EN BANC

G.R. No. 253253, April 27, 2021

VICTOR M. BARROSO Petitioner, v. COMMISSION ON AUDIT, Respondent.

DECISION

LAZARO-JAVIER, J.:

The Case

Petitioner Victor M. Barroso, President of Bukidnon State University (BSU), 1 assails the following
dispositions of the Commission on Audit (CO A) Proper:

1) Decision No. 2015-1572 dated April 6, 2015 finding him solidarily liable with Evelyn S. Mag-
abo (Mag-abo) and Wilma L. Gregory (Gregory) to return the amount of P574,215.27 which was
stolen due to their supposed negligence; and

2) Decision No. 2020-2323 dated January 29, 2020 denying reconsideration of Decision No.
2015-157.

Antecedents

On March 17, 2005, Administrative Officer II Mag-abo was granted a cash advance of
P574,215.27 for the payment of the salaries of the BSU employees for March 16-31, 2005. On
March 28, 2005, about 9 o'clock in the morning, Mag-abo went to Landbank – Malaybalay to
encash the payroll check. Since there were several customers at that time, she left the check with
the bank verifier and returned to BSU.4

Around 11 o'clock in the morning that same day, Mag-abo went back to Landbank – Malaybalay
together with four (4) other BSU employees who had business there. After encashing the check,
Mag-abo et al. walked back to BSU.

As they passed Caltex gasoline station, an unidentified man grabbed Mag-abo's bag containing the
payroll money. The man immediately ran to the other side of the street, boarded a motorcycle,
and drove towards the direction of Cagayan de Oro City. The incident was reported to BSU Chief
Administrative Officer Gregory who accompanied Mag-abo to the police station to report the
incident.5

By Audit Observation Memorandum6 dated April 1, 2005, COA Audit Team Leader Teresita Quijada
informed petitioner of Mag-abo's cash shortage of P574,215.27. Quijada also issued a Demand
Letter7 to Mag-abo directing her to produce the unliquidated amount and explain within 72 hours
why the cash shortage occurred.

By Letter8 dated April 2, 2005, Mag-abo explained the incident to petitioner. In a separate letter
to the COA Legal Adjudication Office, Mag-abo, too, requested relief from her cash accountability.
Mag-abo's request got denied under Decision No. LAO-N-2006-132. The COA Adjudication and
Settlement Board affirmed Mag-abo's liability.9

Mag-abo elevated her case to the COA Commission Proper (COA Proper) via a petition for review.
But through Decision No. 2014-015,10 her appeal got denied anew. Aggrieved, Mag-abo moved for
reconsideration, attaching the affidavit11 dated March 2014 of retired BSU Accountant Gloria P.
Torres (Torres) stating that Mag-abo requested for a security escort and vehicle from her
supervisor, but none were provided.

As borne in its assailed Decision 2015-15712 dated April 6, 2015, the COA Proper denied Mag-
abo's motion and held her, petitioner, and Gregory solidarily liable for the stolen amount, owing to
their supposed negligence when the loss occurred, thus:chanroblesvirtualawlibrary
WHEREFORE, premises considered, this instant motion for reconsideration of Ms. Evelyn S. Mag-
abo, Administrative Officer II, Bukidnon State University (BSU), Malaybalay City, of Commission
of Audit Decision No. 2014-015 dated February 3, 2014 is hereby DENIED for lack of merit.
Accordingly, she shall continue to be liable for the loss of the payroll money due to robbery in the
total amount of P573,215.27. In addition, Ms. Wilma L. Gregory and Mr. Victor M. Barroso,
Supervisor of Cashiering Department and President of BSU, respectively, shall be held solidarily
liable with Ms. Mag-abo for their negligence in providing security escort and service vehicle during
the time of the loss pursuant to Section 102(1) and Section 104 of PD No. 1445.
The ruling surprised petitioner, considering he was never a party to the case and was never even
furnished copy of Torres' affidavit. Thus, petitioner filed his own motion for reconsideration,
invoking his right to due process and questioning the basis of his supposed liability.13

The COA Proper denied petitioner's motion under Decision No. 2020- 23214 dated January 29,
2020. It ruled that petitioner was not deprived of his right to due process. For although he was
not impleaded in the proceedings below, he was able to file a motion for reconsideration anyway
right after he was found solidarily liable with Mag-abo and Gregory.15

As for petitioner's liability, the COA Proper found that petitioner failed to exercise the diligence
expected of a good father since he did not adopt precautionary measures to safeguard the funds
of BSU. It was only after the robbery incident that petitioner realized the importance of sound
internal control in the custody of the agency's cash. 16

Present Petition

Petitioner now argues that the COA Proper acted with grave abuse of discretion when it found him
solidarily liable to return the stolen amount without observing his right to due process of law, and
despite the insufficiency of evidence to establish negligence on his part. 17

For one, the proceedings before the COA was against Mag-abo. He was never made a party
thereto until it reached the COA Proper and only on reconsideration. Prior to this, he was never
asked to participate in the proceedings nor directed to present his case.18

The basis of the COA Proper for finding him liable was the Affidavit dated March 2014 of Torres
which he was never furnished a copy of. Thus, although he was able to file a motion for
reconsideration before the COA Proper, he cannot be deemed to have exercised it in a meaningful
way as he had no opportunity to scrutinize the evidence against him. 19

For another, the finding of negligence against him had no factual basis.20

In its Comment, the Office of the Solicitor General (OSG) asserts that petitioner is solidarily liable
for the stolen amount. It argues that the petition ought to be dismissed outright for petitioner's
failure to attach material portions of the records in support of his petition as required under Rule
64, Section 5 of the Rules of Court.21 In particular, petitioner did not attach copies of Mag-abo's
request for relief before the COA Legal Adjudication Office, the ruling of the COA Adjudication and
Settlement Board, Decision No. 2014-015 of the COA Proper, and Torres' Affidavit dated March
2014.22

At any rate, the COA Proper did not act with grave abuse of discretion when it held petitioner
liable for his failure to implement security measures in relation to the management of BSU's
funds. It was only after the robbery incident that BSU officials realized the importance of
safeguarding government funds by providing security escort and vehicle to its cashiering
personnel.23

Too, petitioner was not denied due process. For one, he was afforded an opportunity to seek a
reconsideration of the ruling complained of. For another, he admitted in his motion for
reconsideration before the COA Proper that, although he was not party to the earlier proceedings,
he received copies of the COA's rulings regarding Mag-abo's case. This included COA Decision No.
2015-157 which contained a summary of Torres' affidavit.24

Threshold Issue
Did the COA violate petitioner's right to due process?

Ruling

The petition is meritorious.

Preliminary Matters

At the outset, the Court notes that petitioner belatedly initiated the present petition. As petitioner
himself admitted, he received Decision No. 2015-157 on June 19, 2015 and moved for its
reconsideration on July 2, 2015 or thirteen (13) days from notice. Thereafter, he received copy of
the Decision No. 2020-232 denying reconsideration on August 25, 2020. Thus, he had seventeen
(17) days or until September 11, 2020 to file a petition for certiorari under Rule 64 of the Rules of
Court.25 As it was though, petitioner mailed the present petition via private courier on
September 11, 2020. The Court received the petition only on September 21, 2020 or ten (10)
days beyond the sixty (60)-day period.

Rule 13, Section 3 of the Rules of Civil Procedure as amended by A.M. No. 19-10-20-
SC26 pertinently states:chanroblesvirtualawlibrary
Section 3. Manner of filing. – The filing of pleadings and other court submissions shall be made
by:

(a) Submitting personally the original thereof, plainly indicated as such, to the court;

(b) Sending them by registered mail;

(c) Sending them by accredited courier; or

(d) Transmitting them by electronic mail or other electronic means as may be authorized by the
[c]ourt in places where the court is electronically equipped.

In the first case, the clerk of court shall endorse on the pleading the date and hour of filing. In the
second and third cases, the date of the mailing of motions, pleadings, [and other court
submissions, and] payments or deposits, as shown by the post office stamp on the envelope or
the registry receipt, shall be considered as the date of their filing, payment, or deposit in
court. The envelope shall be attached to the record of the case. In the fourth case, the date of
electronic transmission shall be considered as the date of filing. (3a) (emphases and underscoring
added)
Verily, service and filing of pleadings via private courier should be reckoned from the date of
mailing when said private courier is accredited by the courts.27 Otherwise, the pre-amendment
jurisprudential doctrine would govern, that is, it would be considered similar to filing via ordinary
mail where the date of actual receipt is deemed the date of filing, albeit it was posted much
earlier.28

The procedure for accreditation is prescribed under Administrative Order 242-A-202029 which the
Court En Banc approved on September 1, 2020. Said Administrative Order took effect on October
1, 2020 or nineteen (19) days after the present petition was mailed to the Court on September
11, 2020. Indubitably, the filing of the petition was not in accordance with the aforecited rule.
Thus, the date when the Court received the petition, September 21,2020, should be considered as
the date of filing. The petition was therefore filed ten (10) days late.

At any rate, Rule 13, Section 14 of the 2019 Rules decrees:chanroblesvirtualawlibrary

Section 14. Conventional service or filing of orders, pleadings and other documents. –
Notwithstanding the foregoing, the following orders, pleadings, and other documents must
be served or filed personally or by registered mail when allowed, and shall not be served or
filed electronically, unless express permission is granted by the Court:
 (a) Submitting personally the original thereof, plainly indicated as such, to the court;

(b) Sending them by registered mail;

(c) Sending them by accredited courier; or

(d) Transmitting them by electronic mail or other electronic means as may be authorized by the [c]ourt
in places where the court is electronically equipped.

As stated, initiatory pleadings such as the present petition for certiorari should be filed personally
or via registered mail. The provision does not allow its filing via private courier regardless of
accreditation. Under such circumstance, the petition should be treated as if filed via ordinary
mail.30 Consequently, the date when the Court actually received a copy of the present petition,
September 21, 2020, shall be deemed the date of filing, not the date of mailing on September 11,
2020.

Despite these procedural lapses, however, the Court resolves to give due course to the petition in
the higher interest of substantial justice. Too, the amendments to the Rules of Civil Procedure
took effect on May 1, 2020 only,31 thus, creating a gap in jurisprudence pertaining to its
interpretation and application. Petitioner's lapses are therefore excusable under the
circumstances.

As for petitioner's purported failure to attach the material portions of the records in support of his
petition, surely he may not be faulted for this omission considering his claim that he was a non-
party to the proceedings before the COA, and that he was found liable, albeit he was not accorded
due process.

Petitioner's right to administrative due

process was violated

Ang Tibay v. Court of Industrial Relations32 bears the requisites of due process in
administrative proceedings, viz.:

1) The right to a hearing, which includes the right to present one's case and submit evidence in
support thereof;

2) The tribunal must consider the evidence presented;

3) The decision must have something to support itself;

4) The evidence must be substantial;

5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the
record and disclosed to the parties;

6) The tribunal or any of its judges must act on its or his own independent consideration of the facts
and the law of the controversy, and not simply accept the views of a subordinate in arriving at a
decision; and
 7) The board or body should, in all controversial questions, render its decision in such a manner that
the parties to the proceeding will know the various issues involved, and the reasons for the
decision.
Here, petitioner claims that he was denied the opportunity to be heard since he was only included
as a party towards the end of the proceedings before the COA, after the COA Proper denied Mag-
abo's motion for reconsideration. More, he was never furnished a copy of Torres' Affidavit dated
March 2014 which was allegedly the basis of the adverse ruling against him.

On the other hand, the OSG invokes Ledesma v. Court of Appeals33 wherein the Court
pronounced that the essence of due process is simply to be heard or an opportunity to explain
one's side, including the opportunity to seek a reconsideration of an action or ruling.

We rule for petitioner.

The mere filing of a motion for reconsideration does not cure due process defects, especially if the
said motion was filed precisely to raise the issue of violation of the right to due process and the
lack of opportunity to be heard on the merits. This was the Court's pronouncement in Fontanilla
v. Commissioner Proper34 which bears a similar set of facts as here.

In Fontanilla, petitioner Dr. Fontanilla was the Division Superintendent of the Department of
Education (DepEd) – South Cotabato, with Special Disbursing Officer Luna Falcis (Falcis) under his
supervision. On August 30, 2007, Falcis and a co-worker went to Landbank - Koronadal City to
encash a P313,024.50 check to defray DepEd – South Cotabato's expenses. On their way back to
their office, however, three (3) men blocked their path, held them at gunpoint and grabbed the
envelope containing the money before speeding away on a motorcycle. The COA Audit Team
Leader investigated the incident and found that Falcis failed to observe extra care and due
diligence in handling the money. The COA Regional Office sustained these findings. Despite
repeated requests, Falcis was not relieved from accountability. Falcis' plea eventually got elevated
to the Adjudication Settlement Board which affirmed her liability and held Dr. Fontanilla solidarily
liable with her for the stolen amount. Dr. Fontanilla moved to intervene in the proceedings,
arguing that his right to due process was violated. He claimed he was not given due notice, nor
ordered to participate in the proceedings, or given the chance to present his side. The COA Proper
treated Dr. Fontanilla's motion for intervention as an appeal which allegedly equated to an
opportunity to be heard, the very process he was supposedly asking for.

The Court reversed the ruling of the COA Proper in Fontanilla, thus:chanroblesvirtualawlibrary
While we have ruled in the past that the filing of a motion for reconsideration cures the defect in
procedural due process because the process of reconsideration is itself an opportunity to be
heard, this ruling does not embody an absolute rule that applies in all circumstances. The mere
filing of a motion for reconsideration cannot cure the due process defect, especially if
the motion was filed precisely to raise the issue of violation of the right to due process
and the lack of opportunity to be heard on the merits remained.

In other words, if a person has not been given the opportunity to squarely and intelligently
answer the accusations or rebut the evidence presented against him, or raise substantive
defenses through the proper pleadings before a quasi-judicial body (like the COA) where he or she
stands charged, then a due process problem exists. This problem worsens and the denial of his
most basic right continues if, in the first place, he is found liable without having been charged and
this finding is confirmed in the appeal or reconsideration process without allowing him to rebut or
explain his side on the finding against him.

xxx

Contrary to the COA's posturing, it did not pass upon the merit of Dr. Fontanilla's claim
that he was denied due process. Instead of asking Dr. Fontanilla to explain his side (by
allowing him to submit his memorandum or calling for an oral argument as provided
under Rule X, Section 3 of the COA Rules of Procedure), the COA concluded right
away that the motion for intervention, exclusion, and reconsideration had effectively
cured the alleged denial of due process. The COA failed or simply refused to realize that
Dr. Fontanilla filed the motion precisely for the purpose of participating in the
proceedings to explain his side.

xxx

In the present case, not only did the COA deny Dr. Fontanilla's plea to be heard, it proceeded to
confirm his liability on reconsideration without hearing his possible defense or
defenses. (emphases added)
Here, petitioner was found liable though he was never charged. The proceedings prior to the COA
Proper's reconsideration all pointed to Mag-abo as sole negligent party responsible for the loss of
the P574,215.27 representing the salaries of BSU personnel. Petitioner only got involved in the
proceedings when the COA Proper denied Mag-abo's motion for reconsideration and ordered him
to pay the unliquidated amount. Notably, petitioner was brought in as party at a much later stage
than Dr. Fontanilla.

Applying Fontanilla, petitioner here was similarly deprived of the opportunity to present and
submit evidence to establish non-culpability via memorandum or oral arguments before the COA
Commission pursuant to Section 3, Rule X of the 2009 Revised Rules of Procedure of the
COA.35 Worse, he was deprived of the opportunity to examine the evidence against him, for he
was never served a copy of Mag-abo's submissions which formed the very basis of the adverse
ruling of the COA Proper.

Though petitioner raised this due process violation issue before the COA Proper, the latter never
addressed his concern. It simply ruled that the very pleading which raised due process violation
was the very pleading which afforded him due process. But this cannot be the case. For a
perusal of petitioner's Motion for Reconsideration36 before the COA Proper reveals that he never
had the opportunity to thoroughly argue the merits of his case precisely because he was not
properly informed of what he was supposed to argue against (i.e. the accusations and statements
against him in Mag-abo's submissions). Thus, petitioner was constrained to limit the discussion in
his motion for reconsideration to the issue of due process. Surely, this cannot be considered the
opportunity to be heard within the concept of administrative due process.

Where the denial of the fundamental right of due process is apparent, a decision rendered in
disregard of such right is void for lack of jurisdiction. Any judgment or decision rendered
notwithstanding such violation may be regarded as a lawless thing, which can be treated as an
outlaw and slain at sight, or ignored wherever it exhibits its ugly head, as here. 37

ACCORDINGLY, the petition is GRANTED. Decision Nos. 2015- 157 and 2020-232 dated April 6,
2015 and January 29, 2020, respectively, of the Commission on Audit - Commission Proper
are NULLIFIED insofar as they hold petitioner Victor M. Barroso solidarily liable with Evelyn S.
Mag-abo and Wilma L. Gregory to return the amount of P574,215.27.chanroblesvirtualawlibrary

SO ORDERED.

Gesmundo, C.J., Perlas-Bernabe, Leonen, Caguioa, Hernando, Carandang, Inting, Zalameda,

Lopez, M., De Los Santos, Gaerlan, Rosario, and Lopez, J. JJ., concur.

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on April 27, 2021 a Decision, copy attached herewith, was
rendered by the Supreme Court in the above-entitled case, the original of which was
received by this Office on July 2, 2021 at 10:05 a.m.
 Very truly yours,

(Sgd.) MARIFE M. LOMIBAO-CUEVAS

Clerk of Court

Endnotes:

1
Also appears in the records as Bukidnon State College.

Rollo, p. 17-21.
2

Id. at 22-26.
3

4
TR, Comment, p. 2.

Id. at 2-3.
5

Id. at Annex 2.
6

Id. at Annex 3.
7

Id. at Annex 4
8

Id. at 3-4.
9

10
Id. at Annex 5.

11
Id. at Annex 8

12
Rollo, p. 17.

13
TR, Comment, Annex 6.

14
Rollo, p. 22.

15
Id. at 24-25.

16
Id. at 24.

17
Id. at 6-12.

18
Id. at 7.

19
Id. at 7-8.

20
Id. at 10-12.

21
Section 5. Form and contents of petition. — xxx
The petition shall be accompanied by a clearly legible duplicate original or certified true copy of
the judgment, final order or resolution subject thereof, together with certified true copies of such
material portions of the record as are referred to therein and other documents relevant and
pertinent thereto. The requisite number of copies of the petition shall contain plain copies of all
documents attached to the original copy of said petition.
xxxx
The failure of petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition.

22
TR, Comment, pp. 6-9.
 Id. at 13-16.
23

Id. at 16-18.
24

25
Section 3. Time to file petition. — The petition shall be filed within thirty (30) days from notice
of the judgment or final order or resolution sought to be reviewed. The filing of a motion for new
trial or reconsideration of said judgment or final order or resolution, if allowed under the
procedural rules of the Commission concerned, shall interrupt the period herein fixed. If the
motion is denied, the aggrieved party may file the petition within the remaining period, but which
shall not be less than five (5) days in any event, reckoned from notice of denial.

26
2019 Proposed Amendments to the 1997 Rules of Civil Procedure.

27
Section 5. Modes of Service. — Pleadings, motions, notices, orders, judgments, and other court
submissions shall be served personally or by registered mail, accredited courier, electronic mail,
facsimile transmission, other electronic means as may be authorized by the Court, or as provided
for in international conventions to which the Philippines is a party.

28
See Industrial Timber Corp. v. NLRC, 303 Phil. 621, 626 (1994); Philippine National Bank v.
Commissioner of Internal Revenue, 678 Phil. 660, 674 (2011).

29
Guidelines on the Accreditation of Courier Service Providers.

30
See Philippine Savings Bank v. Papa, 823 Phil. 725, 734-735 (2018).

31
Rule 144, Rules of Court as amended.

32
See 69 Phil. 635, 642-644 (1940).

33
565 Phil. 731, 740 (2007).

34
787 Phil. 713 (2016).

35
Section 3. Oral Argument. - Upon motion by a party, or motu proprio, the Commission Proper
may call for oral arguments of the parties before the Commission Proper en banc subject to such
limitation of time and issues as the Commission may prescribe. In lieu of oral arguments, the
parties may be allowed to submit their respective memoranda within fifteen (15) days from notice
thereof.

36
TR, Comment, Annex 6.

Ombudsman v. Conti, 806 Phil. 384, 396 (2017).cralawredlibrary

37
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-3962 February 10, 1908

THE UNITED STATES, plaintiff-appellee,

vs.
LING SU FAN, defendant-appellant.

Lionel D. Hargis and C.W. O'Brien for appellant.

Attorney-General Araneta for appellee.

JOHNSON, J.:

This defendant was accused of the offense of "exporting from the Philippine Islands Philippine silver coins,"
in a complaint filed in the Court of First Instance of the city of Manila. The complaint was in the words
following:

The undersigned accuses Ling Su Fan of the criminal offense of attempting to export Philippine
silver coins from the Philippine Islands, contrary to law, committed as follows:

That on or about the 12th day of December, 1906, in the city of Manila, Philippine Islands, the said
Ling Su Fan was freight clerk, supercargo, comprador, and person in charge of all shipments of
freight on board the steamship Taming, which said steamship Taming was then and there about to
depart from the port of Manila, Philippine Islands, to the port of Hongkong; that the said Ling Su Fan
did then and there willfully, unlawfully, and feloniously place, conceal, and hide the sum of twenty
thousand six hundred pesos (20,600) pesos in Philippine silver coins, coined by authority of the act
of Congress approved March 2, 1903, in his stateroom on board the said steamship Taming with
the intent of exporting the said Philippine silver coins from the Philippine Islands to the port of
Hongkong, and did then and there attempt to export the said Philippine silver coins from the
Philippine Islands to the said port of Hongkong.

Contrary to the provisions of Act No. 1411 of the Philippine Commission.

W.H. POLLEY.

Subscribed and sworn to before me and in my presence, in the city of Mania, P.I., this 20th day of
December, 1906, by W.H. Polley.

A.S. CROSSFIELD,
Judge, Court of First Instance, Manila, P.I.

To this complaint the defendant presented the following demurrer:

Now comes Ling Su Fan, the accused in the above-entitled cause, through his undersigned
counsel, and demurs to the complaint filed against him herein and for causes of demurrer
respectfully shows:

1. That said complaint does not conform substantially to the prescribed form.

2. That the fact charged do not constitute a public offense.

3. That the said complaint is contrary to the provisions of the fourteenth amendment of the
Constitution of the United States of America and also contrary to paragraph 1 of section 5 of the act
of Congress of the United States of America dated July 1, 1902.
 Wherefore the defendant herein prays the court that the said complaint be dismissed and that he,
said defendant, be discharged from custody and arrest.

Manila, P.I., December 28, 1906.

LIONEL D. HARGIS,
C.W. O'BRIEN,
Attorneys for the defendant, 18 Plaza Cervantes, Manila.

Upon this demurrer the court below made the following order:

This case is before the court for hearing the demurrer to the complaint presented by the defendant.

After examining the demurrer and the complaint, and giving the same due consideration, I am of the
opinion that the grounds of the demurrer are not well taken.

It is therefore ordered that the demurrer be, and it is overruled.

No exception was made at the time of the overruling of the demurrer.

The defendant was duly arraigned and pleaded "not guilty." The case then proceeded to trial.

After hearing the evidence adduced during the trial of the cause, the court below made the following
findings of fact:

That on the 12th day of December, 1906, an employee at the Manila custom-house found on board
the steamship Taming in the bunk occupied by and in the exclusive use and control of the
defendant, who was the comprador on board (said ship), 20,600 silver coins, each of 1 peso, being
coins made and issued by and under the direction of the Government of the Philippine Islands; that
when the said coins were discovered as aforesaid and the defendant was confronted with the fact
he stated at first that he knew nothing about it, and afterwards that they had been brought aboard
by different Filipinos whom he did not know and had been stored in the place in which they were
found for transportation to Hongkong; that these statements were made by the defendant
voluntarily; that the steamship Taming, on which these coins were found, had already been cleared
from the port of Manila for Hongkong and that she was about ready to sail, and that the coins were
not manifested either in the incoming or outgoing voyage of the said vessel; that the finding of the
coins on board the said steamship Taming as before stated, was admitted by the defendant at the
trial; the bullion value of the said coins at the time they were alleged to have left Hongkong was at
least 9 percent more than their apparent face value in the Philippine Islands.

The lower court made the following observations concerning the proof offered by the defendant and his
witnesses during the trial:

Evidence was offered on the part of the defense to the effect that the said money was owned by a
Chinaman in Hongkong, who shipped the same to the Philippine Islands by the defendant, for the
purpose of purchasing Mexican silver coins and Spanish-Filipino silver coins, in accordance with an
agreement made by the defendant with another person in Manila, under which for 82 Philippine
pesos he was to receive 100 Spanish-Filipino pesos, and for 97 Philippine pesos he was to receive
100 pesos, Mexican currency, and in corroboration of the shipment there was presented an
insurance company at Hongkong. The defendant testified that upon bringing the coins to Manila he
ascertained that he could not purchase Mexican coins and Spanish- Filipino coins as
advantageously as he had before agreed, and in accordance with his understanding with the owner
of the Philippine silver coins, and so decided to take the Philippine coins back to Hongkong to the
owner thereof.

The lower court also made the following observations relating to the credibility of the defendant and his
witnesses:
 From the appearance of the witnesses while testifying, who testified that said coins were brought to
the Philippine Islands for the purpose of buying other coins, and from the unreasonableness of the
proposition advanced by them, I am unable to give their testimony credence. I am unable to believe
that any person would send this amount of money to the Philippine Islands from Hongkong in the
care of the defendant, who was an employee as before stated, on board the
steamer Taming without the knowledge of the owners of the vessel or its shipping agent at
Hongkong, and without the knowledge of the master of the vessel.

Upon these foregoing findings of fact and observations the lower court found the defendant Ling Su Fan,
guilty of the offense charged in the complaint, and sentenced him to be imprisoned for a period of sixty
days and to pay a fine of P200.

From that sentence the defendant appealed to this court and made the following assignment of errors:

First. That the court below erred in overruling the demurrer presented to the complaint by the
defendant and appellant; and

Second. that the sentence of the court below was contrary to law and to the great weight of
evidence.

The appellant bases his first above assignment of error upon the third ground of the demurrer presented by
him in the court below and which the lower court overruled. The third ground of the demurrer is as follows:

That said complaint is contrary to the provision of the fourteenth amendment of the Constitution of
the United States of America and also contrary to paragraph 1 of section 5 of the Act of Congress of
the United States of America dated July 1, 1902.

That part of the contention of the appellant which refers to the Constitution of the United States can have
no important bearing upon the present case, for the reason that paragraph 1 of section 5 of the said act of
Congress dated July 1, 1902, is almost exactly in the same phraseology as a portion of the fourteenth
amendment to the Constitution of the United States, and therefore, decisions of the Supreme Court of the
United States in construing said fourteenth amendment, may be referred to for the purpose of ascertaining
what was intended by Congress in enacting said paragraph 1 of section 5, and what laws the Philippine
Commission may make under its provisions.

Paragraph 1 of section 5 of the said act of Congress is as follows:

That no law shall be enacted in said Islands which shall deprive any person of life, liberty, or
property without due process of law, or deny to any person therein the equal protection of the laws.

It will be noted that this amendment does not prohibit the enactment of laws by the legislative department of
the Philippine Government, depriving persons, of life, liberty, or property. It simply provides that laws shall
not be enacted which shall deprive persons of life, liberty, or property without due process of law. The
question, then, is presented, Is the act under which the defendant is prosecuted here and under which it is
sought to deprive him of the money which it is alleged he attempted to illegally export, in accordance with
due process of law?

The Congress of the United States, on the 2d day of March, 1903, passed an act entitled "An act to
establish a standard value and to provide for a coinage system in the Philippine Islands." Section 6 of said
act is as follows:

SEC. 6. That the coinage authorized by this act shall be subject to the conditions and limitations of
the provisions of the act of July first, nineteen hundred and two, entitled "An act temporarily to
provide for the administration of the affairs of civil government in the Philippine Islands, and for
other purposes," except as herein otherwise provided; and the Government of the Philippine Islands
may adopt such measures as it may deem proper, not inconsistent with said act of July first,
nineteen hundred and two, to maintain the value of the silver Philippine peso at the rate of one gold
peso, and in order to maintain such parity between said silver Philippine pesos and the gold pesos
herein provided for . . .
In pursuance to the authority granted in said section 6, to wit, "the Government of the Philippine Islands
may adopt such measures as it may deem proper, ... to maintain the value of the silver Philippine peso at
the rate of one gold peso ..." the Civil Commission enacted Act No. 1411, dated November 17, 1905, which
act was entitled "An act for the purpose of maintaining the parity of the Philippine currency in accordance
with the provisions of sections one and six of the act of Congress approved March second, nineteen
hundred and three, by prohibiting the exportation from the Philippine Islands of Philippine silver coins, and
for other purposes."

Section 1 and 2 of the said act of the Civil Commission are as follows:

SECTION 1. The exportation from the Philippine Islands of Philippine silver coins, coined by
authority of the act of Congress approved March second, nineteen hundred and three, or of bullion
made by melting or otherwise mutilating such coins, is hereby prohibited, and any of the
aforementioned silver coins or bullion which is exported, or of which the exportation is attempted
subsequent to the passage of this act, and contrary to its provisions, shall be liable to forfeiture
under due process of law, and one-third of the sum or value of bullion so forfeited shall be payable
to the person upon whose information, given to the proper authorities, the seizure of the money or
bullion so forfeited is made, and the other two-thirds shall be payable to the Philippine Government,
and accrue to the gold-standard fund: Provided, That the prohibition herein contained shall not
apply to sums of twenty-five pesos or less, carried by passengers leaving the Philippine Islands.

SEC. 2. The exportation or the attempt to export Philippine silver coins, or bullion made from such
coins, from the Philippine Islands contrary to law is hereby declared to be a criminal offense,
punishable, in addition to the forfeiture of said coins or bullion as above provided, by a fine not to
exceed ten thousand pesos, or by imprisonment for a period not to exceed one year, or both in the
discretion of the court.

It will be noted that the Civil Commission expressly relied upon the act of Congress of March 2, 1903, for its
authority in enacting said Act No. 1411.

Under the question above suggested it becomes important to determine what Congress intended by the
phrase "due process of law." This phrase has been discussed a great many times by the Supreme Court of
the United States, as well as by writers upon questions of constitutional law. This same idea, is couched in
different language in the different constitutions of the different States of the Union. In some, the phrase is
"the law of the land." In others, "due course of law". These different phrases, however, have been given
practically the same definition by the different courts which have attempted an explanation of them. The
phrase "due process of law" was defined by Judge Story, in his work on Constitutional Law, as "the law in
its regular course of administration through the courts of justice."

Judge Cooley, in his work on Constitutional Limitations, says:

Due process of law in each particular case means such an exertion of the powers of the
government as the settled maxims of law permit and sanction, and under such safeguards for the
protection of individual rights as those maxims prescribed for the class of cases to which the one in
question belongs.

The famous constitutional lawyer Daniel Webster, in his argument before the Supreme Court of the United
States in the case of Dartmouth College vs. Woodward (4 Wheaton, 518), gave a definition of this phrase
which the Supreme Court of the United States quoted and adopted. It was:

By the law of the land is more clearly intended the general law, a law which hears before it
condemns, which proceeds upon inquiry and renders judgment only after trial. The meaning is that
every citizen shall hold his life, liberty, property, and immunities under the protection of the general
rules which govern society. Everything which may pass under the form of an enactment is not,
therefore, to be considered the law of the land.

There are but few phrases in the Constitution of the United States which have received more attention by
the courts of the United States, in an endeavor to ascertain their true meaning, than have been given to this
expression "due process of law." Recently a volume has been published devoted entirely to the meaning of
this phrase.

"Due process of law" is process or proceedings according to the law of the land. "Due process of law" is not
that the law shall be according to the wishes of all the inhabitants of the state, but simply —

First. That there shall be a law prescribed in harmony with the general powers of the legislative department
of the Government;

Second. That this law shall be reasonable in its operation;

Third. That it shall be enforced according to the regular methods of procedure prescribed; and

Fourth. That it shall be applicable alike to all the citizens of the state or to all of a class.

When a person is deprived of his life or liberty or property, therefore, under a law prescribed by the proper
lawmaking body of the state and such law is within the power of said department to make and is
reasonable, and is then enforced according to the regular methods of procedure prescribed, and is
applicable alike to all the citizens or to all citizens of a particular class within the state, such person is not
deprived of his property or of his life, or of his liberty without due process of law. When life, liberty, and
property are in question there must be in every instance judicial proceedings, and that the requirement
implies a written accusation and hearing before an impartial tribunal with proper jurisdiction, an opportunity
to defend and a conviction and a judgment before punishment can be inflicted, depriving one of his life,
liberty or property. (Story on the Constitution, 5th ed., secs. 1943-1946; Principles of Constitutional Law,
Cooley, 434).

Such have been the views of able jurists and statesmen, and the deduction is that life, liberty, and property
are placed under the protection of known and established principles which can not be dispensed with either
generally or specially, either by the courts or executive officers or by the legislative department of the
Government itself. Different principles are applicable in different cases and require different forms of
procedure; in some, they must be judicial; in others the Government may interfere directly and ex parte; but
in each particular case "due process of law" means such an exercise of the powers of the Government as
the settled maxims of law permit and sanction and under such safeguards for the protection of the
individual rights as those maxims prescribed have to the class of cases to which the one being dealt with
belongs. (Principles of Constitutional Law, Cooley, 434).

Illustrations might be given indefinitely, showing how the Supreme Court of the United States as well as the
courts of the different States of the Union have applied this general doctrine. The question is fully discussed
in the following cases: "Murray's Lessee vs. Hoboken Land Co. (18 How., 272), Dartmouth College, vs.
Woodward (4 Wheaton, 518), Bank of Columbia vs. Okley (4 Wheaton, 235), Walker vs. Sauvinet (92 U.S.
90), Cooley's Constitutional Limitations (Chap. SI), Story on the Constitution (secs. 1943-1946), Milligan's
Case (4 Wallace, 2), Davidson vs. New Orleans (96 U.S., 97), Slaughter-House Cases (16 Wallace, 36),
and French vs. Barber Asphalt Paving Co. (181, U.S., 324), which contains a historic discussion of the
general meaning of this phrase.

In the present case the following facts may be noted:

First. That the Civil Commission on the 17th day of November, 1905, regularly and under the methods
prescribed by law, enacted Act No. 1411, providing for the punishment of all persons who should export or
attempt to export from the Philippine Islands Philippine silver coins.

Second. That this law had been enacted and published nearly eleven months before the commission of the
alleged offense by the defendant.

Third. That a complaint was duly presented, in writing, in a court regularly organized, having jurisdiction of
the offense under the said law, and the defendant was duly arrested and brought before the court and was
given an opportunity to defend himself against the said charges.
Fourth. That the defendant was regularly tried, being given the opportunity to hear and see and to cross-
examine the witnesses presented against him and to present such witnesses presented against him and to
present such witnesses in his own defense as he deemed necessary and advisable.

Fifth. That after such trial the said court duly sentenced the defendant, complying with all the prescribed
rules of procedure established.

Sixth. That said Act No. 1411 was duly enacted by the Philippine Commission in pursuance of express
authority given said Commission by the Congress of the United States in an act duly approved March 2,
1903.

A question remaining is, Did the Civil Commission have the authority to enact said Act No. 1411? Certainly
said Commission is limited in its powers. As Daniel Webster said in the famous Dartmouth College case:

Everything which may pass under the forms of an enactment is not to be considered the law of the
land. If this were so, acts of attainder, bills of pains and penalties, acts of confiscation, acts
reversing judgments, and acts directing and transferring one man's estate to another, legislative
judgments, decrees, and forfeitures in all possible forms would be the law of the land. Such a
strange construction would render constitutional provisions of the highest importance completely
inoperative and void. It would tend directly to establish the union of all the powers in the legislature.
There would be no general permanent law for the courts to administer or men to live under. The
administration of justice would be an empty form, an idle ceremony. Judges would sit to execute
legislative judgments and decrees, but not to declare the law or to administer the justice of the
country.

But notwithstanding the limitations upon the power of the Commission, there are certain powers which
legislative departments of Government may exercise and which can not be limited. These are known as the
police power of the state. The police power of the state has been variously defined. It has been defined as
the powers of government, inherent in every sovereignty (License Cases, 5 Howard, 583); the power
vested in the legislature to make such laws as they shall judge to be for the good of the state and its
subjects (Commonwealth vs. Alger, 7 Cushing, Mass., 85); the powers to govern men and things,
extending to the protection of the lives, limbs, health, comfort, and quiet of all persons and the protection of
all property within the state (Thorpe vs. Rutland and B. R. Co., 27 Vermont, 149); the authority to establish
such rules and regulations for the conduct of all persons as may be conducive to the public interests
(People vs. Budd, 117 New York, 14). This question of what constitutes police power has been discussed
for many years by the courts of last resort in the various States and by many eminent law writers.

Blackstone, in his Commentaries upon the common law, defines police power as:

The defense, regulation, and domestic order of the country whereby the inhabitants of a state like
members of a well-governed family, are bound to conform their general behaviour to the rules of
propriety, good neighborhood and good manners, and to be decent, industrious, and inoffensive in
their respective stations. (4 Blackstone's Commentaries, 162.)

Chief Justice Shaw in the case of the Commonwealth vs. Alger (7 Cushing, 53, 84), said:

We think it is a settled principle, growing out of the nature of well-ordered civil society, that every
holder of property, however absolute and unqualified may be his title, holds it under the implied
liability that his use of it shall not be injurious to the equal enjoyment of others having equal rights to
the enjoyment of their property, nor injurious to the rights of the community ... . Rights of property
like all other social and conventional rights are subject to such reasonable limitations in their
enjoyment as shall prevent them from being injurious, and to such reasonable restraints and
regulations established by law as the legislature, under the governing and controlling power vested
in them by the constitution, may think necessary and expedient.

The police power of the state may be said to embrace the whole system of internal regulation, by which the
state seeks not only to preserve the public order and to prevent offenses against the state but also to
establish for the intercourse of citizens with citizens those rules of good manners and good neighborhood
which are calculated to prevent a conflict of rights and to insure to each the uninterrupted enjoyment of his
own, so far as is reasonably consistent with a like enjoyment of rights by others. The police power of the
state includes not only public health and safety but also the public welfare, protection against impositions,
and generally the public's best interest. It is so extensive and all pervading that courts refuse to lay down a
general rule defining it, but decide each specific case on its own merits (Harding vs. People, 32 Lawyers'
Rep. Ann., 445). This power has been exercised by the state in controlling and regulating private business
even to the extent of the destruction of property of private persons when the use of such property became a
nuisance to public health and convenience. (Slaughter-House Cases, 16 Wallace, 36; Minnesota vs.
Barber, 136 U.S., 313; Powell vs. Pennsylvania, 127 U.S., 678; Walling vs. Michigan, 116 U.S., 446;
Duncan vs. Missouri, 1252 U.S., 377; Morgan, etc., vs. The Board of Health, 118 U.S., 455; Jacobson vs.
Mass., Feb. 20, 1905.)

The state not only has authority under its police power to make such needful rules and regulations for the
protection of the health of its citizens as it may deem necessary; it may also regulate private business in a
way so that the business of one man shall in no way become a nuisance to the people of the state. It may
regulate the sale and use of intoxicating liquors, the sale of poisons, the sale of foods, etc., and it would
seem that nothing is of greater importance to the safety of the state, in addition to the regulation of the
morals health of its people, than to regulate and control its own money. In addition to the fact that said Act
No. 1411 was enacted in accordance with express permission given by the Congress of the United States,
this court has already decided, in the case of Gaspar vs. Molina (5 Phil. Rep., 197), that the Philippine
Commission possesses general powers of legislation for the Islands, and its laws are valid unless they are
prohibited by some act of Congress, some provision of the Constitution, or some provision of treaty.

We are of opinion, and so hold, that Act No. 1411 was enacted by the Philippine Commission with full
power and authority so to do. We are of opinion, therefore, and so hold, that the lower court committed no
error in overruling the demurrer presented by the defendant.

With reference to the second assignment of error above noted, relating to the sufficiency of the proof
adduced during the trial of the cause, we are of opinion, and so hold, that the evidence adduced during the
trial of the cause was sufficient to justify the findings of fact and the conclusions of the lower court.

An examination of the evidence adduced during the trial of the cause in the lower court shows the following
facts to be true:

1. That on the 12th day of December, 1906, on board the steamship Taming, after the said ship had raised
anchor and was ready to sail out of the harbor of Manila for the port of Hongkong, there was found in the
room occupied by the defendant the sum of 20,600 Philippine silver pesos, coined by authority of the act of
Congress of the United States, March 2, 1903.

2. That the defendant was confronted with the fact that this amount of said money was found in his room,
and that he then and there stated that the same had been brought into his room by a Filipino whose name
he was unable to give; and that he did not know why the money had been placed there.

3. The money was not on the manifest of the ship when she came into the harbor some days before the
said 12th day of December, neither was the said money on the manifest of the ship which had already been
prepared for the trip to Hongkong on the said 12th day of December. The said money was taken charge by
W. H. Polley, a detective of the custom secret service of Manila, and was turned over to the Treasurer of
the Philippine Islands. The defendant was duly arrested and charged with the crime of attempting to export
Philippine silver coin from the Philippine Islands contrary to law.

At the trial of the cause the defendant attempted to show that he had brought the money in question from
Hongkong to be exchanged for certain Mexican coin and Spanish coin in Manila. These statements of the
defendant were corroborated by a Chinaman called Wong Tai from Hongkong, and also by testimony of
Juan On Hieng of Manila. The said Wong Tai testified that he had sent the said P20,600 from Hongkong to
Manila on the said steamship Taming, for the purpose of buying of the said Juan On Hieng old Spanish
silver and Mexican silver; that said money was sent in the care of the defendant.

In support of the statements of Wong Tai the defendant presented an insurance policy or a duplicate copy
of an insurance policy alleged to have been issued by a certain Japanese insurance company doing
business in the city of Hongkong. No proof was offered however to show that said duplicate copy of an
insurance policy had actually been issued by said company. The prosecuting attorney of the city of Manila
objected to the introduction of the said duplicate policy upon the ground that it had not been sufficiently
identified. This objection was overruled. No evidence was presented to show that said company ever, as a
matter of fact, issued the policy. In the absence of proof showing that the document had been issued by the
proper authorities, the same should not have been admitted in evidence. The duplicate policy did not prove
itself. It was dated on the 4th day of December, 1906. In support of the testimony of Wong Tai, the
defendant also presented Juan On Hieng as a witness. This witness testified that he had an arrangement
with Wong Tai to exchange with him at a certain rate Spanish silver coin and Mexican silver coin for
Philippine silver pesos, and that he had an arrangement with a certain Filipino in Manila from whom he was
to purchase said Spanish and Mexican coin. He could not remember, however, the name of the Filipino
from whom he was to purchase said coins; neither could he describe him, nor could he tell where the said
Filipino resided. We do not believe the statements of these witnesses notwithstanding the fact that they
seem to corroborate the statements of the defendant. Courts should not lightly regard the statements of
witnesses under oath, but nevertheless when the testimony of witnesses seems to be unreasonable from
every standpoint it should be weighed with care, when it comes loaded with the temptations of private
interests and the impressions of personal penalties; if the defendant had not been guilty of attempting to
violate the law, there would have been no occasion for him to have stated at the time the money was found
in his room what were the true facts, and then there would have been no difference between his statements
then and the statements he made at the time of the trial. These conflicting statements lend much suspicion
to the veracity of the defendant as well as to the truth of the statements of the witnesses called in his
behalf. The evidence also shows that Philippine silver coin was worth, at the time the coins in question
were shipped, about 9 percent more in bullion than they were as money.

For all of the foregoing reasons, we are of the opinion, and so hold, that the sentence of the lower court
should be affirmed with costs. So ordered.

Arellano, C.J., Torres, Mapa, Carson, and Tracey, JJ., concur.

Willard, J., concurs in the result.
 SPECIAL SECOND DIVISION

April 26, 2017

G.R. No. 217872

ALLIANCE FOR THE FAMILY FOUNDATION, PHILIPPINES, INC. (ALFI) and ATTY. MARIA CONCEPCION
S. NOCHE, in her own behalf and as President of ALFI, JOSE S. SANDEJAS, ROSIE B. LUISTRO,
ELENITA S.A. SANDEJAS, EMILY R. LAWS, EILEEN Z. ARANETA, SALV ACION C. MONTEIRO,
MARIETTA C. GORREZ, ROLANDO M. BAUTISTA, RUBEN T. UMALI, and MILDRED C. CASTOR
, Petitioners
vs.
HON. JANETTE L. GARIN, Secretary-Designate of the Department of Health; NICOLAS B.LUTERO III,
Assistant Secretary of Health, Officer-in-Charge, Food and Drug Administration; and MARIA LOURDES
C. SANTIAGO, Officer in-Charge, Center for Drug Regulation and Research, Respondents

x-----------------------x

G.R. No. 221866

MARIA CONCEPCION S. NOCHE, in her own behalf and as counsel of Petitioners, JOSE S. SANDEJAS,
ROSIE B. LUISTRO, ELENITA S.A. SANDEJAS, EMILY R. LAWS EILEEN Z. ARANETA, SALVACION C.
MONTEIRO MARIETTA C. GORREZ, ROLANDO M. BAUTISTA, RUBEN T. UMALI, and MILDRED C.
CASTOR, Petitioners
vs.
HON. JANETTE L. GARIN, Secretary-Designate of the Department of Health; NICOLAS B. LUTERO III,
Assistant Secretary of Health; NICOLAS B. LUTERO III, Assistant Secretary of Health, Officer-in-Charge,
Food and Drug Administration; and MARIA LOURDES C. SANTIAGO, Officer-in-Charge, Center for Drug
Regulation and Research, Respondents.

RESOLUTION

MENDOZA, J.:

Subject of this resolution is the Omnibus Motion1 filed by the respondents, thru the Office of the Solicitor General
(OSG), seeking partial reconsideration of the August 24, 2016 Decision (Decision), 2 where the Court resolved
the: [1] Petition for Certiorari, Prohibition, Mandamus with Prayer for Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Prohibitory and Mandatory Injunction (G.R. No. 217872); and the [2] Petition for
Contempt of Court (G.R. No. 221866), in the following manner:

WHEREFORE, the case docketed as G.R No. 217872 is hereby REMANDED to the Food and Drugs
Administration which is hereby ordered to observe the basic requirements of due process by conducting a
hearing, and allowing the petitioners to be heard, on the re-certified, procured and administered contraceptive
drugs and devices, including Implanon and lmplanon NXT, and to determine whether they are abortifacients or
non-abortifacients.

Pursuant to the expanded jurisdiction of this Court and its power to issue rules for the protection and
enforcement of constitutional rights, the Court hereby:

1. DIRECTS the Food and Drug Administration to formulate the rules of procedure in the
screening, evaluation and approval of all contraceptive drugs and devices that will be used under
Republic Act No. 10354. The rules of procedure shall contain the following minimum
requirements of due process: (a) publication, notice and hearing, (b) interested parties shall be
 allowed to intervene, (c) the standard laid down in the Constitution, as adopted under Republic
Act No. 10354, as to what constitutes allowable contraceptives shall be strictly followed, that is,
those which do not harm or destroy the life of the unborn from conception/fertilization, (d) in
weighing the evidence, all reasonable doubts shall be resolved in favor of the protection and
preservation of the right to life of the unborn from conception/fertilization, and (e) the other
requirements of administrative due process, as summarized in Ang Tibay v. CIR, shall be
complied with.

