor's choice is
subject to processing and approval or disapproval by the
BOI (Art. 7, Chapter II, Omnibus Investments Code). By
submitting its application and amended application to the
BOI for approval, the investor recognizes the sovereign
prerogative of our Government, through the BOI, to
approve or disapprove the same after determining
whether its proposed project will be feasible, desirable and
beneficial to our country. By asking that his opposition to
the LPC's amended application be heard by the BOI, the
petitioner likewise acknowledges that the BOI, not the
investor, has the last word or the "final choice" on the
matter.
Secondly, as this case has shown, even a choice that had
been approved by the BOI may not be 'final', for
supervening circumstances and changes in the conditions
of a place may dictate a corresponding change in the
choice of plant site in order that the project will not fail.
After all, our country will benefit only when a project
succeeds, not when it fails
2. The Supreme Court found the BOI to have committed
grave abuse of discretion in this case and ordered the
original application of the BPC to have its plant site in
Bataan and the product naphta as feedstock maintained.
First, Bataan was the original choice as the plant site of
the BOI to which the BPC agreed. That is why it organized
itself into a corporation bearing the name Bataan. There is
available 576 hectares of public land precisely reserved as
the petrochemical zone in Limay, Bataan under P.D. No.
1803. There is no need to buy expensive real estate for
the site unlike in the proposed transfer to Batangas. The
site is the result of careful study long before any covetous
interests intruded into the choice. The site is ideal. It is not
unduly constricted and allows for expansion. The
respondents have not shown nor reiterated that the
alleged peace and order situation in Bataan or unstable
labor situation warrant a transfer of the plant site to
Batangas. Certainly, these were taken into account when
the firm named itself Bataan Petrochemical Corporation.
Moreover, the evidence proves the contrary.
Second, the BRC, a government
owned Filipino corporation, located in Bataan produces
60% of the national output of naphtha which can be used
as feedstock for the plant in Bataan. It can provide the
feedstock requirement of the plant. On the other hand, the
country is short of LPG and there is need to import the
same for use of the plant in Batangas. The local
production thereof by Shell can hardly supply the needs of
the consumers for cooking purposes. Scarce dollars will
be diverted, unnecessarily, from vitally essential projects
in order to feed the furnaces of the transferred
petrochemical plant.
Third, naphtha as feedstock has been exempted by law
from the ad valorem  tax by the approval of Republic Act
No. 6767 by President Aquino but excluding LPG from
exemption from ad valorem tax. The law was enacted
specifically for the petrochemical industry. The policy
determination by both Congress and the President is
clear. Neither BOI nor a foreign investor should disregard
or contravene expressed policy by shifting the feedstock
from naphtha to LPG.
Fourth, under Section 10, Article XII of the 1987
Constitution, it is the duty of the State to "regulate and
exercise authority over foreign investments within its
national jurisdiction and in accordance with its national
goals and priorities." The development of a self-reliant and
independent national economy effectively controlled by
Filipinos is mandated in Section 19, Article II of the
Constitution.
In Article 2 of the Omnibus Investments Code of 1987 "the
sound development of the national economy in
consonance with the principles and objectives of
economic nationalism" is the set goal of government.
Fifth, with the admitted fact that the investor is raising the
greater portion of the capital for the project from local
sources by way of loan which led to the so-called
"petroscam scandal", the capital requirements would be
greatly minimized if LPC does not have to buy the land for
the project and its feedstock shall be limited to naphtha
which is certainly more economical, more readily available
than LPG, and does not have to be imported.
Sixth, if the plant site is maintained in Bataan, the PNOC
shall be a partner in the venture to the great benefit and
advantage of the government which shall have a
participation in the management of the project instead of a
firm which is a huge multinational corporation.
In the light of all the clear advantages manifest in the
plant's remaining in Bataan, practically nothing is shown to
justify the transfer to Batangas except a near-absolute
discretion given by BOI to investors not only to freely
choose the site but to transfer it from their own first choice
for reasons which remain murky to say the least.
And this brings us to a prime consideration which the
Court cannot rightly ignore.
Section 1, Article XII of the Constitution provides that:
x x x           x x x          x x x
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.
xxx xxx xxx
Every provision of the Constitution on the national
economy and patrimony is infused with the spirit of
national interest. The non-alienation of natural resources,
the State's full control over the development and utilization
of our scarce resources, agreements with foreigners being
based on real contributions to the economic growth and
general welfare of the country and the regulation of foreign
investments in accordance with national goals and
priorities are too explicit not to be noticed and understood.
MANILA PRINCE HOTEL VS. GSIS
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.
Pertinent Topic: The Filipino First Policy as
provided for under Sec. 10, second par., Art. XII,
of the 1987
Facts:
The controversy arose when respondent Government
Service Insurance System (GSIS), pursuant to the
privatization program of the Philippine Government,
decided to sell through public bidding 30% to 51% of
the issued and outstanding shares of respondent
Manila Hotel Corporation (MHC). The winning
bidder, or the eventual “strategic partner,” will
provide management expertise or an international
marketing/reservation system, and financial support
to strengthen the profitability and performance of
the Manila Hotel.
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. Prior to the declaration of Renong
Berhard as the winning bidder, petitioner Manila
Prince Hotel matched the bid price and sent a
manager’s check as bid security, which GSIS refused
to accept.
Apprehensive that GSIS has disregarded the tender
of the matching bid and that the sale may be
consummated with Renong Berhad, petitioner filed a
petition before the Court.
 
Issues:
1. Whether or not Sec. 10, second par., Art. XII,
of the 1987 Constitution is a self-executing
provision.
2. Whether or not the Manila Hotel forms part
of the national patrimony.
3. Whether or not the submission of matching
bid is premature
4. Whether or not there was grave abuse of
discretion on the part of the respondents in refusing
 the matching bid of the petitioner. national economy and patrimony, the state shall give

Rulings: preference to qualified Filipinos--qualified Filipinos

In the resolution of the case, the Court held that: shall be preferred.

1. Yes, it is a self-executing provision. "Qualified Filipinos" includes corporations at least

60% of which is Filipino owned. This means that
Article XII, Sec. 10 provides:
preference shall be given to those citizens who can
Section 10. The Congress shall, upon make a viable contribution to the common good,
recommendation of the economic and planning
agency, when the national interest dictates, reserve because of credible competence and efficiency.
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 National Patrimony refers not only to natural
percentage as Congress may prescribe, certain areas
resources of the Philippines but also cultural
of investments. The Congress shall enact measures
that will encourage the formation and operation of heritage.
enterprises whose capital is wholly owned by
Filipinos.
Manila Hotel has become a living testimonial of
In the grant of rights, privileges, and
concessions covering the national economy and Philippine Heritage, it is dubbed as the Official
patrimony, the State shall give preference to Guest House of the Philippine Government. Its
qualified Filipinos.
existence is impressed with public interest.
The State shall regulate and exercise authority over
foreign investments within its national jurisdiction
and in accordance with its national goals and
priorities.

