Various - Agra 88-96 PDF

SECOND DIVISION
[G.R. No. 108926. July 12, 1996.]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT OF
APPEALS and HEIRS OF DEMOCRITO O. PLAZA, respondents.
The Solicitor General for petitioner.
Esmeraldo U. Guloy for private respondent.
SYLLABUS
1. CIVIL LAW; PROPERTY; OWNERSHIP; TAX DECLARATION AND
PAYMENT OF REALTY TAX CONSTITUTE AT LEAST PROOF THAT THE
HOLDER HAS A CLAIM OF TITLE OVER THE PROPERTY. Although tax
declarations or realty tax payments of property are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of owner
for no one in his right mind would be paying taxes for a property that is not in his
actual or at least constructive possession. They constitute at least proof that the holder
has a claim of title over the property. The voluntary declaration of a piece of property
for taxation purposes manifests not only one's sincere and honest desire to obtain title
to the property and announces his adverse claim against the State and all other
interested parties, but also the intention to contribute needed revenues to the
Government. Such an act strengthens one's bona fide claim of acquisition of
ownership.
2. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE
COURT OF APPEALS; FINAL AND CONCLUSIVE ON THE SUPREME COURT;
EXCEPTIONS. Well settled and oft-repeated is the rule that findings of facts of
the Court of Appeals are final and conclusive on the Supreme Court except: 1.) when
the conclusion is a finding grounded entirely on speculation, surmises and
conjectures; 2.) when the inference made is manifestly mistaken, absurd or
impossible; 3.) when there is a grave abuse of discretion; 4.) when the judgment is
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based on a misapprehension of facts; 5.) when the findings of facts are conflicting; 6.)
when the Court of Appeals, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both appellant and appellee; 7.) when
the findings of the Court of Appeals are contrary to those of the trial court; and 8.)
when the findings of fact are conclusions without citation of specific evidence on
which they are based.
3. CIVIL LAW; NATURE OF THE LAND REGISTRATION LAWS.
Registration does not vest title. It is merely evidence of such title. Our land
registration laws do not give the holder any better title than what he actually has.
When the conditions set by law are complied with, the possessor of the land, by
operation of law, acquires a right to a grant, a government grant, without the necessity
of a certificate of title being issued. The Torrens system was not established as a
means for the acquisition of title to private land, as it merely confirms, but does not
confer ownership.
DECISION
TORRES, JR., J .:
Petitioner implores this Court to review and set aside the decision 1(1) of
February 8, 1993 of the Court of Appeals in CA-G.R. CV No. 34950 which affirmed
the decision of June 14, 1991 of the Regional Trial Court of Makati in LRC Case No.
M-99 confirming respondent Democrito O. Plaza's title over Rel. Plan 1059, which is
the relocation plan of Psu-97886.
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After the filing of private respondent's Comment, this Court, in its resolution of
May 24, 1993, gave due course to the petition and required the parties to submit their
respective Memoranda. The petitioner filed its Memorandum on June 29, 1993 while
private respondent filed his Memorandum on July 6, 1993.
The factual background is summarized in the Decision
Appeals as follows:
2(2)
of the Court of
"According to petitioner-appellee, the subject property situated at

Liwanag, Talon (formerly Pamplona), Las Pias, Rizal, now Metro Manila,
having an area of 45,295 sq. m., was first owned by Santos de la Cruz who
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declared the same in his name under Tax Declaration Nos. 3932, for the year
1913; 3933 for 1917; and 6905, for 1921 (Exhs. 2-B, 2-C and 2-D, Exh. K for
petitioner-appellee, pp. 514-516, Record). Subsequently, the subject property
was successively bought or acquired by Pedro Cristobal, Regino Gervacio,
Diego Calugdan and Gil Alhambra. To evidence their respective acquisition of
the property in question, Tax Declaration Nos. 7937, for the year 1923; 8463,
for 1927, 9467, for 1934; and 2708 (year not available) were presented. 3(3)
After Gil Alhambra died, his heirs extrajudicially partitioned the subject
property and declared it in their names under Tax Declaration Nos. 5595 and
5596 for the year 1960. 4(4) On 5 July 1966, they executed a "Deed of Sale With
Mortgage" deeding the subject property to petitioner-appellee for P231,340.00
payable in three (3) installments, the payment of which was secured by a
mortgage on the property. Upon receipt of the full payment, they executed a
"Release of Mortgage" on 1 August 1968. 5(5) After the sale, petitioner-appellee
took possession of the subject property and paid the taxes due thereon for the
years 1966 up to 1986, and in 1985 declared it in his name under Tax
Declaration Nos. B-013-01392 and B-013-01391. 6(6) He appointed Mauricio
Plaza and Jesus Magcanlas as the administrator and caretaker thereof,
respectively. Due to losses, the property in question was cultivated only for a
while. Five (5) years according to Mauricio Plaza, and from 1966 up to 1978
according to Jesus Magcanlas. 7(7)
"On 14 November 1986, petitioner-appellee filed a petition, which was
amended on 17 July 1987, for the registration and confirmation of his title over
the subject property alleging, among others, that:
1.
by virtue of the deed of sale, he is the owner thereof:
2.
he and his predecessors-in-interest have been in open,

continuous, exclusive and notorious possession and occupation
of the property prior to, and since 12 June 1945;
3.
other than himself, there is no other person occupying, or having

any interest over the property; and,
4.
there are no tenants or agricultural lessees thereon. 8(8)
"On 24 February 1988, oppositor-appellant, the Republic of the

Philippines (Republic, for brevity), filed its opposition maintaining, among
others, that: (1) petitioner-appellee and his predecessors-in-interest have not
been in open, continuous, exclusive and notorious possession and occupation of
the land in question since 12 June 1945 or prior thereto; (2) the muniment of
title and tax declarations as well as tax payments relied upon do not constitute
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sufficient evidence of a bona fide acquisition of the land by petitioner-appellee

and of his open, continuous possession and occupation thereof in the concept of
owner since 12 June 1945, or prior thereto, and (3) the subject property pertains
to the public domain and is not subject to private appropriation. 9(9)
"On 9 March 1988, after the compliance of the jurisdiction requirements
was proved and, on motion, the lower court issued its order of general default.
10(10)
"Aside from the Republic, there were others who opposed the petition
and filed their opposition thereto prior to, or were allowed to submit their
opposition despite, and after, the issuance of the order of general default. They
are:
(a)
Arsenio Medina who withdrew his opposition on 29 May 1989;

11(11)
(b)
Emilio, Leopoldo and Abraham, all surnamed Borbon; Heirs of

Andres Reyes; Maximo Lopez; and, Marilou Castanares who
prayed that the lower court direct petitioner-appellee to see to it
that their respective property, which adjoins the land in question,
are not included in the petition; 12(12)
(c)
the Heirs of Santos de la Cruz and the Kadakilaan Estate. Upon

their respective motion, the order of default was set aside as to
them and they were allowed to file their opposition.
"The Heirs of Santos de la Cruz argue that: (1) their

predecessor-in-interest, Santos de la Cruz, is the 'primitive owner' of the subject
lot; and, (2) he, his heirs, and upon their tolerance, some other persons have
been in open, peaceful, notorious and continuous possession of the land in
question since time immemorial until the present.
"The Kadakilaan Estate contends that: (1) by reason of its Titulo de
Propiedad de Terrenos of 1891 Royal Decree 01-4, with approved plans
registered under the Torrens System in compliance with, and as a consequence
of, P.D. 872, it is the owner of the subject property; and, (2) petitioner-appellee
or his predecessors-in-interest have not been in open, continuous, exclusive and
notorious possession and occupation of the land in question since 12 June 1945
or earlier. 13(13)
(d)
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the Heirs of Hermogenes Rodriguez. They allege, among others,

that by reason of a Titulo de Propiedad de Terrenos of 1891;
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Royal Decree No. 01-4, Protocol No. 1891; Decree No. 659,
approved Plan of the Bureau of Lands No. 12298 dated 10
September 1963, their predecessor-in-interest is the owner of the
subject property. Despite (sic) that their motion to lift order of
default as to them and admit their opposition, which motion was
opposed by petitioner-appellee, does not appear to have been
acted upon by the lower court, they were able to present one (1)
witness; 14(14) and,
(e)
Phase II Laong Plaza Settlers Association, Inc. It filed a motion

to intervene in the case but the motion does not appear to have
been acted upon by the lower court. 15(15)
"On 13 March 1990, the Community Environment and Natural