2. DIRECTS the Department of Health in coordination with other concerned agencies to

formulate the rules and regulations or guidelines which will govern the purchase and distribution/
dispensation of the products or supplies under Section 9 of Republic Act No. 10354 covered by
the certification from the Food and Drug Administration that said product and supply is made
available on the condition that it will not be used as an abortifacient subject to the following
minimum due process requirements: (a) publication, notice and hearing, and (b) interested
parties shall be allowed to intervene. The rules and regulations or guidelines shall provide
sufficient detail as to the manner by which said product and supply shall be strictly regulated in
order that they will not be used as an abortifacient and in order to sufficiently safeguard the right
to life of the unborn.

3. DIRECTS the Department of Health to generate the complete and correct list of the
government's reproductive health programs and services under Republic Act No. 10354 which
will serve as the template for the complete and correct information standard and, hence, the duty
to inform under Section 23(a)(l) of Republic Act No. 10354. The Department of Health is
DIRECTED to distribute copies of this template to all health care service providers covered by
Republic Act No. 10354.

The respondents are hereby also ordered to amend the Implementing Rules and Regulations to conform to the
rulings and guidelines in G.R. No. 204819 and related cases.

The above foregoing directives notwithstanding, within 30 days from receipt of this disposition, the Food and
Drugs Administration should commence to conduct the necessary hearing guided by the cardinal rights of the
parties laid down in CIR v. Ang Tibay.

Pending the resolution of the controversy, the motion to lift the Temporary Restraining Order is DENIED.

With respect to the contempt petition, docketed as G.R No. 221866, it is hereby DENIED for lack of concrete
basis.

SO ORDERED.3

Arguments of the Respondents

Part 1: Due Process need not be

complied with as the questioned
acts of the Food and Drug
Administration (FDA) were in
the exercise of its Regulatory Powers

In the subject Omnibus Motion, the respondents argued that their actions should be sustained, even if the
petitioners were not afforded notice and hearing, because the contested acts of registering, re-certifying,
procuring, and administering contraceptive drugs and devices were all done in the exercise of its regulatory
power.4 They contended that considering that the issuance of the certificate of product registration (CPR) by the
FDA under Section 7.04, Rule5 of the Implementing Rules and Regulations of Republic Act (R.A.) No. 10354
(RH-IRR) did not involve the adjudication of the parties' opposing rights and liabilities through an adversarial
proceeding, the due process requirements of notice and hearing need not be complied with. 6

Stated differently, the respondents assert that as long as the act of the FDA is exercised pursuant to its
regulatory power, it need not comply with the due process requirements of notice and hearing.

Corollary to this, the respondents wanted the Court to consider that the FDA had delineated its functions among
different persons and bodies in its organization. Thus, they asked the Court to make a distinction between
the "quasi-judicial powers" exercised by the Director-General of the FDA under Section 2(b)7 of Article 3,
Book I of the Implementing Rules and Regulations (IRR) of R.A. No. 9711,8 and the "regulatory/administrative
powers" exercised by the FDA under Section 2(c )(1) 9 of the same. For the respondents, the distinction given
in the above-cited provisions was all but proof that the issuance of CPR did not require notice and hearing.

After detailing the process by which the FDA's Center for Drug Regulation and Research (CDRR) examined and
tested the contraceptives for non-abortifacience, 10 the respondents stressed that the Decision wreaked havoc on
the organizational structure of the FDA, whose myriad of functions had been carefully delineated in the IRR of
R.A. No. 9711. 11 The respondents, thus, prayed for the lifting of the Temporary Restraining Order (TR0). 12

Part 2: The requirements of due

process need not be complied with as
the elements of procedural due
process laid down in Ang Tibay v.
CIR are not applicable

The respondents further claimed in their omnibus motion that the requirements of due process need not be
complied with because the standards of procedural due process laid down in Ang Tibay v. CIR 13 were
inapplicable considering that: a) substantial evidence could not be used as a measure in determining whether a
contraceptive drug or device was abortifacient; 14 b) the courts had neither jurisdiction nor competence to review
the findings of the FDA on the non-abortifacient character of contraceptive drugs or devices; 15 c) the FDA was
not bound by the rules of admissibility and presentation of evidence under the Rules of Court; 16 and d) the
findings of the FDA could not be subject of the rule on res judicata and stare-decisis. 17

The respondents then insisted that Implanon and Implanon NXT were not abortifacients and lamented that the
continued injunction of the Court had hampered the efforts of the FDA to provide for the reproductive health
needs of Filipino women. For the respondents, to require them to afford the parties like the petitioners an
opportunity to question their findings would cause inordinate delay in the distribution of the subject contraceptive
drugs and devices which would have a dire impact on the effective implementation of the RH Law.

The Court's Ruling

After an assiduous assessment of the arguments of the parties, the Court denies the Omnibus Motion, but
deems that a clarification on some points is in order.

Judicial Review

The powers of an administrative body are classified into two fundamental powers: quasi-legislative and quasi-
judicial. Quasi-legislative power, otherwise known as the power of subordinate legislation, has been defined as
the authority delegated by the lawmaking body to the administrative body to adopt rules and regulations
intended to carry out the provisions of law and implement legislative policy. 18 "[A] legislative rule is in the nature
of subordinate legislation, designed to implement a primary legislation by providing the details thereof." 19 The
exercise by the administrative body of its quasi-legislative power through the promulgation of regulations of
general application does not, as a rule, require notice and hearing. The only exception being where the
Legislature itself requires it and mandates that the regulation shall be based on certain facts as determined at an
appropriate investigation.20

Quasi-judicial power, on the other hand, is known as the power of the administrative agency to determine
questions of fact to which the legislative policy is to apply, in accordance with the standards laid down by the law
itself.21 As it involves the exercise of discretion in determining the rights and liabilities of the parties, the proper
exercise of quasi-judicial power requires the concurrence of two elements: one, jurisdiction which must be
acquired by the administrative body and two, the observance of the requirements of due process, that is,
the right to notice and hearing.22

On the argument that the certification proceedings were conducted by the FDA in the exercise of its "regulatory
powers" and, therefore, beyond judicial review, the Court holds that it has the power to review all acts and
decisions where there is a commission of grave abuse of discretion. No less than the Constitution decrees that
the Court must exercise its duty to ensure that no grave abuse of discretion amounting to lack or excess of
jurisdiction is committed by any branch or instrumentality of the Government. Such is committed when there is a
violation of the constitutional mandate that "no person is deprived of life, liberty, and property without due
process of law." The Court's power cannot be curtailed by the FDA's invocation of its regulatory power.
In so arguing, the respondents cited Atty. Carlo L. Cruz in his book, Philippine Administrative Law.

Lest there be any inaccuracy, the relevant portions of the book cited by the respondents are hereby quoted as
follows:

xxx.

B. The Quasi-Judicial Power

xxx

2. Determinative Powers

To better enable the administrative body to exercise its quasi judicial authority, it is also vested with what is
known as determinative powers and functions.

Professor Freund classifies them generally into the enabling powers and the directing powers. The latter
includes the dispensing, the examining, and the summary powers.

The enabling vowers are those that permit the doing of an act which the law undertakes to regulate and
which would be unlawful with government approval. The most common example is the issuance of licenses
to engage in a particular business or occupation, like the operation of a liquor store or restaurant. x x
x. 23 [Emphases and underscoring supplied]

From the above, two things are apparent: one, the "enabling powers" cover "regulatory powers" as defined by
the respondents; and two, they refer to a subcategory of a quasi-judicial power which, as explained in the
Decision, requires the compliance with the twin requirements of notice and hearing. Nowhere from the above-
quoted texts can it be inferred that the exercise of "regulatory power" places an administrative agency beyond
the reach of judicial review. When there is grave abuse of discretion, such as denying a party of his
constitutional right to due process, the Court can come in and exercise its power of judicial review. It can review
the challenged acts, whether exercised by the FDA in its ministerial, quasi-judicial or regulatory power. In the
past, the Court exercised its power of judicial review over acts and decisions of agencies exercising their
regulatory powers, such as DPWH, 24 TRB, 25 NEA, 26 and the SEC,27 among others. In Diocese of Bacolod v.
Commission on Elections,28 the Court properly exercised its power of judicial review over a Comelec resolution
issued in the exercise of its regulatory power.

Clearly, the argument of the FDA is flawed.

Petitioners were Denied their

Right to Due Process

Due process of law has two aspects: substantive and procedural. In order that a particular act may not be
impugned as violative of the due process clause, there must be compliance with both the substantive and the
procedural requirements thereof. 29 Substantive due process refers to the intrinsic validity of a law that interferes
with the rights of a person to his property.30 Procedural due process, on the other hand, means compliance with
the procedures or steps, even periods, prescribed by the statute, in conformity with the standard of fair play and
without arbitrariness on the part of those who are called upon to administer it.31

The undisputed fact is that the petitioners were deprived of their constitutional right to due process of law.

As expounded by the Court, what it found to be primarily deplorable is the failure of the respondents to act upon,
much less address, the various oppositions filed by the petitioners against the product registration,
recertification, procurement, and distribution of the questioned contraceptive drugs and devices. Instead of
addressing the petitioners' assertion that the questioned contraceptive drugs and devices fell within the definition
of an "abortifacient" under Section 4(a) of the RH Law because of their "secondary mechanism of action which
induces abortion or destruction of the fetus inside the mother's womb or the prevention of the fertilized ovum to
reach and be implanted in the mother's womb,"32 the respondents chose to ignore them and proceeded with the
registration, recertification, procurement, and distribution of several contraceptive drugs and devices.

A cursory reading of the subject Omnibus Motion shows that the respondents proffer no cogent explanation as to
why they did not act on the petitioners' opposition. As stated by the Court in the Decision, rather than provide
concrete action to meet the petitioners' opposition, the respondents simply relied on their challenge questioning
the propriety of the subject petition on technical and procedural grounds. 33 The Court, thus, finds the subject
motion to be simply a rehash of the earlier arguments presented before, with the respondents still harping on the
peculiarity of the FDA's functions to exempt it from compliance with the constitutional mandate that "no person
shall be deprived oflife, liberty and property without due process of law."

The law and the rules demand

compliance with due process
requirements

A reading of the various provisions, cited by the respondents in support of their assertion that due process need
not be complied with in the approval of contraceptive drugs or devices, all the more reinforces the Court's
conclusion that the FDA did fail to afford the petitioners a genuine opportunity to be heard.

As outlined by the respondents themselves, the steps by which the FDA approves contraceptive drugs or
devices, demand compliance with the requirements of due process viz:

Step 1. Identify contraceptive products in the database. Create another database containing the following details
of contraceptive products: generic name, dosage strength and form, brand name (if any), registration number,
manufacturer, MAH, and the period of validity of the CPR.

Step 2. Identify contraceptive products which are classified as essential medicines in the Philippine Drug
Formulary.

Step 3. Retrieve the contraceptive product's file and the CPR duplicate of all registered contraceptive products.
Create a database of the contraceptive product's history, including its initial, renewal, amendment, and/or
variation applications.

Step 4. Conduct a preliminary review of the following:

a. general physiology of female reproductive system, including hormones involved, female

reproductive cycle, and conditions of the female reproductive system during pregnancy.

b. classification of hormonal contraceptives;

c. regulatory status of the products in benchmark countries; and

d. mechanism of action of hormonal contraceptives based on reputable journals, meta-analyses,

systemic reviews, evaluation of regulatory authorities in other countries, textbooks, among
others.

Step 5. Issue a notice to all concerned MAHs, requiring them to submit scientific evidence that their
product is non-abortifacient, as defined in the RH Law and Imbong.

Step 6. Post a list of contraceptive products which were applied for re-certification for public
comments in the FDA website.

Step 7. Evaluate contraceptive products for re-certification.

A. Part I (Review of Chemistry, Manufacture and Controls)

1. Unit Dose and Finished Product Formulation

2. Technical Finished Product Specifications

3. Certificate of Analysis

B. Part II (Evaluation of Whether the Contraceptive Product is Abortifacient)

1. Evaluation of the scientific evidence submitted by the applicant and the public.
 2. Review and evaluation of extraneous evidence, e.g., scientific journals, meta-analyses,
etc.

Step 8. Assess and review the documentary requirements submitted by the applicant. Technical reviewers
considered scientific evidence such as meta-analyses, systemic reviews, national and clinical practice guidelines
and recommendations of international medical organizations submitted by the companies, organizations and
individuals, to be part of the review.34 [Emphases and Underlining supplied]

The Court notes that the above-outlined procedure is deficient insofar as it only allows public comments to cases
of re-certification. It fails to allow the public to comment in cases where a reproductive drug or device is being
subject to the certification process for the first time. This is clearly in contravention of the mandate of the
Court in lmbong that the IRR should be amended to conform to it.

More importantly, the Court notes that Step 5 requires the FDA to issue a notice to all concerned MAHs and
require them to submit scientific evidence that their product is non-abortifacient; and that Step 6 requires the
posting of the list of contraceptive products which were applied for re-certification for public comments in the
FDA website.

If an opposition or adverse comment is filed on the ground that the drug or devise has abortifacient
features or violative of the RH Law, based on the pronouncements of the Court in Im bong or any other law or
rule, the FDA is duty-bound to take into account and consider the basis of the opposition.

To conclude that product registration, recertification, procurement, and distribution of the questioned
contraceptive drugs and devices by the FDA in the exercise of its regulatory power need not comply with the
requirements of due process would render the issuance of notices to concerned MAHs and the posting of a list
of contraceptives for public comment a meaningless exercise. Concerned MAHs and the public in general will be
deprived of any significant participation if what they will submit will not be considered.

Section 7.04, Rule 7 of the IRR of the RH Law (RH-IRR),35 relied upon by the respondents in support of their
claims, expressly allows the consideration of conflicting evidence, such as that supplied by the petitioners
in support of their opposition to the approval of certain contraceptive drugs and devices. In fact, the said
provision mandates that the FDA utilize the "best evidence available" to ensure that no bortifacient is approved
as a family planning drug or device. It bears mentioning that the same provision even allows an independent
evidence review group (ERG) to ensure that evidence for or against the certification of a contraceptive drug or
device is duly considered.

Structure of the FDA

As earlier mentioned, the respondents argue that the Decision "wreaked havoc on the organizational structure of
the FDA, whose myriad of functions have been carefully delineated under R.A. No. 9711 IRR." 36 Citing Section
7.04, Rule 7 of the RH-IRR, the FDA insists that the function it exercises in certifying family planning supplies is
in the exercise of its regulatory power, which cannot be the subject of judicial review, and that it is the Director-
General of the FDA who exercises quasi-judicial powers, citing Section 2(b) of Article 3, Book I of the RH-
IRR.37

The FDA wants the Court to consider that, as a body, it has a distinct and separate personality from the Director-
General, who exercises quasi-judicial power. The Court cannot accommodate the position of the respondents.
Section 6(a) of R.A. No. 3720, as amended by Section 7 of R.A. No. 9711,38 provides that "(a) The FDA shall be
headed by a director-general with the rank of undersecretary, xxx." How can the head be separated from the
body?

For the record, Section 4 of R.A. No. 3720, as amended by Section 5 of R.A. No. 9711, also recognizes
compliance with the requirements of due process, although the proceedings are not adversarial. Thus:

Section 5. Section 4 of Republic Act No. 3720, as amended, is hereby further amended to read as follows:

"SEC. 4. To carry out the provisions of this Act, there is hereby created an office to be called the Food and Drug
Administration (FDA) in the Department of Health (DOH). Said Administration shall be under the Office of the
Secretary and shall have the following functions, powers and duties:
"(a) To administer the effective implementation of this Act and of the rules and regulations issued pursuant to the
same;

"(b) To assume primary jurisdiction in the collection of samples of health products;

"(c) To analyze and inspect health products in connection with the implementation of this Act;

"(d) To establish analytical data to serve as basis for the preparation of health products standards, and to
recommend standards of identity, purity, safety, efficacy, quality and fill of container;

"(e) To issue certificates of compliance with technical requirements to serve as basis for the issuance of
appropriate authorization and spot-check for compliance with regulations regarding operation of manufacturers,
importers, exporters, distributors, wholesalers, drug outlets, and other establishments and facilities of health
products, as determined by the FDA;

"xxx

"(h) To conduct appropriate tests on all applicable health products prior to the issuance of appropriate
authorizations to ensure safety, efficacy, purity, and quality;

"(i) To require all manufacturers, traders, distributors, importers, exporters, wholesalers, retailers, consumers,
and non-consumer users of health products to report to the FDA any incident that reasonably indicates that said
product has caused or contributed to the death, serious illness or serious injury to a consumer, a patient, or any
person;

"G) To issue cease and desist orders motu propio or upon verified com plaint for health products, whether or not
registered with the FDA Provided, That for registered health products, the cease and desist order is valid for
thirty (30) days and may be extended for sixty (60) days only after due process has been observed;

"(k) After due process, to order the ban, recall, and/or withdrawal of any health product found to have caused
the death, serious illness or serious injury to a consumer or patient, or is found to be imminently injurious,
unsafe, dangerous, or grossly deceptive, and to require all concerned to implement the risk management plan
which is a requirement for the issuance of the appropriate authorization;

"(l) To strengthen the post market surveillance system in monitoring health products as defined in this Act and
incidents of adverse events involving such products;

"(m) To develop and issue standards and appropriate authorizations that would cover establishments, facilities
and health products;

"(n) To conduct, supervise, monitor and audit research studies on health and safety issues of health products
undertaken by entities duly approved by the FDA;

"(o) To prescribe standards, guidelines, and regulations with respect to information, advertisements and other
marketing instruments and promotion, sponsorship, and other marketing activities about the health products as
covered in this Act;

"(p) To maintain bonded warehouses and/or establish the same, whenever necessary or appropriate, as
determined by the director-general for confiscated goods in strategic areas of the country especially at major
ports of entry; and

"(q) To exercise such other powers and perform such other functions as may be necessary to carry out its duties
and responsibilities under this Act. [Emphases supplied]

The Cardinal Rights of Parties in

Administrative Proceedings as
laid down in Ang Tibay v. CIR

In Ang Tibay v. CJR,39 the Court laid down the cardinal rights of parties in administrative proceedings, as follows:
1) The right to a hearing, which includes the right to present one's case and submit evidence in support thereof;

2) The tribunal must consider the evidence presented;

3) The decision must have something to support itself;

4) The evidence must be substantial;

5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the record
and disclosed to the parties affected;

6) The tribunal or body or any of its judges must act on its or his own independent consideration of the law and
facts of the controversy and not simply accept the views of a subordinate in arriving at a decision; and

7) The board or body should, in all controversial questions, render its decision in such a manner that the parties
to the proceeding can know the various issues involved, and the reason for the decision rendered. 40

In the Decision, the Court found that the FDA certified, procured and administered contraceptive drugs and
devices, without the observance of the basic tenets of due process, that is, without notice and without public
hearing. It appeared that, other than the notice inviting stakeholders to apply for certification/recertification of
their reproductive health products, there was no showing that the respondents considered the opposition of the
petitioners. Thus, the Court wrote:

Rather than provide concrete evidence to meet the petitioners' opposition, the respondents simply relied on their
challenge questioning the propriety of the subject petition on technical and procedural grounds. The Court notes
that even the letters submitted by the petitioners to the FDA and the DOH seeking information on the actions
taken by the agencies regarding their opposition were left unanswered as if they did not exist at all. The mere
fact that the RH Law was declared as not unconstitutional does not permit the respondents to run roughshod
over the constitutional rights, substantive and procedural, of the petitioners.

Indeed, although the law tasks the FDA as the primary agency to determine whether a contraceptive drug or
certain device has no abortifacient effects, its findings and conclusion should be allowed to be questioned and
those who oppose the same must be given a genuine opportunity to be heard in their stance. After all, under
Section 4(k) of R.A. No. 3720, as amended by R.A. No. 9711, the FDA is mandated to order the ban, recall and/
or withdrawal of any health product found to have caused death, serious illness or serious injury to a consumer
or patient, or found to be imminently injurious, unsafe, dangerous, or grossly deceptive, after due process.

Due to the failure of the respondents to observe and comply with the basic requirements of due process, the
Court is of the view that the certifications/re-certifications and the distribution of the questioned contraceptive
drugs by the respondents should be struck down as violative of the constitutional right to due process.

Verily, it is a cardinal precept that where there is a violation of basic constitutional rights, the courts are ousted
from their jurisdiction. The violation of a party's right to due process raises a serious jurisdictional issue which
cannot be glossed over or disregarded at will. Where the denial of the fundamental right to due process is
apparent, a decision rendered in disregard of that right is void for lack of jurisdiction. This rule is equally true in
quasi-judicial and administrative proceedings, for the constitutional guarantee that no man shall be deprived of
life, liberty, or property without due process is unqualified by the type of proceedings (whether judicial or
administrative) where he stands to lose the same.41

The Court stands by that finding and, accordingly, reiterates its order of remand of the case to the FDA.

Procedure in the FDA; No Trial-Type Hearing

The Court is of the view that the FDA need not conduct a trial-type hearing. Indeed, due process does not
require the conduct of a trial-type hearing to satisfy its requirements. All that the Constitution requires is that the
FDA afford the people their right to due process of law and decide on the applications submitted by MAHs after
affording the oppositors like the petitioners a genuine opportunity to present their science-based evidence. As
earlier pointed out, this the FDA failed to do. It simply ignored the opposition of the petitioners. In the case
of Perez, et al. v. Philippine Telegraph and Telephone Company, et al., 42 it was stated that:
A formal trial-type hearing is not even essential to due process. It is enough that the parties are given a fair and
reasonable opportunity to explain their respective sides of the controversy and to present supporting evidence
on which a fair decision can be based.

In the fairly recent case of Vivo v. Pagcor,43 the Court explained:

The observance of fairness in the conduct of any investigation is at the very heart of procedural due process.
The essence of due process is to be heard, and, as applied to administrative proceedings, this means a fair and
reasonable opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling
complained of. Administrative due process cannot be fully equated with due process in its strict judicial
sense, for in the former a formal or trial-type hearing is not always necessary, and technical rules of
procedure are not strictly applied. Ledesma v. Court of Appeals elaborates on the well-established meaning of
due process in administrative proceedings in this wise:

x x x Due process, as a constitutional precept, does not always and in all situations require a trial-type
proceeding. Due process is satisfied when a person is notified of the charge against him and given an
opportunity to explain or defend himself. In administrative proceedings, the filing of charges and giving
reasonable opportunity for the person so charged to answer the accusations against him constitute the minimum
requirements of due process. The essence of due process is simply to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or
ruling complained of. [Emphasis supplied; citations omitted]

Best Evidence Available

Section 5, Rule 133 of the Rules of Court provides:

Section 5. In all cases filed before administrative or quasi-judicialbodies, a fact may be deemed established if
it is supported by substantialevidence, or the amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.

As applied to certification proceedings at the FDA, "substantial evidence" refers to the best scientific evidence
available,44 "including but not limited to: meta analyses, systematic reviews, national clinical practice guidelines
where available, and recommendations of international medical organizations," needed to support a conclusion
whether a contraceptive drug or device is an abortifacient or not. The FDA need not be bound or limited by the
evidence adduced by the parties, but it can conduct its own search for related scientific data. It can also consult
other technical scientific experts known in their fields. It is also not bound by the principle of stare decisis or res
judicata, but may update itself and cancel certifications motu proprio when new contrary scientific findings
become available or there arise manifest risks which have not been earlier predicted.

On the Competence of the Court

to review the Findings of the FDA

The fact that any appeal to the courts will involve scientific matters will neither place the actions of the
respondents beyond the need to comply with the requirements of Ang Tibay nor place the actions of the FDA in
certification proceedings beyond judicial review.

It should be pointed out that nowhere in Batas Pambansa Blg. 129, as amended, are the courts ousted of their
jurisdiction whenever the issues involve questions of scientific nature. A court is not considered incompetent
either in reviewing the findings of the FDA simply because it will be weighing the scientific evidence presented
by both the FDA and its oppositors in determining whether the contraceptive drug or device has complied with
the requirements of the law.

Although the FDA is not strictly bound by the technical rules on evidence, as stated in the Rules of Court, or it
cannot be bound by the principle of stare decisis or res judicata, it is not excused from complying with the
requirements of due process. To reiterate for emphasis, due process does not require that the FDA conduct trial-
type hearing to satisfy its requirements. All that the Constitution requires is that the FDA afford the people their
right to due process of law and decide on the applications submitted by the MAHs after affording the oppositors,
like the petitioners, a genuine opportunity to present their sciencebased evidence.

The Appellate Procedure;

Appeal to the Office of the President
Incidentally, Section 32 of R.A. No. 3720 and Section 9 of Executive Order (E.O.) No. 247 provide that any
decision by the FDA would then be appealable to the Secretary of Health, whose decision, in tum, may be
appealed to the Office of the President (OP). Thus:

Sec. 32. The orders, rulings or decisions of the FDA shall be appealable to the Secretary of Health. - An
appeal shall be deemed perfected upon filing of the notice of appeal and posting of the corresponding appeal
bond.

An appeal shall not stay the decision appealed from unless an order from the Secretary of Health is issued to
stay the execution thereof.

Sec. 9. Appeals. - Decisions of the Secretary (DENR, DA, DOH or DOST) may be appealed to the Office of
the President. Recourse to the courts shall be allowed after exhaustion of all administrative remedies.

In view thereof, the Court should modify that part of the Decision which allows direct appeal of the FDA decision
to the Court of Appeals. As stated in the said decision, the FDA decision need not be appealed to the Secretary
1âwphi1

of Health because she herself is a party herein. Considering that the Executive

Secretary is not a party herein, the appeal should be to the OP as provided in Section 9.

On the Prayer to Lift the TRO

The respondents lament that the assailed decision undermines the functions of the FDA as the specialized
agency tasked to determine whether a contraceptive drug or device is safe, effective and non-abortifacient. They
also claim that the assailed decision requiring notice and hearing would unduly delay the issuance of CPR
thereby affecting public access to State-funded contraceptives. Finally, in a veritable attempt to sow panic, the
respondents claim that the TRO issued by the Court would result in "a nationwide stockout of family planning
supplies in accredited public health facilities and the commercial market. "45

On this score, it should be clarified that the Decision simply enjoined the respondents from registering,
recertifying, procuring, and administering only those contraceptive drugs and devices which were the subjects of
the petitioners' opposition, specifically Implanon and Implanon NXT. It never meant to enjoin the processing of
the entire gamut of family planning supplies that have been declared as unquestionably non-abortifacient.
Moreover, the injunction issued by the Court was only subject to the condition that the respondents afford the
petitioners a genuine opportunity to their right to due process.

As the Decision explained, the Court cannot lift the TRO prior to the summary hearing to be conducted by the
FDA. To do so would render the summary hearing an exercise in futility. Specifically, the respondents would
want the Court to consider their argument that Implanon and Implanon NXT have no abortifacient effects.
According to them, "the FDA tested these devices for safety, efficacy, purity, quality, and non-abortiveness prior
to the issuance of certificates of registration and recertification, and after the promulgation of Imbong." 46 The
Court, however, cannot make such determination or pronouncement at this time. To grant its prayer to lift
the TRO would be premature and presumptuous. Any declaration by the Court at this time would have no
basis because the FDA, which has the mandate and expertise on the matter, has to first resolve the controversy
pending before its office.

This Court also explained in the Decision that the issuance of the TRO did not mean that the FDA should stop
fulfilling its mandate to test, analyze, scrutinize, and inspect other drugs and devices. Thus:

Nothing in this resolution, however, should be construed as restraining or stopping the FDA from carrying on its
mandate and duty to test, analyze, scrutinize, and inspect drugs and devices. What are being enjoined are the
grant of certifications/re-certifications of contraceptive drugs without affording the petitioners due process, and
the distribution and administration of the questioned contraceptive drugs and devices including Implanon and
Implanon NXT until they are determined to be safe and non-abortifacient.47

On Delay

The respondents claim that this judicial review of the administrative decision of the FDA in certifying and
recertifying drugs has caused much delay in the distribution of the subject drugs with a dire impact on the
effective implementation of the RH Law.
In this regard, the respondents have only themselves to blame. Instead of complying with the orders of the Court
as stated in the Decision to conduct a summary hearing, the respondents have returned to this Court, asking the
Court to reconsider the said decision claiming that it has wreaked havoc on the organizational structure of the
FDA.

Had the FDA immediately conducted a summary hearing, by this time it would have finished it and resolved the
opposition of the petitioners. Note that there was already a finding by the FDA, which was its basis in
1âwphi1

registering, certifying and recertifying the questioned drugs and devices. The pharmaceutical companies or the
MAHs need not present the same evidence it earlier adduced to convince the FDA unless they want to present
additional evidence to fortify their positions. The only entities that would present evidence would be the
petitioners to make their point by proving with relevant scientific evidence that the contraceptives have
abortifacient effects. Thereafter, the FDA can resolve the controversy.

Indeed, in addition to guaranteeing that no person shall be deprived of life, liberty and property without due
process of law,48 the Constitution commands that "all persons shall have the right to a speedy disposition of their
cases before all judicial, quasi-judicial and administrative bodies." 49

WHEREFORE, the August 24, 2016 Decision is MODIFIED. Accordingly, the Food and Drug Administration is
ordered to consider the oppositions filed by the petitioners with respect to the listed drugs, including Implanon
and Implanon NXT, based on the standards of the Reproductive Health Law, as construed in lmbong v.
Ochoa, and to decide the case within sixty (60) days from the date it will be deemed submitted for resolution.

After compliance with due process and upon promulgation of the decision of the Food and Drug Administration,
the Temporary Restraining Order would be deemed lifted if the questioned drugs and devices are found not
abortifacients.

After the final resolution by the Food and Drug Administration, any appeal should be to the Office of the
President pursuant to Section 9 of E.O. No. 247.

As ordered in the August 24, 2016 Decision, the Food and Drug Administration is directed to amend the
Implementing Rules and Regulations of R.A. No. 10354 so that it would be strictly compliant with the mandates
of the Court in lmbong v. Ochoa.

SO ORDERED.

JOSE CATRAL MENDOZA,

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

I Concur, see separate opinion

MARIANO C. DEL CASTILLO
MARVIC M.V.F. LEONEN
Associate Justice
Associate Justice

SAMUEL R. MARTIRES
Associate Justice

ATTESTATION

I attest that the conclusions in the above Resolution had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
 CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that
the conclusions in the above Resolution had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes

1 Rollo, pp. 406-744.

2 Id. at 382-405.

3 Id. at 402-403.

4 Id. at 414-430.

5 Section 7.04. FDA Certification of Family Planning Supplies.

The FDA must certify that a family planning drug or device is not an abortifacient in dosages of
its approved indication (for drugs) or intended use (for devices) prior to its inclusion in the EDL.
The FDA shall observe the following guidelines in the determination of whether or not a drug or
device is an abortifacient:

a) As defined in Section 3.01 (a) of these Rules, a drug or device is deemed to be an

abortifacient if it is provento primarily induce abortion or the destruction of a fetus inside
the mother's womb or the prevention of the fertilized ovum to reach and be implanted in
the mother's womb;

b) The following mechanisms do not constitute abortion: the prevention of ovulation; the
direct action on sperm cells prior to fertilization; the thickening of cervical mucus; and any
mechanism acting exclusively prior to the fertilization of the egg by the sperm;

c) In making its determination, the FDA shall use the best evidence available, including
but not limited to: metaanalyses, systematic reviews, national clinical practice guidelines
where available, and recommendations of international medical organizations

d) In the presence of conflicting evidence, the more recent, better-designed, and larger
studies shall be preferred, and the conclusions found therein shall be used to determine
whether or not a drug or device is an abortifacient; and

e) Should the FDA require additional expertise in making its determination, an

independent evidence review group (ERG) composed of leading experts in the fields of
pharmacodynamics, medical research, evidence-based medicine, and other relevant
fields may be convened to review the available evidence. The FDA shall then issue its
certification based on the recommendations of the ERG.

6 Rollo, pp. 414-416.

7 Sec. 2. Duties and Functions of the Director-General x x x

b. Quasi-Judicial Powers, Duties and Functions:

xxx
8 Otherwise known as the Food and Drug Administration Act of2009.

9 c. Regulatory Powers, Duties and Functions:

xxx

10Step 1. Identify contraceptive products in the database. Create another database containing the
following details of contraceptive products: generic name, dosage strength and form, brand name (if
any), registration number, manufacturer, MAH, and the period of validity of the CPR.

Step 2. Identify contraceptive products which are classified as essential medicines in the
Philippine Drug Formulary.

Step 3. Retrieve the contraceptive product's file and the CPR duplicate of all registered
contraceptive products. Create a database of the contraceptive product's history, including its
initial, renewal, amendment, and/or variation applications.

Step 4. Conduct a preliminary review of the following:

a. general physiology of female reproductive system, including hormones involved,

female reproductive cycle, and conditions of the female reproductive system during
pregnancy.

b. classification of hormonal contraceptives;

c. regulatory status of the products in benchmark countries; and

d. mechanism of action of hormonal contraceptives based on reputable journals, meta-

analyses, systemic reviews, evaluation of regulatory authorities in other countries,
textbooks, among others.

Step 5. Issue a notice to all concerned MAHs, requiring them to submit scientific evidence that
their product is non-abortifacient, as defined in the RH Law and lmbong.

Step 6. Post a list of contraceptive products which were applied for re-certification for public
comments in the FDA website.

Step 7. Evaluate contraceptive products for re-certification.

A. Part I (Review of Chemistry, Manufacture and Controls)

1. Unit Dose and Finished Product Formulation

2. Technical Finished Product Specifications

3. Certificate of Analysis

B. Part II (Evaluation of Whether the Contraceptive Product is Abortifacient)

1. Evaluation of the scientific evidence submitted by the applicant and the public.

2. Review and evaluation of extraneous evidence, e.g., scientific journals, meta-

analyses, etc.

Step 8. Assess and review the documentary requirements submitted by the applicant. Technical
reviewers considered scientific evidence such as meta-analyses, systemic reviews, national and
clinical practice guidelines and recommendations of international medical organizations
submitted by the companies, organizations and individuals to be part of the review. [Emphases
and Underling supplied]
11 Omnibus Motion, p. 37.

12 Rollo, pp. 442-447.

13 69 Phil. 635 (1940).

14 Rollo, pp. 430-431.

15 Id. at 431-432, 442.

16 Id. at 432-433.

17 Id. at 433-434.

18 Cruz, Philippine Administrative Law, p. 29 (2007 Edition).

Commissioner of Customs v. Hypermix Feeds Corporation, 680 Phil. 681, 689 (2012), citing Misamis
19

Oriental Association of Coco Traders, Inc. v. Department of Finance Secretary, G.R. No. 108524,
November 10, 1994, 238 SCRA 63, 69-70.

20 Cruz, Philippine Administrative Law, supra note 18 at 67.

21 Id. at 88, citing Gudmindson v. Cardollo, 126 F2d. 521.

22 Id. at 91.

23 Cruz, Philippine Administrative Law, supra note 18 at 41.

24 Mirasol et al. v. DPWH and TRB, 523 Phil. 713, (2006).

25 Id.

26ZAMECO II Board of Directors v. Castillejos Consumers Ass 'n. Inc. (CASCONA), et al., 600 Phil. 365,
(2009).

27 SEC v. Court of Appeals, 316 Phil. 903 (1995).

28G.R. No. 205728, January 21, 2015, 747 SCRA I. ("This case pertains to acts of COMELEC in the
implementation of its regulatory powers. When it issued the notice and letter, the COMELEC was
allegedly enforcing election laws.")

29 Republic of the Phils. v. Sandiganbayan, 461 Phil. 598 (2003).

30 Ynot v. Intermediate Appellate Court, No. L-74457, March 20, 1987, 148 SCRA 659.

31 Tatadv. Sandiganbayan, 242 Phil. 563, 575-576 (1988).

32 Rollo (G.R. No. 217872), p. 18.

33 Decision, p. 15.

34 Rollo, pp. 418-419.

35 Section 7.04. FDA Certification of Family Planning Supplies.

The FDA must certify that a family planning drug or device is not an abortifacient in dosages of
its approved indication (for drugs) or intended use (for devices) prior to its inclusion in the EDL.
The FDA shall observe the following guidelines in the determination of whether or not a drug or
device is an abortifacient:
 a) As define in Section 3.01 (a) of these Rules, a drug or device is deemed to be an
abortifacient if it is proven to primarily induce abortion or the destruction of a fetus inside
the mother's womb or the prevention of the fertilized ovum to reach and be implanted in
the mother's womb;

b) The following mechanisms do not constitute abortion: the prevention of ovulation; the
direct action on sperm cells prior to fertilization; the thickening of cervical mucus; and any
mechanism acting exclusively prior to the fertilization of the egg by the sperm;

c) In making its determination, the FDA shall use the best evidence available, including
but not limited to: meta-analyses, systematic reviews, national clinical practice guidelines
where available, and recommendations of international medical organizations;

d) In the presence of conflicting evidence, the more recent, better-designed, and larger
studies shall be preferred, and the conclusions found therein shall be used to determine
whether or not a drug or device is an abortifacient; and

e) Should the FDA require additional expertise in making its determination, an

independent evidence review group (ERG) composed of leading experts in the fields of
pharmacodynamics, medical research, evidence-based medicine, and other relevant
fields may be convened to review the available evidence. The FDA shall then issue its
certification based on the recommendations of the ERG.

36 Omnibus Motion, p. 37.

37 Id. at 10.

38 Dated August 18, 2009.

39 69 Phil. 635, 642-644 (1940).

40 As cited and paraphrased in Solid Homes v. Laserna, 574 Phil. 69, 83 (2008).

41 Rollo, pp. 396-397.

42 602 Phil. 522, 540 (2009).

43 721 Phil. 34, 39-40(2013).

44 See Section 7.04 (c) Rule 7 ofthe Implementing Rules and Regulations of R.A. No. 10354.

45 Rollo, pp. 442-446.

46 Omnibus Motion, pp. 40-41.

Alliance for the Family Foundation, Philippines, Inc. v. Garin, G.R. Nos. 217872 & 221866, August 24,
47

2016.

48 CONSTITUTION, (I 987), Art. III, Sec. I.

49 CONSTITUTION, (1987), Art. III, Sec. 16.

 CASE DIGEST

ALLIANCE FOR THE FAMILY FOUNDATION v. JANETTE L. GARIN, GR No. 217872, 2016-08-24
Facts:
Hence, the petitioners instituted the subject petition for certiorari, contending that the FDA committed
grave abuse of discretion, not only for violating the Court's pronouncements in Imbong, but also for
failing to act on their opposition.
Issues:
whether their resort to the subject recourse is proper.
Ruling:
Certiorari proper to challenge acts of the FDA
As to the contention that the subject recourse is improper as it involves the FDA's exercise of its
regulatory powers, suffice it to say that the Court has unequivocally declared that certiorari, prohibition
and mandamus are appropriate remedies to raise constitutional issues and to review and/or
prohibit/nullify, when proper, acts of legislative and executive officials as there is no other plain, speedy
or adequate remedy in the ordinary course of law.
Consequently, the Court dismisses the notion that the re-certification of contraceptive drugs and
devices by the FDA in exercise of its regulatory function is beyond judicial review. After all, the
Constitution mandates that judicial power include 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 grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government.[47]Thus, certiorari is proper.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-46496 February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and

NATIONAL WORKERS BROTHERHOOD, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION, INC., respondents.

Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of Industrial Relations.
Antonio D. Paguia for National Labor Unon.
Claro M. Recto for petitioner "Ang Tibay".
Jose M. Casal for National Workers' Brotherhood.

LAUREL, J.:

The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-entitled case has
filed a motion for reconsideration and moves that, for the reasons stated in his motion, we reconsider the
following legal conclusions of the majority opinion of this Court:

1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de duracion o que no sea
para una determinada, termina o bien por voluntad de cualquiera de las partes o cada vez que ilega el
plazo fijado para el pago de los salarios segun costumbre en la localidad o cunado se termine la obra;

2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya colectivamente,
con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus tarbajos por haberse declarando
paro forzoso en la fabrica en la cual tarbajan, dejan de ser empleados u obreros de la misma;

3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con sus osbreros sin
tiempo fijo de duracion y sin ser para una obra determiminada y que se niega a readmitir a dichos
obreros que cesaron como consecuencia de un paro forzoso, no es culpable de practica injusta in
incurre en la sancion penal del articulo 5 de la Ley No. 213 del Commonwealth, aunque su negativa a
readmitir se deba a que dichos obreros pertenecen a un determinado organismo obrero, puesto que
tales ya han dejado deser empleados suyos por terminacion del contrato en virtud del paro.

The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the judgement rendered
by the majority of this Court and the remanding of the case to the Court of Industrial Relations for a new trial,
and avers:

1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of leather soles in ANG
TIBAY making it necessary for him to temporarily lay off the members of the National Labor Union Inc., is
entirely false and unsupported by the records of the Bureau of Customs and the Books of Accounts of
native dealers in leather.

2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a scheme to
systematically prevent the forfeiture of this bond despite the breach of his CONTRACT with the
Philippine Army.

3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re supposed delay of
leather soles from the States) was but a scheme to systematically prevent the forfeiture of this bond
despite the breach of his CONTRACT with the Philippine Army.

4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer union dominated by
Toribio Teodoro, the existence and functions of which are illegal. (281 U.S., 548, petitioner's printed
memorandum, p. 25.)
 5. That in the exercise by the laborers of their rights to collective bargaining, majority rule and elective
representation are highly essential and indispensable. (Sections 2 and 5, Commonwealth Act No. 213.)

6. That the century provisions of the Civil Code which had been (the) principal source of dissensions and
continuous civil war in Spain cannot and should not be made applicable in interpreting and applying the
salutary provisions of a modern labor legislation of American origin where the industrial peace has
always been the rule.

7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating against the
National Labor Union, Inc., and unjustly favoring the National Workers' Brotherhood.

8. That the exhibits hereto attached are so inaccessible to the respondents that even with the exercise of
due diligence they could not be expected to have obtained them and offered as evidence in the Court of
Industrial Relations.

9. That the attached documents and exhibits are of such far-reaching importance and effect that their
admission would necessarily mean the modification and reversal of the judgment rendered herein.

The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the respondent
National Labor Union, Inc.

In view of the conclusion reached by us and to be herein after stead with reference to the motion for a new trial
of the respondent National Labor Union, Inc., we are of the opinion that it is not necessary to pass upon the
motion for reconsideration of the Solicitor-General. We shall proceed to dispose of the motion for new trial of the
respondent labor union. Before doing this, however, we deem it necessary, in the interest of orderly procedure in
cases of this nature, in interest of orderly procedure in cases of this nature, to make several observations
regarding the nature of the powers of the Court of Industrial Relations and emphasize certain guiding principles
which should be observed in the trial of cases brought before it. We have re-examined the entire record of the
proceedings had before the Court of Industrial Relations in this case, and we have found no substantial evidence
that the exclusion of the 89 laborers here was due to their union affiliation or activity. The whole transcript taken
contains what transpired during the hearing and is more of a record of contradictory and conflicting statements of
opposing counsel, with sporadic conclusion drawn to suit their own views. It is evident that these statements and
expressions of views of counsel have no evidentiary value.

The Court of Industrial Relations is a special court whose functions are specifically stated in the law of its
creation (Commonwealth Act No. 103). It is more an administrative than a part of the integrated judicial system
of the nation. It is not intended to be a mere receptive organ of the Government. Unlike a court of justice which is
essentially passive, acting only when its jurisdiction is invoked and deciding only cases that are presented to it
by the parties litigant, the function of the Court of Industrial Relations, as will appear from perusal of its organic
law, is more active, affirmative and dynamic. It not only exercises judicial or quasi-judicial functions in the
determination of disputes between employers and employees but its functions in the determination of disputes
between employers and employees but its functions are far more comprehensive and expensive. It has
jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question, matter
controversy or dispute arising between, and/or affecting employers and employees or laborers, and regulate the
relations between them, subject to, and in accordance with, the provisions of Commonwealth Act No. 103
(section 1). It shall take cognizance or purposes of prevention, arbitration, decision and settlement, of any
industrial or agricultural dispute causing or likely to cause a strike or lockout, arising from differences as regards
wages, shares or compensation, hours of labor or conditions of tenancy or employment, between landlords and
tenants or farm-laborers, provided that the number of employees, laborers or tenants of farm-laborers involved
exceeds thirty, and such industrial or agricultural dispute is submitted to the Court by the Secretary of Labor or
by any or both of the parties to the controversy and certified by the Secretary of labor as existing and proper to
be by the Secretary of Labor as existing and proper to be dealth with by the Court for the sake of public interest.
(Section 4, ibid.) It shall, before hearing the dispute and in the course of such hearing, endeavor to reconcile the
parties and induce them to settle the dispute by amicable agreement. (Paragraph 2, section 4, ibid.) When
directed by the President of the Philippines, it shall investigate and study all industries established in a
designated locality, with a view to determinating the necessity and fairness of fixing and adopting for such
industry or locality a minimum wage or share of laborers or tenants, or a maximum "canon" or rental to be paid
by the "inquilinos" or tenants or less to landowners. (Section 5, ibid.) In fine, it may appeal to voluntary arbitration
in the settlement of industrial disputes; may employ mediation or conciliation for that purpose, or recur to the
more effective system of official investigation and compulsory arbitration in order to determine specific
controversies between labor and capital industry and in agriculture. There is in reality here a mingling of
executive and judicial functions, which is a departure from the rigid doctrine of the separation of governmental
powers.

In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated September 13, 1939,
we had occasion to joint out that the Court of Industrial Relations et al., G. R. No. 46673, promulgated
September 13, 1939, we had occasion to point out that the Court of Industrial Relations is not narrowly
constrained by technical rules of procedure, and the Act requires it to "act according to justice and equity and
substantial merits of the case, without regard to technicalities or legal forms and shall not be bound by any
technicalities or legal forms and shall not be bound by any technical rules of legal evidence but may inform its
mind in such manner as it may deem just and equitable." (Section 20, Commonwealth Act No. 103.) It shall not
be restricted to the specific relief claimed or demands made by the parties to the industrial or agricultural
dispute, but may include in the award, order or decision any matter or determination which may be deemed
necessary or expedient for the purpose of settling the dispute or of preventing further industrial or agricultural
disputes. (section 13, ibid.) And in the light of this legislative policy, appeals to this Court have been especially
regulated by the rules recently promulgated by the rules recently promulgated by this Court to carry into the
effect the avowed legislative purpose. The fact, however, that the Court of Industrial Relations may be said to be
free from the rigidity of certain procedural requirements does not mean that it can, in justifiable cases before it,
entirely ignore or disregard the fundamental and essential requirements of due process in trials and
investigations of an administrative character. There are primary rights which must be respected even in
proceedings of this character:

(1) The first of these rights is the right to a hearing, which includes the right of the party interested or
affected to present his own case and submit evidence in support thereof. In the language of Chief
Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and property of
the citizen shall be protected by the rudimentary requirements of fair play.

(2) Not only must the party be given an opportunity to present his case and to adduce evidence tending
to establish the rights which he asserts but the tribunal must consider the evidence presented. (Chief
Justice Hughes in Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In the language of this
court in Edwards vs. McCoy, 22 Phil., 598, "the right to adduce evidence, without the corresponding duty
on the part of the board to consider it, is vain. Such right is conspicuously futile if the person or persons
to whom the evidence is presented can thrust it aside without notice or consideration."

(3) "While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity
which cannot be disregarded, namely, that of having something to support it is a nullity, a place when
directly attached." (Edwards vs. McCoy, supra.) This principle emanates from the more fundamental is
contrary to the vesting of unlimited power anywhere. Law is both a grant and a limitation upon power.

(4) Not only must there be some evidence to support a finding or conclusion (City of Manila vs. Agustin,
G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G. 1335), but the evidence must be
"substantial." (Washington, Virginia and Maryland Coach Co. v. national labor Relations Board, 301 U.S.
142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It means such relevant evidence as a reasonable mind
accept as adequate to support a conclusion." (Appalachian Electric Power v. National Labor Relations
Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v. Thompson Products, 6 Cir., 97 F. 2d
13, 15; Ballston-Stillwater Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . .
The statute provides that "the rules of evidence prevailing in courts of law and equity shall not be
controlling.' The obvious purpose of this and similar provisions is to free administrative boards from the
compulsion of technical rules so that the mere admission of matter which would be deemed incompetent
inn judicial proceedings would not invalidate the administrative order. (Interstate Commerce Commission
v. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860; Interstate Commerce Commission v.
Louisville and Nashville R. Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v.
Abilene and Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable
flexibility in administrative procedure does not go far as to justify orders without a basis in evidence
having rational probative force. Mere uncorroborated hearsay or rumor does not constitute substantial
evidence. (Consolidated Edison Co. v. National Labor Relations Board, 59 S. Ct. 206, 83 Law. ed. No. 4,
Adv. Op., p. 131.)"