Since the Constitution is the fundamental,

paramount and supreme law of the nation, it is A constitutional provision is self-executing if the

deemed written in every statute and contract. A nature and extent of the right conferred and the

provision which lays down a general principle, such liability imposed are fixed by the constitution itself,
as those found in Art. II of the 1987 Constitution, is so that they can be determined by an examination

usually not self-executing. But a provision which is and construction of its terms, and there is no

complete in itself and becomes operative without language indicating that the subject is referred to

the aid of supplementary or enabling legislation, the legislature for action. Unless it is expressly

or that which supplies sufficient rule by means of provided that a legislative act is necessary to enforce

which the right it grants may be enjoyed or a constitutional mandate, the presumption now is

protected, is self-executing. that all provisions of the constitution are self-

executing. If the constitutional provisions are treated

Sec.10 Par.2 Art. 12, is a provision complete in as requiring legislation instead of self-executing, the
legislature would have the power to ignore and
itself and needs no further guidelines or
practically nullify the mandate of the fundamental
implementing laws or rules for its enforcement.
law.

When our Constitution mandates that in the grant 10, second par., Art. XII of the 1987 Constitution is
of rights privileges and concessions covering a mandatory, positive command which is complete
 in itself and which needs no further guidelines or of the MHC comes within the purview of the
implementing laws or rules for its enforcement. constitutional shelter for it comprises the majority
From its very words the provision does not require and controlling stock, so that anyone who acquires
any legislation to put it in operation. It is per or owns the 51% will have actual control and
se judicially enforceable. When our Constitution management of the hotel. In this instance, 51% of
mandates that in the grant of rights, privileges, and the MHC cannot be disassociated from the hotel and
concessions covering national economy and the land on which the hotel edifice stands.
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 3. It is not premature.

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.
2. Yes
In its plain and ordinary meaning, the term
patrimony pertains to heritage. When
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.
It also refers to Filipino’s intelligence in arts,
sciences and letters. In the present case, 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, a
concourse for the elite, it has since then become the
venue of various significant events which have
shaped Philippine history.
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 the Court is 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
the a perilous skirting of the basic law.
The 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.

Verily, Manila Hotel has become part of our national 4. There was grave abuse of discretion.
economy and patrimony. For sure, 51% of the equity
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 judgement,
regardless of the consequences to the Filipino
people. The miscomprehension of the Constitution is
regrettable. Thus, the Court 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.
 