Resources Office, West Sector (CENRO-WEST) of the Department of
Environment and Natural Resources requested the lower court to furnish it
photocopies of the records of the petition as the property in question was the
subject of a request for a Presidential Proclamation reserving the land in
question for Slum Improvement and Resettlement Site (SIR) of the National
Housing Authority. 16(16)
"On 22 June 1990, upon order of the lower court, an ocular inspection
was conducted on the subject property by the court-appointed commissioner
who submitted his report on 2 July 1990. 17(17)
"On 3 January 1991 Proclamation No. 679 was issued by the President
of the Republic of the Philippines withdrawing the subject property from sale or
settlement and reserve (the same) for slum improvement and sites and services
program under the administration and disposition of the National Housing
Authority in coordination with the National Capital Region, Department of
Environment and Natural Resources subject to actual survey and private rights if
any there be, . . .' The National Housing Authority was authorized to develop,
administer and dispose of the area in accordance with LOI 555, as amended (by
LOI Nos. 686 and 1283), and LOI 557. 18(18)
"On 31 May 1991 petitioner-appellee filed his memorandum. 19(19) The
oppositors did not. Nevertheless, among them, only the Republic and the Heirs
of Santos de la Cruz formally offered their evidence." 20(20)
On 14 June 1991 the lower court rendered the judgment referred to earlier.
On 8 July 1991, from among the oppositors, only the Republic filed a notice of
appeal which was approved on 10 July 1991. 21(21) By reason of the approval thereof,
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the motion filed on 23 July 1991 by the Heirs of Hermogenes Rodriguez for the
reconsideration of the judgment was denied on 1 August 1991.22(22)
On February 8, 1993, the Court of Appeals rendered a decision affirming the
trial court's judgment.
Hence, this petition filed by the Republic of the Philippines alleging that:
"THE DECISION OF THE COURT OF APPEALS AFFIRMING THE
DECISION OF THE REGIONAL TRIAL COURT GRANTING PRIVATE
RESPONDENT'S APPLICATION FOR REGISTRATION, IS NOT
SUPPORTED BY AND IS CONTRARY TO LAW, THE EVIDENCE AND
EXISTING JURISPRUDENCE."
Petitioner argues that the burden rests on the applicant to show by convincing
evidence that he has a registrable title over the property sought to be titled, which the
latter failed to do.
According to petitioner, aside from mere tax declarations all of which are of
recent vintage, private respondent has not established actual possession of the
property in question in the manner required by law (Section 14, P.D. 1529) and settled
jurisprudence on the matter. Thus, no evidence was adduced that private respondent
cultivated much less, fenced the subject property if only to prove actual possession.
The actual fencing of the property was done only starting 1988 when the actual
occupants were forcibly ejected and driven out from their respective abodes and that
its witnesses namely: Elascio Domitita, Manuel Dolom, Bernadette Aguinaldo and
Virginia Franco, who were all actual residents of the questioned area, categorically
testified on this score, summarized as follows:
1.
In their long stay in the area, the longest staying occupant being
Domitita who had been in the premises for more than thirty (30) years nobody
ever claimed ownership over the subject property;
2.
It was only in 1988 that they learned that private respondent had
filed a petition to have the property titled in his name;
3.
Private respondent had not introduced any improvement nor was
there a caretaker assigned by him to look after the property; and,
4.
Aside from them, there were about 200 more families residing in
the area but through force, intimidation and illegal demolitions, were driven out
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by private respondent from the premises.
We are not persuaded. On this point, the respondent Court correctly found that:
"Proof that petitioner-appellee and his predecessors-in-interest have
acquired and have been in open, continuous, exclusive and notorious possession
of the subject property for a period of 30 years under a bona fide claim of
ownership
are
the
tax
declarations
of
petitioner-appellee's
predecessors-in-interest, the deed of sale, tax payment receipts and
petitioner-appellee's tax declarations. The evidence on record reveals that: (1)
the predecessors-in-interest of petitioner-appellee have been declaring the
property in question in their names in the years 1923, 1927, 1934 and 1960; and,
(2) in 1966, petitioner-appellee purchased the same from the Heirs of Gil
Alhambra and since then paid the taxes due thereon and declared the property in
his name in 1985.
xxx
xxx
xxx
. . . Considering the dates of the tax declarations and the realty tax
payments, they can hardly be said to be of recent vintage indicating
petitioner-appellee's pretended possession of the property. On the contrary, they
are strong evidence of possession in the concept of owner by petitioner-appellee
and his predecessors-in-interest. Moreover, the realty tax payment receipts show
that petitioner-appellee has been very religious in paying the taxes due on the
property. This is indicative of his honest belief that he is the owner of the
subject property. We are, therefore, of the opinion that petitioner-appellee has
proved that he and his predecessors-in-interest have been in open, continuous,
exclusive and notorious possession of the subject property in the concept of
owner for a period of 30 years since 12 June 1945 and earlier. By operation of
law, the property in question has become private property. 23(23)
"Contrary to the representations of the Republic, petitioner-appellee had
introduced some improvements on the subject property from the time he
purchased it. His witnesses testified that petitioner-appellee developed the
subject property into a ricefield and planted it with rice, but only for about five
years because the return on investment was not enough to sustain the continued
operation of the riceland. Though not in the category of permanent structures,
the preparation of the land into a ricefield and planting it with rice are
considered 'improvements' thereon." 24(24)
Although tax declarations or realty tax payments of property are not conclusive
evidence of ownership, nevertheless, they are good indicia of possession in the
concept of owner for no one in his right mind would be paying taxes for a property
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that is not in his actual or at least constructive possession. 25(25) They constitute at least
proof that the holder has a claim of title over the property. The voluntary declaration
of a piece of property for taxation purposes manifests not only one's sincere and
honest desire to obtain title to the property and announces his adverse claim against
the State and all other interested parties, but also the intention to contribute needed
revenues to the Government. Such an act strengthens one's bona fide claim of
acquisition of ownership. 26(26)
Neither do we find merit in the assertions of petitioner's witnesses Elascio
Domitita, Manuel Dolom, Bernadette Aguinaldo and Virginia Franco. As properly
stated by the public respondent,
". . . Their alleged possession is not based on any right. Neither do they
claim to have any title or interest over the subject property. As a matter of fact,
they did not bother to oppose the petition. The most that can be said of their
alleged possession is that it was only with the tolerance of rightful owners of the
property plaintiff-appellee and his predecessors-in-interest, hence, is no bar
to the granting of the petition. We do not see why we should accept the bare
assertions of the alleged occupants at their face value as against the claim of
ownership of plaintiff-appellee backed up by legal documents, tax declarations,
and tax receipts." 27(27)
Well-settled and oft-repeated is the rule that findings of facts of the Court of
Appeals are final and conclusive on the Supreme Court except: 1.) when the
conclusion is a finding grounded entirely on speculation, surmises and conjectures; 2.)
when the inference made is manifestly mistaken, absurd or impossible; 3.) when there
is a grave abuse of discretion; 4.) when the judgment is based on a misapprehension of
facts; 5.) when the findings of facts are conflicting; 6.) when the Court of Appeals, in
making its findings, went beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee; 7.) when the findings of the Court of
Appeals are contrary to those of the trial court; and 8.) when the findings of fact are
conclusions without citation of specific evidence on which they are based. 28(28)
Concededly, none of the above exceptions obtains in the case at bar.
Petitioner also alleges that the land in question had been withdrawn from the
alienable portion of the public domain pursuant to Presidential Proclamation No. 679
entitled "Reserving for Slum Improvement and Resettlement (SIR) Sites and Services
of the National Housing Authority, A Certain Parcel of Land of the Public Domain
Situated in the Municipality of Las Pias, Metro Manila," which was issued on
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January 7, 1991 or almost 6 months prior to the issuance of the trial court's decision.
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The Court of Appeals opined that "the issuance of the proclamation did not
have any effect on the subject property as the proclamation only withdrew it from sale
or settlement and reserved the same for slum improvement and sites and services
program, but subject to actual survey and existing private rights. The proclamation did
not prohibit the registration of title of one who claims, and proves, to be the owner
thereof." We agree. At any rate, registration does not vest title. It is merely evidence
of such title. 29(29) Our land registration laws do not give the holder any better title
than what he actually has. When the conditions set by law are complied with, the
possessor of the land, by operation of law, acquires a right to a grant, a government
grant, without the necessity of a certificate of title being issued. The Torrens system
was not established as a means for the acquisition of title to private land, as it merely
confirms, but does not confer ownership. 30(30)
Of particular relevance is the finding of the respondent Court of Appeals to the
effect that
"We have found that petitioner-appellee has proven his claim of
ownership over the subject property. As provided in the proclamation itself, his
ownership of the subject property must be respected and he cannot be barred
from having the land titled in his name. This does not contravene or negate the
intention of the proclamation. Besides, its implementing Letters of Instruction
recognize that there may be lands declared included in the Slum Improvement
Resettlement (SIR) program that are privately owned. Paragraph 10 of LOI No.
555 provides that if the land declared to be included in the SIR program is
privately owned, the concerned local government, upon the approval by the
National Housing Authority of its project plan, shall acquire the property
through expropriation. In LOI No. 686 paragraph 3, it is mandated that the
NHA, upon request of the local government, expropriate or otherwise acquire
land for the SIR program. Proclamation No. 679 is, therefore, not a valid
justification to deny the petition.
. . . At the time the Proclamation was issued, the controversy over the
subject property was sub-judice. The conflicting rights over it had been
presented to the court for resolution. That jurisdiction could not be removed
from it by subsequent legislation. The President must have been aware of this.
Hence, the inclusion of the cautionary clause 'subject to existing private rights.' "
31(31)
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Over time, Courts have recognized with almost pedantic adherence that what is
inconvenient or contrary to reason is not allowed in law Quod est inconveniens, aut
contra rationem non permissum est in lege. Undoubtedly, reason and law find
respondent entitled to rights of ownership over the disputed property.
ACCORDINGLY, the assailed decision dated February 8, 1993 is hereby
AFFIRMED and the instant petition is hereby DISMISSED.
SO ORDERED.
Regalado, Romero, Puno and Mendoza, JJ., concur.
Footnotes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
Penned by Associate Justice Luis A. Javellana, ponente; Minerva P. Gonzaga Reyes

and Consuelo Ynares Santiago, concurring.
Rollo, pp. 18-27; Decision, pp. 1-6.
Record, pp. 564-577. Penned by the Honorable Julio R. Logarta, Presiding Judge of
the Regional Trial Court of the National Capital Region, Branch LXIII, Makati, Metro
Manila.
Exhs. "M", "K" and "L", pp. 1-3 and 7-8, Folder of Exhibits.
Exh. "H" and Annex "1", pp. 21-25, Record.
Exhs. "P" up to "P-180", pp. 9-89, Folder of Exhibits and Exhs. "I" and "J", pp. 13
and 17, Record.
TSN, 23 June 1988, pp. 5-9, and TSN, 20 April 1989, pp. 7-8.
Record, pp. 1-4 and 55-60.
Ibid., pp. 81-83.
Ibid., p. 99.
Ibid., pp. 88-89 and 218-219.
Ibid., pp. 113-116 and 125-128.
Ibid., pp. 202, 162-165 and 149-150.
Ibid., pp. 272-273 and 318-320; and TSN, 14 May 1990.
Ibid., pp. 301-302.
Ibid., p. 219.
Ibid., pp. 360 and 578-579.
Ibid., pp. 507-509 (87 O.G. No. 5, 4 February 1991, pp. 733-734).
Ibid., pp. 536-561.
Ibid., p. 570.
Ibid., pp. 580-584.
Ibid., pp. 581-583 and 585.
Director of Lands vs. Iglesia ni Kristo, 200 SCRA 606, 609.
Court of Appeals Decision, p. 7.
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10
25.
26.
27.
28.
29.
30.
31.
Heirs of Severino Legaspi, Sr. vs. Vda. de Dayot, 188 SCRA 508, 517; G.R. No.
83904, August 13, 1990.
Director of Lands vs. IAC, 209 SCRA 214; G.R. No. 68948, May 22, 1992.
Court of Appeals Decision, p. 9; Rollo, p. 26.
Geronimo vs. Court of Appeals, 224 SCRA 494; G.R. No. 105540, July 5, 1993.
Embrado vs. Court of Appeals, 233 SCRA 335; G.R. No. 51457, June 27, 1994.
Republic vs. Court of Appeals, 235 SCRA 567; 108998, August 24, 1994.
Court of Appeals Decision, pp. 9 & 10; Rollo, pp. 26-27.
EN BANC
[G.R. No. 115455. October 30, 1995.]
ARTURO M. TOLENTINO, petitioner, vs. THE SECRETARY OF
FINANCE and THE COMMISSIONER OF INTERNAL REVENUE,
respondents.
cdll
[G.R. No. 115525. October 30, 1995.]

JUAN T. DAVID, petitioner, vs. TEOFISTO T. GUINGONA, JR., as
Executive Secretary; ROBERTO DE OCAMPO, as Secretary of
Finance; LIWAYWAY VINZONS-CHATO, as Commissioner of
Internal Revenue; and their AUTHORIZED AGENTS OR
REPRESENTATIVES, respondents.
[G.R. No. 115543. October 30, 1995.]

RAUL S. ROCO and the INTEGRATED BAR OF THE
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11
PHILIPPINES, petitioners, vs. THE SECRETARY OF THE

DEPARTMENT OF FINANCE; THE COMMISSIONERS OF THE
BUREAU OF INTERNAL REVENUE AND BUREAU OF
CUSTOMS, respondents.
[G.R. No. 115544. October 30, 1995.]

PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO.,
INC.;
KAMAHALAN
PUBLISHING
CORPORATION;
PHILIPPINE JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA
L. DIMALANTA, petitioners, vs. HON. LIWAYWAY V. CHATO, in
her capacity as Commissioner of Internal Revenue; HON.
TEOFISTO T. GUINGONA, JR., in his capacity as Executive
Secretary; and HON. ROBERTO B. DE OCAMPO, in his capacity as
Secretary of Finance, respondents.
[G.R. No. 115754. October 30, 1995.]

CHAMBER
OF
REAL
ESTATE
AND
BUILDERS
ASSOCIATIONS,
INC.,
(CREBA),
petitioner,
vs.
THE
COMMISSIONER OF INTERNAL REVENUE, respondent.
[G.R. No. 115781. October 30, 1995.]

KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS,
ERME CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO,
EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE,
CHRISTINE TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO,
RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S.
DOROMAL,
MOVEMENT
OF
ATTORNEYS
FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
("MABINI"), FREEDOM FROM DEBT COALITION, INC., and
PHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO TAADA,
petitioners,
vs.
THE
EXECUTIVE
SECRETARY,
THE
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12
SECRETARY OF FINANCE, THE

INTERNAL REVENUE and THE
CUSTOMS, respondents.
COMMISSIONER
COMMISSIONER
OF
OF
CDta
[G.R. No. 115852. October 30, 1995.]

PHILIPPINE AIRLINES, INC., petitioner, vs. THE SECRETARY
OF FINANCE and COMMISSIONER OF INTERNAL REVENUE,
respondents.
[G.R. No. 115873. October 30, 1995.]

COOPERATIVE UNION OF THE PHILIPPINES, petitioner, vs.
HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner
of Internal Revenue, HON. TEOFISTO T. GUINGONA, JR., in his
capacity as Executive Secretary, and HON. ROBERTO B. DE
OCAMPO, in his capacity as Secretary of Finance, respondents.
cdlex
[G.R. No. 115931. October 30, 1995.]

PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION,
INC. and ASSOCIATION OF PHILIPPINE BOOK SELLERS,
petitioners, vs. HON. ROBERTO B. DE OCAMPO, as the Secretary
of Finance; HON. LIWAYWAY V. CHATO, as the Commissioner of
Internal Revenue; and HON. GUILLERMO PARAYNO, JR., in his
capacity as the Commissioner of Customs, respondents.
Arturo M. Tolentino for and in his own behalf.
Donna Celeste D. Feliciano and Juan T . David for petitioner in G.R. No.
115525.
Lorna Kapunan-Patajo and Roco, Bunag, Kapunan, Migallos and Jardeleza
for petitioner R.S. Roco.
Mervyn Encanto and Jose Aguila-Grapilon for petitioner Integrated Bar of the
Philippines.
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Villaraza & Cruz and Simeon V . Marcelo for petitioners in G.R. No. 115544.
Carlos A. Raneses and Manuel M. Serrano for petitioner in G.R. No. 115754.
Jovito R. Salonga and Wigberto Taada for petitioners in G.R. No. 115781.
Salonga, Hernandez & Allado for petitioners Freedom From Debt Coalition,
Inc. and Phil. Bible Society.
Estelito P. Mendoza for petitioner in G.R. No. 115852.
Rene A.V . Saguisag for petitioner MABINI.
Panganiban, Benitez, Parlade, Africa & Barinaga Law Offices for petitioners
in G.R. No. 115873.
R.B. Rodriguez & Associates for petitioners in G.R. No. 115931.
Solicitor General for respondents.
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SYLLABUS
1. CONSTITUTIONAL LAW; LEGISLATURE; POWER OF THE
SENATE TO PROPOSE AMENDMENTS TO REVENUE BILLS; S. NO. 1630 AS
A SUBSTITUTE MEASURE TO H. NO. 11197. The enactment of S. No. 1630 is
not the only instance in which the Senate, in the exercise of its power to propose
amendments to bills required to originate in the House, passed its own version of a
House revenue measure. Art. VI, 24 of our Constitution reads: All appropriation,
revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with amendments. The power
of the Senate to propose amendments must be understood to be full, plenary and
complete "as on other Bills." Because revenue bills are required to originate
exclusively in the House of Representatives, the Senate cannot enact revenue
measures of its own without such bills. After a revenue bill is passed and sent over to
it by the House, however, the Senate certainly can pass its own version on the same
subject matter. This follows from the coequality of the two chambers of Congress.
The provision "but the Senate may propose or concur with amendments" means the
Senate may propose an entirely new bill as a substitute measure. To except from the
procedure (Re: bill referred to a committee) the amendment of bills which are
required to originate in the House by prescribing that the number of the House bill and
its other parts up to the enacting clause must be preserved although the text of the
Senate amendment may be incorporated in place of the original body of the bill is to
insist on a mere technicality. At any rate there is no rule prescribing this form. S. No.
1630, as a substitute measure, is therefore as much an amendment of H. No. 11197 as
Copyright 1994-2016
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any which the Senate could have made. In point of fact, in several instances the
provisions of S. No. 1630, clearly appear to be mere amendments of the
corresponding provisions of H. No. 11197. The very tabular comparison of the
provisions thereof, while showing differences between the two bills, at the same time
indicates that the provisions of the Senate bill were precisely intended to be
amendments to the House bill. Without H. No. 11197, the Senate could not have
enacted S. No. 1630. Because the Senate bill was a mere amendment of the House
bill, H. No. 11197 in its original form did not have to pass the Senate on second and
third readings. It was enough that after it was passed on first reading it was referred to
the Senate Committee on Ways and Means. Neither was it required that S. No. 1630
be passed by the House of Representatives before the two bills could be referred to the
Conference Committee.
2. ID.; ID.; PRESIDENT'S CERTIFICATION IN RELATION TO THE
REQUIREMENT OF THREE READINGS ON SEPARATE DAYS BEFORE A
BILL BECOMES A LAW; CASE AT BAR. The President's certification had to be
made of the version of the same revenue bill which at the moment was being
considered. It is enough that he certifies the bill which, at the time he makes the
certification, is under consideration. Since on March 22, 1994 the Senate was
considering S. No. 1630, it was that bill which had to be certified. For that matter on
June 1, 1993 the President had earlier certified H. No. 9210 for immediate enactment
because it was the one which at that time was being considered by the House. This bill
was later substituted, together with other bills, by H. No. 11197. As to what
Presidential certification can accomplish, we have already explained in the main
decision that the phrase "except when the President certifies to the necessity of its
immediate enactment, etc." in Art. VI, 26 (2) qualifies not only the requirement that
"printed copies [of a bill] in its final form [must be] distributed to the members three
days before its passage" but also the requirement that before a bill can become a law it
must have passed "three readings on separate days." There is not only textual support
for such construction but historical basis as well. This exception is based on the
prudential consideration that if in all cases three readings on separate days are
required and a bill has to be printed in final form before it can be passed, the need for
a law may be rendered academic by the occurrence of the very emergency or public
calamity which it is meant to address. The members of the Senate (including some of
the petitioners in these cases) believed that there was an urgent need for consideration
of S. No. 1630, because they responded to the call of the President by voting on the
bill on second and third readings on the same day. While the judicial department is not
bound by the Senate's acceptance of the President's certification, the respect due
coequal departments of the government in matters committed to them by the
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Constitution and the absence of a clear showing of grave abuse of discretion caution a
stay of the judicial hand. At any rate, we are satisfied that S. No. 1630 received
thorough consideration in the Senate where it was discussed for six days. Only its
distribution in advance in its final printed form was actually dispensed with by
holding the voting on second and third readings on the same day (March 24, 1994).
Otherwise, sufficient time between the submission of the bill on February 8, 1994 on
second reading and its approval on March 24, 1994 elapsed before it was finally voted
on by the Senate on third reading. The purpose for which three readings on separate
days is required is said to be two-fold: (1) to inform the members of Congress of what
they must vote on and (2) to give them notice that a measure is progressing through
the enacting process, thus enabling them and others interested in the measure to
prepare their positions with reference to it. These purposes were substantially
achieved in the case of R.A. No. 7716.
3. ID.; ID.; CONFERENCE COMMITTEE; CLOSE-DOOR MEETING;
CONSTITUTIONAL RIGHT TO KNOW, NOT VIOLATED THEREOF IN LIEU
OF REPORT SUBMITTED BY THE COMMITTEE. The public's right to know
was fully served because the Conference Committee in this case submitted a report
showing the changes made on the differing versions of the House and the Senate.
These changes are shown in the bill attached to the Conference Committee Report.
The members of both houses could thus ascertain what changes had been made in the
original bills without the need of a statement detailing the changes. Nor is there any
doubt about the power of a conference committee to insert new provisions as long as
these are germane to the subject of the conference. As this Court held in Philippine
Judges Association v. Prado, 227 SCRA 703 (1993), in an opinion written by then
Justice Cruz, the jurisdiction of the conference committee is not limited to resolving
differences between the Senate and the House. It may propose an entirely new
provision. What is important is that its report is subsequently approved by the
respective houses of Congress. This Court ruled that it would not entertain allegations
that, because new provisions had been added by the conference committee, there was
thereby a violation of the constitutional injunction that "upon the last reading of a bill,
no amendment thereto shall be allowed." At all events, under Art. VI, 16(3) each
house has the power "to determine the rules of its proceedings," including those of its
committees. Any meaningful change in the method and procedures of Congress or its
committees must therefore be sought in that body itself.
4. ID.; ID.; RA 7716 (EXPANDED VALUE-ADDED-TAX [VAT] LAW);
REQUIREMENT THAT BILL SHALL EMBRACE ONLY ONE (1) SUBJECT
EXPRESSED IN THE TITLE THEREOF, NOT VIOLATED IN CASE AT BAR;
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AMENDMENT OF SEC. 103 OF THE NATIONAL INTERNAL REVENUE CODE

EXEMPTING THE PHILIPPINE AIRLINES (PAL) AND OTHERS FROM
PAYING VAT EXPRESSED IN RA 7716, SUFFICIENT; SEPARATE
STATEMENT AMENDING FRANCHISE, NOT NECESSARY. Art. VI, 26 (1)
of the Constitution provides that "Every bill passed by Congress shall embrace only
one subject which shall be expressed in the title thereof." PAL contends that the
amendment of its franchise by the withdrawal of its exemption from the VAT is not
expressed in the title of R.A. No. 7716. PAL was exempted from the payment of the
VAT along with other entities by 103 of the National Internal Revenue Code. Now,
R.A. No. 7716 seeks to withdraw certain exemptions, including that granted to PAL,
by amending 103. Such amendment of 103 is expressed in the title of R.A. No.
7716. Congress thereby clearly expresses its intention to amend any provision of the
NIRC which stands in the way of accomplishing the purpose of the law. PAL asserts
that the amendment of its franchise must be reflected in the title of the law by specific
reference to P.D. No. 1590. It is unneccesary to do this in order to comply with the
constitutional requirement, since it is already stated in the title that the law seeks to
amend the pertinent provisions of the NIRC, among which is 103(q), in order to
widen the base of the VAT. Actually, it is the bill which becomes a law that is
required to express in its title the subject of legislation. The titles of H. No. 11197 and
S. No. 1630 in fact specifically referred to 103 of the NIRC as among the provisions
sought to be amended. We are satisfied that sufficient notice had been given of the
pendency of these bills in Congress before they were enacted into what is now R.A.
No. 7716.
CDta
5. ID.; ID.; ID.; TAXATION AND FREEDOM OF THE PRESS,