(5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the
record and disclosed to the parties affected. (Interstate Commence Commission vs. L. & N. R. Co., 227
U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431.) Only by confining the administrative tribunal to the evidence
disclosed to the parties, can the latter be protected in their right to know and meet the case against
them. It should not, however, detract from their duty actively to see that the law is enforced, and for that
 purpose, to use the authorized legal methods of securing evidence and informing itself of facts material
and relevant to the controversy. Boards of inquiry may be appointed for the purpose of investigating and
determining the facts in any given case, but their report and decision are only advisory. (Section 9,
Commonwealth Act No. 103.) The Court of Industrial Relations may refer any industrial or agricultural
dispute or any matter under its consideration or advisement to a local board of inquiry, a provincial fiscal.
a justice of the peace or any public official in any part of the Philippines for investigation, report and
recommendation, and may delegate to such board or public official such powers and functions as the
said Court of Industrial Relations may deem necessary, but such delegation shall not affect the exercise
of the Court itself of any of its powers. (Section 10, ibid.)

(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the views of a
subordinate in arriving at a decision. It may be that the volume of work is such that it is literally Relations
personally to decide all controversies coming before them. In the United States the difficulty is solved
with the enactment of statutory authority authorizing examiners or other subordinates to render final
decision, with the right to appeal to board or commission, but in our case there is no such statutory
authority.

(7) The Court of Industrial Relations should, in all controversial questions, render its decision in such a
manner that the parties to the proceeding can know the various issues involved, and the reasons for the
decision rendered. The performance of this duty is inseparable from the authority conferred upon it.

In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as to the alleged
agreement between the Ang Tibay and the National Worker's Brotherhood (appendix A), the record is barren
and does not satisfy the thirst for a factual basis upon which to predicate, in a national way, a conclusion of law.

This result, however, does not now preclude the concession of a new trial prayed for the by respondent National
Labor Union, Inc., it is alleged that "the supposed lack of material claimed by Toribio Teodoro was but a scheme
adopted to systematically discharged all the members of the National Labor Union Inc., from work" and this
avernment is desired to be proved by the petitioner with the "records of the Bureau of Customs and the Books of
Accounts of native dealers in leather"; that "the National Workers Brotherhood Union of Ang Tibay is a company
or employer union dominated by Toribio Teodoro, the existence and functions of which are illegal." Petitioner
further alleges under oath that the exhibits attached to the petition to prove his substantial avernments" are so
inaccessible to the respondents that even within the exercise of due diligence they could not be expected to
have obtained them and offered as evidence in the Court of Industrial Relations", and that the documents
attached to the petition "are of such far reaching importance and effect that their admission would necessarily
mean the modification and reversal of the judgment rendered herein." We have considered the reply of Ang
Tibay and its arguments against the petition. By and large, after considerable discussions, we have come to the
conclusion that the interest of justice would be better served if the movant is given opportunity to present at the
hearing the documents referred to in his motion and such other evidence as may be relevant to the main issue
involved. The legislation which created the Court of Industrial Relations and under which it acts is new. The
failure to grasp the fundamental issue involved is not entirely attributable to the parties adversely affected by the
result. Accordingly, the motion for a new trial should be and the same is hereby granted, and the entire record of
this case shall be remanded to the Court of Industrial Relations, with instruction that it reopen the case, receive
all such evidence as may be relevant and otherwise proceed in accordance with the requirements set forth
hereinabove. So ordered.

Avanceña, C. J., Villa-Real, Imperial, Diaz, Concepcion and Moran, JJ., concur.
CASE DIGEST

G.R. No. L-46496 February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and NATIONAL WORKERS
BROTHERHOOD, petitioners,
vs.

THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION, INC., respondents
Facts:
The Solicitor General in behalf of the respondent Court of Industrial Relations has filed a motion for
reconsideration wherein the court has considered the legal conclusions stated in Spanish language.

The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the judgment of the
majority of this court and remanded the case to the Court of Industrial Relations for new trial averring
among other issues that Toribio Teodoro claimed that there was shortage of Ang Tibay leather shoes thus it
made him necessary to lay off the members of the National Labor Union, Inc.

That the supposed lack of leather materials claimed by Toribio Teodoro was but a scheme to systematically
prevent the forfeiture of this bond despite the breach of his contract with the Philippine Army.

That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating against the National
Labor Union, Inc. and unjustly favoring the National Workers’ Brotherhood.

Issue:
Whether or not the issues should be properly directed, resolved or determined by the Court of Industrial
Relation.

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Held:
Yes, The CIR is a special court whose functions are specifically stated in the law of its creation. It is more an
administrative than part of the integrated judicial system of the nation. It is not intended to be a more
receptive organ of the Government.

The CIR or any of its judges, therefore, must act on its or his own independent consideration of the law and
facts of the controversy, and not simply accept the views of a subordinate in arriving at a decision.

The CIR should, in all controversial questions, render its decision in such a manner that the parties to the
proceeding can know the various issues involved, and the reasons for the decision rendered. The
performance of this duty is inseparable from the authority conferred upon it.

Accordingly, the motion for new trial should be and the same is hereby granted, and the entire record of this
case shall be remanded to the CIR with instruction that it reopen the case, receive all such evidence as may
be relevant and otherwise proceed in accordance w/ the requirements set forth herein above.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 119761 August 29, 1996

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
HON. COURT OF APPEALS, HON. COURT OF TAX APPEALS and FORTUNE TOBACCO
CORPORATION, respondents.

VITUG, J.:p

The Commissioner of Internal Revenue ("CIR") disputes the decision, dated 31 March 1995, of respondent Court of Appeals 1 affirming the 10th August 1994
decision and the 11th October 1994 resolution of the Court of Tax Appeals 2 ("CTA") in C.T.A. Case No. 5015, entitled "Fortune Tobacco Corporation vs.
Liwayway Vinzons-Chato in her capacity as Commissioner of Internal Revenue."

The facts, by and large, are not in dispute.

Fortune Tobacco Corporation ("Fortune Tobacco") is engaged in the manufacture of different brands of
cigarettes.

On various dates, the Philippine Patent Office issued to the corporation separate certificates of trademark
registration over "Champion," "Hope," and "More" cigarettes. In a letter, dated 06 January 1987, of then
Commissioner of Internal Revenue Bienvenido A. Tan, Jr., to Deputy Minister Ramon Diaz of the Presidential
Commission on Good Government, "the initial position of the Commission was to classify 'Champion,' 'Hope,'
and 'More' as foreign brands since they were listed in the World Tobacco Directory as belonging to foreign
companies. However, Fortune Tobacco changed the names of 'Hope' to 'Hope Luxury' and 'More' to
'Premium More,' thereby removing the said brands from the foreign brand category. Proof was also submitted to
the Bureau (of Internal Revenue ['BIR']) that 'Champion' was an original Fortune Tobacco Corporation register
and therefore a local brand." 3 Ad Valorem taxes were imposed on these brands, 4 at the following rates:

BRAND AD VALOREM TAX RATE

E.O. 22 and E.O. 273 RA 6956
06-23-86 07-25-87 06-18-90
07-01-86 01-01-88 07-05-90

Hope Luxury M. 100's

Sec. 142, (c), (2) 40% 45%
Hope Luxury M. King
Sec. 142, (c), (2) 40% 45%
More Premium M. 100's
Sec. 142, (c), (2) 40% 45%
More Premium International
Sec. 142, (c), (2) 40% 45%
Champion Int'l. M. 100's
Sec. 142, (c), (2) 40% 45%
Champion M. 100's
Sec. 142, (c), (2) 40% 45%
Champion M. King
Sec. 142, (c), last par. 15% 20%
Champion Lights
Sec. 142, (c), last par. 15% 20% 5

A bill, which later became Republic Act ("RA") No. 7654, 6 was enacted, on 10 June 1993, by the
legislature and signed into law, on 14 June 1993, by the President of the Philippines. The new law
became effective on 03 July 1993. It amended Section 142(c)(1) of the National Internal Revenue Code
("NIRC") to read; as follows:

Sec. 142. Cigars and Cigarettes. —

xxx xxx xxx

(c) Cigarettes packed by machine. — There shall be levied, assessed and collected on cigarettes
packed by machine a tax at the rates prescribed below based on the constructive manufacturer's
wholesale price or the actual manufacturer's wholesale price, whichever is higher:

(1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five
percent (55%) or the exportation of which is not authorized by contract or otherwise, fifty-five
(55%) provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack.

(2) On other locally manufactured cigarettes, forty-five percent (45%) provided that the minimum
tax shall not be less than Three Pesos (P3.00) per pack.

xxx xxx xxx

When the registered manufacturer's wholesale price or the actual manufacturer's wholesale price
whichever is higher of existing brands of cigarettes, including the amounts intended to cover the
taxes, of cigarettes packed in twenties does not exceed Four Pesos and eighty centavos (P4.80)
per pack, the rate shall be twenty percent (20%). 7 (Emphasis supplied)

About a month after the enactment and two (2) days before the effectivity of RA 7654, Revenue
Memorandum Circular No. 37-93 ("RMC 37-93"), was issued by the BIR the full text of which expressed:

REPUBLIKA NG PILIPINAS
KAGAWARAN NG PANANALAPI
KAWANIHAN NG RENTAS INTERNAS

July
1,
199
3

REVENUE MEMORANDUM CIRCULAR NO. 37-93

SUBJECT: Reclassification of Cigarettes Subject to Excise Tax

TO: All Internal Revenue Officers and Others Concerned.

In view of the issues raised on whether "HOPE," "MORE" and "CHAMPION" cigarettes which are
locally manufactured are appropriately considered as locally manufactured cigarettes bearing a
foreign brand, this Office is compelled to review the previous rulings on the matter.

Section 142 (c)(1) National Internal Revenue Code, as amended by R.A. No. 6956, provides:

On locally manufactured cigarettes bearing a foreign brand, fifty-five percent

(55%) Provided, That this rate shall apply regardless of whether or not the right to
use or title to the foreign brand was sold or transferred by its owner to the local
manufacturer. Whenever it has to be determined whether or not a cigarette bears
a foreign brand, the listing of brands manufactured in foreign countries appearing
in the current World Tobacco Directory shall govern.

Under the foregoing, the test for imposition of the 55% ad valorem tax on cigarettes is that the
locally manufactured cigarettes bear a foreign brand regardless of whether or not the right to use
or title to the foreign brand was sold or transferred by its owner to the local manufacturer. The
brand must be originally owned by a foreign manufacturer or producer. If ownership of the
 cigarette brand is, however, not definitely determinable, ". . . the listing of brands manufactured in
foreign countries appearing in the current World Tobacco Directory shall govern. . . ."

"HOPE" is listed in the World Tobacco Directory as being manufactured by (a) Japan Tobacco,
Japan and (b) Fortune Tobacco, Philippines. "MORE" is listed in the said directory as being
manufactured by: (a) Fills de Julia Reig, Andorra; (b) Rothmans, Australia; (c) RJR-Macdonald
Canada; (d) Rettig-Strenberg, Finland; (e) Karellas, Greece; (f) R.J. Reynolds, Malaysia; (g)
Rothmans, New Zealand; (h) Fortune Tobacco, Philippines; (i) R.J. Reynolds, Puerto Rico; (j)
R.J. Reynolds, Spain; (k) Tabacalera, Spain; (l) R.J. Reynolds, Switzerland; and (m) R.J.
Reynolds, USA. "Champion" is registered in the said directory as being manufactured by (a)
Commonwealth Bangladesh; (b) Sudan, Brazil; (c) Japan Tobacco, Japan; (d) Fortune Tobacco,
Philippines; (e) Haggar, Sudan; and (f) Tabac Reunies, Switzerland.

Since there is no showing who among the above-listed manufacturers of the cigarettes bearing
the said brands are the real owner/s thereof, then it follows that the same shall be considered
foreign brand for purposes of determining the ad valorem tax pursuant to Section 142 of the
National Internal Revenue Code. As held in BIR Ruling No. 410-88, dated August 24, 1988, "in
cases where it cannot be established or there is dearth of evidence as to whether a brand is
foreign or not, resort to the World Tobacco Directory should be made."

In view of the foregoing, the aforesaid brands of cigarettes, viz: "HOPE," "MORE" and
"CHAMPION" being manufactured by Fortune Tobacco Corporation are hereby considered
locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on
cigarettes.

Any ruling inconsistent herewith is revoked or modified accordingly.

(SGD) LIWAYWAY
VINZONS-CHATO
Commissioner

On 02 July 1993, at about 17:50 hours, BIR Deputy Commissioner Victor A. Deoferio, Jr., sent via
telefax a copy of RMC 37-93 to Fortune Tobacco but it was addressed to no one in particular. On 15 July
1993, Fortune Tobacco received, by ordinary mail, a certified xerox copy of RMC 37-93.

In a letter, dated 19 July 1993, addressed to the appellate division of the BIR, Fortune Tobacco
requested for a review, reconsideration and recall of RMC 37-93. The request was denied on 29 July
1993. The following day, or on 30 July 1993, the CIR assessed Fortune Tobacco for ad valorem tax
deficiency amounting to P9,598,334.00.

On 03 August 1993, Fortune Tobacco filed a petition for review with the CTA. 8

On 10 August 1994, the CTA upheld the position of Fortune Tobacco and adjudged:

WHEREFORE, Revenue Memorandum Circular No. 37-93 reclassifying the brands of

cigarettes, viz: "HOPE," "MORE" and "CHAMPION" being manufactured by Fortune Tobacco
Corporation as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad
valorem tax on cigarettes is found to be defective, invalid and unenforceable, such that when
R.A. No. 7654 took effect on July 3, 1993, the brands in question were not CURRENTLY
CLASSIFIED AND TAXED at 55% pursuant to Section 1142(c)(1) of the Tax Code, as amended
by R.A. No. 7654 and were therefore still classified as other locally manufactured cigarettes and
taxed at 45% or 20% as the case may be.

Accordingly, the deficiency ad valorem tax assessment issued on petitioner Fortune Tobacco
Corporation in the amount of P9,598,334.00, exclusive of surcharge and interest, is hereby
canceled for lack of legal basis.

Respondent Commissioner of Internal Revenue is hereby enjoined from collecting the deficiency
tax assessment made and issued on petitioner in relation to the implementation of RMC No. 37-
93.
 SO ORDERED. 9

In its resolution, dated 11 October 1994, the CTA dismissed for lack of merit the motion for
reconsideration.

The CIR forthwith filed a petition for review with the Court of Appeals, questioning the CTA's 10th August
1994 decision and 11th October 1994 resolution. On 31 March 1993, the appellate court's Special
Thirteenth Division affirmed in all respects the assailed decision and resolution.

In the instant petition, the Solicitor General argues: That —

I. RMC 37-93 IS A RULING OR OPINION OF THE COMMISSIONER OF

INTERNAL REVENUE INTERPRETING THE PROVISIONS OF THE TAX
CODE.

II. BEING AN INTERPRETATIVE RULING OR OPINION, THE PUBLICATION

OF RMC 37-93, FILING OF COPIES THEREOF WITH THE UP LAW CENTER
AND PRIOR HEARING ARE NOT NECESSARY TO ITS VALIDITY,
EFFECTIVITY AND ENFORCEABILITY.

III. PRIVATE RESPONDENT IS DEEMED TO HAVE BEEN NOTIFIED OR RMC

37-93 ON JULY 2, 1993.

IV. RMC 37-93 IS NOT DISCRIMINATORY SINCE IT APPLIES TO ALL

LOCALLY MANUFACTURED CIGARETTES SIMILARLY SITUATED AS
"HOPE," "MORE" AND "CHAMPION" CIGARETTES.

V. PETITIONER WAS NOT LEGALLY PROSCRIBED FROM RECLASSIFYING

"HOPE," "MORE" AND "CHAMPION" CIGARETTES BEFORE THE
EFFECTIVITY OF R.A. NO. 7654.

VI. SINCE RMC 37-93 IS AN INTERPRETATIVE RULE, THE INQUIRY IS NOT

INTO ITS VALIDITY, EFFECTIVITY OR ENFORCEABILITY BUT INTO ITS
CORRECTNESS OR PROPRIETY; RMC 37-93 IS CORRECT. 10

In fine, petitioner opines that RMC 37-93 is merely an interpretative ruling of the BIR which can thus
become effective without any prior need for notice and hearing, nor publication, and that its issuance is
not discriminatory since it would apply under similar circumstances to all locally manufactured cigarettes.

The Court must sustain both the appellate court and the tax court.

Petitioner stresses on the wide and ample authority of the BIR in the issuance of rulings for the effective
implementation of the provisions of the National Internal Revenue Code. Let it be made clear that such
authority of the Commissioner is not here doubted. Like any other government agency, however, the CIR
may not disregard legal requirements or applicable principles in the exercise of its quasi-legislative
powers.

Let us first distinguish between two kinds of administrative issuances — a legislative rule and
an interpretative rule.

In Misamis Oriental Association of Coco Traders, Inc., vs. Department of Finance Secretary, 11 the Court
expressed:

. . . a legislative rule is in the nature of subordinate legislation, designed to implement a primary

legislation by providing the details thereof . In the same way that laws must have the benefit of
public hearing, it is generally required that before a legislative rule is adopted there must be
hearing. In this connection, the Administrative Code of 1987 provides:

Public Participation. — If not otherwise required by law, an agency shall, as far as practicable,
publish or circulate notices of proposed rules and afford interested parties the opportunity to
submit their views prior to the adoption of any rule.
 (2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have
been published in a newspaper of general circulation at least two (2) weeks before the first
hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed.

In addition such rule must be published. On the other hand, interpretative rules are designed to
provide guidelines to the law which the administrative agency is in charge of enforcing. 12

It should be understandable that when an administrative rule is merely interpretative in nature, its
applicability needs nothing further than its bare issuance for it gives no real consequence more than
what the law itself has already prescribed. When, upon the other hand, the administrative rule goes
beyond merely providing for the means that can facilitate or render least cumbersome the
implementation of the law but substantially adds to or increases the burden of those governed, it
behooves the agency to accord at least to those directly affected a chance to be heard, and thereafter to
be duly informed, before that new issuance is given the force and effect of law.

A reading of RMC 37-93, particularly considering the circumstances under which it has been issued,
convinces us that the circular cannot be viewed simply as a corrective measure (revoking in the process
the previous holdings of past Commissioners) or merely as construing Section 142(c)(1) of the NIRC, as
amended, but has, in fact and most importantly, been made in order to place "Hope Luxury," "Premium
More" and "Champion" within the classification of locally manufactured cigarettes bearing foreign brands
and to thereby have them covered by RA 7654. Specifically, the new law would have its amendatory
provisions applied to locally manufactured cigarettes which at the time of its effectivity were not so
classified as bearing foreign brands. Prior to the issuance of the questioned circular, "Hope Luxury,"
"Premium More," and "Champion" cigarettes were in the category of locally manufactured
cigarettes not bearing foreign brand subject to 45% ad valorem tax. Hence, without RMC 37-93, the
enactment of RA 7654, would have had no new tax rate consequence on private respondent's products.
Evidently, in order to place "Hope Luxury," "Premium More," and "Champion" cigarettes within the scope
of the amendatory law and subject them to an increased tax rate, the now disputed RMC 37-93 had to
be issued. In so doing, the BIR not simply intrepreted the law; verily, it legislated under its quasi-
legislative authority. The due observance of the requirements of notice, of hearing, and of publication
should not have been then ignored.

Indeed, the BIR itself, in its RMC 10-86, has observed and provided:

RMC NO. 10-86

Effectivity of Internal Revenue Rules and Regulations

It has been observed that one of the problem areas bearing on compliance with Internal Revenue
Tax rules and regulations is lack or insufficiency of due notice to the tax paying public. Unless
there is due notice, due compliance therewith may not be reasonably expected. And most
importantly, their strict enforcement could possibly suffer from legal infirmity in the light of the
constitutional provision on "due process of law" and the essence of the Civil Code provision
concerning effectivity of laws, whereby due notice is a basic requirement (Sec. 1, Art. IV,
Constitution; Art. 2, New Civil Code).

In order that there shall be a just enforcement of rules and regulations, in conformity with the
basic element of due process, the following procedures are hereby prescribed for the drafting,
issuance and implementation of the said Revenue Tax Issuances:

(1) This Circular shall apply only to (a) Revenue Regulations; (b) Revenue Audit
Memorandum Orders; and (c) Revenue Memorandum Circulars and Revenue
Memorandum Orders bearing on internal revenue tax rules and regulations.

(2) Except when the law otherwise expressly provides, the aforesaid internal
revenue tax issuances shall not begin to be operative until after due notice
thereof may be fairly presumed.

Due notice of the said issuances may be fairly presumed only after the following
procedures have been taken;
 xxx xxx xxx

(5) Strict compliance with the foregoing procedures is

enjoined. 13

Nothing on record could tell us that it was either impossible or impracticable for the BIR to observe and
comply with the above requirements before giving effect to its questioned circular.

Not insignificantly, RMC 37-93 might have likewise infringed on uniformity of taxation.

Article VI, Section 28, paragraph 1, of the 1987 Constitution mandates taxation to be uniform and
equitable. Uniformity requires that all subjects or objects of taxation, similarly situated, are to be treated
alike or put on equal footing both in privileges and liabilities. 14 Thus, all taxable articles or kinds of
property of the same class must be taxed at the same rate 15 and the tax must operate with the same
force and effect in every place where the subject may be found.

Apparently, RMC 37-93 would only apply to "Hope Luxury," "Premium More" and "Champion" cigarettes
and, unless petitioner would be willing to concede to the submission of private respondent that the
circular should, as in fact my esteemed colleague Mr. Justice Bellosillo so expresses in his separate
opinion, be considered adjudicatory in nature and thus violative of due process following the Ang
Tibay 16 doctrine, the measure suffers from lack of uniformity of taxation. In its decision, the CTA has
keenly noted that other cigarettes bearing foreign brands have not been similarly included within the
scope of the circular, such as —

1. Locally manufactured by ALHAMBRA INDUSTRIES, INC.

(a) "PALM TREE" is listed as manufactured by office of Monopoly, Korea (Exhibit

"R")

2. Locally manufactured by LA SUERTE CIGAR and CIGARETTE COMPANY

(a) "GOLDEN KEY" is listed being manufactured by United Tobacco, Pakistan

(Exhibit "S")

(b) "CANNON" is listed as being manufactured by Alpha Tobacco, Bangladesh

(Exhibit "T")

3. Locally manufactured by LA PERLA INDUSTRIES, INC.

(a) "WHITE HORSE" is listed as being manufactured by Rothman's, Malaysia

(Exhibit "U")

(b) "RIGHT" is listed as being manufactured by SVENSKA, Tobaks, Sweden

(Exhibit "V-1")

4. Locally manufactured by MIGHTY CORPORATION

(a) "WHITE HORSE" is listed as being manufactured by Rothman's, Malaysia

(Exhibit "U-1")

5. Locally manufactured by STERLING TOBACCO CORPORATION

(a) "UNION" is listed as being manufactured by Sumatra Tobacco, Indonesia and

Brown and Williamson, USA (Exhibit "U-3")

(b) "WINNER" is listed as being manufactured by Alpha Tobacco, Bangladesh;

Nangyang, Hongkong; Joo Lan, Malaysia; Pakistan Tobacco Co., Pakistan;
Premier Tobacco, Pakistan and Haggar, Sudan (Exhibit "U-4"). 17
 The court quoted at length from the transcript of the hearing conducted on 10 August 1993 by the
Committee on Ways and Means of the House of Representatives; viz:

THE CHAIRMAN. So you have specific information on Fortune Tobacco alone. You don't have
specific information on other tobacco manufacturers. Now, there are other brands which are
similarly situated. They are locally manufactured bearing foreign brands. And may I enumerate to
you all these brands, which are also listed in the World Tobacco Directory . . . Why were these
brand not reclassified at 55 if your want to give a level playing filed to foreign manufacturers?

MS. CHATO. Mr. Chairman, in fact, we have already prepared a Revenue Memorandum Circular
that was supposed to come after RMC No. 37-93 which have really named specifically the list of
locally manufactured cigarettes bearing a foreign brand for excise tax purposes and includes all
these brands that you mentioned at 55 percent except that at that time, when we had to come up
with this, we were forced to study the brands of Hope, More and Champion because we were
given documents that would indicate the that these brands were actually being claimed or
patented in other countries because we went by Revenue Memorandum Circular 1488 and we
wanted to give some rationality to how it came about but we couldn't find the rationale there. And
we really found based on our own interpretation that the only test that is given by that existing
law would be registration in the World Tobacco Directory. So we came out with this proposed
revenue memorandum circular which we forwarded to the Secretary of Finance except that at
that point in time, we went by the Republic Act 7654 in Section 1 which amended Section 142, C-
1, it said, that on locally manufactured cigarettes which are currently classified and taxed at 55
percent. So we were saying that when this law took effect in July 3 and if we are going to come
up with this revenue circular thereafter, then I think our action would really be subject to
question but we feel that . . . Memorandum Circular Number 37-93 would really cover even
similarly situated brands. And in fact, it was really because of the study, the short time that we
were given to study the matter that we could not include all the rest of the other brands that
would have been really classified as foreign brand if we went by the law itself. I am sure that by
the reading of the law, you would without that ruling by Commissioner Tan they would really have
been included in the definition or in the classification of foregoing brands. These brands that you
referred to or just read to us and in fact just for your information, we really came out with a
proposed revenue memorandum circular for those brands. (Emphasis supplied)

(Exhibit "FF-2-C," pp. V-5 TO V-6, VI-1 to VI-3).

xxx xxx xxx

MS. CHATO. . . . But I do agree with you now that it cannot and in fact that is why I felt that we . .
. I wanted to come up with a more extensive coverage and precisely why I asked that revenue
memorandum circular that would cover all those similarly situated would be prepared but
because of the lack of time and I came out with a study of RA 7654, it would not have been
possible to really come up with the reclassification or the proper classification of all brands that
are listed there. . . (emphasis supplied) (Exhibit "FF-2d," page IX-1)

xxx xxx xxx

HON. DIAZ. But did you not consider that there are similarly situated?

MS. CHATO. That is precisely why, Sir, after we have come up with this Revenue Memorandum
Circular No. 37-93, the other brands came about the would have also clarified RMC 37-93 by I
was saying really because of the fact that I was just recently appointed and the lack of time, the
period that was allotted to us to come up with the right actions on the matter, we were really
caught by the July 3 deadline. But in fact, We have already prepared a revenue memorandum
circular clarifying with the other . . . does not yet, would have been a list of locally manufactured
cigarettes bearing a foreign brand for excise tax purposes which would include all the other
brands that were mentioned by the Honorable Chairman. (Emphasis supplied) (Exhibit "FF-2-d,"
par. IX-4). 18

All taken, the Court is convinced that the hastily promulgated RMC 37-93 has fallen short of a valid and effective
administrative issuance.
WHEREFORE, the decision of the Court of Appeals, sustaining that of the Court of Tax Appeals, is AFFIRMED.
No costs.

SO ORDERED.

Kapunan, J., concurs.

Separate Opinions

BELLOSILLO, J.: separate opinion:

RA 7654 was enacted by Congress on 10 June 1993, signed into law by the President on 14 June 1993, and
took effect 3 July 1993. It amended partly Sec. 142, par. (c), of the National Internal Revenue Code (NIRC) to
read —

Sec. 142. Cigars and cigarettes. — . . . . (c) Cigarettes packed by machine. — There shall be
levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed
below based on the constructive manufacturer's wholesale price or the actual manufacturer's
wholesale price, whichever is higher.

(1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five
percent (55%) or the exportation of which is not authorized by contract or otherwise, fifty-five
percent (55%) provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack
(emphasis supplied).

(2) On other locally manufactured cigarettes, forty-five percent (45%) provided that the minimum
tax shall not be less than Three Pesos (P3.00) per pack.

Prior to the effectivity of RA 7654, cigarette brands Hope Luxury, Premium More and Champion were considered
local brands subjected to an ad valorem tax at the rate of 20-45%. However, on 1 July 1993 or two (2) days
before RA 7654 took effect, petitioner Commissioner of Internal Revenue issued RMC 37-93 reclassifying
"Hope, More and Champion being manufactured by Fortune Tobacco Corporation . . . . (as) locally manufactured
cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes." 1 RMC 37-93 in effect
subjected Hope Luxury, Premium More and Champion cigarettes to the provisions of Sec. 142, par. (c), subpar.
(1), NIRC, as amended by RA 7654, imposing upon these cigarette brands an ad valorem tax of "fifty-five
percent (55%) provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack."

On 2 July 1993, Friday, at about five-fifty in the afternoon, or a few hours before the effectivity of RA 7654, a
copy of RMC 37-93 with a cover letter signed by Deputy Commissioner Victor A. Deoferio of the Bureau of
Internal Revenue was sent by facsimile to the factory of respondent corporation in Parang, Marikina, Metro
Manila. It appears that the letter together with a copy of RMC 37-93 did not immediately come to the knowledge
of private respondent as it was addressed to no one in particular. It was only when the reclassification of
respondent corporation's cigarette brands was reported in the column of Fil C. Sionil in Business Bulletin on 4
July 1993 that the president of respondent corporation learned of the matter, prompting him to inquire into its
veracity and to request from petitioner a copy of RMC 37-93. On 15 July 1993 respondent corporation received
by ordinary mail a certified machine copy of RMC 37-93.

Respondent corporation sought a review, reconsideration and recall of RMC 37-93 but was forthwith denied by
the Appellate Division of the Bureau of Internal Revenue. As a consequence, on 30 July 1993 private
respondent was assessed an ad valorem tax deficiency amounting to P9,598,334.00. Respondent corporation
went to the Court of Tax Appeals (CTA) on a petition for review.
On 10 August 1994, after due hearing, the CTA found the petition meritorious and ruled —

Revenue Memorandum Circular No. 37-93 reclassifying the brands of

cigarettes, viz: Hope, More and Champion being manufactured by Fortune Tobacco Corporation
as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on
cigarettes is found to be defective, invalid and unenforceable . . . . Accordingly, the deficiency ad
valorem tax assessment issued on petitioner Fortune Tobacco Corporation in the amount of
P9,598,334.00, exclusive of surcharge and interest, is hereby cancelled for lack of legal basis. 2

The CTA held that petitioner Commissioner of Internal Revenue failed to observe due process of law in
issuing RMC 37-93 as there was no prior notice and hearing, and that RMC 37-93 was in itself
discriminatory. The motion to reconsider its decision was denied by the CTA for lack of merit. On 31
March 1995 respondent Court of Appeals affirmed in toto the decision of the CTA. 3 Hence, the instant
petition for review.

Petitioner now submits through the Solicitor General that RMC 37-93 reclassifying Hope Luxury, Premium
More and Champion as locally manufactured cigarettes bearing brands is merely an interpretative ruling which
needs no prior notice and hearing as held in Misamis Oriental Association of Coco Traders, Inc. v. Department
of Finance Secretary. 4 It maintains that neither is the assailed revenue memorandum circular discriminatory as it
merely "lays down the test in determining whether or not a locally manufactured cigarette bears a foreign brand
using (only) the cigarette brands Hope, More and Champion as specific examples." 5

Respondent corporation on the other hand contends that RMC 37-93 is not a mere interpretative ruling but is
adjudicatory in nature where prior notice and hearing are mandatory, and that Misamis Oriental Association of
Coco Traders, Inc. v. Department of Finance Secretary on which the Solicitor General relies heavily is not
applicable. Respondent Fortune Tobacco Corporation also argues that RMC 37-93 discriminates against its
cigarette brands since those of its competitors which are similarly situated have not been reclassified.

The main issues before us are (a) whether RMC 37-93 is merely an interpretative rule the issuance of which
needs no prior notice and hearing, or an adjudicatory ruling which calls for the twin requirements of prior notice
and hearing, and, (b) whether RMC 37-93 is discriminatory in nature.

A brief discourse on the powers and functions of administrative bodies may be instructive.

Administrative agencies posses quasi-legislative or rule making powers and quasi-judicial or administrative
adjudicatory powers. Quasi-legislative or rule making power is the power to make rules and regulations which
results in delegated legislation that is within the confines of the granting statute and the doctrine of
nondelegability and separability of powers.

Interpretative rule, one of the three (3) types of quasi-legislative or rule making powers of an administrative
agency (the other two being supplementary or detailed legislation, and contingent legislation), is promulgated by
the administrative agency to interpret, clarify or explain statutory regulations under which the administrative body
operates. The purpose or objective of an interpretative rule is merely to construe the statute being administered.
It purports to do no more than interpret the statute. Simply, the rule tries to say what the statute means.
Generally, it refers to no single person or party in particular but concerns all those belonging to the same class
which may be covered by the said interpretative rule. It need not be published and neither is a hearing required
since it is issued by the administrative body as an incident of its power to enforce the law and is intended merely
to clarify statutory provisions for proper observance by the people. In Tañada v. Tuvera, 6 this Court expressly
said that "[i]interpretative regulations . . . . need not be published."

Quasi-judicial or administrative adjudicatory power on the other hand is the power of the administrative agency
to adjudicate the rights of persons before it. It is the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in
enforcing and administering the same law. 7 The administrative body exercises its quasi-judicial power when it
performs in a judicial manner an act which is essentially of an executive or administrative nature, where the
power to act in such manner is incidental to or reasonably necessary for the performance of the executive or
administrative duty entrusted to it. 8 In carrying out their quasi-judicial functions the administrative officers or
bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and
draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature. Since
rights of specific persons are affected it is elementary that in the proper exercise of quasi-judicial power due
process must be observed in the conduct of the proceedings.
The importance of due process cannot be underestimated. Too basic is the rule that no person shall be deprived
of life, liberty or property without due process of law. Thus when an administrative proceeding is quasi-judicial in
character, notice and fair open hearing are essential to the validity of the proceeding. The right to reasonable
prior notice and hearing embraces not only the right to present evidence but also the opportunity to know the
claims of the opposing party and to meet them. The right to submit arguments implies that opportunity otherwise
the right may as well be considered impotent. And those who are brought into contest with government in a
quasi-judicial proceeding aimed at the control of their activities are entitled to be fairy advised of what the
government proposes and to be heard upon its proposal before it issues its final command.

There are cardinal primary rights which must be respected in administrative proceedings. The landmark case
of Ang Tibay v. The Court of Industrial Relations 9 enumerated these rights: (1) the right to a hearing, which
includes the right of the party interested or affected to present his own case and submit evidence in support
thereof; (2) the tribunal must consider the evidence presented; (3) the decision must have something to support
itself; (4) the evidence must be substantial; (5) the decision must be rendered on the evidence presented at the
hearing, or at least contained in the record and disclosed to the parties affected; (6) the tribunal or any of its
judges must act on its or his own independent consideration of the law and facts of the controversy, and not
simply accept the views of a subordinate in arriving at a decision; and, (7) the tribunal should in all controversial
questions render its decision in such manner that the parties to the proceeding may know the various issues
involved and the reasons for the decision rendered.

In determining whether RMC No. 37-93 is merely an interpretative rule which requires no prior notice and
hearing, or an adjudicatory rule which demands the observance of due process, a close examination of RMC 37-
93 is in order. Noticeably, petitioner Commissioner of Internal Revenue at first interprets Sec. 142, par. (c),
subpar. (1), of the NIRC, as amended, by citing the law and clarifying or explaining what it means —

Section 142 (c) (1), National Internal Revenue Code, as amended by R.A. No. 6956, provides:
On locally manufactured cigarettes bearing a foreign brand, fifty-five percent (55%) Provided,
That this rate shall apply regardless of whether or not the right to use or title to the foreign brand
was sold or transferred by its owner to the local manufacturer. Whenever it has to be determined
whether or not a cigarette bears a foreign brand, the listing of brands manufactured in foreign
countries appearing in the current World Tobacco Directory shall govern.

Under the foregoing, the test for imposition of the 55% ad valorem tax on cigarettes is that the
locally manufactured cigarettes bear a foreign brand regardless of whether or not the right to use
or title to the foreign brand was sold or transferred by its owner to the local manufacturer. The
brand must be originally owned by a foreign manufacturer or producer. If ownership of the
cigarette brand is, however, not definitely determinable,
". . . the listing of brands manufactured in foreign countries appearing in the current World
Tobacco Directory shall govern . . ."

Then petitioner makes a factual finding by declaring that Hope (Luxury), (Premium) More and Champion are
manufactured by other foreign manufacturers —

Hope is listed in the World Tobacco Directory as being manufactured by (a) Japan Tobacco,
Japan and (b) Fortune Tobacco, Philippines. More is listed in the said directory as being
manufactured by: (a) Fills de Julia Reig, Andorra; (b) Rothmans, Australia; (c) RJR-MacDonald,
Canada; (d) Rettig-Strenberg, Finland; (e) Karellas, Greece; (f) R.J. Reynolds, Malaysia; (g)
Rothmans, New Zealand; (h) Fortune Tobacco, Philippines; (i) R.J. Reynolds, Puerto Rico; (j)
R.J. Reynolds, Spain; (k) Tabacalera, Spain; (l) R.J. Reynolds, Switzerland; and (m) R.J.
Reynolds, USA. "Champion" is registered in the said directory as being manufactured by: (a)
Commonwealth Bangladesh; (b) Sudan, Brazil; (c) Japan Tobacco, Japan; (d) Fortune Tobacco,
Philippines; (e) Haggar, Sudan; and (f) Tabac Reunies, Switzerland.

From this finding, petitioner thereafter formulates an inference that since it cannot be determined who among the
manufacturers are the real owners of the brands in question, then these cigarette brands should be considered
foreign brands —

Since there is no showing who among the above-listed manufacturers of the cigarettes bearing
the said brands are the real owner/s thereof, then it follows that the same shall be considered
foreign brand for purposes of determining the ad valorem tax pursuant to Section 142 of the
National Internal Revenue Code. As held in BIR Ruling No. 410-88, dated August 24, 1988, "in
 cases where it cannot be established or there is dearth of evidence as to whether a brand is
foreign or not, resort to the World Tobacco Directory should be made."

Finally, petitioner caps RMC 37-93 with a disposition specifically directed at respondent corporation reclassifying
its cigarette brands as locally manufactured bearing foreign brands —

In view of the foregoing, the aforesaid brands of cigarettes, viz: Hope, More and Champion being
manufactured by Fortune Tobacco Corporation are hereby considered locally manufactured
cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes.

Any ruling inconsistent herewith is revoked or modified accordingly.

It is evident from the foregoing that in issuing RMC 37-93 petitioner Commissioner of Internal Revenue was
exercising her quasi-judicial or administrative adjudicatory power. She cited and interpreted the law, made a
factual finding, applied the law to her given set of facts, arrived at a conclusion, and issued a ruling aimed at a
specific individual. Consequently prior notice and hearing are required. It must be emphasized that even the text
alone of RMC 37-93 implies that reception of evidence during a hearing is appropriate if not necessary since it
invokes BIR Ruling No. 410-88, dated August 24, 1988, which provides that "in cases where it cannot be
established or there is dearth of evidence as to whether a brand is foreign or not . . . ." Indeed, it is difficult to
determine whether a brand is foreign or not if it is not established by, or there is dearth of, evidence because no
hearing has been called and conducted for the reception of such evidence. In fine, by no stretch of the
imagination can RMC 37-93 be considered purely as an interpretative rule — requiring no previous notice and
hearing and simply interpreting, construing, clarifying or explaining statutory regulations being administered by or
under which the Bureau of Internal Revenue operates.

It is true that both RMC 47-91 in Misamis Oriental Association of Coco Traders v. Department of Finance
Secretary, and RMC 37-93 in the instant case reclassify certain products for purposes of taxation. But the
similarity between the two revenue memorandum circulars ends there. For in properly determining whether a
revenue memorandum circular is merely an interpretative rule or an adjudicatory rule, its very tenor and text, and
the circumstances surrounding its issuance will have no to be considered.

We quote RMC 47-91 promulgated 11 June 1991 —

Revenue Memorandum Circular No. 47-91

SUBJECT : Taxability of Copra

TO : All Revenue Officials and Employees and Others Concerned.

For the information and guidance of all officials and employees and others concerned, quoted
hereunder in its entirety is VAT Ruling No. 190-90 dated August 17, 1990:

COCOFED MARKETING RESEARCH CORPORATION

6th Floor Cocofed Building
144 Amorsolo Street
Legaspi Village, Makati
Metro Manila

Attention: Ms. Esmyrna E. Reyes

Vice President — Finance

Sirs:

This has reference to your letter dated January 16, 1990 wherein you
represented that inspite of your VAT registration of your copra trading company,
you are supposed to be exempt from VAT on the basis of BIR Ruling dated
January 8, 1988 which considered copra as an agricultural food product in its
original state. In this connection, you request for a confirmation of your opinion as
aforestated.

In reply, please be informed that copra, being an agricultural non-food product, is

exempt from VAT only if sale is made by the primary producer pursuant to
 Section 103 (a) of the Tax Code, as amended. Thus as a trading company and a
subsequent seller, your sale of copra is already subject to VAT pursuant to
Section 9(b) (1) of Revenue Regulations 5-27.

This revokes VAT Ruling Nos. 009-88 and 279-88.

Very truly yours,

(Sgd.) JOSE U.
ONG
Commissioner of
Internal Revenue

As a clarification, this is the present and official stand of this Office unless sooner revoked or
amended. All revenue officials and employees are enjoined to give this Circular as wide a
publicity as possible.

(Sgd.) JOSE U.
ONG
Commissioner of
Internal Revenue

Quite obviously, the very text of RMC 47-91 itself shows that it is merely an interpretative rule as it simply quotes
a VAT Ruling and reminds those concerned that the ruling is the present and official stand of the Bureau of
Internal Revenue. Unlike in RMC 37-93 where petitioner Commissioner manifestly exercised her quasi-judicial or
administrative adjudicatory power, in RMC 47-91 there were no factual findings, no application of laws to a given
set of facts, no conclusions of law, and no dispositive portion directed at any particular party.

Another difference is that in the instant case, the issuance of the assailed revenue memorandum circular
operated to subject the taxpayer to the new law which was yet to take effect, while in Misamis, the disputed
revenue memorandum circular was issued simply to restate and then clarify the prevailing position and ruling of
the administrative agency, and no new law yet to take effect was involved. It merely interpreted an existing law
which had already been in effect for some time and which was not set to be amended. RMC 37-93 is thus
prejudicial to private respondent alone.

A third difference, and this likewise resolves the issue of discrimination, is that RMC 37-93 was ostensibly issued
to subject the cigarette brands of respondent corporation to a new law as it was promulgated two days before
the expiration of the old law and a few hours before the effectivity of the new law. That RMC 37-93 is particularly
aimed only at respondent corporation and its three (3) cigarette brands can be seen from the dispositive portion
of the assailed revenue memorandum circular —

In view of the foregoing, the aforesaid brands of cigarettes, viz: Hope, More,
and Champion being manufactured by Fortune Tobacco Corporation are hereby considered
locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on
cigarettes.

Any ruling inconsistent herewith is revoked or modified accordingly.

Thus the argument of the Solicitor General that RMC 37-93 is not discriminatory as "[i]t merely lays down the
test in determining whether or not a locally manufactured cigarette bears a foreign brand using the cigarette
brands Hope, More and Champion as specific examples," cannot be accepted, much less sustained. Without
doubt, RMC 37-93 has a tremendous effect on respondent corporation — and solely on respondent corporation
— as its deficiency ad valorem tax assessment on its removals of Hope, Luxury, Premium More,
and Champion cigarettes for six (6) hours alone, i.e., from six o'clock in the evening of 2 July 1993 which is
presumably the time respondent corporation was supposed to have received the facsimile message sent by
Deputy Commissioner Victor A. Deoferio, until twelve o'clock midnight upon the effectivity of the new law, was
already P9,598,334.00. On the other hand, RMC 47-91 was issued with no purpose except to state and declare
what has been the official stand of the administrative agency on the specific subject matter, and was
indiscriminately directed to all copra traders with no particular individual in mind.
That petitioner Commissioner of Internal Revenue is an expert in her filed is not attempted to be disputed;
hence, we do not question the wisdom of her act in reclassifying the cigarettes. Neither do we deny her the
exercise of her quasi-legislative or quasi-judicial powers. But most certainly, by constitutional mandate, the Court
must check the exercise of these powers and ascertain whether petitioner has gone beyond the legitimate
bounds of her authority.

In the final analysis, the issue before us in not the expertise, the authority to promulgate rules, or the wisdom of
petitioner as Commissioner of Internal Revenue is reclassifying the cigarettes of private respondents. It is simply
the faithful observance by government by government of the basic constitutional right of a taxpayer to due
process of law and equal protection of the laws. This is what distresses me no end — the manner and the
circumstances under which the cigarettes of private respondent were reclassified and correspondingly taxed
under RMC 37-93, and adjudicatory rule which therefore requires reasonable notice and hearing before its
issuance. It should not be confused with RMC 47-91, which is a mere interpretative rule.

In the earlier case of G.R. No. 119322, which practically involved the same opposing interests, I also voted to
uphold the constitutional right of the taxpayer concerned to due process and equal protection of the laws. By a
vote of 3-2, that view prevailed. In sequela, we in the First Division who constituted the majority found ourselves
unjustly drawn into the vortex of a nightmarish episode. The strong ripples whipped up by my opinion expressed
therein — and of the majority — have yet to varnish when we are again in the imbroglio of a similar dilemma.
The unpleasant experience should be reason enough to simply steer clear of this controversy and surf on a
pretended loss of judicial objectivity. Such would have been an easy way out, a gracious exit, so to speak, albeit
lame. But to camouflage my leave with a sham excuse would be to turn away from a professional vow I keep at
all times; I would not be true to myself, and to the people I am committed to serve. Thus, as I have earlier
expressed, if placed under similar circumstances in some future time, I shall have to brave again the prospect of
another vilification and a tarnished image if only to show proudly to the whole world that under the present
dispensation judicial independence in our country is a true component of our democracy.

In fine, I am greatly perturbed by the manner RMC No. 37-93 was issued as well as the effect of such issuance.
For it cannot be denied that the circumstances clearly demonstrate that it was hastily issued — without prior
notice and hearing, and singling out private respondent alone — when two days before a new tax law was to
take effect petitioner reclassified and taxed the cigarette brands of private respondent at a higher rate.
Obviously, this was to make it appear that even before the anticipated date of effectivity of the statute — which
was undeniably priorly known to petitioner — these brands were already currently classified and taxed at fifty-
five percent (55%), thus shoving them into the purview of the law that was to take effect two days after!

For sure, private respondent was not properly informed before the issuance of the questioned memorandum
circular that its cigarette brands Hope Luxury, Premium More and Champion were being reclassified and
subjected to a higher tax rate. Naturally, the result would be to lose financially because private respondent was
still selling its cigarettes at a price based on the old, lower tax rate. Had there been previous notice and hearing,
as claimed by private respondent, it could have very well presented its side, either by opposing the
reclassification, or by acquiescing thereto but increasing the price of its cigarettes to adjust to the higher tax rate.
The reclassification and the ensuing imposition of a tax rate increase therefore could not be anything but
confiscatory if we are also to consider the claim of private respondent that the new tax is even higher than the
cost of its cigarettes.

Accordingly, I vote to deny the petition.

HERMOSISIMA, JR., J.: dissenting

Private respondent Fortune Tobacco Corporation in the instant case disputes its liability for deficiency ad
valorem excise taxes on its removals of "Hope," "More," and "Champion" cigarettes from 6:00 p.m. to 12:00
midnight of July 2, 1993, in the total amount of P9,598,334.00. It claims that the circular, upon which the
assessment was based and made, is defective, invalid and unenforceable for having been issued without notice
and hearing and in violation of the equal protection clause guaranteed by the Constitution.

