LAST MINUTE NOTES FOR BAR EXAM
42
(BASED ON REVISED SYLLABUS RELEASED
JANUARY 4, 2022)
HOREB FELIX VILLA
USC LAW
SOURCES: VILLA BAR REVIEW NOTES
2021, LEGAL EDGE LECTURES, UP BOC
2020, ATENEO BLUE NOTES 2021, USC
LAW REVIEWERS (TANYA NOTES; EH 403
NOTES)
THE LAW PERTAINING TO THE
STATE AND ITS RELATIONSHIP
WITH ITS CITIZENS (FORMERLY
POLITICAL LAW, LABOR LAW
AND TAXATION)
Contents
CONSTITUTIONAL LAW (11
QUESTIONS) .............................. 2
I. BASIC PRINCIPLES OF POLITICAL
LAW ............................................ 2
II. BILL OF RIGHTS ....................... 8
III. COMPOSITION AND POWERS OF
GOVERNMENT ORGANS ................. 20
IV. JUDICIAL REVIEW .................. 31
V. SUPERVISION OF THE COURTS ... 35
VI. POWERS OF THE SUPREME COURT
................................................. 36
VII. QUALIFICATIONS,
DISQUALIFICATIONS, SELECTION OF
THE PRESIDENT, SENATORS,
MEMBERS OF THE HOUSE OF
REPRESENTATIVES, JUSTICES AND
JUDGES, OMBUDSMAN, AND
CONSTITUTIONAL COMMISSIONS ... 36
VIII. IMMUNITY OF THE PRESIDENT,
PRIVILEGES OF SENATORS AND
MEMBERS OF THE HOUSE OF
REPRESENTATIVES ....................... 40
1
IX. STRUCTURE OF GOVERNMENT ..
X. PROCESS OF LEGISLATION ....... 44
XI. NATURAL RESOURCES
(NATIONALIZATION PRINCIPLE FOR
NATURAL RESOURCES AND
ECONOMIC ACTIVITIES) ............... 46
XII. ..... AMENDMENT AND REVISION OF
THE CONSTITUTION ..................... 48
INTERNATIONAL LAW (1
QUESTION)............................... 50
I. SOURCES OF INTERNATIONAL LAW
................................................ 50
II. RELATIONSHIP BETWEEN
INTERNATIONAL LAW AND PHILIPPINE
DOMESTIC LAW........................... 51
LABOR LAW (3 QUESTIONS) ..... 53
I. BASIC PRINCIPLES ................... 53
II. EXISTENCE OF EMPLOYER-
EMPLOYEE RELATIONSHIP; TESTS.. 54
III. TERMINATION OF EMPLOYMENT 55
IV. REQUIREMENTS FOR VALID
LABOR-ONLY CONTRACTING ......... 65
V. RIGHTS OF EMPLOYEES AND OF
LABOR ORGANIZATIONS;
MEMBERSHIP IN UNIONS .............. 66
VI. MANAGEMENT PREROGATIVE ... 71
VII. ILLEGAL RECRUITMENT OF
OVERSEAS FILIPINO WORKERS ..... 74
VIII. REMEDIES (LABOR STANDARDS
VIOLATIONS) .............................. 76
TAXATION LAW (3 QUESTIONS) 79
I. BASIC PRINCIPLES OF TAXATION IN
THE CONSTITUTION ..................... 79
II. INCOME TAX........................... 83
III. DONOR’S TAX ........................ 96
IV. VALUE ADDED TAX (VAT) ......... 97
V. REMEDIES (NIRC) ................... 107
 Two kinds of sovereignty:

1. Legal Sovereignty — authority

CONSTITUTIONAL LAW (11 which has the power to issue final
QUESTIONS) commands
2. Political Sovereignty — power
behind the legal sovereign, or the
sum total of all the influences that
operate upon it.
I. BASIC PRINCIPLES OF POLITICAL LAW
Doctrine of Auto-Limitation

• It is to be admitted that any state may,

Separation of Powers by its consent, express or implied,
submit to a restriction of its sovereign
• Ordains that each of the 3 branches of
rights. There may thus be a curtailment
government has exclusive cognizance of
of what otherwise is a power plenary in
and is supreme in matters falling within
character (Reagan v. CIR, G.R. No. L-
its constitutionally allocated sphere;
26379, December 27, 1969).
each branch cannot invade the domain
of others. Powers of the government are
• Effect of TRANSFER of sovereignty
separated to avoid concentration of
(Spain to US) – Political laws are
powers in any one branch.
automatically abrogated, but municipal
laws (penal, civil, commercial laws)
• The government established by the
remain in force unless repealed,
Constitution follows the theory of
modified, or amended by the new
separation of powers. Separation of
sovereign.
powers is a fundamental principle in our
system of government and is founded
• Effect of belligerent occupation
on the belief that, by establishing
(Japanese) – There is no change in
equilibrium among the three (3) powers
sovereignty. However, political laws
holders, harmony will result and power
(except laws on treason) are
will not be concentrated and tyranny will
suspended. Municipal laws remain in
be avoided [Bernas].
force unless repealed, modified, or
amended by the belligerent occupant.
• Any system that is violative of the
principle of separation of powers is
• Doctrine of jus postliminium - At the end
unconstitutional and void (Belgica v.
of the belligerent occupation when the
Executive Secretary, G.R. No. 208566,
occupant is ousted from the territory,
November 19, 2013).
the political laws which have been
suspended during the occupation shall
• The Constitution does not expressly
automatically become effective again.
declare the principle of Separation of
On the other hand, anything that was
Powers, but it is implied in the division
decided by the belligerent government
of our Constitution by the three
shall automatically be abrogated.
separate Articles outlining our form of
government. (Article VI- Legislative Judicial review
Dept.; Article VII- Executive Dept;
Article VIII- Judicial Dept.) • It is the power of the courts to test the
validity of executive and legislative acts
in light of their conformity with the
Sovereignty Constitution. The power of judicial
review involves basically reviewing a
• The supreme and uncontrollable power
law or act of the President is in
inherent in a State by which that State
consonance with the Constitution. So, if
is governed. (Nachura, Outline
the law is in consonance, the court will
Reviewer in Political Law, 2015)

2
 merely make a double negative ruling
stating that the law is not
unconstitutional. Otherwise, the Court
has the duty to declare the law
unconstitutional.
FUNDAMENTAL POWERS OF THE STATE
POLICE POWER
Police Power in General
• Based on public necessity and the right
of the State and of the public to self-
protection. For this reason, its scope
expands and contracts with changing
needs. (Baseco v. PCGG, G.R. No.
75885, May 27, 1987)
• It is the power of the State to enact
regulations to promote the health,
morals, peace and order, and welfare of
the society (Ermita-Malate Hotel and
Motel Operators v. City of Manila, G.R.
No. L-24693, Oct. 23, 1967). These fall
under “Public Necessity”
• Police power has been properly
characterized as the most essential,
insistent and the least limitable of
powers, extending as it does to all great
public needs.
Requisites:
1. LAWFUL SUBJECT: The interests of
the public generally, as distinguished
from those of a particular class, require
the exercise of the police power,
otherwise, it may violate the equal
protection of the laws
2. LAWFUL MEANS: The means
employed are reasonably necessary for
the accomplishment of the purpose and
not unduly oppressive upon individuals.
• To justify the State in thus interposing
its authority in behalf of the public, it
must appear, first, that the interests of
the public generally, as distinguished
from those of a particular class, require
such interference; and second, that the
means are reasonably necessary for the
accomplishment of the purpose, and not
unduly oppressive upon individuals
(Ynot v. IAC, G.R. No. 74457, March 20,
1987)
Nature of Police Power
3
Legislative but may be delegated to the
following:
1. President
2. Administrative Bodies
3. Legislative Bodies of Local Government
Units
Delegation of Powers to the Local Government
Units
• The exercise of police power by the
LGUs are under the general welfare
clause or under the police power
delegated to them. They are allowed to
pass ordinances for the promotion of the
general welfare in their locality.
However, the LGUs must sit to it that
these ordinances are not only in
consonance with the Constitution, but
also must not be contrary to existing
statutes. Otherwise, they are invalid.
(MMDA vs. Bel-Air Village Association,
Inc., 328 SCRA 836 [2000])
• TN: They can only regulate activities
under existing laws. They cannot
prohibit the activity.
EMINENT DOMAIN
• The purpose of the taking must be
public use. Just compensation must
begiven to the private owner (Art. III,
Sec. 9, 1987 Constitution).
• The State has a paramount interest in
exercising its power of eminent domain
for the general welfare and that the
superior right of the State to
expropriate private property always
takes precedence over the interest of
private owners, provided that:
1. The expropriation is for public use
2. The exercise of the right to eminent
domain complies with the guarantees of
due process (Estate of JBL Reyes v. City
of Manila, G.R. Nos 132431 & 137146,
Feb. 13, 2004).
• The manner is legislative, however,
once authority is given to exercise the
power, the matter ceases to be wholly
legislative. The executive authorities
may then decide whether the power will
be invoked and to what extent (Republic
 v. Juan, G.R. No. L-24740, Jul 30,
1979).
• It may be delegated to LGUs, other
public entities and public utilities. The
scope is narrower and may be exercised
only when authorized by Congress,
subject to its control and restraints
imposed through the law conferring the
power or in other legislations. Thus, the
power of eminent domain delegated to
an LGU is in reality not eminent but
“inferior.” The national legislature is still
the principal of the LGUs, the latter
cannot go beyond the principal’s will or
modify the same (Beluso v. Municipality
of Panay, G.R. 153974, Aug. 7, 2006)
Requisites:
1. Taking of private property
2. Public use/purpose
3. Payment of just compensation
4. Observance of due process of law
“TAKING” in the Constitutional Sense
• May include trespass without actual
eviction of the owner, material
impairment of the value of the property
or prevention of the ordinary uses from
which the property was intended.
• It is not only limited to evicting
physically the owner of the property.
• Any manner or method of depriving the
owner of the beneficial use of the
private property is considered as taking.
Requisites of TAKING:
1. Expropriator must enter a private
property
2. Entry must be for more than a
momentary period
3. Entry must be under warrant or color of
authority
4. Property must be devoted to public use
or otherwise informally appropriated or
injuriously affected
5. Utilization of the property must be in
such a way as to oust the owner and
deprive him of beneficial enjoyment
• Judge Singco: You must know when the
taking took place because the basis for
the computation of the just
4
compensation is reckoned from the time
of taking. As you know, the value of the
lands appreciates or increases. As the
owner, you want the best price while the
government wants to pay the least
amount. The court has the duty to fix
the payment in a fair amount, which is
the just compensation.
Payment of Just Compensation
• Just compensation is described as a full
and fair equivalent of the property taken
from the private owner by the
expropriator. This is intended to
indemnify the owner fully for the loss he
has sustained as a result of the
expropriation.
• Amount of Just Compensation, when
determined: The amount to be paid as
just compensation is to be determined
as of the date of the taking of the
property or the filing of the complaint,
whichever came first (Rule 67, Sec. 4,
Rules of Court; Republic v. Estate of
Posadas, G.R. No. 214310, February 24,
2020)
• Amount of Just Compensation, how
determined:
• Just compensation = actual or basic
value of the property + consequential
damages – consequential benefits
(which should not exceed the
consequential damages)
• Two instances when the owner may
demand payment of just compensation:
1. Initial Stage
2. Final Stage
• TN: If it is the national government that
takes the property, the purpose of the
taking is not subject to judicial review.
The only issue that is left for the trial
court to decide is on the matter of the
amount of just compensation that
should be paid to the owner of the
property. If it is a delegate, it could be
subjected to judicial review.
Initial Stage (First)
• Under RA 8974, there must be full
payment from the start before the
government can use the property.
Under Rule 67, ROC, there are two
stages of proceedings. In the initial
 stage, you file a complaint, you allege
that there was taking for public use,
there was offer and the offer was
refused and so an amount was
deposited to the depositary bank,
usually Land Bank, as regards to the
initial payment.
• It is a ministerial duty on the part of the
court to issue a writ of possession once
it is established that the taking is for
public use and there was an initial
deposit of 10% of the assessed value of
the property subject of the
expropriation. The initial deposit during
the initial stage is determine by law not
by the court.
Q: When do you apply RA 8974, which amended
Rule 67, ROC? It is effective only as of
November 26, 2000.
A: Expropriation, even if national, if it was
initiated before November 26, 2000, what will
apply is Rule 67, ROC. But if it was initiated on
November 26, 2000 and beyond, RA 8974 will
apply. This is insofar as Right of Way or Location
for National Government Infrastructure Projects
only is concerned.
Q: What will be the basis of RA 8974?
A: It will be based on BIR zonal valuation or
market value of the property, whichever is
higher.
Basis of Just Compensation
Rule 67, General taking: Assessed value
1. Local Government taking: Assessed
value
2. Agrarian Program: Market value of the
property
3. National Infrastructure: BIR zonal
valuation or market value of the
property, whichever is higher.
Exercise of Eminent Domain by LGUs
• LGUs may exercise the power of
eminent domain, provided that the
following requisites concur:
1. An ordinance is enacted by the local
legislative council authorizing the local
chief executive, in behalf of the LGU, to
exercise the power of eminent domain
5
or pursue expropriation proceedings
over a particular private property.
2. The power of eminent domain is
exercised for public use, purpose or
welfare, or for the benefit of the poor
and the landless.
3. There is payment of just compensation,
as required under Section 9, Article III
of the Constitution, and other pertinent
laws.
4. A valid and definite offer has been
previously made to the owner of the
property sought to be expropriated, but
said offer was not accepted.
TAXATION
• It is the power by which the State raises
revenue to defray the necessary
expenses of the Government. It is the
enforced proportional contributions
from persons and property, levied by
the State by virtue of its sovereignty, for
the support of the government and for
all public needs.
• It is as broad as the purpose for which
it is given.
Purpose:
1. To raise revenue (Main purpose)
2. Tool for regulation
3. Protection/power to keep alive
• Lifeblood Doctrine- Taxes are the
lifeblood of the govt and should be
collected without any unnecessary
hindrance
• Necessity Theory- Governmental
existence is a necessity and
performance of governmental functions
redound to the people’s benefit.
Tax for special purpose
• Treated as a special fund and paid out
for such purpose only; when purpose is
fulfilled, the balance, if any, shall be
transferred to the general funds of the
Government [Sec. 29 (3), Art. VI].
Requisites
a. Uniform and Equitable
• Taxes should be (a) uniform (persons or
things belonging to the same class shall
be taxed at the same rate) and (b)
 equitable (taxes should be apportioned
among the people according to their
ability to pay)
b. Progressive system of taxation
• The rate increases as the tax base
increases, with social justice as basis
(Taxation here is an instrument for a
more equitable distribution of wealth).
c. Delegated tax legislation
• Congress may delegate law-making
authority when the Constitution itself
specifically authorizes it.
• The power of LGUs to tax is not
delegated from Congress, but it is
directly conferred to them by the
Constitution.
Scope and Limitation
General Limitations
1. Power to tax exists for the general
welfare; should be exercised only for a
public purpose
2. Might be justified as for public purpose
even if the immediate beneficiaries are
private individuals pursuant to the
modern concept of public purposes
(Carlos Superdrug Corporation v.
DSWD, G.R. No.166494, June 29,
2007).
3. Tax should not be confiscatory: If a tax
measure is so unconscionable as to
amount to confiscation of property, the
Court will invalidate it. But invalidating
6
a tax measure must be exercised with
utmost caution.
Specific Limitations
a. Uniformity of taxation
• GR: Simply geographical uniformity,
meaning it operates with the same force
and effect in every place where the
subject of it is found
• XPN: Rule does not prohibit
classification for purposes of taxation,
provided the requisites for valid
classification are met (Ormoc Sugar v.
Treasurer of Ormoc, G.R. No. L- 23793,
February 17, 1968).
b. Tax Exemptions
• No law granting any tax exemption shall
be passed without the concurrence of a
majority of all the Members of Congress
[Sec. 28 (4), Art. VI].
• There is no vested right in a tax
exemption. Being a mere statutory
privilege, a tax exemption may be
modified or withdrawn at will by the
granting authority (Republic v. Caguioa,
G.R. No. 168584, October 15, 2007).
Exemptions may either be constitutional or
statutory:
1. Constitutional exemptions (Art.VI, Sec.
28 par. 3)
2. If statutory, it has to have been passed
by majority of all the members of
Congress (Art. VI Sec. 28 par. 4)
COMPARATIVE TABLE OF THE INHERENT POWERS OF THE STATE (UP BOC 2020)

Police Power Eminent Domain Taxation

1. As to concept Power to make and Power to take private Power to enforce
implement laws for the property for public use contribution to raise
general welfare with just government funds
compensation
2. As to scope Broad in application as Merely a power to take Plenary, comprehensive
it pertains to the private property for and
general power to make public use supreme
and implement
laws
3. As to the Government and its Generally, by the Government and its
exercising political subdivisions government but the political subdivisions
authority power may be granted
to public service or
public utility
companies
4. As to the Promotion of general The taking of private Enforced contribution is
purpose welfare property is for public to support the
use government
5. As to Upon valid delegation, it Upon valid delegation, it Upon valid delegation,
delegation may be exercised bythe may be exercised bythe the President and the
President, Law- making President, Law- making Law-making bodies of
Bodies of LGUs, and bodies of LGUs, Public the LGUs can exercise it
Administrative corporation, Quasi-
Agencies public corporation and
Administrative
agencies
6. As to the Relatively free from Superior to and may Subject to
relationship to the constitutional override constitutional Constitutional and
Constitution limitations and is impairment provision Inherent Limitations;
superior to the non- because the welfare of Inferior to non-
impairment clause the State is superior impairment clause
to any private contract
7. As to Limitation Limited by the Bounded by public Constitutional and
demand for public purpose and just Inherent Limitations
interest and due compensation
process

7

II. BILL OF RIGHTS
DUE PROCESS OF LAW
Section 1. No person shall be deprived of
life, liberty, or property without due
process of law, nor shall any person be
denied the equal protection of the laws.
Due Process
• A law which hears before it condemns,
which proceeds upon inquiry and
renders judgment only after trial.
Embodiment of the fair play.
• Due process evades a precise definition.
The purpose of the guaranty is to
prevent arbitrary governmental
encroachment against the life, liberty
and property of individuals. The due
process guaranty serves as a protection
against arbitrary regulation or seizure.
Even corporations and partnerships are
protected by the guaranty insofar as
their property is concerned. (White
Light Corporation v. City of Manila, G.R.
No. 122846, Jan. 20, 2009)
Concept of Life, Liberty, and Property
LIFE
• Right to his body in completeness, and
extends to the use of God-given
faculties which make life enjoyable.
LIBERTY
• Right to exist and be free from arbitrary
personal restraint or servitude. Includes
the right to use his faculties in all lawful
ways.
PROPERTY
• Anything that can come under the right
of ownership and be subject of contract.
Includes the right to secure, use and
dispose of them.
• Public office is not property; but one
unlawfully ousted therefrom may
institute an action to recover, based on
the de jure officer’s right to office.
• One’s employment, trade or profession
is a property right, and wrongful
8
interference is an actionable wrong. But
it can be regulated through police
power.
Kinds of Due Process
a. Substantive
• A restriction on government’s law and
rule-making powers.
Requisites:
• Interest of the public, in general,
require State intervention.
• Means employed are reasonably
necessary to accomplish its
purpose, and not unduly
oppressive.
b. Procedural
• A restriction on actions of
administrative, judicial and quasi-
judicial agencies of the State
Requisites (Judicial Due Process):
1. Impartial court or tribunal clothes with
judicial power to hear and determine
the matter before it.
2. Jurisdiction must be lawfully acquired
over the person of the defendant and
over the property which is the subject
matter of the proceeding
• Service of summons gives the court
jurisdiction over the person of the
defendant and also affords him the
opportunity to be heard on the claim
against him. Jurisdiction is also acquired
by voluntary appearance before the
court which includes submission of
pleadings.
3. Defendant must be given an opportunity
to be heard – Satisfied as long as the
party is accorded the opportunity to be
heard. It is deemed waived or forfeited
if it is not availed of.
• Not all cases require a trial-type
hearing.
• Due process in labor cases before a LA
is satisfied when the parties are given
the opportunity to submit their position
papers. The holding of an adversarial
 trial depends on the discretion of the
LA; the parties cannot demand it as a
matter of right.
• “To be heard” is also satisfied through
submission of pleadings.
4. Judgment must be rendered upon lawful
hearing – Otherwise, the right to a
hearing would be rendered
meaningless. Also, decisions of courts
without expressing therein clearly and
distinctly the facts and law on which it
is based are prohibited (Sec 14, Article
VIII)
Administrative Due Process
Requisites:
1. Right to hearing – Includes the right to
present one’s case and submit
supporting evidence
2. Tribunal must consider the evidence
presented
3. Decision must have something to
support itself
4. Evidence must be substantial
5. Decision must be rendered on the
evidence presented at the hearing, or at
least contained in the record and
disclosed to the parties
6. Tribunal or any of its judges must act on
its or his own independent consideration
of the facts and the law, and not simply
accept the views of a subordinate in
arriving at a decision.
7. Board or body should, in all
controversial questions, render its
decision in a manner that the parties will
know the issues involved and the
reasons for the decision.
• NOTE: Due process in Quasi-judicial
proceedings before the COMELEC —
Requires notice and hearing
Levels of Scrutiny
1. STRICT SCRUTINY TEST
• Applying strict scrutiny, the focus is on
the presence of compelling, rather than
substantial, governmental interest and
on the absence of less restrictive means
for achieving that interest. In terms of
judicial review of statutes or ordinances,
strict scrutiny refers to the standard for
determining the quality and the amount
9
of governmental interest brought to
justify the regulation of fundamental
freedoms. Strict scrutiny is used today
to test the validity of laws dealing with
the regulation of speech, gender, or
race as well as other fundamental rights
as expansion from its earlier
applications to equal protection. The
United States Supreme Court has
expanded the scope of strict scrutiny to
protect fundamental rights such as
suffrage, judicial access and interstate
travel (White Light Corporation v. City
of Manila, G.R. No. 122846, Jan. 20,
2009).
2. HEIGHTENED OR INTERMEDIATE
SCRUTINY TEST
• Under intermediate review,
governmental interest is extensively
examined and the availability of less
restrictive measures is considered.
(White Light Corporation v. City of
Manila, supra)
3. RATIONAL BASIS TEST
• Using the rational basis examination,
laws or ordinances are upheld if they
rationally further a legitimate
governmental interest. (White Light
Corporation v. City of Manila, supra)
Grounds Invoked in Case of Violation of Right to
Due Process:
1. Void for Vagueness Doctrine
2. Overbreadth Doctrine
• NOTE: These 2 grounds may be used as
basis for facial challenge on the validity
of a law; in case of questioning validity
of a penal law, the penal law shall only
pertain to that violating one’s freedom
of speech.
1. Void for Vagueness- A statute or act
may be said to be vague when it lacks
comprehensible standards that men of
common intelligence must necessarily
guess at its meaning and differ in its
application.
• The test in determining whether a
criminal statute is void for uncertainty is
whether the language conveys a
sufficiently definite warning as to the
 proscribed conduct when measured by
common understanding and practice. It
must be stressed, however, that the
"vagueness" doctrine merely requires a
reasonable degree of certainty for the
statute to be upheld - not absolute
precision or mathematical exactitude.
• An act will not be held invalid merely
because it might have been more
explicit in its wordings or detailed in its
provisions, especially where, because of
the nature of the act, it would be
impossible to provide all the details in
advance as in all other statutes.
(Estrada v. Sandiganbayan, G.R. No.
148560, November 19, 2001)
2. Overbreadth Doctrine- Under the
overbreadth doctrine, a proper
governmental purpose, constitutionally
subject to state regulation, may not be
achieved by means that unnecessarily
sweep its subject broadly, thereby
invading the area of protected
freedoms.
Application to Penal Statutes
• GR: The overbreadth and vagueness
doctrines then have special application
only to free speech cases. They are
inapplicable for testing the validity of
penal statutes.
• Rationale: All penal laws, like the
cybercrime law, have of course an
inherent chilling effect, an in terrorem
effect or the fear of possible
prosecution. But to prevent the State
from legislating criminal laws because
they instill such kind of fear is to render
the state powerless in addressing and
penalizing socially harmful conduct.
XPNS:
1. When a penal statute is challenged as
applied
2. When a penal statute encroaches upon
the freedom of speech, a facial
challenge grounded on the overbreadth
and vagueness doctrine is acceptable.
(Disini v. Sec. of Justice, G.R. No.
203335, Feb. 18, 2014)
EQUAL PROTECTION OF LAWS
10
Section 1. No person shall be deprived of
life, liberty or property without due
process of law, nor shall any person be
denied the equal protection of the laws.
Concept
• The constitutional right to equal
protection requires that all persons or
things similarly situated should be
treated alike, both as to rights conferred
and responsibilities imposed. It requires
public bodies and institutions to treat
similarly situated individuals in a similar
manner.
• The guarantee of equal protection
secures every person within the State’s
jurisdiction against intentional and
arbitrary discrimination, whether
occasioned by the express terms of a
statute or by its improper execution
through the State’s duly constituted
authorities. The concept of equal justice
under the law demands that the State
governs impartially and not to draw
distinctions between individuals solely
on differences that are irrelevant to the
legitimate governmental objective.
Requisites for Valid Classification
• The guaranty of equal protection
envisions equality among equals
determined according to a valid
classification. If the groupings are
characterized by substantial distinctions
that make real differences, one class
may be treated and regulated
differently from another. In other
words, a valid classification must be:
1. Based on substantial distinctions;
2. Germane to the purposes of the law;
3. Not limited to existing conditions only;
and
4. Equally applicable to all members of the
class. (Mosqueda, et al. v. Pilipino
Banana Growers & Exporters
Association, Inc., et al., G.R. No.
189185, August 16, 2016)
Levels of Scrutiny
• Levels of Scrutiny to Determine the
Propriety of Classification under the
Equal Protection Clause:
• To determine the propriety of the
classification, courts resort to three
levels of scrutiny, viz: the rational
scrutiny, intermediate scrutiny and
strict scrutiny.
• The rational basis scrutiny (also known
as the rational relation test or rational
basis test) demands that the
classification reasonably relate to the
legislative purpose. The rational basis
test often applies in cases involving
economics or social welfare, or to any
other case not involving a suspect class.
• When the classification puts a quasi-
suspect class at a disadvantage, it will
be treated under intermediate or
heightened review. Classifications
based on gender or illegitimacy receives
intermediate scrutiny. To survive
intermediate scrutiny, the law must not
only further an important governmental
interest and be substantially related to
that interest, but the justification for the
classification must be genuine and must
not depend on broad generalizations.
• The strict scrutiny review applies when
a legislative classification impermissibly
interferes with the exercise of a
fundamental right or operates to the
peculiar class disadvantage of a suspect
class. The Government carries the
burden to prove that the classification is
necessary to achieve a compelling state
interest, and that it is the least
restrictive means to protect such
interest.
• The Court, applying the rational basis
test, ruled that the ordinance of Davao
City prohibiting aerial spraying in all
agricultural entities therein as the
practice produces pesticide drift causing
inconvenience and harm to the
residents and degrades the
environment, violates the equal
protection clause, hence, should be
declared unconstitutional (Mosqueda, et
al. v. Pilipino Banana Growers &
Exporters Association, Inc., et al,
supra).
11
• RA 9262 (An Act Defining Violence
Against Women and Their Children -
VAWC) is not violative of the equal
protection clause. There is a valid
classification. The unequal power
relationship that women are more likely
to be victims of violence and the
widespread gender bias and prejudice
against women make for real
differences justifying the classification.
The distinction is germane to the
purpose of the law to address violence
committed against women. The law
applies to women and children who
suffer violence and abuse. (Garcia v.
Hon. Drilon, G.R. No. 179267, June 25,
2013)
• There is a substantial distinction
between elective and appointive
officials. The former occupy their office
by virtue of the mandate of the
electorate. They are elected to an office
for a definite term and may be removed
therefrom only upon stringent
conditions. On the other hand,
appointive officials hold their office by
virtue of their designation thereto by an
appointing authority. Some appointive
officials hold their office in a permanent
capacity and are entitled to security of
tenure while others serve at the
pleasure of the appointing authority.
(Eleazar P. Quinto and Gerino A.
Tolentino, Jr., vs. COMELEC, G.R. No.
189698, Feb. 22, 2010)
RIGHT AGAINST UNREASONABLE
SEARCHES AND SEIZURES
Section 2. The right of the people to be
secure in their persons, houses, papers,
and effects against unreasonable searches
and seizures of whatever nature and for
any purpose shall be inviolable, and no
search warrant or warrant of arrest shall
issue except upon probable cause to be
determined personally by the judge after
examination under oath or affirmation of
the complainant and the witnesses he may
produce, particularly describing the place
to be searched and the persons or things to
be seized.
Two constitutional guarantees create these
zones of privacy:
1. The right against unreasonable
searches and seizures, which is the
basis of the right to be let alone, and
2. The right to privacy of communication
and correspondence. In assessing the
challenge that the State has
impermissibly intruded into these zones
of privacy, a court must determine
whether a person has exhibited a
reasonable expectation of privacy and,
if so, whether that expectation has been
violated by unreasonable government
intrusion. (Disini v. Sec. of Justice, G.R.
No. 203335, Feb. 18, 2014)
Concept of a Search
• Search Warrant - A search warrant is an
order in writing issued in the name of
the People of the Philippines, signed by
a judge and directed to a peace officer,
commanding him to search for personal
property described therein and bring it
before the court. (ROC, Rule 126, Sec.
1)
• Validity of a Search Warrant - A search
warrant shall be valid for ten (10) days
from its date. Thereafter, it shall be
void. (ROC, Rule 126, § 10)
• When Any Court May Issue Search
Warrant: In certain cases when no
criminal action has yet been filed, any
court may issue a search warrant even
though it has no jurisdiction over the
offense allegedly committed, provided
that all the requirements for the
issuance of such warrant are present.
(People v. Hon. Castillo, Sr., G.R. No.
204419, Nov. 7, 2016)
Requisites for a Valid Search Warrant:
1. Probable cause is present (in connection
with one specific offense);
2. Such probable cause must be
determined personally by the judge;
3. The judge must examine, in writing and
under oath or affirmation, the
complainant and the witnesses he or
she may produce;
4. The applicant and the witnesses testify
on the facts personally known to them;
and
12
5. The warrant specifically describes the
place to be searched and the things to
be seized. (People v. Mamaril, G.R. No.
171980, Oct. 6, 2010)
• A search warrant must conform strictly
to the constitutional requirements for its
issuance; otherwise, it is void. (Diaz v.
People, G.R. No. 188794, Sept. 2, 2015)
Probable Cause
• Probable cause for a search warrant is
defined as such facts and circumstances
which would lead a reasonably discrete
and prudent man to believe that an
offense has been committed and that
the objects sought in connection with
the offense are in the place sought to be
searched. (Laud v. People, G.R. No.
199032, Nov. 19, 2014)
• A finding of probable cause needs only
to rest on evidence showing that, more
likely than not, a crime has been
committed and that it was committed by
the accused. Probable cause demands
more than bare suspicion; it requires
less than evidence which would justify
conviction.
• Information received through text
message is not only hearsay evidence;
it is double hearsay. Thus, information
received through text message alone
cannot be basis for probable cause
(People v. Jerry Sapla, G.R. No. 244045,
June 16, 2020).
Personal Determination by the Judge
• Probing and Exhaustive Examination: In
determining the existence of probable
cause for the issuance of a search
warrant, the examining magistrate
must make probing and exhaustive, not
merely routine or pro forma
examination of the applicant and the
witnesses. (Nala v. Barroso, G.R. No.
153087, Aug. 7, 2003)
• Personal Examination of the
Complainant and the Witnesses
• Affidavits are Insufficient: Affidavits of
the complainant and his witnesses are
insufficient to establish the factual basis
for probable cause. Personal
examination by the judge of the
applicant and his witnesses is
 indispensable, and the examination
should be probing and exhaustive, not
merely routinary or a rehash of the
affidavits. (Diaz v. People, G.R. No.
188794, Sept. 2, 2015)
• Facts Personally Known to the Applicant
and the Witnesses
• Testimony Must Not be Based on Mere
Hearsay: The testimony must be within
the personal knowledge of the
complainant or the witnesses he may
produce and not based on mere
hearsay. The applicant and the witness
must testify on their personal
knowledge, not personal belief. (Nala v.
Barroso, G.R. No. 153087, Aug. 7,
2003)
Particularity of Description
• Test of Sufficiency: A description of a
place to be searched is sufficient if the
officer with the warrant can, with
reasonable effort, ascertain and identify
the place intended and distinguish it
from other places in the community.
• Any designation or description known to
the locality that points out the place to
the exclusion of all others, and on
inquiry leads the officers unerringly to
it, satisfies the constitutional
requirement. (Laud v. People, G.R. No.
199032, Nov. 19, 2014)
Technical Precision of Description Not Required
• Technical precision of description is not
required. It is only necessary that there
be reasonable particularity and
certainty as to the identity of the
property to be searched for and seized,
so that the warrant shall not be a mere
roving commission.
• Indeed, the law does not require that
the things to be seized must be
described in precise and minute detail
as to leave no room for doubt on the
part of the searching authorities. If this
were the rule, it would be virtually
impossible for the applicants to obtain a
warrant as they would not know exactly
what kind of things to look for. Any
description of the place or thing to be
searched that will enable the officer
making the search with reasonable
certainty to locate such place or thing is
13
sufficient. (Worldwide Web Corporation
v. People, G.R. No. 161106, Jan. 13,
2014)
Mistake in the Name of the Person Does Not
Invalidate the Warrant
• A mistake in the name of the person to
be searched does not invalidate the
warrant, especially when the authorities
had personal knowledge of the drug-
related activities of the accused. In fact,
a "John Doe" warrant satisfies the
requirements so long as it contains a
descriptio personae such as will enable
the officer to identify the accused. A
mistake in the identification of the
owner of the place does not invalidate
the warrant provided the place to be
searched is properly described. (People
v. Tiu Won Chua, G.R. No. 149878, July
1, 2003)
General Warrants are Void
• A general warrant is defined as a search
or arrest warrant that is not particular
as to the person to be arrested or the
property to be seized. It is one that
allows the seizure of one thing under a
warrant describing another and gives
the officer executing the warrant the
discretion over which items to take.
(Worldwide Web Corporation v. People,
G.R. No. 161106, Jan. 13, 2014)
• General warrants do not meet the
requirement in Art. III, Sec. 1, of the
Constitution, and of Sec. 3, Rule 126 of
the Revised Rules of Court, that the
warrant should particularly describe the
things to be seized. (Uy v. BIR, G.R. No.
129651, Oct. 20, 2000)
Properties Subject to Seizure
• Not necessary that the property is
owned by the person against whom the
warrant is issued; sufficient if it is within
his control or possession.
1. Subject of the offense
2. Stolen or embezzled property and other
proceeds or fruits of the offense
3. Property used or intended to be used as
means for the commission of the crime
Conduct of the Search
 • Police may use force in entering the
dwelling if justified by Rule 126. Where
the occupants refused to open the door
when the searching party knocked
several times, and the agents saw
suspicious movements of the people
inside, it justified the searching party’s
forcible entry (People v. Salanguit, G.R.
No. 133254-55, April 19, 2001)
WARRANTLESS SEARCHES
• GR: All searches must have a warrant,
otherwise, the search is void.
XPNS:
1. Search incidental to lawful arrest
2. Search of a moving vehicle
3. Seizure in plain view
4. Customs search
5. Consented Search
6. Stop & frisk or Terry Search
7. Check points
8. Exigent and emergency circumstances
9. Searches conducted at airports
1. SEARCH INCIDENTAL TO A LAWFUL
ARREST
• The Rules of Court provides that a
person lawfully arrested may be
searched for dangerous weapons or
anything which may be used as proof of
the commission of an offense, without a
Search Warrant. (Rule 126, Sec. 13).
• Purpose is to protect the officer from
being harmed by the person arrested
and to prevent him from destroying
evidence within reach.
Requisites:
1. Arrest precedes the search;
2. There is probable cause to effect the
arrest and the subsequent search.
• When the arrest precedes the search,
the arresting officer must have seen the
overt act indicative of criminal activity.
• However, if search precedes the arrest,
probable cause to do so is sufficient.
• Permissible area of search: Search
incidental to lawful arrest may extend
beyond the person of the arrested so as
14
to include the premises or surroundings
under his immediate control. (People v.
Tiu Won Chua, 405 SCRA 280; People v.
Estella, 395 SCRA 553)
• Accused was searched and arrested
while transporting prohibited drugs
(hashish). A crime was actually being
committed by the accused and he was
caught in flagrante delicto. Thus, the
search made upon his personal effects
falls squarely under paragraph (1) of
the foregoing provisions of law, which
allow a warrantless search incident to a
lawful arrest (People v. Maelmstedt, 198
SCRA 401 [1991])
2. SEARCH OF A MOVING VEHICLE
• Carroll vs. United States 267 US 132
(1925): Carroll doctrine: a vehicle could
be searched without a search warrant if
there was probable cause to believe that
evidence is present in the vehicle,
coupled with exigent circumstances to
believe that the vehicle could be
removed from the area before a warrant
could be obtained (People vs. Tampis,
407 SCRA 582).
3. SEIZURE IN PLAIN VIEW
Requisites:
1. Prior valid intrusion – May be based on
the valid warrantless arrest where the
police are legally present in the pursuit
of official duties;
2. Evidence was inadvertently discovered
– Discovered by the police who have the
right to be there;
3. Evidence must be immediately apparent
– Illegality of the object is immediately
apparent. There exists a nexus between
the viewed object and criminal activity.
IOW, there is probable cause to
associate the property with criminal
activity;
4. “Plain view” justified the seizure without
any further search – “Plain view” if the
object is plainly exposed to sight. Not in
“plain view” if inside a closed package,
unless the package proclaims its
contents by its distinctive configuration,
transparency or if its contents are
obvious to an observer. If the package
 is such that an experienced observer
could infer prohibited articles from its
appearance, then the article is deemed
in plain view.
• NOTE: Plain view not literally exclusive
to “view”, it may also refer to smell,
touch, etc. The search is considered
over when the operatives are already
making an inventory.
• If the seized materials were not illegal
per se and were presented as evidence
in the case, you may ask the court to
order its release. Prior to presentation
of the case, however, replevin may lie.
• The counterfeit nature of the seals and
stamps was not apparent and
established until after they have been
turned over to the Chinese embassy and
the Bureau of Immigration for
verification. Hence, not considered as
evidence in plain view (People vs. Go,
411 SCRA 81)
4. CUSTOMS SEARCH
• Customs searches are allowed when
persons exercising police authority
under the customs law effect search and
seizure in the enforcement of customs
laws (Salvador vs. PP, July 15, 2005).
5. CONSENTED SEARCH
Requisites:
a. Right to be waived exists;
b. Person waiving has knowledge of such
right, actually or constructively; and
c. He/she has actual intention to relinquish
the right.
• Consent must be intelligently given and
voluntary. It must be shown by clear
and convincing evidence which the
State has the burden to prove. Whether
the consent was voluntary is a question
of fact, determined from the totality of
the circumstances.
• NOTE: Waiver must be given by the
person whose right is violated
• It is the State which has the burden of
proving, by clear and positive
testimony, that the necessary consent
was obtained and that it was freely and
15
voluntarily given (Valdez vs. People,
538 SCRA 611)
6. STOP AND FRISK (TERRY SEARCH)
Requisites:
a. Police officer should properly introduce
himself and make initial inquiries
b. Approach and restrain a person who
manifests unusual and suspicious
conduct to check the latter’s outer
clothing for concealed weapons
c. Search and seizure must precede the
arrest: Police officer must have a
genuine reason in accordance with his
experience and the surrounding
conditions, to warrant the belief that the
person to be held has weapons or
contraband concealed. In some cases,
the warrantless search and seizure
preceded the arrest was held valid by
the SC as it was effected on the basis of
probable cause (see Posadas v CA, 188
SCRA 288; People v Tangliben, 184
SCRA 220). However, it was not termed
by the SC strictly as “stop and frisk”.
7. CHECKPOINTS
• Limited to visual search (People v.
Escaño, GR No. 129756-58, January 28,
2000);
Two kinds of Checkpoint search:
1. Mere routine inspection: Permissible
when it is limited to a mere visual
search or visual inspection
Search is limited to:
a. Officer merely draws aside the curtain
of a vacant vehicle parked on the public
fair grounds
b. Officer simply looks into a vehicle
c. Officer flashes a light therein without
opening the doors
d. Occupants are not subjected to a
physical or body search
e. Routine check is conducted in a fixed
area
2. Extensive search
 • Permissible only if the officers
conducting it had reasonable or
probable cause to believe, before the
search, that either the motorist is a law
offender or they will find the
instrumentality or evidence pertaining
to a crime in the vehicle to be searched
(e.g., when they receive confidential
reports from a reliable source or smell
marijuana in the vehicle)
8. EXIGENT AND EMERGENCY
CIRCUMSTANCES
• Where a warrantless search was allowed
where there was a prevailing general
chaos and disorder because of an
ongoing coup (People v. De Gracia, 233
SCRA 716).
9. ROUTINE AIRPORT SECURITY
PROCEDURE
• Under RA 6235, every ticket issued to a
passenger by the airline contains a
condition that the holder and his hand-
carried luggage are subject to search
and seizure of prohibited materials.
Holders refusing shall not be allowed to
board the aircraft. This condition
constitutes a contract between the
passenger and the airline (People v.
Suzuki, G.R. No. 120370, October 23,
2003; People v. Johnson, G.R. No.
138881, December 18, 2000).
ARRESTS
• Arrest is the taking of a person into
custody in order that he may be bound
to answer for the commission of an
offense. (ROC, Rule 113, § 1)
• Probable Cause in Arrests: Probable
cause is such set of facts and
circumstances as would lead a •
reasonably discreet and prudent man to
believe that the offense charged in the
Information or any offense included
therein has been committed by the
person sought.
Personal Evaluation of the Report and the
Supporting Documents
• The Judge Not Required to Personally
Examine the Complainant and His
16
Witnesses, this is only required in the
issuance of Search Warrants
• What the Constitution underscores is
the exclusive and personal
responsibility of the issuing judge to
satisfy himself of the existence of
probable cause. In satisfying himself of
the existence of probable cause for the
issuance of a warrant of arrest, the
judge is not required to personally
examine the complainant and his
witnesses. Following established
doctrine and procedure, he shall:
1. Personally evaluate the report and the
supporting documents submitted by the
fiscal regarding the existence of
probable cause and on the basis
thereof, issue a warrant of arrest; or
2. If on the basis thereof he finds no
probable cause, he may disregard the
fiscal’s report and require the
submission of supporting affidavits of
witnesses to aid him in arriving at a
conclusion as to the existence of
probable cause. (AAA v. Carbonell, G.R.
No. 171465, June 8, 2007; Soliven v.
Makasiar, 167 SCRA 393 [1988])
Time of Making Arrest
• An arrest may be made on any day and
at any time of the day or night. (ROC,
Rule 113, § 6)
• Method of Arrest by Officer by Virtue of
Warrant: When making an arrest by
virtue of a warrant, the officer shall
inform the person to be arrested of the
cause of the arrest and the fact that a
warrant has been issued for his arrest,
except when he flees or forcibly resists
before the officer has opportunity to so
inform him, or when the giving of such
information will imperil the arrest.
The officer need not have the warrant in
his possession at the time of the arrest
but after the arrest, if the person
arrested so requires, the warrant shall
be shown to him as soon as practicable.
(ROC, Rule 113, § 7)
Arrests Without Warrants, When Allowed
1. In Flagrante Delicto arrests
2. Hot Pursuit
3. Escapee from a jail

