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G.R. No.

212376

MADAG BUISAN, et al., namely: HADJI MUSA MANALAG, HADJI SUKOR MAMADRA, H. SALAM TUMAGANTANG,
SUGRA SUKOR BUISAN, MONAURA TUMAGANTAING, NOJA TUMAGANTANG, SULTAN BUISAN, PAULO
TUMAGANTANG, DAKUNDAY MANALAG, KINGI BUISAN, BUGOY PANANGBUAN, TUMBA TUMAGANTANG,
MAMALO ELI, MALIGA ATOGAN, PAGUIAL SALDINA, EBRAHIM TAGURAK, HADJI ESMAEL KASAN, OTAP
GANDAWALI, TWAN IT SALAM, EDEL SABAL, GUIMA H. SALAM, KATUNTONG H. SALAM, THONY IBAD,
BANGKALING BANTAS, ALON KIKI, DAMDAEN TUMAGANTANG, MAMASALIDO KIKI, ROSTAN
TUMAGANTANG, MONTASER DAMDAMEN, MODSOL TANDIAN, RAHMAN SUKOR, SUKARNO H. SUKOR,
KUNGAS PAYAG, JIMIE BUISAN, MADAODAO KEDTUNGEN, TUTIN MANALAG, DATU ALI MANALAG, TUGAYA
MANALAG, SAGANDINGAN MANALAG, SAUIATRA MANALAG, KAUTIN MANALAG, PANTASDALANDAS,ULAD
BANTAS, PALANO BUISAN, PANIANG BUISAN, INDASIA BUISAN, MAKAKWA BUISAN, SULTAN BUISAN,
MANTIKAN BUISAN, ABULKARIM TUMAGANTANG, SAKMAG MANALAG, DEMALANES BUISAN, MANALAG
PAKAMAMA, MALAMBONG PANDIAN, ABDULKARIM TUMAGANTANG, GUIANDAL OPAO, KUSIN PUWI, H.
SULAIMAN UNAK, PABLO ALQUESAR, SAGIBA GABAO, TABUAN LUAY, POTENCIANO NAVARRO, KUSIN
PENEL, MALAMON TALIB, MALIGA BIDA, MOKAMAD KUDALIS, CEDULA PAGABANGAN, SALILAGUIA
LENANDANG, ENGKEL ALILAYA, MANGATOG SUDANG, MANAGKING MANGATONG, SEVERINO FERNANDEZ,
JOSEAS GOTOKANO, MALYOD LAWADI, MANSALGAN UDAY, SANDATO DALANDAS, BANTAS DALANDAS,
MAMANTAL DALANDAS, MAKALIPUAS MAKALILAY, BINGKONG BUISAN, FARIDA SUMAGKA, NUNET YUSOP,
KADIGIA SABAL, NANANGGA TAYA, MAMA BANGKALING, CORRY DAMO, BUKA LATIP, MADAODAO
KADTUNGAN, KOMINIE ADAM, BANGKALING BANTAS, RONIE EDZAKAL, KEDOPAO BUTO, SARIP
EDZEMBAGA, TUTEN MANALAG, ABAS LATIP, MAKALIPUAS MAKALILAY, DAGENDENGAN UMBAGA,
PAGUIAL LUBALANG, JIMMY BUISAN, KADIL SUKOR, JAKIRI LOZANO, MANUEL MAKATIMBEL, AISA
BANSUAN, TATO BUISAN, HARON ABO, MAMAAN LAMADA, THING GUIAMILON, TATO SUMAGKA, NORALYN
KAHAR, MOKAGI ANTAS, KINGI BUISAN, ZAINUDEN PANAYAMAN, PIAGA MANALAG, SAGIATRA MANALAG,
SAILA LATIP, PINKI KADTUNGAN, ALI ADTUNGAN, NANDING TAYA, INDAY BUISAN, KINTOL KADTUNGAN,
MALAWINIE EDZAKAL, MINGUTIN AMAL, BUGLI MANALAG, MANGAPANG SADINA, KURANUNGAN SADINA,
SANGUTIN LUBALANG, DAUD H. LATIP, REY PALAMAN, MONTANER KID, BAKATED KADTUNGAN,
GUIAMATULA DIMAGIL, ALON H. LATIP, SULTAN BUISAN, HADJI MUSA MANALAG, MANTO BANTAS, ABAS L.
LATIP, RODIEL KID, DATU BUTO ALI, ODIN TIAGO, ABDUL ANTA, EMBIT BUKA, LAGA KID, ULAMA DALUS,
SUWAILA DAMDAMIN, TALILISAN PALEMBA, LANTOKA PATOG, MAKATEGKA BANGKONG, BEMBI KUDO,
MOGAWAN GINANTE, PATANG BALODTO, EUSEBIO QUIJANO, FAISAN TAYA, LAGA KAHAR, ESMAEL KID,
TAYA PALAMAN, NORJANA BUISAN, TONTONGAN MANALAG, SAMIER MANGULI, SINUMAGAD BANSUAN,
BHING HARON, NENENG BUISAN, DIDO KID, ZALDI AGIONG, ROWENA MANALAG, NASSER MAMALANGKAP,
TANOSI ZUMBAGA, GUIDAT DANDALANAN, FATIMA KID, KIMAMA KATIMPO, ALON GUIANDAL, MAMALUBA
AKOD, AIN SUKOR and NORIA DALANDAS, all represented by BAI ANNIE C. MONTAWAL, Petitioners,
vs.
COMMISSION ON AUDIT and DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, Respondents.

DECISION

REYES, J.:

Before the Court is a Petition for Review on Certiorari1under Rule 64, in relation to Rule 65, of the Rules of Court assailing the
Decision2 dated November 20, 2012 of the Commission on Audit (COA) in COA CP Case No. 2010-089, which denied the money
claims of Madag Buisan (Buisan), et al. (petitioners) against the Department of Public Works and Highways (DPWH) in the amount
of ₱122,051,850.00 for lack of merit, and the Resolution 3 dated February 14, 2014 denying the motion for reconsideration.

The Antecedents

In 1989, the DPWH undertook the construction of the Liguasan Cut-off hannel (Project) in Tunggol, Pagalungan, Maguindanao, to
minimize the perennial problem of flooding in the area. In April 2001, the DPWH received various claims from land owners for
damages allegedly caused to their properties, crops and improvements by the premature opening of the Project. Hence, the Regional
Director (RD), DPWH Regional Office (R.O.) No. XII, Cotabato City, investigated the claims. 4

The DPWH R.O. No. XII and the Technical Working Group (TWG) recommended in 2004 to pay just compensation to the claimants.
The TWG, however, noted that since the event occurred in 1989, it could not account physically the actual quantity of the damaged
crops and properties. In 2006, an ad hoc committee was created to determine the legality and propriety of the claims. However, due to
the considerable lapse of time and the insufficiency of evidence, no final resolution was made by the DPWH. The claims were
forwarded to the RD of the DPWH R.O. No. XII to be returned to the claimants, as such are considered to be under the jurisdiction of
the COA pursuant to Rule VIII of the 2009 Revised Rules of Procedure of the COA. 5
On April 14, 2010, the petitioners, represented by Mayor Bai Annie C. Montawal (Montawal), filed a petition with the COA, 6 praying
that the DPWH be ordered to pay the petitioners the sum of ₱122,051,850.00 as compensation for their damaged crops, properties and
improvements. On September 16, 2010, Buisan filed a Motion to Dismiss the Petition alleging that Montawal was not authorized to
represent them. In fact, Buisan and the other claimants filed a separate petition with the COA based on that same money claim.7

In its Answer, the DPWH averred that the petitioners failed to establish that they are the owners of crops and properties allegedly
damaged, and that the damage was caused by the construction of the Project. Moreover, the DPWH asserted that the petitioners' cause
of action had already prescribed. 8

In its Decision9 dated November 20, 2012, the COA denied the money claims of the petitioners, to wit:

WHEREFORE, premises considered, this Commission DENIES the herein Petition for money claim for lack of merit. 10

The COA held that for the petitioners' failure to file their money claims within a reasonable time, they are deemed to have committed
laches. Furthermore, the petitioners' cause of action had already prescribed in view of Article 1146 of the Civil Code. 11

The petitioners filed a motion for reconsideration, but the same was denied by the COA for lack of merit. 12

Issue

WHETHER THE COA GRAVELY ABUSED ITS DISCRETION IN FINDING THAT THE PETITIONERS' CLAIM WAS
BARRED BY LACHES AND PRESCRIPTION.

Ruling of the Court

The Court denies the petition.

The petition failed to comply with


the rules on certification against
forum shopping.

Section 5 of Rule 64 of the Rules of Court requires, among others, that in a petition for review of judgments and final orders or
resolutions of COA, the petition should be verified and contain a sworn certification against forum shopping as provided in the fourth
paragraph of Section 3, Rule 46, viz.:

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. - x x x.

xxxx

The petitioner shall also submit together with the petition a sworn certification that he has not theretofore commenced any other action
involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if
there is such other action or proceeding, he must state the status of the same; and if he should thereafter learn that a similar action or
proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other
tribunal or agency, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five (5) days
therefrom.

xxxx

The failure of the petitioner to comply any of the requirements shall be sufficient ground for the dismissal of the
petition. (Emphasis ours)

In the present case, the certification against forum shopping was signed by Montawal, the mayor of the Municipality of Montawal,
Maguindanao. 13 Her bare statement that she was the petitioners' duly constituted attorney-in-fact in filing the petition before the COA
can hardly constitute as compliance with the rules. She did not even append a Special Power of Attorney executed by the affected
landowners. Montawal's legal capacity to sue on behalf of the petitioners is questionable, considering that her authority to represent
the claimants was even assailed by the petitioners, when they filed with the COA a Motion to Dismiss the Petition filed therein by
Montawal.14
In the case of natural persons, the rule requires the parties themselves to sign the certification against forum shopping. The reason for
such requirement is that the petitioner himself knows better than anyone else whether a separate case has been filed or pending which
involves substantially the same issues. 15 In this case, the certification against forum shopping in the filing of this petition was neither
signed by the petitioners nor their counsel, but by the mayor of their town who is not even one of the petitioners in this case.
Evidently, the petitioners failed to comply with the certification against forum shopping requirement absent any compelling reason as
to warrant an exception based on the circumstances of the case. 16

The Doctrine of Non-Suability of

State insulates the DPWH, a


governmental entity, from claims of
damages.

The fundamental law of the land provides that the State cannot be sued without its consent. 17 It is a fundamental postulate of
constitutionalism flowing from the juristic concept of sovereignty that the State, as well as its government, is immune from suit unless
it gives its consent. The rule, in any case, is not absolute for it does not say that the State may not be sued under any circumstances.
The doctrine only conveys that "the state may not be sued without its consent;" its clear import then is that the State may at times be
sued. 18 Suits filed against government agencies may either be against incorporated or unincorporated agencies. In case of incorporated
agencies, its suability depends upon whether its own organic act specifically provides that it can sue and be sued in Court. 19

As the State's engineering and construction arm, the DPWH exercises governmental functions that effectively insulate it from any suit,
much less from any monetary liability. The construction of the Project which was for the purpose of minimizing the perennial problem
of flood in the area of Tunggol, Montawal, Maguindanao, is well within the powers and functions of the DPWH as mandated by the
Administrative Code of 1997.

Hence, the Doctrine of Non-Suability clothes the DPWH from being held responsible for alleged damages it performed in consonance
with its mandated duty. Nowhere does it appear in the petition that the State has given its consent, expressly or impliedly, to be sued
before the courts. The failure to allege the existence of the State's consent to be sued in the complaint is a fatal defect, and on this basis
alone, should cause the dismissal of the complaint. 20

The petitioners' cause of action has


been barred by prescription and
laches.

The COA denied the petition primarily on the ground that the petitioners filed their money claims only on 2014, or 15 years after their
cause of action arose in 1989. The petitioners' assertion that the cause of action arose in 1992 is self-serving as no pieces of evidence
was presented or even attached as supporting documents in their petition to prove their claim. Worse, the petitioners could not even
pinpoint the exact moment of time of the destruction of their properties.21

The petitioners' statement that there were already heavy rains since 1989 that caused flooding in the area negates their previous claim
that the cause of action arose in 1992. If in fact there were already heavy rains since 1989, then it can also be argued that prior to 1992,
their properties were already damaged by the floods and that would be the reckoning point of their cause of action. This further
establishes that their cause of action has already prescribed. Thus, while it may be argued that the petitioners have a cause of action
against the DPWH, the same has already prescribed in view of Article 1146 of the Civil Code, viz.:

ART. 1146. The following actions must be instituted within four years:

(1) Upon an injury to the rights of the plaintiff;

(2) Upon a quasi-delict. (Emphasis ours)

Undeniably, the petitioners' money claims which were only filed with the DPWH in 2004 or even in 2001 had already
prescribed.1âwphi1 As correctly pointed out by the Office of the Solicitor General, "[i]t will be the height of injustice for respondent
DPWH to be confronted with stale claims, where verification on the plausibility of the allegations remains difficult, either because the
condition of the alleged inundation of crops has changed, or the physical impossibility of accounting for the lost and damaged crops
due to the considerable lapse of time." 22

On the other hand, "[l]aches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that
which, by exercising due diligence could or should have been done earlier."23
In the case at bar, laches has set in as the elements24 thereof are present. Firstly, the premature opening by the DPWH of the Project
allegedly causing flash floods, and damaging the petitioners' properties took place in 1989 or even in 1992. Secondly, the petitioners
took 15 years to assert their rights when they formally filed a complaint in 2004 against the DPWH. Thirdly, as the petitioners failed
to file a formal suit for their claims before the COA, there is an apparent lack of notice that would give the DPWH the opportunity to
defend itself.

Under Commonwealth Act No. 327,25 as amended by Section 26 of Presidential Decree No. 1445, 26 which were the applicable laws at
the time the cause of action arose, the COA has primary jurisdiction over money claims against government agencies and
instrumentalities. Moreover, Rule II, Section 1 (b) of the 2009 Revised Rules of Procedure of the COA27 specifically enumerated those
matters falling under COA's exclusive jurisdiction, which include "money claims due from or owing to any government agency." Rule
VIII, Section l (a) further provides that COA shall have original jurisdiction over money claims against the Government, among
others. Therefore, the petitioners' money claims have prescribed and are barred by laches for their failure to timely file the petition
with the COA.

COA did not abuse its discretion in


denying the petitioners' claims for
damages against the DPWH.

Even if the Court sets aside the technical and procedural issues in the interest of substantive justice, the instant petition must be
denied. The COA is endowed with enough latitude to determine, prevent, and disallow irregular, unnecessary, excessive, extravagant
or unconscionable expenditures of government funds. It is tasked to be vigilant and conscientious in safeguarding the proper use of the
government's and, ultimately, the people's property. The exercise of its general audit power is among the constitutional mechanisms
that gives life to the check and balance system inherent in our form of government. 28

In denying the petitioners' money claims against the DPWH, the COA did not abuse the exercise of its discretion as its denial was
grounded on facts and circumstances that would warrant such denial arising from the following observations:

In her 5th Indorsement dated July 22, 2011, the ATL, DPWH, Cotabato 2 nd Engineering District, interposed no objection to the claims
for payment for damaged crops allegedly caused by the construction of the [Project] but made significant observations, among others,
to wit:

xxxx

3. That the names of claimants and other details in the attached List of Claims for Crop Damages Affected by the Overflow of the
Diversion Cut-Off Channel in Tunggol, Pagalungan, Maguindanao, (Annexes C-1 to C-12) submitted by the IROW Task Force,
DPWH Central Office amounting to ₱122,049,550.00, were based on and the same with that of the following three (3) reports:

3.1) Undated and Unsigned "List of Improvements Affected by the Overflow of the Diversion Cut-Off Channel in Tunggol,
Pagalungan, Maguindanao amounting to ₱122,049,550.00 (Annex "D" to Annex "D-4") with sub-heading, "NOTE: BASE[D] ON
THE ATTACHED AFFIDAVIT AND APPROVED DATA FROM ARMM" (Original List)

xxxx

4. That in the above-mentioned paragraph (3.1), the claimants/owners declared their lots as either cornland, riceland, lowland or
marshyland as opposed to their claim for crop damages for coconut trees, mango trees, coffee, jackfruits and banana under
paragraphs (3.2) and (3.3) and Annexes "C-1" to "C-12", mentioned below.

5. That [in the] analysis of all lists with regards to the population density of plant and fruit trees, it was computed that population
density was only about 2-3 per square meter. This means that the distance of every fruit tree trunk/clump to each other is only about 2-
3 meters, hence, in order for the fruit trees to be fruit bearing, it would appear that their branches would already be interlocking with
each other. (Schedule 1)

6. That in view of the above, the total number of fruit trees per lot indicated in the lists were determined to be only estimates
and not the actual number/quantity of fruit trees allegedly damaged.

7. That review of the lists of claimants disclosed that there are instances that two (2) or more claimants are owners of the same
lot number. (Schedule 2)
8. That [in the] tracing [of] the affected lots in the parcellary map, there were lots which we believe the flooding of which should
not be attributed to the construction of the Cut-Off Channel but to the original and existing course of the river. Moreover, said
lots are not on the downstream of the project (Lots # 61, 73, 74, 75, 76, 78, 297, 291, 289, 288, 287, 286, 284, 281, 282, 279, 280,
276, 273, 274, 271, 270, 265, 263, 301, 302, 303, 304, 305, 306, 307, 308, 309, 379, 377, 380, and 378). The construction of the Cut-
Off Channel was actually a relief to the upstream which [do not] experience perennial flooding, but sadly a disaster to the downstream
portion. (See attached parcellary Map).

xxxx

9. That there are listed lots which are not in the parcellary map. (Lot # 386, 1440, 1441, 1442, 1443 and 1444).

10. That all undated DECLARATION OF REAL PROPERTY submitted by the owners/claimants in support of [their] claims
for crop damages were all signed by Municipal Assessor Babai M. Bangkulit of Datu Montawal, Maguindanao, which we
believe were issued only on April 12, 2007, the same date the Statements of Tax Delinquency were signed by the
aforementioned Municipal Assessor.

11. That [in the] tracing [of] the lots on the parcellary map, majority of the lots are located on the side of the Municipality of
Pagalungan, Maguindanao, and not in the Municipality of Datu Montawal, Maguindanao. (See attached Parcellary Map).

xxxx

13. That not a single copy of land title was submitted by the claimants to prove that they are the legal owners and rightful
claimants to the alleged crop damages therein.

xxxx

Finally, the then Cluster Director, Cluster D-Economic Services, National Government Sector (NGS), this Commission, in her
8th Indorsement dated December 15, 2011, stated that taking into account the fact that DPWH undertook the construction of the
[Project] in the discharge of its governmental function, it cannot be held liable. In support of her position, she cited the decision
of the Supreme Court in the case of Torio vs. Fontanilla, G.R. No. L-29993 dated October 23, 1978, citing Palafox, et al. vs. Province
of Ilocos Norte, et al., 102 Phil 1186 (1958).

After observing that there are conflicting claims between the petitioners and that it is a primary consideration that a claim must
be instituted by the proper party in interest otherwise the same will fail, the then Cluster Director, Cluster D, NGS, this
Commission, recommended the dismissal of the Petition, subject to the final determination by the Commission Proper.29 (Emphasis
ours)

Absent any showing that COA capriciously, arbitrarily or whimsically exercised its discretion that would tantamount to evasion of a
positive duty or a virtual refusal to perform the duty or to act at all in contemplation of law resulting to the prejudice of the rights of
the claimants, the Court believes that COA did not abuse, much less gravely, its discretion in denying the claims of the petitioners.

Thus, the Court finds no grave abuse of discretion on the part of COA in denying the petitioners' money claims for failure to present
substantial evidence to prove that their properties were damaged by floods due to the premature opening of the Project of the DPWH.
Without a doubt, the inconsistencies and discrepancies in the evidence presented by the petitioners backed by the findings of COA
lead only to one inescapable conclusion: that there is no substantial evidence to prove the petitioners' claims that would render the
DPWH or the State liable for the amount claimed.

In the absence of grave abuse of discretion, the factual findings of COA, which are undoubtedly supported by the evidence on record,
must be accorded great respect and finality. COA, as the duly authorized agency to adjudicate money claims against government
agencies and instrumentalities has acquired special knowledge and expertise in handling matters falling under its specialized
jurisdiction.30

Finally, it is the general policy of the Court to sustain the decision of administrative authorities, especially one that was
constitutionally created like herein respondent COA, not only on the basis of the doctrine of separation of powers, but also of their
presumed expertise in the laws they are entrusted to enforce. It is, in fact, an oft-repeated rule that findings of administrative agencies
are accorded not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that would
amount to grave abuse of discretion. 31
WHEREFORE, the petition is DISMISSED. The Decision dated November 20, 2012 and Resolution dated February 14, 2014 of the
Commission on Audit in COA CP Case No. 2010-089 are hereby AFFIRMED.

G.R. No. 186717

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioners


vs.
JOCELYN I. BOLANTE, OWEN VINCENT D. BOLANTE, MA. CAROL D. BOLANTE, ALEJO LAMERA, CARMEN
LAMERA, EDNA CONSTANTINO, ARIEL C. PANGANIBAN, KATHERINE G. BOMBEO, SAMUEL S. BOMBEO,
MOLUGAN FOUNDATION, SAMUEL G. BOMBEO, JR., and NATIONAL LIVELIHOOD DEVELOPMENT
CORPORATION (Formerly Livelihood Corporation), Respondents

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

G.R. No. 190357

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, Petitioner,


vs.
HON. WINLOVE M. DUMAYAS, Presiding Judge of Branch 59, Regional Trial Court in Makati City, JOCELYN I.
BOLANTE, ARIEL C. PANGANIBAN, DONNIE RAY G. PANGANIBAN, EARL WALTER G. PANGANIBAN, DARRYL
G. PANGANIBAN, GAVINA G. PANGANIBAN, JAYPEE G. PANGANIBAN, SAMUEL S. BOMBEO, KA THERINE G.
BOMBEO, SAMUEL G. BOMBEO, JR., NATIONAL LIVELIHOOD DEVELOPMENT CORPORATION (FORMERLY
LIVELIHOOD CORPORATION), MOLUGAN FOUNDATION, ASSEMBLY OF GRACIOUS SAMARITANS
FOUNDATION, INC., ONE ACCORD CHRISTIAN COMMUNITY ENDEAVOR FOR SALVATION & SUCCESS
THROUGH POVERTY ALLEVIATION, INC., SOCIETY'S MULTI-PURPOSE FOUNDATION, INC., ALLIANCE FOR
THE CONSERVATION OF ENVIRONMENT OF PANGASINAN, INC., AND STA. LUCIA EDUCATIONAL
ASSOCIATION OF BULACAN, INC., Respondents.

DECISION

SERENO, J.:

G.R. No. 186717 is a petition for review on certiorari under Rule 45 of the Rules of Court, with an urgent prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction.1âwphi1 The petition seeks to nullify the Court of Appeals (CA)
Resolution 1 in CA-G.R. AMLC No. 00024. The CA Resolution denied petitioner's application to extend the freeze order issued on 4
Fehruary 20092 over the bank deposits and investments of respondents.

G.R. No. 190357 is a petition for certiorari under Rule 65 of the Rules of Court challenging the Resolution 3 and the Order4 issued by
the Regional Trial Court of Makati, Branch 59 (RTC), in AMLC Case No. 07-001. The RTC Resolution denied petitioner's application
for an order allowing an inquiry into the bank deposits and investments of respondents. The R TC Order denied petitioner's motion for
reconsideration.

FACTS

In April 2005, the Philippine National Bank (PNB) submitted to the Anti-Money Laundering Council (AMLC) a series of suspicious
transaction reports involving the accounts of Livelihood Corporation (LIVECOR), Molugan Foundation (Molugan), and Assembly of
Gracious Samaritans, Inc.

(AGS).5 According to the reports, LIVECOR transferred to Molugan a total amount of' ₱172.6 million in a span of 15 months from
2004 to 2005.6 On 30 April 2004, LIVECOR transferred ₱40 million to AGS, which received another P38 million from Molugan on
the same day. 7 Curiously, AGS returned the P38 million to Molugan also on the same day. 8

The transactions were reported '"suspicious" because they had no underlying legal or trade obligation, purpose or economic
justification; nor were they commensurate to the business or financial capacity of Molugan and AGS, which were both lowly
capitalized at P50,000 each.9 In the case of Molugan, Samuel S. Bombeo, who holds the position of president, secretary and treasurer,
is the lone signatory to the account. 10 In the case of AGS, Samuel S. Bombeo shares this responsibility with Ariel Panganiban. 11

On 7 March 2006, the Senate furnished the AMLC a copy of its Committee Report No. 54 12 prepared by the Committee on
Agriculture and Food and the Committee on Accountability of Public Officers and Investigations. 13
Committee Report No. 54 14 narrated that former Undersecretary of Agriculture Jocelyn I. Bolante (Bolante) requested the Department
of Budget and Management to release to the Department of Agriculture the amount of ₱728 million for the purchase of farm inputs
under the Ginintuang Masaganang Ani Program. This amount was used to purchase liquid fertilizers from Freshan Philippines, Inc.,
which were then distributed to local government units and congressional districts beginning January 2004. Based on the Audit Report
prepared by the Commission on Audit (COA), 15 the use of the funds was characterized by massive irregularities, overpricing,
violations of the procurement law and wanton wastage of scarce government resources.

Committee Report No. 54 also stated that at the time that he served as Undersecretary of Agriculture, Bolante was also appointed by
President Gloria Macapagal Arroyo as acting Chairman of LIVECOR.

The AMLC issued Resolution No. 75 16 finding probable cause to believe that the accounts of LIVECOR, Molugan and AGS - the
subjects of the suspicious transaction reports submitted by PNB - were related to what became known as the "fertilizer fund scam."
The pertinent portion of Resolution No. 75 provides:

Under the foregoing circumstances, there is probable cause to believe that the accounts of the foundations and its officers are related to
the fertilizer fund scam. The release of the amount of ₱728 million for the purchase of farm inputs to the Department of Agriculture
was made by Undersecretary Bolante. Undersecretary Bolante was the Acting Chairman of LIVECOR. LIVECOR transferred huge
amounts of money to Molugan and AGS, while the latter foundations transferred money to each other. Mr. [Samuel S.] Bombeo was
the President, Secretary, and Treasurer of Molugan. He, therefore, played a key role in these transactions. On the other hand, Mr.
[Ariel] Panganiban was the signatory to the account or AGS. Without his participation, these transactions could not have been
possible.

The acts involved in the "fertilizer scam" may constitute violation of Section 3(e) of Republic Act No. 3019, x x x as well as violation
or Republic Act No. 7080 (Plunder). 17

Thus, the AMLC authorized the filing of a petition for the issuance of an order allowing an inquiry into the six accounts 18 of
LIVECOR, Molugan, AGS, Samuel S. Bombeo and Ariel Panganiban. The AMLC also required all covered institutions to submit
reports of covered transactions and/or suspicious transactions of these entities and individuals, including all the related web of
accounts.

The petition was filed ex parte before the R TC and docketed as AMLC SP Case No. 06-003. On 17 November 2006, the trial court
found probable cause and issued the Order prayed for. 19 It allowed the AMLC to inquire into and examine the six bank deposits or
investments and the related web of accounts.

Meanwhile, based on the investigation of the Compliance and Investigation Group of the AMLC Secretariat, a total of 70 bank
accounts or investments were found to be part of the related web of accounts involved in the fertilizer fund scam.20

Accordingly, the AMLC issued Resolution No. 90 21 finding probable cause to believe that these 70 accounts were related to the
fertilizer fund scam. It said that the scam may constitute violations of Section 3(e) 22 of Republic Act No. (R.A.) 3019 (Anti-Graft and
Corrupt Practices Act) and R.A. 7080 (An Act Defining and Penalizing the Crime of Plunder). The AMLC therefore authorized the
filing of a petition for the issuance of an order allowing an inquiry into these 70 accounts. 23

On 14 February 2008, this Court promulgated Republic v. Eugenio.24 We ruled that when the legislature crafted Section 11 25 of
R.A. 9160 (Anti Money Laundering Act of 2001), as amended, it did not intend to authorize ex parte proceedings for the issuance of a
bank inquiry order by the CA. Thus, a bank inquiry order cannot be issued unless notice is given to the account holders.26 That notice
would allow them the opportunity to contest the issuance of the order.

In view of this development, the AMLC issued Resolution No. 40.27 It authorized the filing of a petition for the issuance of a freeze
order against the 70 accounts found to be related to the fertilizer fund scam.

Hence, the Republic filed an Ex Parte Petition28 docketed as CA-G.R. AMLC No. 00014 before the CA, seeking the issuance of a
freeze order against the 70 accounts.

The CA issued a freeze order effective for 20 days. 29 The freeze order required the covered institutions of the 70 accounts to desist
from and not allow any transaction involving the identified monetary instruments. It also asked the covered institutions to submit a
detailed written return to the CA within 24 hours from receipt of the freeze order.

The CA conducted a summary hearing of the application, 30 after which the parties were ordered to submit their memoranda,
manifestations and comments/oppositions. 31 The freeze order was later extended for a period of 30 days until 19 August 2008. 32
Finding that there existed probable cause that the funds transferred to and juggled by LIVECOR, Molugan, and AGS formed pati of
the ₱728 million fertilizer fund, the CA extended the effectivity of the freeze order for another four months, or until 20 December
2008. 33 The extension covered only 31 accounts, 34 which showed an existing balance based on the returns of the covered institutions.

In the meantime, the Republic filed an Ex Parte Application 35 docketed as AMLC Case No. 07-001 before the RTC. Drawing on the
authority provided by the AMLC through Resolution No. 90, the ex parte application sought the issuance of an order allowing an
inquiry into the 70 accounts.

The RTC found probable cause and issued the Order prayed for. 36 It allowed the AMLC to inquire into and examine the 70 bank
deposits or investments and the related web of accounts.

On 20 October 2008, this Court denied with finality the motion for reconsideration filed by the Republic in Eugenio. 37The Court
reiterated that Section 11 38 of R.A. 9160, as then worded, did not allow a bank inquiry order to be issued ex parte; and that the
concerns of the Republic about the consequences of this ruling could be more properly lodged in the legislature.

Thus, in order to comply with the ruling in Eugenio, the Republic filed an Amended and Supplemental Application 39in AMLC Case
No. 07- 001 before the RTC. The Republic sought, after notice to the account holders, the issuance of an order allowing an inquiry
into the original 70 accounts plus the six bank accounts that were the subject of AMLC SP Case No. 06-003. A summary hearing
thereon ensued.

On the belief that the finality of Eugenio constituted a supervening event that might justify the filing of another petition for a freeze
order, the AMLC issued Resolution No. 5.40 The resolution authorized the filing of a new petition for the issuance of a freeze order
against 24 41 of the 31 accounts previously frozen by the CA.

Hence, the Republic filed an Urgent Ex Parte Petition42 docketed as CA-G.R. AMLC No. 00024 before the CA seeking the issuance of
a freeze order against the 24 accounts.

In the Resolution dated 4 February 2009,43 the CA issued a freeze order effective for 20 days. The freeze order required the covered
institutions of the 24 accounts to desist from and not allow any transaction involving the identified monetary instruments. It also asked
the covered institutions to submit a detailed written return to the CA within 24 hours from receipt of the freeze order.

A summary hearing was conducted by the CA for the purpose of determining whether to modify, lift or extend the freeze
order. 44 Thereafter, the parties were required to submit memoranda.

THE CHALLENGED RESOLUTIONS

The assailed CA Resolution dated 27 February 200945 denied the application to extend the freeze order issued on 4 February 2009.

The CA found that the Republic had committed forum shopping.46 Specifically, the appellate court found that the parties in CA-G.R.
AMLC No. 00024 were the same as those in CA-G.R. AMLC No. 00014. The petition in CA-G.R. AMLC No. 00024 sought the
issuance of a freeze order against the same accounts covered by CA-G.R. AMLC No. 00014. Finally, the rights asserted and reliefs
prayed for in both petitions were substantially founded on the same facts, thereby raising identical causes of action and issues.

The CA found no merit in the assertion of the Republic that the ruling in Eugenio was a supervening event that prevented the latter
from concluding its financial investigation into the accounts covered by the freeze order in CA-G.R. AMLC No. 00014.47 The CA
noted that Eugenio was promulgated on 14 February 2008, or almost five months before the Republic filed CA-G.R. AMLC No.
00014 before the CA and AMLC Case No. 07-001 before the RTC. According to the appellate court, since the Republic was faced
with the imminent finality of Eugenio, it should have taken steps to expedite the conduct of the inquiry and the examination of the
bank deposits or investments and the related web of accounts.

At any rate, the CA found that the petition in CA-G.R. AMLC No. 00024 was effectively a prayer for the further extension of the 5-
month, 20- day freeze order already issued in CA-G.R. AMLC No. 00014.48 The extension sought is proscribed under Section 53 of
Administrative Circular No. 05-11-04-SC.49 According to this provision, the effectivity of a freeze order may be extended for good
cause shown for a period not exceeding six months.

Aggrieved, the Republic filed the instant petition for review on certiorari with an urgent prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction docketed as G.R. No. 186717.

On 25 March 2009, this Court issued a Status Quo Ante Order50 enjoining the implementation of the assailed CA Resolution.
At the time of the submission of respondents' Comment 51 and petitioner's Consolidated Reply52 in G.R. No. 186717, the RTC issued
the challenged Resolution dated 3 July 200953 in AMLC Case No. 07-001. The trial court denied the Republic's application for an
order allowing an inquiry into the total of 76 bank deposits and investments of respondents.

The RTC found no probable cause to believe that the deposits and investments of respondents were related to an unlawful activity. 54 It
pointed out that the Republic, in support of the latter's application, relied merely on two pieces of evidence: Senate Committee Report
No. 54 and the court testimony of witness Thelma Espina of the AMLC Secretariat. According to the RTC, Senate Committee Report
No. 54 cannot be taken "hook, line and sinker, " 55because the Senate only conducts inquiries in aid of legislation.

Citing Neri v. Senate Committee on Accountability of Public Officers and Investigations, 56 the trial court pronounced that the Senate
cannot assume the power reposed in prosecutorial bodies and the courts - the power to determine who are liable for a crime or an
illegal activity. 57 On the other hand, the trial court noted that the testimony of the witness merely relied on Senate Committee Report
No. 54. The latter "admitted that the AMLC did not bother to confirm the veracity of the statements contained therein." 58

The RTC instead gave credence to the Audit Report prepared by COA. While outlining the irregularities that attended the use of the
fertilizer fund, COA also showed that none of the funds were channeled or released to LIVECOR, Molugan or AGS.59 The trial court
also took note of the evidence presented by Bolante that he had ceased to be a member of the board of trustees of LIVECOR on 1
February 2003, or more than 14 months before the transfers were made by LIVECOR to Molugan as indicated in the suspicious
transaction reports submitted by PNB.60 Furthermore, the RTC found that the transfers made by LIVECOR to Molugan and AGS
came from the P60 million Priority Development Assistance Fund of Senator Joker Arroyo. 61

62
The Republic moved for reconsideration, but the motion was denied by the RTC in the challenged Order dated 13 November 2009.

Hence, the Republic filed the instant petition for certiorari docketed as G.R. No. 190357.

The Court resolved to consolidate G.R. No. 190357 with G.R. No. 186717, considering that the issues raised in the petitions were
closely intertwined and related.63 On 6 December 2010, these petitions were given due course, and all parties were required to submit
memoranda.64

Amid reports that the Office of the Ombudsman (Ombudsman) had filed plunder cases against those involved in the fertilizer fund
scam, the Court issued the Resolution dated 16 November 2011. 65 We required the AMLC and the Ombudsman to move in the
premises and jointly manifest whether the accounts, subject of the instant petitions, were in any way related to the plunder cases
already filed.

In their compliance dated 14 March 2012,66 the AMLC and the Ombudsman manifested that the plunder case filed in connection with
the fertilizer fund scam included Bolante, but not the other persons and entities whose bank accounts are now the subject of the instant
petitions. That plunder case was docketed as SB-l 1-CRM-0260 before the Second Division of the Sandiganbayan.

ISSUES

The following are the issues for our resolution:

1. Whether the Republic committed forum shopping in filing CA-G.R. AMLC No. 00024 before the CA

2. Whether the RTC committed grave abuse of discretion in ruling that there exists no probable cause to ailow an inquiry into
the total of 76 deposits and investments of respondents

OUR RULING

I.

The Republic committed forum shopping.

As we ruled in Chua v. Metropolitan Bank and Trust Co., 67 forum shopping is committed in three ways: (1) filing multiple cases
based on the same cause of action and with the same prayer, where the previous case has not yet been resolved (the ground for
dismissal is litis pendentia); (2) filing multiple cases based on the same cause of action and with the same prayer, where the previous
case has finally been resolved (the ground for dismissal is res judicata); and (3) filing multiple cases based on the same cause of
action, but with different prayers (splitting of causes of action, where the ground for dismissal is also either litis pendentia or res
judicata).
In the instant petitions, the Republic focused its energies on discussing why it did not commit forum shopping on the ground of litis
pendentia. In its Memorandum, it argued:

While it is true that a previous freeze order was issued in CA-G.R. AMLC No. 00014 covering some of the accounts subject of CA-
G.R. AMLC No. 00024, CA-G.R. AAILC No. 00014 had already attained finality when the second petition was filed, neither petitioner
nor any of the respondents interposed an appeal therefrom, pursuant to Section 57 of the Rule of Procedure in Cases of Civil
F01feiture, etc .. The principle of lit is pendentia presupposes the pendency of at least one case when a second case is filed. Such
situation does not exist in the present controversy since CA-G.R. AMLC No. 00014 was no longer pending but has attained finality
when the second petition was filed. 68

In a clear illustration of the phrase, out of the frying pan and into the fire, the Republic vigorously resisted the application of forum
shopping on the ground of litis pendentia, only to unwittingly admit that it had possibly committed forum shopping on the ground
of res judicata.

We are not even sure where the Republic got the notion that the CA found "that the filing of the second petition for freeze order
constitutes forum shopping on the ground of litis pendentia."69 In its assailed Resolution, the appellate court aptly cited Quinsay
v. CA,70 stating that "forum shopping concurs not only when a final judgment in one case will amount to res judicata in another, but
also where the elements of litis pendentia are present."71 It then went on to enumerate the aforecited elements of litis
pendentia, namely: (I) identity of parties, or those that represent the same interests in both actions; (2) identity of rights asserted and
relief sought, with the relief founded on the same facts; and (3) identity of the two preceding particulars, such that any judgment
rendered in one proceeding will, regardless of which party is successful, amount to res judicata in the other. The CA only discussed
how these elements were present in CA-G.R. AMLC No. 00024 and CA-G.R. AMLC No. 00014 in relation to each other. Nowhere
did the CA make any categorical pronouncement that the Republic had committed forum shopping on the ground of litis pendentia.

With this clarification, we discuss how all the elements of litis pendentia are present in the two petitions for the issuance of a freeze
order.

First, there is identity of parties. In both petitions, the Republic is the petitioner seeking the issuance of a freeze order against the bank
deposits and investments. The 24 accounts sought to be frozen in CA-G.R. AMLC No. 00024 were part of the 31 accounts previously
frozen in CA-G.R. AMLC No. 00014,72 and the holders of these accounts were once again named as respondents.

Second, there is an identity of rights asserted and relief sought based on the same facts. The AMLC filed both petitions in pursuance
of its function to investigate suspicious transactions, money laundering activities, and other violations of R.A. 9160 as
amended. 73 The law also granted the AMLC the authority to make an ex parte application before the CA for the freezing of any
monetary instrument or property alleged to be the proceeds of any unlawful activity, as defined in Section 3(i) thereof. 74

Both petitions sought the issuance of a freeze order against bank deposits and investments believed to be related to the fertilizer fund
scam. Notably, while the petition in CA-G.R. AMLC No. 00014 narrated the facts smTounding the issuance of AMLC Resolution
Nos. 75 and 40,75 the petition in CA-G.R. AMLC No. 00024 used as its foundation the previous grant of the freeze order in CA-G.R.
AMLC No. 00014 and the extensions of its effectivity.76 Nevertheless, both petitions highlighted the role of Senate Committee Report
No. 54 in providing AMLC with the alleged link between the fertilizer fund scam and the bank deposits and investments sought to be
frozen. 77

Third, the judgment in CA-G.R. AMLC No. 00014 barred the proceedings in CA-G.R. AMLC No. 00024 by resjudicata.

Res judicata is defined as a matter adjudged, a thing judicially acted upon or decided, or a thing or matter settled by judgment. 78 It
operates as a bar to subsequent proceedings by prior judgment when the following requisites concur: (1) the former judgment is final;
(2) it is rendered by a court having jurisdiction over the subject matter and the parties; (3) it is a judgment or an order on the merits;
and (4) there is - between the first and the second actions - identity of parties, subject matter, and causes of action. 79

Clearly, the resolution in CA-G.R. AMLC No. 00014 extending the effectivity of the freeze order until 20 December 2008 attained
finality upon the failure of the parties to assail it within 15 days from notice. The

Resolution was rendered by the CA, which had jurisdiction over applications for the issuance of a freeze order under Section 10 80 of
R.A. 9160 as amended. It was a judgment on the merits by the appellate court, which made a determination of the rights and
obligations of the parties with respect to the causes of action and the subject matter. 81 The determination was based on the pleadings
and evidence presented by the parties during the summary hearing and their respective memoranda. Finally, there was - between CAG.
R. AMLC No. 00014 and CA-G.R. AMLC No. 00024 - identity of parties, subject matter and causes of action.
The Republic's commission of forum shopping is further illustrated by its awareness that the effectivity of the freeze order in CA-G.R.
AMLC No. 00014 had already been extended to 5 months and 20 days. Under

Section 5382 of A.M. No. 05-11-04-SC,83 the original 20-day effectivity period of a freeze order may only be extended by the CA for
good cause for a period not exceeding six months. Because of this predicament, the Republic sought to avoid seeking a further
extension that is clearly prohibited by the rules by allowing the extended freeze order in CA-G.R. AMLC No. 00014 to lapse on 20
December 2008. Instead, it filed the petition in CA-G.R. AMLC No. 00024 alluding to the exact same facts and arguments but citing a
special factual circumstance that allegedly distinguished it from CA-G.R. AMLC No. 00014.

The Republic argued that CA-G.R. AMLC No. 00024 was filed at the advent of Eugenio. The ruling was a supervening event that
prevented the Republic from concluding its exhaustive financial investigation within the auspices of the bank inquiry order granted by
the RTC in AMLC Case No. 07-001 and the freeze order granted by the CA in CA-G.R. AMLC No. 00014.84

We find no merit in this argument. The promulgation of Eugenio was not a supervening event under the circumstances. "Supervening
events refer to facts which transpire after judgment has become final and executory or to new circumstances which developed after the
judgment has acquired finality, including matters which the parties were not aware of prior to or during the trial as they were not yet in
existence at that time."85

As aptly pointed out by the appellate court, Eugenio was promulgated five months before the filing of the petition in CA-G .R. AMLC
No. 00014.

Indeed the Decision therein only attained finality upon the denial of the motion for reconsideration on 20 October 2008, or before the
filing of the petition in CA-G.R. AMLC No. 0002. The ruling, however, cannot be regarded as a matter that the parties were not aware
of prior to or during the trial of CA-G.R. AMLC No. 00014.

In fact, it was because of Eugenio that CA-G.R. AMLC No. 00014 was filed in the first place.

We have not painstakingly narrated all the relevant facts of these cases for nothing. It should be noted that before the ruling
in Eugenio, the AMLC commenced its investigations into the fertilizer fund scam by filing petitions for bank inquiry orders. Thus, it
issued Resolutions No. 75 and 90, both authorizing the filing of petitions for the issuance of orders allowing an inquiry into the
pertinent bank deposits and investments.

According to the Court in Eugenio, "a requirement that the application for a bank inquiry order be done with notice to the account
holder will alert the latter that there is a plan to inspect his bank account on the belief that the funds therein are involved in an
unlawful activity or money laundering offense."86 Alarmed by the implications of this ruling, the AMLC changed tack and decided to
pursue the only other remedy within its power to obtain ex parte at the time. Hence, it issued Resolution No. 40 authorizing the filing
of CA-G.R. AMLC No. 00014 for the issuance of a freeze order to preserve the 70 bank deposits and investments and prevent the
account holders from withdrawing them. The pertinent portion of AMLC Resolution No. 40 provides:

In the Resolution No. 90, dated October 26, 2007, the Council found probable cause that the accounts of the subject individuals and
entities are related to the fertilizer fund scam and resolved to authorize the tiling of a petition for the issuance of a freeze order
allowing inquiry into the following accounts:

xxxx

However, in Republic vs. Eugenio (G.R. No. 174629, February 14, 2008), the Supreme Court ruled that proceedings in applications
for issuance of an order allowing inquiry should be conducted after due notice to the respondents/account holders.

In the light of the aforesaid ruling of the Supreme Court, the Council resolved to:

1. Authorize the AMLC Secretariat to file with the Court of Appeals, through the Office of the Solicitor General, a petition for freeze
order against the following bank accounts and all related web of accounts wherever these may be found: 87

Notably, it was only after the freeze order had been issued that AMLC Case No. 07-001 was filed before the RTC to obtain a bank
inquiry order covering the same 70 accounts.

Presently, while Eugenio still provides much needed guidance in the resolution of issues relating to the freeze and bank inquiry orders,
the Decision in that case no longer applies insofar as it requires that notice be given to the account holders before a bank inquiry order
may be issued. Upon the enactment of R.A. 10167 on 18 June 2012, Section 11 of R.A. 9160 was further amended to allow the AMLC
to file an ex parte application for an order allowing an inquiry into bank deposits and investments. Section 11 of R.A. 9160 now reads:

Section 11. Authority to Inquire into Bank Deposits. - Notwithstanding the provisions of Republic Act No. 1405, as amended,
Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular
deposit or investment, including related accounts, with any banking institution or non-bank financial institution upon order of any
competent court based on an ex parte application in cases of violations of this Act, when it has been established that there is
probable cause that the deposits or investments, including related accounts involved, are related to an unlawful activity as defined in
Section 3(i) hereof or a money laundering offense under Section 4 hereof; except that no court order shall be required in cases
involving activities defined in Section 3(i)(1 ), (2 ), and (12) hereof and felonies or offenses of a nature similar to those mentioned in
Section 3(i)(l ), (2), and (12), which are Punishable under the penal laws of other countries, and terrorism and conspiracy to commit
terrorism as defined and penalized under Republic Act No. 9372.

The Court of Appeals shall act on the application to inquire in lo or examine any depositor or investment with any banking institution
or nonbank financial institution within twenty-four (24) hours from filing of the application.

To ensure compliance with this Act, the Bangko Sentral ng Pilipinas may, in the course of a periodic or special examination, check the
compliance of a Covered institution with the requirements of the AMLA and its implementing rules and regulations.

For purposes of this section, related accounts' shall refer to accounts, the funds and sources of which originated from and/or are
materially linked to the monetary instrument(s) or property(ies) subject of the freeze order(s).

A court order ex parte must first be obtained before the AMLC can inquire into these related Accounts: Provided, That the procedure
for the ex parte application of the ex parte court order for the principal account shall be the same with that of the related accounts.

The authority to inquire into or examine the main account and the related accounts shall comply with the requirements of Article III,
Sections 2 and 3 of the 1987 Constitution, which are hereby incorporated by reference. (Emphasis supplied)

The constitutionality of Section 11 of R.A. 9160, as presently worded, was upheld by the Court En Banc in the recently
promulgated Subido Pagente Certeza Mendoza and Binay Law Offices v. CA. 88 The Court therein ruled that the AMLC's ex
parte application for a bank inquiry, which is allowed under Section 11 of R.A. 9160, does not violate substantive due process. There
is no such violation, because the physical seizure of the targeted corporeal property is not contemplated in any form by the law. 89 The
AMLC may indeed be authorized to apply ex parte for an inquiry into bank accounts, but only in pursuance of its investigative
functions akin to those of the National Bureau of Investigation. 90 As the AMLC does not exercise quasi-judicial functions, its inquiry
by court order into bank deposits or investments cannot be said to violate any person's constitutional right to procedural due process.91

As regards the purported violation of the right to privacy, the Court recalled the pronouncement in Eugenio that the source of the right
to privacy governing bank deposits is statutory, not constitutional. 92 The legislature may validly carve out exceptions to the rule on the
secrecy of bank deposits, and one such legislation is Section 11 of R.A. 9160. 93

The Comi in Subido emphasized that the holder of a bank account that is the subject of a bank inquiry order issued ex parte has the
opportunity to question the issuance of such an order after a freeze order has been issued against the account. 94 The account holder
can then question not only the finding of probable cause for the issuance of the freeze order, but also the finding of probable cause for
the issuance of the bank inquiry order. 95

II.

The RTC's finding that there was no


probable cause for the issuance of a
bank inquiry order was not tainted
with grave abuse of discretion.

Rule 10.2 of the Revised Rules and Regulations Implementing Republic Act No. 9160, as Amended by Republic Act No. 9194,
defined probable cause as "such facts and circumstances which would lead a reasonably discreet, prudent or cautious man to believe
that an unlawful activity and/or a money laundering offense is about to be, is being or has been committed and that the account or any
monetary instrument or property subject thereof sought to be frozen is in any way related to said unlawful activity and/or money
laundering offense." As we observed in Subido,96 this definition refers to probable cause for the issuance of a freeze order against an
account or any monetary instrument or property subject thereof. Nevertheless, we shall likewise be guided by the pronouncement
in Ligot v. Republic97 that "probable cause refers to the sufficiency of the relation between an unlawful activity and the property or
monetary instrument."

In the issuance of a bank inquiry order, the power to determine the existence of probable cause is lodged in the trial court. As we ruled
in Eugenio:

Section 11 itself requires that it be established that "there is probable cause that the deposits or investments are related to unlawful
activities," and it obviously is the court which stands as arbiter whether there is indeed such probable cause. The process of inquiring
into the existence of probable cause would involve the function of determination reposed on the trial court. Determination clearly
implies a function of adjudication on the part of the trial court, and not a mechanical application of a standard predetermination by
some other body. The word "determination'' implies deliberation and is, in normal legal contemplation, equivalent to ''the decision of a
court of justice."

The court receiving the application for inquiry order cannot simply take the AMLC's word that probable cause exists that the deposits
or investments are related to an unlawful activity. It will have to exercise its own determinative function in order to be convinced of
such fact.98

For the trial court to issue a bank inquiry order, it is necessary for the AMLC to be able to show specific facts and circumstances that
provide a link between an unlawful activity or a money laundering offense, on the one hand, and the account or monetary instrument
or property sought to be examined on the other hand. In this case, the R TC found the evidence presented by the AMLC wanting. For
its part, the latter insists that the RTC's determination was tainted with grave abuse of discretion for ignoring the glaring existence of
probable cause that the subject bank deposits and investments were related to an unlawful activity.

Grave abuse of discretion is present where power is exercised in an arbitrary or despotic manner by reason of passion, prejudice or
personal hostility, that is so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform a duty
enjoined or to act at all in contemplation of law.99 For certiorari to lie, it must be shown that there was a capricious, arbitrary and
whimsical exercise of power - the very antithesis of the judicial prerogative. 100

We find no reason to conclude that the R TC determined the existence of probable cause, or lack thereof, in an arbitrary and whimsical
manner.1âwphi1

To repeat, the application for the issuance of a bank inquiry order was supported by only two pieces of evidence: Senate Committee
Report No. 54 and the testimony of witness Thelma Espina.

We have had occasion to rule that reports of the Senate stand on the same level as other pieces of evidence submitted by the parties,
and that the facts and arguments presented therein should undergo the same level of judicial scrutiny and analysis. 101 As courts have
the discretion to accept or reject them, 102 no grave error can be ascribed to the RTC for rejecting and refusing to give probative value
to Senate Committee Report No. 54.

At any rate, Senate Committee Report No. 54 only provided the AMLC with a description of the alleged unlawful activity, which is
the fertilizer fund scam. It also named the alleged mastermind of the scam, who was respondent Bolante. The entire case of the
AMLC, however, hinged on the following excerpt of Senate Committee Report No. 54:

But Undersecretary Bolante's power over the agriculture department was widely known. And it encompasses more than what the
Administrative Code provided.

In fact, at the time that he was Undersecretary, Jocelyn Bolante was concurrently appointed by the President in other powerful
positions: as Acting Chairman of the National Irrigation Administration, as Acting Chairman of the Livelihood Corporation x x
x. 103 (Emphasis supplied)

It was this excerpt that led the AMLC to connect the fertilizer fund scam to the suspicious transaction reports earlier submitted to it by
PNB.

However, the R TC found during trial that respondent Bolante had ceased to be a member of the board of trustees of LIVECOR for 14
months before the latter even made the initial transaction, which was the subject of the suspicious transaction reports. Furthermore, the
RTC took note that according to the Audit Report submitted by the Commission on Audit, no part of the P728 million fertilizer fund
was ever released to LIVECOR.
We note that in the RTC Order dated 17 November 2006 in AMLC SP Case No. 06-003, the AMLC was already allowed ex parte to
inquire into and examine the six bank deposits or investments and the related web of accounts of LIVECOR, Molugan, AGS, Samuel
S. Bombeo and Ariel Panganiban. With the resources available to the AMLC, coupled with a bank inquiry order granted 15 months
before Eugenio was even pro mu I gated, the AMLC should have been able to obtain more evidence establishing a more substantive
link tying Bolante and the fertilizer fund scam to LIVECOR. It did not help that the AMLC failed to include in its application for a
bank inquiry order in AMLC SP Case No. 06-003 LIVECOR's PNB account as indicated in the suspicious transaction reports. This
PNB account was included only in the application for a bank inquiry order in AMLC Case No. 07-001.

As it stands, the evidence relied upon by the AMLC in 2006 was still the same evidence it used to apply for a bank inquiry order in
2008. Regrettably, this evidence proved to be insufficient when weighed against that presented by the respondents, who were given
notice and the opportunity to contest the issuance of the bank inquiry order pursuant to Eugenio. In fine, the RTC did not commit
grave abuse of discretion in denying the application.

WHEREFORE, the petition in G.R. No. 186717 is DENIED. The Court of Appeals Resolution dated 27 February 2009 in CA-G.R.
AMLC No. 00024 is AFFIRMED.

The petition in G.R. No. 190357 is DISMISSED. The Resolution dated 3 July 2009 and Order dated 13 November 2009 issued by the
Regional Trial Court of Makati, Branch 59, in AMLC Case No. 07-001 are AFFIRMED.

The Status Quo Ante Order issued by this Court on 25 March 2009 is hereby LIFTED.

G.R. No. 213948

KNIGHTS OF RIZAL, Petitioner.


vs.
DMCI HOMES, INC., DMCI PROJECT DEVELOPERS, INC., CITY OF MANILA, NATIONAL COMMISSION FOR
CULTURE AND THE ARTS, NATIONAL HISTORICAL COMMISSION OF THE PHILIPPINES, Respondents.

DECISION

CARPIO, J.:

Bury me in the ground, place a stone and a cross over it.


My name, the date of my birth, and of my death. Nothing more.
If you later wish to surround my grave with a fence, you may do so.
No anniversaries. I prefer Paang Bundok.

- Jose Rizal

The Case

Before this Court is a Petition for Injunction, with Applications for Temporary Restraining Order, Writ of Preliminary Injunction, and
Others 1 filed by the Knights of Rizal (KOR) seeking, among others, for an order to stop the construction of respondent DMCI Homes,
Inc. 's condominium development project known as the Torre de Manila. In its Resolution dated 25 November 2014, the Court
resolved to treat the petition as one for mandamus. 2

The Facts

On 1 September 2011, DMCI Project Developers, Inc. (DMCI-PDI) 3 acquired a 7,716.60-square meter lot in the City of Manila,
located near Taft Avenue, Ermita, beside the former Manila Jai-Alai Building and Adamson University.4The lot was earmarked for the
construction of DMCI-PDI's Torre de Manila condominium project.
On 2 April 2012, DMCI-PDI secured its Barangay Clearance to start the construction of its project. It then obtained a Zoning Permit
from the City of Manila's City Planning and Development Office (CPDO) on 19 June 2012. 5

Then, on 5 July 2012, the City of Manila's Office of the Building Official granted DMCI-PDI a Building Permit, allowing it to build a
"Forty Nine (49) Storey w/ Basement & 2 penthouse Level Res'l./Condominium" on the property. 6

On 24 July 2012, the City Council of Manila issued Resolution No. 121 enjoining the Office of the Building Official to temporarily
suspend the Building Permit of DMCI-PDI, citing among others, that "the Torre de Manila Condominium, based on their development
plans, upon completion, will rise up high above the back of the national monument, to clearly dwarf the statue of our hero, and with
such towering heights, would certainly ruin the line of sight of the Rizal Shrine from the frontal Roxas Boulevard vantage point[.]" 7

Building Official Melvin Q. Balagot then sought the opinion of the City of Manila's City Legal Officer on whether he is bound to
comply with Resolution No. 121.8 In his letter dated 12 September 2012, City Legal Officer Renato G. Dela Cruz stated that there is
"no legal justification for the temporary suspension of the Building Permit issued in favor of [DMCI-PDI]" since the construction "lies
outside the Luneta Park" and is "simply too far to I be a repulsive distraction or have an objectionable effect on the artistic and
historical significance" of the Rizal Monument. 9 He also pointed out that "there is no showing that the [area of subject property has
been officially declared as an anthropological or archeological area. Neither has it ' been categorically designated by the National
Historical Institute as a heritage zone, a cultural property, a historical landmark or even a national treasure."

Subsequently, both the City of Manila and DMCI-PDI sought the opinion or the National Historical Commission of the Philippines
(NHCP) on the matter. In the letter10 dated 6 November 2012 from NHCP I Chairperson Dr. Maria Serena I. Diokno addressed to
DMCI-PDI and the letter 11 dated 7 November 2012 from NHCP Executive Director III Ludovico D. Bado)f addressed to then Manila
Mayor Alfredo S. Lim, the NHCP maintained that the Torre de Manila project site is outside the boundaries of the Rizal f.ark and well
to the rear of the Rizal Monument, and thus, cannot possibly obstruct the frontal view of the National Monument.

On 26 November 2013, following an online petition against the Torre de Manila project that garnered about 7,800 signatures, the City
Council of Manila issued Resolution No. 146, reiterating its directive in Resolution No. 121 1 enjoining the City of Manila's building
officials to temporarily suspend ~MCI-PDI's Building Permit. 12

In a letter to Mayor Joseph Ejercito Estrada dated 18 December 2013, DMCI-PIDI President Alfredo R. Austria sought clarification
on the controversy surrounding its Zoning Permit. He stated that since the CPDO granted its Zoning Permit, DMCI-PDI continued
with the application for the Building Permit, which was granted, and did not deem it necessary to go through the process of appealing
to the local zoning board. He then expressed DMCI-PDI's willingness to comply with the process if the City of Manila deemed it
necessary. 13

On 23 December 2013, the Manila Zoning Board of Adjustments and Appeals (MZBAA) issued Zoning Board Resolution No. 06,
Series of 2013, 14 recommending the approval of DMCI-PDI's application for variance. ;The MZBAA noted that the Torre de Manila
project "exceeds the prescribed maximum Percentage of Land Occupancy (PLO) and exceeds the prescribeµ Floor Area Ratio (FAR)
as stipulated in Article V, Section 17 of City Ordinance No. 8119[.]" However, the MZBAA still recommended the approval of the
variance subject to the five conditions set under the same resolution.

After some clarification sought by DMCI-PDI, the MZBAA issued Zoning Board Resolution No. 06-A, Series of 2013, 15 on 8
January 2014, amending condition (c) in the earlier resolution. 16

On 16 January 2014, the City Council of Manila issued Resolution No. 5, Series of 2014, 17 adopting Zoning Board Resolution Nos.
06 and 06- A. The City Council resolution states that "the City Council of Manila find[ s] no cogent reason to deny and/or reverse the
aforesaid recommendation of the [MZBAA] and hereby ratif[ies] and confirm[s] all previously issued permits, licenses and approvals
issued by the City [Council] of Manila for Torre de Manila[.]"

Arguments of the KOR

On 12 September 2014, the KOR, a "civic, patriotic, cultural, nonpartisan, non-sectarian and non-profit organization" 18 created under
Republic Act No. 646, 19 filed a Petition for Injunction seeking a temporary restraining I order, and later a permanent injunction,
against the construction of DMCIPDI's Torre de Manila condominium project. The KOR argues that the subject matter of the present
suit is one of "transcendental importance, paramount public interest, of overarching significance to society, or with far-reaching
implication" involving the desecration of the Rizal Monument.

The KOR asserts that the completed Torre de Manila structure will "[stick] out like a sore thumb, [dwarf] all surrounding buildings
within a radius of two kilometer/s" and "forever ruin the sightline of the Rizal Monument in Luneta Park: Torre de Manila building
would loom at the back I and overshadow the entire monument, whether up close or viewed from a distance. ''20
Further, the KOR argues that the Rizal Monument, as a National Treasure, is entitled to "full protection of the law" 21and the national
government must abate the act or activity that endangers the nation's cultural heritage "even against the wishes of the local
government hosting it." 22

Next, the KOR contends that the project is a nuisance per se23 because "[t]he despoliation of the sight view of the Rizal Monument is a
situation that annoy's or offends the senses' of every Filipino who honors the memory of the National Hero Jose Rizal. It is a present,
continuing, worsening and aggravating status or condition. Hence, the PROJECT is a nuisance per se. It deserves I to be abated
summarily, even without need of judicial proceeding. " 24

The KOR also claims that the Torre de Manila project violates the NHCP's Guidelines on Monuments Honoring National Heroes,
Illustrious Filipinos and Other Personages, which state that historic monuments should assert a visual "dominance" over its
surroundings,25 as well as the country's commitment under the International Charter for the Conservation and Restoration of
Monuments and Sites, otherwise known as the Venice Charter. 26

Lastly, the KOR claims that the DMCI-PDI's construction was commenced and continues in bad faith, and is in violation of the City
of Manila's zoning ordinance. 27

Arguments of DMCI-PDI

In its Comment, DMCI-PDI argues that the KOR's petition should be dismissed on the following grounds:

I.

THXS HONORABLE COURT HAS NO JURISDICTION OVER THIS ACTION.

II.

KOR HAS NO LEGAL RIGHT OR INTEREST TO FILE OR PR0SECUTE THIS ACTION.

III.

TORRE DE MANILA IS NOT A NUISANCE PER SE.

IV.

DMCI-PDI ACTED IN GOOD FAITH IN CONSTRUCTING TORRE DE MANILA; AND

V.

KOR IS NOT ENTITLED TO A TEMPORARY RESTRAINING ORPER AND/OR A WRIT OF PRELIMINARY INJUNCTION. 28

First, DMCI-PDI asserts that the Court has no original jurisdiction over actions for injunction.29 Even assuming that the Court has
concurrent jurisdiction, DMCI-PDI maintains that the petition should still have been filed with the Regional Trial Court under the
doctrine of hierarchy of courts and because the petition involves questions of fact. 30

DMCI-PDI also contends that the KOR's petition is in actuality an opposition' or appeal from the exemption granted by the City of
Manila's MZBAA, a matter which is also not within the jurisdiction of the Court. 31 DMCI-PDI claims that the proper forum should be
the MZBAA, and should the KOR fail there, it should appeal the same to the Housing and Land Use Regulatory Board (HLURB). 32

DMCI-PDI further argues that since the Rizal Monument has been declared a National Treasure, the power to issue a cease and desist
order is lodged with the "appropriate cultural agency" under Section 25 of Republic Act No. li0066 or the National Cultural Heritage
Act of 2009. 33 Moreover, DMCI-PDI asserts that the KOR availed of the wrong remedy since an action for injunction is not the proper
remedy for abatement of a nuisance. 34

Second, DMCI-PDI maintains that the KOR has no standing to institute this proceeding because it is not a real party in interest in this
case. The purposes of the KOR as a public corporation do not include the preservation of the Rizal Monument as a cultural or
historical heritage site.35 The KOR has also not shown that it suffered an actual or threatened injury as a result of the alleged illegal
conduct of the City of Manila. If there is any injury to the KOR at all, the same was caused by the private conduct of a private entity
and not the City of Manila. 36

Third, DMCI-PDI argues that the Torre de Manila is not a nuisance per se. DMCI-PDI reiterates that it obtained all the necessary
permits, licenses, clearances, and certificates for its construction. 37 It also refutes the KOR's claim that the Torre de Manila would
dwarf all other structures around it; considering that there are other tall buildings even closer to the Rizal Monument itself, namely,
the Eton Baypark Tower at the corner of Roxas Boulevard and T.M. Kalaw Street (29 storeys; 235 meters from the Rizal Monument)
and Sunview Palace at the corner of M.H. Del Pilar and T.M. Kalaw Streets (42 storeys; 250 meters from the Rizal Monument). 38

Fourth, DMCI-PDI next argues that it did not act in bad faith when it started construction of its Torre de Manila project. Bad faith
cannot be attributed to it since it was within the "lawful exercise of [its] rights." 39 The KOR failed to present any proof that DMCI-
PDI did not follow the proper procedure and zoning restrictions of the City of Manila. Aside from obtaining all the necessary permits
from the appropriate government agencies,40 DMCI-PDI also sought clarification on its right to build on its site from the Office of the
City Legal Officer of Manila, the Manila CPDO, and the NHCP. 41 Moreover, even if the KOR proffered such proof, the Court would
be 1 in no position to declare DMCI-PDI's acts as illegal since the Court is not a trier of facts. 42

Finally, DMCI-PDI opposes the KOR's application for a Temporary Restraining Order (TRO) and writ of preliminary injunction.
DMCI-PDI asserts that the KOR has failed to establish "a clear and unmistakable right to enjoin I the construction of Torre de Manila,
much less request its demolitior."43 DMCI-PDI further argues that it "has complied with all the legal requirements for the construction
of Torre de Manila x x x [and] has violated o right of KOR that must be protected. Further, KOR stands to suffer o damage because of
its lack of direct pecuniary interest in this petiti1 on. To grant the KOR's application for injunctive relief would constitute an unjust
taking of property without due process of law. " 44

Arguments of the City of Manila

In its Comment, the City of Manila argues that the writ of mandamus cannot issue "considering that no property or substantive rights
whatsoever in favor of [the KOR] is being affected or x x x entitled to judicial protection[.]" 45

The City of Manila also asserts that the "issuance and revocation of a Building Permit undoubtedly fall under the category of a
discretionary act or duty performed by the proper officer in light of his meticulous appraisal and evaluation of the pertinent supporting
documents of the application in accordance with the rules laid out under the National Building Code [and] Presidential Decree No.
1096,"46 while the remedy of mandamus is available only to compel the performance of a ministerial duty. 47

Further, the City of Manila maintains that the construction of the Torre de Manila did not violate any existing law, since the "edifice
[is] well behind (some 789 meters away) the line of sight of the Rizal Monument." 48 It adds that the City of Manila's "prevailing Land
Use and Zoning Ordinance [Ordinance No. 8119] x xx allows an adjustment in Floor Area Ratios thru the [MZBAA] subject to further
final approval of the City Council."49 The City Council adopted the MZBAA's favorable: recommendation in its Resolution No. 5,
ratifying all the licenses and permits issued to DMCI-PDI for its Torre de Manila project.

In its Position Paper dated 15 July 2015, the City of Manila admitted that the Zoning Permit issued to DMCI-PDI was "in breach of
certain provisions of City Ordinance No. 8119." 50 It maintained, however, 1 that the deficiency is "procedural in nature and pertains
mostly td the failure of [DMCI-PDI] to comply with the stipulations that allow an excess in the [FAR] provisions." 51 Further, the City
of Manila argued that the MZBAA, when it recommended the allowance of the project's variance, imposed certain conditions upon the
Torre de Manila project in order to mitigate the possible adverse effects of an excess FAR. 52

The Issue

The issues raised by the parties can be summed up into one main point: Can the Court issue a writ of mandamus against the officials
of the City of Manila to stop the construction of DMCI-PDI's Torre de Manila project?

The Court's Ruling

The petition for mandamus lacks merit and must be dismissed.

There is no law prohibiting the construction of the Torre de Manila.

In Manila Electric Company v. Public Service Commission,53 the Court held that "what is not expressly or impliedly prohibited by
law may be done, except when the act is contrary to morals, customs and I public order." This principle is fundamental in a
democratic society, to protect the weak against the strong, the minority against the majority, and the individual citizen against the
government. In essence, this principle, which is the foundation of a civilized society under the rule of law, prescribes that the freedom
to act can be curtailed only through law. Without this principle, the rights, freedoms, and civil liberties of citizens can be arbitrarily
and whimsically trampled upon by the shifting passions of those who can spout the loudest, or those who can gather the biggest crowd
or the most number of Internet trolls. In other instances, 54 the Court has allowed or upheld actions that were not expressly prohibited
by statutes when it determined that these acts were not contrary to morals, customs, and public order, or that upholding the same
would lead to a more equitable solution to the controversy. However, it is the law itself - Articles 130655 and 1409(1)56 of the Civil
Code - which prescribes that acts not contrary to morals, good customs, public order, or public policy are allowed if also not contrary
to law.

In this case, there is no allegation or proof that the Torre de Manila project is "contrary to morals, customs, and public order" or that it
brings harm, danger, or hazard to the community. On the contrary, the City of Manila has determined that DMCI-PDI complied with
the standards set under the pertinent laws and local ordinances to construct its Torre de Manila project.

There is one fact that is crystal clear in this case. There is no law prohibiting the construction of the Torre de Manila due to its effect
on the background "view, vista, sightline, or setting" of the Rizal Monument.

Specifically, Section 47 reads:

SEC. 47. Historical Preservation and Conservation Standards. - Historic site and facilities shall be conserved and preserved. These
shall, to the extent possible, be made accessible for the educational and cultural enrichment of the general public.

The following shall guide the development of historic sites and facilities:

1. Sites with historic buildings or places shall be developed to conserve and enhance their heritage values.

2. Historic sites and facilities shall be adaptively re-used.

3. Any person who proposes to add, to alter, or partially demolish a designated heritage property will require the approval of the City
Planning and Development Office (CPDO) and shall be required to prepare a heritage impact statement that will demonstrate to the
satisfaction of CPDO that the proposal will not adversely impact the heritage significance of the property and shall submit plans for
review by the CPDO in coordination with the National Historical Institute (NHI).