The majority upholds these claims of private respondent, convinced that the Circular in question, in the first
place, did not give prior notice and hearing, and so, it could not have been valid and effective. It proceeds to
affirm the factual findings of the Court of Tax Appeals, which findings were considered correct by respondent
Court of Appeals, to the effect that the petitioner Commissioner of Internal Revenue had indeed blatantly failed
to comply with the said twin requirements of notice and hearing, thereby rendering the issuance of the
questioned Circular to be in violation of the due process clause of the Constitution. It is also its dominant opinion
that the questioned Circular discriminates against private respondent Fortune Tobacco Corporation insofar as it
seems to affect only its "Hope," "More," and "Champion" cigarettes, to the exclusion of other cigarettes
apparently of the same kind or classification as these cigarettes manufactured by private respondent.

With all due respect, I disagree with the majority in its disquisition of the issues and its resulting conclusions.

Section 245 of the National Internal Revenue Code,

as amended, empowers the Commissioner of Internal
Revenue to issue the questioned Circular

Section 245 of the National Internal Revenue Code, as amended, provides:

Sec. 245. Authority of Secretary of Finance to promulgate rules and regulations. — The
Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful
rules and regulations for the effective enforcement of the provisions of this Code . . . without
prejudice to the power of the Commissioner of Internal Revenue to make rulings or opinions in
connection with the implementation of the provisions of internal revenue laws, including rulings
on the classification of articles for sales tax and similar purposes.

The subject of the questioned Circular is the reclassification of cigarettes subject to excise taxes. It was issued in
connection with Section 142 (c) (1) of the National Internal Revenue Code, as amended, which imposes ad
valorem excise taxes on locally manufactured cigarettes bearing a foreign brand. The same provision prescribes
the ultimate criterion that determines which cigarettes are to be considered "locally manufactured cigarettes
bearing a foreign brand." It provides:

. . . Whenever it has to be determined whether or not a cigarette bears a foreign brand, the listing
of brands manufactured in foreign countries appearing in the current World Tobacco Directory
shall govern.

There is only one World Tobacco Directory for a given current year, and the same is mandated by law to
be the BIR Commissioner's controlling basis for determining whether or not a particular locally
manufactured cigarette is one bearing a foreign brand. In so making a determination, petitioner should
inquire into the entries in the World Tobacco Directory for the given current year and shall be held bound
by such entries therein. She is not required to subject the results of her inquiries to feedback from the
concerned cigarette manufacturers, and it is doubtlessly not desirable nor managerially sound to court
dispute thereon when the law does not, in the first place, require debate or hearing thereon. Petitioner
may make such a determination because she is the Chief Executive Officer of the administrative agency
that is the Bureau of Internal Revenue in which are vested quasi-legislative powers entrusted to it by the
legislature in recognition of its more encompassing and unequalled expertise in the field of taxation.

The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not

unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing
complexity of the modern society" (Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79). More and
more administrative bodies are necessary to help in the regulation of society's ramified activities.
"Specialized in the particular field assigned to them, they can deal with the problems thereof with
more expertise and dispatch than can be expected from the legislature or the courts of justice" . .
.1

Statutorily empowered to issue rulings or opinions embodying the proper determination in respect to classifying
articles, including cigarettes, for purposes of tax assessment and collection, petitioner was acting well within her
prerogatives when she issued the questioned Circular. And in the exercise of such prerogatives under the law,
she has in her favor the presumption of regular performance of official duty which must be overcome by clearly
persuasive evidence of stark error and grave abuse of discretion in order to be overturned and disregarded.

It is irrelevant that the Court of Tax Appeals makes much of the effect of the passing of Republic Act No.
7654 2 on petitioner's power to classify cigarettes. Although the decisions assailed and sought to be reviewed, as
well as the pleadings of private respondent, are replete with alleged admissions of our legislators to the effect
that the said Act was intended to freeze the current classification of cigarettes and make the same an integral
part of the said Act, certainly the repeal, if any, of petitioner's power to classify cigarettes must be reckoned from
the effectivity of the said Act and not before. Suffice it to say that indisputable is the plain fact that the questioned
Circular was issued on July 1, 1993, while the said Act took effect on July 3, 1993.
 The contents of the questioned circular have not
been proven to be erroneous or illegal as to render
issuance thereof an act of grave abuse of
discretion on the part of petitioner Commissioner

Prior to the effectivity of R.A. No. 7654, Section 142 (c) (1) of the National Internal Revenue Code, as amended,
levies the following ad valorem taxes on cigarettes in accordance with their predetermined classifications as
established by the Commissioner of Internal Revenue:

. . . based on the manufacturer's registered wholesale price:

(1) On locally manufactured cigarettes bearing a foreign brand, fifty-five percent (55%) Provided,
That this rate shall apply regardless of whether or not the right to use or title to the foreign brand
was sold or transferred by its owner to the local manufacturer. Whenever it has to be determined
whether or not a cigarette bears a foreign brand, the listing of brands manufactured in foreign
countries appearing in the current World Tobacco Directory shall govern.

(2) Other locally manufactured cigarettes, forty five percent (45%).

xxx xxx xxx

Prior to the issuance of the questioned Circular, assessed against and paid by private respondent as ad
valorem excise taxes on their removals of "Hope," "More," and "Champion" cigarettes were amounts based on
paragraph (2) above, i.e., the tax rate made applicable on the said cigarettes was 45% at the most. The reason
for this is that apparently, petitioner's predecessors have all made determinations to the effect that the said
cigarettes were to be considered "other locally manufactured cigarettes" and not "locally manufactured cigarettes
bearing a foreign brand." Even petitioner, until her issuance of the questioned Circular, adhered to her
predecessors' determination as to the proper classification of the above-mentioned cigarettes for purposes of ad
valorem excise taxes. Apparently, the past determination that the said cigarettes were to be classified as "other
locally manufactured cigarettes" was based on private respodnent's convenient move of changing the names of
"Hope" to "Hope Luxury" and "More" to "Premium More." It also submitted proof that "Champion" was an original
Fortune Tobacco Corporation register and, therefore, a local brand. Having registered these brands with the
Philippine Patent Office and with corresponding evidence to the effect, private respondent paid ad
valorem excise taxes computed at the rate of not more than 45% which is the rate applicable to cigarettes
considered as locally manufactured brands.

How these past determinations pervaded notwithstanding their erroneous basis is only tempered by their innate
quality of being merely errors in interpretative ruling, the formulation of which does not bind the government.
Advantage over such errors may precipitously be withdrawn from those who have been benefiting from them
once the same have been discovered and rectified.

Petitioner correctly emphasizes that:

. . . the registration of said brands in the name of private respondent is proof only that it is the
exclusive owner thereof in the Philippines; it does not necessarily follow, however, that it is the
exclusive owner thereof in the whole world. Assuming arguendo that private respondent is the
exclusive owner of said brands in the Philippines, it does not mean that they are local. Otherwise,
they would not have been listed in the WTD as international brands manufactured by different
entities in different countries. Moreover, it cannot be said that the brands registered in the names
of private respondent are not the same brands listed in the WTD because private respondent is
one of the manufacturers of said brands listed in the WTD. 3

Private respondent attempts to cast doubt on the determination made by petitioner in the questioned Circular
that Japan is a manufacturer of "Hope" cigarettes. Private respondent's own inquiry into the World Tobacco
Directory reveals that Japan is not a manufacturer of "Hope" cigarettes. In pointing this out, private respondent
concludes that the entire Circular is erroneous and makes such error the principal proof of its claim that the
nature of the determination embodied in the questioned Circular requires a hearing on the facts and a debate on
the applicable law. Such a determination is adjudicatory in nature and, therefore, requires notice and hearing.
Private respondent is, however, apparently only eager to show error on the part of petitioner for acting with grave
abuse of discretion. Private respondent conveniently forgets that petitioner, equipped with the expertise in
taxation, recognized in that expertise by the legislature that vested in her the power to make rules respecting
classification of articles for taxation purposes, and presumed to have regularly exercised her prerogatives within
the scope of her statutory power to issue determinations specifically under Section 142 (c) (1) in relation to
Section 245 of the National Internal Revenue Code, as amended, simply followed the law as she understood it.
Her task was to determine which cigarette brands were foreign, and she was directed by the law to look into the
World Tobacco Directory. Foreign cigarette brands were legislated to be taxed at higher rates because of their
more extensive public exposure and international reputation; their competitive edge against local brands may
easily be checked by imposition of higher tax rates. Private respondent makes a mountain of the mole hill
circumstance that "Hope" is listed, not as being "manufactured" by Japan but as being "used" by Japan. Whether
manufactured or used by Japan, however, "Hope" remains a cigarette brand that can not be said to be limited to
local manufacture in the Philippines. The undeniable fact is that it is a foreign brand the sales in the Philippines
of which are greatly boosted by its international exposure and reputation. The petitioner was well within her
prerogatives, in the exercise of her rule-making power, to classify articles for taxation purposes, to interpret the
laws which she is mandated to administer. In interpreting the same, petitioner must, in general, be guided by the
principles underlying taxation, i.e., taxes are the lifeblood of Government, and revenue laws ought to be
interpreted in favor of the Government, for Government can not survive without the funds to underwrite its varied
operational expenses in pursuit of the welfare of the society which it serves and protects.

Private respondent claims that its business will be destroyed by the imposition of additional ad valorem taxes as
a result of the effectivity of the questioned Circular. It claims that under the vested rights theory, it cannot now be
made to pay higher taxes after having been assessed for less in the past. Of course private respondent will
trumpet its losses, its interests, after all, being its sole concern. What private respondent fails to see is the loss of
revenue by the Government which, because of erroneous determinations made by its past revenue
commissioners, collected lesser taxes than what it was entitled to in the first place. It is every citizen's duty to
pay the correct amount of taxes. Private respondent will not be shielded by any vested rights, for there are not
vested rights to speak of respecting a wrong construction of the law by administrative officials, and such wrong
interpretation does not place the Government in estoppel to correct or overrule the same. 4

The Questioned Circular embodies an interpretative

ruling of petitioner Commissioner which as such does
not require notice and hearing

As one of the public offices of the Government, the Bureau of Internal Revenue, through its Commissioner, has
grown to be a typical administrative agency vested with a fusion of different governmental powers: the power to
investigate, initiate action and control the range of investigation, the power to promulgate rules and regulations
to better carry out statutory policies, and the power to adjudicate controversies within the scope of their
activities. 5 In the realm of administrative law, we understand that such an empowerment of administrative
agencies was evolved in response to the needs of a changing society. This development arose as the need for
broad social control over complex conditions and activities became more and more pressing, and such
complexity could no longer be dealt with effectivity and directly by the legislature or the judiciary. The theory
which underlies the empowerment of administrative agencies like the Bureau of Internal Revenue, is that the
issues with which such agencies deal ought to be decided by experts, and not be a judge, at least not in the first
instance or until the facts have been sifted and arranged. 6

One of the powers of administrative agencies like the Bureau of Internal Revenue, is the power to make rules.
The necessity for vesting administrative agencies with this power stems from the impracticability of the
lawmakers providing general regulations for various and varying details pertinent to a particular legislation. 7

The rules that administrative agencies may promulgate may either be legislative or interpretative. The former is a
form of subordinate legislation whereby the administrative agency is acting in a legislative capacity,
supplementing the statute, filling in the details, pursuant to a specific delegation of legislative power. 8

Interpretative rules, on the other hand, are "those which purport to do no more than interpret the statute being
administered, to say what it means." 9

There can be no doubt that there is a distinction between an administrative rule or regulation and
an administrative interpretation of a law whose enforcement is entrusted to an administrative
body. When an administrative agency promulgates rules and regulations, it "makes" a new law
with the force and effect of a valid law, while when it renders an opinion or gives a statement of
policy, it merely interprets a pre-existing law (Parker, Administrative Law, p. 197; Davis
Administrative Law, p. 194). Rules and regulations when promulgated in pursuance of the
procedure or authority conferred upon the administrative agency by law, partake of the nature of
a statute, and compliance therewith may be enforced by a penal sanction provided in the law.
This is so because statutes are usually couched in general terms, after expressing the policy,
 purposes, objectives, remedies and sanctions intended by the legislature. The details and the
manner of carrying out the law are often times left to the administrative agency entrusted with its
enforcement. In this sense, it has been said that rules and regulations are the product of a
delegated power to create new or additional legal provisions that have the effect of law.
(Davis, op. cit. p. 194.)

A rule is binding on the courts as long as the procedure fixed for its promulgation is followed and
its scope is within the statutory authority granted by the legislature, even if the courts are not in
agreement with the policy stated therein or its innate wisdom (Davis, op. cit. pp. 195-197). On the
other hand, administrative interpretation of the law is at best merely advisory, for it is the courts
that finally determine what the law means. 10

"Whether a given statutory delegation authorizes legislative or interpretative regulations depends upon whether
the statute places specific 'sanctions' behind the regulations authorized, as for example, by making it a criminal
offense to disobey them, or by making conformity with their provisions a condition of the exercise of legal
privileges." 11 This is because interpretative regulations are by nature simply statutory interpretations, which have
behind them no statutory sanction. Such regulations, whether so expressly authorized by statute or issued only
as an incident of statutory administration, merely embody administrative findings of law which are always subject
to judicial determination as to whether they are erroneous or not, even when their issuance is authorized by
statute.

The questioned Circular has undisputedly been issued by petitioner in pursuance of her rule-making powers
under Section 245 of the National Internal Revenue Code, as amended. Exercising such powers, petitioner re-
classified "Hope," "More" and "Champion" cigarettes as locally manufactured cigarettes bearing foreign brands.
The re-classification, as previously explained, is the correct interpretation of Section 142 (c) (1) of the said Code.
The said legal provision is not accompanied by any penal sanction, and no detail had to be filled in by petitioner.
The basis for the classification of cigarettes has been provided for by the legislature, and all petitioner has to do,
on behalf of the government agency she heads, is to proceed to make the proper determination using the
criterion stipulated by the lawmaking body. In making the proper determination, petitioner gave it a liberal
construction consistent with the rule that revenue laws are to be construed in favor of the Government whose
survival depends on the contributions that taxpayers give to the public coffers that finance public services and
other governmental operations.

The Bureau of Internal Revenue which petitioner heads, is the government agency charged with the
enforcement of the laws pertinent to this case and so, the opinion of the Commissioner of Internal Revenue, in
the absence of a clear showing that it is plainly wrong, is entitled to great weight. Private respondent claims that
its rights under previous interpretations of Section 142 (c) (1) may not abruptly be cut by a new interpretation of
the said section, but precisely the said section is subject to various and changing construction, and hence, any
ruling issued by petitioner thereon is necessarily interpretative and not legislative. Private respondent insists that
the questioned circular is adjudicatory in nature because it determined the rights of private respondent in a
controversy involving his tax liability. It also asseverates that the questioned circular involved administrative
action that is particular and immediate, thereby rendering it subject to the requirements of notice and hearing in
compliance with the due process clause of the Constitution.

We find private respondent's arguments to be rather strained.

Petitioner made a determination as to the classification of cigarettes as mandated by the aforecited provisions in
the National Internal Revenue Code, as amended. Such determination was an interpretation by petitioner of the
said legal provisions. If in the course of making the interpretation and embodying the same in the questioned
circular which the petitioner subsequently issued after making such a determination, private respondent's
cigarettes products, by their very nature of being foreign brands as evidenced by their enlistment in the World
Tobacco Directory, which is the controlling basis for the proper classification of cigarettes as stipulated by the
law itself, have come to be classified as locally manufactured cigarettes bearing foreign brands and as such
subject to a tax rate higher than what was previously imposed thereupon based on past rulings of other revenue
commissioners, such a situation is simply a consequence of the performance by petitioner of here duties under
the law. No adjudication took place, much less was there any controversy ripe for adjudication. The natural
consequences of making a classification in accordance with law may not be used by private respondent in
arguing that the questioned circular is in fact adjudicatory in nature. Such an exercise in driving home a point is
illogical as it is fallacious and misplaced.

Private respondent concedes that under general rules of administrative law, "a ruling which is merely
'interpretative' in character may not require prior notice to affected parties before its issuance as well as a
hearing" and "for this reason, in most instances, interpretative regulations are not given the force of
law." 12 Indeed, "interpretative regulations and those merely internal in nature
. . . need not be published." 13 And it is now settled that only legislative regulations and not interpretative rulings
must have the benefit of public
hearing. 14

Because (1) the questioned circular merely embodied an interpretation or a way of reading and giving meaning
to Section 142 (c) (1) of the National Internal Revenue Code, as amended; (2) petitioner did not fill in any details
in the aforecited section but only classified cigarettes on the basis of the World Tobacco Directory in the light of
the paramount principle of construing revenue laws in favor of the Government to the end that Government
collects as much tax money as it is entitled to in order to fulfill its public purposes for the general good of its
citizens; (3) no penal sanction is provided in the aforecited section that was construed by petitioner in the
questioned circular; and (4) a similar circular declassifying copra from being an agricultural food to non-food
product for purposes of the value added tax laws, resulting in the revocation of an exemption previously enjoyed
by copra traders, has been ruled by us to be merely an interpretative ruling and not a legislative, much less, an
adjudicatory, action on the part of the revenue commissioner, 15 this Court must not be blind to the fact that the
questioned Circular is indeed an interpretative ruling not subject to notice and hearing.

Neither is the questioned Circular tainted by a

violation of the equal protection clause under the
Constitution

Private respondent anchors its claim of violation of its equal protection rights upon the too obvious fact that only
its cigarette brands, i.e., "Hope," "More" and "Champion," are mentioned in the questioned circular. Because
only the cigarettes that they manufacture are enumerated in the questioned circular, private respondent
proceeded to attack the same as being discriminatory against it. On the surface, private respondent seems to
have a point there. A scrutiny of the questioned Circular, however, will show that it is undisputedly one of general
application for all cigarettes that are similarly situated as private respondent's brands. The new interpretation of
Section 142 (1) (c) has been well illustrated in its application upon private respondent's brands, which illustration
is properly a subject of the questioned Circular. Significantly, indicated as the subject of the questioned circular
is the "reclassification of cigarettes subject to excise taxes." The reclassification resulted in the foregrounding of
private respondent's cigarette brands, which incidentally is largely due to the controversy spawned no less by
private respondent's own action of conveniently changing its brand names to avoid falling under a classification
that would subject it to higher ad valorem tax rates. This caused then Commissioner Bienvenido Tan to depart
from his initial determination that private respondent's cigarette brands are foreign brands. The consequent
specific mention of such brands in the questioned Circular, does not change the fact that the questioned Circular
has always been intended for and did cover, all cigarettes similarly situated as "Hope," "More" and "Champion."
Petitioner is thus correct in stating that:

. . . RMC 37-93 is not discriminatory. It lays down the test in determining whether or not a locally
manufactured cigarette bears a foreign brand using the cigarette brands "Hope," More and
"Champion" as specific examples. Such test applies to all locally manufactured cigarette brands
similarly situated as the cigarette brands aforementioned. While it is true that only "Hope," "More"
and "Champion" cigarettes are actually determined as locally manufactured cigarettes bearing a
foreign brand, RMC 37-93 does not state that ONLY cigarettes fall under such classification to
the exclusion of other cigarettes similarly situated. Otherwise stated, RMC 37-93 does not
exclude the coverage of other cigarettes similarly situated. Otherwise stated, RMC 37-93 does
not exclude the coverage of other cigarettes similarly situated as locally manufactured cigarettes
bearing a foreign brand. Hence, in itself, RMC 37-93 is not discriminatory. 16

Both the respondent Court of Appeals and the Court of Tax Appeals held that the questioned Circular
reclassifying "Hope," "More" and "Champion" cigarettes, is defective, invalid and unenforceable and has
rendered the assessment against private respondent of deficiency ad valorem excise taxes to be without legal
basis. The majority agrees with private respondent and respondent Courts. As the foregoing opinion chronicles
the fatal flaws in private respondent's arguments, it becomes more apparent that the questioned Circular is in
fact a valid and subsisting interpretative ruling that the petitioner had power to promulgate and enforce.

WHEREFORE, I vote to grant the petition and set aside the decisions of the Court of Tax Appeals and the Court
of Appeals, respectively, and to reinstate the decision of petitioner Commissioner of Internal Revenue denying
private respondent's request for a review, reconsideration and recall of Revenue Memorandum Circular No. 37-
93 dated July 1, 1993.
Padilla, J., concurs.

Separate Opinions

BELLOSILLO, J.: separate opinion:

RA 7654 was enacted by Congress on 10 June 1993, signed into law by the President on 14 June 1993, and
took effect 3 July 1993. It amended partly Sec. 142, par. (c), of the National Internal Revenue Code (NIRC) to
read —

Sec. 142. Cigars and cigarettes. — . . . . (c) Cigarettes packed by machine. — There shall be
levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed
below based on the constructive manufacturer's wholesale price or the actual manufacturer's
wholesale price, whichever is higher.

(1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five
percent (55%) or the exportation of which is not authorized by contract or otherwise, fifty-five
percent (55%) provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack
(emphasis supplied).

(2) On other locally manufactured cigarettes, forty-five percent (45%) provided that the minimum
tax shall not be less than Three Pesos (P3.00) per pack.

Prior to the effectivity of RA 7654, cigarette brands Hope Luxury, Premium More and Champion were considered
local brands subjected to an ad valorem tax at the rate of 20-45%. However, on 1 July 1993 or two (2) days
before RA 7654 took effect, petitioner Commissioner of Internal Revenue issued RMC 37-93 reclassifying
"Hope, More and Champion being manufactured by Fortune Tobacco Corporation . . . . (as) locally manufactured
cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes." 1 RMC 37-93 in effect
subjected Hope Luxury, Premium More and Champion cigarettes to the provisions of Sec. 142, par. (c), subpar.
(1), NIRC, as amended by RA 7654, imposing upon these cigarette brands an ad valorem tax of "fifty-five
percent (55%) provided that the minimum tax shall not be less than Five Pesos (P5.00) per pack."

On 2 July 1993, Friday, at about five-fifty in the afternoon, or a few hours before the effectivity of RA 7654, a
copy of RMC 37-93 with a cover letter signed by Deputy Commissioner Victor A. Deoferio of the Bureau of
Internal Revenue was sent by facsimile to the factory of respondent corporation in Parang, Marikina, Metro
Manila. It appears that the letter together with a copy of RMC 37-93 did not immediately come to the knowledge
of private respondent as it was addressed to no one in particular. It was only when the reclassification of
respondent corporation's cigarette brands was reported in the column of Fil C. Sionil in Business Bulletin on 4
July 1993 that the president of respondent corporation learned of the matter, prompting him to inquire into its
veracity and to request from petitioner a copy of RMC 37-93. On 15 July 1993 respondent corporation received
by ordinary mail a certified machine copy of RMC 37-93.

Respondent corporation sought a review, reconsideration and recall of RMC 37-93 but was forthwith denied by
the Appellate Division of the Bureau of Internal Revenue. As a consequence, on 30 July 1993 private
respondent was assessed an ad valorem tax deficiency amounting to P9,598,334.00. Respondent corporation
went to the Court of Tax Appeals (CTA) on a petition for review.

On 10 August 1994, after due hearing, the CTA found the petition meritorious and ruled —

Revenue Memorandum Circular No. 37-93 reclassifying the brands of

cigarettes, viz: Hope, More and Champion being manufactured by Fortune Tobacco Corporation
as locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on
cigarettes is found to be defective, invalid and unenforceable . . . . Accordingly, the deficiency ad
valorem tax assessment issued on petitioner Fortune Tobacco Corporation in the amount of
P9,598,334.00, exclusive of surcharge and interest, is hereby cancelled for lack of legal basis. 2
 The CTA held that petitioner Commissioner of Internal Revenue failed to observe due process of law in
issuing RMC 37-93 as there was no prior notice and hearing, and that RMC 37-93 was in itself
discriminatory. The motion to reconsider its decision was denied by the CTA for lack of merit. On 31
March 1995 respondent Court of Appeals affirmed in toto the decision of the CTA. 3 Hence, the instant
petition for review.

Petitioner now submits through the Solicitor General that RMC 37-93 reclassifying Hope Luxury, Premium
More and Champion as locally manufactured cigarettes bearing brands is merely an interpretative ruling which
needs no prior notice and hearing as held in Misamis Oriental Association of Coco Traders, Inc. v. Department
of Finance Secretary. 4 It maintains that neither is the assailed revenue memorandum circular discriminatory as it
merely "lays down the test in determining whether or not a locally manufactured cigarette bears a foreign brand
using (only) the cigarette brands Hope, More and Champion as specific examples." 5

Respondent corporation on the other hand contends that RMC 37-93 is not a mere interpretative ruling but is
adjudicatory in nature where prior notice and hearing are mandatory, and that Misamis Oriental Association of
Coco Traders, Inc. v. Department of Finance Secretary on which the Solicitor General relies heavily is not
applicable. Respondent Fortune Tobacco Corporation also argues that RMC 37-93 discriminates against its
cigarette brands since those of its competitors which are similarly situated have not been reclassified.

The main issues before us are (a) whether RMC 37-93 is merely an interpretative rule the issuance of which
needs no prior notice and hearing, or an adjudicatory ruling which calls for the twin requirements of prior notice
and hearing, and, (b) whether RMC 37-93 is discriminatory in nature.

A brief discourse on the powers and functions of administrative bodies may be instructive.

Administrative agencies posses quasi-legislative or rule making powers and quasi-judicial or administrative
adjudicatory powers. Quasi-legislative or rule making power is the power to make rules and regulations which
results in delegated legislation that is within the confines of the granting statute and the doctrine of
nondelegability and separability of powers.

Interpretative rule, one of the three (3) types of quasi-legislative or rule making powers of an administrative
agency (the other two being supplementary or detailed legislation, and contingent legislation), is promulgated by
the administrative agency to interpret, clarify or explain statutory regulations under which the administrative body
operates. The purpose or objective of an interpretative rule is merely to construe the statute being administered.
It purports to do no more than interpret the statute. Simply, the rule tries to say what the statute means.
Generally, it refers to no single person or party in particular but concerns all those belonging to the same class
which may be covered by the said interpretative rule. It need not be published and neither is a hearing required
since it is issued by the administrative body as an incident of its power to enforce the law and is intended merely
to clarify statutory provisions for proper observance by the people. In Tañada v. Tuvera, 6 this Court expressly
said that "[i]interpretative regulations . . . . need not be published."

Quasi-judicial or administrative adjudicatory power on the other hand is the power of the administrative agency
to adjudicate the rights of persons before it. It is the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in
enforcing and administering the same law. 7 The administrative body exercises its quasi-judicial power when it
performs in a judicial manner an act which is essentially of an executive or administrative nature, where the
power to act in such manner is incidental to or reasonably necessary for the performance of the executive or
administrative duty entrusted to it. 8 In carrying out their quasi-judicial functions the administrative officers or
bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and
draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature. Since
rights of specific persons are affected it is elementary that in the proper exercise of quasi-judicial power due
process must be observed in the conduct of the proceedings.

The importance of due process cannot be underestimated. Too basic is the rule that no person shall be deprived
of life, liberty or property without due process of law. Thus when an administrative proceeding is quasi-judicial in
character, notice and fair open hearing are essential to the validity of the proceeding. The right to reasonable
prior notice and hearing embraces not only the right to present evidence but also the opportunity to know the
claims of the opposing party and to meet them. The right to submit arguments implies that opportunity otherwise
the right may as well be considered impotent. And those who are brought into contest with government in a
quasi-judicial proceeding aimed at the control of their activities are entitled to be fairy advised of what the
government proposes and to be heard upon its proposal before it issues its final command.
There are cardinal primary rights which must be respected in administrative proceedings. The landmark case
of Ang Tibay v. The Court of Industrial Relations 9 enumerated these rights: (1) the right to a hearing, which
includes the right of the party interested or affected to present his own case and submit evidence in support
thereof; (2) the tribunal must consider the evidence presented; (3) the decision must have something to support
itself; (4) the evidence must be substantial; (5) the decision must be rendered on the evidence presented at the
hearing, or at least contained in the record and disclosed to the parties affected; (6) the tribunal or any of its
judges must act on its or his own independent consideration of the law and facts of the controversy, and not
simply accept the views of a subordinate in arriving at a decision; and, (7) the tribunal should in all controversial
questions render its decision in such manner that the parties to the proceeding may know the various issues
involved and the reasons for the decision rendered.

In determining whether RMC No. 37-93 is merely an interpretative rule which requires no prior notice and
hearing, or an adjudicatory rule which demands the observance of due process, a close examination of RMC 37-
93 is in order. Noticeably, petitioner Commissioner of Internal Revenue at first interprets Sec. 142, par. (c),
subpar. (1), of the NIRC, as amended, by citing the law and clarifying or explaining what it means —

Section 142 (c) (1), National Internal Revenue Code, as amended by R.A. No. 6956, provides:
On locally manufactured cigarettes bearing a foreign brand, fifty-five percent (55%) Provided,
That this rate shall apply regardless of whether or not the right to use or title to the foreign brand
was sold or transferred by its owner to the local manufacturer. Whenever it has to be determined
whether or not a cigarette bears a foreign brand, the listing of brands manufactured in foreign
countries appearing in the current World Tobacco Directory shall govern.

Under the foregoing, the test for imposition of the 55% ad valorem tax on cigarettes is that the
locally manufactured cigarettes bear a foreign brand regardless of whether or not the right to use
or title to the foreign brand was sold or transferred by its owner to the local manufacturer. The
brand must be originally owned by a foreign manufacturer or producer. If ownership of the
cigarette brand is, however, not definitely determinable,
". . . the listing of brands manufactured in foreign countries appearing in the current World
Tobacco Directory shall govern . . ."

Then petitioner makes a factual finding by declaring that Hope (Luxury), (Premium) More and Champion are
manufactured by other foreign manufacturers —

Hope is listed in the World Tobacco Directory as being manufactured by (a) Japan Tobacco,
Japan and (b) Fortune Tobacco, Philippines. More is listed in the said directory as being
manufactured by: (a) Fills de Julia Reig, Andorra; (b) Rothmans, Australia; (c) RJR-MacDonald,
Canada; (d) Rettig-Strenberg, Finland; (e) Karellas, Greece; (f) R.J. Reynolds, Malaysia; (g)
Rothmans, New Zealand; (h) Fortune Tobacco, Philippines; (i) R.J. Reynolds, Puerto Rico; (j)
R.J. Reynolds, Spain; (k) Tabacalera, Spain; (l) R.J. Reynolds, Switzerland; and (m) R.J.
Reynolds, USA. "Champion" is registered in the said directory as being manufactured by: (a)
Commonwealth Bangladesh; (b) Sudan, Brazil; (c) Japan Tobacco, Japan; (d) Fortune Tobacco,
Philippines; (e) Haggar, Sudan; and (f) Tabac Reunies, Switzerland.

From this finding, petitioner thereafter formulates an inference that since it cannot be determined who among the
manufacturers are the real owners of the brands in question, then these cigarette brands should be considered
foreign brands —

Since there is no showing who among the above-listed manufacturers of the cigarettes bearing
the said brands are the real owner/s thereof, then it follows that the same shall be considered
foreign brand for purposes of determining the ad valorem tax pursuant to Section 142 of the
National Internal Revenue Code. As held in BIR Ruling No. 410-88, dated August 24, 1988, "in
cases where it cannot be established or there is dearth of evidence as to whether a brand is
foreign or not, resort to the World Tobacco Directory should be made."

Finally, petitioner caps RMC 37-93 with a disposition specifically directed at respondent corporation reclassifying
its cigarette brands as locally manufactured bearing foreign brands —

In view of the foregoing, the aforesaid brands of cigarettes, viz: Hope, More and Champion being
manufactured by Fortune Tobacco Corporation are hereby considered locally manufactured
cigarettes bearing a foreign brand subject to the 55% ad valorem tax on cigarettes.
 Any ruling inconsistent herewith is revoked or modified accordingly.

It is evident from the foregoing that in issuing RMC 37-93 petitioner Commissioner of Internal Revenue was
exercising her quasi-judicial or administrative adjudicatory power. She cited and interpreted the law, made a
factual finding, applied the law to her given set of facts, arrived at a conclusion, and issued a ruling aimed at a
specific individual. Consequently prior notice and hearing are required. It must be emphasized that even the text
alone of RMC 37-93 implies that reception of evidence during a hearing is appropriate if not necessary since it
invokes BIR Ruling No. 410-88, dated August 24, 1988, which provides that "in cases where it cannot be
established or there is dearth of evidence as to whether a brand is foreign or not . . . ." Indeed, it is difficult to
determine whether a brand is foreign or not if it is not established by, or there is dearth of, evidence because no
hearing has been called and conducted for the reception of such evidence. In fine, by no stretch of the
imagination can RMC 37-93 be considered purely as an interpretative rule — requiring no previous notice and
hearing and simply interpreting, construing, clarifying or explaining statutory regulations being administered by or
under which the Bureau of Internal Revenue operates.

It is true that both RMC 47-91 in Misamis Oriental Association of Coco Traders v. Department of Finance
Secretary, and RMC 37-93 in the instant case reclassify certain products for purposes of taxation. But the
similarity between the two revenue memorandum circulars ends there. For in properly determining whether a
revenue memorandum circular is merely an interpretative rule or an adjudicatory rule, its very tenor and text, and
the circumstances surrounding its issuance will have no to be considered.

We quote RMC 47-91 promulgated 11 June 1991 —

Revenue Memorandum Circular No. 47-91

SUBJECT : Taxability of Copra

TO : All Revenue Officials and Employees and Others Concerned.

For the information and guidance of all officials and employees and others concerned, quoted
hereunder in its entirety is VAT Ruling No. 190-90 dated August 17, 1990:

COCOFED MARKETING RESEARCH CORPORATION

6th Floor Cocofed Building
144 Amorsolo Street
Legaspi Village, Makati
Metro Manila

Attention: Ms. Esmyrna E. Reyes

Vice President — Finance

Sirs:

This has reference to your letter dated January 16, 1990 wherein you
represented that inspite of your VAT registration of your copra trading company,
you are supposed to be exempt from VAT on the basis of BIR Ruling dated
January 8, 1988 which considered copra as an agricultural food product in its
original state. In this connection, you request for a confirmation of your opinion as
aforestated.

In reply, please be informed that copra, being an agricultural non-food product, is

exempt from VAT only if sale is made by the primary producer pursuant to
Section 103 (a) of the Tax Code, as amended. Thus as a trading company and a
subsequent seller, your sale of copra is already subject to VAT pursuant to
Section 9(b) (1) of Revenue Regulations 5-27.

This revokes VAT Ruling Nos. 009-88 and 279-88.

Very truly yours,

(Sgd.) JOSE U.
ONG
 Commissioner of
Internal Revenue

As a clarification, this is the present and official stand of this Office unless sooner revoked or
amended. All revenue officials and employees are enjoined to give this Circular as wide a
publicity as possible.

(Sgd.) JOSE U.
ONG
Commissioner of
Internal Revenue

Quite obviously, the very text of RMC 47-91 itself shows that it is merely an interpretative rule as it simply quotes
a VAT Ruling and reminds those concerned that the ruling is the present and official stand of the Bureau of
Internal Revenue. Unlike in RMC 37-93 where petitioner Commissioner manifestly exercised her quasi-judicial or
administrative adjudicatory power, in RMC 47-91 there were no factual findings, no application of laws to a given
set of facts, no conclusions of law, and no dispositive portion directed at any particular party.

Another difference is that in the instant case, the issuance of the assailed revenue memorandum circular
operated to subject the taxpayer to the new law which was yet to take effect, while in Misamis, the disputed
revenue memorandum circular was issued simply to restate and then clarify the prevailing position and ruling of
the administrative agency, and no new law yet to take effect was involved. It merely interpreted an existing law
which had already been in effect for some time and which was not set to be amended. RMC 37-93 is thus
prejudicial to private respondent alone.

A third difference, and this likewise resolves the issue of discrimination, is that RMC 37-93 was ostensibly issued
to subject the cigarette brands of respondent corporation to a new law as it was promulgated two days before
the expiration of the old law and a few hours before the effectivity of the new law. That RMC 37-93 is particularly
aimed only at respondent corporation and its three (3) cigarette brands can be seen from the dispositive portion
of the assailed revenue memorandum circular —

In view of the foregoing, the aforesaid brands of cigarettes, viz: Hope, More,
and Champion being manufactured by Fortune Tobacco Corporation are hereby considered
locally manufactured cigarettes bearing a foreign brand subject to the 55% ad valorem tax on
cigarettes.

Any ruling inconsistent herewith is revoked or modified accordingly.

Thus the argument of the Solicitor General that RMC 37-93 is not discriminatory as "[i]t merely lays down the
test in determining whether or not a locally manufactured cigarette bears a foreign brand using the cigarette
brands Hope, More and Champion as specific examples," cannot be accepted, much less sustained. Without
doubt, RMC 37-93 has a tremendous effect on respondent corporation — and solely on respondent corporation
— as its deficiency ad valorem tax assessment on its removals of Hope, Luxury, Premium More,
and Champion cigarettes for six (6) hours alone, i.e., from six o'clock in the evening of 2 July 1993 which is
presumably the time respondent corporation was supposed to have received the facsimile message sent by
Deputy Commissioner Victor A. Deoferio, until twelve o'clock midnight upon the effectivity of the new law, was
already P9,598,334.00. On the other hand, RMC 47-91 was issued with no purpose except to state and declare
what has been the official stand of the administrative agency on the specific subject matter, and was
indiscriminately directed to all copra traders with no particular individual in mind.

That petitioner Commissioner of Internal Revenue is an expert in her filed is not attempted to be disputed;
hence, we do not question the wisdom of her act in reclassifying the cigarettes. Neither do we deny her the
exercise of her quasi-legislative or quasi-judicial powers. But most certainly, by constitutional mandate, the Court
must check the exercise of these powers and ascertain whether petitioner has gone beyond the legitimate
bounds of her authority.

In the final analysis, the issue before us in not the expertise, the authority to promulgate rules, or the wisdom of
petitioner as Commissioner of Internal Revenue is reclassifying the cigarettes of private respondents. It is simply
the faithful observance by government by government of the basic constitutional right of a taxpayer to due
process of law and equal protection of the laws. This is what distresses me no end — the manner and the
circumstances under which the cigarettes of private respondent were reclassified and correspondingly taxed
under RMC 37-93, and adjudicatory rule which therefore requires reasonable notice and hearing before its
issuance. It should not be confused with RMC 47-91, which is a mere interpretative rule.

In the earlier case of G.R. No. 119322, which practically involved the same opposing interests, I also voted to
uphold the constitutional right of the taxpayer concerned to due process and equal protection of the laws. By a
vote of 3-2, that view prevailed. In sequela, we in the First Division who constituted the majority found ourselves
unjustly drawn into the vortex of a nightmarish episode. The strong ripples whipped up by my opinion expressed
therein — and of the majority — have yet to varnish when we are again in the imbroglio of a similar dilemma.
The unpleasant experience should be reason enough to simply steer clear of this controversy and surf on a
pretended loss of judicial objectivity. Such would have been an easy way out, a gracious exit, so to speak, albeit
lame. But to camouflage my leave with a sham excuse would be to turn away from a professional vow I keep at
all times; I would not be true to myself, and to the people I am committed to serve. Thus, as I have earlier
expressed, if placed under similar circumstances in some future time, I shall have to brave again the prospect of
another vilification and a tarnished image if only to show proudly to the whole world that under the present
dispensation judicial independence in our country is a true component of our democracy.

In fine, I am greatly perturbed by the manner RMC No. 37-93 was issued as well as the effect of such issuance.
For it cannot be denied that the circumstances clearly demonstrate that it was hastily issued — without prior
notice and hearing, and singling out private respondent alone — when two days before a new tax law was to
take effect petitioner reclassified and taxed the cigarette brands of private respondent at a higher rate.
Obviously, this was to make it appear that even before the anticipated date of effectivity of the statute — which
was undeniably priorly known to petitioner — these brands were already currently classified and taxed at fifty-
five percent (55%), thus shoving them into the purview of the law that was to take effect two days after!

For sure, private respondent was not properly informed before the issuance of the questioned memorandum
circular that its cigarette brands Hope Luxury, Premium More and Champion were being reclassified and
subjected to a higher tax rate. Naturally, the result would be to lose financially because private respondent was
still selling its cigarettes at a price based on the old, lower tax rate. Had there been previous notice and hearing,
as claimed by private respondent, it could have very well presented its side, either by opposing the
reclassification, or by acquiescing thereto but increasing the price of its cigarettes to adjust to the higher tax rate.
The reclassification and the ensuing imposition of a tax rate increase therefore could not be anything but
confiscatory if we are also to consider the claim of private respondent that the new tax is even higher than the
cost of its cigarettes.

Accordingly, I vote to deny the petition.

HERMOSISIMA, JR., J.: dissenting

Private respondent Fortune Tobacco Corporation in the instant case disputes its liability for deficiency ad
valorem excise taxes on its removals of "Hope," "More," and "Champion" cigarettes from 6:00 p.m. to 12:00
midnight of July 2, 1993, in the total amount of P9,598,334.00. It claims that the circular, upon which the
assessment was based and made, is defective, invalid and unenforceable for having been issued without notice
and hearing and in violation of the equal protection clause guaranteed by the Constitution.

The majority upholds these claims of private respondent, convinced that the Circular in question, in the first
place, did not give prior notice and hearing, and so, it could not have been valid and effective. It proceeds to
affirm the factual findings of the Court of Tax Appeals, which findings were considered correct by respondent
Court of Appeals, to the effect that the petitioner Commissioner of Internal Revenue had indeed blatantly failed
to comply with the said twin requirements of notice and hearing, thereby rendering the issuance of the
questioned Circular to be in violation of the due process clause of the Constitution. It is also its dominant opinion
that the questioned Circular discriminates against private respondent Fortune Tobacco Corporation insofar as it
seems to affect only its "Hope," "More," and "Champion" cigarettes, to the exclusion of other cigarettes
apparently of the same kind or classification as these cigarettes manufactured by private respondent.

With all due respect, I disagree with the majority in its disquisition of the issues and its resulting conclusions.

Section 245 of the National Internal Revenue Code,

as amended, empowers the Commissioner of Internal
Revenue to issue the questioned Circular
Section 245 of the National Internal Revenue Code, as amended, provides:

Sec. 245. Authority of Secretary of Finance to promulgate rules and regulations. — The
Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all needful
rules and regulations for the effective enforcement of the provisions of this Code . . . without
prejudice to the power of the Commissioner of Internal Revenue to make rulings or opinions in
connection with the implementation of the provisions of internal revenue laws, including rulings
on the classification of articles for sales tax and similar purposes.

The subject of the questioned Circular is the reclassification of cigarettes subject to excise taxes. It was issued in
connection with Section 142 (c) (1) of the National Internal Revenue Code, as amended, which imposes ad
valorem excise taxes on locally manufactured cigarettes bearing a foreign brand. The same provision prescribes
the ultimate criterion that determines which cigarettes are to be considered "locally manufactured cigarettes
bearing a foreign brand." It provides:

. . . Whenever it has to be determined whether or not a cigarette bears a foreign brand, the listing
of brands manufactured in foreign countries appearing in the current World Tobacco Directory
shall govern.

There is only one World Tobacco Directory for a given current year, and the same is mandated by law to
be the BIR Commissioner's controlling basis for determining whether or not a particular locally
manufactured cigarette is one bearing a foreign brand. In so making a determination, petitioner should
inquire into the entries in the World Tobacco Directory for the given current year and shall be held bound
by such entries therein. She is not required to subject the results of her inquiries to feedback from the
concerned cigarette manufacturers, and it is doubtlessly not desirable nor managerially sound to court
dispute thereon when the law does not, in the first place, require debate or hearing thereon. Petitioner
may make such a determination because she is the Chief Executive Officer of the administrative agency
that is the Bureau of Internal Revenue in which are vested quasi-legislative powers entrusted to it by the
legislature in recognition of its more encompassing and unequalled expertise in the field of taxation.

The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not

unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing
complexity of the modern society" (Solid Homes, Inc. vs. Payawal, 177 SCRA 72, 79). More and
more administrative bodies are necessary to help in the regulation of society's ramified activities.
"Specialized in the particular field assigned to them, they can deal with the problems thereof with
more expertise and dispatch than can be expected from the legislature or the courts of justice" . .
.1

Statutorily empowered to issue rulings or opinions embodying the proper determination in respect to classifying
articles, including cigarettes, for purposes of tax assessment and collection, petitioner was acting well within her
prerogatives when she issued the questioned Circular. And in the exercise of such prerogatives under the law,
she has in her favor the presumption of regular performance of official duty which must be overcome by clearly
persuasive evidence of stark error and grave abuse of discretion in order to be overturned and disregarded.

It is irrelevant that the Court of Tax Appeals makes much of the effect of the passing of Republic Act No.
7654 2 on petitioner's power to classify cigarettes. Although the decisions assailed and sought to be reviewed, as
well as the pleadings of private respondent, are replete with alleged admissions of our legislators to the effect
that the said Act was intended to freeze the current classification of cigarettes and make the same an integral
part of the said Act, certainly the repeal, if any, of petitioner's power to classify cigarettes must be reckoned from
the effectivity of the said Act and not before. Suffice it to say that indisputable is the plain fact that the questioned
Circular was issued on July 1, 1993, while the said Act took effect on July 3, 1993.

The contents of the questioned circular have not

been proven to be erroneous or illegal as to render
issuance thereof an act of grave abuse of
discretion on the part of petitioner Commissioner

Prior to the effectivity of R.A. No. 7654, Section 142 (c) (1) of the National Internal Revenue Code, as amended,
levies the following ad valorem taxes on cigarettes in accordance with their predetermined classifications as
established by the Commissioner of Internal Revenue:

. . . based on the manufacturer's registered wholesale price:

 (1) On locally manufactured cigarettes bearing a foreign brand, fifty-five percent (55%) Provided,
That this rate shall apply regardless of whether or not the right to use or title to the foreign brand
was sold or transferred by its owner to the local manufacturer. Whenever it has to be determined
whether or not a cigarette bears a foreign brand, the listing of brands manufactured in foreign
countries appearing in the current World Tobacco Directory shall govern.

(2) Other locally manufactured cigarettes, forty five percent (45%).

xxx xxx xxx

Prior to the issuance of the questioned Circular, assessed against and paid by private respondent as ad
valorem excise taxes on their removals of "Hope," "More," and "Champion" cigarettes were amounts based on
paragraph (2) above, i.e., the tax rate made applicable on the said cigarettes was 45% at the most. The reason
for this is that apparently, petitioner's predecessors have all made determinations to the effect that the said
cigarettes were to be considered "other locally manufactured cigarettes" and not "locally manufactured cigarettes
bearing a foreign brand." Even petitioner, until her issuance of the questioned Circular, adhered to her
predecessors' determination as to the proper classification of the above-mentioned cigarettes for purposes of ad
valorem excise taxes. Apparently, the past determination that the said cigarettes were to be classified as "other
locally manufactured cigarettes" was based on private respodnent's convenient move of changing the names of
"Hope" to "Hope Luxury" and "More" to "Premium More." It also submitted proof that "Champion" was an original
Fortune Tobacco Corporation register and, therefore, a local brand. Having registered these brands with the
Philippine Patent Office and with corresponding evidence to the effect, private respondent paid ad
valorem excise taxes computed at the rate of not more than 45% which is the rate applicable to cigarettes
considered as locally manufactured brands.

How these past determinations pervaded notwithstanding their erroneous basis is only tempered by their innate
quality of being merely errors in interpretative ruling, the formulation of which does not bind the government.
Advantage over such errors may precipitously be withdrawn from those who have been benefiting from them
once the same have been discovered and rectified.