• Under the Rules, a warrant of arrest
need not be issued if the information or
charge was filed for an offense
penalized by a fine only. As a corollary,
neither can a warrantless arrest be
made for such an offense. In this case,
the officer’s issuance (or intent to issue)
a traffic citation ticket negates the
possibility of an arrest for the same
violation (Luz vs. People, GR No.
197788, February 29, 2012).
1. IN FLAGRANTE DELICTO
Requisites:
a. Person to be arrested must execute an
overt act indicating he had just
committed, is actually committing or is
attempting to commit a crime, and
b. Such overt act was done in the presence
of or within the view of the arresting
officer
• NOTE: Not just limited to sight. Hearing
is already considered now.
• Where the accused-appellant was not,
at the moment of his arrest, committing
a crime, the warrantless arrest effected
on him was invalid. It was not shown
that he was about to commit a crime or
that he had just done so. What he was
doing was descending the gangplank of
the M/V Wilcon 9 and there was no
outward indication that called for his
arrest. To all appearances, he was like
any of the other passengers innocently
disembarking from the vessel. It was
only when the informer pointed to him
as the carrier of the marijuana that he
suddenly became suspect and so
subject to apprehension. It was the
furtive finger that triggered his arrest.
The Identification by the informer was
the probable cause as determined by
the officers (and not a judge) that
authorized them to pounce upon
Aminnudin and immediately arrest him.
(People v. Aminnudin, 163 SCRA 402
[1988])
• At the time of the arrest in question, the
accused was merely “looking from side
to side” and “holding his abdomen”.
There was apparently no offense that
has just been committed or was being
17
actually committed or at least being
attempted by Mengote in their
presence. Thus, the warrantless arrest
was invalid (People v. Mengote, G.R.
No. 8759, June 22, 1992).
• The accused was caught in possession
of hashish, a prohibited drug. He was
caught in flagrante delicto. The overt act
committed to sustain the validity of the
arrest was when the police officer
dipped his finger in the bag, and smelled
what seemed to be dangerous drugs.
There was therefore probable cause to
effect the arrest. Thus, the warrantless
arrest effected on him was valid (People
vs. Maelmstedt, 198 SCRA 401 [1991]).
2. HOT PURSUIT
Requisites:
a. The pursuit of the offender by the arresting
officer must be continuous from the time of the
commission of the offense to the time of the
arrest.
b. There must be no supervening event which
breaks the continuity of the chase.
• Personal knowledge of facts in
warrantless arrests must be based on
probable cause. This means an actual
belief or reasonable grounds of
suspicion supported by circumstances
sufficiently strong in themselves to
warrant a reasonable man in believing
the accused to be guilty. Reasonable
suspicion must be founded on probable
cause, coupled with good faith of the
peace officer making the arrest.
• There must be a large measure of
immediacy between the time of the
offense was committed and the time of
the warrantless arrest. If there was a
significant lapse of time between the
arrest and the commission of the crime,
a warrant of arrest must be secured
(People v. Del Rosario, 305 SCRA 740)
3. ESCAPEE FROM A JAIL
• A person may be arrested without a
warrant if he or she is a prisoner who
has escaped from a penal establishment
 or place where he or she is serving final
judgment or temporarily confined while
his or her case is pending or has
escaped while being transferred from
one confinement to another.
• This is based on the theory that an
escapee from jail is committing a
continuing crime, i.e., Evasion of
Service of Sentence (Art. 157, Revised
Penal Code).
Exclusionary Rule
• All evidence obtained in violation of Sec.
2, Art. III shall be inadmissible for any
purpose in any proceeding (Stonehill v.
Diokno, 20 SCRA 383 [1967]).
• The Fruit of the Poisonous Tree: The
Exclusionary Rule is also extended to
exclude evidence which is derived or
directly obtained from that which was
illegally seized (Cruz, Constitutional
Law, 2015 Ed.).
Effects of Unreasonable Searches and Seizures
Unlawful search
• Police officers arrived at appellant’s
residence and “side-swiped” appellant’s
car (which was parked outside) to gain
entry into the house. Appellant’s son,
who is the only one present in the
house, opened the door and was
immediately handcuffed to a chair after
being informed that they are policemen
with a warrant to search the premises
(People v. Benny Go, G.R. No. 144639,
Sept. 12, 2003).
• Consequences of an unlawful search: An
unlawful search will result in the
exclusion from admission as evidence of
that which was obtained from such
unlawful search and seizure.
Effects of Illegal Detention
The invalidity of an arrest leads to several
consequences among which are:
1. The failure to acquire jurisdiction over
the person of an accused;
2. Criminal liability of law enforcers for
illegal arrest; and
3. Any search incident to the arrest
becomes invalid thus rendering the
evidence acquired as constitutionally
18
inadmissible. (Sapi v. People, G.R. No.
200370, June 7, 2017)
• Questions arising from the invalidity of
the arrest must be raised before the
arraignment of the accused on motion
to quash, Otherwise, failure to raise
such objection is tantamount to a
waiver of such right.
• Furthermore, aside from the invalidity
of the arrest, the arresting officers may
be liable for Arbitrary Detention or
Delay in the Delivery of Detained
Persons to the Proper Judicial
Authorities, or Delaying Release, of
which are punished under Article 124-
126 of the Revised Penal Code.
FREEDOM OF SPEECH AND EXPRESSION
Section 4. No law shall be passed abridging
the freedom of speech, of expression, or of
the press, or of the right of the people
peaceably to assemble and petition the
government for redress of grievances.
Scope
• Freedom of expression has gained
recognition as a fundamental principle
of every democratic government, and
given a preferred right that stands on a
higher level than substantive economic
freedom or other liberties. In the
Philippines, the primacy and high
esteem accorded freedom of expression
is a fundamental postulate of our
constitutional system. This right was
elevated to constitutional status in the
1935, the 1973 and the 1987
Constitutions, reflecting our own lesson
of history, both political and legal, that
freedom of speech is an indispensable
condition for nearly every other form of
freedom. (Chavez v. Gonzales, G.R. No.
168338, Feb. 15, 2008)
• Speech is not limited to vocal
communication. Conduct is treated as a
form of speech sometimes referred to as
“symbolic speech,” such that when
“speech” and “non-speech” elements
are combined in the same course of
conduct, the communicative element of
the conduct may be sufficient to bring
 into play the right to freedom of
expression.
Types of Regulation
Prior Restraint and Subsequent Punishment
PRIOR RESTRAINT (CENSORSHIP)
• Prior restraint refers to official
governmental restrictions on the press
or other forms of expression in advance
of actual publication or dissemination.
Freedom from prior restraint is largely
freedom from government censorship of
publications, whatever the form of
censorship, and regardless of whether it
is wielded by the executive, legislative
or judicial branch of the government.
(Chavez v. Gonzales, G.R. No. 168338,
Feb. 15, 2008)
• Presumed Invalid and Unconstitutional
• GR: Any system of prior restraints of
expression comes to court bearing a
heavy presumption against its
constitutional validity. The Government
thus carries a heavy burden of showing
justification for in enforcement of such
restraint. There, thus a reversal of the
normal presumption of validity that
inheres in every legislation. (SWS v.
COMELEC, G.R. No. 147571, May 5,
2001)
• XPN: The technical effect of Article IX
(C) (4) of the Constitution may be seen
to be that no presumption of invalidity
arises in respect of exercises of
supervisory or regulatory authority on
the part of the Comelec for the purpose
of securing equal opportunity among
candidates for political office, although
such supervision or regulation may
result in some limitation of the rights of
free speech and free press (National
Press Club v. COMELEC, G.R. No.
102653, March 5, 1992)
SUBSEQUENT PUNISHMENT
• The aspect of freedom from liability
subsequent to publication precludes
liability for completed publications of
views traditionally held innocent.
• Otherwise, the prohibition on prior
restraint would be meaningless, as the
19
unrestrained threat of subsequent
punishment, by itself, would be an
effective prior restraint.
• Thus, opinions on public issues cannot
be punished when published, merely
because the opinions are novel or
controversial, or because they clash
with current doctrines. This fact does
not imply that publishers and editors are
never liable for what they print. Such
freedom gives no immunity from laws
punishing scandalous or obscene
matter, seditious or disloyal writings,
and libelous or insulting words. (Bernas,
2009)
CONTENT-NEUTRAL REGULATION
• A content-neutral regulation is merely
concerned with the incidents of the
speech, or one that merely controls the
time, place or manner, and under well-
defined standards. (Chavez v. Gonzales,
G.R. No. 168338, Feb. 15, 2008)
Subject to Intermediate Approach
• When the speech restraints take the
form of a content-neutral regulation,
only a substantial governmental interest
is required for its validity.
Intermediate Approach: O’Brien Test for a Valid
Content-Neutral Regulation
A governmental regulation is sufficiently
justified if:
1. It is within the Constitutional power of
the Government;
2. It furthers an Important or Substantial
governmental interest;
3. The governmental interest is Unrelated
to the suppression of free expression;
and
4. The incident restriction on alleged
freedom of speech & expression is NO
Greater than is essential to the
furtherance of that interest. (Chavez v.
Gonzales, G.R. No. 168338, Feb. 15,
2008)
Speech of Public Officers
• Parliamentary immunity guarantees the
members of Congress the freedom of
expression without fear of being held
 responsible in criminal or civil actions
before courts or fora outside of
Congress, but this does not protect
them from being held responsible by the
legislative body. The members may
nevertheless be questioned in Congress
itself.
• For unparliamentary conduct, members
of the Congress have been or could be
censured, committed to prison, or even
expelled by the votes of their colleagues
(Osmeña v. Pendatun, G.R. No. L-
17144, Oct. 28, 1960)
• Civil Service Does Not Deprive
Government Workers of their Freedom
of Expression. Government workers,
whatever their ranks, have as much
right as any person in the land to voice
out their protests against what they
believe to be a violation of their rights
and interests. Civil Service does not
deprive them of their freedom of
expression. It would be unfair to hold
that by joining the government service,
the members thereof have renounced or
waived this basic liberty. This freedom
can be reasonably regulated only but
can never be taken away. (GSIS v.
Villaviza, G.R. No. 180291, July 27,
2010)
• It is correct to conclude that those who
enter government service are subjected
to a different degree of limitation on
their freedom to speak their mind;
however, it is not tantamount to the
relinquishment of their constitutional
right of expression otherwise enjoyed
by citizens just by reason of their
employment.
• Unarguably, a citizen who accepts public
employment must accept certain
limitations on his or her freedom. But
there are some rights and freedoms so
fundamental to liberty that they cannot
be bargained away in a contract for
public employment. It is the Court’s
responsibility to ensure that citizens are
not deprived of these fundamental
rights by virtue of working for the
government.
• In simple paraphrase, regulation of the
freedom of expression is not removal of
the constitutional right. (Davao City
20
Water District v. Aranjuez, G.R. No.
194192, June 16, 2015)
RIGHTS DURING EXPROPRIATION
Section 9. Private property shall not be
taken for public use without just
compensation.
Requisites for Valid Expropriation
1. Private property
2. Genuine necessity - inherent/presumed
in legislation, but when the power is
delegated (e.g. local government units),
necessity must be proven.
3. For public use - Court has adopted a
broad definition of “public use”
4. Payment of just compensation
5. Due process (Manapat v. CA, supra)
Public Use
• Public use may also cover uses which,
while not directly available to the public,
redound to their indirect advantage or
benefit.
• Taking of property for socialized housing
is for public use. (Reyes v. National
Housing Authority, 395 SCRA 494)
III. COMPOSITION AND POWERS OF
GOVERNMENT ORGANS
LEGISLATIVE DEPARTMENT (ART. VI)
LEGISLATIVE POWER
Scope and Limitations
SECTION 1. The legislative power shall be
vested in the Congress of the Philippines
which shall consist of a Senate and a House
of Representatives, except to the extent
reserved to the people by the provision on
initiative and referendum.
Nature of Legislative Power
• Legislative power is the authority to
make, alter and repeal laws. (PHIL.
CONST., art. VI, § 1.)
Classification of Legislative Power:
 1. Constituent - the power to propose
amendments to the Constitution
2. Ordinary - the power to pass
ordinary laws
3. Original - possessed by the people
in their sovereign capacity,
exercised via initiative and
referendum.
4. Delegated - possessed by Congress
and other legislative bodies by
virtue of the Constitution;
subordinate to the original power of
the people who delegated the same
Who Exercises Legislative Power:
1. Congress
• Legislative power is vested in Congress,
which consists of the Senate and the
House of Representatives.
General Plenary Power of Congress
• The grant of legislative power to
Congress is broad, general and
comprehensive. The legislative body
possesses plenary power for all
purposes of civil government. Any
power, deemed to be legislative by
usage and tradition, is necessarily
possessed by Congress, unless the
Constitution has lodged it elsewhere.
Except as limited by the Constitution,
either expressly or impliedly, legislative
power embraces all subjects and
extends to matters of general concern
or common interest. (Ople v. Torres,
G.R. No. 127685, July 23, 1998)
2. Local Legislative Body
• Local legislative bodies are allowed by
the Constitution to legislate on purely
public matters.
• Since what was given to local legislative
bodies is not power to make rules and
regulations but legislative power, the
rules on valid delegation do not apply.
However, when what is given to a local
legislative body is executive power, the
rules applicable to the empowerment of
administrative agencies also becomes
applicable (Rubi v. Provincial Board,
G.R. No. L-14078. March 8, 1919).
Composition:
21
1. Senate:24 who are elected at large
by the qualified voters of the
Philippines. (PHIL. CONST., Art. VI,
§ 2.)
2. HOR: Not more than 250 members,
unless otherwise fixed by law,
consisting of:
a. District Representatives: elected from
legislative districts apportioned among
the provinces, cities and the
Metropolitan Manila area
b. Party-list Representatives: shall
constitute 20% of the total number of
the members of the House of
Representatives including those under
the party-list.
POWERS OF CONGRESS
1. CONSTITUENT POWER
• Constituent power is the power to
formulate a Constitution or to propose
amendments to or revisions of the
Constitution and to ratify such proposal.
Legislative power is the power to pass,
repeal or amend or ordinary laws or
statutes (as opposed to organic law).
• Constituent power is exercised by
Congress (by special constitutional
conferment), by a Constitutional
Convention or Commission, by the
people through initiative and
referendum, and ultimately by
sovereign electorate, whereas
legislative power is an ordinary power of
Congress and of the people, also
through initiative and referendum.
• The exercise of constituent power does
not need the approval of the Chief
Executive, whereas the exercise of
legislative power ordinarily needs the
approval of the Chief Executive, except
when done by people through initiative
and referendum.
2. LEGISLATIVE POWER
• Power of Congress to create, amend or
repeal laws/statutes
• The legislative power of Congress is so
plenary. The only limit of Congress’
legislative power is the Constitution.
Congress cannot make laws that
contravene the Constitution.
 • The Congress cannot also make
irrepealable laws.
Legislative Inquiries and Oversight Functions
Scope
1. The power of legislative investigation
includes:
2. Power to issue summons and notices;
3. Power to punish or declare a person in
contempt
4. The power to determine the rules of its
proceedings
Limitations: (ADR)
1. The inquiry must be in Aid of legislation.
2. The inquiry must be conducted in
accordance with the Duly published
rules of procedure of the House
conducting the inquiry; and
3. The rights of persons appearing in or
affected by such inquiries shall be
Respected. (e.g., right to due process,
right against self- incrimination)
(Bernas,2009).
Nature and Purpose
• The power of inquiry with process to
enforce it is an essential and
appropriate auxiliary to the legislative
function. A legislative body cannot
legislate wisely or effectively in the
absence of information respecting the
conditions which the legislation is
intended to effect or change; and where
the legislative body does not itself
possess the requisite information which
is not infrequently true recourse must
be had to others who do possess it.
(Arnault v. Nazareno, G.R. No. L-3820,
July 18, 1950)
• Legislative inquiries must be conducted
in aid of legislation which does not
necessarily mean that there is pending
legislation regarding the subject of the
inquiry. Hence, the materiality of a
question is determined not by its
connection to any pending legislation,
but by its connection to the general
scope of the inquiry. (Bengzon v.
Senate Blue Ribbon Committee, G.R.
No. 89914, Nov. 20, 1991)
Compulsory Process
22
• The power of legislative investigation
includes the power to compel the
attendance of witnesses. Corollary to
the power to compel the attendance of
witnesses is the power to ensure that
said witnesses would be available to
testify in the legislative investigation.
(Standard Chartered Bank v. Senate
Committee on Banks, G.R. No. 167173,
Dec. 27, 2007).
Right against Self-Incrimination
• A subpoenaed witness cannot refuse to
attend a legislative inquiry by invoking
his or her right against self-
incrimination. Such right may be
invoked only when the incriminating
question is being asked, since they have
no way of knowing in advance the
nature or effect of the questions to be
asked of them. (Sabio v. Gordon, G.R.
No. 174340, Oct. 17, 2006).
• A legislative investigation in aid of
legislation and court proceedings have
different purposes. On one hand, courts
conduct hearings or like adjudicative
procedures to settle, through the
application of a law, actual
controversies arising between adverse
litigants and involving demandable
rights. On the other hand, inquiries in
aid of legislation are, inter alia,
undertaken as tools to enable the
legislative body to gather information
and, thus, legislate wisely and
effectively; and to determine whether
there is a need to improve existing laws
or enact new or remedial legislation,
albeit the inquiry need not result in any
potential legislation. On-going judicial
proceedings do not preclude
congressional hearings in aid of
legislation. (Romero v. Estrada, G.R.
No. 174105, April 2, 2009)
3. OVERSIGHT FUNCTIONS (PHIL.
CONST., Art. VI, § 22.)
• Section 22 pertains to the power to
conduct a question hour, the objective
of which is to obtain information in
pursuit of Congress' oversight function.
• Question Hour Appearance of
department heads before Congress to
 give account of their stewardship
(Bernas, 2009).
• Under Section 22, department heads
(members of the Executive
Department) cannot be compelled to
appear before Congress. Neither may
department heads impose their
appearance upon Congress. This is in
line with the principle of separation of
powers.
• Department Heads May appear before
Congress in the Following Instances:
a. Upon their own initiative, with the
consent of the President (and that of the
House concerned)
b. Upon the request of either House
c. Written questions shall be submitted to
the President of the Senate or Speaker
of the House at least 3 days before the
scheduled appearance of the
department heads.
• Interpellations shall not be limited to
written questions, but may cover
related matters.
The inquiry will be conducted in executive
session when:
a. Required by the security of state, or
public interest, and
b. When the President so states in writing.
• There is no such thing as a “question
hour” in the Constitution (It is a
parliamentary concept and practice).
The distinction in legislative hearings is
between investigative function and
oversight function. (Senate v. Ermita,
G.R. No. 169777, April 20, 2006).
Question Hour vs. Legislative Investigation
• Sections 21 and 22, while closely
related and complementary to each
other, should not be considered as
pertaining to the same power of
Congress. One specifically relates to the
power to conduct inquiries in aid of
legislation, the aim of which is to elicit
information that may be used for
legislation, while the other pertains to
the power to conduct a question hour,
the objective of which is to obtain
information in pursuit of Congress’
oversight function. (Neri v. Senate, G.R.
No. 180643, March 25, 2008)
23
• Under Section 22, in keeping with the
separation of powers, states that
Congress may only request their
appearance. Nonetheless, when the
inquiry in which Congress requires their
appearance is "in aid of legislation"
under Section 21, the appearance is
mandatory (Senate v. Ermita, G.R. No.
1697
NON-LEGISLATIVE POWERS OF CONGRESS
1. Informing function
• The power of Congress, when it
investigates, is not limited to oversight
or in aid of legislation. Equally important
and a fundamental power and duty of
Congress is its informing function by
way of investigating for the purpose of
enlightening the electorate. The
informing function of Congress should
be preferred even to its legislative
function [for] the only really self-
governing people is that people which
discusses and interrogates its
administration (Akbayan v. Aquino, G.R.
170516, July 16, 2008)
2. Impeachment Power
Impeachment Process
1. The House of Representatives shall have
the exclusive power to initiate all cases
of impeachment (PHIL. CONST., Art. IX,
§ 3(1).)
2. The impeachment proceedings begin
with a complaint filed with the House of
Representatives either by a member of
the House or by any citizen supported
by a resolution of endorsement by any
member.
3. The complaint is referred to a
Committee which prepares a report
(which can be favorable or
unfavorable). In either case, the House
by a vote of 1/3 of all its members
decides whether the complaint should
be given due course. (PHIL. CONST.,
Art. IX, § 3(2 & 3).)
4. Referral to the Committee and decision
by the House is unnecessary if the
complaint is filed by at least 1/3 of all
the members of the house (PHIL.
CONST., art. IX, § 3(4).)
Exclusive Power to Try and Decide commander-in-chief of the Armed
Forces of the Philippines. As chief
1. The Senate shall have the sole power to executive, the President exercises
try and decide all cases of control over all the executive
impeachment. No person shall be departments, bureaus, and offices.
convicted without the concurrence of
2/3 of all the Members of the Senate The President of The Philippines
(PHIL. CONST., art. IX, § 3(6).)
2. The penalty imposable shall go no • The President of the Philippines is
further than: elected by direct vote by the people for
a term of six years. He may only serve
a. Removal from office and for one term, and is ineligible for
b. Disqualification to hold any office under reelection. The term of the President of
the Republic of the Philippine (PHIL. the Philippines starts at noon of the 30th
CONST., art. IX, § 3(7).) day of June after the election.

POWERS OF THE PRESIDENT

Officers Subject to Impeachment (PHIL. 1. General Executive and
CONST., Art. IX, § 2.) Administrative Powers
1. President
2. Vice President • The Constitution provides that "The
3. Members of the Supreme Court executive power shall be vested in the
4. Members of the Constitutional President of the Philippines.” However,
Commissions (CSC, COA, COMELEC) it does not define what is meant by
5. Ombudsman executive power although in the same
article it touches on the exercise of
Grounds for Impeachment (PHIL. CONST., Art. certain powers by the President, i.e.,
IX,§2) the power of control over all executive
departments, bureaus and offices, the
1. Culpable Violation of the Constitution power to execute the laws, the
2. Treason appointing power, the powers under the
3. Bribery commander-in-chief clause, the power
4. Graft and Corruption to grant reprieves, commutations and
5. Other High Crimes pardons, the power to grant amnesty
6. Betrayal of Public Trust with the concurrence of Congress, the
power to contract or guarantee foreign
• By virtue of the expanded judicial loans, the power to enter into treaties or
review (Sec. 1[2], Art. VIII), the Court’s international agreements, the power to
power of judicial review extends over submit the budget to Congress, and the
justiciable issues arising in power to address Congress.
impeachment proceedings (Francisco v. • The President’s Executive powers are
House of Representatives, G.R. No. not limited to those set forth in the
160261, November 10, 2003). Constitution. The President has residual
• BUT the question of whether or not powers as the Chief Executive of the
Senate Impeachment Rules were country, which powers include others
followed is a political question (Corona not set forth in the Constitution (Marcos
v. Senate, G.R. No. 200242, July 17, v. Manglapus, G.R. No. 88211, Sept. 15,
2012). 1989).
EXECUTIVE DEPARTMENT
2. Power of Appointment
• Article VII, Section 1, of the 1987
Constitution vests executive power on In General
the President of the Philippines. The Nature of the Power to Appoint:
President is the Head of State and Head
of Government, and functions as the

24
 • Executive in nature; while Congress
(and the Constitution in certain cases)
may prescribe the qualifications for
particular offices, the determination of
who among those who are qualified will
be appointed is the President’s
prerogative.
• In case of vacancy in an office occupied
by an alter ego of the President, such as
the office of a department secretary, the
President must necessarily appoint an
alter ego of her choice as acting
secretary before the permanent
appointee of her choice could assume
office. Congress, through a law, cannot
impose on the President the obligation
to appoint automatically the
undersecretary as her temporary alter
ego. An alter ego, whether temporary or
permanent, holds a position of great
trust and confidence. Congress, in the
guise of prescribing qualifications to an
office, cannot impose on the President
who her alter ego should be (Pimentel
v. Ermita, G.R. No. 164978, Oct. 13,
2005).
Elements of a valid appointment:
1. Authority to appoint and evidence of the
exercise of authority;
2. Transmittal of the appointment paper
and evidence of the transmittal
(preferably through the Malacañang
Records Office);
3. Vacant position at the time of
appointment;
4. 4Receipt of the appointment papers and
acceptance of the appointment by the
appointee who possesses all
qualifications and none of the
disqualifications (Velicaria-Garafil v.
Office of the President, G.R. No.
203372, June 16, 2015).
Four Groups of Officers who the President may
appoint:
1. With Consent of the Commission on
Appointments:
a. Heads of the executive departments
b. Ambassadors, other public ministers
and consuls
c. Officers of the armed forces from the
rank of colonel or naval captain
25
d. Other officers whose appointments are
vested in him by the Constitution:
e. Regular Members of the JBC (ex-officio
members do not need the confirmation
of the CA)
f. Chairman and Commissioners of the
CSC, COMELEC, and COA.
g. Members of the Regional and
Consultative Commissions
2. All other officers of the government
whose appointments are not otherwise
provided by law;
3. Those whom the President may be
authorized by law to appoint; and (e.g.
Chairman and Members of the
Commission on Human Rights)
4. Officers lower in rank whose
appointments Congress may by law vest
in the President alone (Sarmiento III v.
Mison, G.R. No. 79974, December 17,
1987).
• Consent of the Commission on
Appointments is not required for 2, 3,
and 4 as these are not positions whose
appointments are granted by the
Constitution (Calderon v. Carale, 208
SCRA 254 [1992]).
• Appointments upon recommendation of
the Judicial and Bar Council (does not
require confirmation by the Commission
on Appointments):
• Members of the Supreme Court and all
other courts [Sec 9, Art. VIII] (Note: the
appointment must be made 90 days
from when the vacancy occurs [Sec
4(1), Art. VIII])
• For lower courts, appointments shall be
issued within 90 days from submission
of the list.
• Ombudsman and his 5 deputies (for
Luzon, Visayas, Mindanao, general and
military) [Sec 9, Art. XI]
Limitations on the Power of Appointment
The President may not appoint his/her spouse
and relatives by consanguinity or affinity within
the 4th civil degree as members of the:
1. Constitutional Commissions
2. Ombudsman
3. Department Secretaries
 4. Undersecretaries
5. Chairmen and heads of Bureaus
and Offices
6. GOCCs (PHIL. CONST., art. VII,
§ 13)
• Appointments extended by an acting
President shall remain effective unless
revoked by the elected President within
90 days from assumption of office
(PHIL. CONST., Art. VII, § 14)
• Two months immediately before the
next Presidential elections and up to the
end of his/her term, a President or
Acting President shall not make
appointments except temporary
appointments to executive positions
when continued vacancies therein will
prejudice public service or endanger
public safety (PHIL. CONST., Art. VII, §
15).
• Prohibition against Midnight
Appointments applicable to Presidential
Appointments only
• The prohibition on midnight
appointments under Article VII, Sec 15
only applies to presidential
appointments. It does not apply to
appointments made by local chief
executives. Nevertheless, the Civil
Service Commission has the power to
promulgate rules and regulations to
professionalize the civil service. It may
issue rules and regulations prohibiting
local chief executives from making
appointments during the last days of
their tenure.
• Appointments of local chief executives
must conform to these civil service rules
and regulations in order to be valid.
(Provincial Government of Aurora v
Marco, G.R. No. 202331, April 22, 2015)
Ad-Interim Appointments (PHIL. CONST., art
VII,§ 16)
• When Congress is in recess, the
President may still appoint officers to
positions subject to CA confirmation.
These appointments are effective
immediately, but are only effective until
they are disapproved by the CA or until
the next adjournment of Congress
• When an ad-interim position is by-
passed because of law of time or failure
26
of the Commission to organize, there is
no final decision, the President is free to
renew the ad-interim appointment.
• When the Commission disapproves an
ad interim appointment, the appointee
can no longer be extended a new
appointment, inasmuch as the
disapproval is a final decision in the
exercise of the Commission’s checking
power on the appointment authority of
the President.
• GR: The express power of appointment
of the President has the corollary
implied power of removal. Hence, the
President may remove appointees.
• XPN: Appointments requiring certain
methods for removal (e.g.,
Impeachment, appointment of judges of
inferior courts (PHIL. CONST., Art. VIII,
§ 11; Gonzales III vs. Office of the
President, G.R. No. 196231, Sept. 4,
2012).
3. Power of Control and Supervision
• Power of Control- The power of an
officer to alter, modify, or set aside what
a subordinate officer has done in the
performance of his duties, and to
substitute the judgment of the officer
for that of his subordinate.
• The President’s power of control is a
self-executing-provision. The
incumbent President is free to amend,
rescind and modify any political
agreements entered into by the
previous Presidents (Ocampo v.
Enriquez, G.R. No. 225973, Nov. 8,
2016).
• Power of Supervision- The power of a
superior officer to ensure that the laws
are faithfully executed by subordinates.
The power of supervision does not
include the power of control; but the
power of control necessarily includes
the power of supervision.
• Doctrine of Qualified Political Agency -
Acts of department heads, etc.,
performed and promulgated in the
regular course of business, are
presumptively acts of the President.
Exceptions:
a. If the acts are disapproved or
reprobated by the President.
 b. If the President is required to act in
person by law or by the Constitution
(e.g., the power to grant pardons).
Local Government Units
• The power of the president over local
government units is only of general
supervision. He can interfere with the
actions of their executive heads only if
these are contrary to law.
• The President exercises direct
supervision over autonomous regions,
provinces, and independent cities.
• To facilitate the exercise of power of
general supervision of local
government, the President may merge
administrative regions and transfer the
regional center to Koronadal City from
Cotabato City (Republic v. Bayao, G.R.
No. 179492, June 5, 2013).
4. Emergency Powers
• Congress is the repository of emergency
powers. But in times of war or other
national emergency, it may, by law,
authorize the President, for a limited
period and subject to such restrictions
as it may prescribe, to exercise powers
necessary and proper to carry out a
declared national policy.
• Unless sooner withdrawn by resolution
of the Congress, such powers shall
cease upon the next adjournment
thereof. (PHIL. CONST., Art. VI, §
23(2); IBP v. Zamora, G.R. No. 141284,
Aug. 15, 2000)
Conditions for the Exercise of the President of
Emergency Powers (David v. Macapagal-Arroyo,
G.R. No. 171396, May 3, 2006)
a. There must be a war or national
emergency;
b. There must be a law authorizing the
President to exercise emergency powers;
c. Exercise must be for a limited period;
d. Exercise must be necessary and proper
to carry out a declared national policy;
and
e. Must be subject to restrictions that
Congress may provide.
5. Commander-in-Chief Powers
27
Graduation of Powers
• The 1987 Constitution gives the
President a sequence of graduated
power[s]. From the most to the least
benign, these are: the calling out
power, the power to suspend the
privilege of the writ of habeas corpus,
and the power to declare martial law. It
must be stressed, however, that the
graduation refers only to hierarchy
based on scope and effect. It does not
in any manner refer to a sequence,
arrangement, or order which the
Commander-in-Chief must follow. This
so-called "graduation of powers" does
not dictate or restrict the manner by
which the President decides which
power to choose.
• The power to choose, initially, which
among these extraordinary powers to
wield in a given set of conditions is a
judgment call on the part of the
President.
• It is thus beyond doubt that the power
of judicial review does not extend to
calibrating the President's decision
pertaining to which extraordinary power
to avail given a set of facts or
conditions. To do so would be
tantamount to an incursion into the
exclusive domain of the Executive and
an infringement on the prerogative that
solely, at least initially, lies with the
President. (Lagman v. Medialdea, G.R.
No. 231658, July 4, 2017)
Calling out Powers
• As Commander-in-Chief of the Armed
Forces, whenever necessary, the
President may call out the Armed Forces
to PREVENT or SUPPRESS:
a. Lawless violence
b. Invasion
c. Rebellion
• Among the three extraordinary powers,
the calling out power is the most benign
and involves ordinary police action. The
power to call is fully discretionary to the
President; the only limitations being
that he acts within permissible
constitutional boundaries or in a manner
 not constituting grave abuse of
discretion. In fact, the actual use to
which the President puts the armed
forces is not subject to judicial review.
(Lagman v. Medialdea, G.R. No.
231658, July 4, 2017)
• The President's calling out power is in a
different category from the power to
suspend the privilege of the writ of
habeas corpus and the power to declare
martial law. In other words, the
President may exercise the power to call
out the Armed Forces independently of
the power to suspend the privilege of
the writ of habeas corpus and to declare
martial law, although, of course, it may
also be a prelude to a possible future
exercise of the latter powers (Id.)
• Declaration of a State of Emergency:
The declaration of a state of emergency
is merely a description of a situation
that authorizes (the President) to call
out the Armed Forces to help the police
maintain law and order. It gives no new
power to her, or to the military, or to the
police. Certainly, it does not authorize
warrantless arrests or control of media
(David v. Macapagal-Arroyo, G.R. No.
171409, May 3, 2006).
Declaration of Martial Law and Suspension of
the Privilege of the Writ of Habeas Corpus;
Extension
Besides his calling out powers, the President
may also:
a. Suspend the privilege of the writ of
habeas corpus
b. Proclaim a state of martial law
• These are separate powers. They
must be expressly declared.
• Congress can revoke or extend the
proclamation of a state of Martial
law by a majority vote of all its
members voting JOINTLY.
• The Supreme Court has the power
to review the factual basis for the
proclamation of Martial Law upon an
appropriate proceeding filed by
ANY CITIZEN. (Meaning the
requirement of legal standing or
locus standi is done away with)
6. Executive Clemency
28
Nature and Limitation
• The matter of executive clemency is
non-delegable power and must be
exercised by the President personally
(Villena v. Secretary of the Interior,
G.R. No. L-46570, April 21, 1939).
• The power exists as an instrument for
correcting the infirmities in
administration of justice and for
mitigating whenever a strict application
of the provisions of the law will result in
undue harshness. (Bernas, 2009).
• The exercise of the pardoning power is
discretionary in the President and may
not be interfered with by Congress or
the Court, except only when it exceeds
the limits provided for by the
Constitution (Risos-Vidal v. COMELEC,
G.R. No. 206666, Jan. 21, 2015).
Limitations to Executive Clemency
• The President cannot be grant executive
clemency before conviction, in cases of
impeachment.
• For violations of election laws, rules,
and regulations without the favorable
recommendation of the COMELEC in
cases of civil or legislative contempt
• Executive Clemency can be granted only
after conviction by final judgment.
(People. v. Salle, G.R. No. 103567, Dec.
4, 1995)
Forms of executive Clemency
1. PARDON- An act of grace, proceeding
from the power entrusted of the laws,
which exempts the individual on whom
it is bestowed, from the punishment the
law inflicts for a crime he has
committed. It is either conditional or
plenary.
2. AMNESTY - An act of grace concurred in
by Congress, usually extended to
groups of persons who commit political
offenses, which puts into oblivion the
offense itself. The President alone
cannot grant amnesty for it needs the
concurrence by a majority of all the
members of Congress.
When a person applies for amnesty, he must
admit his guilt of the offense that is subject to
such amnesty. If his application is denied, he
can be convicted based on this admission of
guilt.
7. Diplomatic Power
Power to Contract of Guarantee Foreign Loans
(PHIL. CONST., art. VII, § 20):
• The President may contract or
guarantee foreign loans on behalf of the
Republic of the Philippines with the prior
concurrence of the Monetary Board; and
subject to such limitations as may be
provided by law
• The Monetary Board shall, within 30
days from the end of every quarter of
the calendar year, submit to Congress a
complete report on loans to be
contracted or guaranteed by the
government.
8. Delegated Powers
GR: Legislative power is non-delegable.
XPNS (pertinent to the President):
1. 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. (PHIL. CONST., art.
VI, § 28(2))
2. In times of war or other national
emergency, the Congress may, by law,
authorize the President, for a limited
period and subject to such restrictions
as it may prescribe, to exercise powers
necessary and proper to carry out a
declared national policy. Unless sooner
withdrawn by resolution of the
Congress, such powers shall cease upon
the next adjournment thereof. (PHIL.
CONST., art. VI, § 23(2))
9. Residual Powers
• The President shall exercise such other
powers and functions vested in the
President which are provided for under
29
the laws and which are not specifically
enumerated above, or which are not
delegated by the President in
accordance with law.
• The textual justification for this under
the Constitution is Article VII, Section
17 is to ensure that the laws are
faithfully executed- called the “Faithful
Execution Clause.”
• The power involved is the President's
residual power to protect the general
welfare of the people. It is founded on
the duty of the President, as steward of
the people. It is not only the power of
the President but also his duty to do
anything not forbidden by the
Constitution or the laws that the needs
of the nation demand. It is a power
borne by the President's duty to
preserve and defend the Constitution. It
also may be viewed as a power implicit
in the President's duty to take care that
the laws are faithfully executed (Marcos
v Manglapus, G. R. No. 88211, Sept. 15,
1989).
10. Veto Powers
• The President must communicate his
decision to veto within 30 days from the
date of receipt thereof.
• If he fails to do so, the bill shall become
law as if he signed it. This rule
eliminates the possibility of a pocket
veto whereby the President simply
refuses to act on the bill.
• In exercising the veto power, the bill is
rejected and returned with his
objections to the House from which it
originated. The House shall enter the
objections in the journal and proceed to
reconsider it.
JUDICIAL DEPARTMENT
Judicial power
Judicial Power includes the duty of the courts of
justice to:
a. Settle actual controversies involving
rights which are legally demandable and
enforceable, and to
b. Determine whether or not there has
been a grave abuse of discretion
amounting to lack or excess of
jurisdiction on the part of any branch or
 instrumentality of the Government.
[Sec. 1 (2) Art. VIII]
• It is vested in one Supreme Court and
in such other courts as may be
established by law. [Sec. 1, Art. VIII]
• When the grant of power is qualified,
conditional, or subject to limitations, the
issue of whether the prescribed
qualifications or conditions have been
met or the limitations respected, is
justiciable – the problem being one of
legality or validity, not on its wisdom
(IBP v. Zamora, 338 SCRA 81)
Composition of the Supreme Court:
administrative or criminal action, if
otherwise.
• The Supreme Court may not be
deprived of its minimum original and
appellate jurisdiction (Sec. 2, Art. VIII)
• Members of the judiciary enjoy security
of tenure. (Art. VIII, Sec. 2.)
• Members of judiciary may not be
designated to any agency performing
quasi-judicial or administrative
functions. (Art. VIII, Sec. 12.)

