2020/2021 The Law Pertaining to the State and Its Relationship with Its Citizens

(Jurisprudence and Doctrines)

CONSTITUTIONAL LAW

(1) Doctrine of constitutional supremacy. If a law or contract violates any norm of the constitution, that law or contract whether promulgated by
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the legislative or by the executive branch or entered by private persons for private purposes is void. (Resident Marine Mammals of the
Protected Seascape Tañon Straight v. Reyes, April 21, 2015).

Principles of constitutional construction. The principles are (i) verba legis, that is, wherever possible, the words used in the Constitution
should be given their ordinary meaning except where technical terms are employed, (ii) where there is ambiguity, ratio legis est anima,
meaning that the words of the Constitution should be interpreted in accordance with the intent of its framers, and (iii) ut magis valeat quam
pereat, meaning that the Constitution is to be interpreted as a whole. (Francisco Jr. v. House of Representatives, November 10, 2003)

(2) Sovereignty and auto-limitation. Sovereignty is the supreme and uncontrollable power inherent in a State by which that State is governed.
(Nachura) Under the concept of auto-limitation, any State may by its consent, express or implied, submit to a restriction of its sovereignty
rights; a State then, if it chooses to, may refrain from the exercise of what otherwise is illimitable competence. (Raegan v. Commissioner of
Internal Revenue, December 27, 1969)

The State cannot be sued without its consent. There can be no legal right as against the authority that makes the law on which the right
depends. Consent may be express or implied, such as when the government exercises its proprietary functions, or where such is embodied in a
general or special law. (City of Bacolod v. Phuture Visions Co., Inc., January 17, 2018)

Instances where state immunity from suit is waived. Instances are (i) entering into a contract for management and maintenance of an
airport as the same is primarily private and non-governmental (Air Transportation Office v. Ramos, February 23, 2011), (ii) expropriation
cases, whenever private property is taken for public use, it becomes ministerial duty of the concerned office or agency to initiate expropriation
proceedings (Department of Transportation and Communication v. Abecina, June 29, 2016), (iii) taking of private property without just
compensation; State immunity is not an instrument for perpetrating any injustice on a citizen (Air Transportation Office v. Ramos, February
23, 2011), and (iv) shielding Bureau of Customs from ineptitude and gross negligence resulting in loss of imported goods; State should not
avail itself of this prerogative to take undue advantage of parties. (Commissioner of Customs v. AGFHA Incorporated, March 28, 2011)

Instances where state immunity from suit is not waived. Instances are (i) entering into a contract for construction of road as the same is
done in the exercise of governmental function (Mendoza v. Department of Public Works and Highways, July 9, 2014), (ii) Department of
Health and its officials for issuing orders in the implementation of the law. The Department of Health is an unincorporated agency which
performs sovereign functions. The mantle of non-suability extends to complaints filed against public officials for acts done in the performance
of official functions (Department of Health v. Phil Pharma Wealth, Inc., February 20, 2013), and (iii) Bacolod City agents padlocking a lotto
betting station for lack of mayor’s permit. While the authority of city mayors to issue business permits is granted by the Local Government
Code, which also vests local government units with the power to sue and be sued, the power to issue or grant licenses and business permits is
not an exercise of the government’s proprietary function but of the police power of the State, ergo a governmental act. No consent to be sued
and be liable for damages can be implied from mere exercise of power to issue permits. (City of Bacolod v. Phuture Visions Co., Inc., January
17, 2018)

(3) Principle of separation of powers vis-à-vis principle of check and balances. Separation of powers is a fundamental principle in the system
of government. It obtains not through express provision but by actual division in the 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 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. (Re: COA Opinion on the Computation of the Appraised Value of the Properties Purchased by the Retired Chief/Associate
Justices of the Supreme Court, July 31, 2012)

(4) Police power is the State’s authority to enact legislation that may interfere with personal liberty or property to promote the general
welfare. It is co-extensive with self-protection and termed the “law of overwhelming necessity.” It is the most essential, insistent, and
illimitable of powers. It is a dynamic force that enables the state to meet the exigencies of the winds of change. (Council of Teachers and Staff
of Colleges and Universities of the Philippines v. Secretary of Education, October 9, 2018) Requisites of rational relationship test for a valid
exercise of police power are (i) interests of the public generally require its exercise and (ii) means employed are reasonably necessary for the
purpose and not unduly oppressive upon individuals. (Fernando v. St. Scholastica’s College, March 12, 2013)
 Commission on Elections, through regulation, can compel survey firms to disclose the identities of subscribers to election surveys,
despite confidentiality clause in their contracts. The regulation effects the constitutional policy of guaranteeing equal access to
opportunities for public service and is impelled by the imperative of fair elections. Election surveys may influence voter preferences and when
left unregulated, it can undermine the holding of fair elections. The exercise of police power limits the non-impairment of contracts clause.
(Social Weather Station v. Commission on Elections, April 27, 2015)

R.A. No. 10533 (“K to 12” Law) is valid exercise of police power. Enactment of education laws, including the K to 12 Law, is an exercise
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of the State’s police power. State has an interest in prescribing regulations to promote the education and the general welfare of the people.
(Council of Teachers and Staff of Colleges and Universities of the Philippines v. Secretary of Education, October 9, 2018)

(5) Expansive concept of public use in relation to eminent domain. Public use includes any use of that is of usefulness, utility, or advantage, or
what is productive of general benefit of the public. (National Power Corporation v. Posada, March 11, 2015) Thus, an ordinance requiring
landowners to setback their fences by five meters to provide for public parking space amounts to taking of private property for public use
without just compensation. It is no longer for the exclusive use of the landowners but is available for use by the general public. (Fernando v.
St. Scholastica’s College, March 12, 2013)

Action for payment of just compensation does not prescribe and cannot be barred by laches. Action for payment of just compensation
does not prescribe. Laches as a doctrine of equity does not apply as the law and equity dictate payment of just compensation. (Land Bank of
the Philippines v. Franco, March 12, 2019)

A law or executive issuance cannot determine the just compensation. Determination of just compensation is a judicial function. Laws and
executive issuances fixing or providing for method of computing just compensation are not binding on courts but best treated as guidelines in
ascertaining the amount thereof. (DAR v. Romana, July 9, 2014) The final determination of just compensation is vested in courts. Courts may
deviate from the basic formula provided by administrative agencies if it finds, in its discretion, that other factors must be considered in the
determination of just compensation. Deviation, however, must be grounded on a reasoned explanation based on the evidence on record.
Absent this, the deviation constitutes grave abuse of discretion. (Land Bank of the Philippines v. Franco, March 12, 2019)

Reckoning point for determining just compensation is the value of the property at the time of taking, or the time when the landowner
was deprived of the use and benefit of his property. This holds true even if the taking happened earlier and the action for payment of just
compensation was instituted years after. While disparity in the valuation exists as property owners will be receiving such outdated valuation of
their property, it is equally true that, they too are remiss in guarding against the cruel effects of belated claim. (Secretary of Department of
Public Works and Highways v. Tecson, July 1, 2013)

Consequential damages may be awarded if because of the expropriation, the remaining property of the owner suffers from an
impairment or decrease in value. (National Transmission Corporation v. Lacson-De Leon, July 4, 2018)

In case of delay in the payment of just compensation, interest must be paid to be computed from the time the property is taken to the
time when compensation is actually paid or deposited with the court. Just compensation due is an effective forbearance on the part of the
State. (Department of Agrarian Reform v. Romana, July 9, 2014) Absent full payment, interest on the balance is due on the unpaid amount
(Evergreen Manufacturing Corporation v. Republic, September 6, 2017) from the time of taking. (Republic v. Decena, July 30, 2018) Interest
is also due on the consequential damages, the same being a component of just compensation. (National Transmission Corporation v. Lacson-
De Leon, July 4, 2018)

There is compensable taking even if the owners were not completely and actually dispossessed. Compensable taking includes destruction,
restriction, diminution, or interruption of the rights of ownership or of the common and necessary use and enjoyment of the property in a
lawful manner, lessening or destroying its value. It is neither necessary that the owner be wholly deprived of the use of his property nor
material whether the property is removed from the possession of the owner, or in any respect changes hands. (National Power Corporation v.
Heirs of Sangkay, August 24, 2011)

Reliefs available to owners whose property has been expropriated but subsequently the expropriation proceeding was abandoned. If
the taking for public 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. Nevertheless, they are
entitled to compensation 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, if any. (Republic v. Borbon, January 12, 2015) Thus, while the State may
acquire private property through either expropriation or voluntary sale, each has a different implication. In expropriation, the Republic’s
acquisition of the expropriated property is subject to the condition that the Republic will return the property should the public purpose for
which the expropriation was done did not materialize. In a sale contract between the Republic and private persons, there is no such condition
unless the parties stipulate it. (Republic v. Jose Gamir-Consuelo Diaz Heirs Association, Inc., November 12, 2018)
 Law allowing business establishments to claim the 20% discount given to senior citizens as a tax deduction is an exercise of police
power, and not of eminent domain. The 20% discount is intended to improve the welfare of senior citizens who, at their age, are less likely
to be gainfully employed, more prone to illnesses and other disabilities. The 20% discount is a regulation affecting the ability of private
establishments to price their products and services relative to senior citizens, a special class of individuals, for which the Constitution affords
preferential concern. It merely regulates the pricing of goods and services relative to, and the amount of profits or income/gross sales that such
private establishments may derive from, senior citizens. (Manila Memorial Park, Inc. v. Secretary of Social Welfare and Development,
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December 3, 2013)

(6) Bill of Rights cannot be invoked against private persons. Bill of Rights governs the relationship between the individual and the state; its
concern is not the relation between private individuals. (People v. Marti, January 18, 1991) Thus, Bill of Rights cannot be invoked: (i)
discipline of members by a political party, being a private organization, not a State instrument (Atienza v. Commission on Elections, February
16, 2010), (ii) flight steward claiming equal protection clause on his dismissal from a private airline company (Yrasuegui v. Philippine
Airlines, Inc., October 17, 2008), (iii) private electric company enters the premises of a private individual pursuant to their service contract,
there being no unreasonable search (Sesbreno v. Court of Appeals, March 26, 2014), and (iv) extrajudicial confession given by accused during
interview by a field reporter even if done inside detention cell and surrounded by police officers is admissible, there being no proof of undue
pressure or coercion from said officers or collusion of the reporter with them. (People v. Quitola, July 13, 2016).

(7) Two kinds of due process. First is procedural due process, which refers to the procedures that the government must follow before it deprives
a person of life, liberty, or property. Classic procedural due process issues are concerned with what kind of notice and what form of hearing
the government must provide when it takes a particular action. Second is substantive due process, which asks whether the government has an
adequate reason for taking away a person’s life, liberty, or property. Substantive due process looks to whether there is a sufficient justification
for the government’s action. (Lim v. Laguio Jr., April 12, 2005)

Section 11 of R.A. No. 9160 authorizing Anti-Money Laundering Council (AMLC) to file with Court of Appeals an ex parte
application for inquiry into certain bank deposits and investments does not violate due process clause. There is no physical seizure of
property involved at that stage. AMLC’s power of inquiry does not transform it into an investigative body exercising quasi-judicial powers.
Hence, there can be no violation of right to procedural due process. (Subido Pagente Certeza Mendoza and Binay Law Offices v. Court of
Appeals, December 6, 2016)

R.A. No. 9646 requiring real estate developers to employ licensed real estate brokers to sell, market, and dispose of their properties
does not deprive property without due process of law. Proper regulation of a profession, calling, business, or trade is a legitimate subject of
a valid exercise of the police power of the State. The legislature recognized the importance of professionalizing the ranks of real estate
practitioners by increasing their competence and raising ethical standards. (Remman Enterprises, Inc. v. Professional Regulatory Board of
Real Estate Service, February 4, 2014)

Instances in which absence of either or both notice and hearing as elements of procedural due process does not amount to denial of
due process. Instances are (i) cancellation of passport of a person being sought for the commission of a crime, (ii) preventive suspension of a
civil servant facing administrative charges, (iii) distraint of properties to answer for tax delinquencies, (iv) padlocking of restaurants found to
be unsanitary or of theaters showing obscene movies; (v) abatement of nuisance per se, and (vi) arrest of a person in flagrante delicto.
(Legaspi v. City of Cebu, December 10, 2013)

(8) Three levels of scrutiny at which the constitutionality of a classification embodied in a law is reviewed. Levels are (i) deferential or
rational basis scrutiny – challenged classification needs only be shown to be rationally related to serving a legitimate state interest; this is
usually applied in cases involving economics or social welfare, (ii) middle-tier or intermediate scrutiny – government must show that the
challenged classification serves an important state interest and that the classification is at least substantially related to serving that interest; this
is usually applied in classifications based on gender or illegitimacy, and (iii) strict judicial scrutiny – a legislative classification which
impermissibly interferes with the exercise of a fundamental right or operates to the peculiar disadvantage of a suspect class is presumed
unconstitutional, and the burden is upon the government to prove that the classification is necessary to achieve a compelling state interest and
that it is the least restrictive means to protect such interest. (Serrano v. Gallant Maritime Services, Inc., March 24, 2009)

Requisites to determine valid and reasonable classification under the equal protection clause. Classification must (i) rest on substantial
distinctions, (ii) be germane to the purpose of the law, (iii) not be limited to existing conditions only, and (iv) apply equally to all members of
the same class. (Biraogo v. Philippine Truth Commission of 2010, December 7, 2010)