Petitioner correctly emphasizes that:

. . . the registration of said brands in the name of private respondent is proof only that it is the
exclusive owner thereof in the Philippines; it does not necessarily follow, however, that it is the
exclusive owner thereof in the whole world. Assuming arguendo that private respondent is the
exclusive owner of said brands in the Philippines, it does not mean that they are local. Otherwise,
they would not have been listed in the WTD as international brands manufactured by different
entities in different countries. Moreover, it cannot be said that the brands registered in the names
of private respondent are not the same brands listed in the WTD because private respondent is
one of the manufacturers of said brands listed in the WTD. 3

Private respondent attempts to cast doubt on the determination made by petitioner in the questioned Circular
that Japan is a manufacturer of "Hope" cigarettes. Private respondent's own inquiry into the World Tobacco
Directory reveals that Japan is not a manufacturer of "Hope" cigarettes. In pointing this out, private respondent
concludes that the entire Circular is erroneous and makes such error the principal proof of its claim that the
nature of the determination embodied in the questioned Circular requires a hearing on the facts and a debate on
the applicable law. Such a determination is adjudicatory in nature and, therefore, requires notice and hearing.
Private respondent is, however, apparently only eager to show error on the part of petitioner for acting with grave
abuse of discretion. Private respondent conveniently forgets that petitioner, equipped with the expertise in
taxation, recognized in that expertise by the legislature that vested in her the power to make rules respecting
classification of articles for taxation purposes, and presumed to have regularly exercised her prerogatives within
the scope of her statutory power to issue determinations specifically under Section 142 (c) (1) in relation to
Section 245 of the National Internal Revenue Code, as amended, simply followed the law as she understood it.
Her task was to determine which cigarette brands were foreign, and she was directed by the law to look into the
World Tobacco Directory. Foreign cigarette brands were legislated to be taxed at higher rates because of their
more extensive public exposure and international reputation; their competitive edge against local brands may
easily be checked by imposition of higher tax rates. Private respondent makes a mountain of the mole hill
circumstance that "Hope" is listed, not as being "manufactured" by Japan but as being "used" by Japan. Whether
manufactured or used by Japan, however, "Hope" remains a cigarette brand that can not be said to be limited to
local manufacture in the Philippines. The undeniable fact is that it is a foreign brand the sales in the Philippines
of which are greatly boosted by its international exposure and reputation. The petitioner was well within her
prerogatives, in the exercise of her rule-making power, to classify articles for taxation purposes, to interpret the
laws which she is mandated to administer. In interpreting the same, petitioner must, in general, be guided by the
principles underlying taxation, i.e., taxes are the lifeblood of Government, and revenue laws ought to be
interpreted in favor of the Government, for Government can not survive without the funds to underwrite its varied
operational expenses in pursuit of the welfare of the society which it serves and protects.

Private respondent claims that its business will be destroyed by the imposition of additional ad valorem taxes as
a result of the effectivity of the questioned Circular. It claims that under the vested rights theory, it cannot now be
made to pay higher taxes after having been assessed for less in the past. Of course private respondent will
trumpet its losses, its interests, after all, being its sole concern. What private respondent fails to see is the loss of
revenue by the Government which, because of erroneous determinations made by its past revenue
commissioners, collected lesser taxes than what it was entitled to in the first place. It is every citizen's duty to
pay the correct amount of taxes. Private respondent will not be shielded by any vested rights, for there are not
vested rights to speak of respecting a wrong construction of the law by administrative officials, and such wrong
interpretation does not place the Government in estoppel to correct or overrule the same. 4

The Questioned Circular embodies an interpretative

ruling of petitioner Commissioner which as such does
not require notice and hearing

As one of the public offices of the Government, the Bureau of Internal Revenue, through its Commissioner, has
grown to be a typical administrative agency vested with a fusion of different governmental powers: the power to
investigate, initiate action and control the range of investigation, the power to promulgate rules and regulations
to better carry out statutory policies, and the power to adjudicate controversies within the scope of their
activities. 5 In the realm of administrative law, we understand that such an empowerment of administrative
agencies was evolved in response to the needs of a changing society. This development arose as the need for
broad social control over complex conditions and activities became more and more pressing, and such
complexity could no longer be dealt with effectivity and directly by the legislature or the judiciary. The theory
which underlies the empowerment of administrative agencies like the Bureau of Internal Revenue, is that the
issues with which such agencies deal ought to be decided by experts, and not be a judge, at least not in the first
instance or until the facts have been sifted and arranged. 6

One of the powers of administrative agencies like the Bureau of Internal Revenue, is the power to make rules.
The necessity for vesting administrative agencies with this power stems from the impracticability of the
lawmakers providing general regulations for various and varying details pertinent to a particular legislation. 7

The rules that administrative agencies may promulgate may either be legislative or interpretative. The former is a
form of subordinate legislation whereby the administrative agency is acting in a legislative capacity,
supplementing the statute, filling in the details, pursuant to a specific delegation of legislative power. 8

Interpretative rules, on the other hand, are "those which purport to do no more than interpret the statute being
administered, to say what it means." 9

There can be no doubt that there is a distinction between an administrative rule or regulation and
an administrative interpretation of a law whose enforcement is entrusted to an administrative
body. When an administrative agency promulgates rules and regulations, it "makes" a new law
with the force and effect of a valid law, while when it renders an opinion or gives a statement of
policy, it merely interprets a pre-existing law (Parker, Administrative Law, p. 197; Davis
Administrative Law, p. 194). Rules and regulations when promulgated in pursuance of the
procedure or authority conferred upon the administrative agency by law, partake of the nature of
a statute, and compliance therewith may be enforced by a penal sanction provided in the law.
This is so because statutes are usually couched in general terms, after expressing the policy,
purposes, objectives, remedies and sanctions intended by the legislature. The details and the
manner of carrying out the law are often times left to the administrative agency entrusted with its
enforcement. In this sense, it has been said that rules and regulations are the product of a
delegated power to create new or additional legal provisions that have the effect of law.
(Davis, op. cit. p. 194.)

A rule is binding on the courts as long as the procedure fixed for its promulgation is followed and
its scope is within the statutory authority granted by the legislature, even if the courts are not in
agreement with the policy stated therein or its innate wisdom (Davis, op. cit. pp. 195-197). On the
other hand, administrative interpretation of the law is at best merely advisory, for it is the courts
that finally determine what the law means. 10
"Whether a given statutory delegation authorizes legislative or interpretative regulations depends upon whether
the statute places specific 'sanctions' behind the regulations authorized, as for example, by making it a criminal
offense to disobey them, or by making conformity with their provisions a condition of the exercise of legal
privileges." 11 This is because interpretative regulations are by nature simply statutory interpretations, which have
behind them no statutory sanction. Such regulations, whether so expressly authorized by statute or issued only
as an incident of statutory administration, merely embody administrative findings of law which are always subject
to judicial determination as to whether they are erroneous or not, even when their issuance is authorized by
statute.

The questioned Circular has undisputedly been issued by petitioner in pursuance of her rule-making powers
under Section 245 of the National Internal Revenue Code, as amended. Exercising such powers, petitioner re-
classified "Hope," "More" and "Champion" cigarettes as locally manufactured cigarettes bearing foreign brands.
The re-classification, as previously explained, is the correct interpretation of Section 142 (c) (1) of the said Code.
The said legal provision is not accompanied by any penal sanction, and no detail had to be filled in by petitioner.
The basis for the classification of cigarettes has been provided for by the legislature, and all petitioner has to do,
on behalf of the government agency she heads, is to proceed to make the proper determination using the
criterion stipulated by the lawmaking body. In making the proper determination, petitioner gave it a liberal
construction consistent with the rule that revenue laws are to be construed in favor of the Government whose
survival depends on the contributions that taxpayers give to the public coffers that finance public services and
other governmental operations.

The Bureau of Internal Revenue which petitioner heads, is the government agency charged with the
enforcement of the laws pertinent to this case and so, the opinion of the Commissioner of Internal Revenue, in
the absence of a clear showing that it is plainly wrong, is entitled to great weight. Private respondent claims that
its rights under previous interpretations of Section 142 (c) (1) may not abruptly be cut by a new interpretation of
the said section, but precisely the said section is subject to various and changing construction, and hence, any
ruling issued by petitioner thereon is necessarily interpretative and not legislative. Private respondent insists that
the questioned circular is adjudicatory in nature because it determined the rights of private respondent in a
controversy involving his tax liability. It also asseverates that the questioned circular involved administrative
action that is particular and immediate, thereby rendering it subject to the requirements of notice and hearing in
compliance with the due process clause of the Constitution.

We find private respondent's arguments to be rather strained.

Petitioner made a determination as to the classification of cigarettes as mandated by the aforecited provisions in
the National Internal Revenue Code, as amended. Such determination was an interpretation by petitioner of the
said legal provisions. If in the course of making the interpretation and embodying the same in the questioned
circular which the petitioner subsequently issued after making such a determination, private respondent's
cigarettes products, by their very nature of being foreign brands as evidenced by their enlistment in the World
Tobacco Directory, which is the controlling basis for the proper classification of cigarettes as stipulated by the
law itself, have come to be classified as locally manufactured cigarettes bearing foreign brands and as such
subject to a tax rate higher than what was previously imposed thereupon based on past rulings of other revenue
commissioners, such a situation is simply a consequence of the performance by petitioner of here duties under
the law. No adjudication took place, much less was there any controversy ripe for adjudication. The natural
consequences of making a classification in accordance with law may not be used by private respondent in
arguing that the questioned circular is in fact adjudicatory in nature. Such an exercise in driving home a point is
illogical as it is fallacious and misplaced.

Private respondent concedes that under general rules of administrative law, "a ruling which is merely
'interpretative' in character may not require prior notice to affected parties before its issuance as well as a
hearing" and "for this reason, in most instances, interpretative regulations are not given the force of
law." 12 Indeed, "interpretative regulations and those merely internal in nature
. . . need not be published." 13 And it is now settled that only legislative regulations and not interpretative rulings
must have the benefit of public
hearing. 14

Because (1) the questioned circular merely embodied an interpretation or a way of reading and giving meaning
to Section 142 (c) (1) of the National Internal Revenue Code, as amended; (2) petitioner did not fill in any details
in the aforecited section but only classified cigarettes on the basis of the World Tobacco Directory in the light of
the paramount principle of construing revenue laws in favor of the Government to the end that Government
collects as much tax money as it is entitled to in order to fulfill its public purposes for the general good of its
citizens; (3) no penal sanction is provided in the aforecited section that was construed by petitioner in the
questioned circular; and (4) a similar circular declassifying copra from being an agricultural food to non-food
product for purposes of the value added tax laws, resulting in the revocation of an exemption previously enjoyed
by copra traders, has been ruled by us to be merely an interpretative ruling and not a legislative, much less, an
adjudicatory, action on the part of the revenue commissioner, 15 this Court must not be blind to the fact that the
questioned Circular is indeed an interpretative ruling not subject to notice and hearing.

Neither is the questioned Circular tainted by a

violation of the equal protection clause under the
Constitution

Private respondent anchors its claim of violation of its equal protection rights upon the too obvious fact that only
its cigarette brands, i.e., "Hope," "More" and "Champion," are mentioned in the questioned circular. Because
only the cigarettes that they manufacture are enumerated in the questioned circular, private respondent
proceeded to attack the same as being discriminatory against it. On the surface, private respondent seems to
have a point there. A scrutiny of the questioned Circular, however, will show that it is undisputedly one of general
application for all cigarettes that are similarly situated as private respondent's brands. The new interpretation of
Section 142 (1) (c) has been well illustrated in its application upon private respondent's brands, which illustration
is properly a subject of the questioned Circular. Significantly, indicated as the subject of the questioned circular
is the "reclassification of cigarettes subject to excise taxes." The reclassification resulted in the foregrounding of
private respondent's cigarette brands, which incidentally is largely due to the controversy spawned no less by
private respondent's own action of conveniently changing its brand names to avoid falling under a classification
that would subject it to higher ad valorem tax rates. This caused then Commissioner Bienvenido Tan to depart
from his initial determination that private respondent's cigarette brands are foreign brands. The consequent
specific mention of such brands in the questioned Circular, does not change the fact that the questioned Circular
has always been intended for and did cover, all cigarettes similarly situated as "Hope," "More" and "Champion."
Petitioner is thus correct in stating that:

. . . RMC 37-93 is not discriminatory. It lays down the test in determining whether or not a locally
manufactured cigarette bears a foreign brand using the cigarette brands "Hope," More and
"Champion" as specific examples. Such test applies to all locally manufactured cigarette brands
similarly situated as the cigarette brands aforementioned. While it is true that only "Hope," "More"
and "Champion" cigarettes are actually determined as locally manufactured cigarettes bearing a
foreign brand, RMC 37-93 does not state that ONLY cigarettes fall under such classification to
the exclusion of other cigarettes similarly situated. Otherwise stated, RMC 37-93 does not
exclude the coverage of other cigarettes similarly situated. Otherwise stated, RMC 37-93 does
not exclude the coverage of other cigarettes similarly situated as locally manufactured cigarettes
bearing a foreign brand. Hence, in itself, RMC 37-93 is not discriminatory. 16

Both the respondent Court of Appeals and the Court of Tax Appeals held that the questioned Circular
reclassifying "Hope," "More" and "Champion" cigarettes, is defective, invalid and unenforceable and has
rendered the assessment against private respondent of deficiency ad valorem excise taxes to be without legal
basis. The majority agrees with private respondent and respondent Courts. As the foregoing opinion chronicles
the fatal flaws in private respondent's arguments, it becomes more apparent that the questioned Circular is in
fact a valid and subsisting interpretative ruling that the petitioner had power to promulgate and enforce.

WHEREFORE, I vote to grant the petition and set aside the decisions of the Court of Tax Appeals and the Court
of Appeals, respectively, and to reinstate the decision of petitioner Commissioner of Internal Revenue denying
private respondent's request for a review, reconsideration and recall of Revenue Memorandum Circular No. 37-
93 dated July 1, 1993.

Padilla, J., concurs.

Footnotes

1 Through Associate Justices Justo P. Torres, Jr. ( ponente ), Corona Ibay-Somera and Conrado M.
Vasquez, Jr. (members).

2 Penned by Presiding Judge Ernesto D. Acosta and concurred in by Associate Judges Ramon O. De
Veyra and Manuel K. Gruba.
3 Emphasis supplied. Rollo, pp. 55-58.

4 Since the institution of Executive Order No. 22 on 23 June 1986.

5 Rollo, p. 56.

6 An Act Revising The Excise Tax Base, Allocating a Portion Of The Incremental Revenue Collected For
The Emergency Employment Program For Certain Workers Amending For The Purpose Section 142 Of
The National Internal Revenue Code, As Amended, And For Other Purposes.

7 Official Gazette, Vol. 89., No. 32, 09 August 1993, p. 4476.

8 The petition was subsequently amended on 12 August 1993.

9 Rollo, pp. 115-116.

10 Rollo, pp. 21-22.

11 238 SCRA 63.

12 Emphasis supplied. At p. 69.

13 Rollo, pp. 65-66.

14 See Juan Luna Subdivision vs. Sarmiento, 91 Phil. 371.

15 City of Baguio vs. De Leon, 25 SCRA 938.

16 Ang Tibay vs. Court of Industrial Relations, 69 Phil. 635.

17 Rollo, pp. 97-98.

18 Rollo, pp. 98-100.

Bellosillo, J.; concurring

1 See penultimate paragraph of RMC 37-93.

2 Decision penned by Presiding Judge Ernesto D. Acosta, concurred in by Associate Jusges Manuel K.
Gruba and Ramon O. De Veyra.

3 Special Thirteenth Division; Decision penned by Associate Justice Justo P. Torres as Chairman,
concurred in by Associate Justices Corona Ibay-Somera and Conrado M. Vasquez, Jr.

4 G.R. No. 108524, 10 November 1994; 238 SCRA 63.

5 Petition for Review, p. 28; Rollo, p. 38.

6 No. L-63915, 29 December 1986, 146 SCRA 446.

7 Hormed v. Helvering, 312 U.S. 552; Reetz v. Michigan, 188 U.S. 505; Gudmindson v. Cardollo, 126 F
2d. 521.

8 Collins v. Selectmen of Brookline, 91 N.E. 2d, 747.

9 69 Phil. 635 (1940).

Hermosisima, Jr., J., dissenting

1 Phil. Association of Service Exporters, Inc. vs. Torres, 212 SCRA 304.

2 Entitled, "An Act Revising the Excise Tax Base, Allocting a Portion of the Incremental Revenue
Collected for the Emergency Employment Program for Certain Workers Amending for the Purpose
Section 142 of the National Internal Revenue Code, as amended, and for Other Purposes," 89 O.G.
4475-4480, August 9, 1993.

3 Petition for Review dated May 9, 1995, p. 38, Rollo, p. 48.

4 Tan Guan vs. Court of Appeals, 19 SCRA 903; Compania General de Tabacos de Filipinas vs. City of
Manila, 8 SCRA 367.

5 1 Am. Jur. 2d., p. 816.

6 73 C.J.S. pp. 295-296.

7 1 Am. Jur. 2d., p. 890.

8 1 Am. Jur. 2d., p. 892.

9 de Leon, Hector, Administrative Law, 1989 ed., p. 67.

10 Victorias Milling Co. Inc. vs. Social Security Commission, 114 Phil. 558.

11 de Leon, supra, p. 69.

12 Comment of Fortune Tobacco Corporation, p. 52; Rollo, p. 199.

13 Tanada vs. Tuvera, 146 SCRA 454.

14 Misamis Oriental Association of Coco Traders, Inc. vs. Department of Finance Secretary, 238 SCRA
63.

15 Ibid.

16 Petition for Review dated May 9, 1995, pp. 28-29, Rollo, pp. 38-39.
CASE DIGEST

CIR v. CA, GR No. 119761, 1996-08-29

Facts:
initial position of the Commission was to classify 'Champion,' 'Hope,' and 'More' as foreign brands since
they were listed in the World Tobacco Director
However,... Fortune Tobacco changed the names of 'Hope' to Hope Luxury' and 'More' to 'Premium
More,' thereby removing the said brands from the foreign brand category.
A bill, which later became Republic Act ("RA") No. 7654, [6] was enacted, on 10 June 1993, by the
legislature and signed into law, on 14 June 1993, by the President of the Philippines. The new law
became effective on 03 July 1993. It amended Section
142(c)(1) of the National Internal Revenue Code ("NIRC") to read; as follows:
"SEC. 142. Cigars and Cigarettes. -
"x x x xxx x x x.
"(c) Cigarettes packed by machine. - There shall be levied, assessed and collected on cigarettes packed
by machine a tax at the rates prescribed below based on the constructive manufacturer's wholesale
price or the actual manufacturer's wholesale price, whichever is... higher:
"(1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five percent
(55%) or the exportation of which is not authorized by contract or otherwise, fifty-five (55%) provided
that the minimum tax shall not be less than Five Pesos (P5.00)... per pack.
"(2).On other locally manufactured cigarettes, forty-five percent (45%) provided that the minimum tax
shall not be less than Three Pesos (P3.00) per pack.
About a month after the enactment and two (2) days before the effectivity of RA 7654, Revenue
Memorandum Circular No. 37-93 ("RMC 37-93"), was issued by the BIR the full text of which
expressed:
"Under the foregoing, the test for imposition of the 55% ad valorem tax on cigarettes is that the locally
manufactured cigarettes bear a foreign brand regardless of whether or not the right to use or title to
the foreign brand was sold or transferred by its owner to the local... manufacturer. The brand must be
originally owned by a foreign manufacturer or producer.
On 10 August 1994, the CTA upheld the position of Fortune Tobacco and adjudged:
Issues:
In fine, petitioner opines that RMC 37-93 is merely an interpretative ruling of the BIR which can thus
become effective without any prior need for notice and hearing, nor publication, and that its issuance is
not discriminatory since it would apply under similar circumstances to... all locally manufactured
cigarettes.
Ruling:
The Court must sustain both the appellate court and the tax court.
two kinds of administrative issuances - a legislative rule and an interpretative
In addition such rule must be publishe... interpretative rules are designed to provide guidelines to the
law which the administrative agency is in charge of enforcing."... reading of RMC 37-93, particularly
considering the circumstances under which it has been issued, convinces us that the circular cannot be
viewed simply as a corrective measure (revoking in the process the previous holdings of past
Commissioners) or merely as construing
Section
142(c)(1) of the NIRC, as amended, but has, in fact and most importantly, been made in order to place
"Hope Luxury," "Premium More" and "Champion" within the classification of locally manufactured
cigarettes bearing foreign brands
Prior to the issuance of the questioned circular, "Hope Luxury," "Premium More," and
"Champion" cigarettes were in the category of locally manufactured cigarettes not bearing foreign
brand subject to 45% ad valorem tax.
Hence, without RMC 37-93, the enactment of RA 7654, would have had no new tax rate consequence
on private respondent's products.
BIR not simply interpreted the law; verily, it legislated under... its quasi-legislative authority. The due
observance of the requirements of notice, of hearing, and of publication should not have been then
ignore
 THIRD DIVISION

[ G.R. No. 227777, June 15, 2020 ]

OMAR VILLARBA, PETITIONER, VS. COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES,
RESPONDENTS.

DECISION

LEONEN, J.:

A formal amendment does not change the crime charged or affect the accused's theory or defense. It adds
nothing crucial for a conviction as to deprive the accused of the opportunity to meet the new information. When
an amendment only rectifies something that was already included in the original information, it is but a formal
amendment. A second arraignment, therefore, is no longer necessary.1

Moreover, the information need not reproduce the law verbatim in alleging the acts or omissions that constitute
the offense. If its language is understood, the constitutional right to be informed of the nature and cause of the
accusation against the accused stands unviolated.2

This Court resolves a Petition for Review on Certiorari3 assailing the Decision4 and Resolution5 of the Court of
Appeals, which affirmed Omar Villarba's (Villarba) conviction6 for the violation of Republic Act No. 8049,
otherwise known as the Anti-Hazing Act of 1995.

Villarba was among the members7 of the Junior Order of Kalantiao, a fraternity based in the Central Philippine
University in Iloilo City,8 who were all charged in 2003 with violating the Anti-Hazing Act for their acts against
Wilson Dordas III (Dordas).

The accusatory portion of the original Information reads:

That on or about the 15th day of September 2001, in the City of Iloilo, Philippines, and within the jurisdiction of
this Court, the above-named accused, members and officers of the Junior Order of Kalantiao, a fraternity,
conspiring and confederating with each other, working together and helping one another, did then and there
willfully, unlawfully and criminally subject one Wilson Dordas to hazing or initiation by placing Wilson Dordas, the
recruit, in some embarrassing or humiliating situation such as forcing him to do physical activity or subjecting
him to physical or psychological suffering or injury which resulted to his confinement and operation and
prevented him from engaging in his habitual work for more than ninety (90) days.

CONTRARY TO LAW.9 (Emphasis supplied)

All the accused were arraigned under the original Information, and they accordingly pleaded not guilty to the
crime charged.10 Subsequently, the Information was amended11 by adding the suffix 'III' to the name 'Wilson
Dordas' to correct his name. Pre-trial and trial ensued without arraignment on the amended Information.12

During trial, the prosecution presented Dordas as witness. He testified that he learned about the Junior Order of
Kalantiao through Villarba, his classmate and then fraternity chairperson. In August 2001, Villarba recruited
Dordas to join the fraternity, assuring him that the membership would help him in his studies, and that no
physical harm would be involved in the application process.13

Dordas agreed. Yet, after attending meetings and taking a written examination,14 Dordas and his co-applicants
were made to perform various tasks in the campus, many of them humiliating and foolish stunts. They were
ordered to act as models, perform yoga and karate, and shout while running around the flagpole. They were also
made to jog around the campus with their feet tied and, at times, to sing in front of strangers.15

On September 15, 2001, Dordas and his co-applicants were brought to Racrap Beach Resort in Calaparan,
Arevalo, Iloilo City for the final rites. Upon arrival that evening, they were told to eat a mix of rice, canned goods,
and hot peppers. When they failed to finish the meal, Villarba told them to chew hot peppers as punishment.
Dordas ate about five of them.16

Afterward, the applicants passed through a series of stations where they were asked, among others, to recite the
organization's preamble. Whenever they failed to perform the tasks, they suffered different forms of punishment.
Dordas was instructed to jog and crawl around the resort, and cling and lift himself on scaffoldings. He was
made to climb a coconut tree and shout that he was a gecko. His right hand was used as an ashtray. Hot
peppers were squeezed on his lips and left eye. He was slapped in the face for three to five times.17

After a while, Dordas and his co-applicants were brought inside a big cottage, where the members blindfolded
them. After being asked to turn and walk for a few meters, two members held his hands while another punched
him in his right waist. Startled, Dordas struggled to remove his blindfold and was able to see some members,
including Villarba and another member who then each threw a punch in his stomach. Dordas was later made to
lie face down on a table and recite the preamble while the members dripped hot wax on his body. Soon after this
ordeal, Dordas officially became a member of the fraternity.18

When Dordas went home the morning after, he complained of an intense pain in his abdomen. His family then
brought him to St. Paul's Hospital, where he underwent surgery due to liver damage.19

For its part, the defense presented several witnesses, among them Villarba. Villarba admitted that he was a
member of the fraternity and that he recruited Dordas. He confirmed that Dordas took a written test along with
psychological and physical examinations, and underwent final rites at the same beach resort that Dordas
identified. However, Villarba testified that their recruits only had to do sit-ups, push-ups, or jogging,20 insisting
that "no physical harm was inflicted on the recruits."21

In its November 14, 2006 Decision,22 the Regional Trial Court found all the accused guilty of the crime charged.
The relevant part of the dispositive portion reads:

WHEREFORE, judgment is hereby rendered as follows:

1. Finding accused OMAR VILLARBA [and co-accused] Guilty beyond reasonable doubt of violation of Republic
Act No. 8049 and sentencing them to suffer an indeterminate penalty of imprisonment ranging from Ten (10)
Years and One (1) Day of Prision Mayor, as minimum to Twelve (12) Years as maximum.

....

4. Ordering accused OMAR VILLARBA [and co-accused] to jointly and severally pay private complainant Wilson
Dordas III the sum of Seventy Seven Thousand Three Hundred Five Pesos and Forty-Four Centavos
(P77,305.44) as compensatory damages;

5. Ordering accused OMAR VILLARBA [and co-accused] to jointly and severally pay private complainant Wilson
Dordas III the sum of Two Hundred Thousand Pesos (P200,000.00), as moral damages for the pain and
suffering they inflicted upon said complainant;

....

7. Ordering accused OMAR VILLARBA [and the other accused] to jointly and severally pay private complainant
Wilson Dordas III the sum of One Hundred Two Thousand Two Hundred Eighty Pesos (P102,280.00[)] as
attorney's fees and expenses for litigation.

SO ORDERED.23

The trial court held that the prosecution provided a clear account of the hazing through the credible testimony of
Dordas, who identified all the accused and pinpointed their specific acts.24 It gave little faith to the accused,
whose defense of denial was not substantiated by evidence, and whose testimonies were conflicting on
significant points.25 It further observed that none of them fully accounted for the activities prior to the final rites,
intentionally evading the topic instead.26

The trial court was convinced that the injuries and humiliation suffered by Dordas were caused by Villarba and
the other accused as part of the initiation rites.27 It held that they violated the Anti-Hazing Act when they
punched Dordas and inflicted abdominal injury on him.28

Villarba appealed along with his co-accused, mainly averring that the Information charged against him was
invalid. He argued that the phrase "as a prerequisite for admission into membership in a fraternity, sorority or
organization"29 was an essential element of hazing, which should have been alleged in the Information. He also
found fault in not being arraigned under the amended Information, which added 'III' to the victim's name.30
Additionally, Villarba alleged that Dordas's sworn statement before the university for administrative investigation
conflicted with the one he gave before the National Bureau of Investigation.31

Nonetheless, the Court of Appeals upheld Villarba's conviction. In its December 21, 2012 Decision,32 it
disposed, thus:

WHEREFORE, in view of the foregoing, the instant appeal is hereby DENIED. The Decision dated 16 (sic)
November 2006 rendered by Branch 36 of the Regional Trial Court of Iloilo finding the accused-appellants Omar
Villarba and [co-accused] guilty beyond reasonable doubt of violation of Republic Act No. 8049 and sentencing
them to suffer an indeterminate penalty of imprisonment ranging from ten (10) years and one (1) day of prision
mayor as minimum to twelve (12) years as maximum is hereby SUSTAINED and AFFIRMED.

Upon finality, let the entire records of this case be remanded to the court a quo for the execution of the
judgment.

Costs against the accused-appellants.

SO ORDERED.33 (Emphasis in the original)

To the Court of Appeals, the element of initiation activities as a prerequisite for admission to the fraternity was
not an essential part of the Information. Instead, the essential element was the "infliction of physical or
psychological suffering or injury which resulted from the hazing or initiation rites of the recruit, neophyte or
applicant."34 Since initiation activities are required for membership in the fraternity, they already formed part of
the definition of hazing, the Court of Appeals explained. In any case, the omission did "not make the accused
ignorant of the crime they were being charged with, and what defenses they needed to prepare for trial."35

As to the amendment in the victim's name, the Court of Appeals held that Villarba did not need to be
rearraigned. It explained that the amendment was merely a formal one, which did not change the nature of the
charge, affect the essence of the offense, or deprive the accused of the opportunity to meet the averment. It also
deemed a re-arraignment unnecessary since Villarba, who recruited Dordas, would have certainly known the
victim's identity.36

The Court of Appeals also brushed aside the supposed conflicts in Dordas's sworn statements.37 It noted that
although Dordas did not tell in his statement before the university that Villarba punched him, he did so during
trial anyway. In any event, the Court of Appeals gave respect to the trial court's finding that Dordas's testimony
was credible.38

Villarba moved for reconsideration, but the Motion was denied in the Court of Appeals' August 30, 2016
Resolution.39 Subsequently, Villarba filed this Petition for Review on Certiorari40 before this Court.

Similar to his arguments before the Court of Appeals, petitioner mainly assigns fault to the Information charged,
arguing that his right to due process under Article Ill, Section 14 of the Constitution was violated.41 He avers that
his right "to be informed of the nature and cause of the accusation against him"42 was violated when he was not
rearraigned after the Information had been amended.43

Petitioner insists that the correction of the victim's name is a substantial amendment because it will alter his
defense. He zeroes in on Rule 110, Section 6 of the Rules of Court, which states that an Information must
contain the offended party's name.44

Citing the same provision, petitioner also claims that the Information's failure to state that "the acts or omission
complained of were committed as pre-requisites to the victim's membership to the fraternity"45 was fatal to the
case. He reasons that without this element, it is possible to argue that the acts resulting in physical injuries did
not violate the Anti-Hazing Act.46

In its Comment,47 the Office of the Solicitor General counters that adding the suffix 'III' in the victim's name was
not a substantial change, because it did not involve a "recital of facts constituting the offense charged or the
jurisdiction of the court"48 and nor would it change petitioner's defense. It also echoed the Court of Appeals'
ruling that a rearraignment was unnecessary because petitioner is obviously aware of the victim's identity.49

Moreover, the Office of the Solicitor General asserts that petitioner was "sufficiently informed of the nature and
cause of the accusation against him."50 It claims that the Information clearly describes the acts constituting the
crime charged—that the accused were members of the fraternity and that Dordas was a recruit who was
subjected to hazing.51 Thus, it asserts, the phrase "the physical or mental suffering or injury was inflicted as a
prerequisite for admission to a fraternity, sorority or organization" is not necessary in the Information.52

In his Reply,53 petitioner adds that the testimony of Dordas is insufficient to convict him of the crime. As such,
he argues that the prosecution failed to prove that there was a hazing or an initiation rite that transpired on
September 15, 2001.54

He asserts that Dordas's testimony was bare and self-serving, which must fail against the defense's
straightforward and corroborated narration. He cites the testimony of the resort owner who stated that she did
not notice any unusual activity when the fraternity rented the place.55

Moreover, petitioner insists that Dordas's statements were conflicting.56 He points out that while Dordas
renounced his first affidavit and offered a new one that identified more accused, the investigating prosecutor
observed that the earlier one was more detailed and credible.57 He likewise attempts to destroy Dordas's
narration during trial, finding it unbelievable how Dordas was able to remove his blindfold while his hands were
held by two members. Petitioner maintains that this contradiction affects Dordas's credibility and casts doubt on
the truth of his other statements.58

The issues for this Court's resolution are the following:

First, whether or not the amendment to the Information in this case is substantial;

Second, whether or not the Information is considered void for being insufficient; and

Finally, whether or not the prosecution sufficiently proved the guilt of petitioner Omar Villarba for the violation of
the Anti-Hazing Act.

Due process in criminal prosecutions requires that an accused be "informed of the nature and cause of the
accusation against him,"59 a right enshrined in our very Constitution. This constitutional mandate is reinforced in
the procedural rules instated to safeguard the rights of the accused.

Arraignment is one of these safeguards. Due process requires that the accusation be in due form and that the
accused be given the opportunity to answer the accusation against them. As their liberty is at stake, the accused
should not be left in the dark about why they are being charged, and must be apprised of the necessary
information as to the charges against them.60

Arraignment is the accused's first opportunity to know the precise charge pressed against them. During the
arraignment, they are "informed of the reason for [their] indictment, the specific charges [they are] bound to face,
and the corresponding penalty that could be possibly meted against [them]."61

Hence, arraignment is not a mere formality, but a legal imperative to satisfy the constitutional requirements of
due process. In Kummer v. People:62

Arraignment is indispensable in bringing the accused to court and in notifying him of the nature and cause of the
accusations against him. The importance of arraignment is based on the constitutional right of the accused to be
informed. . . . It is only imperative that he is thus made fully aware of the possible loss of freedom, even of his
life, depending on the nature of the imputed crime.63 (Citations omitted)

Arraignment is equally important in rules on amendments of the information. Rule 110, Section 14 of the 2000
Revised Rules of Criminal Procedure provides:

SECTION 14. Amendment or substitution. — A complaint or information may be amended, in form or in

substance, without leave of court, at any time before the accused enters his plea. After the plea and during the
trial, a formal amendment may only be made with leave of court and when it can be done without causing
prejudice to the rights of the accused.
However, any amendment before plea, which downgrades the nature of the offense charged in or excludes any
accused from the complaint or information, can be made only upon motion by the prosecutor, with notice to the
offended party and with leave of court. The court shall state its reasons in resolving the motion and copies of its
order shall be furnished all parties, especially the offended party.

If it appears at any time before judgment that a mistake has been made in charging the proper offense, the court
shall dismiss the original complaint or information upon the filing of a new one charging the proper offense in
accordance with section 19, Rule 119, provided the accused shall not be placed in double jeopardy. The court
may require the witnesses to give bail for their appearance at the trial.

Under this rule, any amendment—be it formal or substantial—may be made without leave of court before the
arraignment. Once the arraignment is conducted, however, formal amendments may be made but only if there is
leave of court and if such amendment does not prejudice the rights of the accused. A substantial amendment, on
the other hand, is no longer allowed unless it "is beneficial to the accused."64

Notably, unlike for a substantial amendment, a second arraignment is not required for a formal amendment. This
is so because a formal amendment does not charge a new offense, alter the prosecution's theory, or adversely
affect the accused's substantial rights. In Kummer, this Court explained:

The need for arraignment is equally imperative in an amended information or complaint. This however, we
hastily clarify, pertains only to substantial amendments and not to formal amendments that, by their very nature,
do not charge an offense different from that charged in the original complaint or information; do not alter the
theory of the prosecution; do not cause any surprise and affect the line of defense: and do not adversely affect
the substantial rights of the accused, such as an amendment in the date of the commission of the offense.

We further stress that an amendment done after the plea and during trial, in accordance with the rules, does not
call for a second plea since the amendment is only as to form. The purpose of an arraignment, that is, to inform
the accused of the nature and cause of the accusation against him, has already been attained when the accused
was arraigned the first time. The subsequent amendment could not have conceivably come as a surprise to the
accused simply because the amendment did not charge a new offense nor alter the theory of the
prosecution.65 (Emphasis supplied)

As held in jurisprudence, the following are merely formal amendments: (1) new allegations only affecting the
range of the imposable penalty; (2) amendments that do not change the offense originally charged; (3)
allegations that will not alter the prosecution's theory as to surprise the accused and affect their form of defense;
(4) amendments that do not prejudice an accused's substantial rights; and (5) amendments that only address the
vagueness in the information but does not "introduce new and material facts" and those which "merely states
with additional precision something which is already contained in the original information and which adds nothing
essential for conviction for the crime charged."66

On the other hand, substantial amendments refer to the "recital of facts constituting the offense charged and
determinative of the jurisdiction of the court."67

In Ricarze v. Court of Appeals,68 this Court held that the test of determining whether an amendment is
substantial is the effect of the amendment on the defense and evidence. An amendment is deemed substantial if
the accused's defense and evidence will no longer be applicable after the amendment is made. Thus:

The test as to whether a defendant is prejudiced by the amendment is whether a defense under the information
as it originally stood would be available after the amendment is made, and whether any evidence defendant
might have would be equally applicable to the information in the one form as in the other. An amendment to an
information which does not change the nature of the crime alleged therein does not affect the essence of the
offense or cause surprise or deprive the accused of an opportunity to meet the new averment had each been
held to be one of form and not of substance.69 (Citation omitted)

Here, petitioner argues that the inclusion of the suffix 'III' to the name of Dordas in the Information was a
substantial amendment, which should have warranted a second arraignment. This Court disagrees.

The amendment does not change the crime charged and the theory or defense of petitioner. It added nothing
crucial for a conviction of the crime charged. It did not change the essence of the offense or cause surprise as to
deprive petitioner of the opportunity to meet the new information. Instead, the amendment only states with
precision something that was already included in the original Information. It is, therefore, merely a formal
amendment.
Since the amendment was only of form, and not of substance, an arraignment under the amended Information is
therefore unnecessary.70

II

The constitutional right to be informed of the nature and cause of the accusation against an accused further
requires a sufficient complaint or information. It is deeply rooted in one's constitutional rights to due process and
the presumption of innocence.71

Due process dictates that an accused be fully informed of the reason and basis for their indictment. This would
allow an accused to properly form a theory and to prepare their defense, because they are "presumed to have
no independent knowledge of the facts constituting the offense they have purportedly committed."72

In Andaya v. People,73 this Court explained that the purpose of a written accusation is to enable the accused to
make their defense, to protect themselves against double jeopardy, and for the court to determine whether the
facts alleged are sufficient in law to support a conviction.74 Hence, a complaint or information must set forth a
"specific allegation of every fact and circumstances necessary to constitute the crime charged."75

Rule 110, Section 6 of the Rules of Court provides the allegations fundamental to an information, namely: (1) the
accused's name; (2) the statute's designation of the offense; (3) the acts or omissions complained of that
constitute the offense; (4) the offended party's name; (5) the approximate date of the offense's commission; and
(6) the place where the offense was committed.76

It is critical that all of these elements are alleged in the infom1ation. Full compliance with this rule is essential to
satisfy the constitutional rights of the accused; conversely, any deviation that prejudices the accused's
substantial rights is fatal to the case. In Enrile v. People:77

A concomitant component of this stage of the proceedings is that the Information should provide the accused
with fair notice of the accusations made against him, so that he will be able to make an intelligent plea and
prepare a defense. Moreover, the Information must provide some means of ensuring that the crime for which the
accused is brought to trial is in fact one for which he was charged, rather than some alternative crime seized
upon by the prosecution in light of subsequently discovered evidence. Likewise, it must indicate just what crime
or crimes an accused is being tried for, in order to avoid subsequent attempts to retry him for the same crime or
crimes. In other words, the Information must permit the accused to prepare his defense, ensure that he is
prosecuted only on the basis of facts presented, enable him to plead jeopardy against a later prosecution, and
inform the court of the facts alleged so that it can determine the sufficiency of the charge.

Oftentimes, this is achieved when the Information alleges the material elements of the crime charged. If the
Information fails to comply with this basic standard, it would be quashed on the ground that it fails to charge an
offense....78 (Citations omitted)

Factual allegations that constitute the offense are substantial matters. Moreover, an accused's right to question a
conviction based on facts not alleged in the Information cannot be waived.79 Thus, even if the prosecution
satisfies the burden of proof, but if the offense is not charged or necessarily included in the information,
conviction cannot ensue:

The allegations of facts constituting the offense charged are substantial matters and an accused's right to
question his conviction based on facts not alleged in the information cannot be waived. No matter how
conclusive and convincing the evidence of guilt may be, an accused cannot be convicted of any offense unless it
is charged in the information on which he is tried or is necessarily included therein. To convict him of a ground
not alleged while he is concentrating his defense against the ground alleged would plainly be unfair and
underhanded. The rule is that a variance between the allegation in the information and proof adduced during trial
shall be fatal to the criminal case if it is material and prejudicial to the accused so much so that it affects his
substantial rights.80 (Citations omitted)

The allegations in the information are vital because they determine "the real nature and cause of the accusation
against an accused[.]"81 They are given more weight than a prosecutor's designation of the offense in the
caption. In Quimvel v. People:82

Indeed, the Court has consistently put more premium on the facts embodied in the Information as constituting
the offense rather than on the designation of the offense in the caption. In fact, an investigating prosecutor is not
required to be absolutely accurate in designating the offense by its formal name in the law. What determines the
real nature and cause of the accusation against an accused is the actual recital of facts stated in the Information
or Complaint, not the caption or preamble thereof nor the specification of the provision of law alleged to have
been violated, being conclusions of law. It then behooves this Court to place the text of the Information under
scrutiny.83 (Citation omitted)

Nevertheless, the wording of the information does not need to be a verbatim reproduction of the law in alleging
the acts or omissions that constitute the offense. Rule 110, Section 9 of the Rules of Court is clear that the
information does not need to use the exact language of the statute:

SECTION 9. Cause of the accusation. — The acts or omissions complained of as constituting the offense and
the qualifying and aggravating circumstances must be stated in ordinary and concise language and not
necessarily in the language used in the statute but in terms sufficient to enable a person of common
understanding to know what offense is being charged as well as its qualifying and aggravating circumstances
and for the court to pronounce judgment.

Hence, to successfully state the acts or omissions that constitute the offense, they must be "'described in
intelligible terms with such particularity as to apprise the accused, with reasonable certainty, of the offense
charged.' Furthermore, '[t]he use of derivatives or synonyms or allegations of basic facts constituting the offense
charged is sufficient."84

Here, petitioner claims that the Information is insufficient for failing to state that the acts or omissions complained
of were committed as a prerequisite to the victim's membership to the fraternity.85 He reasons that the definition
of hazing under the Anti-Hazing Act requires that the "initiation rite or practice was used as a prerequisite for
admission into membership in a fraternity, sorority or organization."86 Absent this requisite, he asserts that the
acts done cannot be penalized under the law.87

The question, therefore, is whether the phrase in the Information, "did then and there willfully, unlawfully and
criminally subject one Wilson Dordas III to hazing or initiation by placing Wilson Dordas III, the recruit, in some
embarrassing or humiliating situation such as forcing him to do physical activity or subjecting him to physical or
psychological suffering or injury," sufficiently apprised petitioner of the elements of the offense charged.

This Court affirms the Court of Appeals' ruling.

Petitioner's constitutional right to be informed of the nature and cause of the accusation against him was not
violated. A plain reading of the Information shows that the allegations stated there sufficiently apprised petitioner
that the crime charged against him was hazing.

The pertinent portion of the assailed Information states:

That on or about the 15th day of September 2001, in the City of Iloilo, Philippines, and within the jurisdiction of
this Court, the abovenamed accused, members and officers of the Junior Order of Kalantiao, a fraternity,
conspiring and confederating with each other, working together and helping one another, did then and there
willfully, unlawfully and criminally subject one Wilson Dordas III to hazing or initiation by placing Wilson Dordas
III, the recruit, in some embarrassing or humiliating situation such as forcing him to do physical activity or
subjecting him to physical or psychological suffering or injury which resulted to his confinement and operation
and prevented him from engaging in his habitual work for more than ninety (90) days.88 (Emphasis supplied)

The lack of the phrase "prerequisite to admission" does not make the Information invalid. Even with its absence,
the alleged facts, which include the controlling words 'fraternity,' 'initiation,' 'hazing,' and 'recruit, ' would have
reasonably informed petitioner of the nature and cause of the accusation against him.

Petitioner's constitutional right to be informed of the nature and cause of the accusation against him is upheld as
long as the crime, as described, is reasonably adequate to apprise him of the offense charged. This mandate
does not require a verbatim reiteration of the law. The use of derivatives, synonyms, and allegations of basic
facts constituting the crime will suffice.89

Moreover, this Court agrees with the Court of Appeals that petitioner was able to prepare his defense and
evidence based on the Information. There is no showing that petitioner was caught by surprise during trial or that
he was oblivious to the crime charged.90 In People v. Wilson Lab-eo:91
The test of sufficiency of Information is whether it enables a person of common understanding to know the
charge against him, and the court to render judgment properly. . . . The purpose is to allow the accused to fully
prepare for his defense, precluding surprises during the trial. Significantly, the appellant never claimed that he
was deprived of his right to be fully apprised of the nature of the charges against him because of the style or
form adopted in the Information.92 (Citations omitted)

The assailed Information here sufficiently enables a layperson to understand the crime charged. There is no
ambiguity in the allegations that prevented petitioner to prepare his defense. As long as this purpose is attained,
the constitutional right to be informed of the nature and cause of accusation is satisfied.

In any case, if the Information was indeed insufficient and did not conform to the substantially prescribed form,
petitioner should have moved to quash it.93 Yet, he did no such thing. This means that he had already
acquiesced to the validity and sufficiency of the Information.

III

Finally, petitioner questions how the lower courts found Dordas's testimony credible, when it is supposedly bare
and self-serving, and therefore unconvincing. Petitioner's argument, however, is untenable.

It is settled that the factual findings of the trial court, more so when affirmed by the appellate court, are entitled to
great weight and respect. Particularly, the evaluation of witnesses' credibility is "best left to the trial court
because it has the opportunity to observe the witnesses and their demeanor during the trial."94 In People v.
Quijada:95

For, the trial court has the advantage of observing the witnesses through the different indicators of truthfulness
or falsehood, such as the angry flush of an insisted assertion or the sudden pallor of a discovered lie or the
tremulous mutter of a reluctant answer or the forthright tone of a ready reply; or the furtive glance, the blush of
conscious shame, the hesitation, the sincere or the flippant or sneering tone, the heat, the calmness, the yawn,
the sigh, the candor or lack of it, the scant or full realization of the solemnity of an oath, the carriage and mien.
The appellant has miserably failed to convince us that we must depart from this rule.96 (Citations omitted)

The trial court's findings on witness credibility are binding upon this Court, unless substantial facts were shown
to have been overlooked, misapprehended, or misinterpreted. In People v. Daramay, Jr. :97

Time and time again, this Court has said that the assessment of the credibility of witnesses and their testimonies
is a matter best undertaken by a trial court because of its unique opportunity to observe the witnesses firsthand;
and to note their demeanor, conduct and attitude under examination. Its findings on such matters are binding
and conclusive on appellate courts unless some facts or circumstances of weight and substance have been
overlooked, misapprehended or misinterpreted...98 (Citation omitted)

The rule will hold sway in this case as well. Without a showing that the Regional Trial Court and the Court of
Appeals have overlooked or misinterpreted the victim's testimony, this Court sees no reason to overturn their
factual findings.

To recall, petitioner contends that the lower courts erred in appreciating the victim's testimony, claiming that it
was self-serving and uncorroborated by any other witness. He further faults the victim's testimony for being
inconsistent and unbelievable.99

Petitioner's assertion lacks basis. As held by both the trial court and the Court of Appeals, the victim was able to
provide a detailed and categorical narration of his ordeal during the initiation. 100 Dordas identified petitioner as
one of the members who punched him in the abdomen. Thus:

ATTY[.] MARANON:

Mr. Dordas, last December 8, 2003, you testified before the Honorable Court that you are blindfolded and guided
to the elevated portion of the big cottage and thereafter, they held your both two hands [sic] and you were boxed
and hit on the right portion of your body. My question now is: After you were hit, can you please tell us what
happened next?

xxx
After you have struggled and said you tried to free yourself from the hold of three persons holding your hands,
can you please tell us what happened next?