• The Supreme Court is composed of one • The Presidential Electoral Tribunal (PET)
Chief Justice and 14 Associate Justices. does not exercise quasi-judicial
functions. When the Supreme Court, as
Judicial Independence and Autonomy the PET, resolves a presidential or vice-
presidential election contest, it performs
Constitutional Provisions to Preserve the what is essentially a judicial power
Independence of the Judiciary: (Macalintal v. PET, G.R. No. 191618,
Nov. 23, 2010).
• The Supreme Court is a constitutional
body; it may not be abolished nor may
• The salaries of Justices and judges shall
its membership or the manner of its
be fixed by law and cannot be decreased
meetings be changed by mere
during their continuance in office. (Art.
legislation (Sec. 4(1), Art. VIII)
VIII, Sec. 10.)
• The members of the Supreme Court are
• However, their salaries are properly
removable only by impeachment (Sec.
subject to a general income tax law
2, Art. XI)
applicable to all income earners and that
the payment of such income tax does
• But take note of the case of Republic v.
not fall within the constitutional
Sereno (G.R. No. 237438, May 11,
protection against decrease of their
2018) where the Supreme Court ruled
salaries during their continuance in
that Quo warranto is also a remedy to
office. (Nitafan v. CIR, G.R. No. 78780,
oust an ineligible public official may be
July 23, 1987).
availed of when the subject act or
omission was committed prior to or at
• Appellate jurisdiction may not be
the time of appointment or election
increased without its advice and
relating to an official’s qualifications to
concurrence (Sec. 30, Art. VIII)
hold office as to render such
appointment or election invalid. Acts or
• Original jurisdiction can it be increased,
omissions, even if it relates to the
and it does not need the advice or
qualification of integrity being a
concurrence of the SC. On the other
continuing requirement but nonetheless
hand, Appellate jurisdiction cannot be
committed during the incumbency of a
reduced. It cannot also be increased
validly appointed and/or validly elected
unless the SC gives its consent by its
official cannot be the subject of a quo
advice or concurrence. Otherwise, it
warranto proceeding, but of
would be a violation of the Constitution.
impeachment if the public official
concerned is impeachable and the act or
• Sec. 27 of RA 6770 Vests power to the
omission constitutes an impeachable
SC to review the findings of fact of the
offense, or to disciplinary,

30
 ombudsman in administrative cases on
certiorari. There is nothing in the
Constitution conferring that power to
the SC. So according to the SC that
since they were not consulted, that law
sec. 27 of RA 6770 was declared
unconstitutional.
IV. JUDICIAL REVIEW
• It is the power of the courts to test the
validity of executive and legislative acts
in light of their conformity with the
Constitution. The power of judicial
review involves basically reviewing a
law or act of the President is in
consonance with the Constitution. So, if
the law is in consonance, the court will
merely make a double negative ruling
stating that the law is not
unconstitutional. Otherwise, the Court
has the duty to declare the law
unconstitutional.
Functions of Judicial Review (Salonga v. Cruz
Pano, 134 SCRA 438)
1. Checking - reviewing a law or act
2. Legitimating -determining
whether or not it is in consonance
with the Constitution or laws.
3. Symbolic - decision of the SC
would serve as a guideline that
would educate the judges,
justices, the lawyers and the
public as to the meaning of the
law, or the implication of the
exercise of certain powers of
those in the government.
• Doctrine of Constitutional Supremacy -
When the judiciary exercises its power
of judicial review, this is not an
assertion of superiority by the courts
over the other departments, but merely
an expression of the supremacy of the
Constitution. (Angara v. Electoral
Commission, 63 Phil. 139 [1936])
Who may Exercise Judicial Review:
1. The Supreme Court
2. Any other court as authorized by law
• The power of judicial review is not
limited to the Supreme Court, it is also
31
granted to the lower courts. (Ynot v.
IAC, 148 SCRA 659 [1987])
• The exercise of judicial review by the
lower courts is subject to review by the
Supreme Court. (Id.)
• The Supreme Court is the only
constitutional court, and cannot be
abolished by ordinary legislation except
when you amend the Constitution.
• Atty. Galeon: If a lower court declares a
law unconstitutional, and the parties do
not elevate the ruling to the SC, the
ruling will be binding only among the
parties.
Requisites
Requisites for the Exercise of Judicial Review:
1. There must be an actual case or
controversy.
2. The question of constitutionality must
be raised by the property party (Locus
standi or legal standing)
3. The constitutional question must be
raised at the earliest opportunity
4. The decision must be necessary to the
determination of the case itself.
ACTUAL CASE OR CONTROVERSY
• Actual case or controversy is one that
involves a conflict of legal rights, an
assertion of opposite legal claims
susceptive of judicial resolution; the
case must not be moot or academic or
based on extra-legal or other similar
considerations not cognizable by a court
of justice (Garcia v. Executive
Secretary, 583 SCRA 119).
• The justiciable controversy is thus
distinguished from a difference or
dispute of a hypothetical or abstract
character or from one that is academic
or moot. (Cruz, Philippine Political Law,
2015 Ed.).
• Courts have no authority to pass upon
issues through advisory opinions or to
resolve hypothetical or feigned
problems (Guingona Jr. v. CA, 254 Phil.
415)
• But where the purpose is to solicit from
the court a declaratory judgment
involving the interpretation of the right
and duties of a person under the
provisions of a deed, will, contract, or
 other written instrument, or a stature or
ordinance, the case is deemed an actual
controversy over which the courts may
validly assume jurisdiction (Cruz,
Philippine Political Law, 2015 Ed., Sec.
1 Rule 64, ROC)
• An actual case or controversy means an
existing case or controversy that is
appropriate or ripe for determination,
not conjectural or anticipatory, lest the
decision of the court would amount to
an advisory opinion (Republic
Telecommunications Holding, Inc. v.
Santiago, 556 Phil. 83, 91-92 [2001])
• A question is ripe for adjudication when
the act being challenged has had a
direct adverse effect on the individual
challenging it. For a case to be
considered ripe for adjudication, it is a
prerequisite that something has then
been accomplished or performed by
either branch before a court may come
into the picture, and the petitioner must
allege the existence of an immediate or
threatened injury to himself as a result
of the challenged action. He must show
that he has sustained or is immediately
in danger of sustaining some direct
injury as a result of the act complained
of (The Province of North Cotabato v.
The Government of the Republic of the
Philippines, 589 Phil. 387, 481 [2008])
• The requirement of an actual case or
controversy is required so as not to
violate the doctrine of separation of
powers.
Moot and Academic Principle
• GR: When the issue becomes moot and
academic, as a rule the court will not
rule on it.
• XPN: Even on the assumption of
mootness, jurisprudence dictates that
“the ‘moot and academic’ principle is not
a magical formula that can
automatically dissuade the Court in
resolving a case.
Requirements:
1. There is grave or patent violation of the
Constitution;
2. The exceptional character of the
situation or paramount public interest or
transcendental importance;
32
3. When constitutional issue requires
formulation of controlling principles to
guide the bench, the bar and the public;
and
4. It is capable of repetition yet evading
review
• Note: Not all requirements need be
present. The existence of one of the
requirements is sufficient for the Court
to exercise its power of judicial review.
LOCUS STANDI
• A proper party is one who is injured or
who is in danger of sustaining or will
sustain an injury as a result of the
implementation of an act or law.
• A person, to be a real party in interest
in whose name an action must be
prosecuted, should appear to be the
present real owner of the right sought
to be enforced, that is, his interest must
be present substantial interest, not a
mere expectancy, or a future
contingent, subordinate or
consequential interest. Where the
plaintiff is not the real party in interest,
the ground for the motion to dimiss is
lack of cause of action. The reason for
this is that the courts ought not to pass
upon questions not derived from any
actual controversy (Stronghold
Insurance Company Inc. Cuenca, 692
SCRA 473)
• Locus standi, which is a mere procedural
technicality, has been defined as a
personal and substantial interest in a
case such that the party has sustained
or will sustain direct injury as a result of
the governmental act that is being
challenged (Anak Mindanao Party-list
Group v. The Executive Secretary, 531
SCRA 583)
• However, being a mere procedural
technicality, the requirement of locus
standi may be waived by the Supreme
Court in the exercise of its discretion.
Even when the petitioners have failed to
show direct injury, they have been
allowed to sue under the “principle of
transcendental importance”; of
overreaching significance to society or
of paramount public interest. (David v.
Macapagal-Arroyo, G.R. No. 171396,
May 3, 2006)
Rule on Locus Standi
GR: A Citizen can raise a constitutional question
only when:
1. He can show that he has personally
suffered some actual or threatened
injury because of the allegedly illegal
conduct of the government;
2. The injury is fairly traceable to the
challenged action; and
3. A favorable action will likely redress the
injury (Francisco v. Fernando, 507
SCRA 173)
Direct Injury Test
• GR: To be a proper party, one who
impugns the validity of a statute must
have personal and substantial interest
in the case such that he has sustained
or will sustain direct injury as a result.
XPNS: (No need to establish direct injury)
1. Sufficiency of factual basis in the
declaration of martial law;
2. Questions on the constitutionality of the
ratification, amendments or revision of
the constitution; and
3. Any issue pertaining to environmental
cases (Citizen’s suit)
Who are considered as proper parties to raise
Constitutional Issues:
a. The cases involved constitutional
issues;
b. Taxpayers – there must be claim of
illegal disbursement of public funds or
that the tax measure is
unconstitutional;
As a taxpayer, you must establish:
1. There is illegal disbursement of public
funds or that there is an appropriation
2. The appropriation is illegal amounting to
malversation of public funds
3. That the taxes is exorbitant or the tax
law is confiscatory which amounts to
taking without due process of law
c. Voters – there must be a showing of obvious
interest in the validity of the election law in
33
question especially in his exercise of his right of
suffrage;
d. Concerned citizens – there must be a showing
that the issues raised are of transcendental
importance which must be settled early. As
concerned citizens, petitioners are also required
to substantiate that the issues are of
transcendental significance, or of paramount
public interest. In cases involving such issues,
the imminence and clarity of the threat to
fundamental constitutional rights outweigh the
necessity for prudence.
e. Legislators- there must be a claim that the
official action complained of encroaches on their
prerogatives as legislators. In the absence of a
clear showing of any direct injury to their person
or the institution to which they belong, their
standing as members of the Congress cannot be
upheld.
Transcendental importance
• For it to be accorded standing on the
ground of transcendental importance,
however, it must establish:
1. The character of the funds (that it is
public) or other assets involved in the
case;
2. The presence of a clear case of
disregard of a constitutional or statutory
prohibition by the public respondent
agency or instrumentality of the
government and
3. The lack of any party with a more direct
and specific interest in raising the
questions being raised (Senate v.
Ermita, 488 SCRA 1)
EARLIEST OPPORTUNITY
• GR: The question of constitutionality
must be raised at the earliest possible
opportunity, so that if not raised in the
pleadings, ordinarily, it may not be
raised at the trial and if not raised in the
trial court, it will not be considered on
appeal (Matibag v. Benipayo, 429 SCRA
554)
XPNS:
1. In criminal cases, the constitutional
question can be raised at any time in the
discretion of the court;
 2. In civil cases, the constitutional
question can be raised at any stage if it
is necessary to the determination of the
case itself; and
3. In every case, except where there is
estoppel, the constitutional question
may be raised at any stage if it involves
the jurisdiction of the court (People v.
Vera, 53 SCRA 678) Under these
exceptions, even if raised the first time
on appeal, the Court may still review:
a. In Criminal Cases- especially if the guilt
of the accused is dependent on the
constitutionality of the law that defines
the act or omission unauthorized. If it is
unconstitutional, then there is no law
punishing the act.
b. In Civil Cases- when the issue is the lis
mota of the case. Meaning, you cannot
define the case without first setting the
issue of constitutionality.
• Then on jurisdiction because if the court
has no jurisdiction, then the
proceedings are void except if the
person waived the jurisdiction by
submitting himself to the court. He is
now estopped to question jurisdiction
for actively participating in the
proceedings.
• A constitutional question was deemed
raised at the earliest opportunity when
raised for the first time at the Court of
Appeals, despite the case being
previously heard by the Labor Arbiter
and the NLRC, because the
constitutional question should be raised
before those authorized to rule on
constitutional questions. Labor tribunals
have no authority to rule on
constitutional questions. That is
reserved to the regular courts (Serrano
v. Gallant Maritime, G.R. No. 167614
March 24, 2009).
LIS MOTA OF THE CASE
• The decision must be necessary to the
determination of the case itself. As a
rule, the courts will not resolve the
constitutionality of a law, if the
controversy can be settled on other
grounds. The policy of the courts is to
avoid ruling on constitutional questions
and to presume that the acts of the
34
political departments are valid, absent a
clear and unmistakable showing to the
contrary. To doubt is to sustain. This
presumption is based on the doctrine of
separation of powers. This means that
the measure had first been carefully
studied by the legislative and executive
departments and found to be in accord
with the Constitution before it was
finally enacted and approved (Sps.
Mirasol v. CA, 403 Phil. 760)
Operative fact doctrine
• As a general rule, an unconstitutional
act is not a law; it confers no rights; it
imposes no duties; it affords no
protection; it creates no office; it is
inoperative as if it has not been passed
at all. The general rule is supported by
Article 7 of the Civil Code, which
provides. “Laws are repealed only by
subsequent ones, and their violation or
non-‐‐observance shall not be excused
by disuse or custom or practice to the
contrary” (Yap v. Thenamaris Ship’s
Management, G.R. No. 179532, May 30,
2011).
• The doctrine of operative fact serves as
an exception to the aforementioned
general rule. The doctrine of operative
fact, as an exception to the general rule,
only applies as a matter of equity and
fair play. It nullifies the effects of an
unconstitutional law by recognizing that
the existence of a statute prior to a
determination of unconstitutionality is
an operative fact and may have
consequences which cannot always be
ignored.
• The past cannot always be erased by a
new judicial declaration (Ibid).
• The doctrine is applicable when a
declaration of unconstitutionality will
impose an undue burden on those who
have relied on the invalid law. Thus, it
was applied to a criminal case when a
declaration of unconstitutionality would
put the accused in double jeopardy or
would put in limbo the acts done by a
municipality in reliance upon a law
creating it (Ibid).
 • The Operative Fact Doctrine will not be
applied as an exception when to rule
otherwise would be iniquitous and
would send a wrong signal that an act
may be justified when based on an
unconstitutional provision of law (Ibid).
• The Doctrine of Operative Fact Extends
as well to a Void or Unconstitutional
Executive Act: The term executive act is
broad enough to include any and all acts
of the Executive, including those that
are quasi-legislative and quasi-judicial
in nature.
• The doctrine operative fact doctrine
recognizes the existence of the law or
executive act prior to the determination
of its unconstitutionality as an operative
fact that produced consequences that
always be erased, ignored or
disregarded. In short, it nullifies the
void law or executive act but sustains its
effects. It provides an exception to the
general rule that a void or
unconstitutional law produces no effect.
But its use must be subjected to great
scrutiny and circumspection, and it
cannot be invoked to validate an
unconstitutional law or executive act,
but is resorted to only as a matter of
equity and fair play. It applies only to
cases where extraordinary
circumstances exist, and only when the
extraordinary circumstances have met
the stringent conditions that will permit
its application.
• It applies only to cases where
extraordinary circumstances exist and
only when the extraordinary
circumstances have met the stringent
conditions that will permit its
application. Its application to the DAP
proceeds from equity and fair play. The
consequences resulting from the DAP
and its related issuances could not be
ignored or could no longer be undone.
(Aurallo v. Aquino III, G.R. No., 209287,
728 SCRA 1, July 1, 2014)
Political question doctrine
• Political Question - A question, the
resolution of which has been vested by
the Constitution exclusively:
a. In the people, in the exercise of their
sovereign capacity, or
35
b. In which full discretionary authority has
been delegated to a co-equal branch of
the Government (Tanada v. Cuenco,
G.R. No. L-10520, Feb. 28, 1957).
• The judiciary is NOT precluded from
reviewing Political questions. Under the
second clause of Sec. 1, Art. VIII (the
power to determine whether or not
there has been a grave abuse of
discretion) the Courts may now
determine whether there has been
grave abuse of discretion amounting to
lack or excess of jurisdiction on the part
of any branch or instrumentality of
government (Francisco v. House of
Representatives, G.R. No. 160261,
November 11, 2003).
• While courts can determine questions of
legality with respect to governmental
action, they cannot review government
policies and the wisdom behind such
policies. These questions are vested by
the Constitution in the Executive and
Legislative Departments.
V. SUPERVISION OF THE COURTS
Administrative Supervision Over Lower
Courts
Administrative Powers of the Supreme Court:
1. Assign temporarily judges of
lower courts to other stations as
public interest may require;
2. Shall not exceed 6 months
without the consent of the judge
concerned;
3. Order a change of venue or place
of trial to avoid a miscarriage of
justice;
4. Appoint all officials and
employees of the Judiciary in
accordance with the Civil Service
Law;
5. Supervision over all courts and
the personnel thereof;
6. Discipline judges of lower courts
or order their dismissal.
Period for Deciding Cases:
1. SC- 24 months
 2. Lower Collegiate Courts- 12 months
3. Other Lower Courts- 90 days
Notes:
• Period counted from date of submission.
• Case deemed submitted upon filing of
the last pleading, brief or memorandum
required by the Rules or the court [Sec.
15(2), Art. VIII].
• The Sandiganbayan, while of the same
level as the Court of Appeals, functions
as a trial court. Therefore, the period for
deciding cases which applies to the
Sandiganbayan is the three (3) month
period, not the twelve (12) month
period [In Re: Problems of Delays in
Cases before the Sandiganbayan, A. M.
No. 00-8-05- SC (2001)].
VI. POWERS OF THE SUPREME COURT
RULEMAKING POWER
The SC has the power to promulgate rules
concerning the protection and
enforcement of constitutional rights,
pleading, practice, and procedure in all
courts, the admission to the practice of
law, the integrated bar, and legal
assistance to the under-privileged.
The 1987 Constitution took away the
power of Congress to repeal, alter, or
supplement rules concerning pleading,
practice and procedure. The power to
promulgate rules of pleading, practice
and procedure is no longer shared by the
Court with Congress, more so with the
Executive (Echegaray v. Secretary of
Justice, G.R. No. 132601, January 19,
1999).
ORIGINAL AND APPELLATE JURISDICTION
OF THE SUPREME COURT
Original Jurisdiction [Sec. 5(1), Art. VIII]
1. Cases affecting ambassadors, other
public ministers and consuls
2. Petition for certiorari
3. Petition for prohibition
4. Petition for mandamus
5. Petition for quo warranto
36
6. Petition for habeas corpus
• Note: Original jurisdiction also extends
to writs of amparo, habeas data, and
the environmental writ of kalikasan.
• The Supreme Court’s original
jurisdiction to issue writs of certiorari
(as well as prohibition, mandamus, quo
warranto, habeas corpus and
injunction) is not exclusive. Its
jurisdiction is concurrent with the CA,
and with the RTC in proper cases (Cruz
v. Judge Gingoyon, G.R. No. 170404,
September 28, 2011).
Appellate Jurisdiction [Sec. 5(2), Art. VIII]:
On appeal or certiorari (as the Rules of Court
provide), SC may review, revise, reverse,
modify, or affirm final judgments and orders of
lower courts in:
1. Cases involving the constitutionality or
validity of any treaty, international or
executive agreement, law, presidential
decree, proclamation, order,
instruction, ordinance, or regulation,
except in circumstances where the
Court believes that resolving the issue
of constitutionality of a law or regulation
at the first instance is of paramount
importance and immediately affects the
social, economic and moral well-being
of the people (Moldex Realty v. HLURB,
G.R. No. 149719, June 21, 2007);
2. Cases involving the legality of any tax,
impost, assessment, or toll, or any
penalty imposed in relation thereto;
3. Cases in which the jurisdiction of any
lower court is in issue;
4. Criminal cases where the penalty
imposed is reclusion perpetua or higher;
5. Cases where only a question of law is
involved.
VII. QUALIFICATIONS,
DISQUALIFICATIONS, SELECTION OF THE
PRESIDENT, SENATORS, MEMBERS OF THE
HOUSE OF REPRESENTATIVES, JUSTICES
AND JUDGES, OMBUDSMAN, AND
CONSTITUTIONAL COMMISSIONS
PRESIDENT AND VICE PRESIDENT
Qualifications:
1. Natural-born citizen of the
Philippines;
2. A registered voter;
3. Able to read and write;
4. At least 40 years of age on the
day of the election; and
5. A resident of the Philippines for at
least 10 years immediately
preceding such election [Sec. 2,
Art. VII].
Election
• Regular Election: Second Monday of
May
• National Board of Canvassers (President
and Vice-President): Congress
• Judge of all Election Contests: Supreme
Court sitting as Presidential Electoral
Tribunal (PET)
Term of Office
• The President and Vice President shall
be elected by direct vote of the people
for a term of 6 years (PHIL. CONST. Art.
VII, § 4).
• The president shall not be eligible for
any reelection.
• No person who has succeeded as
President and has served for more than
4 years shall be qualified for election to
the same office at any time. (PHIL.
CONST., art VII, § 4, par. 1).
• No Vice-President shall serve for more
than 2 consecutive terms. (PHIL.
CONST., art. VII, § 4, par. 2).
SENATORS AND MEMBERS OF THE HOUSE
OF REPRESENTATIVES (HOR)
Composition:
• Senate:24 who are elected at large by
the qualified voters of the Philippines.
(PHIL. CONST., Art. VI, § 2.)
• HOR: Not more than 250 members,
unless otherwise fixed by law,
consisting of:
a. District Representatives: elected from
legislative districts apportioned among
the provinces, cities and the
Metropolitan Manila area
37
b. Party-list Representatives: shall
constitute 20% of the total number of
the members of the House of
Representatives including those under
the party-list.
Term of Office:
• Senate: 6 years commencing at noon on
the 30th day of June following their
election (PHIL. CONST., Art. VI, § 4.)
• HOR: 3 years, commencing at noon on
the 30th day of June next following their
election.
• Regular Election: 2nd Monday of May
Term Limit:
• Senate: No Senator shall serve for more
than 2 consecutive terms. Voluntary
renunciation of the office for any length
of time shall not be considered as an
interruption in the continuity of his
service for the full term for which he was
elected (PHIL. CONST., Art. VI, § 4.)
• HOR: No member of the HOR shall serve
for more than 3 consecutive terms.
Voluntary renunciation of the office for
any length of time shall not be
considered as an interruption in the
continuity of his service for the full term
for which he was elected.
Qualifications:
Senate:
1. Natural-born Filipino citizen,
2. A registered voter,
3. A resident of the Philippines for at least
two (2) years before the day of the
election,
4. Able to read and write,
5. At least thirty-five (35) years old.
HOR:
1. Natural-born citizen of the Philippines
2. At least twenty-five (25) years of age on
the day of the election,
3. Able to read and write,
4. Except the party list representatives, a
registered voter in the district in which
he shall be elected, and a resident
thereof for a period of not less than one
year immediately preceding the day of
the election.
Disqualifications (both Senate and HOR): Experience

DISQUALIFICATION WHEN 15 years or Has been Has been

APPLICABLE more as a engaged for engaged for
Cannot hold any other During his term. If judge of a at least 10 at least 5
office or employment he does so, he
lower court years in the years in the
in the Government, or forfeits his seat in
any subdivision, Congress. OR has practice of practice of
agency, or (Forbidden Office) been law OR has law OR has
instrumentality, engaged in held public held public
including GOCCs or the office in the office in the
their subsidiaries practice of PH requiring PH requiring
Cannot be appointed During the term for law in the admission to admission to
to any office which which he was
PH for the the practice the practice
was created or the elected.
enoulments thereof same of law as an of law as an
increased period indispensable indispensable
Cannot be financially During his term of requisite requisite
interested directly or office Tenure [Sec. 11, Art. VIII]
indirectly with any
contract, franchise, or Hold office during good behavior until they
special privilege reach the age of 70 OR become
granted by the incapacitated to discharge their duties
government, or any
Qualifications [Sec. 7(3), Art. VIII]
subdivision, agency,
or instrumentality, Person of proven competence, integrity,
including GOCCs or probity, and independence
their subsidiaries
Cannot intervene in During his term of
any matter before any office How Members of the Judiciary are Selected:
office of the
government when it is • By virtue of Article VIII, Section 8,
for his pecuniary appointments to the judiciary are made
benefit or where he by the President of the Philippines based
may be called upon to
on a list submitted by the Judicial and
act on account of his
Bar Council which is under the
office.
supervision of the Supreme Court. Its
principal function is to screen
JUSTICES AND JUDGES prospective appointees to any judicial
post. It is composed of the chief justice
Qualifications of members of the judiciary as ex-officio chairman, the Secretary of
Justice and representatives of Congress
Justices RTC Judge MTC/MCTC
as ex-officio members, and a
of the SC (Sec. 15, Judge (Sec.
representative of the Integrated Bar, a
and the B.P. 129) 26, B.P.
professor of law, a retired member of
Collegiat 129)
the Supreme Court and a representative
e Courts
Citizenship of the private sector as members.
• Note: Judges may not be appointed in
any acting or temporary capacity as this
Natural- born Natural-born Natural-born would undermine the independence of
Citizen Citizen citizen the judiciary
• The JBC shall submit a list of three (3)
Age nominees for every vacancy to the
President [Sec. 9, Art. VIII]
At least 40 At least 35 At least 30
• Any vacancy in the Supreme Court shall
years of years of age years of age be filed within ninety (90) days from the
age occurrence thereof [Sec. 4(1), Art. VIII]

38
 • For lower courts, the President shall
issue the appointment within ninety
(90) days from the submission by the
JBC of such list [Sec. 9, Art. VIII]
THE OMBUDSMAN
Composition:
1. Ombudsman/Tanodbayan;
2. Overall Deputy (at least one Deputy
each for Luzon, Visayas and Mindanao);
and
3. Deputy for military establishment may
be appointed.
Qualifications (Ombudsman and Deputies):
1. Natural born citizen of the Philippines
2. At least 40 years old at time of
appointment
3. Recognized probity and independence;
4. Member of the Philippine bar
5. Must not have been candidate for any
elective office in the immediately
preceding
Appointment, Term, and Filling of vacancies
• Appointed by the President in a list of at
least 3 nominees for each vacancy
prepared by the JBC. Said list must be
published in a newspaper of general
circulation. (Sec.4, R.A. 6770).
• Appointments do NOT require
confirmation
• All vacancies shall be filled within 3
months after they occur. (Sec. 4)
• Appointees shall serve a 7-year term
without reappointment. (Sec. 7)
• All other officers and employees of the
Office of the Ombudsman and the Office
of the Special Prosecutor shall be
appointed by the Ombudsman in
accordance with the Civil Service Law.
(Sec. 11 (5))
Disqualifications and Prohibitions:
1. Cannot hold any other office or
employment during his tenure;
2. Cannot engage (directly or indirectly) in
the practice of any profession or in the
active management or control of any
business which may be affected by the
functions of his office;
39
3. Cannot be financially interested, directly
or indirectly, in any contract with or in
any franchise or privilege granted by the
Government, any of its subdivisions,
agencies or instrumentalities, including
GOCCs or their subsidiaries;
4. Shall not be qualified to run for any
office in the election immediately
following their cessation from office;
and
5. Shall not be allowed to appear or
practice in the Ombudsman for 2 years
following their cessation from office
CONSTITUTIONAL COMMISSIONS
Composition and qualifications of members
CIVIL SERVICE COMMISSION
Composition:
• A Chairman, and 2 Commissioners
Qualifications:
1. Natural-born citizens of the Philippines;
2. At the time of their appointment, at
least 35 years of age
3. With proven capacity for public
administration; and
4. Must not have been candidates for any
elective position in the election
immediately preceding their
appointment
COMMISSION ON ELECTIONS
Composition:
• One Chairman and 6 Commissioners
Qualifications:
1. Natural-born citizen;
2. At least 35 years old at the time of
appointment;
3. College degree holder;
4. Not a candidate in any election
Immediately preceding the
appointment; and
5. Majority, including the chairman, must
be members of the Philippine Bar who
have been engaged in the practice of
law for at least 10 years
COMMISSION ON AUDIT
Composition
 • 1 Chairman, 2 Commissioners
Qualifications
1. Natural born citizen;
2. At least 35 years old at the time of
appointment
3. CPAs with at least 10 years auditing
experience or members of the Bar with
at least 10 years of experience in the
practice of law; at no time shall all
members belong to the same
profession, and
4. Not a candidate in any election
immediately preceding appointment
Prohibited offices and interests
1. No member of a Constitutional
Commission shall, during his tenure:
2. Be financially interested, directly or
indirectly, in any contract with, or in any
franchise or privilege granted by the
Government, any of its subdivisions,
agencies or instrumentalities
3. Engage in the Practice of any
profession;
4. Engage in the Active management and
control of any business which in any
way may be affected by the functions of
his office; and
5. Hold any other Office or Employment.
VIII. IMMUNITY OF THE PRESIDENT,
PRIVILEGES OF SENATORS AND MEMBERS
OF THE HOUSE OF REPRESENTATIVES
PRESIDENTIAL IMMUNITY
• Immunity from suit is personal to the
President and may be invoked by him
alone. The President may waive it
impliedly, as when he himself files suit
(Soliven v. Makasiar, G.R. No. 82585,
Nov. 14, 1988).
• The presidential immunity from suit
remains preserved under our system of
government, albeit not expressly
reserved in the present Constitution.
(Rubrico, et al. v. Gloria Macapagal-
Arroyo, et al., G.R. No. 183871, Feb. 18,
2010).
• Unlawful acts of public officials are not
acts of State and the officer who acts
40
illegally is not acting as such but stands
in the same footing as any other
trespasser. Once out of office, even
before the end of the six-year term,
immunity for non-official acts is lost
(Estrada v. Desierto, G.R. No. 146710-
15, March 2, 2001).
Presidential Privilege
• Executive Privilege is the power of the
President to withhold certain types of
information from the court, the
Congress, and the public. (Neri v.
Senate, G.R. No. 180643, March 25
2008).
• For the presidential communications
privilege to apply, the following must
concur:
• Communications relate to a
quintessential and nondelegable power
of the President. (e.g., the power to
enter into an executive agreement with
other countries without the concurrence
of the Legislature has traditionally been
recognized in Philippine jurisprudence)
• Communications are received by a close
advisor of the President.
• There is no adequate showing of a
compelling need that would justify the
limitation of the privilege and of the
unavailability of the information
elsewhere by an appropriate
investigating authority.
Scope of Executive Privilege
• Executive privilege covers all
confidential or classified information
between the President and the public
officers covered by this executive order.
Person Covered by the Privilege
• The person covered by the executive
privilege is a person in possession of
information which is, in the judgment of
the head of office concerned, privileged.
• Actually, it is not only the President who
has Executive Privilege. All three
branches of government also have
executive privilege. The Legislative also
has privilege like during executive
sessions. The Judiciary also has
privilege, where the litigants cannot
compel the disclosure of how a case was
 deliberated (Marcos v. Robredo, PET
Case 005, February 16, 2021).
PRIVILEGES OF SENATORS AND MEMBERS
OF THE HOUSE OF REPRESENTATIVES
• Immunity from Arrest - Legislators are
privileged from arrest while Congress is
in session only (whether regular or
special) with respect to offenses
punishable by not more than 6 years of
imprisonment. The immunity does not
extend to the prosecution of criminal
offenses.
• Right of Members to Attend
Congressional Sessions: A Senator, who
remains in detention, cannot be allowed
to go to the Senate to attend all its
official functions. All prisoners whether
under preventive detention or serving
final sentence cannot practice their
profession nor engage in any business
or occupation, or hold office, elective or
appointive, while in detention. This is a
necessary consequence of arrest and
detention. The presumption of
innocence does not carry with it the full
enjoyment of civil and political rights
(Trillanes v. Judge Pimentel, G.R. No
179817, June 27, 2008).
• Privileged Speech - No member shall be
questioned or held liable in any forum
other than his/her respective
Congressional body for any speech or
debate in Congress or in any Committee
thereof.
“Speech or Debate” includes:
• Utterances made by Congressmen in
the performance of their official
functions, such as speeches delivered,
statements made, or votes cast in the
halls of Congress, while the same is in
session
• Bills introduced in Congress, whether
the same is in session or not
• Other acts performed by Congressmen,
either in Congress or outside the
premises housing its offices, in the
official discharge of their duties as
members of Congress and of
Congressional Committees duly
authorized to perform its functions as
such, at the time of the performance of
the act in question. (Jimenez v.
41
Cabangbang, G.R. No. L-15905, Aug. 3,
1966)
• The privilege arises not because the
statement is made by a lawmaker, but
because it is uttered in furtherance of
legislation. It cannot be invoked when
the lawmaker's speech or utterance is
extraneous to the due functioning of the
legislative process. (Trillianes v.
Castillo-Marigomen, G.R. No. 223451,
March 14, 2018)
• To participate in or respond to media
interviews is not an official function of
any lawmaker; it is not demanded by his
sworn duty nor is it a component of the
process of enacting laws. A lawmaker
may discharge his duties and legislate
without having to communicate with the
press. A lawmaker's participation in
media interviews is not a legislative act,
but is "political in nature, outside he
ambit of the immunity conferred under
the Speech or Debate Clause. (Trillanes
v. Castillo-Marigomen, G.R. No.
223451, March 14, 2018)
• A complaint for disbarment or
disciplinary action based on disparaging
remarks made by an incumbent Senator
against the Chief Justice will not prosper
because of the Speech and Debate
clause. (Pobre v. Defensor-Santiago,
A.C. No. 7399, Aug. 25, 2009)
Limitations:
• Protection is only against prosecution in
any forum other than Congress itself.
Hence, the Senate or the House may
discipline their respective members.
• The speech or debate must be made in
performance of their duties as members
of Congress.
• Congress need not be in session when
the utterance is made, as long as it
forms part of legislative action (e.g.,
part of the deliberative and
communicative process used to
participate in legislative proceedings in
consideration of proposed legislation or
with respect to other matters within
Congress’ jurisdiction)