Hence, 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 agreements and documents to effect the
sale, to issue the necessary clearances and to do
such other acts and deeds as may be necessary for
the purpose.
Tañada v. Angara G.R. No. 118295 | May 2, 1997
Petitioners: Wigberto Tanada, et al.
Respondents: Edgardo Angara, et al.
Ponente: Panganiban, J.
SUMMARY:
Petitioners assail the constitutionality of the Philippines
acceding to the World Trade Organization for being violative of
provisions which are supposed to give preference to Filipino
workers and economy and on the ground that it infringes
legislative and judicial power. The WTO, through it provisions
on “most favored nation” and national treatment, require that
nationals and other member countries are placed in the same
footing in terms of products and services. However, the Court
brushed off these contentions and ruled that the WTO is
constitutional. Sections 10 and 12 of Article XII (National
Economy and Patrimony) should be read in relation to Sections
1 and 13 (promoting the general welfare). Also, Section 10 is
self-executing only to “rights, privileges, and concessions
covering national economy and patrimony” but not every aspect
of trade and commerce. There are balancing provisions in the
Constitution allowing the Senate to ratify the WTO agreement.
Also, the Constitution doesn’t rule out foreign competition.
States waive certain amount of sovereignty when entering into
treaties.
FACTS:
The Philippines joined World Trade Organization as a
founding member with the goal of improving Philippine access
to foreign markets, especially its major trading partners, through
the reduction of tariffs on its exports. 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. On April 15, 1994, respondent Navarro, then DTI
Secretary, signed in Marrakesh, Morocco, the Final Act
Embodying the Results of the Uruguay Round of Multilateral
Negotiations. On December 14, 1994, the Senate concurred in
the ratification of the President of the Philippines of the
Agreement Establishing the WTO which includes various
agreements and associated legal instruments. On December 16,
1994, the President signed the Instrument of Ratification.
ISSUES:
1. Whether the WTO Agreement violated the mandated
economic nationalism by the Constitution
2. Whether the provisions of the WTO Agreement restrict and
impairs Philippine sovereignty, specifically the legislative
power vested in the Congress
3. Whether the Senate concurrence in the WTO Agreement and
its annexes but not in the other documents referred to in the
Final Act is defective and insufficient and thus constitutes abuse
of discretion
RULING:
1. No. 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. In fact,
it allows an exchange on the basis of equality and reciprocity,
frowning only on foreign competition that is unfair. 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.
2. No. 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. 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 laws. A treaty
engagement is not a mere moral obligation on the parties. By
their inherent nature, treaties really limit or restrict the
absoluteness of 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 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 same commitments under
WTO-GATT. The point is that 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.
3. No. The petitioners submit that concurrence in the WTO
Agreement alone is flawed because it is in effect a rejection of
the Final Act. The Court held that a final act is an instrument
which records the winding up of the proceedings of a diplomatic
conference and not the treaty itself. On the other hand, the WTO
Agreement itself expresses what multilateral agreements are
deemed included as its integral parts. It should be added that the
Senate was well-aware of what it was concurring in as shown by
the member’s deliberation.
FRANCISCO S. TATAD, JOHN H. OSMEÑA and
RODOLFO G. BIAZON, petitioners, vs. HON.
JESUS B. GARCIA, JR., in his capacity as the
Secretary of the Department of
Transportation and Communications, and
EDSA LRT CORPORATION, LTD., respondents.
QUIASON, J.:
Petitioners Francisco S. Tatad, John H. Osmena
and Rodolfo G. Biazon are are suing in their
capacities as Senators and as taxpayers.
Respondent Secretary of the Department of
Transportation and Communications (DOTC), while
private respondent EDSA LRT Corporation, Ltd. is a
private corporation organized under the laws of
Hongkong.
FACTS
In 1989, DOTC planned to construct a light railway
transit line along EDSA, referred to as EDSA Light
Rail Transit III (EDSA LRT III), was intended to
provide a mass transit system along EDSA and
alleviate the congestion and growing
transportation problem in the metropolis.
R.A. No. 6957 entitled "An Act Authorizing the
Financing, Construction, Operation and
Maintenance of Infrastructure Projects by the
Private Sector, and For Other Purposes," was and
referred to as the Build-Operate-Transfer
(BOT) Law.
BOT Law provides for two schemes for the
financing, construction and operation of
government projects through private initiative and
investment: Build-Operate-Transfer (BOT) or
Build-Transfer (BT).
The Prequalification Bids and Awards Committee
(PBAC) and the Technical Committee] issued
guidelines for the prequalification of contractors for
the financing and implementation of the project.
Five groups responded to the invitation namely:
ABB Trazione of Italy,
Hopewell Holdings Ltd. of Hongkong,
Mansteel International of Mandaue, Cebu,
Mitsui & Co., Ltd. of Japan, and
EDSA LRT Consortium, composed of ten foreign
and domestic corporations
After evaluating the prequalification, only the
EDSA LRT Consortium "met the requirements.
Finding the proposal by EDSA to be in compliance
with the bid requirements, DOTC and respondent
EDSA LRT Corporation, Ltd., in substitution of the
EDSA LRT Consortium, entered into an "Agreement
to Build, Lease and Transfer a Light Rail Transit
System for EDSA" under the terms of the BOT Law
and thereafter requested presidential approval of
the contract.
Executive Secretary Franklin Drilon informed
Secretary [DOTC] that the President could not
grant the requested approval because DOTC failed
to conduct actual public bidding and that the public
bidding is the only mode to award BOT projects,
and the prequalification proceedings was not the
public bidding contemplated under the law.
In view of this, DOTC and private respondents re-
negotiated the agreement. The parties entered into
a "Revised and Restated Agreement to Build,
Lease and Transfer a Light Rail Transit System for
EDSA" so as to "clarify their respective rights and
responsibilities" and to submit it to the President.
Such was approved in a Memorandum.
According to the agreements, private
respondents shall undertake and finance the
entire project required. Upon full or partial
completion and viability thereof, private
respondent shall deliver the use and
possession of the completed portion to DOTC
which shall operate the same. DOTC shall pay
private respondent rentals on a monthly basis
through an Irrevocable Letter of Credit. As
agreed upon, private respondent's capital
shall be recovered from the rentals to be paid
by the DOTC which, in turn, shall come from
the earnings of the EDSA LRT III. After 25
years and DOTC shall have completed
payment of the rentals, ownership of the
project shall be transferred to the latter for a
consideration of only U.S. $1.00.
Subsequently, R.A. No. 7718, an "Act Amending
Certain Sections of Republic Act No. 6957, Entitled
"An Act Authorizing the Financing, Construction,
Operation and Maintenance of Infrastructure
Projects by the Private Sector, and for Other
Purposes" was signed. The law expressly
recognizes BLT scheme and allows direct
negotiation of BLT contracts.
ISSUES
(1) WON the EDSA LRT III is a public utility, and
the ownership and operation thereof is limited by
the Constitution to Filipino citizens and domestic
corporations, not foreign corporations like private
respondent;
(2) WON the Build-Lease-Transfer (BLT) scheme
provided in the agreements is not the BOT or BT
Scheme under the law;
(3) the contract to construct the EDSA LRT III was
awarded to private respondent not through public
bidding which is the only mode of awarding
infrastructure projects under the BOT law; and
HELD
1. [No].
Private respondent EDSA LRT Corporation, Ltd. to
whom the contract to construct the EDSA LRT III
was awarded by public respondent, is admittedly a
foreign corporation "duly incorporated and existing
under the laws of Hongkong".
Section 11 of Article XII of the Constitution
provides:
No franchise, certificate or any
other form of authorization for
the operation of a public
utility shall be granted except to
citizens of the Philippines or to
corporations or associations
organized under the laws of the
Philippines at least sixty per
centum of whose capital is
owned by such citizens, nor shall
such franchise, certificate or
authorization be exclusive
character or for a longer period
than fifty years . . . (Emphasis
supplied).
The Constitution, in no uncertain terms, requires a
franchise for the operation of a public utility.
However, it does not require a franchise before
one can own the facilities needed to operate a
public utility so long as it does not operate them to
serve the public.
Even the mere formation of a public utility
corporation does not ipso facto characterize the
corporation as one operating a public utility. The
moment for determining the requisite Filipino
nationality is when the entity applies for a
franchise, certificate or any other form of
authorization for that purpose.
In law, there is a clear distinction between the
"operation" of a public utility and the ownership of
the facilities and equipment used to serve the
public.
The exercise of the rights encompassed in
ownership is limited by law so that a property
cannot be operated and used to serve the public as
a public utility unless the operator has a franchise.
The right to operate a public utility may exist
independently and separately from the ownership
of the facilities thereof. One can own said facilities
without operating them as a public utility, or
conversely, one may operate a public utility
without owning the facilities used to serve the
public. The devotion of property to serve the public
may be done by the owner or by the person in
control thereof who may not necessarily be the
owner thereof.
What private respondent owns are the rail tracks,
rolling stocks like the coaches, rail stations,
terminals and the power plant, not a public utility.
While a franchise is needed to operate these
facilities to serve the public, they do not by
themselves constitute a public utility. What
constitutes a public utility is not their ownership
but their use to serve the public.
While private respondent is the owner of the
facilities necessary to operate the EDSA. LRT III, it
admits that it is not enfranchised to operate a