4. Any proposed alteration and/or re-use of designated heritage properties shall be evaluated based on criteria established by the
heritage significance of the particular property or site.

5. Where an owner of a heritage property applies for approval to demolish a designated heritage property or properties, the owner shall
be required to provide evidence to satisfaction that demonstrates that rehabilitation and re-use of the property is not viable.

6. Any designated heritage property which is to be demolished or significantly altered shall be thoroughly documented for archival
purposes with! a history, photographic records, and measured drawings, in accordance with accepted heritage recording guidelines,
prior to demolition or alteration.

7. Residential and commercial infill in heritage areas will be sensitive to the existing scale and pattern of those areas, which maintains
the existing landscape and streetscape qualities of those areas, and which does not result in the loss of any heritage resources.

8. Development plans shall ensure that parking facilities (surface lots residential garages, stand-alone parking garages and parking
components as parts of larger developments) are compatibly integrated into heritage areas, and/or are compatible with adjacent
heritage resources.

9. Local utility companies (hydro, gas, telephone, cable) shall be required to place metering equipment, transformer boxes, power
lines, conduit, equipment boxes, piping, wireless telecommunication towers and other utility equipment and devices in locations which
do not detract from the visual character of heritage resources, and which do not have a negative impact on its architectural integrity.

10. Design review approval shall be secured from the CPDO for any alteration of the heritage property to ensure that design guidelines
and standards are met and shall promote preservation and conservation of the heritage property. (Emphasis supplied)

It is clear that the standards laid down in Section 47 of Ordinance No. 8119 only serve as guides, as it expressly states that "the
following shall guide the :development of historic sites and facilities." A guide simply sets a direction 'or gives an instruction to be
followed by prope1iy owners and developers in order to conserve and enhance a property's heritage values.
On the other hand, Section 48 states:

SEC. 48. Site Performance Standards. - The City considers it in the public interest that all projects are designed and developed in a
safe, efficient and aesthetically pleasing manner. Site development shall consider the environmental character and limitations of the
site and its adjacent properties. All project elements shall be in complete harmony according to good design principles and the
subsequent development must be visually pleasing as well as efficiently functioning especially in relation to the adjacent properties
and bordering streets.

The design, construction, operation and maintenance of every facility shall be in harmony with the existing and intended character of
its neighborhood. It shall not change the essential character of the said area but will be a substantial improvement to the value of the
properties in the neighborhood in particular and the community in general.

Furthermore, designs should consider the following:

1. Sites, buildings and facilities shall be designed and developed with1 regard to safety, efficiency and high standards of design. The
natural environmental character of the site and its adjacent properties shall be considered in the site development of each building and
facility.

2. The height and bulk of buildings and structures shall be so designed that it does not impair the entry of light and ventilation, cause
the loss I of privacy and/or create nuisances, hazards or inconveniences to adjacent developments.

3. Abutments to adjacent properties shall not be allowed without the neighbor's prior written consent which shall be required by the
City Planning and Development Office (CPDO) prior to the granting of a Zoning Permit (Locational Clearance).

4. The capacity of parking areas/lots shall be per the minimum requirements of the National Building Code. These shall be located,
developed and landscaped in order to enhance the aesthetic quality of the facility. In no case, shall parking areas/lots encroach into
street rights-of-way and shall follow the Traffic Code as set by the City.

5. Developments that attract a significant volume of public modes of transportation, such as tricycles, jeepneys, buses, etc., shall
provide on-site parking for the same. These shall also provide vehicular loading and unloading bays so as street traffic flow will not be
impeded.

6. Buffers, silencers, mufflers, enclosures and other noise-absorbing I materials shall be provided to all noise and vibration-producing
machinery. Noise levels shall be maintained according to levels specified in DENR DA9 No. 30 - Abatement of Noise and Other
Forms of Nuisance as Defined by Law.

7. Glare and heat from any operation or activity shall not be radiated, seen or felt from any point beyond the limits of the property.

8. No large commercial signage and/or pylon, which will be detrimental to the skyline, shall be allowed.

9. Design guidelines, deeds of restriction, property management plans and other regulatory tools that will ensure high quality
developments shall be required from developers of commercial subdivisions and condominiums. These shall be submitted to the City
Planning and Development Office (CPDO) for review and approval. (Emphasis supplied)

Se9tion 4 7 of Ordinance No. 8119 specifically regulates the "development of historic sites and facilities."Section 48
regulates "large commercial signage and/or pylon." There is nothing in Sections 47 and 48 of Ordinance No. 8119 that disallows
the construction of a building outside the boundaries of a historic site or facility, where such building may affect the1 background
of a historic site. In this case, the Torre de Manila stands 870 meters outside and to the rear of the Rizal Monument and "cannot
possibly obstruct the front view of the [Rizal] Monument." 57 Likewise, ;the Torre de Manila is not in an area that has been declared as
an "anthropological or archeological area" or in an area designated as a heritage zone, cultural property, historical landmark, or a
national treasure by the NHCP. 58

Section 15, Article XIV of the Constitution, which deals with the subject of arts and culture, provides that "[t]he State shall conserve,
promote and popularize the nation's historical and cultural heritage and resources x x x." Since this provision is not self-executory,
Congress passed laws dealing with the preservation and conservation of our cultural heritage.

One such law is Republic Act No. 10066,59 or the National Cultural Heritage Act of 2009, which empowers the National Commission
for Culture and the Arts and other cultural agencies to issue a cease and desist order "when the physical integrity of the national
cultural treasures or important cultural properties [is] found to be in danger of destruction or significant alteration from its
original state."60 This law declares that the State should protect the "physical integrity" of the heritage property or building if there is
"danger of destruction or significant alteration from its original state." Physical integrity refers to the structure itself - how strong
and sound the structure is. The same law does not mention that another project, building, or property, not itself a heritage property
or building, may be the subject of a cease and desist order when it adversely affects the background view, vista, or sightline of a
heritage property or building. Thus, Republic Act No. 10066 cannot apply to the Torre de Manila condominium project.

Mandamus does not lie against the City of Manila.

The Constitution states that "[n]o person shall be deprived of life, liberty or 1property without due process of law x x x." 61 It is a
fundamental principle that no property shall be taken away from an individual without due process, whether substantive or procedural.
The dispossession of property, or in this case the stoppage of the construction of a building in one's own property would violate
substantive due process.

The Rules on Civil Procedure are clear that mandamus only issues when there is a clear legal duty imposed upon the office or the
officer sought to be compelled to perform an act, and when the party seeking mandamus has a clear legal right to the performance of
such act.

In the present case, nowhere is it found in Ordinance No. 8119 or in any law, ordinance, or rule for that matter, that the construction of
a building outside the Rizal Park is prohibited if the building is within the background sightline or view of the Rizal Monument. Thus,
there is no legal duty on the part of the City of Manila "to consider," in the words of the Dissenting Opinion, "the standards set
under Ordinance No. 8119" in relation to the applications of DMCI-PDI for the Torre de Manila since under the ordinance these
standards can never be applied outside the boundaries of Rizal Park. While the Rizal Park has been declared a National Historical
Site, the area where Torre de Manila is being built is a privately-owned property that is "not pap: of the Rizal Park that has been
declared as a National Heritage Site in 1095," and the Torre de Manila area is in fact "well-beyond" the Rizal Park, according to
NHCP Chairperson Dr. Maria Serena I. Diokno. 62 Neither has the area of the Torre de Manila been designated as a "heritage zone, a
cultural property, a historical landmark or even a national treasure." 63

Also, to declare that the City of Manila failed to consider the standards under Ordinance No. 8119 would involve making a finding of
fact. A finding lot fact requires notice, hearing, and the submission of evidence to ascertain compliance with the law or regulation. In
such a case, it is the Regional Trial Court which has the jurisdiction to hear the case, receive evidence, make a proper finding of fact,
and determine whether the Torre de Manila project properly complied with the standards set by the ordinance. In Meralco v. Public
Service Commission, 64 we held that it is the cardinal right of a party in trials and administrative proceedings to be heard, which
includes the right of the party interested or affected to present his own case and submit evidence in support thereof and to have such
evidence presented considered by the proper court or tribunal.

To compel the City of Manila to consider the standards under Ordinance No. 8119 to the Torre de Manila project will be an empty
exercise since these standards cannot apply outside of the Rizal Park - and the Torre de Manila is outside the Rizal Park. Mandamus
will lie only if the officials

The KOR also invokes this Court's exercise of its extraordinary certiorari power of review under Section 1, Article VIII65 of the
Constitution. However, this Court can only exercise its extraordinary certiorari power if the City of Manila, in issuing the required
permits and licenses, gravely abused its discretion amounting to lack or excess of jurisdiction. Tellingly, neither the majority nor
minority opinion in this case has found that the City of Manila committed grave abuse of discretion in issuing the permits and licenses
to DMCI-PDI. Thus, there is no justification at all for this Court to exercise its extraordinary certiorari power.

Moreover, the exercise of this Court's extraordinary certiorari power is limited to actual cases and controversies that necessarily
involve a violation of the Constitution or the determination of the constitutionality or validity of a governmental act or issuance.
Specific violation of a statute that does not raise the issue of constitutionality or validity of the statute cannot, as a rule, be the subject
of the Court's direct exercise of its expanded certiorari power. Thus, the KOR's recourse lies with other judicial remedies or
proceedings allowed under the Rules of Court.

In Association of Medical Clinics for Overseas Workers, Inc. v. GCC Approved Medical Centers Association, Inc., 66we held that in
cases where the question of constitutionality of a governmental action is raised, the judicial power that the courts exercise is likewise
identified as the power of judicial review - the power to review the constitutionality of the actions of other branches of government. As
a rule, as required by the hierarchy of courts principle, these cases are filed with the lowest court with jurisdiction over the 1subject
matter. The judicial review that the courts undertake requires:

1) there be an actual case or controversy calling for the exercise of judicial power;
2) the person challenging the act must have "standing" to challenge; he must have a personal and substantial interest in the case such
that he has sustained, or will sustain, direct injury as a result of its enforcement;

3) the question of constitutionality must be raised at the earliest possible opportunity; and

4) the issue of constitutionality must be the very lismota of the case.

The lower court's decision under the constitutional scheme reaches the Supreme Court through the appeal process, through a petition
for review on certiorari under Rule 45 of the Rules of Court.

In the present case, the KOR elevated this case immediately to this Court in an original petition for injunction which we later on
treated as one for mandamus under Rule 65. There is, however, no clear legal duty on the City of Manila to consider the provisions of
Ordinance No. 8119 for applications for permits to build outside the protected areas of the Rizal Park. Even if there were such legal
duty, the determination of whether the City of .Manila failed to abide by this legal duty would involve factual matters which have not
been admitted or established in this case. Establishing factual matters is not within the realm of this Court. Findings of fact are the
province of the trial courts.

There is no standard in Ordinance No. 8119 for defining or determining the background sightline that is supposed to be protected or
that is part of the "physical integrity" of the Rizal Monument. How far should a building like the Torre de Manila be from the Rizal
Monument - one, two, three, four, or five kilometers? Even the Solicitor General, during the Oral Arguments, conceded that the
ordinance does not prescribe how sightline is determined, neither is there any way to measure by metes and bounds whether al
construction that is not part of the historic monument itself or is outside the protected area can be said to violate the Rizal
Monument's physicalintegrity, except only to say "when you stand in front of the Rizal Monument, there can be no doubt that your
view is marred and impaired." This kind of a standard has no parameters and can include a sightline or a construction as far as the
human eyes can see when standing in front of the Rizal Monument. Obviously, this Court cannot apply such a subjective and non-
uniform standard that adversely affects property rights several kilometers away from a historical sight or facility.

The Dissenting Opinion claims that "the City, by reason of a mistaken or erroneous construction of its own Ordinance, had failed to
consider its duties under [Ordinance No. 8119] when it issued permits in DMCI-PDI's favor." However, MZBAA Zoning Board
Resolution Nos. 06 and 06-A67 easily dispel this claim. According to the resolutions, the City of Manila, through the MZBAA, acted
on DMCI-PDI's application for variance under the powers and standards set forth in Ordinance No. 8119.

Without further proof that the MZBAA acted whimsically, capriciously, or arbitrarily in issuing said resolution, the Court should
respect MZBAA's exercise of discretion. The Court cannot "substitute its I judgment :for that of said officials who are in a better
position to consider and weigh the same in the light of the authority specifically vested in them by law." 68 Since the Court has "no
supervisory power over the proceedings I and actions of the administrative departments of the government," it "should not generally
interfere with purely administrative and discretionary functions.; 69 The power of the Court in mandamus petitions does not extend "to
direct the exercise of judgment or discretion in a particular way or the retraction or reversal of an action already taken in the
exercise of either."70

Still, the Dissenting Opinion insists on directing the re-evaluation by the City of Manila, through the CPDO, of the permits previously
issued in favor of the Torre de Manila project to determine compliance with the standards ]under Ordinance No. 8119. It also declares
that the circumstances in this case warrant the prohacvice conversion of the proceedings in the issuance of the permits into a
"contested case" necessitating notice and hearing with all the parties involved.

Prohac vice means a specific decision does not constitute a precedent because the decision is for the specific case only, not to be
followed in other cases. A prohac vice decision violates statutory law - Article 8 of the Civil Code - which states that "judicial
decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines." The decision of
the Court in this case cannot be prohac vice because by mandate bf the law everydecision of the Court forms part of the legal system
of the Philippines. If another case comes up with the same facts as the present case, that case must be decided in the same way as this
case to comply with the constitutional mandate of equal protection of the law. Thus, a prohac vice decision also violates the equal
protection clause of the Constitution.

It is the policy of the courts not to interfere with the discretionary executive acts of the executive branch unless there is a clear
showing of grave abuse of discretion amounting to lack or excess of jurisdiction. Mandamus does not lie against the legislative and
executive branches or their members acting in the exercise of their official discretionary functions. This emanates from the respect
accorded by the judiciary to said branches as co-equal entities under the principle of separation of powers.

In De Castro v. Salas,71 we held that no rule of law is better established than the one that provides that mandamus will not issue to
control the discretion of an officer or a court when honestly exercised and when such power and authority is not abused.
In exceptional cases, the Court has granted a prayer for mandamus to compel action in matters involving judgment and discretion,
only "to act, but not to act lone way or the other," 72 and only in cases where there has been a clear showing of grave abuse of
discretion, manifest injustice, or palpable excess of authority.73

In this case, there can be no determination by this Court that the City of Manila had been negligent or remiss in its duty under
Ordinance No. 8119 considering that this determination will involve questions of fact. DMCI- PDI had been issued the proper permits
and had secured all approvals and licenses months before the actual construction began. Even the KOR could not point to any law that
respondent City of Manila had violated and could only point to declarations of policies by the NHCP and the Venice Charter which do
not constitute clear legal bases for the issuance of a writ of mandam1s.

The Venice Charter is merely a codification of guiding principles for the preservation and restoration of ancient monuments, sites, and
buildings. It brings I together principles in the field of historical conservation and restoration that have been developed, agreed upon,
and and laid down by experts over the years. Each country, however, remains "responsible for applying the plan within the framework
of its own culture and traditions." 74

The Venice Charter is not a treaty and therefore does not become enforceable as law. The Philippines is not legally bound to follow its
directive, as in fact, these are not directives but mere guidelines - a set of the best practices and techniques that have been proven over
the years to be the most effective in preserving and restoring historical monuments, sites and buildings.

The City of Manila concedes that DMCI-PDI's Zoning Permit was granted without going through the process under Ordinance No.
8119. However, the same was properly rectified when, faced with mounting opposition, DMCI-PDI itself sought clarification from the
City of Manila and immediately began complying with the procedure for applying for a variance. The MZBAA did subsequently
recommend the approval of the variance and the City Council of Manila approved the same, ratifying the licenses and permits already
given to DMCI-PDI. Such ratification was well within the right of the City Council of Manila. The City Council of Manila could have
denied the application had it seen any reason to do so. Again, the ratification is a function of the City Council of Manila, an exercise of
its discretion1 and well within the authority granted it by law and the City's own Ordinance No. 8119.

The main purpose of zoning is the protection of public safety, health, convenience, and welfare. There is no indication that the Torre
de Manila project brings any harm, danger, or hazard to the people in the surrounding areas except that the building allegedly poses an
unsightly view on the taking of photos or the visual appreciation of the Rizal Monument by locals and tourists. In fact, the Court must
take the approval of the MZBAA, and its subsequent ratification by the City Council of Manila, as the duly authorized exercise of
discretion by the city officials. Great care must be taken that the Court does not unduly tread upon the local government's performance
of its duties. It is not for this Court to dictate upon the other branches bf the government how their discretion must be exercised so
long as these branches do not commit grave abuse of discretion amounting to lack or excess of jurisdiction.

Likewise, any violation of Ordinance No. 8119 must be determined in the proper case and before the proper forum. It is not within the
power of this Court in this case to make such determination. Without such determination, this Court cannot simply declare that the
City of Manila had failed to consider its duties under Ordinance No. 8119 when it issued the permits in DMCI-PDI's favor without
making a finding of fact how the City of Manila failed "to consider" its duties with respect to areas outside the boundaries of the Rizal
Park. In the first place, this Court has no jurisdiction to make findings of fact in an original action like this before this Court. Moreover
the City of Manila could not legally apply standards to sites outside the area covered by the ordinance that prescribed the standards.
With this, I taken in light of the lack of finding that there was grave abuse of discretion I on the part of the City of Manila, there is no
basis to issue the writ of mandamus against the City of Manila.

During the Oral Arguments, it was established that the granting of a variance neither uncommon nor irregular. On the contrary, current
practice has made granting of a variance the rule rather than the exception:

JUSTICE CARPIO: Let's go to Ordinance 8119. For residential condominium that stand alone, in other words not part of a
commercial complex or an industrial complex ...

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: The [Floor Area Ratio (FAR)] is uniform for the entire City of Manila, the FAR 4, correct? ATTY.
FLAMINIANO: I believe so, Your Honor, it's FAR 4.

JUSTICE CARPIO: So it's FAR 4 for all residential condominium complex or industrial projects.

ATTY. FLAMINIANO: There might be, the FAR might be different when it comes to condominiums in commercial areas, Your
Honor.
JUSTICE CARPIO: Yes, I'm talking of stand-alone ...

ATTY. FLAMINIANO: Yes, Your Honor.

JUITICE CARPIO: ... residential condominiums...

ATTY. FLAMINIANO: Uniform at FAR 4, Your Honor.

JUSTICE CARPIO: And the percentage of land occupancy is always 60 percent.

ATTY. FLAMINIANO: 60 percent correct, Your Honor.

JUSTICE CARPIO: Okay ... how many square meters is this Torre de Manila?

xxx

ATTY. FLAMINIANO: The land area, Your Honor, it's almost 5,000 ... 5,556.

JUSTICE CARPIO: So, it's almost half a hectare.

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: And at FAR 4, it can only build up to 18 storeys, I mean at FAR 4, is that correct?

ATTY. FLAMINIANO: If the 60 percent of the lot...

JUSTICE CARPIO: Yes, but that is a rule.

ATTY. FLAMINIANO: That is a rule, that's the rule, Your Honor.

JUSTICE CARPIO: 60 percent of...

ATTY. FLAMINIANO: Of the land area.

JUSTICE CARPIO: ... buildable, the rest not buildable.

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: Okay, so if you look around here in the City of Manila anywhere you go, you look at stand alone residential
condominium buildings...

ATTY. FLAMINIANO: There's a lot of them, Your Honor.

JUSTICE CARPIO: It's always not FAR 4, it's more than FAR 4.

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: And the buildable area is to the edge of the property ...it's not 60 percent, correct?

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: So, if you look at all the ... residential buildings in the last ten years, they [have] all variances. They did
not follow the original FAR 4 or the 60 percent (of land occupancy). Every residential building that stand alone was a
variance. ATTY. FLAMINIANO: That's correct, Your Honor.

JUSTICE CARPIO: So the rule really in the City of Manila is variance, and the exception which is never followed is FAR 4.
ATTY. FLAMINIANO: FAR 4, it appears to be that way, Your Honor.

xxxx

JUSTICE CARPIO: Every developer will have to get a variance because it doesn't make sense to follow FAR 4 because the
land is so expensive and if you can build only two storeys on a 1,000-square meter lot, you will surely lose money, correct?
ATTY. FLAMINIANO: Exactly, Your Honor. 75 (Emphasis supplied)

This, the MZBAA's grant of the variance cannot be used as a basis to grant the mandamus petition absent any clear finding
that said act amo'1nted to "grave abuse of discretion, manifest injustice, or palpable excess of authority."

The KOR is Estopped from Questioning the


Torre de Manila Construction.

The KOR is now estopped from questioning the construction of the Torre de Manila project. The KOR itself came up with the idea to
build a structure right behind the Rizal Monument that would dwarf the Rizal Monument.

In the mid-1950s, the Jose Rizal National Centennial Commission (JRNCC) l formulated a plan to build an Educational Center within
the Rizal Park. In July 1955, the KOR proposed the inclusion of a national theater on the site of the Educational Center. The JRNCC
adopted the proposal. The following[ year, a law - Republic Act No. 142776 - authorized the establishment of the Jose Rizal National
Cultural Shrine consisting of a national theater, a national museum, and a national library on a single site. 77

To be built on the open space right behind the 12.7 meter high Rizal Monument were: the KOR's proposed nationaltheater, standing
29.25 meters high and 286 meters in distance from the Rizal Monument; the nationallibrary, standing 25 .6 meters high and 180
meters in distance from the Rizal ;Monument, with its rear along San Luis Street (now T.M. Kalaw Street); and facing it,
the nationalmuseum, at 19.5 meters high and 190 meters in I distance from the Rizal Monument, with its back along P. Burgos
Street. 78

However, several sectors voiced their objections to the construction for various reasons. Among them, the need to preserve the open
space of the park, the high cost of construction, the desecration of the park's hallowed grounds, and the fact that the proposed
cultural center including the 129.25 meter high national theater proposed by the KOR would dwarf the 12.7 meter high Rizal
Monument. 79 The JRNCC revised the plan and only the National Library - which still stands today - was built. 80

According to the NHCP, the KOR even proposed to build a Rizal Center on the park as recently as 2013.81 The proposal was
disapproved by the NHCR and the Department of Tourism.

Surely, as noble as the KOR's intentions were, its proposed center would have dwarfed the Rizal Monument with its size and
proximity.

In contrast, the Torre de Manila is located well outside the Rizal Park, and to the rear of the Rizal Monument - approximately 870
meters from the Rizal Monument and 3 0 meters from the edge of Rizal Park. 82

It is a basic principle that "one who seeks equity and justice must come to court with clean hands. " 83 In Jenosa v. Delariarte, 84 the
Court reiterated ,that he who seeks equity must do equity, and he who comes into equity must come with clean hands. This "signifies
that a litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair and dishonest, or
fraudulent, or deceitful as to the controversy in issue. " 85Thus, the KOR, having earlier proposed a national theater a mere 286meters
in distance from the back of the Rizal Monument that would have dwarfed the Rizal Monument, comes to this I Court with unclean
hands. It is now precluded from "seeking any equitable refuge" 86 from the Court. The KOR's petition should be dismissed on this
ground alone.

Torre de Manila is Not a Nuisance Per Se.

In its petition, the KOR claims that the Torre de Manila is a nuisance perse that deserves to be summarily abated even without judicial
proceedings. 87 However, during the Oral Arguments, counsel for the KOR argued that the KOR now believes that the Torre de
Manila is a nuisance per accidens and not a nuisance perse. 88

Article 694 of the Civil Code defines a nuisance as any act, omission, establishment, business, condition of property, or anything else
which: (1) injures or endangers the health or safety of others; (2) annoys or offends the senses; (3) shocks, defies or disregards
decency or morality; (4) obstructs or interferes with the free passage of any public highway or street, or any body of water; or (5)
hinders or impairs the use of property.

Thy Court recognizes two kinds of nuisances. The first, nuisance perse, is on "recognized as a nuisance under any and all
circumstances, because it constitutes a direct menace to public health or safety, and, for that reason, may be abated summarily under
the undefined law of necessity." 89 The second, nuisance peraccidens, is that which "depends upon certain conditions and
circumstances, and its existence being a question of fact, it cannot be abated without due hearing thereon in a tribunal authorized to
decide whether such a thing in law constitutes a nuisance. " 90

It can easily be gleaned that the Torre de Manila is not a nuisance per se. The Torre de Manila project cannot be considered as a
"direct menace to I public health or safety." Not only is a condominium project commonplace in the City of Manila, DMCI-PDI has,
according to the proper government agencies, complied with health and safety standards set by law. DMCI-PDI has been granted the
following permits and clearances prior to starting the project: (1) Height Clearance Permit from the Civil Aviation Authority of the
Philippines;91 (2) Development Permit from the HLURB;92 (3) Zoning Certification from the HLURB;93 (4) Certificate of
Environmental Compliance Commitment from the Environment Management Bureau of the Department of Environment and Natural
Resources;94 (5) Barangay Clearance95 (6) Zoning Permit;96 (7) Building Permit;97 (8) and Electrical and Mechanical Permit.98

Later, DMCI-PDI also obtained the right to build under a variance recommended by the MZBAA and granted by the City Council of
Manila. Thus, there can be no doubt that the Torre de Manila project is not a nuisance perse.

On the other hand, the KOR now claims that the Torre de Manila is a nuisance peraccidens.

By definition, a nuisance peraccidens is determined based on its surrounding conditions and circumstances. These conditions and
circumstances must be well established, not merely alleged. The Court cannot simply accept these conditions and circumstances as
established facts as the KOR would have us do in this case. 99 The KOR itself concedes that the question of whether the Torre de
Manila is a nuisance peraccidens is a question of fact. 100

The authority to decide when a nuisance exists is an authority to find facts, to estimate their force, and to apply rules of law to the case
thus made. 101 1lhis Court is no such authority. It is not a trier of facts. It cannot simply take the allegations in the petition and accept
these as facts, more so in this case where these allegations are contested by the respondents.

The task to receive and evaluate evidence is lodged with the trial courts. The question, then, of whether the Torre de Manila project is
a nuisance peraccidens must be settled after due proceedings brought before the proper Regional Trial Court. The KOR cannot
circumvent the process in the guise be protecting national culture and heritage.

The TRO must be lifted.

Injunctive reliefs are meant to preserve substantive rights and prevent further injury102 until final adjudication on the merits of the
case. In the present case, since the legal rights of the KOR are not well-defined, clear, and certain, the petition for mandamus must be
dismissed and the TRO lifted.

The general rule is that courts will not disturb the findings of I administrative agencies when they are supported by substantial
evidence. In this case, DMCI-PDI already acquired vested rights in the various permits, licenses, or even variances it had applied for
in order to build a 49-storey building which is, and had been, allowed by the City of Manila's zoning ordinance.

As we have time and again held, courts generally hesitate to review discretionary decisions or actions of administrative agencies in the
absence of proof that such decisions or actions were arrived at with grave abuse of discretion amounting to lack or excess of
jurisdiction.

In JRS Business Corp. v. Montesa, 103 we held that mandamus is the proper remedy if it could be shown that there was neglect on the
part of a tribunal in the performance of an act which the law specifically enjoins as a duty, or there was an unlawful exclusion of a
party from the use and enjoyment be a right to which he is clearly entitled. Only specific legal rights may be enforced by mandamus if
they are clear and certain. If the legal rights of th6 petitioner are not well-defined, definite, clear, and certain, 104 the petition must be
dismissed. Stated otherwise, the writ never issues in doubtful cases. It neither confers powers nor imposes duties. It is simply a
command to exercise a power already possessed and to perform a duty already imposed. 105

In sum, bearing in mind the Court does not intervene in discretionary acts of the executive department in the absence of grave abuse of
discretion, 106 and considering that mandamus may only be issued to enforce a clear and certain legal right, 107 the present special civil
action for mandamus must be dismissed and the TRO issued earlier must be lifted.
A FINAL WORD

It had been Rizal’s wish to die facing the rising sun. In his Mi Ultimo Adios, the poem he left for his family the night before he was
executed, Rizal wrote:

Yo muero cuando veo que el cielo se colora


Y al fin anuncia el dia tras lobrego capuz 108

[Ako’y mamamatay, ngayong namamalas


na sa Silanganan ay namamanaag
yaong maligayang araw na sisikat
sa likod ng luksang nagtabing na ulap.] 109

[I die just when I see the dawn break,


Through the gloom of night, to herald the day] 110

Yet at the point of his execution, he was made to stand facing West towards Manila Bay, with his back to the firing squad, like the
traitor the colonial government wished to portray him. He asked to face his executioners, facing the East where the sun would be
rising since it was early morning, but the Spanish captain did not allow it. As he was shot and a single bullet struck his frail body,
Rizal forced himself, with his last remaining strength, to turn around to face the East and thus he fell on his back with] his face to the
sky and the rising sun. Then, the Spanish captain approached Rizal and finished him off with one pistol shot to his head.

Before his death, Rizal wrote a letter to his family. He asked for a simple tomb, marked with a cross and a stone with only his name
and the date of his birth and death; no anniversary celebrations; and interment at Paang Bundok(now, the Manila North Cemetery).
Rizal never wanted his grave to be a burden to future generations.

The letter never made it to his family and his wishes were not carried out. The letter was discovered many years later, in 1953. By
then, his remains had been entombed at the Rizal Monument, countless anniversaries had been . celebrated, with memorials and
monuments built throughout the world.

Rizal's wish was unmistakable: to be buried without pomp or pageantry; to the point of reaching oblivion or obscurity in the
future. 111 For Rizal's life was never about fame or vainglory, but for the country he loved dearly and for which he gave up his life.

The Rizal Monument is expressly against Rizal' s own wishes. That Rizal's statue now stands facing West towards Manila Bay, with
Rizal's back to the East, adds salt to the wound. If we continue the present orientation of Rizal's statue, with Rizal facing West, we
would be like the Spanish captain who refused Rizal's request to die facing the rising sun in the East. On the other hand, if Rizal' s
statue is made to face East, as Rizal had desired when he was about to be shot, the background - the blue sky above Manila Bay -
would forever be clear of obstruction, and we would be faithful to Rizal's dying wish.

WHEREFORE, the petition for mandamus is DISMISSED for lack of merit. The Temporary Restraining Order issued by the Court
on 16 June 2015 is LIFTED effective immediately.

[ G.R. No. 189026, November 09, 2016 ]

PHILIPPINE TELEGRAPH TELEPHONE CORP., PETITIONER, VS. SMART COMMUNICATIONS, INC., RESPONDENT.

DECISION

JARDELEZA, J.:
Since 1979, the National Telecommunications Commission (NTC) has been the lead government agency in charge of regulating the
telecommunications industry. The Public Telecommunications Policy Act of the Philippines [1] (RA 7925) gave the NTC the authority
to approve or adopt access charge arrangements between two public telecommunication entities. The issues here are whether the NTC
has primary jurisdiction over questions involving access charge stipulations in a bilateral interconnection agreement, and whether
regular courts can restrain the NTC from reviewing the negotiated access charges.

I
Petitioner Philippine Telegraph & Telephone Corporation (PT&T) and respondent Smart Communications, Inc. (Smart) entered into
an Agreement[2] dated June 23, 1997 for the interconnection of their telecommunication facilities. The Agreement provided for the
interconnection of Smart's Cellular Mobile Telephone System (CMTS), Local Exchange Carrier (LEC) and Paging services with
PT&T's LEC service. Starting 1999, however, PT&T had difficulty meeting its financial obligations to Smart. [3] Thus, on November
28, 2003, the parties amended the Agreement, which extended the payment period and allowed PT&T to settle its obligations on
installment basis. The amended Agreement also specified, among others, that Smart's access charge to PT&T would increase from
P1.00 to P2.00 once PT&T's unpaid balance reaches P4 Million and that PT&T's access charge to Smart would be reduced from P8.69
to P6.50. Upon full payment, PT&T's access charge would be further reduced to P4.50. [4]

On April 4, 2005, Smart sent a letter informing PT&T that it increased the access charge from P1.00 to P2.00 starting April 1, 2005 in
accordance with the amended Agreement. However, on September 2, 2005, PT&T sent a letter to Smart claiming that the latter
overcharged PT&T on outbound calls to Smart's CMTS. [5] PT&T cited the NTC resolution in a separate dispute between Smart and
Digitel, where the NTC ultimately disallowed the access charges imposed by Smart for being discriminatory and less favorable than
terms offered to other public telecommunication entities (PTEs). Accordingly, PT&T demanded a refund of P12,681,795.13 from
Smart.[6]

Thereafter, on September 15, 2005, PT&T filed a letter-complaint with the NTC raising the issue that the access charges imposed by
Smart were allegedly "discriminatory and not in conformity with those of other carriers." [7] On January 20, 2006, the NTC ordered
Smart and PT&T to attend mediation conferences in order to thresh out the issues. [8] After the mediation efforts failed, the NTC
directed the parties to file their respective pleadings, after which it would consider the case submitted for resolution. But before the
parties were able to submit the pleadings, Smart filed a complaint with the Regional Trial Court of Makati City (RTC) against PT&T
on April 7, 2006.[9] Smart alleged that PT&T was in breach of its contractual obligation when it failed to pay its outstanding debt and
denied its liability to Smart. Accordingly, Smart prayed that PT&T be ordered to pay the sum of P1,387,742.33 representing its unpaid
obligation and to comply with the amended Agreement.[10] Smart also asked the RTC to issue a temporary restraining order against the
NTC and PT&T, which the RTC granted on April 25, 2006.[11]

In its answer to the complaint,[12] PT&T sought for the dismissal of the civil case on the grounds of lack of jurisdiction, non-
observance of the doctrine of primary jurisdiction, exhaustion of administrative remedies, litis pendentia and res judicata. It also
prayed that the restraining order be immediately set aside. After several hearings, the RTC issued a writ of preliminary injunction in
favor of Smart.[13]The RTC reasoned that allowing the NTC to proceed and adjudicate access charges would violate Smart's
contractual rights. The RTC also denied PT&T's motion to dismiss, finding that the nature of the civil case was incapable of pecuniary
estimation which squarely falls within its jurisdiction.[14] It added that the NTC has no jurisdiction to adjudicate breaches of contract
and award damages.

PT&T elevated the case to the Court of Appeals through a petition for certiorari. The Court of Appeals held that the RTC did not
commit grave abuse of discretion and, consequently, denied the petition. [15] It found that the RTC had jurisdiction over the case
because it involved an action for specific performance, i.e., PT&T's compliance with the Agreement, and is therefore incapable of
pecuniary estimation. And insofar as the dispute involved an alleged breach of contract, there was no need to refer the matter to the
NTC because it had no jurisdiction over breach of contract cases.[16]

After its motion for reconsideration was denied by the Court of Appeals, PT&T filed this petition for review [17] seeking to overturn the
RTC's order of injunction and non-dismissal of Smart's complaint. PT&T principally argues that the NTC has primary jurisdiction
over the determination of access charges. PT&T characterizes the NTC case as one involving the validity of interconnection rates, as
opposed to one involving purely a breach of contract and claim for damages cognizable by the RTC. PT&T adds that the writ of
preliminary injunction issued by the RTC against NTC constitutes interference with a co-equal body. Smart counters by claiming that
the dispute was purely contractual; hence, it properly falls within the jurisdiction of the RTC. Although the Agreement contained
technical terms, Smart's position is that the NTC has no jurisdiction over bilateral interconnection agreements voluntarily negotiated
and entered into by PTEs.

II

Like the Court of Appeals below, Smart relies on the argument that its complaint before the RTC is one which is incapable of
pecuniary estimation and, accordingly, falls within the RTC's jurisdiction. Smart's theory is that, because it is seeking to enforce the
Agreement, the action falls within the ruling of Boiser v. Court of Appeals[18] that the regular courts, not the NTC, have jurisdiction
over cases involving breach of contract and damages. Invoking the freedom to contract and non-impairment clause, Smart posits that
"[t]he specialized knowledge and expertise of the NTC is not indispensable or even necessary in this case since x x x [Smart] simply
seeks to enforce and implement the contractual agreement between the parties and their rights and obligations in relation
thereto."[19] Responding to PT&T's claim that it is seeking the NTC intervention only to resolve the issue on validity of the rates of
charges between the two PTEs, Smart downplays this by stating that there is no dispute on the applicable rates since these were
already stated in the Agreement.[20]
We cannot agree with Smart's position. While it is true that regional trial courts, as courts of general jurisdiction, can take cognizance
of cases that are incapable of pecuniary estimation-including actions for breach of contract and damages-the fact that the
interconnection agreement between Smart and PT&T involved access charges warrants a more nuanced analysis.

RA 7925 recognizes and encourages bilateral negotiations between PTEs, but it does not strictly adopt a laissez-faire policy. It
imposes strictures that restrain within reason how PTEs conduct their business. [21] The law aims to foster a healthy competitive
environment by striking a balance between the freedom of PTEs to make business decisions and to interact with one another on the
one hand and the affordability of rates on the other. [22] However, one can speak of healthy competition only between equals. Thus,
consistent with Section 19,[23] Article XII of the Constitution, RA 7925 seeks to break up the monopoly in the telecommunications
industry by gradually dismantling the barriers to entry and granting new industry entrants protection against dominant carriers through
equitable access charges and equal access clauses in interconnection agreements and through the strict policing of predatory pricing by
dominant carriers.[24]

Specifically, Section 18 of RA 7925 regulates access charge arrangements between two PTEs:

Access Charge/Revenue Sharing. - The access charge/revenue sharing arrangements between all interconnecting carriers shall be
negotiated between the parties and the agreement between the parties shall be submitted to the Commission. In the event the parties
fail to agree thereon within a reasonable period of time, the dispute shall be submitted to the Commission for resolution.

In adopting or approving an access charge formula or revenue sharing agreement between two or more carriers, particularly, but not
limited to a local exchange, interconnecting with a mobile radio, interexchange long distance carrier, or international carrier, the
Commission shall ensure equity, reciprocity and fairness among the parties concerned. In so approving the rates for
interconnection between the telecommunications carriers, the Commission shall take into consideration the costs of the
facilities needed to complete the interconnection, the need to provide the cross-subsidy to local exchange carriers to enable
them to fulfill the primary national objective of increasing telephone density in the country and assure a rate of return on the
local exchange network investment that is at parity with those earned by other segments of the telecommunications
industry: Provided, That international carriers and mobile radio operators which are mandated to provide local exchange services,
shall not be exempt from the requirement to provide the cross-subsidy when they interconnect with the local exchanges of other
carriers: Provided, further, That the local exchanges which they will additionally operate, shall equally be entitled to the cross-subsidy
from other international carriers, mobile radio operators, or inter-exchange carriers interconnecting with them. (Emphasis supplied.)
The first paragraph mandates that any agreement pertaining to access charges must be submitted to the NTC for approval; in case the
parties fail to agree, the matter shall be resolved by the NTC. Smart contends that the NTC's authority under the second paragraph of
Section 18 is limited to instances where the parties fail to agree on the rates. This interpretation is incorrect. There is no indication
that-and Smart has not pointed to any significant reason why-the second paragraph of Section 18 should be construed as limited to the
latter instances. On the contrary, We observe that Congress deliberately used the word "approve," in conjunction with "adopt," in
describing the action that the NTC may take. The plain dictionary meaning of approve is "to express often formally agreement with
and support of or commendation of as meeting a standard." [25] This presupposes that something has been submitted to the NTC, as the
approving authority, contrasted with the NTC adopting its own formula. Under Section 18, it is either the access charge formula or
revenue-sharing arrangement that is submitted to the NTC for approval. Smart and PT&T's Agreement, insofar as it specifies the
access charge rates for the interconnection of their networks, falls within the coverage of the provision. Therefore, the Agreement
should have been submitted to the NTC for its review and approval in accordance with the second paragraph of Section 18.
Conspicuously, however, neither Smart nor PT&T claims that the access charges in the Agreement have been submitted to, much less
approved, by the NTC. This further justifies the intervention of the NTC.

It is clear that the law did not intend the approval to simply be a ministerial function. The second paragraph of Section 18 enumerates
the guidelines to be considered by the NTC before it approves the access charges. Thus, the NTC must be satisfied that the access
charge formula is fair and reasonable based on factors such as cost, public necessity and industry returns; otherwise, it has the
discretion to disapprove the rates in the event that it finds that they fall short of the statutory standards. [26] Evidently, the proceeding
under Section 18 is quasi-judicial in nature. Any action by the NTC would particularly and immediately affect the rights of the
interconnecting PTEs-in this case, Smart and PT&T-rather than being applicable to all PTEs throughout the Philippines.[27] The NTC,
therefore, correctly treated the dispute as adversarial and gave both Smart and PT&T the opportunity to be heard.

The mere fact that Smart and PT&T negotiated and executed a bilateral interconnection agreement does not take their stipulations on
access charges out of the NTC's regulatory reach. This has to be so in order to further one of the declared policies of RA 7925 of
expanding the telecommunications network by improving and extending basic services in unserved and underserved areas at
affordable rates.[28] A contrary ruling would severely limit the NTC's ability to discharge its twin mandates of protecting consumers
and promoting consumer welfare,[29] and would go against the trend towards greater delegation of judicial authority to administrative
agencies in matters requiring technical knowledge.[30] Smart cannot rely on the non-impairment clause because it is a limit on the
exercise of legislative power and not of judicial or quasi-judicial power.[31] As discussed in the preceding paragraph, the approval of
the access charge formula under Section 18 is a quasi-judicial function.
The foregoing interpretation is equally supported by the structure of RA 7925. Congress gave the NTC broad powers over
interconnection matters in order to achieve the goal of universal accessibility. Apart from the authority to approve or adopt
interconnection rates, the NTC can even "[m]andate a fair and reasonable interconnection of facilities of authorized public network
operators and other providers of telecommunications services through appropriate modalities of interconnection and at a reasonable
and fair level of charges, which make provision for the cross subsidy to unprofitable local exchange service areas so as to promote
telephone density and provide the most extensive access to basic telecommunications services available at affordable rates to the
public."[32] Such extensive powers may generally be traced to the Constitution, which recognizes the vital role of communication and
information in nationbuilding.[33] In Philippine Long Distance Telephone Co. (PLDT) v. National Telecommunications
Commission,[34] we explained why the NTC may regulate-in that case, mandate-interconnection between PTEs:

The interconnection which has been required of PLDT is a form of "intervention" with property rights [recognized by Article XII,
Section 6 of the Constitution] dictated by "the objective of government to promote the rapid expansion of telecommunications services
in all areas of the Philippines, x x x to maximize the use of telecommunications facilities available, x x x in recognition of the vital
role of communications in nation building x x x and to ensure that all users of the public telecommunications service have access to all
other users of the service wherever they may be within the Philippines at an acceptable standard of service and at reasonable cost"
(DOTC Circular No. 90-248). Undoubtedly, the encompassing objective is the common good. The NTC, as the regulatory agency of
the State, merely exercised its delegated authority to regulate the use of telecommunications networks when it decreed
interconnection.

xxx

The decisive considerations are public need, public interest, and the common good. x x x Article II, Section 24 of the 1987
Constitution, recognizes the vital role of communication and information in nation building. It is likewise a State policy to provide the
environment for the emergence of communications structures suitable to the balanced flow of information into, out of, and across the
country (Article XVI, Section 10, x x x). A modem and dependable communications network rendering efficient and reasonably
priced services is also indispensable for accelerated economic recovery and development. To these public and national interests,
public utility companies must bow and yield.[35] (Emphasis omitted.)
The same reasoning obtains here. Access charges directly affect the State's goal of making basic telecommunications services
accessible to everyone at affordable rates. If the access charges are too high, the cost to end-users may well be prohibitive. Smart
cannot simply invoke the freedom of contract to shield it from the intervention of the NTC, especially when the law itself sanctions
the agency's intervention. As correctly pointed out by PT&T, "[b]ecause petitioner and respondent are public utility PTEs subject to
regulation by the NTC, their freedom to enter into contracts is not absolute but subject to the police power of the State, especially
when it comes to matters affecting public interest and convenience."[36]

The case relied upon by Smart, Boiser, finds no application here for the simple reason that the dispute in that case did not involve
access charges. Boiser arose from PLDT's alleged failure to observe the 30-day predisconnection notice requirement stated in the
parties' Interconnecting Agreement. In holding that regular courts had jurisdiction, we said that "[t]here is nothing in the Commission's
powers which authorizes it to adjudicate breach of contract cases, much less to award moral and exemplary damages." [37] In stark
contrast, jurisdiction over negotiated access charge formulas, such as Smart and PT&T's Agreement, has been allocated to the NTC by
express provision of law.

In fine, Section 18 of RA 7925 authorizes the NTC to determine the equity, reciprocity and fairness of the access charges stipulated in
Smart and PT&T's Agreement. This does not, however, completely deprive the RTC of its jurisdiction over the complaint filed by
Smart. The Agreement has other stipulations which do not require the NTC's expertise. But insofar as Smart's complaint involved the
enforcement of, as well as the collection of sums based on the rates subject of the NTC proceedings, the RTC cannot proceed with the
civil case until the NTC has finally determined if the access charges are fair and reasonable. Hence, the more prudent course of action
for the RTC would have been to hold the civil action in abeyance until after a determination of the NTC case. Indeed, logic and the
doctrine of primary jurisdiction dictate such move. In San Miguel Properties, Inc. v. Perez,[38] we held that:

The doctrine of primary jurisdiction has been increasingly called into play on matters demanding the special competence of
administrative agencies even if such matters are at the same time within the jurisdiction of the courts. A case that requires for its
determination the expertise, specialized skills, and knowledge of some administrative board or commission because it involves
technical matters or intricate questions of fact, relief must first be obtained in an appropriate administrative proceeding before a
remedy will be supplied by the courts although the matter comes within the jurisdiction of the courts. The application of the doctrine
does not call for the dismissal of the case in the court but only for its suspension until after the matters within the competence of
the administrative body are threshed out and determined.

To accord with the doctrine of primary jurisdiction, the courts cannot and will not determine a controversy involving a question
within the competence of an administrative tribunal, the controversy having been so placed within the special competence of
the administrative tribunal under a regulatory scheme. In that instance, the judicial process is suspended pending referral to
the administrative body for its view on the matter in dispute. Consequently, if the courts cannot resolve a question that is within
the legal competence of an administrative body prior to the resolution of that question by the latter, especially where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the
administrative agency to ascertain technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the
purposes of the regulatory statute administered, suspension or dismissal of the action is proper. [39](Emphasis supplied; citations
omitted.)
Here, it would be more proper for the RTC to yield its jurisdiction in favor of the NTC since the determination of a central issue, i.e.,
the matter of access charges, requires the special competence and expertise of the latter. "In this era of clogged court dockets,
administrative boards or commissions with special knowledge, experience and capability to promptly hear and determine disputes on
technical matters or intricate questions of facts, subject to judicial review in case of grave abuse of discretion, are well-nigh
indispensable. Between the power lodged in an administrative body and a court, therefore, the unmistakable trend is to refer it to the
former."[40]

III

Under Rule 58, Section 2 of the 1997 Rules of Civil Procedure, the court where the action is pending may grant the provisional
remedy of preliminary injunction. Generally, trial courts have the ancillary jurisdiction to issue writs of preliminary injunction in cases
falling within its jurisdiction, including civil actions that are incapable of pecuniary estimation [41] and claims for sum of money
exceeding P400,000.00,[42] among others. There are, however, exceptions to this rule, such as when Congress, in the exercise of its
power to apportion jurisdiction,[43] restricts the authority of regular courts to issue injunctive reliefs. For example, the Labor Code
prohibits any court from issuing injunctions in cases involving or arising from labor disputes. [44] Similarly, Republic Act No.
8975[45] (RA 8975) provides that no court, other than the Supreme Court, may issue provisional injunctive reliefs which would
adversely affect the expeditious implementation and completion of government infrastructure projects. [46] Another well-recognized
exception is that courts could not interfere with the judgments, orders, or decrees of a court of concurrent or coordinate
jurisdiction.[47] This rule of non-interference applies not only to courts of law having equal rank but also to quasi-judicial agencies
statutorily at par with such courts.[48]

The NTC was created pursuant to Executive Order No. 546 [49] (EO 546), promulgated on July 23, 1979. It assumed the functions
formerly assigned to the Board of Communications and the Telecommunications Control Bureau and was placed under the
administrative supervision of the Ministry of Public Works. Meanwhile, the Board of Communications previously exercised the
authority which originally pertained to the Public Service Commission (PSC). [50] Under Executive Order No. 125,[51] issued in January
1987, the NTC became an attached agency of the Department of Transportation and Communications.

Section 16 of EO 546 provides that, with respect to the NTC's quasi-judicial functions, its decisions shall be appealable in the same
manner as the decisions of the Board of Communications had been appealed. The rulings and decisions of the Board were, in turn,
appealable in the same manner as the rulings and decisions of the PSC. [52] Under Section 35 of the Public Service Act, the Supreme
Court had jurisdiction to review any order, ruling, or decision of the PSC. [53] In Iloilo Commercial and Ice Company v. Public Service
Commission,[54] we categorically held that courts of first instance have no power to issue a restraining order directed to the PSC. [55] In
that case, the PSC instructed the city fiscal to file a criminal action against the owner and manager of Iloilo Commercial and Ice
Company for allegedly operating a public utility without the required certificate of public convenience. The company brought a
complaint in the Court of First Instance of Iloilo for an injunction to restrain the PSC from proceeding against the company and its
officers. The Court, speaking through Justice Malcolm, said:

The Public Service Law, Act No. 3108, as amended, creates a Public Service Commission which is vested with the powers and duties
therein specified. The Public Service Commissioners are given the rank, prerogatives, and privileges of Judges of First Instance. Any
order made by the commission may be reviewed on the application of any person or public service affected thereby, by certiorari, in
appropriate cases or by petition, to the Supreme Court, and the Supreme Court is given jurisdiction to review any order of the
Commission and to modify or set it aside (sec. 35).

x x x In the absence of a specific delegation of jurisdiction to Courts of First Instance to grant injunctive relief against orders
of the Public Service Commission, it would appear that no court, other than the Supreme Court, possesses such jurisdiction.
To hold otherwise would amount to a presumption of power in favor of one branch of the judiciary, as against another branch
of equal rank. If every Court of First Instance had the right to interfere with the Public Service Commission in the due performance
of its functions, unutterable confusion would result. The remedy at law is adequate, and consists either in making the proper defense in
the criminal action or in the Ice Company following the procedure provided in the Public Service Law. An injunction is not the proper
remedy, since other and exclusive remedies are prescribed by law. [56] (Emphasis supplied.)
The above ruling is deemed to have been modified by Batas Pambansa Blg. 129, which granted the Court of Appeals exclusive
appellate jurisdiction over "all final judgments, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commission" except those falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution and the Labor Code.[57] In this regard, Rule 43 of the Rules of Court provides that an appeal from any award,
judgment or resolution of or authorized by a quasi-judicial agency in the exercise of its quasi-judicial functions, including the NTC,
shall be through a petition for review with the Court of Appeals. [58]
In view of the legislative history of the NTC, it is clear that Congress intended NTC, in respect of its quasi-judicial or adjudicatory
functions, to be co-equal with regional trial courts. Hence, the RTC cannot interfere with the NTC's exercise of its quasi-judicial
powers without breaching the rule of non-interference with tribunals of concurrent or coordinate jurisdiction. In this case, the NTC
was already in the process of resolving the issue of whether the access charges stipulated in the Agreement were fair and equitable
pursuant to its mandate under RA 7925 when the RTC issued the assailed writ of preliminary injunction. Mediation conferences had
been conducted and, failing to arrive at a settlement, the NTC had ordered the parties to submit their respective pleadings. Simply put,
the NTC had already assumed jurisdiction over the issue involving access charges. Undeniably, the RTC exceeded its jurisdiction
when it restrained the NTC from exercising its statutory authority over the dispute.

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated February 18, 2009, as well as the Resolution dated
July 23, 2009, of the Court of Appeals in CA-G.R. SP No. 97737 are SET ASIDE. The writ of preliminary injunction issued by the
Regional Trial Court, Branch 146, Makati City is DISSOLVED. The Regional Trial Court, Branch 146, Makati City is further
directed to SUSPENDits proceedings until the National Telecommunications Commission makes a final determination on the issue
involving access charges.

G.R. No. 165354 January 12, 2015

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL POWER CORPORATION, Petitioner,


vs.
HEIRS OF SATURNINO Q. BORBON, AND COURT OF APPEALS, Respondents.

DECISION

BERSAMIN, J.:

The expropriator who has taken possession of the property subject of expropriation is obliged to pay reasonable compensation to the
landowner for the period of such possession although the proceedings had been discontinued on the ground that the public purpose for
the expropriation had meanwhile ceased.

Antecedents

The National Power Corporation (NAPOCOR) is a government-owned and -controlled corporation vested with authority under
Republic Act No. 6395, as amended, to undertake the development of hydro-electric generation of power, production of electricity
from any and all sources, construction, operation and maintenance of power plants, auxiliary plants, dams, reservoirs, pipes, main
transmission lines, power stations and substations, and other works for the purpose of developing hydraulic power from any river,
lake, creek, spring and waterfalls in the Philippines and to supply such power to the inhabitants thereof. 1

In February 1993, NAPOCOR entered a property located in Barangay San Isidro, Batangas City in order to construct and maintain
transmission lines for the 230 KV Mahabang Parang-Pinamucan Power Transmission Project.2 Respondents heirs of Saturnino Q.
Borbon owned the property, with a total area of 14,257 square meters, which was registered under Transfer Certificate of Title No. T-
9696 of the Registry of Deeds of Batangas.3

On May 26, 1995, NAPOCOR filed a complaint for expropriation in the Regional Trial Court in Batangas City (RTC), 4seeking the
acquisition of an easement of right of way over a portion of the property involving an area of only 6,326 square meters, more or
less,5 alleging that it had negotiated with the respondents for the acquisition of the easement but they had failed to reach any
agreement; and that, nonetheless, it was willing to deposit the amount of ₱9,790.00 representing the assessed value of the portion
sought to be expropriated.6 It prayed for the issuance of a writ of possession upon deposit to enable it to enter and take possession and
control of the affected portion of the property; to demolish all improvements existing thereon; and to commence construction of the
transmission line project. It likewise prayed for the appointment of three commissioners to determine the just compensation to be
paid.7

In their answer with motion to dismiss,8 the respondents staunchly maintained that NAPOCOR had not negotiated with them before
entering the property and that the entry was done without their consent in the process, destroying some fruit trees without payment,
and installing five transmission line posts and five woodpoles for its project;9 that the area being expropriated only covered the portion
directly affected by the transmission lines; that the remaining portion of the property was also affected because the transmission line
passed through the center of the land, thereby dividing the land into three lots; that the presence of the high tension transmission line
had rendered the entire property inutile for any future use and capabilities;10 that, nonetheless, they tendered no objection to
NAPOCOR’s entry provided it would pay just compensation not only for the portion sought to be expropriated but for the entire
property whose potential was greatly diminished, if not totally lost, due to the project; 11 and that their property was classified as
industrial land. Thus, they sought the dismissal of the complaint, the payment of just compensation of ₱1,000.00/square meter, and
attorney’s fees;12 and to be allowed to nominate their representative to the panel of commissioners to be appointed by the trial court. 13

In the pre-trial conference conducted on December 20, 1995, the parties stipulated on: (1) the location of the property; (2) the number
of the heirs of the late Saturnino Q. Borbon; (3) the names of the persons upon whom title to the property was issued; and (4) the
ownership and possession of the property.14 In its order of that date, the RTC directed the parties to submit the names of their
nominees to sit in the panel of commissioners within 10 days from the date of the pre-trial.15

The RTC constituted the panel of three commissioners. Two commissioners submitted a joint report on April 8, 1999, 16 in which they
found that the property was classified as industrial land located within the Industrial 2 Zone; 17that although the property used to be
classified as agricultural (i.e., horticultural and pasture land), it was reclassified to industrial land for appraisal or taxation purposes on
June 30, 1994; and that the reclassification was made on the basis of a certification issued by the Zoning Administrator pursuant to
Section 3.10 (d) of the Amended Zoning Ordinance (1989) of the City of Batangas. 18 The two commissioners appraised the value at
₱550.00/square meter.19However, the third commissioner filed a separate report dated March 16, 1999,20 whereby he recommended
the payment of "an easement fee of at least ten percent (10%) of the assessed value indicated in the tax declaration21plus cost of
damages in the course of the construction, improvements affected and tower occupancy fee." 22

The parties then submitted their respective objections to the reports. On their part, the respondents maintained that NAPOCOR should
compensate them for the entire property at the rate of ₱550.00/square meter because the property was already classified as industrial
land at the time NAPOCOR entered it.23 In contrast, NAPOCOR objected to the joint report, insisting that the property was classified
as agricultural land at the time of its taking in March 1993; and clarifying that it was only seeking an easement of right of way over a
portion of the property, not the entire area thereof, so that it should pay only 10% of the assessed value of the portion thus occupied.24

In the judgment dated November 27, 2000,25 the RTC adopted the recommendation contained in the joint report, and ruled thusly:

The price to be paid for an expropriated land is its value at the time of taking, which is the date when the plaintiff actually entered the
property or the date of the filing of the complaint for expropriation. In this case, there is no evidence as to when the plaintiff actually
entered the property in question, so the reference point should be the date of filing of the complaint, which is May 5, 1995.

On this date, the property in question was already classified as industrial. So, the Joint Report (Exhibit "1") is credible on this point.
The two Commissioners who submitted the Joint Report are government officials who were not shown to be biased. So, that their
report should be given more weight than the minority report submitted by a private lawyer representing the plaintiff. In view of these,
the Court adopts the Joint Report and rejects the minority report. The former fixed the just compensation at ₱550.00 per square meter
for the whole lot of 14,257 square meters.26

Accordingly, the RTC ordered NAPOCOR to pay the respondents: (1) just compensation for the whole area of 14,257 square meters at
the rate of ₱550.00/square meter; (2) legal rate of interest from May 5, 1995 until full payment; and (3) the costs of suit. 27

NAPOCOR appealed (CA-G.R. No. 72069).

On April 29, 2004,28 the CA promulgated its decision, viz:

WHEREFORE, premises considered, the Decision dated November 27, 2000 of Branch I of the Regional Trial Court of Batangas
City, is hereby AFFIRMED with the MODIFICATION that plaintiff-appellant shall pay only for the occupied 6,326 square meters of
the subject real property at the rate of ₱550.00 per square meter and to pay legal interest therefrom until fully paid.

SO ORDERED.29

Hence, this appeal by NAPOCOR.

Issue

On December 3, 2012, during the pendency of the appeal, NAPOCOR filed a Motion to Defer Proceedings stating that negotiations
between the parties were going on with a view to the amicable settlement of the case. 30

On January 3, 2014, NAPOCOR filed a Manifestation and Motion to Discontinue Expropriation Proceedings, 31informing that the
parties failed to reach an amicable agreement; that the property sought to be expropriated was no longer necessary for public purpose
because of the intervening retirement of the transmission lines installed on the respondents’ property; 32 that because the public purpose
for which such property would be used thereby ceased to exist, the proceedings for expropriation should no longer continue, and the
State was now duty-bound to return the property to its owners; and that the dismissal or discontinuance of the expropriation
proceedings was in accordance with Section 4, Rule 67 of the Rules of Court. Hence, NAPOCOR prayed that the proceedings be
discontinued "under such terms as the court deems just and equitable,"33 and that the compensation to be awarded the respondents be
reduced by the equivalent of the benefit they received from the land during the time of its occupation, for which purpose the case
could be remanded to the trial court for the determination of reasonable compensation to be paid to them. 34

In light of its Manifestation and Motion to Discontinue Expropriation Proceedings, NAPOCOR contends that the expropriation has
become without basis for lack of public purpose as a result of the retirement of the transmission lines; that if expropriation still
proceeds, the Government will be unduly burdened by payment of just compensation for property it no longer requires; and that there
is legal basis in dismissing the proceedings, citing Metropolitan Water District v. De los Angeles 35 where the Court granted
petitioner’s prayer for the quashal of expropriation proceedings and the eventual dismissal of the proceedings on the ground that the
land sought to be expropriated was no longer "indispensably necessary" in the maintenance and operation of petitioner's waterworks
system.

The issue to be considered and resolved is whether or not the expropriation proceedings should be discontinued or dismissed pending
appeal.

Ruling of the Court

The dismissal of the proceedings for expropriation at the instance of NAPOCOR is proper, but, conformably with Section 4, 36 Rule 67
of the Rules of Court, the dismissal or discontinuance of the proceedings must be upon such terms as the court deems just and
equitable.

Before anything more, we remind the parties about the nature of the power of eminent domain. The right of eminent domain is "the
ultimate right of the sovereign power to appropriate, not only the public but the private property of all citizens within the territorial
sovereignty, to public purpose." 37 But the exercise of such right is not unlimited, for two mandatory requirements should underlie the
Government’s exercise of the power of eminent domain, namely: (1) that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner.38 These requirements partake the nature of implied conditions that should be complied
with to enable the condemnor to keep the property expropriated.39

Public use, in common acceptation, means "use by the public." However, the concept has expanded to include utility, advantage or
productivity for the benefit of the public.40 In Asia's Emerging Dragon Corporation v. Department of Transportation and
Communications,41 Justice Corona, in his dissenting opinion said that:

To be valid, the taking must be for public use. The meaning of the term "public use" has evolved over time in response to changing
public needs and exigencies. Public use which was traditionally understood as strictly limited to actual "use by the public" has already
been abandoned. "Public use" has now been held to be synonymous with "public interest," "public benefit," and "public convenience."

It is essential that the element of public use of the property be maintained throughout the proceedings for expropriation. The effects of
abandoning the public purpose were explained in Mactan-Cebu International Airport Authority v. Lozada, Sr.,42 to wit:

More particularly, with respect to the element of public use, the expropriator should commit to use the property pursuant to the
purpose stated in the petition for expropriation filed, failing which, it should file another petition for the new purpose. If not, it is then
incumbent upon the expropriator to return the said property to its private owner, if the latter desires to reacquire the same. Otherwise,
the judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the proper exercise of the power
of eminent domain, namely, the particular public purpose for which the property will be devoted. Accordingly, the private property
owner would be denied due process of law, and the judgment would violate the property owner's right to justice, fairness and equity.43

A review reveals that Metropolitan Water District v. De los Angeles 44 is an appropriate precedent herein. There, the Metropolitan
Water District passed a board resolution requesting the Attorney-General to file a petition in the Court of First Instance of the
Province of Rizal praying that it be permitted to discontinue the condemnation proceedings it had initiated for the expropriation of a
parcel of land in Montalban, Rizal to be used in the construction of the Angat Waterworks System. It claimed that the land was no
longer indispensably necessary in the maintenance and operation of its waterworks system, and that the expropriation complaint
should then be dismissed. The Court, expounding on the power of the State to exercise the right of eminent domain, then pronounced:

There is no question raised concerning the right of the plaintiff here to acquire the land under the power of eminent
domain.1âwphi1 That power was expressly granted it by its charter. The power of eminent domain is a right reserved to the people or
Government to take property for public use. It is the right of the state, through its regular organization, to reassert either temporarily or
permanently its dominion over any portion of the soil of the state on account of public necessity and for the public good. The right of
eminent domain is the right which the Government or the people retains over the estates of individuals to resume them for public use.
It is the right of the people, or the sovereign, to dispose, in case of public necessity and for the public safety, of all the wealth
contained in the state.45

Indeed, public use is the fundamental basis for the action for expropriation; hence, NAPOCOR’s motion to discontinue the
proceedings is warranted and should be granted. The Court has observed in Metropolitan Water District v. De los Angeles:

It is not denied that the purpose of the plaintiff was to acquire the land in question for public use. The fundamental basis then of all
actions brought for the expropriation of lands, under the power of eminent domain, is public use. That being true, the very moment
that it appears at any stage of the proceedings that the expropriation is not for a public use, the action must necessarily fail and should
be dismissed, for the reason that the action cannot be maintained at all except when the expropriation is for some public use. That
must be true even during the pendency of the appeal or at any other stage of the proceedings. If, for example, during the trial in the
lower court, it should be made to appear to the satisfaction of the court that the expropriation is not for some public use, it would be
the duty and the obligation of the trial court to dismiss the action. And even during the pendency of the appeal, if it should be made to
appear to the satisfaction of the appellate court that the expropriation is not for public use, then it would become the duty and the
obligation of the appellate court to dismiss it.

In the present case the petitioner admits that the expropriation of the land in question is no longer necessary for public use. Had that
admission been made in the trial court the case should have been dismissed there. It now appearing positively, by resolution of the
plaintiff, that the expropriation is not necessary for public use, the action should be dismissed even without a motion on the part of the
plaintiff. The moment it appears in whatever stage of the proceedings that the expropriation is not for a public use the complaint
should be dismissed and all the parties thereto should be relieved from further annoyance or litigation. 46 (underscoring and emphasis
supplied)

It is notable that the dismissal of the expropriation proceedings in Metropolitan Water District v. De los Angeles was made subject to
several conditions in order to address the dispossession of the defendants of their land, and the inconvenience, annoyance and
damages suffered by the defendants on account of the proceedings. Accordingly, the Court remanded the case to the trial court for the
issuance of a writ of possession ordering Metropolitan Water District to immediately return possession of the land to the defendants,
and for the determination of damages in favor of the defendants, the claims for which must be presented within 30 days from the
return of the record to the court of origin and notice thereof. 47

Here, NAPOCOR seeks to discontinue the expropriation proceedings on the ground that the transmission lines constructed on the
respondents’ property had already been retired. Considering that the Court has consistently upheld the primordial importance of public
use in expropriation proceedings, NAPOCOR’s reliance on Metropolitan Water District v. De los Angeles was apt and correct. Verily,
the retirement of the transmission lines necessarily stripped the expropriation proceedings of the element of public use. To continue
with the expropriation proceedings despite the definite cessation of the public purpose of the project would result in the rendition of an
invalid judgment in favor of the expropriator due to the absence of the essential element of public use.

Unlike in Metropolitan Water District v. De los Angeles where the request to discontinue the expropriation proceedings was made
upon the authority appearing in the board resolution issued on July 14, 1930, 48 counsel for NAPOCOR has not presented herein any
document to show that NAPOCOR had decided, as a corporate body, to discontinue the expropriation proceedings. Nonetheless, the
Court points to the Memorandum dated December 13, 2012 49 and the Certificate of Inspection/Accomplishment dated February 5,
200550 attached to NAPOCOR’s motion attesting to the retirement of the transmission lines. Also, Metropolitan Water District v. De
los Angeles emphasized that it became the duty and the obligation of the court, regardless of the stage of the proceedings, to dismiss
the action "if it should be made to appear to the satisfaction of the court that the expropriation is not for some public use." 51 Despite
the lack of the board resolution, therefore, the Court now considers the documents attached to NAPOCOR’s Manifestation and Motion
to Discontinue Expropriation Proceedings to be sufficient to establish that the expropriation sought is no longer for some public
purpose.

Accordingly, the Court grants the motion to discontinue the proceedings subject to the conditions to be shortly mentioned hereunder,
and requires the return of the property to the respondents. Having said that, we must point out that NAPOCOR entered the property
without the owners’ consent and without paying just compensation to the respondents. Neither did it deposit any amount as required
by law prior to its entry. The Constitution is explicit in obliging the Government and its entities to pay just compensation before
depriving any person of his or her property for public use. 52 Considering that in the process of installing transmission lines,
NAPOCOR destroyed some fruit trees and plants without payment, and the installation of the transmission lines went through the
middle of the land as to divide the property into three lots, thereby effectively rendering the entire property inutile for any future use, it
would be unfair for NAPOCOR not to be made liable to the respondents for the disturbance of their property rights from the time of
entry until the time of restoration of the possession of the property. There should be no question about the taking. In several rulings,
notably National Power Corporation v. Zabala,53 Republic v. Libunao,54 National Power Corporation v. Tuazon,55 and National Power
Corporation v. Saludares,56 this Court has already declared that "since the high-tension electric current passing through the
transmission lines will perpetually deprive the property owners of the normal use of their land, it is only just and proper to require
Napocor to recompense them for the full market value of their property."
There is a sufficient showing that NAPOCOR entered into and took possession of the respondents’ property as early as in March 1993
without the benefit of first filing a petition for eminent domain. For all intents and purposes, therefore, March 1993 is the reckoning
point of NAPOCOR’s taking of the property, instead of May 5, 1995, the time NAPOCOR filed the petition for expropriation. The
reckoning conforms to the pronouncement in Ansaldo v. Tantuico, Jr.,57 to wit:

Normally, of course, where the institution of an expropriation action precedes the taking of the property subject thereof, the just
compensation is fixed as of the time of the filing of the complaint. This is so provided by the Rules of Court, the assumption of
possession by the expropriator ordinarily being conditioned on its deposits with the National or Provincial Treasurer of the value of
the property as provisionally ascertained by the court having jurisdiction of the proceedings.

There are instances, however, where the expropriating agency takes over the property prior to the expropriation suit, as in this case
although, to repeat, the case at bar is quite extraordinary in that possession was taken by the expropriator more than 40 years prior to
suit. In these instances, this Court has ruled that the just compensation shall be determined as of the time of taking, not as of the time
of filing of the action of eminent domain.

In the context of the State's inherent power of eminent domain, there is a "taking" when the owner is actually deprived or dispossessed
of his property; when there is a practical destruction or a material impairment of the value of his property or when he is deprived of
the ordinary use thereof. There is a "taking" in this sense when the expropriator enters private property not only for a momentary
period but for a more permanent duration, for the purpose of devoting the property to a public use in such a manner as to oust the
owner and deprive him of all beneficial enjoyment thereof. For ownership, after all, "is nothing without the inherent rights of
possession, control and enjoyment. Where the owner is deprived of the ordinary and beneficial use of his property or of its value by its
being diverted to public use, there is taking within the Constitutional sense." x x x. 58

In view of the discontinuance of the proceedings and the eventual return of the property to the respondents, there is no need to pay
"just compensation" to them because their property would not be taken by NAPOCOR. Instead of full market value of the property,
therefore, NAPOCOR should compensate the respondents for the disturbance of their property rights from the time of entry in March
1993 until the time of restoration of the possession by paying to them actual or other compensatory damages. This conforms with the
following pronouncement in Mactan-Cebu International Airport Authority v. Lozada, Sr.: 59

In light of these premises, we now expressly hold that the taking of private property, consequent to the Government’s exercise of its
power of eminent domain, is always subject to the condition that the property be devoted to the specific public purpose for which it
was taken. Corollarily, if this particular purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the
former owners, if they so desire, may seek the reversion of the property, subject to the return of the amount of just compensation
received. In such a case, the exercise of the power of eminent domain has become improper for lack of the required factual
justification.60

This should mean that the compensation must be based on what they actually lost as a result and by reason of their dispossession of
the property and of its use, including the value of the fruit trees, plants and crops destroyed by NAPOCOR’s construction of the
transmission lines. Considering that the dismissal of the expropriation proceedings is a development occurring during the appeal, the
Court now treats the dismissal of the expropriation proceedings as producing the effect of converting the case into an action for
damages. For that purpose, the Court remands the case to the court of origin for further proceedings, with instruction to the court of
origin to enable the parties to fully litigate the action for damages by giving them the opportunity to re-define the factual and legal
issues by the submission of the proper pleadings on the extent of the taking, the value of the compensation to be paid to the
respondents by NAPOCOR, and other relevant matters as they deem fit. Trial shall be limited to matters the evidence upon which had
not been heretofore heard or adduced. The assessment and payment of the correct amount of filing fees due from the respondents shall
be made in the judgment, and such amount shall constitute a first lien on the recovery. Subject to these conditions, the court of origin
shall treat the case as if originally filed as an action for damages.