WITNESS:

I was able to remove my blindfold.

ATTY. MARANON:

Because you were able to remove ... your blindfold, can you please tell us whether you were able to identify
those persons who were holding your hands?

WITNESS:

When I faced front again somebody suddenly boxed me.

ATTY[.] MARANON:

And were [you] able to identify who was that person who boxed you?

WITNESS:

Yes sir.

ATTY. MARANON:

Who was he?

WITNESS:

Omar Villarba.

ATTY. MARANON:

Were you hit?

WITNESS:

Yes sir.

ATTY. MARANON:

Where?

WITNESS:

Here at my stomach.101

The lower courts deemed Dordas's testimony as direct and straightforward. He identified petitioner during trial
and clearly narrated the acts that petitioner and the other accused had done to him.

Contrary to petitioner's claim, the testimony of a single witness may suffice to attain conviction if it is deemed
credible. The prosecution has no obligation to present a certain number of witnesses; after all, testimonies are
1âшphi1

weighed, not numbered.102 It is inconsequential that only the victim testified on the events that transpired during
the hazing. If the trial court found the sole testimony of the victim credible, conviction may ensue.

This is not unusual in prosecutions of hazing cases, where the reluctance of fraternity members to speak about
the initiation rites persists. In Dungo v. People:103
Needless to state, the crime of hazing is shrouded in secrecy. Fraternities and sororities, especially the Greek
organizations, are secretive in nature and their members are reluctant to give any information regarding initiation
rites. The silence is only broken after someone has been injured so severely that medical attention is required. It
is only at this point that the secret is revealed and the activities become public....104 (Citations omitted)

Against Dordas's candid testimony, petitioner's defense of denial utterly fails. This Court has settled that "mere
denial ... is inherently a weak defense and constitutes self-serving negative evidence which cannot be accorded
greater evidentiary weight than the declaration of credible witnesses who testify on affirmative
matters."105 Petitioner's denial is no exception.

Indeed, not one of petitioner's assertions has withstood the strength of the prosecution's evidence. The lower
courts have given full faith to the testimony of Dordas, and this Court finds no reason to differ. Thus, petitioner's
conviction is sustained. He is, beyond reasonable doubt, guilty of the crime of hazing.

Hazing is a form of deplorable violence that has no place in any civil society, more so in an association that calls
itself a brotherhood. It is unthinkable that admissions to such organizations are marred by ceremonies of
psychological and physical trauma, all shrouded in the name of fraternity. This practice of violence, regardless of
its gravity and context, can never be justified. This culture of impunity must come to an end.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The December 21, 2012 Decision and August
30, 2016 Resolution of the Court of Appeals in CA-G.R. CEB CR. No. 00557 are AFFIRMED. Petitioner Omar
Villarba is found GUlLTY beyond reasonable doubt of violation of Republic Act No. 8049. He is sentenced to
suffer the indeterminate penalty of imprisonment ranging from 10 years and one (1) day of prision mayor, as
minimum, to 12 years, as maximum. Petitioner shall also pay the costs of suit.

SO ORDERED.

Gesmundo, Carandang, Zalameda, and Gaerlan, JJ., concur.

September 8, 2020

NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on June 15, 2020 a Decision, copy attached hereto, was rendered by the Supreme Court
in the above-entitled case, the original of which was received by this Office on September 8, 2020 at 1:33 p.m.

By authority of the Court:

MISAEL DOMINGO C. BATTUNG III

Division Clerk of Court

By:

(Sgd.) RUMAR D. PASION

Deputy Division Clerk of Court

Footnotes

1 Corpus, Jr. v. Pamular, G.R. No. 186403, September 5, 2018, [Per J. Leonen, Third Division].

2 Quimvel v. People, 808 Phil. 889, 920 (2017) [Per J. Velasco, Jr., En Banc].

3 Rollo, pp. 15-29.

4 Id. at 31-45. The Decision dated December 21, 2012 was penned by Associate Justice Pampio A.
Abarintos and concurred in by Associate Justices Gabriel T. Ingles and Pedro B. Corales of the
Eighteenth Division, Court of Appeals, Cebu City.

5 Id. at 57-60. The Resolution dated August 30, 2016 was penned by Associate Justice Gabriel T. Ingles
and concurred in by Associate Justices Pamela Ann Abella Maximo and Marilyn B. Lagura-Yap of the
Special Former Eighteenth Division of the Court of Appeals, Cebu City.

6 Id. at 119-169. The Decision dated November 14, 2006 in Crim. Case No. 02-56194 was penned by
Judge Victor E. Gelvezon of the Regional Trial Court of Iloilo City, Branch 36.

7 Id. at 119. The other accused were Vincent Eiben Gonzales, Rasty Jones Sumagaysay, Lorly Totica,
Emily Garcia, Sergio Cercado, Jr., Edrel Tojoy, Oliver Montejo, Donnaline Locsin, May Andres, Paul
Andre Margarico, Marie Hope Talabucon, Nehru Sanico, Joann Malunda, Wesley Corvera, Keith
Piamonte, Vincent Serafin Singian, Hennie Bandojo, Christy Alejaga, Chester Roy Rogan, Roma
Aspero, and Rogen Magno.

8 Id. at 121.

9 Id. at 170.

10 Id. at 120.

11 Id. at 119-120.

12 Id. at 120.

13 Id. at 121.

14 Id. at 122.

15 Id. at 122-123.

16 Id. at 124-125.

17 Id. at 125-127.

18 Id. at 127-129.

19 Id. at 129-130.

20 Id. at 134.

21 Id. at 134-135.

22 Id. at 119-169.

23 Id. at 167-169.

24 Id. at 152.

25 Id. at 147.

26 Id. at 150.

27 Id. at 158-160.

28 Id. at 164.
29 Id. at 38.

30 Id. at 38-39.

31 Id. at 39.

32 Id. at 31-45.

33 Id. at 44-45.

34 Id. at 40.

35 Id. at 40-41.

36 Id. at 41.

37 Id. at 42.

38 Id. at 44.

39 Id. at 57-60.

40 Id. at 15-29.

41 Id. at 21-A-22.

42 Id. at 22.

43 Id. at 22-24.

44 Id.

45 Id. at 26.

46 Id. at 24-26.

47 Id. at 82-91.

48 Id. at 84-85.

49 Id. at 85-86.

50 Id. at 86.

51 Id. at 86-87.

52 Id. at 87.

53 Id. at 100-110.

54 Id. at 101-102.

55 Id.

56 Id. at 102.

57 Id. at 103.

58 Id. at 104.
59 CONST., art. III, sec. 14(2) provides:

(2) In all criminal prosecutions, the accused shall be presumed innocent until the contrary is
proved, and shall enjoy the right to be heard by himself and counsel, to be informed of the nature
and cause of the accusation against him, to have a speedy, impartial, and public trial, to meet the
witnesses face to face, and to have compulsory process to secure the attendance of witnesses
and the production of evidence in his behalf. However, after arraignment, trial may proceed
notwithstanding the absence of the accused provided that he has been duly notified and his
failure to appear is unjustifiable.

60 Corpus, Jr. v. Pamular, G.R. No. 186403, September 5, 2018, [PerJ. Leonen, Third Division].

61 Kummer v. People, 717 Phil. 670, 687 (2013) [Per J. Brion, Second Division].

62 717 Phil. 670 (2013) [Per J. Brion, Second Division].

63 Id. at 687.

64 Ricarze v. Court of Appeals, 544 Phil. 237, 249 (2007) [Per J. Callejo, Sr., Third Division].

65 Kummer v. People, 717 Phil. 670, 687-688 (2013) [Per J. Brion, Second Division].

66 Ricarze v. Court of Appeals, 544 Phil. 237, 249 (2007) [Per J. Calleja, Sr., Third Division]
citing Matalam v. Sandiganbayan, 495 Phil. 664 (2005) [Per J. Chico-Nazario, Second Division].

67 Id.

68 544 Phil. 237 (2007) [Per J. Calleja, Sr., Third Division].

69 Id. at 249-250.

70 Corpus, Jr. v. Pamular, G. R. No. 186403, September 5, 2018, [Per J. Leonen, Third Division].

71 CONST., art III, sec. 14 provides:

SECTION 14. (1) No person shall be held to answer for a criminal offense without due process of
law. (2) In all criminal prosecutions, the accused shall be presumed innocent until the contrary is
proved, and shall enjoy the right to be heard by himself and counsel, to be informed of the nature
and cause of the accusation against him, to have a speedy, impartial, and public trial, to meet the
witnesses face to face, and to have compulsory process to secure the attendance of witnesses
and the production of evidence in his behalf. However, after arraignment, trial may proceed
notwithstanding the absence of the accused provided that he has been duly notified and his
failure to appear is unjustifiable.

72 People v. Bayabos, 754 Phil. 90, 103-104 (2015) [Per C.J. Sereno, First Division].

73 526 Phil. 480 (2006) [Per J. Ynares-Santiago, First Division].

74 Id. at 496-497.

75 Id. at 496 citing U.S. v. Karelsen, 3 PhiI. 226 (1904) [Per J. Johnson, En Banc].

76 RULES OF COURT, Rule 110, sec. 6 provides:

SECTION 6. Sufficiency of complaint or information. — A complaint or information is sufficient if it

states the name of the accused; the designation of the offense given by the statute; the acts or
omissions complained of as constituting the offense; the name of the offended party; the
approximate date of the commission of the offense; and the place where the offense was
committed.
 When an offense is committed by more than one person, all of them shall be included in the
complaint or information.

77 766 Phil. 75 (2015) [Per J. Brion, En Banc].

78 Id. at 104-105.
79 David v. People, 767 Phil. 519, 532 (2015) [Per J. Carpio, Second Division].
80 Andaya v. People, 526 Phil. 480, 497 (2006) [Per J. Ynares-Santiago, First Division].
81 Quimvel v. People, 808 PhiI. 889, 913 (2017) [Per J. Velasco, Jr., En Banc].
82 808 Phil. 889 (2017) [Per J. Velasco, Jr.. En Banc].
83 Id. at 913.
84 Id. at 920 citing Lazarte v. Sandiganbayan, 600 Phil. 475 (2009) [Per J. Tinga, En Banc] and Serapio v.
Sandiganbayan, 444 Phil. 499, 522 (2003) [Per J. Calleja, Sr., En Banc].
85 Rollo, p. 26.
86 Id. at 102.
87 Id.
88 Id. at 119-120.
89 Quimvel v. People, 808 Phil. 889, 920 (2017) [Per J. Velasco, Jr., En Banc].
90 Rollo, p. 41.
91 424 Phil. 482 (2002) [Per J. Carpio, Third Division].
92 Id. at 497.
93 Miranda v. Sandiganbayan, 502 Phil. 423, 444-445 (2005) [Per J. Puno, En Banc].
94 People v. Corpuz, 812 Phil. 62, 88 (2017) [Per J. Leonen, Second Division] citing People v. Badilla, 749 Phil. 809, 820
(2014) [Per J. Leonen, Second Division].
95 328 Phil. 505 (1996) [Per J. Davide, Jr. En Banc].
96 Id. at 530-531.
97 431 Phil. 715 (2002) [Per J. Panganiban, Third Division].
98 Id. at 727.
99 Id. at 102-104.
100 Rollo, p. 44.
101 Id. at 43-44.
102 PeopIe v. Ponsaran, 426 Phil. 836, 847 (2002) (Per J. Puno, First Division].
103 762 Phil. 630 (2015) [Per J. Mendoza, Second Division].
104 Id. at 679.
105 People v. Buclao, 736 Phil. 325, 339 (2014) [Per J. Leonen, Third Division] citing People v. Alvero, 386 Phil. 181,
200 (2000) [Per Curiam, En Banc].
CASE DIGEST

OMAR VILLARBA v. CA, GR No. 227777, 2020-06-15

Facts:
Villarba was among the members[7] of the Junior Order of Kalantiao, a fraternity... who were all
charged in 2003 with violating the Anti-Hazing Act for their acts against Wilson Dordas III (Dordas)
All the accused were arraigned under the original Information, and they accordingly pleaded not guilty
to the crime charged.
, the Information was amended[11] by adding the suffix 'III' to the name 'Wilson Dordas' to correct his
name. Pre-trial and trial ensued without arraignment on the amended Information... the prosecution
presented Dordas as witness. He testified that he learned about the Junior Order of Kalantiao through
Villarba, his classmate
Villarba recruited Dordas to join the fraternity, assuring him that the membership would help him in his
studies, and that no physical harm would be involved
Yet, after attending meetings and taking a written examination,[14] Dordas and his co-applicants were
made to perform various tasks in the campus, many of them humiliating and foolish stunts.
Dordas and his co-applicants were brought to
Iloilo City for the final rites. Upon arrival that evening, they were told to eat a mix of rice, canned goods,
and hot peppers. When they failed to finish the meal, Villarba told them to chew hot peppers as
punishment. Dordas ate about five of them.
the applicants passed through a series of stations where they were asked, among others, to recite the
organization's preamble.
Whenever they failed to perform the tasks, they suffered different forms of punishment
Dordas and his co-applicants were brought inside a big cottage, where the members blindfolded them.
After being asked to turn and walk for a few meters, two members held his hands while another
punched him in his right waist.
Dordas struggled to remove his blindfold and was able to see some members, including Villarba and
another member who then each threw a punch
Dordas officially became a member of the fraternity
When Dordas went home the morning after, he complained of an intense pain in his abdomen
His family then brought him to St. Paul's Hospital, where he underwent surgery due to liver damage...
the defense presented several witnesses, among them Villarba. Villarba admitted that he was a member
of the fraternity and that he recruited Dordas. He confirmed that Dordas took a written test along with
psychological and physical examinations, and underwent final rites at the same beach resort that
Dordas identified. However, Villarba testified that their recruits only had to do sit-ups, push-ups, or
jogging,[20] insisting that "no physical harm was inflicted on the recruits.
the Regional Trial Court found all the accused guilty of the crime charged.
The trial court held that the prosecution provided a clear account of the hazing through the credible
testimony of Dordas
Villarba appealed along with his co-accused, mainly averring that the Information charged against him
was invalid. He argued that the phrase "as a prerequisite for admission into membership in a fraternity,
sorority or organization"[29] was an essential element of hazing, which should have been alleged in the
Information. He also found fault in not being arraigned under the amended Information, which added
'III' to the victim's name.
s, the Court of Appeals upheld Villarba's conviction
To the Court of Appeals, the element of initiation activities as a prerequisite for admission to the
fraternity was not an essential part of the Information. Instead, the essential element was the "infliction
of physical or psychological suffering or injury which resulted from the hazing or initiation rites of the
recruit, neophyte or applicant."[34] Since initiation activities are required for membership in the
fraternity, they already formed part of the definition of hazing,... As to the amendment in the victim's
name, the Court of Appeals held that Villarba did not need to be rearraigned. It explained that the
amendment was merely a formal one, which did not change the nature of the charge,... The Court of
Appeals also brushed aside the supposed conflicts in Dordas's sworn statements.
Villarba filed this Petition for Review on Certiorar
Similar to his arguments before the Court of Appeals,... Petitioner insists that the correction of the
victim's name is a substantial amendment because it will alter his defense. He zeroes in on Rule 110,
Section 6 of the Rules of Court, which states that an Information must contain the offended party's
name... the Office of the Solicitor General counters that adding the suffix 'III' in the victim's name was
not a substantial change, because it did not involve a "recital of facts constituting the offense charged
or the jurisdiction of the court"[48] and nor would it change petitioner's defense. It also echoed the
Court of Appeals' ruling that a rearraignment was unnecessary because petitioner is obviously aware of
the victim's identity... the Office of the Solicitor General asserts that petitioner was "sufficiently
informed of the nature and cause of the accusation against him."[50] It claims that the Information
clearly describes the acts constituting the crime charged—that the accused were members of the
fraternity and that Dordas was a recruit who was subjected to hazing
Issues:
whether or not the amendment to the Information in this case is substantial;... whether or not the
Information is considered void for being insufficient; and
Ruling:
Arraignment is equally important in rules on amendments of the information. Rule 110, Section 14 of
the 2000 Revised Rules of Criminal Procedure provides:SECTION 14. Amendment or substitution. — A
complaint or information may be amended, in form or in substance, without leave of court, at any time
before the accused enters his plea. After the plea and during the trial, a formal amendment may only be
made with leave of court and when it can be done without causing prejudice to the rights of the
accused.
petitioner argues that the inclusion of the suffix 'III' to the name of Dordas in the Information was a
substantial amendment, which should have warranted a second arraignment. This Court disagrees.The
amendment does not change the crime charged and the theory or defense of petitioner. It added
nothing crucial for a conviction of the crime charged. It did not change the essence of the offense or
cause surprise as to deprive petitioner of the opportunity to meet the new information. Instead, the
amendment only states with precision something that was already included in the original Information.
It is, therefore, merely a formal amendment.Since the amendment was only of form, and not of
substance, an arraignment under the amended Information is therefore unnecessary.
Rule 110, Section 6 of the Rules of Court provides the allegations fundamental to an information,
namely: (1) the accused's name; (2) the statute's designation of the offense; (3) the acts or omissions
complained of that constitute the offense; (4) the offended party's name; (5) the approximate date of
the offense's commission; and (6) the place where the offense was committed.[76]It is critical that all of
these elements are alleged in the infom1ation. Full compliance with this rule is essential to satisfy the
constitutional rights of the accused; conversely, any deviation that prejudices the accused's substantial
rights is fatal to the case.
Nevertheless, the wording of the information does not need to be a verbatim reproduction of the law in
alleging the acts or omissions that constitute the offense. Rule 110, Section 9 of the Rules of Court is
clear that the information does not need to use the exact language of the statute:SECTION 9. Cause of
the accusation. — The acts or omissions complained of as constituting the offense and the qualifying
and aggravating circumstances must be stated in ordinary and concise language and not necessarily in
the language used in the statute but in terms sufficient to enable a person of common understanding to
know what offense is being charged as well as its qualifying and aggravating circumstances and for the
court to pronounce judgment.Hence, to successfully state the acts or omissions that constitute the
offense, they must be "'described in intelligible terms with such particularity as to apprise the accused,
with reasonable certainty, of the offense charged.' Furthermore, '[t]he use of derivatives or synonyms
or allegations of basic facts constituting the offense charged is sufficient."
Petitioner's constitutional right to be informed of the nature and cause of the accusation against him
was not violated. A plain reading of the Information shows that the allegations stated there sufficiently
apprised petitioner that the crime charged against him was hazing.
The lack of the phrase "prerequisite to admission" does not make the Information invalid. Even with its
absence, the alleged facts, which include the controlling words 'fraternity,' 'initiation,' 'hazing,' and
'recruit, ' would have reasonably informed petitioner of the nature and cause of the accusation against
him.Petitioner's constitutional right to be informed of the nature and cause of the accusation against
him is upheld as long as the crime, as described, is reasonably adequate to apprise him of the offense
charged. This mandate does not require a verbatim reiteration of the law. The use of derivatives,
synonyms, and allegations of basic facts constituting the crime will suffice
 THIRD DIVISION

November 28, 2016

G.R. No. 223506

GARRY V. INACAY, Petitioner

vs.
PEOPLE OF THE PHILIPPINES, Respondent

RESOLUTION

REYES, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision2 dated March 15, 2016 issued by the Court of Appeals (CA) in CA-G.R. CR No. 35652.

Facts

Garry V. Inacay (Inacay) was a former sales agent of Mega Star Commercial (MSC), a business enterprise
engaged in the wholesale of electrical and construction materials. As part of his duties, Inacay was tasked to find
clients in Pangasinan, solicit orders, collect payments, and issue receipts. Inacay was able to collect a check
payment from Gamboa Lumber and Hardware (GLH), one' of MSC's clients, in the amount of ₱53,170.00. 3

Fernando Tan (Tan), the proprietor of MSC, claimed that he demanded Inacay to remit the said amount paid by
GLH, but he failed to do so.4 Tan then filed a criminal complaint for estafa with the Office of the Prosecutor in
Quezon 8ity against Inacay. Consequently, an Information for the crime of estafa was filed with the Regional
Trial Court (RTC) of Quezon City against Inacay.5

In the proceedings before the RTC, Inacay was represented by a certain Eulogia B. Manila (Manila), who
represented herself as a lawyer. During arraignment, Inacay pleaded not guilty to the crime charged. 6
1âwphi1

Inacay admitted that he received the payment made by GLH, but claimed that he remitted the same to Melinda
Castro, the accounting officer of MSC. However, on cross-examination, Inacay claimed that he previously
executed an Affidavit dated November 3, 2006, stating that he was held up by robbers and among the things
taken from him were several checks issued by the customers of MSC.7

On February 21, 2013, the RTC of Quezon City, Branch 80 rendered a Decision 8 finding Inacay guilty beyond
reasonable doubt of the crime of Estafa punishable under Article 315(1)(b) of the Revised Penal Code and
sentencing him to suffer the indeterminate penalty of one (1) year, eight (8) months and twenty-one (21) days
of prision correccional, as minimum, to nine (9) years, eight (8) months and twenty-one (21) days of prision
mayor, as maximum. The RTC likewise directed Inacay to pay MSC the amount of ₱53,170.00. 9

Unperturbed, Inacay appealed the RTC decision to the CA; he was still represented by Manila in the
proceedings before the appellate court.10

On March 15, 2016, the CA rendered a Decision,11 affirming the RTC's disposition in toto. When Inacay learned
of the CA's decision, he requested Manila to file the appropriate petition with this Court, but the latter refused
and told him to find another lawyer. 12

Subsequently, Inacay found out, after talking to a lawyer, that Manila is not a member of the Bar. Thus, Inacay
obtained a Certification13 from the Office of the Bar Confidant (OBC) showing that Manila is indeed not a member
of the Philippine Bar.14

In this petition, Inacay claims that he was denied due process since he was not represented by a lawyer. He,
likewise, avers that the lower courts erred in convicting him of the offense charged since there was no evidence
presented showing that he actually encashed the check paid by GLH and misappropriated the proceeds thereof.

Issue
Essentially, the issue for the Court's resolution is whether Inacay's guilt of the crime charged had been proven
beyond reasonable doubt.

Ruling of the Court

The petition is granted.

Section 1, Article III of the Constitution provides that no person shall be deprived of life, liberty, or property
without due process of law. Section 14(2), Article III of the Constitution further mandates that in all criminal
prosecutions, the accused shall enjoy the right to be heard by himself and counsel.

In criminal cases, the right of the accused to be assisted by counsel is immutable. Otherwise, there will be a
1âwphi1

grave denial of due process. The right to counsel proceeds from the fundamental principle of due process which
basically means that a person must be heard before being condemned.15 "Thus, even if the judgment had
become final and executory, it may still be recalled, and the accused afforded the opportunity to be heard by
himself and counsel."16

"The right to counsel is absolute and may be invoked at all times. More so, in the case of an on-going litigation, it
is a right that must be exercised at every step of the way, with the lawyer faithfully keeping his client
company."17 Unless the accused is represented by a lawyer, there is great danger that any defense presented in
his behalf will be inadequate considering the legal perquisites and skills needed in the court proceedings. This
would certainly be a denial of due process.18

In this case, Inacay, during the proceedings before the trial court and the appellate court, was represented by
Manila who, based on the Certification issued by the OBC, is not a lawyer. At that time, Inacay had no inkling
that he was being represented by a sham lawyer. It was only when his conviction of the offense charged was
upheld by the appellate court did Inacay learn that Manila is not a lawyer. Clearly, Inacay was not assisted by
counsel in the proceedings before the lower courts and, hence, was denied of due process.

In People v. Santocildes, Jr.,19 the Court held that:

The presence and participation of counsel in criminal proceedings should never be taken lightly. Even the most
intelligent or educated man may have no skill in the science of the law, particularly in the rules of procedure,
and, without counsel, he may be convicted not because he is guilty but because he does not know how to
establish his innocence. The right of an accused to counsel is guaranteed to minimize the imbalance in the
adversarial system where the accused is pitted against the awesome prosecutory machinery of the State. Such
a right proceeds from the fundamental principle of due process which basically means that a person must be
heard before being condemned. The due process requirement is a part of a person's basic rights; it is not a mere
formality that may be dispensed with or performed perfunctorily. 20 (Citations omitted)

Considering that there was a denial of due process, there is a need to set aside the judgment of conviction
against Inacay and remand the case to the trial court for new, trial. Further, Manila, for representing herself as a
lawyer, should be held liable for indirect contempt of court.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is GRANTED. The Decision dated
March 15, 2016 issued by the Court of Appeals in CA-G.R. CR No. 35652 is hereby SET ASIDE. The case
is REMANDED to the Regionai Trial Court of Quezon City, Branch 80, for new trial.

With respect to the unauthorized practice of law by the person named Eulogia B. Manila in connection with this
case, the local chapter of the Integrated Bar of the Philippines of Quezon City is DIRECTED to conduct a prompt
and thorough investigation regarding this matter and to report its recommendations to the Court within ninety
(90) days from notice of this Resolution. Let all concerned parties, including the Office of the Bar Confidant, be
each furnished a copy of this Resolution for their appropriate action.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

WE CONCUR:
 PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson

(On official leave)

JOSE PORTUGAL PEREZ
DIOSDADO M. PERALTA*
Associate Justice
Associate Justice

ALFREDO BENJAMIN S. CAGUIOA**

Associate Justice

ATTESTATION

I attest that the conclusions in the above Resolution had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that
the conclusions in the above Resolution had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes
* On official leave .

** Additional Member per Raffle dated November 18, 2016 vice Associate Justice Francis H. Jardeleza.

1 Rollo, pp. 25-37.

2 Penned by Associate Justice Noel G. Tijam, with Associate Justices Francisco P. Acosta and Eduardo B. Peralta, Jr.

concurring; id. at 39-47.

3 Id. at 27.

4 Id. at 41.

5 Id. at 27.

6 Id. at 28.

7 Id. at 41.

8 Rendered by Presiding Judge Charito B. Gonzales; id. at 48-53.

9 Id. at 53.

10 Id. at 28.

11 Id. at 39-47.

12 Id. at 30.

13 Id. at 55.

14 Id. at 30.

15 Callangan v. People, 526 Phil. 239, 245-246 (2006).

16 Spouses Telan v. Court of Appeals, 279 Phil. 587, 594-595 (1991).

17 Id. at 595.

18 See People v. Santocildes, Jr., 378 Phil. 943, 948 (1999), citing Delgado v. CA, 229 Phil. 362, 366 (1986)

19 378 Phil. 943 (1999).

20 Id. at 949.
 THIRD DIVISION

[ G.R. No. 218282, September 09, 2020 ]

REDENTOR Y. AGUSTIN, PETITIONER, VS. ALPHALAND CORPORATION, ET AL., RESPONDENTS.

DECISION

CARANDANG, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking the modification of the
Decision2 dated September 26, 2014 and the Resolution3 dated April 20, 2015 of the Court of Appeals in CA-
G.R. SP No. 130198. The assailed issuances affirmed the Decision4 dated January 14, 2013 and the
Resolution5 dated March 15, 2013 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No.
11-16616-11 (NLRC LAC No. 09-002627-12), which likewise affirmed the Decision6 dated August 2, 2012 of the
Labor Arbiter (LA).

Facts of the Case

Via a letter7 dated July 6, 2011, respondent Alphaland Corporation (Alphaland) offered to employ petitioner
Redentor Y. Agustin (Agustin) as Executive Chef, with a gross monthly salary of P122,500.00. The offer came
with a six-month probation period.8

Agustin signed the letter to signify his acceptance of the job offer. As the Executive Chef, Agustin took over the
Balesin Island Club's Kitchen. He organized the kitchen, prepared the job descriptions and responsibilities of
each kitchen staff, conceptualized the menu, kitchen design, and managed the equipment acquisition.9

On November 4, 2011, barely four months from commencement of his employment, Agustin received a Notice of
Termination.10 He was informed that regular employment status cannot be granted to him because he failed to
meet the standards set forth by the company for his position. Also stated is the immediate effectivity of Agustin's
termination.11

Agustin filed a complaint for illegal dismissal against Alphaland and prayed for reinstatement and payment of
backwages. He alleged that the standards set forth by Alphaland in order to qualify as regular employee were
not made known to him at the time of his engagement. The letter-offer,12 which likewise serves as the
employment contract between Alphaland and Agustin, merely states:

As an employee of ALPHALAND CORPORATION you are expected to render the highest quality of professional
service and to always pursue the interest of the company. Any behavior or action contrary will become the basis
for appropriate disciplinary action on the part of the Company including suspension and
termination.13 (Emphasis in the original)

Agustin also claimed for 13th month pay, damages, and attorney's fees.

In its Position Paper14 submitted before the LA, Alphaland alleged that the executives of the company and the
business associates assessed the variety of dishes offered by Agustin, its palatability, and the quality of his
cooking. Unfortunately, Agustin's performance fell short of their expectations. The executives and business
associates also voted that Agustin's performance was not apt for a high-end luxury resort. Similarly, the diners
were not satisfied with the food prepared by Agustin.15 Alphaland claimed that Agustin failed to meet the
following standards in order to qualify as regular employee: (1) that he was expected to render high quality of
professional service; and (2) to always pursue the interest of the company.16 Further, Alphaland argued that
Agustin's employment was validly terminated within the probationary period and in accordance with procedural
due process. According to Alphaland, the two-notice rule was not applicable to probationary employees and that
procedural due process in the termination of a probationary employee merely requires a termination notice.17

Ruling of the Labor Arbiter

The LA issued on August 2, 2012 a Decision finding Agustin to have been illegally dismissed. The LA found that
the standard provided in the appointment letter was too general and did not specify with clarity what is expected
or needed for an Executive Chef. The record is also bereft of anything to show that the executives and guests
did not desire much of Agustin's cooking skills.18 Hence, Agustin was entitled to his salary for November 5,
2011 up to January 6, 2012, the unexpired portion of his probation period. As regards the 13th month pay, the
LA awarded the same proportionately for the period of July 6, 2011 to January 6, 2012.19 The claim for
damages was denied for lack of factual basis.20 The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered finding complainant to have been illegally
dismissed. Respondent Alphaland Corporation is ordered to pay complainant the following:

1. unexpired portion of his probationary employment in the amount of TWO HUNDRED FORTY FIVE
THOUSAND PESOS (P 245,000.00);

2. proportionate 13th month pay in the amount of SIXTY ONE THOUSAND TWO HUNDRED FIFTY
PESOS (P51,250.00);

3. attorney's fees in the amount of THIRTY THOUSAND SIX HUNDRED TWENTY FIVE PESOS
(30,625.00).

SO ORDERED.21

Alphaland appealed to the NLRC.

To support its claim that Agustin's performance had been subject of an assessment, Alphaland presented for the
first time the affidavits of Mario A. Oreta and Conrad Nicholson M. Celdran, the President of Alphaland and
Agustin's immediate supervisor, respectively. "Both attested to the fact that they were the recipients of
feedbacks from guests of the Balesin Island Club about the food served being ordinary, below average,
mediocre, and did not seem appropriate for a resort touted as one of the country's most exclusive and
luxurious."22

Ruling of the National Labor Relations Commission

The NLRC denied the appeal.

In its Decision dated January 14, 2013, the NLRC agreed with the LA in finding that Alphaland failed to establish
that Agustin was properly apprised beforehand of the reasonable standards set forth by the company for
Agustin's position, the conditions for his employment, and the basis for his advancement. The record was bereft
of any persuasive showing that the dissatisfaction on the part of the executives and the guests was real and in
good faith. The NLRC also took note that the affidavits of the persons who conducted the alleged assessment
were only submitted as evidence on appeal, and never before the LA. The NLRC explained that in the normal
course of events, Alphaland would have at least called the attention of Agustin on the alleged
assessment.23 Aside from failure to apprise Agustin of the reasonable standards against which his performance
shall be assessed, Alphaland also failed to serve upon Agustin the notice of termination within a reasonable time
from the effective date of termination as required under Section 2, Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code.24 The Motion for Reconsideration25 filed by Alphaland was denied by the NLRC
in its Resolution dated March 15, 2013.

Therefrom, Alphaland filed a Petition for Certiorari26 before the CA, which rendered the assailed Decision.

Ruling of the Court of Appeals

In denying the petition, the CA held that the LA and NLRC did not err in finding that Alphaland failed to specify
the necessary standards for Agustin's work as an Executive Chef.27 The standards set forth in the employment
contract indeed were too general for Agustin to be informed of what constitutes "the highest quality of
professional service."28 The NLRC correctly disregarded the Affidavits executed by the members of the Balesin
Club. Such Affidavits were presented for the first time only on appeal and Alphaland did not offer any
explanation for such belated submission.29 Agustin's claims for reinstatement, additional backwages and
damages cannot be granted due to Agustin's failure to appeal these awards.30 The awards granted by the LA
and affirmed by the NLRC were already final and binding.31 The CA also denied the Motion for Reconsideration
filed by Alphaland.

In his Petition, Agustin prays for reinstatement and payment of additional backwages from the date of his illegal
dismissal.32 This relief is based on the premise that he shall be deemed a regular employee because no
standards were made known to him at the time of his employment.33 Further, Agustin argues that following the
ruling in the case of St. Michael's Institute v. Santos,34 he may still be awarded backwages and reinstatement
even if he did not appeal the Decisions of the LA and NLRC.35

This Court required the parties to file subsequent pleadings, such as Comment, Reply, and their respective
Memoranda.36 In its Memorandum, Alphaland mainly points out that Agustin did not appeal the Decision of the
LA and merely included in his Opposition and Answer a prayer for relief which was not among the issues raised
in the Appeal. Alphaland argues that Agustin was in effect belatedly appealing the Decision of the LA in the
guise of his Opposition and Answer.37 Agustin did not file a Petition for Certiorari before the CA and merely
opposed Alphaland's Petition for Certiorari filed before the CA.38 In his Comment opposing the said Petition,
Agustin "cunningly interjected the issue of his reinstatement, and his entitlement to backwages and 13th month
pay until his actual reinstatement, which issues were not covered by respondent Alphaland's
Petition."39 Moreover, Agustin's full satisfaction with the Decision of the LA is unmistakable because he has not
only moved for the execution and implementation thereof, but had already received the benefits arising from the
said Decision.40

Ruling of the Court

The petition is meritorious.

In the case of St. Michael's Institute v. Santos,41 a group of teachers with regular employment status were
dismissed for joining a public rally and disrupting classes.42 The LA found and declared that there was just
cause for the dismissal since they were guilty of dereliction of duty and insubordination.43 On appeal, the NLRC
reversed the ruling of the LA and held that the teachers had been illegally dismissed. However, the NLRC in its
Decision did not award backwages. The employer in St. Michael's Institute filed a Petition for Certiorari. The CA
sustained the decision of the NLRC and in addition, awarded backwages to the teachers who were illegally
dismissed.44 Undaunted, the employer filed a Petition for Review on Certiorari before this Court. In the said
petition, the employer averred that when the CA awarded backwages in favor of the employees, it "unwittingly
reversed a time-honored doctrine that a party who has not appealed cannot obtain from the appellate court any
affirmative relief other than the ones granted in the appealed decision."45 To this issue, this Court ruled that the
award of backwages is merely a legal consequence of the finding that the employees were illegally dismissed by
the employer. In unequivocal terms, this Court explained in the said case that: "the [Court] is imbued with
sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that
their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests
or to avoid dispensing piecemeal justice."46

The case of Alphaland and Agustin presents Us with a similar factual milieu. In the same vein as St. Michael's
Institute, the case at bar involves a regular employee who was declared illegally dismissed yet was not properly
awarded backwages from the time of illegal dismissal until reinstatement.

Based on two grounds, this Court holds that Agustin was a regular employee of Alphaland.

First, The LA, NLRC, and later on the CA uniformly found that Agustin was hired from the management's
standpoint as a probationary employee but was not informed of the reasonable standards by which his
probationary employment was to be assessed. The standards set are too general and failed to specify with
clarity what is expected of Agustin as an Executive Chef.47 Consequently, the lower courts found that Agustin's
dismissal was illegal. This finding warrants the application of the following self-explanatory provisions:

Article 296 of the Labor Code

Article 296. 281 Probationary Employment. – Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged on a probationary basis may be terminated for a
just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made
known by the employer to the employee at the time of his engagement. An employee who is allowed to work
after a probationary period shall be considered a regular employee.

Section 6 (d) of the Implementing Rules of Book VI, Rule I of the Labor Code

Section 6. Probationary Employment. – There is probationary employment where the employee, upon his
engagement, is made to undergo a trial period during which the employer determines his fitness to qualify for
regular employment based on reasonable standards made known to him at the time of engagement.

Probationary employment shall be governed by the following rules:

xxxx

(d) In all cases of probationary employment, the employer shall make known to the employee the standards
under which he will qualify as a regular employee at the time of his engagement. Where no standards are made
known to the employee at that time, he shall be deemed a regular employee. (Emphasis supplied).

Considering the foregoing, the probationary period set in the contract of employment dated July 6, 2011 is
therefore purposeless. In no case was Agustin hired on a probationary status by Alphaland. As of July 6, 2011,
Agustin became part of Alphaland Corporation as a regular employee of the company without a fixed term of
employment.

Second, Agustin served as a consultant prior to being hired as an Executive Chef allegedly on a probationary
status. The Consultancy Engagement Offer48 provides that Agustin served as a consultant from June 6, 2011
until July 5, 2011, with a salary of P50,000.00. Narrated in the Memorandum49 submitted by Alphaland, Agustin
as a consultant, was responsible for setting up the kitchen, choosing the equipment, laying out the job
description for each kitchen staff, and the preparation of menus for all cuisines that the Club will offer. Following
the completion of Agustin's tasks as the Club's consultant, Alphaland proceeded to search for an Executive Chef
to head the Club's restaurants. Since the opening of the Club was fast approaching, Alphaland hired Agustin as
the Executive Chef for all the Club's restaurants. Alphaland claims that since it still had to assess and determine
whether Agustin's skills as Executive Chef are at par with what the Club requires, it hired Agustin as a
probationary employee.50

We find this circumstance contrary to the ordinary course of business. Mainly, consultants are hired to provide
their expert advice and opinion on what needs to be done. Records show that Agustin has been in the culinary
industry for almost 19 years already, won several contests, and has served well-known establishments in the
Philippines and abroad.51 When Alphaland hired Agustin as Consultant, without doubt, it was fully aware of his
qualifications and skills to set up the "kitchen" at the Balesin Island Club. This Court cannot agree that Agustin
was hired as Executive Chef on probationary basis since the tasks for which Agustin was engaged as a
Consultant were the very same tasks he had to do as an Executive Chef. In both engagements, Agustin was
tasked to take over the kitchen planning.

Dismissal of regular employees by the employer requires the observance of the two-fold due process, namely:
(1) substantive due process; and (2) procedural due process. Alphaland failed to observe both substantive and
procedural due process in dismissing Agustin from employment.

Substantive due process means that the dismissal must be for any of the: (1) just causes provided under Article
297 of the Labor Code or the company rules and regulations promulgated by the employer; or (2) authorized
causes under Article 298 and 299 thereof. None of these causes exist in the case at bar.

The attendant circumstances in the instant case show that the issue of Agustin's alleged failure to meet the
standards set by Alphaland as a ground for terminating employment was not proven with substantial evidence.
The NLRC correctly observed that "the record is bereft of any persuasive showing that such dissatisfaction is
real and in good faith, not feigned. How the assessment was made, who made it, and the result of such
assessment are not known. It is only on appeal that Alphaland submitted the affidavits of Mario A. Oreta and
Conrad Nicholson M. Celdran who assessed and evaluated the performance of [Agustin]. [Alphaland] offered no
explanation why such affidavits were presented only on appeal. What comes clear is that the execution of these
affidavits – more than one year from [Agustin's] termination – is just an afterthought x x x."52

Neither does the purported unsatisfactory performance of Agustin as Executive Chef fall under any of the just
causes provided in Article 297 of the Labor Code, such as gross and habitual neglect or serious misconduct and
similar offenses. For misconduct or improper behavior to be a just cause for dismissal, there must be a valid
company rule or regulation violated. As found by the labor tribunals and by the CA, the standards set by
Alphaland are too general to apprise the employee of what he is expected to do or accomplish. Expecting
Agustin "to render the highest quality of professional service and to always pursue the interest of the
company"53 falls short of the required reasonable standards to be provided by the employer in order to serve as
guidelines for the employee for purposes of evaluating his performance. Moreover, even if the standards for an
Executive Chef need not be spelled out, Agustin has not acted in a manner contrary to basic knowledge and
common sense.

Procedural due process means that the employee must be accorded due process required under Article 292(b)
of the Labor Code, the elements of which are the twin-notice rule and the employee's opportunity to be heard
and to defend himself.54 In the case of Agustin's dismissal, neither of these elements was satisfied.

Agustin's dismissal, through a Notice of Termination55 dated November 2, 2011, took effect upon
notice. Alphaland does not deny the fact that only one Notice of Termination was sent to Agustin. Without
Ꮮαwρhi৷

presenting any evidence, Alphaland also failed to discharge its burden of proving that it afforded Agustin the
opportunity to be heard and to explain himself.

Pursuant to Article 294 of the Labor Code, an illegally dismissed employee is entitled to the following reliefs: (1)
reinstatement without loss of seniority rights and other privileges; (2) full backwages, inclusive of allowances;
and (3) other benefits or their monetary equivalent.

Notably, the lower courts awarded backwages merely for the unexpired portion of Agustin's probationary
employment. The fact that Agustin did not appeal the Decision of the LA does not bar this Court from awarding
additional backwages, i.e., backwages from the time of his illegal dismissal until reinstatement as a regular
employee. Following the ruling in St. Michael's Institute, the grant of such additional backwages is "necessary in
arriving at a complete and just resolution of the case"56 and is a relief granted by substantive law which cannot
be defeated by mere procedural lapses. This award is merely a logical consequence of the finding that Agustin
was a regular employee who has been illegally dismissed by Alphaland.

Agustin is thus entitled to backwages reckoned from the time he was illegally dismissed on November 4, 2011,
with a P122,500.00 monthly salary, until his reinstatement. However, this Court finds that the award of
separation pay in lieu of reinstatement will be in the best interest of both parties. This Court recognizes the fact
that a continued relationship between Agustin and Alphaland is no longer viable due to the strained
relations57 and antagonism definitely brought about by the long lapse or passage of time that Agustin was out of
Alphaland's employment from the date of his dismissal until the final resolution of this case.58

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated September 26, 2014 and the Resolution
dated April 20, 2015 of the Court of Appeals in CA-G.R. SP No. 130198 are
hereby AFFIRMED with MODIFICATION in that Alphaland Corporation is ORDERED to pay petitioner Redentor
Y. Agustin the following:

(a) Backwages from the date he was illegally dismissed on November 4, 2011 until the finality of this
Decision; and

(b) Separation pay computed from July 6, 2011 until the finality of this Decision, at the rate of one (1)
month salary for every year of service.

The amount of P245,000.00 previously received by petitioner Redentor Y. Agustin by virtue of the Decision of
the Labor Arbiter must be deducted from the foregoing awards.

Further, Alphaland Corporation is ORDERED to pay petitioner Redentor Y. Agustin legal interest of six percent
(6%) per annum of the foregoing monetary awards computed from the finality of this Decision until full
satisfaction.59

The Labor Arbiter is hereby ORDERED to make another recomputation according to the above directives.

SO ORDERED.

Leonen, (Chairperson), Gesmundo, Lopez,* and Gaerlan, JJ., concur.

January 7, 2021

NOTICE OF JUDGMENT

Sirs/Mesdames:

Please take notice that on September 9, 2020 a Decision, copy attached hereto, was rendered by the Supreme
Court in the above-entitled case, the original of which was received by this Office on January 7, 2021 at 3:35
p.m.

Very truly yours,

(SGD.) MISAEL DOMINGO C. BATTUNG III

Division Clerk of Court

Footnotes

* Designated as additional Member per Raffle dated June 29, 2020.

1 Rollo, pp. 33-47.

2 Id. at 8-14.

3 Id. at 25-27.

4 Id. at 292-300

5 Id. at 333-335.

6 Id. at 236-247.

7 Rollo, pp. 206-208.

8 Id. at 206.

9 Id. at 85-168. Agustin submitted as evidence before the LA the kitchen organization chart and job
descriptions for each kitchen staff.

10 Id. at 169.

11 Id.

12 Id. at 227-229

13 Id. at 227.

14 Id. at 177-188.

15 Id. at 182.

16 Id.

17 Id. at 182-183.
18 Id. at 245.

19 Id. at 246.

20 Id. at 247.

21 Id.

22 Id. at 296.

23 Id. at 298.

24 Id. at 297-299.

25 Id. at 301-311.

26 Id. at 336-352.

27 Id. at 12.

28 Id. at 13.

29 Id. at 13-14.

30 Id. at 14.

31 Id.

32 Id. at 46.

33 Id. at 41-42.

34 422 Phil. 723 (2001).

35 Rollo, pp. 43-45.

36 Id. at 455-456.

37 Id. at 459.

38 Id. at 460.

39 Id.

40 Id. at 465.

41 Supra note 19.

42 Id. at 727-728

43 Id. at 729.

44 Id. at 731.

45 Id. at 735.

46 Id.

47 Rollo, p. 245.
48 Id. at 226.

49 Id. at 457-473.

50 Id. at 462.

51 Id. at 35.

52 Id. at 298.

53 Id. at 182.

54 Pascua v. NLRC, 351 Phil. 48 (1998); Manila Electric Co. v. NLRC, 506 Phil. 338 (2005); St. Luke's
Medical Center, Inc. v. Notario, 648 Phil. 258 (2010); Lima Land, Inc. v. Cuevas, 635 Phil. 36 (2010).

55 Rollo, p. 169.

56 St. Michael's Institute v. Santos, supra note 19 at 735.

57 Bordomeo v. CA, 704 Phil. 278, 300 (2013); Naranjo v. Biomedica Health Care, Inc., 695 Phil. 551,
573-574 (2012); Aliling v. Feliciano, 686 Phil. 889, 916-917 (2012); Velasco v. NLRC, 492 SCRA 686,
699 (2006); St. Luke's Medical Center, Inc. v. Notario, 648 Phil. 258, 299-300 (2010); Manila Water Co.,
Inc. v. Pena, 478 Phil. 68, 83 (2004).

58 Sanoh Fulton Philippines, Inc. v. Bernardo and Taghoy, 716 Phil. 378, 391 (2013); Blue Sky Trading
Co. v. Bias, 683 Phil. 689, 711 (2012); Abaria v. NLRC, 678 Phil. 64, 96-97 (2011); St. Luke's Medical

59 See Nacar v. Gallery Frames, 716 Phil. 267, 283 (2013).

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-7995 May 31, 1957

LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations and partnerships
adversely affected. by Republic Act No. 1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City Treasurer of
Manila, respondents.

Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for respondent Secretary of
Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent City Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.

LABRADOR, J.:

I. The case and issue, in general

This Court has before it the delicate task of passing upon the validity and constitutionality of a legislative
enactment, fundamental and far-reaching in significance. The enactment poses questions of due process, police
power and equal protection of the laws. It also poses an important issue of fact, that is whether the conditions
which the disputed law purports to remedy really or actually exist. Admittedly springing from a deep, militant, and
positive nationalistic impulse, the law purports to protect citizen and country from the alien retailer. Through it,
and within the field of economy it regulates, Congress attempts to translate national aspirations for economic
independence and national security, rooted in the drive and urge for national survival and welfare, into a
concrete and tangible measures designed to free the national retailer from the competing dominance of the
alien, so that the country and the nation may be free from a supposed economic dependence and bondage. Do
the facts and circumstances justify the enactment?