public utility. In view of this incapacity, private
respondent and DOTC agreed that on completion
date, private respondent will immediately deliver
possession of the LRT system by way of lease for
25 years, during which period DOTC shall operate
the same as a common carrier and private
respondent shall provide technical maintenance
and repair services to DOTC.
Fees for private respondent' s services shall be
included in the rent, which likewise includes the
project cost, cost of replacement of plant
equipment and spare parts, investment and
financing cost, plus a reasonable rate of return
thereon.
Since DOTC shall operate the EDSA LRT III, it shall
assume all the obligations and liabilities of a
common carrier. In sum, private respondent
will not run the light rail vehicles and collect
fees from the riding public. It will have no
dealings with the public and the public will
have no right to demand any services from it.
2. [No]
The BOT scheme is expressly defined as one where
the contractor undertakes the construction and
financing in infrastructure facility, and operates
and maintains the same. The contractor operates
the facility for a fixed period during which it may
recover its expenses and investment in the project
plus a reasonable rate of return thereon. After the
expiration of the agreed term, the contractor
transfers the ownership and operation of the
project to the government.
Emphasis must be made that under the BOT
scheme, the owner of the infrastructure facility
must comply with the citizenship requirement of
the Constitution on the operation of a public utility.
No such a requirement is imposed in the BT
scheme.
In the BT scheme, the contractor undertakes the
construction and financing of the facility, but after
completion, the ownership and operation thereof
are turned over to the government. The
government, in turn, shall pay the contractor its
total investment on the project in addition to a
reasonable rate of return. If payment is to be
effected through amortization payments by the
government infrastructure agency or local
government unit concerned, this shall be made in
accordance with a scheme proposed in the bid and
incorporated in the contract (R.A. No. 6957, Sec.
6). The BLT scheme in the challenged
agreements is but a variation of the BT
scheme under the law.
There is no mention in the BOT Law that the BOT
and BT schemes bar any other arrangement for
the payment by the government of the project
cost. As a matter of fact, the burden on the
government in raising funds to pay for the project
is made lighter by allowing it to amortize payments
out of the income from the operation of the LRT
System.
3. [No]
The fact that the contract for the construction of
the EDSA LRT III was awarded through negotiation
does not suffice to invalidate the award.
The records show that only one applicant passed
the prequalification process. Since only one was
left, to conduct a public bidding in accordance with
Section 5 of the BOT Law for that lone participant
will be an absurb and pointless exercise.
Contrary to the comments of the Executive
Secretary Drilon, Section 5 of the BOT Law in
relation to Presidential Decree No. 1594 allows the
negotiated award of government infrastructure
projects.
Indeed, where there is a lack of qualified bidders
or contractors, the award of government
infrastructure contracts may be made by
negotiation. Presidential Decree No. 1594 is the
general law on government infrastructure
contracts while the BOT Law governs particular
arrangements or schemes aimed at encouraging
private sector participation in government
infrastructure projects. The two laws are not
inconsistent with each other but are in pari
materia and should be read together accordingly.
There is nothing in our laws that prohibits parties
to a contract from renegotiating and modifying in
good faith the terms and conditions thereof so as
to meet legal, statutory and constitutional
requirements. Under the circumstances, to require
the parties to go back to step one of the
prequalification process would just be an idle
ceremony.
Republic Act No. 7718 is intended to provide
financial incentives and "a climate of minimum
government regulations and procedures and
specific government undertakings in support of the
private sector" (Sec. 1). Section 5-A of R.A. No.
7718, which expressly allows direct negotiation of
contracts, provides:
Direct Negotiation of Contracts. —
Direct negotiation shall be
resorted to when there is only
one complying bidder left as
defined hereunder.
(a) If, after advertisement, only one
contractor applies for
prequalification and it meets the
prequalification requirements, after
which it is required to submit a bid
proposal . . .
Petitioners' claim that the BLT scheme and direct
negotiation of contracts are not contemplated by
the BOT Law has now been rendered moot and
academic by R.A. No. 7718. Section 3 of this law
authorizes all government infrastructure agencies,
government-owned and controlled corporations
and local government units to enter into contract
with any duly prequalified proponent for the
financing, construction, operation and maintenance
of any financially viable infrastructure or
development facility through a BOT, BT, BLT, BOO
(Build-own-and-operate), CAO (Contract-add-
operate), DOT (Develop-operate-and-transfer),
ROT (Rehabilitate-operate-and-transfer), and ROO
(Rehabilitate-own-operate) (R.A. No. 7718, Sec. 2
[b-j]).
4. [No]
It must be noted that as part of the EDSA LRT III
project, private respondent has been granted, for
a period of 25 years, exclusive rights over the
depot and the air space above the stations for
development into commercial premises for lease,
sublease, transfer, or advertising. For and in
consideration of these development rights,
private respondent shall pay DOTC in
Philippine currency guaranteed revenues
generated therefrom in the amounts set forth
in the Supplemental Agreement. In the event
that DOTC shall be unable to collect the
guaranteed revenues, DOTC shall be allowed to
deduct any shortfalls from the monthly rent due
private respondent for the construction of the
EDSA LRT III. All rights, titles, interests and
income over all contracts on the commercial
spaces shall revert to DOTC upon expiration of the
25-year period.
That the grantee of a government contract will
profit therefrom and to that extent the government
is deprived of the profits if it engages in the
business itself, is not worthy of being raised as an
issue. In all cases where a party enters into a
contract with the government, he does so, not out
of charity and not to lose money, but to gain
pecuniarily.
ASSOCIATED COMMUNICATIONS & WIRELESS SERVICES-
UNITED BROADCASTING NETWORKS, petitioner, vs.
NATIONAL TELECOMMUNICATIONS COMMISSION,
respondent.
February 17, 2003
Facts:
On November 11, 1931, Act No. 3846, entitled “An Act
Providing for the Regulation of Radio Stations and Radio
Communications in the Philippines and for Other Purposes,”
was enacted. Sec. 1 of the law reads, viz.:
“Sec. 1. No person, firm, company,
association, or corporation shall construct,
install, establish, or operate a radio
transmitting station, or a radio receiving
station used for commercial purposes, or a
radio broadcasting station, without having
first obtained a franchise therefor from the
Congress of the Philippines . . .”
Pursuant to the above provision, Congress enacted in 1965
R.A. No. 4551, entitled “An Act Granting Marcos J. Villaverde,
Jr. and Winfred E. Villaverde a Franchise to Construct,
Install, Maintain and Operate Public Radiotelephone and
Radiotelegraph Coastal Stations, and Public Fixed and Public
Based and Land Mobile Stations within the Philippines for
the Reception and Transmission of Radiotelephone and
Radiotelegraph for Domestic Communications and
Provincial Telephone Systems in Certain Provinces.” It gave
the grantees a 50-year franchise. In 1969, the franchise was
transferred to petitioner Associated Communications &
Wireless Services-United Broadcasting Network, Inc. (ACWS
for brevity) through Congress’ Concurrent Resolution No.
58.3 Petitioner ACWS then engaged in the installation and
operation of several radio stations around the country.
In 1974, P.D. No. 576-A, “Regulating the Ownership and
Operation of Radio and Television Stations and for other
Purposes” was issued, with the following pertinent
provisions on franchise of radio and television
broadcasting systems:
“Sec. 1. No radio station or television channel
may obtain a franchise unless it has sufficient
capital on the basis of equity for its operation
for at least one year, including purchase of
equipment.
x x x     x x x     x x x
Sec. 6. All franchises, grants, licenses, permits,
certificates or other forms of authority to
operate radio or television broadcasting
systems shall terminate on December 31, 1981.
Thereafter, irrespective of any franchise, grant,
license, permit, certificate or other forms of
authority to operate granted by any office,
agency or person, no radio or television station
shall be authorized to operate without the
authority of the Board of Communications and
the Secretary of Public Works and
Communications or their successors who have
the right and authority to assign to qualified
parties frequencies, channels or other means of
identifying broadcasting system; Provided,
however, that any conflict over, or
disagreement with a decision of the
aforementioned authorities may be appealed
finally to the Office of the President within
fifteen days from the date the decision is
received by the party in interest.”
A few years later or in 1979, E.O. No. 5464 was issued. It
integrated the Board of Communications and the
Telecommunications Control Bureau under the Integrated
Reorganization Plan of 1972 into the NTC. Among the
powers vested in the NTC under Sec. 15 of E.O. No. 546 are
the following:
“a. Issue Certificate of Public
Convenience for the operation of
communication utilities and services,
radio communications systems, wire or
wireless telephone or telegraph system,
radio and television broadcasting
system and other similar public utilities;
x x x     x x x     x x x
c. Grant permits for the use of radio
frequencies for wireless telephone and
telegraph systems and radio
communication systems including
amateur radio stations and radio and
television broadcasting systems; . . .”
Upon termination of petitioner’s franchise on December 31,
1981 pursuant to P.D. No. 576-A, it continued operating its
radio stations under permits granted by the NIC.
Issue
Whether or not the operation of a radio or television station
requires a congressional franchise.
Ruling:
Yes.
The appellate court correctly ruled that a
congressional franchise is necessary for petitioner to
operate television Channel 25. Even assuming that Act No.
3846 applies only to radio stations and not to television
stations as petitioner adamantly insists, the subsequent P.D.
No. 576-A clearly shows in Section 1 that a franchise is