Instances where equal protection clause is violated. Instances are (i) E.O. No. 1 creating the Truth Commission to investigate reported
cases of corruption of Arroyo administration. It does not apply to all members of the same class. The Arroyo administration is but a member
of the class of all previous administrations (Biraogo v. Philippine Truth Commission of 2010, December 7, 2010), (ii) Commission on
 Election’s directive allowing owners of private vehicles and other properties to express their political ideas by posting election campaign
materials on their properties but denies this right to owners of public utility vehicles (PUVs) and transport terminals in relation to their PUVS
and transport terminals. No substantial distinction exists between owners of PUVs and transport terminals and owners of private vehicles and
other properties. In terms of ownership, distinction is merely superficial; superficial differences do not make for a valid classification (1-
United Transport Koalisyon v. Commission on Elections, April 14, 2015), (iii) ordinance banning aerial spraying in all agricultural lands to
prevent drifting of pesticides. It is under-inclusive as it does not include all individuals tainted with same mischief (airblast, ground, etc.) that
the law seeks to eliminate (drift or the movement of droplets from target area). It is also over-inclusive as it affects groups that have no
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relation to accomplishment of the legislative purpose (purpose is for pesticides but covers also sprays for vitamins and other substances)
(Mosqueda v. Pilipino Banana Growers and Exporters Association, Inc., August 16, 2016), and (iv) garbage collection fees based on whether
the payee is an occupant of lot, condominium, social housing project, or apartment. There is no substantial distinction based on where the
payee occupies. Garbage output produced by these types of occupants is uniform and does not vary to a large degree. (Ferrer Jr. v. Bautista,
June 30, 2015)

Instances where equal protection clause is not violated. Instances are (i) real property owners and informal settlers for purposes of
socialized housing program. Disparities between them as two distinct classes are obvious. Hence, a socialized housing tax on real property
owners to provide funds for the socialized housing of the latter is not a class legislation (Ferrer Jr. v. Bautista, June 30, 2015), (ii) R.A. No.
9262 by favoring women over men as victims of violence to whom the State extends its protection. There are substantial distinctions – the
unequal power relationship between women and men; the fact that women are more likely than men to be victims of violence; and the
widespread gender bias and prejudice against women (Garcia v. Drilon, June 25, 2013), (iii) Judicial and Bar Council’s policy requiring five
years of service as judges of first-level courts before they can qualify as applicants to second-level courts. Placing a premium on many years
of experience is an application of one of the stringent constitutional standards requiring that a member of the judiciary be of “proven
competence” (Villanueva v. Judicial and Bar Council, April 7, 2015), and (iv) R.A. No. 8791 providing that juridical persons whose property
is being sold pursuant to an extrajudicial foreclosure shall have the right to redeem the property until, but not after, the registration of the
certificate of foreclosure sale with the applicable Register of Deeds which in no case shall be more than three months after foreclosure,
whichever is earlier, as opposed to one year redemption period for natural persons. Difference in the treatment of juridical persons and natural
persons is based on the nature of the properties foreclosed – whether these are used as residence, for which the more liberal one-year
redemption period is retained, or used for industrial or commercial purposes, in which case a shorter term is deemed necessary to reduce the
period of uncertainty in the ownership of property and enable mortgagee-banks to dispose sooner of these acquired assets (Alan v. Philippine
National Bank, January 27, 2016)

An erroneous performance of statutory duty - such as an apparent selective enforcement of the statute - could not be considered a
violation of the equal protection clause, unless the element of intentional or purposeful discrimination is shown. There is no violation
of the equal protection of the laws in prosecuting only one of the many equally guilty persons. Absent a clear showing of intentional
discrimination, the prosecuting officers are presumed to have regularly performed their official duties. (Department of Public Works and
Highways, Region IV-A v. Commission on Audit, March 19, 2019)

(9) Search warrant. A search warrant shall not issue except upon probable cause in connection with one specific offense to be determined
personally by the judge after examination under oath or affirmation of the complainant and the witness he may produce, and particularly
describing the place to be searched and the things to be seized which may be anywhere in the Philippines. (People v. Pastrana, February 21,
2018)

Warrantless search and seizure when valid. Instances are (i) warrantless search incidental to a lawful arrest, (ii) seizure of evidence in plain
view, (iii) search of a moving vehicle as the vehicle’s inherent mobility reduces expectation of privacy especially when its transit in public
thoroughfares furnishes a highly reasonable suspicion amounting to probable cause that the occupant committed a criminal activity, (iv)
consented warrantless search, (v) customs search, (vi) stop and frisk (Terry searches), and (vii) exigent and emergency circumstances. (Lapi v.
People, February 13, 2019)

Warrantless search cannot be made during roadside questioning of a motorist pursuant to a routine traffic stop. It is not an arrest,
justifying a warrantless search, by virtue of the nature of questioning, the expectations of the motorist and the officer, and the length of time
the procedure is conducted. (Luz v. People, February 29, 2012)

There is no valid warrantless arrest – and hence a valid search incident to lawful arrest – for an offense penalized by a fine only.
Under Rules of Court, warrant of arrest need not be issued if Information is for an offense punished by fine only. Neither can a warrantless
arrest be made for such an offense. There being no valid arrest, warrantless search cannot be made. (Luz v. People, February 29, 2012) Thus,
where the firearm was discovered through an illegal search, the same cannot be used in any prosecution against the accused. (Baluyot v.
People, June 19, 2019)
 Searches incidental to lawful arrests are allowed even without a warrant. Thus, the warrantless arrest and the incidental search are valid
where the police officers had probable cause to justify the belief that accused was an offender of the law and that the contents of the backpack
and sack he was carrying were instruments of an offense not only in light of the confidential tip they received from an informant but also
because of accused’s peculiar acts of making a sudden u-turn before reaching the checkpoint and attempting to run when the motorcycle he
was driving crashed. Indeed, the arresting officers were impelled to effect the arrest and seizure because of a probable cause. Given that the
search was valid, the arrest was likewise lawful because it was made upon the discovery of the prohibited drug in accused’s possession.
(People v. Suico, September 10, 2018) But shabu seized from a person who was caught crossing the street in a place not designated for
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crossing is inadmissible in evidence where the person was not arrested at all. (Homar v. People, September 2, 2015)

While a warrantless arrest must precede a warrantless search, a search substantially contemporaneous with an arrest can precede the
arrest if the police have probable cause to make the arrest at the outset of the search. What must be resolved is whether the police had
probable cause for the arrest when the search was made. (Aparente v. People, September 27, 2017)

For a valid stop and frisk search, the arresting officer must have had personal knowledge of facts, which would engender a reasonable
degree of suspicion of an illicit act. Mere suspicion is not enough; there should be a genuine reason, as determined by the police officer, to
warrant a belief that the person searched was carrying a weapon. Test for the existence of reasonable suspicion that a person is engaged in
criminal activity is the totality of the circumstances, viewed through the eyes of a reasonable, prudent police officer. Thus, a tip on given to
the chief inspector, coupled with the police officers’ visual confirmation that accused had a gun-shaped object tucked in his waistband, led to a
reasonable suspicion that he was carrying a gun during an election gun ban. (Manibog v. People, March 20, 2019)

Silence is not necessarily a consent to a search but mere passive conformity given under intimidating or coercive circumstances. The
police carry the burden of showing that the waiver of a constitutional right is one which is knowing, intelligent, and free from any coercion.
(People v. Cogaed, July 30, 2014) But there is a valid warrantless search based on express consent, where an airport security officer requested
to conduct a pat down search on accused and the latter readily agreed, there being no manifestation of objection or hesitation on the body
search. Accused verbally replied to the request demonstrating that he also understood the nature and consequences of the request. He
voluntarily raised his hands by stretching sideward to the level of his shoulders with palms open. (People v. O’cochlain, December 10, 2018)

Airport security searches are valid even without a warrant. They are valid because of their minimal intrusiveness, the gravity of the safety
interests involved, and the reduced privacy expectations associated with airline travel. (Sales v. People, February 6, 2013) Particularly, they
are lawful because (i) the searches constitute relatively limited intrusions geared toward finding particular items (weapons, explosives, and
incendiary devices) that pose grave danger to airplanes and air travelers, (ii) scrutiny of carry-on luggage is no more intrusive (in both its
scope and intensity) than is necessary to achieve the legitimate aims of the screening process (that is, to ensure air travel safety), (iii) airline
passengers have advance notice that their carry-on luggage will be subjected to these security measures, thus giving passengers the
opportunity to place their personal effects in checked luggage, (iv) all passengers are subject to the same screening procedures, (v) passengers
are aware that they can avoid the screening process altogether by electing not to board the plane, and (vi) abuse is unlikely because of its
public nature. Thus, there is a valid search and seizure of illegal drugs incidentally uncovered during initial security check, in the course of
routine airport screening, after accused was frisked and/or the alarm of the metal detector was triggered. But there is no valid search and
seizure where the illegal drugs were discovered only during the final security checkpoint, after a pat down search was conducted by security
officer, who did not act based on personal knowledge but merely relied on an information given by another that accused was possibly in
possession of marijuana. Airport search is reasonable when limited in scope to the object of the Anti-Hijacking program – search and seizure
of any explosive, flammable, corrosive or poisonous substance or material – not the war on illegal drugs. Unlike a routine search where a
prohibited drug was found by chance, a search on the person of the passenger or on his personal belongings in a deliberate and conscious
effort to discover an illegal drug is not authorized under the exception to the warrant and probable cause requirement. (People v. O’cochlain,
December 10, 2018)

Plain view doctrine provides that objects falling in plain view of an officer who has a right to be in a position to have that view are
subject to seizure even without a search warrant and may be introduced in evidence. Requisites for its application are (i) law
enforcement officer in search of the evidence has a prior justification for an intrusion or is in a position from which he can view a particular
area, (ii) discovery of evidence in plain view is inadvertent, (iii) it is immediately apparent to the officer that the item he observes may be
evidence of a crime, contraband, or otherwise subject to seizure. The law enforcement officer must lawfully make an initial intrusion or
properly be in a position from which he can particularly view the area. During such lawful intrusion, he came inadvertently across a piece of
evidence incriminating the accused. The object must be open to eye and hand and its discovery inadvertent. The doctrine cannot apply if the
officers are actually “searching” for evidence against the accused, such as where the police officers searched the accused’s home upon
appraisal by another that dangerous drugs could be found therein. (People v. Acosta, January 28, 2019)

(10) Content-based vis-à-vis content-neutral. Content-based restraint or censorship refers to restrictions based on the subject matter of the
utterance or speech. A content-based regulation, however, bears a heavy presumption of invalidity and is measured against the clear and
present danger rule. The latter will pass constitutional muster only if justified by a compelling reason, and the restrictions imposed are neither
 overbroad nor vague. In contrast, content-neutral regulation includes controls merely on the incidents of the speech such as time, place, or
manner of the speech. Free speech and peaceful assembly are not absolute for it may be so regulated that it shall not be injurious to the equal
enjoyment of others having equal rights, nor injurious to the rights of the community or society. (Diocese of Bacolod v. Commission on
Elections, January 21, 2015)

R.A. No. 10175 (Cybercrime Prevention Act), insofar as it prohibits the sending of internet “spam” or unsolicited ads and aiding and
abetting the commission of internet libel are unconstitutional, while cyberlibel is constitutional. Prohibition of sending of internet spam
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violates freedom of expression, as to prohibit the transmission of unsolicited ads would deny a person the right to read his emails, even
unsolicited commercial ads addressed to him. Commercial speech is entitled to protection. Meanwhile, cyberlibel or libel committed online is
an unprotected speech and may be penalized, as the government has an obligation to protect private individuals from defamation. Aiding and
abetting the commission of internet libel is unconstitutional for being overbroad, as the terms “aiding or abetting” constitute broad sweep that
generates chilling effect on those who express themselves through cyberspace posts and other messages. (Disini Jr. v. Secretary of Justice,
February 18, 2014)

Commission on Elections cannot order the removal of clergies’ tarpaulin classifying election candidates under “Team Patay” and
“Team Buhay” according to their respective votes on the Reproductive Health Law, which was posted on the church vicinity.
Regulation of speech is unconstitutional if done in the context of electoral campaigns made by persons who are not candidates or who do not
speak as members of a political party which are principally advocacies of a social issue that the public must consider during elections.
Regulation of election paraphernalia is constitutionally valid if it reaches into speech of persons who are not candidates or who do not speak as
members of a political party if they are not candidates, only if what is to be regulated is declarative speech that, taken as a whole, has for its
principal object the endorsement of a candidate only. (Diocese of Bacolod v. Commission on Elections, January 21, 2015)

Commission on Elections resolution limiting the broadcast and radio advertisements of candidates and political parties for national
election positions to an aggregate total of 120 minutes and 180 minutes for political campaigns or advertisements is invalid. It is
unreasonable and arbitrary, as it unreasonably restricts the freedom of speech and of the press. It unduly restricts and constrains the ability of
candidates and political parties to connect with the people. It likewise violates the people’s right to suffrage as it restricts the right of people to
determine their own destiny through the choice of leaders they may have in government. (GMA Network, Inc. v. Commission on Elections,
September 2, 2014)

Prior restraint refers to official governmental restrictions on the press or other forms of expression in advance of actual publication
or dissemination. Freedom from prior restraint is largely freedom from government censorship of publications, whatever the form of
censorship, and regardless of whether it is wielded by the executive, legislative, or judicial branch of the government. Thus, it precludes
governmental acts that required approval of a proposal to publish; licensing or permits as prerequisites to publication including the payment of
license taxes for the privilege to publish; and even injunctions against publication. Even the closure of the business and printing offices of
certain newspapers, resulting in the discontinuation of their printing and publication, are deemed as previous restraint or censorship. Any law
or official that requires some form of permission to be had before publication can be made, commits an infringement of the constitutional
right, and remedy can be had at the courts. (Tordesillas v. Puno, October 1, 2018) Thus, stricken down as violative of the prohibition on prior
restraint are (i) statements made by the Department of Justice Secretary and the National Telecomunications Commission warning the media
on airing the alleged wiretapped telephone conversations of then President Gloria Macapagal-Arroyo (Chavez v. Gonzales, February 15,
2008), (ii) Commission on Election resolution totally prohibiting the conduct of exit polls in the guise of promoting clean, honest, orderly, and
credible elections (ABS-CBN Broadcasting Corporation v. Commission on Elections, January 28, 2000), and (iii) warrantless search of the
Daily Tribune offices, the seizure of materials for publication therein, the stationing of policemen in the vicinity, and the arrogant warning of
government officials to media, among others, pursuant to President Arroyo’s Presidential Proclamation No. 1017 and General Order No. 5
(David v. Arroyo, May 3, 2006). But Department of Justice advisory stating that “Please be reminded that your respective companies,
networks or organizations may incur criminal liabilities under the law, if anyone of your field reporters, news gatherers, photographers,
cameramen and other media practitioners will disobey lawful orders from duly authorized government officers and personnel during
emergencies which may lead to collateral damage to properties and civilian casualties in case of authorized police or military operations,”
issued during the Oakwood Mutiny in 2003 does not involve prior restraint. It does not have any statements, expressly nor impliedly,
preventing the media to cover police operations and events relating to the Manila Pen standoff and to any future newsworthy events.
(Tordesillas v. Puno, October 1, 2018)