WHEREFORE, the Court DISMISSES the expropriation proceedings due to the intervening cessation of the need for public use;
REMANDS the records to the Regional Trial Court, Branch 1, in Batangas City as the court of origin for further proceedings to be
conducted in accordance with the foregoing instructions; and ORDERS said trial court to try and decide the issues with dispatch.

LEONEN, J.:
A cashier who is found to have been negligent in keeping the funds in his or her custody cannot be relieved from his or her
accountability for amounts lost through robbery.

This is a Petition for Certiorari under Rule 65 of the Rules of Court assailing the June 5, 2008 withholding order and the Commission
on Audit's January 31, 2012 decision holding Maria Theresa G. Gutierrez (Gutierrez) liable for the P10,105,687.25 that was lost
through robbery.

Gutierrez is a Cash Collecting Officer, with the designation of Cashier III at National Food Authority-National Capital Region,
National District Office (NFA-NCR, NDO).[1] On May 30, 2008, she had collections amounting to F9,390,834.00, covered by Official
Receipt Nos. 0420975 to 0421246.[2] On that day, she placed the collections in a wooden cabinet. [3]

The next day,.Gutierrez's collections amounted to P1,505,625.00. [4] Of that amount, P714,852.75 and an undeposited amount of P0.50
from March 2008 were placed in a wooden cabinet. [5] The rest was placed in the safety vault.[6]

The total undeposited collection as of March 31, 2008 was P10,896,459.50. Of that amount, P10,105,687.25 was placed in the
"pearless" boxes[7] in a wooden cabinet and P790,772.25 was placed in the safety vault. [8]

On June 1, 2008, at about 1:35 a.m., armed men in military uniforms with Philippine National Police-Security Agencies and Guards
Supervision Division (PNP-SAGSD) identifications entered the NFA-NCR, NDO.[9] The armed men disarmed NFA-NCR, NDO's
security guards and took Gutierrez's undeposited collections. [10] Lockheed Detective and Watchman Agency, Inc. was NFA-NCR,
NDO's contracted security agency.[11]

The security guards on duty executed their respective affidavits. Based on their affidavits, armed men entered the NFA-NCR, NDO
compound after they had been disarmed, threatened, and tied up.[12] The security guards immediately reported the incident to the
Valenzuela Police Station,[13] where an investigation report[14] was issued consistent with the security guards' narrations in their
affidavits.[15]

On June 3, 2008, the Commission on Audit, National Food Authority-NCR, North District Office, Malanday, Valenzuela City,
through State Auditor Narcisa DJ Joaquin (State Auditor Joaquin), issued a demand letter to Gutierrez. [16] Gutierrez was informed that
she must immediately produce the missing funds amounting to P10,105,686.75.[17] She was also ordered to submit within 72 hours a
written explanation why such shortage occurred.[18]

On June 5, 2008, the Commission on Audit, through State Auditor Joaquin, issued a withholding order, addressed to Roberto S.
Musngi (Musngi), Manager of National Food Authority, North District Office. [19] Musngi was informed that upon examination of
Gutierrez's account on June 1, 2008, it was established that there was a P10,105,686.75 shortage in Gutierrez's
accountabilities.[20] Pursuant to Section 37 of Presidential Decree No. 1445, Musngi was directed to withhold Gutierrez's salaries and
other emoluments so these could be applied to the satisfaction of the shortage. [21]

In response to the June 3, 2008 demand letter of the Commission on Audit, Gutierrez executed an affidavit dated June 6, 2008 wherein
she narrated that she had been serving as National Food Authority's Cash Collecting Officer since 1985. [22] Her office was located at
the far end of the National Food Authority building.[23] That was where the "pearless" boxes and the cabinet where she kept her
collections could be found.[24] Quoted below is her explanation for using "pearless" boxes to keep her collections:

6. That because of the volume of money I accept every day, which averages from 4 to 6 million pesos every day depending on the
seasons, most of my time inside the office is spent to counting, bundling by different denominations the money. To emphasize the
point, the money that I am accepting from remittances and payments are of different denominations, from twenty five centavo
(Php0.25) coins to one thousand peso (Php1,000.00) bills. The coins alone would amount in the average of Twelve thousand pesos
(Php12,000.00). I could literally say that from the time I timed in the office at about 6:30 a.m. up to the time I timed out at about 6:30
p.m., my only rest from my work is to [be] going to the ladies room and the break during lunch time.

....

8. That when the rice crises came up on April 2008, volume of work including the amount of money that comes into my office almost
doubled. That because of the heavy operations in our office I had an average collection starting April 2008 of 6 to 9 Million Pesos
every day of every denomination, with coins averaging from 12 to 16 thousand pesos that needs to be counted, receipted, bundled,
balanced, reported and kept.

9. That it is almost automatic that when I enter my office what comes to my mind is to count the money and bundle them by the
hundreds and prepare receipts for the payments and remittances until the time to leave at about 6:30 p.m. I would also cause the
deposit of the money collected the day before to Land Bank. But there were even times that because of the volume of the money, bank
representatives could not sort out all the smaller bills (P20s and P50s) being picked up from our office as the Armor van should be in
the bank at 3:00 p.m. Thus, there would be arrangements in the bank that the counting would continue inside their office, which
oftentimes lasts until late night.

10. That since April 2008 or the start of the heavy operations, I have been putting some of the money in the "pearless" box, because of
the volume, which I have to carry and keep safe at the cabinet inside. I have six (6) pearless boxes in the office.
....

13. That since May 30, 2008 is a Friday, banks are closed the following day and the money collected on said date would have
remained in my office until the next banking day.

....

18. It was very unfortunate that the money accepted on May 30, 2008 and the collection in the night before the robbery were left in the
pearless box inside the cabinet and not inside the vault. But with the volume of money, the vault has not enough space to
accommodate all of it.

19. And with the amount of work that I am doing every day from 6:30 in the morning up to 6:30 p.m., more or less, where my only
rest is literally going to the ladies room, and with the safe location of my office, it did not come to my mind that this incident would
come.

20. That I have nothing to do with what happened in the incident of June 1, 2008 at 1:30 in the morning and I am not in control now to
produce those missing funds taken by the robbers. [25]
On June 10, 2008, Gutierrez requested relief from money accountability for the loss of the collections.[26] The letter was addressed to
State Auditor Joaquin.

In the letter dated June 26, 2008 addressed to State Auditor Joaquin, Gutierrez appealed the withholding order issued on June 5,
2008.[27] She prayed that her salaries and emoluments be given to her while the robbery incident was still under investigation. [28] She
was a widow who had three (3) dependents and an 85-year-old mother residing with her in need of medical attention. [29] She had no
other source of income to support herself, her dependents, and her mother. [30]

On June 26, 2008, State Auditor Joaquin denied Gutierrez's appeal of the withholding order. [31] State Auditor Joaquin informed
Gutierrez that there was already a prima facie case for malversation against her under Article 217 of the Revised Penal Code. [32]

On July 11, 2008, Gutierrez filed a notice of appeal of State Auditor Joaquin's withholding order dated June 5, 2008. [33]

On July 21, 2008, Atty. Saturnino R. Rola, Jr., Director of the National Food Authority, Enforcement, Investigation and Prosecution
Department, submitted a memorandum addressed to the Administrator, Jessup P. Navarro. [34] He found that the security agency was
solidarity liable with security guard Romeo Casta for the amount lost.[35] He also found that Gutierrez, by keeping her collections in
unsecured "pearless" boxes and not in a vault, was grossly negligent in safekeeping her collections. [36] He recommended that Gutierrez
be administratively charged with dishonesty, gross neglect of duty, conduct prejudicial to the best interest of the service, and violation
of reasonable office rules and regulations without prejudice to the filing of appropriate criminal charges. [37] He also recommended the
restitution of the amount lost from Lockheed Detective and Watchman Agency, Inc. Further, he recommended the ban of security
guard Romeo Casta from deployment in any National Food Authority installations. [38]

Similar incidents of robbery at different National Food Authority offices involving Lockheed Detective and Watchman Agency, Inc.
were reported between 2006 and 2008.[39]

On September 11, 2008, Commission on Audit Director IV Tito S. Nabua (Director Nabua) issued a decision denying Gutierrez's
appeal[40] and expressing his agreement with the issuance of the withholding order.[41] The robbery incident was acknowledged in the
decision.[42] However, Gutierrez's alleged act of negligence in the performance of her duties could not be set aside. [43] Her failure to
follow safekeeping procedures showed lack of due care on her part.[44] Aside from Article 217 of the Revised Penal Code, the
liabilities of an accountable officer are found in Section 105 of Presidential Decree No. 1445. [45]

Gutierrez filed a motion for reconsideration of the September 11, 2008 decision of Director Nabua on the ground that he did not give
her a chance to file a memorandum of appeal before submission of the case for resolution. [46] According to Gutierrez, this was a
violation of the rules and of her right to due process.[47] She also cited reversible error in upholding State Auditor Joaquin's order
despite lack of factual and legal bases as ground for her motion. [48]

On January 31, 2012, the Commission on Audit denied her request for relief from money accountability. [49] Its ruling is reproduced as
follows:

WHEREFORE, premises considered, this Commission DENIES the herein request for relief from money accountability, there being
positive showing of fault or negligence on the part of Ms. Maria Theresa G. Gutierrez in the safekeeping and custody of subject
government funds.

Accordingly, Ms. Gutierrez shall be liable to pay to1 the NFA the missing amount of P10,105,687.25. This is without prejudice to the
right of the NFA-NCR, NDO to proceed against Lockheed Detective and Watchman Agency, Inc. for the indemnification of the loss
as security services provider to the NFA-NCR, NDO, Valenzuela City.[50]
The Commission on Audit found that Gutierrez was negligent in safekeeping her collections. [51] Placement of collections in a
"pearless" box instead of in the safety vault, especially given the volume of collections, constituted gross negligence on her
part.[52] Her 20-year service aggravated her negligence.[53] It should have made her more "security-conscious."[54]

The Commission on Audit also found that the security guards' failure to secure National Food Authority's premises was a violation of
the contract between National Food Authority and Lockheed Detective and Watchman Agency, Inc. [55]

We decide whether Gutierrez's due process rights were violated when the Commission on Audit decided her appeal without requiring
her to file an appeal memorandum. We also decide whether Gutierrez is liable for the amounts lost through a robbery.

Petitioner emphasizes that she was first assisted by counsel only when she filed a notice of appeal. Respondent auditor had already
issued the withholding order dated June 5, 2008 and .letter dated June 26, 2008 before petitioner was assisted by counsel.

Petitioner argues that her right to due process was violated when a decision was rendered against her without giving her a chance to
file an appeal memorandum in accordance with Section 5 of Rule V of the Revised Rules of Procedure of the Commission on Audit.
The appeal memorandum was her chance to raise issues against respondent auditor's orders to prove her case and to submit evidence
to support her defense.[56]

Petitioner's right to due process was further violated when her motion for reconsideration was resolved by the Commission on Audit
instead of by Director Nabua. This prevented her from filing a petition for review of Director Nabua's decision before the Commission
on Audit.[57]

Petitioner cites Article IX(A), Section 7 of the Constitution to support her argument that she has a right to present her side in a
memorandum.[58] It provides:

Section 7. Each Commission shall decide by a majority vote of all its Members, any case or matter brought before it within sixty days
from the date of its submission for decision or resolution. A case or matter is deemed submitted for decision or resolution upon
the filing of the last pleading, brief, or memorandum required by the rules of the Commission or by the Commission
itself. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to
the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof. (Emphasis supplied)
Petitioner argues that aside from the right to be heard, administrative due process also requires the right to present evidence and for
such evidence to be considered by the deciding tribunal. [59]

Lastly, petitioner points out that the cause of the shortage was the robbery incident, which was a result of the negligence of the
security guards and not her negligence.[60] The vault that was assigned to her did not have enough space to accommodate her
collections.[61]

On the other hand, respondents argue that petitioner was not deprived of due process when she was not given the opportunity to file an
appeal memorandum. Her affidavit was a sufficient platform to raise her defenses. [62] Moreover, the presence of a counsel is not
required in administrative proceedings.[63]

Respondents also argue that petitioner cannot ask the Director or the Auditor to allow her to file an appeal memorandum since it is the
Commission on Audit that has the exclusive jurisdiction over requests for relief from accountability in excess of P500,000.00.[64] This,
according to respondent, is based on Commission on Audit Resolution No. 93-605 dated August 3, 1993.[65]

Finally, respondents argue that the circumstances show that petitioner fell short of the demands of her position as cashier. [66] What she
could have done was to request additional vaults if the vaults in her possession were not enough to accommodate all her collections. [67]

We rule for respondents.

Petitioner's due process rights were not violated

Petitioner argues that she was assisted by counsel only after a withholding order had already been issued. She also argued that the
Commission on Audit Director's issuance of a decision on her appeal without requiring her to file an appeal memorandum was a
violation of her due process rights.

Petitioner's arguments are not tenable.


The right to counsel under Section 12(1) of Article III of the Constitution applies in criminal proceedings, but not in administrative
proceedings. It is a right given to persons accused of an offense during criminal investigation. [68] Any proceeding conducted by an
administrative body is not part of the criminal investigation or prosecution. [69]

Thus, this court said in Remolona v. Civil Service Commission:[70]

While investigations conducted by an administrative body may at times be akin to a criminal proceeding, the fact remains that under
existing laws, a party in an administrative inquiry may or may not be assisted by counsel, irrespective of the nature of the charges and
of the respondent's capacity to represent himself, and no duty rests on such body to furnish the person being investigated with counsel.
In an administrative proceeding, a respondent has the option of engaging the services of counsel or not. This is clear from the
provisions of Section 32, Article VII of Republic Act No. 2260 (otherwise known as the Civil Service Act) and Section 39, paragraph
2, Rule XIV (on discipline) of the Omnibus Rules Implementing Book V of Executive Order No. 292 (otherwise known as the
Administrative Code of 1987). Thus, the right to counsel is not always imperative in administrative investigations because such
inquiries are conducted merely to determine whether there are facts that merit disciplinary measure against erring public officers and
employees, with the purpose of maintaining the dignity of government service. As such, the hearing conducted by the investigating
authority is not part of a criminal prosecution.[71]
While the purpose of criminal proceedings is to determine if a person suspected of committing an offense has indeed committed an
offense, the purpose of an administrative proceeding is to determine if a person in public office has violated the trust reposed in him or
her by the public. In a criminal proceeding, if a person is found guilty of an offense, the corresponding punishment is imposed
primarily to protect the public from being exposed to and correct his or her deviant behavior. In an administrative proceeding, if a
person is found administratively liable, the corresponding penalty is imposed primarily to preserve public trust and protect the
integrity of public service.[72]

Petitioner is not being accused of or investigated for a crime. The Commission on Audit's withholding order and its denial of
petitioner's request for relief from shortage were issued after it had made a finding that the money entrusted to petitioner was lost. A
finding of criminal liability was not the reason for the Commission on Audit's issuances. The Commission on Audit has no jurisdiction
to investigate a crime or to make a finding of criminal liability. Any proceeding conducted prior to these issuances was for the purpose
of determining if petitioner's salaries should be withheld or if petitioner should be relieved from her liability as a cashier.

Petitioner argues that Rule V, Section 5 of the Revised Rules of Procedure of the Commission on Audit[73] requires that she be given
an opportunity to file an appeal memorandum before the case is submitted for decision. Section 5 is cited as follows:

Section 5. APPEAL MEMORANDUM AND REPLY - Upon receipt of the records of the case, the Director shall issue an Order
requiring the appellant to file an appeal memorandum within twenty (20) days from receipt of the order. The appellant shall serve a
copy of his appeal memorandum to the Auditor or appellee who may reply thereto within the same period of time. With the filing of
the appeal memorandum and reply or lapse of the period within which to file them, the appeal shall be deemed submitted for decision.
Petitioner also argues that her due process rights were violated when the Commission on Audit decided her motion for reconsideration
of the Commission on Audit Director's decision dated September 11, 2008, and denied her request for relief from accountability
without her filing a memorandum or a petition for review. She cites Article IX(A), Section 7 of the Constitution:

Section 7. Each Commission shall decide by a majority vote of all its Members, any case or matter brought before it within sixty days
from the date of its submission for decision or resolution. A case or matter is deemed submitted for decision or resolution upon the
filing of the last pleading, brief, or memorandum required by the rules of the Commission or by the Commission itself. Unless
otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to the Supreme
Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof. (Emphasis supplied)
Petitioner's due process rights were not violated when the Commission on Audit Director had failed to require her to submit an appeal
memorandum before he decided her appeal of the State Auditor's issuance of a withholding order. There was also no violation of due
process rights when the Commission on Audit issued its January 31, 2012 decision denying her request for relief from accountability,
without a petition for review of the Commission on Audit Director's decision. The right to appeal is not part of due process. [74] Neither
is it a natural right.[75]

Moreover, petitioner's relief from accountability may be decided by the Commission on Audit at the first instance. Based on
Commission on Audit Resolution No. 93-605,[76] only the Commission on Audit may approve requests for relief from accountabilities
amounting to more than P500,000.00. Thus:

Now, therefore, pursuant to Article IX-D, Section 2(2) of the Constitution, Section 73 of PD 1445 and in conformity with Section 378
of the Local Government Code, the Commission Proper hereby resolves, as it does hereby resolve, to authorize the following COA
Officials to act on requests for relief from property and/or money accountability in the amounts indicated hereunder, except in cases of
questions of law, without prejudice to the usual appeal that may be taken therefrom to the Commission Proper, pursuant to Section 48
of PD 1445.
Approving COA Official Total Amount of Money or Cost of Property Involved
Corporate and National Unit Auditor Provincial and City Auditor not exceeding P5 0,000
Director/Officer-in-Charge of Central and Regional Offices in excess of P50,000 up to P100,000
Assistant Commissioner in excess of P100,000 up to P200,000
COA Chairman in excess of P200,000 up to P500,000
Commission Proper above P500,000
The lost accountability involved in this case amounts to 10,105,687.75.

In any case, we determine if petitioner's due process rights were violated in the course of the proceedings before the Commission on
Audit.

This court in Ang Tibay v. Court of Industrial Relations[77] ruled that administrative due process requires only the following:

(a) The party should be allowed to present his or her own case and submit supporting evidence;
(b) The deciding tribunal must consider the party's evidence;
(c) There is evidence to support the tribunal's decision;
The evidence supporting the tribunal's decision must be substantial or such "relevant evidence as a reasonable mind might
(d)
accept as adequate to support a conclusion";[78]
(e) The tribunal's decision was based on the evidence presented or the records of the case disclosed to the parties;
(f) The tribunal's decision must be based on the judges' independent consideration of the facts and law governing the case; and
The tribunal's decision must be rendered such that the issues of the case and the reasons for the decisions are known to the
(g)
parties.[79]
In sum, due process in administrative proceedings does not necessarily require a trial type of hearing. Neither does it require an
exchange of pleadings between or among the parties. Due process is satisfied if the party who is properly notified of allegations
against him or her is given an opportunity to defend himself or herself against those allegations, and such defense was considered by
the tribunal in arriving at its own independent conclusions. This court explained in Ledesma v. Court of Appeals:[80]

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.

....

Administrative due process cannot be fully equated with due process in its strict judicial sense for it is enough that the party is given
the chance to be heard before the case against him is decided.[81]
Petitioner's arguments and the issues she raised are sufficiently expressed in her affidavit submitted to the Commission on Audit, her
motion for reconsideration of the Commission on Audit Director's decision, and her petition and memorandum submitted to this court.
Even though petitioner was not able to file an appeal memorandum, she was able to state her substantive defenses in the pleadings she
filed before the Commission on Audit and this court. According to petitioner, the money that was lost through robbery was not a result
of her negligence. She kept the money in "pearless" boxes for practical and not for malicious reasons.

The decisions of the State Auditor, the Commission on Audit Director, and the Commission on Audit had considered these facts and
defenses before they made conclusions' against petitioner. Therefore, petitioner cannot say that her due process rights were violated
for the lack of order to file an appeal memorandum.

II

Relief from cashier's liability cannot be granted if the cashier was negligent in keeping funds under his or her custody

As a cashier for the National Food Authority, petitioner qualified as an accountable officer under Presidential Decree No. 1445.
Accountable officers are government officers whose duties require them to possess or be in custody of government funds or
properties.[82] They are in charge of the safekeeping of the funds or properties under their custody. [83]

Presidential Decree No. 1445 makes cashiers liable for the value of the money or property in their custody in case they were lost
because of negligence or unlawful deposit, use, or application. Thus:

Section 105. Measure of liability of accountable officers.

(1) Every officer accountable for government property shall be liable for its money value in case of improper or unauthorized use or
misapplication thereof, by himself or any person for whose acts he may be responsible. We shall likewise be liable for all losses,
damages, or deterioration occasioned by negligence in the keeping or use of the property, whether or not it be at the time in his actual
custody.

(2) Every officer accountable for government funds shall be liable for all losses resulting from the unlawful deposit, use, or application
thereof and for all losses attributable to negligence in the keeping of the funds.
Imposing liability on cashiers for lost money or property in their custody means that the value of the money or property becomes their
debt.

The Commission on Audit has the power to withhold payment of money due to persons indebted to the government. Section 37 of
Presidential Decree No. 1445 provides:

Section 37. Retention of money for satisfaction of indebtedness to government. When any person is indebted to any government
agency, the Commission may direct the proper officer to withhold the payment of any money due such person or his estate to be
applied in satisfaction of the indebtedness.
Petitioner does not deny that the money for which she was accountable as a cashier was lost through robbery. She also did not deny
that she kept the greater portion of the amount lost, not in the vault, but in boxes, for practical reasons. She was not motivated by
malice when she kept the money that was in her possession in the boxes.

Without going to the issue of the existence of negligence, the Commission on Audit may already issue a withholding order for
petitioner's salaries and emoluments because of this. Petitioner's act of keeping the money in boxes instead of in the vault can be
subsumed under "unlawful deposit" that may cause a cashier to incur liability in case the unlawfully deposited money was lost.

A similar case, Leano v. Domingo,[84] showed that the safety of money cannot be ensured when it is deposited in enclosures other than
the safety vault. Leano also involves a government cashier whose money accountability was lost through robbery. As in this case, the
cashier did not keep her money accountabilities in the vault. Requesting this court to review the Commission on Audit's denial of her
request for accountability, Leano argued that she had no other choice but to use a steel cabinet to keep her money accountabilities
because the former cashier did not entrust to her the safety vault's combination. This court upheld the Commission on Audit's decision
to deny Leano's request for relief from accountabilities and found her to be negligent in handling her money accountabilities:

[I]t is evident that petitioner fell short of the demands inherent in her position. As aptly argued by the Solicitor General, an exercise of
proper diligence expected of her position would have compelled petitioner to request an immediate change of the combination of the
safe. However, the record is bare of any showing that petitioner had, at least, exerted any effort to have the combination changed,
content with the fact that, according to her, the former cashier also used the steel cabinet as depository of the funds.

In addition, it was found that the use of the steel cabinet was not a wise and prudent decision. The steel cabinet, even when locked, at
times could be pulled open, thus it can be surmised that even without the use of a key, the robbery could be committed once the
culprits succeed in entering the room (Progress Report of the Police dated February 28, 1985). Moreover, the original key of the steel
cabinet was left inside a small wooden box placed near the steel cabinet; it is therefore highly possible that the said steel cabinet was
opened with the use of its original key (Police Alarm Report). [85]
Hence, keeping National Food Authority collections outside the vault constituted negligence on the part of petitioner.

The test of negligence is stated in Picart v. Smith, Jr.:[86]

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing
the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence.[87]
"The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation
before him. The Law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence
and determines liability by that."[88]

Petitioner is negligent because she failed to use "that reasonable care and caution which an ordinarily prudent person would have used
in the same situation."[89] A cashier in her position would have used the vault to keep her collections. Petitioner failed to do this. Her
negligence is made more pronounced by the fact that the collections kept in the vault were not taken by the robbers.

Petitioner insists that the space in the vault was not enough to accommodate all her collections. However, she admitted that she had
been receiving relatively large collections in the past three (3) months prior to the robbery. She should have requested an additional
vault wherein she could safely keep her collections. She could also have set aside time to deposit her collections for the day
considering the. amount of cash she had been collecting, in order to prevent its accumulation. This could have ensured that the vault's
space would be sufficient to keep any remaining collection after the deposit. This could also have prevented her collections from
accumulating to an amount that rendered any loss through untoward incidents such as robbery significant. Petitioner failed to even
allege that she exerted effort to obtain additional vaults or to set aside time to deposit her collections to the bank.
For these reasons, petitioner cannot be relieved from liability. A person who is negligent in keeping the funds cannot be relieved from
liability.[90] DENIED

LEONEN, J.:
A cashier who is found to have been negligent in keeping the funds in his or her custody cannot be relieved from his or her
accountability for amounts lost through robbery.

This is a Petition for Certiorari under Rule 65 of the Rules of Court assailing the June 5, 2008 withholding order and the Commission
on Audit's January 31, 2012 decision holding Maria Theresa G. Gutierrez (Gutierrez) liable for the P10,105,687.25 that was lost
through robbery.

Gutierrez is a Cash Collecting Officer, with the designation of Cashier III at National Food Authority-National Capital Region,
National District Office (NFA-NCR, NDO).[1] On May 30, 2008, she had collections amounting to F9,390,834.00, covered by Official
Receipt Nos. 0420975 to 0421246.[2] On that day, she placed the collections in a wooden cabinet.[3]

The next day,.Gutierrez's collections amounted to P1,505,625.00. [4] Of that amount, P714,852.75 and an undeposited amount of P0.50
from March 2008 were placed in a wooden cabinet. [5] The rest was placed in the safety vault.[6]

The total undeposited collection as of March 31, 2008 was P10,896,459.50. Of that amount, P10,105,687.25 was placed in the
"pearless" boxes[7] in a wooden cabinet and P790,772.25 was placed in the safety vault. [8]

On June 1, 2008, at about 1:35 a.m., armed men in military uniforms with Philippine National Police-Security Agencies and Guards
Supervision Division (PNP-SAGSD) identifications entered the NFA-NCR, NDO.[9] The armed men disarmed NFA-NCR, NDO's
security guards and took Gutierrez's undeposited collections. [10] Lockheed Detective and Watchman Agency, Inc. was NFA-NCR,
NDO's contracted security agency.[11]

The security guards on duty executed their respective affidavits. Based on their affidavits, armed men entered the NFA-NCR, NDO
compound after they had been disarmed, threatened, and tied up.[12] The security guards immediately reported the incident to the
Valenzuela Police Station,[13] where an investigation report[14] was issued consistent with the security guards' narrations in their
affidavits.[15]

On June 3, 2008, the Commission on Audit, National Food Authority-NCR, North District Office, Malanday, Valenzuela City,
through State Auditor Narcisa DJ Joaquin (State Auditor Joaquin), issued a demand letter to Gutierrez. [16] Gutierrez was informed that
she must immediately produce the missing funds amounting to P10,105,686.75. [17] She was also ordered to submit within 72 hours a
written explanation why such shortage occurred.[18]

On June 5, 2008, the Commission on Audit, through State Auditor Joaquin, issued a withholding order, addressed to Roberto S.
Musngi (Musngi), Manager of National Food Authority, North District Office. [19] Musngi was informed that upon examination of
Gutierrez's account on June 1, 2008, it was established that there was a P10,105,686.75 shortage in Gutierrez's
accountabilities.[20] Pursuant to Section 37 of Presidential Decree No. 1445, Musngi was directed to withhold Gutierrez's salaries and
other emoluments so these could be applied to the satisfaction of the shortage. [21]

In response to the June 3, 2008 demand letter of the Commission on Audit, Gutierrez executed an affidavit dated June 6, 2008 wherein
she narrated that she had been serving as National Food Authority's Cash Collecting Officer since 1985. [22] Her office was located at
the far end of the National Food Authority building. [23] That was where the "pearless" boxes and the cabinet where she kept her
collections could be found.[24] Quoted below is her explanation for using "pearless" boxes to keep her collections:

6. That because of the volume of money I accept every day, which averages from 4 to 6 million pesos every day depending on the
seasons, most of my time inside the office is spent to counting, bundling by different denominations the money. To emphasize the
point, the money that I am accepting from remittances and payments are of different denominations, from twenty five centavo
(Php0.25) coins to one thousand peso (Php1,000.00) bills. The coins alone would amount in the average of Twelve thousand pesos
(Php12,000.00). I could literally say that from the time I timed in the office at about 6:30 a.m. up to the time I timed out at about 6:30
p.m., my only rest from my work is to [be] going to the ladies room and the break during lunch time.

....

8. That when the rice crises came up on April 2008, volume of work including the amount of money that comes into my office almost
doubled. That because of the heavy operations in our office I had an average collection starting April 2008 of 6 to 9 Million Pesos
every day of every denomination, with coins averaging from 12 to 16 thousand pesos that needs to be counted, receipted, bundled,
balanced, reported and kept.

9. That it is almost automatic that when I enter my office what comes to my mind is to count the money and bundle them by the
hundreds and prepare receipts for the payments and remittances until the time to leave at about 6:30 p.m. I would also cause the
deposit of the money collected the day before to Land Bank. But there were even times that because of the volume of the money, bank
representatives could not sort out all the smaller bills (P20s and P50s) being picked up from our office as the Armor van should be in
the bank at 3:00 p.m. Thus, there would be arrangements in the bank that the counting would continue inside their office, which
oftentimes lasts until late night.

10. That since April 2008 or the start of the heavy operations, I have been putting some of the money in the "pearless" box, because of
the volume, which I have to carry and keep safe at the cabinet inside. I have six (6) pearless boxes in the office.

....

13. That since May 30, 2008 is a Friday, banks are closed the following day and the money collected on said date would have
remained in my office until the next banking day.

....

18. It was very unfortunate that the money accepted on May 30, 2008 and the collection in the night before the robbery were left in the
pearless box inside the cabinet and not inside the vault. But with the volume of money, the vault has not enough space to
accommodate all of it.

19. And with the amount of work that I am doing every day from 6:30 in the morning up to 6:30 p.m., more or less, where my only
rest is literally going to the ladies room, and with the safe location of my office, it did not come to my mind that this incident would
come.

20. That I have nothing to do with what happened in the incident of June 1, 2008 at 1:30 in the morning and I am not in control now to
produce those missing funds taken by the robbers. [25]
On June 10, 2008, Gutierrez requested relief from money accountability for the loss of the collections. [26] The letter was addressed to
State Auditor Joaquin.

In the letter dated June 26, 2008 addressed to State Auditor Joaquin, Gutierrez appealed the withholding order issued on June 5,
2008.[27] She prayed that her salaries and emoluments be given to her while the robbery incident was still under investigation. [28] She
was a widow who had three (3) dependents and an 85-year-old mother residing with her in need of medical attention. [29] She had no
other source of income to support herself, her dependents, and her mother. [30]

On June 26, 2008, State Auditor Joaquin denied Gutierrez's appeal of the withholding order. [31] State Auditor Joaquin informed
Gutierrez that there was already a prima facie case for malversation against her under Article 217 of the Revised Penal Code. [32]

On July 11, 2008, Gutierrez filed a notice of appeal of State Auditor Joaquin's withholding order dated June 5, 2008. [33]

On July 21, 2008, Atty. Saturnino R. Rola, Jr., Director of the National Food Authority, Enforcement, Investigation and Prosecution
Department, submitted a memorandum addressed to the Administrator, Jessup P. Navarro. [34] He found that the security agency was
solidarity liable with security guard Romeo Casta for the amount lost.[35] He also found that Gutierrez, by keeping her collections in
unsecured "pearless" boxes and not in a vault, was grossly negligent in safekeeping her collections. [36] He recommended that Gutierrez
be administratively charged with dishonesty, gross neglect of duty, conduct prejudicial to the best interest of the service, and violation
of reasonable office rules and regulations without prejudice to the filing of appropriate criminal charges. [37] He also recommended the
restitution of the amount lost from Lockheed Detective and Watchman Agency, Inc. Further, he recommended the ban of security
guard Romeo Casta from deployment in any National Food Authority installations. [38]

Similar incidents of robbery at different National Food Authority offices involving Lockheed Detective and Watchman Agency, Inc.
were reported between 2006 and 2008.[39]

On September 11, 2008, Commission on Audit Director IV Tito S. Nabua (Director Nabua) issued a decision denying Gutierrez's
appeal[40] and expressing his agreement with the issuance of the withholding order. [41] The robbery incident was acknowledged in the
decision.[42] However, Gutierrez's alleged act of negligence in the performance of her duties could not be set aside. [43] Her failure to
follow safekeeping procedures showed lack of due care on her part. [44] Aside from Article 217 of the Revised Penal Code, the
liabilities of an accountable officer are found in Section 105 of Presidential Decree No. 1445. [45]
Gutierrez filed a motion for reconsideration of the September 11, 2008 decision of Director Nabua on the ground that he did not give
her a chance to file a memorandum of appeal before submission of the case for resolution. [46] According to Gutierrez, this was a
violation of the rules and of her right to due process.[47] She also cited reversible error in upholding State Auditor Joaquin's order
despite lack of factual and legal bases as ground for her motion. [48]

On January 31, 2012, the Commission on Audit denied her request for relief from money accountability.[49] Its ruling is reproduced as
follows:

WHEREFORE, premises considered, this Commission DENIES the herein request for relief from money accountability, there being
positive showing of fault or negligence on the part of Ms. Maria Theresa G. Gutierrez in the safekeeping and custody of subject
government funds.

Accordingly, Ms. Gutierrez shall be liable to pay to1 the NFA the missing amount of P10,105,687.25. This is without prejudice to the
right of the NFA-NCR, NDO to proceed against Lockheed Detective and Watchman Agency, Inc. for the indemnification of the loss
as security services provider to the NFA-NCR, NDO, Valenzuela City.[50]
The Commission on Audit found that Gutierrez was negligent in safekeeping her collections. [51] Placement of collections in a
"pearless" box instead of in the safety vault, especially given the volume of collections, constituted gross negligence on her
part.[52] Her 20-year service aggravated her negligence.[53] It should have made her more "security-conscious."[54]

The Commission on Audit also found that the security guards' failure to secure National Food Authority's premises was a violation of
the contract between National Food Authority and Lockheed Detective and Watchman Agency, Inc. [55]

We decide whether Gutierrez's due process rights were violated when the Commission on Audit decided her appeal without requiring
her to file an appeal memorandum. We also decide whether Gutierrez is liable for the amounts lost through a robbery.

Petitioner emphasizes that she was first assisted by counsel only when she filed a notice of appeal. Respondent auditor had already
issued the withholding order dated June 5, 2008 and .letter dated June 26, 2008 before petitioner was assisted by counsel.

Petitioner argues that her right to due process was violated when a decision was rendered against her without giving her a chance to
file an appeal memorandum in accordance with Section 5 of Rule V of the Revised Rules of Procedure of the Commission on Audit.
The appeal memorandum was her chance to raise issues against respondent auditor's orders to prove her case and to submit evidence
to support her defense.[56]

Petitioner's right to due process was further violated when her motion for reconsideration was resolved by the Commission on Audit
instead of by Director Nabua. This prevented her from filing a petition for review of Director Nabua's decision before the Commission
on Audit.[57]

Petitioner cites Article IX(A), Section 7 of the Constitution to support her argument that she has a right to present her side in a
memorandum.[58] It provides:

Section 7. Each Commission shall decide by a majority vote of all its Members, any case or matter brought before it within sixty days
from the date of its submission for decision or resolution. A case or matter is deemed submitted for decision or resolution upon
the filing of the last pleading, brief, or memorandum required by the rules of the Commission or by the Commission
itself. Unless otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to
the Supreme Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof. (Emphasis supplied)
Petitioner argues that aside from the right to be heard, administrative due process also requires the right to present evidence and for
such evidence to be considered by the deciding tribunal. [59]

Lastly, petitioner points out that the cause of the shortage was the robbery incident, which was a result of the negligence of the
security guards and not her negligence.[60] The vault that was assigned to her did not have enough space to accommodate her
collections.[61]

On the other hand, respondents argue that petitioner was not deprived of due process when she was not given the opportunity to file an
appeal memorandum. Her affidavit was a sufficient platform to raise her defenses. [62] Moreover, the presence of a counsel is not
required in administrative proceedings.[63]

Respondents also argue that petitioner cannot ask the Director or the Auditor to allow her to file an appeal memorandum since it is the
Commission on Audit that has the exclusive jurisdiction over requests for relief from accountability in excess of P500,000.00.[64] This,
according to respondent, is based on Commission on Audit Resolution No. 93-605 dated August 3, 1993.[65]

Finally, respondents argue that the circumstances show that petitioner fell short of the demands of her position as cashier. [66] What she
could have done was to request additional vaults if the vaults in her possession were not enough to accommodate all her collections. [67]
We rule for respondents.

Petitioner's due process rights were not violated

Petitioner argues that she was assisted by counsel only after a withholding order had already been issued. She also argued that the
Commission on Audit Director's issuance of a decision on her appeal without requiring her to file an appeal memorandum was a
violation of her due process rights.

Petitioner's arguments are not tenable.

The right to counsel under Section 12(1) of Article III of the Constitution applies in criminal proceedings, but not in administrative
proceedings. It is a right given to persons accused of an offense during criminal investigation. [68] Any proceeding conducted by an
administrative body is not part of the criminal investigation or prosecution. [69]

Thus, this court said in Remolona v. Civil Service Commission:[70]

While investigations conducted by an administrative body may at times be akin to a criminal proceeding, the fact remains that under
existing laws, a party in an administrative inquiry may or may not be assisted by counsel, irrespective of the nature of the charges and
of the respondent's capacity to represent himself, and no duty rests on such body to furnish the person being investigated with counsel.
In an administrative proceeding, a respondent has the option of engaging the services of counsel or not. This is clear from the
provisions of Section 32, Article VII of Republic Act No. 2260 (otherwise known as the Civil Service Act) and Section 39, paragraph
2, Rule XIV (on discipline) of the Omnibus Rules Implementing Book V of Executive Order No. 292 (otherwise known as the
Administrative Code of 1987). Thus, the right to counsel is not always imperative in administrative investigations because such
inquiries are conducted merely to determine whether there are facts that merit disciplinary measure against erring public officers and
employees, with the purpose of maintaining the dignity of government service. As such, the hearing conducted by the investigating
authority is not part of a criminal prosecution.[71]
While the purpose of criminal proceedings is to determine if a person suspected of committing an offense has indeed committed an
offense, the purpose of an administrative proceeding is to determine if a person in public office has violated the trust reposed in him or
her by the public. In a criminal proceeding, if a person is found guilty of an offense, the corresponding punishment is imposed
primarily to protect the public from being exposed to and correct his or her deviant behavior. In an administrative proceeding, if a
person is found administratively liable, the corresponding penalty is imposed primarily to preserve public trust and protect the
integrity of public service.[72]

Petitioner is not being accused of or investigated for a crime. The Commission on Audit's withholding order and its denial of
petitioner's request for relief from shortage were issued after it had made a finding that the money entrusted to petitioner was lost. A
finding of criminal liability was not the reason for the Commission on Audit's issuances. The Commission on Audit has no jurisdiction
to investigate a crime or to make a finding of criminal liability. Any proceeding conducted prior to these issuances was for the purpose
of determining if petitioner's salaries should be withheld or if petitioner should be relieved from her liability as a cashier.

Petitioner argues that Rule V, Section 5 of the Revised Rules of Procedure of the Commission on Audit[73] requires that she be given
an opportunity to file an appeal memorandum before the case is submitted for decision. Section 5 is cited as follows:

Section 5. APPEAL MEMORANDUM AND REPLY - Upon receipt of the records of the case, the Director shall issue an Order
requiring the appellant to file an appeal memorandum within twenty (20) days from receipt of the order. The appellant shall serve a
copy of his appeal memorandum to the Auditor or appellee who may reply thereto within the same period of time. With the filing of
the appeal memorandum and reply or lapse of the period within which to file them, the appeal shall be deemed submitted for decision.
Petitioner also argues that her due process rights were violated when the Commission on Audit decided her motion for reconsideration
of the Commission on Audit Director's decision dated September 11, 2008, and denied her request for relief from accountability
without her filing a memorandum or a petition for review. She cites Article IX(A), Section 7 of the Constitution:

Section 7. Each Commission shall decide by a majority vote of all its Members, any case or matter brought before it within sixty days
from the date of its submission for decision or resolution. A case or matter is deemed submitted for decision or resolution upon the
filing of the last pleading, brief, or memorandum required by the rules of the Commission or by the Commission itself. Unless
otherwise provided by this Constitution or by law, any decision, order, or ruling of each Commission may be brought to the Supreme
Court on certiorari by the aggrieved party within thirty days from receipt of a copy thereof. (Emphasis supplied)
Petitioner's due process rights were not violated when the Commission on Audit Director had failed to require her to submit an appeal
memorandum before he decided her appeal of the State Auditor's issuance of a withholding order. There was also no violation of due
process rights when the Commission on Audit issued its January 31, 2012 decision denying her request for relief from accountability,
without a petition for review of the Commission on Audit Director's decision. The right to appeal is not part of due process. [74] Neither
is it a natural right.[75]

Moreover, petitioner's relief from accountability may be decided by the Commission on Audit at the first instance. Based on
Commission on Audit Resolution No. 93-605,[76] only the Commission on Audit may approve requests for relief from accountabilities
amounting to more than P500,000.00. Thus:

Now, therefore, pursuant to Article IX-D, Section 2(2) of the Constitution, Section 73 of PD 1445 and in conformity with Section 378
of the Local Government Code, the Commission Proper hereby resolves, as it does hereby resolve, to authorize the following COA
Officials to act on requests for relief from property and/or money accountability in the amounts indicated hereunder, except in cases of
questions of law, without prejudice to the usual appeal that may be taken therefrom to the Commission Proper, pursuant to Section 48
of PD 1445.

Approving COA Official Total Amount of Money or Cost of Property Involved


Corporate and National Unit Auditor Provincial and City Auditor not exceeding P5 0,000
Director/Officer-in-Charge of Central and Regional Offices in excess of P50,000 up to P100,000
Assistant Commissioner in excess of P100,000 up to P200,000
COA Chairman in excess of P200,000 up to P500,000
Commission Proper above P500,000
The lost accountability involved in this case amounts to 10,105,687.75.

In any case, we determine if petitioner's due process rights were violated in the course of the proceedings before the Commission on
Audit.

This court in Ang Tibay v. Court of Industrial Relations[77] ruled that administrative due process requires only the following:

(a) The party should be allowed to present his or her own case and submit supporting evidence;
(b) The deciding tribunal must consider the party's evidence;
(c) There is evidence to support the tribunal's decision;
The evidence supporting the tribunal's decision must be substantial or such "relevant evidence as a reasonable mind might
(d)
accept as adequate to support a conclusion";[78]
(e) The tribunal's decision was based on the evidence presented or the records of the case disclosed to the parties;
(f) The tribunal's decision must be based on the judges' independent consideration of the facts and law governing the case; and
The tribunal's decision must be rendered such that the issues of the case and the reasons for the decisions are known to the
(g)
parties.[79]
In sum, due process in administrative proceedings does not necessarily require a trial type of hearing. Neither does it require an
exchange of pleadings between or among the parties. Due process is satisfied if the party who is properly notified of allegations
against him or her is given an opportunity to defend himself or herself against those allegations, and such defense was considered by
the tribunal in arriving at its own independent conclusions. This court explained in Ledesma v. Court of Appeals:[80]

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.

....

Administrative due process cannot be fully equated with due process in its strict judicial sense for it is enough that the party is given
the chance to be heard before the case against him is decided. [81]
Petitioner's arguments and the issues she raised are sufficiently expressed in her affidavit submitted to the Commission on Audit, her
motion for reconsideration of the Commission on Audit Director's decision, and her petition and memorandum submitted to this court.
Even though petitioner was not able to file an appeal memorandum, she was able to state her substantive defenses in the pleadings she
filed before the Commission on Audit and this court. According to petitioner, the money that was lost through robbery was not a result
of her negligence. She kept the money in "pearless" boxes for practical and not for malicious reasons.

The decisions of the State Auditor, the Commission on Audit Director, and the Commission on Audit had considered these facts and
defenses before they made conclusions' against petitioner. Therefore, petitioner cannot say that her due process rights were violated
for the lack of order to file an appeal memorandum.

II
Relief from cashier's liability cannot be granted if the cashier was negligent in keeping funds under his or her custody

As a cashier for the National Food Authority, petitioner qualified as an accountable officer under Presidential Decree No. 1445.
Accountable officers are government officers whose duties require them to possess or be in custody of government funds or
properties.[82] They are in charge of the safekeeping of the funds or properties under their custody. [83]

Presidential Decree No. 1445 makes cashiers liable for the value of the money or property in their custody in case they were lost
because of negligence or unlawful deposit, use, or application. Thus:

Section 105. Measure of liability of accountable officers.

(1) Every officer accountable for government property shall be liable for its money value in case of improper or unauthorized use or
misapplication thereof, by himself or any person for whose acts he may be responsible. We shall likewise be liable for all losses,
damages, or deterioration occasioned by negligence in the keeping or use of the property, whether or not it be at the time in his actual
custody.

(2) Every officer accountable for government funds shall be liable for all losses resulting from the unlawful deposit, use, or application
thereof and for all losses attributable to negligence in the keeping of the funds.
Imposing liability on cashiers for lost money or property in their custody means that the value of the money or property becomes their
debt.

The Commission on Audit has the power to withhold payment of money due to persons indebted to the government. Section 37 of
Presidential Decree No. 1445 provides:

Section 37. Retention of money for satisfaction of indebtedness to government. When any person is indebted to any government
agency, the Commission may direct the proper officer to withhold the payment of any money due such person or his estate to be
applied in satisfaction of the indebtedness.
Petitioner does not deny that the money for which she was accountable as a cashier was lost through robbery. She also did not deny
that she kept the greater portion of the amount lost, not in the vault, but in boxes, for practical reasons. She was not motivated by
malice when she kept the money that was in her possession in the boxes.

Without going to the issue of the existence of negligence, the Commission on Audit may already issue a withholding order for
petitioner's salaries and emoluments because of this. Petitioner's act of keeping the money in boxes instead of in the vault can be
subsumed under "unlawful deposit" that may cause a cashier to incur liability in case the unlawfully deposited money was lost.

A similar case, Leano v. Domingo,[84] showed that the safety of money cannot be ensured when it is deposited in enclosures other than
the safety vault. Leano also involves a government cashier whose money accountability was lost through robbery. As in this case, the
cashier did not keep her money accountabilities in the vault. Requesting this court to review the Commission on Audit's denial of her
request for accountability, Leano argued that she had no other choice but to use a steel cabinet to keep her money accountabilities
because the former cashier did not entrust to her the safety vault's combination. This court upheld the Commission on Audit's decision
to deny Leano's request for relief from accountabilities and found her to be negligent in handling her money accountabilities:

[I]t is evident that petitioner fell short of the demands inherent in her position. As aptly argued by the Solicitor General, an exercise of
proper diligence expected of her position would have compelled petitioner to request an immediate change of the combination of the
safe. However, the record is bare of any showing that petitioner had, at least, exerted any effort to have the combination changed,
content with the fact that, according to her, the former cashier also used the steel cabinet as depository of the funds.

In addition, it was found that the use of the steel cabinet was not a wise and prudent decision. The steel cabinet, even when locked, at
times could be pulled open, thus it can be surmised that even without the use of a key, the robbery could be committed once the
culprits succeed in entering the room (Progress Report of the Police dated February 28, 1985). Moreover, the original key of the steel
cabinet was left inside a small wooden box placed near the steel cabinet; it is therefore highly possible that the said steel cabinet was
opened with the use of its original key (Police Alarm Report).[85]
Hence, keeping National Food Authority collections outside the vault constituted negligence on the part of petitioner.

The test of negligence is stated in Picart v. Smith, Jr.:[86]

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing
the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence.[87]
"The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation
before him. The Law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence
and determines liability by that."[88]

Petitioner is negligent because she failed to use "that reasonable care and caution which an ordinarily prudent person would have used
in the same situation."[89] A cashier in her position would have used the vault to keep her collections. Petitioner failed to do this. Her
negligence is made more pronounced by the fact that the collections kept in the vault were not taken by the robbers.

Petitioner insists that the space in the vault was not enough to accommodate all her collections. However, she admitted that she had
been receiving relatively large collections in the past three (3) months prior to the robbery. She should have requested an additional
vault wherein she could safely keep her collections. She could also have set aside time to deposit her collections for the day
considering the. amount of cash she had been collecting, in order to prevent its accumulation. This could have ensured that the vault's
space would be sufficient to keep any remaining collection after the deposit. This could also have prevented her collections from
accumulating to an amount that rendered any loss through untoward incidents such as robbery significant. Petitioner failed to even
allege that she exerted effort to obtain additional vaults or to set aside time to deposit her collections to the bank.

For these reasons, petitioner cannot be relieved from liability. A person who is negligent in keeping the funds cannot be relieved from
liability.[90]

G.R. No. 181756 June 15, 2015

MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), Petitioner,


vs.
CITY OF LAPU-LAPU and ELENA T. PACALDO, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This is a clear opportunity for this Court to clarify the effects of our two previous decisions, issued a decade apart, on the power of
local government units to collect real property taxes from airport authorities located within their area, and the nature or the juridical
personality of said airport authorities.

Before us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking to reverse and set aside
the October 8, 2007 Decision1 of the Court of Appeals (Cebu City) in CA-G.R. SP No. 01360 and the February 12, 2008
Resolution2 denying petitioner's motion for reconsideration.

THE FACTS

Petitioner Mactan-Cebu International Airport Authority (MCIAA) was created by Congress on July 31, 1990 under Republic Act No.
69583 to "undertake the economical, efficient and effective control, management and supervision of the Mactan International Airport
in the Province of Cebu and the Lahug Airport in Cebu City x x x and such other airports as may be established in the Province of
Cebu." It is represented in this case by the Office of the Solicitor General. Respondent City of Lapu-Lapu is a local government unit
and political subdivision, created and existing under its own charter with capacity to sue and be sued. Respondent Elena T. Pacaldo
was impleaded in her capacity as the City Treasurer of respondent City.

Upon its creation, petitioner enjoyed exemption from realty taxes under the following provision of Republic Act No. 6958:

Section 14. Tax Exemptions.– The Authority shall be exempt from realty taxes imposed by the National Government or any of its
political subdivisions, agencies and instrumentalities: Provided, That no tax exemption herein granted shall extend to any subsidiary
which may be organized by the Authority.

On September 11, 1996, however, this Court rendered a decision in Mactan-Cebu International Airport Authority v. Marcos4 (the
1996 MCIAA case) declaring that upon the effectivity of Republic Act No. 7160 (The Local Government Code of 1991), petitioner
was no longer exempt from real estate taxes. The Court held:

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from payment of real
property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except as provided in
the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption from
such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn. x x x.
On January 7, 1997, respondent City issued to petitioner a Statement of Real Estate Tax assessing the lots comprising the Mactan
International Airport in the amount of ₱162,058,959.52. Petitioner complained that there were discrepancies in said Statement of Real
Estate Tax as follows:

(a) [T]he statement included lots and buildings not found in the inventory of petitioner’s real properties;

(b) [S]ome of the lots were covered by two separate tax declarations which resulted in double assessment;

(c) [There were] double entries pertaining to the same lots; and

(d) [T]he statement included lots utilized exclusively for governmental purposes. 5

Respondent City amended its billing and sent a new Statement of Real Estate Tax to petitioner in the amount of ₱151,376,134.66.
Petitioner averred that this amount covered real estate taxes on the lots utilized solely and exclusively for public or governmental
purposes such as the airfield, runway and taxiway, and the lots on which they are situated.6

Petitioner paid respondent City the amount of four million pesos (₱4,000,000.00) monthly, which was later increased to six million
pesos (₱6,000,000.00) monthly. As of December 2003, petitioner had paid respondent City a total of ₱275,728,313.36. 7

Upon request of petitioner’s General Manager, the Secretary of the Department of Justice (DOJ) issued Opinion No. 50, Series of
1998,8 and we quote the pertinent portions of said Opinion below:

You further state that among the real properties deemed transferred to MCIAA are the airfield, runway, taxiway and the lots on which
the runway and taxiway are situated, the tax declarations of which were transferred in the name of the MCIAA. In 1997, the City of
Lapu-Lapu imposed real estate taxes on these properties invoking the provisions of the Local Government Code.

It is your view that these properties are not subject to real property tax because they are exclusively used for airport purposes. You
said that the runway and taxiway are not only used by the commercial airlines but also by the Philippine Air Force and other
government agencies. As such and in conjunction with the above interpretation of Section 15 of R.A. No. 6958, you believe that these
properties are considered owned by the Republic of the Philippines. Hence, this request for opinion.

The query is resolved in the affirmative. The properties used for airport purposes (i.e. airfield, runway, taxiway and the lots on which
the runway and taxiway are situated) are owned by the Republic of the Philippines.

xxxx

Under the Law on Public Corporations, the legislature has complete control over the property which a municipal corporation has
acquired in its public or governmental capacity and which is devoted to public or governmental use. The municipality in dealing with
said property is subject to such restrictions and limitations as the legislature may impose. On the other hand, property which a
municipal corporation acquired in its private or proprietary capacity, is held by it in the same character as a private individual. Hence,
the legislature in dealing with such property, is subject to the constitutional restrictions concerning property (Martin, Public
Corporations [1997], p. 30; see also Province of Zamboanga del [Norte] v. City of Zamboanga [131 Phil. 446]). The same may be said
of properties transferred to the MCIAA and used for airport purposes, such as those involved herein. Since such properties are of
public dominion, they are deemed held by the MCIAA in trust for the Government and can be alienated only as may be provided by
law.

Based on the foregoing, it is our considered opinion that the properties used for airport purposes, such as the airfield, runway and
taxiway and the lots on which the runway and taxiway are located, are owned by the State or by the Republic of the Philippines and
are merely held in trust by the MCIAA, notwithstanding that certificates of titles thereto may have been issued in the name of the
MCIAA. (Emphases added.)

Based on the above DOJ Opinion, the Department of Finance issued a 2nd Indorsement to the City Treasurer of Lapu-Lapu dated
August 3, 1998,9 which reads:

The distinction as to which among the MCIAA properties are still considered "owned by the State or by the Republic of the
Philippines," such as the resolution in the above-cited DOJ Opinion No. 50, for purposes of real property tax exemption is hereby
deemed tenable considering that the subject "airfield, runway, taxiway and the lots on which the runway and taxiway are situated"
appears to be the subject of real property tax assessment and collection of the city government of Lapu-Lapu, hence, the same are
definitely located within the jurisdiction of Lapu-Lapu City. Moreover, then Undersecretary Antonio P. Belicena of the Department of
Finance, in his 1st Indorsement dated May 18, 1998, advanced that "this Department (DOF) interposes no objection to the request of
Mactan Cebu International Airport Authority for exemption from payment of real property tax on the property used for airport
purposes" mentioned above.

The City Assessor, therefore, is hereby instructed to transfer the assessment of the subject airfield, runway, taxiway and the lots on
which the runway and taxiway are situated, from the "Taxable Roll" to the "Exempt Roll" of real properties.

The City Treasurer thereat should be informed on the action taken for his immediate appropriate action. (Emphases added.)

Respondent City Treasurer Elena T. Pacaldo sent petitioner a Statement of Real Property Tax Balances up to the year 2002 reflecting
the amount of ₱246,395,477.20. Petitioner claimed that the statement again included the lots utilized solely and exclusively for public
purpose such as the airfield, runway, and taxiway and the lots on which these are built. Respondent Pacaldo then issued Notices of
Levy on 18 sets of real properties of petitioner. 10

Petitioner filed a petition for prohibition11 with the Regional Trial Court (RTC) of Lapu-Lapu City with prayer for the issuance of a
temporary restraining order (TRO) and/or a writ of preliminary injunction, docketed as SCA No. 6056-L. Branch 53 of RTC Lapu-
Lapu City then issued a 72-hour TRO. The petition for prohibition sought to enjoin respondent City from issuing a warrant of levy
against petitioner’s properties and from selling them at public auction for delinquency in realty tax obligations. The petition likewise
prayed for a declaration that the airport terminal building, the airfield, runway, taxiway and the lots on which they are situated are
exempted from real estate taxes after due hearing. Petitioner based its claim of exemption on DOJ Opinion No. 50.

The RTC issued an Order denying the motion for extension of the TRO. Thus, on December10, 2003, respondent City auctioned 27 of
petitioner’s properties. As there was no interested bidder who participated in the auction sale, respondent City forfeited and purchased
said properties. The corresponding Certificates of Sale of Delinquent Property were issued to respondent City. 12

Petitioner claimed before the RTC that it had discovered that respondent City did not pass any ordinance authorizing the collection of
real property tax, a tax for the special education fund (SEF), and a penalty interest for its nonpayment. Petitioner argued that without
the corresponding tax ordinances, respondent City could not impose and collect real property tax, an additional tax for the SEF, and
penalty interest from petitioner.13

The RTC issued an Order14 on December 28, 2004 granting petitioner’s application for a writ of preliminary injunction. The pertinent
portions of the Order are quoted below:

The supervening legal issue has rendered it imperative that the matter of the consolidation of the ownership of the auctioned properties
be placed on hold. Furthermore, it is the view of the Court that great prejudice and damage will be suffered by petitioner if it were to
lose its dominion over these properties now when the most important legal issue has still to be resolved by the Court. Besides, the
respondents and the intervenor have not sufficiently shown cause why petitioner’s application should not be granted.

WHEREFORE, the foregoing considered, petitioner’s application for a writ of preliminary injunction is granted. Consequently, upon
the approval of a bond in the amount of one million pesos (₱1,000,000.00), let a writ of preliminary injunction issue enjoining the
respondents, the intervenor, their agents or persons acting in [their] behalf, to desist from consolidating and exercising ownership over
the properties of the petitioner.

However, upon motion of respondents, the RTC lifted the writ of preliminary injunction in an Order 15 dated December 5, 2005. The
RTC reasoned as follows:

The respondent City, in the courseof the hearing of its motion, presented to this Court a certified copy of its Ordinance No. 44
(Omnibus Tax Ordinance of the City of Lapu-Lapu), Section 25 whereof authorized the collection of a rate of one and one-half (1 1/2)
[per centum] from owners, executors or administrators of any real estate lying within the jurisdiction of the City of Lapu-Lapu, based
on the assessed value as shown in the latest revision.

Though this ordinance was enacted prior to the effectivity of Republic Act No. 7160 (Local Government Code of 1991), to the mind
of the Court this ordinance is still a valid and effective ordinance in view of Sec. 529 of RA 7160 x x x [and the] Implementing Rules
and Regulations of RA 7160 x x x.

xxxx

The tax collected under Ordinance No. 44 is within the rates prescribed by RA 7160, though the 25% penalty collected is higher than
the 2% interest allowed under Sec. 255 of the said law which provides:
In case of failure to pay the basic real property tax or any other tax levied under this Title upon the expiration of the periods as
provided in Section 250, or when due, as the case may be, shall subject the taxpayer to the payment of interest at the rate of two
percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid: Provided,
however, That in no case shall the total interest on the unpaid tax or portion thereof exceed thirty-six (36) months.

This difference does not however detract from the essential enforceability and effectivity of Ordinance No. 44 pursuant to Section 529
of RA 7160 and Article 278 of the Implementing Rules and Regulations. The outcome of this disparity is simply that respondent City
can only collect an interest of 2% per month on the unpaid tax. Consequently, respondent City [has] to recompute the petitioner’s tax
liability.

It is also the Court’s perception that respondent City can still collect the additional 1% tax on real property without an ordinance to
this effect. It may be recalled that Republic Act No. 5447 has created the Special Education Fund which is constituted from the
proceeds of the additional tax on real property imposed by the law. Respondent City has collected this tax as mandated by this law
without any ordinance for the purpose, as there is no need for it. Even when RA 5447 was amended by PD 464 (Real Property Tax
Code), respondent City had continued to collect the tax, as it used to.

It is true that RA 7160 has repealed RA 5447, but what has been repealed are only Section 3, a(3) and b(2) which concern the
allocation of the additional tax, considering that under RA 7160, the proceeds of the additional 1% tax on real property accrue
exclusively to the Special Education Fund. Nevertheless, RA 5447 has not been totally repealed; there is only a partial repeal.

It may be observed that there is no requirement in RA 7160 that an ordinance be enacted to enable the collection of the additional 1%
tax. This is so since RA 5447 is still in force and effect, and the declared policy of the government in enacting the law, which is to
contribute to the financial support of the goals of education as provided in the Constitution, necessitates the continued and
uninterrupted collection of the tax. Considering that this is a tax of far-reaching importance, to require the passage of an ordinance in
order that the tax may be collected would be to place the collection of the tax at the option of the local legislature. This would run
counter to the declared policy of the government when the SEF was created and the tax imposed.

As regards the allegation of respondents that this Court has no jurisdiction to entertain the instant petition, the Court deems it proper,
at this stage of the proceedings, not to treat this issue, as it involves facts which are yet to be established.

x x x [T]he Court’s issuance of a writ of preliminary injunction may appear to be a futile gesture in the light of Section 263 of RA
7160. x x x.

xxxx

It would seem from the foregoing provisions, that once the taxpayer fails to redeem within the one-year period, ownership fully vests
on the local government unit concerned. Thus, when in the present case petitioner failed to redeem the parcels of land acquired by
respondent City, the ownership thereof became fully vested on respondent City without the latter having to perform any other acts to
perfect its ownership. Corollary thereto, ownership on the part of respondent City has become a fait accompli.

WHEREFORE, in the light of the foregoing considerations, respondents’ motion for reconsideration is granted, and the order of this
Court dated December 28, 2004 is hereby reconsidered. Consequently, the writ of preliminary injunction issued by this Court is
hereby lifted.

Aggrieved, petitioner filed a petition for certiorari16 with the Court of Appeals (Cebu City), with urgent prayer for the issuance of a
TRO and/or writ of preliminary injunction, docketed as CA-G.R. SP No. 01360. The Court of Appeals (Cebu City) issued a TRO17 on
January 5, 2006 and shortly thereafter, issued a writ of preliminary injunction 18 on February 17, 2006.

RULING OF THE COURT OF APPEALS

The Court of Appeals (Cebu City) promulgated the questioned Decision on October 8, 2007, holding that petitioner is a government-
owned or controlled corporation and its properties are subject to realty tax. The dispositive portion of the questioned Decision reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered by us as follows:

a. We DECLARE the airport terminal building, the airfield, runway, taxiway and the lots on which they are situated NOT
EXEMPT from the real estate tax imposed by the respondent City of Lapu-Lapu;
b. We DECLARE the imposition and collection of the real estate tax, the additional levy for the Special Education Fund and
the penalty interest as VALID and LEGAL. However, pursuant to Section 255 of the Local Government Code, respondent
city can only collect an interest of 2% per month on the unpaid tax which total interest shall, in no case, exceed thirty-six (36)
months; c. We DECLARE the sale in public auction of the aforesaid properties and the eventual forfeiture and purchase of
the subject property by the respondent City of Lapu-Lapu as NULL and VOID. However, petitioner MCIAA’s property is
encumbered only by a limited lien possessed by the respondent City of Lapu-Lapu in accord with Section 257 of the Local
Government Code.19Petitioner filed a Motion for Partial Reconsideration20 of the questioned Decision covering only the
portion of said decision declaring that petitioner is a GOCC and, therefore, not exempt from the realty tax and special
education fund imposed by respondent City. Petitioner cited Manila International Airport Authority v. Court of
Appeals21 (the 2006 MIAA case) involving the City of Parañaque and the Manila International Airport Authority. Petitioner
claimed that it had been described by this Court as a government instrumentality, and that it followed "as a logical
consequence that petitioner is exempt from the taxing powers of respondent City of Lapu-Lapu."22 Petitioner alleged that the
1996 MCIAA case had been overturned by the Court in the 2006 MIAA case. Petitioner thus prayed that it be declared
exempt from paying the realty tax, special education fund, and interest being collected by respondent City.

On February 12, 2008, the Court of Appeals denied petitioner’s motion for partial reconsideration in the questioned Resolution.

The Court of Appeals followed and applied the precedent established in the 1996 MCIAA case and refused to apply the 2006 MIAA
case. The Court of Appeals wrote in the questioned Decision: "We find that our position is in line with the coherent and cohesive
interpretation of the relevant provisions of the Local Government Code on local taxation enunciated in the [1996 MCIAA] case which
to our mind is more elegant and rational and provides intellectual clarity than the one provided by the Supreme Court in the [2006]
MIAA case."23

In the questioned Decision, the Court of Appeals held that petitioner’s airport terminal building, airfield, runway, taxiway, and the lots
on which they are situated are not exempt from real estate tax reasoning as follows:

Under the Local Government Code (LGC for brevity), enacted pursuant to the constitutional mandate of local autonomy, all natural
and juridical persons, including government-owned or controlled corporations (GOCCs), instrumentalities and agencies, are no longer
exempt from local taxes even if previously granted an exemption. The only exemptions from local taxes are those specifically
provided under the Code itself, or those enacted through subsequent legislation.

Thus, the LGC, enacted pursuant to Section 3, Article X of the Constitution, provides for the exercise by local government units of
their power to tax, the scope thereof or its limitations, and the exemptions from local taxation.

Section 133 of the LGC prescribes the common limitations on the taxing powers of local government units. x x x.

xxxx

The above-stated provision, however, qualified the exemption of the National Government, its agencies and instrumentalities from
local taxation with the phrase "unless otherwise provided herein."

Section 232 of the LGC provides for the power of the local government units (LGUs for brevity) to levy real property tax. x x x.

xxxx

Section 234 of the LGC provides for the exemptions from payment of real property taxes and withdraws previous exemptions granted
to natural and juridical persons, including government-owned and controlled corporations, except as provided therein. x x x.

xxxx

Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges. x x x. 24 (Citations omitted.)

The Court of Appeals went on to state that contrary to the ruling of the Supreme Court in the 2006 MIAA case, it finds and rules that:

a) Section 133 of the LGC is not an absolute prohibition on the power of the LGUs to tax the National Government, its agencies and
instrumentalities as the same is qualified by Sections 193, 232 and 234 which "otherwise provided"; and

b) Petitioner MCIAA is a GOCC.25 (Emphasis ours.)


The Court of Appeals ratiocinated in the following manner:

Pursuant to the explicit provision of Section 193 of the LGC, exemptions previously enjoyed by persons, whether natural or juridical,
like the petitioner MCIAA, are deemed withdrawn upon the effectivity of the Code. Further, the last paragraph of Section 234 of the
Code also unequivocally withdrew, upon the Code’s effectivity, exemptions from payment of real property taxes previously granted to
natural or juridical persons, including government-owned or controlled corporations, except as provided in the said section. Petitioner
MCIAA, undoubtedly a juridical person, it follows that its exemption from such tax granted under Section 14 of R.A. 6958 has been
withdrawn.

xxxx

From the [1996 MCIAA] ruling, it is acknowledged that, under Section 133 of the LGC, instrumentalities were generally exempt from
all forms of local government taxation, unless otherwise provided in the Code. On the other hand, Section 232 "otherwise provided"
insofar as it allowed local government units to levy an ad valorem real property tax, irrespective of who owned the property. At the
same time, the imposition of real property taxes under Section 232 is, in turn, qualified by the phrase "not hereinafter specifically
exempted." The exemptions from real property taxes are enumerated in Section 234 of the Code which specifically states that only real
properties owned by the Republic of the Philippines or any of its political subdivisions are exempted from the payment of the tax.
Clearly, instrumentalities or GOCCs do not fall within the exceptions under Section 234 of the LGC.

Thus, as ruled in the [1996 MCIAA] case, the prohibition on taxing the national government, its agencies and instrumentalities under
Section 133 is qualified by Sections 232 and 234, and accordingly, the only relevant exemption now applicable to these bodies is what
is now provided under Section 234(a) of the Code. It may be noted that the express withdrawal of previously granted exemptions to
persons from the payment of real property tax by the LGC does not even make any distinction as to whether the exempt person is a
governmental entity or not. As Sections 193 and 234 of the Code both state, the withdrawal applies to "all persons, including
GOCCs," thus encompassing the two classes of persons recognized under our laws, natural persons and juridical persons.

xxxx

The question of whether or not petitioner MCIAA is an instrumentality or a GOCC has already been lengthily but soundly, cogently
and lucidly answered in the [1996 MCIAA] case x x x.

xxxx

Based on the foregoing, the claim of the majority of the Supreme Court in the [2006 MIAA] case that MIAA (and also petitioner
MCIAA) is not a government-owned or controlled corporation but an instrumentality based on Section 2(10) of the Administrative
Code of 1987 appears to be unsound. In the [2006 MIAA] case, the majority justifies MIAA’s purported exemption on Section
133(o)of the Local Government Code which places "agencies and instrumentalities: as generally exempt from the taxation powers of
the LGUs. It further went on to hold that "By express mandate of the Local Government Code, local governments cannot impose any
kind of tax on national government instrumentalities like the MIAA." x x x. 26 (Citations omitted.)