IX. STRUCTURE OF GOVERNMENT
COMPOSITION
ARTICLE II, SECTION 1. The Philippines is
a democratic and republican State.
Sovereignty resides in the people and all
government authority emanates from
them.
ARTICLE VI, SECTION 1. The legislative
power shall be vested in the Congress of
the Philippines which shall consist of a
Senate and a House of Representatives,
except to the extent reserved to the people
by the provision on initiative and
referendum.
ARTICLE VII, SECTION 1. The executive
power shall be vested in the President of
the Philippines.
ARTICLE VIII, SECTION 1. The judicial
power shall be vested in one Supreme
Court and in such lower courts as may be
established by law.
Judicial power includes the duty of the
courts of justice to settle actual
controversies involving rights which are
legally demandable and enforceable, and
to determine whether or not there has
been a grave abuse of discretion
amounting to lack or excess of jurisdiction
on the part of any branch or
instrumentality of the Government.
ESSENTIAL CHARACTERISTICS OF
DEMOCRATIC STATE
1. Elections
2. People enjoy basic civil and political
rights and liberties (Article III)
• Judge Singco: There is no such thing as
absolute right, except freedom to think.
You cannot exercise your rights to the
detriment of the rights of others.
Likewise, you cannot exercise the right
to free speech to malign the reputation
of others.
REPUBLICAN STATE
• A representative form of government.
People elect representatives in an
election. Once elected, these persons
act as our representatives and are
accountable to us. (Article XI)
THE PHILIPPINE GOVERNMENT
• The Government of the Philippines is
governed as a unitary state under a
presidential representative and
democratic and a constitutional republic
where the President functions as both
the head of state and the head of
government of the country within a
pluriform multi-party system.
• The Philippine government is composed
of three different branches which are
found in different areas of our
Constitution: The Legislative
Department (Article VI), the Executive
Department (Article VII), and the
Judicial Department (Article VIII)
FUNCTIONS
• The basic function of the Legislative
Department is to create, alter,
repeal laws or statutes.
• Statutes passed by Congress have
the presumption of
Constitutionality. Only upon a clear
finding of a law’s unconstitutionality
will the court declare a law to be
unconstitutional. Otherwise, the
courts are bound to uphold the
constitutionality of a law in respect
and deference to the power of the
Legislative Department to make and
repeal laws.
A
• The basic function of the Executive
Department is to ensure that all the
laws of the land are faithfully
executed.
• The textual justification for this
under the Constitution is Article VII,
Section 17 is to ensure that the laws
are faithfully executed- called the
“Faithful Execution Clause.”
• The power involved is the
President's residual power to
protect the general welfare of the
people. It is founded on the duty of
the President, as steward of the
people. It is not only the power of
the President but also his duty to do
anything not forbidden by the
Constitution or the laws that the
42
 needs of the nation demand. It is a
power borne by the President's duty
to preserve and defend the
Constitution. It also may be viewed
as a power implicit in the President's
duty to take care that the laws are
faithfully executed (Marcos v declare the principle of Separation of
Manglapus, G. R. No. 88211, Sept.
15, 1989).
• The basic function of the Judicial
Department is to interpret and
apply the laws of the land. They can
also review the acts of any branch
or instrumentality of the
Government to determine whether
they have committed a grave abuse
of discretion amounting to lack or
excess of jurisdiction.
• When the judiciary exercises its
power of judicial review, this is not
an assertion of superiority by the
courts over the other departments,
but merely an expression of the
supremacy of the Constitution.
(Angara v. Electoral Commission,
63 Phil. 139 [1936])
POWERS AND PRIVILEGES
(For an extensive discussion on the
powers and privileges of the different
government organs, please Parts III
and VIII of this reviewer)
SEPARATION OF POWERS
• Ordains that each of the 3 branches of
government has exclusive cognizance of
and is supreme in matters falling within
its constitutionally allocated sphere;
each branch cannot invade the domain
of others. Powers of the government are
separated to avoid concentration of
powers in any one branch
• The government established by the
Constitution follows the theory of
separation of powers. Separation of
powers is a fundamental principle in our
system of government and is founded
on the belief that, by establishing
equilibrium among the three (3) power
holders, harmony will result and power
will not be concentrated and tyranny will
be avoided [Bernas].
43
• Any system that is violative of the
principle of separation of powers is
unconstitutional and void (Belgica v.
Executive Secretary, G.R. No. 208566,
November 19, 2013).
• The Constitution does not expressly
Powers, but it is implied in the division
of our Constitution by the three
separate Articles outlining our form of
government. (Article VI- Legislative
Dept.; Article VII- Executive Dept;
Article VIII- Judicial Dept.)
CHECKS AND BALANCES
• A system operating between and among
the three branches of government the
net effect of which is that no one
department is able to act without the
cooperation of at least one of the other
departments.
Allocation of checks and balances
How can the executive branch check the acts of
the other branches?
• Check on Congress: The power to veto
any bill proposed by Congress
• Check on the Judiciary: Appointment of
justices of the Supreme Court and
judges of the lower courts; Pardoning
power
How can the legislative branch check the acts of
the other branches?
• Check on the Executive: The president
has the power of appointment and any
such appointment shall be approved by
the Commission on Appointments
composed of the members of Congress
(Article VII, Sec. 16); The power to
override the veto power of the president
by a vote of 2/3
• Check on the Judiciary: Legislative
department may define and apportion
the jurisdiction of the courts, especially
the lower courts (Art. VIII, Secs. 1 and
2)
How can the judiciary branch check the acts of
other branches?
 • Power of judicial review – can declare an
executive act or act made by Congress
to be unconstitutional.
X. PROCESS OF LEGISLATION
PROCESS OF LAWMAKING
• Bill- any proposed law.
• GR: Any bill can originate from either
House of Congress.
XPN (ARTILP):
1. Appropriation;
2. Revenue
3. Tariff;
4. Bills Authorizing the Increase of
Public Debt;
5. Bills of Local Application;
6. Private Bills
• These bills must originate exclusively in
the House of Representatives, although
the Senate may propose or concur with
amendments (Art. VI, Sec. 24)
• The Constitution only mandates that the
bill ORIGINATE in the House of
Representatives. It did not say that the
bill that would be presented to the
President should be the exact same one
as passed by the House. That would
violate the power of the Senate to
concur or propose amendments to the
law. The Constitution merely mandates
that the INITIATIVE come from the
House of Representatives. (Tolentino v.
Secretary of Finance, 1995).
• Every Bill must go through three
readings in each House and each
reading must be done on separate days,
except when the Bill is certified as
urgent by the President, in which case,
the three readings can be done in one
day.
• The Constitution also mandates that
each bill only tackle one subject matter.
• Multiple subject matters which are
tackled in one bill are prohibited for
being logrolling legislation.
• Effect of Logrolling Legislation: Entire
bill is void. Logrolling puts the people in
a dilemma since they can answer only
either yes or no to the entire
44
proposition, forcing them to sign a
petition that effectively contains two
propositions, one of which they may find
unacceptable. (Lambino v. COMELEC,
G.R. No. 174153, October 25, 2006).
• The requirement that the subject of an
act shall be expressed in its title should
receive a reasonable and not a technical
construction. It is sufficient if the title be
comprehensive enough reasonably to
include the general object which a
statute seeks to effect, without
expressing each and every end and
means necessary or convenient for the
accomplishing of that object (Farinas v.
Executive Secretary, G.R. No. 147387,
December 10, 2003).
• Note: “Chamber” or “House” as used
herein means the HOR or the Senate.
First Reading
• The title of the bill as well as the bill
number is read by the Secretary-
General of the Chamber, and then it is
referred to its respective committee for
committee hearings.
• After committee hearings, if the bill is
approved, a committee report is made.
If the committee disapproves of the bill,
the bill is said to have died a “natural
death”
• For bills which must originate from the
HOR, the Senate can conduct
committee hearings even if the bill is
still with the HOR. But the Senate must
refrain from making a committee report
until they receive the bill as passed by
the HOR.
• Once the Senate receives the House
version of the Bill, they can do away
with the House’s version of the bill, and
immediately replace it with their own
version of the Bill (Tolentino v.
Secretary of Finance, supra).
Second Reading
• Once the committee report is approved,
it is then sent to the plenary (all the
members of the Chamber) for plenary
debates.
• The sponsor of the bill usually makes a
sponsorship speech, where the sponsor
defends the bill and lay out its overview
and the benefits of the said bill.
 • The bill is then read in its entirety, and
the Members of the said Chamber will
debate on the bill, proposing
amendments or even removal of
questionable provisions.
• After all the debates have concluded,
the Members of the Chamber will then
vote on whether to approve the bill on
Second reading. If the bill is approved,
it will now move to third and final
reading.
Third Reading
• On third reading of the bill, the entire
version of the bill, including the
proposed amendments to the same will
be reproduced for all the members of
the Chamber to read.
• The Secretary-General of the Chamber
will then read the Title and Number of
the Bill, and then Members will vote on
whether to approve the bill on third and
final reading or not.
• In the third and final reading, no
amendments to the bill are allowed. Just
a simple yes or no vote.
• If the bill is approved, the bill will then
be transmitted to the other House for it
to undergo the same process (three
readings) all over again. (Both houses
may also tackle the bill simultaneously,
for efficiency)
Bicameral Conference Committee (BCC)
• After the bill has been approved in both
Houses, a BCC will be formed to thresh
out differences in both versions of the
bill.
• Atty. Galeon: The BCC is also
sometimes referred to as the “Third
House” of Congress.
• Forming a BCC is optional on the part of
Congress. They may do away with such,
and just decide to adopt one of the
Chamber’s version of the bill if they see
fit.
• In theory, anything can be tackled in the
BCC. But Members of Congress usually
just tackle matters relevant to the Bill in
the BCC.
Enrolled Bill
45
• After the BCC has concluded, the
consolidated version of the bill will then
be sent to the Secretaries-General of
each respective House as well as to the
Speaker of the HOR and the Senate
President for them to sign the bill.
• The signed bill is then called an enrolled
bill. This enrolled bill will then be sent to
the President for his signature.
• Enrolled Bill Doctrine - The signing of a
bill by the Speaker of the House and the
President of the Senate and its
certification by the secretaries of both
Houses of Congress that such bill was
passed are conclusive of its due
enactment (Arroyo v. De Venecia, G.R.
No.127255, Aug. 14, 1997).
Options of the President
The President, once he receives the bill, has
three options:
1. He/she can sign the bill, and there and
then the bill will become a law after
publication.
2. He/she can veto the bill, and send the
bill back to the House where the bill
originated, along with his veto message,
outlying his objections to the bill.
• The House concerned (meaning the
House where the bill originated) can
then discuss the objections of the
President. They can concur with the
objections, in which case, amend the bill
to consider the objections of the
President, or they can reject the
objections of the President, and
override the President’s veto by a vote
of 2/3 of the House concerned. If the
veto is successfully overridden, the bill
will then become a law.
• GR: If the President decides to veto a
bill, must veto the bill in its entirety, not
just a particular provision. Partial vetoes
are generally not allowed.
• XPN: In Appropriation, Revenue, and
Tariff bills, partial (item) veto is allowed.
3. The President can also just simply
refuse to sign the bill or communicate
his/her veto message to the House
where the bill originated, in which case
the bill will “lapse” into law after 30
 days, just as if he had signed it. This
eliminates the chances of a pocket veto,
or where laws are left hanging because
of the President’s refusal to sign the
measure.
XI. NATURAL RESOURCES
(NATIONALIZATION PRINCIPLE FOR
NATURAL RESOURCES AND ECONOMIC
ACTIVITIES)
Goals
1. More equitable distribution of
opportunities, income and wealth;
2. Sustained increase in amount of goods
and services produced by the nation for
the benefit of the people
3. Expanding production as the key to
raising the quality of life for all,
especially the underprivileged.
• It must be emphasized that FLGLA No.
542 is a mere license or privilege
granted by the State to petitioner for
the use or exploitation of natural
resources and public lands over which
the State has sovereign ownership
under the Regalian Doctrine. Like
timber or mining licenses, a forest land
grazing lease agreement is a mere
permit which, by executive action, can
be revoked, rescinded, cancelled,
amended or modified, whenever public
welfare or public interest so requires.
The determination of what is in the
public interest is necessarily vested in
the State as owner of the country's
natural resources. Thus, a privilege or
license is not in the nature of a contract
that enjoys protection under the due
process and non-impairment clauses of
the Constitution. In cases in which the
license or privilege is in conflict with the
people's welfare, the license or privilege
must yield to the supremacy of the
latter, as well as to the police power of
the State. Such a privilege or license is
not even a property or property right,
nor does it create a vested right; as
such, no irrevocable rights are created
in its issuance.
• The Supreme Court recognized the
inherent right of ICCs/IPs to recover
their ancestral land from outsiders and
usurpers. Seen by many as a victory
attained by the private respondents
only after a long and costly effort, the
Court, as a guardian and instrument of
social justice, abhors a further delay in
the resolution of this controversy and
brings it to its fitting conclusion by
denying the petition. (Alcantara v.
DENR, GR NO. 161881, July 31, 2008)
• Foreshore and submerged areas form
part of the public domain and are
inalienable. Lands reclaimed from
foreshore and submerged areas are also
form part of the public domain and are
also inalienable, unless converted into
alienable or disposable lands of the
public domain.
• The prevailing rule is that reclaimed
disposable lands of the public domain
may only be leased and not sold to
private parties. These lands remained
sui generis, as the only alienable or
disposable lands of the public domain
which the government could not sell to
private parties except if the legislature
passes a law authorizing such sale.
Reclaimed lands retain their inherent
potential as areas for public use or
public service. The ownership of lands
reclaimed from foreshore areas is
rooted in the Regalian Doctrine, which
declares that all lands and waters of the
public domain belong to the State. But
notwithstanding the conversion of
reclaimed lands to alienable lands of the
public domain, they may not be sold to
private corporations which can only
lease the same. The State may only sell
alienable public land to Filipino citizens.
(Chavez v. PEA, 2002)
Exploration And Development, And Utilization of
Natural Resources
• The State, being the owner of the
natural resources, is accorded the
primary power and responsibility in the
exploration, development and utilization
thereof. As such:
1. The State may directly undertake such
activities;
2. The State may enter into co-production,
joint venture or production-sharing

46
 agreements with Filipino citizens or
qualified corporations;
3. Congress may, by law, allow small-scale
utilization of natural resources by
Filipino citizens; or
4. For the large-scale exploration,
development and utilization of minerals,
petroleum and other mineral oils, the
President may enter into agreements
with foreign-owned corporations
involving technical or financial
assistance subject to limitations.
Service Contracts Not Prohibited
The following are valid:
1. Financial and Technical Assistance
Agreements (FTAA): even supposing
they are service contracts, these are not
prohibited agreements in the
contemplation of the Constitution
2. Philippine Mining Law (RA 7942)
3. Its Implementing Rules and
Regulations, insofar as they relate to
financial and technical agreements
• The Constitution should be construed to
grant the President and Congress
sufficient discretion and reasonable
leeway to enable them to attract foreign
investments and expertise, as well as to
secure for our people and our posterity
the blessings of prosperity and peace.
• Foreign corporations are confined to
technical and financial assistance. The
State itself may explore, develop or
utilize the country’s natural resources
by entering into the necessary
agreements with individuals or entities
in the pursuit of visible operations.
Service contracts with foreign
corporations as contractors who invest
in and operate and manage extractive
enterprises, subject to the full control
and supervision of the State. Control by
the state must be on the macro level,
through the establishment of policies,
guidelines, regulations, industry
standards and similar measures that
would enable the government to control
the conduct of the affairs in various
enterprises and restrain activities
deemed not desirable or beneficial. (La
47
Bugal-B’laan Tribal Assn. v. Ramos,
G.R. No. 127882, January 27, 2004)
Requisites for a valid service contract under
the Constitution
1. A general law that will set standards or
uniform terms, conditions, and
requirements
2. The president shall be the signatory for
the government
3. Within thirty (30) days of the executed
agreement, the President shall report it to
Congress
Regalian Doctrine
• It provides that all lands of the public
domain belong to the State, which is the
source of any asserted right to
ownership pf land.
• 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 natural
resources belong to the State. With the
exception of agricultural lands, all other
natural resources shall not be alienated.
Acquisition, Ownership, And Transfer of Public
and Private Lands
Lands of the public domain are classified into:
a. Agricultural lands
b. Forest or timber lands
c. Mineral lands
d. Agricultural parks
• Note: The classification of public lands
is a function of the executive branch,
specifically by the Director of the Land
Management Bureau (formerly the
Director of Lands). The decision of the
Director, when approved by the
Secretary of the DENR, as to questions
of fact, is conclusive upon the courts.
(Republic vs. Imperial, G.R. No.
130906, 1999)
• Note: Only agricultural lands can be
alienable lands of public domain.
• To prove that the land subject of an
application for registration is alienable,
an applicant must conclusively establish
 the existence of a positive act of the
government such as the presidential
proclamation or an executive order or a
legislative act or statute. (Republic vs.
Candymaker, Inc., G.R. No. 163766,
2006)
• Foreshore land is that part of the land Examples:
which is between the high and low
water, and left dry by the flux and reflux
of the tides. It is part of the alienable
land of public domain and may be
disposed of only by lease and not
otherwise.
Revision
Private Lands
• GR: No private lands shall be
transferred or conveyed to Except to
individuals, corporations or associations
qualified to acquire or hold lands of the
public domain
XPNs:
a. Hereditary succession. This does not apply
to testamentary dispositions; the alien must
be an intestate heir.
b. A natural-born citizen of the Philippines,
who has lost his Philippine citizenship,
subject to limitations provided by the law.
• Purpose of Prohibition Disqualifying
Aliens: The conservation of the national
economy and patrimony.
• Consequence of Sale to Non-Citizens: Examples:
Any sale or transfer in violation of the
prohibition is null and void. When a
disqualified foreigner later sells it a
qualified owner, the defect is cured. The
qualified owner owns the land.
XII.
AMENDMENT AND REVISION OF
THE CONSTITUTION
Amendment
Two-part test in determining whether a proposal
• An alteration of one or a few specific involves an amendment or revision.
separable provisions of the Constitution.
The changes brought about by
amendments will not affect the other
provisions of the Constitution (Bernas,
2009).
• It is an addition or change within the
lines of the original constitution as will
effect an improvement, or better carry
out the purpose for which it was framed;
a change that adds, reduces or deletes
48
without altering the basic principles
involved; affects only the specific
provision being amended. (Lambino v.
COMELEC, G.R. No. 174153, Oct. 25,
2006)
• A change reducing the voting age from
18 years to 15 years;
• A change stating that a degree should
be a requirement for a person to run for
public office.
• A re-examination of the entire
Constitution or of provisions which have
over-all implications for the entire
Constitution to determine how and to
what extent it should be altered. A
revision implies substantive change,
affecting the Constitution as a whole
(Bernas, 2009).
• A change that alters a basic principle in
the constitution, like altering the
principle of separation of powers or the
system of checks-and-balances; alters
the substantial entirety of the
constitution, as when the change affects
substantial provisions of the
constitution.
• Altering the principle of separation of
powers or the system of checks-and-
balances;
• A switch from the presidential system to
a parliamentary system;
• A switch from a bicameral system to a
unicameral system (Lambino v.
COMELEC, G.R. No. 174153, Oct. 25,
2006).
1. Quantitative test - The quantitative test
asks whether the proposed change is
"so extensive in its provisions as to
change directly the 'substantial entirety'
of the constitution by the deletion or
alteration of numerous existing
provisions." The court examines only
the number of provisions affected and
 does not consider the degree of the
change.
2. Qualitative test - qualitative test
inquires into the qualitative effects of
the proposed change in the constitution.
The main inquiry is whether the change
will "accomplish such far reaching
changes in the nature of our basic
governmental plan as to amount to a
revision (Lambino v. COMELEC, G.R.
No. 174153, October 25, 2006).
Ways of Proposing Amendments (CCP)
1. Constituent Assembly (ConAss)
• The Congress, acting as a Constituent
Assembly, by itself may propose
amendments by 3/4 vote of all its
members.
Notes:
• The power of Congress to propose
amendments is NOT part of its ordinary
legislative power. Congress possesses
constituent power only because it has
been specifically given that power by
and under the conditions of Article XVII
(Bernas, 2011, citing Gonzales v.
COMELEC, G.R. No. L-28196, Nov. 9,
1967).
• Each House may separately formulate
amendments by a vote of 3/4 of all its
members, and then pass it on to the
other house for similar process. Nothing
is said about joint sessions (Bernas, The
1987 Philippine Constitution: A not a political question because the
Comprehensive Reviewer, 2011).
• Even in a joint session, they must still
vote separately
2. Constitutional Convention (ConCon)
• Congress may call a ConCon by a 2/3
vote of all its members, or
• By a majority vote of all its members,
Congress may submit to the electorate
the question of calling a ConCon.
3. People’s Initiative
• A petition of at least 12% of the total
number of registered voters; every
legislative district must be represented
49
by at least 3% of the registered voters
therein
• Limitation on Initiative: No amendment
in this manner shall be authorized (1)
within 5 years following the ratification
of the 1987 Const. nor (2) more often
than once every 5 years thereafter.
• Enabling Law: Constitutional provision
on amendments via People’s Initiative
are not self-executory (Defensor-
Santiago v. COMELEC, 270 SCRA 170,
1997)
• An amendment of the Constitution by
people’s initiative can only be done if
the changes proposed are
AMENDMENTS and not REVISIONS
(Defensor-Santiago v. COMELEC, GR
127325, March 19, 1997; Reiterated in
Lambino).
Doctrine of Proper Submission
• A plebiscite may be held on the same
day as a regular election (Gonzales v.
COMELEC, G.R. No. L-28196, October
16, 1967).
• The entire Constitution must be
submitted for ratification at one
plebiscite only. The people must have a
proper “frame of reference”.
• No “piecemeal submission” is allowed
e.g. submission of age amendment
ahead of other proposed amendments
(Lambino v. COMELEC, supra).
• Judicial Review of Amendments: The
validity of the process of amendment is
Court must review if constitutional
processes were followed (Sanidad v.
COMELEC, GR L-446640, Oct. 12,
1976).
Ratification of Proposal if made through
People’s Initiative:
• Valid when ratified by a majority of
votes cast in a plebiscite.
• Plebiscite is held not earlier than 60
days nor later than 90 days after the
certification by COMELEC of the
petition's sufficiency.
Requisites for Valid Ratification:
1. Held in a Plebiscite conducted under the
election law.
 2. Supervised by the COMELEC.
3. Where only franchised (Registered)
voters take part.
-END OF TOPIC-
INTERNATIONAL LAW (1
QUESTION)
I. SOURCES OF INTERNATIONAL LAW
ARTICLE 38 OF THE ICJ STATUTE
• The Court, whose function is to decide
in accordance with international law
such disputes as are submitted to it,
shall apply:
A. International conventions, whether
general or particular, establishing rules
expressly recognized by the contesting
states;
B. International custom, as evidence of a
general practice accepted as law;
C. The general principles of law recognized
by civilized nations;
D. Subject to the provisions of Article 59,
judicial decisions and the teachings of
the most highly qualified publicists of
the various nations, as subsidiary
means for the determination of rules of
law.
This provision shall not prejudice the power of
the Court to decide a case ex aequo et bono, if
the parties agree thereto.
Primary vs. Subsidiary Sources
• Atty DBL: The first three are primary
sources. These are the sources that will
be primarily used in settling disputes.
The fourth item (judicial decisions and
the teachings of the most highly
qualified publicists of the various
nations) is a subsidiary source, resorted
only when the first three cannot be
resorted to.
Primary Sources
50
A. INTERNATIONAL CONVENTIONS/
TREATIES- “International Conventions
whether general or particular and
establishing rules expressly recognized by
the contesting States”
B. INTERNATIONAL CUSTOMS-
“Customary international law results from
general and consistent practice of states
followed by them from sense of legal
obligation.”
Two elements:
1. Objective Element (general practice)
2. Subjective Element (opinio juris sive
necessitates)
• Generally, only states make customary
international law. Customary
international law evolves if enough
states adopt a new practice which is in
violation of customary international law,
the new practice becomes the new
customary international law.
• Highest form of customary international
law- Jus Cogens norm.
C. GENERAL PRINCIPLES OF LAW-
Recognized by civilized (peace-loving)
nations. Aimed at providing solutions to
controversies where treaty law or
customary law provides no guidance.
Subsidiary Sources
D. JUDICIAL DECISIONS AND
TEACHINGS OF MOST HIGHLY
QUALIFIED PUBLICISTS
• These are only subsidiary sources.
Thus, they can only be applied when
there are no clear primary sources of
international law.
• Atty. DBL: There are authors who
suggest that these are not law creating
sources but merely law determining.
Meaning, it is where we determine
whether the law exists. They don’t
create the norm, because international
law must be created by state practice
and not just by the belief of courts or
publicicts. Nonetheless, the court
decisions and teaching can help locate
and affirm whether such international
law is indeed practiced by States.
 • Judicial Decisions- The decision of the
Sources Derived Consists
court has no binding force, except
principally mainly of
between the parties and in respect of
from treaties, enactments
that particular case. (Article 59, Statute
international from the
of the ICJ)
custom and lawmaking
• No stare decisis- There is no stare
general authority of
decisis on ICJ decisions because Art 59
principles of each State
provides that decisions of ICJ shall apply law [Art.
only between the parties and only in a 38(1), ICJ
particular case. So even if two cases Statute]
have practically the same issue, the ICJ
is not bound. Settlement By means of By means
of Disputes State-to- of local
State administrati
II. RELATIONSHIP BETWEEN transactions ve and
INTERNATIONAL LAW AND PHILIPPINE judicial
DOMESTIC LAW processes
Responsibilt Collective Generally
y for responsibility entails
Int’l Law Domestic Wrongful because it individual
Law Acts attaches responsibilit
directly to y in case of
Scope The conduct Applies to the State and breach
of States a single not to its
and country or nationals
international nation,
organizations within a
, their determined
relations with territory Different Theories of the Relationship between
each other and its International Law and Domestic Law
and, in inhabitants
certain 1. Monism- There is no substantial
circumstance distinction between international law
s, their and municipal law. Under this theory,
relations with international law and domestic law
persons, belong to only one system of law.
natural or a. Theory 1: Municipal law subsumes and
Juridical [ALI is superior to international law.
Third b. Theory 2: International law is superior
Restatement] to domestic law.
How made Through Issued by a
consent, political 2. Dualism- International law and national
adopted by superior for law are essentially different from each
States as a observance other as to source (i.e., municipal law is
common rule a product of local custom or legislation;
of action whereas sources of international law are
treaties and custom grown among
Relations Regulates Regulates states.); as regards the relations they
Regulated relations of relations of regulate (i.e., municipal law regulated
States and individuals relations between individual persons
other among under the state; whereas international
international themselves law regulates relations between states);
persons or with their and lastly, as to substance (i.e.
own States municipal law is a law of the sovereign
over individuals whereas international

51
 law is a law between sovereign states). of international law are not part of
(Bernas, Public International municipal law unless they are
Law,2009). transformed via legislation.
• For the dualists, when international law
and municipal law conflict, municipal Philippine Domestic Law in Public International
law must prevail. Law

How International Law Becomes part of • GR: A State cannot invoke its own
Philippine Law national law to resist an international
claim or excuse itself from breach of
1. Doctrine of Incorporation: The duty under international law (Art. 6,
Philippines adopts the “generally VCLT)
accepted principles of international law” • A party may not invoke the provisions
(customary international law) as part of of its internal law as justification for its
the law of the land [Sec. 2, Art. II, 1987 failure to perform a treaty. This rule is
Constitution]. without prejudice to Article 46 (Art. 27,
• They are deemed as national law VCLT).
whether or not they are enacted as • XPN: A State may invoke the fact that
statutory or legislative rules. its consent to be bound by a treaty has
• By the doctrine of incorporation, the been expressed in violation of a
country is bound by generally accepted provision of its internal law regarding
principles of international law, which are competence to conclude treaties as
considered to be automatically part of invalidating its consent if that violation
our own laws. (Tañada v. Angara, G.R. was manifest and concerned a rule of its
No. 118295. May 2, 1997) internal law of fundamental importance
(Art. 46, VCLT).
• The rule that a state may not be sued
without its consent, now expressed in -END OF TOPIC-
Article XVI, Section 3, of the 1987
Constitution, is one of the generally
accepted principles of international law
that we have adopted as part of the law
of our land under Article II, Section 2.
• Even without such affirmation, we
would still be bound by the generally
accepted principles of international law
under the doctrine of incorporation.
Under this doctrine, as accepted by the
majority of states, such principles are
deemed incorporated in the law of every
civilized state as a condition and
consequence of its membership in the
society of nations. Upon its admission to
such society, the state is automatically
obligated to comply with these
principles in its relations with other
states. (USA v. Guinto, 182 SCRA 644
[1990])

2. Doctrine of Transformation: Treaties

or international agreements shall
become valid and effective upon
concurrence by at least two-thirds of all
the Members of the Senate (Sec. 21,
Art. VII, 1987 Constitution). These rules