(11) Judicial power. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government. (Sec. 1, Art. 8)

Requisites of judicial review involving constitutionality or validity of law. Requisites are (i) actual case or controversy, (ii) person
challenging the act must have standing to question the validity of the subject or issuance, (iii) question of constitutionality must be raised at
the earliest opportunity, and (iv) issue of constitutionality must be the lis mota of the case. (Samahan ng mga Progresibong Kabataan v.
Quezon City, August 8, 2017)

Instances where there is no actual case or controversy. Instances are (i) petition challenging constitutionality of a proposed bill, which is
not a law, does not present an actual justiciable controversy (In the Matter of: Save the Supreme Court Judicial Independence and Fiscal
Autonomy, January 21, 2015), (ii) petition to declare a Securities and Exchange Commission circular void based on a hypothetical case of a
fictional corporation (Roy v. Herbosa, November 22, 2016), (iii) petition challenging constitutionality of law on ground that its
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implementation may be abused; allegations of abuse must be anchored on real events before courts may step in to settle actual controversies
(Southern Hemisphere Engagement Network v. Anti-Terrorism Council, October 5, 2010), (iv) petition challenging constitutionality of peace
agreements that can only be implemented through passage of law; until such law is passed, petition is premature (Philippine Constitution
Association v. Philippine Government, November 29, 2016), (v) petition challenging constitutionality of Department of Labor and
Employment department order based on speculations that the same may result in diminution of income of bus drivers and conductors
(Provincial Bus Operators Association of the Philippines v. Department of Labor and Employment, July 17, 2018), and (vi) moot and
academic case. A case is moot and academic if it ceases to present justiciable controversy because of supervening events so that a declaration
thereon would be of no practical value or use (Timbol v. Commission on Elections, February 24, 2015), such as the expiration of the Biosafety
Permits and completion of the field trials of Bt talong, a bioengineered eggplant specie, subject of a petition for writ of kalikasan rendered said
petition moot (International Service for the Acquisition of Agri-Biotech Applications, Inc. v. Greenpeace Southeast Asia, July, 26, 2016), and
release of persons in whose behalf the application for a writ of habeas corpus was filed rendered the petition for the issuance thereof moot.
(Agcaoili v. Fariñas, July 3, 2018)

Instances when courts can take cognizance of moot and academic cases. Instances are (i) there was a grave violation of the Constitution,
(ii) case involved a situation of exceptional character and was of paramount public interest, (iii) issues raised required the formulation of
controlling principles to guide the Bench, the Bar, and the public, and (iv) case was capable of repetition yet evading review. (Timbol v.
Commission on Elections, February 24, 2015) The fourth exception requires that (i) the challenged action is in its duration too short to be fully
litigated prior to its cessation or expiration and (ii) there is a reasonable expectation that the same complaining party would be subjected to the
same action again (Madrilejos v. Gatdula, September 24, 2019). Thus, assailing Commission on Elections resolution on Gun Ban issued for
the 2016 Elections does not present moot and academic case even if the election period is over since the election period was only for 150 days
and said Commission has consistently issued rules on Gun Ban for previous elections. (Philippine Association of Detective and Protective
Agency Operators, Region 7 Chapter, Inc. v. Commission on Elections, October 3, 2017)

Legal standing/locus standi is the right of appearance in a court of justice on a given question. To possess legal standing, parties must
show a personal and substantial interest in the case such that they have sustained or will sustain direct injury as a result of the governmental
act that is being challenged. As exception, the Supreme Court has taken cognizance of petitions filed by those who have no personal or
substantial interest in the challenged governmental act but whose petitions nevertheless raise constitutional issues of critical significance.
Requirements for granting legal standing to non traditional suitors are (i) for taxpayers, there must be a claim of illegal disbursement of public
funds or that the tax measure is unconstitutional, (ii) for voters, there must be a showing of obvious interest in the validity of the election law
in question, (iii) for concerned citizens, there must be a showing that the issues raised are of transcendental importance which must be settled
early, and (iv) for legislators, there must be a claim that the official action complained of infringes their prerogatives as legislators. Another
exception is the concept of third-party standing, where actions may be brought on behalf of third parties provided the following are met: (i)
party bringing suit suffered an injury-in-fact, thus giving him a sufficiently concrete interest in the outcome of the issue in dispute, (ii) party
must have a close relation to the third party, and (iii) there must exist some hindrance to the third party’s ability to protect his own interests.
(Provincial Bus Operators Association of the Philippines v. Department of Labor and Employment, July 17, 2018)

As-applied challenge vis-a-vis facial challenge. In an as-applied challenge, one can challenge the constitutionality of statute only if he
asserts a violation of his own rights. It prohibits the attack on the constitutionality of statute based solely on the violation of the rights of third
persons not before the court. In facial challenge, a petitioner challenges the constitutionality of a statute even if he claims no violation of his
own rights under the assailed statute on grounds of overbreadth or vagueness of the statute where it involves free speech and component rights
such as religious freedom, freedom of the press, and the right of the people to peaceably assemble, and to petition the government for a redress
of grievance. The rationale for this exception is to counter the “chilling effect” on protected speech. (Disini Jr. v. Secretary of Justice,
February 18, 2014; Imbong v. Ochoa, April 8, 2014)

Void-for-vagueness vis-a-vis overbreadth. A statute or act suffers from the defect of vagueness when it lacks comprehensible standards that
men of common intelligence must necessarily guess its meaning and differ as to its application. It is repugnant to the Constitution because (i)
it violates due process for failure to accord persons, especially the parties targeted by it, fair notice of the conduct to avoid and (ii) it leaves
law enforcers unbridled discretion in carrying out its provisions and becomes an arbitrary flexing of government muscle. (Imbong v. Ochoa,
April 8, 2014) Under the overbreadth doctrine, a proper governmental purpose, constitutionally subject to state regulation, may not be
achieved by means that unnecessarily sweep its subject broadly, thereby invading the area of protected freedoms. (Disini Jr. v. Secretary of
Justice, February 18, 2014)
 A litigant cannot successfully mount a facial challenge against a criminal statute on either vagueness or overbreadth grounds. If a
facial challenge to a penal statute is permitted, the prosecution of crimes may be hampered. (Southern Hemisphere Engagement Network v.
Anti-Terrorism Council, October 5, 2010) But when a penal statute encroaches upon the freedom of speech, a facial challenge grounded on
the void-for-vagueness doctrine is applicable. (Disini Jr. v. Secretary of Justice, February 18, 2014)

(12) The Supreme Court shall have administrative supervision over all courts and the personnel thereof. By virtue of this power, it is only
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the Supreme Court that can oversee the judges’ and court personnel’s administrative compliance with all laws, rules and regulations. No other
branch of government may intrude into this power, without running afoul of the doctrine of separation of powers. Thus, in case of violation of
the Civil Service Law by a court personnel, the standard procedure is for the Civil Service Commission to bring its complaint against a
judicial employee before the Office of the Court Administrator of the Supreme Court. (Civil Service Commission v. Andal, December 16,
2009)

Circular providing guidelines to be complied by judges and court personnel before they can travel abroad does not violate one’s right
to travel. It does not restrict but merely regulates the right to travel by providing guidelines before they can go on leave to travel abroad,
consistent with the Supreme Court’s inherent power of administrative supervision over lower courts. (Office of Administrative Services-
Office of the Court Administrator v. Macarine, July 18, 2012)

(13) Rule-making power is exclusive to the Supreme Court. Constitution took away the power of Congress to repeal, alter, or supplement rules
concerning pleading, practice, and procedure. Examples where Supreme Court rejected previous attempts of Congress, in exercise of its
legislative power, to amend Rules of Court: (i) Cooperative Code provisions on notices cannot replace the rules on summons under Rule 14
(Cathay Metal Corporation v. Laguna West Multi-Purpose Cooperative, Inc., July 2, 2014), (ii) despite statutory provision, Government
Service Insurance System is not exempt from the payment of legal fees imposed by Rule 141 (Re: Petition for Recogniion of Exemption of
Government Service Insurance System from Payment of Legal Fees, February 11, 2010), (iii) Section 14(1) of R.A. No. 6770 prohibiting
courts, except the Supreme Court, from issuing temporary restraining order and/or writ of preliminary injunction to enjoin an investigation
conducted by the Ombudsman is unconstitutional as it contravenes Rule 58 (Carpio-Morales v. Court of Appeals, November 10, 2015), and
(iv) Section 23 of Dangerous Drugs Act prohibiting persons charged with violation of said law to enter into plea bargaining is unconstitutional
as it violates provisions of Rules of Court on plea bargaining. (Estipona v. Lobrigo, August 15, 2017)

The provisions on Visiting Forces Agreement providing procedure on criminal jurisdiction neither violates the exclusive power of the
Supreme Court to adopt rules of procedure for all courts in the Philippines nor the equal protection clause. The rule in international
law is that a foreign armed force allowed to enter one’s territory is immune from local jurisdiction, except to the extent agreed upon. As a
result, the situation involved is not one in which the power of the Supreme Court to adopt rules of procedure is curtailed or violated, but
rather one in which, as is normally encountered around the world, the laws, including rules of procedure, of one State do not extend or apply
— except to the extent agreed upon — to subjects of another State due to the recognition of extraterritorial immunity given to such bodies as
visiting foreign armed forces. Nothing in the Constitution prohibits such agreements recognizing immunity from jurisdiction or some aspects
of jurisdiction, such as custody, in relation to long-recognized subjects of such immunity like Heads of State, diplomats and members of the
armed forces contingents of a foreign State allowed to enter another State’s territory. The equal protection clause is not violated because there
is a substantial basis for a different treatment of a member of a foreign military armed forces allowed to enter our territory and all other
accused. (Laude v. Ginez-Jabalde, November 24, 2015)

Supreme Court, as Presidential Electoral Tribunal (PET), is clothed with jurisdiction by the Constitution to act respectively as sole
judge of all contests relating to the election, returns, and qualifications of the President and Vice-President. The conferment of this
jurisdiction to the Supreme Court includes the means necessary to carry it into effect, thus justifying budget allocation to the PET. (Macalintal
v. Presidential Electoral Tribunal, November 23, 2010)

(14) Election and qualification of senators. The Senate shall be composed of twenty-four Senators who shall be elected at large by the qualified
voters of the Philippines. (Sec. 2, Art. 6) No person shall be a Senator unless he is a natural-born citizen of the Philippines, and, on the day of
the election, is at least thirty-five years of age, able to read and write, a registered voter, and a resident of the Philippines for not less than two
years immediately preceding the day of the election. (Sec. 3, Art. 6)

Election and qualification of members of House of Representatives. The House of Representatives shall be composed of not more than two
hundred and fifty members, unless otherwise fixed by law, who shall be elected from legislative districts apportioned among the provinces,
cities, and the Metropolitan Manila area in accordance with the number of their respective inhabitants, and on the basis of a uniform and
progressive ratio, and those who, as provided by law, shall be elected through a party-list system of registered national, regional, and sectoral
parties or organizations. The party-list representatives shall constitute twenty per centum of the total number of representatives including those
under the party list. (Sec. 5, Art. 6) No person shall be a Member of the House of Representatives unless he is a natural-born citizen of the
Philippines and, on the day of the election, is at least twenty-five years of age, able to read and write, and, except the party-list representatives,
 a registered voter in the district in which he shall be elected, and a resident thereof for a period of not less than one year immediately
preceding the day of the election. (Sec. 6, Art. 6)

Incompatible office and forbidden office. Under incompatible office means that no Senator or Member of the House of Representatives may
hold any other office or employment in the Government, or any subdivision, agency, or instrumentality thereof, including government-owned
or controlled corporations or their subsidiaries, during his term without forfeiting his seat. Under forbidden office, no Senator or Member of
the House of Representatives shall be appointed to any office which may have been created or the emoluments thereof increased during the
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term for which he was elected. (Sec. 13, Art. 6)

Compliance with the constitutional and statutory requirement of filing of Statement of Assets, Liabilities, and Net Worth (SALN)
intimately relates to a person’s integrity, a qualification which satisfies the “proven integrity” requirement for one to be a member of
the Judiciary. To be of proven integrity means the applicant must have established a steadfast adherence to moral and ethical principles.
Failure to file SALN is a violation of law and shows that the applicant cannot be said to be of proven integrity. (Republic v. Sereno, May 11,
2018)

Prohibited midnight appointments are inapplicable to judiciary. Section 14 and Section 16, Article VII reference to appointments within
the Executive Department renders conclusive that Section 15 on ban on midnight appointments applies only to the Executive Department. (De
Castro v. Judicial and Bar Council, March 17, 2010)

Chairman of Civil Service Commission (CSC) cannot sit as director or trustee of Government Service Insurance System (GSIS),
Philhealth, Employee Compensation Commission (ECC), and Home Development Mutual Fund (HDMF). While the Chairman of CSC
can hold any other office or employment in the government during his tenure if such holding is allowed by law or by the primary functions of
his office, he cannot sit as director or trustee of GSIS, Philhealth, ECC, and HDMF, as this will allow him to exercise powers and functions –
such as imposing interest on unpaid contributions, issuing guidelines for the accreditation of health care providers and other non-personnel
related functions – which are not anymore derived from his position as CSC Chairman. Moreover, as the GSIS, Philhealth, ECC, and HDMF
are under the executive branch, the CSC Chairman, if he will sit as director or trustees of these, will be under the control of the president,
thereby impairing the independence of the CSC. (Funa v. Duque, November 25, 2014)

A commissioner who resigns after serving in a constitutional commission for less than seven years is eligible for appointment to the
position of Chairman for the unexpired portion of the term of the departing Chairman. Such appointment is not covered by the ban on
reappointment, provided that the aggregate period of the length of service as commissioner and the unexpired period of the term of the
predecessor will not exceed seven years and provided further that the vacancy in the position of Chairman resulted from death, resignation,
disability or removal by impeachment. “Reappointment” found in Section 1(2), Article IX(D) means a movement to one and the same office
(Commissioner to Commissioner or Chairman to Chairman). An appointment involving a movement to a different position or office
(Commissioner to Chairman) would constitute a new appointment and, hence, not, in the strict legal sense, a reappointment barred under the
Constitution. (Funa v. Villar, April 12, 2012)