The Court of Appeals further cited Justice Tinga’s dissent in the 2006 MIAA case as well as provisions from petitioner MCIAA’s
charter to show that petitioner is a GOCC.27 The Court of Appeals wrote:

These cited provisions establish the fitness of the petitioner MCIAA to be the subject of legal relations. Under its charter, it has the
power to acquire, possess and incur obligations. It also has the power to contract in its own name and to acquire title to movable or
immovable property. More importantly, it may likewise exercise powers of a corporation under the Corporation Code. Moreover,
based on its own allegation, it even recognized itself as a GOCC when it alleged in its petition for prohibition filed before the lower
court that it "is a body corporate organized and existing under Republic Act No. 6958 x x x."

We also find to be not meritorious the assertion of petitioner MCIAA that the respondent city can no longer challenge the tax-exempt
character of the properties since it is estopped from doing so when respondent City of Lapu-Lapu, through its former mayor, Ernest H.
Weigel, Jr., had long ago conceded that petitioner’s properties are exempt from real property tax.

It is not denied by the respondent city that it considered, through its former mayor, Ernest H. Weigel, Jr., petitioner’s subject
properties, specifically the runway and taxiway, as exempt from taxes. However, as astutely pointed out by the respondent city it "can
never be in estoppel, particularly in matters involving taxes. It is a well-known rule that erroneous application and enforcement of the
law by public officers do not preclude subsequent correct application of the statute, and that the Government is never estopped by
mistake or error on the part of its agents." 28 (Citations omitted.)
The Court of Appeals established the following:

a) [R]espondent City was able to prove and establish that it has a valid and existing ordinance for the imposition of realty tax
against petitioner MCIAA;

b) [T]he imposition and collection of additional levy of 1% Special Education Fund (SEF) is authorized by law, Republic Act
No. 5447; and

c) [T]he collection of penalty interest for delinquent taxes is not only authorized by law but is likewise [sanctioned] by
respondent City’s ordinance.29

The Court of Appeals likewise held that respondent City has a valid and existing local tax ordinance, Ordinance No. 44, or the
Omnibus Tax Ordinance of Lapu-Lapu City, which provided for the imposition of real property tax. The relevant provision reads:

Chapter 5 – Tax on Real Property Ownership

Section 25. RATE OF TAX. - A rate of one and one-half (1 1/2) percentum shall be collected from owners, executors or
administrators of any real estate lying within the territorial jurisdiction of the City of Lapu-Lapu, based on the assessed value as shown
in the latest revision.30

The Court of Appeals found that even if Ordinance No. 44 was enacted prior to the effectivity of the LGC, it remained in force and
effect, citing Section 529 of the LGC and Article 278 of the LGC’s Implementing Rules and Regulations. 31

As regards the Special Education Fund, the Court of Appeals held that respondent City can still collect the additional 1% tax on real
property even without an ordinance to this effect, as this is authorized by Republic Act No. 5447, as amended by Presidential Decree
No. 464 (the Real Property Tax Code), which does not require an enabling tax ordinance. The Court of Appeals affirmed the RTC’s
ruling that Republic Act No. 5447 was still in force and effect notwithstanding the passing of the LGC, as the latter only partially
repealed the former law. What Section 534 of the LGC repealed was Section 3 a(3) and b(2) of Republic Act No. 5447, and not the
entire law that created the Special Education Fund.32 The repealed provisions referred to allocation of taxes on Virginia type cigarettes
and duties on imported leaf tobacco and the percentage remittances to the taxing authority concerned. The Court of Appeals, citing
The Commission on Audit of the Province of Cebu v. Province of Cebu, 33 held that "[t]he failure to add a specific repealing clause
particularly mentioning the statute to be repealed indicates that the intent was not to repeal any existing law on the matter, unless an
irreconcilable inconsistency and repugnancy exists in the terms of the new and the old laws."34 The Court of Appeals quoted the
RTC’s discussion on this issue, which we reproduce below:

It may be observed that there is no requirement in RA 7160 that an ordinance be enacted to enable the collection of the additional 1%
tax. This is so since R.A. 5447 is still in force and effect, and the declared policy of the government in enacting the law, which is to
contribute to the financial support of the goals of education as provided in the Constitution, necessitates the continued and
uninterrupted collection of the tax. Considering that this is a tax of far-reaching importance, to require the passage of an ordinance in
order that the tax may be collected would be to place the collection of the tax at the option of the local legislature. This would run
counter to the declared policy of the government when the SEF was created and the tax imposed. 35 Regarding the penalty interest, the
Court of Appeals found that Section 30 of Ordinance No. 44 of respondent City provided for a penalty surcharge of 25% of the tax
due for a given year. Said provision reads:

Section 30. – PENALTY FOR FAILURE TO PAY TAX. – Failure to pay the tax provided for under this Chapter within the time
fixed in Section 27, shall subject the taxpayer to a surcharge of twenty-five percent (25%), without interest.36

The Court of Appeals however declared that after the effectivity of the Local Government Code, the respondent City could only
collect penalty surcharge up to the extent of 72%, covering a period of three years or 36 months, for the entire delinquent
property.37 This was lower than the 25% per annum surcharge imposed by Ordinance No. 44. 38The Court of Appeals affirmed

the findings of the RTC in the decision quoted below:

The tax collected under Ordinance No. 44 is within the rates prescribed by RA 7160, though the 25% penalty collected is higher than
the 2% allowed under Sec. 255 of the said law which provides:

xxxx
This difference does not however detract from the essential enforceability and effectivity of Ordinance No. 44 pursuant to Section 529
of RA No. 7160 and Article 278 of the Implementing Rules and Regulations. The outcome of this disparity is simply that respondent
City can only collect an interest of 2% per month on the unpaid tax. Consequently, respondent city will have to [recompute] the
petitioner’s tax liability.39

It is worthy to note that the Court of Appeals nevertheless held that even if it is clear that respondent City has the power to
impose real property taxes over petitioner, "it is also evident and categorical that, under Republic Act No. 6958, the properties
of petitioner MCIAA may not be conveyed or transferred to any person or entity except to the national government." 40 The
relevant provisions of the said law are quoted below:

Section 4. Functions, Powers and Duties.– The Authority shall have the following functions, powers and duties:

xxxx

(e) To acquire, purchase, own, administer, lease, mortgage, sell or otherwise dispose of any land, building, airport facility, or property
of whatever kind and nature, whether movable or immovable, or any interest therein: Provided, That any asset located in the Mactan
International Airport important to national security shall not be subject to alienation or mortgage by the Authority nor to transfer to
any entity other than the National Government[.]

Section 13. Borrowing Power.– The Authority may, in accordance with Section 21, Article XII of the Constitution and other existing
laws, rules and regulations on local or foreign borrowing, raise funds, either from local or international sources, by way of loans,
credit or securities, and other borrowing instruments with the power to create pledges, mortgages and other voluntary liens or
encumbrances on any of its assets or properties, subject to the prior approval of the President of the Philippines.

All loans contracted by the Authority under this section, together with all interests and other sums payable in respect thereof, shall
constitute a charge upon all the revenues and assets of the Authority and shall rank equally with one another, but shall have priority
over any other claim or charge on the revenue and assets of the Authority: Provided, That this provision shall not be construed as a
prohibition or restriction on the power of the Authority to create pledges, mortgages and other voluntary liens or encumbrances on any
asset or property of the Authority. The payment of the loans or other indebtedness of the Authority may be guaranteed by the National
Government subject to the approval of the President of the Philippines.

The Court of Appeals concluded that "it is clear that petitioner MCIAA is denied by its charter the absolute right to dispose of its
property to any person or entity except to the national government and it is not empowered to obtain loans or encumber its property
without the approval of the President." 41 The questioned Decision contained the following conclusion:

With the advent of RA 7160, the Local Government Code, the power to tax is no longer vested exclusively on Congress. LGUs,
through its local legislative bodies, are now given direct authority to levy taxes, fees and other charges pursuant to Article X, Section 5
of the 1987 Constitution. And one of the most significant provisions of the LGC is the removal of the blanket inclusion of
instrumentalities and agencies of the national government from the coverage of local taxation. The express withdrawal by the Code of
previously granted exemptions from realty taxes applied to instrumentalities and government-owned or controlled corporations
(GOCCs) such as the petitioner Mactan-Cebu International Airport Authority. Thus, petitioner MCIAA became a taxable person in
view of the withdrawal of the realty tax exemption that it previously enjoyed under Section 14 of RA No. 6958 of its charter. As
expressed and categorically held in the Mactan case, the removal and withdrawal of tax exemptions previously enjoyed by persons,
natural or juridical, are consistent with the State policy to ensure autonomy to local governments and the objective of the Local
Government Code that they enjoy genuine and meaningful local autonomy to enable them to attain their fullest development as self-
reliant communities and make them effective partners in the attainment of national goals.

However, in the case at bench, petitioner MCIAA’s charter expressly bars the alienation or mortgage of its property to any person or
entity except to the national government. Therefore, while petitioner MCIAA is a taxable person for purposes of real property
taxation, respondent City of Lapu-Lapu is prohibited from seizing, selling and owning these properties by and through a public
auction in order to satisfy petitioner MCIAA’s tax liability. 42 (Citations omitted.)

In the questioned Resolution that affirmed its questioned Decision, the Court of Appeals denied petitioner’s motion for reconsideration
based on the following grounds:

First, the MCIAA case remains the controlling law on the matter as the same is the established precedent; not the MIAA case but the
MCIAA case since the former, as keenly pointed out by the respondent City of Lapu-Lapu, has not yet attained finality as there is still
yet a pending motion for reconsideration filed with the Supreme Court in the aforesaid case.
Second, and more importantly, the ruling of the Supreme Court in the MIAA case cannot be similarly invoked in the case at bench.
The said case cannot be considered as the "law of the case." The "law of the case" doctrine has been defined as that principle under
which determinations of questions of law will generally be held to govern a case throughout all its subsequent stages where such
determination has already been made on a prior appeal to a court of last resort. It is merely a rule of procedure and does not go to the
power of the court, and will not be adhered to where its application will result in an unjust decision. It relates entirely to questions of
law, and is confined in its operation to subsequent proceedings in the same case. According to said doctrine, whatever has been
irrevocably established constitutes the law of the case only as to the same parties in the same case and not to different parties in an
entirely different case. Besides, pending resolution of the aforesaid motion for reconsideration in the MIAA case, the latter case has
not irrevocably established anything.

Thus, after a thorough and judicious review of the allegations in petitioner’s motion for reconsideration, this Court resolves to deny
the same as the matters raised therein had already been exhaustively discussed in the decision sought to be reconsidered, and that no
new matters were raised which would warrant the modification, much less reversal, thereof. 43 (Emphasis added, citations omitted.)

PETITIONER’S THEORY

Petitioner is before us now claiming that this Court, in the 2006 MIAA case, had expressly declared that petitioner, while vested with
corporate powers, is not considered a government-owned or controlled corporation, but is a government instrumentality like the
Manila International Airport Authority (MIAA), Philippine Ports Authority (PPA), University of the Philippines, and Bangko Sentral
ng Pilipinas (BSP). Petitioner alleges that as a government instrumentality, all its airport lands and buildings are exempt from real
estate taxes imposed by respondent City.44Petitioner alleges that Republic Act No. 6958 placed "a limitation on petitioner’s
administration of its assets and properties" as it provides under Section 4(e) that "any asset in the international airport important to
national security cannot be alienated or mortgaged by petitioner or transferred to any entity other than the National Government."45

Thus, petitioner claims that the Court of Appeals (Cebu City) gravely erred in disregarding the following:

PETITIONER IS A GOVERNMENT INSTRUMENTALITY AS EXPRESSLY DECLARED BY THE HONORABLE COURT IN


THE MIAA CASE. AS SUCH, IT IS EXEMPT FROM PAYING REAL ESTATE TAXES IMPOSED BY RESPONDENT CITY OF
LAPULAPU.

II

THE PROPERTIES OF PETITIONER CONSISTING OF THE AIRPORT TERMINAL BUILDING, AIRFIELD, RUNWAY,
TAXIWAY, INCLUDING THE LOTS ON WHICH THEY ARE SITUATED, ARE EXEMPT FROM REAL PROPERTY TAXES.

III

RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE REAL PROPERTY TAX WITHOUT ANY APPROPRIATE
ORDINANCE.

IV

RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE AN ADDITIONAL 1% TAX FOR THE SPECIAL EDUCATION
FUND IN THE ABSENCE OF ANY CORRESPONDING ORDINANCE.

RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE ANY INTEREST SANSANY ORDINANCE MANDATING ITS
IMPOSITION.46

Petitioner claims the following similarities with MIAA:

1. MCIAA belongs to the same class and performs identical functions as MIAA;

2. MCIAA is a public utility like MIAA;


3. MIAA was organized to operate the international and domestic airport in Paranaque City for public use, while MCIAA
was organized to operate the international and domestic airport in Mactan for public use.

4. Both are attached agencies of the Department of Transportation and Communications. 47

Petitioner compares its charter (Republic Act No. 6958) with that of MIAA (Executive Order No. 903).

Section 3 of Executive Order No. 903 provides:

Sec. 3. Creation of the Manila International Airport Authority. There is hereby established a body corporate to be known as the Manila
International Airport Authority which shall be attached to the Ministry of Transportation and Communications. The principal office of
the Authority shall be located at the New Manila International Airport. The Authority may establish such offices, branches, agencies
or subsidiaries as it may deem proper and necessary; x x x.

Section 2 of Republic Act No. 6958 reads:

Section 2. Creation of the Mactan-Cebu International Airport Authority.– There is hereby established a body corporate to be known as
the Mactan-Cebu International Airport Authority which shall be attached to the Department of Transportation and Communications.
The principal office of the Authority shall be located at the Mactan International Airport, Province of Cebu.

The Authority may have such branches, agencies or subsidiaries as it may deem proper and necessary.

As to MIAA’s purposes and objectives, Section 4 of Executive Order No. 903 reads:

Sec. 4. Purposes and Objectives. The Authority shall have the following purposes and objectives:

(a) To help encourage and promote international and domestic air traffic in the Philippines as a means of making the
Philippines a center of international trade and tourism and accelerating the development of the means of transportation and
communications in the country;

(b) To formulate and adopt for application in the Airport internationally acceptable standards of airport accommodation and
service; and

(c) To upgrade and provide safe, efficient, and reliable airport facilities for international and domestic air travel.

Petitioner claims that the above purposes and objectives are analogous to those enumerated in its charter, specifically Section 3 of
Republic Act No. 6958, which reads:

Section 3. Primary Purposes and Objectives.– The Authority shall principally undertake the economical, efficient and effective
control, management and supervision of the Mactan International Airport in the Province of Cebu and the Lahug Airport in Cebu City,
hereinafter collectively referred to as the airports, and such other airports as may be established in the Province of Cebu. In addition, it
shall have the following objectives:

(a) To encourage, promote and develop international and domestic air traffic in the central Visayas and Mindanao regions as
a means of making the regions centers of international trade and tourism, and accelerating the development of the means of
transportation and communications in the country; and

(b) To upgrade the services and facilities of the airports and to formulate internationally acceptable standards of airport
accommodation and service.

The powers, functions and duties of MIAA under Section 5 of Executive Order No. 903 are:

Sec. 5. Functions, Powers and Duties. The Authority shall have the following functions, powers and duties:

(a) To formulate, in coordination with the Bureau of Air Transportation and other appropriate government agencies, a
comprehensive and integrated policy and program for the Airport and to implement, review and update such policy and
program periodically;
(b) To control, supervise, construct, maintain, operate and provide such facilities or services as shall be necessary for the
efficient functioning of the Airport;

(c) To promulgate rules and regulations governing the planning, development, maintenance, operation and improvement of
the Airport, and to control and/or supervise as may be necessary the construction of any structure or the rendition of any
services within the Airport;

(d) To sue and be sued in its corporate name;

(e) To adopt and use a corporate seal;

(f) To succeed by its corporate name;

(g) To adopt its by-laws, and to amend or repeal the same from time to time;

(h) To execute or enter into contracts of any kind or nature;

(i) To acquire, purchase, own, administer, lease, mortgage, sell or otherwise dispose of any land, building, airport facility, or
property of whatever kind and nature, whether movable or immovable, or any interest therein;

(j) To exercise the power of eminent domain in the pursuit of its purposes and objectives;

(k) To levy, and collect dues, charges, fees or assessments for the use of the Airport premises, works, appliances, facilities or
concessions or for any service provided by the Authority, subject to the approval of the Minister of Transportation and
Communications in consultation with the Minister of Finance, and subject further to the provisions of Batas Pambansa Blg.
325 where applicable;

(l) To invest its idle funds, as it may deem proper, in government securities and other evidences of indebtedness of the
government;

(m) To provide services, whether on its own or otherwise, within the Airport and the approaches thereof, which shall include
but shall not be limited to, the following:

(1) Aircraft movement and allocation of parking areas of aircraft on the ground;

(2) Loading or unloading of aircrafts;

(3) Passenger handling and other services directed towards the care, convenience and security of passengers, visitors
and other airport users; and

(4) Sorting, weighing, measuring, warehousing or handling of baggage and goods.

(n) To perform such other acts and transact such other business, directly or indirectly necessary, incidental or conducive to
the attainment of the purposes and objectives of the Authority, including the adoption of necessary measures to remedy
congestion in the Airport; and

(o) To exercise all the powers of a corporation under the Corporation Law, insofar as these powers are not inconsistent with
the provisions of this Executive Order.

Petitioner claims that MCIAA has related functions, powers and duties under Section 4 of Republic Act No. 6958, as shown in the
provision quoted below:

Section 4. Functions, Powers and Duties.– The Authority shall have the following functions, powers and duties:

(a) To formulate a comprehensive and integrated development policy and program for the airports and to implement, review
and update such policy and program periodically;
(b) To control, supervise, construct, maintain, operate and provide such facilities or services as shall be necessary for the
efficient functioning of the airports;

(c) To promulgate rules and regulations governing the planning, development, maintenance, operation and improvement of
the airports, and to control and supervise the construction of any structure or the rendition of any service within the airports;

(d) To exercise all the powers of a corporation under the Corporation Code of the Philippines, insofar as those powers are not
inconsistent with the provisions of this Act;

(e) To acquire, purchase, own, administer, lease, mortgage, sell or otherwise dispose of any land, building, airport facility, or
property of whatever kind and nature, whether movable or immovable, or any interest therein: Provided, That any asset
located in the Mactan International Airport important to national security shall not be subject to alienation or mortgage by the
Authority nor to transfer to any entity other than the National Government;

(f) To exercise the power of eminent domain in the pursuit of its purposes and objectives;

(g) To levy and collect dues, charges, fees or assessments for the use of airport premises, works, appliances, facilities or
concessions, or for any service provided by the Authority;

(h) To retain and appropriate dues, fees and charges collected by the Authority relative to the use of airport premises for such
measures as may be necessary to make the Authority more effective and efficient in the discharge of its assigned tasks;

(i) To invest its idle funds, as it may deem proper, in government securities and other evidences of indebtedness; and

(j) To provide services, whether on its own or otherwise, within the airports and the approaches thereof as may be necessary
or in connection with the maintenance and operation of the airports and their facilities.

Petitioner claims that like MIAA, it has police authority within its premises, as shown in their respective charters quoted below:

EO 903, Sec. 6. Police Authority. — The Authority shall have the power to exercise such police authority as may be necessary within
its premises to carry out its functions and attain its purposes and objectives, without prejudice to the exercise of functions within the
same premises by the Ministry of National Defense through the Aviation Security Command (AVSECOM) as provided in LOI 961:
Provided, That the Authority may request the assistance of law enforcement agencies, including request for deputization as may be
required. x x x.

R.A. No. 6958, Section 5. Police Authority.– The Authority shall have the power to exercise such police authority as may be
necessary within its premises or areas of operation to carry out its functions and attain its purposes and objectives: Provided, That the
Authority may request the assistance of law enforcement agencies, including request for deputization as may be required. x x x.

Petitioner pointed out other similarities in the two charters, such as:

1. Both MCIAA and MIAA are covered by the Civil Service Law, rules and regulations (Section 15, Executive Order No.
903; Section 12, Republic Act No. 6958);

2. Both charters contain a proviso on tax exemptions (Section 21, Executive Order No. 903; Section 14, Republic Act No.
6958);

3. Both MCIAA and MIAA are required to submit to the President an annual report generally dealing with their activities and
operations (Section 14, Executive Order No. 903; Section 11, Republic Act No. 6958); and

4. Both have borrowing power subject to the approval of the President (Section 16, Executive Order No. 903; Section 13,
Republic Act No. 6958).48

Petitioner suggests that it is because of its similarity with MIAA that this Court, in the 2006 MIAA case, placed it in the same class as
MIAA and considered it as a government instrumentality. Petitioner submits that since it is also a government instrumentality like
MIAA, the following conclusion arrived by the Court in the 2006 MIAA case is also applicable to petitioner:
Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which governs the legal relation and
status of government units, agencies and offices within the entire government machinery, MIAA is a government
instrumentality and not a government-owned or controlled corporation. Under Section 133(o) of the Local Government Code,
MIAA as a government instrumentality is not a taxable person because it is not subject to "[t]axes, fees or charges of any
kind" by local governments. The only exception is when MIAA leases its real property to a "taxable person" as provided in
Section 234(a) of the Local Government Code, in which case the specific real property leased becomes subject to real estate
tax. Thus, only portions of the Airport Lands and Buildings leased to taxable persons like private parties are subject to real
estate tax by the City of Parañaque.

Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use, are properties of
public dominion and thus owned by the State or the Republic of the Philippines. Article 420 specifically mentions "ports x x x
constructed by the State," which includes public airports and seaports, as properties of public dominion and owned by the
Republic. As properties of public dominion owned by the Republic, there is no doubt whatsoever that the Airport Lands and
Buildings are expressly exempt from real estate tax under Section 234(a) of the Local Government Code. This Court has also
repeatedly ruled that properties of public dominion are not subject to execution or foreclosure sale.49 (Emphases added.)

Petitioner insists that its properties consisting of the airport terminal building, airfield, runway, taxiway and the lots on which they are
situated are not subject to real property tax because they are actually, solely and exclusively used for public purposes. 50 They are
indispensable to the operation of the Mactan International Airport and by their very nature, these properties are exempt from tax. Said
properties belong to the State and are merely held by petitioner in trust. As earlier mentioned, petitioner claims that these properties
are important to national security and cannot be alienated, mortgaged, or transferred to any entity except the National Government.

Petitioner prays that judgment be rendered:

a) Declaring petitioner exempt from paying real property taxes as it is a government instrumentality;

b) Declaring respondent City of Lapu-Lapu as bereft of any authority to levy and collect the basic real property tax, the
additional tax for the SEF and the penalty interest for its failure to pass the corresponding tax ordinances; and

c) Declaring, in the alternative, the airport lands and buildings of petitioner as exempt from real property taxes as they are
used solely and exclusively for public purpose.51

In its Consolidated Reply filed through the OSG, petitioner claims that the 2006 MIAA ruling has overturned the 1996 MCIAA ruling.
Petitioner cites Justice Dante O. Tinga’s dissent in the MIAA ruling, as follows:

[The] ineluctable conclusion is that the majority rejects the rationale and ruling in Mactan. The majority provides for a wildly different
interpretation of Section 133, 193 and 234 of the Local Government Code than that employed by the Court in Mactan. Moreover, the
parties in Mactan and in this case are similarly situated, as can be obviously deducted from the fact that both petitioners are airport
authorities operating under similarly worded charters. And the fact that the majority cites doctrines contrapuntal to the Local
Government Code as in Basco and Maceda evinces an intent to go against the Court’s jurisprudential trend adopting the philosophy of
expanded local government rule under the Local Government Code.

x x x The majority is obviously inconsistent with Mactan and there is no way these two rulings can stand together. Following basic
principles in statutory construction, Mactan will be deemed as giving way to this new ruling.

xxxx

There is no way the majority can be justified unless Mactan is overturned. The MCIAA and the MIAA are similarly situated. They are
both, as will be demonstrated, GOCCs, commonly engaged in the business of operating an airport. They are the owners of airport
properties they respectively maintain and hold title over these properties in their name. These entities are both owned by the State, and
denied by their respective charters the absolute right to dispose of their properties without prior approval elsewhere. Both of them are
not empowered to obtain loans or encumber their properties without prior approval the prior approval of the President. 52 (Citations
omitted.)

Petitioner likewise claims that the enactment of Ordinance No. 070-2007 is an admission on respondent City’s part that it must have a
tax measure to be able to impose a tax or special assessment. Petitioner avers that assuming that it is a non-exempt entity or that its
airport lands and buildings are not exempt, it was only upon the effectivity of Ordinance No. 070-2007 on January 1,2008 that
respondent City could properly impose the basic real property tax, the additional tax for the SEF, and the interest in case of
nonpayment.53
Petitioner filed its Memorandum54 on June 17, 2009.

RESPONDENTS’ THEORY

In their Comment,55 respondents point out that petitioner partially moved for a reconsideration of the questioned Decision only as to
the issue of whether petitioner is a GOCC or not. Thus, respondents declare that the other portions of the questioned decision had
already attained finality and ought not to be placed in issue in this petition for certiorari. Thus, respondents discussed the other issues
raised by petitioner with reservation as to this objection. Respondents summarized the issues and the grounds relied upon as follows:

STATEMENT OF THE ISSUES

WHETHER OR NOT PETITIONER IS A GOVERNMENT INSTRUMENTALITY EXEMPT FROM PAYING REAL PROPERTY
TAXES

WHETHER OR NOT RESPONDENT CITY CAN [IMPOSE] REALTY TAX, SPECIAL EDUCATION FUND AND PENALTY
INTEREST

WHETHER OR NOT THE AIRPORT TERMINAL BUILDING, AIRFIELD, RUNWAY, TAXIWAY INCLUDING THE LOTS ON
WHICH THEY ARE SITUATED ARE EXEMPT FROM REALTY TAXES

GROUNDS RELIED UPON

1. PETITIONER IS A GOCC HENCE NOT EXEMPT FROM REALTY TAXES

2. TERMINAL BUILDING, RUNWAY, TAXIWAY ARE NOT EXEMPT FROM REALTY TAXES

3. ESTOPPEL DOES NOT LIE AGAINST GOVERNMENT

4. CITY CAN COLLECT REALTY TAX AND INTEREST

5. CITY CAN COLLECT SEF

6. MCIAA HAS NOT SHOWN ANY IRREPARABLE INJURY WARRANTING INJUNCTIVE RELIEF

7. MCIAA HAS NOT COMPLIED WITH PROVISION OF THE LGC56

Respondents claim that "the mere mention of MCIAA in the MIAA v. [Court of Appeals] case does not make it the controlling case
on the matter."57 Respondents further claim that the 1996 MCIAA case where this Court held that petitioner is a GOCC is the
controlling jurisprudence. Respondents point out that petitioner and MIAA are two very different entities. Respondents argue that
petitioner is a GOCC contrary to its assertions, based on its Charter and on DOJ Opinion No. 50.

Respondents contend that if petitioner is not a GOCC but an instrumentality of the government, still the following statement in the
1996 MCIAA case applies:

Besides, nothing can prevent Congress from decreeing that even instrumentalities or agencies of the Government performing
governmental functions may be subject to tax. Where it is done precisely to fulfill a constitutional mandate and national policy, no one
can doubt its wisdom.58 Respondents argue that MCIAA properties such as the terminal building, taxiway and runway are not exempt
from real property taxation. As discussed in the 1996 MCIAA case, Section 234 of the LGC omitted GOCCs such as MCIAA from
entities enjoying tax exemptions. Said decision also provides that the transfer of ownership of the land to petitioner was absolute and
petitioner cannot evade payment of taxes.59

Even if the following issues were not raised by petitioner in its motion for reconsideration of the questioned Decision, and thus the
ruling pertaining to these issues in the questioned decision had become final, respondents still discussed its side over its objections as
to the propriety of bringing these up before this Court.

1. Estoppel does not lie against the government.

2. Respondent City can collect realty taxes and interest.


a. Based on the Local Government Code (Sections 232, 233, 255) and its IRR (Sections 241, 247).

b. The City of Lapu-Lapu passed in1980 Ordinance No. 44, or the Omnibus Tax Ordinance, wherein the imposition
of real property tax was made. This Ordinance was in force and effect by virtue of Article 278 of the IRR of
Republic Act No. 7160.60

c. Ordinance No. 070-2007, known as the Revised Lapu-Lapu City Revenue Code, imposed real property taxes,
special education fund and further provided for the payment of interest and surcharges. Thus, the issue is passé and
is moot and academic.

3. Respondent City can collect Special Education Fund.

a. The LGC does not require the enactment of an ordinance for the collection of the SEF.

b. Congress did not entirely repeal the SEF law, hence, its levy, imposition and collection need not be covered by
ordinance. Besides, the City has enacted the Revenue Code containing provisions for the levy and collection of the
SEF.61

Furthermore, respondents aver that:

1. Collection of taxes is beyond the ambit of injunction.

a. Respondents contend that the petition only questions the denial of the writ of preliminary injunction by the RTC
and the Court of Appeals. Petitioner failed to show irreparable injury.

b. Comparing the alleged damage that may be caused petitioner and the direct affront and challenge against the
power to tax, which is an attribute of sovereignty, it is but appropriate that injunctive relief should be denied.

2. Petitioner did not comply with LGC provisions on payment under protest.

a. Petitioner should have protested the tax imposition as provided in Article 285 of the IRR of Republic Act No.
7160. Section 252 of Republic Act No. 7160 62 requires that the taxpayer’s protest can only be entertained if the tax
is first paid under protest.63

Respondents submitted their Memorandum64 on June 30, 2009, wherein they allege that the 1996 MCIAA case is still good law, as
shown by the following cases wherein it was quoted:

1. National Power Corporation v. Local Board of Assessment Appeals of Batangas [545 Phil. 92 (2007)];

2. Mactan-Cebu International Airport Authority v. Urgello [549 Phil. 302 (2007)];

3. Quezon City v. ABS-CBN Broadcasting Corporation[588 Phil. 785 (2008)]; and

4. The City of Iloilo v. Smart Communications, Inc. [599 Phil. 492 (2009)].

Respondents assert that the constant reference to the 1996 MCIAA case "could hardly mean that the doctrine has breathed its last" and
that the 1996 MCIAA case stands as precedent and is controlling on petitioner MCIAA. 65

Respondents allege that the issue for consideration is whether it is proper for petitioner to raise the issue of whether it is not liable to
pay real property taxes, special education fund (SEF), interests and/or surcharges. 66 Respondents argue that the Court of Appeals was
correct in declaring petitioner liable for realty taxes, etc., on the terminal building, taxiway, and runway. Respondent City relies on the
following grounds:

1. The case of MCIAA v. Marcos, et al., is controlling on petitioner MCIAA;

2. MCIAA is a corporation;
3. Section 133 in relation to Sections 232 and 234 of the Local Government Code of 1991 authorizes the collection of real
property taxes (etc.) from MCIAA;

4. Terminal Building, Runway & Taxiway are not of the Public Dominion and are not exempt from realty taxes, special
education fund and interest;

5. Respondent City can collect realty tax, interest/surcharge, and Special Education Fund from MCIAA; [and]

6. Estoppel does not lie against the government.67

THIS COURT’S RULING

The petition has merit. The petitioner is an instrumentality of the government; thus, its properties actually, solely and exclusively used
for public purposes, consisting of the airport terminal building, airfield, runway, taxiway and the lots on which they are situated, are
not subject to real property tax and respondent City is not justified in collecting taxes from petitioner over said properties.

DISCUSSION

The Court of Appeals (Cebu City) erred in declaring that the 1996 MCIAA case still controls and that petitioner is a GOCC. The 2006
MIAA case governs.

The Court of Appeals’ reliance on the 1996 MCIAA case is misplaced and its staunch refusal to apply the 2006 MIAA case is patently
erroneous. The Court of Appeals, finding for respondents, refused to apply the ruling in the 2006 MIAA case on the premise that the
same had not yet reached finality, and that as far as MCIAA is concerned, the 1996 MCIAA case is still good law. 68

While it is true, as respondents allege, that the 1996 MCIAA case was cited in a long line of cases,69 still, in 2006, the Court en banc
decided a case that in effect reversed the 1996 Mactan ruling. The 2006 MIAA case had, since the promulgation of the questioned
Decision and Resolution, reached finality and had in fact been either affirmed or cited in numerous cases by the Court. 70 The decision
became final and executory on November 3, 2006. 71Furthermore, the 2006 MIAA case was decided by the Court en banc while the
1996 MCIAA case was decided by a Division. Hence, the 1996 MCIAA case should be read in light of the subsequent and
unequivocal ruling in the 2006 MIAA case.

To recall, in the 2006 MIAA case, we held that MIAA’s airport lands and buildings are exempt from real estate tax imposed by local
governments; that it is not a GOCC but an instrumentality of the national government, with its real properties being owned by the
Republic of the Philippines, and these are exempt from real estate tax. Specifically referring to petitioner, we stated as follows:

Many government instrumentalities are vested with corporate powers but they do not become stock or non-stock corporations, which
is a necessary condition before an agency or instrumentality is deemed a government-owned or controlled corporation. Examples are
the Mactan International Airport Authority, the Philippine Ports Authority, the University of the Philippines and Bangko Sentral ng
Pilipinas. All these government instrumentalities exercise corporate powers but they are not organized as stock or non-stock
corporations as required by Section 2(13) of the Introductory Provisions of the Administrative Code. These government
instrumentalities are sometimes loosely called government corporate entities. However, they are not government-owned or controlled
corporations in the strict sense as understood under the Administrative Code, which is the governing law defining the legal
relationship and status of government entities.72 (Emphases ours.)

In the 2006 MIAA case, the issue before the Court was "whether the Airport Lands and Buildings of MIAA are exempt from real
estate tax under existing laws."73 We quote the extensive discussion of the Court that led to its finding that MIAA’s lands and
buildings were exempt from real estate tax imposed by local governments:

First, MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt
from local taxation. Second, the real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real
estate tax.

1. MIAA is Not a Government-Owned or Controlled Corporation

xxxx
There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax. However, MIAA is not a
government-owned or controlled corporation. Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines
a government-owned or controlled corporation as follows:

SEC. 2. General Terms Defined. - x x x (13) Government-owned or controlled corporation refers to any agency organized as a stock
or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by
the Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the
extent of at least fifty-one (51) percent of its capital stock: x x x.

A government-owned or controlled corporation must be "organized as a stock or non-stock corporation." MIAA is not organized as a
stock or non-stock corporation. MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no
stockholders or voting shares. x x x

xxxx

Clearly, under its Charter, MIAA does not have capital stock that is divided into shares.

Section 3 of the Corporation Code defines a stock corporation as one whose "capital stock is divided into shares and x x x authorized
to distribute to the holders of such shares dividends x x x." MIAA has capital but it is not divided into shares of stock. MIAA has no
stockholders or voting shares. Hence, MIAA is not a stock corporation.

MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation Code defines a non-stock
corporation as "one where no part of its income is distributable as dividends to its members, trustees or officers." A non-stock
corporation must have members. Even if we assume that the Government is considered as the sole member of MIAA, this will not
make MIAA a non-stock corporation. Non-stock corporations cannot distribute any part of their income to their members. Section 11
of the MIAA Charter mandates MIAA to remit 20% of its annual gross operating income to the National Treasury. This prevents
MIAA from qualifying as a non-stock corporation.

Section 88 of the Corporation Code provides that non-stock corporations are "organized for charitable, religious, educational,
professional, cultural, recreational, fraternal, literary, scientific, social, civil service, or similar purposes, like trade, industry,
agriculture and like chambers." MIAA is not organized for any of these purposes. MIAA, a public utility, is organized to operate an
international and domestic airport for public use.

Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned or controlled corporation.
What then is the legal status of MIAA within the National Government?

MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like
any other government instrumentality, the only difference is that MIAA is vested with corporate powers. Section 2(10) of the
Introductory Provisions of the Administrative Code defines a government "instrumentality" as follows:

SEC. 2. General Terms Defined. - x x x

(10) Instrumentality refers to any agency of the National Government, not integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. x x x.

When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not
only governmental but also corporate powers. Thus, MIAA exercises the governmental powers of eminent domain, police authority
and the levying of fees and charges. At the same time, MIAA exercises "all the powers of a corporation under the Corporation Law,
insofar as these powers are not inconsistent with the provisions of this Executive Order."

Likewise, when the law makes a government instrumentality operationally autonomous, the instrumentality remains part of the
National Government machinery although not integrated with the department framework. The MIAA Charter expressly states that
transforming MIAA into a "separate and autonomous body" will make its operation more "financially viable."

Many government instrumentalities are vested with corporate powers but they do not become stock or non-stock corporations, which
is a necessary condition before an agency or instrumentality is deemed a government-owned or controlled corporation. Examples are
the Mactan International Airport Authority, the Philippine Ports Authority, the University of the Philippines and Bangko Sentral ng
Pilipinas. All these government instrumentalities exercise corporate powers but they are not organized as stock or non-stock
corporations as required by Section 2(13) of the Introductory Provisions of the Administrative Code. These government
instrumentalities are sometimes loosely called government corporate entities. However, they are not government-owned or controlled
corporations in the strict sense as understood under the Administrative Code, which is the governing law defining the legal
relationship and status of government entities.74 (Emphases ours, citations omitted.)

The Court in the 2006 MIAA case went on to discuss the limitation on the taxing power of the local governments as against the
national government or its instrumentality:

A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code, which states:

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units.- Unless otherwise provided herein, the exercise of
the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:

xxxx

(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local government units. x x
x.

Section 133(o) recognizes the basic principle that local governments cannot tax the national government, which historically merely
delegated to local governments the power to tax. While the 1987 Constitution now includes taxation as one of the powers of local
governments, local governments may only exercise such power "subject to such guidelines and limitations as the Congress may
provide."

When local governments invoke the power to tax on national government instrumentalities, such power is construed strictly against
local governments. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. Any doubt
whether a person, article or activity is taxable is resolved against taxation. This rule applies with greater force when local governments
seek to tax national government instrumentalities.

Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption. However, when Congress grants
an exemption to a national government instrumentality from local taxation, such exemption is construed liberally in favor of the
national government instrumentality. x x x.

xxxx

There is, moreover, no point in national and local governments taxing each other, unless a sound and compelling policy requires such
transfer of public funds from one government pocket to another.

There is also no reason for local governments to tax national government instrumentalities for rendering essential public services to
inhabitants of local governments. The only exception is when the legislature clearly intended to tax government instrumentalities for
the delivery of essential public services for sound and compelling policy considerations. There must be express language in the law
empowering local governments to tax national government instrumentalities. Any doubt whether such power exists is resolved against
local governments.

Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in the Code, local governments cannot tax
national government instrumentalities. x x x.75 (Emphases ours, citations omitted.)

The Court emphasized that the airport lands and buildings of MIAA are owned by the Republic and belong to the public domain. The
Court said:

The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the
Philippines. x x x.

xxxx

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like "roads, canals, rivers, torrents,
ports and bridges constructed by the State," are owned by the State. The term "ports" includes seaports and airports. The MIAA
Airport Lands and Buildings constitute a "port" constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport
Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines.
The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel
and transportation. The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of
the Airport Lands and Buildings as properties for public use. x x x.

xxxx

The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines, constitute the bulk of the income
that maintains the operations of MIAA. The collection of such fees does not change the character of MIAA as an airport for public
use. Such fees are often termed user’s tax. This means taxing those among the public who actually use a public facility instead of
taxing all the public including those who never use the particular public facility. A user’s tax is more equitable - a principle of taxation
mandated in the 1987 Constitution.

The Airport Lands and Buildings of MIAA x x x are properties of public dominion because they are intended for public use. As
properties of public dominion, they indisputably belong to the State or the Republic of the Philippines.76 (Emphases supplied, citations
omitted.)

The Court also held in the 2006 MIAA case that airport lands and buildings are outside the commerce of man.

As properties of public dominion, the Airport Lands and Buildings are outside the commerce of man. The Court has ruled repeatedly
that properties of public dominion are outside the commerce of man. As early as 1915, this Court already ruled in Municipality of
Cavite v. Rojas that properties devoted to public use are outside the commerce of man, thus:

xxxx

The Civil Code, Article 1271, prescribes that everything which is not outside the commerce of man may be the object of a contract, x
x x.

xxxx

The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be the subject of an auction
sale.

Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale.
Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy.
Essential public services will stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale. This
will happen if the City of Parañaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-
payment of real estate tax.

Before MIAA can encumber the Airport Lands and Buildings, the President must first withdraw from public use the Airport Lands
and Buildings. x x x.

xxxx

Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings from public use, these properties
remain properties of public dominion and are inalienable. Since the Airport Lands and Buildings are inalienable in their present status
as properties of public dominion, they are not subject to levy on execution or foreclosure sale. As long as the Airport Lands and
Buildings are reserved for public use, their ownership remains with the State or the Republic of the Philippines.

The authority of the President to reserve lands of the public domain for public use, and to withdraw such public use, is reiterated in
Section 14, Chapter 4, Title I, Book III of the Administrative Code of 1987, which states:

SEC. 14. Power to Reserve Lands of the Public and Private Domain of the Government. - (1) The President shall have the power to
reserve for settlement or public use, and for specific public purposes, any of the lands of the public domain, the use of which is not
otherwise directed by law. The reserved land shall thereafter remain subject to the specific public purpose indicated until otherwise
provided by law or proclamation;

xxxx
There is no question, therefore, that unless the Airport Lands and Buildings are withdrawn by law or presidential proclamation from
public use, they are properties of public dominion, owned by the Republic and outside the commerce of man. 77

Thus, the Court held that MIAA is "merely holding title to the Airport Lands and Buildings in trust for the Republic. [Under] Section
48, Chapter 12, Book I of the Administrative Code [which] allows instrumentalities like MIAA to hold title to real properties owned
by the Republic."78

The Court in the 2006 MIAA case cited Section 234(a) of the Local Government Code and held that said provision exempts from real
estate tax any "[r]eal property owned by the Republic of the Philippines." 79 The Court emphasized, however, that "portions of the
Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax." The Court further held:

This exemption should be read in relation with Section 133(o) of the same Code, which prohibits local governments from imposing
"[t]axes, fees or charges of any kind on the National Government, its agencies and instrumentalities x x x." The real properties owned
by the Republic are titled either in the name of the Republic itself or in the name of agencies or instrumentalities of the National
Government. The Administrative Code allows real property owned by the Republic to be titled in the name of agencies or
instrumentalities of the national government. Such real properties remain owned by the Republic and continue to be exempt from real
estate tax.

The Republic may grant the beneficial use of its real property to an agency or instrumentality of the national government. This
happens when title of the real property is transferred to an agency or instrumentality even as the Republic remains the owner of the
real property. Such arrangement does not result in the loss of the tax exemption. Section 234(a) of the Local Government Code states
that real property owned by the Republic loses its tax exemption only if the "beneficial use thereof has been granted, for consideration
or otherwise, to a taxable person." MIAA, as a government instrumentality, is not a taxable person under Section 133(o) of the Local
Government Code. Thus, even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and
Buildings, such fact does not make these real properties subject to real estate tax.

However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. For
example, the land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax. In such a case,
MIAA has granted the beneficial use of such land area for a consideration to a taxable person and therefore such land area is subject to
real estate tax. x x x.80

Significantly, the Court reiterated the above ruling and applied the same reasoning in Manila International Airport Authority v. City of
Pasay,81 thus:

The only difference between the 2006 MIAA case and this case is that the 2006 MIAA case involved airport lands and buildings
located in Parañaque City while this case involved airport lands and buildings located in Pasay City. The 2006 MIAA case and this
case raised the same threshold issue: whether the local government can impose real property tax on the airport lands, consisting mostly
of the runways, as well as the airport buildings, of MIAA. x x x.

xxxx

The definition of "instrumentality" under Section 2(10) of the Introductory Provisions of the Administrative Code of 1987 uses the
phrase "includes x x x government-owned or controlled corporations" which means that a government "instrumentality" may or may
not be a "government-owned or controlled corporation." Obviously, the term government "instrumentality" is broader than the term
"government-owned or controlled corporation." x x x.

xxxx

The fact that two terms have separate definitions means that while a government "instrumentality" may include a "government-owned
or controlled corporation," there may be a government "instrumentality" that will not qualify as a "government-owned or controlled
corporation."

A close scrutiny of the definition of "government-owned or controlled corporation" in Section 2(13) will show that MIAA would not
fall under such definition. MIAA is a government "instrumentality" that does not qualify as a "government-owned or controlled
corporation." x x x.

xxxx
Thus, MIAA is not a government-owned or controlled corporation but a government instrumentality which is exempt from any kind of
tax from the local governments. Indeed, the exercise of the taxing power of local government units is subject to the limitations
enumerated in Section 133 of the Local Government Code. Under Section 133(o) of the Local Government Code, local government
units have no power to tax instrumentalities of the national government like the MIAA. Hence, MIAA is not liable to pay real property
tax for the NAIA Pasay properties. Furthermore, the airport lands and buildings of MIAA are properties of public dominion intended
for public use, and as such are exempt from real property tax under Section 234(a) of the Local Government Code. However, under
the same provision, if MIAA leases its real property to a taxable person, the specific property leased becomes subject to real property
tax. In this case, only those portions of the NAIA Pasay properties which are leased to taxable persons like private parties are subject
to real property tax by the City of Pasay. (Emphases added, citations omitted.)

The Court not only mentioned petitioner MCIAA as similarly situated as MIAA. It also mentioned several other government
instrumentalities, among which was the Philippine Fisheries Development Authority. Thus, applying the 2006 MIAA ruling, the
Court, in Philippine Fisheries Development Authority v. Court of Appeals, 82 held:

On the basis of the parameters set in the MIAA case, the Authority should be classified as an instrumentality of the national
government. As such, it is generally exempt from payment of real property tax, except those portions which have been leased to
private entities.

In the MIAA case, petitioner Philippine Fisheries Development Authority was cited as among the instrumentalities of the national
government. x x x.

xxxx

Indeed, the Authority is not a GOCC but an instrumentality of the government. The Authority has a capital stock but it is not divided
into shares of stocks. Also, it has no stockholders or voting shares. Hence, it is not a stock corporation. Neither [is it] a non-stock
corporation because it has no members.

The Authority is actually a national government instrumentality which is defined as an agency of the national government, not
integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all
corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. When the law vests in a
government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only
governmental but also corporate powers.

Thus, the Authority which is tasked with the special public function to carry out the government’s policy "to promote the development
of the country’s fishing industry and improve the efficiency in handling, preserving, marketing, and distribution of fish and other
aquatic products," exercises the governmental powers of eminent domain, and the power to levy fees and charges. At the same time,
the Authority exercises "the general corporate powers conferred by laws upon private and government-owned or controlled
corporations."

xxxx

In light of the foregoing, the Authority should be classified as an instrumentality of the national government which is liable to pay
taxes only with respect to the portions of the property, the beneficial use of which were vested in private entities. When local
governments invoke the power to tax on national government instrumentalities, such power is construed strictly against local
governments. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. Any doubt
whether a person, article or activity is taxable is resolved against taxation. This rule applies with greater force when local governments
seek to tax national government instrumentalities.

Thus, the real property tax assessments issued by the City of Iloilo should be upheld only with respect to the portions leased to private
persons.1âwphi1 In case the Authority fails to pay the real property taxes due thereon, said portions cannot be sold at public auction to
satisfy the tax delinquency. x x x.

xxxx

In sum, the Court finds that the Authority is an instrumentality of the national government, hence, it is liable to pay real property taxes
assessed by the City of Iloilo on the IFPC only with respect to those portions which are leased to private entities. Notwithstanding said
tax delinquency on the leased portions of the IFPC, the latter or any part thereof, being a property of public domain, cannot be sold at
public auction. This means that the City of Iloilo has to satisfy the tax delinquency through means other than the sale at public auction
of the IFPC. (Citations omitted.) Another government instrumentality specifically mentioned in the 2006 MIAA case was the
Philippine Ports Authority (PPA). Hence, in Curata v. Philippine Ports Authority, 83 the Court held that the PPA is similarly situated as
MIAA, and ruled in this wise:

This Court’s disquisition in Manila International Airport Authority v. Court of Appeals –– ruling that MIAA is not a government-
owned and/or controlled corporation (GOCC), but an instrumentality of the National Government and thus exempt from local
taxation, and that its real properties are owned by the Republic of the Philippines –– is instructive. x x x. These findings are squarely
applicable to PPA, as it is similarly situated as MIAA. First, PPA is likewise not a GOCC for not having shares of stocks or members.
Second, the docks, piers and buildings it administers are likewise owned by the Republic and, thus, outside the commerce of man.
Third, PPA is a mere trustee of these properties. Hence, like MIAA, PPA is clearly a government instrumentality, an agency of the
government vested with corporate powers to perform efficiently its governmental functions.

Therefore, an undeniable conclusion is that the funds of PPA partake of government funds, and such may not be garnished absent an
allocation by its Board or by statutory grant. If the PPA funds cannot be garnished and its properties, being government properties,
cannot be levied via a writ of execution pursuant to a final judgment, then the trial court likewise cannot grant discretionary execution
pending appeal, as it would run afoul of the established jurisprudence that government properties are exempt from execution. What
cannot be done directly cannot be done indirectly. (Citations omitted.)

In Government Service Insurance System v. City Treasurer and City Assessor of the City of Manila 84 the Court found that the GSIS
was also a government instrumentality and not a GOCC, applying the 2006 MIAA case even though the GSIS was not among those
specifically mentioned by the Court as similarly situated as MIAA. The Court said:

GSIS an instrumentality of the National Government

Apart from the foregoing consideration, the Court’s fairly recent ruling in Manila International Airport Authority v. Court of Appeals,
a case likewise involving real estate tax assessments by a Metro Manila city on the real properties administered by MIAA, argues for
the non-tax liability of GSIS for real estate taxes. x x x.

xxxx

While perhaps not of governing sway in all fours inasmuch as what were involved in Manila International Airport Authority, e.g.,
airfields and runways, are properties of the public dominion and, hence, outside the commerce of man, the rationale underpinning the
disposition in that case is squarely applicable to GSIS, both MIAA and GSIS being similarly situated. First, while created under CA
186 as a non-stock corporation, a status that has remained unchanged even when it operated under PD 1146 and RA 8291, GSIS is not,
in the context of the aforequoted Sec. 193 of the LGC, a GOCC following the teaching of Manila International Airport Authority, for,
like MIAA, GSIS’s capital is not divided into unit shares. Also, GSIS has no members to speak of. And by members, the reference is
to those who, under Sec. 87 of the Corporation Code, make up the non-stock corporation, and not to the compulsory members of the
system who are government employees. Its management is entrusted to a Board of Trustees whose members are appointed by the
President.

Second, the subject properties under GSIS’s name are likewise owned by the Republic. The GSIS is but a mere trustee of the subject
properties which have either been ceded to it by the Government or acquired for the enhancement of the system. This particular
property arrangement is clearly shown by the fact that the disposal or conveyance of said subject properties are either done by or
through the authority of the President of the Philippines. x x x. (Emphasis added, citations omitted.)

All the more do we find that petitioner MCIAA, with its many similarities to the MIAA, should be classified as a government
instrumentality, as its properties are being used for public purposes, and should be exempt from real estate taxes. This is not to
derogate in any way the delegated authority of local government units to collect realty taxes, but to uphold the fundamental doctrines
of uniformity in taxation and equal protection of the laws, by applying all the jurisprudence that have exempted from said taxes similar
authorities, agencies, and instrumentalities, whether covered by the 2006 MIAA ruling or not.

To reiterate, petitioner MCIAA is vested with corporate powers but it is not a stock or non-stock corporation, which is a necessary
condition before an agency or instrumentalityis deemed a government-owned or controlled corporation. Like MIAA, petitioner
MCIAA has capital under its charter but it is not divided into shares of stock. It also has no stockholders or voting shares. Republic
Act No. 6958 provides:

Section 9. Capital.– The [Mactan-Cebu International Airport] Authority shall have an authorized capital stock equal to and consisting
of:

(a) The value of fixed assets (including airport facilities, runways and equipment) and such other properties, movable and
immovable, currently administered by or belonging to the airports as valued on the date of the effectivity of this Act;
(b) The value of such real estate owned and/or administered by the airports; and

(c) Government contribution in such amount as may be deemed an appropriate initial balance.1âwphi1 Such initial amount,
as approved by the President of the Philippines, which shall be more or less equivalent to six (6) months working capital
requirement of the Authority, is hereby authorized to be appropriated in the General Appropriations Act of the year following
its enactment into law. Thereafter, the government contribution to the capital of the Authority shall be provided for in the
General Appropriations Act.

Like in MIAA, the airport lands and buildings of MCIAA are properties of public dominion because they are intended for public use.
As properties of public dominion, they indisputably belong to the State or the Republic of the Philippines, and are outside the
commerce of man. This, unless petitioner leases its real property to a taxable person, the specific property leased becomes subject to
real property tax; in which case, only those portions of petitioner’s properties which are leased to taxable persons like private parties
are subject to real property tax by the City of Lapu-Lapu.

We hereby adopt and apply to petitioner MCIAA the findings and conclusions of the Court in the 2006 MIAA case, and we quote:

To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of the Introductory Provisions of the
Administrative Code because it is not organized as a stock or non-stock corporation. Neither is MIAA a government-owned or
controlled corporation under Section 16, Article XII of the 1987 Constitution because MIAA is not required to meet the test of
economic viability. MIAA is a government instrumentality vested with corporate powers and performing essential public services
pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a government instrumentality, MIAA is not
subject to any kind of tax by local governments under Section 133(o) of the Local Government Code. The exception to the exemption
in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under the Local Government Code. Such exception
applies only if the beneficial use of real property owned by the Republic is given to a taxable entity.

Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public dominion.
Properties of public dominion are owned by the State or the Republic. x x x.

xxxx

The term "ports x x x constructed by the State" includes airports and seaports. The Airport Lands and Buildings of MIAA are intended
for public use, and at the very least intended for public service. Whether intended for public use or public service, the Airport Lands
and Buildings are properties of public dominion. As properties of public dominion, the Airport Lands and Buildings are owned by the
Republic and thus exempt from real estate tax under Section 234(a) of the Local Government Code.

4. Conclusion

Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which governs the legal relation and status of
government units, agencies and offices within the entire government machinery, MIAA is a government instrumentality and not a
government-owned or controlled corporation. Under Section 133(o) of the Local Government Code, MIAA as a government
instrumentality is not a taxable person because it is not subject to "[t]axes, fees or charges of any kind" by local governments. The
only exception is when MIAA leases its real property to a "taxable person" as provided in Section 234(a) of the Local Government
Code, in which case the specific real property leased becomes subject to real estate tax. Thus, only portions of the Airport Lands and
Buildings leased to taxable persons like private parties are subject to real estate tax by the City of Parañaque.

Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use, are properties of public
dominion and thus owned by the State or the Republic of the Philippines. Article 420 specifically mentions "ports x x x constructed by
the State," which includes public airports and seaports, as properties of public dominion and owned by the Republic. As properties of
public dominion owned by the Republic, there is no doubt whatsoever that the Airport Lands and Buildings are expressly exempt from
real estate tax under Section 234(a) of the Local Government Code. This Court has also repeatedly ruled that properties of public
dominion are not subject to execution or foreclosure sale. 85 (Emphases added.) WHEREFORE, we hereby GRANT the petition. We
REVERSE and SET ASIDE the Decision dated October 8, 2007 and the Resolution dated February 12, 2008 of the Court of Appeals
(Cebu City) in CA-G.R. SP No. 01360. Accordingly, we DECLARE:

1. Petitioner's properties that are actually, solely and exclusively used for public purpose, consisting of the airport terminal
building, airfield, runway, taxiway and the lots on which they are situated, EXEMPT from real property tax imposed by the
City of Lapu-Lapu.
2. VOID all the real property tax assessments, including the additional tax for the special education fund and the penalty
interest, as well as the final notices of real property tax delinquencies, issued by the City of Lapu-Lapu on petitioner's
properties, except the assessment covering the portions that petitioner has leased to private parties.

3. NULL and VOID the sale in public auction of 27 of petitioner's properties and the eventual forfeiture and purchase of the
said properties by respondent City of Lapu-Lapu. We likewise declare VOID the corresponding Certificates of Sale of
Delinquent Property issued to respondent City of Lapu-Lapu.

SO ORDERED.

ATTY. CHELOY E. VELICARIA- GARAFIL v. OFFICE OF PRESIDENT, GR No. 203372, 2015-06-16


Facts:
Prior to the conduct of the May 2010 elections, then President Gloria Macapagal-Arroyo (President Macapagal-Arroyo) issued more
than 800 appointments to various positions in several government offices.
The ban on midnight appointments in Section 15, Article VII of the 1987 Constitution reads:
Two months immediately before the next presidential elections and up to the end of his term, a President or Acting President shall not
make appointments, except temporary appointments to executive positions when continued vacancies therein will prejudice public...
service or endanger public safety.
None of the petitioners claim that their appointments fall under this exception.
Issuance of EO 2
On 30 June 2010, President Benigno S. Aquino III (President Aquino) took his oath of office as President of the Republic of the
Philippines. On 30 July 2010, President Aquino issued EO 2 recalling, withdrawing, and revoking appointments issued by President
Macapagal-Arroyo which... violated the constitutional ban on midnight appointments.
The only known exceptions to this prohibition are (1)... temporary appointments in the executive positions when continued vacancies
will prejudice public service or endanger public safety and in the light of the recent Supreme Court decision in the case of De Castro,
et al. vs. JBC and PGMA, G.R. No. 191002, 17 March 2010, (2)... appointments to the Judiciary;
(a) Those made on or after March 11, 2010, including all appointments bearing dates prior to March 11, 2010 where the appointee has
accepted, or taken his oath, or assumed public office on or after March 11, 2010, except temporary appointments in the executive...
positions when continued vacancies will prejudice public service or endanger public safety as may be determined by the appointing
authority.
Effect of the Issuance of EO 2
Atty. Velicaria-Garafil reported for work on 9 August 2010 without any knowledge of her termination. She was made to return the
office-issued laptop and cellphone, and was told that her salary ceased as of 7 August 2010. On 12 August 2010, Atty. Velicaria-
Garafil was informed... that her former secretary at the OSG received a copy of a memorandum on her behalf. The memorandum,
dated 9 August 2010, bore the subject “Implementation of Executive Order No. 2 dated 30 July 2010” and was addressed to the OSG’s
Director of Finance and Management Service.
Atty. Venturanza received via facsimile transmission an undated copy of DOJ Order No. 556. DOJ Order No. 556, issued by DOJ
Secretary Leila M. De Lima (Sec. De Lima), designated Senior Deputy State Prosecutor Richard Anthony D. Fadullon (Pros.
Fadullon) as
Officer-in-Charge of the Office of the City Prosecutor in Quezon City. In a letter to Sec. De Lima dated 15 September 2010, Atty.
Venturanza asked for clarification of his status, duties, and functions since DOJ Order No. 556 did not address the same.
G.R. No. 209138
The OP withheld the salaries of Villanueva and Rosquita on the basis of EO 2. On 3 August 2010, Villanueva and Rosquita sought to
intervene in G.R. No. 192991.[
Atty. Tamondong was removed from the SBMA Board of Directors on 30 July 2010.
Rulings of the CA
Even though the same issues were raised in the different petitions, the CA promulgated separate Decisions for the petitions. The CA
consistently ruled that EO 2 is constitutional
In the cases of Attys. Velicaria-Garafil and Venturanza, the CA stated that the OP should consider the circumstances of their
appointments. In the cases of Villanueva, Rosquita, and Atty. Tamondong, the CA explicitly stated that the revocation of their
appointments... was proper because they were midnight appointees.
Issues:
We resolve the following issues in these petitions: (1) whether petitioners’ appointments violate Section 15, Article VII of the 1987
Constitution, and (2) whether EO 2 is constitutional.
Ruling:
The petitions have no merit. All of petitioners’ appointments are midnight appointments and are void for violation of Section 15,
Article VII of the 1987 Constitution. EO 2 is constitutional.
Midnight Appointments
This ponencia and the dissent both agree that the facts in all these cases show that “none of the petitioners have shown that their
appointment papers (and transmittal letters) have been issued (and released) before the ban.”[41] The dates of receipt... by the MRO,
which in these cases are the only reliable evidence of actual transmittal of the appointment papers by President Macapagal-Arroyo, are
dates clearly falling during the appointment ban. Thus, this ponencia and the dissent both agree that all the appointments in... these
cases are midnight appointments in violation of Section 15, Article VII of the 1987 Constitution.
Constitutionality of EO 2
Based on prevailing jurisprudence, appointment to a government post is a process that takes several steps to complete. Any valid
appointment, including one made under the exception provided in Section 15, Article VII of the 1987 Constitution, must consist of the
President... signing an appointee’s appointment paper to a vacant office, the official transmittal of the appointment paper (preferably
through the MRO), receipt of the appointment paper by the appointee, and acceptance of the appointment by the appointee evidenced
by his or her oath of... office or his or her assumption to office.
In its narrow sense, an appointment is not a process, but is only an “executive act that the President unequivocally exercises pursuant
to his discretion.”
In short, the dissent allows an appointment to take effect during the ban, as long as the President signed and transmitted the
appointment before the... ban, even if the appointee never received the appointment paper before the ban and accepted the
appointment only during the ban.
The dissent’s view will lead to glaring absurdities. Allowing the dissent’s proposal that an appointment is complete merely upon the
signing of an appointment paper and its transmittal, excluding the appointee’s acceptance from the appointment process, will lead to
the absurdity... that, in case of non-acceptance, the position is considered occupied and nobody else may be appointed to it. Moreover,
an incumbent public official, appointed to another public office by the President, will automatically be deemed to occupy the new
public office and to have... automatically resigned from his first office upon transmittal of his appointment paper, even if he refuses to
accept the new appointment. This will result in chaos in public service
Even worse, a President who is unhappy with an incumbent public official can simply appoint him to another public office, effectively
removing him from his first office without due process. The mere transmittal of his appointment paper will remove the public official
from office... without due process and even without cause, in violation of the Constitution.
The dissent’s assertion that appointment should be viewed in its narrow sense (and is not a process) only during the prohibited period
is selective and time-based, and ignores well-settled jurisprudence. For purposes of complying with the time limit imposed... by the
appointment ban, the dissent’s position cuts short the appointment process to the signing of the appointment paper and its transmittal,
excluding the receipt of the appointment paper and acceptance of the appointment by the appointee.
The concurrence of all steps in the appointment process is... admittedly required for appointments outside the appointment ban. There
is no justification whatsoever to remove acceptance as a requirement in the appointment process for appointments just before the start
of the appointment ban, or during the appointment ban in appointments... falling within the exception. The existence of the
appointment ban makes no difference in the power of the President to appoint; it is still the same power to appoint. In fact, considering
the purpose of the appointment ban, the concurrence of all steps in the appointment... process must be strictly applied on appointments
made just before or during the appointment ban.
Thus, an acceptance is still necessary in order for the appointee to validly assume his post and discharge the functions of his new
office, and thus make the appointment effective.
There can never be an instance where the appointment of an incumbent will... automatically result in his resignation from his present
post and his subsequent assumption of his new position; or where the President can simply remove an incumbent from his current
office by appointing him to another one. I stress that acceptance through oath or any positive... act is still indispensable before any
assumption of office may occur.[46]
Appointing Authority
Appointment involves an exercise of discretion of whom to appoint; it is not a ministerial act of issuing appointment papers to the
appointee. In other words, the choice of the appointee is a fundamental component... of the appointing power.
Hence, when Congress clothes the President with the power to appoint an officer, it (Congress) cannot at the same time limit the
choice of the President to only one candidate. Once the power of appointment is conferred on the President, such conferment
necessarily carries the... discretion of whom to appoint.
MRO - Malacañang Records Office
Transmittal
It is not enough that the President signs the appointment paper. There should be evidence that the President intended the appointment
paper to be issued. It could happen that an appointment paper may be dated and signed by the President months before the
appointment ban, but... never left his locked drawer for the entirety of his term. Release of the appointment paper through the MRO is
an unequivocal act that signifies the President’s intent of its issuance.
The MRO’s exercise of its mandate does not prohibit the President or the Executive Secretary from giving the appointment paper
directly to the appointee. However, a problem may arise if an appointment paper is not coursed through the MRO and the appointment
paper is lost or the... appointment is questioned. T
The possession of the original appointment paper is not indispensable to authorize an appointee to assume office. If it were
indispensable, then a loss of the original appointment paper, which could be brought about by negligence, accident, fraud, fire or theft,
corresponds to a... loss of the office.[56] However, in case of loss of the original appointment paper, the appointment must be
evidenced by a certified true copy issued by the proper office, in this case the MRO.
Vacant Position
An appointment can be made only to a vacant office. An appointment cannot be made to an occupied office. The incumbent must first
be legally removed, or his appointment validly terminated, before one could be validly installed to succeed him.[57]
EO 2 remained faithful to the intent of Section 15, Article VII of... the 1987 Constitution: the outgoing President is prevented from
continuing to rule the country indirectly after the end of his term.
Acceptance by the Qualified Appointee
Acceptance is indispensable to complete an appointment. Assuming office and taking the oath amount to acceptance of the
appointment.[60] An oath of office is a qualifying requirement for a public office, a prerequisite to the full investiture of the...
office.[61]
Excluding the act of acceptance from the appointment process leads us to the very evil which we seek to avoid (i.e., antedating of
appointments). Excluding the act of acceptance will only provide more occasions to honor the Constitutional provision in the breach.
The inclusion... of acceptance by the appointee as an integral part of the entire appointment process prevents the abuse of the
Presidential power to appoint. It is relatively easy to antedate appointment papers and make it appear that they were issued prior to the
appointment ban, but it is... more difficult to simulate the entire appointment process up until acceptance by the appointee.
Petitioners have failed to show compliance with all four elements of a valid appointment. They cannot prove with certainty that their
appointment papers were transmitted before the appointment ban took effect. On the other hand, petitioners admit that they took their
oaths of... office during the appointment ban.
Petitioners have failed to raise any valid ground for the Court to declare EO 2, or any part of it, unconstitutional. Consequently, EO 2
remains valid and constitutional.
EO 2- PNOY revokes the midnight ban appointments of PGMA
WHEREFORE, the petitions in G.R. Nos. 203372, 206290, and 212030 are DENIED, and the petition in G.R. No. 209138 is
DISMISSED. The appointments of petitioners Atty. Cheloy E. Velicaria-Garafil (G.R. No. 203372), Atty. Dindo G. Venturanza (G.R.
No.
206290), Irma A. Villanueva, and Francisca B. Rosquita (G.R. No. 209138), and Atty. Eddie U. Tamondong (G.R. No. 212030) are
declared VOID. We DECLARE that Executive Order No. 2 dated 30 July 2010 is VALID and CONSTITUTIONAL.
S
Principles:
The President exercises only one kind of appointing power. There is no need to differentiate the exercise of the President’s appointing
power outside, just before, or during the appointment ban. The Constitution allows the President to exercise the power of...
appointment during the period not covered by the appointment ban, and disallows (subject to an exception) the President from
exercising the power of appointment during the period covered by the appointment ban.
The following elements should always concur in the making of a valid (which should be understood as both complete and effective)
appointment: (1) authority to appoint and evidence of the exercise of the authority; (2) transmittal of the appointment paper and...
evidence of the transmittal; (3) a vacant position at the time of appointment; and (4) receipt of the appointment paper and acceptance
of the appointment by the appointee who possesses all the qualifications and none of the disqualifications. The concurrence of all...
these elements should always apply, regardless of when the appointment is made, whether outside, just before, or during the
appointment ban.

G.R. No. 191787 June 22, 2015

MACARIO CATIPON, JR., Petitioner,


vs.
JEROME JAPSON, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside the December 11, 2009 Decision2 of the Court of Appeals (CA) in CA-G.R.
SP No. 94426 affirming the July 6, 2005 Decision3 of the Civil Service Commission-Cordillera Administrative Region (CSC-CAR) in
CAR-05-034DC, as well as its March 17, 2010 Resolution4 denying petitioner's Motion for Reconsideration.5

Factual Antecedents

The facts are as follows:

Petitioner Macario U. Catipon, Jr. is the holder of a Bachelor's Degree in Commerce from the Baguio Colleges Foundation. When
applying for graduation, he was allowed to join the graduation ceremonies despite a deficiency of 1.5 units in Military Science,
pursuant to a school policy allowing students with deficiencies of not more than 12 units to be included in the list of graduates.
However, a restriction came after, which is, that the deficiency must be cured before the student can be considered a graduate.

In 1985, petitioner found employment with the Social Security System (SSS) in Bangued, Abra. Sometime in September 1993, the
personnel head of the SSS in Bangued, Abra informed petitioner that the Civil Service Commission was conducting a Career Service
Professional Examination (CSPE) in October of the same year. Petitioner filed an application to take the examination, believing that
the CSC still allowed CSPE applicants to substitute the length of their government service for any academic deficiency which they
may have. However, the above-mentioned policy of the CSC had been discontinued since January 1993 pursuant to Civil Service
Commission Memorandum Circular No. 42, Series of 1991 and Office Memo. No. 63, Series of 1992.

Nevertheless, petitioner took the CSPE tests on October 17, 1993 and obtained a rating of 80.52%. Eventually, petitioner was
promoted to Senior Analyst and Officer-in-Charge Branch Head of the SSS at Bangued, Abra. In October 1995, he finally eliminated
his deficiency of 1.5 units in Military Science.

On March 10, 2003, respondent Jerome Japson, a former Senior Member Services Representative of SSS Bangued, filed a letter-
complaint with the Civil Service Commission-CAR Regional Director, alleging that petitioner made deliberate false entries in his
CSPE application, specifically, that he obtained his college degree in 1993 when actually he graduated in 1995 only, after removing
his deficiency of 1.5 units in Military Education. Also, that petitioner was not qualified to take the CSPE examination in 1993 since he
was not yet then a graduate of a four-year college course, contrary to the entry in his application form.

After preliminary investigation, petitioner was charged with Dishonesty, Falsification of Official documents, Grave Misconduct and
Conduct Prejudicial to the Best Interest of the Service by the CSC-CAR.6

Respondent’s Letter-Complaint7 against petitioner was docketed as CSC Disciplinary Administrative Case No. BB-03-006.

In his Answer,8 petitioner essentially pleaded good faith, lack of malice, and honest mistake. He maintained that at the time of his
application to take the CSPE, he was of the honest belief that the policy of the CSC – that any deficiency in the applicant’s educational
requirement may be substituted by his length of service – was still subsisting.
On July 6, 2005, the CSC-CAR, through Director IV Atty. Lorenzo S. Danipog, rendered a Decision 9 containing the following
pronouncements:

Clearly, respondent Catipon is not without any fault under the foregoing circumstances. The only issue now left is with respect to the
particular offense for which Catipon may be held responsible. Respondent Catipon is charged (with) four offenses: Dishonesty,
Falsification of Official Documents, Grave Misconduct and Conduct Prejudicial to the Best Interest of the Service.