II. Pertinent provisions of Republic Act No. 1180

Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it nationalizes the retail trade
business. The main provisions of the Act are: (1) a prohibition against persons, not citizens of the Philippines,
and against associations, partnerships, or corporations the capital of which are not wholly owned by citizens of
the Philippines, from engaging directly or indirectly in the retail trade; (2) an exception from the above prohibition
in favor of aliens actually engaged in said business on May 15, 1954, who are allowed to continue to engaged
therein, unless their licenses are forfeited in accordance with the law, until their death or voluntary retirement in
case of natural persons, and for ten years after the approval of the Act or until the expiration of term in case of
juridical persons; (3) an exception therefrom in favor of citizens and juridical entities of the United States; (4) a
provision for the forfeiture of licenses (to engage in the retail business) for violation of the laws on
nationalization, control weights and measures and labor and other laws relating to trade, commerce and
industry; (5) a prohibition against the establishment or opening by aliens actually engaged in the retail business
of additional stores or branches of retail business, (6) a provision requiring aliens actually engaged in the retail
business to present for registration with the proper authorities a verified statement concerning their businesses,
giving, among other matters, the nature of the business, their assets and liabilities and their offices and principal
offices of judicial entities; and (7) a provision allowing the heirs of aliens now engaged in the retail business who
die, to continue such business for a period of six months for purposes of liquidation.

III. Grounds upon which petition is based-Answer thereto

Petitioner, for and in his own behalf and on behalf of other alien residents corporations and partnerships
adversely affected by the provisions of Republic Act. No. 1180, brought this action to obtain a judicial declaration
that said Act is unconstitutional, and to enjoin the Secretary of Finance and all other persons acting under him,
particularly city and municipal treasurers, from enforcing its provisions. Petitioner attacks the constitutionality of
the Act, contending that: (1) it denies to alien residents the equal protection of the laws and deprives of their
liberty and property without due process of law ; (2) the subject of the Act is not expressed or comprehended in
the title thereof; (3) the Act violates international and treaty obligations of the Republic of the Philippines; (4) the
provisions of the Act against the transmission by aliens of their retail business thru hereditary succession, and
those requiring 100% Filipino capitalization for a corporation or entity to entitle it to engage in the retail business,
violate the spirit of Sections 1 and 5, Article XIII and Section 8 of Article XIV of the Constitution.

In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the Act was passed in the
valid exercise of the police power of the State, which exercise is authorized in the Constitution in the interest of
national economic survival; (2) the Act has only one subject embraced in the title; (3) no treaty or international
obligations are infringed; (4) as regards hereditary succession, only the form is affected but the value of the
property is not impaired, and the institution of inheritance is only of statutory origin.

IV. Preliminary consideration of legal principles involved

a. The police power. —

There is no question that the Act was approved in the exercise of the police power, but petitioner claims that its
exercise in this instance is attended by a violation of the constitutional requirements of due process and equal
protection of the laws. But before proceeding to the consideration and resolution of the ultimate issue involved, it
would be well to bear in mind certain basic and fundamental, albeit preliminary, considerations in the
determination of the ever recurrent conflict between police power and the guarantees of due process and equal
protection of the laws. What is the scope of police power, and how are the due process and equal protection
clauses related to it? What is the province and power of the legislature, and what is the function and duty of the
courts? These consideration must be clearly and correctly understood that their application to the facts of the
case may be brought forth with clarity and the issue accordingly resolved.

It has been said the police power is so far - reaching in scope, that it has become almost impossible to limit its
sweep. As it derives its existence from the very existence of the State itself, it does not need to be expressed or
defined in its scope; it is said to be co-extensive with self-protection and survival, and as such it is the most
positive and active of all governmental processes, the most essential, insistent and illimitable. Especially is it so
under a modern democratic framework where the demands of society and of nations have multiplied to almost
unimaginable proportions; the field and scope of police power has become almost boundless, just as the fields of
public interest and public welfare have become almost all-embracing and have transcended human foresight.
Otherwise stated, as we cannot foresee the needs and demands of public interest and welfare in this constantly
changing and progressive world, so we cannot delimit beforehand the extent or scope of police power by which
and through which the State seeks to attain or achieve interest or welfare. So it is that Constitutions do not
define the scope or extent of the police power of the State; what they do is to set forth the limitations thereof.
The most important of these are the due process clause and the equal protection clause.

b. Limitations on police power. —

The basic limitations of due process and equal protection are found in the following provisions of our
Constitution:

SECTION 1.(1) No person shall be deprived of life, liberty or property without due process of law, nor
any person be denied the equal protection of the laws. (Article III, Phil. Constitution)

These constitutional guarantees which embody the essence of individual liberty and freedom in democracies,
are not limited to citizens alone but are admittedly universal in their application, without regard to any differences
of race, of color, or of nationality. (Yick Wo vs. Hopkins, 30, L. ed. 220, 226.)

c. The, equal protection clause. —

The equal protection of the law clause is against undue favor and individual or class privilege, as well as hostile
discrimination or the oppression of inequality. It is not intended to prohibit legislation, which is limited either in the
object to which it is directed or by territory within which is to operate. It does not demand absolute equality
among residents; it merely requires that all persons shall be treated alike, under like circumstances and
conditions both as to privileges conferred and liabilities enforced. The equal protection clause is not infringed by
legislation which applies only to those persons falling within a specified class, if it applies alike to all persons
within such class, and reasonable grounds exists for making a distinction between those who fall within such
class and those who do not. (2 Cooley, Constitutional Limitations, 824-825.)
d. The due process clause. —

The due process clause has to do with the reasonableness of legislation enacted in pursuance of the police
power. Is there public interest, a public purpose; is public welfare involved? Is the Act reasonably necessary for
the accomplishment of the legislature's purpose; is it not unreasonable, arbitrary or oppressive? Is there
sufficient foundation or reason in connection with the matter involved; or has there not been a capricious use of
the legislative power? Can the aims conceived be achieved by the means used, or is it not merely an unjustified
interference with private interest? These are the questions that we ask when the due process test is applied.

The conflict, therefore, between police power and the guarantees of due process and equal protection of the
laws is more apparent than real. Properly related, the power and the guarantees are supposed to coexist. The
balancing is the essence or, shall it be said, the indispensable means for the attainment of legitimate aspirations
of any democratic society. There can be no absolute power, whoever exercise it, for that would be tyranny. Yet
there can neither be absolute liberty, for that would mean license and anarchy. So the State can deprive persons
of life, liberty and property, provided there is due process of law; and persons may be classified into classes and
groups, provided everyone is given the equal protection of the law. The test or standard, as always, is reason.
The police power legislation must be firmly grounded on public interest and welfare, and a reasonable relation
must exist between purposes and means. And if distinction and classification has been made, there must be a
reasonable basis for said distinction.

e. Legislative discretion not subject to judicial review. —

Now, in this matter of equitable balancing, what is the proper place and role of the courts? It must not be
overlooked, in the first place, that the legislature, which is the constitutional repository of police power and
exercises the prerogative of determining the policy of the State, is by force of circumstances primarily the judge
of necessity, adequacy or reasonableness and wisdom, of any law promulgated in the exercise of the police
power, or of the measures adopted to implement the public policy or to achieve public interest. On the other
hand, courts, although zealous guardians of individual liberty and right, have nevertheless evinced a reluctance
to interfere with the exercise of the legislative prerogative. They have done so early where there has been a
clear, patent or palpable arbitrary and unreasonable abuse of the legislative prerogative. Moreover, courts are
not supposed to override legitimate policy, and courts never inquire into the wisdom of the law.

V. Economic problems sought to be remedied

With the above considerations in mind, we will now proceed to delve directly into the issue involved. If the
disputed legislation were merely a regulation, as its title indicates, there would be no question that it falls within
the legitimate scope of legislative power. But it goes further and prohibits a group of residents, the aliens, from
engaging therein. The problem becomes more complex because its subject is a common, trade or occupation,
as old as society itself, which from the immemorial has always been open to residents, irrespective of race, color
or citizenship.

a. Importance of retail trade in the economy of the nation. —

In a primitive economy where families produce all that they consume and consume all that they produce, the
dealer, of course, is unknown. But as group life develops and families begin to live in communities producing
more than what they consume and needing an infinite number of things they do not produce, the dealer comes
into existence. As villages develop into big communities and specialization in production begins, the dealer's
importance is enhanced. Under modern conditions and standards of living, in which man's needs have multiplied
and diversified to unlimited extents and proportions, the retailer comes as essential as the producer, because
thru him the infinite variety of articles, goods and needed for daily life are placed within the easy reach of
consumers. Retail dealers perform the functions of capillaries in the human body, thru which all the needed food
and supplies are ministered to members of the communities comprising the nation.

There cannot be any question about the importance of the retailer in the life of the community. He ministers to
the resident's daily needs, food in all its increasing forms, and the various little gadgets and things needed for
home and daily life. He provides his customers around his store with the rice or corn, the fish, the salt, the
vinegar, the spices needed for the daily cooking. He has cloths to sell, even the needle and the thread to sew
them or darn the clothes that wear out. The retailer, therefore, from the lowly peddler, the owner of a small sari-
sari store, to the operator of a department store or, a supermarket is so much a part of day-to-day existence.

b. The alien retailer's trait. —

The alien retailer must have started plying his trades in this country in the bigger centers of population (Time
there was when he was unknown in provincial towns and villages). Slowly but gradually be invaded towns and
villages; now he predominates in the cities and big centers of population. He even pioneers, in far away nooks
where the beginnings of community life appear, ministering to the daily needs of the residents and purchasing
their agricultural produce for sale in the towns. It is an undeniable fact that in many communities the alien has
replaced the native retailer. He has shown in this trade, industry without limit, and the patience and forbearance
of a slave.

Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of ill-bred and insolent
neighbors and customers are made in his face, but he heeds them not, and he forgets and forgives. The
community takes note of him, as he appears to be harmless and extremely useful.

c. Alleged alien control and dominance. —

There is a general feeling on the part of the public, which appears to be true to fact, about the controlling and
dominant position that the alien retailer holds in the nation's economy. Food and other essentials, clothing,
almost all articles of daily life reach the residents mostly through him. In big cities and centers of population he
has acquired not only predominance, but apparent control over distribution of almost all kinds of goods, such as
lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of other goods and articles. And
were it not for some national corporations like the Naric, the Namarco, the Facomas and the Acefa, his control
over principal foods and products would easily become full and complete.

Petitioner denies that there is alien predominance and control in the retail trade. In one breath it is said that the
fear is unfounded and the threat is imagined; in another, it is charged that the law is merely the result of
radicalism and pure and unabashed nationalism. Alienage, it is said, is not an element of control; also so many
unmanageable factors in the retail business make control virtually impossible. The first argument which brings
up an issue of fact merits serious consideration. The others are matters of opinion within the exclusive
competence of the legislature and beyond our prerogative to pass upon and decide.

The best evidence are the statistics on the retail trade, which put down the figures in black and white. Between
the constitutional convention year (1935), when the fear of alien domination and control of the retail trade
already filled the minds of our leaders with fears and misgivings, and the year of the enactment of the
nationalization of the retail trade act (1954), official statistics unmistakably point out to the ever-increasing
dominance and control by the alien of the retail trade, as witness the following tables:

Assets Gross Sales

Year and
No.- Per cent Per cent
Retailers Pesos Pesos
Establishments Distribution Distribution
Nationality
1941:
Filipino 106,671 200,323,138 55.82 174,181,924 51.74
..........
Chinese 15,356 118,348,692 32.98 148,813,239 44.21
...........
Others 1,646 40,187,090 11.20 13,630,239 4.05
............
1947:
Filipino 111,107 208,658,946 65.05 279,583,333 57.03
..........
Chinese 13,774 106,156,218 33.56 205,701,134 41.96
...........
Others 354 8,761,260 .49 4,927,168 1.01
...........
1948: (Census)
Filipino 113,631 213,342,264 67.30 467,161,667 60.51
..........
 Chinese 12,087 93,155,459 29.38 294,894,227 38.20
..........
Others 422 10,514,675 3.32 9,995,402 1.29
..........
1949:
Filipino 113,659 213,451,602 60.89 462,532,901 53.47
..........
Chinese 16,248 125,223,336 35.72 392,414,875 45.36
..........
Others 486 12,056,365 3.39 10,078,364 1.17
..........
1951:
Filipino 119,352 224,053,620 61.09 466,058,052 53.07
.........
Chinese 17,429 134,325,303 36.60 404,481,384 46.06
..........
Others 347 8,614,025 2.31 7,645,327 87
..........

AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT

Item Gross
Year and Retailer's
Assets Sales
Nationality
(Pesos) (Pesos)

1941:

Filipino ............................................. 1,878 1,633

Chinese 7,707 9,691

..............................................

Others 24,415 8,281

...............................................

1947:

Filipino ............................................. 1,878 2,516

Chinese ........................................... 7,707 14,934

Others .............................................. 24,749 13,919

1948: (Census)

Filipino ............................................. 1,878 4,111

Chinese 7,707 24,398

.............................................

Others .............................................. 24,916 23,686

1949:

Filipino ............................................. 1,878 4,069

 Chinese 7,707 24,152
..............................................

Others .............................................. 24,807 20,737

1951:

Filipino ............................................. 1,877 3,905

Chinese 7,707 33,207

.............................................

Others 24,824 22,033

...............................................

(Estimated Assets and Gross Sales of Retail Establishments, By Year and Nationality of Owners,
Benchmark: 1948 Census, issued by the Bureau of Census and Statistics, Department of Commerce
and Industry; pp. 18-19 of Answer.)

The above statistics do not include corporations and partnerships, while the figures on Filipino establishments
already include mere market vendors, whose capital is necessarily small..

The above figures reveal that in percentage distribution of assests and gross sales, alien participation has
steadily increased during the years. It is true, of course, that Filipinos have the edge in the number of retailers,
but aliens more than make up for the numerical gap through their assests and gross sales which average
between six and seven times those of the very many Filipino retailers. Numbers in retailers, here, do not imply
superiority; the alien invests more capital, buys and sells six to seven times more, and gains much more. The
same official report, pointing out to the known predominance of foreign elements in the retail trade, remarks that
the Filipino retailers were largely engaged in minor retailer enterprises. As observed by respondents, the native
investment is thinly spread, and the Filipino retailer is practically helpless in matters of capital, credit, price and
supply.

d. Alien control and threat, subject of apprehension in Constitutional convention. —

It is this domination and control, which we believe has been sufficiently shown to exist, that is the legislature's
target in the enactment of the disputed nationalization would never have been adopted. The framers of our
Constitution also believed in the existence of this alien dominance and control when they approved a resolution
categorically declaring among other things, that "it is the sense of the Convention that the public interest requires
the nationalization of the retail trade; . . . ." (II Aruego, The Framing of the Philippine Constitution, 662-663,
quoted on page 67 of Petitioner.) That was twenty-two years ago; and the events since then have not been
either pleasant or comforting. Dean Sinco of the University of the Philippines College of Law, commenting on the
patrimony clause of the Preamble opines that the fathers of our Constitution were merely translating the general
preoccupation of Filipinos "of the dangers from alien interests that had already brought under their control the
commercial and other economic activities of the country" (Sinco, Phil. Political Law, 10th ed., p. 114); and
analyzing the concern of the members of the constitutional convention for the economic life of the citizens, in
connection with the nationalistic provisions of the Constitution, he says:

But there has been a general feeling that alien dominance over the economic life of the country is not
desirable and that if such a situation should remain, political independence alone is no guarantee to
national stability and strength. Filipino private capital is not big enough to wrest from alien hands the
control of the national economy. Moreover, it is but of recent formation and hence, largely inexperienced,
timid and hesitant. Under such conditions, the government as the instrumentality of the national will, has
to step in and assume the initiative, if not the leadership, in the struggle for the economic freedom of the
nation in somewhat the same way that it did in the crusade for political freedom. Thus . . . it (the
Constitution) envisages an organized movement for the protection of the nation not only against the
possibilities of armed invasion but also against its economic subjugation by alien interests in the
economic field. (Phil. Political Law by Sinco, 10th ed., p. 476.)

Belief in the existence of alien control and predominance is felt in other quarters. Filipino businessmen,
manufacturers and producers believe so; they fear the dangers coming from alien control, and they express
sentiments of economic independence. Witness thereto is Resolution No. 1, approved on July 18, 1953, of the
Fifth National convention of Filipino Businessmen, and a similar resolution, approved on March 20, 1954, of the
Second National Convention of Manufacturers and Producers. The man in the street also believes, and fears,
alien predominance and control; so our newspapers, which have editorially pointed out not only to control but to
alien stranglehold. We, therefore, find alien domination and control to be a fact, a reality proved by official
statistics, and felt by all the sections and groups that compose the Filipino community.

e. Dangers of alien control and dominance in retail. —

But the dangers arising from alien participation in the retail trade does not seem to lie in the predominance
alone; there is a prevailing feeling that such predominance may truly endanger the national interest. With ample
capital, unity of purpose and action and thorough organization, alien retailers and merchants can act in such
complete unison and concert on such vital matters as the fixing of prices, the determination of the amount of
goods or articles to be made available in the market, and even the choice of the goods or articles they would or
would not patronize or distribute, that fears of dislocation of the national economy and of the complete
subservience of national economy and of the consuming public are not entirely unfounded. Nationals, producers
and consumers alike can be placed completely at their mercy. This is easily illustrated. Suppose an article of
daily use is desired to be prescribed by the aliens, because the producer or importer does not offer them
sufficient profits, or because a new competing article offers bigger profits for its introduction. All that aliens would
do is to agree to refuse to sell the first article, eliminating it from their stocks, offering the new one as a
substitute. Hence, the producers or importers of the prescribed article, or its consumers, find the article suddenly
out of the prescribed article, or its consumers, find the article suddenly out of circulation. Freedom of trade is
thus curtailed and free enterprise correspondingly suppressed.

We can even go farther than theoretical illustrations to show the pernicious influences of alien domination. Grave
abuses have characterized the exercise of the retail trade by aliens. It is a fact within judicial notice, which courts
of justice may not properly overlook or ignore in the interests of truth and justice, that there exists a general
feeling on the part of the public that alien participation in the retail trade has been attended by a pernicious and
intolerable practices, the mention of a few of which would suffice for our purposes; that at some time or other
they have cornered the market of essential commodities, like corn and rice, creating artificial scarcities to justify
and enhance profits to unreasonable proportions; that they have hoarded essential foods to the inconvenience
and prejudice of the consuming public, so much so that the Government has had to establish the National Rice
and Corn Corporation to save the public from their continuous hoarding practices and tendencies; that they have
violated price control laws, especially on foods and essential commodities, such that the legislature had to enact
a law (Sec. 9, Republic Act No. 1168), authorizing their immediate and automatic deportation for price control
convictions; that they have secret combinations among themselves to control prices, cheating the operation of
the law of supply and demand; that they have connived to boycott honest merchants and traders who would not
cater or yield to their demands, in unlawful restraint of freedom of trade and enterprise. They are believed by the
public to have evaded tax laws, smuggled goods and money into and out of the land, violated import and export
prohibitions, control laws and the like, in derision and contempt of lawful authority. It is also believed that they
have engaged in corrupting public officials with fabulous bribes, indirectly causing the prevalence of graft and
corruption in the Government. As a matter of fact appeals to unscrupulous aliens have been made both by the
Government and by their own lawful diplomatic representatives, action which impliedly admits a prevailing
feeling about the existence of many of the above practices.

The circumstances above set forth create well founded fears that worse things may come in the future. The
present dominance of the alien retailer, especially in the big centers of population, therefore, becomes a
potential source of danger on occasions of war or other calamity. We do not have here in this country isolated
groups of harmless aliens retailing goods among nationals; what we have are well organized and powerful
groups that dominate the distribution of goods and commodities in the communities and big centers of
population. They owe no allegiance or loyalty to the State, and the State cannot rely upon them in times of crisis
or emergency. While the national holds his life, his person and his property subject to the needs of his country,
the alien may even become the potential enemy of the State.

f. Law enacted in interest of national economic survival and security. —

We are fully satisfied upon a consideration of all the facts and circumstances that the disputed law is not the
product of racial hostility, prejudice or discrimination, but the expression of the legitimate desire and
determination of the people, thru their authorized representatives, to free the nation from the economic situation
that has unfortunately been saddled upon it rightly or wrongly, to its disadvantage. The law is clearly in the
interest of the public, nay of the national security itself, and indisputably falls within the scope of police power,
thru which and by which the State insures its existence and security and the supreme welfare of its citizens.

VI. The Equal Protection Limitation

a. Objections to alien participation in retail trade. — The next question that now poses solution is, Does the law
deny the equal protection of the laws? As pointed out above, the mere fact of alienage is the root and cause of
the distinction between the alien and the national as a trader. The alien resident owes allegiance to the country
of his birth or his adopted country; his stay here is for personal convenience; he is attracted by the lure of gain
and profit. His aim or purpose of stay, we admit, is neither illegitimate nor immoral, but he is naturally lacking in
that spirit of loyalty and enthusiasm for this country where he temporarily stays and makes his living, or of that
spirit of regard, sympathy and consideration for his Filipino customers as would prevent him from taking
advantage of their weakness and exploiting them. The faster he makes his pile, the earlier can the alien go back
to his beloved country and his beloved kin and countrymen. The experience of the country is that the alien
retailer has shown such utter disregard for his customers and the people on whom he makes his profit, that it
has been found necessary to adopt the legislation, radical as it may seem.

Another objection to the alien retailer in this country is that he never really makes a genuine contribution to
national income and wealth. He undoubtedly contributes to general distribution, but the gains and profits he
makes are not invested in industries that would help the country's economy and increase national wealth. The
alien's interest in this country being merely transient and temporary, it would indeed be ill-advised to continue
entrusting the very important function of retail distribution to his hands.

The practices resorted to by aliens in the control of distribution, as already pointed out above, their secret
manipulations of stocks of commodities and prices, their utter disregard of the welfare of their customers and of
the ultimate happiness of the people of the nation of which they are mere guests, which practices, manipulations
and disregard do not attend the exercise of the trade by the nationals, show the existence of real and actual,
positive and fundamental differences between an alien and a national which fully justify the legislative
classification adopted in the retail trade measure. These differences are certainly a valid reason for the State to
prefer the national over the alien in the retail trade. We would be doing violence to fact and reality were we to
hold that no reason or ground for a legitimate distinction can be found between one and the other.

b. Difference in alien aims and purposes sufficient basis for distinction. —

The above objectionable characteristics of the exercise of the retail trade by the aliens, which are actual and
real, furnish sufficient grounds for legislative classification of retail traders into nationals and aliens. Some may
disagree with the wisdom of the legislature's classification. To this we answer, that this is the prerogative of the
law-making power. Since the Court finds that the classification is actual, real and reasonable, and all persons of
one class are treated alike, and as it cannot be said that the classification is patently unreasonable and
unfounded, it is in duty bound to declare that the legislature acted within its legitimate prerogative and it can not
declare that the act transcends the limit of equal protection established by the Constitution.

Broadly speaking, the power of the legislature to make distinctions and classifications among persons is not
curtailed or denied by the equal protection of the laws clause. The legislative power admits of a wide scope of
discretion, and a law can be violative of the constitutional limitation only when the classification is without
reasonable basis. In addition to the authorities we have earlier cited, we can also refer to the case of Linsey vs.
Natural Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined the application of equal
protection clause to a law sought to be voided as contrary thereto:

. . . . "1. The equal protection clause of the Fourteenth Amendment does not take from the state the
power to classify in the adoption of police laws, but admits of the exercise of the wide scope of discretion
in that regard, and avoids what is done only when it is without any reasonable basis, and therefore is
purely arbitrary. 2. A classification having some reasonable basis does not offend against that clause
merely because it is not made with mathematical nicety, or because in practice it results in some
inequality. 3. When the classification in such a law is called in question, if any state of facts reasonably
can be conceived that would sustain it, the existence of that state of facts at the time the law was
enacted must be assumed. 4. One who assails the classification in such a law must carry the burden of
showing that it does not rest upon any reasonable basis but is essentially arbitrary."

c. Authorities recognizing citizenship as basis for classification. —

The question as to whether or not citizenship is a legal and valid ground for classification has already been
affirmatively decided in this jurisdiction as well as in various courts in the United States. In the case of Smith Bell
& Co. vs. Natividad, 40 Phil. 136, where the validity of Act No. 2761 of the Philippine Legislature was in issue,
because of a condition therein limiting the ownership of vessels engaged in coastwise trade to corporations
formed by citizens of the Philippine Islands or the United States, thus denying the right to aliens, it was held that
the Philippine Legislature did not violate the equal protection clause of the Philippine Bill of Rights. The
legislature in enacting the law had as ultimate purpose the encouragement of Philippine shipbuilding and the
safety for these Islands from foreign interlopers. We held that this was a valid exercise of the police power, and
all presumptions are in favor of its constitutionality. In substance, we held that the limitation of domestic
ownership of vessels engaged in coastwise trade to citizens of the Philippines does not violate the equal
protection of the law and due process or law clauses of the Philippine Bill of Rights. In rendering said decision
we quoted with approval the concurring opinion of Justice Johnson in the case of Gibbons vs. Ogden, 9 Wheat.,
I, as follows:

"Licensing acts, in fact, in legislation, are universally restraining acts; as, for example, acts licensing
gaming houses, retailers of spirituous liquors, etc. The act, in this instance, is distinctly of that character,
and forms part of an extensive system, the object of which is to encourage American shipping, and place
them on an equal footing with the shipping of other nations. Almost every commercial nation reserves to
its own subjects a monopoly of its coasting trade; and a countervailing privilege in favor of American
shipping is contemplated, in the whole legislation of the United States on this subject. It is not to give the
vessel an American character, that the license is granted; that effect has been correctly attributed to the
act of her enrollment. But it is to confer on her American privileges, as contra distinguished from foreign;
and to preserve the Government from fraud by foreigners; in surreptitiously intruding themselves into the
American commercial marine, as well as frauds upon the revenue in the trade coastwise, that this whole
system is projected."

The rule in general is as follows:

Aliens are under no special constitutional protection which forbids a classification otherwise justified
simply because the limitation of the class falls along the lines of nationality. That would be requiring a
higher degree of protection for aliens as a class than for similar classes than for similar classes of
American citizens. Broadly speaking, the difference in status between citizens and aliens constitutes a
basis for reasonable classification in the exercise of police power. (2 Am., Jur. 468-469.)

In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the licensing of hawkers and
peddlers, which provided that no one can obtain a license unless he is, or has declared his intention, to become
a citizen of the United States, was held valid, for the following reason: It may seem wise to the legislature to limit
the business of those who are supposed to have regard for the welfare, good order and happiness of the
community, and the court cannot question this judgment and conclusion. In Bloomfield vs. State, 99 N. E. 309
(Ohio, 1912), a statute which prevented certain persons, among them aliens, from engaging in the traffic of
liquors, was found not to be the result of race hatred, or in hospitality, or a deliberate purpose to discriminate, but
was based on the belief that an alien cannot be sufficiently acquainted with "our institutions and our life as to
enable him to appreciate the relation of this particular business to our entire social fabric", and was not,
therefore, invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115 (1926), the U.S. Supreme
Court had under consideration an ordinance of the city of Cincinnati prohibiting the issuance of licenses (pools
and billiard rooms) to aliens. It held that plainly irrational discrimination against aliens is prohibited, but it does
not follow that alien race and allegiance may not bear in some instances such a relation to a legitimate object of
legislation as to be made the basis of permitted classification, and that it could not state that the legislation is
clearly wrong; and that latitude must be allowed for the legislative appraisement of local conditions and for the
legislative choice of methods for controlling an apprehended evil. The case of State vs. Carrol, 124 N. E. 129
(Ohio, 1919) is a parallel case to the one at bar. In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922),
the business of pawn brooking was considered as having tendencies injuring public interest, and limiting it to
citizens is within the scope of police power. A similar statute denying aliens the right to engage in auctioneering
was also sustained in Wright vs. May, L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs. Van Winkle,
297 F. 340 (Oregon, 1924), the court said that aliens are judicially known to have different interests, knowledge,
attitude, psychology and loyalty, hence the prohibitions of issuance of licenses to them for the business of
pawnbroker, pool, billiard, card room, dance hall, is not an infringement of constitutional rights. In Templar vs.
Michigan State Board of Examiners, 90 N.W. 1058 (Michigan, 1902), a law prohibiting the licensing of aliens as
barbers was held void, but the reason for the decision was the court's findings that the exercise of the business
by the aliens does not in any way affect the morals, the health, or even the convenience of the community.
In Takahashi vs. Fish and Game Commission, 92 L. ed. 1479 (1947), a California statute banning the issuance
of commercial fishing licenses to person ineligible to citizenship was held void, because the law conflicts with
Federal power over immigration, and because there is no public interest in the mere claim of ownership of the
waters and the fish in them, so there was no adequate justification for the discrimination. It further added that the
law was the outgrowth of antagonism toward the persons of Japanese ancestry. However, two Justices
dissented on the theory that fishing rights have been treated traditionally as natural resources. In Fraser vs.
McConway & Tarley Co., 82 Fed. 257 (Pennsylvania, 1897), a state law which imposed a tax on every employer
of foreign-born unnaturalized male persons over 21 years of age, was declared void because the court found
that there was no reason for the classification and the tax was an arbitrary deduction from the daily wage of an
employee.

d. Authorities contra explained. —

It is true that some decisions of the Federal court and of the State courts in the United States hold that the
distinction between aliens and citizens is not a valid ground for classification. But in this decision the laws
declared invalid were found to be either arbitrary, unreasonable or capricious, or were the result or product of
racial antagonism and hostility, and there was no question of public interest involved or pursued. In Yu Cong
Eng vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme Court declared invalid a Philippine law
making unlawful the keeping of books of account in any language other than English, Spanish or any other local
dialect, but the main reasons for the decisions are: (1) that if Chinese were driven out of business there would be
no other system of distribution, and (2) that the Chinese would fall prey to all kinds of fraud, because they would
be deprived of their right to be advised of their business and to direct its conduct. The real reason for the
decision, therefore, is the court's belief that no public benefit would be derived from the operations of the law and
on the other hand it would deprive Chinese of something indispensable for carrying on their business. In Yick
Wo vs. Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on officials to withhold consent in the
operation of laundries both as to persons and place, was declared invalid, but the court said that the power
granted was arbitrary, that there was no reason for the discrimination which attended the administration and
implementation of the law, and that the motive thereof was mere racial hostility. In State vs. Montgomery, 47 A.
165 (Maine, 1900), a law prohibiting aliens to engage as hawkers and peddlers was declared void, because the
discrimination bore no reasonable and just relation to the act in respect to which the classification was proposed.

The case at bar is radically different, and the facts make them so. As we already have said, aliens do not
naturally possess the sympathetic consideration and regard for the customers with whom they come in daily
contact, nor the patriotic desire to help bolster the nation's economy, except in so far as it enhances their profit,
nor the loyalty and allegiance which the national owes to the land. These limitations on the qualifications of the
aliens have been shown on many occasions and instances, especially in times of crisis and emergency. We can
do no better than borrow the language of Anton vs. Van Winkle, 297 F. 340, 342, to drive home the reality and
significance of the distinction between the alien and the national, thus:

. . . . It may be judicially known, however, that alien coming into this country are without the intimate
knowledge of our laws, customs, and usages that our own people have. So it is likewise known that
certain classes of aliens are of different psychology from our fellow countrymen. Furthermore, it is natural
and reasonable to suppose that the foreign born, whose allegiance is first to their own country, and
whose ideals of governmental environment and control have been engendered and formed under
entirely different regimes and political systems, have not the same inspiration for the public weal, nor are
they as well disposed toward the United States, as those who by citizenship, are a part of the
government itself. Further enlargement, is unnecessary. I have said enough so that obviously it cannot
be affirmed with absolute confidence that the Legislature was without plausible reason for making the
classification, and therefore appropriate discriminations against aliens as it relates to the subject of
legislation. . . . .

VII. The Due Process of Law Limitation.

a. Reasonability, the test of the limitation; determination by legislature decisive. —

We now come to due process as a limitation on the exercise of the police power. It has been stated by the
highest authority in the United States that:

. . . . And the guaranty of due process, as has often been held, demands only that the law shall not be
unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial
relation to the subject sought to be attained. . . . .

xxx xxx xxx

So far as the requirement of due process is concerned and in the absence of other constitutional
restriction a state is free to adopt whatever economic policy may reasonably be deemed to promote
public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without
authority either to declare such policy, or, when it is declared by the legislature, to override it. If the laws
passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary
 nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect
renders a court functus officio. . . . (Nebbia vs. New York, 78 L. ed. 940, 950, 957.)

Another authority states the principle thus:

. . . . Too much significance cannot be given to the word "reasonable" in considering the scope of the
police power in a constitutional sense, for the test used to determine the constitutionality of the means
employed by the legislature is to inquire whether the restriction it imposes on rights secured to
individuals by the Bill of Rights are unreasonable, and not whether it imposes any restrictions on such
rights. . . .

xxx xxx xxx

. . . . A statute to be within this power must also be reasonable in its operation upon the persons whom it
affects, must not be for the annoyance of a particular class, and must not be unduly oppressive. (11 Am.
Jur. Sec. 302., 1:1)- 1074-1075.)

In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:

. . . . 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. . . .

Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of constitutionality:

In determining whether a given act of the Legislature, passed in the exercise of the police power to
regulate the operation of a business, is or is not constitutional, one of the first questions to be considered
by the court is whether the power as exercised has a sufficient foundation in reason in connection with
the matter involved, or is an arbitrary, oppressive, and capricious use of that power, without substantial
relation to the health, safety, morals, comfort, and general welfare of the public.

b. Petitioner's argument considered. —

Petitioner's main argument is that retail is a common, ordinary occupation, one of those privileges long ago
recognized as essential to the orderly pursuant of happiness by free men; that it is a gainful and honest
occupation and therefore beyond the power of the legislature to prohibit and penalized. This arguments
overlooks fact and reality and rests on an incorrect assumption and premise, i.e., that in this country where the
occupation is engaged in by petitioner, it has been so engaged by him, by the alien in an honest creditable and
unimpeachable manner, without harm or injury to the citizens and without ultimate danger to their economic
peace, tranquility and welfare. But the Legislature has found, as we have also found and indicated, that the
privilege has been so grossly abused by the alien, thru the illegitimate use of pernicious designs and practices,
that he now enjoys a monopolistic control of the occupation and threatens a deadly stranglehold on the nation's
economy endangering the national security in times of crisis and emergency.

The real question at issue, therefore, is not that posed by petitioner, which overlooks and ignores the facts and
circumstances, but this, Is the exclusion in the future of aliens from the retail trade unreasonable. Arbitrary
capricious, taking into account the illegitimate and pernicious form and manner in which the aliens have
heretofore engaged therein? As thus correctly stated the answer is clear. The law in question is deemed
absolutely necessary to bring about the desired legislative objective, i.e., to free national economy from alien
control and dominance. It is not necessarily unreasonable because it affects private rights and privileges (11 Am.
Jur. pp. 1080-1081.) The test of reasonableness of a law is the appropriateness or adequacy under all
circumstances of the means adopted to carry out its purpose into effect (Id.) Judged by this test, disputed
legislation, which is not merely reasonable but actually necessary, must be considered not to have infringed the
constitutional limitation of reasonableness.

The necessity of the law in question is explained in the explanatory note that accompanied the bill, which later
was enacted into law:

This bill proposes to regulate the retail business. Its purpose is to prevent persons who are not citizens
of the Philippines from having a strangle hold upon our economic life. If the persons who control this vital
 artery of our economic life are the ones who owe no allegiance to this Republic, who have no profound
devotion to our free institutions, and who have no permanent stake in our people's welfare, we are not
really the masters of our destiny. All aspects of our life, even our national security, will be at the mercy of
other people.

In seeking to accomplish the foregoing purpose, we do not propose to deprive persons who are not
citizens of the Philippines of their means of livelihood. While this bill seeks to take away from the hands
of persons who are not citizens of the Philippines a power that can be wielded to paralyze all aspects of
our national life and endanger our national security it respects existing rights.

The approval of this bill is necessary for our national survival.

If political independence is a legitimate aspiration of a people, then economic independence is none the less
legitimate. Freedom and liberty are not real and positive if the people are subject to the economic control and
domination of others, especially if not of their own race or country. The removal and eradication of the shackles
of foreign economic control and domination, is one of the noblest motives that a national legislature may pursue.
It is impossible to conceive that legislation that seeks to bring it about can infringe the constitutional limitation of
due process. The attainment of a legitimate aspiration of a people can never be beyond the limits of legislative
authority.

c. Law expressly held by Constitutional Convention to be within the sphere of legislative action. —

The framers of the Constitution could not have intended to impose the constitutional restrictions of due process
on the attainment of such a noble motive as freedom from economic control and domination, thru the exercise of
the police power. The fathers of the Constitution must have given to the legislature full authority and power to
enact legislation that would promote the supreme happiness of the people, their freedom and liberty. On the
precise issue now before us, they expressly made their voice clear; they adopted a resolution expressing their
belief that the legislation in question is within the scope of the legislative power. Thus they declared the their
Resolution:

That it is the sense of the Convention that the public interest requires the nationalization of retail trade;
but it abstain from approving the amendment introduced by the Delegate for Manila, Mr. Araneta, and
others on this matter because it is convinced that the National Assembly is authorized to promulgate a
law which limits to Filipino and American citizens the privilege to engage in the retail trade. (11 Aruego,
The Framing of the Philippine Constitution, quoted on pages 66 and 67 of the Memorandum for the
Petitioner.)

It would do well to refer to the nationalistic tendency manifested in various provisions of the Constitution. Thus in
the preamble, a principle objective is the conservation of the patrimony of the nation and as corollary the
provision limiting to citizens of the Philippines the exploitation, development and utilization of its natural
resources. And in Section 8 of Article XIV, it is provided that "no franchise, certificate, or any other form of
authorization for the operation of the public utility shall be granted except to citizens of the Philippines." The
nationalization of the retail trade is only a continuance of the nationalistic protective policy laid down as a primary
objective of the Constitution. Can it be said that a law imbued with the same purpose and spirit underlying many
of the provisions of the Constitution is unreasonable, invalid and unconstitutional?

The seriousness of the Legislature's concern for the plight of the nationals as manifested in the approval of the
radical measures is, therefore, fully justified. It would have been recreant to its duties towards the country and its
people would it view the sorry plight of the nationals with the complacency and refuse or neglect to adopt a
remedy commensurate with the demands of public interest and national survival. As the repository of the
sovereign power of legislation, the Legislature was in duty bound to face the problem and meet, through
adequate measures, the danger and threat that alien domination of retail trade poses to national economy.

d. Provisions of law not unreasonable. —

A cursory study of the provisions of the law immediately reveals how tolerant, how reasonable the Legislature
has been. The law is made prospective and recognizes the right and privilege of those already engaged in the
occupation to continue therein during the rest of their lives; and similar recognition of the right to continue is
accorded associations of aliens. The right or privilege is denied to those only upon conviction of certain offenses.
In the deliberations of the Court on this case, attention was called to the fact that the privilege should not have
been denied to children and heirs of aliens now engaged in the retail trade. Such provision would defeat the law
itself, its aims and purposes. Beside, the exercise of legislative discretion is not subject to judicial review. It is
well settled that the Court will not inquire into the motives of the Legislature, nor pass upon general matters of
legislative judgment. The Legislature is primarily the judge of the necessity of an enactment or of any of its
provisions, and every presumption is in favor of its validity, and though the Court may hold views inconsistent
with the wisdom of the law, it may not annul the legislation if not palpably in excess of the legislative power.
Furthermore, the test of the validity of a law attacked as a violation of due process, is not its reasonableness, but
its unreasonableness, and we find the provisions are not unreasonable. These principles also answer various
other arguments raised against the law, some of which are: that the law does not promote general welfare; that
thousands of aliens would be thrown out of employment; that prices will increase because of the elimination of
competition; that there is no need for the legislation; that adequate replacement is problematical; that there may
be general breakdown; that there would be repercussions from foreigners; etc. Many of these arguments are
directed against the supposed wisdom of the law which lies solely within the legislative prerogative; they do not
import invalidity.

VIII. Alleged defect in the title of the law

A subordinate ground or reason for the alleged invalidity of the law is the claim that the title thereof is misleading
or deceptive, as it conceals the real purpose of the bill which is to nationalize the retail business and prohibit
aliens from engaging therein. The constitutional provision which is claimed to be violated in Section 21 (1) of
Article VI, which reads:

No bill which may be enacted in the law shall embrace more than one subject which shall be expressed
in the title of the bill.

What the above provision prohibits is duplicity, that is, if its title completely fails to appraise the legislators or the
public of the nature, scope and consequences of the law or its operation (I Sutherland, Statutory Construction,
Sec. 1707, p. 297.) A cursory consideration of the title and the provisions of the bill fails to show the presence of
duplicity. It is true that the term "regulate" does not and may not readily and at first glance convey the idea of
"nationalization" and "prohibition", which terms express the two main purposes and objectives of the law. But
"regulate" is a broader term than either prohibition or nationalization. Both of these have always been included
within the term regulation.

Under the title of an act to "regulate", the sale of intoxicating liquors, the Legislature may prohibit the sale
of intoxicating liquors. (Sweet vs. City of Wabash, 41 Ind., 7; quoted in page 41 of Answer.)

Within the meaning of the Constitution requiring that the subject of every act of the Legislature shall be
stated in the tale, the title to regulate the sale of intoxicating liquors, etc." sufficiently expresses the
subject of an act prohibiting the sale of such liquors to minors and to persons in the habit of getting
intoxicated; such matters being properly included within the subject of regulating the sale. (Williams vs.
State, 48 Ind. 306, 308, quoted in p. 42 of Answer.)

The word "regulate" is of broad import, and necessarily implies some degree of restraint and prohibition
of acts usually done in connection with the thing to be regulated. While word regulate does not ordinarily
convey meaning of prohibit, there is no absolute reason why it should not have such meaning when used
in delegating police power in connection with a thing the best or only efficacious regulation of which
involves suppression. (State vs. Morton, 162 So. 718, 182 La. 887, quoted in p. 42 of Answer.)

The general rule is for the use of general terms in the title of a bill; it has also been said that the title need not be
an index to the entire contents of the law (I Sutherland, Statutory Construction, See. 4803, p. 345.) The above
rule was followed the title of the Act in question adopted the more general term "regulate" instead of "nationalize"
or "prohibit". Furthermore, the law also contains other rules for the regulation of the retail trade which may not be
included in the terms "nationalization" or "prohibition"; so were the title changed from "regulate" to "nationalize"
or "prohibit", there would have been many provisions not falling within the scope of the title which would have
made the Act invalid. The use of the term "regulate", therefore, is in accord with the principle governing the
drafting of statutes, under which a simple or general term should be adopted in the title, which would include all
other provisions found in the body of the Act.

One purpose of the constitutional directive that the subject of a bill should be embraced in its title is to apprise
the legislators of the purposes, the nature and scope of its provisions, and prevent the enactment into law of
matters which have received the notice, action and study of the legislators or of the public. In the case at bar it
cannot be claimed that the legislators have been appraised of the nature of the law, especially the
nationalization and the prohibition provisions. The legislators took active interest in the discussion of the law, and
a great many of the persons affected by the prohibitions in the law conducted a campaign against its approval. It
cannot be claimed, therefore, that the reasons for declaring the law invalid ever existed. The objection must
therefore, be overruled.

IX. Alleged violation of international treaties and obligations

Another subordinate argument against the validity of the law is the supposed violation thereby of the Charter of
the United Nations and of the Declaration of the Human Rights adopted by the United Nations General
Assembly. We find no merit in the Nations Charter imposes no strict or legal obligations regarding the rights and
freedom of their subjects (Hans Kelsen, The Law of the United Nations, 1951 ed. pp. 29-32), and the Declaration
of Human Rights contains nothing more than a mere recommendation or a common standard of achievement for
all peoples and all nations (Id. p. 39.) That such is the import of the United Nations Charter aid of the Declaration
of Human Rights can be inferred the fact that members of the United Nations Organizations, such as Norway
and Denmark, prohibit foreigners from engaging in retail trade, and in most nations of the world laws against
foreigners engaged in domestic trade are adopted.

The Treaty of Amity between the Republic of the Philippines and the Republic of China of April 18, 1947 is also
claimed to be violated by the law in question. All that the treaty guarantees is equality of treatment to the
Chinese nationals "upon the same terms as the nationals of any other country." But the nationals of China are
not discriminating against because nationals of all other countries, except those of the United States, who are
granted special rights by the Constitution, are all prohibited from engaging in the retail trade. But even supposing
that the law infringes upon the said treaty, the treaty is always subject to qualification or amendment by a
subsequent law (U. S. vs. Thompson, 258, Fed. 257, 260), and the same may never curtail or restrict the scope
of the police power of the State (plaston vs. Pennsylvania, 58 L. ed. 539.)

X. Conclusion

Resuming what we have set forth above we hold that the disputed law was enacted to remedy a real actual
threat and danger to national economy posed by alien dominance and control of the retail business and free
citizens and country from dominance and control; that the enactment clearly falls within the scope of the police
power of the State, thru which and by which it protects its own personality and insures its security and future;
that the law does not violate the equal protection clause of the Constitution because sufficient grounds exist for
the distinction between alien and citizen in the exercise of the occupation regulated, nor the due process of law
clause, because the law is prospective in operation and recognizes the privilege of aliens already engaged in the
occupation and reasonably protects their privilege; that the wisdom and efficacy of the law to carry out its
objectives appear to us to be plainly evident — as a matter of fact it seems not only appropriate but actually
necessary — and that in any case such matter falls within the prerogative of the Legislature, with whose power
and discretion the Judicial department of the Government may not interfere; that the provisions of the law are
clearly embraced in the title, and this suffers from no duplicity and has not misled the legislators or the segment
of the population affected; and that it cannot be said to be void for supposed conflict with treaty obligations
because no treaty has actually been entered into on the subject and the police power may not be curtailed or
surrendered by any treaty or any other conventional agreement.

Some members of the Court are of the opinion that the radical effects of the law could have been made less
harsh in its impact on the aliens. Thus it is stated that the more time should have been given in the law for the
liquidation of existing businesses when the time comes for them to close. Our legal duty, however, is merely to
determine if the law falls within the scope of legislative authority and does not transcend the limitations of due
process and equal protection guaranteed in the Constitution. Remedies against the harshness of the law should
be addressed to the Legislature; they are beyond our power and jurisdiction.

The petition is hereby denied, with costs against petitioner.

Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.

Separate Opinions

PADILLA, J., concurring and dissenting:

I agree to the proposition, principle or rule that courts may not inquire into the wisdom of an the Act passed by
the Congress and duly approved by the President of the Republic. But the rule does not preclude courts from
inquiring and determining whether the Act offends against a provision or provisions of the Constitution. I am
satisfied that the Act assailed as violative of the due process of law and the equal protection of the laws clauses
of the Constitution does not infringe upon them, insofar as it affects associations, partnership or corporations,
the capital of which is not wholly owned by the citizens of the Philippines, and aliens, who are not and have not
been engaged in the retail business. I am, however, unable to persuade myself that it does not violate said
clauses insofar as the Act applies to associations and partnerships referred to in the Act and to aliens, who are
and have heretofore been engaged in said business. When they did engage in the retail business there was no
prohibition on or against them to engage in it. They assumed and believed in good faith they were entitled to
engaged in the business. The Act allows aliens to continue in business until their death or voluntary retirement
from the business or forfeiture of their license; and corporations, associations or partnership, the capital of which
is not wholly owned by the citizens of the Philippines to continue in the business for a period of ten years from
the date of the approval of the Act (19 June 1954) or until the expiry of term of the existence of the association or
partnership or corporation, whichever event comes first. The prohibition on corporations, the capital of which is
not wholly owned by citizens of the Philippines, to engage in the retail business for a period of more than ten
years from the date of the approval of the Act or beyond the term of their corporate existence, whichever event
comes first, is valid and lawful, because the continuance of the existence of such corporations is subject to
whatever the Congress may impose reasonably upon them by subsequent legislation. 1 But the prohibition to
engage in the retail business by associations and partnerships, the capital of which is not wholly owned by
citizen of the Philippines, after ten years from the date of the approval of the Act, even before the end of the term
of their existence as agreed upon by the associates and partners, and by alien heirs to whom the retail business
is transmitted by the death of an alien engaged in the business, or by his executor or administrator, amounts to a
deprivation of their property without due process of law. To my mind, the ten-year period from the date of the
approval of the Act or until the expiration of the term of the existence of the association and partnership,
whichever event comes first, and the six-month period granted to alien heirs of a deceased alien, his executor or
administrator, to liquidate the business, do not cure the defect of the law, because the effect of the prohibition is
to compel them to sell or dispose of their business. The price obtainable at such forced sale of the business
would be inadequate to reimburse and compensate the associates or partners of the associations or partnership,
and the alien heirs of a deceased alien, engaged in the retail business for the capital invested in it. The stock of
merchandise bought and sold at retail does not alone constitute the business. The goodwill that the association,
partnership and the alien had built up during a long period of effort, patience and perseverance forms part of
such business. The constitutional provisions that no person shall be deprived of his property without due process
of law2 and that no person shall be denied the equal protection of the laws 3 would have no meaning as applied to
associations or partnership and alien heirs of an alien engaged in the retail business if they were to be
compelled to sell or dispose of their business within ten years from the date of the approval of the Act and before
the end of the term of the existence of the associations and partnership as agreed upon by the associations and
partners and within six months after the death of their predecessor-in-interest.