Ombudsman’s term is for seven years, regardless of the cause of vacancy. He does not serve only for the unexpired portion of the term of
his predecessor in case of the latter’s death, resignation, removal, or permanent disability. (Ifurung v. Carpio-Morales, April 24, 2018)

(15) President enjoys immunity from suit during his tenure of office or actual incumbency. The dignity of the high office of the President, the
Head of State, will be degraded if he can be dragged into court litigations while serving as such. (Zabal v. Duterte, February 12, 2019) But the
immunity cannot be invoked by a non-sitting president even for acts committed during his tenure. (Lozada v. Macapagal-Arroyo, April 24,
2012)

Executive privilege is not a personal privilege but one that adheres to the Office of the President. It is recognized with respect to
information the confidential nature of which is crucial to the fulfillment of the unique role and responsibilities of the executive branch. It is
premised on the fact that certain information must, as a matter of necessity, be kept confidential in pursuit of the public interest. The privilege
being an exemption from the obligation to disclose information, the necessity must be of such high degree as to outweigh the public interest in
enforcing that obligation in a particular case. When an executive official claim to be exempt from disclosure, there can be no presumption of
authorization to invoke executive privilege given by the President to said executive official, such that the presumption inclines heavily against
executive secrecy and in favor of disclosure. The power to invoke the privilege is limited to the President or he may authorize the Executive
Secretary to invoke the privilege on his behalf, in which case the Executive Secretary must state that the authority is “By order of the
President”, which means that he personally consulted with him. The President may not authorize his subordinates to exercise such power.
(Neri v. Senate Committee on Accountability of Public Officers and Investigations, September 4, 2008)

Parliamentary immunity. A Senator or Member of the House of Representatives shall, in all offenses punishable by not more than six years
imprisonment, be privileged from arrest while the Congress is in session. No Member shall be questioned nor be held liable in any other place
 for any speech or debate in the Congress or in any committee thereof. (Sec. 11, Art. 6) But statements made in media interviews are not
covered by parliamentary immunity. Only covered are the speeches delivered in Congress or any of its committees, spoken in the course of
any debate in said fora, or made in the official discharge or performance of duties as legislator. (Trillanes v. Castillo-Marigomen, March 14,
2018)

(16) Instances in which the Constitution limits the President’s pardoning power. Instances are (i) impeachment cases, (ii) cases that have not
yet resulted in final conviction, and (iii) cases involving violations of election laws, rules, and regulations, in which there was no favorable
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recommendation from the COMELEC. (Risos-Vidal v. Commission on Elections, January 21, 2015)
10
President can pardon or condone liability arising from administrative offenses. If the President can grant reprieves, commutations and
pardons, and remit fines and forfeitures in criminal cases, with much more reason can he grant executive clemency in administrative cases,
which are clearly less serious than criminal offenses. (Carpio-Morales v. Court of Appeals, November 10, 2015)

Doctrine of qualified political agency postulates that heads of the various executive departments are alter egos of the President, and,
thus, the actions taken by them in the performance of their official duties are deemed the acts of the President unless the President
himself should disapprove such acts. This doctrine does not extend to Cabinet members sitting as ex officio members in Board of Directors
of a government corporation as they sit therein by reason of their office or function, not because of their direct appointment to said Board by
the President. (Manalang-Demegillo v. Trade and Investment Development of the Philippines, March 5, 2013)

President’s power to reorganize the executive branch is an exercise of his residual powers under the Administrative Code which
grants the President broad organization powers to implement reorganization measures. President has the continuing authority to
reorganize the national government, which includes the power to group, consolidate bureaus and agencies, to abolish offices, to transfer
functions, to create and classify functions, services and activities and to standardize salaries and materials. (Malaria Employees and Workers
Association of the Philippines, Inc. v. Romulo, July 31, 2007)

Political question pertains to a matter which is to be exercised by the people in their primary political capacity, or that it has been
specifically delegated to some other department or particular officer of the government, with discretionary power to act. It pertains to
the wisdom, justice, or expediency of a law. Examples are (i) foreign relations, as the Constitution commits its conduct to the executive and
legislative – the political – departments of the government. (Vinuya v. Executive Secretary, April 28, 2010), (ii) decision to have the remains
of Marcos interred at the Libingan ng mga Bayani, the same being a question of policy based on wisdom that it shall promote national healing
and forgiveness (Ocampo v. Enriquez, November 8, 2016), and (iii) whether the House of Representatives observed its own internal rules of
procedure. (Baguilat v. Alvarez, July 25, 2017) Size limitation on election campaign propaganda and its reasonableness, however, are not
political questions because the existence of constitutionally imposed limits on regulations on free speech justifies subjecting the official
actions of the COMELEC to review of the court. (Diocese of Bacolod v. Commission on Elections, January 21, 2015)

(17) Constitution requires mere sufficiency, and not accuracy, of factual basis for the declaration of martial law. Parameters for determining
sufficiency of factual basis are (i) actual rebellion or invasion, (ii) public safety requires it, and (iii) probable cause for the President to believe
that there is actual rebellion or invasion. Only facts known to the President at the time of declaration of martial law should be considered in
determining sufficiency of factual basis; these facts are found in the proclamation and written report submitted by him to Congress. (Lagman
v. Medialdea, December 5, 2017)

President has discretion to determine territorial scope of martial law. There is no constitutional edict that martial law must be confined
only in particular place where armed public uprising actually transpired. President’s power to maintain peace and public safety extends to
other areas where present hostilities are in danger of spilling over. (Lagman v. Medialdea, December 5, 2017)

Recommendation of, or consultation with, the Secretary of National Defense, or other high-ranking military officials, is not a
condition for the President to declare martial law. President’s power to declare martial law is not subject to any condition except for the
requirements of actual invasion or rebellion and that public safety requires it. Besides, it would be contrary to common sense if the decision of
the President is made dependent on the recommendation of his mere alter ego. (Lagman v. Medialdea, December 5, 2017)

Limitations on the power of Congress to extend period of martial law. Limitations are (i) extension should be upon the President’s
initiative, (ii) grounded on persistence of invasion or rebellion and the demands of public safety, and (iii) subject to the Supreme Court’s
review of the sufficiency of its factual basis upon the petition of any citizen. The Constitution gives the Congress the authority to decide on its
duration. (Lagman v. Pimentel, February 6, 2018)

Exhaustion of less severe remedies is not required before the President can invoke martial law. President has the discretion which
extraordinary power to use – calling out power, power to suspend the privilege of the writ of habeas corpus, and power to declare martial law
– depending on the exigencies or threats that endanger the State. (Lagman v. Medialdea, December 5, 2017)
 Congress is not mandated to convene jointly upon the President’s proclamation of martial law. Only exception is to vote jointly to
revoke the President’s declaration. (Padilla v. Congress, July 25, 2017)

In determining the sufficiency of the factual basis for the extension of martial law, the Supreme Court needs only to assess and
evaluate the written reports of the government agencies tasked in enforcing and implementing martial law. Supreme Court is not a fact-
finding body required to determine the correctness of the factual basis for the declaration or extension of martial law. It is impossible for
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Supreme Court to go on the ground to conduct an independent investigation or factual inquiry, since it is not equipped with resources
comparable to that of the Commander-in-Chief to ably and properly assess the ground conditions. Thus, the sufficiency of the factual basis for 11
the extension of martial law must be determined from the facts and information contained in the President’s request, supported by reports
submitted by his alter egos to Congress. (Lagman v. Medialdea, February 19, 2019)

(18) The Senate as an institution is “continuing” as it is not dissolved as an entity with each national election or change in the composition
of its members. However, in the conduct of its day-to-day business, the Senate of each Congress acts separately and independently of the
Senate of the Congress before it. (Balag v. Senate, July 3, 2018)

Power to conduct inquiries in aid of legislation. The Constitution expressly grants to the Senate, the House of Representatives, or any of its
respective committees the power to conduct inquiries in aid of legislation. This power of legislative inquiry is so searching and extensive in
scope that the inquiry need not result in any potential legislation and may even end without any predictable legislation. The phrase “inquiries
in aid of legislation” refers to inquiries to aid the enactment of laws, inquiries to aid in overseeing the implementation of laws, and even
inquiries to expose corruption, inefficiency, or waste in executive departments. The Constitution imposes two limitations on this power: (i)
rules of procedure for the inquiry must be duly published; publication of the rules of the inquiry is an essential requirement of due process and
(ii) rights of persons appearing before the investigating committees, or affected by such inquiries, must be respected; these rights include the
right against self-incrimination, as well as the right to privacy of communications and correspondence of a private nature. (Neri v. Senate
Committee on Accountability of Public Officers and Investigation, March 25, 2007)

The period of imprisonment under the inherent power of contempt by the Senate during inquiries in aid of legislation should only last
until the termination of the legislative inquiry under which the said power is invoked. If there is a legitimate legislative inquiry, then the
inherent power of contempt by the Senate may be properly exercised. Conversely, once the said legislative inquiry concludes, the exercise of
the inherent power of contempt ceases and there is no more genuine necessity to penalize the detained witness. Legislative inquiry of the
Senate terminates on two instances: (i) upon the approval or disapproval of the Committee Report and (ii) upon the expiration of one
Congress. (Balag v. Senate, July 3, 2018)

Inquiries in aid of legislation vis-à-vis question hour. The aim of the former is to elicit information that may be used for legislation, while
the latter pertains to the power to obtain information in pursuit of Congress’ oversight function. While attendance was meant to be
discretionary in the question hour, it was compulsory in inquiries in aid of legislation. When Congress merely seeks to be informed on how
department heads are implementing the statutes which it has issued, its right to such information is not as imperative as that of the President to
whom, as Chief Executive, such department heads must give a report of their performance as a matter of duty. In such instances, Congress
may only request their appearance. Nonetheless, when the inquiry in which Congress requires their appearance is in aid of legislation, the
appearance is mandatory. (Senate v. Ermita, April 20, 2006)

(19) Requisites for valid transfer of appropriated funds under Section 25(5), Article VI. Requisites are (i) law authorizing President, Senate
President, Speaker of the House of Representatives, Chief Justice, and heads of the Constitutional Commissions to transfer funds within their
respective offices, (ii) funds to be transferred are savings generated from appropriations for their respective offices, and (iii) purpose of
transfer is to augment an item in the general appropriations law for their respective offices. (Araullo v. Aquino III, July 1, 2014) Thus, the
Career Executive Service Board does not have legal authority to use its savings for the payment of additional benefits to employees since it is
an attached agency of the Civil Service Commission, and only the head of said Commission can transfer funds, if authorized by law. (Career
Executive Service Board v. Commission on Audit, June 19, 2018)

Following acts under Disbursement Acceleration Program (DAP) implemented under Aquino administration violate Section 25(5),
Article VI: (i) withdrawal of unobligated allotments from implementing agencies, and the declaration of withdrawn unobligated allotments
and unreleased appropriations as savings prior to end of fiscal year without complying with statutory definition of savings contained in
General Appropriations Acts and (ii) cross-border transfers of the savings of the Executive to augment appropriations of other offices outside
the Executive; and funding of projects, activities, and programs that were not covered by any appropriation in the General Appropriations Act.
(Araullo v. Aquino III, July 1, 2014 and February 3, 2015)

Programs, activities, and projects already implemented under the unconstitutional acts and practices of the DAP may be given effect
under the operative fact doctrine. While an unconstitutional act cannot be source of any legal rights or duties, the doctrine of operative fact
 recognizes the existence of the law or executive act prior to the determination of its unconstitutionality as an operative fact that produced
consequences that cannot always be erased, ignored, or disregarded. It nullifies the void law or executive act but sustains its effects. (Araullo
v. Aquino III, July 1, 2014, and February 3, 2015)

Congressional Pork Barrel or the Priority Development Assistance Fund (PDAF) is unconstitutional for giving authority to legislators
to participate in post-enactment phases of project implementation. From the moment the law becomes effective, any provision of law that
empowers Congress or any of its members to play any role in the implementation or enforcement of the law violates the principle of
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separation of powers. It likewise violates the principle of non-delegation of legislative power as an individual legislator is given authority to
dictate how much fund would go to a specific project or beneficiary, which power of appropriation is lodge in Congress as a whole. Also, 12
being a lump-sum appropriation and having no item which can be an object of veto, it undermines the system of checks and balance by
impairing the President’s item veto power. Finally, it violates the constitutional principles on local autonomy allowing district representatives
who are national officers to substitute judgment of local officials on use of public funds for local development. (Belgica v. Ochoa Jr.,
November 19, 2013)

(20) One subject-one title rule provides that every bill passed by the Congress shall embrace only one subject which shall be expressed in
the title thereof. The rule is satisfied if all parts of the statute are related and are germane to the subject matter expressed in the title, or as
long as they are not inconsistent with or foreign to the general subject and title. It is not required to employ in the title language of such
precision as to mirror or catalogue all the minute details therein. (Remman Enterprises v. Philippine Regulatory Commission, February 4,
2014) The title should not be made to cover legislation incongruous, and which by no fair intendment can be considered as having a necessary
or proper connection. (Department of Transportation v. Philippine Petroleum Sea Transport Association, July 24, 2018)

Three readings on separate days. No bill passed by either House shall become a law unless it has passed three readings on separate days,
and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President
certifies to the necessity of its immediate enactment to meet a public calamity or emergency. (Sec. 26, Art. 6)

A bill originating in the House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole. As a
result of the Senate action, a distinct bill may be produced. Thus, to insist that a revenue statute — and not only the bill which initiated the
legislative process culminating in the enactment of the law — must substantially be the same as the House bill would be to deny the Senate's
power not only to "concur with amendments" but also to "propose amendments." It would be to violate the coequality of legislative power of
the two houses of Congress and in fact make the House superior to the Senate. (Tolentino v. Secretary of Finance, August 25, 1994)