The key document allegedly falsified in this case is the Application Form x x x of respondent Catipon for the purpose of taking the CS
Professional Examination scheduled on October 17, 1993. Close and careful perusal of the said application form reveals that most of
the entries filled up by respondent are typewritten. The only entries handwritten by respondent are those corresponding to "Year
Graduated" and "School Where Graduated" which were answered by Macario with "1984" and "BCF" respectively. Another
handwritten entry is with respect to "Degree Finished", the handwritten "BSC" entry, however, was just superimposed on the
typewritten "Commerce".

The fact that majority of the entries or data in the application form is typewritten suggests that the said application form was
consciously drafted and meticulously prepared before its actual submission to the CSC for processing. They are relevant and material
entries or data sought from respondent. It is worth emphasizing however that the pre-drafted application form, considering the
typewritten entries, shows respondent’s confusion on how to make entries thereat. Respondent answered both the IF YES column and
IF NO column corresponding to the question "Are you a college graduate" in Item 8. x x x

xxxx

The manner that Item 8 was filled up by respondent Catipon shows lack of deliberate intent to defraud the government. He manifested
in his application his uncertainty on how to take the fact that he only lacks 1.5 units Military Science to be conferred a graduate status,
vis-à-vis the CSC policy on educational requirement. Though the entry "undergrad" was erased, the CSC employee who processed the
application would have doubted the truthfulness and authenticity of respondent’s entries in Item 8 of the Application Form, and thus
the educational status of Macario. x x x

xxxx

Catipon had tried to show the real state of the matter regarding his educational attainment as can be deduced from the manner he
answered Item No. 8 in the application form. This may be taken as good faith, which will serve to mitigate any liability incurred by
respondent Catipon. The premeditated intent to deceive or willfully distort the facts in this case is not present. The acts of Catipon do
not even show blatant disregard of an established rule or a clear intent to violate the law if at all, there was attempt to reveal the truth
to the examination division processing the application.

xxxx

With [regard] to the eligibility earned by respondent Macario in view of his passing the October 17, 1993 Career Service Professional
Examination, the same needs to be revoked being the fruit of a poisonous tree, so to speak. Paragraph 2 of Sec. 6, Rule II, Omnibus
Rules Implementing Book V of Executive Order No. 292 states:

Provided that when an applica[nt] for examination is found to have x x x intentionally made any false statement of any material fact in
his application, x x x the Commission shall invalidate such examination x x x.

With the foregoing, respondent Macario U. Catipon, Jr., Senior Analyst and OIC Branch Head, Social Security System, Bangued,
Abra, is hereby exonerated of the charges Dishonesty, Falsification of Official Documents and Grave Misconduct. However,
respondent is found guilty of Conduct Prejudicial to the Best Interest of the Service.

Under the Uniform Rules on Administrative Cases in the Civil Service, the imposable penalty on the first offense of Conduct
Prejudicial to the Best Interest of the Service is suspension of six months and one day to one year.

Under Section 53 of the same Rules, good faith is enumerated as one mitigating circumstance. Thus, respondent Macario Catipon, Jr.
is hereby meted a penalty of six months and one day suspension, without pay, which is the minimum period of the penalty attached to
the offense committed. The Career Service Professional eligibility of respondent is also ordered revoked, without prejudice however
to retaking of the said examination. Thus, Catipon, after serving suspension herein provided should not be allowed to go back to his
current position without CS Professional eligibility. Consequently, in case respondent Catipon fails to retake or pass CSPE, after
serving his suspension, he may be demoted to any available position that fits his subprofessional eligibility. 10
Petitioner moved for reconsideration,11 but the CSC-CAR sustained its judgment in a March 23, 2006 Decision,12which contained the
following pronouncement:

Catipon also asserted that in view of his exoneration of Dishonesty, Falsification of Official Documents and Grave Misconduct, there
is no longer any basis to hold respondent guilty of Conduct Prejudicial to the Best Interest of the Service. This contention is without
legal basis. In the case of Philippine Retirement Authority vs. Rupa 363 SCRA 480, the Honorable Supreme Court held as follows:

Under the Civil Service laws and rules, there is no description of what specific acts constitute the grave offense of Conduct Prejudicial
to the Best Interest of the Service.

As alluded to previously in Decision No. CAR-05-034DC, Catipon is not without fault under the circumstances. To completely
exonerate respondent would be inequitable and iniquitous considering the totality of events surrounding this case. Though there was
no deliberate intent to falsify or to make dishonest entry in the Application Form as deduced from the manner that the said form was
accomplished, the fact that there was indeed such dishonest or false entry in the CSPE Application Form is undisputedly established.
In view of such an established fact, the integrity of the Civil Service Examination, particularly the CSPE has been blemished which is
sufficient to constitute Conduct Prejudicial to the Interest of the Service. 13

Ruling of the Court of Appeals

In a Petition for Review docketed with the CA as CA-G.R. SP No. 94426, petitioner prayed for injunctive relief and the reversal of the
above CSC-CAR decision. He argued that the CSC-CAR incorrectly found him guilty of conduct prejudicial to the best interest of the
service when he has been declared innocent of the charges of dishonesty, falsification of official documents, and grave misconduct;
that while the Supreme Court has held that making false entries in public documents may be considered as conduct prejudicial to the
best interest of the service, such act must be accompanied by deliberate intent or a willful desire to defy or disregard established rules
or norms in the service;14 and that with the finding that he merely committed an innocent mistake in filling up the application form for
the CSPE, he may not be found guilty of conduct prejudicial to the best interest of the service.

On December 11, 2009, the CA rendered the assailed Decision denying the petition, decreeing thus:

WHEREFORE, in view of the foregoing, the instant petition is DENIED for lack of merit. The Decision [sic] of the Civil Service
Commission-Cordillera Administrative Region dated July 6, 2005 and March 23, 2006 is [sic] AFFIRMED.

SO ORDERED.15

The CA held that instead of filing a petition for review directly with it, petitioner should have interposed an appeal with the Civil
Service Commission (CSC), pursuant to Sections 5(A)(1),43 and 49 of the CSC Uniform Rules on Administrative Cases;16 that by
filing a petition directly with it, petitioner violated the doctrine of exhaustion of administrative remedies; that petitioner’s case is not
exceptional as would exempt it from the application of the doctrine; that per the ruling in Bayaca v. Judge Ramos, 17 the absence of
deliberate intent or willful desire to defy or disregard established rules or norms in the service does not preclude a finding of guilt for
conduct prejudicial to the best interest of the service; and that petitioner did not act with prudence and care, but instead was negligent,
in the filling up of his CSPE application form and in failing to verify beforehand the requirements for the examination.

Petitioner moved for reconsideration, but the CA stood its ground. Hence, the instant recourse. Issues

Petitioner raises the following issues for resolution:

(A)

THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO REALIZE THAT
GIVEN THE IMMEDIATE EFFECT OF THE SUSPENSION IMPOSED BY THE CIVIL SERVICE COMMISSION-
CORDILLERA ADMINISTRATIVE REGION AGAINST THE PETITIONER, HE WAS JUSTIFIED IN SEEKING JUDICIAL
RECOURSE BEFORE (THE COURT OF APPEALS);

(B)

THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT MISAPPLIEDIN THE ABOVE-
ENTITLED CASE THE RULE ON PRIOR EXHAUSTION OF ADMINISTRATIVE REMEDIES;

(C)
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO CONSIDER THAT
THE PETITIONER ACTED IN GOOD FAITH AND THIS NEGATES GUILT FOR CONDUCT PREJUDICIAL TO THE BEST
INTEREST OF THE SERVICE.18

Petitioner’s Arguments

In his Petition and Reply19 seeking a reversal of the assailed CA dispositions and, consequently, exoneration from the charge of
conduct prejudicial to the best interest of the service, petitioner argues that he was constrained to file the petition for review with the
CA as his decreed six-month suspension was imminent as a consequence of the executory nature of the CSC-CAR decision; that
immediate judicial intervention was necessary to "prevent serious injury and damage" to him, which is why his CA petition included a
prayer for injunctive relief; that the doctrine of exhaustion of administrative remedies should not have been applied strictly in his case,
given the special circumstance that his suspension would mean loss of his only source of income; 20 that he should be completely
exonerated from the charges against him, since conduct prejudicial to the best interest of the service must be accompanied by
deliberate intent or a willful desire to defy or disregard established rules or norms in the service – which is absent in his case; and that
his career service professional eligibility should not be revoked in the interest of justice and in the spirit of the policy which promotes
and preserves civil service eligibility.

Respondent’s Arguments

In his Comment21 seeking denial of the petition, respondent counters that completion of all the academic requirements – and not
merely attendance at graduation rites – confers the necessary degree which qualifies a student to take the CSPE; that petitioner’s claim
that he is a graduate as of 1984 is belied by his Transcript of Records 22 and other pieces of evidence submitted, which reflect the date
of his graduation as October 1995 – or after completion of his 1.5-unit deficiency in Military Science; that petitioner cannot claim to
suffer irreparable injury or damage as a result of the CSC-CAR’s Decision, which is valid and binding; that the revocation of
petitioner’s eligibility is only proper, since he was then not qualified when he took the CSPE; that the CSC-CAR was correct in
finding that petitioner’s act compromised the image and integrity of the civil service, which justified the imposition of a corresponding
penalty; that this Court in the Rupa case made it clear that the act of making false entries in public documents constitutes conduct
prejudicial to the best interest of the service, a grave offense punishable by suspension for six months and one day to one year for the
first offense, and dismissal for the second offense; and that indeed, petitioner violated the doctrines of primary jurisdiction and
exhaustion of administrative remedies when he proceeded directly to the CA, instead of filing an appeal with the CSC.

Our Ruling

The Court denies the Petition.

Our fundamental law, particularly Sections 2 (1) and 3 of Article IX-B, state that –

Section 2. (1) The civil service embraces all branches, subdivisions, instrumentalities and agencies of the Government, including
government-owned or controlled corporations with original charters.

Section 3. The Civil Service Commission, as the central personnel agency of the Government, shall establish a career service and
adopt measures to promote morale, efficiency, integrity, responsiveness, progressiveness, and courtesy in the civil service. It shall
strengthen the merit and rewards system, integrate all human resources development programs for all levels and ranks, and
institutionalize a management climate conducive to public accountability. It shall submit to the President and the Congress an annual
report on its personnel programs.

Thus, "the CSC, as the central personnel agency of the Government, has jurisdiction over disputes involving the removal and
separation of all employees of government branches, subdivisions, instrumentalities and agencies, including government-owned or
controlled corporations with original charters. Simply put, it is the sole arbiter of controversies relating to the civil service." 23

In line with the above provisions of the Constitution and its mandate as the central personnel agency of government and sole arbiter of
controversies relating to the civil service, the CSC adopted Memorandum Circular No. 19, series of 1999 (MC 19), or the Revised
Uniform Rules on Administrative Cases in the Civil Service, which the CA cited as the basis for its pronouncement. Section 4 thereof
provides:

Section 4. Jurisdiction of the Civil Service Commission. — The Civil Service Commission shall hear and decide administrative cases
instituted by, or brought before it, directly or on appeal, including contested appointments, and shall review decisions and actions of
its offices and of the agencies attached to it.
Except as otherwise provided by the Constitution or by law, the Civil Service Commission shall have the final authority to pass upon
the removal, separation and suspension of all officers and employees in the civil service and upon all matters relating to the conduct,
discipline and efficiency of such officers and employees.

As pointed out by the CA, pursuant to Section 5(A)(1) of MC 19, the Civil Service Commission Proper, or Commission Proper, shall
have jurisdiction over decisions of Civil Service Regional Offices brought before it on petition for review. And under Section 43,
"decisions of heads of departments, agencies, provinces, cities, municipalities and other instrumentalities imposing a penalty
exceeding thirty days suspension or fine in an amount exceeding thirty days salary, may be appealed to the Commission Proper within
a period of fifteen days from receipt thereof."24 "Commission Proper" refers to the Civil Service Commission-Central Office.25

It is only the decision of the Commission Proper that may be brought to the CA on petition for review, under Section 50 of MC 19,
which provides thus:

Section 50. Petition for Review with the Court of Appeals. – A party may elevate a decision of the Commission before the Court of
Appeals by way of a petition for review under Rule 43 of the 1997 Revised Rules of Court. 26

Thus, we agree with the CA’s conclusion that in filing his petition for review directly with it from the CSC-CAR Regional Director,
petitioner failed to observe the principle of exhaustion of administrative remedies. As correctly stated by the appellate court, non-
exhaustion of administrative remedies renders petitioner’s CA petition premature and thus dismissible.

The doctrine of exhaustion of administrative remedies requires that "before a party is allowed to seek the intervention of the court, he
or she should have availed himself or herself of all the means of administrative processes afforded him or her. Hence, if resort to a
remedy within the administrative machinery can still be made by giving the administrative officer concerned every opportunity to
decide on a matter that comes within his or her jurisdiction, then such remedy should be exhausted first before the court's judicial
power can be sought.1âwphi1 The premature invocation of the intervention of the court is fatal to one’s cause of action. The doctrine
of exhaustion of administrative remedies is based on practical and legal reasons. The availment of administrative remedy entails lesser
expenses and provides for a speedier disposition of controversies. Furthermore, the courts of justice, for reasons of comity and
convenience, will shy away from a dispute until the system of administrative redress has been completed and complied with, so as to
give the administrative agency concerned every opportunity to correct its error and dispose of the case."27 Indeed, the administrative
agency concerned – in this case the Commission Proper – is in the "best position to correct any previous error committed in its
forum."28

The CA is further justified in refusing to take cognizance of the petition for review, as "[t]he doctrine of primary jurisdiction does not
warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence." 29 When petitioner’s recourse lies in an appeal to the Commission Proper in accordance
with the procedure prescribed in MC 19, the CA may not be faulted for refusing to acknowledge petitioner before it.

We likewise affirm the CA’s pronouncement that petitioner was negligent in filling up his CSPE application form and in failing to
verify beforehand the specific requirements for the CSPE examination. Petitioner’s claim of good faith and absence of deliberate
intent or willful desire to defy or disregard the rules relative to the CSPE is not a defense as to exonerate him from the charge of
conduct prejudicial to the best interest of the service; under our legal system, ignorance of the law excuses no one from compliance
therewith.30 Moreover, petitioner – as mere applicant for acceptance into the professional service through the CSPE – cannot expect to
be served on a silver platter; the obligation to know what is required for the examination falls on him, and not the CSC or his
colleagues in office. As aptly ruled by the appellate court:

In Bacaya31 v. Ramos, the Supreme Court found respondent judge guilty of both negligence and conduct prejudicial to the best interest
of the service when he issued an arrest warrant despite the deletion of the penalty of imprisonment imposed on an accused in a
particular criminal case. Respondent judge in the said case claimed that the issuance of the warrant was a mistake, done in good faith
and that it has been a practice in his office for the Clerk of Court to study motions and that he would simply sign the prepared order.
The Supreme Court rejected his defense and stated that negligence is the failure to observe such care as a reasonably prudent and
careful person would use under ordinary circumstances. An act of the will is necessary for deliberate intent to exist; such is not
necessary in an act of negligence.

Here, petitioner failed to verify the requirements before filing his application to take the CSPE exam. He simply relied on his prior
knowledge of the rules, particularly, that he could substitute his deficiency in Military Science with the length of his government
service. He cannot lay blame on the personnel head of the SSS-Bangued, Abra, who allegedly did not inform him of the pertinent rules
contained in Civil Service Memorandum Circular No. 42, Series of 1991. For, [if] he were truly a reasonably prudent and careful
person, petitioner himself should have verified from the CSC the requirements imposed on prospective examinees. In so doing, he
would certainly have been informed of the new CSC policy disallowing substitution of one’s length of government service for
academic deficiencies. Neither should petitioner have relied on an unnamed Civil Service employee’s advice since it was not shown
that the latter was authorized to give information regarding the examination nor that said employee was competent and capable of
giving correct information. His failure to verify the actual CSPE requirements which a reasonably prudent and careful person would
have done constitutes negligence. Though his failure was not a deliberate act of the will, such is not necessary in an act of negligence
and, as in Bacaya, negligence is not inconsistent with a finding of guilt for conduct prejudicial to the best interest of the service.32

The corresponding penalty for conduct prejudicial to the best interest of the service may be imposed upon an erring public officer as
long as the questioned act or conduct taints the image and integrity of the office; and the act need not be related to or connected with
the public officer’s official functions. Under our civil service laws, there is no concrete description of what specific acts constitute
conduct prejudicial to the best interest of the service, but the following acts or omissions have been treated as such: misappropriation
of public funds; abandonment of office; failure to report back to work without prior notice; failure to safe keep public records and
property; making false entries in public documents; falsification of court orders; a judge’s act of brandishing a gun, and threatening
the complainants during a traffic altercation; a court interpreter’s participation in the execution of a document conveying
complainant’s property which resulted in a quarrel in the latter’s family; selling fake Unified Vehicular Volume Program exemption
cards to his officemates during office hours; a CA employee’s forging of receipts to avoid her private contractual obligations; a
Government Service Insurance System (GSIS) employee’s act of repeatedly changing his IP address, which caused network problems
within his office and allowed him to gain access to the entire GSIS network, thus putting the system in a vulnerable state of
security;33 a public prosecutor’s act of signing a motion to dismiss that was not prepared by him, but by a judge; 34 and a teacher’s act
of directly selling a book to her students in violation of the Code of Ethics for Professional Teachers. 35 In petitioner’s case, his act of
making false entries in his CSPE application undoubtedly constitutes conduct prejudicial to the best interest of the service; the absence
of a willful or deliberate intent to falsify or make dishonest entries in his application is immaterial, for conduct grossly prejudicial to
the best interest of the service "may or may not be characterized by corruption or a willful intent to violate the law or to disregard
established rules."36

Finally, the Court cannot consider petitioner's plea that "in the interest of justice and in the spirit of the policy which promotes and
preserves civil service eligibility," his career service professional eligibility should not be revoked. The act of using a fake or spurious
civil service eligibility for one's benefit not only amounts to violation of the civil service examinations or CSPE; it also results in
prejudice to the government and the public in general. It is a transgression of the law which has no place in the public
service.37 "Assumption of public office is impressed with the paramount public interest that requires the highest standards of ethical
conduct. A person aspiring for public office must observe honesty, candor, and faithful compliance with the law. Nothing less is
expected."38

WHEREFORE, the Petition is DENIED. The December 11, 2009 Decision and March 17, 2010 Resolution of the Court of Appeals in
CA-G.R. SP No. 94426 are AFFIRMED.

SO ORDERED.

Ferrer Vs. Bautista


Facts:
 The City of Quezon passed two ordinances namely.
 The first one was the Socialized Housing Tax of QC allowing the imposition of special assessment (1/2 of the assessed valued
of land in excess of P100k)
 The second one was Ordinance No. SP-2235, S-2013 on Garbage Collection Fees imposing fees depending on the amount of
the land or floor area).
 Jose Ferrer, as a property in Quezon City questioned the validity of the city ordinances.
 According to Ferrer:
 The city has no power to impose the tax.
 The SHT violates the rule on equality because it burdens real property owners with expenses to provide funds for the
housing of informal settlers.
 The SHT is confiscatory or oppressive.
 Also, he assails the validity of the garbage fees imposition because:
 It violates the rule on double taxation.
 It violates the rule on equality because the fees are collected from only domestic households and not from restaurants,
food courts, fast food chains, and other commercial dining places that spew garbage much more than residential property
owners.

Issue: WON the ordinances were valid.

Held:
1st ordinance: Socialized Housing Tax of Quezon City is valid.

Cities have the power to tax


It must be noted that local government units such as cities has the power to tax. The collection for the socialized housing tax is valid.
It must be noted that the collections were made to accrue to the socialized housing programs and projects of the city.

The imposition was for a public purpose (exercise of power of taxation + police power)
In this case, there was both an exercise of the power to tax (primary) and police power (incidental). Removing slum areas in Quezon
City is not only beneficial to the underprivileged and homeless constituents but advantageous to the real property owners as well.
The situation will improve the value of the their property investments, fully enjoying the same in view of an orderly, secure, and safe
community, and will enhance the quality of life of the poor, making them law-abiding constituents and better consumers of business
products.

There is no violation of the rule on equality


Note: There is a substantial distinction between: real property owner and an informal settler. In fact, the Supreme Court said that the
disparity is so obvious. It is inherent in the power to tax that a State is free to select the subjects of taxation. Inequities which result
from a singling out of one particular class for taxation or exemption infringe no constitutional limitation.

All these requisites are complied with: An ordinance based on reasonable classification does not violate the constitutional guaranty of
the equal protection of the law. The requirements for a valid and reasonable classification are: (1) it must rest on substantial
distinctions; (2) it must be germane to the purpose of the law; (3) it must not be limited to existing conditions only; and (4) it must
apply equally to all members of the same class.

The ordinance is not oppressive or confiscatory


The ordinance is also not oppressive since the tax rate being imposed is consistent with the UDHA (Urban Development and Housing
Act of 1992). While the law authorizes LGUs to collect SHT on properties with an assessed value of more than P50,000.00, the
questioned ordinance only covers properties with an assessed value exceeding P100,000.00. As well, the ordinance provides for a tax
credit equivalent to the total amount of the special assessment paid by the property owner beginning in the sixth (6th) year of the
effectivity of the ordinance.

2nd ordinance: The imposition of garbage fee is invalid.

Note: There was no violation of double taxation but there was a violation of the rule on equity.

There is no violation of double taxation: the garbage fees are not taxes
In Progressive Development Corporation v. Quezon City, the Court declared that:
"if the generating of revenue is the primary purpose and regulation is merely incidental, the imposition is a tax; but if regulation is the
primary purpose, the fact that incidentally revenue is also obtained does not make the imposition a tax."

Contention of Ferrer: that the imposition of garbage fee is tantamount to double taxation because garbage collection is a basic and
essential public service that should be paid out from property tax, business tax, transfer tax, amusement tax, community tax certificate,
other taxes, and the IRA of the Quezon City Government. All these are valid taxes. The garbage fees are license fees

Footnote: In order to constitute double taxation in the objectionable or prohibited sense the same property must be taxed twice when it
should be taxed but once; both taxes must be imposed on the same property or subject-matter, for the same purpose, by the same State,
Government, or taxing authority, within the same jurisdiction or taxing district, during the same taxing period, and they must be the
same kind or character of tax.

There is a violation of the rule on equality: no substantial distinction


There is no substantial distinction between an occupant of a lot, on one hand, and an occupant of a unit in a condominium, socialized
housing project or apartment, on the other hand.
Most likely, garbage output produced by these types of occupants is uniform and does not vary to a large degree; thus, a similar
schedule of fee is both just and equitable.

The garbage fees or rates are unjust and inequitable


A resident of a 200 sq. m. unit in a condominium or socialized housing project has to pay twice the amount than a resident of a lot
similar in size; unlike unit occupants, all occupants of a lot with an area of 200 sq. m. and less have to pay a fixed rate of Php100.00;
and the same amount of garbage fee is imposed regardless of whether the resident is from a condominium or from a socialized housing
project.

The classifications are not germane to the purpose of the ordinance


The declared purpose is: "promoting shared responsibility with the residents to attack their common mindless attitude in over-
consuming the present resources and in generating waste."

Instead of simplistically categorizing the payee into land or floor occupant of a lot or unit of a condominium, socialized housing
project or apartment, respondent City Council should have considered factors that could truly measure the amount of wastes generated
and the appropriate fee for its collection. Factors include, among others, household age and size, accessibility to waste collection,
population density of the barangay or district, capacity to pay, and actual occupancy of the property.

SC:
→ Validity of Socialized Housing Tax of Quezon City is upheld.
→ Ordinance No. SP-2235, S-2013, which collects an annual garbage fee on all domestic households in Quezon City, is
unconstitutional and illegal.

G.R. No. 210759 June 23, 2015

CHAIRPERSON SIEGFRED B. MISON, in his capacity as Chairperson 1 of Bureau of Immigration and


Deportation,2 Petitioner,
vs.
HON. PAULINO Q. GALLEGOS, in his capacity as Presiding Judge of the Regional Trial Court-Manila, Branch 47 and JA
HOON KU, Respondents.

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

G.R. No. 211403

CHAIRPERSON SIEGFRED B. MISON, as the Chairperson of Bureau of Immigration and Deportation,Petitioner,


vs.
HON. PAULINO Q. GALLEGOS, as Presiding Judge of the Regional Trial Court-Manila, Branch 47 and
JAHOONKU, Respondents.

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

G.R. No. 211590

CHAIRPERSON SIEGFRED B. MISON, in his capacity as the Chairperson of Bureau of Immigration and
Deportation, Petitioner,
vs.
JA HOON KU, Respondent.

DECISION

PEREZ, J.:

The privilege of the writ of amparo is .an extraordinary remedy adopted to address the special concerns of extra-legal killings and
enforced disappearances. Accordingly, the remedy ought to be resorted to and granted judiciously, lest the ideal sought by the Amparo
Rule be diluted and undermined by the indiscriminate filing of Amparo petitions for purposes less than the desire to secure amparo
reliefs and protection and/or on the basis of unsubstantiated allegations. 3

For the consideration of the Court are three consolidated petitions assailing the Orders dated 28 January 2014, 4 29 January 2014,5 and
18 February 2014,6 as well as the Resolution dated 14 March 2014,7 all issued by respondent Presiding Judge Paulino Gallegos (Judge
Gallegos) of the Regional Trial Court-Manila, Branch 47 in SP. PROC. No. 14-131282.

The records show that on 23 December 2013, the International Criminal Police Organization (Interpol) of Seoul, Republic of Korea
sent a Notice8 to Interpol Manila requesting assistance in the location and deportation of respondent Ja Hoon Ku (Ku) for arbitrarily
spending money allotted as reserve fund of Phildip Korea Co., Ltd. Consequently, the Embassy of the Republic of Korea wrote a
Letter-Request9 to petitioner, Hon. Siegfred Mison, Chairperson of the Bureau of Immigration (BI), for the immediate arrest and
deportatio n of Ku to Korea for being an undesirable alien.

Meanwhile, on 1 January 2014, Ku’s visa expired. 10


On 3 January 2014, Special Prosecutor Maria Antonette Bucasas-Mangrobang charged Ku for being a risk to public interest pursuant
to Sec. 69, Act No. 2711.11This finding was approved by the BI Board of Commissioners which, on 16 January 2014, issued a
Summary Deportation Order.12

On the same day, 16 January 2014, BI officers, with the assistance of the Manila Police District-Warrant and Subpoena Section,
arrested Ku. Upon arrival at the BI detention center, Ku was detained. 13

On 17 January 2014, the Republic of Korea voided Ku’s passport. 14

Also on 17 January 2014, Ku filed a Petition for the Issuance of a Writ of Amparo with Interim Remedies, docketed as SP PROC. No.
14- 131282.15 On 22 January 2014, he also filed a Supplemental Petition for the Issuance of a Writ of Amparo. 16

Finding said supple mental petition to be sufficient in form and substance, Judge Gallegos, in an Order dated 22 January 2014, issued
a Writ of Amparo.17 On 24 January 2014, Ku filed a Motion for the Issuance of a Temporary Protection Order (TPO).18 Judge
Gallegos then set the hearing on the TPO on 27 January 2014 at 8:30 a.m., 19 while he set the hearing on the petition for the issuance of
a writ of amparo on 29 January 2014 at 8:30 a.m. 20

In the afternoon of 27 January 2014, petitioner filed his Return of the Writ. 21 He was then notified that a hearing on the TPO was held
earlier in the morning and that the same was already submitted for resolution.22

Petitioner then filed an Opposition to the Motion for Issuance of TPO on 28 January 2014. 23

On 28 January 2014, Judge Gallegos issued the first assailed Order granting the motion for issuance of TPO, entrusting Ku’s custody
to the Philippine National Red Cross and/or its Chairman CEO Richard Gordon, and directing the Philippine National Police-Police
Security and Protection Group (PNP-PSPG) to protect Ku and his immediate family.24 On 29 January 2014, Judge Gallegos issued the
second assailed Order directing the transfer of custody and protection of Ku to the PNP-PSPG.25 Petitioner challenged these orders
before the Court via a Petition for Certiorari26 docketed as G.R. No. 210759.

On 4 February 2014, the Court issued a Resolution in G.R. No. 210759 issuing a Temporary Restraining Order (TRO) enjoining the
enforcement of the Orders dated 28 and 29 January 2014 and directing the BI to retain custody of Ku, as well as requiring Ku to
comment on the petition.27 In issuing this resolution, the Court intimated the possibility of misuse by Ku of the writ of amparo given
that he was validly arrested and placed under the jurisdiction and custody of the BI; thus the case cannot be categorized as one of
extralegal killing or enforced disappearance.28

Owing to the Court’s Resolution dated 4 February 2014, in the hearing set on 11 February 2014 before the trial court, petitioner
verbally moved for the dismissal of the amparo petition. 29On 18 February 2014, however, Judge Gallegos issued the third assailed
order denying the motion to dismiss for lack of merit. 30Thus, petitioner appealed the matter to the Court via the Petition for Certiorari
and Prohibition31 docketed as G.R. No. 211403.

On 25 February 2014, Ku filed an appeal memorandum on his deportation order addressed to the Office of the President (OP).32

On 14 March 2014, Judge Gallegos issued the assailed Resolution granting the privilege of the writ of amparo, to wit:

WHEREFORE, the privilege of the Writ of Amparo is hereby GRANTED. [Ku] is ordered immediately released from [petitioner’s]
custody without prejudice to the institution of the proper remedy to extradition. Moreover, the [petitioner] and/or agents are ordered to
cease and desist from further violating the right to liberty of [Ku] and the members of his family by filing cases to legitimize his
detention.33

Meanwhile, in the Resolution dated 18 March 2014 in G.R. No. 211403, the Court issued a TRO enjoining the RTC from enforcing
the Order dated 18 February 2014 and from further proceeding with the case. 34

On 19 March 2014, the OP granted Ku provisional liberty only until 31 August 2014 or until his appeal was resolved, whichever came
first.35Ku then moved for the release of his passport before the RTC, which petitioner opposed and to which he filed a counter-motion
for the RTC to release said passport to the BI, given that such was one of the conditions for the OP’s grant of provisional liberty to
Ku.36 In the Order dated 26 March 2014, however, Judge Gallegos merely noted petitioner’s motion for being moot, considering that
he already released Ku’s passport on 20 March 2014, upon the personal request of Ku. 37

Due to the complexities involved, petitioner filed the Petition for Review on Certiorari in G.R. No. 211590, essentially assailing the
Resolution dated 14 March 2014.
Condensing the various issues raised in these petitions,38 we come to the central question of whether or not the privilege of the writ of
amparo was properly granted in the case at bar.

We rule in the negative.

Section 1 of the Rule on the Writ of Amparo (Amparo Rule) 39 provides:

SECTION 1. Petition. – The petition for a writ of amparo is a remedy available to any person whose right to life, liberty and security
is violated or threatened with violation by an unlawful act or omission of a public official or employee, or of a private individual or
entity.

The writ shall cover extralegal killings and enforced disappearances or threats thereof.

On 25 September 2007, the Court promulgated the Amparo Rule "in light of the prevalence of extralegal killings and enforced
disappearances." It was an exercise for the first time of the Court’s expanded power to promulgate rules to protect our people’ s
constitutional rights, which made its maiden appearance in the 1987 Constitution in response to the Filipino experience of the martial
law regime. As the Amparo Rule was intended to address the intractable problem of "extralegal killings" and "enforced
disappearances," its coverage, in its present form, is confined to these two instances or to threats thereof. "Extralegal killings" are
‘killings committed without due process of law, i.e., without legal safeguards or judicial proceedings." On the other hand, "enforced
disappearances" are "attended by the following characteristics: an arrest, detention or abduction of a person by a government official
or organized groups or private individuals acting with the direct or indirect acquiescence of the government; the refusal of the State to
disclose the fate or where about s of the person concerned or a refusal to acknowledge the deprivation of liberty which places such
persons outside the protection of law." 40

This pronouncement on the coverage of the writ was further cemented in the latter case of Lozada, Jr. v. Macapagal-Arroyo41 where
this Court explicitly declared that as it stands, the writ of amparo is confined only to cases of extrajudicial killings and enforced
disappearances, or to threats thereof. As to what constitutes "enforced disappearance," the Court in Navia v. Pardico 42 enumerated the
elements constituting "enforced disappearances" as the term is statutorily defined in Section 3(g) of Republic Act (R.A.) No.
9851,43 to wit:

(a) that there be an arrest, detention, abduction or any form of deprivation of liberty;

(b) that it be carried out by, or with the authorization, support or acquiescence of, the State or a political organization;

(c) that it be followed by the State or political organization’s refusal to acknowledge or give information on the fate or
whereabouts of the person subject of the amparo petition; and

(d) that the intention for such refusal is to remove the subject person from the protection of the law for a prolonged period of
time.44

As clarified in Navia, with the enactment of R.A. No. 9851, the Amparo Rule is now a procedural law anchored, not only on the
constitutional rights to life, liberty and security, but on a concrete statutory definition as well of what an ‘enforced or involuntary
disappearance’ is. Therefore, A.M. No. 07-9-12-SC’s reference to enforced disappearances should be construed to mean the enforced
or involuntary disappearance of persons contemplated in Section 3(g) of R.A. No. 9851. Meaning, in probing enforced disappearance
cases, courts should read A.M. No. 07-9-12-SC in relation to R.A. No. 9851.45

Guided by the parameters of R.A. No. 9851, we can readily discern that Ku’s circumstance does not come under the statutory
definition of an enforced or involuntary disappearance. Indeed, Ku was arrested by agents of the BI, but there was no refusal on the
part of the BI to acknowledge such arrest nor was there any refusal to give information on the whereabouts of Ku. Neither can it be
said that the BI had any intention to remove Ku from the protection of the law for a prolonged time.

Although Ku claims that he was arbitrarily arrested and detained by agents of the BI, that he was not read his rights under the
constitution and was not informed of the reason for hi s arrest, nor provided a copy of any document leading to his arrest and
detention,46 the arresting officers are all consistent in testifying that, upon Ku’s arrest, they introduced themselves as agents of the BI,
presented to Ku the Warrant of Deportation, and informed him of his constitutional rights as well as the expiration of his visa.47

More importantly, there was no attempt on the part of the BI to conceal Ku or his whereabouts. Within the Bureau, Ku’s arrest and the
fact that he was in their custody was not obscured as, in fact, these were well-documented as evidenced by the Return of Warrant of
Deportation dated 20 January 201448 and the After-Mission Report dated 17 January 2014.49
More importantly, in the Return of the Writ, petitioner readily disclosed to the trial court that Ku was in the custody of the BI pursuant
to a Warrant of Deportation and a Summary Deportation Order. 50

These documents and pleading show that there was never any intention on the part of the BI to re move Ku from the protection of the
law for a prolonged time. Besides, when Ku was arrested at 9:30 p.m. on 16 January 2014, and received at the BI Detention Center at
11:30 p.m. also on 16 January 2014,51 the following day or on 17 January 2014, Ku’s counsel was immediately able to file his Entry of
Appearance with Motion for Reconsideration before the BI, 52 thereby showing that Ku’s legal rights were amply guarded and that he
was never removed from the protection of the law.

Section 5 of the Amparo Rule enumerates what an amparo petition should contain, among which is the right to life, liberty and
security of the aggrieved party violated or threatened with violation by an unlawful act or omission of the respondent, and how such
threat or violation is committed with the attendant circumstances detailed in supporting affidavits, to wit:

SEC. 5. Contents of Petition. – The petition shall be signed and verified and shall allege the following:

(a) The personal circumstances of the petitioner;

(b) The name and personal circumstances of the respondent responsible for the threat, act or omission, or, if the name is
unknown or uncertain, the respondent may be described by an assumed appellation;

(c) The right to life, liberty and security of the aggrieved party violated or threatened with violation by an unlawful act or
omission of the respondent, and how such threat or violation is committed with the attendant circumstances detailed in
supporting affidavits;

(d) The investigation conducted, if any, specifying the names, personal circumstances, and addresses of the investigating
authority or individuals, as well as the manner and conduct of the investigation, together with any report;

(e) The actions and recourses taken by the petitioner to determine the fate or whereabouts of the aggrieved party and the
identity of the person responsible for the threat, act or omission; and

(f) The relief prayed for.

The petition may include a general prayer for other just and equitable reliefs.

Ku claims that he fears for his life and feels the serious danger of being detained for a long period of time without any cause, and that
he fears that the BI will fabricate criminal cases against him to hold him under detention. 53

According to Ku, what he seeks to obtain in filing an amparo petition is the protection it will give to his person against the actions of
some government officials who will likely take advantage of their positions and use the power of the government at their command.
Ku adds that the longer he stays in confinement the more he is exposed to life-threatening situations and the further the violation of his
guaranteed rights.54

The allegations of Ku, though, are specious. It is to be noted that the Amparo Rule requires the parties to establish their claims by
substantial evidence.55 Other than making unfounded claims, however, Ku was not able to present evidence that he was exposed to
"life-threatening situations" while confined at the BI Detention Center. On the contrary, the records show that he is afforded visitorial
rights and that he has access to his counsel.

Moreover, his primary fear, which prompted him to file the amparo petition, was that the BI would trump up charges against him so as
to justify his detention. The fact remains, however, that even before his arrest, deportation charges against him were already duly filed
and ruled upon by the BI.

As such, it can readily be discerned that the RTC’s grant of the privilege of the writ of amparo was improper in this case as Ku and his
whereabouts were never concealed, and as the alleged threats to his life, liberty and security were unfounded and unsubstantiated. It is
to be emphasized that the fundamental function of the writ of amparo is to cause the disclosure of details concerning the extrajudicial
killing or the enforced disappearance of an aggrieved party. As Ku and his whereabouts were never hidden, there was no need for the
issuance of the privilege of the writ of amparo in the case at bar.

It is to be additionally observed that Ku is guilty of forum shopping. Being the subject of a Warrant of Deportation and a Summary
Deportation Order, Ku’s proper recourse is with the BI and, thereafter, with the DOJ and the OP. 56
Ku knows this and, in fact, he filed a Motion for Reconsideration before the BI and an Appeal before the OP. When Ku, however,
injudiciously filed a Petition and a Supplemental Petition for the Issuance of a Writ of Amparo, he committed forum shopping by
seeking a remedy which he had already solicited from another tribunal.

In Kiani v. BID,57 where petitioner therein file d before the trial court a petition for a writ of habeas corpus seeking to have the
detention of her husband declared as illegal and to order the latter’s release, and where her husband filed before the Bureau of
Immigration and Deportation (BID) an omnibus motion seeking to question the summary deportation order issued against him, the
Court held that petitioner indulged in forum shopping.

The Court clarified that under Section 8, Chapter 3, Title I, Book III of Executive Order No. 292, the power to deport aliens is vested
in the President of the Philippines, subject to the requirements of due process. The Immigration Commissioner is vested with authority
to deport aliens under Section 37 of the Philippine Immigration Act of 1940, as amended. Thus, a party aggrieved by a Deportation
Order issued by the BOC is proscribed from assailing said Order in the RTC even via a petition for a writ of habeas corpus .
Conformably with ruling of the Court in Domingo v. Scheer , such party may file a motion for the reconsideration thereof before the
BOC.58

Citing Balite v. Court of Appeals,59 the Court held that there is forum shopping when a party seeks to obtain remedies in an action in
one court, which had already been solicited, and in other courts and other proceedings in other tribunals. While a party may avail of
the remedies prescribed by the Rules of Court, such party is not free to resort to them simultaneously or at his/her pleasure or caprice.
A party should not be allowed to present simultaneous remedies in two different forums, for it degrades and wreaks havoc to the rule
on orderly procedure. A party must follow the sequence and hierarchical order in availing of such remedies and not resort to shortcuts
in procedure or playing fast and loose with the said rules. Forum shopping, an act of malpractice, is considered as trifling with the
courts and abusing their processes. It is improper conduct and degrades the administration of justice.

On a final note, the Court observes that Judge Gallegos knowingly disregarded the Court’s directives as regards this case. The records
show that the Court’s Resolution dated 4 February 2014, wherein we issued a TRO enjoining the enforcement of the Orders dated 28
and 29 January 2014 and intimated the impropriety of the amparo petition, was received by the RTC on 5 February 2014. 60 This
should have alerted Judge Gallegos to proceed with caution and restraint in granting the privilege of the writ of amparo. And yet,
despite having knowledge of the Court’s pronouncements, Judge Gallegos proceeded to grant the said privilege.

Also, the records show that the Court’s Resolution dated 18 March 2014, wherein we issued a TRO enjoining the enforcement of the
Order dated 18 February 2014 and enjoining the RTC from further proceeding with the case, was received by the RTC on 20 March
2014 at 9:00 a.m.61

Although by then, Judge Gallegos already issued the Resolution dated 14 March 2014 which granted the privilege of the writ of
amparo, his receipt of the Court’s Resolution dated 18 Marc h 2014 should have forewarned him against releasing Ku’s passport. That
he did so demonstrates his resistance and unwillingness to follow the Court’s edicts.

It is well to note that a resolution of the Supreme Court should not be construed as a mere request, and should be complied with
promptly and completely.1âwphi1 Such failure to comply accordingly betrays not only a recalcitrant streak in character, but al so
disrespect for the Court’s lawful order and directive. 62

Judge Gallegos should know that judges must respect the orders and decisions of higher tribunals, especially the Supreme Court from
which all other courts take their bearings. A resolution of the Supreme Court is not to be construed as a mere request nor should it be
complied with partially, inadequately or selectively. 63

In the Judiciary, moral integrity is more than a cardinal virtue, it is a necessity. The exacting standards of conduct demanded from
judges are designed to promote public confidence in the integrity and impartiality of the judiciary. When the judge himself becomes
the transgressor of the law which he is sworn to apply, he places his office in disrepute, encourages disrespect for the law and impairs
public confidence in the integrity of the judiciary itself. 64

WHEREFORE, premises considered, the Court hereby resolves to:

a) GRANT the present petitions, and REVERSE and SET ASIDE the Resolution dated 14 March 2014 of the Regional Trial
Court which granted the privilege of the Writ of Amparo;

b) DENY the privilege of the Writ of Amparo sought via the Petition for the Issuance of a Writ of Amparo and the
Supplemental Petition for the Issuance of Writ of Amparo in SP. PROC.No. 14131282 before the Regional Trial of Manila,
Branch 47; and
c) DIRECT the Office of the Court Administrator to file the appropriate administrative charge/s against Judge Paulino Q.
Gallegos in accordance with the tenor of this Decision, and to forthwith submit to the Court its report and recommendation
thereon.

LEONARDO-DE CASTRO, J.:


Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by Manila Electric Company
(MERALCO), seeking the reversal of the Decision[1] dated May 13, 2004 and Resolution[2] dated November 18, 2004 of the Court of
Appeals in CA-G.R. SP No. 67027. The appellate court affirmed the Decision[3] dated May 3, 2001 of the Central Board of
Assessment Appeals (CBAA) in CBAA Case No. L-20-98, which, in turn, affirmed with modification the Decision[4] dated June 17,
1998[5] of the Local Board of Assessment Appeals (LBAA) of Lucena City, Quezon Province, as regards Tax Declaration Nos. 019-
6500 and 019-7394, ruling that MERALCO is liable for real property tax on its transformers, electric posts (or poles), transmission
lines, insulators, and electric meters, beginning 1992.

MERALCO is a private corporation organized and existing under Philippine laws to operate as a public utility engaged in electric
distribution. MERALCO has been successively granted franchises to operate in Lucena City beginning 1922 until present time,
particularly, by: (1) Resolution No. 36[6] dated May 15, 1922 of the Municipal Council of Lucena; (2) Resolution No. 108 [7] dated July
1, 1957 of the Municipal Council of Lucena; (3) Resolution No. 2679 [8] dated June 13, 1972 of the Municipal Board of Lucena
City;[9] (4) Certificate of Franchise[10] dated October 28, 1993 issued by the National Electrification Commission; and (5) Republic Act
No. 9209[11]approved on June 9, 2003 by Congress.[12]

On February 20, 1989, MERALCO received from the City Assessor of Lucena a copy of Tax Declaration No. 019-6500[13] covering
the following electric facilities, classified as capital investment, of the company: (a) transformer and electric post; (b) transmission
line; (c) insulator; and (d) electric meter, located in Quezon Ave. Ext., Brgy. Gulang-Gulang, Lucena City. Under Tax Declaration No.
019-6500, these electric facilities had a market value of P81,811,000.00 and an assessed value of P65,448,800.00, and were subjected
to real property tax as of 1985.

MERALCO appealed Tax Declaration No. 019-6500 before the LBAA of Lucena City, which was docketed as LBAA-89-2.
MERALCO claimed that its capital investment consisted only of its substation facilities, the true and correct value of which was only
P9,454,400.00; and that MERALCO was exempted from payment of real property tax on said substation facilities.

The LBAA rendered a Decision[14] in LBAA-89-2 on July 5, 1989, finding that under its franchise, MERALCO was required to pay
the City Government of Lucena a tax equal to 5% of its gross earnings, and "[s]aid tax shall be due and payable quarterly and shall be
in lieu of any and all taxes of any kind, nature, or description levied, established, or collected x x x, on its poles, wires, insulators,
transformers and structures, installations, conductors, and accessories, x x x, from which taxes the grantee (MERALCO) is hereby
expressly exempted."[15]As regards the issue of whether or not the poles, wires, insulators, transformers, and electric meters of
MERALCO were real properties, the LBAA cited the 1964 case of Board of Assessment Appeals v. Manila Electric
Company[16] (1964 MERALCO case) in which the Court held that: (1) the steel towers fell within the term "poles" expressly exempted
from taxes under the franchise of MERALCO; and (2) the steel towers were personal properties under the provisions of the Civil Code
and, hence, not subject to real property tax. The LBAA lastly ordered that Tax Declaration No. 019-6500 would remain and the poles,
wires, insulators, transformers, and electric meters of MERALCO would be continuously assessed, but the City Assessor would stamp
on the said Tax Declaration the word "exempt." The LBAA decreed in the end:

WHEREFORE, from the evidence adduced by the parties, the Board overrules the claim of the [City Assessor of Lucena] and sustain
the claim of [MERALCO].

Further, the Appellant (Meralco) is hereby ordered to render an accounting to the City Treasurer of Lucena and to pay the City
Government of Lucena the amount corresponding to the Five (5%) per centum of the gross earnings in compliance with paragraph 13
both Resolutions 108 and 2679, respectively, retroactive from November 9, 1957 to date, if said tax has not yet been paid.[17]

The City Assessor of Lucena filed an appeal with the CBAA, which was docketed as CBAA Case No. 248. In its Decision[18] dated
April 10, 1991, the CBAA affirmed the assailed LBAA judgment. Apparently, the City Assessor of Lucena no longer appealed said
CBAA Decision and it became final and executory.

Six years later, on October 29, 1997, MERALCO received a letter19 dated October 16, 1997 from the City Treasurer of Lucena,
which stated that the company was being assessed real property tax delinquency on its machineries beginning 1990, in the total
amount of P17,925,117.34, computed as follows:
TAX ASSESSED COVERED
TAX DUE PENALTY TOTAL
DEC. # VALUE PERIOD
019-6500 P65,448,800.00 1990-94 P3,272,440.00 P2,356,156.80 P5,628,596.80
019-7394 78,538,560.00 1995 785,385.60 534,062.21 1,319,447.81
1996 785,385.60 345,569.66 1,130,955.26
lst-3rd/1997 589,039.20 117,807.84 706,847.04
4th 1997 196,346.40 (19,634.64) 176,711.76
BASIC---- P8,962,558.67
SEF---- 8,962,558.67
TOTAL TAX DELINQUENCY---- P17,925,117.34

The City Treasurer of Lucena requested that MERALCO settle the payable amount soon to avoid accumulation of penalties. Attached
to the letter were the following documents: (a) Notice of Assessment[20] dated October 20, 1997 issued by the City Assessor of
Lucena, pertaining to Tax Declaration No. 019-7394, which increased the market value and assessed value of the machinery; (b)
Property Record Form;[21] and (c) Tax Declaration No. 019-6500.[22]

MERALCO appealed Tax Declaration Nos. 019-6500 and 019-7394 before the LBAA of Lucena City on December 23, 1997 and
posted a surety bond[23] dated December 10, 1997 to guarantee payment of its real property tax delinquency. MERALCO asked the
LBAA to cancel and nullify the Notice of Assessment dated October 20, 1997 and declare the properties covered by Tax Declaration
Nos. 019-6500 and 019-7394 exempt from real property tax.

In its Decision dated June 17, 1998 regarding Tax Declaration Nos. 019-6500 and 019-7394, the LBAA declared that Sections 234
and 534(f) of the Local Government Code repealed the provisions in the franchise of MERALCO and Presidential Decree No.
551[24]pertaining to the exemption of MERALCO from payment of real property tax on its poles, wires, insulators, transformers, and
meters. The LBAA refused to apply as res judicata its earlier judgment in LBAA-89-2, as affirmed by the CBAA, because it involved
collection of taxes from 1985 to 1989, while the present case concerned the collection of taxes from 1989 to 1997; and LBAA is only
an administrative body, not a court or quasi-judicial body. The LBAA though instructed that the computation of the real property tax
for the machineries should be based on the prevailing 1991 Schedule of Market Values, less the depreciation cost allowed by law. The
LBAA ultimately disposed:

WHEREFORE, in view of the foregoing, it is hereby ordered that:

1) MERALCO's appeal be dismissed for lack of merit;

2) MERALCO be required to pay the realty tax on the questioned properties, because they are not exempt by law, same to be based on
the 1991 level of assessment, less depreciation cost allowed by law. [25]

MERALCO went before the CBAA on appeal, which was docketed as CBAA Case No. L-20-98. The CBAA, in its Decision dated
May 3, 2001, agreed with the LBAA that MERALCO could no longer claim exemption from real property tax on its machineries with
the enactment of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, thus:

Indeed, the Central Board of Assessment Appeals has had the opportunity of ruling in [MERALCO's] favor in connection with this
very same issue. The matter was settled on April 10, 1991 where this Authority ruled that "wires, insulators, transformers and electric
meters which are mounted on poles and can be separated from the poles and moved from place to place without breaking the material
or causing [the] deterioration of the object, are deemed movable or personal property". The same position of MERALCO would have
been tenable and that decision may have stood firm prior to the enactment of R.A. 7160 but not anymore in this jurisdiction. The Code
provides and now sets a more stringent yet broadened concept of machinery, x x x:

xxxx

The pivotal point where the difference lie between the former and the current case is that by the very wordings of [Section 199(0)], the
ground being anchored upon by MERALCO concerning the properties in question being personal in nature does not hold anymore for
the sole reason that these come now within the purview and new concept of Machineries. The new law has treated these in an
unequivocal manner as machineries in the sense that they are instruments, mechanical contrivances or apparatus though not attached
permanently to the real properties of [MERALCO] are actually, directly and exclusively used to meet their business of distributing
electricity.

xxxx
Clearly, [Section 234 of the Local Government Code] lists down the instances of exemption in real property taxation and very
apparent is the fact that the enumeration is exclusive in character in view of the wordings in the last paragraph. Applying the maxim
"Expressio Unius est Exclusio Alterius", we can say that "Where the statute enumerates those who can avail of the exemption, it is
construed as excluding all others not mentioned therein". Therefore, the above-named company [had] lost its previous exemptions
under its franchise because of non-inclusion in the enumeration in Section 234. Furthermore, all tax exemptions being enjoyed by all
persons, whether natural or juridical, including all government-owned or controlled corporations are expressly withdrawn, upon
effectivity of R.A. 7160.

In the given facts, it has been manifested that the Municipal Board of Lucena passed Resolution No. 108 on July 1, 1957 extending the
franchise of MERALCO to operate in Lucena city an electric light system for thirty-five years, which should have expired on
November 9, 1992 and under Resolution No. 2679 passed on June 13, 1972 by the City Council of Lucena City awarding
[MERALCO] a franchise to operate for twenty years an electric light, heat and power system in Lucena City, also to expire in the year
1992. Under those franchises, they were only bound to pay franchise taxes and nothing more.

Now, granting arguendo that there is no express revocation of the exemption under the franchise of [MERALCO] since,
unquestionably [MERALCO] is a recipient of another franchise granted this time by the National Electrification Commission as
evidenced by a certificate issued on October 28, 1993, such conferment does not automatically include and/or award exemption from
taxes, nor does it impliedly give the franchisee the right to continue the privileges like exemption granted under its previous franchise.
It is just a plain and simple franchise. In countless times, the Supreme Court has ruled that exemption must be clear in the language of
the law granting such exemption for it is strictly construed and favored against the person invoking it. In addition, a franchise though
in the form of a contract is also a privilege that must yield to the sublime yet inherent powers of the state, one of these is the power of
taxation.

Looking into the law creating the National Electrification Administration (Commission), P.D. 269 as amended by P.D. 1645, nowhere
in those laws can we find such authority to bestow upon the grantee any tax exemption of whatever nature except those of
cooperatives. This we believe is basically in consonance with the provisions of the Local Government Code more particularly Section
234.

Furthermore, Section 534(f) of R.A. 7160 which is taken in relation to Section 234 thereof states that "All general and special laws,
acts, city charters, decrees, executive orders, proclamations and administrative regulations or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly". Anent this unambiguous mandate,
P.D. 551 is mandatorily repealed due to its contradictory and irreconcilable provisions with R.A. 7160. [26]

Yet, the CBAA modified the ruling of the LBAA by excluding from the real property tax deficiency assessment the years 1990 to
1991, considering that:

In the years 1990 and 1991, the exemption granted to MERALCO under its franchise which incidentally expired upon the effectivity
of the Local Government Code of 1991 was very much in effect and the decision rendered by the Central Board of Assessment
Appeals (CBAA) classifying its poles, wires, insulators, transformers and electric meters as personal property was still controlling as
the law of the case. So, from 1990 to 1991, it would be inappropriate and illegal to make the necessary assessment on those properties,
much more to impose any penalty for nonpayment of such.

But, assessments made beginning 1992 until 1997 by the City Government of Lucena is legal, both procedurally and substantially.
When R.A. 7160, which incorporated amended provisions of the Real Property Tax Code, took effect on January 1, 1992, as already
discussed, the nature of the aforecited questioned properties considered formerly as personal metamorphosed to machineries and the
exemption being invoked by [MERALCO] was automatically withdrawn pursuant to the letter and spirit of the law. x x x.[27]

Resultantly, the decretal portion of said CBAA Decision reads:

WHEREFORE, in view of the foregoing, the Decision appealed from is hereby modified. The City Assessor of Lucena City is hereby
directed to make a new assessment on the subject properties to retroact from the year 1992 and the City Treasurer to collect the tax
liabilities in accordance with the provisions of the cited Section 222 of the Local Government Code. [28]

The CBAA denied the Motion for Reconsideration of MERALCO in a Resolution[29] dated August 16, 2001.

Disgruntled, MERALCO sought recourse from the Court of Appeals by filing a Petition for Review under Rule 43 of the Rules of
Court, which was docketed as CA-G.R. SP No. 67027.

The Court of Appeals rendered a Decision on May 13, 2004 rejecting all arguments proffered by MERALCO. The appellate court
found no deficiency in the Notice of Assessment issued by the City Assessor of Lucena:
It was not disputed that [MERALCO] failed to provide the [City Assessor and City Treasurer of Lucena] with a sworn statement
declaring the true value of each of the subject transformer and electric post, transmission line, insulator and electric meter which
should have been made the basis of the fair and current market value of the aforesaid property and which would enable the assessor to
identify the same for assessment purposes. [MERALCO] merely claims that the assessment made by the [City Assessor and City
Treasurer of Lucena] was incorrect but did not even mention in their pleading the true and correct assessment of the said properties.
Absent any sworn statement given by [MERALCO], [the City Assessor and City Treasurer of Lucena] were constrained to make an
assessment based on the materials within [their reach].[30]

The Court of Appeals further ruled that there was no more basis for the real property tax exemption of MERALCO under the Local
Government Code and that the withdrawal of said exemption did not violate the non-impairment clause of the Constitution, thus:

Although it could not be denied that [MERALCO] was previously granted a Certificate of Franchise by the National Electrification
Commission on October 28, 1993 x x x, such conferment does not automatically include an exemption from the payment of realty tax,
nor does it impliedly give the franchisee the right to continue the privileges granted under its previous franchise considering that Sec.
534(f) of the Local Government Code of 1991 expressly repealed those provisions which are inconsistent with the Code.

At the outset, the Supreme Court has held that "Section 193 of the LGC prescribes the general rule, viz., tax exemptions or incentives
granted to or presently enjoyed by natural or juridical persons are withdrawn upon the effectivity of the LGC except with respect to
those entities expressly enumerated. In the same vein, We must hold that the express withdrawal upon effectivity of the LGC of all
exemptions except only as provided therein, can no longer be invoked by MERALCO to disclaim liability for the local tax." (City
Government of San Pablo, Laguna vs. Reyes, 305 SCRA 353, 362-363)

In fine, [MERALCO's] invocation of the non-impairment clause of the Constitution is accordingly unavailing. The LGC was enacted
in pursuance of the constitutional policy to ensure autonomy to local governments and to enable them to attain fullest development as
self-reliant communities. The power to tax is primarily vested in Congress. However, in our jurisdiction, it may be exercised by local
legislative bodies, no longer merely by virtue of a valid delegation as before, but pursuant to [a] direct authority conferred by Section
5, Article X of the Constitution. The important legal effect of Section 5 is that henceforth, in interpreting statutory provisions on
municipal fiscal powers, doubts will be resolved in favor of the municipal corporations. (Ibid. pp. 363-365)[31]

MERALCO similarly failed to persuade the Court of Appeals that the transformers, transmission lines, insulators, and electric meters
mounted on the electric posts of MERALCO were not real properties. The appellate court invoked the definition of "machinery" under
Section 199(o) of the Local Government Code and then wrote that:

We firmly believe and so hold that the wires, insulators, transformers and electric meters mounted on the poles of [MERALCO] may
nevertheless be considered as improvements on the land, enhancing its utility and rendering it useful in distributing electricity. The
said properties are actually, directly and exclusively used to meet the needs of [MERALCO] in the distribution of electricity.

In addition, "improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty.
It is a familiar personalty phenomenon to see things classed as real property for purposes of taxation which on general principle might
be considered personal property." (Caltex (Phil) Inc. vs. Central Board of Assessment Appeals, 114 SCRA 296, 301-302)[32]

Lastly, the Court of Appeals agreed with the CBAA that the new assessment of the transformers, electric posts, transmission lines,
insulators, and electric meters of MERALCO shall retroact to 1992.

Hence, the Court of Appeals adjudged:

WHEREFORE, premises considered, the assailed Decision [dated] May 3, 2001 and Resolution dated August 16, 2001 are hereby
AFFIRMED in toto and the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED for lack of merit. [33]

In a Resolution dated November 18, 2004, the Court of Appeals denied the Motion for Reconsideration of MERALCO.

MERALCO is presently before the Court via the instant Petition for Review on Certiorari grounded on the following lone assignment
of error:

THE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN AFFIRMING IN TOTO THE DECISION OF
THE CENTRAL BOARD OF ASSESSMENT APPEALS WHICH HELD THAT THE SUBJECT PROPERTIES ARE REAL
PROPERTIES SUBJECT TO REAL PROPERTY TAX; AND THAT ASSESSMENT ON THE SUBJECT PROPERTIES SHOULD
BE MADE TO TAKE EFFECT RETROACTIVELY FROM 1992 UNTIL 1997, WITH PENALTIES; THE SAME BEING UNJUST,
WHIMSICAL AND NOT IN ACCORD WITH THE LOCAL GOVERNMENT CODE. [34]

MERALCO argues that its transformers, electric posts, transmission lines, insulators, and electric meters are not subject to real
property tax, given that: (1) the definition of "machinery" under Section 199(o) of the Local Government Code, on which real property
tax is imposed, must still be within the contemplation of real or immovable property under Article 415 of the Civil Code because it is
axiomatic that a statute should be construed to harmonize with other laws on the same subject matter as to form a complete, coherent,
and intelligible system; (2) the Decision dated April 10, 1991 of the CBAA in CBAA Case No. 248, which affirmed the Decision
dated July 5, 1989 of the LBAA in LBAA-89-2, ruling that the transformers, electric posts, transmission lines, insulators, and electric
meters of MERALCO are movable or personal properties, is conclusive and binding; and (3) the electric poles are not exclusively
used to meet the needs of MERALCO alone since these are also being utilized by other entities such as cable and telephone
companies.

MERALCO further asserts that even if it is assumed for the sake of argument that the transformers, electric posts, transmission lines,
insulators, and electric meters are real properties, the assessment of said properties by the City Assessor in 1997 is a patent nullity.
The collection letter dated October 16, 1997 of the City Treasurer of Lucena, Notice of Assessment dated October 20, 1997 of the City
Assessor of Lucena, the Property Record Form dated October 20, 1997, and Tax Declaration No. 019-6500 simply state a lump sum
market value for all the transformers, electric posts, transmission lines, insulators, and electric meters covered and did not provide an
inventory/list showing the actual number of said properties, or a schedule of values presenting the fair market value of each property
or type of property, which would have enabled MERALCO to verify the correctness and reasonableness of the valuation of its
properties. MERALCO was not furnished at all with a copy of Tax Declaration No. 019-7394, and while it received a copy of Tax
Declaration No. 019-6500, said tax declaration did not contain the requisite information regarding the date of operation of MERALCO
and the original cost, depreciation, and market value for each property covered. For the foregoing reasons, the assessment of the
properties of MERALCO in 1997 was arbitrary, whimsical, and without factual basis - in patent violation of the right to due process of
MERALCO. MERALCO additionally explains that it cannot be expected to make a declaration of its transformers, electric posts,
transmission lines, insulators, and electric meters, because all the while, it was of the impression that the said properties were personal
properties by virtue of the Decision dated July 5, 1989 of the LBAA in LBAA-89-2 and the Decision dated April 10, 1991 of the
CBAA in CBAA Case No. 248.

Granting that the assessment of its transformers, electric posts, transmission lines, insulators, and electric meters by the City Assessor
of Lucena in 1997 is valid, MERALCO alternatively contends that: (1) under Sections 221[35] and 222[36] of the Local Government
Code, the assessment should take effect only on January 1, 1998 and not retroact to 1992; (2) MERALCO should not be held liable for
penalties and interests since its nonpayment of real property tax on its properties was in good faith; and (3) if interest may be legally
imposed on MERALCO, it should only begin to run on the date it received the Notice of Assessment on October 29, 1997 and not all
the way back to 1992.

At the end of its Petition, MERALCO prays:

WHEREFORE, it is respectfully prayed of this Honorable Court that the appealed Decision dated May 13, 2004 of the Court of
Appeals, together with its Resolution dated November 18, 2004 be reversed and set aside, and judgment be rendered x x x nullifying
and cancel[l]ing the Notice of Assessment, dated October 20, 1997, issued by respondent City Assessor, and the collection letter dated
October 16, 1997 of respondent City Treasurer.

Petitioner also prays for such other relief as may be deemed just and equitable in the premises.[37]

The City Assessor and City Treasurer of Lucena counter that: (1) MERALCO was obliged to pay the real property tax due, instead of
posting a surety bond, while its appeal was pending, because Section 231 of the Local Government Code provides that the appeal of
an assessment shall not suspend the collection of the real property taxes; (2) the cases cited by MERALCO can no longer be applied to
the case at bar since they had been decided when Presidential Decree No. 464, otherwise known as the Real Property Tax Code, was
still in effect; (3) under the now prevailing Local Government Code, which expressly repealed the Real Property Tax Code, the
transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO fall within the new definition of
"machineries," deemed as real properties subject to real property tax; and (4) the Notice of Assessment dated October 20, 1997
covering the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO only retroacts to 1992,
which is less than 10 years prior to the date of initial assessment, so it is in compliance with Section 222 of the Local Government
Code, and since MERALCO has yet to pay the real property taxes due on said assessment, then it is just right and appropriate that it
also be held liable to pay for penalties and interests from 1992 to present time. Ultimately, the City Assessor and City Treasurer of
Lucena seek judgment denying the instant Petition and ordering MERALCO to pay the real property taxes due.

The Petition is partly meritorious.


The Court finds that the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO are no longer
exempted from real property tax and may qualify as "machinery" subject to real property tax under the Local Government Code.
Nevertheless, the Court declares null and void the appraisal and assessment of said properties of MERALCO by the City Assessor in
1997 for failure to comply with the requirements of the Local Government Code and, thus, violating the right of MERALCO to due
process.

By posting a surety bond before


filing its appeal of the assessment with
the LBAA, MERALCO substantially complied
with the requirement of payment under
protest in Section 252 of the Local
Government Code.

Section 252 of the Local Government Code mandates that "[n]o protest shall be entertained unless the taxpayer first pays the tax." It is
settled that the requirement of "payment under protest" is a condition sine qua non before an appeal may be entertained.[38] Section
231 of the same Code also dictates that "[a]ppeal on assessments of real property x x x shall, in no case, suspend the collection of the
corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent
adjustment depending upon the final outcome of the appeal." Clearly, under the Local Government Code, even when the assessment
of the real property is appealed, the real property tax due on the basis thereof should be paid to and/or collected by the local
government unit concerned.

In the case at bar, the City Treasurer of Lucena, in his letter dated October 16, 1997, sought to collect from MERALCO the amount of
P17,925,l 17.34 as real property taxes on its machineries, plus penalties, for the period of 1990 to 1997, based on Tax Declaration
Nos. 019-6500 and 019-7394 issued by the City Assessor of Lucena. MERALCO appealed Tax Declaration Nos. 019-6500 and 019-
7394 with the LBAA, but instead of paying the real property taxes and penalties due, it posted a surety bond in the amount of PI
7,925,117.34.

By posting the surety bond, MERALCO may be considered to have substantially complied with Section 252 of the Local Government
Code for the said bond already guarantees the payment to the Office of the City Treasurer of Lucena of the total amount of real
property taxes and penalties due on Tax Declaration Nos. 019-6500 and 019-7394. This is not the first time that the Court allowed a
surety bond as an alternative to cash payment of the real property tax before protest/appeal as required by Section 252 of the Local
Government Code. In Camp John Hay Development Corporation v. Central Board of Assessment Appeals [39] the Court affirmed the
ruling of the CBAA and the Court of Tax Appeals en bane applying the "payment under protest" requirement in Section 252 of the
Local Government Code and remanding the case to the LBAA for "further proceedings subject to a full and up-to-date
payment, either in cash or surety, of realty tax on the subject properties x x x."

Accordingly, the LBAA herein correctly took cognizance of and gave due course to the appeal of Tax Declaration Nos. 019-6500 and
019-7394 filed by MERALCO.

Beginning January 1, 1992,


MERALCO can no longer claim
exemption from real property tax of
its transformers, electric posts,
transmission lines, insulators, and
electric meters based on its
franchise.

MERALCO relies heavily on the Decision dated April 10, 1991 of the CBAA in CBAA Case No. 248, which affirmed the Decision
dated July 5, 1989 of the LBAA in LBAA-89-2. Said decisions of the CBAA and the LBAA, in turn, cited Board of Assessment
Appeals v. Manila Electric Co.,[40] which was decided by the Court way back in 1964 (1964 MERALCO case). The decisions in
CBAA Case No. 248 and the 1964 MERALCO case recognizing the exemption from real property tax of the transformers, electric
posts, transmission lines, insulators, and electric meters of MERALCO are no longer applicable because of subsequent developments
that changed the factual and legal milieu for MERALCO in the present case.

In the 1964 MERALCO case, the City Assessor of Quezon City considered the steel towers of MERALCO as real property and
required MERALCO to pay real property taxes for the said steel towers for the years 1952 to 1956. MERALCO was operating
pursuant to the franchise granted under Ordinance No. 44 dated March 24, 1903 of the Municipal Board of Manila, which it acquired
from the original grantee, Charles M. Swift. Under its franchise, MERALCO was expressly granted the following tax exemption
privilege:
Par 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles, wires, transformers,
and insulators), machinery and personal property as other persons are or may be hereafter required by law to pay. x x x Said
percentage shall be due and payable at the times stated in paragraph nineteen of Part One hereof, x x x and shall be in lieu of all taxes
and assessments of whatsoever nature, and by whatsoever authority upon the privileges, earnings, income, franchise, and poles, wires,
transformers, and insulators of the grantee from which taxes and assessments the grantee is hereby expressly exempted, x x x.[41]

Given the express exemption from taxes and assessments of the "poles, wires, transformers, and insulators" of MERALCO in the
aforequoted paragraph, the sole issue in the 1964 MERALCO case was whether or not the steel towers of MERALCO qualified as
"poles" which were exempted from real property tax. The Court ruled in the affirmative, ratiocinating that:

Along the streets, in the City of Manila, may be seen cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co. which
are made of two steel bars joined together by an interlacing metal rod. They are called "poles" notwithstanding the fact that they are
not made of wood. It must be noted from paragraph 9, above quoted, that the concept of the "poles" for which exemption is granted, is
not determined by their place or location, nor by the character of the electric current it carries, nor the material or form of which it is
made, but the use to which they are dedicated. In accordance with the definitions, a pole is not restricted to a long cylindrical piece of
wood or metal, but includes "upright standards to the top of which something is affixed or by which something is supported." As
heretofore described, respondent's steel supports consist of a framework of four steel bars or strips which are bound by steel cross-
arms atop of which are cross-arms supporting five high voltage transmission wires (See Annex A) and their sole function is to support
or carry such wires.