52

LABOR LAW (3 QUESTIONS)
I. BASIC PRINCIPLES
• Labor- It is exertion by human beings of
physical or mental efforts, or both,
towards the production of goods and
services (Porquiz, 2012).
Three Aspects of Labor Law:
1. Labor Standards- minimum standards set by
law regarding terms and conditions of
employment.
• e.g., minimum wage, standard work
hours, 13th month pay, etc.
2. Labor Relations- Defines and Regulates the
Status, rights and the duties and institutional
mechanisms that govern collective relations
between the Employer (ER) and the Employees
(EEs), and their representatives.
• e.g., collective bargaining negotiations
3. Social Legislation- All laws passed to promote
social welfare.
• Social Legislation is much broader than
labor laws.
• Labor Laws are a type of social
legislation.
• Social Legislation does not only cover
labor laws, but also includes statutes
that are intended to enhance the
welfare of the people even in the
absence of an employer- employee (ER-
EE) relationship.
• e.g., GSIS Law, Portability law, SSS
Law.
STATE POLICY TOWARDS LABOR
Security of Tenure
• All workers shall be entitled to security
of tenure. (Art. XIII, Sec. 3 par. 2, 1987
Constitution)
• Police power allows the State to
regulate the grant of the right to
security of tenure. (St. Luke’s Medical
Center Employee’s Association-AFW v.
NLRC, 2007)
53
• Purpose: to safeguard the general
welfare of the public.
Social Justice
• The State shall promote a just and
dynamic social order that will:
• Ensure the prosperity and independence
• of the nation;
• Free the people from poverty through
policies that provide adequate social
services; and promote full employment,
a rising standard of living and an
improved quality of life for all (Art. II,
Sec. 9, 1987 Constitution)
• The State shall promote social justice in
all phases of national development.
(Sec. 10, Art. II, 1987 Constitution).
• Social justice is neither communism,
nor despotism, nor atomism, nor
anarchy but the humanization of laws;
and the equalization of social and
economic forces by the State so that
justice in its rational and objectively
secular conception may at least be
approximated. (Calalang v. Williams,
1940).
• Labor laws are meant to implement and
effect social justice. Thus, such
considerations should be taken into
account when dealing with labor cases.
(Rivera v. Genesis Transport Service,
2015).
Equal Work Opportunities
• The State shall Ensure equal work
opportunities regardless of sex, race, or
creed.
The State shall assure the rights of workers to:
1. Self-organization,
2. Collective bargaining,
3. Security of tenure, and
4. Just and humane conditions of
work.
Right of Self- Organization and Collective
Bargaining
• The State shall guarantee the right of
the people, including those employed in
the public and private sectors, to form
unions, associations, or societies for
purposes not contrary to law. (Art. III,
Sec. 8, 1987 Constitution)
 • The State shall guarantee the rights of
all workers to self-organization,
collective bargaining and negotiations,
and peaceful concerted activities,
including the right to strike in
accordance with law. They shall be
entitled to security of tenure, humane
conditions of work, and a living wage.
They shall also participate in policy and
decision-making processes affecting
their rights and benefits as may be
provided by law.
Construction in Favor of Labor
• All doubts in the implementation and
interpretation of the provisions of this
Code, including its implementing rules
and regulations, shall be resolved in
favor of labor. (Art. 4, LC) II. EXISTENCE OF EMPLOYER- EMPLOYEE
• In case of doubt, all legislation and all
labor contracts shall be construed in
favor of the safety and decent living for
the laborer. (Art. 1702, Civil Code) EMPLOYER-EMPLOYEE
• Atty. JMM: Article 4 of the Labor Code (ER-EE)
only applies when there is doubt as to
the implementation and interpretation Employer (ER)
of the Labor Code. This does not mean
that Labor gets an undue advantage. If
there is no doubt in the law, it will be
applied as it is (Spectra, 2018)
Burden of Proof and Quantum of Evidence
Summary on Burden of Proof: Includes:
1. Existence of ER-EE Relationship:
Employee
2.
Fact of dismissal: Employee
3. Validity of Dismissal: Employer
• Employee has burden of proving fact of
employment and of dismissal
• Before a case for illegal dismissal can
prosper, an employer-employee
relationship must first be established by
the employee. (Javier v. Fly Ace Corp., Employee (EE)
2012)
• The employee must first establish by
substantial evidence the fact of his
dismissal from service. If there is no
dismissal, then there can be no question
as to the legality or illegality thereof.
(MZR Industries v. Colambot, 2013)
• Employer has burden of proving valid
dismissal. Unsubstantiated accusations
54
or baseless conclusions of the employer
are insufficient legal justifications to
dismiss an employee. The unflinching
rule in illegal dismissal cases is that the
employer bears the burden of proof.
(Garza v. Coca-Cola Bottlers
Philippines, Inc., 2014)
• The Penalty imposed must be
commensurate with the gravity of the
offense. Not every case of
insubordination or willful disobedience
by an employee reasonably deserves
the penalty of dismissal. The penalty to
be imposed on an erring employee must
be commensurate with the gravity of his
offense. (Montallana v. La Consolacion
College, 2014)
RELATIONSHIP; TESTS
RELATIONSHIP
• Any person acting directly or indirectly
in the interest of an employer in relation
to an employee.
• Any person, natural or juridical,
employing the services of the employee.
• The government
• All its branches, subdivisions and
instrumentalities
• All government-owned or controlled
corporations and institutions
• All nonprofit private institutions, or
organizations.
• Does not include any labor organization
or any of its officers or agents except
when acting as ER.
• Any individual employed by an
employer.
• Any person compulsorily covered by the
GSIS under C.A. No. 168, as amended
• Atty. JMM: The existence of ER-EE
relationship is both a question of law
and of fact
 • The existence or absence of EE-ER
relationship is a question of law and of
fact, each in its defined sense.
Ultimately, it is a question of fact
because whether one exists or not is
dependent upon the facts of each case.
(SSS v. CA and Ayalde, 2000) However,
• it is a question of law because it cannot
be made the subject of agreement
(Tabas et.al. v. California Manufacturing
Co., 1989)
Test to Determine Existence
FOUR-FOLD TEST (Sonza v. ABS-CBN,
2004)
1. Selection and engagement of the
employee;
2. Payment of wages;
3. Power of dismissal; and
4. Employer’s power to control the
employee’s conduct with respect to the
means and methods by which the work
is to be accomplished
• It is the so-called “control test” which
constitutes the most important index of
the existence of the employer-employee
relationship that is, whether the
employer controls or has reserved the
right to control the employee not only
as to the result of the work to be done
but also as to the means and methods
by which the same is to be
accomplished (Pacific Consultants
International v. Schonfeld, 516 SCRA
209).
• Registration of a person in the SSS is a
conclusive indication of ER-EE
Relationship. In registration before the
SSS, ER-EE relationship must be
present (Haveria v. SSS, 2018).
ECONOMIC DEPENDENCY TEST (Francisco
v. NLRC, 2006)
Two-tiered approach:
1. Control Test (refer to the Four-Fold
Test)
2. Underlying economic realities within the
activity or relationship
• The economic dependency test is
especially appropriate where there is no
written agreement or terms of reference
55
to base the relationship on; and due to
the complexities of the relationship
based on the various positions and
responsibilities given to the worker over
the period of the latter’s employment
(Francisco v. NLRC, 2006).
III. TERMINATION OF EMPLOYMENT
TERMINATION BY EMPLOYER
Security of Tenure [Art. 294, LC]
• In case of regular employment, the ER
shall not terminate the services of an EE
except for a just cause or when
authorized by this Title.
• An EE who is unjustly dismissed from
work shall be entitled to:
1. Reinstatement without loss of seniority
rights, and other privileges,
2. Full backwages inclusive of allowance,
and
3. Other benefits or their monetary
equivalent
• Reckoning period of computation: from
the time his compensation was withheld
up to his actual reinstatement.
• EE must first establish fact of dismissal.
Before the ER must bear the burden of
proving that the dismissal was legal, the
EE must prove by substantial evidence
the fact of his dismissal from service for
the question of the legality or illegality
of the dismissal to arise. (MZR
Industries v. Colambot, 2013)
• ER’s burden of proving legality of
dismissal - The burden of proving the
termination was for a valid or authorized
cause shall rest on the ER. (Art. 292 (b))
Requisites for Validity
Substantive due process
• Substantive Due Process - whether the
termination was based on the provisions
of the Labor Code or in accordance with
jurisprudence.
• The dismissal must be for any of the
causes provided for in Art. 297-299
JUST CAUSES
a. Serious Misconduct or Willful
Disobedience (Insubordination)
b. Gross & Habitual Neglect of Duties
c. Fraud/Willful Breach of Trust
d. Commission of A Crime
e. Analogous cases
A. Serious Misconduct or Willful
Disobedience
Requisites of Serious Misconduct
1. There must be misconduct
2. The misconduct is of such grave and
aggravated character
3. It must relate to the performance of the
employee’s duties
4. A showing that the employee becomes
unfit to continue working for the
employer.
• Misconduct refers to the improper or
wrong conduct that transgresses some
established and definite rule of action, a
forbidden act, a dereliction of duty,
willful in character, and implies wrongful
intent and not mere error in judgment.
(Northwest Airlines Inc v. Del Rosario,
2014)
Requisites of Willful Disobedience
1. There must be disobedience or
insubordination;
2. The disobedience or insubordination
must be willful or intentional
characterized by a wrongful and
perverse attitude;
3. The order violated must be reasonable,
lawful and made known to the employee
4. The order must pertain to the duties
which he has been engaged to
discharge.
B. Gross and Habitual Neglect
Duties
Requisites
1. There must be a neglect of duty
2. The neglect must be both gross and
habitual in character.
• Gross negligence has been defined as
the want or absence of or failure to
exercise slight care or diligence, or the
entire absence of care. It evinces a
thoughtless disregard of consequences
without exerting any effort to avoid
them. In order to constitute just cause
for an EE’s dismissal due to negligence,
it must be both gross and habitual. A
single or an isolated act cannot be
categorized as habitual. (National
Bookstore v. CA, 2002)
• Gross negligence - want of care in the
performance of one’s duties
• Habitual neglect - repeated failure to
perform one’s duties for a period of
time.
• Gross negligence includes gross
inefficiency
• Gross and habitual neglect of duty
includes gross inefficiency, negligence
and carelessness.
C. Fraud/Willful Breach of Trust
Requisites of fraud or willful breach of trust:
1. There must be an act, omission or
concealment;
2. The act, omission or concealment
involves a breach of legal duty, trust, or
confidence justly reposed;
3. It must be committed against the ER or
his/her representative; and
4. It must be in connection with EE’s work.
When dismissal is proper for fraud/willful breach
of trust:
• Such breach is willful if it is done
intentionally, knowingly, and purposely,
without justifiable excuse as
distinguished from an act done
carelessly, thoughtlessly, heedlessly or
inadvertently.
• The act complained of must be work-
related and shows that the employee is
of unfit to continue working.
• In addition, it must be premised on the
fact that the EE concerned holds a
position of responsibility, trust and
confidence or is entrusted with
confidence with respect to delicate
matters such as handling or case and
protection of the property and assets of
the ER. (Villanueva, Jr. v. NLRC, 2012)
Requisites of loss of confidence
56
 1. There must be an act, omission or his family, or his duly authorized
concealment; representative
2. The act, omission or concealment • The ER may validly dismiss for loss of
justifies the loss of trust and confidence trust and confidence an EE who commits
of the ER to the EE; an act of fraud prejudicial to the interest
3. The EE concerned must be holding a of the ER. Neither a criminal prosecution
position of trust and confidence; nor a conviction beyond reasonable
4. The loss of trust and confidence should doubt for the crime is a requisite for the
not be simulated; validity of the dismissal. (Concepcion v.
5. Mimex Imports, 2012).
It should not be used as a subterfuge for
causes which are improper, illegal or
E. Analogous causes
unqualified; and
6. It must be genuine and not a mere Requisites
afterthought to justify an earlier action
taken in bad faith. 1. There must be an act or omission similar
to those specified just causes; and
Positions of trust and confidence 2. The act or omission must be voluntary
1. and/or willful on the part of the EEs.
Managerial EEs - vested with powers or
prerogatives to lay down management Other causes
policies and to hire, transfer, suspend,
lay-off, recall, discharge, assign or 1. Abandonment
discipline employees or effectively 2. Courtesy resignation
recommend such managerial actions. 3. Change of ownership
2. Fiduciary Rank and File - those who in 4. Habitual absenteeism/tardiness
the normal and routine exercise of their 5. Poor performance
functions, regularly handle significant 6. Past offenses
amounts of money or property. Ex. 7. Habitual infractions
Cashiers, auditors, property custodians
8. Drug Addiction
9. Immorality
Managerial Fiduciary Rank-
10. Totality of infractions
and-File
11. Pregnancy out of wedlock
• Mere • Proof of
existence of a involvement in Abandonment
basis for the the alleged
belief of EE’s events in It is the deliberate and unjustified refusal of an
guilt. question employee to resume his employment. It is a
required; mere form of neglect of duty.
• Employment uncorroborated
Courtesy resignation
for a long assertions and
time is accusations are • Resignation per se means voluntary
counted not enough. relinquishment of a position or office.
AGAINST the Adding the word ‘courtesy’ did not
EE change the essence of the resignation.
(Batongbacal v. Associated Bank, 2013)
D. Commission of a Crime Change of ownership
Requisites: • A mere change in the equity
1. composition of a corporation is neither
There must be an act or omission
just nor an authorized cause that would
punishable or prohibited by law; and
legally permit the dismissal of the
2. The act or omission was committed by
corporation’s employees en masse.
the EE against the person of the ER or
(SME Bank Inc. v. De Guzman, 2013)

57
Habitual absenteeism/tardiness
• Atty. JMM: This is analogous to gross
neglect of duty.
Poor performance
• Atty. JMM: This is analogous to
gross/habitual neglect of duties
• It is tantamount to inefficiency and
incompetence in the performance of
official duties. An unsatisfactory rating
can be a just cause for dismissal only if
it amounts to gross and habitual neglect
of duties. Poor or unsatisfactory
performance of an employee does not
necessarily mean he is guilty of gross
and habitual neglect of duty.
Past offenses
• Previous offenses may be used as a
valid justification for dismissal only if
the infractions are related to the
subsequent offense upon which the
basis of termination is decreed.
Habitual infractions
• Atty. JMM: This is analogous to
gross/habitual neglect of duties
• A series of irregularities when put
together may constitute serious
misconduct, under which Art 297 of the
Labor Code is a just cause for dismissal.
Drug Addiction
• Atty. JMM: This is analogous to Serious
Misconduct and Willful Disobedience
• Drug Addiction is a valid ground for an
ER to terminate the employment of the
addicted EE.
Immorality
• Atty. JMM: This is analogous to Serious
Misconduct and Willful Disobedience
• Disgraceful or immoral conduct can be
used as a basis for termination of
employment.
• Standard of morality: It is public and
secular, not religious. Whether a
conduct is considered disgraceful or
immoral should be made in accordance
with the prevailing norms of conduct,
which as stated in Leus, refer to those
conducts which are proscribed because
58
they are detrimental to conditions upon
which depend the existence of and
progress of human society.
• Pregnancy out of wedlock: When the
law speaks of immoral or necessarily,
disgraceful conduct, it pertains to public
and secular morality.
• Pre-marital sexual relations between
two consenting adults, who have no
impediment to marry each other, and
consequently, conceiving a child out of
wedlock, gauged from a purely public
and secular view of morality does NOT
amount to an immoral conduct. (Cheryl
Leus v. St. Scholastica College
Westgrove, 2015)
AUTHORIZED CAUSES
The ER may also terminate the employment of
any EE due to:
a. The installation of labor-saving devices,
b. Redundancy,
c. Retrenchment to prevent losses or
d. The closing or cessation of operation of
the establishment or undertaking not
due to serious loss [Art. 298]
Other causes
a. Disease incurable in 6 months [Art. 299]
b. Enforcement of union security clause in
the CBA
c. Dismissal of union officers for the
conduct of an illegal strike; Dismissal of
union members for participating in the
commission of illegal acts in a strike
[Art. 279 (a)]
d. Termination in conformity with existing
statute/qualification requirements.
• Written notice - For all authorized
causes, a written notice served on both
the EEs and the DOLE at least one
month prior to the intended date of
termination is required.
A. Installation of labor-saving devices
• This refers to the installation of
machinery to effect efficiency and
economy in the ER’s method of
production.
Requisites
 1. There must be introduction of
machinery, equipment, or other
devices;
2. The introduction must be done in good
faith;
3. The purpose for such introduction must
be valid such as to save on cost,
enhance efficiency and other justifiable
economic reasons;
4. There is no other option available to
employer than the introduction of
machinery, equipment or device and the
consequent termination of employment
of those affected thereby; and
5. There must be fair and reasonable
criteria in selecting employees to be
terminated.
• GR: In cases of installation of labor-
saving devices, redundancy and
retrenchment, the Last-In, First-Out
Rule shall apply.
• XPN: EE volunteers to be separated
from employment.
B. Redundancy
• Redundancy exists when the service
capability of the workforce is in excess
of what is reasonably needed to meet
the demands of the business enterprise.
• A position is redundant when it is
superfluous and superfluity of a position
or positions could be the result of a
number of factors such the overhiring of
workers, a decrease in the volume of
business or dropping of a particular line
or service previously manufactured or
undertaken by the enterprise. (Morales
v. Metrobank, 2012)
Requisites
1. There must be superfluous positions or
services of EEs;
2. The positions or services are in excess
of what is reasonably demanded by the
actual requirements of the enterprise to
operate in an efficient and economical
manner;
3. There must be good faith in abolishing
redundant positions;
4. There must be fair and reasonable
criteria in selecting the employees to be
terminated; and
59
5. There must be adequate proof of
redundancy such as but not limited to
the new staffing pattern, feasibility
studies/proposal, on the viability of
newly created positions, job description
and the approval by the management of
the restructuring.
• In implementing a redundancy
program, the ER is required to adopt fair
and reasonable criteria taking into
consideration factors such as (a)
preferred status, (b) efficiency, and (c)
seniority among others. (Morales v.
Metrobank, 2012)
C. Retrenchment to prevent serious
loss
Requisites
1. The retrenchment is reasonably
necessary and likely to prevent business
losses;
2. The losses, if already incurred, are not
merely de minimis, but substantial,
serious, actual and real, or if only
expected are reasonably imminent as
perceived objectively and in good faith
by the employer;
3. The expected or actual losses must be
proved by sufficient and convincing
evidence;
• The retrenchment must be in good faith
for the advancement of its interest and
not to defeat or circumvent the
employees’ right to security of tenure;
and
• There must be fair and reasonable
criteria in ascertaining who would be
dismissed and would be retained among
the employees such as status,
efficiency, seniority, physical fitness,
age and financial hardship for certain
workers.
• The ER bears the burden of proving the
existence of the imminence of
substantial losses with clear and
satisfactory evidence that there are
legitimate business reasons justifying a
retrenchment. (Mount Carmel College
Employees Union v. Mount Carmel
College, 2014)
Two kinds of losses justifying retrenchment
1. Incurred losses - substantial, serious
actual and real
2. Expected losses - reasonably imminent
D. Closing or cessation of business not
due to serious loss
Requisites
1. There must be a decision to close or
cease operation of the enterprise by the
management;
2. The decision was made in good faith;
and
3. There is no other option available to the
employer except to close or cease
operations.
4. The ER must serve a written notice on
the workers and the SOLE at least 1
month before the intended date thereof.
[Art. 298]
Guidelines
• Closure or cessation of operations of
establishment or undertaking may
either be partial or total.
• Closure or cessation of operations of
establishment or undertaking may or
may not be due to serious business
losses or financial reverses. In both
instances, proof must be shown that:
• It was done in good faith to advance the
ER’s interest and not for the purpose of
defeating or circumventing the rights of
EEs under the law or a valid agreement;
and
• A written notice on the affected
employees and the DOLE is served at
least 1 month before the intended date
of termination of employment.
• The ER can lawfully close shop even if
not due to serious business losses or
financial reverses but separation pay,
which is equivalent to at least one
month pay as provided for by Article
283 of the Labor Code, as amended,
must be given to all the affected EEs.
• If the closure or cessation of operations
of establishment or undertaking is due
to serious business losses or financial
reverses, the ER must prove such
allegation in order to avoid the payment
of separation pay. Otherwise, the
60
affected EEs are entitled to separation
pay.
• The burden of proving compliance with
all the above-stated falls upon the ER.
E. Disease
An ER may terminate the services of an EE:
1. Who has been found to be suffering
from any disease; and
2. Whose continued employment is
prohibited by law or is prejudicial to his
health as well as the health of his co-
EEs. [Art. 299]
Separation Pay
• An employee terminated on the ground
of disease shall be paid separation pay
equivalent to at least 1 month salary or
to ½ month salary for every year of
service, whichever is greater. [Art. 299]
• Note: A fraction of at least six (6)
months being considered as one (1)
whole year.
Requisites
• The employee must be suffering from a
disease which cannot be cured within 6
months, even with proper medical
treatment;
Continued employment is either:
a. Prohibited by law or
b. Prejudicial to his health or
c. Prejudicial to the health of his co-
employees; and
3. A certification to that effect issued by a
competent public health authority,
which must state that the disease is of
such nature or at such a stage that it
cannot be cured within a period of six
(6) months even with proper medical
treatment.
• Burden of proof with ER- The burden of
proof falls upon the employer to
establish the requisites. In the absence
of such certification, the dismissal must
be necessarily declared illegal.
• Prior certification required - It is only
where there is a prior certification from
a competent public authority that the
disease afflicting the EE sought to be
 dismissed is of such nature or at such
stage that it cannot be cured within 6
months even with proper medical
treatment that the latter could be validly
terminated from his job.
• Note: If the disease or ailment can be
cured within the period of 6 months, the
employer shall not terminate the
employee but shall ask the employee to
take a leave of absence. The employer
shall reinstate such employee to his
former position immediately upon the
restoration of his health.
F. Enforcement of Union Security
Clause in CBA
• The law authorizes the enforcement of
union security clauses, provided it is not
characterized by arbitrariness and
always with due process.
• In terminating the employment of an
employee by enforcing the Union
Security Clause, the ER needs only to
determine and prove that:
1. The union security clause is applicable
2. The union is requesting for the
enforcement of the union security
provision in the CBA
3. There is sufficient evidence to support
the union’s decision to expel the EE from
the union or company.
G. Dismissal of Union Officers for the
conduct of an illegal strike;
Dismissal of union members for
participating in the commission of
illegal acts in a strike
• Any union officer who knowingly
participates in an illegal strike, and any
worker or union officer who knowingly
participates in the commission of illegal
acts during a strike may be declared to
have lost employment status. [Art. 279]
H. Termination in Conformity with
Existing Statute/ Qualification
Requirements
• While the right of workers to security of
tenure is guaranteed by the
Constitution, its exercise may be
61
reasonably regulated pursuant to the
police powers of the State to safeguard
health, morals, peace, education, order,
safety, and the general welfare of the
people.
• Consequently, persons who desire to
engage in the learned professions
requiring scientific or technical
knowledge may be required to take an
examination as a prerequisite to
engaging in their chosen careers. (St.
Luke's Medical Center Employees
Association v. NLRC, 2007)
Procedural due process
The ER shall:
1. Furnish the worker, whose employment
is sought to be terminated, a written
notice containing a statement of the
causes for termination; and
2. Afford the latter ample opportunity to be
heard and to defend himself, with the
assistance of his representative if he so
desires, in accordance with company
rules and regulations promulgated
pursuant to guidelines set by the DOLE.
Procedural Due Process - manner in which the
dismissal was effected (Twin Notice Rule):
1. The first written notice to be served on
the EEs should contain the specific
causes or grounds for termination
against them, and a directive that the
EEs are given the opportunity to submit
their written explanation within a
reasonable period. (First Notice)
2. The requirement of a hearing is
complied with as long as there was an
opportunity to be heard, and not
necessarily an actual hearing was
conducted.
3. After determining that termination of
employment is justified, the ERs shall
serve the EEs a written notice of
termination indicating that:
• All circumstances involving the charge
against the EE have been considered,
and
• The grounds have been established to
justify the severance of the
employment. (Second Notice) (Inguillo
v. First Phil Scales, 2019)
Contents of First Notice: causes.

1. Specific causes or grounds for

termination against the EE
2. Directive that the EE is given the
opportunity to submit his written
NO YES INVALID Reinstatement
explanation within a “reasonable
or separation
period” or every kind of assistance that pay (if
management must accord to enable him reinstatement
to prepare adequately for his defense. is not
This should be construed as a period of possible) +
at least 5 calendar days from receipt of full backwages
notice.
3. Detailed narration of the facts and NO NO INVALID Reinstatement
circumstances that will serve as basis or separation
pay (if
for the charge against the EE. A general
reinstatement
description of the charge will not suffice.
is not
(Unilever v. Rivera, 2013)
possible) +
4. The company rules, if any, violated
full backwages
and/or the grounds under Art. 288
being charged against the EE. (United YES NO VALID Liable for
Tourist Promotions v. Kemplin, 2014) damages due
to procedural
Contents of Second Notice: infirmity
(nominal
1. All circumstances involving the charge damages).
against the employee considered Separation
2. Grounds established to justify the pay if for
severance of employment. (United authorized
Tourist Promotions v. Kemplin, 2014) cause.
Hearing
Illegal Dismissal
• In EE dismissal cases, the essence of
due process is simply the opportunity to Kinds
be heard, it is the denial of this that
constitutes a violation of due process of 1. No just or authorized cause
law. (Technol Eight Philippines
Corporation v. NLRC, 2010) • For the dismissal of an EE to be valid,
• While a formal hearing or conference is the dismissal must be for any of the
ideal, it is not an absolute, mandatory causes provided for in Art. 297-299.
or exclusive avenue of due process. • An ER who dismisses an EE without just
(Perez v. PT&T, 2009) or authorized cause is liable for:
a. Reinstatement or separation
Consequences of Non-Observance of pay if reinstatement is not
Procedural Due Process (PDP) possible; and
b. Full backwages.
Just/ PDP Dismissal Employer’s
Autho liability 2. Constructive dismissal
- rized
cause • Constructive dismissal is cessation of
work because continued employment is
YES YES VALID No liability. either:
Separation a. Rendered impossible, unreasonable or
pay only in unlikely;
authorized

62
 b. When there is a demotion in rank or
diminution in pay or both; or
c. When a clear discrimination,
insensibility, or disdain by an employer
becomes unbearable to the employee.
(Dusit Hotel Nikko v. NUHWRAIN-Dusit
Hotel Chapter, 2005)
• The Test of Constructive Dismissal is
whether a reasonable person in the EE’s
position would have felt compelled to
give up his position under the
circumstances. (Tuazon v. Bank of
Commerce, 2012)
• Burden of proof: The burden of proving
that the termination was for a valid or
authorized cause shall rest on the ER.
[Art. 292 (b)]
• In illegal dismissal cases, the onus of
proving that the EE was not dismissed
or, if dismissed, that the dismissal was
not illegal, rests on the ER, failure to
discharge which would mean that the
dismissal is not justified and, therefore,
illegal. (Macasero v. Southern Industrial
Gases Philippines, 2014)
• Liability of officers: As a general rule,
officers are not personally liable for
corporate obligation, with the exception
that in order to hold a director or officer
personally liable occurs when the
following requisites are present:
Reliefs from illegal dismissal
The following reliefs are cumulative and not
alternative:
1. Reinstatement
Options Given to ERs:
a. Actually reinstate the dismissed
employees or,
b. Constructively reinstate them in the
payroll.
2. Backwages
3. Damages and Attorney’s Fees
4. Separation Pay
TERMINATION BY EMPLOYEE
1. With notice to the ER
• An EE may terminate without just cause
the ER-EE relationship
63
• By serving a written notice on the ER at
least one (1) month in advance
• The ER upon whom no such notice was
served may hold the EE liable for
damages [Art. 300]
• Notice is required when termination is
without just cause. Written notice to
resign must be submitted one (1)
month in advance. [Art. 300]
• The 30-day notice requirement for an
EE’s resignation is for the benefit of the
ER in order to afford the him enough
time to hire another EE if needed and to
see to it that there is proper turn-over
of the tasks which the resigning EE may
be handling (Hechanova v. Matorre,
2013).
• Since the 30-day notice is for the ER’s
benefit, he may waive such period
(Paredes v. Feed the Children
Philippines Inc., 2015).
Resignation
• Resignation is the voluntary act of an EE
who finds himself in a situation where
he believes that personal reasons
cannot be sacrificed in favor of the
exigency of the service, such that he
has no other choice but to disassociate
himself from his employment.
(Cervantes v. PAL Maritime Corp.,
2013)
To constitute a resignation:
a. It must be unconditional and with the
intent to operate as such;
b. There must be an intention to relinquish
a portion of the term of office
accompanied by an act of
relinquishment.
2. Without notice to the ER
• An EE may put an end to the
relationship without serving any notice
on the ER for any of the following
requirements:
a. Serious insult by the ER or his
representative on the honor and person
of the EE;
b. Inhuman and unbearable treatment
accorded the EE by the ER or his
representative;
 c. Commission of a crime or offense by the For surface mine workers:
ER or his representative against the
person of the EE or any of the 1. Compulsory retirement age: 60 years
immediate members of his family; and old
d. Other causes analogous to any of the 2. Optional retirement age is 50 and
foregoing. [Art. 300] having served the establishment for at
• Notice is NOT required when least 5 years.
termination is with just cause. [Art. For Racehorse Jockeys:
300]
• Compulsory Retirement Age: 65 years
Retirement old (Spectra 2018).
• Applicable Laws: Art. 302, LC; RA 7641 • EE may still work after retirement: Upon
(New Retirement Pay Law) retirement of an EE, whether optional or
• Retirement- It is the result of a bilateral compulsory, his services may be
act of the parties, a voluntary continued or extended on a case-to-
agreement between the ER and the EE case basis upon the agreement of the
whereby the latter, after reaching a ER & EE. [Sec. 4, IRR, RA 7641]
certain age agrees to sever his or her Amount of Retirement Pay
employment with the former.
Minimum Components
Who are covered: • ½ month ½ month salary
salary for includes:
• All EEs in the private sector, regardless
every year of 1. 15 days’
of their position, designation, or status,
service. salary based
and irrespective of the method by which
on the latest
their wages are paid. • Note: A salary rate
fraction of 6 2. Cash
XPNS:
months shall equivalent of
1. EEs covered by the Civil Service Law; be 5 days SIL
2. EEs in retail, service and agricultural considered a 3. 1/12 of 13th
year. month pay.
establishments or operations regularly
4. Other
employing not more than ten EEs
• ½ moth’s benefits
Age of retirement salary is which may
equivalent to be agreed
In the absence of a retirement plan or 22.5 days. upon
agreement: between ER
and EE.
1. Compulsory retirement: 65 years old
2. Optional retirement: 60 years or more
(but below 65) and having served the • Retirement pay under RA 7641 vis-à-vis
establishment for at least 5 years. retirement benefits under SSS and GSIS
• Atty. JMM: The age requirement and the laws - The benefits under RA 7641 are
minimum number of years of service other than those granted by the SSS or
must both be separately complied with. the GSIS. (Secs. 1 & 2, RA 7641)
They are 2 distinct and separate • Retirement Benefits under a CBA or
requirements for one to avail of the Applicable Contract: Any EE may retire
benefits of the New Retirement Law. If or be retired by his/her ER upon
the EE lacks one of these two reaching the age established in the CBA
requirements, he/she is not eligible to or other applicable agreement/contract
receive benefits under this law. and shall receive the retirement benefits
• An EE is free to impose a retirement age granted therein; provided, however,
less than 65 for as long as it has the EE’s that such retirement benefits shall not
consent. (Jaculbe v. Silliman University, be less than the retirement pay required
2007) under RA 7641, and provided further
that if such retirement benefits under

64
 the agreement are less, the ER shall pay
the difference. [Art. 302; Sec. 3.2, IRR]
IV. REQUIREMENTS FOR VALID LABOR-
ONLY CONTRACTING
Legitimate Subcontracting as
distinguished from Labor-Only Contracting
• Contracting or subcontracting refers to
an arrangement whereby a principal
agrees to farm out to a contractor the
performance or completion of a specific
job or work within a definite or
predetermined period, regardless of
whether such job or work is to be
performed or completed within or
outside the premises of the principal.
There is "labor-only" contracting where:
1. The person supplying workers to an
employer does not have substantial
capital or investment in the form of
tools, equipment, machineries, work
premises, among others. (No
substantial capital)
2. The workers recruited and placed by
such person are performing activities
which are directly related to the
principal business of such employer.
(Work is directly related to ER’s
business)
• Effect of labor-only contracting: In such
cases, the person or intermediary shall
be considered merely as an agent of the
ER who shall be responsible to the
workers in the same manner and extent
as if the latter were directly employed
by him. (Contractor is ER’s agent, ER
liable for all EE benefits of Contractor’s
EEs)
Rules for Contracting/Subcontracting
1. Whenever ER enters into a contract with
another person for the performance of
the former’s work, the EEs of the
contractor and of the latter’s
subcontractor, if any, shall be paid in
65
accordance with the provisions of the
Labor Code. [Art. 106, par. 1]
2. In the event that the contractor or
subcontractor fails to pay the wages of
his EEs in accordance with this Code,
the ER shall be jointly and severally
liable with his contractor or
subcontractor to such employees:
a. To the extent of the work performed
under the contract
b. In the same manner and extent that he
is liable to EEs directly employed by
him. [Art. 106, par. 2]
3. The SOLE may, by appropriate
regulations, restrict or prohibit the
contracting-out of labor to protect the
rights of workers established under this
Code. [Art. 106, par. 3]
• He/She may make appropriate
distinctions between labor-only
contracting and job contracting as well
as differentiations within these types of
contracting.
• He/She may determine who among the
parties involved shall be considered the
employer for purposes of this Code.
4. An ER, whether direct or indirect, may
require the contractor or subcontractor
to furnish a bond equal to the cost of
labor under contract, on condition that
the bond will answer for the wages due
the employees should the contractor or
subcontractor, as the case may be, fail
to pay the same. [Art. 108]
5. Contractors and subcontractors referred
to in these rules are prohibited from
engaging in recruitment and placement
activities.
• A service agreement refers to the
contract between the principal and
contractor containing the terms and
conditions governing the performance
or completion of a specific job or work
being farmed out for a definite or
predetermined period.
Elements of Legitimate Contracting:
To be considered legitimate contracting or
subcontracting, the following elements must
concur:
 1. Distinct and independent business:
Contractor or subcontractor is engaged
in a distinct and independent business
and undertakes to perform the job on its
own responsibility, according to its own
manner and method;
2. Substantial capital or investment:
Contractor or subcontractor has
substantial capital to carry out the job
farmed out by the principal on his
account, manner and method,
investment in the form of tools,
equipment, machinery and supervision;
• Substantial Capital refers to paid-up
capital stocks/shares of at least
P5,000,000 in the case of corporations,
partnerships and cooperatives; in case
of single proprietorship, a net worth of
at least P5,000,000.
3. Free from control/direction of the
principal: In performing the work,
contractor or subcontractor is free from
the control/direction of the principal in
all matters regarding performance of
the work except the result;
4. Compliance with labor laws: Service
Agreement ensures that employees of
the contractor/subcontractor are given
all the benefits and rights they are
entitled to under labor laws.
Trilateral relationship
• When the above-elements are present,
a trilateral relationship arises. It
consists of the following parties:
1. Principal - Any natural or juridical entity,
whether an employer or not, who puts
out or farms out a job or work to a
contractor.
2. Contractor - Any person or entity
engaged in a legitimate contracting or
subcontracting arrangement providing
services for a specific job or undertaking
farmed out by a principal under a
Service Agreement.
3. Contractor’s employee - Employee of
the contractor hired to perform or
complete a job or work farmed out by
the principal.
66
• Note: Contractor may also be a
subcontractor.
Relationships within the trilateral relationship
1. ER- EE between the contractor and the
employees it engaged to perform the
specific job, work or service being
contracted; and
2. Contractual relationship between the
principal and the contractor as governed
by the provisions of the Civil Code.
V. RIGHTS OF EMPLOYEES AND OF LABOR
ORGANIZATIONS; MEMBERSHIP IN
UNIONS
The State shall assure the rights of workers to:
1. Self-organization,
2. Collective bargaining,
3. Security of tenure, and
4. Just and humane conditions of work.
[Art. 3]
Right of Self- Organization and Collective
Bargaining
• The State shall guarantee the right of
the people, including those employed in
the public and private sectors, to form
unions, associations, or societies for
purposes not contrary to law. (Art. III,
Sec. 8, 1987 Constitution)
• The State shall guarantee the rights of
all workers to self-organization,
collective bargaining and negotiations,
and peaceful concerted activities,
including the right to strike in
accordance with law. They shall be
entitled to security of tenure, humane
conditions of work, and a living wage.
They shall also participate in policy and
decision-making processes affecting
their rights and benefits as may be
provided by law.
• The State shall promote the principle of
shared responsibility between workers
and employers and the preferential use
of voluntary modes in settling disputes,
including conciliation, and shall enforce
their mutual compliance therewith to
foster industrial peace.
• The State shall regulate the relations
between workers and employers,
 recognizing the right of labor to its just RIGHTS OF A LABOR ORGANIZATION
share in the fruits of production and the
right of enterprises to reasonable A Legitimate Labor Organization (LLO) shall
returns on investments, and to have the ff. rights:
expansion and growth. (Art. XIII, Sec. 1. To represent its members in
3, 1987 Constitution) collective bargaining
• All persons employed in commercial, 2. To be certified as exclusive
industrial and agricultural enterprises, representative in collective
and in religious, charitable, medical or bargaining
educational institutions, whether 3. To ask for financial statements
operating for profit or not, shall have 4. To own property
the right to self-organization, to form, 5. To sue and be sued
join, or assist labor organization of their 6. To do acts which benefit the
own choosing for purposes of collective organization
bargaining (Art. 254, LC). 7. To collect membership fees
• Employees of government corporations
established under the corporation code Check Off, Assessment, Agency Fees
shall have the right to organize, and
bargain collectively with their respective Check- Off
employers (Art. 255, LC).
• A check-off is a process or device
• Infringement of the right to self-
whereby the ER, on agreement with the
organization: It shall be unlawful for any
Union, recognized as the proper
person to restrain, coerce, discriminate
bargaining representative, or on prior
against or unduly interfere with
authorization from the EEs, deducts
employees and workers in their exercise
union dues or agency fees from the
of the right to self-organization (Art.
latter’s wages and remits them directly
257, LC)
to the Union. (Marino v. Gamilla, 2009)
Scope of right to self-organization:
Union Dues vs. Agency Fees
• Right to form, join or assist labor
organizations of their own choosing for
the purpose of collective bargaining Basis UNION AGENCY
through representatives of their own DUES FEES
choosing (Art. 257, LC); From whom Collected Collected by
• Right to engage in lawful concerted collected from union the union
activities for the same purpose members members
(collective bargaining) or for their from the
mutual aid and protection (Art. 257, LC) non-
• The right to form or join a labor members
belonging
organization necessarily includes the
to the same
right to refuse or refrain from exercising
bargaining
said right. It is self-evident that just as unit who
no one should be denied the exercise of receive
a right granted by law, so also, no one benefits
should be compelled to exercise such a under the
conferred right. (Reyes v. Trajano, CBA.
1992) Need for There must Can be
• The freedom to form organizations written be an assessed
would be rendered nugatory if the authorizatio individual even
members could not choose their own n written without a
leaders to speak on their behalf and to authorizatio written
bargain for them. (Pan- American World n by authorizatio
individual n of the EE
Airways, Inc v. Pan- American
members concerned.
Employees Association, 1969)