ELABORATED. As a general proposition, the press is not exempt from the taxing
power of the State and that what the constitutional guarantee of free press prohibits
are laws which single out the press or target a group belonging to the press for special
treatment or which in any way discriminate against the press on the basis of the
content of the publication, and R.A. No. 7716 is none of these. Since the law granted
the press a privilege, the law could take back the privilege anytime without offense to
the Constitution. The reason is simple: by granting exemptions, the State does not
forever waive the exercise of its sovereign prerogative. Indeed, in withdrawing the
exemption, the law merely subjects the press to the same tax burden to which other
businesses have long ago been subject. And VAT is not a license tax. It is not a tax on
the exercise of a privilege, much less a constitutional right. It is imposed on the sale,
barter, lease or exchange of goods or properties or the sale or exchange of services
and the lease of properties purely for revenue purposes. To subject the press to its
payment is not to burden the exercise of its right any more than to make the press pay
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income tax or subject it to general regulation is not to violate its freedom under the
Constitution.
6. ID.; ID.; ID.; TAXATION AND FREEDOM OF RELIGION IN CASE
AT BAR. The Philippine Bible Society, Inc. claims that although it sells bibles, the
proceeds derived from the sales are used to subsidize the cost of printing copies which
are given free to those who cannot afford to pay so that to tax the sales would be to
increase the price, while reducing the volume of sale. Granting that to be the case, the
resulting burden on the exercise of religious freedom is so incidental as to make it
difficult to differentiate it from any other economic imposition that might make the
right to disseminate religious doctrines costly. The registration fee imposed by 107
of the NIRC, as amended by 7 of R.A. No. 7716, although fixed in amount, is really
just to pay for the expenses of registration and enforcement of provisions such as
those relating to accounting in 108 of the NIRC. That the PBS distributes free bibles
and therefore is not liable to pay the VAT does not excuse it from the payment of this
fee because it also sells some copies. At any rate whether the PBS is liable for the
VAT must be decided in concrete cases, in the event it is assessed this tax by the
Commissioner of Internal Revenue.
7. ID.; ID.; ID.; TAXATION AND NON-IMPAIRMENT OF
CONTRACTS. "Authorities from numerous sources are cited by the plaintiffs, but
none of them show that a lawful tax on a new subject, or an increased tax on an old
one, interferes with a contract or impairs its obligation, within the meaning of the
Constitution. Even though such taxation may affect particular contracts, as it may
increase the debt of one person and lessen the security of another, or may impose
additional burdens upon one class and release the burdens of another, still the tax must
be paid unless prohibited by the Constitution, nor can it be said that it impairs the
obligation of any existing contract in its true legal sense." Indeed not only existing
laws but also "the reservation of the essential attributes of sovereignty, is . . . read into
contracts as a postulate of the legal order." Contracts must be understood as having
been made in reference to the possible exercise of the rightful authority of the
government and no obligation of contract can extend to the defeat of that authority.
8. ID.; ID.; ID.; ON REAL ESTATE TRANSACTIONS; EQUALITY AND
UNIFORMITY OF TAXATION; VALIDITY OF VAT. CREBA claims that real
estate transactions of "the less poor," i.e., the middle class, who are equally homeless,
should be exempted. There is a difference between the "homeless poor" and the
"homeless less poor" in the example given by petitioner, because the second group or
middle class can afford to rent houses in the meantime that they cannot yet buy their
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own homes. The two social classes are thus differently situated in life. "It is inherent
in the power to tax that the State be free to select the subjects of taxation, and it has
been repeatedly held that 'inequalities which result from a singling out of one
particular class for taxation, or exemption infringe no constitutional limitation.'"
Equality and uniformity of taxation means that all taxable articles or kinds of property
of the same class be taxed at the same rate. The taxing power has the authority to
make reasonable and natural classifications for purposes of taxation. To satisfy this
requirement it is enough that the statute or ordinance applies equally to all persons,
forms and corporations placed in similar situation. Indeed, the VAT was already
provided in E.O. No. 273 long before R.A. No. 7716 was enacted. R.A. No. 7716
merely expands the base of the tax. The validity of the original VAT Law was
questioned on grounds similar to those made in these cases, namely, that the law was
"oppressive, discriminatory, unjust and regressive in violation of Art. VI, 28(1) of
the Constitution." This Court held: EO 273 satisfies all the requirements of a valid tax.
It is uniform. . . . The sales tax adopted in EO 273 is applied similarly on all goods
and services sold to the public, which are not exempt, at the constant rate of 0% or
10%. The disputed sales tax is also equitable. It is imposed only on sales of goods or
services by persons engaged in business with an aggregate gross annual sales
exceeding P200,000.00. Small corner sari-sari stores are consequently exempt from its
application. Likewise exempt from the tax are sales of farm and marine products, so
that the costs of basic food and other necessities, spared as they are from the incidence
of the VAT, are expected to be relatively lower and within the reach of the general
public.
9. ID.; ID.; ID.; VAT IS AN INDIRECT AND REGRESSIVE TAX
WHICH IS NOT ACTUALLY PROHIBITED BY THE CONSTITUTION. The
Constitution does not really prohibit the imposition of indirect taxes which, like the
VAT, are regressive. What it simply provides is that Congress shall "evolve a
progressive system of taxation." The constitutional provision has been interpreted to
mean simply that "direct taxes are . . . to be preferred [and] as much as possible,
indirect taxes should be minimized." Indeed, the mandate to Congress is not to
prescribe, but to evolve, a progressive tax system. Sales taxes, are form of indirect
taxes, and they are also regressive. Resort to indirect taxes should be minimized but
not avoided entirely because it is difficult, if not impossible, to avoid them by
imposing such taxes according to the taxpayers' ability to pay. In the case of the VAT,
the law minimizes the regressive effects of this imposition by providing for zero
rating of certain transactions (R.A. No. 7716, 3, amending 102 (b) of the NIRC),
while granting exemptions to other transactions. (R.A. No. 7716, 4, amending 103
of the NIRC) Transactions involving basic and essential goods and services are
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exempted from the VAT. On the other hand, the transactions which are subject to the
VAT are those which involve goods and services which are used or availed of mainly
by higher income groups.
10. ID.; JUDICIARY; JUDICIAL POWER; CASE MUST BE ACTUAL
FOR ADJUDICATION. CREBA's petition claims constitutional violations at
wholesale and in the abstract. There is no fully developed record which can impart to
adjudication the impact of actuality. There is no factual foundation to show in the
concrete the application of the law to actual contracts and exemplify its effect on
property rights. A test case may be presented provided, it is an actual case and not an
abstract or hypothetical one. Our duty under Art. VIII, 1 (2) to decide whenever a
claim is made that "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"
can only arise if an actual case or controversy is before us.
11. ID.; LEGISLATION; RA NO. 7716; ON COOPERATIVES; NO
VIOLATION OF CONSTITUTIONAL POLICY TOWARDS THE SAME SIMPLY
BECAUSE TAX EXEMPTION WAS NOT GRANTED. The Constitution does
not require that cooperatives be granted tax exemptions in order to promote their
growth and viability. There is no basis for petitioner's assertion that the government's
policy toward cooperatives had been one of vacillation, as far as the grant of tax
privileges was concerned, and that it was to put an end to this indecision that the
constitutional provisions under Art. XII, 1 and 15 were adopted. Perhaps as a
matter of policy cooperatives should be granted tax exemptions, but that is left to the
discretion of Congress. If Congress does not grant exemption and there is no
discrimination to cooperatives, no violation of any constitutional policy can be
charged. That electric cooperatives are exempted from the VAT, We say: The
classification between electric and other cooperatives apparently rests on a
congressional determination that there is greater need to provide cheaper electric
power to as many people as possible, especially those living in the rural areas, than
there is to provide them with other necessities in life. We cannot say that such
classification is unreasonable.
12. ID.; JUDICIARY; RULING ON THE ACTION OF CONSTITUTIONAL
VALIDITY OF RA NO. 7716. We have carefully read the various arguments
raised against the constitutional validity of R.A. No. 7716. We have in fact taken the
extraordinary step of enjoining its enforcement pending resolution of these cases. We
have now come to the conclusion that the law suffers from none of the infirmities
attributed to it by petitioners and that its enactment by the other branches of the
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government does not constitute a grave abuse of discretion. Any question as to its
necessity, desirability or expediency must be addressed to Congress as the body which
is electorally responsible, remembering that, as Justice Holmes has said, "legislators
are the ultimate guardians of the liberties and welfare of the people in quite as great a
degree as are the courts." It is not right that we should enforce the public
accountability of legislators, that those who took part in passing the law in question by
voting for it in Congress should later thrust to the courts the burden of reviewing
measures in the flush of enactment. This Court does not sit as a third branch of the
legislature, much less exercise a veto power over legislation.
RESOLUTION
MENDOZA, J :
p
These are motions seeking reconsideration of our decision dismissing the

petitions filed in these cases for the declaration of unconstitutionality of R.A. No.
7716, otherwise known as the Expanded Value-Added Tax Law. The motions, of
which there are 10 in all, have been filed by the several petitioners in these cases, with
the exception of the Philippines Educational Publishers Association, Inc. and the
Association of Philippine Booksellers, petitioners in G.R. No. 115931.
aisadc
The Solicitor General, representing the respondents, filed a consolidated

comment, to which the Philippine Airlines, Inc., petitioner in G.R. No. 115852, and
the Philippine Press Institute, Inc., petitioner in G.R. No. 115544, Juan T. David,
petitioner in G.R. No. 115525, each filed a reply. In turn the Solicitor General filed on
June 1, 1995 a rejoinder to the PPI's reply.
On June 27, 1995 the matter was submitted for resolution.
I. Power of the Senate to propose amendments to revenue bills. Some of the
petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines (PAL), Roco, and
Chamber of Real Estate and Builders Association [CREBA]) reiterate previous claims
made by them that R.A. No. 7716 did not "originate exclusively" in the House of
Representatives as required by Art. VI, 24 of the Constitution. Although they admit
that H. No. 11197 was filed in the House of Representatives where it passed three
readings and that afterward it was sent to the Senate where after first reading it was
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referred to the Senate Ways and Means Committee, they complain that the Senate did
not pass it on second and third readings. Instead what the Senate did was to pass its
own version (S. No. 1630) which it approved on May 24, 1994. Petitioner Tolentino
adds that what the Senate committee should have done was to amend H. No. 11197 by
striking out the text of the bill and substituting it with the text of S. No. 1630. That
way, it is said, "the bill remains a House bill and the Senate version just becomes the
text (only the text) of the House bill."
cdta
The contention has no merit.

The enactment of S. No. 1630 is not the only instance in which the Senate
proposed an amendment to a House revenue bill by enacting its own version of a
revenue bill. On at least two occasions during the Eighth Congress, the Senate passed
its own version of revenue bills, which, in consolidation with House bills earlier
passed, became the enrolled bills. These were:
R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS
CODE OF 1987 BY EXTENDING FROM FIVE (5) YEARS TO TEN YEARS THE
PERIOD FOR TAX AND DUTY EXEMPTION AND TAX CREDIT ON CAPITAL
EQUIPMENT) which was approved by the President on April 10, 1992. This Act is
actually a consolidation of H. No. 34254, which was approved by the House on
January 29, 1992, and S. No. 1920, which was approved by the Senate on February 3,
1992.
cdasia
R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER

SHALL GIVE REWARD TO ANY FILIPINO ATHLETE WINNING A MEDAL IN
OLYMPIC GAMES) which was approved by the President on May 22, 1992. This
Act is a consolidation of H. No. 22232, which was approved by the House of
Representatives on August 2, 1989, and S. No. 807, which was approved by the
Senate on October 21, 1991.
On the other hand, the Ninth Congress passed revenue laws which were also
the result of the consolidation of House and Senate bills. These are the following, with
indications of the dates on which the laws were approved by the President and dates
the separate bills of the two chambers of Congress were respectively passed:
1.
R.A. No. 7642

AN ACT INCREASING THE PENALTIES FOR TAX EVASION,
AMENDING FOR THIS PURPOSE THE PERTINENT SECTIONS OF THE
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NATIONAL INTERNAL REVENUE CODE (December 28, 1992)
cdta
House Bill No. 2165, October 5, 1992

Senate Bill No. 32, December 7, 1992
2.
R.A. No. 7643

AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE
TO REQUIRE THE PAYMENT OF THE VALUE-ADDED TAX EVERY
MONTH AND TO ALLOW LOCAL GOVERNMENT UNITS TO SHARE IN
VAT REVENUE, AMENDING FOR THIS PURPOSE CERTAIN SECTIONS
OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992)
House Bill No. 1503, September 3, 1992
Senate Bill No. 968, December 7, 1992
3.
R.A. No. 7646

AN ACT AUTHORIZING THE COMMISSIONER OF
INTERNAL REVENUE TO PRESCRIBE THE PLACE FOR
PAYMENT OF INTERNAL REVENUE TAXES BY LARGE
TAXPAYERS, AMENDING FOR THIS PURPOSE CERTAIN
PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE,
AS AMENDED (February 24, 1993)
House Bill No. 1470, October 20, 1992
Senate Bill No. 35, November 19, 1992
4.
R.A. No. 7649

AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS
POLITICAL
SUBDIVISIONS,
INSTRUMENTALITIES
OR
AGENCIES
INCLUDING
GOVERNMENT-OWNED
OR
CONTROLLED CORPORATIONS (GOCCS) TO DEDUCT AND
WITHHOLD THE VALUE-ADDED TAX DUE AT THE RATE OF
THREE PERCENT (3%) ON GROSS PAYMENT FOR THE
PURCHASE OF GOODS AND SIX PERCENT (6%) ON GROSS
RECEIPTS FOR SERVICES RENDERED BY CONTRACTORS (April
6, 1993)
House Bill No. 5260, January 26, 1993
Senate Bill No. 1141, March 30, 1993
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5.
R.A. No. 7656

AN ACT REQUIRING GOVERNMENT-OWNED OR
CONTROLLED CORPORATIONS TO DECLARE DIVIDENDS
UNDER CERTAIN CONDITIONS TO THE NATIONAL
GOVERNMENT, AND FOR OTHER PURPOSES (November 9, 1993)
House Bill No. 11024, November 3, 1993
6.
R.A. No. 7660

AN ACT RATIONALIZING FURTHER THE STRUCTURE
AND ADMINISTRATION OF THE DOCUMENTARY STAMP TAX,
AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
ALLOCATING FUNDS FOR SPECIFIC PROGRAMS, AND FOR
OTHER PURPOSES (December 23, 1993)
House Bill No. 7789, May 31, 1993
7.
R.A. No. 7717

AN ACT IMPOSING A TAX ON THE SALE, BARTER OR
EXCHANGE OF SHARES OF STOCK LISTED AND TRADED
THROUGH THE LOCAL STOCK EXCHANGE OR THROUGH
INITIAL PUBLIC OFFERING, AMENDING FOR THE PURPOSE
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
BY INSERTING A NEW SECTION AND REPEALING CERTAIN
SUBSECTIONS THEREOF (May 5, 1994)
House Bill No. 9187, November 3, 1993
Senate Bill No. 1127, March 23, 1994
Thus, the enactment of S. No. 1630 is not the only instance in which the
Senate, in the exercise of its power to propose amendments to bills required to
originate in the House, passed its own version of a House revenue measure. It is
noteworthy that, in the particular case of S. No. 1630, petitioners Tolentino and Roco,
as members of the Senate, voted to approve it on second and third readings.
On the other hand, amendment by substitution, in the manner urged by
petitioner Tolentino, concerns a mere matter of form. Petitioner has not shown what
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substantial difference it would make if, as the Senate actually did in this case, a
separate bill like S. No. 1630 is instead enacted as a substitute measure, "taking into
consideration . . . H.B. 11197."
cdasia
Indeed, so far as pertinent, the Rules of the Senate only provide:

RULE XXIX
AMENDMENTS
xxx
xxx
xxx
Section 68. Not more than one amendment to the original amendment
shall be considered.
No amendment by substitution shall be entertained unless the text
thereof is submitted in writing.
cdtai
Any of said amendments may be withdrawn before a vote is taken

thereon.
Section 69. No amendment which seeks the inclusion of a
legislative provision foreign to the subject matter of a bill (rider) shall be
entertained.
xxx
xxx
xxx
Section 70-A.
A bill or resolution shall not be amended by
substituting it with another which covers a subject distinct from that proposed in
the original bill or resolution. (Emphasis added.)
cdtai
Nor is there merit in petitioners' contention that, with regard to revenue bills,
the Philippine Senate possesses less power than the U.S. Senate because of textual
differences between constitutional provisions giving them the power to propose or
concur with amendments.
Art. I, Section 7, cl. 1 of the U.S. Constitution reads:
All Bills for raising Revenue shall originate in the House of
Representatives; but the Senate may propose or concur with amendments as on
other Bills.
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Art. VI, Section 24 of our Constitution reads:

All appropriation, revenue or tariff bills, bills authorizing increase of the
public debt, bills of local application, and private bills shall originate
exclusively in the House of Representatives, but the Senate may propose or
concur with amendments.
The addition of the word "exclusively" in the Philippine Constitution and the
decision to drop the phrase "as on other Bills" in the American version, according to
petitioners, shows the intention of the framers of our Constitution to restrict the
Senate's power to propose amendments to revenue bills. Petitioner Tolentino contends
that the word "exclusively" was inserted to modify "originate" and "the words 'as in
any other bills' (sic) were eliminated so as to show that these bills were not to be like
other bills but must be treated as a special kind."
cdasia
The history of this provision does not support this contention. The supposed
indicia of constitutional intent are nothing but the relics of an unsuccessful attempt to
limit the power of the Senate. It will be recalled that the 1935 Constitution originally
provided for a unicameral National Assembly. When it was decided in 1939 to change
to a bicameral legislature, it became necessary to provide for the procedure for
lawmaking by the Senate and the House of Representatives. The work of proposing
amendments to the Constitution was done by the National Assembly, acting as a
constituent assembly, some of whose members, jealous of preserving the Assembly's
lawmaking powers, sought to curtail the powers of the proposed Senate. Accordingly
they proposed the following provision:
All bills appropriating public funds, revenue or tariff bills, bills of local
application, and private bills shall originate exclusively in the Assembly, but the
Senate may propose or concur with amendments. In case of disapproval by the
Senate of any such bills, the Assembly may repass the same by a two-thirds vote
of all its members, and thereupon, the bill so repassed shall be deemed enacted
and may be submitted to the President for corresponding action. In the event that
the Senate should fail to finally act on any such bills, the Assembly may, after
thirty days from the opening of the next regular session of the same legislative
term, reapprove the same with a vote of two-thirds of all the members of the
Assembly. And upon such reapproval, the bill shall be deemed enacted and may
be submitted to the President for corresponding action.
The special committee on the revision of laws of the Second National

Assembly vetoed the proposal. It deleted everything after the first sentence. As
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rewritten, the proposal was approved by the National Assembly and embodied in
Resolution No. 38, as amended by Resolution No. 73. (J. ARUEGO, KNOW YOUR
CONSTITUTION 65-66 [1950]) The proposed amendment was submitted to the
people and ratified by them in the elections held on June 18, 1940.
cdtai
This is the history of Art. VI, 18 (2) of the 1935 Constitution, from which
Art. VI, 24 of the present Constitution was derived. It explains why the word
"exclusively" was added to the American text from which the framers of the
Philippine Constitution borrowed and why the phrase "as on other Bills" was not
copied. Considering the defeat of the proposal, the power of the Senate to propose
amendments must be understood to be full, plenary and complete "as on other Bills."
Thus, because revenue bills are required to originate exclusively in the House of
Representatives, the Senate cannot enact revenue measures of its own without such
bills. After a revenue bill is passed and sent over to it by the House, however, the
Senate certainly can pass its own version on the same subject matter. This follows
from the coequality of the two chambers of Congress.
That this is also the understanding of book authors of the scope of the Senate's
power to concur is clear from the following commentaries:
The power of the Senate to propose or concur with amendments is
apparently without restriction. It would seem that by virtue of this power, the
Senate can practically re-write a bill required to come from the House and leave
only a trace of the original bill. For example, a general revenue bill passed by
the lower house of the United States Congress contained provisions for the
imposition of an inheritance tax. This was changed by the Senate into a
corporation tax. The amending authority of the Senate was declared by the
United States Supreme Court to be sufficiently broad to enable it to make the
alteration. [Flint v. Stone Tracy Company, 220 U.S. 107, 55 L. ed. 389]
cdt
(L. TAADA AND F. CARREON, POLITICAL LAW OF THE

PHILIPPINES 247 [1961])
The above-mentioned bills are supposed to be initiated by the House of
Representatives because it is more numerous in membership and therefore also
more representative of the people. Moreover, its members are presumed to be
more familiar with the needs of the country in regard to the enactment of the
legislation involved.
The Senate is, however, allowed much leeway in the exercise of its
power to propose or concur with amendments to the bills initiated by the House
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of Representatives. Thus, in one case, a bill introduced in the U.S. House of

Representatives was changed by the Senate to make a proposed inheritance tax a
corporation tax. It is also accepted practice for the Senate to introduce what is
known as an amendment by substitution, which may entirely replace the bill
initiated in the House of Representatives.
(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 [1993])
In sum, while Art. VI, 24 provides that all appropriation, revenue or tariff
bills, bills authorizing increase of the public debt, bills of local application, and
private bills must "originate exclusively in the House of Representatives," it also adds,
"but the Senate may propose or concur with amendments." In the exercise of this
power, the Senate may propose an entirely new bill as a substitute measure. As
petitioner Tolentino states in a high school text, a committee to which a bill is referred
may do any of the following:
cdasia
(1) to endorse the bill without changes; (2) to make changes in the bill
omitting or adding sections or altering its language; (3) to make and endorse an
entirely new bill as a substitute, in which case it will be known as a committee
bill; or (4) to make no report at all.
(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258
[1950])
To except from this procedure the amendment of bills which are required to
originate in the House by prescribing that the number of the House bill and its other
parts up to the enacting clause must be preserved although the text of the Senate
amendment may be incorporated in place of the original body of the bill is to insist on
a mere technicality. At any rate there is no rule prescribing this form. S. No. 1630, as a
substitute measure, is therefore as much an amendment of H. No. 11197 as any which
the Senate could have made.
II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic error is
that they assume that S. No. 1630 is an independent and distinct bill. Hence their
repeated references to its certification that it was passed by the Senate "in substitution
of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197,"
implying that there is something substantially different between the reference to S.
No. 1129 and the reference to H. No. 11197. From this premise, they conclude that
R.A. No. 7716 originated both in the House and in the Senate and that it is the product
of two "half-baked bills because neither H. No. 11197 nor S. No. 1630 was passed by
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both houses of Congress."
cdtai
In point of fact, in several instances the provisions of S. No. 1630, clearly

appear to be mere amendments of the corresponding provisions of H. No. 11197. The
very tabular comparison of the provisions of H. No. 11197 and S. No. 1630 attached
as Supplement A to the basic petition of petitioner Tolentino, while showing
differences between the two bills, at the same time indicates that the provisions of the
Senate bill were precisely intended to be amendments to the House bill.
Without H. No. 11197, the Senate could not have enacted S. No. 1630.
Because the Senate bill was a mere amendment of the House bill, H. No. 11197 in its
original form did not have to pass the Senate on second and third readings. It was
enough that after it was passed on first reading it was referred to the Senate
Committee on Ways and Means. Neither was it required that S. No. 1630 be passed by
the House of Representatives before the two bills could be referred to the Conference
Committee.
There is legislative precedent for what was done in the case of H. No. 11197
and S. No. 1630. When the House bill and Senate bill, which became R.A. No. 1405
(Act prohibiting the disclosure of bank deposits), were referred to a conference
committee, the question was raised whether the two bills could be the subject of such
conference, considering that the bill from one house had not been passed by the other
and vice versa. As Congressman Duran put the question:
MR. DURAN. Therefore, I raise this question of order as to procedure: If
a House bill is passed by the House but not passed by the Senate, and a Senate
bill of a similar nature is passed in the Senate but never passed in the House,
can the two bills be the subject of a conference, and can a law be enacted from
these two bills? I understand that the Senate bill in this particular instance does
not refer to investments in government securities, whereas the bill in the House,
which was introduced by the Speaker, covers two subject matters: not only
investigation of deposits in banks but also investigation of investments in
government securities. Now, since the two bills differ in their subject matter, I
believe that no law can be enacted.
Ruling on the point of order raised, the chair (Speaker Jose B. Laurel, Jr.) said:
THE SPEAKER. The report of the conference committee is in order. It
is precisely in cases like this where a conference should be had. If the House bill
had been approved by the Senate, there would have been no need of a
conference; but precisely because the Senate passed another bill on the same
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subject matter, the conference committee had to be created, and we are now
considering the report of that committee.
cdt
(2 CONG. REC. No. 13, JULY 27, 1955, pp. 3841-42 [emphasis added])
III. The President's certification. The fallacy in thinking that H. No. 11197
and S. No. 1630 are distinct and unrelated measures also accounts for the petitioners'
(Kilosbayan's and PAL's) contention that because the President separately certified to
the need for the immediate enactment of these measures, his certification was
ineffectual and void. The certification had to be made of the version of the same
revenue bill which at the moment was being considered. Otherwise, to follow
petitioners' theory, it would be necessary for the President to certify as many bills as
are presented in a house of Congress even though the bills are merely versions of the
bill he has already certified. It is enough that he certifies the bill which, at the time he
makes the certification, is under consideration. Since on March 22, 1994 the Senate
was considering S. No. 1630, it was that bill which had to be certified. For that matter
on June 1, 1993 the President had earlier certified H. No. 9210 for immediate
enactment because it was the one which at that time was being considered by the
House. This bill was later substituted, together with other bills, by H. No. 11197.
As to what Presidential certification can accomplish, we have already
explained in the main decision that the phrase "except when the President certifies to
the necessity of its immediate enactment, etc." in Art. VI, 26 (2) qualifies not only
the requirement that "printed copies [of a bill] in its final form [must be] distributed to
the members three days before its passage" but also the requirement that before a bill
can become a law it must have passed "three readings on separate days." There is not
only textual support for such construction but historical basis as well.
Art. VI, 21 (2) of the 1935 Constitution originally provided:
(2) No bill shall be passed by either House unless it shall have been
printed and copies thereof in its final form furnished its Members at least three
calendar days prior to its passage, except when the President shall have certified
to the necessity of its immediate enactment. Upon the last reading of a bill, no
amendment thereof shall be allowed and the question upon its passage shall be
taken immediately thereafter, and the yeas and nays entered on the Journal.
When the 1973 Constitution was adopted, it was provided in Art. VIII, 19
(2):
(2)
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separate days, and printed copies thereof in its final form have been distributed
to the Members three days before its passage, except when the Prime Minister
certifies to the necessity of its immediate enactment to meet a public calamity or
emergency. Upon the last reading of a bill, no amendment thereto shall be
allowed, and the vote thereon shall be taken immediately thereafter, and the yeas
and nays entered in the Journal.
cdta
This provision of the 1973 document, with slight modification, was adopted in
Art. VI, 26 (2) of the present Constitution, thus:
(2) 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. Upon the
last reading of a bill, no amendment thereto shall be allowed, and the vote
thereon shall be taken immediately thereafter, and the yeas and nays
entered in the Journal.
The exception is based on the prudential consideration that if in all cases three
readings on separate days are required and a bill has to be printed in final form before
it can be passed, the need for a law may be rendered academic by the occurrence of
the very emergency or public calamity which it is meant to address.
cdasia
Petitioners further contend that a "growing budget deficit" is not an emergency,

especially in a country like the Philippines where budget deficit is a chronic condition.
Even if this were the case, an enormous budget deficit does not make the need for
R.A. No. 7716 any less urgent or the situation calling for its enactment any less an
emergency.
Apparently, the members of the Senate (including some of the petitioners in
these cases) believed that there was an urgent need for consideration of S. No. 1630,
because they responded to the call of the President by voting on the bill on second and
third readings on the same day. While the judicial department is not bound by the
Senate's acceptance of the President's certification, the respect due coequal
departments of the government in matters committed to them by the Constitution and
the absence of a clear showing of grave abuse of discretion caution a stay of the
judicial hand.
At any rate, we are satisfied that S. No. 1630 received thorough consideration
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in the Senate where it was discussed for six days. Only its distribution in advance in
its final printed form was actually dispensed with by holding the voting on second and
third readings on the same day (March 24, 1994). Otherwise, sufficient time between
the submission of the bill on February 8, 1994 on second reading and its approval on
March 24, 1994 elapsed before it was finally voted on by the Senate on third reading.
cdtai
The purpose for which three readings on separate days is required is said to be
two-fold: (1) to inform the members of Congress of what they must vote on and (2) to
give them notice that a measure is progressing through the enacting process, thus
enabling them and others interested in the measure to prepare their positions with
reference to it. (1 J. G. SUTHERLAND, STATUTES AND STATUTORY
CONSTRUCTION 10.04, p. 282 [1972]). These purposes were substantially achieved
in the case of R.A. No. 7716.
IV. Power of Conference Committee. It is contended (principally by
Kilosbayan, Inc. and the Movement of Attorneys for Brotherhood, Integrity and
Nationalism, Inc. [MABINI]) that in violation of the constitutional policy of full
public disclosure and the people's right to know (Art. II, 28 and Art. III, 7) the
Conference Committee met for two days in executive session with only the conferees
present.
As pointed out in our main decision, even in the United States it was customary
to hold such sessions with only the conferees and their staffs in attendance and it was
only in 1975 when a new rule was adopted requiring open sessions. Unlike its
American counterpart, the Philippine Congress has not adopted a rule prescribing
open hearings for conference committees.
cdt
It is nevertheless claimed that in the United States, before the adoption of the
rule in 1975, at least staff members were present. These were staff members of the
Senators and Congressmen, however, who may be presumed to be their confidential
men, not stenographers as in this case who on the last two days of the conference were
excluded. There is no showing that the conferees themselves did not take notes of
their proceedings so as to give petitioner Kilosbayan basis for claiming that even in
secret diplomatic negotiations involving state interest, conferees keep notes of their
meetings. Above all, the public's right to know was fully served because the
Conference Committee in this case submitted a report showing the changes made on
the differing versions of the House and the Senate.
Petitioners cite the rules of both houses which provide that conference
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committee reports must contain "a detailed, sufficiently explicit statement of the
changes in or other amendments." These changes are shown in the bill attached to the
Conference Committee Report. The members of both houses could thus ascertain
what changes had been made in the original bills without the need of a statement
detailing the changes.
The same question now presented was raised when the bill which became R.A.
No. 1400 (Land Reform Act of 1955) was reported by the Conference Committee.
Congressman Bengzon raised a point of order. He said:
aisadc
MR. BENGZON. My point of order is that it is out of order to consider