required to operate radio as well as television stations, viz.:
“Sec. 1. No radio station or television channel may obtain a
franchise unless it has sufficient capital on the basis of
equity for its operation for at least one year, including
purchase of equipment.”
As pointed out in DOJ Opinion No. 98, there is
nothing in P.D. No. 576-A that reveals any intention to do
away with the requirement of a franchise for the operation
of radio and television stations. Section 6 of P.D. No. 576-A
merely identifies the regulatory agencies from whom
authorizations, in addition to the required congressional
franchise, must be secured after December 31, 1981, viz.:
“Sec. 6. All franchises, grants, licenses, permits, certificates
or other forms of authority to operate radio or television
broadcasting systems shall terminate on December 31,
1981. Thereafter, irrespective of any franchise, grant,
license, permit, certificate or other forms of authority to
operate granted by any office, agency or person, no radio or
television station shall be authorized to operate without the
authority of the Board of Communications and the Secretary
of Public Works and Communications or their successors
who have the right and authority to assign to qualified
parties frequencies, channels or other means of identifying
broadcasting system . . .”
EASTERN ASSURANCE & SURETY CORPORATION (EASCO),
Petitioner, vs. LAND TRANSPORTATION FRANCHISING and
REGULATORY BOARD (LTFRB), respondent.\
PANGANIBAN, J.:
The Facts
LTFRB conducted a thorough investigation on the sufficiency of
existing insurance policies for PUVs. In the course of its
investigation, the Board discovered that insurance coverage of
PUVs was only P50, 000.00 for the entire vehicle regardless of
the number of passengers or persons killed or injured.
Thereafter, the Board issued Memorandum Circular fixing the
insurance coverage of PUVs on the basis of the number of
persons that may be killed or injured instead of the entire
vehicle alone.
After a year of implementation, the Board now has received
numerous complaints. So the board made several amendments
In order to make sure that future claims of PUV operators and
passenger accident victims are paid within the required time,
and in order to minimize, if not eliminate, fake certificates of
cover and graft and corruption, as well as to ensure the
payment of the proper taxes much needed by the government,
as well as to create a computerized data bank without any cost
to the government which is necessary for transport planning.
The Board will only accept, as proof of compliance of this
program, insurance policies/certificates of cover duly approved
by the Insurance Commission specifically for this project, and
issued by any of the two groups as authorized by the Board.
More so, any insurance company found to have violated any of
the prohibitions shall, after notice and hearing, be banned
permanently from participating. All insurance companies who
are blacklisted in any government agency or instrumentality
including court and other quasi-judicial agencies are
automatically disallowed to participate in this program.
Accordingly, no policy or certificate of cover shall be accepted
from these companies as proof of compliance with this
program. The Board shall issue from time to time the list of the
blacklisted or suspended companies.
The LTFRB made a one month nationwide information
campaign on the nature of the two-group system and of the
blacklisting scheme and in a meeting with the different
insurance companies, including EASCO was blacklisted by the
RTC QC. Thus prompted them to file a Petition
for Certiorari and Prohibition with the CA questioning the
validity of those issuances.
Issue: Won Petitioner the subsequent implementing Circulars
violate the constitutional proscription against monopoly as well
as unfair competition and combination in restraint of trade
Held: The constitutional provision on monopolies is found in
Article XII as follows:
Sec. 19. The State shall regulate or prohibit monopolies when
the public interest so requires. No combinations in restraint of
trade or unfair competition shall be allowed.
While embracing free enterprise as an economic creed, the
Constitution does not totally prohibit the operation of
monopolies.10 However, it mandates the State to regulate them
when public interest so requires.
Undoubtedly, Memorandum Circular No. 2001-010 authorized
and regulated two separate monopolies. In Garcia v.
Corona,12  the Court stated:
The simplest form of monopoly exists when there is only one
seller or producer of a product or service for which there are no
substitute. In its more complex form, monopoly is defined as
the joint acquisition or maintenance by members of a
conspiracy formed for that purpose, of the power to control
and dominate trade and commerce in a commodity to such an
extent that they are able, as a group, to exclude actual or
potential competitors from the field, accompanied with the
intention or purpose to exercise such power.
Indeed, in authorizing and regulating the two insurance
monopolies, the LTFRB acted within its prerogatives in
promoting public interest and protecting the riding public. After
all, the consortia are open to all insurance companies, including
petitioner. There is no discrimination against any legitimate
insurer. On the whole, the public is given protection without
unfair competition or undue restraint of trade. As the Court of
Appeals pointed out, the two consortia are not engaged in the
insurance business; they merely serve as service arms of their
respective members.
At bottom, the subject Memorandum Circulars were issued for
the stated purpose of promoting public interest; and of
protecting the riding public and PUV operators from being
defrauded by fake, undervalued or misrepresented insurance
policies.
G.R. No. 124360 November 5, 1997
FRANCISCO S. TATAD, petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENERGY AND THE
SECRETARY OF THE DEPARTMENT OF FINANCE, respondents.
The petitions at bar challenge the constitutionality of Republic
Act No. 8180 entitled "An Act Deregulating the Downstream Oil
Industry and For Other Purposes".
Prior to 1971, there was no government agency regulating the
oil industry other than those dealing with ordinary
commodities. Oil companies were free to enter and exit the
market without any government interference. All the oil
refineries and marketing companies were owned by foreigners
whose economic interests did not always coincide with the
interest of the Filipino.
In March 1996, Congress took the audacious step of
deregulating the downstream oil industry. It enacted R.A. No.
8180, entitled the "Downstream Oil Industry Deregulation Act
of 1996." Under the deregulated environment, "any person or
entity may import or purchase any quantity of crude oil and
petroleum products from a foreign or domestic source, lease or
own and operate refineries and other downstream oil facilities
and market such crude oil or use the same for his own
requirement," subject only to monitoring by the Department of
Energy.
On February 8, 1997, the President implemented the full
deregulation of the Downstream Oil Industry through E.O. No.
372.
The petitions at bar assail the constitutionality of various
provisions of R.A No. 8180 and E.O. No. 372.
In G.R. No. 124360, petitioner Francisco S. Tatad seeks the
annulment of section 5(b) of R.A. No. 8180. Section 5(b)
provides:
b) Any law to the contrary notwithstanding and starting
with the effectivity of this Act, tariff duty shall be imposed and
collected on imported crude oil at the rate of three percent
(3%) and imported refined petroleum products at the rate of
seven percent (7%), except fuel oil and LPG, the rate for which
shall be the same as that for imported crude oil: Provided, That
beginning on January 1, 2004 the tariff rate on imported crude
oil and refined petroleum products shall be the same: Provided,
further, That this provision may be amended only by an Act of
Congress.
In G.R. No. 127867, petitioners Edcel C. Lagman, Joker P.
Arroyo, Enrique Garcia, Wigberto Tanada, Flag Human Rights
Foundation, Inc., Freedom from Debt Coalition (FDC) and
Sanlakas contest the constitutionality of section 15 of R.A. No.
8180 and E.O. No. 392. Section 15 provides:
Sec. 15. Implementation of Full Deregulation. — Pursuant to
Section 5(e) of Republic Act No. 7638, the DOE shall, upon
approval of the President, implement the full deregulation of
the downstream oil industry not later than March 1997. As far
as practicable, the DOE shall time the full deregulation when
the prices of crude oil and petroleum products in the world
market are declining and when the exchange rate of the peso in
relation to the US dollar is stable. Upon the implementation of
the full deregulation as provided herein, the transition phase is
deemed terminated and the following laws are deemed
repealed:
In assailing section 15 of R.A. No. 8180 and E.O. No. 392,
petitioners offer the following submissions:
First, section 15 of R.A. No. 8180 constitutes an undue
delegation of legislative power
Second, petitioners aver that E.O. No. 392 implementing the
full deregulation of the downstream oil industry is arbitrary and
unreasonable because it was enacted due to the alleged
depletion of the OPSF fund — a condition not found in R.A. No.
8180.
Third, section 15 of R.A. No. 8180 and E.O. No. 392 allow the
formation of a de facto cartel among the three existing oil
companies — Petron, Caltex and Shell — in violation of the
constitutional prohibition against monopolies, combinations in
restraint of trade and unfair competition.
Respondents, on the other hand, fervently defend the
constitutionality of R.A. No. 8180 and E.O. No. 392. In addition,
respondents contend that the issues raised by the petitions are
not justiciable as they pertain to the wisdom of the law.
Respondents further aver that petitioners have no locus standi
The procedural issues are: (1) whether or not the petitions raise
a justiciable controversy, and (2) whether or not the petitioners
have the standing to assail the validity of the subject law and
executive order. The substantive issues are: (1) whether or not
section 5 (b) violates the one title — one subject requirement
of the Constitution; (2) whether or not the same section
violates the equal protection clause of the Constitution; (3)
whether or not section 15 violates the constitutional
prohibition on undue delegation of power; (4) whether or not
E.O. No. 392 is arbitrary and unreasonable; and (5) whether or
not R.A. No. 8180 violates the constitutional prohibition against
monopolies, combinations in restraint of trade and unfair
competition.
We now come to grips with the contention that some
provisions of R.A. No. 8180 violate section 19 of Article XII of
the 1987 Constitution. These provisions are:
(1) Section 5 (b) which states — "Any law to the contrary
notwithstanding and starting with the effectivity of this Act,
tariff duty shall be imposed and collected on imported crude oil