Legal basis of bicameral conference committee. The creation of bicameral conference committee is in response to a problem, not addressed
by any constitutional provision, where the two houses of Congress find themselves in disagreement over changes or amendments introduced
by the other in a legislative bill. (Abakada Guro v. Ermita, September 1, 2005) It is not a constitutional body but is based on Section 16(3),
Article VI: Each house has the power to determine the rules of its proceedings. The jurisdiction of the conference committee is not limited to
resolving differences between Senate and House. It may propose entirely new provision. What is important is that its report is subsequently
approved by the respective houses of Congress. (Tolentino v. Secretary of Finance, October 30, 1995)

Enrolled bill doctrine. The signing of a bill by the Speaker of the House and the Senate President and the certification of the Secretaries of
both Houses of Congress that it was passed is conclusive not only as to its provisions but also as to its due enactment. The rationale behind the
enrolled bill doctrine rests on the consideration that the respect due to coequal and independent departments requires the Judiciary to act upon
that assurance, and to accept, as having passed by Congress, all bills authenticated in the manner stated; leaving the court to determine, when
the question properly arises, whether the Act, so authenticated, is in conformity with the Constitution. (Council of Teachers and Staff of
Colleges and Universities of the Philippines v. Secretary of Education, October 9, 2018)

Every bill passed by the Congress shall, before it becomes a law, be presented to the President. If he approves the same, he shall sign
it; otherwise, he shall veto it and return the same with his objections to the House where it originated, which shall enter the objections
at large in its Journal and proceed to reconsider it. If, after such reconsideration, two-thirds of all the Members of such House shall agree
to pass the bill, it shall be sent, together with the objections, to the other House by which it shall likewise be reconsidered, and if approved by
two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes of each House shall be determined by yeas or
nays, and the names of the Members voting for or against shall be entered in its Journal. The President shall communicate his veto of any bill
to the House where it originated within thirty days after the date of receipt thereof; otherwise, it shall become a law as if he had signed it. (Sec.
27, Art. 6)

Under his general veto power, the President has to veto the entire bill, not merely parts thereof. The exception to the general veto power
is the power given to the President to veto any particular item or items in certain bills. In so doing, the President must veto the entire item.
(Philippine Constitution Association v. Enriquez, August 19, 1994) These bills may be an appropriation, revenue, or tariff bill, but the veto
shall not affect the item or items to which he does not object. (Belgica v. Ochoa Jr., November 19, 2013) For the President to exercise his
 item-veto power, it necessarily follows that there exists a proper item which may be the object of the veto. An item pertains to the particulars,
the details, the distinct and severable parts of the appropriation or of the bill. (Araullo v. Aquino III, February 3, 2015)

(21) Under the Regalian doctrine, all lands of the public domain belong to the State, which is the source of any asserted right to any
ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Accordingly, public
lands not shown to have been reclassified or released as alienable agricultural land or alienated to a private person by the State remain part of
the inalienable public domain. Property of the public domain is beyond the commerce of man and not susceptible of private appropriation and
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acquisitive prescription. Occupation thereof in the concept of owner no matter how long cannot ripen into ownership and be registered as a
title. The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on the person applying for 13
registration or claiming ownership, who must prove that the land subject of the application is alienable or disposable. (Republic v. Heirs of
Sin, March 26, 2014)

For purposes of determining Filipino ownership of a public utility, “capital” in Section 11, Article XII of Constitution refers to both (i)
the total number of outstanding shares of stock entitled to vote in the election of directors and (ii) the total number of outstanding
shares of stock, whether or not entitled to vote. Full and legal beneficial ownership of 60 percent of the outstanding capital stock, coupled
with 60 percent of the voting rights must rest in the hands of Filipino national. (Roy v. Herbosa, April 18, 2017)

Non-Filipinos can engage in hydropower generation but not in water exploitation, development, and utilization. Waters are natural
resources within the meaning of Section 2, Article XII. As such, the exploitation, development, and utilization of waters should be limited to
Filipino citizens or corporations or associations at least 60% of the capital of which is owned by Filipino citizens. Utilization of waters can be
opened even to foreign nationals, after the same have been extracted from the source by qualified entities. The process of generating electric
power from the dam water entering the power plant – hydropower generation – does not constitute appropriation of natural resource. There is
no legal impediment to foreign-owned companies undertaking the generation of electric power using waters already appropriated by qualified
entities. (Initiatives for Dialogue and Empowerment through Alternative Legal Services, Inc. v. Power Sector Assets and Liabilities
Management Corporation, October 9, 2012)

Economic activities. The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations,
cooperatives or associations, wholly-owned and managed by such citizens. Only Filipino citizens or corporations or associations at least
seventy per centum of the capital of which is owned by such citizens shall be allowed to engage in the advertising industry. (Sec. 11, Art. 12)

(22) Revision vis-à-vis amendment of the Constitution. Revision implies a change that alters a basic principle in the constitution, like altering
the principle of separation of powers or the system of checks-and-balances. There is also revision if the change alters the substantial entirety of
the constitution, as when the change affects substantial provisions of the constitution. On the other hand, amendment broadly refers to a
change that adds, reduces, or deletes without altering the basic principle involved. Revision generally affects several provisions of the
constitution, while amendment generally affects only the specific provision being amended. Courts have developed a two-part test: the
quantitative test and the qualitative test. The quantitative test asks whether the proposed change is "so extensive in its provisions as to change
directly the 'substantial entirety' of the constitution by the deletion or alteration of numerous existing provisions." The court examines only the
number of provisions affected and does not consider the degree of the change. The qualitative test inquires into the qualitative effects of the
proposed change in the constitution. The main inquiry is whether the change will "accomplish such far reaching changes in the nature of our
basic governmental plan as to amount to a revision." (Lambino v. Commission on Elections, October 25, 2006)

PUBLIC INTERNATIONAL LAW

(23) Sources of public international law. Primary sources are international treaties and convention, international customs, and general principles
of law. Secondary sources are judicial decisions and writings of highly qualified publicists. (Nachura)

“Erga omnes” and “jus cogens.” Erga omnes (Latin: in relation to everyone) refers to obligations owed by the State towards the community
of states as a whole. All States can be held to have a legal interest in their protection; they are obligations erga omnes. Such obligations derive,
for example, in contemporary international law, from outlawing of acts of aggression and of genocide. Jus cogens (literally, “compelling law”)
refers to norms that command peremptory authority, in the sense that they are mandatory, do not admit derogation, and can be modified only
by general international norms of equivalent authority. (Vinuya v. Romulo, April 28, 2010)

Ex aequo et bono. This principle means “what is good and just” and may be treated as a source of public international law and may be
applied, provided that the parties to the dispute agree thereto. (Nachura)

When international customary rules considered binding. They are binding if these are present: (i) established, widespread, and consistent
practice on the part of States and (ii) a psychological element known as the opinion juris sive necessitates (opinion as to law or necessity).
 Implicit in the latter element is a belief that the practice in question is rendered obligatory by the existence of a rule of law requiring it. (Poe-
Llamanzares v. Commission on Elections, March 8, 2016)

Soft law pertains to non-binding norms, principles, and practices that influence state behavior. It does not fall into any of the categories
of international law set forth in Article 38, Chapter III of the 1946 Statute of the International Court of Justice. Examples are certain
declarations and resolutions of the United Nations General Assembly, such as the UN Declaration of Human Rights. (Pharmaceutical and
Health Care Association of the Philippines v. Duque, October 9, 2007)
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(24) Monist versus dualist. To monists, there is no substantial distinction between international law and municipal law. But to dualists, the 14
distinction lies in that municipal law is issued by a political superior for observance by those under its authority, while international law is not
imposed but adopted by states as a common rule of action; that municipal law consists of enactments of the law-making authority, while
international law is derived from such sources as international customs, conventions or general principles of law; and municipal law regulates
relations of individuals among themselves, while international law applies to relations between states and international persons. (Nachura)

Under the 1987 Constitution, international law can become part of the sphere of domestic law either
by transformation or incorporation. The transformation method requires that an international law be transformed into a domestic law
through a constitutional mechanism such as local legislation. The incorporation method applies when, by mere constitutional declaration,
international law is deemed to have the force of domestic law. Treaties become part of the law of the land through transformation pursuant to
Article VII, Section 21 of the Constitution which provides that "[n]o treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the members of the Senate." Thus, treaties or conventional international law must go through a
process prescribed by the Constitution for it to be transformed into municipal law that can be applied to domestic conflicts. (Pharmaceutical
and Health Care Association of the Philippines v. Health Secretary, October 9, 2007) Under the doctrine of incorporation. Philippines adopts
the generally accepted principles of international law and international jurisprudence as part of the law of the land and adheres to the policy of
peace, cooperation, and amity with all nations. (Bayan Muna v. Romulo, Februar 1, 2011)

LABOR LAW

(25) Constitutional due process under the Bill of Rights cannot be invoked against the employer. In the absence of governmental interference,
the liberties guaranteed by the Constitution cannot be invoked against acts of private individuals, such as a private employer. (Yrasuegui v.
Philippine Airlines, Inc., October 17, 2008)

Government-owned and -controlled corporations without original charter are covered by the Labor Code. Civil service embraces only
those government-owned or -controlled corporations with original charter. (Salenga v. Court of Appeals, February 1, 2012) Non-chartered
government-owned or controlled corporations, however, are limited by law in negotiating economic terms with their employees. This is
because the law has provided the Compensation and Position Classification System, which applies to all government-owned or controlled
corporations, chartered or non-chartered. (GSIS Family Bank Employees Union v. Villanueva, January 23, 2019)

Doubts in labor contracts are resolved in favor of the laborer. Labor contracts are imbued with social justice considerations. Thus, doubt
or vagueness in the provisions of the contract of employment is interpreted and resolved in favor of the employee. (Centro Project Manpower
Services Corporation v. Naluis, June 17, 2015)

Quantum of proof required in labor cases is substantial evidence. Substantial evidence means that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. (Philippine National Bank v. Gregorio, September 18, 2017) Where both
parties failed prove their allegations by substantial evidence, the evidence is in equipoise. In such case, scales of justice are tilted in favor of
labor. (Hubilla v. HSY Marketing, Ltd., Co., January 10, 2018)

(26) Four-fold test to determine the existence of employer-employer relationship. Four-fold test is (i) selection and engagement of the
employee, (ii) payment of wages, (iii) power of dismissal, and (iv) power to control the employee on end to be achieved and the means and
methods by which the work is accomplished. Control test is the most important element. (Tenazas v. R. Villegas Taxi Transport, April 2,
2014) It merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is not essential that the employer
actually supervises the performance of duties by the employee. It is enough that the former has a right to wield the power. (Alba v. Espinosa,
August 9, 2017) Thus, where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not
subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no
employer-employee relationship exists. (Loreche-Amit v. Cagayna de Oro Medical Center, Inc. June 3, 2019)

Relationship between jeepney owners/operators and jeepney drivers under the boundary system is that of employer-employee and not
of lessor-lessee. Fact that drivers do not receive fixed wages but only get the amount in excess of the so-called “boundary” that they pay to the
owner/operator is not sufficient to negate the relationship between them as employer and employee. (Caong Jr. v. Regualos, January 26, 2011)
 Economic reality test as a test to determine employer-employee relationship. Existing economic conditions prevailing between the parties
can help in determining the existence of an employer-employee relationship. The proper standard of economic dependence is whether the
worker is dependent on the alleged employer for his continued employment in that line of business. (Francisco v. National Labor Relations
Commission, August 31, 2006) Thus, a pathologist cannot be considered an employee of a particular hospital where she caters to other
hospitals where her services are needed. She was not wholly dependent on the particular hospital. (Loreche-Amit v. Cagayna de Oro Medical
Center, Inc. June 3, 2019)
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(27) Retirement from service vis-à-vis termination of employment. Retirement from service is contractual, while termination of employment is 15
statutory. Main feature of retirement is that it is the result of a bilateral act of both the employer and the employee based on
their voluntary agreement that upon reaching a certain age, the employee agrees to sever his employment. (Barroga v. Quezon Colleges of the
North, December 5, 2018)

Retirement at the age below the legal retirement age allowed if agreed by the employee. A retirement plan giving the employer the option
to retire its employees below the ages provided by law must be accepted by the latter; otherwise, it amounts to deprivation of property without
due process of law. (Cercado v. Uniprom, Inc., October 13, 2010) Retirement of the employee whose intent to retire was not clearly
established or whose retirement was involuntary is to be treated as a discharge. (Manila Hotel Corporation v. De Leon, July 23, 2018)

Computation of retirement pay. Unless the parties provide for broader inclusions, retirement pay is equal to half-month’s pay per year of
service, where half month pay is computed as 15 days plus 1/12 th of the 13th month pay (30 days / 12 = 2.5 days) and the cash equivalent of
not more than 5 days service incentive leaves, for a total of 22.5 days. But if the employee is exempted by law from receiving 13th month pay
and service incentive leave, such as a taxi driver paid on the “boundary” system basis, then these shall not be included in the computation of
retirement pay. Retirement pay is equivalent to 15 days only, and not 22.5 days of salary. (Serrano v. Severino Santos, August 9, 2010)

Part-time employees are entitled to retirement benefits, even if the company policy and the CBA grant retirement benefits only to full-
time employees. Under the law, only government employees and employees of retail, service, and agricultural establishments regularly
employing not more than ten employees are not covered by retirement. Part-time employees are not among those specifically exempted from
the law. (De La Salle Araneta University v. Bernardo, February 13, 2017)

Employee who has already qualified for optional retirement but dies before the option to retire could be exercised is entitled to his
optional retirement benefits, which may be claimed by the qualified employee’s beneficiaries on his behalf. Retirement encompasses
even the concept of death. Death is a form of disability retirement as there is no more permanent or total physical disability than
death. Compulsory retirement and death both involve events beyond the employee’s control. Retirement laws should be liberally construed
and administered in favor of the persons intended to be benefited and all doubts as to the intent of the law should be resolved in favor of the
retiree to achieve its humanitarian purposes. (United Doctors Medical Center v. Bernadas, December 13, 2017)