the report of the conference committee regarding House Bill No. 2557 by reason
of the provision of Section 11, Article XII, of the Rules of this House which
provides specifically that the conference report must be accompanied by a
detailed statement of the effects of the amendment on the bill of the House. This
conference committee report is not accompanied by that detailed statement, Mr.
Speaker. Therefore it is out of order to consider it.
Petitioner Tolentino, then the Majority Floor Leader, answered:

MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in
connection with the point of order raised by the gentleman from Pangasinan.
cdta
There is no question about the provision of the Rule cited by the

gentleman from Pangasinan, but this provision applies to those cases where only
portions of the bill have been amended. In this case before us an entire bill is
presented; therefore, it can be easily seen from the reading of the bill what the
provisions are. Besides, this procedure has been an established practice.
After some interruption, he continued:

MR. TOLENTINO. As I was saying, Mr. Speaker, we have to look into
the reason for the provisions of the Rules, and the reason for the requirement in
the provision cited by the gentleman from Pangasinan is when there are only
certain words or phrases inserted in or deleted from the provisions of the bill
included in the conference report, and we cannot understand what those words
and phrases mean and their relation to the bill. In that case, it is necessary to
make a detailed statement on how those words and phrases will affect the bill as
a whole; but when the entire bill itself is copied verbatim in the conference
report, that is not necessary. So when the reason for the Rule does not exist, the
Rule does not exist.
cdta
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(2 CONG. REC. No. 2, p. 4056. [emphasis added])
Congressman Tolentino was sustained by the chair. The record shows that
when the ruling was appealed, it was upheld by viva voce and when a division of the
House was called, it was sustained by a vote of 48 to 5. (Id., p. 4058)
Nor is there any doubt about the power of a conference committee to insert
new provisions as long as these are germane to the subject of the conference. As this
Court held in Philippine Judges Association v. Prado, 227 SCRA 703 (1993), in an
opinion written by then Justice Cruz, the jurisdiction of the conference committee is
not limited to resolving differences between the Senate and the House. It may propose
an entirely new provision. What is important is that its report is subsequently
approved by the respective houses of Congress. This Court ruled that it would not
entertain allegations that, because new provisions had been added by the conference
committee, there was thereby a violation of the constitutional injunction that "upon
the last reading of a bill, no amendment thereto shall be allowed."
Applying these principles, we shall decline to look into the petitioners'
charges that an amendment was made upon the last reading of the bill that
eventually became R.A. No. 7354 and that copies thereof in its final form were
not distributed among the members of each House. Both the enrolled bill and
the legislative journals certify that the measure was duly enacted, i.e., in
accordance with Article VI, Sec. 26 (2) of the Constitution. We are bound by
such official assurances from a coordinate department of the government, to
which we owe, at the very least, a becoming courtesy.
cdasia
(Id. at 710. [emphasis added])
It is interesting to note the following description of conference committees in

the Philippines in a 1979 study:
Conference committees may be of two types: free or instructed. These
committees may be given instructions by their parent bodies or they may be left
without instructions. Normally the conference committees are without
instructions, and this is why they are often critically referred to as "the little
legislatures." Once bills have been sent to them, the conferees have almost
unlimited authority to change the clauses of the bills and in fact sometimes
introduce new measures that were not in the original legislation. No minutes are
kept, and members' activities on conference committees are difficult to
determine. One congressman known for his idealism put it this way: "I killed a
bill on export incentives for my interest group [copra] in the conference
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committee but I could not have done so anywhere else." The conference
committee submits a report to both houses, and usually it is accepted. If the
report is not accepted, then the committee is discharged and new members are
appointed.
(R. Jackson, Committees in the Philippine Congress, in COMMITTEES
AND LEGISLATURES: A COMPARATIVE ANALYSIS 163 [J. D. LEES
AND M. SHAW, eds.])
In citing this study, we pass no judgment on the methods of conference

committees. We cite it only to say that conference committees here are no different
from their counterparts in the United States whose vast powers we noted in Philippine
Judges Association v. Prado, supra. At all events, under Art. VI, 16 (3) each house
has the power "to determine the rules of its proceedings," including those of its
committees. Any meaningful change in the method and procedures of Congress or its
committees must therefore be sought in that body itself.
cdtai
V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A. No.
7716 violates Art. VI, 26 (1) of the Constitution which provides that "Every bill
passed by Congress shall embrace only one subject which shall be expressed in the
title thereof." PAL contends that the amendment of its franchise by the withdrawal of
its exemption from the VAT is not expressed in the title of the law.
Pursuant to 13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross
revenue "in lieu of all other taxes, duties, royalties, registration, license and other fees
and charges of any kind, nature, or description, imposed, levied, established, assessed
or collected by any municipal, city, provincial or national authority or government
agency, now or in the future."
PAL was exempted from the payment of the VAT along with other entities by
103 of the National Internal Revenue Code, which provides as follows:
aisadc
103.
Exempt transactions. The following shall be exempt
from the value-added tax:
xxx
xxx
xxx
(q) Transactions which are exempt under special laws or international

agreements to which the Philippines is a signatory.
R.A. No. 7716 seeks to withdraw certain exemptions, including that

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granted to PAL, by amending 103, as follows:
aisadc
103.
Exempt transactions. The following shall be exempt
from the value-added tax:
xxx
xxx
xxx
(q) Transactions which are exempt under special laws, except

those granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590.
xxx
xxx
xxx
The amendment of 103 is expressed in the title of R.A. No. 7716 which
reads:
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT)
SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS
ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND
REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL
INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES.
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE

VALUE-ADDED TAX (VAT) SYSTEM [BY] WIDENING ITS TAX BASE AND
ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES
AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER
PURPOSES," Congress thereby clearly expresses its intention to amend any provision
of the NIRC which stands in the way of accomplishing the purpose of the law.
cdasia
PAL asserts that the amendment of its franchise must be reflected in the title of
the law by specific reference to P.D. No. 1590. It is unnecessary to do this in order to
comply with the constitutional requirement, since it is already stated in the title that
the law seeks to amend the pertinent provisions of the NIRC, among which is 103
(q), in order to widen the base of the VAT. Actually, it is the bill which becomes a law
that is required to express in its title the subject of legislation. The titles of H. No.
11197 and S. No. 1630 in fact specifically referred to 103 of the NIRC as among the
provisions sought to be amended. We are satisfied that sufficient notice had been
given of the pendency of these bills in Congress before they were enacted into what is
now R.A. No. 7716.
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In Philippine Judges Association v. Prado, supra, a similar argument as that

now made by PAL was rejected. R.A. No. 7354 is entitled AN ACT CREATING
THE PHILIPPINE POSTAL CORPORATION, DEFINING ITS POWERS,
FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR REGULATION OF
THE INDUSTRY AND FOR OTHER PURPOSES CONNECTED THEREWITH. It
contained a provision repealing all franking privileges. It was contended that the
withdrawal of franking privileges was not expressed in the title of the law. In holding
that there was sufficient description of the subject of the law in its title, including the
repeal of franking privileges, this Court held:
To require every end and means necessary for the accomplishment of the
general objectives of the statute to be expressed in its title would not only be
unreasonable but would actually render legislation impossible. [Cooley,
Constitutional Limitations, 8th Ed., p. 297] As has been correctly explained:
The details of the legislative act need not be specifically stated in its title, but
matter germane to the subject as expressed in the title, and adopted to the
accomplishment of the object in view, may properly be included in the act. Thus, it is
proper to create in the same act the machinery by which the act is to be enforced, to
prescribe the penalties for its infraction, and to remove obstacles in the way of its
execution. If such matters are properly connected with the subject as expressed in the
title, it is unnecessary that they should also have special mention in the title. (Southern
Pac. Co. v. Bartine, 170 Fed. 725)
(227 SCRA at 707-708)
VI. Claims of press freedom and religious liberty. We have held that, as a
general proposition, the press is not exempt from the taxing power of the State and
that what the constitutional guarantee of free press prohibits are laws which single out
the press or target a group belonging to the press for special treatment or which in any
way discriminate against the press on the basis of the content of the publication, and
R.A. No. 7716 is none of these.
Now it is contended by the PPI that by removing the exemption of the press
from the VAT while maintaining those granted to others, the law discriminates against
the press. At any rate, it is averred, "even nondiscriminatory taxation of
constitutionally guaranteed freedom is unconstitutional."
cdtai
With respect to the first contention, it would suffice to say that since the law
granted the press a privilege, the law could take back the privilege anytime without
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offense to the Constitution. The reason is simple: by granting exemptions, the State
does not forever waive the exercise of its sovereign prerogative.
Indeed, in withdrawing the exemption, the law merely subjects the press to the
same tax burden to which other businesses have long ago been subject. It is thus
different from the tax involved in the cases invoked by the PPI. The license tax in
Grosjean v. American Press Co., 297 U.S. 233, 80 L. Ed. 660 (1936) was found to be
discriminatory because it was laid on the gross advertising receipts only of
newspapers whose weekly circulation was over 20,000, with the result that the tax
applied only to 13 out of 124 publishers in Louisiana. These large papers were critical
of Senator Huey Long who controlled the state legislature which enacted the license
tax. The censorial motivation for the law was thus evident.
On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r of
Revenue, 460 U.S. 575, 75 L. Ed. 2d 295 (1983), the tax was found to be
discriminatory because although it could have been made liable for the sales tax or, in
lieu thereof, for the use tax on the privilege of using, storing or consuming tangible
goods, the press was not. Instead, the press was exempted from both taxes. It was,
however, later made to pay a special use tax on the cost of paper and ink which made
these items "the only items subject to the use tax that were component of goods to be
sold at retail." The U.S. Supreme Court held that the differential treatment of the press
"suggests that the goal of regulation is not unrelated to suppression of expression, and
such goal is presumptively unconstitutional." It would therefore appear that even a
law that favors the press is constitutionally suspect. (See the dissent of Rehnquist, J.
in that case)
aisadc
Nor is it true that only two exemptions previously granted by E.O. No. 273 are
withdrawn "absolutely and unqualifiedly" by R.A. No. 7716. Other exemptions from
the VAT, such as those previously granted to PAL, petroleum concessionaires,
enterprises registered with the Export Processing Zone Authority, and many more are
likewise totally withdrawn, in addition to exemptions which are partially withdrawn,
in an effort to broaden the base of the tax.
The PPI says that the discriminatory treatment of the press is highlighted by the
fact that transactions, which are profit oriented, continue to enjoy exemption under
R.A. No. 7716. An enumeration of some of these transactions will suffice to show that
by and large this is not so and that the exemptions are granted for purpose. As the
Solicitor General says, such exemptions are granted, in some cases, to encourage
agricultural production and, in other cases, for the personal benefit of the end-user
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rather than for profit. The exempt transactions are:

(a) Goods for consumption or use which are in their original state
(agricultural, marine and forest products, cotton seeds in their original state,
fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and poultry feeds)
and goods or services to enhance agriculture (milling of palay, corn, sugar cane
and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the
manufacture of feeds).
aisadc
(b) Goods used for personal consumption or use (household and

personal effects of citizens returning to the Philippines) or for professional use,
like professional instruments and implements, by persons coming to the
Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be
used for manufacture of petroleum products subject to excise tax and services
subject to percentage tax.
(d) Educational services, medical, dental, hospital and veterinary
services, and services rendered under employer-employee relationship.
aisadc
(e)
Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international

agreements.
(g)
Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not exceeding
P500,000.00.
(Respondents' Consolidated
Reconsideration, pp. 58-60)
Comment
on
the
Motions
for
The PPI asserts that it does not really matter that the law does not discriminate
against the press because "even nondiscriminatory taxation on constitutionally
guaranteed freedom is unconstitutional." PPI cites in support of this assertion the
following statement in Murdock v. Pennsylvania, 319 U.S. 105, 87 L. Ed 1292 (1943):
aisadc
The fact that the ordinance is "nondiscriminatory" is immaterial. The

protection afforded by the First Amendment is not so restricted. A license tax
certainly does not acquire constitutional validity because it classifies the
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privileges protected by the First Amendment along with the wares and
merchandise of hucksters and peddlers and treats them all alike. Such equality in
treatment does not save the ordinance. Freedom of press, freedom of speech,
freedom of religion are in preferred position.
The Court was speaking in that case of a license tax, which, unlike an ordinary
tax, is mainly for regulation. Its imposition on the press is unconstitutional because it
lays a prior restraint on the exercise of its right. Hence, although its application to
others, such those selling goods, is valid, its application to the press or to religious
groups, such as the Jehovah's Witnesses, in connection with the latter's sale of
religious books and pamphlets, is unconstitutional. As the U.S. Supreme Court put it,
"it is one thing to impose a tax on income or property of a preacher. It is quite another
thing to exact a tax on him for delivering a sermon."
A similar ruling was made by this Court in American Bible Society v. City of
Manila, 101 Phil. 386 (1957) which invalidated a city ordinance requiring a business
license fee on those engaged in the sale of general merchandise. It was held that the
tax could not be imposed on the sale of bibles by the American Bible Society without
restraining the free exercise of its right to propagate.
cdta
The VAT is, however, different. It is not a license tax. It is not a tax on the
exercise of a privilege, much less a constitutional right. It is imposed on the sale,
barter, lease or exchange of goods or properties or the sale or exchange of services
and the lease of properties purely for revenue purposes. To subject the press to its
payment is not to burden the exercise of its right any more than to make the press pay
income tax or subject it to general regulation is not to violate its freedom under the
Constitution.
Additionally, the Philippine Bible Society, Inc. claims that although it sells
bibles, the proceeds derived from the sales are used to subsidize the cost of printing
copies which are given free to those who cannot afford to pay so that to tax the sales
would be to increase the price, while reducing the volume of sale. Granting that to be
the case, the resulting burden on the exercise of religious freedom is so incidental as
to make it difficult to differentiate it from any other economic imposition that might
make the right to disseminate religious doctrines costly. Otherwise, to follow the
petitioner's argument, to increase the tax on the sale of vestments would be to lay an
impermissible burden on the right of the preacher to make a sermon.
On the other hand the registration fee of P1,000.00 imposed by 107 of the
NIRC, as amended by 7 of R.A. No. 7716, although fixed in amount, is really just to
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pay for the expenses of registration and enforcement of provisions such as those
relating to accounting in 108 of the NIRC. That the PBS distributes free bibles and
therefore is not liable to pay the VAT does not excuse it from the payment of this fee
because it also sells some copies. At any rate whether the PBS is liable for the VAT
must be decided in concrete cases, in the event it is assessed this tax by the
Commissioner of Internal Revenue.
cdtai
VII. Alleged violations of the due process, equal protection and contract
clauses and the rule on taxation. CREBA asserts that R.A. No. 7716 (1) impairs the
obligations of contracts, (2) classifies transactions as covered or exempt without
reasonable basis and (3) violates the rule that taxes should be uniform and equitable
and that Congress shall "evolve a progressive system of taxation."
With respect to the first contention, it is claimed that the application of the tax
to existing contracts of the sale of real property by installment or on deferred payment
basis would result in substantial increases in the monthly amortizations to be paid
because of the 10% VAT. The additional amount, it is pointed out, is something that
the buyer did not anticipate at the time he entered into the contract.
The short answer to this is the one given by this Court in an early case:
"Authorities from numerous sources are cited by the plaintiffs, but none of them show
that a lawful tax on a new subject, or an increased tax on an old one, interferes with a
contract or impairs its obligation, within the meaning of the Constitution. Even though
such taxation may affect particular contracts, as it may increase the debt of one person
and lessen the security of another, or may impose additional burdens upon one class
and release the burdens of another, still the tax must be paid unless prohibited by the
Constitution, nor can it be said that it impairs the obligation of any existing contract in
its true legal sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil.
567, 574 [1919]) Indeed not only existing laws but also "the reservation of the
essential attributes of sovereignty, is . . . read into contracts as a postulate of the legal
order." (Philippine-American Life Ins. Co. v. Auditor General, 22 SCRA 135, 147
[1968]) Contracts must be understood as having been made in reference to the
possible exercise of the rightful authority of the government and no obligation of
contract can extend to the defeat of that authority. (Norman v. Baltimore and Ohio
R.R., 79 L. Ed. 885 [1935])
cdtai
It is next pointed out that while 4 of R.A. No. 7716 exempts such transactions
as the sale of agricultural products, food items, petroleum, and medical and veterinary
services, it grants no exemption on the sale of real property which is equally essential.
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The sale of real property for socialized and low-cost housing is exempted from the
tax, but CREBA claims that real estate transactions of "the less poor," i.e., the middle
class, who are equally homeless, should likewise be exempted.
The sale of food items, petroleum, medical and veterinary services etc., which
are essential goods and services was already exempt under 103, pars. (b) (d) (1) of
the NIRC before the enactment of R.A. No. 7716. Petitioner is in error in claiming
that R.A. No. 7716 granted exemption to these transactions, while subjecting those of
petitioner to the payment of the VAT. Moreover, there is a difference between the
"homeless poor" and the "homeless less poor" in the example given by petitioner,
because the second group or middle class can afford to rent houses in the meantime
that they cannot yet buy their own homes. The two social classes are thus differently
situated in life. "It is inherent in the power to tax that the State be free to select the
subjects of taxation, and it has been repeatedly held that 'inequalities which result
from a singling out of one particular class for taxation, or exemption infringe no
constitutional limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153 (1955). Accord, City of
Baguio v. De Leon, 134 Phil. 912 (1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663
(1984); Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163
SCRA 371 [1988]).
Finally, it is contended, for the reasons already noted, that R.A. No. 7716 also
violates Art. VI, 28 (1) which provides that "The rule of taxation shall be uniform
and equitable. The Congress shall evolve a progressive system of taxation."
cdt
Equality and uniformity of taxation means that all taxable articles or kinds of
property of the same class be taxed at the same rate. The taxing power has the
authority to make reasonable and natural classification for purposes of taxation. To
satisfy this requirement it is enough that the statute or ordinance applies equally to all
persons, forms and corporations placed in similar situation. (City of Baguio v. De
Leon, supra; Sison, Jr. v. Ancheta, supra)
Indeed, the VAT was already provided in E.O. No. 273 long before R.A. No.
7716 was enacted. R.A. No. 7716 merely expands the base of the tax. The validity of
the original VAT Law was questioned in Kapatiran ng Naglilingkod sa Pamahalaan
ng Pilipinas, Inc. v. Tan, 163 SCRA 383 (1988) on grounds similar to those made in
these cases, namely, that the law was "oppressive, discriminatory, unjust and
regressive in violation of Art. VI, 28 (1) of the Constitution." (At 382) Rejecting the
challenge to the law, this Court held:
As the Court sees it, EO 273 satisfies all the requirements of a valid tax.
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It is uniform. . . .
cdt
The sales tax adopted in EO 273 is applied similarly on all goods and
services sold to the public, which are not exempt, at the constant rate of 0% or
10%.
The disputed sales tax is also equitable. It is imposed only on sales of
goods or services by persons engaged in business with an aggregate gross annual
sales exceeding P200,000.00. Small corner sari-sari stores are consequently
exempt from its application. Likewise exempt from the tax are sales of farm and
marine products, so that the costs of basic food and other necessities, spared as
they are from the incidence of the VAT, are expected to be relatively lower and
within the reach of the general public.
(At 382-383)
The CREBA claims that the VAT is regressive. A similar claim is made by the
Cooperative Union of the Philippines, Inc. (CUP), while petitioner Juan T. David
argues that the law contravenes the mandate of Congress to provide for a progressive
system of taxation because the law imposes a flat rate of 10% and thus places the tax
burden on all taxpayers without regard to their ability to pay.
The Constitution does not really prohibit the imposition of indirect taxes
which, like the VAT, are regressive. What it simply provides is that Congress shall
"evolve a progressive system of taxation." The constitutional provision has been
interpreted to mean simply that "direct taxes are . . . to be preferred [and] as much as
possible, indirect taxes should be minimized." (E. FERNANDO, THE
CONSTITUTION OF THE PHILIPPINES 221 Second ed. [1977]) Indeed, the
mandate to Congress is not to prescribe, but to evolve, a progressive tax system.
Otherwise, sales taxes, which perhaps are the oldest form of indirect taxes, would
have been prohibited with the proclamation of Art. VIII, 17 (1) of the 1973
Constitution from which the present Art. VI, 28 (1) was taken. Sales taxes are also
regressive.
Resort to indirect taxes should be minimized but not avoided entirely because it
is difficult, if not impossible, to avoid them by imposing such taxes according to the
taxpayers' ability to pay. In the case of the VAT, the law minimizes the regressive
effects of this imposition by providing for zero rating of certain transactions (R.A.
No. 7716, 3, amending 102 (b) of the NIRC), while granting exemptions to other
transactions. (R.A. No. 7716, 4, amending 103 of the NIRC)
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Thus, the following transactions involving basic and essential goods and
services are exempted from the VAT:
cdasia
(a) Goods for consumption or use which are in their original state
(agricultural, marine and forest products, cotton seeds in their original state,
fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and poultry feeds)
and goods or services to enhance agriculture (milling of palay, corn, sugar cane
and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the
manufacture of feeds).
(b) Goods used for personal consumption or use (household and
personal effects of citizens returning to the Philippines) and or professional use,
like professional instruments and implements, by persons coming to the
Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be
used for manufacture of petroleum products subject to excise tax and services
subject to percentage tax.
cdt
(d) Educational services, medical, dental, hospital and veterinary

services, and services rendered under employer-employee relationship.
(e)
Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international

agreements.
(g)
Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not exceeding
P500,000.00.
(Respondents' Consolidated
Reconsideration, pp. 58-60)
Comment
on
the
Motions
for
cdt
On the other hand, the transactions which are subject to the VAT are those
which involve goods and services which are used or availed of mainly by higher
income groups. These include real properties held primarily for sale to customers or
for lease in the ordinary course of trade or business, the right or privilege to use
patent, copyright, and other similar property or right, the right or privilege to use
industrial, commercial or scientific equipment, motion picture films, tapes and discs,
radio, television, satellite transmission and cable television time, hotels, restaurants
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and similar places, securities, lending investments, taxicabs, utility cars for rent,
tourist buses, and other common carriers, services of franchise grantees of telephone
and telegraph.
The problem with CREBA's petition is that it presents broad claims of
constitutional violations by tendering issues not at retail but at wholesale and in the
abstract. There is no fully developed record which can impart to adjudication the
impact of actuality. There is no factual foundation to show in the concrete the
application of the law to actual contracts and exemplify its effect on property rights.
For the fact is that petitioner's members have not even been assessed the VAT.
Petitioner's case is not made concrete by a series of hypothetical questions asked
which are no different from those dealt with in advisory opinions.
The difficulty confronting petitioner is thus apparent. He alleges
arbitrariness. A mere allegation, as here, does not suffice. There must be a
factual foundation of such unconstitutional taint. Considering that petitioner
here would condemn such a provision as void on its face, he has not made out a
case. This is merely to adhere to the authoritative doctrine that where the due
process and equal protection clauses are invoked, considering that they are not
fixed rules but rather broad standards, there is a need for proof of such
persuasive character as would lead to such a conclusion. Absent such a showing,
the presumption of validity must prevail.
cdta
(Sison, Jr. v. Ancheta, 130 SCRA at 661)
Adjudication of these broad claims must await the development of a concrete

