UANAN, Claudine S.

Assignment #2

1. Republic v. Rosemoor
G.R. No. 149927, March 30, 2004
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.
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.
After compliance with the requirements, License No. 33 was issued.
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.

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.

Petitioner appealed lower court’s ruling.

RULING OF COURT OF APPEALS:

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

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.)

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Assignment #2

SC RULING: The Petition has merit.

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

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Assignment #2

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.

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

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Assignment #2

cancelled at any time by the Director of Mines and Geo-Sciences when, in his 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. RULING OF CA WAS SET ASIDE.

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UANAN, Claudine S.
Assignment #2

2. 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.

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UANAN, Claudine S.
Assignment #2

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.

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Assignment #2

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3. TEN FORTY REALTY AND LORENZANA vs CRUZ,
GR NO 151212, SEPTEMBER 10 2013.
UANAN, Claudine S.
FACTS:
Assignment #2
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 8bad 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
UANAN, Claudine S.
Assignment #2

3. CONGRESSMAN ENRIQUE T. GARCIA (Second District of Bataan), 

vs. THE BOARD OF INVESTMENTS, THE DEPARTMENT OF TRADE AND
INDUSTRY, LUZON PETROCHEMICAL CORPORATION, and PILIPINAS SHELL
CORPORATION, 
G.R. No. 92024 November 9, 1990.

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

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UANAN, Claudine S.
Assignment #2

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.

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UANAN, Claudine S.
Assignment #2

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

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Assignment #2

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

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Assignment #2

4. Whether or not there was grave abuse of discretion on the part of the respondents in
refusing the matching bid of the petitioner.

Rulings:
In the resolution of the case, the Court held that:

1. Yes, it is a self-executing provision.

Article XII, Sec. 10 provides:

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.

Since the Constitution is the fundamental, paramount and supreme law of the nation, it is deemed
written in every statute and contract. A provision which lays down a general principle, such as
those found in Art. II of the 1987 Constitution, is usually not self-executing. But a provision
which is complete in itself and becomes operative without the aid of supplementary or
enabling legislation, or that which supplies sufficient rule by means of which the right it
grants may be enjoyed or protected, is self-executing.

Sec.10 Par.2 Art. 12, is a provision complete in itself and needs no further guidelines or
implementing laws or rules for its enforcement.

When our Constitution mandates that in the grant of rights privileges and concessions covering
national economy and patrimony, the state shall give preference to qualified Filipinos--qualified
Filipinos shall be preferred.

"Qualified Filipinos" includes corporations at least 60% of which is Filipino owned. This means
that preference shall be given to those citizens who can make a viable contribution to the
common good, because of credible competence and efficiency.

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Assignment #2

National Patrimony refers not only to natural resources of the Philippines but also cultural
heritage.

Manila Hotel has become a living testimonial of Philippine Heritage, it is dubbed as the Official
Guest House of the Philippine Government. Its existence is impressed with public interest.

A constitutional provision is self-executing if the nature and extent of the right conferred and the
liability imposed are fixed by the constitution itself, so that they can be determined by an
examination and construction of its terms, and there is no language indicating that the subject is
referred to the legislature for action. Unless it is expressly provided that a legislative act is
necessary to enforce a constitutional mandate, the presumption now is that all provisions of the
constitution are self-executing. If the constitutional provisions are treated as requiring legislation
instead of self-executing, the legislature would have the power to ignore and practically nullify
the mandate of the fundamental law.

10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command which is
complete in itself and which needs no further guidelines or implementing laws or rules for its
enforcement. From its very words the provision does not require any legislation to put it in
operation. It is per se judicially enforceable. When our Constitution mandates that in the grant of
rights, privileges, and concessions covering national economy and patrimony, the State shall give
preference to qualified Filipinos, it means just that – qualified Filipinos shall be preferred. And
when our Constitution declares that a right exists in certain specified circumstances an action
may be maintained to enforce such right notwithstanding the absence of any legislation on the
subject; consequently, if there is no statute especially enacted to enforce such constitutional
right, such right enforces itself by its own inherent potency and puissance, and from which all
legislations must take their bearings. Where there is a right there is a remedy. Ubi jus ibi
remedium.

2. Yes

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

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Assignment #2

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.

Verily, Manila Hotel has become part of our national economy and patrimony. For sure, 51% of
the equity of the MHC comes within the purview of the constitutional shelter for it comprises the
majority and controlling stock, so that anyone who acquires or owns the 51% will have actual
control and management of the hotel. In this instance, 51% of the MHC cannot be disassociated
from the hotel and the land on which the hotel edifice stands.

3. It is not premature.

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 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.

4. There was grave abuse of discretion.

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.

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Assignment #2

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.

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Assignment #2

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

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Assignment #2

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,

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Assignment #2

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;

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Assignment #2

(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.

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Assignment #2

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]

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Assignment #2

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]

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Assignment #2

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.

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Assignment #2

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.

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UANAN, Claudine S.
Assignment #2

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 . . .”

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