at the rate of three percent (3%) and imported refined
petroleum products at the rate of seven percent (7%) except
fuel oil and LPG, the rate for which shall be the same as that for
imported crude oil. Provided, that beginning on January 1, 2004
the tariff rate on imported crude oil and refined petroleum
products shall be the same. Provided, further, that this
provision may be amended only by an Act of Congress."
(2) Section 6 which states — "To ensure the security and
continuity of petroleum crude and products supply, the DOE
shall require the refiners and importers to maintain a minimum
inventory equivalent to ten percent (10%) of their respective
annual sales volume or forty (40) days of supply, whichever is
lower," and
(3) Section 9 (b) which states — "To ensure fair competition
and prevent cartels and monopolies in the downstream oil
industry, the following acts shall be prohibited:
(b) Predatory pricing which means selling or offering to sell any
product at a price unreasonably below the industry average
cost so as to attract customers to the detriment of competitors.
On the other hand, section 19 of Article XII of the Constitution
allegedly violated by the aforestated provisions of R.A. No.
8180 mandates: "The State shall regulate or prohibit
monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be
allowed."
A monopoly is a privilege or peculiar advantage vested in one
or more persons or companies, consisting in the exclusive right
or power to carry on a particular business or trade,
manufacture a particular article, or control the sale or the
whole supply of a particular commodity. It is a form of market
structure in which one or only a few firms dominate the total
sales of a product or service.28 On the other hand, a
combination in restraint of trade is an agreement or
understanding between two or more persons, in the form of a
contract, trust, pool, holding company, or other form of
association, for the purpose of unduly restricting competition,
monopolizing trade and commerce in a certain commodity,
controlling its, production, distribution and price, or otherwise
interfering with freedom of trade without statutory
authority.29 Combination in restraint of trade refers to the
means while monopoly refers to the end.30
Article 186 of the Revised Penal Code and Article 28 of the New
Civil Code breathe life to this constitutional policy. Article 186
of the Revised Penal Code penalizes monopolization and
creation of combinations in restraint of
trade, 31 while Article 28 of the New Civil Code makes any
person who shall engage in unfair competition liable for
damages.32
Respondents aver that sections 5(b), 6 and 9(b) implement the
policies and objectives of R.A. No. 8180. They explain that the
4% tariff differential is designed to encourage new entrants to
invest in refineries. They stress that the inventory requirement
is meant to guaranty continuous domestic supply of petroleum
and to discourage fly-by-night operators. They also submit that
the prohibition against predatory pricing is intended to protect
prospective entrants. Respondents manifested to the Court
that new players have entered the Philippines after
deregulation and have now captured 3% — 5% of the oil
market.
The validity of the assailed provisions of R.A. No. 8180 has to be
decided in light of the letter and spirit of our Constitution,
especially section 19, Article XII. Beyond doubt, the
Constitution committed us to the free enterprise system but it
is a system impressed with its own distinctness. Thus, while the
Constitution embraced free enterprise as an economic creed, it
did not prohibit per se the operation of monopolies which can,
however, be regulated in the public interest.33 Thus too, our
free enterprise system is not based on a market of pure and
unadulterated competition where the State pursues a strict
hands-off policy and follows the let-the-devil devour the
hindmost rule. Combinations in restraint of trade and unfair
competitions are absolutely proscribed and the proscription is
directed both against the State as well as the private sector.34
This distinct free enterprise system is dictated by the need to
achieve the goals of our national economy as defined by
section 1, Article XII of the Constitution which are: 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. It also calls for the State
to protect Filipino enterprises against unfair competition and
trade practices.
Section 19, Article XII of our Constitution is anti-trust in history
and in spirit. It espouses competition. The desirability of
competition is the reason for the prohibition against restraint
of trade, the reason for the interdiction of unfair competition,
and the reason for regulation of unmitigated monopolies.
Competition is thus the underlying principle of section 19,
Article XII of our Constitution which cannot be violated by R.A.
No. 8180.
In the cases at bar, it cannot be denied that our downstream oil
industry is operated and controlled by an oligopoly, a foreign
oligopoly at that. Petron, Shell and Caltex stand as the only
major league players in the oil market. All other players belong
to the lilliputian league. As the dominant players, Petron, Shell
and Caltex boast of existing refineries of various capacities. The
tariff differential of 4% therefore works to their immense
benefit. Yet, this is only one edge of the tariff differential. The
other edge cuts and cuts deep in the heart of their competitors.
It erects a high barrier to the entry of new players. New players
that intend to equalize the market power of Petron, Shell and
Caltex by building refineries of their own will have to spend
billions of pesos. Those who will not build refineries but
compete with them will suffer the huge disadvantage of
increasing their product cost by 4%. They will be competing on
an uneven field.
Finally, we come to the provision on predatory pricing which is
defined as ". . . selling or offering to sell any product at a price
unreasonably below the industry average cost so as to attract
customers to the detriment of competitors." Respondents
contend that this provision works against Petron, Shell and
Caltex and protects new entrants. The ban on predatory pricing
cannot be analyzed in isolation. Its validity is interlocked with
the barriers imposed by R.A. No. 8180 on the entry of new
players. The inquiry should be to determine whether predatory
pricing on the part of the dominant oil companies is
encouraged by the provisions in the law blocking the entry of
new players. Text-writer
Hovenkamp,36 gives the authoritative answer and we quote:
The rationale for predatory pricing is the sustaining of losses
today that will give a firm monopoly profits in the future. The
monopoly profits will never materialize, however, if the market
is flooded with new entrants as soon as the successful predator
attempts to raise its price. Predatory pricing will be profitable
only if the market contains significant barriers to new entry.
We come to the final point. We now resolve the total effect of
the untimely deregulation, the imposition of 4% tariff
differential on imported crude oil and refined petroleum
products, the requirement of inventory and the prohibition on
predatory pricing on the constitutionality of R.A. No. 8180. The
question is whether these offending provisions can be
individually struck down without invalidating the entire R.A. No.
8180. The ruling case law is well stated by author Agpalo,37
viz.:
The general rule is that where part of a statute is void as
repugnant to the Constitution, while another part is valid, the
valid portion, if separable from the invalid, may stand and be
enforced. The presence of a separability clause in a statute
creates the presumption that the legislature intended
separability, rather than complete nullity of the statute. To
justify this result, the valid portion must be so far independent
of the invalid portion that it is fair to presume that the
legislature would have enacted it by itself if it had supposed
that it could not constitutionally enact the other. Enough must
remain to make a complete, intelligible and valid statute, which
carries out the legislative intent. . . .
The exception to the general rule is that when the 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, the nullity of one part will vitiate the rest. In
making the parts of the statute dependent, conditional, or
connected with one another, the legislature intended the
statute to be carried out as a whole and would not have
enacted it if one part is void, in which case if some parts are
unconstitutional, all the other provisions thus dependent,
conditional, or connected must fall with them.
R.A. No. 8180 contains a separability clause. Section 23
provides that "if for any reason, any section or provision of this
Act is declared unconstitutional or invalid, such parts not
affected thereby shall remain in full force and effect." This
separability clause notwithstanding, we hold that the offending
provisions of R.A. No. 8180 so permeate its essence that the
entire law has to be struck down. The provisions on tariff
differential, inventory and predatory pricing are among the
principal props of R.A. No. 8180. Congress could not have
deregulated the downstream oil industry without these
provisions. Unfortunately, contrary to their intent, these
provisions on tariff differential, inventory and predatory pricing
inhibit fair competition, encourage monopolistic power and
interfere with the free interaction of market forces. R.A. No.
8180 needs provisions to vouchsafe free and fair competition.
The need for these vouchsafing provisions cannot be
overstated. Before deregulation, PETRON, SHELL and CALTEX
had no real competitors but did not have a free run of the
market because government controls both the pricing and non-
pricing aspects of the oil industry. After deregulation, PETRON,
SHELL and CALTEX remain unthreatened by real competition
yet are no longer subject to control by government with
respect to their pricing and non-pricing decisions. The
aftermath of R.A. No. 8180 is a deregulated market where
competition can be corrupted and where market forces can be
manipulated by oligopolies.
The fact that the three (3) oil companies' petroleum products
are uniformly priced suggests collusion, amounting to
cartelization, among Caltex Philippines, Inc., Petron
Corporation and Pilipinas Shell Petroleum Corporation to fix the
prices of petroleum products in violation of paragraph (a),
Section 9 of R.A. No. 8180.
Senator Francisco S. Tatad also filed S.B. No. 2307 providing for
a uniform tariff rate on imported crude oil and refined
petroleum products.
In the House of Representatives, the moves to rehabilitate R.A.
No. 8180 are equally feverish. Representative Leopoldo E. San
Buenaventura has filed H.B. No. 9826 removing the tariff
differential for imported crude oil and imported refined
petroleum products.
Representative Marcial C. Punzalan, Jr., filed H.B. No. 9981 to