The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty. Several courts of last
resort in the United States have called these steel supports "steel towers", and they have denominated these supports or towers, as
electric poles. In their decisions the words "towers" and "poles" were used interchangeably, and it is well understood in that
jurisdiction that a transmission tower or pole means the same thing.

xxxx

It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the petitioner's franchise, should not be given
a restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles as contemplated
thereon, should be understood and taken as a part of the electric power system of the respondent Meralco, for the conveyance of
electric current from the source thereof to its consumers, x x x. [42]

Similarly, it was clear that under the 20-year franchise granted to MERALCO by the Municipal Board of Lucena City through
Resolution No. 2679 dated June 13, 1972, the transformers, electric posts, transmission lines, insulators, and electric meters of
MERALCO were exempt from real property tax. Paragraph 13 of Resolution No. 2679 is quoted in full below:

13. The grantee shall be liable to pay the same taxes upon its real estate, building, machinery, and personal property (not including
poles, wires, transformers, and insulators) as other persons are now or may hereafter be required by law to pay. In consideration of
the franchise and rights hereby granted, the grantee shall pay into the City Treasury of Lucena a tax equal to FIVE (5%) PER
CENTUM of the gross earnings received from electric current sold or supplied under this franchise. Said tax shall be due and
payable quarterly and shall be in lieu of any and all taxes of any kind, nature or description levied, established, or collected by
any authority whatsoever, municipal, provincial, or national, now or in the future, on its poles, wires, insulators, switches,
transformers and structures, installations, conductors, and accessories, placed in and over and under all the private and/or public
property, including public streets and highways, provincial roads, bridges, and public squares, and on its franchise rights, privileges,
receipts, revenues and profits, from which taxes the grantee is hereby expressly exempted. (Emphases supplied.)

In CBAA Case No. 248 (and LBAA-89-2), the City Assessor assessed the transformers, electric posts, transmission lines, insulators,
and electric meters of MERALCO located in Lucena City beginning 1985 under Tax Declaration No. 019-6500. The CBAA in its
Decision dated April 10, 1991 in CBAA Case No. 248 sustained the exemption of the said properties of MERALCO from real
property tax on the basis of paragraph 13 of Resolution No. 2679 and the 1964 MERALCO case.

Just when the franchise of MERALCO in Lucena City was about to expire, the Local Government Code took effect on January 1,
1992, Sections 193 and 234 of which provide:

Section 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemptions or incentives granted
to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except
local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and nonprofit hospitals and educational institutions,
are hereby withdrawn upon the effectivity of this Code.
Section 234. Exemptions from Real Property Tax. - The following are exempted from payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof
has been granted, for consideration or otherwise, to a taxable person;

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or religious cemeteries and all
lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or
controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and

(e) Machinery and equipment used for pollution control and environmental protection.

Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all
persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the
effectivity of this Code.

The Local Government Code, in addition, contains a general repealing clause under Section 534(f) which states that "[a]ll general and
special laws, acts, city charters, decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which
are inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly."

Taking into account the above-mentioned provisions, the evident intent of the Local Government Code is to withdraw/repeal all
exemptions from local taxes, unless otherwise provided by the Code. The limited and restrictive nature of the tax exemption privileges
under the Local Government Code is consistent with the State policy to ensure autonomy of local governments and the objective of
the Local Government Code to grant genuine and meaningful autonomy to enable local government units to attain their fullest
development as self-reliant communities and make them effective partners in the attainment of national goals. The obvious intention
of the law is to broaden the tax base of local government units to assure them of substantial sources of revenue.[43]

Section 234 of the Local Government Code particularly identifies the exemptions from payment of real property tax, based on the
ownership, character, and use of the property, viz.:

(a) Ownership Exemptions. Exemptions from real property taxes on the basis of ownership are real properties owned by: (i) the
Republic, (ii) a province, (iii) a city, (iv) a municipality, (v) a barangay, and (vi) registered cooperatives.

(b) Character Exemptions. Exempted from real property taxes on the basis of their character are: (i) charitable institutions, (ii) houses
and temples of prayer like churches, parsonages or convents appurtenant thereto, mosques, and (iii) nonprofit or religious cemeteries.

(c) Usage exemptions. Exempted from real property taxes on the basis of the actual, direct and exclusive use to which they are devoted
are: (i) all lands, buildings and improvements which are actually directly and exclusively used for religious, charitable or educational
purposes; (ii) all machineries and equipment actually, directly and exclusively used by local water districts or by government-owned
or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; and
(iii) all machinery and equipment used for pollution control and environmental protection.

To help provide a healthy environment in the midst of the modernization of the country, all machinery and equipment for pollution
control and environmental protection may not be taxed by local governments.

2. Other Exemptions Withdrawn. All other exemptions previously granted to natural or juridical persons including government-owned
or controlled corporations are withdrawn upon the effectivity of the Code. [44]

The last paragraph of Section 234 had unequivocally withdrawn, upon the effectivity of the Local Government Code, exemptions from
payment of real property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except
as provided in the same section.

MERALCO, a private corporation engaged in electric distribution, and its transformers, electric posts, transmission lines, insulators,
and electric meters used commercially do not qualify under any of the ownership, character, and usage exemptions enumerated in
Section 234 of the Local Government Code. It is a basic precept of statutory construction that the express mention of one person,
thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius.[45] Not being
among the recognized exemptions from real property tax in Section 234 of the Local Government Code, then the exemption of the
transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO from real property tax granted under its
franchise was among the exemptions withdrawn upon the effectivity of the Local Government Code on January 1, 1998.

It is worthy to note that the subsequent franchises for operation granted to MERALCO, i.e., under the Certificate of Franchise dated
October 28, 1993 issued by the National Electrification Commission and Republic Act No. 9209 enacted on June 9, 2003 by Congress,
are completely silent on the matter of exemption from real property tax of MERALCO or any of its properties.

It is settled that tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption must point to a specific provision
of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption
exists is resolved against the taxpayer.[46] MERALCO has failed to present herein any express grant of exemption from real property
tax of its transformers, electric posts, transmission lines, insulators, and electric meters that is valid and binding even under the Local
Government Code.

The transformers, electric posts,


transmission lines, insulators, and electric
meters of MERALCO may qualify as
"machinery" under the Local Government
Code subject to real property tax.

Through the years, the relevant laws have consistently considered "machinery" as real property subject to real property tax. It is the
definition of "machinery" that has been changing and expanding, as the following table will show:

Real Property
Incidence of Real Property Tax Definition of Machinery[47]
Tax Law
Section 3. Property exempt from tax. - The
exemptions shall be as follows:
The Assessment Law
Section 2. Incidence of real property tax. - Except in x x x x
(Commonwealth Act No.
chartered cities, there shall be levied, assessed, and (f) Machinery, which term shall embrace machines,
470)
collected, an annual ad valorem tax on real property, mechanical contrivances, instruments, appliances,
including land, buildings, machinery, and other and apparatus attached to the real estate, used for
Effectivity: January 1,
improvements not hereinafter specifically exempted. industrial agricultural or manufacturing purposes,
1940
during the first five years of the operation of the
machinery.
Section 3. Definition of Terms. -
When used in this Code -

Section 38. Incidence of Real Property Tax. - There xxxx


shall be levied, assessed and collected in all
Real Property
provinces, cities and municipalities an annual ad (m) Machinery - shall embrace machines, mechanical
Tax Code
valorem tax on real property, such as land, buildings, contrivances, instruments, appliances and apparatus
machinery and other improvements affixed or attached to the real estate. It includes the physical
Effectivity: June 1, 1974
attached to real property not hereinafter specifically facilities available for production, as well as the
exempted. installations and appurtenant service facilities,
together with all other equipment designed for or
essential to its manufacturing, industrial or
agricultural purposes.
Section 3. Definition of Terms.
When used in this Code -
xxxx

(m) Machinery - shall embrace machines, equipment,


Section 38. Incidence of Real Property Tax. - There
Real Property mechanical contrivances, instruments, appliances and
shall be levied, assessed and collected in all
Tax Code, as amended by apparatus attached to the real estate. It shall include
provinces, cities and municipalities an annual ad
Presidential the physical facilities available for production, as
valorem tax on real property, such as land, buildings,
Decree No. 1383 well as the installations and appurtenant service
machinery and other improvements affixed or
facilities, together with all those not permanently
attached to real property not hereinafter specifically
Effectivity: May 25, 1978 attached to the real estate but are actually, directly
exempted.
and essentially used to meet the needs of the
particular industry, business, or works, which by their
very nature and purpose are designed for, or essential
to manufacturing, commercial, mining, industrial or
agricultural purposes.
Local Section 232. Power to Levy Real Property Tax. — A Section 199. Definitions. - When used in this Title:
Government province or city or a municipality within the xxxx
Code Metropolitan Manila Area may levy an annual ad
valorem tax on real property such as land, (o) "Machinery" embraces machines, equipment,
Effectivity: building, machinery, and other improvement not mechanical contrivances, instruments, appliances or
January 1, 1992 hereinafter specifically exempted. apparatus which may or may not be attached,
permanently or temporarily, to the real property.
It includes the physical facilities for production, the
installations and appurtenant service facilities, those
which are mobile, self-powered or self- propelled,
and those not permanently attached to the real
property which are actually, directly, and exclusively
used to meet the needs of the particular industry,
business or activity and which by their very nature
and purpose are designed for, or necessary to its
manufacturing, mining, logging, commercial,
industrial or agricultural purposes[.]

MERALCO is a public utility engaged in electric distribution, and its transformers, electric posts, transmission lines, insulators, and
electric meters constitute the physical facilities through which MERALCO delivers electricity to its consumers. Each may be
considered as one or more of the following: a
"machine,"[48] "equipment,"[49] "contrivance,"[50] "instrument,"[51] "appliance,"[52] "apparatus,"[53]or "installation."[54]

The Court highlights that under Section 199(o) of the Local Government Code, machinery, to be deemed real property subject to real
property tax, need no longer be annexed to the land or building as these "may or may not be attached, permanently or temporarily to
the real property," and in fact, such machinery may even be "mobile." [55] The same provision though requires that to be machinery
subject to real property tax, the physical facilities for production, installations, and appurtenant service facilities, those which are
mobile, self-powered or self-propelled, or not permanently attached to the real property (a) must be actually, directly, and exclusively
used to meet the needs of the particular industry, business, or activity; and (2) by their very nature and purpose, are designed for, or
necessary for manufacturing, mining, logging, commercial, industrial, or agricultural purposes. Thus, Article 290(o) of the Rules and
Regulations Implementing the Local Government Code of 1991 recognizes the following exemption:

Machinery which are of general purpose use including but not limited to office equipment, typewriters, telephone equipment,
breakable or easily damaged containers (glass or cartons), microcomputers, facsimile machines, telex machines, cash dispensers,
furnitures and fixtures, freezers, refrigerators, display cases or racks, fruit juice or beverage automatic dispensing machines which are
not directly and exclusively used to meet the needs of a particular industry, business or activity shall not be considered within the
definition of machinery under this Rule. (Emphasis supplied.)

The 1964 MERALCO case was decided when The Assessment Law was still in effect and Section 3(f) of said law still required that
the machinery be attached to the real property. Moreover, as the Court pointed out earlier, the ruling in the 1964 MERALCO case -
that the electric poles (including the steel towers) of MERALCO are not subject to real property tax - was primarily based on the
express exemption granted to MERALCO under its previous franchise. The reference in said case to the Civil Code definition of real
property was only an alternative argument:

Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles, the
logical question posited is whether they constitute real properties, so that they can be subject to a real property tax. The tax law
does not provide for a definition of real property; but Article 415 of the Civil Code does, by stating the following are immovable
property:

(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;

xxxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the
material or deterioration of the object;

xxxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be
carried in a building or on a piece of land, and which tends directly to meet the needs of the said industry or works;

xxxx
The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do not constitute
buildings or constructions adhered to the soil. They are not constructions analogous to buildings nor adhering to the soil. As per
description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when
unscrewed could easily be dismantled and moved from place to place. They can not be included under paragraph 3, as they are not
attached to an immovable in a fixed manner, and they can be separated without breaking the material or causing deterioration upon the
object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means
of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same. These steel towers or supports do
not also fall under paragraph 5, for they are not machineries or receptacles, instruments or implements, and even if they were, they are
not intended for industry or works on the land. Petitioner is not engaged in an industry or works on the land in which the steel supports
or towers are constructed.[56] (Emphases supplied.)

The aforequoted conclusions of the Court in the 1964 MERALCO case do not hold true anymore under the Local Government Code.

While the Local Government Code still does not provide for a specific definition of "real property," Sections 199(o) and 232 of the
said Code, respectively, gives an extensive definition of what constitutes "machinery" and unequivocally subjects such machinery to
real property tax. The Court reiterates that the machinery subject to real property tax under the Local Government Code "may or may
not be attached, permanently or temporarily to the real property;" and the physical facilities for production, installations, and
appurtenant service facilities, those which are mobile, self-powered or self-propelled, or are not permanently attached must (a) be
actually, directly, and exclusively used to meet the needs of the particular industry, business, or activity; and (2) by their very nature
and purpose, be designed for, or necessary for manufacturing, mining, logging, commercial, industrial, or agricultural purposes.

Article 415, paragraph (1) of the Civil Code declares as immovables or real properties "[l]and, buildings, roads and constructions of all
kinds adhered to the soil." The land, buildings, and roads are immovables by nature "which cannot be moved from place to place,"
whereas the constructions adhered to the soil are immovables by incorporation "which are essentially movables, but are attached to an
immovable in such manner as to be an integral part thereof." [57] Article 415, paragraph (3) of the Civil Code, referring to "[ejverything
attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or
deterioration of the object," are likewise immovables by incorporation. In contrast, the Local Government Code considers as real
property machinery which "may or may not be attached, permanently or temporarily to the real property," and even those which are
"mobile."

Article 415, paragraph (5) of the Civil Code considers as immovables or real properties "[machinery, receptacles, instruments or
implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said industry or works." The Civil Code, however, does not define "machinery."

The properties under Article 415, paragraph (5) of the Civil Code are immovables by destination, or "those which are essentially
movables, but by the purpose for which they have been placed in an immovable, partake of the nature of the latter because of the
added utility derived therefrom." [58] These properties, including machinery, become immobilized if the following requisites concur: (a)
they are placed in the tenement by the owner of such tenement; (b) they are destined for use in the industry or work in the tenement;
and (c) they tend to directly meet the needs of said industry or works. [59] The first two requisites are not found anywhere in the Local
Government Code.

MERALCO insists on harmonizing the aforementioned provisions of the Civil Code and the Local Government Code. The Court
disagrees, however, for this would necessarily mean imposing additional requirements for classifying machinery as real property for
real property tax purposes not provided for, or even in direct conflict with, the provisions of the Local Government Code.

As between the Civil Code, a general law governing property and property relations, and the Local Government Code, a special law
granting local government units the power to impose real property tax, then the latter shall prevail. As the Court pronounced
in Disomangcop v. The Secretary of the Department of Public Works and Highways Simeon A. Datumanong[60]:

It is a finely-imbedded principle in statutory construction that a special provision or law prevails over a general one. Lex specialis
derogant generali. As this Court expressed in the case of Leveriza v. Intermediate Appellate Court, "another basic principle of
statutory construction mandates that general legislation must give way to special legislation on the same subject, and generally be so
interpreted as to embrace only cases in which the special provisions are not applicable, that specific statute prevails over a general
statute and that where two statutes are of equal theoretical application to a particular case, the one designed therefor specially should
prevail." (Citations omitted.)

The Court also very clearly explicated in Vinzons-Chato v. Fortune Tobacco Corporation[61] that:
A general law and a special law on the same subject are statutes in pah materia and should, accordingly, be read together and
harmonized, if possible, with a view to giving effect to both. The rule is that where there are two acts, one of which is special and
particular and the other general which, if standing alone, would include the same matter and thus conflict with the special act, the
special law must prevail since it evinces the legislative intent more clearly than that of a general statute and must not be taken as
intended to affect the more particular and specific provisions of the earlier act, unless it is absolutely necessary so to construe it in
order to give its words any meaning at all.

The circumstance that the special law is passed before or after the general act does not change the principle. Where the special law is
later, it will be regarded as an exception to, or a qualification of, the prior general act; and where the general act is later, the special
statute will be construed as remaining an exception to its terms, unless repealed expressly or by necessary implication. (Citations
omitted.)

Furthermore, in Caltex (Philippines), Inc. v. Central Board of Assessment Appeals,[62] the Court acknowledged that "[i]t is a familiar
phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal
property[.]"

Therefore, for determining whether machinery is real property subject to real property tax, the definition and requirements under the
Local Government Code are controlling.

MERALCO maintains that its electric posts are not machinery subject to real property tax because said posts are not being exclusively
used by MERALCO; these are also being utilized by cable and telephone companies. This, however, is a factual issue which the Court
cannot take cognizance of in the Petition at bar as it is not a trier of facts. Whether or not the electric posts of MERALCO are actually
being used by other companies or industries is best left to the determination of the City Assessor or his deputy, who has been granted
the authority to take evidence under Article 304 of the Rules and Regulations Implementing the Local Government Code of 1991.

Nevertheless, the appraisal and


assessment of the transformers, electric
posts, transmission lines, insulators, and
electric meters of MERALCO as machinery
under Tax Declaration Nos. 019-6500 and
019-7394 were not in accordance with the
Local Government Code and in violation of
the right to due process of MERALCO and,
therefore, null and void.

The Local Government Code defines "appraisal" as the "act or process of determining the value of property as of a specific date for a
specific purpose." "Assessment" is "the act or process of determining the value of a property, or proportion thereof subject to tax,
including the discovery, listing, classification, and appraisal of the properties[.]" [63] When it comes to machinery, its appraisal and
assessment are particularly governed by Sections 224 and 225 of the Local Government Code, which read:

Section 224. Appraisal and Assessment of Machinery. - (a) The fair market value of a brand-new machinery shall be the acquisition
cost. In all other cases, the fair market value shall be determined by dividing the remaining economic life of the machinery by its
estimated economic life and multiplied by the replacement or reproduction cost.

(b) If the machinery is imported, the acquisition cost includes freight, insurance, bank and other charges, brokerage, arrastre and
handling, duties and taxes, plus cost of inland transportation, handling, and installation charges at the present site. The cost in foreign
currency of imported machinery shall be converted to peso cost on the basis of foreign currency exchange rates as fixed by the Central
Bank.

Section 225. Depreciation Allowance for Machinery. - For purposes of assessment, a depreciation allowance shall be made for
machinery at a rate not exceeding five percent (5%) of its original cost or its replacement or reproduction cost, as the case may be, for
each year of use: Provided, however, That the remaining value for all kinds of machinery shall be fixed at not less than twenty percent
(20%) of such original, replacement, or reproduction cost for so long as the machinery is useful and in operation.

It is apparent from these two provisions that every machinery must be individually appraised and assessed depending on its acquisition
cost, remaining economic life, estimated economic life, replacement or reproduction cost, and depreciation.

Article 304 of the Rules and Regulations Implementing the Local Government Code of 1991 expressly authorizes the local assessor or
his deputy to receive evidence for the proper appraisal and assessment of the real property:
Article 304. Authority of Local Assessors to Take Evidence. - For the purpose of obtaining information on which to base the market
value of any real property, the assessor of the province, city, or municipality or his deputy may summon the owners of the properties
to be affected or persons having legal interest therein and witnesses, administer oaths, and take deposition concerning the property, its
ownership, amount, nature, and value.

The Local Government Code further mandates that the taxpayer be given a notice of the assessment of real property in the following
manner:

Section 223. Notification of New or Revised Assessment. - When real property is assessed for the first time or when an existing
assessment is increased or decreased, the provincial, city or municipal assessor shall within thirty (30) days give written notice of such
new or revised assessment to the person in whose name the property is declared. The notice may be delivered personally or by
registered mail or through the assistance of the punong barangay to the last known address of the person to served.

A notice of assessment, which stands as the first instance the taxpayer is officially made aware of the pending tax liability, should be
sufficiently informative to apprise the taxpayer the legal basis of the tax. [64] In Manila Electric Company v. Barlis,[65] the Court
described the contents of a valid notice of assessment of real property and differentiated the same from a notice of collection:

A notice of assessment as provided for in the Real Property Tax Code should effectively inform the taxpayer of the value of a specific
property, or proportion thereof subject to tax, including the discovery, listing, classification, and appraisal of properties. The
September 3, 1986 and October 31, 1989 notices do not contain the essential information that a notice of assessment must specify,
namely, the value of a specific property or proportion thereof which is being taxed, nor does it state the discovery, listing,
classification and appraisal of the property subject to taxation. In fact, the tenor of the notices bespeaks an intention to collect unpaid
taxes, thus the reminder to the taxpayer that the failure to pay the taxes shall authorize the government to auction off the properties
subject to taxes x x x.

Although the ruling quoted above was rendered under the Real Property Tax Code, the requirement of a notice of assessment has not
changed under the Local Government Code.

A perusal of the documents received by MERALCO on October 29, 1997 reveals that none of them constitutes a valid notice of
assessment of the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO.

The letter dated October 16, 1997 of the City Treasurer of Lucena (which interestingly precedes the purported Notice of Assessment
dated October 20, 1997 of the City Assessor of Lucena) is a notice of collection, ending with the request for MERALCO to settle the
payable amount soon in order to avoid accumulation of penalties. It only presented in table form the tax declarations covering the
machinery, assessed values in the tax declarations in lump sums for all the machinery, the periods covered, and the taxes and penalties
due again in lump sums for all the machinery.

The Notice of Assessment dated October 20, 1997 issued by the City Assessor gave a summary of the new/revised assessment of the
"machinery" located in "Quezon Avenue Ext., Brgy. Gulang-Gulang, Lucena City," covered by Tax Declaration No. 019-7394, with
total market value of P98,173,200.00 and total assessed value of P78,538,560.00. The Property Record Form basically contained the
same information. Without specific description or identification of the machinery covered by said tax declaration, said Notice of
Assessment and Property Record Form give the false impression that there is only one piece of machinery covered.

In Tax Declaration No. 019-6500, the City Assessor reported its findings under "Building and Improvements" and not "Machinery."
Said tax declaration covered "capital investment-commercial," specifically: (a) Transformer and Electric Post; (b) Transmission Line,
(c) Insulator, and (d) Electric Meter, with a total market value of P81,811,000.00, assessment level of 80%, and assessed value of
£65,448,800.00. Conspicuously, the table for "Machinery" - requiring the description, date of operation, replacement cost,
depreciation, and market value of the machinery - is totally blank.

MERALCO avers, and the City Assessor and the City Treasurer of Lucena do not refute at all, that MERALCO has not been furnished
the Owner's Copy of Tax Declaration No. 019-7394, in which the total market value of the machinery of MERALCO was increased
by PI6,632,200.00, compared to that in Tax Declaration No. 019-6500.

The Court cannot help but attribute the lack of a valid notice of assessment to the apparent lack of a valid appraisal and assessment
conducted by the City Assessor of Lucena in the first place. It appears that the City Assessor of Lucena simply lumped together all the
transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO located in Lucena City under Tax
Declaration Nos. 019-6500 and 019-7394, contrary to the specificity demanded under Sections 224 and 225 of the Local Government
Code for appraisal and assessment of machinery. The City Assessor and the City Treasurer of Lucena did not even provide the most
basic information such as the number of transformers, electric posts, insulators, and electric meters or the length of the transmission
lines appraised and assessed under Tax Declaration Nos. 019-6500 and 019-7394. There is utter lack of factual basis for the
assessment of the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO.

The Court of Appeals laid the blame on MERALCO for the lack of information regarding its transformers, electric posts, transmission
lines, insulators, and electric meters for appraisal and assessment purposes because MERALCO failed to file a sworn declaration of
said properties as required by Section 202 of the Local Government Code. As MERALCO explained, it cannot be expected to file
such a declaration when all the while it believed that said properties were personal or movable properties not subject to real property
tax. More importantly, Section 204 of the Local Government Code exactly covers such a situation, thus:

Section 204. Declaration of Real Property by the Assessor. -When any person, natural or juridical, by whom real property is required
to be declared under Section 202 hereof, refuses or fails for any reason to make such declaration within the time prescribed, the
provincial, city or municipal assessor shall himself declare the property in the name of the defaulting owner, if known, or against an
unknown owner, as the case may be, and shall assess the property for taxation in accordance with the provision of this Title. No oath
shall be required of a declaration thus made by the provincial, city or municipal assessor.

Note that the only difference between the declarations of property made by the taxpayer, on one hand, and the
provincial/city/municipal assessor, on the other, is that the former must be made under oath. After making the declaration of the
property himself for the owner, the provincial/city/municipal assessor is still required to assess the property for taxation in accordance
with the provisions of the Local Government Code.

It is true that tax assessments by tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of
proving otherwise.[66] In this case, MERALCO was able to overcome the presumption because it has clearly shown that the assessment
of its properties by the City Assessor was baselessly and arbitrarily done, without regard for the requirements of the Local
Government Code.

The exercise of the power of taxation constitutes a deprivation of property under the due process clause, and the taxpayer's right to due
process is violated when arbitrary or oppressive methods are used in assessing and collecting taxes. [67] The Court applies by analogy
its pronouncements in Commissioner of Internal Revenue v. United Salvage and Towage (Phils.), Inc.,[68] concerning an assessment
that did not comply with the requirements of the National Internal Revenue Code:

On the strength of the foregoing observations, we ought to reiterate our earlier teachings that "in balancing the scales between the
power of the State to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights
of a citizen to due process of law and the equal protection of the laws on the other, the scales must tilt in favor of the individual, for a
citizen's right is amply protected by the Bill of Rights under the Constitution." Thus, while "taxes are the lifeblood of the
government," the power to tax has its limits, in spite of all its plenitude. Even as we concede the inevitability and indispensability of
taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure.
(Citations omitted.)

The appraisal and assessment of the transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO
under Tax Declaration Nos. 019-6500 and 019-7394, not being in compliance with the Local Government Code, are attempts at
deprivation of property without due process of law and, therefore, null and void.

WHEREFORE, premises considered, the Court PARTLY GRANTS the instant Petition and AFFIRMS with
MODIFICATION the Decision dated May 13, 2004 of the Court of Appeals in CA-G.R. SP No. 67027, affirming in toto the
Decision dated May 3, 2001 of the Central Board of Assessment Appeals in CBAA Case No. L-20-98. The Court DECLARES that
the transformers, electric posts, transmission lines, insulators, and electric meters of Manila Electric Company are NOT
EXEMPTED from real property tax under the Local Government Code. However, the Court also DECLARES the appraisal and
assessment of the said properties under Tax Declaration Nos. 019-6500 and 019-7394 as NULL and VOID for not complying with the
requirements of the Local Government Code and violating the right to due process of Manila Electric Company,
and ORDERS the CANCELLATION of the collection letter dated October 16, 1997 of the City Treasurer of Lucena and the Notice
of Assessment dated October 20, 1997 of the City Assessor of Lucena, but WITHOUT PREJUDICE to the conduct of a new
appraisal and assessment of the same properties by the City Assessor of Lucena in accord with the provisions of the Local
Government Code and guidelines issued by the Bureau of Local Government Financing.

G.R. No. 212426

RENE A.V. SAGUISAG, WIGBERTO E. TAÑADA, FRANCISCO "DODONG" NEMENZO, JR., SR. MARY JOHN
MANANZAN, PACIFICO A. AGABIN, ESTEBAN "STEVE" SALONGA, H. HARRY L. ROQUE, JR., EVALYN G.
URSUA, EDRE U. OLALIA, DR. CAROL PAGADUAN-ARAULLO, DR. ROLAND SIMBULAN, AND TEDDY
CASIÑO, Petitioners,
vs.
EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR., DEPARTMENT OF NATIONAL DEFENSE SECRETARY
VOLTAIRE GAZMIN, DEPARTMENT OF FOREIGN AFFAIRS SECRETARY ALBERT DEL ROSARIO, JR.,
DEPARTMENT OF BUDGET AND MANAGEMENT SECRETARY FLORENCIO ABAD, AND ARMED FORCES OF
THE PHILIPPINES CHIEF OF STAFF GENERAL EMMANUEL T. BAUTISTA, Respondents.

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

G.R. No. 212444

BAGONG ALYANSANG MAKABAYAN (BAYAN), REPRESENTED BY ITS SECRETARY GENERAL RENATO M.


REYES, JR., BAYAN MUNA PARTY-LIST REPRESENTATIVES NERI J. COLMENARES AND CARLOS ZARATE,
GABRIELA WOMEN'S PARTY-LIST REPRESENTATIVES LUZ ILAGAN AND EMERENCIANA DE JESUS, ACT
TEACHERS PARTY-LIST REPRESENTATIVE ANTONIO L. TINIO, ANAKPAWIS PARTY-LIST REPRESENTATIVE
FERNANDO HICAP, KABATAAN PARTY-LIST REPRESENTATIVE TERRY RIDON, MAKABAYANG KOALISYON
NG MAMAMAYAN (MAKABAYAN), REPRESENTED BY SATURNINO OCAMPO AND LIZA MAZA, BIENVENIDO
LUMBERA, JOEL C. LAMANGAN, RAFAEL MARIANO, SALVADOR FRANCE, ROGELIO M. SOLUTA, AND
CLEMENTE G. BAUTISTA, Petitioners,
vs.
DEPARTMENT OF NATIONAL DEFENSE (DND) SECRETARY VOLTAIRE GAZMIN, DEPARTMENT OF FOREIGN
AFFAIRS SECRETARY ALBERT DEL ROSARIO, EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR., ARMED
FORCES OF THE PHILIPPINES CHIEF OF STAFF GENERAL EMMANUEL T. BAUTISTA, DEFENSE
UNDERSECRETARY PIO LORENZO BATINO, AMBASSADOR LOURDES YPARRAGUIRRE, AMBASSADOR J.
EDUARDO MALAYA, DEPARTMENT OF JUSTICE UNDERSECRETARY FRANCISCO BARAAN III, AND DND
ASSISTANT SECRETARY FOR STRATEGIC ASSESSMENTS RAYMUND JOSE QUILOP AS CHAIRPERSON AND
MEMBERS, RESPECTIVELY, OF THE NEGOTIATING PANEL FOR THE PHILIPPINES ON EDCA, Respondents.

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

KILUSANG MAYO UNO, REPRESENTED BY ITS CHAIRPERSON, ELMER LABOG, CONFEDERATION FOR UNITY,
RECOGNITION AND ADVANCEMENT OF GOVERNMENT EMPLOYEES (COURAGE), REPRESENTED BY ITS
NATIONAL PRESIDENT FERDINAND GAITE, NATIONAL FEDERATION OF LABOR UNIONS-KILUSANG MAYO
UNO, REPRESENTED BY ITS NATIONAL PRESIDENT JOSELITO USTAREZ, NENITA GONZAGA, VIOLETA
ESPIRITU, VIRGINIA FLORES, AND ARMANDO TEODORO, JR., Petitioners-in-Intervention,
RENE A.Q. SAGUISAG, JR., Petitioner-in-Intervention.

DECISION

SERENO, J.:

The petitions1 before this Court question the constitutionality of the Enhanced Defense Cooperation Agreement (EDCA) between the
Republic of the Philippines and the United States of America (U.S.). Petitioners allege that respondents committed grave abuse of
discretion amounting to lack or excess of jurisdiction when they entered into EDCA with the U.S., 2 claiming that the instrument
violated multiple constitutional provisions.3 In reply, respondents argue that petitioners lack standing to bring the suit. To support the
legality of their actions, respondents invoke the 1987 Constitution, treaties, and judicial precedents.4

A proper analysis of the issues requires this Court to lay down at the outset the basic parameters of the constitutional powers and roles
of the President and the Senate in respect of the above issues. A more detailed discussion of these powers and roles will be made in the
latter portions.

I. BROAD CONSTITUTIONAL CONTEXT OF THE POWERS OF THE PRESIDENT: DEFENSE, FOREIGN


RELATIONS, AND EDCA

A. The Prime Duty of the State and the Consolidation of Executive Power in the President

Mataimtim kong pinanunumpaan (o pinatotohanan) na tutuparin ko nang buong katapatan at sigasig ang aking mga tungkulin bilang
Pangulo (o Pangalawang Pangulo o Nanunungkulang Pangulo) ng Pilipinas, pangangalagaan at ipagtatanggol ang kanyang
Konstitusyon, ipatutupad ang mga batas nito, magiging makatarungan sa bawat tao, at itatalaga ang aking sarili sa paglilingkod sa
Bansa. Kasihan nawa aka ng Diyos.
- Panunumpa sa Katungkulan ng Pangulo ng Pilipinas ayon sa Saligang Batas 5

The 1987 Constitution has "vested the executive power in the President of the Republic of the Philippines."6 While the vastness of the
executive power that has been consolidated in the person of the President cannot be expressed fully in one provision, the Constitution
has stated the prime duty of the government, of which the President is the head:

The prime duty of the Government is to serve and protect the people. The Government may call upon the people to defend the
State and, in the fulfillment thereof, all citizens may be required, under conditions provided by law, to render personal military or civil
service.7 (Emphases supplied)

B. The duty to protect the territory and the citizens of the Philippines, the power to call upon the people to defend the State, and the
President as Commander-in-Chief

The duty to protect the State and its people must be carried out earnestly and effectively throughout the whole territory of the
Philippines in accordance with the constitutional provision on national territory. Hence, the President of the Philippines, as the sole
repository of executive power, is the guardian of the Philippine archipelago, including all the islands and waters embraced therein and
all other territories over which it has sovereignty or jurisdiction. These territories consist of its terrestrial, fluvial, and aerial domains;
including its territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas; and the waters around, between, and
connecting the islands of the archipelago, regardless of their breadth and dimensions. 8

To carry out this important duty, the President is equipped with authority over the Armed Forces of the Philippines (AFP), 9 which is
the protector of the people and the state. The AFP's role is to secure the sovereignty of the State and the integrity of the national
territory.10 In addition, the Executive is constitutionally empowered to maintain peace and order; protect life, liberty, and property; and
promote the general welfare.11

In recognition of these powers, Congress has specified that the President must oversee, ensure, and reinforce our defensive capabilities
against external and internal threats12 and, in the same vein, ensure that the country is adequately prepared for all national and local
emergencies arising from natural and man-made disasters.13

To be sure, this power is limited by the Constitution itself. To illustrate, the President may call out the AFP to prevent or suppress
instances of lawless violence, invasion or rebellion,14 but not suspend the privilege of the writ of habeas corpus for a period exceeding
60 days, or place the Philippines or any part thereof under martial law exceeding that same span. In the exercise of these powers, the
President is also duty-bound to submit a report to Congress, in person or in writing, within 48 hours from the proclamation of martial
law or the suspension of the privilege of the writ of habeas corpus; and Congress may in turn revoke the proclamation or suspension.
The same provision provides for the Supreme Court's review of the factual basis for the proclamation or suspension, as well as the
promulgation of the decision within 30 days from filing.

C. The power and duty to conduct foreign relations

The President also carries the mandate of being the sole organ in the conduct of foreign relations. 15 Since every state has the capacity
to interact with and engage in relations with other sovereign states,16 it is but logical that every state must vest in an agent the authority
to represent its interests to those other sovereign states.

The conduct of foreign relations is full of complexities and consequences, sometimes with life and death significance to the nation
especially in times of war. It can only be entrusted to that department of government which can act on the basis of the best available
information and can decide with decisiveness. x x x It is also the President who possesses the most comprehensive and the most
confidential information about foreign countries for our diplomatic and consular officials regularly brief him on meaningful events all
over the world. He has also unlimited access to ultra-sensitive military intelligence data. In fine, the presidential role in foreign affairs
is dominant and the President is traditionally accorded a wider degree of discretion in the conduct of foreign affairs. The regularity,
nay, validity of his actions are adjudged under less stringent standards, lest their judicial repudiation lead to breach of an international
obligation, rupture of state relations, forfeiture of confidence, national embarrassment and a plethora of other problems with equally
undesirable consequences.17

The role of the President in foreign affairs is qualified by the Constitution in that the Chief Executive must give paramount importance
to the sovereignty of the nation, the integrity of its territory, its interest, and the right of the sovereign Filipino people to self-
determination.18 In specific provisions, the President's power is also limited, or at least shared, as in Section 2 of Article II on the
conduct of war; Sections 20 and 21 of Article VII on foreign loans, treaties, and international agreements; Sections 4(2) and 5(2)(a) of
Article VIII on the judicial review of executive acts; Sections 4 and 25 of Article XVIII on treaties and international agreements
entered into prior to the Constitution and on the presence of foreign military troops, bases, or facilities.
D. The relationship between the two major presidential functions and the role of the Senate

Clearly, the power to defend the State and to act as its representative in the international sphere inheres in the person of the President.
This power, however, does not crystallize into absolute discretion to craft whatever instrument the Chief Executive so desires. As
previously mentioned, the Senate has a role in ensuring that treaties or international agreements the President enters into, as
contemplated in Section 21 of Article VII of the Constitution, obtain the approval of two-thirds of its members.

Previously, treaties under the 1973 Constitution required ratification by a majority of the Batasang Pambansa,19except in instances
wherein the President "may enter into international treaties or agreements as the national welfare and interest may require." 20 This left
a large margin of discretion that the President could use to bypass the Legislature altogether. This was a departure from the 1935
Constitution, which explicitly gave the President the power to enter into treaties only with the concurrence of two-thirds of all the
Members of the Senate.21 The 1987 Constitution returned the Senate's power22 and, with it, the legislative's traditional role in foreign
affairs.23

The responsibility of the President when it comes to treaties and international agreements under the present Constitution is therefore
shared with the Senate. This shared role, petitioners claim, is bypassed by EDCA.

II. HISTORICAL ANTECEDENTS OF EDCA

A. U.S. takeover of Spanish colonization and its military bases, and the transition to Philippine independence

The presence of the U.S. military forces in the country can be traced to their pivotal victory in the 1898 Battle of Manila Bay during
the Spanish-American War.24 Spain relinquished its sovereignty over the Philippine Islands in favor of the U.S. upon its formal
surrender a few months later.25 By 1899, the Americans had consolidated a military administration in the archipelago.26

When it became clear that the American forces intended to impose colonial control over the Philippine Islands, General Emilio
Aguinaldo immediately led the Filipinos into an all-out war against the U.S.27 The Filipinos were ultimately defeated in the
Philippine-American War, which lasted until 1902 and led to the downfall of the first Philippine Republic.28 The Americans
henceforth began to strengthen their foothold in the country. 29 They took over and expanded the former Spanish Naval Base in Subic
Bay, Zambales, and put up a cavalry post called Fort Stotsenberg in Pampanga, now known as Clark Air Base. 30

When talks of the eventual independence of the Philippine Islands gained ground, the U.S. manifested the desire to maintain military
bases and armed forces in the country.31 The U.S. Congress later enacted the Hare-Hawes-Cutting Act of 1933, which required that the
proposed constitution of an independent Philippines recognize the right of the U.S. to maintain the latter's armed forces and military
bases.32 The Philippine Legislature rejected that law, as it also gave the U.S. the power to unilaterally designate any part of Philippine
territory as a permanent military or naval base of the U.S. within two years from complete independence. 33

The U.S. Legislature subsequently crafted another law called the Tydings-McDuffie Act or the Philippine Independence Act of 1934.
Compared to the old Hare-Hawes-Cutting Act, the new law provided for the surrender to the Commonwealth Government of "all
military and other reservations" of the U.S. government in the Philippines, except "naval reservations and refueling
stations."34 Furthermore, the law authorized the U.S. President to enter into negotiations for the adjustment and settlement of all
questions relating to naval reservations and fueling stations within two years after the Philippines would have gained
independence.35 Under the Tydings-McDuffie Act, the U.S. President would proclaim the American withdrawal and surrender of
sovereignty over the islands 10 years after the inauguration of the new government in the Philippines.36 This law eventually led to the
promulgation of the 1935 Philippine Constitution.

The original plan to surrender the military bases changed.37 At the height of the Second World War, the Philippine and the U.S.
Legislatures each passed resolutions authorizing their respective Presidents to negotiate the matter of retaining military bases in the
country after the planned withdrawal of the U.S.38 Subsequently, in 1946, the countries entered into the Treaty of General Relations, in
which the U.S. relinquished all control and sovereignty over the Philippine Islands, except the areas that would be covered by the
American military bases in the country.39 This treaty eventually led to the creation of the post-colonial legal regime on which would
hinge the continued presence of U.S. military forces until 1991: the Military Bases Agreement (MBA) of 1947, the Military
Assistance Agreement of 1947, and the Mutual Defense Treaty (MDT) of 1951. 40

B. Former legal regime on the presence of U.S. armed forces in the territory of an independent Philippines (1946-1991)

Soon after the Philippines was granted independence, the two countries entered into their first military arrangement pursuant to the
Treaty of General Relations - the 1947 MBA.41 The Senate concurred on the premise of "mutuality of security interest," 42 which
provided for the presence and operation of 23 U.S. military bases in the Philippines for 99 years or until the year 2046. 43 The treaty
also obliged the Philippines to negotiate with the U.S. to allow the latter to expand the existing bases or to acquire new ones as
military necessity might require.44

A number of significant amendments to the 1947 MBA were made.45 With respect to its duration, the parties entered into the Ramos-
Rusk Agreement of 1966, which reduced the term of the treaty from 99 years to a total of 44 years or until 1991. 46 Concerning the
number of U.S. military bases in the country, the Bohlen-Serrano Memorandum of Agreement provided for the return to the
Philippines of 17 U.S. military bases covering a total area of 117,075 hectares. 47 Twelve years later, the U.S. returned Sangley Point in
Cavite City through an exchange of notes.48 Then, through the Romulo-Murphy Exchange of Notes of 1979, the parties agreed to the
recognition of Philippine sovereignty over Clark and Subic Bases and the reduction of the areas that could be used by the U.S.
military.49 The agreement also provided for the mandatory review of the treaty every five years. 50 In 1983, the parties revised the 1947
MBA through the Romualdez-Armacost Agreement.51 The revision pertained to the operational use of the military bases by the U.S.
government within the context of Philippine sovereignty, 52 including the need for prior consultation with the Philippine government
on the former' s use of the bases for military combat operations or the establishment of long-range missiles.53

Pursuant to the legislative authorization granted under Republic Act No. 9, 54 the President also entered into the 1947 Military
Assistance Agreement55 with the U.S. This executive agreement established the conditions under which U.S. military assistance would
be granted to the Philippines,56 particularly the provision of military arms, ammunitions, supplies, equipment, vessels, services, and
training for the latter's defense forces.57 An exchange of notes in 1953 made it clear that the agreement would remain in force until
terminated by any of the parties.58

To further strengthen their defense and security relationship, 59 the Philippines and the U.S. next entered into the MDT in 1951.
Concurred in by both the Philippine60 and the U.S.61 Senates, the treaty has two main features: first, it allowed for mutual assistance in
maintaining and developing their individual and collective capacities to resist an armed attack;62 and second, it provided for their
mutual self-defense in the event of an armed attack against the territory of either party. 63 The treaty was premised on their recognition
that an armed attack on either of them would equally be a threat to the security of the other. 64

C. Current legal regime on the presence of U.S. armed forces in the country

In view of the impending expiration of the 1947 MBA in 1991, the Philippines and the U.S. negotiated for a possible renewal of their
defense and security relationship.65 Termed as the Treaty of Friendship, Cooperation and Security, the countries sought to recast their
military ties by providing a new framework for their defense cooperation and the use of Philippine installations. 66 One of the proposed
provisions included an arrangement in which U.S. forces would be granted the use of certain installations within the Philippine naval
base in Subic.67 On 16 September 1991, the Senate rejected the proposed treaty.68

The consequent expiration of the 1947 MBA and the resulting paucity of any formal agreement dealing with the treatment of U.S.
personnel in the Philippines led to the suspension in 1995 of large-scale joint military exercises.69In the meantime, the respective
governments of the two countries agreed70 to hold joint exercises at a substantially reduced level.71 The military arrangements between
them were revived in 1999 when they concluded the first Visiting Forces Agreement (VFA). 72

As a "reaffirm[ation] [of the] obligations under the MDT," 73 the VFA has laid down the regulatory mechanism for the treatment of
U.S. military and civilian personnel visiting the country.74 It contains provisions on the entry and departure of U.S. personnel; the
purpose, extent, and limitations of their activities; criminal and disciplinary jurisdiction; the waiver of certain claims; the importation
and exportation of equipment, materials, supplies, and other pieces of property owned by the U.S. government; and the movement of
U.S. military vehicles, vessels, and aircraft into and within the country.75 The Philippines and the U.S. also entered into a second
counterpart agreement (VFA II), which in turn regulated the treatment of Philippine military and civilian personnel visiting the
U.S.76 The Philippine Senate concurred in the first VFA on 27 May 1999. 77

Beginning in January 2002, U.S. military and civilian personnel started arriving in Mindanao to take part in joint military exercises
with their Filipino counterparts.78 Called Balikatan, these exercises involved trainings aimed at simulating joint military maneuvers
pursuant to the MDT.79

In the same year, the Philippines and the U.S. entered into the Mutual Logistics Support Agreement to "further the interoperability,
readiness, and effectiveness of their respective military forces" 80 in accordance with the MDT, the Military Assistance Agreement of
1953, and the VFA.81 The new agreement outlined the basic terms, conditions, and procedures for facilitating the reciprocal provision
of logistics support, supplies, and services between the military forces of the two countries. 82 The phrase "logistics support and
services" includes billeting, operations support, construction and use of temporary structures, and storage services during an approved
activity under the existing military arrangements.83 Already extended twice, the agreement will last until 2017. 84

D. The Enhanced Defense Cooperation Agreement


EDCA authorizes the U.S. military forces to have access to and conduct activities within certain "Agreed Locations" in the country. It
was not transmitted to the Senate on the executive's understanding that to do so was no longer necessary. 85 Accordingly, in June 2014,
the Department of Foreign Affairs (DFA) and the U.S. Embassy exchanged diplomatic notes confirming the completion
of all necessary internal requirements for the agreement to enter into force in the two countries. 86

According to the Philippine government, the conclusion of EDCA was the result of intensive and comprehensive negotiations in the
course of almost two years.87 After eight rounds of negotiations, the Secretary of National Defense and the U.S. Ambassador to the
Philippines signed the agreement on 28 April 2014. 88 President Benigno S. Aquino III ratified EDCA on 6 June 2014. 89 The OSG
clarified during the oral arguments90 that the Philippine and the U.S. governments had yet to agree formally on the specific sites of the
Agreed Locations mentioned in the agreement.

Two petitions for certiorari were thereafter filed before us assailing the constitutionality of EDCA. They primarily argue that it should
have been in the form of a treaty concurred in by the Senate, not an executive agreement.

On 10 November 2015, months after the oral arguments were concluded and the parties ordered to file their respective memoranda,
the Senators adopted Senate Resolution No. (SR) 105. 91 The resolution expresses the "strong sense" 92 of the Senators that for EDCA to
become valid and effective, it must first be transmitted to the Senate for deliberation and concurrence.

III. ISSUES

Petitioners mainly seek a declaration that the Executive Department committed grave abuse of discretion in entering into EDCA in the
form of an executive agreement. For this reason, we cull the issues before us:

A. Whether the essential requisites for judicial review are present

B. Whether the President may enter into an executive agreement on foreign military bases, troops, or facilities

C. Whether the provisions under EDCA are consistent with the Constitution, as well as with existing laws and treaties

IV. DISCUSSION

A. Whether the essential requisites for judicial review have been satisfied

Petitioners are hailing this Court's power of judicial review in order to strike down EDCA for violating the Constitution. They stress
that our fundamental law is explicit in prohibiting the presence of foreign military forces in the country, except under a treaty
concurred in by the Senate. Before this Court may begin to analyze the constitutionality or validity of an official act of a coequal
branch of government, however, petitioners must show that they have satisfied all the essential requisites for judicial review. 93

Distinguished from the general notion of judicial power, the power of judicial review specially refers to both the authority and the duty
of this Court to determine whether a branch or an instrumentality of government has acted beyond the scope of the latter's
constitutional powers.94 As articulated in Section 1, Article VIII of the Constitution, the power of judicial review involves the power to
resolve cases in which the questions concern the constitutionality or validity of any treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation. 95 In Angara v. Electoral Commission, this Court
exhaustively discussed this "moderating power" as part of the system of checks and balances under the Constitution. In our
fundamental law, the role of the Court is to determine whether a branch of government has adhered to the specific restrictions and
limitations of the latter's power:96

The separation of powers is a fundamental principle in our system of government. It obtains not through express provision but by
actual division in our Constitution. Each department of the government has exclusive cognizance of matters within its
jurisdiction, and is supreme within its own sphere. But it does not follow from the fact that the three powers are to be kept separate
and distinct that the Constitution intended them to be absolutely unrestrained and independent of each other. The Constitution has
provided for an elaborate system of checks and balances to secure coordination in the workings of the various departments of the
government. x x x. And the judiciary in turn, with the Supreme Court as the final arbiter, effectively checks the other departments
in the exercise of its power to determine the law, and hence to declare executive and legislative acts void if violative of the
Constitution.

xxxx
As any human production, our Constitution is of course lacking perfection and perfectibility, but as much as it was within the power
of our people, acting through their delegates to so provide, that instrument which is the expression of their sovereignty however
limited, has established a republican government intended to operate and function as a harmonious whole, under a system of
checks and balances, and subject to specific limitations and restrictions provided in the said instrument. The Constitution sets
forth in no uncertain language the restrictions and limitations upon governmental powers and agencies. If these restrictions
and limitations are transcended it would be inconceivable if the Constitution had not provided for a mechanism by which to
direct the course of government along constitutional channels, for then the distribution of powers would be mere verbiage, the
bill of rights mere expressions of sentiment, and the principles of good government mere political apothegms. Certainly, the
limitations and restrictions embodied in our Constitution are real as they should be in any living constitution. x x x. In our case, this
moderating power is granted, if not expressly, by clear implication from section 2 of article VIII of [the 1935] Constitution.

The Constitution is a definition of the powers of government. Who is to determine the nature, scope and extent of such powers? The
Constitution itself has provided for the instrumentality of the judiciary as the rational way. And when the judiciary mediates to
allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or
invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the
rights which that instrument secures and guarantees to them. This is in truth all that is involved in what is termed "judicial
supremacy" which properly is the power of judicial review under the Constitution. x x x x. (Emphases supplied)

The power of judicial review has since been strengthened in the 1987 Constitution. The scope of that power has been extended to the
determination of whether in matters traditionally considered to be within the sphere of appreciation of another branch of government,
an exercise of discretion has been attended with grave abuse.97 The expansion of this power has made the political question doctrine
"no longer the insurmountable obstacle to the exercise of judicial power or the impenetrable shield that protects executive and
legislative actions from judicial inquiry or review." 98

This moderating power, however, must be exercised carefully and only if it cannot be completely avoided. We stress that our
Constitution is so incisively designed that it identifies the spheres of expertise within which the different branches of government shall
function and the questions of policy that they shall resolve. 99 Since the power of judicial review involves the delicate exercise of
examining the validity or constitutionality of an act of a coequal branch of government, this Court must continually exercise restraint
to avoid the risk of supplanting the wisdom of the constitutionally appointed actor with that of its own. 100

Even as we are left with no recourse but to bare our power to check an act of a coequal branch of government - in this case the
executive - we must abide by the stringent requirements for the exercise of that power under the Constitution. Demetria v.
Alba101 and Francisco v. House of Representatives102 cite the "pillars" of the limitations on the power of judicial review as enunciated
in the concurring opinion of U.S. Supreme Court Justice Brandeis in Ashwander v. Tennessee Valley
Authority.103 Francisco104 redressed these "pillars" under the following categories:

1. That there be absolute necessity of deciding a case

2. That rules of constitutional law shall be formulated only as required by the facts of the case

3. That judgment may not be sustained on some other ground

4. That there be actual injury sustained by the party by reason of the operation of the statute

5. That the parties are not in estoppel

6. That the Court upholds the presumption of constitutionality

(Emphases supplied)

These are the specific safeguards laid down by the Court when it exercises its power of judicial review. 105 Guided by these pillars, it
may invoke the power only when the following four stringent requirements are satisfied: (a) there is an actual case or controversy; (b)
petitioners possess locus standi; (c) the question of constitutionality is raised at the earliest opportunity; and (d) the issue of
constitutionality is the lis mota of the case.106 Of these four, the first two conditions will be the focus of our discussion.

1. Petitioners have shown the presence of an actual case or controversy.


The OSG maintains107 that there is no actual case or controversy that exists, since the Senators have not been deprived of the
opportunity to invoke the privileges of the institution they are representing. It contends that the nonparticipation of the Senators in the
present petitions only confirms that even they believe that EDCA is a binding executive agreement that does not require their
concurrence.

It must be emphasized that the Senate has already expressed its position through SR 105. 108 Through the Resolution, the Senate has
taken a position contrary to that of the OSG. As the body tasked to participate in foreign affairs by ratifying treaties, its belief that
EDCA infringes upon its constitutional role indicates that an actual controversy - albeit brought to the Court by non-Senators, exists.

Moreover, we cannot consider the sheer abstention of the Senators from the present proceedings as basis for finding that there is no
actual case or controversy before us. We point out that the focus of this requirement is the ripeness for adjudication of the matter at
hand, as opposed to its being merely conjectural or anticipatory. 109 The case must involve a definite and concrete issue involving real
parties with conflicting legal rights and legal claims admitting of specific relief through a decree conclusive in nature. 110 It should not
equate with a mere request for an opinion or advice on what the law would be upon an abstract, hypothetical, or contingent state of
facts.111 As explained in Angara v. Electoral Commission:112

[The] power of judicial review is limited to actual cases and controversies to be exercised after full opportunity of argument by
the parties, and limited further to the constitutional question raised or the very lis mota presented. Any attempt at abstraction could
only lead to dialectics and barren legal questions and to sterile conclusions of wisdom, justice or expediency of legislation.
More than that, courts accord the presumption of constitutionality to legislative enactments, not only because the legislature is
presumed to abide by the Constitution but also because the judiciary in the determination of actual cases and controversies must
reflect the wisdom and justice of the people as expressed through their representatives in the executive and legislative
departments of the government. (Emphases supplied)

We find that the matter before us involves an actual case or controversy that is already ripe for adjudication. The Executive
Department has already sent an official confirmation to the U.S. Embassy that "all internal requirements of the Philippines x x x have
already been complied with."113 By this exchange of diplomatic notes, the Executive Department effectively performed the last act
required under Article XII(l) of EDCA before the agreement entered into force. Section 25, Article XVIII of the Constitution, is clear
that the presence of foreign military forces in the country shall only be allowed by virtue of a treaty concurred in by the Senate. Hence,
the performance of an official act by the Executive Department that led to the entry into force of an executive agreement was
sufficient to satisfy the actual case or controversy requirement.

2. While petitioners Saguisag et. al., do not have legal standing, they nonetheless raise issues involving matters of
transcendental importance.

The question of locus standi or legal standing focuses on the determination of whether those assailing the governmental act have the
right of appearance to bring the matter to the court for adjudication.114 They must show that they have a personal and substantial
interest in the case, such that they have sustained or are in immediate danger of sustaining, some direct injury as a consequence of the
enforcement of the challenged governmental act.115 Here, "interest" in the question involved must be material - an interest that is in
issue and will be affected by the official act - as distinguished from being merely incidental or general.116 Clearly, it would be
insufficient to show that the law or any governmental act is invalid, and that petitioners stand to suffer in some indefinite way.117 They
must show that they have a particular interest in bringing the suit, and that they have been or are about to be denied some right or
privilege to which they are lawfully entitled, or that they are about to be subjected to some burden or penalty by reason of the act
complained of.118 The reason why those who challenge the validity of a law or an international agreement are required to allege the
existence of a personal stake in the outcome of the controversy is "to assure the concrete adverseness which sharpens the presentation
of issues upon which the court so largely depends for illumination of difficult constitutional questions." 119

The present petitions cannot qualify as citizens', taxpayers', or legislators' suits; the Senate as a body has the requisite standing, but
considering that it has not formally filed a pleading to join the suit, as it merely conveyed to the Supreme Court its sense that EDCA
needs the Senate's concurrence to be valid, petitioners continue to suffer from lack of standing.

In assailing the constitutionality of a governmental act, petitioners suing as citizens may dodge the requirement of having to establish
a direct and personal interest if they show that the act affects a public right. 120 In arguing that they have legal standing, they
claim121 that the case they have filed is a concerned citizen's suit. But aside from general statements that the petitions involve the
protection of a public right, and that their constitutional rights as citizens would be violated, they fail to make any specific assertion of
a particular public right that would be violated by the enforcement of EDCA. For their failure to do so, the present petitions cannot
be considered by the Court as citizens' suits that would justify a disregard of the aforementioned requirements.

In claiming that they have legal standing as taxpayers, petitioners122 aver that the implementation of EDCA would result in the
unlawful use of public funds. They emphasize that Article X(1) refers to an appropriation of funds; and that the agreement entails a
waiver of the payment of taxes, fees, and rentals. During the oral arguments, however, they admitted that the government had not yet
appropriated or actually disbursed public funds for the purpose of implementing the agreement. 123 The OSG, on the other hand,
maintains that petitioners cannot sue as taxpayers.124Respondent explains that EDCA is neither meant to be a tax measure, nor is it
directed at the disbursement of public funds.

A taxpayer's suit concerns a case in which the official act complained of directly involves the illegal disbursement of public funds
derived from taxation.125 Here, those challenging the act must specifically show that they have sufficient interest in preventing the
illegal expenditure of public money, and that they will sustain a direct injury as a result of the enforcement of the assailed
act.126 Applying that principle to this case, they must establish that EDCA involves the exercise by Congress of its taxing or spending
powers.127

We agree with the OSG that the petitions cannot qualify as taxpayers' suits. We emphasize that a taxpayers' suit contemplates a
situation in which there is already an appropriation or a disbursement of public funds. 128 A reading of Article X(l) of EDCA would
show that there has been neither an appropriation nor an authorization of disbursement of funds. The cited provision reads:

All obligations under this Agreement are subject to the availability of appropriated funds authorized for these purposes. (Emphases
supplied)

This provision means that if the implementation of EDCA would require the disbursement of public funds, the money must come
from appropriated funds that are specifically authorized for this purpose. Under the agreement, before there can even be a
disbursement of public funds, there must first be a legislative action. Until and unless the Legislature appropriates funds for
EDCA, or unless petitioners can pinpoint a specific item in the current budget that allows expenditure under the agreement,
we cannot at this time rule that there is in fact an appropriation or a disbursement of funds that would justify the filing of a
taxpayers' suit.

Petitioners Bayan et al. also claim129 that their co-petitioners who are party-list representatives have the standing to challenge the act
of the Executive Department, especially if it impairs the constitutional prerogatives, powers, and privileges of their office. While they
admit that there is no incumbent Senator who has taken part in the present petition, they nonetheless assert that they also stand to
sustain a derivative but substantial injury as legislators. They argue that under the Constitution, legislative power is vested in both the
Senate and the House of Representatives; consequently, it is the entire Legislative Department that has a voice in determining whether
or not the presence of foreign military should be allowed. They maintain that as members of the Legislature, they have the requisite
personality to bring a suit, especially when a constitutional issue is raised.

The OSG counters130 that petitioners do not have any legal standing to file the suits concerning the lack of Senate concurrence in
EDCA. Respondent emphasizes that the power to concur in treaties and international agreements is an "institutional prerogative"
granted by the Constitution to the Senate. Accordingly, the OSG argues that in case of an allegation of impairment of that power, the
injured party would be the Senate as an institution or any of its incumbent members, as it is the Senate's constitutional function that is
allegedly being violated.

The legal standing of an institution of the Legislature or of any of its Members has already been recognized by this Court in a number
of cases.131 What is in question here is the alleged impairment of the constitutional duties and powers granted to, or the impermissible
intrusion upon the domain of, the Legislature or an institution thereof. 132 In the case of suits initiated by the legislators themselves, this
Court has recognized their standing to question the validity of any official action that they claim infringes the prerogatives, powers,
and privileges vested by the Constitution in their office.133 As aptly explained by Justice Perfecto in Mabanag v. Lopez Vito:134

Being members of Congress, they are even duty bound to see that the latter act within the bounds of the Constitution which, as
representatives of the people, they should uphold, unless they are to commit a flagrant betrayal of public trust. They are
representatives of the sovereign people and it is their sacred duty to see to it that the fundamental law embodying the will of the
sovereign people is not trampled upon. (Emphases supplied)

We emphasize that in a legislators' suit, those Members of Congress who are challenging the official act have standing only to the
extent that the alleged violation impinges on their right to participate in the exercise of the powers of the institution of which they are
members.135 Legislators have the standing "to maintain inviolate the prerogatives, powers, and privileges vested by the Constitution
in their office and are allowed to sue to question the validity of any official action, which they claim infringes their prerogatives as
legislators."136 As legislators, they must clearly show that there was a direct injury to their persons or the institution to which they
belong.137

As correctly argued by respondent, the power to concur in a treaty or an international agreement is an institutional prerogative granted
by the Constitution to the Senate, not to the entire Legislature. In Pimentel v. Office of the Executive Secretary, this Court did not
recognize the standing of one of the petitioners therein who was a member of the House of Representatives. The petition in that case
sought to compel the transmission to the Senate for concurrence of the signed text of the Statute of the International Criminal Court.
Since that petition invoked the power of the Senate to grant or withhold its concurrence in a treaty entered into by the Executive
Department, only then incumbent Senator Pimentel was allowed to assert that authority of the Senate of which he was a member.

Therefore, none of the initial petitioners in the present controversy has the standing to maintain the suits as legislators.

Nevertheless, this Court finds that there is basis for it to review the act of the Executive for the following reasons.

In any case, petitioners raise issues involving matters of transcendental importance.

Petitioners138 argue that the Court may set aside procedural technicalities, as the present petition tackles issues that are of
transcendental importance. They point out that the matter before us is about the proper exercise of the Executive Department's power
to enter into international agreements in relation to that of the Senate to concur in those agreements. They also assert that EDCA
would cause grave injustice, as well as irreparable violation of the Constitution and of the Filipino people's rights.

The OSG, on the other hand, insists139 that petitioners cannot raise the mere fact that the present petitions involve matters of
transcendental importance in order to cure their inability to comply with the constitutional requirement of standing. Respondent
bewails the overuse of "transcendental importance" as an exception to the traditional requirements of constitutional litigation. It
stresses that one of the purposes of these requirements is to protect the Supreme Court from unnecessary litigation of constitutional
questions.

In a number of cases,140 this Court has indeed taken a liberal stance towards the requirement of legal standing, especially when
paramount interest is involved. Indeed, when those who challenge the official act are able to craft an issue of transcendental
significance to the people, the Court may exercise its sound discretion and take cognizance of the suit. It may do so in spite of the
inability of the petitioners to show that they have been personally injured by the operation of a law or any other government act.

While this Court has yet to thoroughly delineate the outer limits of this doctrine, we emphasize that not every other case, however
strong public interest may be, can qualify as an issue of transcendental importance. Before it can be impelled to brush aside the
essential requisites for exercising its power of judicial review, it must at the very least consider a number of factors: (1) the character
of the funds or other assets involved in the case; (2) the presence of a clear case of disregard of a constitutional or statutory prohibition
by the public respondent agency or instrumentality of the government; and (3) the lack of any other party that has a more direct and
specific interest in raising the present questions.141

An exhaustive evaluation of the memoranda of the parties, together with the oral arguments, shows that petitioners have presented
serious constitutional issues that provide ample justification for the Court to set aside the rule on standing. The transcendental
importance of the issues presented here is rooted in the Constitution itself. Section 25, Article XVIII thereof, cannot be any clearer:
there is a much stricter mechanism required before foreign military troops, facilities, or bases may be allowed in the country. The DFA
has already confirmed to the U.S. Embassy that "all internal requirements of the Philippines x x x have already been complied
with."142 It behooves the Court in this instance to take a liberal stance towards the rule on standing and to determine forthwith whether
there was grave abuse of discretion on the part of the Executive Department.

We therefore rule that this case is a proper subject for judicial review.

B. Whether the President may enter into an executive agreement on foreign military bases, troops, or facilities

C. Whether the provisions under EDCA are consistent with the Constitution, as well as with existing laws and treaties

Issues B and C shall be discussed together infra.

1. The role of the President as the executor of the law includes the duty to defend the State, for which purpose he may use that
power in the conduct of foreign relations

Historically, the Philippines has mirrored the division of powers in the U.S. government. When the Philippine government was still an
agency of the Congress of the U.S., it was as an agent entrusted with powers categorized as executive, legislative, and judicial, and
divided among these three great branches.143 By this division, the law implied that the divided powers cannot be exercised except by
the department given the power.144

This divide continued throughout the different versions of the Philippine Constitution and specifically vested the supreme executive
power in the Governor-General of the Philippines,145 a position inherited by the President of the Philippines when the country attained
independence. One of the principal functions of the supreme executive is the responsibility for the faithful execution of the laws as
embodied by the oath of office.146 The oath of the President prescribed by the 1987 Constitution reads thus:

I do solemnly swear (or affirm) that I will faithfully and conscientiously fulfill my duties as President (or Vice-President or Acting
President) of the Philippines, preserve and defend its Constitution, execute its laws, do justice to every man, and consecrate myself to
the service of the Nation. So help me God. (In case of affirmation, last sentence will be omitted.)147 (Emphases supplied)

This Court has interpreted the faithful execution clause as an obligation imposed on the President, and not a separate grant of
power.148 Section 1 7, Article VII of the Constitution, expresses this duty in no uncertain terms and includes it in the provision
regarding the President's power of control over the executive department, viz:

The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that the laws be faithfully
executed.

The equivalent provisions in the next preceding Constitution did not explicitly require this oath from the President. In the 1973
Constitution, for instance, the provision simply gives the President control over the ministries. 149 A similar language, not in the form
of the President's oath, was present in the 1935 Constitution, particularly in the enumeration of executive functions. 150 By 1987,
executive power was codified not only in the Constitution, but also in the Administrative Code: 151

SECTION 1. Power of Control. - The President shall have control of all the executive departments, bureaus, and offices. He shall
ensure that the laws be faithfully executed. (Emphasis supplied)

Hence, the duty to faithfully execute the laws of the land is inherent in executive power and is intimately related to the other executive
functions. These functions include the faithful execution of the law in autonomous regions; 152 the right to prosecute crimes;153 the
implementation of transportation projects;154 the duty to ensure compliance with treaties, executive agreements and executive
orders;155 the authority to deport undesirable aliens;156 the conferment of national awards under the President's jurisdiction; 157 and the
overall administration and control of the executive department. 158

These obligations are as broad as they sound, for a President cannot function with crippled hands, but must be capable of securing the
rule of law within all territories of the Philippine Islands and be empowered to do so within constitutional limits. Congress cannot, for
instance, limit or take over the President's power to adopt implementing rules and regulations for a law it has enacted. 159

More important, this mandate is self-executory by virtue of its being inherently executive in nature.160 As Justice Antonio T. Carpio
previously wrote,161

[i]f the rules are issued by the President in implementation or execution of self-executory constitutional powers vested in the
President, the rule-making power of the President is not a delegated legislative power. The most important self-executory
constitutional power of the President is the President's constitutional duty and mandate to "ensure that the laws be faithfully executed."
The rule is that the President can execute the law without any delegation of power from the legislature.

The import of this characteristic is that the manner of the President's execution of the law, even if not expressly granted by the
law, is justified by necessity and limited only by law, since the President must "take necessary and proper steps to carry into
execution the law."162 Justice George Malcolm states this principle in a grand manner:163

The executive should be clothed with sufficient power to administer efficiently the affairs of state. He should have complete control of
the instrumentalities through whom his responsibility is discharged. It is still true, as said by Hamilton, that "A feeble executive
implies a feeble execution of the government. A feeble execution is but another phrase for a bad execution; and a government ill
executed, whatever it may be in theory, must be in practice a bad government." The mistakes of State governments need not be
repeated here.

xxxx

Every other consideration to one side, this remains certain - The Congress of the United States clearly intended that the Governor-
General's power should be commensurate with his responsibility. The Congress never intended that the Governor-General should be
saddled with the responsibility of administering the government and of executing the laws but shorn of the power to do so. The
interests of the Philippines will be best served by strict adherence to the basic principles of constitutional government.

In light of this constitutional duty, it is the President's prerogative to do whatever is legal and necessary for Philippine defense
interests. It is no coincidence that the constitutional provision on the faithful execution clause was followed by that on the President's
commander-in-chief powers,164 which are specifically granted during extraordinary events of lawless violence, invasion, or rebellion.
And this duty of defending the country is unceasing, even in times when there is no state of lawlesss violence, invasion, or rebellion.
At such times, the President has full powers to ensure the faithful execution of the laws.

It would therefore be remiss for the President and repugnant to the faithful-execution clause of the Constitution to do nothing when the
call of the moment requires increasing the military's defensive capabilities, which could include forging alliances with states that hold
a common interest with the Philippines or bringing an international suit against an offending state.

The context drawn in the analysis above has been termed by Justice Arturo D. Brion's Dissenting Opinion as the beginning of a
"patent misconception."165 His dissent argues that this approach taken in analyzing the President's role as executor of the laws is
preceded by the duty to preserve and defend the Constitution, which was allegedly overlooked. 166

In arguing against the approach, however, the dissent grossly failed to appreciate the nuances of the analysis, if read holistically and in
context. The concept that the President cannot function with crippled hands and therefore can disregard the need for Senate
concurrence in treaties167 was never expressed or implied. Rather, the appropriate reading of the preceding analysis shows that the
point being elucidated is the reality that the President's duty to execute the laws and protect the Philippines is inextricably interwoven
with his foreign affairs powers, such that he must resolve issues imbued with both concerns to the full extent of his powers, subject
only to the limits supplied by law. In other words, apart from an expressly mandated limit, or an implied limit by virtue of
incompatibility, the manner of execution by the President must be given utmost deference. This approach is not different from that
taken by the Court in situations with fairly similar contexts.

Thus, the analysis portrayed by the dissent does not give the President authority to bypass constitutional safeguards and limits. In fact,
it specifies what these limitations are, how these limitations are triggered, how these limitations function, and what can be done within
the sphere of constitutional duties and limitations of the President.

Justice Brion's dissent likewise misinterprets the analysis proffered when it claims that the foreign relations power of the President
should not be interpreted in isolation.168 The analysis itself demonstrates how the foreign affairs function, while mostly the President's,
is shared in several instances, namely in Section 2 of Article II on the conduct of war; Sections 20 and 21 of Article VII on foreign
loans, treaties, and international agreements; Sections 4(2) and 5(2)(a) of Article VIII on the judicial review of executive acts;
Sections 4 and 25 of Article XVIII on treaties and international agreements entered into prior to the Constitution and on the presence
of foreign military troops, bases, or facilities.

In fact, the analysis devotes a whole subheading to the relationship between the two major presidential functions and the role of the
Senate in it.