(28) Requisites of serious misconduct as just cause for termination of employment. Requisites are (i) it must be serious, (ii) it must relate to the
performance of the employee’s duties, and (iii) it must show that the employee has become unfit to continue working for the employer. (The
Coffee Bean and Tea Leaf v. Arenas, March 11, 2015) Two employees caught having sexual intercourse during office hours within company
premises can be legally dismissed on this ground. (Imasen vs Alcon, October 22, 2014) So is an employee uttering obscene, insulting or
offensive words against his superior. (Sterling Paper Products Enterprises v. KMM-Katipunan, August 2, 2017)

Requisites of fraud as just cause for termination of employment. Requisites are (i) there must be an act, omission, or concealment, (ii) the
act, omission, or concealment involves a breach of legal duty, trust, or confidence justly reposed, (iii) it must be committed against the
employer or his representative, and (iv) it must be in connection with the employee’s work. Thus, there is fraud when the employees, who are
sewers, deceived their employer by making it seem that they worked with greater speed and efficiency than they actually did, as shown by the
discrepancy between the time goals purportedly accomplished by them and the regular time goals as recorded. (First Glory Philippines, Inc. v.
Lumantao, March 6, 2019)

Requisites of willful disobedience as just cause for termination of employment. Requisites are (i) employee’s assailed conduct must have
been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude and (ii) order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. (Mamaril v. Red
System Company, Inc., July 4, 2018)

Requisites of neglect of duty as just cause for termination of employment. Requisites are (i) it must be gross and (ii) it must be habitual.
Gross neglect entails want of care in the performance of one’s duties, while habitual neglect imparts repeated failure to perform such duties for
a period of time, depending on the circumstances. (Casco v. National Labor Relations Commission, February 19, 2018) Requisite of
habituality is not required if the neglect leads to employer’s loss involving substantial amount, e.g., delivery boy who did not lock the steering
wheel of employer’s motorcycle, causing it to be carnapped, even if it is his first infraction. (LBC Express – Metro Manila, Inc. v. Mateo, June
9, 2009)

Requisites of willful breach of trust or loss of confidence as just cause for termination of employment. Requisites are (i) employee must
be holding a position of trust and confidence and (ii) act complained against would justify the loss of trust and confidence. (Wesleyan
University v. Reyes, July 30, 2014)
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Two classes of employees vested with trust and confidence. In the first class belong the managerial employees or those vested with the
powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline 16
employees or effectively recommend such managerial actions. In the second class belong the fiduciary rank-and-file or those who in the
normal and routine exercise of their functions regularly handle significant amounts of money or property, and are, thus, classified as
occupying positions of trust and confidence. Cashiers, auditors, property custodians, and bus conductor are some of the employees in the
second class. (Lagahit v. Pacific Concord Container Lines, January 13, 2016; Mapili v. Philippine Rabbit Bus Lines, Inc., July 27, 2011) For
the first class, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal
on ground of loss of trust and confidence. For the second class, loss of trust and confidence requires proof of involvement; mere
uncorroborated assertions and accusations by the employer would not suffice. (Alaska Milk Corporation v. Ponce, July 26, 2017) Thus, a
supervisor nurse’s act of getting medicines and supplies without having the transaction recorded contrary to hospital policy and practice
warrants her dismissal on this ground. (Cadavas v. Court of Appeals, March 20, 2019)

Requisites of valid retrenchment as authorized cause for termination of employment. Requisites are (i) it is reasonably necessary and
likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious and real, or only if expected,
are reasonably imminent as perceived objectively and in good faith by the employer, (ii) employer serves written notice to both the
employee/s concerned and the Department of Labor and Employment (DOLE) at least a month before the intended date of retrenchment, (iii)
payment of separation pay equivalent to at least one month pay for every year of service, (iv) prerogative is exercised in good faith, and (v)
employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained. Losses must be supported by the submission of
financial statements duly audited by independent external auditors. (Anabe v. Asian Construction, December 23, 2009)

Requisites of a valid redundancy as authorized cause for termination of employment. Requisites are (i) written notice served on both the
employees and the DOLE at least one month prior to the intended date of termination of employment, (ii) payment of separation pay
equivalent to at least one month pay for every year of service, (iii) good faith in abolishing the redundant positions, and (iv) fair and
reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. (Philippine National Bank v.
Dalmacio, July 5, 2017) It is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of
such redundancy to justify the dismissal of the affected employees, such as new staffing pattern, feasibility studies/proposal, on the viability of
the newly created positions, job description, and approval by the management of the restructuring. (Yulo v. Concentrix Daksh Services,
Philippines, Inc., January 21, 2019) Among the accepted criteria in implementing a redundancy program are preferred status, efficiency, and
seniority. (Que v. Asia Brewery, Inc., April 10, 2019) Thus, there is no valid redundancy where the justification was an alleged email received
from the client informing the latter’s plans to “right size the headcount of the account due to business exigencies/requirements,” and such
email was not presented. There were also no fair and reasonable criteria in the redundancy program where the employer merely presented a
screenshot of a table with names of the employees it sought to redundate based on their alleged poor performance ratings. (Yulo v. Concentrix
Daksh Services, Philippines, Inc., January 21, 2019) Similarly, there is no valid redundancy if the employer, after effecting the redundancy
program, hired additional employees for the positions declared redundant. (Abbott Laboratories, Inc. v. Torralba, October 11, 2017)

Decision to close one’s business is a management prerogative that courts cannot interfere with. Employers can lawfully close shop at
anytime, even for reasons of their own. Just as no law forces anyone to go into business, no law can compel anybody to continue in it. Despite
this management prerogative, employers closing their businesses must pay affected workers separation pay equivalent to one-month pay or to
at least one-half-month pay for every year of service, whichever is higher. The reason is that an employee dismissed, even for an authorized
cause, loses his means of livelihood. The only time employers are not compelled to pay separation pay is when they closed their
establishments or undertaking due to serious business losses or financial reverses. To prove serious business losses, employers must present in
evidence financial statements showing the net losses suffered by the business within a sufficient period of time. Generally, it cannot be based
on a single financial statement showing losses. Absent this proof, employers closing their businesses must pay the dismissed employees the
required separation pay. (G.J.T. Rebuilders Machine Shop v. Ambos, January 28, 2015)

Substantive and procedural requisites before an employee is validly dismissed on ground of disease. Substantive requisites are (i)
employee is suffering from any disease, (ii) his continued employment is prohibited by law or prejudicial to his health as well as to the health
of his co-employees, and (iii) competent public health authority issues a medical certificate that the disease is of such nature or at such a stage
that it cannot be cured within a period of six months even with proper medical treatment. Procedural requisites are (i) notice to apprise the
employee of the ground for which his dismissal is sought and (ii) notice informing the employee of his dismissal, to be issued after the
employee has been given opportunity to answer and to be heard on his defense. (Deoferio v. Intel Technology Philippines, Inc., June 18, 2014)
 In abandonment, employee failed to report for work without any valid and justifiable reason and that he had a clear intention to sever
employment relationship by some overt act. There is no abandonment where there is mere absence or failure to report for work (Vilma v.
NII Enterprises, November 22, 2017) especially where the employee, after notice of return, inquired several times as to his employment status
but was not entertained. (Litex Glass and Aluminium Supply v. Sanchez, April 22, 2015) Thus, an employee who was asked to turn over the
files to the Head Administrative Assistant and was no longer given work but informed that it was her last day of work and her salary would
just be deposited in her ATM account was illegally dismissed and did not abandon work. (Cabañas v. Abelardo G. Luzano Law Office, July 2,
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2018) To effect valid dismissal based on abandonment, the law mandates the twin notice requirements to the employee’s last known address.
(Agabon v. National Labor Relations Commission, November 17, 2004) 17

(29) In cases of termination, the “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or conference”
requirement in the implementing rules and regulations. Thus, procedural due process requires: (a) first written notice. It contains (i)
detailed narration of facts and circumstances that serves as basis for the charge, (ii) specific causes or grounds for termination, (iii) company
rules violated or which just cause under the Labor Code is the charged premised upon, and (iv) directive that the employee is given an
opportunity to submit written explanation within a reasonable period, which must be at least five calendar days from receipt; (b) ample
opportunity to be heard. “Ample opportunity to be heard” means any meaningful opportunity, verbal or written, given to the employee to
answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference, or some other fair, just and
reasonable way. Formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary
disputes exist or a company rule or practice requires it, or when similar circumstances justify it; (c) written notice of termination. If
termination is justified, this contains (i) all circumstances involving the charge against the employees have been considered and (ii) grounds
have been established to justify severance of employment. (Distribution and Control Products, Inc. v. Santos, July 10, 2017)

(30) When labor-only contracting exists. It exists when any of the two elements are present (i) contractor does not have substantial capital or
investment which relates to the job, work, or service to be performed and the employees recruited, supplied, or placed by such contractor or
subcontractor are performing activities which are directly related to the main business of the principal or (ii) contractor does not exercise the
right to control the performance of the work of the contractual employee. (Lingat v. Coca-cola Bottlers Philippines, Inc., July 4, 2018) Failure
to register as contractor with the Department of Labor and Employment raises a disputable presumption of engaging labor-only contracting.
(Manila Memorial Park Cemetery, Inc. v. Lluz, February 3, 2016). A finding that a contractor is a “labor-only” contractor is equivalent to
declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the labor-
only contractor is considered as a mere agent of the principal, the real employer. (Petron Corporation v. Caberte, June 15, 2015) Under D.O.
No. 174-17, substantial capital refers to paid-up capital of at least ₱5 Million for corporations or net worth of ₱5 Million for single
proprietorship.

In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work, or service
between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor
and its workers. Hence, there are three parties involved in these arrangements: (i) principal which decides to farm out a job or service to a
contractor or subcontractor, (ii) contractor or subcontractor which has the capacity to independently undertake the performance of the job,
work, or service, and (iii) contractual workers engaged by the contractor or subcontractor to accomplish the job, work, or service. (Manila
Memorial Park Cemetery, Inc. v. Lluz, February 3, 2016)

(31) Differences between union, workers’ association, and labor management council (LMC). A union refers to any labor organization in the
private sector organized for collective bargaining and for other legitimate purpose, while a workers’ association is an organization of workers
formed for the mutual aid and protection of its members or for any legitimate purpose other than collective bargaining. Workers and
employers may form LMC, which is based on the Labor Code provision mandating that workers shall have the right to participate in policy
and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights,
benefits, and welfare. A common element between unionism and LMC is the existence of employer-employee relationship. This is not
mandatory in the formation of workers’ association. What the law simply requires is that the members thereof share the same interest. The
very definition of a workers’ association speaks of mutual aid and protection. (Samahan ng Manggagawa sa Hanjin v. Bureau of Labor
Relations, October 14, 2015)

Employees with definite employers may form a workers’ association for mutual aid and protection instead of a union. While Article
243 provides that ambulant, intermittent, and itinerant workers, and those without any definite employers may form labor organizations for
mutual aid and protection, the law does not restrict said right to form workers’ association to them. Option to form or join a union or workers’
association lies with the workers themselves and whether they have definite employers or not. (Samahan ng Manggagawa sa Hanjin v. Bureau
of Labor Relations, October 14, 2015)

Managerial employees are prohibited from forming or joining labor organizations. If these managerial employees would belong to or be
affiliated with a union, they might not be assured of their loyalty to the union in view of evident conflict of interests. The union can also
 become company-dominated with the presence of managerial employees in union membership. Thus, the employer’s collective bargaining
agreement (CBA) with the rank and file employees does not apply to a managerial employee. (Manila Hotel Corporation v. De Leon, July 23,
2018)

Confidential employees are those who assist or act in a confidential capacity, in regard to persons who formulate, determine, and
effectuate management policies in the field of labor relations. Confidential employees should be excluded from the rank-and-file
bargaining unit. The rationale for their separate category and disqualification to join any labor organization is similar to the inhibition for
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managerial employees. If allowed to be affiliated with a union, a confidential employee might not be assured of loyalty in view of evident
conflict of interests and the union can also become company-denominated with the presence of such employee in the union membership. (San 18
Miguel Foods, Incorporation v. San Miguel Corporation Supervisors and Exempt Union, August 1, 2011) Otherwise stated, under the doctrine
of necessary implication, the disqualification of managerial employees equally applies to confidential employees. Thus, when the employee
does not have access to confidential labor relations information, there is no legal prohibition against confidential employees from forming,
assisting, or joining a union. (Sugbuanon Rural Bank, Inc. v. Laguesma, February 2, 2000)

Inclusion of supervisory employees in a labor organization seeking to represent the bargaining unit of rank-and-file employees does
not divest it of its status as a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its
membership cannot affect its legitimacy for that is not a ground for cancellation of its registration, unless such mingling was brought about by
misrepresentation, false statement, or fraud. (Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for
Empowerment and Reforms v. Charter Chemica and Coating Corporation, March 16, 2011) This is true even if those allegedly mingled are
managerial employees. (Asian Institute of Management v. Asian Institute of Management Faculty Association, January 23, 2017)

(32) Management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work suspension, lay-off of workers and discipline, dismissal and recall of workers. Thus, there is
valid exercise of management prerogative when removal of chairs for bottling operators was done in good faith. The chairs were removed
pursuant to an efficiency program to avoid instances of operators sleeping on the job and taking into consideration the duty of operators to
move constantly while working. (Royal Plant Workers’ Union v. Coca-cola Bottlers Philippines, Inc.-Cebu Plant, April 15, 2013) Similarly,
there is valid exercise of management prerogative in imposing company policy prohibiting an employee from having a relationship with an
employee of a competitor company. Company has a right to guard its trade secrets, manufacturing formulas, marketing strategies, and other
confidential programs and information from competitors. Prohibition against personal or marital relationships with employees of competitor
companies is reasonable under the circumstances because relationships of that nature might compromise the interests of the company.
(Duncan Association of Detailman-PTGWO v. Gaxo Wellcome Philippines, Inc., September 17, 2004)

There is invalid exercise of management prerogative in imposing indefinite suspension of a human resource officer due to unwed
pregnancy until she marries her boyfriend. There is no showing that marriage or no-marriage qualification is justified as a “bona fide
occupational qualification” that is satisfied by the following requisites: (i) employment qualification is reasonably related to the essential
operation of the job involved and (ii) factual basis for believing that all or substantially all persons meeting the qualification would be unable
to property perform the duties of the job. (Capin-Cadiz v. Brent Hospital and Colleges, Inc., February 24, 2016)