prevent collusion among the present oil companies by
strengthening the oversight function of the government
Representative Sergio A.F . Apostol filed H.B. No. 10039 to
remedy an omission in R.A. No. 8180 where there is no agency
in government that determines what is "reasonable" increase
in the prices of oil products.
Representative Dente O. Tinga, one of the principal sponsors of
R.A. No. 8180, filed H.B. No. 10057 to strengthen its anti-trust
provisions.
Various resolutions have also been filed in the Senate calling for
an immediate and comprehensive review of R.A. No. 8180 to
prevent the downpour of its ill effects on the people.
Senator Alberto G. Romulo filed S. Res. No. 769 entitled
resolution "Directing the Committees on Energy and Public
Services In Aid Of Legislation To Assess The Immediate Medium
And Long Term Impact of Oil Deregulation On Oil Prices And
The Economy."
Parallel resolutions have been filed in the House of
Representatives..
With this Decision, some circles will chide the Court for
interfering with an economic decision of Congress. Such
criticism is charmless for the Court is annulling R.A. No. 8180
not because it disagrees with deregulation as an economic
policy but because as cobbled by Congress in its present form,
the law violates the Constitution. The right call therefor should
be for Congress to write a new oil deregulation law that
conforms with the Constitution and not for this Court to shirk
its duty of striking down a law that offends the Constitution.
Striking down R.A. No. 8180 may cost losses in quantifiable
terms to the oil oligopolists. But the loss in tolerating the
tampering of our Constitution is not quantifiable in pesos and
centavos. More worthy of protection than the supra-normal
profits of private corporations is the sanctity of the
fundamental principles of the Constitution. Indeed when
confronted by a law violating the Constitution, the Court has no
option but to strike it down dead. Lest it is missed, the
Constitution is a covenant that grants and guarantees both the
political and economic rights of the people. The Constitution
mandates this Court to be the guardian not only of the people's
political rights but their economic rights as well. The protection
of the economic rights of the poor and the powerless is of
greater importance to them for they are concerned more with
the exoterics of living and less with the esoterics of liberty.
Hence, for as long as the Constitution reigns supreme so long
will this Court be vigilant in upholding the economic rights of
our people especially from the onslaught of the powerful. Our
defense of the people's economic rights may appear heartless
because it cannot be half-hearted.
IN VIEW WHEREOF, the petitions are granted. R.A. No. 8180 is
declared unconstitutional and E.O. No. 372 void.
SO ORDERED
PHILIPPINE LONG DISTANCE TELEPHONE CO.
[PLDT], petitioner,
vs.
THE NATIONAL TELECOMMUNICATIONS
COMMISSION and CELLCOM, INC., (EXPRESS
TELECOMMUNICATIONS CO., INC.
[ETCI]), respondents.
G.R. No. 88404 October 18, 1990
MELENCIO-HERRERA, J.:
FACTS: On 22 June 1958, Rep. Act No. 2090, was
enacted, otherwise known as "An Act Granting Felix
Alberto and Company, Incorporated, a Franchise to
Establish Radio Stations for Domestic and Transoceanic
Telecommunications." Felix Alberto & Co., Inc. (FACI) was
the original corporate name, which was changed to ETCI
(CELLCOM was the name to be adopted before the SEC
but was abandoned)
On 13 May 1987, alleging urgent public need, ETCI filed
an application with public respondent NTC for the
issuance of a Certificate of Public Convenience and
Necessity (CPCN) to construct, install, establish, operate
and maintain a Cellular Mobile Telephone System and an
Alpha Numeric Paging System in Metro Manila and in the
Southern Luzon regions.
PLDT filed an Opposition with a Motion to Dismiss, based
multiple grounds among others are the following:
1) ETCI is not capacitated or qualified under its
legislative franchise to operate a systemwide
telephone or network of telephone service
2) the provisional authority, if granted, will result in
needless, uneconomical and harmful duplication
NTC overruled PLDT's Opposition and declared that Rep.
Act No. 2090 (1958) should be liberally construed as to
include among the services under said franchise the
operation of a cellular mobile telephone service
On 12 December 1988, NTC granted ETCI provisional
authority to install, operate and maintain a cellular mobile
telephone system initially in Metro Manila subject to the
terms and conditions set forth. One of the conditions was
that ETCI and PLDT "shall enter into an interconnection
agreement for the provision of adequate interconnection
facilities between applicant's cellular mobile telephone
switch and the public switched telephone network and
shall jointly submit such interconnection agreement to the
Commission for approval."
In a "Motion to Set Aside the Order", PLDT alleged
essentially that the interconnection ordered was in
violation of due process and that the grant of provisional
authority was jurisdictionally and procedurally infirm. NTC
denied reconsideration and set the date for continuation of
the hearings on the main proceedings.
PLDT urges us now to annul the NTC Orders of 12
December 1988 and 8 May 1989 and to order ETCI to
desist from, suspend, and/or discontinue any and all acts
intended for its implementation.
On 27 February 1990, we issued a Temporary Restraining
Order enjoining NTC to "Cease and Desist its on-going
proceedings and ETCI and any and all acts which will
amount to the implementation/execution of its provisional
authority."
The case was set for oral argument on 21 August 1990
with the parties directed to address, but not limited to, the
following issues: (1) the status and coverage of Rep. Act
No. 2090 as a franchise; (2) the transfer of shares of stock
of a corporation holding a CPCN; and (3) the principle and
procedure of interconnection.
PLDT vehemently opposes interconnection with its own
public switched telephone network. While PLDT welcomes
interconnections, only parties who can establish that they
have valid and subsisting legislative franchises are entitled
to apply for a CPCN or provisional authority; that "the
NTC is not empowered to compel such a private raid
on PLDT's legitimate income arising out of its gigantic
investment;" that "it is not public interest, but purely a
private and selfish interest which will be served by an
interconnection under ETCI's terms;" and that "to compel
PLDT to interconnect merely to give viability to a
prospective competitor, which cannot stand on its own
feet, cannot be justified in the name of a non-existent
public need"
ISSUE: Whether or not the NTC is empowered to compel
PLDT, a private company, to enter into an interconnection
agreement with ETCI.
RULING: (1) We find no grave abuse of discretion on the
part of NTC.
Jurisdiction
The NTC is the regulatory agency of the national
government with jurisdiction over all telecommunications
entities. It is legally clothed with authority and given ample
discretion to grant a provisional permit or authority.
What the NTC granted was such a provisional authority,
with a definite expiry period of eighteen (18) months
unless sooner renewed, and which may be revoked,
amended or revised by the NTC, and was issued after due
hearing, reception of evidence and evaluation thereof, with
the hearings attended by various oppositors, including
PLDT.
The final outcome of the application rests within the
exclusive prerogative of the NTC.
(2) PLDT cannot justifiably refuse to interconnect.
Rep. Act No. 6849, or the Municipal Telephone Act of
1989, approved on 8 February 1990, mandates
interconnection providing as it does that "all domestic
telecommunications carriers or utilities ... shall be
interconnected to the public switch telephone network."
Such regulation of the use and ownership of
telecommunications systems is in the exercise of the
plenary police power of the State for the promotion of the
general welfare. The 1987 Constitution recognizes the
existence of that power when it provides.
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 (Article XII).
The interconnection which has been required of PLDT is a
form of "intervention" with property rights dictated by "the
objective of government to promote the rapid expansion of
telecommunications services in all areas of the
Philippines, ... to maximize the use of telecommunications
facilities available, ... in recognition of the vital role of
communications in nation building ... and to ensure that all
users of the public telecommunications service have
access to all other users of the service wherever they may
be within the Philippines at an acceptable standard of
service and at reasonable cost" (DOTC Circular No. 90-
248). Undoubtedly, the encompassing objective is the
common good. The NTC, as the regulatory agency of the
State, merely exercised its delegated authority to regulate
the use of telecommunications networks when it decreed
interconnection.
The importance and emphasis given to interconnection
dates back to Ministry Circular No. 82-81, dated 6
December 1982, providing:
Sec. 1. That the government encourages
the provision and operation of public
mobile telephone service within local sub-
base stations, particularly, in the highly
commercialized areas;
Sec. 5. That, in the event the authority to
operate said service be granted to other
applicants, other than the franchise
holder, the franchise operator shall be
under obligation to enter into an
agreement with the domestic telephone
network, under an interconnection
agreement;
Department of Transportation and Communication
(DOTC) Circular No. 87-188, issued in 1987, also
decrees:
12. All public communications carriers
shall interconnect their facilities pursuant
to comparatively efficient interconnection
(CEI) as defined by the NTC in the
interest of economic efficiency
The NTC order to interconnect allows the parties
themselves to discuss and agree upon the specific terms
and conditions of the interconnection agreement instead
of the NTC itself laying down the standards of
interconnection which it can very well impose. Thus it is
that PLDT cannot justifiably claim denial of clue process. It
has been heard. It will continue to be heard in the main
proceedings. It will surely heard in the negotiations
concerning the interconnection agreement.
As disclosed during the hearing, the interconnection
sought by ETCI is by no means a "parasitic dependence"
on PLDT. The ETCI system can operate on its own even
without interconnection, but it will be limited to its own
subscribers. What interconnection seeks to accomplish is
to enable the system to reach out to the greatest number
of people possible in line with governmental policies laid
down. Cellular phones can access PLDT units and vice
versa in as wide an area as attainable. With the broader
reach, public interest and convenience will be better
served.