This approach of giving utmost deference to presidential initiatives in respect of foreign affairs is not novel to the Court. The
President's act of treating EDCA as an executive agreement is not the principal power being analyzed as the Dissenting Opinion seems
to suggest. Rather, the preliminary analysis is in reference to the expansive power of foreign affairs. We have long treated this power
as something the Courts must not unduly restrict. As we stated recently in Vinuya v. Romulo:

To be sure, not all cases implicating foreign relations present political questions, and courts certainly possess the authority to construe
or invalidate treaties and executive agreements. However, the question whether the Philippine government should espouse claims of
its nationals against a foreign government is a foreign relations matter, the authority for which is demonstrably committed by our
Constitution not to the courts but to the political branches. In this case, the Executive Department has already decided that it is to the
best interest of the country to waive all claims of its nationals for reparations against Japan in the Treaty of Peace of 1951. The
wisdom of such decision is not for the courts to question. Neither could petitioners herein assail the said determination by the
Executive Department via the instant petition for certiorari.

In the seminal case of US v. Curtiss-Wright Export Corp., the US Supreme Court held that "[t]he President is the sole organ of the
nation in its external relations, and its sole representative with foreign relations."

It is quite apparent that if, in the maintenance of our international relations, embarrassment - perhaps serious
embarrassment - is to be avoided and success for our aims achieved, congressional legislation which is to be made
effective through negotiation and inquiry within the international field must often accord to the President a
degree of discretion and freedom from statutory restriction which would not be admissible where domestic
affairs alone involved. Moreover, he, not Congress, has the better opportunity of knowing the conditions which
prevail in foreign countries, and especially is this true in time of war. He has his confidential sources of information.
He has his agents in the form of diplomatic, consular and other officials ....
This ruling has been incorporated in our jurisprudence through Bavan v. Executive Secretary and Pimentel v. Executive
Secretary; its overreaching principle was, perhaps, best articulated in (now Chief) Justice Puno's dissent in Secretary of Justice v.
Lantion:

. . . The conduct of foreign relations is full of complexities and consequences, sometimes with life and death
significance to the nation especially in times of war. It can only be entrusted to that department of government
which can act on the basis of the best available information and can decide with decisiveness .... It is also the
President who possesses the most comprehensive and the most confidential information about foreign countries for
our diplomatic and consular officials regularly brief him on meaningful events all over the world. He has also
unlimited access to ultra-sensitive military intelligence data. In fine, the presidential role in foreign affairs is
dominant and the President is traditionally accorded a wider degree of discretion in the conduct of foreign
affairs. The regularity, nay, validity of his actions are adjudged under less stringent standards, lest their
judicial repudiation lead to breach of an international obligation, rupture of state relations, forfeiture of
confidence, national embarrassment and a plethora of other problems with equally undesirable
consequences.169 (Emphases supplied)

Understandably, this Court must view the instant case with the same perspective and understanding, knowing full well the
constitutional and legal repercussions of any judicial overreach.

2. The plain meaning of the Constitution prohibits the entry of foreign military bases, troops or facilities, except by way of a
treaty concurred in by the Senate - a clear limitation on the President's dual role as defender of the State and as sole authority
in foreign relations.

Despite the President's roles as defender of the State and sole authority in foreign relations, the 1987 Constitution expressly limits his
ability in instances when it involves the entry of foreign military bases, troops or facilities. The initial limitation is found in Section 21
of the provisions on the Executive Department: "No treaty or international agreement shall be valid and effective unless concurred in
by at least two-thirds of all the Members of the Senate." The specific limitation is given by Section 25 of the Transitory Provisions, the
full text of which reads as follows:

SECTION 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of
America concerning Military Bases, foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a
treaty duly concurred in by the Senate and, when the Congress so requires, ratified by a majority of the votes cast by the people in a
national referendum held for that purpose, and recognized as a treaty by the other contracting State.

It is quite plain that the Transitory Provisions of the 1987 Constitution intended to add to the basic requirements of a treaty under
Section 21 of Article VII. This means that both provisions must be read as additional limitations to the President's overarching
executive function in matters of defense and foreign relations.

3. The President, however, may enter into an executive agreement on foreign military bases, troops, or facilities, if (a) it is not
the instrument that allows the presence of foreign military bases, troops, or facilities; or (b) it merely aims to implement an
existing law or treaty.

Again we refer to Section 25, Article XVIII of the Constitution:

SECTION 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of
America concerning Military Bases, foreign military bases, troops, or facilities shall not be allowed in the
Philippines except under a treaty duly concurred in by the Senate and, when the Congress so requires, ratified by a majority of the
votes cast by the people in a national referendum held for that purpose, and recognized as a treaty by the other contracting State.
(Emphases supplied)

In view of this provision, petitioners argue170 that EDCA must be in the form of a "treaty" duly concurred in by the Senate. They stress
that the Constitution is unambigous in mandating the transmission to the Senate of all international agreements concluded after the
expiration of the MBA in 1991 - agreements that concern the presence of foreign military bases, troops, or facilities in the country.
Accordingly, petitioners maintain that the Executive Department is not given the choice to conclude agreements like EDCA in the
form of an executive agreement.

This is also the view of the Senate, which, through a majority vote of 15 of its members - with 1 against and 2 abstaining - says in SR
105171 that EDCA must be submitted to the Senate in the form of a treaty for concurrence by at least two-thirds of all its members.
The Senate cites two constitutional provisions (Article VI, Section 21 and Article XVIII, Section 25) to support its position. Compared
with the lone constitutional provision that the Office of the Solicitor General (OSG) cites, which is Article XVIII, Section 4(2), which
includes the constitutionality of "executive agreement(s)" among the cases subject to the Supreme Court's power of judicial review,
the Constitution clearly requires submission of EDCA to the Senate. Two specific provisions versus one general provision means that
the specific provisions prevail. The term "executive agreement" is "a term wandering alone in the Constitution, bereft of provenance
and an unidentified constitutional mystery."

The author of SR 105, Senator Miriam Defensor Santiago, upon interpellation even added that the MDT, which the Executive claims
to be partly implemented through EDCA, is already obsolete.

There are two insurmountable obstacles to this Court's agreement with SR 105, as well as with the comment on interpellation made by
Senator Santiago.

First, the concept of "executive agreement" is so well-entrenched in this Court's pronouncements on the powers of the President.
When the Court validated the concept of "executive agreement," it did so with full knowledge of the Senate's role in concurring in
treaties. It was aware of the problematique of distinguishing when an international agreement needed Senate concurrence for validity,
and when it did not; and the Court continued to validate the existence of "executive agreements" even after the 1987
Constitution.172 This follows a long line of similar decisions upholding the power of the President to enter into an executive
agreement.173

Second, the MDT has not been rendered obsolescent, considering that as late as 2009, 174 this Court continued to recognize its validity.

Third, to this Court, a plain textual reading of Article XIII, Section 25, inevitably leads to the conclusion that it applies only to a
proposed agreement between our government and a foreign government, whereby military bases, troops, or facilities of such foreign
government would be "allowed" or would "gain entry" Philippine territory.

Note that the provision "shall not be allowed" is a negative injunction. This wording signifies that the President is not authorized by
law to allow foreign military bases, troops, or facilities to enter the Philippines, except under a treaty concurred in by the Senate.
Hence, the constitutionally restricted authority pertains to the entry of the bases, troops, or facilities, and not to the activities to be
done after entry.

Under the principles of constitutional construction, of paramount consideration is the plain meaning of the language expressed in the
Constitution, or the verba legis rule.175 It is presumed that the provisions have been carefully crafted in order to express the objective it
seeks to attain.176 It is incumbent upon the Court to refrain from going beyond the plain meaning of the words used in the Constitution.
It is presumed that the framers and the people meant what they said when they said it, and that this understanding was reflected in the
Constitution and understood by the people in the way it was meant to be understood when the fundamental law was ordained and
promulgated.177 As this Court has often said:

We look to the language of the document itself in our search for its meaning. We do not of course stop there, but that is where we
begin. It is to be assumed that the words in which constitutional provisions are couched express the objective sought to be
attained. They are to be given their ordinary meaning except where technical terms are employed in which case the significance
thus attached to them prevails. As the Constitution is not primarily a lawyer's document, it being essential for the rule of law to
obtain that it should ever be present in the people's consciousness, its language as much as possible should be understood in the
sense they have in common use. What it says according to the text of the provision to be construed compels acceptance and negates
the power of the courts to alter it, based on the postulate that the framers and the people mean what they say. Thus, these are the
cases where the need for construction is reduced to a minimum.178(Emphases supplied)

It is only in those instances in which the constitutional provision is unclear, ambiguous, or silent that further construction must be
done to elicit its meaning.179 In Ang Bagong Bayani-OFW v. Commission on Elections,180 we reiterated this guiding principle:

it [is] safer to construe the Constitution from what appears upon its face. The proper interpretation therefore depends more
on how it was understood by the people adopting it than in the framers' understanding thereof. (Emphases supplied)

The effect of this statement is surprisingly profound, for, if taken literally, the phrase "shall not be allowed in the Philippines" plainly
refers to the entry of bases, troops, or facilities in the country. The Oxford English Dictionary defines the word "allow" as a transitive
verb that means "to permit, enable"; "to give consent to the occurrence of or relax restraint on (an action, event, or activity)"; "to
consent to the presence or attendance of (a person)"; and, when with an adverbial of place, "to permit (a person or animal) to go,
come, or be in, out, near, etc." 181 Black's Law Dictionary defines the term as one that means "[t]o grant, approve, or permit." 182
The verb "allow" is followed by the word "in," which is a preposition used to indicate "place or position in space or anything having
material extension: Within the limits or bounds of, within (any place or thing)." 183 That something is the Philippines, which is the noun
that follows.

It is evident that the constitutional restriction refers solely to the initial entry of the foreign military bases, troops, or facilities. Once
entry is authorized, the subsequent acts are thereafter subject only to the limitations provided by the rest of the Constitution and
Philippine law, and not to the Section 25 requirement of validity through a treaty.

The VFA has already allowed the entry of troops in the Philippines. This Court stated in Lim v. Executive Secretary:

After studied reflection, it appeared farfetched that the ambiguity surrounding the meaning of the word "activities" arose from
accident. In our view, it was deliberately made that way to give both parties a certain leeway in negotiation. In this manner, visiting
US forces may sojourn in Philippine territory for purposes other than military. As conceived, the joint exercises may include
training on new techniques of patrol and surveillance to protect the nation's marine resources, sea search-and-rescue operations to
assist vessels in distress, disaster relief operations, civic action projects such as the building of school houses, medical and
humanitarian missions, and the like.

Under these auspices, the VFA gives legitimacy to the current Balikatan exercises. It is only logical to assume that "Balikatan 02-1," a
"mutual anti- terrorism advising, assisting and training exercise," falls under the umbrella of sanctioned or allowable activities in the
context of the agreement. Both the history and intent of the Mutual Defense Treaty and the VFA support the conclusion that combat-
related activities -as opposed to combat itself-such as the one subject of the instant petition, are indeed authorized.184 (Emphasis
supplied)

Moreover, the Court indicated that the Constitution continues to govern the conduct of foreign military troops in the
Philippines,185 readily implying the legality of their initial entry into the country.

The OSG emphasizes that EDCA can be in the form of an executive agreement, since it merely involves "adjustments in detail" in the
implementation of the MDT and the VFA.186 It points out that there are existing treaties between the Philippines and the U.S. that have
already been concurred in by the Philippine Senate and have thereby met the requirements of the Constitution under Section 25.
Because of the status of these prior agreements, respondent emphasizes that EDCA need not be transmitted to the Senate.

The aforecited Dissenting Opinion of Justice Brion disagrees with the ponencia's application of verba legis construction to the words
of Article XVIII, Section 25.187 It claims that the provision is "neither plain, nor that simple." 188 To buttress its disagreement, the
dissent states that the provision refers to a historical incident, which is the expiration of the 1947 MBA. 189 Accordingly, this position
requires questioning the circumstances that led to the historical event, and the meaning of the terms under Article XVIII, Section 25.

This objection is quite strange. The construction technique of verba legis is not inapplicable just because a provision has a specific
historical context. In fact, every provision of the Constitution has a specific historical context. The purpose of constitutional and
statutory construction is to set tiers of interpretation to guide the Court as to how a particular provision functions. Verba legis is of
paramount consideration, but it is not the only consideration. As this Court has often said:

We look to the language of the document itself in our search for its meaning. We do not of course stop there, but that is where we
begin. It is to be assumed that the words in which constitutional provisions are couched express the objective sought to be
attained. They are to be given their ordinary meaning except where technical terms are employed in which case the significance
thus attached to them prevails. As the Constitution is not primarily a lawyer's document, it being essential for the rule of law to obtain
that it should ever be present in the people's consciousness, its language as much as possible should be understood in the sense
they have in common use. What it says according to the text of the provision to be construed compels acceptance and negates the
power of the courts to alter it, based on the postulate that the framers and the people mean what they say. Thus, these are the
cases where the need for construction is reduced to a minimum.190(Emphases supplied)

As applied, verba legis aids in construing the ordinary meaning of terms. In this case, the phrase being construed is "shall not be
allowed in the Philippines" and not the preceding one referring to "the expiration in 1991 of the Agreement between the Republic of
the Philippines and the United States of America concerning Military Bases, foreign military bases, troops, or facilities." It is explicit
in the wording of the provision itself that any interpretation goes beyond the text itself and into the discussion of the framers, the
context of the Constitutional Commission's time of drafting, and the history of the 1947 MBA. Without reference to these factors, a
reader would not understand those terms. However, for the phrase "shall not be allowed in the Philippines," there is no need for such
reference. The law is clear. No less than the Senate understood this when it ratified the VFA.

4. The President may generally enter into executive agreements subject to limitations defined by the Constitution and may be
in furtherance of a treaty already concurred in by the Senate.
We discuss in this section why the President can enter into executive agreements.

It would be helpful to put into context the contested language found in Article XVIII, Section 25. Its more exacting requirement was
introduced because of the previous experience of the country when its representatives felt compelled to consent to the old
MBA.191 They felt constrained to agree to the MBA in fulfilment of one of the major conditions for the country to gain independence
from the U.S.192 As a result of that experience, a second layer of consent for agreements that allow military bases, troops and facilities
in the country is now articulated in Article XVIII of our present Constitution.

This second layer of consent, however, cannot be interpreted in such a way that we completely ignore the intent of our constitutional
framers when they provided for that additional layer, nor the vigorous statements of this Court that affirm the continued existence of
that class of international agreements called "executive agreements."

The power of the President to enter into binding executive agreements without Senate concurrence is already well-established in this
jurisdiction.193 That power has been alluded to in our present and past Constitutions,194 in various statutes,195 in Supreme Court
decisions,196 and during the deliberations of the Constitutional Commission. 197 They cover a wide array of subjects with varying
scopes and purposes,198 including those that involve the presence of foreign military forces in the country.199

As the sole organ of our foreign relations 200 and the constitutionally assigned chief architect of our foreign policy, 201the President is
vested with the exclusive power to conduct and manage the country's interface with other states and governments. Being the principal
representative of the Philippines, the Chief Executive speaks and listens for the nation; initiates, maintains, and develops diplomatic
relations with other states and governments; negotiates and enters into international agreements; promotes trade, investments, tourism
and other economic relations; and settles international disputes with other states. 202

As previously discussed, this constitutional mandate emanates from the inherent power of the President to enter into agreements with
other states, including the prerogative to conclude binding executive agreements that do not require further Senate concurrence. The
existence of this presidential power203 is so well-entrenched that Section 5(2)(a), Article VIII of the Constitution, even provides for a
check on its exercise. As expressed below, executive agreements are among those official governmental acts that can be the subject of
this Court's power of judicial review:

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final
judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (Emphases supplied)

In Commissioner of Customs v. Eastern Sea Trading, executive agreements are defined as "international agreements embodying
adjustments of detail carrying out well-established national policies and traditions and those involving arrangements of a more or less
temporary nature."204 In Bayan Muna v. Romulo, this Court further clarified that executive agreements can cover a wide array of
subjects that have various scopes and purposes.205 They are no longer limited to the traditional subjects that are usually covered by
executive agreements as identified in Eastern Sea Trading. The Court thoroughly discussed this matter in the following manner:

The categorization of subject matters that may be covered by international agreementsmentioned in Eastern Sea Trading is not
cast in stone. x x x.

As may be noted, almost half a century has elapsed since the Court rendered its decision in Eastern Sea Trading. Since then,
the conduct of foreign affairs has become more complex and the domain of international law wider, as to include such subjects
as human rights, the environment, and the sea. In fact, in the US alone, the executive agreements executed by its President from 1980
to 2000 covered subjects such as defense, trade, scientific cooperation, aviation, atomic energy, environmental cooperation,
peace corps, arms limitation, and nuclear safety, among others. Surely, the enumeration in Eastern Sea Trading cannot
circumscribe the option of each state on the matter of which the international agreement format would be convenient to serve its
best interest. As Francis Sayre said in his work referred to earlier:

. . . It would be useless to undertake to discuss here the large variety of executive agreements as such concluded from time to
time. Hundreds of executive agreements, other than those entered into under the trade-agreement act, have been negotiated with
foreign governments. . . . They cover such subjects as the inspection of vessels, navigation dues, income tax on shipping profits, the
admission of civil air craft, custom matters and commercial relations generally, international claims, postal matters, the registration of
trademarks and copyrights, etc .... (Emphases Supplied)

One of the distinguishing features of executive agreements is that their validity and effectivity are not affected by a lack of Senate
concurrence.206 This distinctive feature was recognized as early as in Eastern Sea Trading (1961), viz:
Treaties are formal documents which require ratification with the approval of two-thirds of the Senate. Executive
agreements become binding through executive action without the need of a vote by the Senate or by Congress.

xxxx

[T]he right of the Executive to enter into binding agreements without the necessity of subsequent Congressional approval has
been confirmed by long usage. From the earliest days of our history we have entered into executive agreements covering such
subjects as commercial and consular relations, most-favored-nation rights, patent rights, trademark and copyright protection, postal
and navigation arrangements and the settlement of claims. The validity of these has never been seriously questioned by our
courts. (Emphases Supplied)

That notion was carried over to the present Constitution. In fact, the framers specifically deliberated on whether the general term
"international agreement" included executive agreements, and whether it was necessary to include an express proviso that would
exclude executive agreements from the requirement of Senate concurrence. After noted constitutionalist Fr. Joaquin Bernas quoted the
Court's ruling in Eastern Sea Trading, the Constitutional Commission members ultimately decided that the term "international
agreements" as contemplated in Section 21, Article VII, does not include executive agreements, and that a proviso is no longer
needed. Their discussion is reproduced below:207

MS. AQUINO: Madam President, first I would like a clarification from the Committee. We have retained the words "international
agreement" which I think is the correct judgment on the matter because an international agreement is different from a treaty. A treaty
is a contract between parties which is in the nature of international agreement and also a municipal law in the sense that the people are
bound. So there is a conceptual difference. However, I would like to be clarified if the international agreements include executive
agreements.

MR. CONCEPCION: That depends upon the parties. All parties to these international negotiations stipulate the conditions which are
necessary for the agreement or whatever it may be to become valid or effective as regards the parties.

MS. AQUINO: Would that depend on the parties or would that depend on the nature of the executive agreement? According to
common usage, there are two types of executive agreement: one is purely proceeding from an executive act which affects
external relations independent of the legislative and the other is an executive act in pursuance of legislative authorization.
The first kind might take the form of just conventions or exchanges of notes or protocol while the other, which would be pursuant
to the legislative authorization, may be in the nature of commercial agreements.

MR. CONCEPCION: Executive agreements are generally made to implement a treaty already enforced or to determine the
details for the implementation of the treaty. We are speaking of executive agreements, not international agreements.

MS. AQUINO: I am in full agreement with that, except that it does not cover the first kind of executive agreement which is just
protocol or an exchange of notes and this would be in the nature of reinforcement of claims of a citizen against a country, for example.

MR. CONCEPCION: The Commissioner is free to require ratification for validity insofar as the Philippines is concerned.

MS. AQUINO: It is my humble submission that we should provide, unless the Committee explains to us otherwise, an explicit
proviso which would except executive agreements from the requirement of concurrence of two-thirds of the Members of the
Senate. Unless I am enlightened by the Committee I propose that tentatively, the sentence should read. "No treaty or international
agreement EXCEPT EXECUTIVE AGREEMENTS shall be valid and effective."

FR. BERNAS: I wonder if a quotation from the Supreme Court decision [in Eastern Sea Trading] might help clarify this:

The right of the executive to enter into binding agreements without the necessity of subsequent Congressional approval has
been confirmed by long usage. From the earliest days of our history, we have entered into executive agreements covering such
subjects as commercial and consular relations, most favored nation rights, patent rights, trademark and copyright protection, postal
and navigation arrangements and the settlement of claims. The validity of this has never been seriously questioned by our Courts.

Agreements with respect to the registration of trademarks have been concluded by the executive of various countries under the Act of
Congress of March 3, 1881 (21 Stat. 502) . . . International agreements involving political issues or changes of national policy
and those involving international agreements of a permanent character usually take the form of treaties. But international
agreements embodying adjustments of detail, carrying out well established national policies and traditions and those
involving arrangements of a more or less temporary nature usually take the form of executive agreements.
MR. ROMULO: Is the Commissioner, therefore, excluding the executive agreements?

FR. BERNAS: What we are referring to, therefore, when we say international agreements which need concurrence by at least two-
thirds are those which are permanent in nature.

MS. AQUINO: And it may include commercial agreements which are executive agreements essentially but which are proceeding from
the authorization of Congress. If that is our understanding, then I am willing to withdraw that amendment.

FR. BERNAS: If it is with prior authorization of Congress, then it does not need subsequent concurrence by Congress.

MS. AQUINO: In that case, I am withdrawing my amendment.

MR. TINGSON: Madam President.

THE PRESIDENT: Is Commissioner Aquino satisfied?

MS. AQUINO: Yes. There is already an agreement among us on the definition of "executive agreements" and that would make
unnecessary any explicit proviso on the matter.

xxx

MR. GUINGONA: I am not clear as to the meaning of "executive agreements" because I heard that these executive agreements must
rely on treaties. In other words, there must first be treaties.

MR. CONCEPCION: No, I was speaking about the common use, as executive agreements being the implementation of treaties, details
of which do not affect the sovereignty of the State.

MR. GUINGONA: But what about the matter of permanence, Madam President? Would 99 years be considered permanent? What
would be the measure of permanency? I do not conceive of a treaty that is going to be forever, so there must be some kind of a time
limit.

MR. CONCEPCION: I suppose the Commissioner's question is whether this type of agreement should be included in a provision of
the Constitution requiring the concurrence of Congress.

MR. GUINGONA: It depends on the concept of the executive agreement of which I am not clear. If the executive agreement
partakes of the nature of a treaty, then it should also be included.

MR. CONCEPCION: Whether it partakes or not of the nature of a treaty, it is within the power of the Constitutional Commission to
require that.

MR. GUINGONA: Yes. That is why I am trying to clarify whether the words "international agreements" would include
executive agreements.

MR. CONCEPCION: No, not necessarily; generally no.

xxx

MR. ROMULO: I wish to be recognized first. I have only one question. Do we take it, therefore, that as far as the Committee is
concerned, the term "international agreements" does not include the term "executive agreements" as read by the
Commissioner in that text?

FR. BERNAS: Yes. (Emphases Supplied)

The inapplicability to executive agreements of the requirements under Section 21 was again recognized in Bayan v. Zamora and
in Bayan Muna v. Romulo. These cases, both decided under the aegis of the present Constitution, quoted Eastern Sea Trading in
reiterating that executive agreements are valid and binding even without the concurrence of the Senate.
Executive agreements may dispense with the requirement of Senate concurrence because of the legal mandate with which they are
concluded. As culled from the afore-quoted deliberations of the Constitutional Commission, past Supreme Court Decisions, and works
of noted scholars,208 executive agreements merely involve arrangements on the implementation of existing policies, rules, laws, or
agreements. They are concluded (1) to adjust the details of a treaty; 209 (2) pursuant to or upon confirmation by an act of the
Legislature;210 or (3) in the exercise of the President's independent powers under the Constitution. 211 The raison d'etre of executive
agreements hinges on prior constitutional or legislative authorizations.

The special nature of an executive agreement is not just a domestic variation in international agreements. International practice has
accepted the use of various forms and designations of international agreements, ranging from the traditional notion of a treaty - which
connotes a formal, solemn instrument - to engagements concluded in modem, simplified forms that no longer necessitate
ratification.212 An international agreement may take different forms: treaty, act, protocol, agreement, concordat, compromis
d'arbitrage, convention, covenant, declaration, exchange of notes, statute, pact, charter, agreed minute, memorandum of
agreement, modus vivendi, or some other form.213 Consequently, under international law, the distinction between a treaty and an
international agreement or even an executive agreement is irrelevant for purposes of determining international rights and obligations.

However, this principle does not mean that the domestic law distinguishing treaties, international agreements, and executive
agreements is relegated to a mere variation in form, or that the constitutional requirement of Senate concurrence is demoted to an
optional constitutional directive. There remain two very important features that distinguish treaties from executive agreements and
translate them into terms of art in the domestic setting.

First, executive agreements must remain traceable to an express or implied authorization under the Constitution, statutes, or treaties.
The absence of these precedents puts the validity and effectivity of executive agreements under serious question for the main function
of the Executive is to enforce the Constitution and the laws enacted by the Legislature, not to defeat or interfere in the performance of
these rules.214 In turn, executive agreements cannot create new international obligations that are not expressly allowed or reasonably
implied in the law they purport to implement.

Second, treaties are, by their very nature, considered superior to executive agreements. Treaties are products of the acts of the
Executive and the Senate215 unlike executive agreements, which are solely executive actions.216Because of legislative participation
through the Senate, a treaty is regarded as being on the same level as a statute. 217 If there is an irreconcilable conflict, a later law or
treaty takes precedence over one that is prior. 218 An executive agreement is treated differently. Executive agreements that are
inconsistent with either a law or a treaty are considered ineffective. 219 Both types of international agreement are nevertheless subject to
the supremacy of the Constitution.220

This rule does not imply, though, that the President is given carte blanche to exercise this discretion. Although the Chief Executive
wields the exclusive authority to conduct our foreign relations, this power must still be exercised within the context and the parameters
set by the Constitution, as well as by existing domestic and international laws. There are constitutional provisions that restrict or limit
the President's prerogative in concluding international agreements, such as those that involve the following:

a. The policy of freedom from nuclear weapons within Philippine territory221

b. The fixing of tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts, which must be
pursuant to the authority granted by Congress222

c. The grant of any tax exemption, which must be pursuant to a law concurred in by a majority of all the Members of
Congress223

d. The contracting or guaranteeing, on behalf of the Philippines, of foreign loans that must be previously concurred in by the
Monetary Board224

e. The authorization of the presence of foreign military bases, troops, or facilities in the country must be in the form of a
treaty duly concurred in by the Senate.225

f. For agreements that do not fall under paragraph 5, the concurrence of the Senate is required, should the form of the
government chosen be a treaty.

5. The President had the choice to enter into EDCA by way of an executive agreement or a treaty.

No court can tell the President to desist from choosing an executive agreement over a treaty to embody an international agreement,
unless the case falls squarely within Article VIII, Section 25.
As can be gleaned from the debates among the members of the Constitutional Commission, they were aware that legally binding
international agreements were being entered into by countries in forms other than a treaty. At the same time, it is clear that they were
also keen to preserve the concept of "executive agreements" and the right of the President to enter into such agreements.

What we can glean from the discussions of the Constitutional Commissioners is that they understood the following realities:

1. Treaties, international agreements, and executive agreements are all constitutional manifestations of the conduct of foreign
affairs with their distinct legal characteristics.

a. Treaties are formal contracts between the Philippines and other States-parties, which are in the nature of
international agreements, and also of municipal laws in the sense of their binding nature. 226

b. International agreements are similar instruments, the provisions of which may require the ratification of a
designated number of parties thereto. These agreements involving political issues or changes in national policy, as
well as those involving international agreements of a permanent character, usually take the form of treaties. They
may also include commercial agreements, which are executive agreements essentially, but which proceed from
previous authorization by Congress, thus dispensing with the requirement of concurrence by the Senate. 227

c. Executive agreements are generally intended to implement a treaty already enforced or to determine the details of
the implementation thereof that do not affect the sovereignty of the State. 228

2. Treaties and international agreements that cannot be mere executive agreements must, by constitutional decree, be
concurred in by at least two-thirds of the Senate.

3. However, an agreement - the subject of which is the entry of foreign military troops, bases, or facilities - is particularly
restricted. The requirements are that it be in the form of a treaty concurred in by the Senate; that when Congress so requires,
it be ratified by a majority of the votes cast by the people in a national referendum held for that purpose; and that it be
recognized as a treaty by the other contracting State.

4. Thus, executive agreements can continue to exist as a species of international agreements.

That is why our Court has ruled the way it has in several cases.

In Bayan Muna v. Romulo, we ruled that the President acted within the scope of her constitutional authority and discretion when she
chose to enter into the RP-U.S. Non-Surrender Agreement in the form of an executive agreement, instead of a treaty, and in ratifying
the agreement without Senate concurrence. The Court en banc discussed this intrinsic presidential prerogative as follows:

Petitioner parlays the notion that the Agreement is of dubious validity, partaking as it does of the nature of a treaty; hence, it must be
duly concurred in by the Senate. x x x x. Pressing its point, petitioner submits that the subject of the Agreement does not fall under any
of the subject-categories that xx x may be covered by an executive agreement, such as commercial/consular relations, most-favored
nation rights, patent rights, trademark and copyright protection, postal and navigation arrangements and settlement of claims.

The categorization of subject matters that may be covered by international agreements mentioned in Eastern Sea Trading is not cast in
stone. There are no hard and fast rules on the propriety of entering, on a given subject, into a treaty or an executive
agreement as an instrument of international relations. The primary consideration in the choice of the form of agreement is
the parties' intent and desire to craft an international agreement in the form they so wish to further their respective
interests. Verily, the matter of form takes a back seat when it comes to effectiveness and binding effect of the enforcement of a
treaty or an executive agreement, as the parties in either international agreement each labor under the pacta sunt servanda principle.

xxxx

But over and above the foregoing considerations is the fact that - save for the situation and matters contemplated in Sec. 25, Art.
XVIII of the Constitution - when a treaty is required, the Constitution does not classify any subject, like that involving political
issues, to be in the form of, and ratified as, a treaty. What the Constitution merely prescribes is that treaties need the concurrence of
the Senate by a vote defined therein to complete the ratification process.

xxxx
x x x. As the President wields vast powers and influence, her conduct in the external affairs of the nation is, as Bayan would put it,
"executive altogether." The right of the President to enter into or ratify binding executive agreements has been confirmed by
long practice.

In thus agreeing to conclude the Agreement thru E/N BF0-028-03, then President Gloria Macapagal-Arroyo, represented by the
Secretary of Foreign Affairs, acted within the scope of the authority and discretion vested in her by the Constitution. At the end
of the day, the President - by ratifying, thru her deputies, the non-surrender agreement - did nothing more than discharge a
constitutional duty and exercise a prerogative that pertains to her office. (Emphases supplied)

Indeed, in the field of external affairs, the President must be given a larger measure of authority and wider discretion, subject only to
the least amount of checks and restrictions under the Constitution.229 The rationale behind this power and discretion was recognized by
the Court in Vinuya v. Executive Secretary, cited earlier.230

Section 9 of Executive Order No. 459, or the Guidelines in the Negotiation of International Agreements and its Ratification, thus,
correctly reflected the inherent powers of the President when it stated that the DFA "shall determine whether an agreement is an
executive agreement or a treaty."

Accordingly, in the exercise of its power of judicial review, the Court does not look into whether an international agreement should be
in the form of a treaty or an executive agreement, save in cases in which the Constitution or a statute requires otherwise. Rather, in
view of the vast constitutional powers and prerogatives granted to the President in the field of foreign affairs, the task of the Court is
to determine whether the international agreement is consistent with the applicable limitations.

6. Executive agreements may cover the matter of foreign military forces if it merely involves detail adjustments.

The practice of resorting to executive agreements in adjusting the details of a law or a treaty that already deals with the presence of
foreign military forces is not at all unusual in this jurisdiction. In fact, the Court has already implicitly acknowledged this practice
in Lim v. Executive Secretary.231 In that case, the Court was asked to scrutinize the constitutionality of the Terms of Reference of
the Balikatan 02-1 joint military exercises, which sought to implement the VFA. Concluded in the form of an executive agreement,
the Terms of Reference detailed the coverage of the term "activities" mentioned in the treaty and settled the matters pertaining to the
construction of temporary structures for the U.S. troops during the activities; the duration and location of the exercises; the number of
participants; and the extent of and limitations on the activities of the U.S. forces. The Court upheld the Terms of Reference as being
consistent with the VFA. It no longer took issue with the fact that the Balikatan Terms of Reference was not in the form of a treaty
concurred in by the Senate, even if it dealt with the regulation of the activities of foreign military forces on Philippine territory.

In Nicolas v. Romulo,232 the Court again impliedly affirmed the use of an executive agreement in an attempt to adjust the details of a
provision of the VFA. The Philippines and the U.S. entered into the Romulo-Kenney Agreement, which undertook to clarify the
detention of a U.S. Armed Forces member, whose case was pending appeal after his conviction by a trial court for the crime of rape.
In testing the validity of the latter agreement, the Court precisely alluded to one of the inherent limitations of an executive agreement:
it cannot go beyond the terms of the treaty it purports to implement. It was eventually ruled that the Romulo-Kenney Agreement was
"not in accord" with the VFA, since the former was squarely inconsistent with a provision in the treaty requiring that the detention be
"by Philippine authorities." Consequently, the Court ordered the Secretary of Foreign Affairs to comply with the VFA and "forthwith
negotiate with the United States representatives for the appropriate agreement on detention facilities under Philippine authorities as
provided in Art. V, Sec. 10 of the VFA. " 233

Culling from the foregoing discussions, we reiterate the following pronouncements to guide us in resolving the present controversy:

1. Section 25, Article XVIII of the Constitution, contains stringent requirements that must be fulfilled by the international
agreement allowing the presence of foreign military bases, troops, or facilities in the Philippines: (a) the agreement must be
in the form of a treaty, and (b) it must be duly concurred in by the Senate.

2. If the agreement is not covered by the above situation, then the President may choose the form of the agreement (i.e., either
an executive agreement or a treaty), provided that the agreement dealing with foreign military bases, troops, or facilities is
not the principal agreement that first allows their entry or presence in the Philippines.

3. The executive agreement must not go beyond the parameters, limitations, and standards set by the law and/or treaty that
the former purports to implement; and must not unduly expand the international obligation expressly mentioned or
necessarily implied in the law or treaty.

4. The executive agreement must be consistent with the Constitution, as well as with existing laws and treaties.
In light of the President's choice to enter into EDCA in the form of an executive agreement, respondents carry the burden of proving
that it is a mere implementation of existing laws and treaties concurred in by the Senate. EDCA must thus be carefully dissected to
ascertain if it remains within the legal parameters of a valid executive agreement.

7. EDCA is consistent with the content, purpose, and framework of the MDT and the VFA

The starting point of our analysis is the rule that "an executive agreement xx x may not be used to amend a treaty."234 In Lim v.
Executive Secretary and in Nicolas v. Romulo, the Court approached the question of the validity of executive agreements by
comparing them with the general framework and the specific provisions of the treaties they seek to implement.

In Lim, the Terms of Reference of the joint military exercises was scrutinized by studying "the framework of the treaty antecedents to
which the Philippines bound itself,"235 i.e., the MDT and the VFA. The Court proceeded to examine the extent of the term "activities"
as contemplated in Articles 1236 and II237 of the VFA. It later on found that the term "activities" was deliberately left undefined and
ambiguous in order to permit "a wide scope of undertakings subject only to the approval of the Philippine government" 238 and thereby
allow the parties "a certain leeway in negotiation." 239 The Court eventually ruled that the Terms of Reference fell within the
sanctioned or allowable activities, especially in the context of the VFA and the MDT.

The Court applied the same approach to Nicolas v. Romulo. It studied the provisions of the VFA on custody and detention to ascertain
the validity of the Romulo-Kenney Agreement.240 It eventually found that the two international agreements were not in accord, since
the Romulo-Kenney Agreement had stipulated that U.S. military personnel shall be detained at the U.S. Embassy Compound and
guarded by U.S. military personnel, instead of by Philippine authorities. According to the Court, the parties "recognized the difference
between custody during the trial and detention after conviction." 241 Pursuant to Article V(6) of the VFA, the custody of a U.S. military
personnel resides with U.S. military authorities during trial. Once there is a finding of guilt, Article V(l0) requires that the confinement
or detention be "by Philippine authorities."

Justice Marvic M.V.F. Leonen's Dissenting Opinion posits that EDCA "substantially modifies or amends the VFA" 242and follows with
an enumeration of the differences between EDCA and the VFA. While these arguments will be rebutted more fully further on, an
initial answer can already be given to each of the concerns raised by his dissent.

The first difference emphasized is that EDCA does not only regulate visits as the VFA does, but allows temporary stationing on a
rotational basis of U.S. military personnel and their contractors in physical locations with permanent facilities and pre-positioned
military materiel.

This argument does not take into account that these permanent facilities, while built by U.S. forces, are to be owned by the Philippines
once constructed.243 Even the VFA allowed construction for the benefit of U.S. forces during their temporary visits.

The second difference stated by the dissent is that EDCA allows the prepositioning of military materiel, which can include various
types of warships, fighter planes, bombers, and vessels, as well as land and amphibious vehicles and their corresponding
ammunition.244

However, the VFA clearly allows the same kind of equipment, vehicles, vessels, and aircraft to be brought into the country. Articles
VII and VIII of the VFA contemplates that U.S. equipment, materials, supplies, and other property are imported into or acquired in the
Philippines by or on behalf of the U.S. Armed Forces; as are vehicles, vessels, and aircraft operated by or for U.S. forces in connection
with activities under the VFA. These provisions likewise provide for the waiver of the specific duties, taxes, charges, and fees that
correspond to these equipment.

The third difference adverted to by the Justice Leonen's dissent is that the VFA contemplates the entry of troops for training exercises,
whereas EDCA allows the use of territory for launching military and paramilitary operations conducted in other states.245 The dissent
of Justice Teresita J. Leonardo-De Castro also notes that VFA was intended for non-combat activides only, whereas the entry and
activities of U.S. forces into Agreed Locations were borne of military necessity or had a martial character, and were therefore not
contemplated by the VFA.246

This Court's jurisprudence however established in no uncertain terms that combat-related activities, as opposed to actual combat, were
allowed under the MDT and VFA, viz:

Both the history and intent of the Mutual Defense Treaty and the VFA support the conclusion that combat-related activities as opposed
to combat itself such as the one subject of the instant petition, are indeed authorized. 247
Hence, even if EDCA was borne of military necessity, it cannot be said to have strayed from the intent of the VFA since EDCA's
combat-related components are allowed under the treaty.

Moreover, both the VFA and EDCA are silent on what these activities actually are. Both the VFA and EDCA deal with the presence
of U.S. forces within the Philippines, but make no mention of being platforms for activity beyond Philippine territory. While it may be
that, as applied, military operations under either the VFA or EDCA would be carried out in the future the scope of judicial review does
not cover potential breaches of discretion but only actual occurrences or blatantly illegal provisions. Hence, we cannot invalidate
EDCA on the basis of the potentially abusive use of its provisions.

The fourth difference is that EDCA supposedly introduces a new concept not contemplated in the VFA or the MDT: Agreed
Locations, Contractors, Pre-positioning, and Operational Control.248

As previously mentioned, these points shall be addressed fully and individually in the latter analysis of EDCA's provisions. However,
it must already be clarified that the terms and details used by an implementing agreement need not be found in the mother treaty. They
must be sourced from the authority derived from the treaty, but are not necessarily expressed word-for-word in the mother treaty. This
concern shall be further elucidated in this Decision.

The fifth difference highlighted by the Dissenting Opinion is that the VFA does not have provisions that may be construed as a
restriction on or modification of obligations found in existing statues, including the jurisdiction of courts, local autonomy, and
taxation. Implied in this argument is that EDCA contains such restrictions or modifications. 249

This last argument cannot be accepted in view of the clear provisions of EDCA. Both the VFA and EDCA ensure Philippine
jurisdiction in all instances contemplated by both agreements, with the exception of those outlined by the VFA in Articles III-VI. In
the VFA, taxes are clearly waived whereas in EDCA, taxes are assumed by the government as will be discussed later on. This fact
does not, therefore, produce a diminution of jurisdiction on the part of the Philippines, but rather a recognition of sovereignty and the
rights that attend it, some of which may be waived as in the cases under Articles III-VI of the VFA.

Taking off from these concerns, the provisions of EDCA must be compared with those of the MDT and the VFA, which are the two
treaties from which EDCA allegedly draws its validity.

"Authorized presence" under the VFA versus "authorized activities" under EDCA: (1) U.S. personnel and (2) U.S. contractors

The OSG argues250 that EDCA merely details existing policies under the MDT and the VFA. It explains that EDCA articulates
the principle of defensive preparation embodied in Article II of the MDT; and seeks to enhance the defensive, strategic, and
technological capabilities of both parties pursuant to the objective of the treaty to strengthen those capabilities to prevent or resist a
possible armed attack. Respondent also points out that EDCA simply implements Article I of the VFA, which already allows the entry
of U.S. troops and personnel into the country. Respondent stresses this Court's recognition in Lim v. Executive Secretary that U.S.
troops and personnel are authorized to conduct activities that promote the goal of maintaining and developing their defense capability.

Petitioners contest251 the assertion that the provisions of EDCA merely implement the MDT. According to them, the treaty does not
specifically authorize the entry of U.S. troops in the country in order to maintain and develop the individual and collective capacities
of both the Philippines and the U.S. to resist an armed attack. They emphasize that the treaty was concluded at a time when there was
as yet no specific constitutional prohibition on the presence of foreign military forces in the country.

Petitioners also challenge the argument that EDCA simply implements the VFA. They assert that the agreement covers only short-
term or temporary visits of U.S. troops "from time to time" for the specific purpose of combined military exercises with their Filipino
counterparts. They stress that, in contrast, U.S. troops are allowed under EDCA to perform activities beyond combined military
exercises, such as those enumerated in Articles 111(1) and IV(4) thereof. Furthermore, there is some degree of permanence in the
presence of U.S. troops in the country, since the effectivity of EDCA is continuous until terminated. They proceed to argue that while
troops have a "rotational" presence, this scheme in fact fosters their permanent presence.

a. Admission of U.S. military and civilian personnel into Philippine territory is already allowed under the VFA

We shall first deal with the recognition under EDCA of the presence in the country of three distinct classes of individuals who will be
conducting different types of activities within the Agreed Locations: (1) U.S. military personnel; (2) U.S. civilian personnel; and (3)
U.S. contractors. The agreement refers to them as follows:

"United States personnel" means United States military and civilian personnel temporarily in the territory of the Philippines in
connection with activities approved by the Philippines, as those terms are defined in the VFA.252
"United States forces" means the entity comprising United States personnel and all property, equipment, and materiel of the
United States Armed Forces present in the territory of the Philippines. 253

"United States contractors" means companies and firms, and their employees, under contract or subcontract to or on behalf of
the United States Department of Defense. United States contractors are not included as part of the definition of United States
personnel in this Agreement, including within the context of the VFA. 254

United States forces may contract for any materiel, supplies, equipment, and services (including construction) to be furnished or
undertaken in the territory of the Philippines without restriction as to choice of contractor, supplier, or person who
provides such materiel, supplies, equipment, or services. Such contracts shall be solicited, awarded, and administered in accordance
with the laws and regulations of the United States.255 (Emphases Supplied)

A thorough evaluation of how EDCA is phrased clarities that the agreement does not deal with the entry into the country of U.S.
personnel and contractors per se. While Articles I(l)(b)256 and II(4)257 speak of "the right to access and use" the Agreed Locations,
their wordings indicate the presumption that these groups have already been allowed entry into Philippine territory, for which, unlike
the VFA, EDCA has no specific provision. Instead, Article II of the latter simply alludes to the VFA in describing U.S. personnel, a
term defined under Article I of the treaty as follows:

As used in this Agreement, "United States personnel" means United States military and civilian personnel temporarily in the
Philippines in connection with activities approved by the Philippine Government. Within this definition:

1. The term "military personnel" refers to military members of the United States Army, Navy, Marine Corps,
Air Force, and Coast Guard.

2. The term "civilian personnel" refers to individuals who are neither nationals of nor ordinarily resident in the
Philippines and who are employed by the United States armed forces or who are accompanying the United
States armed forces, such as employees of the American Red Cross and the United Services Organization.258

Article II of EDCA must then be read with Article III of the VFA, which provides for the entry accommodations to be accorded to
U.S. military and civilian personnel:

1. The Government of the Philippines shall facilitate the admission of United States personnel and their departure from
the Philippines in connection with activities covered by this agreement.

2. United States military personnel shall be exempt from passport and visa regulations upon enteringand departing the
Philippines.

3. The following documents only, which shall be required in respect of United States military personnel who enter the
Philippines; xx xx.

4. United States civilian personnel shall be exempt from visa requirements but shall present, upon demand, valid
passports upon entry and departure of the Philippines. (Emphases Supplied)

By virtue of Articles I and III of the VFA, the Philippines already allows U.S. military and civilian personnel to be "temporarily in the
Philippines," so long as their presence is "in connection with activities approved by the Philippine Government." The Philippines,
through Article III, even guarantees that it shall facilitate the admission of U.S. personnel into the country and grant exemptions from
passport and visa regulations. The VFA does not even limit their temporary presence to specific locations.

Based on the above provisions, the admission and presence of U.S. military and civilian personnel in Philippine territory are
already allowed under the VFA, the treaty supposedly being implemented by EDCA. What EDCA has effectively done, in fact, is
merely provide the mechanism to identify the locations in which U.S. personnel may perform allowed activities pursuant to the VFA.
As the implementing agreement, it regulates and limits the presence of U.S. personnel in the country.

b. EDCA does not provide the legal basis for admission of U.S. contractors into Philippine territory; their entry must be sourced from
extraneous Philippine statutes and regulations for the admission of alien employees or business persons.

Of the three aforementioned classes of individuals who will be conducting certain activities within the Agreed Locations, we note that
only U.S. contractors are not explicitly mentioned in the VFA. This does not mean, though, that the recognition of their presence
under EDCA is ipso facto an amendment of the treaty, and that there must be Senate concurrence before they are allowed to enter the
country.

Nowhere in EDCA are U.S. contractors guaranteed immediate admission into the Philippines. Articles III and IV, in fact, merely grant
them the right of access to, and the authority to conduct certain activities within the Agreed Locations. Since Article II(3) of EDCA
specifically leaves out U.S. contractors from the coverage of the VFA, they shall not be granted the same entry accommodations and
privileges as those enjoyed by U.S. military and civilian personnel under the VFA.

Consequently, it is neither mandatory nor obligatory on the part of the Philippines to admit U.S. contractors into the country. 259 We
emphasize that the admission of aliens into Philippine territory is "a matter of pure permission and simple tolerance which creates no
obligation on the part of the government to permit them to stay." 260 Unlike U.S. personnel who are accorded entry accommodations,
U.S. contractors are subject to Philippine immigration laws. 261The latter must comply with our visa and passport regulations262 and
prove that they are not subject to exclusion under any provision of Philippine immigration laws. 263 The President may also deny them
entry pursuant to his absolute and unqualified power to prohibit or prevent the admission of aliens whose presence in the country
would be inimical to public interest.264

In the same vein, the President may exercise the plenary power to expel or deport U.S. contractors 265 as may be necessitated by
national security, public safety, public health, public morals, and national interest. 266 They may also be deported if they are found to be
illegal or undesirable aliens pursuant to the Philippine Immigration Act 267 and the Data Privacy Act.268 In contrast, Article 111(5) of
the VFA requires a request for removal from the Philippine government before a member of the U.S. personnel may be "dispos[ed] xx
x outside of the Philippines."

c. Authorized activities of U.S. military and civilian personnel within Philippine territory are in furtherance of the MDT and the VFA

We begin our analysis by quoting the relevant sections of the MDT and the VFA that pertain to the activities in which U.S. military
and civilian personnel may engage:

MUTUAL DEFENSE TREATY

Article II

In order more effectively to achieve the objective of this Treaty, the Parties separately and jointly byself-help and mutual
aid will maintain and develop their individual and collective capacity to resist armed attack.

Article III

The Parties, through their Foreign Ministers or their deputies, will consult together from time to time regarding
the implementation of this Treaty and whenever in the opinion of either of them the territorial integrity, political independence or
security of either of the Parties is threatened by external armed attack in the Pacific.

VISITING FORCES AGREEMENT

Preamble

xxx

Reaffirming their obligations under the Mutual Defense Treaty of August 30, 1951;

Noting that from time to time elements of the United States armed forces may visit the Republic of the Philippines;

Considering that cooperation between the United States and the Republic of the Philippines promotes their common security
interests;

xxx

Article I - Definitions
As used in this Agreement, "United States personnel" means United States military and civilian personnel temporarily in the
Philippines in connection with activities approved by the Philippine Government. Within this definition: xx x

Article II - Respect for Law

It is the duty of United States personnel to respect the laws of the Republic of the Philippines and to abstain from any activity
inconsistent with the spirit of this agreement, and, in particular, from any political activity in the Philippines. The Government of
the United States shall take all measures within its authority to ensure that this is done.

Article VII - Importation and Exportation

1. United States Government equipment, materials, supplies, and other property imported into or acquired in the Philippines by
or on behalf of the United States armed forces in connection with activities to which this agreement applies, shall be free of all
Philippine duties, taxes and other similar charges. Title to such property shall remain with the United States, which may remove such
property from the Philippines at any time, free from export duties, taxes, and other similar charges. x x x.

Article VIII - Movement of Vessels and Aircraft

1. Aircraft operated by or for the United States armed forces may enter the Philippines upon approval of the Government of the
Philippines in accordance with procedures stipulated in implementing arrangements.

2. Vessels operated by or for the United States armed forces may enter the Philippines upon approval of the Government of the
Philippines. The movement of vessels shall be in accordance with international custom and practice governing such vessels,
and such agreed implementing arrangements as necessary. x x x (Emphases Supplied)

Manifest in these provisions is the abundance of references to the creation of further "implementing arrangements" including the
identification of "activities [to be] approved by the Philippine Government." To determine the parameters of these implementing
arrangements and activities, we referred to the content, purpose, and framework of the MDT and the VFA.

By its very language, the MDT contemplates a situation in which both countries shall engage in joint activities, so that they can
maintain and develop their defense capabilities. The wording itself evidently invites a reasonable construction that the joint activities
shall involve joint military trainings, maneuvers, and exercises. Both the interpretation269 and the subsequent practice270 of the parties
show that the MDT independently allows joint military exercises in the country. Lim v. Executive Secretary271 and Nicolas v.
Romulo272 recognized that Balikatan exercises, which are activities that seek to enhance and develop the strategic and technological
capabilities of the parties to resist an armed attack, "fall squarely under the provisions of the RP-US MDT."273 In Lim, the Court
especially noted that the Philippines and the U.S. continued to conduct joint military exercises even after the expiration of the MBA
and even before the conclusion of the VFA.274 These activities presumably related to the Status of Forces Agreement, in which the
parties agreed on the status to be accorded to U.S. military and civilian personnel while conducting activities in the Philippines in
relation to the MDT.275

Further, it can be logically inferred from Article V of the MDT that these joint activities may be conducted on Philippine or on U.S.
soil. The article expressly provides that the term armed attack includes "an armed attack on the metropolitan territory of either of
the Parties, or on the island territories under its jurisdiction in the Pacific or on its armed forces, public vessels or aircraft in the
Pacific." Surely, in maintaining and developing our defense capabilities, an assessment or training will need to be performed,
separately and jointly by self-help and mutual aid, in the territories of the contracting parties. It is reasonable to conclude that the
assessment of defense capabilities would entail understanding the terrain, wind flow patterns, and other environmental factors unique
to the Philippines.

It would also be reasonable to conclude that a simulation of how to respond to attacks in vulnerable areas would be part of the training
of the parties to maintain and develop their capacity to resist an actual armed attack and to test and validate the defense plan of the
Philippines. It is likewise reasonable to imagine that part of the training would involve an analysis of the effect of the weapons that
may be used and how to be prepared for the eventuality. This Court recognizes that all of this may require training in the area where
an armed attack might be directed at the Philippine territory.

The provisions of the MDT must then be read in conjunction with those of the VFA.

Article I of the VFA indicates that the presence of U.S. military and civilian personnel in the Philippines is "in connection with
activities approved by the Philippine Government." While the treaty does not expressly enumerate or detail the nature of activities of
U.S. troops in the country, its Preamble makes explicit references to the reaffirmation of the obligations of both countries under the
MDT. These obligations include the strengthening of international and regional security in the Pacific area and the promotion of
common security interests.

The Court has already settled in Lim v. Executive Secretary that the phrase "activities approved by the Philippine Government" under
Article I of the VFA was intended to be ambiguous in order to afford the parties flexibility to adjust the details of the purpose of the
visit of U.S. personnel.276 In ruling that the Terms of Reference for the Balikatan Exercises in 2002 fell within the context of the
treaty, this Court explained:

After studied reflection, it appeared farfetched that the ambiguity surrounding the meaning of the word "activities" arose from
accident. In our view, it was deliberately made that way to give both parties a certain leeway in negotiation. In this
manner, visiting US forces may sojourn in Philippine territory for purposes other than military. As conceived, the joint exercises
may include training on new techniques of patrol and surveillance to protect the nation's marine resources, sea search-and-rescue
operations to assist vessels in distress, disaster relief operations, civic action projects such as the building of school houses, medical
and humanitarian missions, and the like.

Under these auspices, the VFA gives legitimacy to the current Balikatan exercises. It is only logical to assume that "Balikatan 02-
1," a "mutual anti-terrorism advising, assisting and training exercise," falls under the umbrella of sanctioned or allowable
activities in the context of the agreement. Both the history and intent of the Mutual Defense Treaty and the VFA support the
conclusion that combat-related activities - as opposed to combat itself- such as the one subject of the instant petition, are indeed
authorized. (Emphases Supplied)

The joint report of the Senate committees on foreign relations and on national defense and security further explains the wide range and
variety of activities contemplated in the VFA, and how these activities shall be identified: 277

These joint exercises envisioned in the VFA are not limited to combat-related activities; they have a wide range and variety. They
include exercises that will reinforce the AFP's ability to acquire new techniques of patrol and surveillance to protect the country's
maritime resources; sea-search and rescue operations to assist ships in distress; and disaster-relief operations to aid the civilian
victims of natural calamities, such as earthquakes, typhoons and tidal waves.

xxxx

Joint activities under the VFA will include combat maneuvers; training in aircraft maintenance and equipment repair; civic-action
projects; and consultations and meetings of the Philippine-U.S. Mutual Defense Board. It is at the level of the Mutual Defense
Board-which is headed jointly by the Chief of Staff of the AFP and the Commander in Chief of the U.S. Pacific Command-that the
VFA exercises are planned. Final approval of any activity involving U.S. forces is, however, invariably given by the Philippine
Government.

xxxx

Siazon clarified that it is not the VFA by itself that determines what activities will be conductedbetween the armed forces of the
U.S. and the Philippines. The VFA regulates and provides the legal framework for the presence, conduct and legal status of U.S.
personnel while they are in the country for visits, joint exercises and other related activities. (Emphases Supplied)

What can be gleaned from the provisions of the VFA, the joint report of the Senate committees on foreign relations and on
national defense and security, and the ruling of this Court in Lim is that the "activities" referred to in the treaty are meant to
be specified and identified infurther agreements. EDCA is one such agreement.

EDCA seeks to be an instrument that enumerates the Philippine-approved activities of U.S. personnel referred to in the VFA. EDCA
allows U.S. military and civilian personnel to perform "activities approved by the Philippines, as those terms are defined in the
VFA"278 and clarifies that these activities include those conducted within the Agreed Locations:

1. Security cooperation exercises; joint and combined training activities; humanitarian assistance and disaster relief activities; and
such other activities as may be agreed upon by the Parties279

2. Training; transit; support and related activities; refueling of aircraft; bunkering of vessels; temporary maintenance of vehicles,
vessels, and aircraft; temporary accommodation of personnel; communications; prepositioning of equipment, supplies, and materiel;
deployment of forces and materiel; and such other activities as the Parties may agree 280
3. Exercise of operational control over the Agreed Locations for construction activities and other types of activity, including
alterations and improvements thereof281

4. Exercise of all rights and authorities within the Agreed Locations that are necessary for their operational control or defense,
including the adoption of apfropriate measures to protect U.S. forces and contractors 282

5. Use of water, electricity, and other public utilities283

6. Operation of their own telecommunication systems, including the utilization of such means and services as are required to ensure
the full ability to operate telecommunication systems, as well as the use of the necessary radio spectrum allocated for this purpose284

According to Article I of EDCA, one of the purposes of these activities is to maintain and develop, jointly and by mutual aid, the
individual and collective capacities of both countries to resist an armed attack. It further states that the activities are in furtherance of
the MDT and within the context of the VFA.

We note that these planned activities are very similar to those under the Terms of Reference 285 mentioned in Lim. Both EDCA and the
Terms of Reference authorize the U.S. to perform the following: (a) participate in training exercises; (b) retain command over their
forces; (c) establish temporary structures in the country; (d) share in the use of their respective resources, equipment and other assets;
and (e) exercise their right to self-defense. We quote the relevant portion of the Terms and Conditions as follows: 286

I. POLICY LEVEL

xxxx

No permanent US basing and support facilities shall be established. Temporary structures such as those for troop billeting,
classroom instruction and messing may be set up for use by RP and US Forces during the Exercise.

The Exercise shall be implemented jointly by RP and US Exercise Co-Directors under the authority of the Chief of Staff, AFP. In no
instance will US Forces operate independently during field training exercises (FTX). AFP and US Unit Commanders will retain
command over their respective forces under the overall authority of the Exercise Co-Directors. RP and US participants shall
comply with operational instructions of the AFP during the FTX.

The exercise shall be conducted and completed within a period of not more than six months, with the projected participation of 660
US personnel and 3,800 RP Forces. The Chief of Staff, AFP shall direct the Exercise Co-Directors to wind up and terminate the
Exercise and other activities within the six month Exercise period.

The Exercise is a mutual counter-terrorism advising, assisting and training Exercise relative to Philippine efforts against the
ASG, and will be conducted on the Island of Basilan. Further advising, assisting and training exercises shall be conducted in
Malagutay and the Zamboanga area. Related activities in Cebu will be for support of the Exercise.

xx xx.

US exercise participants shall not engage in combat, without prejudice to their right of self-defense.

These terms of Reference are for purposes of this Exercise only and do not create additional legal obligations between the US
Government and the Republic of the Philippines.

II. EXERCISE LEVEL

1. TRAINING

a. The Exercise shall involve the conduct of mutual military assisting, advising and trainingof RP and US Forces
with the primary objective of enhancing the operational capabilities of both forces to combat terrorism.

b. At no time shall US Forces operate independently within RP territory.

c. Flight plans of all aircraft involved in the exercise will comply with the local air traffic regulations.
2. ADMINISTRATION & LOGISTICS

xxxx

a. RP and US participating forces may share, in accordance with their respective laws and regulations, in the use of their resources,
equipment and other assets. They will use their respective logistics channels. x x x. (Emphases Supplied)

After a thorough examination of the content, purpose, and framework of the MDT and the VFA, we find that EDCA has remained
within the parameters set in these two treaties. Just like the Terms of Reference mentioned in Lim, mere adjustments in detail to
implement the MDT and the VFA can be in the form of executive agreements.

Petitioners assert287 that the duration of the activities mentioned in EDCA is no longer consistent with the temporary nature of the
visits as contemplated in the VFA. They point out that Article XII(4) of EDCA has an initial term of 10 years, a term automatically
renewed unless the Philippines or the U.S. terminates the agreement. According to petitioners, such length of time already has a badge
of permanency.

In connection with this, Justice Teresita J. Leonardo-De Castro likewise argues in her Concurring and Dissenting Opinion that the
VFA contemplated mere temporary visits from U.S. forces, whereas EDCA allows an unlimited period for U.S. forces to stay in the
Philippines.288

However, the provisions of EDCA directly contradict this argument by limiting itself to 10 years of effectivity. Although this term is
automatically renewed, the process for terminating the agreement is unilateral and the right to do so automatically accrues at the end
of the 10 year period. Clearly, this method does not create a permanent obligation.

Drawing on the reasoning in Lim, we also believe that it could not have been by chance that the VFA does not include a maximum
time limit with respect to the presence of U.S. personnel in the country. We construe this lack of specificity as a deliberate effort on
the part of the Philippine and the U.S. governments to leave out this aspect and reserve it for the "adjustment in detail" stage of the
implementation of the treaty. We interpret the subsequent, unconditional concurrence of the Senate in the entire text of the VFA as an
implicit grant to the President of a margin of appreciation in determining the duration of the "temporary" presence of U.S. personnel in
the country.

Justice Brion's dissent argues that the presence of U.S. forces under EDCA is "more permanent" in nature. 289However, this argument
has not taken root by virtue of a simple glance at its provisions on the effectivity period. EDCA does not grant permanent bases, but
rather temporary rotational access to facilities for efficiency. As Professor Aileen S.P. Baviera notes:

The new EDCA would grant American troops, ships and planes rotational access to facilities of the Armed Forces of the Philippines –
but not permanent bases which are prohibited under the Philippine Constitution - with the result of reducing response time should an
external threat from a common adversary crystallize.290

EDCA is far from being permanent in nature compared to the practice of states as shown in other defense cooperation agreements. For
example, Article XIV(l) of the U.S.-Romania defense agreement provides the following:

This Agreement is concluded for an indefinite period and shall enter into force in accordance with the internal laws of each Party x
x x. (emphasis supplied)

Likewise, Article 36(2) of the US-Poland Status of Forces Agreement reads:

This Agreement has been concluded for an indefinite period of time. It may be terminated by written notification by either Party and
in that event it terminates 2 years after the receipt of the notification. (emphasis supplied)

Section VIII of US.-Denmark Mutual Support Agreement similarly provides:

8.1 This Agreement, which consists of a Preamble, SECTIONs I-VIII, and Annexes A and B, shall become effective on the date of the
last signature affixed below and shall remain in force until terminated by the Parties, provided that it may be terminated by either
Party upon 180 days written notice of its intention to do so to the other Party. (emphasis supplied)

On the other hand, Article XXI(3) of the US.-Australia Force Posture Agreement provides a longer initial term:
3. This Agreement shall have an initial term of 25 years and thereafter shall continue in force, but may be terminated by either
Party at any time upon one year's written notice to the other Party through diplomatic channels. (emphasis supplied)

The phrasing in EDCA is similar to that in the U.S.-Australia treaty but with a term less than half of that is provided in the latter
agreement. This means that EDCA merely follows the practice of other states in not specifying a non-extendible maximum term. This
practice, however, does not automatically grant a badge of permanency to its terms. Article XII(4) of EDCA provides very clearly, in
fact, that its effectivity is for an initial term of 10 years, which is far shorter than the terms of effectivity between the U.S. and other
states. It is simply illogical to conclude that the initial, extendible term of 10 years somehow gives EDCA provisions a permanent
character.

The reasoning behind this interpretation is rooted in the constitutional role of the President who, as Commander-in-Chief of our armed
forces, is the principal strategist of the nation and, as such, duty-bound to defend our national sovereignty and territorial
integrity;291 who, as chief architect of our foreign relations, is the head policymaker tasked to assess, ensure, and protect our national
security and interests;292 who holds the most comprehensive and most confidential information about foreign countries 293 that may
affect how we conduct our external affairs; and who has unrestricted access to highly classified military intelligence data 294 that may
threaten the life of the nation. Thus, if after a geopolitical prognosis of situations affecting the country, a belief is engendered that a
much longer period of military training is needed, the President must be given ample discretion to adopt necessary measures including
the flexibility to set an extended timetable.

Due to the sensitivity and often strict confidentiality of these concerns, we acknowledge that the President may not always be able to
candidly and openly discuss the complete situation being faced by the nation. The Chief Executive's hands must not be unduly tied,
especially if the situation calls for crafting programs and setting timelines for approved activities. These activities may be necessary
for maintaining and developing our capacity to resist an armed attack, ensuring our national sovereignty and territorial integrity, and
securing our national interests. If the Senate decides that the President is in the best position to define in operational terms the meaning
of temporary in relation to the visits, considered individually or in their totality, the Court must respect that policy decision. If the
Senate feels that there is no need to set a time limit to these visits, neither should we.

Evidently, the fact that the VFA does not provide specificity in regard to the extent of the "temporary" nature of the visits of U.S.
personnel does not suggest that the duration to which the President may agree is unlimited. Instead, the boundaries of the meaning of
the term temporary in Article I of the treaty must be measured depending on the purpose of each visit or activity. 295 That purpose must
be analyzed on a case-by-case basis depending on the factual circumstances surrounding the conclusion of the implementing
agreement. While the validity of the President's actions will be judged under less stringent standards, the power of this Court to
determine whether there was grave abuse of discretion remains unimpaired.

d. Authorized activities performed by US. contractors within Philippine territory - who were legitimately permitted to enter the
country independent of EDCA - are subject to relevant Philippine statutes and regulations and must be consistent with the MDT and
the VFA

Petitioners also raise296 concerns about the U.S. government's purported practice of hiring private security contractors in other
countries. They claim that these contractors - one of which has already been operating in Mindanao since 2004 - have been implicated
in incidents or scandals in other parts of the globe involving rendition, torture and other human rights violations. They also assert that
these contractors employ paramilitary forces in other countries where they are operating.

Under Articles III and IV of EDCA, U.S. contractors are authorized to perform only the following activities:

1. Training; transit; support and related activities; refueling of aircraft; bunkering of vessels; temporary maintenance of
vehicles, vessels, and aircraft; temporary accommodation of personnel; communications; prepositioning of equipment,
supplies, and materiel; deployment of forces and materiel; and such other activities as the Parties may agree 297

2. Prepositioning and storage of defense equipment, supplies, and materiel, including delivery, management, inspection, use,
maintenance, and removal of such equipment, supplies and materiel298

3. Carrying out of matters in accordance with, and to the extent permissible under, U.S. laws, regulations, and policies 299

EDCA requires that all activities within Philippine territory be in accordance with Philippine law. This means that certain privileges
denied to aliens are likewise denied to foreign military contractors. Relevantly, providing security 300and carrying, owning, and
possessing firearms301 are illegal for foreign civilians.

The laws in place already address issues regarding the regulation of contractors. In the 2015 Foreign Investment Negative list, 302 the
Executive Department has already identified corporations that have equity restrictions in Philippine jurisdiction. Of note is No. 5 on
the list - private security agencies that cannot have any foreign equity by virtue of Section 4 of Republic Act No. 5487; 303 and No. 15,
which regulates contracts for the construction of defense-related structures based on Commonwealth Act No. 541.

Hence, any other entity brought into the Philippines by virtue of EDCA must subscribe to corporate and civil requirements imposed by
the law, depending on the entity's corporate structure and the nature of its business.

That Philippine laws extraneous to EDCA shall govern the regulation of the activities of U.S. contractors has been clear even to some
of the present members of the Senate.

For instance, in 2012, a U.S. Navy contractor, the Glenn Marine, was accused of spilling fuel in the waters off Manila Bay. 304 The
Senate Committee on Foreign Relations and the Senate Committee on Environment and Natural Resources chairperson claimed
environmental and procedural violations by the contractor. 305 The U.S. Navy investigated the contractor and promised stricter
guidelines to be imposed upon its contractors.306 The statement attributed to Commander Ron Steiner of the public affairs office of the
U.S. Navy's 7th Fleet - that U.S. Navy contractors are bound by Philippine laws - is of particular relevance. The statement
acknowledges not just the presence of the contractors, but also the U.S. position that these contractors are bound by the local laws of
their host state. This stance was echoed by other U.S. Navy representatives. 307

This incident simply shows that the Senate was well aware of the presence of U.S. contractors for the purpose of fulfilling the terms of
the VFA. That they are bound by Philippine law is clear to all, even to the U.S.

As applied to EDCA, even when U.S. contractors are granted access to the Agreed Locations, all their activities must be consistent
with Philippine laws and regulations and pursuant to the MDT and the VFA.

While we recognize the concerns of petitioners, they do not give the Court enough justification to strike down EDCA. In Lim v.
Executive Secretary, we have already explained that we cannot take judicial notice of claims aired in news reports, "not because of any
issue as to their truth, accuracy, or impartiality, but for the simple reason that facts must be established in accordance with the rules of
evidence."308 What is more, we cannot move one step ahead and speculate that the alleged illegal activities of these contractors in
other countries would take place in the Philippines with certainty. As can be seen from the above discussion, making sure that U.S.
contractors comply with Philippine laws is a function of law enforcement. EDCA does not stand in the way of law enforcement.

Nevertheless, we emphasize that U.S. contractors are explicitly excluded from the coverage of the VFA. As visiting aliens, their entry,
presence, and activities are subject to all laws and treaties applicable within the Philippine territory. They may be refused entry or
expelled from the country if they engage in illegal or undesirable activities. There is nothing that prevents them from being detained in
the country or being subject to the jurisdiction of our courts. Our penal laws,309 labor laws,310 and immigrations laws311 apply to them
and therefore limit their activities here. Until and unless there is another law or treaty that specifically deals with their entry and
activities, their presence in the country is subject to unqualified Philippine jurisdiction.

EDCA does not allow the presence of U.S.-owned or -controlled military facilities and bases in the Philippines

Petitioners Saguisag et al. claim that EDCA permits the establishment of U.S. military bases through the "euphemistically" termed
"Agreed Locations. "312 Alluding to the definition of this term in Article II(4) of EDCA, they point out that these locations are actually
military bases, as the definition refers to facilities and areas to which U.S. military forces have access for a variety of purposes.
Petitioners claim that there are several badges of exclusivity in the use of the Agreed Locations by U.S. forces. First, Article V(2) of
EDCA alludes to a "return" of these areas once they are no longer needed by U.S. forces, indicating that there would be some transfer
of use. Second, Article IV(4) ofEDCA talks about American forces' unimpeded access to the Agreed Locations for all matters relating
to the prepositioning and storage of U.S. military equipment, supplies, and materiel. Third, Article VII of EDCA authorizes U.S.
forces to use public utilities and to operate their own telecommunications system.

a. Preliminary point on badges of exclusivity

As a preliminary observation, petitioners have cherry-picked provisions of EDCA by presenting so-called "badges of exclusivity,"
despite the presence of contrary provisions within the text of the agreement itself.