67

Membership in Unions
Scope
All Employees
• All persons employed in commercial,
industrial and agricultural enterprises
and in religious, charitable, medical or
educational institutions, whether
operating for profit or not, shall have
the right to self-organization and to
form, join or assist labor organizations
of their own choosing for purposes of
collective bargaining. (Presumes ER-EE
relationship)
• Ambulant, intermittent and itinerant
workers, self-employed people, rural
workers and those without any definite
employers may form labor
organizations for their mutual aid and
protection. [Art. 253]
• Any EE, whether employed for a definite
period or not, shall, beginning on his
first day of service, be considered an
employee for purposes of membership
in any labor union. [Art. 292(c)]
• “Employee” (EE) shall include any
individual whose work has ceased as a
result of or in connection with any
current labor dispute or because of any
unfair labor practice if he has not
obtained any other substantially
equivalent and regular employment.
[Art. 219(f)]
Government EEs of corporations created
under the Corporation Code
• The right to self-organization shall not
be denied to government EEs. [Sec.
2(5), Art. IX-B, 1987 Constitution]
• EEs of government corporations
established under the Corporation Code
shall have the right to organize and to
bargain collectively with their respective
ERs
• All other EEs in the civil service shall
have the right to form associations for
purposes not contrary to law. [Art. 254]
• Government EEs right to organize is for
a limited purpose. – Government EEs
cannot negotiate matters which are
68
fixed by law such as those involving
appropriation of funds.
Supervisory EEs
• Supervisory EEs are those who, in the
interest of the ER, effectively
recommend such managerial actions if
the exercise of such authority is not
merely routinary or clerical in nature but
requires the use of independent
judgment. [Art. 219(m)]
• What is essential is the nature of the
EE’s function and not the nomenclature
or title given to the job which
determines whether the EE has rank-
and-file or managerial status or whether
he is a supervisory employee.
(Tagaytay Highlands International Golf
Club, Inc. v. Tagaytay Highlands
Employees Union-PTGWO, 2003)
Aliens with valid working permits
• GR: All aliens, natural or juridical, are
strictly prohibited from engaging
directly or indirectly in all forms of trade
union activities. [Art. 284]
• XPN: Aliens may exercise the right to
self-organization and join or assist labor
unions for purposes of collective
bargaining, provided the following
requisites are fulfilled:
1. With valid working permits issued by the
DOLE; and
2. They are nationals of a country which
grants the same or similar rights to
Filipino workers [Art. 284]
Security personnel
• The security guards and other personnel
employed by the security service
contractor shall have the right:
1. To form, join, or assist in the formation
of a labor organization of their own
choosing for purposes of collective
bargaining and
2. To engage in concerted activities which
are not contrary to law including the
right to strike
Ineligibility of Managerial EEs; Rights of
Supervisory EEs
 • Managerial EEs are not eligible to join,
assist or form any labor organization.
[Art. 255]
• Supervisory EEs shall not be eligible for
membership in the collective bargaining
unit of the rank-and-file EEs but may
join, assist or form separate collective
bargaining units and/or legitimate labor
organizations of their own. The rank-
and-file union and the supervisors'
union operating within the same
establishment may join the same
federation or national union.
• Rationale: Supervisory EEs, while in the
performance of supervisory functions,
become the alter ego of the
management in the making and the
implementing of key decisions at the
sub-managerial level. Certainly, it
would be difficult to find unity or
mutuality of interests in a bargaining
unit consisting of a mixture of rank-and-
file and supervisory EEs.
Doctrine of Necessary Implication
• While Art. 255 of the Labor Code singles
out managerial EEs as ineligible to join,
assist or form any labor organization,
under the doctrine of necessary
implication, confidential EEs are
similarly disqualified. This doctrine
states that what is implied in a statute
is as much a part thereof as that which
is expressed. (Metrolab Industries Inc.
v. Roldan-Confessor, 1996)
Nature of Access Test
• Confidential EEs, by the nature of their
functions, assist and act in a confidential
capacity to, or have access to
confidential matters of, persons who
exercise managerial functions in the
field of labor relations.
Requisites
1. The confidential relationship must exist
between the EEs and his supervisor, and
2. The supervisor must handle the
prescribed responsibilities relating to
labor relations. (San Miguel Supervisors
and Exempt Union v. Laguesma, 1997)
Function Test: Nomenclature is not controlling
69
• The mere fact that an EE is designated
“manager” does not ipso facto make
him one. Designation should be
reconciled with the actual job
description of the EE. (Paper Industries
Corp. of the Philippines. v. Laguesma,
2000)
• Confidential information: Must relate to
labor relations and not from a business
standpoint
• An EE must assist or act in a confidential
capacity and obtain confidential
information relating to labor relations
policies. Exposure to internal business
operations of the company is not per se
a ground for the exclusion in the
bargaining unit. (Coca-Cola Bottlers v.
IPTEU, 2015)
Rationale of Exclusion of Confidential EEs
• If confidential employees could unionize
in order to bargain for advantages for
themselves, then they could be
governed by their own motives rather
than the interest of the employers.
• Moreover, unionization of confidential
EEs for the purpose of collective
bargaining would mean the extension of
the law to persons or individuals who
are supposed to act in the interest of the
ERs. It is not far-fetched that in the
course of collective bargaining, they
might jeopardize that interest which
they are duty bound to protect.
(Metrolab Industries Inc. v. Roldan-
Confessor, 1996)
Other People Who Cannot Form, Join or Assist
Labor Organizations
New EEs
• Persons who are not EEs of a company
are not entitled to the constitutional
right to join or form a labor organization
for purposes of collective bargaining.
The question of whether ER-EE
relationship exists is a primordial
consideration before extending labor
benefits under the workmen's
compensation, social security,
Medicare, termination pay and labor
relations law. (Singer Sewing Machine
Co. v. Drilon, 1991)
EE-member of a Cooperative
• GR: An EE of a cooperative who is a
member and co-owner thereof cannot
invoke the right to collective bargaining
for certainly an owner cannot bargain
with himself or his co-owners.
(Batangas-I Electric Cooperative Labor
Union v. Romeo A. Young, 1988)
• XPN: EEs who withdrew their
membership from the cooperative are
entitled to form or join a labor union for
the negotiations of a Collective
Bargaining Agreement. (Central Negros
Electric Cooperative, Inc. v. DOLE,
1991)
• Irrespective of the degree of their
participation in the actual management
of the cooperative, all members thereof
cannot form, assist or join a labor
organization for the purpose of
collective bargaining. (Benguet Electric
Cooperative v. Ferrer-Calleja, 1989)
EEs of International Organizations
• International organizations are
endowed with some degree of
international legal personality. They are
granted jurisdictional immunity, as
provided in their organization’s
constitutions, to safeguard them from
the disruption of their functions.
Members of the AFP, Policemen, Police
Officers, Firemen, and Jail Guards
• Members of the AFP, Policemen, Police
Officers, Firemen and Jail Guards are
expressly excluded by EO 180, Sec. 4
from the coverage of the EO 180 which
provides guidelines for the exercise of
the right to organize of government EEs.
Commingling or Mixture of Membership
Effect of Inclusion of EEs Outside the Bargaining
Unit or Commingling
• GR: It shall not be a ground for the
cancellation of the registration of the
union. Said EEs are automatically
deemed removed from the list of
membership of said union. [Art. 256]
• Atty. JMM: Previously, commingling was
a ground for cancellation of union
registration. But now, under the
70
amendments, commingling is no longer
a ground for denial of registration, but
rather, the disqualified EEs are just
deemed removed from the union.
• XPN: Unless such mingling was brought
about by misrepresentation, false
statement or fraud under Art. 247.
Rights and Conditions of Membership
Nature of Relationship
Member-Labor Union
• The nature of the relationship between
the union and its members is fiduciary
in nature, which arises from the
dependence of the EE on the union, and
from the comprehensive power vested
in the union with respect to the
individual. The union may be considered
but the agent of its members for the
purpose of securing for them fair and
just wages and good working
conditions. (Heirs of Cruz v. CIR, 1969)
Admission and Discipline of Members
• No arbitrary or excessive initiation fees
or fines. No arbitrary or excessive
initiation fees shall be required of the
members of a legitimate labor
organization nor shall arbitrary,
excessive or oppressive fine and
forfeiture be imposed. [Art. 250(e)]
Prohibition on subversive activities or
membership
• No labor organization shall knowingly
admit as members or continue in
membership any individual who:
a. Belongs to a subversive organization; or
b. Who is engaged directly or indirectly in
any subversive activity;
• Unions cannot arbitrarily exclude
qualified applicants: Unions are not
entitled to arbitrarily exclude qualified
applicants for membership, and a closed
shop provision would not justify the ER
in discharging, or a union in insisting
upon the discharge of, an employee
whom the union thus refuses to admit
to membership, without any reasonable
ground therefor. Needless to say, if said
 unions may be compelled to admit new
members, who have the requisite
qualifications, with more reason may
the law and the courts exercise the
coercive power when the EE involved is
a long-standing union member, who,
owing to provocations of union officers,
was impelled to tender his resignation
which he forthwith withdrew or revoked.
(Salunga v. CIR, 1967)
VI. MANAGEMENT PREROGATIVE
• Management Prerogative is the right of
an ER to regulate all aspects of
employment.
• Courts often decline to interfere in
legitimate business decisions of ERs. In
fact, labor laws discourage interference
in ERs’ judgment concerning the
conduct of their business.
• Basis: The State recognizes the
indispensable role of the private sector,
encourages private enterprise, and
provides incentives to needed
investments. (Art. II, Sec. 20, 1987
Constitution)
• The State shall regulate the relations
between workers and employers,
recognizing the right of labor to its just
share in the fruits of production and the
right of enterprises to reasonable
returns to investments, and to
expansion and growth. (Art. XIII, Sec. 3
(4), 1987 Constitution)
Limits to Management Prerogative
Limits to Management Prerogative
1. Good faith - So long as a company’s
management prerogatives are
exercised in good faith for the
advancement of the employer’s interest
and not for the purpose of defeating or
circumventing the rights of the
employees under special laws or under
valid agreements, this Court will uphold
them (Ymbong v. ABS-CBN, 2012).
2. Without grave abuse of discretion - The
managerial prerogative to transfer
personnel must be exercised without
grave abuse of discretion, bearing in
mind the basic elements of justice and
71
fair play. Having the right should not be
confused with the manner in which the
right is exercised.
3. Law – The privilege of management
prerogative is not absolute, but subject
to limitations imposed by law.
4. Collective Bargaining – The CBA
provisions agreed upon by the Company
and the Union delimit the free exercise
of management prerogative. The
parties in a CBA may establish such
stipulations, clauses, terms and
conditions as they may deem
convenient provided these are not
contrary to law, morals, good customs,
public order or public policy.
5. Equity and/or Substantial Justice – The
Court should still ensure that the
employer exercises the prerogative to
discipline humanely and considerately,
and that the sanction imposed is
commensurate to the offense involved
and to the degree of the infraction.
DISCIPLINE
Components of Right to Discipline:
The Right to discipline includes the rights of
the ER to:
1. Discipline
2. Dismiss
3. Determine who to punish
4. Promulgate rules and regulations
5. Impose a penalty subject to the
proportionality rule
6. Right to choose what penalty to impose
7. Right to impose heavier penalties than
what company rules provide.
• Proportionality Rule- Penalty imposed
should be commensurate to the
infraction committed.
TRANSFER OF EMPLOYEES
• Transfer is the lateral movement from
one position to another of equivalent
rank, level, or salary, without break of
service.
Kinds of Transfer:
A transfer means a movement:
 1. From one position to another equivalent
rank, level, or salary, without break of
service.
2. From one office to another within the
same business establishment (Chan,
2017).
• Reason for transfer: To maximize
service of EEs
• Consent of EEs is not required. It is
inherent in management prerogative.
• An EE’s right to security of tenure does
not give him the vested right in his
position as would deprive the company
of its prerogative to change his
assignment or transfer him where he
would be most useful (PT&T v. NLRC,
1991).
Requisites of a Valid Transfer:
1. It must be REASONABLE or it must
have a sound purpose- If there is a need
to augment work force because of a
work assignment.
2. NOT INCONVENIENT to the welfare of
EE
3. NOT PREJUDICIAL to the EE
4. NOT INVOLVE A DEMOTION of rank
or status or a diminution of EE’s salary
and other benefits.
5. Not motivated by DISCRIMINATION
towards EE
6. Must not be made in BAD FAITH
• Violation of these requirements
constitutes constructive dismissal.
• Right to transfer is a valid management
prerogative, but it must not be
exercised as a means to harass EEs.
Reliefs of Illegal Transfer:
• Illegal Transfer- Reinstatement
• Constructive Dismissal-
Reinstatement with backwages
Notes:
• The exercise of the prerogative to
transfer or assign from one office or
area of operation to another is valid
provided that there is no demotion in
rank and status, nor diminution of
salary and other benefits. The transfer
72
should not be motivated by
discrimination or made in bad faith.
(Mendoza v. Rural Bank of Lucban,
2004).
• A commitment by EE to be reassigned
anywhere in the Philippines is binding
upon him.
• Even if EE is performing well in his
current post, management may
reassign him anytime.
• The refusal by an EE to be transferred
was held to be justified if there is a
showing that the transfer was directed
by the ER under questionable
circumstances.
• An EE who refuses to be transferred,
when such transfer is valid, is guilty of
insubordination or willful disobedience
of a lawful order of an ER.
• Refusal to be transferred due to
parental obligations, inconvenience,
additional expenses is NOT VALID.
• Refusal to transfer overseas is valid.
• Refusal to transfer consequent to
promotion is valid.
• Transfer to avoid conflict of interest is
valid.
• A transfer from one position to another
occasioned by the abolition of the
position is valid (Chan, 2017).
PRODUCTIVITY STANDARDS
• The ER has the right to demote and
transfer an EE who has failed to
observe proper diligence in his work
and incurred habitual tardiness and
absences and indolence in his assigned
work. (Petrophil Corporation v. NLRC,
1986)
• In the case of Leonardo v. NLRC
(2000), the ER claimed that the EE was
demoted pursuant to a company policy
intended to foster competition among
its EE. Under this scheme, its EE are
required to comply with a monthly
sales quota. Should a supervisor such
as the EE fail to meet his quota for
several consecutive months, he will be
demoted, whereupon his supervisor’s
allowance will be withdrawn and be
given to the individual who takes his
place. When the EE concerned
succeeds in meeting the quota again,
 he is re-appointed supervisor and his
allowance is restored.
• The Supreme Court held that this
arrangement is an allowable exercise of
company rights since an ER is entitled
to impose productivity standards for its
workers. In fact, non-compliance may
be visited with a penalty even more
severe than demotion.
BONUS
• A bonus is "a gratuity or act of liberality
of the giver which the recipient has no
right to demand as a matter of right"
(Philippine National Construction Corp.
v. NLRC, 345 Phil. 324, 331)
• It is something given in addition to
what is ordinarily received by or strictly
due the recipient.
• The granting of a bonus is basically a
management prerogative which cannot
be forced upon the ER "who may not be
obliged to assume the onerous burden
of granting bonuses or other benefits
aside from the employee's basic
salaries or wages" (Kamaya Point Hotel
v. NLRC, 1989; Traders Royal Bank v.
NLRC, 1990)
• The matter of giving a bonus over and
above the worker’s lawful salaries and
allowances is entirely dependent on the
financial capability of the ER to give it.
(Kimberly-Clark Philippines, Inc. v.
Dimayuga, 2009)
CHANGE OF WORKING HOURS
• Management retains the prerogative,
whenever exigencies of the service so
require, to change the working hours of
its EEs. So long as such prerogative is
exercised in good faith for the
advancement of the ER’s interest and
not for the purpose of defeating or
circumventing the rights of the EEs
under special laws or under valid
agreements, this Court will uphold such
exercise. (Sime Darby Pilipinas Inc. v.
NLRC, 1998)
BONA FIDE OCCUPATIONAL
QUALIFICATIONS
73
• Bona Fide Occupational Qualification-
To justify a bona fide occupational
qualification, the ER must prove two
factors:
1. The employment qualification is
reasonably related to the essential
operation of the job involved;
2. There is factual basis for believing
that all or substantially all persons
meeting the qualification would be
unable to properly perform the
duties of the job.
Two Theories of Employment Discrimination
(Spectra 2018):
1. Disparate Treatment- Plaintiff must
prove that an employment policy is
discriminatory in its face.
2. Disparate Impact- Complainant must
prove that a facial neutral policy has a
disproportionate effect on a part of the
class.
POST-EMPLOYMENT RESTRICTIONS
• In cases where an EE assails a contract
containing a provision prohibiting him
or her from accepting competitive
employment as against public policy,
the ER has to adduce evidence to prove
that the restriction is reasonable and
not greater than necessary to protect
the employer’s legitimate business
interests. The restraint may not be
unduly harsh or oppressive in curtailing
the EE legitimate efforts to earn a
livelihood, and must be reasonable in
light of sound public policy. (Rivera v.
Solidbank, 2006)
Non-Compete Clause
• A non-compete agreement is a type of
“restrictive covenant” generally used
by ERs to limit an EE’s freedom to
pursue a similar profession if and when
the employment relationship ends.
• Non-compete clauses are valid and
enforceable as long as there are
reasonable limitations as to time,
trade, and place (Tiu v. Platinum Plans
Philippines, 2007).
MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR EMPLOYERS
• GR: Stipulation against marriage- It
VII. ILLEGAL RECRUITMENT OF OVERSEAS
shall be unlawful for an ER to require as
FILIPINO WORKERS
a condition of employment or
continuation of employment that a
woman EE shall not get married, or to • Illegal Recruitment- Any act of
stipulate expressly or tacitly that upon canvassing, enlisting, contracting,
getting married, a woman EE shall be transporting, utilizing, hiring, or
deemed resigned or separated, or to procuring workers and includes
actually dismiss, discharge, referring, contract services, promising
discriminate or otherwise prejudice a or advertising for employment abroad,
woman EE merely by reason of her whether for profit or not, when
marriage (Art. 136). undertaken by a non-licensee or non-
• XPN: In Duncan Association of holder of authority contemplated under
Detailman-PTGWO and Pedro Tecson v. Art. 13(f), LC. [Sec. 5, R.A. No.10022]
Glaxo Wellcome Philippines, Inc.
Simple Illegal Recruitment
(2004), we passed on the validity of the
policy of a pharmaceutical company • The following are the types of illegal
prohibiting its EEs from marrying recruitment of local workers and the
employees of any competitor company. elements for each type:
We held that Glaxo has a right to guard 1. By a licensee/holder of authority
its trade secrets, manufacturing
formulas, marketing strategies and a. Offender has a valid license or authority
other confidential programs and required by law to enable one to lawfully
information from competitors. We engage in the recruitment and
considered the prohibition against placement of workers;
personal or marital relationships with 1. Offender undertakes any of the
EEs of competitor companies upon prohibited acts under Art. 34
Glaxo’s EEs reasonable under the (Canvassing, Enlisting, Contracting,
circumstances because relationships of Transporting, Utilizing Hiring, or
that nature might compromise the Procuring workers)
interests of Glaxo. In laying down the 2. By a non-licensee/non-holder of
assailed company policy, we recognized authority
that Glaxo only aims to protect its
interests against the possibility that a • Offender has no valid license or
competitor company will gain access to authority required by law to enable one
its secrets and procedures. (Star Paper to lawfully engage in the recruitment
Corp. v. Simbol, 2006) and placement of workers;
• A requirement that a woman EE must
remain unmarried could be justified as Offender undertakes either:
a "bona fide occupational qualification,"
or BFOQ, where the particular a. Any activity within the meaning of
requirements of the job would justify recruitment and placement under Art.
the same, but not on the ground of a 13(b)
general principle, such as the b. Any of the prohibited practices under
desirability of spreading work in the Art. 34. (Art. 34 and 38, LC)
workplace. A requirement of that nature • Contract Substitution = Illegal
would be valid provided it reflects an Recruitment The reduced salaries and
inherent quality reasonably necessary employment period in the new
for satisfactory job performance. (Phil. employment contract contradicted the
Telegraph and Telephone Company v. POEA-approved employment contract.
NLRC, 1997) By this act of contract substitution,
respondents committed a prohibited
practice; consequently, engaged in
illegal recruitment. (PERT/CPM

74
 Manpower Exponent Co. v. Vinuya, ACT PENALTY
2012) License or authority 2-5 years
holder violating or imprisonment or
Illegal Recruitment as Economic Sabotage causing another to 10K-50K fine, or both
violate Title 1, Book 1
Two Types according to Qualifying
Non- License or 4-8 years
Circumstance: authority holder imprisonment, or
violating or causing 20K- 100K fine, or
Illegal recruitment is considered economic
another to violate both
sabotage when attended by the ff. qualifying
Title 1, Book 1
circumstances:
Illegal Recruitment Life imprisonment
1. constituting and 100K fine
By a syndicate - carried out by a group
Economic Sabotage
of 3 or more persons conspiring and
confederating with one another;
2. In large scale - committed against 3 or If the offender is a corporation, partnership,
more persons individually or as a group. association or entity, the penalty shall be
imposed upon the officer or officers responsible
Note re: In Large Scale – for the violation.
• 3+ complainants must be in a single In every case, conviction carries with it:
case “Committed against 3 or
more persons individually or as a group” 1. Automatic revocation of
must be understood as referring to the license/authority and all permits and
number of complainants in each case; privileges granted under this Title
otherwise, prosecutions for single 2. Forfeiture of cash and surety bonds in
crimes of illegal recruitment can be favor of POEA or the Regional
cumulated to make it in large scale. Department with jurisdiction over the
(People v. Reyes, 1995) place where the agency or branch office
is located
Conviction for Illegal Recruitment NOT a Bar to
3. For aliens, in addition to the penalties
Conviction for Estafa and Vice versa
herein prescribed, deportation without
• A person who commits illegal further proceedings. [Art. 39 (3), LC]
recruitment may be charged and
convicted separately of illegal Jurisdiction of Illegal Recruitment Cases:
recruitment under the LC and estafa A criminal action arising from illegal recruitment
under Art. 315(2a), RPC. The offense of of migrant workers shall be filed with the RTC of
illegal recruitment is malum prohibitum the province or city:
while estafa is a mala in se crime. They
also have different elements. Thus, a 1. Where offense was committed, or
conviction for both estafa and illegal 2. Where the offended party actually
recruitment may result even if they resides at the time of the commission of
were committed by one act. It is settled the offense. [Sec. 9, RA 8042]
that one act may give rise to many • Provided, the court where such action is
crimes as long as the crimes are of first filed acquires jurisdiction to the
different elements. Thus, a conviction of exclusion of other courts. [Sec. 6, Rule
both crimes will not result to the IV, Omnibus Rules implementing RA
prohibited double jeopardy (People v. 8042, as amended]
Ochoca, 2011).
Prescription
LIABILITY OF LOCAL RECRUITMENT
AGENCY AND FOREIGN EMPLOYER Crime Classification Prescriptive
Period
Local Simple/economic 3 years [Art.
workers sabotage 305 LC]

75

Migrant Simple 5 years [Sec.
workers 12, RA 8042]
Economic 20 years
Sabotage [Sec. 12, RA
8042]
VIII. REMEDIES (LABOR STANDARDS
VIOLATIONS)
Visitorial and enforcement powers of the
Secretary of Labor and Employment
• Visitorial and Enforcement Power - The
Secretary of Labor and Employment
(SOLE) or his duly authorized
representatives, including labor
regulation officers, shall:
1. Have access to employer’s records and
premises at any time of the day or night
whenever work is being undertaken
therein.
The SOLE or his representatives also have the
right:
a. To copy therefrom,
b. To question any EE and
c. To investigate any fact, condition or
matter which may be necessary to
determine violations or which may aid in
the enforcement of this Code and of any
labor law, wage order or rules and
regulations issued pursuant thereto.
2. The SOLE/ rep also has the power to
issue compliance orders
• Purpose: to give effect to the labor
standards provisions of this Code and
other labor legislation based on the
findings of labor employment and
enforcement officers or industrial safety
engineers made in the course of
inspection.
• Notwithstanding the provisions of this
Code to the contrary, and in cases
where the relationship of ER-EE still
exists
3. The SOLE/ rep can also issue writs of
execution to the appropriate authority
for the enforcement of their orders
• XPN: cases where the ER contests the
findings of the labor employment and
76
enforcement officer and raises issues
supported by documentary proofs which
were not considered in the course of
inspection.
• Visitorial Power. – The SOLE or his duly
authorized representatives may, at any
time –
1. Inspect the premises, books of accounts
and records of any person or entity
covered by this Title
2. Require it to submit reports regularly on
prescribed forms, and
3. Act on violation of any provisions of this
Title.
Visitorial Powers of SOLE or Rep:
The SOLE or his duly authorized representative
is hereby empowered:
1. To inquire into the financial activities of
legitimate labor organizations
• Upon the filing of a complaint under
oath and duly supported by the written
consent of at least twenty percent
(20%) of the total membership of the
labor organization concerned
2. To examine their books of accounts and
other records to determine compliance
or non-compliance with the law
3. To prosecute any violations of the law
and the union constitution and by-laws.
Anti-Injunction
• Atty. JMM: It shall be UNLAWFUL for
any person or any entity to obstruct,
impede, delay or otherwise render
ineffective the orders of the SOLE or his
duly authorized representative issued
pursuant to the authority granted under
this Article, and no inferior court or
entity shall issue temporary or
permanent injunction or restraining
order or otherwise to assume
jurisdiction over any case involving the
enforcement orders issued in
accordance with this Article (Spectra
2018).
• The visitorial and enforcement powers
of the DOLE Regional Director to order
and enforce compliance with labor
standard laws can be exercised even
where the individual claim exceeds
P5,000.00 (Spectra 2018).
Power to suspend effects of termination
• Art. 292 (b). Visitorial and Enforcement
Power - The SOLE may suspend the
effects of a termination pending
resolution of the dispute in the event of
a prima facie finding by the appropriate
official of the DOLE that:
a. The termination may cause a serious
labor dispute (may or may not be a
strike or a lockout)
b. The termination is in implementation of
a mass lay-off.
Remedies
• The aggrieved party from a decision of
the SOLE may file one motion for
reconsideration within 10 days from
receipt thereof.
• If the motion for reconsideration is
denied, the party may appeal via Rule
65 to the CA 60 days from receipt of the
denial. Upon denial, the party may
proceed via Rule 45 to the SC. (Rule 65,
ROC; St. Martin Funeral Home v. NLRC,
1998)
• Filing of MR before going to CA or SC is
MANDATORY AND
JURISDICTIONAL.
VOLUNTARY ARBITRATOR
• Voluntary Arbitration – Referred to as a
contractual proceeding whereby the
parties to any dispute, in order to obtain
a speedy and inexpensive final
disposition of the matter, select a judge
of their own choice and by consent,
submit their controversy to him for
determination (Spectra 2018).
• It is the policy of the State to encourage
voluntary arbitration to settle labor-
management disputes.
• Before the conduct of compulsory
arbitration, the parties may opt to
submit their dispute to voluntary
arbitration.
• The “judge” in voluntary arbitration is
named by the parties pursuant to an
arbitration clause in their CBA.
• The “judge” in Voluntary Arbitration
cases is called a VOLUNTARY
ARBITRATOR (VA) (Spectra 2018).
77
Automatic Referral If Grievance Machinery Fails
• All grievances submitted to the
grievance machinery which are not
settled within 7 calendar days from the
date of its submission shall
automatically be referred to voluntary
arbitration prescribed in the CBA.
Who is a voluntary arbitrator: A “voluntary
arbitrator” is:
• Any person accredited by the NCMB as
such; or
• Any person named or designated in the
CBA by the parties to act as their VA; or
• One chosen, with or without the
assistance of the NCMB, pursuant to a
selection procedure agreed upon in the
CBA; or
• Any official that may be authorized by
the SOLE to act as VA upon the written
request and agreement of the parties to
a labor dispute.
Jurisdiction
Exclusive and Original Jurisdiction over
Unresolved Grievances
1. Interpretation or implementation of the
CBA
2. Interpretation or enforcement of
company personnel policies
3. Violations of a CBA which are not gross
in character. (Gross being flagrant
and/or malicious refusal to comply with
the economic provisions of the CBA.)
• Note: If gross violation of CBA, amounts
to Unfair Labor Practice, and thus a
strikable issue. In cases of these, follow
the procedures for a valid strike.
4. All other labor disputes including ULP
and bargaining deadlock, if the parties
agree
5. Wage distortions arising from
application of any wage orders in
organized establishments
6. Unresolved grievances arising from the
interpretation and implementation of
the productivity incentives program
under RA 6971.
Remedies
Motion for Reconsideration
 • An MR may be filed by the parties within PRESCRIPTION OF ACTIONS
10 days from the receipt of the decision
of the VA. Money claims

Appeal • All money claims arising from employer-

employee relations accruing during the
• The decision of a VA is appealable by effectivity of this Code shall be filed
ordinary appeal under Rule 43 of the WITHIN 3 YEARS FROM THE TIME
Rules of Civil Procedure directly to the THE CAUSE OF ACTION ACCRUED;
CA (Appeal from decisions of Quasi- otherwise, they shall be forever barred.
Judicial Bodies to CA).
Illegal dismissal
LABOR ARBITER
• In illegal dismissal cases, the EE
The Labor Arbiter (LA) has Jurisdiction over the concerned is given a period of FOUR
following cases: YEARS from the time of his dismissal
within which to institute a complaint.
1. Termination Disputes This is based on Art. 1146 of the Civil
2. Unfair Labor Practices Code which states that actions based
3. If accompanied with a claim of upon an injury to the rights of the
reinstatement, those cases that workers plaintiff must be brought within four
may file involving wages, rates of pay, years. (Victory Liner, Inc. v. Race,
hours of work, and other terms and 2007)
conditions of employment
4. Claims for damages involving ER-EE -END OF TOPIC-
relations
5. Questions on the legality of strikes or
lockouts
6. All other claims arising from ER-EE
relations including those persons in
domestic and household service,
involving an amount greater than
P5,000.00 regardless of whether
accompanied by a claim for
reinstatement.

• The National Labor Relations

Commission (NLRC) has exclusive
appellate jurisdiction over cases decided
by LAs.

Other matters falling within the JD of LAs:

1. Disputes involving legislated wage

increases and wage distortion in
unorganized establishments.
2. Contested cases under the exception
clause of Article 128, LC.
3. Enforcement of compromise
agreements when there is non-
compliance by the parties
4. Issuance of writs of execution to enforce
decisions of Voluntary Arbitrators.
5. Money claims of OFWs arising from ER-
EE relations, including death and
disability claims, as well as damages.

78
 8. Kind of tax to be collected
TAXATION LAW (3 QUESTIONS) 9. Provision for admin and judicial
remedies

• Lifeblood Doctrine- Taxes are the

I. BASIC PRINCIPLES OF TAXATION IN lifeblood of the govt and should be
THE CONSTITUTION collected without any unnecessary
hindrance.
• What is important here is the TAX.
• Taxation- Inherent power of the State to • Necessity Theory- Governmental
impose burdens on its subjects within its existence is a necessity and
jurisdiction for the purpose of raising performance of governmental functions
revenues to carry out the legitimate redound to the people’s benefit.
objects of the government subject to • What is important here is the
inherent and constitutional limitations. GOVERNMENT.
• Taxation is inherent, meaning there • Justice Dimaampao (on necessity
does not need to be any law that confers theory): Taxes are necessary to
on the State the power to tax its maintain a State’s sovereignty.
citizens. • Symbiotic Relationship- Citizens must
• Justice Dimaampao: Taxation is pay their taxes; govt must protect and
inherent because it is a necessary support its citizens.
attribute of sovereignty. Without taxes, • Benefits received principle – The
no sovereign state can exist or endure. Taxpayer (TP) receives benefits from
• Taxation is the power to destroy taxes through the protection the State
• Courts may review tax laws passed by affords to him or her. From the
Legislature protection he or she get arises his or her
• Power to tax, attribute of sovereignty= obligation to support the government
only thru the national govt, not the LGU. through payment of taxes (CIR v. Algue,
• Purpose is to raise revenue 1988).
• LGUs have fiscal autonomy. • The 4 Rs of taxation:
• Lifeblood Doctrine- Taxes are the 1. Revenue
lifeblood of the State; no State can exist 2. Repricing
without means to pay its expenses. 3. Redistribution
• Taxes can be imposed even without the 4. Representation
Constitution.
• Scope of the objects of tax is unlimited Purposes of Taxation
• There can be no injunction in the
• Revenue Raising- Primary Purpose
collection of taxes.
• Regulation, Promotion of Social Welfare,
• XPN: Equitable Recoupment (Not
Reduction of Social Inequality,
applicable in PH)
Encourage Economic Growth-
• Taxes cannot be subject of
Secondary Purposes.
compensation.
• Collection of taxes cannot be stopped by
• Taxes are legislative in character. Only
injunction.
Congress can exercise.
• XPN: CTA or SC stops it because it may
Aspects of Taxation: jeopardize the government.
• Taxation can be used as an implement
1. Purpose of police power or eminent domain.
2. Subjects/Objects • Look at the purpose: If purpose is
3. Amount and Rate of Tax regulation= police power
4. Manner of enforcement • If purpose is revenue raising= taxation.
5. Situs
6. Apportionment Scope of Taxation (CUPS)
7. Grant of tax exemption