(33) A person who is a holder of a license can be held liable for illegal recruitment. Performance of prohibited acts, whether holder or not of a
license, is considered illegal recruitment. Example is failing to reimburse expenses by the workers in connection with documentation for
purposes of deployment in cases where the deployment does not actually take place without worker’s fault. (People v. Molina, June 1, 2016)

Failure to present receipts in proving payments by the victims to illegal recruiter is not fatal to prosecution of illegal recruitment.
What is essential is the witnesses had positively shown through their respective testimonies that the accused is the one involved in the
prohibited recruitment. (People v. Abat, March 16, 2011)

Money is immaterial to the prosecution for illegal recruitment. Definition of illegal recruitment includes the phrase “whether for profit or
not.” (People v. Mateo, April 22, 2015)

Illegal recruitment when considered an offense involving economic sabotage. Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic sabotage. Illegal recruitment is deemed committed by a syndicate if carried out
by a group of three or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction
scheme, or enterprise. Illegal recruitment is deemed committed in large scale if committed against three or more persons individually or as a
group. (People v. Tolentino, July 1, 2015)

A person can be charged and convicted separately with estafa and illegal recruitment. The offense of illegal recruitment is malum
prohibitum where the criminal intent of the accused is not necessary for conviction, while estafa is malum in se where the criminal intent of
 the accused is crucial for conviction. (People v. Daud, June 2, 2014) Thus, the two offenses are entirely distinct from each other not only from
their being punished under different statutes but also from their elements being different. (People v. Bayker, February 10, 2016) Conviction
for offenses under the Labor Code does not bar conviction for offenses punishable by other laws. Conversely, conviction for estafa does not
bar a conviction for illegal recruitment under the Labor Code. One’s acquittal of the crime of estafa will not necessarily result in his acquittal
of the crime of illegal recruitment in large scale, and vice versa. (People v. Sison, August 9, 2017)

Elements of estafa by means of deceit under Article 315(2)(a) of the Revised Penal Code where an OFW may be defrauded. Elements
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are (i) there must be a false pretense or fraudulent representation as to his power, influence, qualifications, property, credit, agency, business
or imaginary transactions, (ii) such false pretense or fraudulent representation was made or executed prior to or simultaneously with the 19
commission of the fraud, (iii) the offended party relied on the false pretense, fraudulent act, or fraudulent means and was induced to part with
his money or property, and (iv) as a result thereof, the offended party suffered damage. Thus, accused is guilty of estafa where she
misrepresented her qualifications and authority to send the victim to work in Australia; such false representation was made prior to or
simultaneous to the commission of the fraud; the victim relied on accused; and misrepresentation resulted in damage to the victim as he paid
the ₱80,000 down payment that accused required of him as processing fee, but the purpose for which it was paid never materialized. (People
v. Sison, August 9, 2017)

(34) No jurisdictional limit as to the amount of claim that the DOLE Secretary may award in inspection cases pursuant to the visitorial
and enforcement power under Article 128. Jurisdiction of DOLE Secretary in inspection cases is not affected by the amount of claim
involved. (Tiger Construction and Development Corporation v. Abay, February 26, 2010)

DOLE Secretary has the power to determine the existence of employee-employer relationship under its visitorial and enforcement
power under Article 128. No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-
employee relationship. If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the
matter, to the exclusion of the NLRC. DOLE would have no jurisdiction only if the employer-employee relationship has already been
terminated, or it appears, upon review, that no employer-employee relationship existed in the first place. (People’s Broadcasting Service v.
Secretary of Labor, March 6, 2012)

Requisites of “exception clause” found under paragraph 2, Article 128 where, pursuant to visitorial and enforcement power, the
DOLE Secretary or his duly authorized representatives shall issue writs of execution, to the appropriate authority for the enforcement
of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises
issues supported by documentary proofs which were not considered in the course of inspection. Elements are (i) employer contests the
findings of the labor regulations officer and raises issues thereon, (ii) in order to resolve such issues, there is a need to examine evidentiary
matters, and (iii) such matters are not verifiable in the normal course of inspection. (Meteoro v. Creative Creatures, Inc., July 13, 2009) If the
labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse
the case to the appropriate Arbitration Branch of the National Labor Relations Commission (NLRC). (Ex-Bataan Veterans Security Agency,
Inc. v. Laguesma, November 20, 2007)

All money claims arising from employer-employee relationship shall be filed within three years from the time the cause of action
accrued; otherwise, they shall be forever barred. If it is established that the benefits being claimed have been withheld from the employee
for a period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within
three years before the filing of the complaint. Nonetheless, in case of service incentive leave, the cause of action of an entitled employee to
claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did
not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave
credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his
accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from
employment. (Auto Bus Transport Systems, Inc. v. Bautista, May 16, 2005)

TAXATION LAW

(35) Congress can create tax exemptions subject to the constitutional provision that no law granting any tax exemption shall be passed
without the concurrence of a majority of all the Members of Congress. Power of Congress to tax implies the power to exempt from
tax. (Commissioner of Internal Revenue v. St. Luke’s Medical Center, Inc., February 13, 2017)

Constitutional provision requiring concurrence of majority of members of Congress for tax exemption does not apply in an
“Exchange of Notes” executed between the Japanese and Philippine governments, where the former will grant P40B yen to the latter,
which undertakes to assume all the taxes imposed by the latter’s laws on the former’s Japanese contractors engaged in certain
thermal power plant. To “assume” means that the obligation or liability remains, although the same is merely passed on to a different person.
 There is still tax liability, although assumed by the Philippines. Thus, the constitutional provision on tax exemptions would not apply.
(Mitsubishi Corporation-Manila Branch v. Commissioner of Internal Revenue, June 5, 2017)

Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands,
buildings, and improvements, actually, directly and exclusively used for religious, charitable or educational purposes shall be exempt
from taxation. Thus, a charitable hospital institution, which leases portions of the hospital spaces to professional practitioners and for
commercial purposes, are required to pay real property tax (RPT) with respect to such space. These spaces are not actually, directly, and
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exclusively used for charitable purposes. Even if said institution applies the profits from rentals to further charitable purpose, it is not
exempted from RPT. Use of profits is immaterial; it is the use of the property that determines exemption. (Lung Center of the Philippines v. 20
Quezon City, June 29, 2004)

Under Section 4(3), Article XIV of the Constitution, all revenues and assets of non-stock, non-profit educational institutions used
actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Revenues consist of the amounts
earned by a person or entity from the conduct of business operations. It is a component of the tax base in income tax, value added tax (VAT),
and local business tax (LBT). Meanwhile, assets are the tangible and intangible properties owned by a person or entity. The fair market value
of real property is a component of the tax base in RPT. Thus, when a non-stock, non-profit educational institution proves that it uses
its revenues actually, directly, and exclusively for educational purposes, it shall be exempted from income tax, VAT, and LBT. On the other
hand, when it also shows that it uses its assets in the form of real property for educational purposes, it shall be exempted from RPT.
(Commissioner of Internal Revenue v. De La Salle University, Inc., November 9, 2016) Notably, a non-profit institution is not considered
profit driven simply because of generating profits. The provision does not require that the revenues and income must have also been earned
from educational activities or activities related to the purposes of an educational institution. The phrase “all revenues” is unqualified by any
reference to the source of revenues. Thus, so long as the revenues and income are used actually, directly and exclusively for educational
purposes, then said revenues and income shall be exempt from taxes and duties. (La Sallian Educational Innovators Foundation, Inc. v.
Commissioner of Internal Revenue, February 27, 2019)

Foregoing constitutional provision prevails over Section 30 of Tax Code. Section 30 providing that the income of whatever kind and
character of a non-stock and non-profit educational institution from any of their properties, real or personal, or from any of their activities
conducted for profit regardless of the disposition made of such income, shall be subject to tax is contrary to Section 4(3), Article XIV of the
Constitution. The limitations in Section 30 do not apply to non-stock, non-profit educational institutions. (Commissioner of Internal Revenue
v. De La Salle University, Inc., November 9, 2016)

(36) General principles of income taxation. Principles are: (a) a citizen of the Philippines residing therein is taxable on all income derived from
sources within and without the Philippines; (b) a nonresident citizen is taxable only on income derived from sources within the Philippines; (c)
an individual citizen of the Philippines who is working and deriving income from abroad as an overseas contract worker is taxable only on
income derived from sources within the Philippines; (d) an alien individual, whether a resident or not of the Philippines, is taxable only on
income derived from sources within the Philippines; (e) a domestic corporation is taxable on all income derived from sources within and
without the Philippines; and (f) a foreign corporation, whether engaged or not in trade or business in the Philippines, is taxable only on income
derived from sources within the Philippines. (Sec. 32)

(37) Income vis-a-vis capital. Income means cash received or its equivalent, the amount of money coming to a person within a specific time or
something distinct from principal or capital (Commissioner of Internal Revenue v. Filinvest Development Corporation, July 19, 2011). It
means all the wealth which flows into the taxpayer other than a mere return on capital. Capital is a fund or property existing at one distinct
point in time while income denotes a flow of wealth during a definite period of time. Income is gain derived and severed from capital.
Requisites for income to be taxable: (i) there must be gain, (ii) gain must be realized or received, and (iii) gain must not be excluded by law or
treaty from taxation. (Chamber of Real Estate and Builders’ Associations, Inc. v. Romulo, March 9, 2010) Thus, while recreational clubs are
no longer exempt from income tax, the revenue memorandum circular imposing income tax on membership fees, assessment dues, rental
income, and service fees of recreational club is invalid. These fees only constitute contributions to and/or replenishment of the funds for the
maintenance and operations of the facilities offered by recreational clubs to their exclusive members. They represent funds “held in trust” by
these clubs to defray their operating and general costs and only constitute infusion of capital. The State cannot impose a tax on capital as it
constitutes an unconstitutional confiscation of property. (Association of Non-Profit Clubs, Inc. v. Bureau of Internal Revenue, June 26, 2019)

Gross income vis-a-vis taxable income. Gross income means all income from whatever source derived, including, but not limited to the
following items: compensation for services, including fees, commissions, and similar items, gross income derived from business, gains
derived from dealings in property, interest, rents, royalties, dividends, annuities, prizes and winnings, pensions, and partner’s distributive share
of the gross income of general professional partnership. The phrase “from whatever source derived” indicates a legislative policy to include all
income not expressly exempted within the class of taxable income under our laws. (Commissioner of Internal Revenue v. Filinvest
Development Corporation, July 19, 2011) Under R.A. No. 10963 or TRAIN Law, taxable income means the pertinent items of gross income
specified in the Tax Code, less deductions, if any, authorized for such types of income by the Tax Code or other special laws.
 Tax liability of a general professional partnership. A general professional partnership as such shall not be subject to the income tax
imposed under this Chapter. Persons engaging in business as partners in a general professional partnership shall be liable for income tax only
in their separate and individual capacities. (Sec. 26)

Minimum corporate income tax (MCIT) of two percent (2%) of the gross income as of the end of the taxable year is imposed on a
taxable corporation beginning on the fourth taxable year immediately following the year in which such corporation commenced its
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business operations, when the minimum income tax is greater than the normal income tax computed for the taxable year. This allows
the government to collect from corporations MCIT equivalent to 2% of “gross income” in lieu of the 30% of “gross income” basic income tax 21
for domestic corporations, whenever the former is higher. Although both rates of taxes are applied to “gross income” as tax base, the
definition of “gross income,” for purposes of MCIT and basic corporate income tax, varies. “Gross income” as used in determining MCIT
means “gross receipts less sales returns, allowances, discounts and cost of services.” This definition is much more limited in terms of
inclusions, exclusions, and deductions, compared to the definition of “gross income” for purposes for computing basic corporate tax. (Manila
Banker’s Life Insurance Corporation v. Commissioner of Internal Revenue, February 27, 2019)

MCIT is constitutional and neither violates due process nor amounts to deprivation of property. An income tax is arbitrary and
confiscatory if it taxes capital because capital is not income. MCIT, however, is not a tax on capital. It is imposed on gross income which is
arrived at by deducting the capital spent by a corporation in the sale of its goods, i.e., the cost of goods and other direct expenses from gross
sales. Furthermore, it is not an additional tax imposition. It is imposed in lieu of the normal net income tax, and only if the normal income tax
is suspiciously low. (Chamber of Real Estate and Builders’ Associations, Inc. v. Romulo, March 9, 2010)

Requisites for the deductibility of ordinary and necessary trade or business expenses. Requisites are (i) expenses must be ordinary and
necessary, (ii) they must have been paid or incurred during the taxable year, (iii) they must have been paid or incurred in carrying on the trade
or business of the taxpayer, and (iv) they must be supported by receipts, records, or other pertinent papers. (H. Tambunting Pawnshop, Inc. v.
Commissioner of Internal Revenue, July 29, 2013) An expense is “necessary” where the expenditure is appropriate and helpful in the
development of the taxpayer’s business. It is “ordinary” when it connotes a payment which is normal in relation to the business of the taxpayer
and the surrounding circumstances. The term “ordinary” does not require the payments be habitual or normal in the sense that the same
taxpayer will have to make them often; payment may be unique or non-recurring to the particular taxpayer affected. Legitimate corporate
expenses may fall under ordinary and necessary expenses. (Hacienda Luisita Incorporated v. Philippine Agrarian Reform Council, April 24,
2018) Advertising expenses to stimulate current sale of merchandise is an ordinary and necessary business expense but if done to stimulate
future sale to maintain goodwill, then it is a capital expenditure which should be spread out over a reasonable period of time. (Commissioner
of Internal Revenue v. General Foods, Inc. April 24, 2003)

Taxability of fringe benefits and de minimis benefits. Fringe benefits furnished or granted, in cash or in kind, by an employer to its
managerial or supervisory employees, are not considered part of compensation income and, thus, exempt from withholding tax on
compensation. Instead, these fringe benefits are subject to a fringe benefit tax equivalent to 32% of the grossed-up monetary value of the
benefit, which the employer is legally required to pay. On the other hand, fringe benefits given to rank and file employees, while exempt from
fringe benefit tax, form part of compensation income taxable under the regular income tax rate and consequently, subject to withholding tax
on compensation. De minimis benefits are fringe benefits of relatively small value furnished by the employer to his employees (both
managerial/supervisory and rank and file) as a means of promoting health, goodwill, contentment, or efficiency, that are exempt from both
income tax on compensation and fringe benefit tax; hence, not subject to withholding tax. They are limited and exclusive only to those
enumerated under relevant revenue regulation. All other benefits given by the employer which are not included in said list, although of
relatively small value, are not considered as de minimis benefits; hence, subject to income tax as well as withholding tax on compensation
income, for rank and file employees, or fringe benefits tax for managerial and supervisory employees, as the case may be. (Confederation for
Unity, Recognition and Advancement of Government Employees v. Bureau of Internal Revenue, July 3, 2018)

(38) Date-of-death valuation rule. The estate tax should be measured based on the value of the estate as it stood at the time of the decedent’s
death, regardless of any subsequent contingency affecting value or any subsequent increase or decrease in value. Thus, where the claims are
reduced or condoned through compromise agreements entered into by the estate with its creditors resulting in the reduction of the amount
actually paid post-death, the deductible claim would still be valued as of the date of death. (Dizon v. Court of Tax Appeals, April 30, 2008)

Absence of donative intent does not exempt the sales of stock transactions from donor’s tax where the fair market value exceeded the
value of the consideration. Even if there is no actual donation, the difference in price is considered a donation by fiction of law. Section 100
which states that the amount by which the fair market value of the property exceeded the value of the consideration shall be deemed a gift.
(Philippine American Life and General Insurance Company v. Secretary of Finance, November 24, 2014)
 Political contributions for election purposes. Any contribution in cash or in kind to any candidate or political party or coalition of parties for
campaign purposes, duly reported to the COMELEC, shall not be subject to the payment of any gift (donor‟s) tax. (Sec. 13, R.A. 7166).