RATIONALE: Ultimate Considerations

The decisive consideration are public need, public

interest, and the common good. Those were the
overriding factors which motivated NTC in granting
provisional authority to ETCI. Article II, Section 24 of the
1987 Constitution, recognizes the vital role of
communication and information in nation building. It
is likewise a State policy to provide the environment
for the emergence of communications structures
suitable to the balanced flow of information into, out
of, and across the country (Article XVI, Section
10, Ibid.). A modern and dependable communications
network rendering efficient and reasonably priced services
is also indispensable for accelerated economic recovery
and development. To these public and national interests,
public utility companies must bow and yield.

Additionally, the State is empowered to decide

whether public interest demands that monopolies be
regulated or prohibited (1987 Constitution. Article XII,
Section 19).

DISPOSITIVE PART: WHEREFORE, finding no grave

abuse of discretion, tantamount to lack of or excess of
jurisdiction, on the part of the National
Telecommunications Commission in issuing its challenged
Orders of 12 December 1988 and 8 May 1989 in NTC
Case No. 87-39, this Petition is DISMISSED for lack of
merit. The Temporary Restraining Order heretofore issued
is LIFTED. The bond issued as a condition for the
issuance of said restraining Order is declared forfeited in
favor of private respondent Express Telecommunications
Co., Inc. Costs against petitioner.