79
 1. Comprehensive
2. Unlimited
3. Plenary
4. Superior
Aspects of Taxation
A. Levy or imposition- Taxation is a
legislative function
B. Enforcement or Administration-
Administrative/ Executive Function
(Assessment, Collection or Refund)
Government Agencies Charged with Collection
of Taxes:
1. Bureau of Internal Revenue (BIR)
2. Bureau of Customs (BOC)
3. City/Municipal Assessors or Treasurers.
Basic Principles of a Sound Tax System:
1. Fiscal Adequacy- sufficiency of revenues
vis-à-vis subjects of the government.
2. Administrative feasibility- Refers to the
ease of collecting taxes and that tax
laws are enforced uniformly.
3. Theoretical Justice- Taxes to be
imposed must be based on the
individual’s capacity to pay (Most
important part)
4. Economic Efficiency- Cost of collecting
taxes should not be higher than the
benefits derived from it.
• Justice Dimaampao: If the tax system
does not follow the principles of fiscal
adequacy or administrative feasibility, it
will not make the tax invalid. But if a tax
does not adhere to theoretical justice, it
will make the tax unconstitutional for
violating Article VI, Sec.28 par. 1 of the
1987 Constitution where it states that
the rule of taxation shall be uniform and
equitable. The Congress shall evolve a
progressive system of taxation.
TAXES
• Taxes are enforced contributions
• Generally payable in money
• XPNS: Tax credit certificates or tax liens
• Proportionate in character
• Levied on persons, property or on an
exercise of a privilege.
• Taxpayer (TP)- person(s) liable of
paying taxes.
80
• Taxes are levied by the State having
jurisdiction
• They are levied by the legislature
• Taxes are for public purposes.
Justice Dimaampao: Mnemonic on Lifeblood
Doctrine is WERPA
• Waiver of Statute of Limitations,
upheld. (CIR v. Next Mobile, 776 SCRA
443)
• Exemption is DISFAVORED (Davao Gulf
Lumber v. CIR, 293 SCRA 77)
• Refunds are strictly construed (CIR v.
San Roque, 690 SCRA 336)
• Payment under Protest, NO
INJUNCTION (Camp John Hay v. CBAA,
706 SCRA 547)
• Approval of Probate Court not a
requirement (Marcos v. CIR, 273 SCRA
47)
• Justice Dimaampao: Estoppel does not
apply against the State in the collection
of taxes. The government is not bound
by the errors, mistakes, and the
negligence committed by its agents
(CIR v. City Trust, 1994).
INHERENT AND CONSTITUTIONAL
LIMITATIONS IN TAXATION
Inherent Limitations (PENIT)
1. Public Purpose
2. Exemption of the government
3. Non-delegation of power to tax
4. International Comity
5. Territorial Jurisdiction
• Public Purpose- devoted for purposes of
government.
• Public purpose is an elastic concept that
is hammered to fit modern standards.
(Planters Products v. Fertiphil Corp.,
2008).
• Determining Factor- WON the statute is
designed to promote the public interest,
as opposed to the furtherance of the
advantage of individuals.
• It is the essential character of the direct
object of the expenditure which must
determine its validity as justifying a tax,
not the magnitude of interests to be
affected (Pascual v. Secretary of Public
Works, 1960)
Non-Delegation of Power to Tax
• GR: Power to tax cannot be delegated.
• XPN: Delegation to:
1. LGUs (pursuant to Constitution and
LGC)
2. President (fix tariff rates, import and
export quotas, tonnage and wharfage
dues, other duties and imports)
3. Admin Agencies (Sufficient Standard
and Completeness Tests) (Gerochi v.
Secretary of Energy, 2007)
Exemption of the Government from
Taxation
• The government is exempt from
taxation.
• Atty. Aranas: The government is
exempt from taxation because it would
be like taking money out of one pocket,
and putting it in another.
• But government can be taxed if it is
exercising proprietary functions.
• XPN: If given exemption
International Comity
• Other States cannot be taxed.
• Based on sovereign equality of states
Territorial Jurisdiction
• People can only be taxed within a
country’s territorial jurisdiction.
• But take note that the imposition of
taxes is based on the privity of
relationships.
• Fundamental basis of the power to tax
is the capacity of the government to
provide benefits and protection to the
object of the tax.
• A person may be taxed where there is
between him and the taxing state, a
privity of relationship justifying the levy.
Constitutional Limitations
DIRECT CONSTITUTIONAL LIMITATIONS:
1. All tax bills must originate in the House
of Representatives, although the Senate
may propose or concur amendments
(Art. VI, Sec. 24, 1987 Constitution)
• The Constitution only mandates that
the bill ORIGINATE in the House of
Representatives. It did not say that
the bill that would be presented to
81
the President should be the exact
same one as passed by the House.
That would violate the power of the
Senate to concur or propose
amendments to the law. The
Constitution merely mandates that
the INITIATIVE come from the
House of Representatives.
(Tolentino v. Secretary of Finance,
1995).
2. Majority of both houses needed to
approve a tax exemption law
• Refers to the majority of the
houses voting SEPARATELY.
3. All lands Actually, Directly, Exclusively
(ADE) used for religious, charitable or
educational purposes are exempt from
real property taxation.
• Note: Exemption is based on the
USE, not the ownership of the
property.
• Exemption also covers incidental
use that is reasonably necessary as
long as ADE use is still for religious,
charitable or educational purposes.
(Abra Valley College v. Aquino,
1988).
• The operations of the Medical Arts
Building of a hospital is incidental
and reasonably necessary for the
operations of said hospital (City
Assessor of Cebu v. Association
Benevola de Cebu, 1998)
• For educational entities, it does not
matter what the source of income
is, as long as it is used for
educational purposes, it is
exempted from taxation (all
encompassing, not just property
taxation), but such income must be
USED for educational purposes to
be exempted (CIR v. DLSU, 2016)
• The tax exemption for educational
institutions only apply to non-stock,
non-profit educational institutions.
• Proprietary educational institutions
are not exempted, but are given a
preferential tax rate (10%).
• Predominance Test- If proprietary
institutions’ income from unrelated
activities exceeds 50%, they are
subject to corporate income tax
(30%). But if it does not exceed
 50%, they can avail of preferential
rate (10%).
4. Uniform, equitable and progressive
taxation.
Non-Imprisonment for Non-Payment of
Poll Tax
• No person can be imprisoned for non-
payment of poll tax (Art. III, Sec. 20,
1987 Constitution)
• But if a person under declares his/her
income to evade the payment of taxes,
such can be imprisoned for falsification.
Non-Impairment of Jurisdiction of the
Supreme Court
• Basis: Article VIII, Section 2, Sec. 5 (2),
and Article VI, Sec. 30, 1987
Constitution.
• Congress in its lawmaking powers,
cannot deprive or impair the jurisdiction
of the Supreme Court. Nor can it add to
the appellate jurisdiction of the
Supreme Court without its advice and
concurrence.
Prohibition of the Use of Special Funds
• All money collected on any tax levied for
a special purpose shall be treated as a
special fund and paid out for such
purpose only. If the purpose for which a
special fund was created has been
fulfilled or abandoned, the balance, if
any, shall be transferred to the general
funds of the Government (Article VI,
Sec. 29 (3), 1987 Constitution)
President’s Power of Partial Veto
• GR: There is no power of partial veto.
The President must approve or veto a
bill in its entirety.
• XPN: Appropriation, revenue, and tariff
bills.
INDIRECT CONSTITUTIONAL
LIMITATIONS:
Due Process and Equal Protection
1. Due Process
• No person shall be deprived of life,
liberty, or property without due process
of law, nor shall any person be denied
82
the equal protection of the laws (Art. III,
Sec. 1, 1987 Constitution)
• 2 kinds of Due Process: Substantive and
Procedural
• Substantive: Valid Authority under the
law
• Procedural: Reasonableness of the
means used
CREBA v. Romulo (G.R. No. 160756, March 9,
2010)
• CREBA assails the imposition of the
minimum corporate income tax (MCIT)
as being violative of the due process
clause as it levies income tax even if
there is no realized gain
• Are the impositions of the MCIT on
domestic corporations and CWT on
income from sales of real properties
classified as ordinary assets
unconstitutional?
• NO. MCIT does not tax capital but only
taxes income as shown by the fact that
the MCIT is arrived at by deducting the
capital spent by a corporation in the sale
of its goods, i.e., the cost of goods and
other direct expenses from gross sales.
Besides, there are sufficient safeguards
that exist for the MCIT: (1) it is only
imposed on the 4th year of operations;
(2) the law allows the carry forward of
any excess MCIT paid over the normal
income tax; and (3) the Secretary of
Finance can suspend the imposition of
MCIT in justifiable instances.
2. Equal Protection
Requisites for Valid Classification:
(1) must rest on substantial distinctions;
(2) must be germane to the purposes of the law;
(3) must not be limited to existing conditions
only; and
(4) must apply equally to all members of the
same class.
Test to Determine Valid Classification:
1. Compelling Interest Test- Focuses more on the
presence of compelling governmental interest
rather than substantial restrictions.
2. Rational Basis Test- The classification is valid if
it is rationally related to a constitutionally
permissible state interest.
Non-Impairment of Obligations of
Contracts
• No law impairing the obligation of
contracts shall be passed (Art. III, Sec.
10, 1987 Constitution)
• When is there impairment of obligations
of contracts? - When its terms or
conditions are changed by law or a party
without the consent of the other.
• The general rule is that tax exemptions
can be withdrawn by government at any
time.
• The exception is when the exemption
pertains to the nature of a contract, the
government cannot just withdraw the
exemption without violating the
constitutional right to non-impairment
of contracts.
Non-Infringement of Religious Freedom
• No law shall be made respecting an
establishment of religion, or prohibiting
the free exercise thereof. The free
exercise and enjoyment of religious
profession and worship, without
discrimination or preference, shall
forever be allowed. No religious test
shall be required for the exercise of civil
or political rights (Art. III, Sec. 5, 1987
Constitution)
• The imposition of license fees on entities
distributing Bibles by the City of Manila
was deemed to be unconstitutional
because it suppressed the religious
freedom of petitioners. But the
requirement of a mayor’s permit was
upheld, pursuant to the police power of
the State (American Bible Society v.
City of Manila, 1957)
No Appropriation for Religious Purposes
• No public money or property shall be
appropriated, applied, paid, or
employed, directly or indirectly, for the
use, benefit, or support of any sect,
church, denomination, sectarian
institution, or system of religion, or of
any priest, preacher, minister, or other
religious teacher, or dignitary as such,
83
except when such priest, preacher,
minister, or dignitary is assigned to the
armed forces, or to any penal
institution, or government orphanage or
leprosarium. (Art. III, Sec. 29 (2), 1987
Constitution)
• This provision prohibits the
appropriation of public funds for
religious purposes.
• Exceptions are when a religious minister
is assigned to the armed forces, or to
any penal institution, or to any
government leprosarium or orphanage.
• Public funds can be used to answer for
expenses for a Papal visit as the Pope is
a head of State, thus any government
appropriation for the visit of the Pope is
justified.
II. INCOME TAX
• Income Tax- a tax on all yearly profits
arising from property, professions,
trades or offices or as a tax on a
person’s income, enoulments, profits
and the like.
• It is a direct tax on actual or presumed
income, gross or net, of the TP during
the taxable year.
• Actual- something actually received
• Presumptive- nothing physically
received but the law presupposes that
it could be received.
• Gross- no deduction allowed
• Net- deductions are allowed.
• Accrued Income-something recognized
as income, but has not yet been
received, and such income is by virtue
of a perfected contract.
• Realized Income- Income from an
actual transaction.
• Excise tax- Privilege tax on the right to
earn income by an individual or entity
• Self-Assessment- The TP himself
determines how much tax he owes
based on his own computation. The BIR
just confirms if such computation is
true.
• Purpose of Income Tax- to generate
revenues for the government.
• Income tax is also there to offset the
effects of sales and consumption taxes
which are seen to be regressive.
• Another purpose is to mitigate the
effects of the inequitable distribution of
wealth between different income
earners.
Financial Statements (FS)
• Balance Sheet- talks about assets and
liabilities of the TP, reports the financial
position of the company.
• Income Statement- tells how much the
company has performed; reports the
financial performance of the company.
• Statement of changes in the retained
earnings (corporation) changes in
capital (individual)- tells how much of
the capital was used up or maintained.
Income
Broad Sense:
• All wealth that flows from the TP other
than mere return on capital.
• It is the excess of your ROI.
Strict Sense:
• Gain derived from capital, from labor, or
from both.
• Includes profits gained through a sale or
conversion of assets.
• The amount of money coming into a
person or corporation within a specified
time.
• These are also payments for services,
interests, or profits from investments.
• This excludes capital returned to the TP.
Capital
• What the TP has at the moment.
• Atty. Amago: Capital is the tree; income
is the fruits.
• Capital is dynamic because it changes
from time to time. It’s possible that you
can have more or less, depending on the
activity you engage in.
General Principles in Income Taxation (Section
23, NIRC)
• ONLY RESIDENT CITIZEN (RC) is
taxable for income within and without
the Philippines
• All others (NRC, RA, NRA) taxable only
for income earned WITHIN the PH.
• Domestic Corporation (DC)- Taxable for
income within and without PH.
• Foreign Corporation (FC)- Taxable for
income within PH.
Systems of Taxation:
• Schedular- Income classified differently
and subjected to different tax rates.
84
• Global- All income is grouped regardless
of classification and subject them to one
tax rate. Only one return is filed.
• Semi Schedular and Semi Global- A mix
of both systems
• Progressive- more income, more tax.
• The Philippines follows the Semi-
Schedular and Semi-Global. Schedular
for individual income tax, global for
corporate income tax.
Income Tax Base Used in PH:
• Gross Income- Income (AKA
compensation, wage, etc.)
• Net Income- Gross Income- Deductions
• PH uses the net income more.
Deductions are allowed.
Features of PH Income Taxation
Comprehensive Tax Situs
• PH follows American Tax System
Individual Taxation
• We follow a schedular system
• Our Taxation is progressive in
character.
• PH follows the pay-as-you-file system-
payment is done simultaneously with
the filing of the tax return.
Corporate Taxation
• Follows the global tax system
• Uses net income approach because it is
allowed deductions
• Also follows the pay-as-you-file system.
Sources of Income:
1. Capital-Ex. Stocks (Stocks are
purchased and when dividends are
declared, then you will get income from
the stocks you purchased)
2. Labor-Income in the form of salary,
compensation, benefits, etc. Income
arising from an employer-employee
relationship.
3. Both Capital and Labor- Such as that in
business. The capital that is set up to
start up the business earns income, and
the compensation of the employees are
also counted.
4. Dealings in Property- Such as a house
and lot which are sold. The return given
 by the buyer is deemed to be a capital
gain. In which case you have to earn
income out of your sale from property.
Criteria for Income to be Taxable:
• There is gain or profit
• Such profit is received or realized
(whether actual or constructive)
• Such profit is not exempted by any law
or treaty
Ordinary Assets- there is an enumeration
provided by the NIRC. (SOUR)
1. Stocks in Trade included in inventory at
the end of the taxable year- literally
anything you can stock together for the
purpose of selling it.
2. Property primary held for sale to
customers in the Ordinary course of
trade or business e.g., inventory of real
estate, parcels of land you are selling,
condominium units, house and lot.
3. Property Used in trade or business
subject to depreciation- e.g., house and
lot subject to depreciation
4. Real property used in trade in business.
• Capital Assets- anything not
enumerated by the NIRC as an ordinary
asset is considered a capital asset.
TAXABLE INCOME
• The term ‘taxable income’ means the
pertinent items of gross income
specified in this Code, less the
deductions, if any, authorized for such
types of income by this Code or other
special laws. (Sec. 31, NIRC)
• Gross Income- means all income
derived from whatever source.
(Enumeration in Section 32, NIRC is not
exclusive)
• Mnemonic: CG2IR2DAP3
Exclusions from Gross Income (LAGCRIM):
1. Life Insurance
2. Amount Received by Insured
3. Gifts, Bequeaths and Benefits
4. Compensation from Injuries
5. Retirement Benefits
6. Income Exempt Under Treaty
7. Miscellaneous Items
Situs of Income
1. Compensation- where the services are
rendered
2. Business- place of business
3. Property: Personal- place of sale; Real-
where property is located
4. Interest- Residence of BORROWER
5. Rent- where property being rented is
located
6. Royalties- place where intangible is
used
7. Dividends:
a. Domestic: Income purely from PH
b. Foreign: Must be in PH for at least 3
years.
• Income of FC purely within PH is >85%
• Income purely w/o PH <50%
• Equal to 50% or 85%, there should be
allocation
• If 50-85%, partly within, partly without.
• ≤50%, income without
• >85%, income within.
8. Annuities- place where contract was
made
9. Prizes and Winnings- Where services
are rendered OR where the same is
given
10. Pension- place where pension is given
11. Partner’s Distributive Share- place
where profession is practiced.
Allowable Deductions
• Appliable Provision: Sec. 34, NIRC

What gross income includes (CG2IR2DAP3): Enumeration of Allowable Deductions

1. Compensation (ExInTaLoBaChaRePenDepDep)
2. Gross Income
3. Gains from Property 1. Expenses
4. Interests 2. Interests
5. Rents 3. Taxes
6. Royalties 4. Losses
7. Dividends 5. Bad Debts
8. Annuities 6. Charitable Contributions
9. Prizes and Winnings 7. Research and Development
10. Pensions 8. Pensions
11. Partner’s Distributive Share 9. Depreciation

85
 10. Depletion
Exemption vs. Deduction
• Exemption- you pay nothing, income
not subject to tax.
• Deduction- expenses allowed to lessen
the income.
• Deduction allowed if:
1. Provided by law
2. All conditions for deductibility
satisfied
3. Strict construction vs. TP
4. Withholding tax must have been
imposed.
Kinds of Deduction:
1. Itemized
• ExInTaLoBaChaRePenDepDep
Optional Standard Deduction (OSD)- Deduct
maximum of 40% from gross income (no need
itemized deduction)
Non-Deductible Items:
1. Personal Living/ Family Expense
2. Amount paid for new buildings or
permanent improvements or
betterment to increase the value of any
property or estate for the business- not
deductible in the year it is incurred
(Not really that it’s not allowed as a
deduction, only that you cannot deduct
outright. You need to spread out the
deduction)
XPN: Proprietary Educational
Institution- given option to deduct one
time for the value of the building
3. Amount spent in restoring property or in
making good the exhaustion thereof for
which an allowance is made.
4. Premiums paid on life insurance policy
covering the life of any officer or
employee.
5. Losses from sales or exchanges of
property
a. Between members of a family
b. Direct shareholder with more than a
50% equity interest and his
corporation
c. Between corporations owned by the
same individual.
d. Between grantor and fiduciary
e. Between trusts if grantor is the
same
f. Between fiduciary of a trust and
beneficiary of such trust
86
g. Based on undue influence
h. Related party transactions,
construed strictly vs. TP.
Additional Principles
Taxable Income
a. Accrual Method- Revenue not received
as of yet, but already recognized as
income.
b. Cash- Income based on flow of cash
c. Construction in Progress- Based on
progress of the activity
d. Installments- paid slowly in parts. Initial
Payment should not be more than 25%.
e. Classification as passive income vs.
active income
Tests in Determining Receipt of Income:
1. Realization Principle- Income has to be
realized to be taxable
2. Economic Benefit Principle- Income may
only be included in the receipt of an item
if it confers an economic benefit
regardless if there are some benefits
derived from it.
3. Recovery of Capital Doctrine- The cost
has to be accounted for and not just the
proceeds of the sale.
4. Income “Adjusted Basis”- Account for
cost-accumulated depreciation
SPECIFIC ITEMS OF GROSS INCOME
(CG2IR2DAP3)
1. COMPENSATION
• All income derived from services arising
from employer-employee relationship
• Includes all renumeration for services
rendered by EE to ER.
• Cash Equivalent: All items considered
income which is not cash has to be valued
in cash for tax purposes.
• Convenience of Employer Rule- Do not
account compensation income as taxable
when they are furnished as a necessary
incident for the proper performance of EE’s
duties.
• Tips- generally taxable
• Pensions- may not be subject to tax
• Vacation or sick leave- taxable
• Backwages and labor benefits- taxable
• Meals, Board and Lodging- Taxable
• PNP and AFP- tax exempt (for clothes,
quarters, hazard pay)
• Compensation may be in cash or in kind.
 2. BUSINESS INCOME (GROSS
INCOME)
• Income derived from the conduct of any
business or profession
3. GAINS FROM DEALINGS
PROPERTY
• These are ORDINARY ASSETS.
• If it is a capital asset, the tax rate is 6%.
It is not based on the gain but on the
“presumed gain” or the gross selling price,
the fair market value determined by the
assessor or determined by the BIR,
whichever is higher.
4. INTEREST INCOME
• The compensation for the use of money
or the forbearance thereof
• Foreign Currency Account:
a. PH Resident: 15%
b. Non-Resident: Exempted
• Basis is RESIDENCE, not citizenship.
• If foreigner lives in PH and has a dollar
account, interest income is taxable at
15%.
• Filipino in US has a dollar account,
exempted, not taxable in PH.
Compounded Interest
• Interest on Interest is still taxable
• Bank subject to final tax of 20%
• FCDU Account: 15%
5. RENT INCOME
• 5% Creditable Withholding Tax
• Leasehold Improvement- lessee built
permanent structures on lessor’s land.
Such improvements become the lessor’s
once the lease expires.
• The value of the leasehold improvement
should be reported as income of lessor
using outright or spread-out method.
• Outright- Income recognized one time
all together.
• Spread-Out- income recognition spread
out over remaining term of lease.
• If lessee pays lessor’s taxes- recognized
as income on the part of lessor.
• If lease is pre-terminated before
expiration of lease contract: Considered
as additional income on the part of
lessor.
6. ROYALTIES
• Compensation for use of intellectual
Properties
7. DIVIDENDS
• Distribution of income of a stock
corporation
Kinds of Dividends:
1. Cash
IN 2. Stock
3. Property
• If what is distributed are own
shares: Stock Dividends
• Shares of another corp: Property
dividends
• If corp declares treasury shares:
Property Dividends.
• Distribution of shares from one corp
to another: Exempted
• Stock Dividends: Tax Exempt
When Stock Dividends are Taxable:
1. Substantial change in shareholdings of
a corporation
2. Change in structure of shareholdings
3. Stock dividend is deemed cancelled
when it amounts to distribution of cash
or property dividends looking at the
circumstances.
8. ANNUITIES
• Periodic Payment of Income out
of investments not borne out of
ER-EE relationship.
• Part of computation of taxable
income
9. PRIZES AND WINNINGS
• Prizes- Income derived out of talent or
skills
• Winnings- Income derived from luck
• Prizes: If 10K or less= 0-35%; > 10K-
20% final tax
• Winnings: 20% final tax regardless of
amount
XPN:
a. Less than 10K= exempt
b. ≥ 10K= 20% final tax
10. PENSIONS
• Periodic payment of income
arising from ER-EE when EE has
retired.
• Normally exempted
• XPN: Private pension plan may
be taxable
Requisites for Private Pension Plan to be Tax
Exempt:
1. Reasonable private pension benefit plan
2. Approved by the BIR
3. EE is at least 50 years old
87
4. Minimum of 10 years of service
5. Benefit can be availed of only once.
11. PARTNER’S DISTRIBUTIVE SHARE
IN GENERAL PROFESSIONAL
PARTNERSHIP
• If trade partnership: Not an
exercise of profession= it
becomes dividends subject to
final tax (10%, 20%, 25%)
• Trade partnership also subject
to 30% corporate income tax
• General Professional
Partnership- pursuant to the
exercise of a profession
• Distribution of income subject
to the Tax Table (0-35%)
EXCLUSIONS FROM GROSS INCOME
• Applicable Provision: Sec. 32 (B), NIRC
• Mnemonic: LAGCRIM
• Endowment- insured outlived the period
of insurance and can claim the proceeds
after the lapse of the period.
3. GIFTS, BEQUEATHS, DEVISES
• Not included in the computation of
gross income.
• Not taxable because already subject to
donor’s or estate tax.
4. COMPENSATION FROM INJURIES
OR SICKNESS
• Not taxable
• Limited to physical injuries
• Damage to property, taxable
5. INCOME EXEMPT UNDER TREATY
• Pursuant to international comity
• Income of any kind is not taxable, as
long as exempt under treaty.
6. RETIREMENT BENEFIT

1. Life Insurance Retirement Plans Covered under this

2. Amount received as return on Premium Provision:
3. Gifts, Bequeaths, Devises a. Reasonable Private Benefit Plan
4. Compensation received from Injuries b. New Retirement Law
5. Retirement Benefits c. CBA Retirement Plan
6. Income Exempt from Treaty
7. Miscellaneous Items Requisites:

1. LIFE INSURANCE a. Retiree at least 50 years old

• Life Insurance proceeds are not taxable b. ER must have secured a reasonable
regardless of beneficiary private benefit plan
c. Plan is approved by BIR
Requisites: d. Minimum of 10 years of service
e. Can be availed of only once.
1. Paid to the heirs
2. Paid upon death of the insured 7. MISCALLENEOUS ITEMS
3. Paid in a single sum or in
installments a. Income Derived from Foreign
Government
XPN: b. Income derived by the government
a. When used to secure a monetary or its political subdivisions
obligation c. Prizes and Awards given in
b. If it is transferred for a valuable recognition of Religious, Charitable,
consideration Scientific, Educational, Artistic,
Literary, or Civic Achievements
2. AMOUNT RECEIVED BY INSURED d. Prizes and Awards in Sports
AS RETURN ON PREMIUM Competition
e. 13th Month pay and other benefits
• Amounts received by the insured as f. GSIS, SSS, Medicare and other
return on premiums paid by him under contributions
insurance or endowment. g. Gains from the sale of bonds,
debentures or other evidence of
indebtedness
h. Gains from Redemption of Shares in
Mutual Funds

88
 10. Daily Meal Allowance for OT and
A. INCOME DERIVED FROM graveyard shift not exceeding 25% of
FOREIGN GOVERNMENT the minimum wage.
• Not included and not taxable
pursuant to international comity • In case of excess of the de minimis
and because of the sovereign benefits, add to your 13th month
equality of states pay and other benefits. If exceeds
90,000.00, excess of 90K is taxable.
B. INCOME DERIVED BY THE
GOVERNMENT OR ITS F. GSIS, SSS, MEDICARE AND
POLITICAL SUBDIVISIONS OTHER CONTRIBUTIONS
• Govt is not taxable • Deductions are made before
• Includes barangay and GOCCs deriving at the tax amount.
performing governmental • Includes union dues
functions • Now taxable under the TRAIN Law
• If GOCC performs proprietary,
subject to tax.
G. GAINS FROM THE SALE OF
BONDS, DEBENTURES OR
C. PRIZES IN RECOGNITION
OTHER EVIDENCE OF
OF ACHIEVEMENTS
INDEBTEDNESS
• Now taxable under the TRAIN Law
Requisites:
1. Must be related to Religious, Charitable,
Scientific, Educational, Artistic, Literary, H. GAINS FROM REDEMPTION
or Civic Achievements OF SHARES IN MUTUAL
2. No action on your part to enter the FUNDS
contest • Now taxable under the TRAIN Law
3. No future services required

D. PRIZES IN SPORTS
COMPETITIONS ALLOWABLE DEDUCTIONS

• Graduated Income Tax Rate: Gross

Requisites:
Income- Allowable Deduction= Taxable
1. Sanctioned by National Sports
Association Income
2. Recognized by Philippine Olympic • Double Nexus Rule: (1) TP must show a
Committee law granting an exemption; (2) He must
prove entitlement to such deduction.
E. 13TH MONTH PAY AND • Strictly construed against TP
OTHER BENEFITS • No law, no deduction.
• Limited to P90,000.00 • Itemized Deduction:
• Excess of 90K, taxable ExInTaLoBaChaRePenDepDep
1. Expenses
De Minimis Benefits 2. Interests
3. Taxes
1. Monetized Vacation Leave not
4. Losses
exceeding 10 days
2. Monetized Vacation and Sick leave given 5. Bad Debts
to govt EEs 6. Charitable Contributions
3. Medical Allowance not exceeding 1.5K 7. Research and Development
per person or 250/month 8. Pensions
4. Rice Subsidy of 2K or 50kg sack of rice/ 9. Depreciation
month 10. Depletion
5. Uniform/Clothing Allowance not
exceeding 6K/year
6. Actual Medical Assistance < 10K/year • Optional Standard Deduction (OSD)-
7. Laundry Allowance < 300/month 40% of gross sales/receipts
8. EE Achievement Awards < 10K (individual); 40% of gross income
9. Christmas gifts < 5K per EE per year (corporation)

89
 • The taxpayer can choose whether to opt
for Itemized Deduction or OSD. But
once the TP chooses one, he can no
longer opt of the other for the remainder
of the year.
• Itemized deduction needs evidence for
the items to be deductible. OSD needs
no evidence, it can directly be deducted.
Not allowed as Deductions:
1. Family Living Expenses
• Reason: Not related to your
business, but for the
sustenance and survival of the
family.
2. Expenses for new buildings and
Improvements
• Reason: The full amount of the
capital expenditure for the new
asset cannot be claimed in the
taxable year in which it is paid
but will be spread out over the
life of the asset.
3. Expenses for Restoring Property
• Extraordinary Repairs form part
of the value of the property. It
can extend its life.
• Ordinary repairs are deductible
under business expenses.
• Atty. Amago: It’s not that
numbers 2 and 3 cannot be
deducted, only that you cannot
deduct outright. The deduction
must be spread-out.
4. Premiums paid on any Life Insurance
Policy
• Not deductible because it is a
return on capital where the
employer is the beneficiary of
the policy, directly or indirectly.
5. Losses/Exchanges of Property involving
related taxpayers
a. Between family members
b. Direct shareholder with more than
50% equity interest
XPN: Liquidation distribution
c. Corporations owned by the same
individual
d. Grantor and fiduciary of any trust
e. Between grantors if the grantors for
such trust are the same
f. Fiduciary of trust and the
beneficiary of the trust.
General Requisites for Deductibility:
90
1. Incurred during Taxable Year
2. Incurred in carrying out the business,
trade, or profession of TP
3. Supported by receipts/ invoices
4. Not contrary to law
5. Tax is required to be withheld.
1. EXPENSES
• Ordinary and Necessary
• Incurred during Taxable Year
• Supported by adequate
evidence
• Subject to withholding
• Expense must be legitimate.
• Ordinary- normal expenses for
trade, business or profession of
TP.
• Necessary- needed for
development of business.
• Must be reasonable.
• Must be supported by receipts.
• XPN: Cohan Rule- need not be
supported by receipts, as long
as supported by adequate
records.
• Atty. Amago: Even if there is no
proper submission, the fact that
you can still show an actual
incurrence of an expense means
that it can be deducted
• Subject to withholding:
a. ER withholds part of EE’s
wages to pay to BIR as
taxes
b. Also applies to statutory
contributions (SSS,
PagIbig, PhilHealth, etc.)
c. Required to withhold taxes
on compensation before
compensation can be
deducted.
Advertising Expenses
Requisites for Recognition:
a. Must be on the year actually incurred
b. On the year it is able to generate sales
for the company.
• Goodwill- Benefit arising from the
connection and reputation similar to the
acquisition of capital assets.
• Advertising Expenses are NOT allowed
as a deduction in full if it will create a
goodwill for a product for a line of
 business for more than one year. (It
must be spread-out among taxable
years for which the advertising benefits
will accrue.
Rent Expense
Requisites:
1. Leasehold contract acquired for
business purposes
2. Incurred during taxable year
3. Withholding required
4. Lessee must not own the property.
• Operating Lease- ordinary lease;
deductible as expense.
• Finance Lease- technically a
purchase by installment (rent to
own)
• Finance lease treated as a capital
investment
Entertainment, Amusement, Recreation (EAR)
Expenses
• Only when directly connected with TP’s
business
• This requirement applies to all types of
allowable deductions except for
Charitable Contributions
• Entertainment must not be contrary to
morals
2. INTEREST
Requisites:
a. There must be indebtedness
b. Interest must be in writing
c. It must be legally due
• Tax Arbitrage Scheme: Applies when
there is interest payment and interest
income which is subject to final
withholding tax at the same time.
• Interest Claimed as Deduction shall be
reduced by 33% of interest income
earned which has been subjected to
final withholding tax.
Interest Income that is subject to Final
Withholding Tax:
a. Any currency bank deposit
b. Deposit substitutes
c. Trust funds and similar arrangements
• Arbitrage always reduces the amount of
interest expenses that you may have if
you have interest income subject to
FWT.
3. TAXES
Requisites for Deductibility:
a. Related to trade or business of TP
b. Not contrary to morals, public policy,
etc.
c. Paid during taxable year
Taxes not allowed to be Deducted:
a. PH income tax
b. Estate and Donor’s Tax
c. Stock Transaction Tax
d. Special Assessment on Real Property
e. Income Tax paid to foreign government
claimed as tax credit
f. VAT
• All others not enumerated, deductible.
4. LOSSES
• To be deductible, must not be
compensated by insurance.
• Losses must be evidenced by a
completed transaction.
• Losses from Wash Sales are not
deductible (illegal)
• XPN: Those engaged in the business of
buying and selling shares of stock.
• Wash Sales- A sale wherein there is no
change in beneficial ownership of shares
of stocks.
Removal of buildings:
• If involuntary, deductible.
• If voluntary, deductible if incidental to
replacement or renewal of the building
Losses for useful value, deductible only if:
a. Due to unforeseen causes
b. Property has been permanently
discarded.
Shrinkage in Stock Value, When Deductible:
• When stock is disposed due to
fluctuations in the market.
Net Operating Loss Carry-Over (NOLCO)
• Expenses more than revenues.
• The excess of allowable deduction over
gross income of the business in a
taxable year. IOW, you have more than
income. So, you incurred a loss (Lugi).
The running of the 3-year period will
continue even if you did not benefit.
• It shall be carried over as a deduction
from the gross income for the next 3

91
 consecutive taxable years immediately 2. No part of net income accrues to the
following the year of loss. Such loss benefit of private stockholder or
shall be allowed as a deduction. individual.
Provided, it had not been previously 3. Made within taxable year
offset as deduction from gross income. 4. Should not exceed 5% or 10%
However, any net loss incurred in a depending on type of charitable
taxable year during which the taxpayer contribution
was exempt from income tax shall not
be allowed as a deduction. NOLCO shall • Ordinary Charitable Contribution-
be allowed only if there has been no deductible in full
substantial change in the ownership of • Special Charitable Contribution-
the business or enterprise. deductible, subject to limitations.
• NOLCO will be applied within 3 years
when the Company is already subjected Charitable Contribution to government,
RCIT and not MCIT. Three- year expiry deductible in full if beneficiary is:
period will continue to run even if MCIT. a. Science
b. Health
Requisites: c. Education
1. Cannot be claimed if OSD d. Economic Development
2. Cannot be claimed if tax holiday e. Youth and Sports Development
3. Cannot be claimed if based on gross
income or receipts 7. RESEARCH AND DEVELOPMENT
4. Cannot be deducted if subject to MCIT
5. Cannot be deducted if there is • Expenses pertinent to innovations
substantial change in ownership. or the improvement of processes.
• Note: Substantial ownership threshold • It is something that should not have
is 75%. been attached to the capital account
or one that you have claimed as an
5. BAD DEBTS asset.
• If ever attached to a capital
Requisites for Deductibility: account, TP must be able to
amortize the cost or R&D over the
a. The bad debt must be arising from a period of 60 months or 5 years.
valid and subsisting obligation.
b. An obligation to the taxpayer concerned Limitations:
(TP is the creditor)
c. Related to the TP’s trade, business or a. Money spent to acquire land for R&D,
profession not deductible under R&D.
d. Ascertained to be worthless b. Money spent to locate materials, not
e. Charged off and uncollectible within the deductible under R&D.
year proven to be worthless
8. PENSION TRUST
f. Uncollectible in the near future.
Requisites for Deductibility:
• If it can be collected in the future,
subject the debt to the Tax Benefit Rule.
a. ER established a pension plan
b. Reasonable and Actuarially Sound
6. CHARITABLE CONTRIBUTIONS
c. Contributions are made by ER to
• Not related to trade or business unless
pension fund
the business is charity.
d. Amount deposited is not controlled by
ER.
Requisites for Deductibility:
e. Payment has not yet been allowed as
deduction.
1. Actual Payment to PH govt or to any
corporation engaged in charity. Must be
• Atty. Amago: Deduction is apportioned
a legitimate entity. Those who ask
in equal parts over a period of 10
people to buy their products are
consecutive years beginning with the
excluded.
year in which the transfer or payment

92
 is made. This is the Corridor (or
Corregidor) method.
Requisites of Reasonable Private Pension Benefit
Plan:
1. Definite written program for it
2. Plan must be permanent and continuing
3. It must cover at least 70% of the EEs of
the company (or at least 80% of the
70% must be qualified to be covered)
9. DEPRECIATION
• Value of a property across a period for
which it is useful.
4 methods:
1. Straight Line- Account for the
depreciation based on how long the
property will be used.
2. Declining Balance- Accounts for
depreciation based on a predetermined
rate of depreciation.
3. Sum of the Years Digit- Getting the sum
of the years digit
4. Any other method prescribed by DOF.
10. DEPLETION
• Assigning usefulness of a particular
undertaking including wasting assets.
• Depletion is used when the assets to be
used are non-renewable and will be
depleted or completely run out in the
future (i.e., mining. Once all the
minerals have been mined and
extracted, the land where the minerals
were located will be bare and depleted)
Cost Depletion Method
• Depreciation where you amortize the
cost of exploration throughout the life of
the operation involved.
OPTIONAL STANDARD DEDUCTION (OSD)
• 40% Deduction
• Based on gross sales or receipts if
individual; Based on gross income if
corporation.
• Atty. Amago: The good thing about OSD
is there is no need for substantiation. If
the TP does not have any receipts,
invoices or records to prove
deductibility, he can opt for OSD where
93
in 40% will be deducted even without
substantiation.
• Atty. Amago: The TP is supposed to
signify his intention to avail of OSD
during the FIRST QUARTER FILING OF
EVERY YEAR (May 15)
• Atty. Amago: In practice, because we
are not so keen in keeping receipts, you
might as well avail of OSD. But then
with the availability of 8% gross income
tax, you are allowed to pay 8% of your
gross income but less 250,000. The 8%
is not only in lieu of income tax but also
of other percentage tax. If you reach the
threshold of 3M, you are subject to VAT.
If less than 3M, 3% OPT may be
charged.
INCOME TAX ON INDIVIDUALS
Classifications:
1. Resident Citizen (RC)
2. Non-Resident Citizen (NRC)
3. Resident Alien (RA)
4. Non- Resident Alien (NRA)
a. Non-Resident Alien Engaged in
Trade or Business (NRA-ETB)
b. Non- Resident Alien Not Engaged in
Trade or Business (NRA-NETB)
5. Special Employees
6. Estates and Trusts
1. RESIDENT CITIZENS (RC)
Article IV, Sec. 1, 1987 Constitution:
The following are citizens of the Philippines:
(1) Those who are citizens of the Philippines at
the time of the adoption of this Constitution;
(2) Those whose fathers or mothers are
citizens of the Philippines;
(3) Those born before January 17, 1973, of
Filipino mothers, who elect Philippine
citizenship upon reaching the age of majority;
and
(4) Those who are naturalized in accordance
with law
2. NON-RESIDENT CITIZENS (NRC)
a. Filipinos abroad with intention of
staying abroad
 b. PH citizen who leaves PH during
taxable year for employment/
immigrant
c. PH citizen staying abroad for 183 days
or more
d. Previous NRC, arrives in PH to reside
permanently with respect to income
earned abroad until arrival
e. Overseas Contract Worker
f. PH citizen seaman if member of vessel
engaged in international trade.
3. RESIDENT ALIEN (RA)
• An individual whose residence is in
PH but who is not a citizen thereof.
• Must not be a mere transient or
sojourner
• He must not have a definite
intention to stay in PH. Period of
staying in PH is indefinite
• If intention is definite and there is
clear intention to stay in PH, cannot
be considered an RA
• If intent is to extend stay in PH and
PH is a temporary home, considered
as an RA
• Generally, if stay in PH is more than
one year, considered RA.
4. NON- RESIDENT ALIEN (NRA)
• Engaged in Trade or Business (NRA-
ETB): More than 180 days in PH
• Not Engaged in Trade or Business
(NRA-NETB): Less than 180 days in
PH.
• NRA-NETB is a mere transient or
sojourner
• If an ANRA-NETB stays here for 181
days or more, now considered an
NRA-ETB.
TAKE NOTE!!!
• 183 days for NRC
• More than 180 (181+) days for NRA-
ETB
5. ESTATE AND TRUSTS
• Taxable as Individuals
• Trust: An obligation to administer a
property given to a person for the
benefit of another.
• Parties to a Trust:
a. Trustor or Grantor
b. Trustee or Fiduciary
c. Beneficiary or Grantee
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• GR: A trust, once created, can be
considered a separate taxpayer
• XPN: Consolidation of trusts when
multiple trusts are created by the same
person for the same beneficiary.
Mode of Tax Collection Payment:
• Withholding Tax: For purposes of
collection of taxes due on compensation
is based on withholding of wages
• Excessive Withholding: Any excess
taxes withheld by ER which supposedly
to be credited to the BIR. The BIR is
required to refund it in the form of
warrants within 3 months from May 15.
Passive Income vs. Active Income
• Active Income: Where ER exerts effort
to earn the income
• Passive Income: ER does not exert
effort to earn income other than the
initial payment of an investment.
Tax Involving Individuals
An individual TP can earn through:
1. Compensation income- There is ER-EE
relationship
2. Business Income- Practice of profession
or of a business
3. Mixed- Both compensation and business
• Importance: A person earning purely
professional or business income or
mixed income pertaining to the business
aspect of the income has an additional
option to be taxed at 8% based on gross
income/ gross sales or receipts in lieu of
the 3% Other Percentage Taxes. But the
250,000 exemption must be noted.
(The 8% only applies in excess of
250,000). If not exceeding 250,000, no
8%. (There can however be 3% OPT.)
• If earning purely compensation income,
this 8% option is NOT AVAILABLE. The
Tax rate of a compensation earner is the
0-35% GITR.
FRINGE BENEFIT
• It is any good, service or other benefit
furnished or granted by an ER in cash
or in kind, in addition to basic salaries,
to individual EEs, EXCEPT RANK-
AND-FILE EEs.
 • Mnemonics: HEVHIMEHEL December 31. (Example: October 1-
1. Housing September 30).
2. Expense Account • These 2 periods are available only
3. Vehicle of any Kind to corporations.
4. Household personnel • Individuals only have the calendar
5. Interest on Loan year. They must always file by April
6. Membership Fees
15.Change of Accounting Periods:
7. Expenses for Foreign Travel
• Generally, when a TP wants to change
8. Holiday and Vacation Expenses
9. Educational Assistance to EE accounting periods, they are required to
10. Life or Health Insurance file a SHORT PERIOD RETURN.

• Managerial Employee- One vested with

powers and prerogatives to lay down
and execute management policies and
or fire, transfer, lay-off, discharge or
assign employees
• Supervisory Employee- He recommends
managerial action and who exercises
independent judgment in the making of
such recommendations
• Rank-and-File Employees: Those who
are neither managerial or supervisory
EEs.
• Fringe Benefit Tax (FBT) is 35% for
regular; for NRA-NETB, 25% (highest in
tax table)
• The one who should pay the FBT is the
EMPLOYER not the employee.
• Tax Base: Grossed Up Monetary Value
(GUMV)
• TP is the ER because what is actually
received by EE is deemed the NET of
whatever is the tax liability.
8% GROSS INCOME TAX
• What is established by the TRAIN Law is
the imposition of 8% gross income tax
rate, in lieu of the 0-35% graduated
income tax rate (GITR).
Requisites:
1. Must be earning business or
professional income
2. Gross sales or gross receipts do not
exceed 3M.
3. Subjected to Other Percentage Tax
(OPT) of 3%.
ACCOUNTING PERIODS
Two Accounting Periods:
1. Calendar Year- Any 12-month period
ending on December 31.
2. Fiscal Year: any 12-month period
ending in another period other than
Three Ways to Change:
1. Fiscal year to calendar year
• Rule: Short Period Return shall be made
for the period between the close of the
last fiscal year for which the return was
made and the following December 31.
Example:
• Option: From October 1- September 30
to January 1- December 31.
• Short Period Return to be filed: October
1- December 31.
2. Calendar Year to Fiscal Year
• Rule: Short Period Return shall be made
for the period between the close of the
last calendar year for which the return
was made and the date designated as
the close of the fiscal year.
Example:
• January 1-December 31 to October 1-
September 30.
• Short Period Return to be Filed: January
1- September 30.
3. Fiscal year to another Fiscal Year
• Rule: Short period return shall be made
for the period between the close of the
former fiscal year and the date
designated as the close of the new fiscal
year.
Example:
• Option: October 1- September 30 to
August 1- July 31.
• Short Period Return to be filed: October
1- July 31.
• Atty. Amago: A short period return
never exceeds 12 months. If it exceeds
12 months, it is no longer a short-period
return.