First, they clarify the word "return" in Article V(2) of EDCA. However, the use of the word "return" is within the context of a lengthy
provision. The provision as a whole reads as follows:

The United States shall return to the Philippines any Agreed Locations, or any portion thereof, including non-relocatable structures
and assemblies constructed, modified, or improved by the United States, once no longer required by United States forces for activities
under this Agreement. The Parties or the Designated Authorities shall consult regarding the terms of return of any Agreed Locations,
including possible compensation for improvements or construction.

The context of use is "required by United States forces for activities under this Agreement." Therefore, the return of an Agreed
Location would be within the parameters of an activity that the Mutual Defense Board (MDB) and the Security Engagement Board
(SEB) would authorize. Thus, possession by the U.S. prior to its return of the Agreed Location would be based on the authority given
to it by a joint body co-chaired by the "AFP Chief of Staff and Commander, U.S. PACOM with representatives from the Philippines'
Department of National Defense and Department of Foreign Affairs sitting as members." 313 The terms shall be negotiated by both the
Philippines and the U.S., or through their Designated Authorities. This provision, seen as a whole, contradicts petitioners'
interpretation of the return as a "badge of exclusivity." In fact, it shows the cooperation and partnership aspect of EDCA in full bloom.

Second, the term "unimpeded access" must likewise be viewed from a contextual perspective. Article IV(4) states that U.S. forces and
U.S. contractors shall have "unimpeded access to Agreed Locations for all matters relating to the prepositioning and storage of defense
equipment, supplies, and materiel, including delivery, management, inspection, use, maintenance, and removal of such equipment,
supplies and materiel."

At the beginning of Article IV, EDCA states that the Philippines gives the U.S. the authority to bring in these equipment, supplies, and
materiel through the MDB and SEB security mechanism. These items are owned by the U.S., 314 are exclusively for the use of the
U.S.315 and, after going through the joint consent mechanisms of the MDB and the SEB, are within the control of the U.S. 316 More
importantly, before these items are considered prepositioned, they must have gone through the process of prior authorization by the
MDB and the SEB and given proper notification to the AFP. 317

Therefore, this "unimpeded access" to the Agreed Locations is a necessary adjunct to the ownership, use, and control of the U.S. over
its own equipment, supplies, and materiel and must have first been allowed by the joint mechanisms in play between the two states
since the time of the MDT and the VFA. It is not the use of the Agreed Locations that is exclusive per se; it is mere access to items in
order to exercise the rights of ownership granted by virtue of the Philippine Civil Code.318

As for the view that EDCA authorizes U.S. forces to use public utilities and to operate their own telecommunications system, it will be
met and answered in part D, infra.

Petitioners also point out319 that EDCA is strongly reminiscent of and in fact bears a one-to-one correspondence with the provisions of
the 1947 MBA. They assert that both agreements (a) allow similar activities within the area; (b) provide for the same "species of
ownership" over facilities; and (c) grant operational control over the entire area. Finally, they argue320 that EDCA is in fact an
implementation of the new defense policy of the U.S. According to them, this policy was not what was originally intended either by
the MDT or by the VFA.

On these points, the Court is not persuaded.

The similar activities cited by petitioners321 simply show that under the MBA, the U.S. had the right to construct, operate, maintain,
utilize, occupy, garrison, and control the bases. The so-called parallel provisions of EDCA allow only operational control over the
Agreed Locations specifically for construction activities. They do not allow the overarching power to operate, maintain, utilize,
occupy, garrison, and control a base with full discretion. EDCA in fact limits the rights of the U.S. in respect of every activity,
including construction, by giving the MDB and the SEB the power to determine the details of all activities such as, but not limited to,
operation, maintenance, utility, occupancy, garrisoning, and control. 322

The "species of ownership" on the other hand, is distinguished by the nature of the property. For immovable property constructed or
developed by the U.S., EDCA expresses that ownership will automatically be vested to the Philippines. 323 On the other hand, for
movable properties brought into the Philippines by the U.S., EDCA provides that ownership is retained by the latter. In contrast, the
MBA dictates that the U.S. retains ownership over immovable and movable properties.

To our mind, both EDCA and the MBA simply incorporate what is already the law of the land in the Philippines. The Civil Code's
provisions on ownership, as applied, grant the owner of a movable property full rights over that property, even if located in another
person's property.324

The parallelism, however, ends when the situation involves facilities that can be considered immovable. Under the MBA, the U.S.
retains ownership if it paid for the facility.325 Under EDCA, an immovable is owned by the Philippines, even if built completely on the
back of U.S. funding.326 This is consistent with the constitutional prohibition on foreign land ownership. 327
Despite the apparent similarity, the ownership of property is but a part of a larger whole that must be considered before the
constitutional restriction is violated. Thus, petitioners' points on operational control will be given more attention in the discussion
below. The arguments on policy are, however, outside the scope of judicial review and will not be discussed

Moreover, a direct comparison of the MBA and EDCA will result in several important distinctions that would allay suspicion that
EDCA is but a disguised version of the MBA.

b. There are substantial matters that the US. cannot do under EDCA, but which it was authorized to do under the 1947 MBA

The Philippine experience with U.S. military bases under the 1947 MBA is simply not possible under EDCA for a number of
important reasons.

First, in the 1947 MBA, the U.S. retained all rights of jurisdiction in and over Philippine territory occupied by American bases. In
contrast, the U.S. under EDCA does not enjoy any such right over any part of the Philippines in which its forces or equipment may be
found. Below is a comparative table between the old treaty and EDCA:

1947 MBA/ 1946 Treaty of General Relations EDCA

1947 MBA, Art. I(1): EDCA, preamble:

The Government of the Republic of Affirming that the Parties share an understanding for
the Philippines (hereinafter referred to as the the United States not to establish a permanent
Philippines) grants to the Government of the United military presence or base in the territory of the
States of America (hereinafter referred to as the Philippines;
United States) the right to retain the use of the
bases in the Philippines listed in Annex A attached xxxx
hereto.
Recognizing that all United States access to and use
1947 MBA, Art. XVII(2): of facilities and areas will be at the invitation of the
Philippines and with full respect for the Philippine
All buildings and structures which are erected by Constitution and Philippine laws;
the United States in the bases shall be the property
of the United States and may be removed by xxxx
it before the expiration of this Agreement or the
earlier relinquishment of the base on which the
EDCA, Art. II(4):
structures are situated. There shall be no obligation
on the part of the Philippines or of the United States
to rebuild or repair any destruction or damage "Agreed Locations" means facilities and areas that
inflicted from any cause whatsoever on any of the are provided by the Government of the
said buildings or structures owned or used by the Philippines through the AFP and that United States
United States in the bases. x x x x. forces, United States contractors, and others as
mutually agreed, shall have the right to access and
use pursuant to this Agreement. Such Agreed
1946 Treaty of Gen. Relations, Art. I: Locations may be listed in an annex to be appended
to this Agreement, and may be further described in
The United States of America agrees to withdraw implementing arrangements.
and surrender, and does hereby withdraw and
surrender, all rights of possession, supervision,
EDCA, Art. V:
jurisdiction, control or sovereignty existing and
exercised by the United States of America in and
over the territory and the people of the Philippine 1. The Philippines shall retain ownership of and
Islands, except the use of such bases, necessary title to Agreed Locations.
appurtenances to such bases, and the rights
incident thereto, as the United States of America, by xxxx
agreement with the Republic of the Philippines may
deem necessary to retain for the mutual protection of 4. All buildings, non-relocatable structures, and
the Republic of the Philippines and of the United assemblies affixed to the land in the Agreed
States of America. x x x. Locations, including ones altered or improved by
United States forces, remain the property of the
Philippines.Permanent buildings constructed by
United States forces become the property of the
Philippines, once constructed, but shall be used by
United States forces until no longer required by
United States forces.

Second, in the bases agreement, the U.S. and the Philippines were visibly not on equal footing when it came to deciding whether to
expand or to increase the number of bases, as the Philippines may be compelled to negotiate with the U.S. the moment the latter
requested an expansion of the existing bases or to acquire additional bases. In EDCA, U.S. access is purely at the invitation of the
Philippines.

1947 MBA/ 1946 Treaty of General Relations EDCA

1947 MBA, Art.I(3): EDCA, preamble:

The Philippines agree to enter into Recognizing that all United States access to and use
negotiations with the United States at the latter's of facilities and areas will be at the invitation of the
request, to permit the United States to expand such Philippines and with full respect for the Philippine
bases, to exchange such bases for other bases, to Constitution and Philippine laws;
acquire additional bases, or relinquish rights to
bases, as any of such exigencies may be required by xxxx
military necessity.
EDCA. Art. II(4):
1946 Treaty of Gen. Relations, Art. I:
"Agreed Locations" means facilities and areas that
The United States of America agrees to are provided by the Government of the
withdraw and surrender, and does hereby withdraw Philippines through the AFP and that United States
and surrender, all rights of possession, supervision, forces, United States contractors, and others as
jurisdiction, control or sovereignty existing and mutually agreed, shall have the right to access and
exercised by the United States of America in and use pursuant to this Agreement. Such Agreed
over the territory and the people of the Philippine Locations may be listed in an annex to be appended
Islands, except the use of such bases, necessary to this Agreement, and may be further described in
appurtenances to such bases, and the rights incident implementing arrangements.
thereto, as the United States of America, by
agreement with the Republic of the
Philippines may deem necessary to retain for the
mutual protection of the Republic of the Philippines
and of the United States of America. x x x.

Third, in EDCA, the Philippines is- guaranteed access over the entire area of the Agreed Locations. On the other hand, given that the
U.S. had complete control over its military bases under the 1947 MBA, the treaty did not provide for any express recognition of the
right of access of Philippine authorities. Without that provision and in light of the retention of U.S. sovereignty over the old military
bases, the U.S. could effectively prevent Philippine authorities from entering those bases.

1947 MBA EDCA

No equivalent provision. EDCA, Art. III(5):

The Philippine Designated Authority and its


authorized representative shall have access to the
entire area of the Agreed Locations. Such access
shall be provided promptly consistent with
operational safety and security requirements in
accordance with agreed procedures developed by the
Parties.
Fourth, in the bases agreement, the U.S. retained the right, power, and authority over the establishment, use, operation, defense, and
control of military bases, including the limits of territorial waters and air space adjacent to or in the vicinity of those bases. The only
standard used in determining the extent of its control was military necessity. On the other hand, there is no such grant of power or
authority under EDCA. It merely allows the U.S. to exercise operational control over the construction of Philippine-owned structures
and facilities:

1947 MBA EDCA

1947 MBA, Art.I(2): EDCA, Art. III(4):

The Philippines agrees to permit the United States, The Philippines hereby grants to the United
upon notice to the Philippines, to use such of those States, through bilateral security
bases listed in Annex B as the United States mechanisms, such as the MDB and
determines to be required by military necessity. SEB, operational control of Agreed
Locations for construction
1947 MBA, Art. III(1): activities and authority to undertake such
activities on, and make alterations and improvements
It is mutually agreed that the United Statesshall have to, Agreed Locations. United States forces shall
consult on issues regarding such construction,
the rights, power and authority within the
alterations, and improvements based on the Parties'
bases which are necessary for the establishment,
shared intent that the technical requirements and
use, operation and defense thereof or appropriate
construction standards of any such projects
for the control thereof and all the rights, power and
authority within the limits of territorial waters and undertaken by or on behalf of United States forces
air space adjacent to, or in the vicinity of, the bases should be consistent with the requirements and
standards of both Parties.
which are necessary to provide access to them, or
appropriate for their control.

Fifth, the U.S. under the bases agreement was given the authority to use Philippine territory for additional staging areas, bombing and
gunnery ranges. No such right is given under EDCA, as seen below:

1947 MBA EDCA

1947 MBA, Art. VI: EDCA, Art. III(1):

The United States shall, subject to previous With consideration of the views of the Parties,
agreement with the Philippines, have the right to use the Philippines hereby authorizes and agrees that
land and coastal sea areas of appropriate size and United States forces, United States contractors, and
location for periodic maneuvers, for additional vehicles, vessels, and aircraft operated by or for
staging areas, bombing and gunnery ranges, and United States forces may conduct the following
for such intermediate airfields as may be required activities with respect to Agreed Locations: training;
for safe and efficient air operations. Operations in transit; support and related activities; refueling of
such areas shall be carried on with due regard and aircraft; bunkering of vessels; temporary maintenance
safeguards for the public safety. of vehicles, vessels, and aircraft; temporary
accommodation of personnel; communications;
1947 MBA, Art.I(2): prepositioning of equipment, supplies, and materiel;
deploying forces and materiel; and such other
activities as the Parties may agree.
The Philippines agrees to permit the United States,
upon notice to the Philippines, to use such of those
bases listed in Annex B as the United States
determines to be required by military necessity.

Sixth, under the MBA, the U.S. was given the right, power, and authority to control and prohibit the movement and operation of all
types of vehicles within the vicinity of the bases. The U.S. does not have any right, power, or authority to do so under EDCA.

1947 MBA EDCA


1947 MBA, Art. 111(2)(c) No equivalent provision.

Such rights, power and authority shall include, inter


alia, the right, power and authority: x x x x to
control (including the right to prohibit) in so far as
may be required for the efficient operation and safety
of the bases, and within the limits of military
necessity, anchorages, moorings, landings,
takeoffs, movements and operation of ships and
water-borne craft, aircraft and other vehicles on
water, in the air or on land comprising

Seventh, under EDCA, the U.S. is merely given temporary access to land and facilities (including roads, ports, and airfields). On the
other hand, the old treaty gave the U.S. the right to improve and deepen the harbors, channels, entrances, and anchorages; and to
construct or maintain necessary roads and bridges that would afford it access to its military bases.

1947 MBA EDCA

1947 MBA, Art. III(2)(b): EDCA, Art. III(2):

Such rights, power and authority shall include, inter When requested, the Designated Authority of the
alia, the right, power and authority: x x x x to Philippines shall assist in facilitating transit or
improve and deepen the harbors, channels, temporary access by United States forces to public
entrances and anchorages, and to construct or land and facilities (including roads, ports, and
maintain necessary roadsand bridges affording airfields), including those owned or controlled by
access to the bases. local governments, and to other land and facilities
(including roads, ports, and airfields).

Eighth, in the 1947 MBA, the U.S. was granted the automatic right to use any and all public utilities, services and facilities, airfields,
ports, harbors, roads, highways, railroads, bridges, viaducts, canals, lakes, rivers, and streams in the Philippines in the same manner
that Philippine military forces enjoyed that right. No such arrangement appears in EDCA. In fact, it merely extends to U.S. forces
temporary access to public land and facilities when requested:

1947 MBA EDCA

1947 MBA, Art. VII: EDCA, Art. III(2):

It is mutually agreed that the United States may When requested, the Designated Authority of the
employ and use for United States military forces any Philippines shall assist in facilitating transit or
and all public utilities, other services and facilities, temporary access by United States forces to public
airfields, ports, harbors, roads, highways, railroads, land and facilities (including roads, ports, and
bridges, viaducts, canals, lakes, rivers and streams in airfields), including those owned or controlled by
the Philippines under conditions no less favorable local governments, and to other land and facilities
than those that may be applicablefrom time to time (including roads, ports, and airfields).
to the military forces of the Philippines.

Ninth, under EDCA, the U.S. no longer has the right, power, and authority to construct, install, maintain, and employ any type of
facility, weapon, substance, device, vessel or vehicle, or system unlike in the old treaty. EDCA merely grants the U.S., through
bilateral security mechanisms, the authority to undertake construction, alteration, or improvements on the Philippine-owned Agreed
Locations.

1947 MBA EDCA

1947 MBA, Art. III(2)(e): EDCA, Art. III(4):

Such rights, power and authority shall include, inter The Philippines hereby grants to the United States,
alia, the right, power and authority: x x x x through bilateral security mechanisms, such as the
to construct, install, maintain, and employ on any MDB and SEB, operational control of Agreed
base any type of facilities, weapons, substance, Locations for construction activities and authority to
device, vessel or vehicle on or under the ground, in undertake such activities on, and make alterations
the air or on or under the water that may be requisite and improvements to, Agreed Locations. United
or appropriate, including meteorological systems, States forces shall consult on issues regarding such
aerial and water navigation lights, radio and radar construction, alterations, and improvements based on
apparatus and electronic devices, of any desired the Parties' shared intent that the technical
power, type of emission and frequency. requirements and construction standards of any such
projects undertaken by or on behalf of United States
forces should be consistent with the requirements and
standards of both Parties.

Tenth, EDCA does not allow the U.S. to acquire, by condemnation or expropriation proceedings, real property belonging to any
private person. The old military bases agreement gave this right to the U.S. as seen below:

1947 MBA EDCA

1947 MBA, Art. XXII(l): No equivalent provision.

Whenever it is necessary to acquire by

condemnation or expropriation proceedings real


property belonging to any private
persons, associations or corporations located in bases
named in Annex A and Annex B in order to carry out
the purposes of this Agreement, the Philippines will
institute and prosecute such condemnation or
expropriation proceedings in accordance with the
laws of the Philippines. The United States agrees to
reimburse the Philippines for all the reasonable
expenses, damages and costs therebv incurred,
including the value of the property as determined by
the Court. In addition, subject to the mutual
agreement of the two Governments, the United States
will reimburse the Philippines for the reasonable
costs of transportation and removal of any occupants
displaced or ejected by reason of the condemnation
or expropriation.

Eleventh, EDCA does not allow the U.S. to unilaterally bring into the country non-Philippine nationals who are under its employ,
together with their families, in connection with the construction, maintenance, or operation of the bases. EDCA strictly adheres to the
limits under the VFA.

1947 MBA EDCA

1947 MBA, Art. XI(l): EDCA, Art. II:

It is mutually agreed that the United States shall 1. "United States personnel" means United
have the right to bring into the States military and civilian personneltemporarily in
Philippines members of the United States military the territory of the Philippines in connection with
forces and the United States nationals employed by activities approved by the Philippines, as those
or under a contract with the United States terms are defined in the VFA.
together with their families, and technical
personnel of other nationalities (not being persons x xx x
excluded by the laws of the Philippines) in
connection with the construction, maintenance, or
3. "United States contractors" means companies
operation of the bases. The United States shall make
and firms, and their employees, under contract or
suitable arrangements so that such persons may be
subcontract to or on behalf of the United States
readily identified and their status established when Department of Defense. United States contractors
necessary by the Philippine authorities. Such persons, are not includedas part of the definition of United
other than members of the United States armed forces States personnel in this Agreement, including
in uniform, shall present their travel documents to the within the context of the VFA.
appropriate Philippine authorities for visas, it being
understood that no objection will be made to their
travel to the Philippines as non-immigrants.

Twelfth, EDCA does not allow the U.S. to exercise jurisdiction over any offense committed by any person within the Agreed
Locations, unlike in the former military bases:

1947 MBA EDCA

1947 MBA, Art. XIII(l)(a): No equivalent provision.

The Philippines consents that the United

States shall have the right to exercise


jurisdiction over the following offenses: (a) Any
offense committed by any person within any
base except where the offender and offended parties
are both Philippine citizens (not members of the
armed forces of the United States on active duty) or
the offense is against the security of the Philippines.

Thirteenth, EDCA does not allow the U.S. to operate military post exchange (PX) facilities, which is free of customs duties and taxes,
unlike what the expired MBA expressly allowed. Parenthetically, the PX store has become the cultural icon of U.S. military presence
in the country.

1947 MBA EDCA

1947 MBA, Art. XVIII(l): No equivalent provision.

It is mutually agreed that the United States

shall have the right to establish on bases, free of all


licenses; fees; sales, excise or other taxes, or
imposts; Government agencies, including
concessions, such as sales commissaries and post
exchanges; messes and social clubs, for the
exclusive use of the United States military forces
and authorized civilian personnel and their
families. The merchandise or services sold or
dispensed by such agencies shall be free of all taxes,
duties and inspection by the Philippine
authorities. Administrative measures shall be taken
by the appropriate authorities of the United States to
prevent the resale of goods which are sold under the
provisions of this Article to persons not entitled to
buy goods at such agencies and, generally, to prevent
abuse of the privileges granted under this Article.
There shall be cooperation between such authorities
and the Philippines to this end.

In sum, EDCA is a far cry from a basing agreement as was understood by the people at the time that the 1987 Constitution was
adopted.
Nevertheless, a comprehensive review of what the Constitution means by "foreign military bases" and "facilities" is required before
EDCA can be deemed to have passed judicial scrutiny.

c. The meaning of military facilities and bases

An appreciation of what a military base is, as understood by the Filipino people in 1987, would be vital in determining whether EDCA
breached the constitutional restriction.

Prior to the drafting of the 1987 Constitution, the last definition of "military base" was provided under Presidential Decree No. (PD)
1227.328 Unlawful entry into a military base is punishable under the decree as supported by Article 281 of the Revised Penal Code,
which itself prohibits the act of trespass.

Section 2 of the law defines the term in this manner: "'[M]ilitary base' as used in this decree means any military, air, naval, or coast
guard reservation, base, fort, camp, arsenal, yard, station, or installation in the Philippines."

Commissioner Tadeo, in presenting his objections to U.S. presence in the Philippines before the 1986 Constitutional Commission,
listed the areas that he considered as military bases:

1,000 hectares Camp O'Donnel

20,000 hectares Crow Valley Weapon's Range

55,000 hectares Clark Air Base

150 hectares Wallace Air Station

400 hectares John Hay Air Station

15,000 hectares Subic Naval Base

1,000 hectares San Miguel Naval Communication

750 hectares Radio Transmitter in Capas, Tarlac

900 hectares Radio Bigot Annex at Bamban, Tarlac329

The Bases Conversion and Development Act of 1992 described its coverage in its Declaration of Policies:

Sec. 2. Declaration of Policies. - It is hereby declared the policy of the Government to accelerate the sound and balanced conversion
into alternative productive uses of the Clark and Subic military reservations and their extensions (John Hay Station, Wallace Air
Station, O'Donnell Transmitter Station, San Miguel Naval Communications Station and Capas Relay Station), to raise funds by the
sale of portions of Metro Manila military camps, and to apply said funds as provided herein for the development and conversion to
productive civilian use of the lands covered under the 194 7 Military Bases Agreement between the Philippines and the United States
of America, as amended.330

The result of the debates and subsequent voting is Section 25, Article XVIII of the Constitution, which specifically restricts, among
others, foreign military facilities or bases. At the time of its crafting of the Constitution, the 1986 Constitutional Commission had a
clear idea of what exactly it was restricting. While the term "facilities and bases" was left undefined, its point of reference was clearly
those areas covered by the 1947 MBA as amended.

Notably, nearly 30 years have passed since then, and the ever-evolving world of military technology and geopolitics has surpassed the
understanding of the Philippine people in 1986. The last direct military action of the U.S. in the region was the use of Subic base as
the staging ground for Desert Shield and Desert Storm during the Gulf War. 331In 1991, the Philippine Senate rejected the successor
treaty of the 1947 MBA that would have allowed the continuation of U.S. bases in the Philippines.

Henceforth, any proposed entry of U.S. forces into the Philippines had to evolve likewise, taking into consideration the subsisting
agreements between both parties, the rejection of the 1991 proposal, and a concrete understanding of what was constitutionally
restricted. This trend birthed the VFA which, as discussed, has already been upheld by this Court.
The latest agreement is EDCA, which proposes a novel concept termed "Agreed Locations."

By definition, Agreed Locations are

facilities and areas that are provided by the Government of the Philippines through the AFP and that United States forces, United
States contractors, and others as mutually agreed, shall have the right to access and use pursuant to this Agreement. Such Agreed
Locations may be listed in an annex to be appended to this Agreement, and may be further described in implementing arrangements.332

Preliminarily, respondent already claims that the proviso that the Philippines shall retain ownership of and title to the Agreed
Locations means that EDCA is "consistent with Article II of the VFA which recognizes Philippine sovereignty and jurisdiction over
locations within Philippine territory.333

By this interpretation, respondent acknowledges that the contention of petitioners springs from an understanding that the Agreed
Locations merely circumvent the constitutional restrictions. Framed differently, the bone of contention is whether the Agreed
Locations are, from a legal perspective, foreign military facilities or bases. This legal framework triggers Section 25, Article XVIII,
and makes Senate concurrence a sine qua non.

Article III of EDCA provides for Agreed Locations, in which the U.S. is authorized by the Philippines to "conduct the following
activities: "training; transit; support and related activities; refueling of aircraft; bunkering of vessels; temporary maintenance of
vehicles, vessels and aircraft; temporary accommodation of personnel; communications; prepositioning of equipment, supplies and
materiel; deploying forces and materiel; and such other activities as the Parties may agree."

This creation of EDCA must then be tested against a proper interpretation of the Section 25 restriction.

d. Reasons for the constitutional requirements and legal standards for constitutionally compatible military bases and facilities

Section 25 does not define what is meant by a "foreign military facility or base." While it specifically alludes to U.S. military facilities
and bases that existed during the framing of the Constitution, the provision was clearly meant to apply to those bases existing at the
time and to any future facility or base. The basis for the restriction must first be deduced from the spirit of the law, in order to set a
standard for the application of its text, given the particular historical events preceding the agreement.

Once more, we must look to the 1986 Constitutional Commissioners to glean, from their collective wisdom, the intent of Section 25.
Their speeches are rich with history and wisdom and present a clear picture of what they considered in the crafting the provision.

SPEECH OF COMMISSIONER REGALADO334

xxxx

We have been regaled here by those who favor the adoption of the anti-bases provisions with what purports to be an objective
presentation of the historical background of the military bases in the Philippines. Care appears, however, to have been taken to
underscore the inequity in their inception as well as their implementation, as to seriously reflect on the supposed objectivity of the
report. Pronouncements of military and civilian officials shortly after World War II are quoted in support of the proposition
on neutrality; regrettably, the implication is that the same remains valid today, as if the world and international activity stood still for
the last 40 years.

We have been given inspired lectures on the effect of the presence of the military bases on our sovereignty - whether in its legal
or political sense is not clear - and the theory that any country with foreign bases in its territory cannot claim to be fully
sovereign or completely independent. I was not aware that the concepts of sovereignty and independence have now assumed the
totality principle, such that a willing assumption of some delimitations in the exercise of some aspects thereof would put that State in a
lower bracket of nationhood.

xxxx

We have been receiving a continuous influx of materials on the pros and cons on the advisability of having military bases within our
shores. Most of us who, only about three months ago, were just mulling the prospects of these varying contentions are now expected,
like armchair generals, to decide not only on the geopolitical aspects and contingent implications of the military bases but also on their
political, social, economic and cultural impact on our national life. We are asked to answer a plethora of questions, such as: 1) whether
the bases are magnets of nuclear attack or are deterrents to such attack; 2) whether an alliance or mutual defense treaty is a derogation
of our national sovereignty; 3) whether criticism of us by Russia, Vietnam and North Korea is outweighed by the support for us of the
ASEAN countries, the United States, South Korea, Taiwan, Australia and New Zealand; and 4) whether the social, moral and legal
problems spawned by the military bases and their operations can be compensated by the economic benefits outlined in papers which
have been furnished recently to all of us.335

xxxx

Of course, one side of persuasion has submitted categorical, unequivocal and forceful assertions of their positions. They are entitled to
the luxury of the absolutes. We are urged now to adopt the proposed declaration as a "golden," "unique" and "last"
opportunity for Filipinos to assert their sovereign rights. Unfortunately, I have never been enchanted by superlatives, much less for
the applause of the moment or the ovation of the hour. Nor do I look forward to any glorious summer after a winter of political
discontent. Hence, if I may join Commissioner Laurel, I also invoke a caveat not only against the tyranny of labels but also the tyranny
of slogans.336

xxxx

SPEECH OF COMMISSIONER SUAREZ337

MR. SUAREZ: Thank you, Madam President.

I am quite satisfied that the crucial issues involved in the resolution of the problem of the removal of foreign bases from the
Philippines have been adequately treated by previous speakers. Let me, therefore, just recapitulate the arguments adduced in favor of a
foreign bases-free Philippines:

1. That every nation should be free to shape its own destiny without outside interference;

2. That no lasting peace and no true sovereignty would ever be achieved so long as there are foreign military forces in our
country;

3. That the presence of foreign military bases deprives us of the very substance of national sovereigntyand this is a
constant source of national embarrassment and an insult to our national dignity and selfrespect as a nation;

4. That these foreign military bases unnecessarily expose our country to devastating nuclear attacks;

5. That these foreign military bases create social problems and are designed to perpetuate the strangle-hold of United States
interests in our national economy and development;

6. That the extraterritorial rights enjoyed by these foreign bases operate to deprive our country of jurisdiction over civil
and criminal offenses committed within our own national territory and against Filipinos;

7. That the bases agreements are colonial impositions and dictations upon our helpless country; and

8. That on the legal viewpoint and in the ultimate analysis, all the bases agreements are null and void ab initio, especially
because they did not count the sovereign consent and will of the Filipino people.338

xxxx

In the real sense, Madam President, if we in the Commission could accommodate the provisions I have cited, what is our objection to
include in our Constitution a matter as priceless as the nationalist values we cherish? A matter of the gravest concern for the safety
and survival of this nation indeed deserves a place in our Constitution.

xxxx

x x x Why should we bargain away our dignity and our self-respect as a nation and the future of generations to come with thirty
pieces of silver?339

SPEECH OF COMMISSIONER BENNAGEN340

xxxx
The underlying principle of military bases and nuclear weapons wherever they are found and whoever owns them is that those are
for killing people or for terrorizing humanity. This objective by itself at any point in history is morally repugnant. This alone is
reason enough for us to constitutionalize the ban on foreign military bases and on nuclear weapons. 341

SPEECH OF COMMISSIONER BACANI342

xxxx

x x x Hence, the remedy to prostitution does not seem to be primarily to remove the bases because even if the bases are removed,
the girls mired in poverty will look for their clientele elsewhere. The remedy to the problem of prostitution lies primarily elsewhere -
in an alert and concerned citizenry, a healthy economy and a sound education in values.343

SPEECH OF COMMISSIONER JAMIR344

xxxx

One of the reasons advanced against the maintenance of foreign military bases here is that they impair portions of our
sovereignty. While I agree that our country's sovereignty should not be impaired, I also hold the view that there are times when it is
necessary to do so according to the imperatives of national interest. There are precedents to this effect. Thus, during World War II,
England leased its bases in the West Indies and in Bermuda for 99 years to the United States for its use as naval and air bases. It was
done in consideration of 50 overaged destroyers which the United States gave to England for its use in the Battle of the Atlantic.

A few years ago, England gave the Island of Diego Garcia to the United States for the latter's use as a naval base in the Indian Ocean.
About the same time, the United States obtained bases in Spain, Egypt and Israel. In doing so, these countries, in effect, contributed to
the launching of a preventive defense posture against possible trouble in the Middle East and in the Indian Ocean for their own
protection.345

SPEECH OF COMMISSIONER TINGSON346

xxxx

In the case of the Philippines and the other Southeast Asian nations, the presence of American troops in the country is a projection of
America's security interest. Enrile said that nonetheless, they also serve, although in an incidental and secondary way, the security
interest of the Republic of the Philippines and the region. Yes, of course, Mr. Enrile also echoes the sentiments of most of us in this
Commission, namely: It is ideal for us as an independent and sovereign nation to ultimately abrogate the RP-US military treaty
and, at the right time, build our own air and naval might.347

xxxx

Allow me to say in summation that I am for the retention of American military bases in the Philippines provided that such an
extension from one period to another shall be concluded upon concurrence of the parties, and such extension shall be based on
justice, the historical amity of the people of the Philippines and the United States and their common defense interest.348

SPEECH OF COMMISSIONER ALONTO349

xxxx

Madam President, sometime ago after this Commission started with this task of framing a constitution, I read a statement of President
Aquino to the effect that she is for the removal of the U.S. military bases in this country but that the removal of the U.S. military bases
should not be done just to give way to other foreign bases. Today, there are two world superpowers, both vying to control any and all
countries which have importance to their strategy for world domination. The Philippines is one such country.

Madam President, I submit that I am one of those ready to completely remove any vestiges of the days of enslavement, but not
prepared to erase them if to do so would merely leave a vacuum to be occupied by a far worse type.350

SPEECH OF COMMISSIONER GASCON351

xxxx
Let us consider the situation of peace in our world today. Consider our brethren in the Middle East, in Indo-China, Central America, in
South Africa - there has been escalation of war in some of these areas because of foreign intervention which views these conflicts
through the narrow prism of the East-West conflict. The United States bases have been used as springboards for intervention in
some of these conflicts. We should not allow ourselves to be party to the warlike mentality of these foreign interventionists. We
must always be on the side of peace – this means that we should not always rely on military solution. 352

xxxx

x x x The United States bases, therefore, are springboards for intervention in our own internal affairs and in the affairs of other
nations in this region.

xxxx

Thus, I firmly believe that a self-respecting nation should safeguard its fundamental freedoms which should logically be declared in
black and white in our fundamental law of the land - the Constitution. Let us express our desire for national sovereignty so we may
be able to achieve national self-determination. Let us express our desire for neutrality so that we may be able to follow active
nonaligned independent foreign policies. Let us express our desire for peace and a nuclear-free zone so we may be able to pursue a
healthy and tranquil existence, to have peace that is autonomous and not imposed. 353

xxxx

SPEECH OF COMMISSIONER TADEO354

Para sa magbubukid, ano ha ang kahulugan ng U.S. military bases? Para sa magbubukid, ang kahulugan nito ay
pagkaalipin. Para sa magbubukid, ang pananatili ng U.S. military bases ay tinik sa dibdib ng sambayanang Pilipinong patuloy na
nakabaon. Para sa sambayanang magbubukid, ang ibig sabihin ng U.S. military bases ay batong pabigat na patuloy na pinapasan
ng sambayanang Pilipino. Para sa sambayanang magbubukid, ang pananatili ng U.S. military bases ay isang nagdudumilat na
katotohanan ng patuloy na paggahasa ng imperyalistang Estados Unidos sa ating Inang Bayan - economically, politically and
culturally. Para sa sambayanang magbubukid ang U.S. military bases ay kasingkahulugan ng nuclear weapon - ang kahulugan ay
magneto ng isang nuclear war. Para sa sambayanang magbubukid, ang kahulugan ng U.S. military bases ay isang salot.355

SPEECH OF COMMISSIONER QUESADA356

xxxx

The drift in the voting on issues related to freeing ourselves from the instruments of domination and subservience has clearly been
defined these past weeks.

xxxx

So for the record, Mr. Presiding Officer, I would like to declare my support for the committee's position to enshrine in the Constitution
a fundamental principle forbidding foreign military bases, troops or facilities in any part of the Philippine territory as a clear and
concrete manifestation of our inherent right to national self-determination, independence and sovereignty.

Mr. Presiding Officer, I would like to relate now these attributes of genuine nationhood to the social cost of allowing foreign countries
to maintain military bases in our country. Previous speakers have dwelt on this subject, either to highlight its importance in relation to
the other issues or to gloss over its significance and !llake this a part of future negotiations.357

xxxx

Mr. Presiding Officer, I feel that banning foreign military bases is one of the solutions and is the response of the Filipino people
against this condition and other conditions that have already been clearly and emphatically discussed in past deliberations. The
deletion, therefore, of Section 3 in the Constitution we are drafting will have the following implications:

First, the failure of the Constitutional Commission to decisively respond to the continuing violation of our territorial integrity via
the military bases agreement which permits the retention of U.S. facilities within the Philippine soil over which our authorities
have no exclusive jurisdiction contrary to the accepted definition of the exercise of sovereignty.
Second, consent by this forum, this Constitutional Commission, to an exception in the application of a provision in the Bill of
Rights that we have just drafted regarding equal application of the laws of the land to all inhabitants, permanent or otherwise, within
its territorial boundaries.

Third, the continued exercise by the United States of extraterritoriality despite the condemnations of such practice by the world
community of nations in the light of overwhelming international approval of eradicating all vestiges of colonialism. 358

xxxx

Sixth, the deification of a new concept called pragmatic sovereignty, in the hope that such can be wielded to force the United States
government to concede to better terms and conditions concerning the military bases agreement, including the transfer of complete
control to the Philippine government of the U.S. facilities, while in the meantime we have to suffer all existing indignities and
disrespect towards our rights as a sovereign nation.

xxxx

Eighth, the utter failure of this forum to view the issue of foreign military bases as essentially a question of sovereignty which
does not require in-depth studies or analyses and which this forum has, as a constituent assembly drafting a constitution, the expertise
and capacity to decide on except that it lacks the political will that brought it to existence and now engages in an elaborate scheme of
buck-passing.

xxxx

Without any doubt we can establish a new social order in our country, if we reclaim, restore, uphold and defend our national
sovereignty. National sovereignty is what the military bases issue is all about. It is only the sovereign people exercising their
national sovereignty who can design an independent course and take full control of their national destiny. 359

SPEECH OF COMMISSIONER P ADILLA360

xxxx

Mr. Presiding Officer, in advocating the majority committee report, specifically Sections 3 and 4 on neutrality, nuclear and bases-free
country, some views stress sovereignty of the Republic and even invoke survival of the Filipino nation and people. 361

REBUTTAL OF COMMISSIONER NOLLEDO362

xxxx

The anachronistic and ephemeral arguments against the provisions of the committee report to dismantle the American bases after 1991
only show the urgent need to free our country from the entangling alliance with any power bloc.363

xxxx

xx x Mr. Presiding Officer, it is not necessary for us to possess expertise to know that the so-called RP-US Bases Agreement will
expire in 1991, that it infringes on our sovereignty and jurisdiction as well as national dignity and honor, that it goes against the
UN policy of disarmament and that it constitutes unjust intervention in our internal affairs.364 (Emphases Supplied)

The Constitutional Commission eventually agreed to allow foreign military bases, troops, or facilities, subject to the provisions of
Section 25. It is thus important to read its discussions carefully. From these discussions, we can deduce three legal standards that were
articulated by the Constitutional Commission Members. These are characteristics of any agreement that the country, and by extension
this Court, must ensure are observed. We can thereby determine whether a military base or facility in the Philippines, which houses or
is accessed by foreign military troops, is foreign or remains a Philippine military base or facility. The legal standards we find
applicable are: independence from foreign control, sovereignty and applicable law, and national security and territorial integrity.

i. First standard: independence from foreign control

Very clearly, much of the opposition to the U.S. bases at the time of the Constitution's drafting was aimed at asserting Philippine
independence from the U.S., as well as control over our country's territory and military.
Under the Civil Code, there are several aspects of control exercised over property.

Property is classified as private or public.365 It is public if "intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar character[,]" or "[t]hose which belong to the State,
without being for public use, and are intended for some public service or for the development of the national wealth. " 366

Quite clearly, the Agreed Locations are contained within a property for public use, be it within a government military camp or
property that belongs to the Philippines.1avvphi1

Once ownership is established, then the rights of ownership flow freely. Article 428 of the Civil Code provides that "[t]he owner has
the right to enjoy and dispose of a thing, without other limitations than those established by law." Moreover, the owner "has also a
right of action against the holder and possessor of the thing in order to recover it."

Philippine civil law therefore accords very strong rights to the owner of property, even against those who hold the property.
Possession, after all, merely raises a disputable presumption of ownership, which can be contested through normal judicial
processes.367

In this case, EDCA explicitly provides that ownership of the Agreed Locations remains with the Philippine govemment. 368 What U.S.
personnel have a right to, pending mutual agreement, is access to and use of these locations. 369

The right of the owner of the property to allow access and use is consistent with the Civil Code, since the owner may dispose of the
property in whatever way deemed fit, subject to the limits of the law. So long as the right of ownership itself is not transferred, then
whatever rights are transmitted by agreement does not completely divest the owner of the rights over the property, but may only limit
them in accordance with law.

Hence, even control over the property is something that an owner may transmit freely. This act does not translate into the full transfer
of ownership, but only of certain rights. In Roman Catholic Apostolic Administrator of Davao, Inc. v. Land Registration
Commission, we stated that the constitutional proscription on property ownership is not violated despite the foreign national's control
over the property.370

EDCA, in respect of its provisions on Agreed Locations, is essentially a contract of use and access. Under its pertinent provisions, it is
the Designated Authority of the Philippines that shall, when requested, assist in facilitating transit or access to public land and
facilities.371 The activities carried out within these locations are subject to agreement as authorized by the Philippine
govemment.372 Granting the U.S. operational control over these locations is likewise subject to EDCA' s security mechanisms, which
are bilateral procedures involving Philippine consent and cooperation. 373 Finally, the Philippine Designated Authority or a duly
designated representative is given access to the Agreed Locations. 374

To our mind, these provisions do not raise the spectre of U.S. control, which was so feared by the Constitutional Commission. In fact,
they seem to have been the product of deliberate negotiation from the point of view of the Philippine government, which balanced
constitutional restrictions on foreign military bases and facilities against the security needs of the country. In the 1947 MBA, the U.S.
forces had "the right, power and authority x x x to construct (including dredging and filling), operate, maintain, utilize, occupy,
garrison and control the bases."375 No similarly explicit provision is present in EDCA.

Nevertheless, the threshold for allowing the presence of foreign military facilities and bases has been raised by the present
Constitution. Section 25 is explicit that foreign military bases, troops, or facilities shall not be allowed in the Philippines, except under
a treaty duly concurred in by the Senate. Merely stating that the Philippines would retain ownership would do violence to the
constitutional requirement if the Agreed Locations were simply to become a less obvious manifestation of the U.S. bases that were
rejected in 1991.

When debates took place over the military provisions of the Constitution, the committee rejected a specific provision proposed by
Commissioner Sarmiento. The discussion illuminates and provides context to the 1986 Constitutional Commission's vision of control
and independence from the U.S., to wit:

MR. SARMIENTO: Madam President, my proposed amendment reads as follows: "THE STATE SHALL ESTABLISH AND
MAINTAIN AN INDEPENDENT AND SELF-RELIANT ARMED FORCES OF THE PHILIPPINES." Allow me to briefly explain,
Madam President. The Armed Forces of the Philippines is a vital component of Philippine society depending upon its training,
orientation and support. It will either be the people's protector or a staunch supporter of a usurper or tyrant, local and foreign
interest. The Armed Forces of the Philippines' past and recent experience shows it has never been independent and self-
reliant. Facts, data and statistics will show that it has been substantially dependent upon a foreign power. In March 1968,
Congressman Barbero, himself a member of the Armed Forces of the Philippines, revealed top secret documents showing what he
described as U.S. dictation over the affairs of the Armed Forces of the Philippines. He showed that under existing arrangements,
the United States unilaterally determines not only the types and quantity of arms and equipments that our armed forces would
have, but also the time when these items are to be made available to us. It is clear, as he pointed out, that the composition,
capability and schedule of development of the Armed Forces of the Philippines is under the effective control of the U.S.
government.376 (Emphases supplied)

Commissioner Sarmiento proposed a motherhood statement in the 1987 Constitution that would assert "independent" and "self-reliant"
armed forces. This proposal was rejected by the committee, however. As Commissioner De Castro asserted, the involvement of
the Philippine military with the U.S. did not, by itself, rob the Philippines of its real independence. He made reference to the
context of the times: that the limited resources of the Philippines and the current insurgency at that time necessitated a strong military
relationship with the U.S. He said that the U.S. would not in any way control the Philippine military despite this relationship and the
fact that the former would furnish military hardware or extend military assistance and training to our military. Rather, he claimed that
the proposal was in compliance with the treaties between the two states.

MR. DE CASTRO: If the Commissioner will take note of my speech on U.S. military bases on 12 September 1986, I spoke on the
selfreliance policy of the armed forces. However, due to very limited resources, the only thing we could do is manufacture small arms
ammunition. We cannot blame the armed forces. We have to blame the whole Republic of the Philippines for failure to provide the
necessary funds to make the Philippine Armed Forces self-reliant. Indeed that is a beautiful dream. And I would like it that way. But
as of this time, fighting an insurgency case, a rebellion in our country - insurgency - and with very limited funds and very limited
number of men, it will be quite impossible for the Philippines to appropriate the necessary funds therefor. However, if we say that
the U.S. government is furnishing us the military hardware, it is not control of our armed forces or of our government. It is in
compliance with the Mutual Defense Treaty. It is under the military assistance program that it becomes the responsibility of the
United States to furnish us the necessary hardware in connection with the military bases agreement. Please be informed that there are
three (3) treaties connected with the military bases agreement; namely: the RP-US Military Bases Agreement, the Mutual Defense
Treaty and the Military Assistance Program.

My dear Commissioner, when we enter into a treaty and we are furnished the military hardware pursuant to that treaty, it is
not in control of our armed forces nor control of our government. True indeed, we have military officers trained in the U.S. armed
forces school. This is part of our Military Assistance Program, but it does not mean that the minds of our military officers are for the
U.S. government, no. I am one of those who took four courses in the United States schools, but I assure you, my mind is for the
Filipino people. Also, while we are sending military officers to train or to study in U.S. military schools, we are also sending our
officers to study in other military schools such as in Australia, England and in Paris. So, it does not mean that when we send military
officers to United States schools or to other military schools, we will be under the control of that country. We also have foreign
officers in our schools, we in the Command and General Staff College in Fort Bonifacio and in our National Defense College, also in
Fort Bonifacio.377 (Emphases supplied)

This logic was accepted in Tañada v. Angara, in which the Court ruled that independence does not mean the absence of foreign
participation:

Furthermore, the constitutional policy of a "self-reliant and independent national economy" does not necessarily rule out the entry
of foreign investments, goods and services. It contemplates neither "economic seclusion" nor "mendicancy in the international
community." As explained by Constitutional Commissioner Bernardo Villegas, sponsor of this constitutional policy:

Economic self reliance is a primary objective of a developing country that is keenly aware of overdependence on external assistance
for even its most basic needs. It does not mean autarky or economic seclusion; rather, it means avoiding mendicancy in the
international community. Independence refers to the freedom from undue foreign control of the national economy, especially in
such strategic industries as in the development of natural resources and public utilities. 378 (Emphases supplied)

The heart of the constitutional restriction on foreign military facilities and bases is therefore the assertion of independence from the
U.S. and other foreign powers, as independence is exhibited by the degree of foreign control exerted over these areas.1âwphi1 The
essence of that independence is self-governance and self-control.379 Independence itself is "[t]he state or condition of being free from
dependence, subjection, or control. " 380

Petitioners assert that EDCA provides the U.S. extensive control and authority over Philippine facilities and locations, such that the
agreement effectively violates Section 25 of the 1987 Constitution. 381

Under Article VI(3) of EDCA, U.S. forces are authorized to act as necessary for "operational control and defense." The term
"operational control" has led petitioners to regard U.S. control over the Agreed Locations as unqualified and, therefore,
total.382 Petitioners contend that the word "their" refers to the subject "Agreed Locations."
This argument misreads the text, which is quoted below:

United States forces are authorized to exercise all rights and authorities within Agreed Locations that are necessary for their
operational control or defense, including taking appropriate measure to protect United States forces and United States contractors. The
United States should coordinate such measures with appropriate authorities of the Philippines.

A basic textual construction would show that the word "their," as understood above, is a possessive pronoun for the subject "they," a
third-person personal pronoun in plural form. Thus, "their" cannot be used for a non-personal subject such as "Agreed Locations." The
simple grammatical conclusion is that "their" refers to the previous third-person plural noun, which is "United States forces." This
conclusion is in line with the definition of operational control.

a. U.S. operational control as the exercise of authority over U.S. personnel, and not over the Agreed Locations

Operational control, as cited by both petitioner and respondents, is a military term referring to

[t]he authority to perform those functions of command over subordinate forces involving organizing and employing commands and
forces, assigning tasks, designating objective, and giving authoritative direction necessary to accomplish the mission. 383

At times, though, operational control can mean something slightly different. In JUSMAG Philippines v. National Labor Relations
Commission, the Memorandum of Agreement between the AFP and JUSMAG Philippines defined the term as follows: 384

The term "Operational Control" includes, but is not limited to, all personnel administrative actions, such as: hiring recommendations;
firing recommendations; position classification; discipline; nomination and approval of incentive awards; and payroll computation.

Clearly, traditional standards define "operational control" as personnel control. Philippine law, for instance, deems operational control
as one exercised by police officers and civilian authorities over their subordinates and is distinct from the administrative control that
they also exercise over police subordinates.385 Similarly, a municipal mayor exercises operational control over the police within the
municipal government,386 just as city mayor possesses the same power over the police within the city government. 387

Thus, the legal concept of operational control involves authority over personnel in a commander-subordinate relationship and does not
include control over the Agreed Locations in this particular case. Though not necessarily stated in EDCA provisions, this
interpretation is readily implied by the reference to the taking of "appropriate measures to protect United States forces and United
States contractors."

It is but logical, even necessary, for the U.S. to have operational control over its own forces, in much the same way that the
Philippines exercises operational control over its own units.

For actual operations, EDCA is clear that any activity must be planned and pre-approved by the MDB-SEB.388 This provision evinces
the partnership aspect of EDCA, such that both stakeholders have a say on how its provisions should be put into effect.

b. Operational control vis-à-vis effective command and control

Petitioners assert that beyond the concept of operational control over personnel, qualifying access to the Agreed Locations by the
Philippine Designated Authority with the phrase "consistent with operational safety and security requirements in accordance with
agreed procedures developed by the Parties" leads to the conclusion that the U.S. exercises effective control over the Agreed
Locations.389 They claim that if the Philippines exercises possession of and control over a given area, its representative should not
have to be authorized by a special provision.390

For these reasons, petitioners argue that the "operational control" in EDCA is the "effective command and control" in the 1947
MBA.391 In their Memorandum, they distinguish effective command and control from operational control in U.S. parlance. 392 Citing
the Doctrine for the Armed Forces of the United States, Joint Publication 1, "command and control (C2)" is defined as "the exercise of
authority and direction by a properly designated commander over assigned and attached forces in the accomplishment of the mission x
x x."393 Operational control, on the other hand, refers to "[t]hose functions of command over assigned forces involving the
composition of subordinate forces, the assignment of tasks, the designation of objectives, the overall control of assigned resources, and
the full authoritative direction necessary to accomplish the mission." 394

Two things demonstrate the errors in petitioners' line of argument.


Firstly, the phrase "consistent with operational safety and security requirements in accordance with agreed procedures developed by
the Parties" does not add any qualification beyond that which is already imposed by existing treaties. To recall, EDCA is based upon
prior treaties, namely the VFA and the MDT.395 Treaties are in themselves contracts from which rights and obligations may be
claimed or waived.396 In this particular case, the Philippines has already agreed to abide by the security mechanisms that have long
been in place between the U.S. and the Philippines based on the implementation of their treaty relations. 397

Secondly, the full document cited by petitioners contradicts the equation of "operational control" with "effective command and
control," since it defines the terms quite differently, viz:398

Command and control encompasses the exercise of authority, responsibility, and direction by a commander over assigned and attached
forces to accomplish the mission. Command at all levels is the art of motivating and directing people and organizations into action to
accomplish missions. Control is inherent in command. To control is to manage and direct forces and functions consistent with a
commander's command authority. Control of forces and functions helps commanders and staffs compute requirements, allocate means,
and integrate efforts. Mission command is the preferred method of exercising C2. A complete discussion of tenets, organization, and
processes for effective C2 is provided in Section B, "Command and Control of Joint Forces," of Chapter V "Joint Command and
Control."

Operational control is defined thus:399

OPCON is able to be delegated from a lesser authority than COCOM. It is the authority to perform those functions of command over
subordinate forces involving organizing and employing commands and forces, assigning tasks, designating objectives, and giving
authoritative direction over all aspects of military operations and joint training necessary to accomplish the mission. It should be
delegated to and exercised by the commanders of subordinate organizations; normally, this authority is exercised through subordinate
JFCs, Service, and/or functional component commanders. OPCON provides authority to organize and employ commands and forces
as the commander considers necessary to accomplish assigned missions. It does not include authoritative direction for logistics or
matters of administration, discipline, internal organization, or unit training. These elements of COCOM must be specifically delegated
by the CCDR. OPCON does include the authority to delineate functional responsibilities and operational areas of subordinate JFCs.

Operational control is therefore the delegable aspect of combatant command, while command and control is the overall power and
responsibility exercised by the commander with reference to a mission. Operational control is a narrower power and must be given,
while command and control is plenary and vested in a commander. Operational control does not include the planning, programming,
budgeting, and execution process input; the assignment of subordinate commanders; the building of relationships with Department of
Defense agencies; or the directive authority for logistics, whereas these factors are included in the concept of command and control.400

This distinction, found in the same document cited by petitioners, destroys the very foundation of the arguments they have built: that
EDCA is the same as the MBA.

c. Limited operational control over the Agreed Locations only for construction activitites

As petitioners assert, EDCA indeed contains a specific provision that gives to the U.S. operational control within the Agreed
Locations during construction activities.401 This exercise of operational control is premised upon the approval by the MDB and the
SEB of the construction activity through consultation and mutual agreement on the requirements and standards of the construction,
alteration, or improvement.402

Despite this grant of operational control to the U.S., it must be emphasized that the grant is only for construction activities. The narrow
and limited instance wherein the U.S. is given operational control within an Agreed Location cannot be equated with foreign military
control, which is so abhorred by the Constitution.

The clear import of the provision is that in the absence of construction activities, operational control over the Agreed Location is
vested in the Philippine authorities. This meaning is implicit in the specific grant of operational control only during construction
activities. The principle of constitutional construction, "expressio unius est exclusio alterius," means the failure to mention the thing
becomes the ground for inferring that it was deliberately excluded.403Following this construction, since EDCA mentions the existence
of U.S. operational control over the Agreed Locations for construction activities, then it is quite logical to conclude that it is not
exercised over other activities.

Limited control does not violate the Constitution. The fear of the commissioners was total control, to the point that the foreign military
forces might dictate the terms of their acts within the Philippines.404 More important, limited control does not mean an abdication or
derogation of Philippine sovereignty and legal jurisdiction over the Agreed Locations. It is more akin to the extension of diplomatic
courtesies and rights to diplomatic agents,405 which is a waiver of control on a limited scale and subject to the terms of the treaty.
This point leads us to the second standard envisioned by the framers of the Constitution: that the Philippines must retain sovereignty
and jurisdiction over its territory.

ii. Second standard: Philippine sovereignty and applicable law

EDCA states in its Preamble the "understanding for the United States not to establish a permanent military presence or base in the
territory of the Philippines." Further on, it likewise states the recognition that "all United States access to and use of facilities and areas
will be at the invitation of the Philippines and with full respect for the Philippine Constitution and Philippine laws."

The sensitivity of EDCA provisions to the laws of the Philippines must be seen in light of Philippine sovereignty and jurisdiction over
the Agreed Locations.

Sovereignty is the possession of sovereign power,406 while jurisdiction is the conferment by law of power and authority to apply the
law.407 Article I of the 1987 Constitution states:

The national territory comprises the Philippine archipelago, with all the islands and waters embraced therein, and all other territories
over which the Philippines has sovereignty or jurisdiction, consisting of its terrestrial, fluvial, and aerial domains, including its
territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas. The waters around, between, and connecting the
islands of the archipelago, regardless of their breadth and dimensions, form part of the internal waters of the Philippines. (Emphasis
supplied)

From the text of EDCA itself, Agreed Locations are territories of the Philippines that the U.S. forces are allowed to access and
use.408 By withholding ownership of these areas and retaining unrestricted access to them, the government asserts sovereignty over its
territory. That sovereignty exists so long as the Filipino people exist. 409

Significantly, the Philippines retains primary responsibility for security with respect to the Agreed Locations. 410Hence, Philippine law
remains in force therein, and it cannot be said that jurisdiction has been transferred to the U.S. Even the previously discussed
necessary measures for operational control and defense over U.S. forces must be coordinated with Philippine authorities. 411

Jurisprudence bears out the fact that even under the former legal regime of the MBA, Philippine laws continue to be in force within
the bases.412 The difference between then and now is that EDCA retains the primary jurisdiction of the Philippines over the security of
the Agreed Locations, an important provision that gives it actual control over those locations. Previously, it was the provost marshal of
the U.S. who kept the peace and enforced Philippine law in the bases. In this instance, Philippine forces act as peace officers, in stark
contrast to the 1947 MBA provisions on jurisdiction.413

iii. Third standard: must respect national security and territorial integrity

The last standard this Court must set is that the EDCA provisions on the Agreed Locations must not impair or threaten the national
security and territorial integrity of the Philippines.

This Court acknowledged in Bayan v. Zamora that the evolution of technology has essentially rendered the prior notion of permanent
military bases obsolete.

Moreover, military bases established within the territory of another state is no longer viable because of the alternatives offered by new
means and weapons of warfare such as nuclear weapons, guided missiles as well as huge sea vessels that can stay afloat in the sea
even for months and years without returning to their home country. These military warships are actually used as substitutes for a land-
home base not only of military aircraft but also of military personnel and facilities. Besides, vessels are mobile as compared to a land-
based military headquarters.414

The VFA serves as the basis for the entry of U.S. troops in a limited scope. It does not allow, for instance, the re-establishment of the
Subic military base or the Clark Air Field as U.S. military reservations. In this context, therefore, this Court has interpreted the
restrictions on foreign bases, troops, or facilities as three independent restrictions. In accord with this interpretation, each restriction
must have its own qualification.

Petitioners quote from the website http://en.wikipedia.org to define what a military base is. 415 While the source is not authoritative,
petitioners make the point that the Agreed Locations, by granting access and use to U.S. forces and contractors, are U.S. bases under a
different name.416 More important, they claim that the Agreed Locations invite instances of attack on the Philippines from enemies of
the U.S.417
We believe that the raised fear of an attack on the Philippines is not in the realm of law, but of politics and policy. At the very least,
we can say that under international law, EDCA does not provide a legal basis for a justified attack on the Philippines.

In the first place, international law disallows any attack on the Agreed Locations simply because of the presence of U.S. personnel.
Article 2(4) of the United Nations Charter states that "All Members shall refrain in their international relations from the threat or use
of force against the territorial integrity or political independence of any state, or in any other manner inconsistent with the Purposes of
the United Nations."418 Any unlawful attack on the Philippines breaches the treaty, and triggers Article 51 of the same charter, which
guarantees the inherent right of individual or collective self-defence.

Moreover, even if the lawfulness of the attack were not in question, international humanitarian law standards prevent participants in an
armed conflict from targeting non-participants. International humanitarian law, which is the branch of international law applicable to
armed conflict, expressly limits allowable military conduct exhibited by forces of a participant in an armed conflict. 419 Under this legal
regime, participants to an armed conflict are held to specific standards of conduct that require them to distinguish between combatants
and non-combatants,420 as embodied by the Geneva Conventions and their Additional Protocols. 421

Corollary to this point, Professor John Woodcliffe, professor of international law at the University of Leicester, noted that there is no
legal consensus for what constitutes a base, as opposed to other terms such as "facilities" or "installation." 422 In strategic literature,
"base" is defined as an installation "over which the user State has a right to exclusive control in an extraterritorial sense."423 Since this
definition would exclude most foreign military installations, a more important distinction must be made.

For Woodcliffe, a type of installation excluded from the definition of "base" is one that does not fulfill a combat role. He cites an
example of the use of the territory of a state for training purposes, such as to obtain experience in local geography and climactic
conditions or to carry out joint exercises.424 Another example given is an advanced communications technology installation for
purposes of information gathering and communication. 425 Unsurprisingly, he deems these non-combat uses as borderline situations
that would be excluded from the functional understanding of military bases and installations.426

By virtue of this ambiguity, the laws of war dictate that the status of a building or person is presumed to be protected, unless proven
otherwise.427 Moreover, the principle of distinction requires combatants in an armed conflict to distinguish between lawful
targets428 and protected targets.429 In an actual armed conflict between the U.S. and a third state, the Agreed Locations cannot be
considered U.S. territory, since ownership of territory even in times of armed conflict does not change. 430

Hence, any armed attack by forces of a third state against an Agreed Location can only be legitimate under international humanitarian
law if it is against a bona fide U.S. military base, facility, or installation that directly contributes to the military effort of the U.S.
Moreover, the third state's forces must take all measures to ensure that they have complied with the principle of distinction (between
combatants and non-combatants).

There is, then, ample legal protection for the Philippines under international law that would ensure its territorial integrity and national
security in the event an Agreed Location is subjected to attack. As EDCA stands, it does not create the situation so feared by
petitioners - one in which the Philippines, while not participating in an armed conflict, would be legitimately targeted by an enemy of
the U.S.431

In the second place, this is a policy question about the wisdom of allowing the presence of U.S. personnel within our territory and is
therefore outside the scope of judicial review.

Evidently, the concept of giving foreign troops access to "agreed" locations, areas, or facilities within the military base of another
sovereign state is nothing new on the international plane. In fact, this arrangement has been used as the framework for several defense
cooperation agreements, such as in the following:

1. 2006 U.S.-Bulgaria Defense Cooperation Agreement432

2. 2009 U.S.-Colombia Defense Cooperation Agreement433

3. 2009 U.S.-Poland Status of Forces Agreement434

4. 2014 U.S.-Australia Force Posture Agreement435

5. 2014 U.S.-Afghanistan Security and Defense Cooperation Agreement436


In all of these arrangements, the host state grants U.S. forces access to their military bases.437 That access is without rental or similar
costs to the U.S.438 Further, U.S. forces are allowed to undertake construction activities in, and make alterations and improvements to,
the agreed locations, facilities, or areas.439 As in EDCA, the host states retain ownership and jurisdiction over the said bases. 440

In fact, some of the host states in these agreements give specific military-related rights to the U.S. For example, under Article IV(l) of
the US.-Bulgaria Defense Cooperation Agreement, "the United States forces x x x are authorized access to and may use agreed
facilities and areas x x x for staging and deploying of forces and materiel, with the purpose of conducting x x x contingency operations
and other missions, including those undertaken in the framework of the North Atlantic Treaty." In some of these agreements, host
countries allow U.S. forces to construct facilities for the latter’s exclusive use.441

Troop billeting, including construction of temporary structures, is nothing new. In Lim v. Executive Secretary, the Court already
upheld the Terms of Reference of Balikatan 02-1, which authorized U.S. forces to set up "[t]emporary structures such as those for
troop billeting, classroom instruction and messing x x x during the Exercise." Similar provisions are also in the Mutual Logistics
Support Agreement of 2002 and 2007, which are essentially executive agreements that implement the VFA, the MDT, and the 1953
Military Assistance Agreement. These executive agreements similarly tackle the "reciprocal provision of logistic support, supplies,
and services,"442 which include "[b ]illeting, x x x operations support (and construction and use of temporary structures incident to
operations support), training services, x x x storage services, x x x during an approved activity." 443 These logistic supplies, support,
and services include temporary use of "nonlethal items of military equipment which are not designated as significant military
equipment on the U.S. Munitions List, during an approved activity." 444 The first Mutual Logistics Support Agreement has lapsed,
while the second one has been extended until 2017 without any formal objection before this Court from the Senate or any of its
members.

The provisions in EDCA dealing with Agreed Locations are analogous to those in the aforementioned executive agreements. Instead
of authorizing the building of temporary structures as previous agreements have done, EDCA authorizes the U.S. to build permanent
structures or alter or improve existing ones for, and to be owned by, the Philippines.445 EDCA is clear that the Philippines retains
ownership of altered or improved facilities and newly constructed permanent or non-relocatable structures.446 Under EDCA, U.S.
forces will also be allowed to use facilities and areas for "training; x x x; support and related activities; x x x; temporary
accommodation of personnel; communications" and agreed activities. 447

Concerns on national security problems that arise from foreign military equipment being present in the Philippines must likewise be
contextualized. Most significantly, the VFA already authorizes the presence of U.S. military equipment in the country. Article
VII of the VFA already authorizes the U.S. to import into or acquire in the Philippines "equipment, materials, supplies, and other
property" that will be used "in connection with activities" contemplated therein. The same section also recognizes that "[t]itle to such
property shall remain" with the US and that they have the discretion to "remove such property from the Philippines at any time."

There is nothing novel, either, in the EDCA provision on the prepositioning and storing of "defense equipment, supplies, and
materiel,"448 since these are sanctioned in the VFA. In fact, the two countries have already entered into various implementing
agreements in the past that are comparable to the present one. The Balikatan 02-1 Terms of Reference mentioned in Lim v. Executive
Secretary specifically recognizes that Philippine and U.S. forces "may share x x x in the use of their resources, equipment and other
assets." Both the 2002 and 2007 Mutual Logistics Support Agreements speak of the provision of support and services, including the
"construction and use of temporary structures incident to operations support" and "storage services" during approved
activities.449 These logistic supplies, support, and services include the "temporary use of x x x nonlethal items of military equipment
which are not designated as significant military equipment on the U.S. Munitions List, during an approved activity."450Those activities
include "combined exercises and training, operations and other deployments" and "cooperative efforts, such as humanitarian
assistance, disaster relief and rescue operations, and maritime anti-pollution operations" within or outside Philippine
territory.451 Under EDCA, the equipment, supplies, and materiel that will be prepositioned at Agreed Locations include "humanitarian
assistance and disaster relief equipment, supplies, and materiel. " 452 Nuclear weapons are specifically excluded from the materiel that
will be prepositioned.

Therefore, there is no basis to invalidate EDCA on fears that it increases the threat to our national security. If anything, EDCA
increases the likelihood that, in an event requiring a defensive response, the Philippines will be prepared alongside the U.S. to defend
its islands and insure its territorial integrity pursuant to a relationship built on the MDT and VFA.

8. Others issues and concerns raised

A point was raised during the oral arguments that the language of the MDT only refers to mutual help and defense in the Pacific
area.453 We believe that any discussion of the activities to be undertaken under EDCA vis-a-vis the defense of areas beyond the Pacific
is premature. We note that a proper petition on that issue must be filed before we rule thereon. We also note that none of the petitions
or memoranda has attempted to discuss this issue, except only to theorize that the U.S. will not come to our aid in the event of an
attack outside of the Pacific. This is a matter of policy and is beyond the scope of this judicial review.
In reference to the issue on telecommunications, suffice it to say that the initial impression of the facility adverted to does appear to be
one of those that require a public franchise by way of congressional action under Section 11, Article XII of the Constitution. As
respondents submit, however, the system referred to in the agreement does not provide telecommunications services to the public for
compensation.454 It is clear from Article VIl(2) of EDCA that the telecommunication system is solely for the use of the U.S. and not
the public in general, and that this system will not interfere with that which local operators use. Consequently, a public franchise is no
longer necessary.

Additionally, the charge that EDCA allows nuclear weapons within Philippine territory is entirely speculative. It is noteworthy that the
agreement in fact specifies that the prepositioned materiel shall not include nuclear weapons. 455Petitioners argue that only
prepositioned nuclear weapons are prohibited by EDCA; and that, therefore, the U.S. would insidiously bring nuclear weapons to
Philippine territory.456 The general prohibition on nuclear weapons, whether prepositioned or not, is already expressed in the 1987
Constitution.457 It would be unnecessary or superfluous to include all prohibitions already in the Constitution or in the law through a
document like EDCA.

Finally, petitioners allege that EDCA creates a tax exemption, which under the law must originate from Congress. This allegation
ignores jurisprudence on the government's assumption of tax liability. EDCA simply states that the taxes on the use of water,
electricity, and public utilities are for the account of the Philippine Government.458 This provision creates a situation in which a
contracting party assumes the tax liability of the other. 459 In National Power Corporation v. Province of Quezon, we distinguished
between enforceable and unenforceable stipulations on the assumption of tax liability. Afterwards, we concluded that an enforceable
assumption of tax liability requires the party assuming the liability to have actual interest in the property taxed. 460 This rule applies to
EDCA, since the Philippine Government stands to benefit not only from the structures to be built thereon or improved, but also from
the joint training with U.S. forces, disaster preparation, and the preferential use of Philippine suppliers. 461 Hence, the provision on the
assumption of tax liability does not constitute a tax exemption as petitioners have posited.

Additional issues were raised by petitioners, all relating principally to provisions already sufficiently addressed above. This Court
takes this occasion to emphasize that the agreement has been construed herein as to absolutely disauthorize the violation of the
Constitution or any applicable statute. On the contrary, the applicability of Philippine law is explicit in EDCA.

EPILOGUE

The fear that EDCA is a reincarnation of the U.S. bases so zealously protested by noted personalities in Philippine history arises not so
much from xenophobia, but from a genuine desire for self-determination, nationalism, and above all a commitment to ensure the
independence of the Philippine Republic from any foreign domination.

Mere fears, however, cannot curtail the exercise by the President of the Philippines of his Constitutional prerogatives in respect of
foreign affairs. They cannot cripple him when he deems that additional security measures are made necessary by the times. As it
stands, the Philippines through the Department of Foreign Affairs has filed several diplomatic protests against the actions of the
People's Republic of China in the West Philippine Sea;462 initiated arbitration against that country under the United Nations
Convention on the Law of the Sea;463 is in the process of negotiations with the Moro Islamic Liberation Front for peace in Southern
Philippines,464 which is the subject of a current case before this Court; and faces increasing incidents of kidnappings of Filipinos and
foreigners allegedly by the Abu Sayyaf or the New People's Army.465 The Philippine military is conducting reforms that seek to ensure
the security and safety of the nation in the years to come. 466 In the future, the Philippines must navigate a world in which armed forces
fight with increasing sophistication in both strategy and technology, while employing asymmetric warfare and remote weapons.

Additionally, our country is fighting a most terrifying enemy: the backlash of Mother Nature. The Philippines is one of the countries
most directly affected and damaged by climate change. It is no coincidence that the record-setting tropical
cyclone Yolanda (internationally named Haiyan), one of the most devastating forces of nature the world has ever seen hit the
Philippines on 8 November 2013 and killed at least 6,000 people. 467 This necessitated a massive rehabilitation project.468 In the
aftermath, the U.S. military was among the first to extend help and support to the Philippines.

That calamity brought out the best in the Filipinos as thousands upon thousands volunteered their help, their wealth, and their prayers
to those affected. It also brought to the fore the value of having friends in the international community.

In order to keep the peace in its archipelago in this region of the world, and to sustain itself at the same time against the destructive
forces of nature, the Philippines will need friends. Who they are, and what form the friendships will take, are for the President to
decide. The only restriction is what the Constitution itself expressly prohibits. It appears that this overarching concern for balancing
constitutional requirements against the dictates of necessity was what led to EDCA.

As it is, EDCA is not constitutionally infirm. As an executive agreement, it remains consistent with existing laws and treaties that it
purports to implement.
WHEREFORE, we hereby DISMISS the petitions.

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