(39) Destination principle/cross-border doctrine. Under the destination principle, goods and services are taxed only in the country where these
are consumed. The cross-border doctrine mandates that no value added tax (VAT) shall be imposed to form part of the cost of the goods
destined for consumption outside the territorial border of the taxing authority. Hence, actual export of goods and services from the Philippines
to a foreign country must be free of VAT, while those destined for use or consumption within the Philippines shall be imposed with VAT.
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(Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, June 8, 2007) For this purpose, an ecozone,
by fiction of law, is a foreign territory separate and distinct from the customs territory. Accordingly, the sales made by suppliers from a 22
customs territory to a purchaser located within an ecozone will be considered as exportations. The implication is that no VAT shall be
imposed, in accordance with the destination principle and cross border doctrine. Thus, if a buyer pays VAT on purchase of goods destined for
consumption within an ecozone, he has recourse for claim of reimbursement, not against the government, but against the seller who had
shifted to it the output VAT. (Coral Bay Nickel Corporation v. Commissioner of Internal Revenue, June 13, 2016)

VAT can be imposed upon non-profitable transactions. VAT is a tax on transactions, imposed at every stage of the distribution process on
the sale, barter, exchange of goods or property, and on the performance of services, even in the absence of profit. If the entity provides service
for a fee, remuneration or consideration, then the service rendered is subject to VAT (Bureau of Internal Revenue v. Court of Appeals, March
30, 2000).

Transactions subject to VAT include those entered in the course of trade or business including transactions incidental thereto. Thus,
sale of Mindanao II Geothermal of its depreciated car previously used by its manager is subject to VAT. Prior to the sale, the depreciated car
was part of the company’s equipment. Its sale is incidental transaction made in the course of its business. (Mindanao II Geothermal
Partnership v. Commissioner of Internal Revenue, March 11, 2013)

Transactions done “in the course of trade or business.” Phrase “in the course of trade or business” means the regular conduct or pursuit of
a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged
therein is a nonstock, nonprofit private organization, irrespective of the disposition of its net income and whether or not it sells exclusively to
members or their guests, or government entity. (Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue, March 11, 2013)

A health maintenance organization, which collects fees from its members where 80% thereof is earmarked for medical utilization of
its members, is liable for VAT, not on its gross receipts, but on only on the 20% not earmarked for medical utilization. As gross
receipts comprise the entire receipts without any deduction, the 80% earmarked is considered a deduction and, thus, no VAT should be
imposed. (Medicard Philippines, Inc. v. Commissioner of Internal Revenue, April 5, 2017)

Membership fees, assessment dues, and other fees collected by recreational clubs are not subject to VAT. In collecting such fees, the
club is not selling its service to the members. Conversely, the members are not buying services from the club when dues are paid; hence, there
is no economic or commercial activity as these dues are devoted for the operations/maintenance of the facilities of the organization. There
could be no “sale, barter or exchange of goods or properties, or sale of a service” to speak of, which would then be subject to VAT.
(Association of Non-Profit Clubs, Inc. v. Bureau of Internal Revenue, June 26, 2019)

(40) When the three-year prescriptive period to assess and collect internal revenue taxes is extended. It is extended to ten years in cases of (i)
fraudulent returns, (ii) false returns with intent to evade tax, and (iii) failure to file a return, to be computed from the time of discovery of the
falsity, fraud, or omission. (Banco de Oro v. Republic, January 13, 2015) A false return simply involves a deviation from the truth, whether
intentional or not while a fraudulent return implies intentional or deceitful entry with intent to evade the taxes due. To avail of the
extraordinary period of assessment, the Commissioner of Internal Revenue (CIR) should show that the facts upon which the fraud is based is
communicated to the taxpayer. (Commissioner of Internal Revenue v. Fitness by Design, Inc., November 9, 2016)

An examination of taxpayer cannot be undertaken without a letter of authority (LOA) from the Commissioner of Internal Revenue
(CIR) or duly authorized representative. LOA is the authority given to the appropriate revenue officer assigned to perform assessment
functions. It empowers or enables said revenue officer to examine the books of account and other accounting records of a taxpayer for the
purpose of collecting the correct amount of tax. Without it, the taxpayer’s right to due process is violated. (Medicard Philippines, Inc. v.
Commissioner of Internal Revenue, April 5, 2017)

Preliminary Assessment Notice (PAN) vis-à-vis Final Assessment Notice (FAN). PAN merely informs the taxpayer of the initial findings
of BIR. It contains the proposed assessment, and the facts, law, rules, and regulations or jurisprudence on which the proposed assessment is
based. It does not contain a demand for payment but usually requires the taxpayer to reply within 15 days from receipt. Otherwise, the CIR
will finalize an assessment and issue FAN. FAN contains not only a computation of tax liabilities but also a demand for payment within a
 prescribed period. As soon as it is served, an obligation arises on the part of the taxpayer concerned to pay the amount assessed and demanded.
It also signals the time when penalties and interests begin to accrue against the taxpayer. The assessment that must be served to the taxpayer
within the prescriptive period is the FAN, not PAN. (Commissioner of Internal Revenue v. Transitions Optical Philippines, Inc., November
22, 2017) FAN is invalid if it does not contain a definite due date for payment by the taxpayer. Absence of definite due date negates demand
for payment. (Commissioner of Internal Revenue v. Fitness by Design, Inc., November 9, 2016)

Absence of PAN is fatal in the assessment of a taxpayer. It is a due process requirement in the issuance of a deficiency tax assessment and
cannot be dispense with. But PAN is not required in the following: (i) finding for deficiency tax is the result of mathematical error in the
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computation of the tax as appearing on the face of the return, (ii) discrepancy has been determined between the tax withheld and the amount 23
actually remitted by the withholding agent, (iii) taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a
taxable period was determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for
the taxable quarter/s of the succeeding taxable year, (iv) excise tax due on exciseable articles has not been paid, or (v) article locally purchased
or imported by an exempt person has been sold, traded or transferred to non-exempt persons. (Commissioner of Internal Revenue v. Metro
Star Superama, Inc., December 8, 2010)

Request for reconsideration vis-à-vis request for reinvestigation. A request for reconsideration refers to a plea for a re-evaluation of an
assessment based on existing records without need of additional evidence. A request for reinvestigation refers to a plea for re-evaluation of an
assessment on the basis of newly-discovered or additional evidence that a taxpayer intends to present in the reinvestigation. Both may involve
questions of fact or law or both. As reinvestigation will take more time than a reconsideration, this justifies why the former can suspend the
running of the statute of limitations on collection of the assessed tax, while the latter cannot. (Bank of the Philippine Islands v. Commissioner
of Internal Revenue, July 9, 2014)

Options of the protesting taxpayer to dispute an assessment. Options are (i) if the protest is wholly or partially denied by the CIR or his
authorized representative, then the taxpayer may appeal to the CTA within 30 days from receipt of the whole or partial denial of the protest,
(ii) if the protest is wholly or partially denied by the CIR’s authorized representative, then the taxpayer may appeal to the CIR within 30 days
from receipt of the whole or partial denial of the protest, and (iii) if the CIR or his authorized representative failed to act upon the protest
within 180 days from submission of the required supporting documents, then the taxpayer may appeal to the CTA within 30 days from the
lapse of the 180-day period. (Commissioner of Internal Revenue v. V.Y. Domingo Jewellers, Inc., March 25, 2019)

(41) Taxpayer does not need to wait the final resolution of its administrative claim for refund if the two-year prescriptive period is to
expire. Thus, a taxpayer who, after 13 days from filing an administrative refund, filed a judicial claim because the two-year prescriptive
period is about to lapse cannot be said to have deprived the Bureau of Internal Revenue (BIR) of opportunity to ascertain the validity of the
claim. (Commissioner of Internal Revenue v. Goodyear Philippines, Inc., August 3, 2016)

(42) CTA is not limited by the evidence presented in the administrative claim. Thus, claimant may present new and additional evidence to the
CTA to support its case for tax refund. As CTA is a court of record, parties are expected to litigate and prove every aspect of their case anew
and formally offer all their evidence. CTA review thus covers factual findings. (Philippine Airlines, Inc. v. Commissioner of Internal Revenue,
January 17, 2018)

Filing of a motion for reconsideration (MR) or motion for new trial (MNT) before the CTA Division is mandatory. CTA En Banc does
not acquire jurisdiction if the taxpayer immediately appealed the case to the CTA En Banc. (City of Manila v. Cosmos Bottling Corporation,
June 27, 2018). Same requirement is applicable when the CTA division issues an amended decision. An amended decision is a different
decision, and thus, is a· proper subject of a motion for reconsideration. (Asiatrust Development Bank, Inc. v. Commissioner of Internal
Revenue, April 19, 2017)

When the CTA division disposed of the case in its entirety and the aggrieved party’s MR is denied, the remedy is to file an appeal to
the CTA En Banc, and not a petition for certiorari with the Supreme Court. A party adversely affected by a resolution of a CTA division
on MR or MNT may file a petition for review with the CTA En Banc. (Bureau of Internal Revenue v. Acosta, April 23, 2018)

CTA has jurisdiction over questions of constitutionality or validity of tax law or regulation. R.A. No. 9282 expanding the jurisdiction of
CTA, a special and later law than B.P. 129, provides an exception to the original jurisdiction of regional trial court (RTC) over actions
questioning the constitutionality or validity of tax laws or regulations. Thus, except for local tax cases, actions directly challenging the
constitutionality or validity of a tax law or administrative issuance may be filed directly before the CTA. In the same manner, CTA may pass
upon the constitutionality or validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or contesting an
assessment or claiming a refund. (Banco de Oro v. Republic, August 16, 2016)

CTA has certiorari powers. Judicial power is vested in one Supreme Court and in such lower courts as may be established by law and that
judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
(GADALEJ) on the part of any branch or instrumentality of the government. CTA, being a lower court established by law, thus has the power
to determine whether there has been GADALEJ, which is the essence of certiorari. (City of Manila v. Cuerdo, February 4, 2014)

CTA may validly enjoin collection of taxes. As a rule, no court has the authority to issue an injunction to restrain the collection of taxes of
any national internal revenue tax. The CTA may, however, at any stage of the proceedings, suspend or restrain the collection of taxes when in
its opinion the collection of the tax may jeopardize the interest of the government and/or taxpayer. Taxpayer is required either to deposit the
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amount claimed or to file a surety bond for not more than double the amount. Said provision applies only to national internal revenue taxes,
and not to local taxes. The Local Government Code does not specifically prohibit an injunction enjoining the collection of taxes. (Angeles 24
City v. Angeles City Electric Corporation; June 29, 2010)

Where the CTA enjoins the collection of taxes, it may exempt the filing of the required bond whenever (i) Bureau of Internal
Revenue’s right to collect has prescribed and (ii) the method employed by the CIR in the collection of tax jeopardizes the interests of a
taxpayer for being patently in violation of the law. This is to prevent the absurd situation that collection by the summary methods of
distraint and levy was violative of law, and then, the same breath requires the taxpayer to deposit or file a bond as a prerequisite for the
issuance of a writ of injunction. (Pacquiao v. Court of Tax Appeals, April 6, 2016) But an agency of the government is not required to put up a
bond before the CTA enjoins the collection of taxes. Purpose of the surety bond is to ensure that the tax due will be paid if and when the case
is finally decided against the taxpayer. Indeed, the Republic is not required to give this security as it is presumed to be always solvent and able
to meet its obligations. Similarly, an agent of the national government is not required to put up a bond because to do so would be to indirectly
require the State to submit such bond. (Privatization and Management Office v. Court of Tax Appeals, March 18, 2019)

In cases within the jurisdiction of the CTA, the criminal action and the corresponding civil action for the recovery of civil liability for
taxes and penalties shall be deemed jointly instituted in the same proceeding. The filing of the criminal action shall necessarily carry with
it the filing of the civil action. No right to reserve the filing of such civil action separately from the criminal action shall be allowed or
recognized. But taxpayer’s obligation to pay the tax is an obligation that is created by law and does not arise from the offense of tax evasion,
and, as such, the same is not deemed instituted in the criminal case. Thus, what is deemed instituted with the criminal action is only the
government’s recovery of the taxes and penalties relative to the criminal case. The remedy of the taxpayer to appeal the disputed assessment is
not deemed instituted with the criminal case. (Gaw v. Commissioner of Internal Revenue, July 23, 2018)

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