The authors of the Constitution were vigilant, careful and zealous in the safeguard of the ownership of private
agricultural lands which together with the lands of the public domain constitute the priceless patrimony and
mainstay of the nation; yet, they did not deem it wise and prudent to deprive aliens and their heirs of such lands. 4

For these reasons, I am of the opinion that section 1 of the Act, insofar as it compels associations and
partnership referred to therein to wind up their retail business within ten years from the date of the approval of
the Act even before the expiry of the term of their existence as agreed upon by the associates and partners and
section 3 of the Act, insofar as it compels the aliens engaged in the retail business in his lifetime his executor or
administrator, to liquidate the business, are invalid, for they violate the due process of law and the equal
protection of the laws clauses of the Constitution.

Footnotes

1
Section 76, Act No. 1459..

2
Section 1 (1), Article III, of the Constitution..

3
Ibid.

4
Section 5, Article XIII, of the Constitution.
CASE DIGEST:

ICHONG VS HERNANDEZ (G.R. No. L-7995, May 31, 1957)

FACTS
Driven by aspirations for economic independence and national security, the Congress enacted Act No. 1180 entitled
“An Act to Regulate the Retail Business.” The main provisions of the Act, among others, are:
(1) Prohibition against persons, not citizens of the Philippines, and against associations, among others, from engaging
directly or indirectly in the retail trade; and
(2) Prohibition against the establishment or opening by aliens actually engaged in the retail business of additional
stores or branches of retail business.
Lao H. Ichong, in his own behalf and on behalf of other alien residents, corporations and partnerships adversely
affected by the said Act, brought an action to obtain a judicial declaration, and to enjoin the Secretary of Finance,
Jaime Hernandez, and all other persons acting under him, particularly city and municipal treasurers, from enforcing
its provisions. Petitioner attacked the constitutionality of the Act, contending that:
• It denies to alien residents the equal protection of the laws and deprives of their liberty and property without due
process of law.
• The subject of the Act is not expressed or comprehended in the title thereof.
• The Act violates international and treaty obligations of the Republic of the Philippines.

Issue/s: Whether or not a law may invalidate or supersede treaties or generally accepted principles.

RULING
Yes, a law may supersede a treaty or a generally accepted principle. In this case, the Supreme Court saw no conflict
between the raised generally accepted principle and with RA 1180. The equal protection of the law clause “does not
demand absolute equality amongst residents; it merely requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities enforced”; and, that the equal protection
clause “is not infringed by legislation which applies only to those persons falling within a specified class, if it applies
alike to all persons within such class, and reasonable grounds exist for making a distinction between those who fall
within such class and those who do not.”
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-20387 January 31, 1968

JESUS P. MORFE, plaintiff-appellee,

vs.
AMELITO R. MUTUC, as Executive Secretary, ET AL., defendants-appellants.

Jesus P. Morfe for and his own behalf as plaintiff-appellee.

Office of the Solicitor General for defendants-appellants.

FERNANDO, J.:

Congress in 1960 enacted the Anti-Graft and Corrupt Practices Act 1 to deter public officials and employees
from committing acts of dishonesty and improve the tone of morality in public service. It was declared to be
the state policy "in line with the principle that a public office is a public trust, to repress certain acts of public
officers and private persons alike which constitute graft or corrupt practices or which may lead
thereto." 2 Nor was it the first statute of its kind to deal with such a grave problem in the public service that
unfortunately has afflicted the Philippines in the post-war era. An earlier statute decrees the forfeiture in
favor of the State of any property found to have been unlawfully acquired by any public officer or
employee. 3

One of the specific provisions of the Anti-Graft and Corrupt Practices Act of 1960 is that every public officer,
either within thirty (30) days after its approval or after his assumption of office "and within the month of
January of every other year thereafter", as well as upon the termination of his position, shall prepare and
file with the head of the office to which he belongs, "a true detailed and sworn statement of assets and
liabilities, including a statement of the amounts and sources of his income, the amounts of his personal and
family expenses and the amount of income taxes paid for the next preceding calendar: . . ." 4

In this declaratory relief proceeding, the periodical submission "within the month of January of every other
year thereafter" of such sworn statement of assets and liabilities after an officer or employee had once
bared his financial condition upon assumption of office was challenged for being violative of due process as
an oppressive exercise of police power and as an unlawful invasion of the constitutional right to privacy,
implicit in the ban against unreasonable search and seizure construed together with the prohibition against
self-incrimination. The lower court in the decision appealed from sustained plaintiff, then as well as now, a
judge of repute of a court of first instance. For it, such requirement of periodical submission of such sworn
statement of assets and liabilities exceeds the permissible limit of the police power and is thus offensive to
the due process clause.

We do not view the matter thus and accordingly reverse the lower court.

1. The reversal could be predicated on the absence of evidence to rebut the presumption of validity. For in
this action for declaratory relief filed with the Court of First Instance of Pangasinan on January 31, 1962,
plaintiff, after asserting his belief "that it was a reasonable requirement for employment that a public officer
make of record his assets and liabilities upon assumption of office and thereby make it possible thereafter
to determine whether, after assuming his position in the public service, he accumulated assets grossly
disproportionate to his reported incomes, the herein plaintiff [having] filed within the period of time fixed in
the aforesaid Administrative Order No. 334 the prescribed sworn statement of financial condition, assets,
income and liabilities, . . ." 5 maintained that the provision on the "periodical filing of sworn statement of
financial condition, assets, income and liabilities after an officer or employee had once bared his financial
condition, upon assumption of office, is oppressive and unconstitutional." 6

As earlier noted, both the protection of due process and the assurance of the privacy of the individual as
may be inferred from the prohibition against unreasonable search and seizure and self-incrimination were
relied upon. There was also the allegation that the above requirement amounts to "an insult to the personal
integrity and official dignity" of public officials, premised as it is "on the unwarranted and derogatory
assumption" that they are "corrupt at heart" and unless thus restrained by this periodical submission of the
statements of "their financial condition, income, and expenses, they cannot be trusted to desist from
committing the corrupt practices defined. . . ." 7 It was further asserted that there was no need for such a
provision as "the income tax law and the tax census law also require statements which can serve to
determine whether an officer or employee in this Republic has enriched himself out of proportion to his
reported income." 8

Then on February 14, 1962, came an Answer of the then Executive Secretary and the then Secretary of
Justice as defendants, where after practically admitting the facts alleged, they denied the erroneous
conclusion of law and as one of the special affirmative defenses set forth: "1. That when a government
official, like plaintiff, accepts a public position, he is deemed to have voluntarily assumed the obligation to
give information about his personal affair, not only at the time of his assumption of office but during the time
he continues to discharge public trust. The private life of an employee cannot be segregated from his public
life. . . ." 9 The answer likewise denied that there was a violation of his constitutional rights against self-
incrimination as well as unreasonable search and seizure and maintained that "the provision of law in
question cannot be attacked on the ground that it impairs plaintiff's normal and legitimate enjoyment of his
life and liberty because said provision merely seeks to adopt a reasonable measure of insuring the interest
or general welfare in honest and clean public service and is therefore a legitimate exercise of the police
power." 10

On February 27, 1962, plaintiff filed a Motion for judgment on the pleadings as in his opinion all his material
allegations were admitted. Then on March 10, 1962, an order was issued giving the parties thirty days
within which to submit memoranda, but with or without them, the case was deemed submitted for decision
the lower court being of the belief that "there is no question of facts, . . . the defendants [having admitted] all
the material allegations of the complaint." 11

The decision, now on appeal, came on July 19, 1962, the lower court declaring "unconstitutional, null and
void Section 7, Republic Act No. 3019, insofar as it required periodical submittal of sworn statements of
financial conditions, assets and liabilities of an official or employee of the government after he had once
submitted such a sworn statement upon assuming office; . . . ." 12

In Ermita-Malate Hotel and Motel Operators Association v. The Mayor of Manila, 13 it was the holding of this
Court that in the absence of a factual foundation, the lower court deciding the matter purely "on the
pleadings and the stipulation of facts, the presumption of validity must prevail." In the present case likewise
there was no factual foundation on which the nullification of this section of the statute could be based.
Hence as noted the decision of the lower court could be reversed on that ground.

A more extended consideration is not inappropriate however, for as likewise made clear in the above
Ermita-Malate Hotel case: "What cannot be stressed sufficiently is that if the liberty involved were freedom
of the mind or the person, the standard for the validity of governmental acts is much more rigorous and
exacting, but where the liberty curtailed affects at the most rights of property, the permissible scope of
regulatory measure is wider."

Moreover, in the Resolution denying the Motion for Reconsideration in the above case, we expressly
affirmed: "This is not to discount the possibility of a situation where the nullity of a statute, executive order,
or ordinance may not be readily apparent but the threat to constitutional rights, especially those involving
the freedom of the mind, present and ominous." 14 In such an event therefore, "there should not be a rigid
insistence on the requirement that evidence be presented." Also, in the same Resolution, Professor Freund
was quoted thus: "In short, when freedom of the mind is imperiled by law, it is freedom that commands a
momentum of respect; when property is imperiled, it is the lawmakers' judgment that commands respect.
This dual standard may not precisely reverse the presumption of constitutionality in civil liberties cases, but
obviously it does set up a hierarchy of values within the due process clause. 15

2. We inquire first whether or not by virtue of the above requirement for a periodical submission of sworn
statement of assets and liabilities, there is an invasion of liberty protected by the due process clause.

Under the Anti-Graft Act of 1960, after the statement of policy, 16 and definition of terms, 17 there is an
enumeration of corrupt practices declared unlawful in addition to acts or omissions of public officers already
penalized by existing law. They include persuading, inducing, or influencing another public officer to
perform an act constituting a violation of rules and regulations duly promulgated by competent authority or
an offense in connection with the official duties of the latter, or allowing himself to be persuaded, induced,
or influenced to commit such violation or offense; requesting or receiving directly or indirectly any gift,
present, share, percentage, or benefit, for himself, or for any other person, in connection with any contract
or transaction between the government and any other party, wherein the public officer in his official
capacity, has to intervene under the law; requesting or receiving directly or indirectly any gift, present, or
other pecuniary or material benefit, for himself or for another, from any person for whom the public officer,
in any manner or capacity, has secured or obtained, or will secure or obtain, any Government permit or
license, in consideration for the help given or to be given; accepting or having any member of his family
accept employment in a private enterprise which has pending official business with him during the
pendency thereof or within one year after its termination; causing any undue injury to any party, including
the Government, or giving any private party any unwarranted benefits, advantage or preference in the
discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or
gross inexcusable negligence; neglecting or refusing, after due demand or request, without sufficient
justification, to act within a reasonable time on any matter pending before him for the purpose of obtaining,
directly or indirectly, from any person interested in the matter some pecuniary or material benefit or
advantage, or for the purpose of favoring his own interest or giving undue advantage in favor of or
discriminating against any other interested party; entering, on behalf of the Government, into any contract
or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer
profited or will profit thereby; having directly or indirectly financial or pecuniary interest in any business,
contract or transaction in connection with which he intervenes or takes part in his official capacity or in
which he is prohibited by the Constitution or by any law from having any interests; becoming interested
directly or indirectly, for personal gain, or having a material interest in any transaction or act requiring the
approval of a board, panel or group of which he is a member, and which exercises discretion in such
approval, even if he votes against the same or does not participate in such action; approving or granting
knowingly any license, permit, privilege or benefit in favor of any person not qualified for or not legally
entitled to such license, permit, privilege or advantage, or of a mere representative or dummy of one who is
not so qualified or entitled and divulging valuable information of a confidential character, acquired by his
office or by him on account of his official position to unauthorized persons, or releasing such information in
advance of its authorized release date. 18

After which come the prohibition on private individuals, 19 prohibition on certain relatives, 20 and prohibition
on Members of Congress. 21 Then there is this requirement of a statement of assets and liabilities, that
portion requiring periodical submission being challenged here. 22 The other sections of the Act deal with
dismissal due to unexplained wealth, reference being made to the previous statute, 23 penalties for
violation, 24 the vesting of original jurisdiction in the Court of First Instance as the competent court, 25 the
prescription of offenses, 26 the prohibition against any resignation or retirement pending investigation,
criminal or administrative or pending a prosecution, 27 suspension and loss of benefits, 28 exception of
unsolicited gifts or presents of small or insignificant value as well as recognition of legitimate practice of
one's profession or trade or occupation, 29 the separability clause, 30 and its effectivity. 31

Nothing can be clearer therefore than that the Anti-Graft Act of 1960 like the earlier statute 32 was precisely
aimed at curtailing and minimizing the opportunities for official corruption and maintaining a standard of
honesty in the public service. It is intended to further promote morality in public administration. A public
office must indeed be a public trust. Nobody can cavil at its objective; the goal to be pursued commands
the assent of all. The conditions then prevailing called for norms of such character. The times demanded
such a remedial device.

The statute was framed with that end in view. It is comprehensive in character, sufficiently detailed and
explicit to make clear to all and sundry what practices were prohibited and penalized. More than that, an
effort was made, so evident from even a cursory perusal thereof, to avoid evasions and plug loopholes.
One such feature is the challenged section. Thereby it becomes much more difficult by those disposed to
take advantage of their positions to commit acts of graft and corruption.

While in the attainment of such public good, no infringement of constitutional rights is permissible, there
must be a showing, clear, categorical, and undeniable, that what the Constitution condemns, the statute
allows. More specifically, since that is the only question raised, is that portion of the statute requiring
periodical submission of assets and liabilities, after an officer or employee had previously done so upon
assuming office, so infected with infirmity that it cannot be upheld as valid?
Or, in traditional terminology, is this requirement a valid exercise of the police power? In the aforesaid
Ermita-Malate Hotel decision, 33 there is a reaffirmation of its nature and scope as embracing the power to
prescribe regulations to promote the health, morals, education, good order, safety, or the general welfare of
the people. It has been negatively put forth by Justice Malcolm as "that inherent and plenary power in the
state which enables it to prohibit all things hurtful to the comfort, safety and welfare of society." 34

Earlier Philippine cases refer to police power as the power to promote the general welfare and public
interest; 35 to enact such laws in relation to persons and property as may promote public health, public
morals, public safety and the general welfare of each inhabitant; 36 to preserve public order and to prevent
offenses against the state and to establish for the intercourse of citizen with citizen those rules of good
manners and good neighborhood calculated to prevent conflict of rights. 37 In his work on due process,
Mott 38 stated that the term police power was first used by Chief Justice Marshall. 39

As currently in use both in Philippine and American decisions then, police power legislation usually has
reference to regulatory measures restraining either the rights to property or liberty of private individuals. It is
undeniable however that one of its earliest definitions, valid then as well as now, given by Marshall's
successor, Chief Justice Taney does not limit its scope to curtailment of rights whether of liberty or property
of private individuals. Thus: "But what are the police powers of a State? They are nothing more or less than
the powers of government inherent in every sovereignty to the extent of its dominions. And whether a State
passes a quarantine law, or a law to punish offenses, or to establish courts of justice, or requiring certain
instruments to be recorded, or to regulate commerce within its own limits, in every case it exercises the
same power; that is to say, the power of sovereignty, the power to govern men and things within the limits
of its domain." 40 Text writers like Cooley and Burdick were of a similar mind. 41

What is under consideration is a statute enacted under the police power of the state to promote morality in
public service necessarily limited in scope to officialdom. May a public official claiming to be adversely
affected rely on the due process clause to annul such statute or any portion thereof? The answer must be
in the affirmative. If the police power extends to regulatory action affecting persons in public or private life,
then anyone with an alleged grievance can invoke the protection of due process which permits deprivation
of property or liberty as long as such requirement is observed.

While the soundness of the assertion that a public office is a public trust and as such not amounting to
property in its usual sense cannot be denied, there can be no disputing the proposition that from the
standpoint of the security of tenure guaranteed by the Constitution the mantle of protection afforded by due
process could rightfully be invoked. It was so implicitly held in Lacson v. Romero, 42 in line with the then
pertinent statutory provisions 43 that procedural due process in the form of an investigation at which he must
be given a fair hearing and an opportunity to defend himself must be observed before a civil service officer
or employee may be removed. There was a reaffirmation of the view in even stronger language when this
Court through Justice Tuason in Lacson v. Roque 44 declared that even without express provision of law, "it
is established by the great weight of authority that the power of removal or suspension for cause can not,
except by clear statutory authority, be exercised without notice and hearing." Such is likewise the import of
a statement from the then Justice, now Chief Justice, Concepcion, speaking for the Court in Meneses v.
Lacson; 45 "At any rate, the reinstatement directed in the decision appealed from does not bar such
appropriate administrative action as the behaviour of petitioners herein may warrant, upon compliance with
the requirements of due process."

To the same effect is the holding of this Court extending the mantle of the security of tenure provision to
employees of government-owned or controlled corporations entrusted with governmental functions when
through Justice Padilla in Tabora v. Montelibano, 46 it stressed: "That safeguard, guarantee, or feeling of
security that they would hold their office or employment during good behavior and would not be dismissed
without justifiable cause to be determined in an investigation, where an opportunity to be heard and defend
themselves in person or by counsel is afforded them, would bring about such a desirable condition."
Reference was there made to promoting honesty and efficiency through an assurance of stability in their
employment relation. It was to be expected then that through Justice Labrador in Unabia v. City
Mayor, 47 this Court could categorically affirm: "As the removal of petitioner was made without investigation
and without cause, said removal is null and void. . . ."

It was but logical therefore to expect an explicit holding of the applicability of due process guaranty to be
forthcoming. It did in Cammayo v. Viña, 48 where the opinion of Justice Endencia for the Court contained
the following unmistakable language: "Evidently, having these facts in view, it cannot be pretended that the
constitutional provision of due process of law for the removal of the petitioner has not been complied with."

Then came this restatement of the principle from the pen of Justice J.B.L. Reyes "We are thus compelled to
conclude that the positions formerly held by appellees were not primarily confidential in nature so as to
make their terms of office co-terminal with the confidence reposed in them. The inevitable corollary is that
respondents-appellees, Leon Piñero, et al., were not subject to dismissal or removal, except for cause
specified by law and within due process. . . ." 49 In a still later decision, Abaya v. Subido, 50 this Court,
through Justice Sanchez, emphasized "that the vitality of the constitutional principle of due process cannot
be allowed to weaken by sanctioning cancellation" of an employee's eligibility or "of his dismissal from
service — without hearing — upon a doubtful assumption that he has admitted his guilt for an offense
against Civil Service rules." Equally emphatic is this observation from the same case: "A civil service
employee should be heard before he is condemned. Jurisprudence has clung to this rule with such
unrelenting grasp that by now it would appear trite to make citations thereof."

If as is so clearly and unequivocally held by this Court, due process may be relied upon by public official to
protect the security of tenure which in that limited sense is analogous to property, could he not likewise
avail himself of such constitutional guarantee to strike down what he considers to be an infringement of his
liberty? Both on principle, reason and authority, the answer must be in the affirmative. Even a public official
has certain rights to freedom the government must respect. To the extent then, that there is a curtailment
thereof, it could only be permissible if the due process mandate is not disregarded.

Since under the constitutional scheme, liberty is the rule and restraint the exception, the question raised
cannot just be brushed aside. In a leading Philippine case, Rubi v. Provincial Board, 51 liberty as
guaranteed by the Constitution was defined by Justice Malcolm to include "the right to exist and the right to
be free from arbitrary personal restraint or servitude. The term cannot be dwarfed into mere freedom from
physical restraint of the person of the citizen, but is deemed to embrace the right of man to enjoy the
facilities with which he has been endowed by his Creator, subject only to such restraint as are necessary
for the common welfare." In accordance with this case therefore, the rights of the citizens to be free to use
his faculties in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; to
pursue any avocation, are all deemed embraced in the concept of liberty. This Court in the same case,
however, gave the warning that liberty as understood in democracies, is not license. Implied in the term is
restraint by law for the good of the individual and for the greater good, the peace and order of society and
the general well-being. No one can do exactly as he pleases. Every man must renounce unbridled license.
In the words of Mabini as quoted by Justice Malcolm, "liberty is freedom to do right and never wrong; it is
ever guided by reason and the upright and honorable conscience of the individual."

The liberty to be safeguarded is, as pointed out by Chief Justice Hughes, liberty in a social
organization, 52 implying the absence of arbitrary restraint not immunity from reasonable regulations and
prohibitions imposed in the interest of the community. 53 It was Linton's view that "to belong to a society is to
sacrifice some measure of individual liberty, no matter how slight the restraints which the society
consciously imposes." 54 The above statement from Linton however, should be understood in the sense that
liberty, in the interest of public health, public order or safety, of general welfare, in other words through the
proper exercise of the police power, may be regulated. The individual thought, as Justice Cardozo pointed
out, has still left a "domain of free activity that cannot be touched by government or law at all, whether the
command is specially against him or generally against him and others." 55

Is this provision for a periodical submission of sworn statement of assets and liabilities after he had filed
one upon assumption of office beyond the power of government to impose? Admittedly without the
challenged provision, a public officer would be free from such a requirement. To the extent then that there
is a compulsion to act in a certain way, his liberty is affected. It cannot be denied however that under the
Constitution, such a restriction is allowable as long as due process is observed.

The more crucial question therefore is whether there is an observance of due process. That leads us to an
inquiry into its significance. "There is no controlling and precise definition of due process. It furnishes
though a standard to which governmental action should conform in order that deprivation of life, liberty or
property, in each appropriate case, be valid. What then is the standard of due process which must exist
both as a procedural and as substantive requisite to free the challenged ordinance, or any action for that
matter, from the imputation of legal infirmity sufficient to spell its doom? It is responsiveness to the
supremacy of reason, obedience to the dictates of justice. Negatively put, arbitrariness is ruled out and
unfairness avoided. To satisfy the due process requirement, official action, to paraphrase Cardozo, must
not outrun the bounds of reason and result in sheer oppression. Due process is thus hostile to any official
action marred by lack of reasonableness. Correctly has it been identified as freedom from arbitrariness. It is
the embodiment of the sporting idea of fair play. It exacts fealty 'to those strivings for justice' and judges the
act of officialdom of whatever branch 'in the light of reason drawn from considerations of fairness that
reflect [democratic] traditions of legal and political thought.' It is not a narrow or 'technical conception with
fixed content unrelated to time, place and circumstances,' decisions based on such a clause requiring a
'close and perceptive inquiry into fundamental principles of our society.' Questions of due process are not
to be treated narrowly or pedantically in slavery to form or phrases." 56

It would be to dwell in the realm of abstractions and to ignore the harsh and compelling realities of public
service with its ever-present temptation to heed the call of greed and avarice to condemn as arbitrary and
oppressive a requirement as that imposed on public officials and employees to file such sworn statement of
assets and liabilities every two years after having done so upon assuming office. The due process clause is
not susceptible to such a reproach. There was therefore no unconstitutional exercise of police power.

4. The due process question touching on an alleged deprivation of liberty as thus resolved goes a long way
in disposing of the objections raised by plaintiff that the provision on the periodical submission of a sworn
statement of assets and liabilities is violative of the constitutional right to privacy. There is much to be said
for this view of Justice Douglas: "Liberty in the constitutional sense must mean more than freedom from
unlawful governmental restraint; it must include privacy as well, if it is to be a repository of freedom. The
right to be let alone is indeed the beginning of all freedom." 57 As a matter of fact, this right to be let alone is,
to quote from Mr. Justice Brandeis "the most comprehensive of rights and the right most valued by civilized
men." 58

The concept of liberty would be emasculated if it does not likewise compel respect for his personality as a
unique individual whose claim to privacy and interference demands respect. As Laski so very aptly stated:
"Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are
indefeasible; indeed, they are so fundamental that they are the basis on which his civic obligations are built.
He cannot abandon the consequences of his isolation, which are, broadly speaking, that his experience is
private, and the will built out of that experience personal to himself. If he surrenders his will to others, he
surrenders his personality. If his will is set by the will of others, he ceases to be master of himself. I cannot
believe that a man no longer master of himself is in any real sense free." 59

Nonetheless, in view of the fact that there is an express recognition of privacy, specifically that of
communication and correspondence which "shall be inviolable except upon lawful order of Court or when
public safety and order" 60 may otherwise require, and implicitly in the search and seizure clause, 61 and the
liberty of abode 62 the alleged repugnancy of such statutory requirement of further periodical submission of
a sworn statement of assets and liabilities deserves to be further looked into.

In that respect the question is one of first impression, no previous decision having been rendered by this
Court. It is not so in the United States where, in the leading case of Griswold v. Connecticut, 63 Justice
Douglas, speaking for five members of the Court, stated: "Various guarantees create zones of privacy. The
right of association contained in the penumbra of the First Amendment is one, as we have seen. The Third
Amendment in its prohibition against the quartering of soldiers 'in any house' in time of peace without the
consent of the owner is another facet of that privacy. The Fourth Amendment explicitly affirms the 'right of
the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and
seizures.' The Fifth Amendment in its Self-Incrimination Clause enables the citizen to create a zone of
privacy which government may not force him to surrender to his detriment. The Ninth Amendment provides:
'The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others
retained by the people." After referring to various American Supreme Court decisions, 64 Justice Douglas
continued: "These cases bear witness that the right of privacy which presses for recognition is a legitimate
one."

The Griswold case invalidated a Connecticut statute which made the use of contraceptives a criminal
offense on the ground of its amounting to an unconstitutional invasion of the right of privacy of married
persons; rightfully it stressed "a relationship lying within the zone of privacy created by several fundamental
constitutional guarantees." 65 It has wider implications though. The constitutional right to privacy has come
into its own.1äwphï1.ñët
So it is likewise in our jurisdiction. The right to privacy as such is accorded recognition independently of its
identification with liberty; in itself, it is fully deserving of constitutional protection. The language of Prof.
Emerson is particularly apt: "The concept of limited government has always included the idea that
governmental powers stop short of certain intrusions into the personal life of the citizen. This is indeed one
of the basic distinctions between absolute and limited government. Ultimate and pervasive control of the
individual, in all aspects of his life, is the hallmark of the absolute state. In contrast, a system of limited
government, safeguards a private sector, which belongs to the individual, firmly distinguishing it from the
public sector, which the state can control. Protection of this private sector — protection, in other words, of
the dignity and integrity of the individual — has become increasingly important as modern society has
developed. All the forces of a technological age — industrialization, urbanization, and organization —
operate to narrow the area of privacy and facilitate intrusion into it. In modern terms, the capacity to
maintain and support this enclave of private life marks the difference between a democratic and a
totalitarian society." 66

Even with due recognition of such a view, it cannot be said that the challenged statutory provision calls for
disclosure of information which infringes on the right of a person to privacy. It cannot be denied that the
rational relationship such a requirement possesses with the objective of a valid statute goes very far in
precluding assent to an objection of such character. This is not to say that a public officer, by virtue of a
position he holds, is bereft of constitutional protection; it is only to emphasize that in subjecting him to such
a further compulsory revelation of his assets and liabilities, including the statement of the amounts and
sources of income, the amounts of personal and family expenses, and the amount of income taxes paid for
the next preceding calendar year, there is no unconstitutional intrusion into what otherwise would be a
private sphere.

5. Could it be said, however, as plaintiff contends, that insofar as the challenged provision requires the
periodical filing of a sworn statement of financial condition, it would be violative of the guarantees against
unreasonable search and seizure and against self-incrimination?

His complaint cited on this point Davis v. United States. 67 In that case, petitioner Davis was convicted
under an information charging him with unlawfully having in his possession a number of gasoline ration
coupons representing so many gallons of gasoline, an offense penalized under a 1940 statute. 68 He was
convicted both in the lower court and in the Circuit Court of Appeals over the objection that there was an
unlawful search which resulted in the seizure of the coupons and that their use at the trial was in violation of
Supreme Court decisions. 69 In the District Court, there was a finding that he consented to the search and
seizure. The Circuit Court of Appeals did not disturb that finding although expressed doubt concerning it,
affirming however under the view that such seized coupons were properly introduced in evidence, the
search and seizure being incidental to an arrest, and therefore reasonable regardless of petitioner's
consent.

In affirming the conviction the United States Supreme Court, through Justice Douglas emphasized that the
Court was dealing in this case "not with private papers or documents, but with gasoline ration coupons
which never became the private property of the holder but remained at all times the property of the
government and subject to inspection and recall by it." 70 He made it clear that the opinion was not to be
understood as suggesting "that officers seeking to reclaim government property may proceed lawlessly and
subject to no restraints. Nor [does it] suggest that the right to inspect under the regulations subjects a
dealer to a general search of his papers for the purpose of learning whether he has any coupons subject to
inspection and seizure. The nature of the coupons is important here merely as indicating that the officers
did not exceed the permissible limits of persuasion in obtaining them." 71

True, there was a strong dissenting opinion by Justice Frankfurter in which Justice Murphy joined, critical of
what it considered "a process of devitalizing interpretation" which in this particular case gave approval "to
what was done by arresting officers" and expressing the regret that the Court might be "in danger of
forgetting what the Bill of Rights reflects experience with police excesses."

Even this opinion, however, concerned that the constitutional guarantee against unreasonable search and
seizure "does not give freedom from testimonial compulsion. Subject to familiar qualifications every man is
under obligation to give testimony. But that obligation can be exacted only under judicial sanctions which
are deemed precious to Anglo-American civilization. Merely because there may be the duty to make
documents available for litigation does not mean that police officers may forcibly or fraudulently obtain
them. This protection of the right to be let alone except under responsible judicial compulsion is precisely
what the Fourth Amendment meant to express and to safeguard." 72

It would appear then that a reliance on that case for an allegation that this statutory provision offends
against the unreasonable search and seizure clause would be futile and unavailing. This is the more so in
the light of the latest decision of this Court in Stonehill v. Diokno, 73 where this Court, through Chief Justice
Concepcion, after stressing that the constitutional requirements must be strictly complied with, and that it
would be "a legal heresy of the highest order" to convict anybody of a violation of certain statutes without
reference to any of its determinate provisions delimited its scope as "one of the most fundamental rights
guaranteed in our Constitution," safeguarding "the sanctity, of the domicile and the privacy of
communication and correspondence. . . ." Such is precisely the evil sought to be remedied by the
constitutional provision above quoted — to outlaw the so-called general warrants.

It thus appears clear that no violation of the guarantee against unreasonable search and seizure has been
shown to exist by such requirement of further periodical submission of one's financial condition as set forth
in the Anti-Graft Act of 1960.

Nor does the contention of plaintiff gain greater plausibility, much less elicit acceptance, by his invocation of
the non-incrimination clause. According to the Constitution: "No person shall be compelled to be a witness
against himself." 74 This constitutional provision gives the accused immunity from any attempt by the
prosecution to make easier its task by coercing or intimidating him to furnish the evidence necessary to
convict. He may confess, but only if he voluntarily wills it. He may admit certain facts but only if he freely
chooses to.75 Or he could remain silent, and the prosecution is powerless to compel him to talk. 76 Proof is
not solely testimonial in character. It may be documentary. Neither then could the accused be ordered to
write, when what comes from his pen may constitute evidence of guilt or innocence. 77 Moreover, there can
be no search or seizure of his house, papers or effects for the purpose of locating incriminatory matter. 78

In a declaratory action proceeding then, the objection based on the guaranty against self-incrimination is far
from decisive. It is well to note what Justice Tuason stated: "What the above inhibition seeks to [prevent] is
compulsory disclosure of incriminating facts." 79 Necessarily then, the protection it affords will have to await,
in the language of Justice J. B. L. Reyes, the existence of actual cases, "be they criminal, civil or
administrative." 80 Prior to such a stage, there is no pressing need to pass upon the validity of the fear
sincerely voiced that there is an infringement of the non-incrimination clause. What was said in an
American State decision is of relevance. In that case, a statutory provision requiring any person operating a
motor vehicle, who knows that injury has been caused a person or property, to stop and give his name,
residence, and his license number to the injured party or to a police officer was sustained against the
contention that the information thus exacted may be used as evidence to establish his connection with the
injury and therefore compels him to incriminate himself. As was stated in the opinion: "If the law which
exacts this information is invalid, because such information, although in itself no evidence of guilt, might
possibly lead to a charge of crime against the informant, then all police regulations which involve
identification may be questioned on the same ground. We are not aware of any constitutional provision
designed to protect a man's conduct from judicial inquiry or aid him in fleeing from justice. But, even if a
constitutional right be involved, it is not necessary to invalidate the statute to secure its protection. If, in this
particular case, the constitutional privilege justified the refusal to give the information exacted by the
statute, that question can be raised in the defense to the pending prosecution. Whether it would avail, we
are not called upon to decide in this proceeding." 81

6. Nor could such a provision be nullified on the allegation that it constitutes "an insult to the personal
integrity and official dignity" of public officials. On its face, it cannot thus be stigmatized. As to its being
unnecessary, it is well to remember that this Court, in the language of Justice Laurel, "does not pass upon
questions of wisdom, justice or expediency of legislation." 82 As expressed by Justice Tuason: "It is not the
province of the courts to supervise legislation and keep it within the bounds of propriety and common
sense. That is primarily and exclusively a legislative concern." 83 There can be no possible objection then to
the observation of Justice Montemayor: "As long as laws do not violate any Constitutional provision, the
Courts merely interpret and apply them regardless of whether or not they are wise or salutary." 84 For they,
according to Justice Labrador, "are not supposed to override legitimate policy and . . . never inquire into the
wisdom of the law." 85

It is thus settled, to paraphrase Chief Justice Concepcion in Gonzales v. Commission on Elections, 86 that
only congressional power or competence, not the wisdom of the action taken may be the basis for declaring
a statute invalid. This is as it ought to be. The principle of separation of powers has in the main wisely
allocated the respective authority of each department and confined its jurisdiction to such a sphere. There
would then be intrusion not allowable under the Constitution if on a matter left to the discretion of a
coordinate branch, the judiciary would substitute its own. If there be adherence to the rule of law, as there
ought to be, the last offender should be courts of justice, to which rightly litigants submit their controversy
precisely to maintain unimpaired the supremacy of legal norms and prescriptions. The attack on the validity
of the challenged provision likewise insofar as there may be objections, even if valid and cogent on its
wisdom cannot be sustained.

WHEREFORE, the decision of the lower court of July 19, 1962 "declaring unconstitutional, null and void
Section 7, Republic Act No. 3019, insofar as it requires periodical submittal of sworn statements of financial
conditions, assets and liabilities of an official or employee of the government after he had once submitted
such a sworn statement . . . is reversed." Without costs.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar and Angeles, JJ., concur.
Sanchez, J., reserves his vote.
Castro, J., concurs in the result.

Footnotes

1
Republic Act No. 3019, approved August 17, 196O.

2
Section 1, Statement of Policy.

3
Republic Act 1379, approved June 18, 1955.

4
Sec. 7. Statement of assets and liabilities. — Every public officer, within thirty days after the
approval of this Act or after assuming office, and within the month of January of every other year
thereafter, as well as upon the expiration of his term of office, or upon his resignation or separation
from office, shall prepare and file with the office of the corresponding Department Head, or in the
case of a Head of Department or chief of an independent office, with the Office of the President, or
in the case of members of the Congress and the officials and employees thereof, with the Office of
the Secretary of the corresponding House, a true detailed and sworn statement of assets and
liabilities, including a statement of the amounts and sources of his income, the amounts of his
personal and family expenses and the amount of income taxes paid for the next preceding calendar
year: Provided, That public officers assuming office less than two months before the end of the
calendar year, may file their first statements in the following months of January.

5
Complaint, Record on Appeal, p. 4.

6
Complaint, Record on Appeal, p. 5.

7
Complaint, Record on Appeal, par. 5, p. 5.

8
Complaint, Record on Appeal, p. 7.

9
Record on Appeal p. 10.

10
Answer, pars. 4, 6 and 9, Record on Appeal, pp. 12, 14 and 15.

11
Order of March 10, 1962, Record on Appeal, p. 18.

12
Decision of July 19, 1962, Record on Appeal, pp. 36, 37.

13
L-24693, July 31, 1967.

14
Resolution denying the Motion for Reconsideration, L-24693, October 23, 1967, p. 5.
15
Freund, On Understanding the Supreme Court (1950) p. II.

16
Section 1, Rep. Act. No. 3019.

17
Section 2, Rep. Act. No. 3019.

18
Sec. 3, Id.

19
Sec. 4, Id.

20
Sec. 5, Id.

21
Sec. 6, Id.

22
Sec. 7, Id.

23
Sec. 8, Id.

24
Sec. 9, Id.

25
Sec. 10, Id.

26
Sec. 11, Id.

27
Sec. 12, Id.

28
Sec. 13, Id.

29
Sec. 14, Id.

30
Sec. 15, Id.

31
Sec. 16, Id.

32
Rep. Act No. 1379.

33
L-24693, July 31, 1967.

34
Rubi v. Provincial Board, 39 Phil. 660, 708 (1919).

35
U. S. v. Toribio, 15 Phil. 85, 94 (1910).

36
U. S. v. Gomez Jesus, 31 Phil. 218, 225 (1915).

37
U. S. v. Pompeya, 31 Phil. 245, 254 (1915).

38
Due Process of Law, 301.

39
Gibbons v. Ogden 9 Wheat, 208 (1824) and Brown v. Maryland, 12 Wheat. 419 (1827).

40
License Cases, 5 How. 504, 583 (1847).

41
2 Cooley, Constitutional Limitations, p. 1223 (1927). Burdick, The Law of the American
Constitution (1922).

42
84 Phil. 740 (1949).
43
Secs. 64, 694 Rev. Administrative Code.

44
92 Phil. 456, 471 (1953).

45
97 Phil. 857, 865 (1955).

46
98 Phil. 800, 806 (1956).

47
99 Phil. 253, 256 (1956).

48
101 Phil. 1149, 1154 (1957).

49
Piñero v. Hechanova, L-22562, Oct. 22, 1966.

50
L-25641, December 17, 1966.

51
39 Phil. 660 (1919).

52
West Coast Hotel v. Parrish, 300 U.S. 379 (1937).

53
Chicago, B. & O. Ry. Co. v. McGuire, 219 U. S. 549 (1910).

54
The Individual, Culture and Society, p. 17 (1945).

55
Paradoxes of Legal Science, p. 98 (1928).

56
Ermita-Malate Hotel, etc., et al. vs. Hon. City Mayor of Manila, L-24693, July 31, 1967.

57
Public Utilities Commission v. Pollak 343 U. S. 451, 467 (1952). In this case the American
Supreme Court rejected the claim that radio program on buses and street cars of a private company
regulated by the District Columbia invaded the rights of privacy of passengers in violation of the due
process clause. Mr. Justice Douglas was the sole dissenter.

58
Olmstead v. United States, 277 U.S. 438, 478 (1928). In this case Justice Brandeis along with
Justice Holmes dissented.

59
Laski, Liberty in the Modern State, 44 (1944). Also "Secrecy nevertheless may be an important
component of the core idea of privacy as a public-law concept, and to this probably should be
added the factor of 'solitude' — freedom from certain social impositions and pressures. The
meaning of privacy, as thus refined and separated from a generalized concept of freedom, may be
fairly well encompassed by the twin ideas of secrecy, which protects the non-disclosure interest,
and solitude, which protects against coercion of belief or, derivatively, against actions designed to
make the holding of belief uncomfortable, or against any undue social instrusions on the intimacies
and dignities of life. As already noted, however, these twin ideas are Janus-faced, because secrecy
in the context of associational privacy is an activist concept supporting political action, whereas
solitude in the context of non-disclosure of nonconformity is a passivist, right-to-be-let-alone
concept." Dixon, The Griswold Penumbra, 64 Mich. Law Rev. 197, 205, (1955.)

60
Art. III, See. I, par. 5, Constitution.

61
Art. III, Sec. I, par. 3, Constitution.

62
Art. III, Sec. I, par. 4, Constitution.

63
381 U. S. 479, 484 (1965).

64
Boyd v. United States, 116 U.S. 616 (1886); Breard v. City of Alexandria, 341 U.S. 622 (1951):
Public Utilities Comm. v. Pollak, 341 U.S. 451 (1952); Frank v. Maryland 359 U.S. 360 (1959);
Monroe v. Pape, 365 U.S. 167 (1967); Mapp V. Ohio, 367 U.S. 643 (1961); Lanza v. New York, 370
U.S. 139 (1962).

65
Id. at p. 485.

66
Emerson, Nine Justices in Search of a Doctrine, 64 Mich. Law. Rev. 219, 229 (1965). But compare
the pungent observation of a knowledgeable and highly literate critic of the social scene: "Privacy?
What's that? There is no precise word for it in Filipino, and as far as I know any Filipino dialect and
there is none because there is no need for it. The concept and practice of privacy are missing from
conventional Filipino life. The Filipino believes that privacy is an unnecessary imposition, an
eccentricity that is barely pardonable or, at best, an esoteric Western afterthought smacking of legal
trickery." Guerrero-Nakpil, Consensus of One, Sunday Times Magazine, Sept. 24, 1967, at pa. 18.

67
328 U.S. 582 (1946).

68
54 Stat. 676 as amended by the Act of May 31, 1940; 55 Stat. 236.

69
Weeks v. United States, 232 U.S. 383 and United States v. Lefkowitz 285 U.S. 452.

70
Id. at p. 588.

71
Id. at p. 591.

72
Id. at p. 596.

73
L-19550, June 19, 1967.

74
Art. III, Sec. 1, Clause 18.

75
People v. Carillo, 77 Phil. 572 (1946).

76
U. S. v. Tan Teng, 23 Phil. 145 (1912): U. S. v. Ong Siu Hong, 36 Phil. 735 (1917); Villaflor v.
Summers, 41 Phil. 62 (1920); and Jimenez v. Cañizares L-12790, Aug. 31, 1960.

77
Bermudez v. Castillo, 64 Phil. 483 (1937).

78
Boyd v. United States, 116 U.S. 616 (1886), but see Warden v. Hayden 18 L. ed. 2d 182 (1967).

79
People v. Carillo, 77 Phil. 572 (1946).

80
Suarez v. Tengco, L-17113, May 23, 1961.

81
Ex parte Kneedler 147 S. W. 983, 984 (1912)

82
Angara v. Electoral Commission, 63 Phil. 139 (1936).

83
People vs. Carlos, 78 Phil. 535, 548 (1947).

84
Quintos v. Lacson, 97 Phil. 290, 293 (1955).

85
Ichong v. Hernandez, 101 Phil. 1155, 1166 (1957).

86
L-28196, Nov. 9, 1967. There is nothing in the separate opinion of Justice Sanchez to which five
other justices concurred that calls for a different conclusion, the point of disagreement being in the
earnestly held conviction of this group that Congress exceeded its legitimate authority under the
Constitution.
CASE DIGEST:

JESUS P. MORFE v. AMELITO R. MUTUC, GR No. L-20387, 1968-01-31

Facts:
Congress in 1960 enacted the Anti-Graft and Corrupt Practices Act[1] to deter public officials and
employees from committing acts of dishonesty and improve the tone of morality in public service. It was...
declared to be the state policy "in line with the principle that a public office is a public trust, to repress
certain acts of public officers and private persons alike which constitute graft or corrupt practices or which
may lead thereto."
One of the specific provisions of the Anti-Graft and Corrupt Practices Act of 1960 is that every public
officer, either within thirty (30) days after its approval or after his assumption of office "and within the
month of January of every other year thereafter", as well as... upon the termination of his position, shall
prepare end file with the head of the office to which he belongs, "a true detailed and sworn statement of
assets and liabilities, including a statement of the amounts and sources of his income, the amounts of his
personal and family... expenses and the amount of income taxes paid for the next preceding calendar year
Then on February 14, 1962, came an Answer of the then Executive Secretary and the then Secretary of
Justice as defendants, where after practically admitting the facts alleged, they denied the erroneous
conclusion of law and as one of the special affirmative defenses set... forth: "1. That when a government
official, like plaintiff, accepts a public position, he is deemed to have voluntarily assumed the obligation to
give information about his personal affair, not only at the time of his assumption of office but during the
time... he continues to discharge public trust. The private life of an employee cannot be segregated from his
public life * * *."[9] The answer likewise denied that there was a violation of his constitutional rights... against
self-incrimination as well as unreasonable search and seizure and maintained that "the provision of law in
question cannot be attacked on the ground that it impairs plaintiff's normal and legitimate enjoyment of his
life and liberty because said provision merely seeks to... adopt a reasonable measure of insuring the interest
of general welfare in honest and clean public service and is therefore a legitimate exercise of the police
power."
Issues:
In this declaratory relief proceeding, the periodical submission "within the month of January of every other
year thereafter" of such sworn statement of assets and liabilities after an officer or employee had once
bared his financial condition upon assumption of office was... challenged for being violative of due process
as an oppressive exercise of police power and as an unlawful invasion of the constitutional right to privacy,
implicit in the ban against unreasonable search and seizure construed together with the prohibition against...
self-incrimination.
Ruling:
It would appear then that a reliance on that case for an allegation that this statutory provision offends
against the unreasonable search and seizure clause would be futile and unavailing. This is the more so in the
light of the latest decision of this
Court in Stonehill v. Diokno.[73] where this Court, through Chief Justice Concepcion, after stressing that the
constitutional requirements must be strictly complied with, and that it would be
"a legal heresy of the highest order to convict anybody of a violation of certain statutes without reference
to any of it its determinate provisions delimited its scope as "one of the most fundamental rights guaranteed
in our Constitution," safeguarding "the... sanctity of the domicile and the privacy of communication and
correspondence * * *." Such is precisely the evil sough to be remedied by the constitutional provision above
quoted - to outlaw the so-called general warrants.
It thus appears clear that no violation of the guarantee against unreasonable search and seizure has been
shown to exist by such requirement of further periodical submission of one's financial condition as set forth
in the Anti-Graft Act of 1960.
Nor does the contention of plaintiff gain greater plausibility, much less licit acceptance, by his invocation of
the non-incrimination clause. According to the Constitution: "No person shall be compelled to be a witness
against him... self."[74] This constitutional provision gives the accused immunity from any attempt by the
prosecution to make easier its task by coercing or intimidating him to furnish the evidence necessary to
convict. He may... confess, but only if he voluntarily wills it. He may admit certain facts but only if he freely
chooses to.[75] Or he could remain silent, and the prosecution is powerless to compel him to...
talk.[76] Proof is not solely testimonial in character. It may be documentary. Neither then could the
accused be ordered to write, when what comes from his pen may constitute evidence of guilt... or
innocence.[77] Moreover, there can be no search seizure of his house, papers or effects for the purpose of
locating incriminatory matter.
WHEREFORE, the decision of the lower court of July 19, 1962 "declaring unconstitutional, null and void
Section 7, Republic Act. No. 3019, insofar as it requires periodical submittal of sworn statements of financial
conditions, assets and liabilities of an official or... employee of the government after he had once submitted
such a sworn statement * * * is reversed." Without costs.