95

III. DONOR’S TAX
• Donor’s Tax is levied, assessed,
collected and paid upon the transfer by
ANY PERSON, resident or non-resident,
of property by gift (Ingles).
• The property can be real or personal,
tangible or intangible.
• The transfer can be in trust or
otherwise.
• The gift can be direct or indirect.
• The donor’s tax shall not apply unless
and until there is a completed gift. The
transfer of property by gift is perfected
from the moment the donor knows of
the acceptance by the donee; it is
completed by the delivery either
actually or constructively, of the
donated property to the donee. Thus, it
is the law in force at the time of the
perfection of the donation that will
govern the imposition of donor’s tax (RR
2-2003)
• A gift that is incomplete because of
reserved powers becomes complete
when either:
1. The donor renounces the power; or
2. His right to exercise the reserved
power ceases because of the
happening of some event or
contingency or the fulfillment of
some condition, other than because
of the donor’s death.
• The accrual date of donor’s tax is upon
completion of the gift, although the
filing of the return is to be done 30 days
after the donation.
• There is a consolidated donation return
to be made at the end of the year to
ensure that the 250,000 exemption was
availed of only once throughout the
year.
• Donor’s Tax is not a property tax but a
tax on the privilege on the right to
transfer property by way of donation.
• If the property is an immovable, it
should be in a public instrument to be
valid.
Indirect Gift/Donation
1. Transfers for insufficient consideration
2. Condonation of Debt
Elements of a Taxable Donation:
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1. Actual or constructive delivery
2. Form to effect donation
3. Reduce the assets or patrimony of the
donor
4. Acceptance of the donation by the
donee during his lifetime
5. Increase in the patrimony of the donee
6. Donative Intent
7. Capacity of the Donor
Incapacitated Donors
1. Insane Persons
2. Minors
3. Spouses (to each other; except
moderate gifts during occasions of
family rejoicing)
4. Those under Civil Interdiction
• As a rule, the donee need not be
capacitated in order to receive the gift.
It can be received by his guardian or
legal representative.
• Gifts received by a disinherited heir can
be subject to donor’s tax.
Renunciation of Inheritance and Conjugal
Shares
• Renunciation of conjugal or communal
shares is taxable.
• Renunciation of inheritance must be
qualified: if general, not taxable, but
specific renunciation is taxable.
• But renouncing your conjugal share is
tantamount to donating it, because you
own such share. Therefore, it is taxable.
Transfers for Insufficient Consideration
• If there is transfer for less than
adequate consideration in money or
money’s worth, but it was discovered
during the lifetime of the donor, it shall
be subject to donor’s tax (In estate tax,
it must be discovered after the death of
the donor. But the period of discovery is
no longer important since both donor’s
and estate is taxed at 6%.)
Incomplete Donations
1. Conditional Donations
2. Revocable Donations
• These are donations subject to a
condition.
Condonation of a Debt
 • The cancellation of the debt must be
complete
• There must be no consideration for the
cancellation of the debt.
IV. VALUE ADDED TAX (VAT)
• VAT is a tax on consumption. The final
purchase by the end consumer
represents the final link in the
production chain that itself involves
several transactions and several acts of
consumption.
• It is a tax on value added. (Mao ganing
VALUE ADDED TAX)
• Every time you add value to a product,
you also incur a certain expense, and
this expense incurred may have also
been subject to VAT from the
perspective of the supplier or the input.
So that is why those who put value may
not end up paying the full tax because
they are able to get a credit out from
their input, hence the input-output
system in relation to VAT. But, this is
still a tax on value-added.
• e.g., The manufacturer has 100.00,
selling goods subject to 12% VAT, thus,
it would now be 112.00. Now the 112.00
will be charged to the wholesaler. This
wholesaler will then add a mark-up to
the 100.00, it will now become 120.00.
Such will be imposed on it, thus, the
value added from the original 100.00 is
120.00, get the 12% of 120.00, it will
be 14.04. The 14.04 is the output VAT
on the sale, and the input VAT on the
purchase is 12.00.
Sales Tax
• VAT is a sales tax, because you impose it
on sales. That is why the statutory
taxpayer in VAT is really the seller.
Indirect Tax: Impact and Incidence of Tax
• It is an indirect tax, where the seller is
really the one subject to tax, but he just
shifted the burden of paying (or incidence
of) the tax to the buyer.
Tax Credit Method
• It also follows the tax credit method
because the input VAT can be credited
97
from the Output VAT, so only the net
amount is payable.
Destination Principle and Cross Boarder
Doctrine
• Destination Principle- goods and services
are taxed in the place where they are
consumed.
• Cross-Boarder Doctrine- no VAT shall be
imposed to form part of the cost of goods
destined for consumption outside PH
Customs territory.
Persons Liable for VAT
1. Seller/Transferor- in the course of trade
or business (also includes incidental
transactions)
2. Importer- liable for VAT once goods are
in PH
3. Non-Resident Persons- For services
done in PH.
VAT Liability
To be liable for VAT:
1. Gross Sales or Receipts for past 12
months, have exceeded P3M.
2. There are reasonable grounds to believe
that the gross sales/receipts for the
next 12 months will exceed 3M.
Rules:
1. If > 3M, VAT-able.
2. Incidental to business, and business is
VAT-able: VAT-able.
3. VAT Registered, VAT-able.
4. GS/GR for past 12 months > 3M, VAT-
able.
5. If GS/GR exceeds 3M but not VAT
Registered, cannot claim input tax.
VAT Registration
• New VAT taxpayers shall apply for
registration and pay the registration fee
of P 500.00.
• TPs are also required to pay an annual
registration off of P500.00 every
January 31 of every year.
• Any person who is subject to VAT and
fails to pay the VAT registration fee shall
be liable to pay output tax without the
benefit of input tax.
 • VAT Registration is irrevocable for 3
years. But this is only in theory because
in practice, it is very difficult to change
from VAT registered to non-VAT
registered.
Transactions Liable for VAT
1. Sale of Goods
2. Sale of Services
3. Importation
• There are also transactions that are
liable for VAT, but because the person is
VAT-exempt, there will be no VAT. In
the same way that there are persons
liable for VAT, yet the transactions are
not VAT-able, there will also be no VAT
liability.
Sale of Goods
Sale of Goods can be categorized into three:
1. Regular Transactions
• Tax Base: Gross Selling Price
• Tax Rate: 12%
2. Zero-Rated Transactions
• Tax Base: Gross Selling Price
• Tax Rate: 0%
3. Transactions Deemed Sale
• Tax Base: Fair Market Value
• Tax Rate: 12%
• Gross Selling Price (GSP)- the total
amount of money or its equivalent
which the purchaser pays or is obligated
to pay un consideration of the sale,
excluding VAT. The payment may be
received either actually
constructively.
• Atty. Amago: You do not look at
whether the cash received is received
either actually or constructively in
relation to the goods. The moment the
obligation arises, VAT is already
imposable.
• Transactions deemed sale will be
treated just like any other regular
transaction, subject to VAT. (You can
avail of input tax credit).
• Example: Corned Beef worth 100.00
and it is displayed at a sari-sari store for
sale. But instead of selling it, you
consumed it yourself. That is a
transaction deemed sale, which is still
subject to VAT even though it was not
actually sold. In here, you do not deduct
the input VAT in relation to those
particular goods that you consumed
personally it should be subject to VAT in
the same way, you can also avail of
Input tax credit on the same goods that
you consume personally.
• Atty. Amago: You purchase it from the
supplier, you are charged with VAT on
the purchase, shifted by the supplier to
you. You can use this as input VAT, how
will the government know that you did
not actually utilize the input VAT on this
particular good, when you consume it
personally considering that there is
actually no specific pinpointing of the
input VAT is for this particular can of
corned beef. Since it cannot be
monitored by the government, they
decided that they should consider any
consumption that is not in the ordinary
course of trade or business, but the
expenses for using those inventories
may be charged as input VAT as
Transactions Deemed Sale.
Regular Transactions
• GR: Subject to the rule of regularity
• XPN: Services rendered in the PH by
non-resident foreign persons shall be
considered as being in the course of
trade or business whether isolated or
not.
• Rule of Regularity means in the regular
course of trade or business.
or • Incidental Transaction- something that
is necessary, appertaining to, or
depending on another business of the
seller or transferor.
• These are transactions that is related to
the business of the TP.
Zero-Rated Transactions on Sale of Goods
• Tax Base: GSP
• Tax Rate: 0%
• You can only avail of zero rated if you
are a VAT registered person. If you are
not VAT registered, and the transaction
is not subject to VAT, that is VAT-
98
 exempt only. (Meaning you cannot
claim input tax for your purchases). But
if you are VAT-registered, you can be
zero-rated meaning, you can still claim
input tax.
Export Sales Subject to Zero-Rated:
1. (1) The sale and actual shipment of
goods from the Philippines to a foreign
country, irrespective of any shipping
arrangement that may be agreed upon
which may influence or determine the
transfer of ownership of the goods so
exported and (2) paid for in acceptable
foreign currency or its equivalent in
goods or services, and (3) accounted for
in accordance with the rules and
regulations of the Bangko Sentral ng
Pilipinas (BSP);
• This is an actual export because the
goods are actually shipped out of PH.
• Example: A chair made in the
Philippines, paid for by a foreigner who
is outside of the Philippines foreign
currency, through the bank, and the
chair was shipped out of the Philippines
to the customer abroad. This is an
actual export, and subject to zero-rated
VAT.
2. (1) Sale of raw materials or packaging
materials (2) to a nonresident buyer (3)
for delivery to a resident local export-
oriented enterprise (4) to be used in
manufacturing, processing, packing or
repacking in the Philippines of the said
buyer's goods and (5) paid for in
acceptable foreign currency and (6)
accounted for in accordance with the
rules and regulations of the Bangko
Sentral ng Pilipinas (BSP);
• This is very specific as to the type of
goods being sold, it has to be raw
materials and packaging to a non-
resident buyer. Such that if instead of
the finished product being delivered to
the non-resident buyer abroad, it is the
raw materials for the making of such
product that will be shipped, and then
the finished product will be done
abroad, the export of the raw materials
will be zero-rated.
99
3. (1) Sale of raw materials or packaging
materials (2) to export-oriented
enterprise (3) whose export sales
exceed seventy percent (70%) of total
annual production;
• Sale of raw materials to a local export-
oriented industry granting that the
export sale will exceed 70% of total
annual production is considered an
export subject to the zero-rated rate.
• Even if the sale was made to a local
enterprise, it will still be considered an
export because the use of the particular
materials will be for abroad, and
intended to be delivered there when it
becomes a finished product.
4. Those considered export sales under
Executive Order NO. 226, otherwise
known as the “Omnibus Investment
Code of 1987”, and other special laws;
• There is a definition of what is
considered an export sale:
A. Actual Exportation
B. Constructive Exportation
a. Sales to bonded manufacturing
warehouses of export-oriented
manufacturers
b. Sales to export processing zones
c. Sales registered and accredited by the
SBMA
d. Sales to registered export trader
operating bonded trading warehouses
supplying raw materials in the
manufacture of export products
e. Sales to diplomatic missions and other
agencies and instrumentalities granted
tax immunities, of locally manufactured,
assembled or repacked products
whether or not paid for in foreign
currency.
5. The sale of goods, supplies, equipment
and fuel to persons engaged in
international shipping or international
air transport operations: Provided, That
the goods, supplies, equipment and fuel
shall be used for international shipping
or air transport operations
• The type of business here is
international; the goods will be
consumed outside of the Philippines.
Transactions Deemed Sale
• Tax Base: FMV
• Tax Rate: 12%
1. Transfer, use or consumption not in the
course of business of goods or
properties originally intended for sale or
for use in the course of business;
• VAT Registered person removes
his goods from his business for
his personal use. This is not
prohibited; but this will still
subject the product to VAT.
• When you donate your goods,
that is still VAT-able.
2. Distribution or transfer to:
a. Shareholders or investors as share in
the profits of the VAT-registered
persons; or
b. Creditors in payment of debt;
• You are distributing the goods or
properties as property dividends or
when you make your own goods as
payment of a debt or obligation
• Under these instances, you are
actually using it, transferring it in
the ordinary course of trade or
business, although not in the usual
way, you are distributing it as it is,
without actually receiving any cash.
3. Consignment of goods if actual sale is
not made within sixty (60) days
following the date such goods were
consigned;
• It is a transaction deemed sale if it is
beyond the 60-day period. Consigned
goods returned by the consignee within
the 60-day period are not deemed sold.
4. Retirement from or cessation of
business, with respect to inventories of
taxable goods existing as of such
retirement or cessation.
100
• This pertains to an instance when you
have inventories left at your store at the
end of your business.
• You may have used your Input VAT
against your Output VAT for the
previous period in relation to these
particular types of goods, so if you close
your business and there remains
inventory, and input VAT may still be
used up, the law then presumes that
there is a sale, after all, these goods
were intended to be sold in the ordinary
course of trade or business, only that it
can no longer be sold because the
business has ceased. It is just as if you
used it for personal purposes.
Sale of Services
1. Regular Transactions
• Tax Base: Gross Receipts
• Tax Rate: 12%
2. Zero-Rated
• Tax Rate: Gross Receipts
• Tax Rate: 12%
Gross Receipts- the total amount of money or
its equivalent representing the contract price,
compensation, service fees, etc., actually or
constructively received during the taxable year
for the services performed or to be performed
for another person, excluding value-added tax.
• There are only 2 transactions in Sale of
Services. There is no Transactions
Deemed Sale in Sale of Services.
1. (1) Processing, manufacturing or
repacking goods for (2) other persons
doing business outside the Philippines
(3) which goods are subsequently
exported, where the services are (4)
paid for in acceptable foreign currency
(5) and accounted for in accordance
with the rules and regulations of the
Bangko Sentral ng Pilipinas (BSP);
Example:
• A foreign manufacturer will send their
products here to the Philippines for
packaging, and the materials for
packaging may be sold to or sourced
here or abroad, it does not matter as
long as the service that you are
supposed to do is the repackaging.

2. (1) Services other than those
mentioned in the preceding paragraph,
(2) rendered to a person engaged in
business conducted outside the
Philippines or to a nonresident person
not engaged in business who is outside
the Philippines when the services are
performed, (3) the consideration for
which is paid for in acceptable foreign
currency and (4) accounted for in
accordance with the rules and
regulations of the Bangko Sentral ng
Pilipinas (BSP);
• Even if it is not processing or
manufacturing goods, if its is rendered
to a person engaged in business
conducted outside of the PH, or to a
non-resident person not engaged in
business who is outside of the PH when
the services are rendered, it can still be
zero-rated.
• Example: BPO services, the services are
done in the PH, but the services are
rendered to people situated abroad.
These are also zero-rated.
3. Services rendered to persons or entities
whose exemption under special laws or
international agreements to which the
Philippines is a signatory effectively
subjects the supply of such services to
zero percent (0%) rate;
• If the recipient of the service is
exempted under special laws or
international agreements, it can be
zero-rated.
4. Services rendered to persons engaged
in international shipping or international
air transport operations, including
leases of property for use thereof:
Provided, that these services shall be
exclusive for international shipping or
air transport operations;
• This pertains to the selling of goods and
services in relation to services rendered
to those engaged in international
operations.
• The services referred to here shall not
pertain to those made to common
101
carriers by air or sea, relative to the
transport of passengers. This type of
service is covered by another provision
of the Tax Code, but still subject to
12% VAT.
5. Services performed by subcontractors
and/or contractors in processing,
converting, or manufacturing goods for
an enterprise whose export sales
exceed seventy percent (70%) of total
annual production;
• When you sell packaging or raw
materials and other goods to
these export-oriented
enterprises, it is zero-rated.
The same goes for services.
6. Transport of passengers and cargo by
air or sea vessels from the Philippines to
a foreign country;
• If domestic sea carriers, zero
rated.
• If international sea carriers,
VAT-exempt.
7. Sale of power or fuel generated through
renewable sources of energy such as,
but not limited to, biomass, solar, wind,
hydropower, geothermal, ocean energy,
and other emerging energy sources
using technologies such as fuel cells and
hydrogen fuels.
• These pertains to renewable sources of
energy. They are zero-rated to
encourage entities to do business using
renewable sources of energy.
Importation
1. Regular Transactions
• Tax Base: Transaction Value
• Tax Rate: 12%
• Need not be in regular course of trade
or business
2. Technical Importation
• Tax Base: Transaction Value
• Tax Rate: 12%
• Transfer of goods by tax-exempt
persons
• Transaction Value- The actual value of
the transaction, plus customs duties
and excise tax. The VAT here will just
 be another tax. This is to discourage
importation.
• The transfer of goods by tax exempt
persons, such as those in PEZA who
receives cars from abroad and puts it in
PEZA so there will be no tax, but once
it will be brought outside PEZA, it will
also be deemed an importation subject
to 12% VAT based on transaction
value. This is to prevent circumvention
of the law.
VAT-Exempt Transactions
• VAT exempt transactions are different
from zero-rated in the sense that in zero
rated transactions, the seller can still
claim input tax credit on their
purchases. But in VAT-exempt, the
seller cannot charge output tax to the
buyers, and he cannot also claim input
tax on his purchases. (Ingles)
Types of VAT-Exempt Transactions
(A) Sale or importation of agricultural and
marine food products in their original
state, livestock and poultry of or king
generally used as, or yielding or producing
foods for human consumption; and
breeding stock and genetic materials
therefor.
Products classified under this paragraph
shall be considered in their original state
even if they have undergone the simple
processes of preparation or preservation
for the market, such as freezing, drying,
salting, broiling, roasting, smoking or
stripping. Polished and/or husked rice,
corn grits, raw cane sugar and molasses,
ordinary salt and copra shall be considered
in their original state;
• It is not just the sale that is exempt,
even the importation. This refers to
agricultural or marine products. The
products must be in their original state.
It can go through simple processes, but
it should not substantially change the
product itself.
• Note: FRYING is not one of the
processes enumerated. Therefore,
FRYING does not make a product VAT
exempt. (Fried chicken is subject to
VAT. :( )
• So, in the sale of fried chicken, you can
charge output tax, because fried
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chicken is Vat-able, but you cannot
claim input tax because when you
bought the chicken for frying, it is VAT
exempt as it is in its original state.
(B) Sale or importation of fertilizers;
seeds, seedlings and fingerlings; fish,
prawn, livestock and poultry feeds,
including ingredients, whether locally
produced or imported, used in the
manufacture of finished feeds (except
specialty feeds for race horses, fighting
cocks, aquarium fish, zoo animals and
other animals generally considered as
pets);
• What is exempted here is the sale
or importation of fertilizers, seeds,
etc. But specialty products may be
subject of VAT.
(C) Importation of personal and
household effects belonging to the
residents of the Philippines returning
from abroad and nonresident citizens
coming to resettle in the Philippines:
Provided, that such goods are exempt
from customs duties under the Tariff
and Customs Code of the Philippines;
• Importation of personal household
effects of PH residents returning
abroad.
• Atty. Amago: Now the periods
under the Tariff and Customs Code
and the NIRC are uniform, both 90
days.
(D) Importation of professional
instruments and implements, tools of
trade, occupation or employment, wearing
apparel, domestic animals, and personal
and household effects belonging to
persons coming to settle in the Philippines
or Filipinos or their families and
descendants who are now residents or
citizens of other countries, such parties
hereinafter referred to as overseas
Filipinos, in quantities and of the class
suitable to the profession, rank or position
of the persons importing said items, for
their own use and not for barter or sale,
accompanying such persons, or arriving
within a reasonable time: Provided, That
the Bureau of Customs may, upon the
production of satisfactory evidence that
such persons are actually coming to settle
in the Philippines and the goods are
brought from their former place of abode,
exempt such goods from payment of duties
and taxes: Provided, further, That the
vehicles, vessels, aircrafts, machineries
and other similar goods for use in
manufacture, shall not fall within this
classification and shall therefore be
subject to duties, taxes and other charges;
• This talks about the importation of
professional instruments for occupation
or employment of PH citizens and their
families.
• It is the Bureau of Customs that may
decide after being satisfied with the
evidence presented, that these
instruments are actually VAT exempt.
(E) Services subject to percentage tax
under Title V;
• If you are subject to OPT, you cannot be
subject to VAT. These two are distinct
and cannot co-exist with one another.
(F) Services by agricultural contract
growers and milling for others of palay into
rice, corn into grits and sugar cane into raw
sugar;
• This talks about the staple product of
the Philippines, and other agricultural
products. When you are dealing with
these essential products in agriculture,
they will be VAT-exempt.
(G) Medical, dental, hospital and
veterinary services except those rendered
by professionals;
• Professional doctors are not included
here (they are professionals). What this
provision refers to are the quack
doctors, faith healers, etc.
(H) Educational services rendered by
private educational institutions, duly
accredited by the Department of Education
(DepED), the Commission on Higher
Education (CHED), the Technical Education
and Skills Development Authority (TESDA)
and those rendered by government
educational institutions;
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• Educational services are VAT exempt so
as to not make tuition and other
educational expenses more expensive.
(I) Services rendered by individuals
pursuant to an employer-employee
relationship;
• It will be very burdensome on
employees if they will be subject to VAT,
the employers may just simply shift the
burden of paying VAT to the employees.
They have been burdened enough by
income tax.
(J) Services rendered by regional or area
headquarters established in the
Philippines by multinational corporations
which act as supervisory, communications
and coordinating centers for their
affiliates, subsidiaries or branches in the
Asia-Pacific Region and do not earn or
derive income from the Philippines;
• These entities (RAHQ) do not generate
income in the Philippines. They are only
here to serve their affiliates in the Asia-
Pacific Region, therefore, any services
rendered by these entities will be VAT
exempt.
(K) Transactions which are exempt under
international agreements to which the
Philippines is a signatory or under special
laws, except those under Presidential
Decree No. 529;
• Exempt under international
agreements.
• Must have a treaty.
(L) Sales by agricultural cooperatives duly
registered with the Cooperative
Development Authority to their members
as well as sale of their produce, whether in
its original state or processed form, to non-
members; their importation of direct farm
inputs, machineries and equipment,
including spare parts thereof, to be used
directly and exclusively in the production
and/or processing of their produce;
• Sale by agricultural cooperatives of ANY
PRODUCT to their members; and the
sale of agricultural products by these
cooperatives to non-members.
(M) Gross receipts from lending activities
by credit or multi-purpose cooperatives
duly registered with the Cooperative
Development Authority;
• Lending services by cooperatives are
VAT exempt.
(N) Sales by non-agricultural, non- electric
and non-credit cooperatives duly
registered with the Cooperative
Development Authority: Provided, That the
share capital contribution of each member
does not exceed Fifteen thousand pesos
(P15,000) and regardless of the aggregate
capital and net surplus ratably distributed
among the members;
• Sales by non-agricultural, non-electric,
non-credit cooperatives.
• Capital contribution must not exceed
P15,000.00
• Electric cooperatives are VAT-able.
• Cooperatives who engage in lending but
also engage in other activities such as
selling other goods are subject to VAT,
granting they exceed the threshold and
supposing their capital contributions will
exceed 15K.
(O) Export sales by persons who are not
VAT-registered;
• If VAT-registered, zero rated (can claim
input tax credit)
• If not VAT Registered, VAT-exempt
(cannot claim input tax credit)
(P) Sale of real properties not primarily
held for sale to customers or held for lease
in the ordinary course of trade or business
or real property utilized for low-cost and
socialized housing as defined by Republic
Act No. 7279, otherwise known as the
Urban Development and Housing Act of
1992, and other related laws, residential
lot valued at One million pesos
(P1,500,000) and below, house and lot,
and other residential dwellings valued at
Two million five hundred thousand pesos
(P2,500,000) and below: Provided, That
beginning January 1, 2021, the VAT
exemption shall only apply to sale of real
properties not primarily held for sale to
customers or held for lease in the ordinary
course of trade or business, sale of real
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property utilized for socialized housing as
defined by Republic Act No. 7279, sale of
house and lot, and other residential
dwellings with the selling price of not more
than Two million pesos (P2,000,000):
Provided, further, That every three (3)
years thereafter, the amount herein stated
shall be adjusted to its present value using
the Consumer Price Index, as published by
the Philippine Statistics Authority(PSA);
The following sales of Real Property are VAT
Exempt:
1. Sale of Real Properties not primarily
held for sale to customers or held for
lease in the ordinary course of trade or
business. – Already subject to Capital
Gains Tax; CGT and VAT are mutually
exclusive.
2. Sale of residential lot below 1.5M, other
dwellings below 2.5M.- A sale of a house
and lot below 2M is VAT Exempt. If the
value of the lot (lot only) does not
exceed 1.5M, it is VAT exempt.
(Q) Lease of a residential unit with a
monthly rental not exceeding Fifteen
thousand pesos (₱15,000);
• Those considered residential units
include dormitories, apartments, house
and lot, etc.
• If you lease these residential units, for
it to be VAT exempt, the rent should not
exceed 15K.
(R) Sale, importation, printing or
publication of books, and any newspaper,
magazine, journal, review bulletin, or any
such educational reading material covered
by the UNESCO Agreement on the
Importation of Educational, Scientific and
Cultural Materials, including the digital or
electronic format thereof: Provided, That
the materials enumerated herein are not
devoted principally to the publication of
paid advertisements;
• This pertains to sale of books,
newspapers, magazines.
• Atty. Amago: If you buy books from
National Bookstore, these books are
supposed to be VAT-exempt.
(S) Transport of passengers
international carriers;
• These are already subject to OPT.
Remember, VAT and OPT are mutually
exclusive.
• Both transport of passengers and
cargoes, if the transport is international,
VAT exempt.
(T) Sale, importation or lease of passenger
or cargo vessels and aircraft, including
engine, equipment and spare parts thereof
for domestic or international transport
operations;
• Sale of vessels or aircraft.
• Here, the vessel itself is being sold.
(U) Importation of fuel, goods and supplies
by persons engaged in international
shipping or air transport operations:
Provided, That the fuel, goods, and
supplies shall be used for international
shipping or air transport operations;
• Importation of fuel, goods, and supplies
by persons engaged in international
shipping or air transport.
(V) Services of bank, non-bank financial
intermediaries performing quasi-banking
functions, and other non-bank financial
intermediaries;
• Banking services are already subject to
Gross Receipts Tax.
(W) Sale or lease of goods and services to
senior citizens and persons with disability,
as provided under Republic Act Nos. 9994
(Expanded Senior Citizens Act of 2010) and
10754 (An Act Expanding the Benefits and
Privileges of Persons with Disability),
respectively;
• Not only do senior citizens get the
benefit of 20% discount on goods and
services, any goods or services
rendered to them are also VAT exempt.
(X) Transfer of property pursuant to
Section 40(C)(2) of the NIRC, as amended;
• The transfer of properties in merger or
consolidation are VAT exempt.
by • These are the tax-free exchanges.
(Y) Association dues, membership fees,
and other assessments and charges
collected by homeowners’ associations and
condominium corporations;
• Association dues are not extracted by
the condominium corporations or
homeowners’ associations in the regular
course of trade or business. These are
primarily for maintenance. Thus, these
cannot be subject to VAT pursuant to
Yamane v. Lepanto Condo (2003).
(Z) Sale of gold to the Banko Sentral ng
Pilipinas (BSP);
• This used to be zero-rated.
(AA) Sale of or importation of prescription
drugs and medicines for:
(i) Diabetes, high cholesterol, and
hypertension beginning January 1, 2020;
and
(ii) Cancer, mental illness, tuberculosis,
and kidney diseases beginning January 1,
2021.
Provided, That the DOH shall issue a list of
approved drugs and medicines for this
purpose within sixty (60) days from the
effectivity of this Act; and
• The sale of certain prescription drugs
are VAT exempt to make them cheaper.
• These diseases/ illnesses are
enumerated because these are the
common diseases being experienced by
Filipinos.
(BB) Sale or importation of the following
beginning January 1, 2021 to December
31, 2023:
(i) Capital equipment, its spare parts and
raw materials, necessary for the
production of personal protective
equipment components such as coveralls,
gown, surgical cap, surgical mask, N-95
mask, scrub suits, goggles and face shield,
double or surgical gloves, dedicated shoes,
and shoe covers, for COVID-19 prevention;
and
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(ii) All drugs, vaccines and medical devices
specifically prescribed and directly used
for the treatment of COVID-19; and
(iii) Drugs for the treatment of COVID-19
approved by the Food and Drug
Administration (FDA) for use in clinical
trials, including raw materials directly
necessary for the production of such drugs:
Provided, That the Department of Trade
and Industry (DTI) shall certify that such
equipment, spare parts or raw materials
for importation are not locally available or
insufficient in quantity, or not in
accordance with the quality or
specification required: Provided, further,
That for item (ii), within sixty (60) days
from the effectivity of this Act, and every
three (3) months thereafter, the
Department of Health (DOH) shall issue a
list of prescription drugs and medical
devices covered by this provision:
Provided, finally, That the exemption
claimed under this subsection shall be
subject to post audit by the Bureau of
Internal Revenue or the Bureau of Customs
as may be applicable.
• This is an amendment under the
Bayanihan Law, all drugs that will be
used to treat COVID- 19 will be VAT
exempt so as to make these drugs more
accessible to the COVID stricken
patients.
• manufacture of sardines, mackerel,
(CC) Sale or lease of goods or properties or
the performance of services other than the
transactions mentioned in the preceding
paragraphs, the gross annual sales and/or
receipts do not exceed the amount of Three
million pesos (P3,000,000.00).
• This is a catch-all provision.
• You may not be specifically enumerated
in any of the items above, but if your
gross sales/gross receipts for the year
do not exceed 3M, you are VAT exempt.
System of Paying VAT
• REMEMBER: PISO (Purchases Input,
Sales Output).
• We use an input-output crediting
system where the VAT imposed on the
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sale is reduced by the VAT on
purchases.
• The VAT will be imposed on the
difference between the sales and the
purchases. If no difference, there is no
VAT.
Input Tax
• Paid by a VAT registered person on
importation or local purchase of goods,
properties, including the use or lease
thereof, in the ordinary course of trade
or business.
1. Actual Input VAT: 12%
2. Transitional Input VAT: 2%
Atty: Remember Transitional (T): Two
(T)
• This transitional input VAT is imposed
on persons just beginning to be liable
for VAT. He will be allowed to claim
input tax on his beginning inventory of
goods to 2% of the value of such
inventory of such goods, which he can
credit with output tax.
• 2% of beginning inventory or 2% of
actual VAT paid on such inventory
whichever is HIGHER.
3. Presumptive Input VAT: 4%
(Presumptive: P Four (POR!))
• Imposed on those engaged in the
milk, refined sugar, cooking oil, instant
noodles.
• These entities are allowed a
presumptive input tax of 4% on the
gross value of their money on these
purchases of primary agricultural
products which are used as inputs on
their production.
4. Creditable Withholding VAT: 12%
• These are imposed on non-resident
persons rendering services in PH.
• If the non-resident engages in an
isolated transaction in the PH, it does
not mean that they are VAT Exempt,
they are still subject to VAT, only that
such will be withheld by the payor.
 5. VAT on Government Transactions (Final
Withholding)
• In government Transactions, the
government will withhold 5% of the final
gross payment, so the amount of input
tax that can be claimed from the BIR is
only 7%.
• Note: This is no longer applicable, as
Under a recent Memorandum Circular,
the input taxes on government
transactions will be through a creditable
withholding system where the entire
amount will now be withheld by the
payor.
VAT Refund
• You have to make a distinction between
VAT Refund of VAT because there are
two kinds of VAT Refund. (1) you paid
in excess because you committed a
mistake in the computation of your
output minus input and (2) the excess
input tax you have, no other transaction
subject to output VAT.
• Excess input VAT: Zero-rated sales (no
output VAT)
• Erroneous computation of VAT: 2 year-
period includes both admin and judicial
procedure.
Zero-Rated Sales
• Within 2 years after close of the taxable
quarter where the sales were made,
apply for tax refund or issuance of tax
credit certificate.
Cancellation of VAT Registration
•You can still claim input VAT within 2
years.
• Within 2 years from date of cancellation,
apply for issuance of tax credit
certificate for any unused input tax.
• CIR must grant refund within 90 days or
else face an administrative penalty.
REMEMBER:
• 2 years-admin action
• 90 days- period for CIR to decide
• 30 days-period to appeal to CTA
• CIR will not decide- subject to penalty.
Filing and Payment of VAT
• 20th day following the close of the
taxable month.
• Pay-as-you-file system
Documentary Requirements
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• VAT Invoice- for sales of goods or
properties
• VAT official receipts- for lease of
properties or services rendered.
Penalties
1. Issues VAT but not registered- 50%
surcharge plus, liable for VAT and OPT.
2. Does not indicate “VAT Exempt Sale”-
liable for VAT, cannot claim for refund.
3. Temporary Closure (not less than 5
days)/ Suspension of Business License:
• Fails to register
• Fails to issue receipts
• Failure to file VAT Return
• Understatement of taxable
sales or receipts by 30% or
more (rebuttable presumption
of fraud) (Can also be ground
for denial of refund)
V. REMEDIES (NIRC)
Jurisdiction of Courts
Jurisdiction of CTA Division (Original):
1. Decisions of CIR, go to CTA Div.
2. Inaction of CIR, go to CTA Div.
3. RTC in its original jurisdiction, go to CTA
Div.
4. BOC, go to CTA Div.
ALWAYS THREE (3) APPEALS:
1. Decisions of Customs Commissioner
2. Decisions of CBAA
3. Decisions of SOF regarding Customs
Cases
4. Decisions of STI, Agriculture Secretary
5. Tax cases 1M and above
Appellate Jurisdiction of CTA:
1. RTC tax cases (original jurisdiction)
2. MTC (if case came from MTC, it will still
have to go to RTC, then to CTA En
Banc)
Criminal Cases:
1. Violation of NIRC or Tariff and Customs
Code must be at least 1M.
2. Appellate jurisdiction over criminal
violations filed with MTC or RTC. (If <
1M)
 3. The CTA has jurisdiction over all cases RTC

involving taxation even if the remedy is

not purely pertaining to tax. (Such as
injunctions or declaratory reliefs
pertaining to tax cases; CTA has CTA Div (30 days)

jurisdiction).

CTA Division Process MR (15 days)

• CTA Div -> CTA En Banc -> SC

• Before a case from CTA Div can be
elevated to CTA En Banc, MR is needed. CTA En Banc (15
days)
• If from RTC: 30 days, file MR with Div
before going to En Banc (15 days)
• RTC -> CTA Div -> CTA En Banc ->
SC SC (15 days; Rule
45)

If from MTC

MTC

RTC (15 days)

CTA En Banc (30

days)

From decisions of CIR:

SC (15 days; Rule
45)

Jurisdiction of CTA En Banc

• Decisions of CTA Div.

• Cases from admin agencies
• Local cases decided by RTC (Original
Jurisdiction)
• Tax Cases originally decided by RTC (<
1M)
• Tax Collection cases (appellate
jurisdiction)
• Cases originally decided by CTA Div.
• Cases from the CBAA.
• Criminal Cases decided by DTA Div.
• Criminal Cases decided by RTC.
If from RTC (original jurisdiction): • IF FIRST TIME IN CTA, IT IS
ALWAYS 30 DAYS. THEREAFTER, 15
DAYS.

Prescriptive Period

108
GR:
1. 3 years is the general prescriptive
period. Reckoned from the last day
prescribed by law to file the return OR
the date was return was filed if in
default. (April 15 OR date of actual filing
of return if done after April 15).
2. 10 years from DISCOVERY- if there is
fraud involved.
Reckoning Point
1. When FAN is released
2. When TP amends his return
Suspension of Statute of Limitations
1. TP requests for reinvestigation and is
granted
2. TP cannot be located, unless he informs
the CIR of his change in address
3. Warrant duly served and no property is
located
4. When TP is out of PH.
Waiver
• If TP protests an assessment, he is
made to sign a waiver on the
prescriptive period
1. Waiver must be in prescribed form
2. Signed by TP himself or designated
representative
3. CIR or Revenue Officer must also sign
indicating that he has accepted and
agreed to the waiver
4. Both the date of execution and date of
acceptance should be before the date of
prescription agreed upon.
5. The waiver must be in 3 copies.
Abatement
•Only the penalties will be abated;
deficiency taxes still have to be paid.
Grounds for Abatement:
1. Unjust Assessment
2. Collection costs do not justify collection
of amount due
• Authority to abate: Only CIR
authority to abate.
Unjust, Excessive Tax Cases:
1. Filing of Return at the wrong venue
2. Mistake in tax payments due to
erroneous written official advice of a
revenue officer
3. Failure to file a return due to:
a. Prolonged labor dispute
b. Force majeure
c. Legitimate business reverses (also
grounds for suspension of MCIT by
SOF)
4. Non-compliance of the law due to
difficult interpretation
5. Failure is due to circumstances beyond
TP’s control
6. Late payment under meritorious
circumstances
7. Other analogous cases
Remedies Against Assessment Notices
1. Request for Reconsideration- based on
existing records
2. Request for Reinvestigation- based on
newly-discovered evidence.
Protest Steps:
1. File protest within 30 days of FAN
2. Submit documents within 60 days.
3. Within 180 days:
a. BIR decides- 30 days to appeal to
CTA.
b. BIR does not decide- Wait for BIR to
decide, or after 180 days, file with
CTA.
• Both are mutually exclusive. Cannot
have both.
Appeal to CTA:
1. In Division- Adverse decision, MR within
15 days
2. En Banc- if MR denied, file with En Banc
(Rule 43; 15 days)
3. SC- 15 days under Rule 45.
60-day period:
• Recon: 30-day period of protest (1st
Step)
• Rein: after lapse of the 60-day period
(2nd Step)
has • CIR-> CTA (30 days)-> CTA Div-> CTA
EB (needs MR; 15 days)-> SC (15 days)
Refund
Grounds: Error in assessment, assessment was
illegal, or made without authority, excessive
collection.
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Requisites:

1. In writing
2. Filed within 2 years
3. Proof of Payment

• After filing claim for refund, you can

immediately file judicial claim without
waiting for the 2-year period.
• Input VAT Refund: 2-year period
includes both admin and judicial
remedies.

-END OF TOPIC-

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