case. It may be that postponement of adjudication would result in a multiplicity of
suits. This need not be the case, however. Enforcement of the law may give rise to
such a case. A test case, provided it is an actual case and not an abstract or
hypothetical one, may thus be presented.
Nor is hardship to taxpayers alone an adequate justification for adjudicating
abstract issues. Otherwise, adjudication would be no different from the giving of
advisory opinion that does not really settle legal issues.
We are told that it is our duty under Art. VIII, 1, (2) to decide whenever a
claim is made that "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."
This duty can only arise if an actual case or controversy is before us. Under Art. VIII,
5 our jurisdiction is defined in terms of "cases" and all that Art. VIII, 1 (2) can
plausibly mean is that in the exercise of that jurisdiction we have the judicial power to
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determine questions of grave abuse of discretion by any branch or instrumentality of

the government.
cdta
Put in another way, what is granted in Art. VIII, 1 (2) is "judicial power,"
which is "the power of a court to hear and decide cases pending between parties who
have the right to sue and be sued in the courts of law and equity" (Lamb v. Phipps, 22
Phil. 456, 559 [1912]), as distinguished from legislative and executive power. This
power cannot be directly appropriated until it is apportioned among several courts
either by the Constitution, as in the case of Art. VIII, 5, or by statute, as in the case
of the Judiciary Act of 1948 (R.A. No. 296) and the Judiciary Reorganization Act of
1980 (B.P. Blg. 129). The power thus apportioned constitutes the court's
"jurisdiction," defined as "the power conferred by law upon a court or judge to take
cognizance of a case, to the exclusion of all others." (United States v. Arceo, 6 Phil.
29 [1906]) Without an actual case coming within its jurisdiction, this Court cannot
inquire into any allegation of grave abuse of discretion by the other departments of the
government.
VIII. Alleged violation of policy towards cooperatives. On the other hand, the
Cooperative Union of the Philippines (CUP), after briefly surveying the course of
legislation, argues that it was to adopt a definite policy of granting tax exemption to
cooperatives that the present Constitution embodies provisions on cooperatives. To
subject cooperatives to the VAT would therefore be to infringe a constitutional policy.
Petitioner claims that in 1973, P.D. No. 175 was promulgated exempting cooperatives
from the payment of income taxes and sales taxes but in 1984, because of the crisis
which menaced the national economy, this exemption was withdrawn by P.D. No.
1955; that in 1986, P.D. No. 2008 again granted cooperatives exemption from income
and sales taxes until December 31, 1991, but, in the same year, E.O. No. 93 revoked
the exemption; and that finally in 1987 the framers of the Constitution "repudiated the
previous actions of the government adverse to the interests of the cooperatives, that is,
the repeated revocation of the tax exemption to cooperatives and instead upheld the
policy of strengthening the cooperatives by way of the grant of tax exemptions," by
providing the following in Art. XII:
1. The goals of the national economy are a more equitable
distribution of opportunities, income, and wealth; a sustained increase in the
amount of goods and services produced by the nation for the benefit of the
people; and an expanding productivity as the key to raising the quality of life for
all, especially the underprivileged.
aisadc
The State shall promote industrialization and full employment based on

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sound agricultural development and agrarian reform, through industries that

make full and efficient use of human and natural resources, and which are
competitive in both domestic and foreign markets. However, the State shall
protect Filipino enterprises against unfair foreign competition and trade
practices.
In the pursuit of these goals, all sectors of the economy and all regions of
the country shall be given optimum opportunity to develop. Private enterprises,
including corporations, cooperatives, and similar collective organizations, shall
be encouraged to broaden the base of their ownership.
15. The Congress shall create an agency to promote the viability and
growth of cooperatives as instruments for social justice and economic
development.
cdtai
Petitioner's contention has no merit. In the first place, it is not true that P.D.
No. 1955 singled out cooperatives by withdrawing their exemption from income and
sales taxes under P.D. No. 175, 5. What P.D. No. 1955, 1 did was to withdraw the
exemptions and preferential treatments theretofore granted to private business
enterprises in general, in view of the economic crisis which then beset the nation. It is
true that after P.D. No. 2008, 2 had restored the tax exemptions of cooperatives in
1986, the exemption was again repealed by E.O. No. 93, 1, but then again
cooperatives were not the only ones whose exemptions were withdrawn. The
withdrawal of tax incentives applied to all, including government and private entities.
In the second place, the Constitution does not really require that cooperatives be
granted tax exemptions in order to promote their growth and viability. Hence, there is
no basis for petitioner's assertion that the government's policy toward cooperatives
had been one of vacillation, as far as the grant of tax privileges was concerned, and
that it was to put an end to this indecision that the constitutional provisions cited were
adopted. Perhaps as a matter of policy cooperatives should be granted tax exemptions,
but that is left to the discretion of Congress. If Congress does not grant exemption and
there is no discrimination to cooperatives, no violation of any constitutional policy can
be charged.
Indeed, petitioner's theory amounts to saying that under the Constitution
cooperatives are exempt from taxation. Such theory is contrary to the Constitution
under which only the following are exempt from taxation: charitable institutions,
churches and parsonages, by reason of Art. VI, 28 (3), and non-stock, non-profit
educational institutions, by reason of Art. XIV, 4 (3).
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CUP's further ground for seeking the invalidation of R.A. No. 7716 is that it
denies cooperatives the equal protection of the law because electric cooperatives are
exempted from the VAT. The classification between electric and other cooperatives
(farmers cooperatives, producers cooperatives, marketing cooperatives, etc.)
apparently rests on a congressional determination that there is greater need to provide
cheaper electric power to as many people as possible, especially those living in the
rural areas, than there is to provide them with other necessities in life. We cannot say
that such classification is unreasonable.
cdasia
We have carefully read the various arguments raised against the constitutional
validity of R.A. No. 7716. We have in fact taken the extraordinary step of enjoining
its enforcement pending resolution of these cases. We have now come to the
conclusion that the law suffers from none of the infirmities attributed to it by
petitioners and that its enactment by the other branches of the government does not
constitute a grave abuse of discretion. Any question as to its necessity, desirability or
expediency must be addressed to Congress as the body which is electorally
responsible, remembering that, as Justice Holmes has said, "legislators are the
ultimate guardians of the liberties and welfare of the people in quite as great a degree
as are the courts." (Missouri, Kansas & Texas Ry, Co. v. May, 194 U.S. 267, 270, 48
L. Ed. 971, 973 [1904]) It is not right, as petitioner in G.R. No. 115543 does in
arguing that we should enforce the public accountability of legislators, that those who
took part in passing the law in question by voting for it in Congress should later thrust
to the courts the burden of reviewing measures in the flush of enactment. This Court
does not sit as a third branch of the legislature, much less exercise a veto power over
legislation.
WHEREFORE, the motions for reconsideration are denied with finality and the
temporary restraining order previously issued is hereby lifted.
LLjur
SO ORDERED.
Narvasa, C.J., Feliciano, Melo, Kapunan, Francisco and Hermosisima, Jr., JJ.,
concur.
Padilla and Vitug, JJ., maintain their separate opinion.
Regalado, Romero, Bellosillo and Puno, JJ., maintain their dissenting opinion.
Davide, Jr., J., maintains his dissent. Grants Motion for Reconsideration.
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Panganiban, J., took no part. Petitioner in G.R. No. 115873 is a former client.
FIRST DIVISION
[G.R. Nos. L-44501-05. July 19, 1990.]
JOHN L. GARRISON, FRANK ROBERTSON, ROBERT H.
CATHEY, JAMES W. ROBERTSON, FELICITAS DE GUZMAN
and EDWARD McGURK, petitioners, vs. COURT OF APPEALS and
REPUBLIC OF THE PHILIPPINES, respondents.
Quasha, Asperilla, Ancheta, Valmonte, Pea & Marcos for petitioners.
DECISION
NARVASA, J :
p
Sought to be overturned in these appeals is the judgment of the Court of

Appeals, 1 (32)which affirmed the decision of the Court of First Instance of Zambales
at Olongapo City convicting the petitioners "of violation of Section 45 (a) (1) (b)
of the National Internal Revenue Code, as amended, by not filing their respective
income tax returns for the year 1969" and sentencing "each of them to pay a fine of
Two Thousand (P2,000.00) Pesos, with subsidiary imprisonment in case of
insolvency, and to pay the cost proportionately." 2(33)
The petitioners have adopted the factual findings of the Court of Appeals, 3
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(34)viz.:
1.
JOHN L. GARRISON "was born in the Philippines and . . . lived in
this country since birth up to 1945, when he was repatriated and returned to the
United States. He stayed in the United States for the following twenty years
until May 5, 1965, when he entered the Philippines through the Clark Air Base.
The said accused lived in the Philippines since his return on May 6, 1965. He
lives with his Filipino wife and their children at No. 4 Corpus Street, West
Tapinac, Olongapo City, and they own the house and lot on which they are
presently residing. His wife acquired by inheritance six hectares of agricultural
land in Quezon Province."
2.
JAMES W. ROBERTSON "was born on December 22, 1915 in
Olongapo, Zambales and he grew up in this country. He and his family were
repatriated to the United States in 1945. They stayed in Long Beach, California
until the latter part of 1946 or the early part of 1947, when he was re-assigned
overseas, particularly to the Pacific area with home base in Guam. His next
arrival in the Philippines was in 1958 and he stayed in this country from that
time up to the present. He is presently residing at No. 25 Elicao Street, East
Bajac-Bajac, Olongapo City, and his house and lot are declared in his name for
tax purposes."
3.
FRANK W. ROBERTSON "was born in the Philippines and he
lived in this country up to 1945, when he was repatriated to the United States
along with his brother, his co-accused James W. Robertson. He stayed in the
United States for about one year, during which time he resided in Magnolia
Avenue, Long Beach, California. Sometime in 1946 or early 1947, he was
assigned to work in the Pacific Area, particularly Hawaii. At that time he had
been visiting the Philippines off and on in connection with his work. In 1962, he
returned once more to the Philippines and he has been residing here ever since.
He is married to a Filipino citizen named Generosa Juico and they live at No. 3
National Road, Lower Kalaklan, Olongapo City. The residential lot on which
they are presently residing is declared in his wife's name for tax purposes, while
the house constructed thereon was originally declared in his name and the same
was transferred in his wife's name only in February, 1971."
4.
ROBERT H. CATHEY "was born in Tennessee, United States, on
April 8, 1917; his first arrival in the Philippines, as a member of the liberation
forces of the United States, was in 1944. He stayed in the Philippines until
April, 1950, when he returned to the United States, and he came back to the
Philippines in 1951. He stayed in the Philippines since 1951 up to the present."
5.
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and her father was a naturalized American citizen. While she was studying at the
University of Sto. Tomas, Manila, she was recruited to work in the United
States Naval Base, Subic Bay, Philippines. Afterwards, she left the Philippines
to work in the United States Naval Base, Honolulu, Hawaii, and she returned to
the Philippines on or about April 21, 1967. The said accused has not left the
Philippines since then. She is married to Jose de Guzman, a Filipino citizen, and
they and their children live at No. 96 Fendler Street, East Tapinac, Olongapo
City. Her husband is employed in the United States Naval Base, Olongapo City,
and he also works as an insurance manager of the Traveller's Life."
6.
EDWARD McGURK "came to the Philippines on July 11, 1967
and he stayed in this country continuously up to the present time."
ALL THE PETITIONERS "are United States citizens, entered this
country under Section 9 (a) of the Philippine Immigration Act of 1940, as
amended, and presently employed in the United States Naval Base, Olongapo
City. For the year 1969 John L. Garrison earned $15,288.00; Frank Robertson,
$12,045.84; Robert H. Cathey, $9,855.20; James W. Robertson, $14,985.54;
Felicitas de Guzman, $8,502.40; and Edward McGurk, $12,407.99 . . .
ALL SAID PETITIONERS "received separate notices from Ladislao
Firmacion, District Revenue Officer, stationed at Olongapo City, informing
them that they had not filed their respective income tax returns for the year
1969, as required by Section 45 of the National Internal Revenue Code, and
directing them to file the said returns within ten days from receipt of the notice.
But the accused refused to file their income tax returns, claiming that they are
not resident aliens but only special temporary visitors, having entered this
country under Section 9 (a) of the Philippine Immigration Act of 1940, as
amended. The accused also claimed exemption from filing the return in the
Philippines by virtue of the provisions of Article XII, paragraph 2 of the US-RP
Military Bases Agreement."
The petitioners contend that given these facts, they may not under the law be
deemed resident aliens required to file income tax returns. Hence, they argue, it was
error for the Court of Appeals
1) to consider their "physical or bodily presence" in the country as "sufficient
by itself to qualify . . . (them) as resident aliens despite the fact that they were not
'residents' of the Philippines immediately before their employment by the U.S.
Government at Subic Naval Base and their presence here during the period concerned
was dictated by their respective work as employees of the United States Naval Base in
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the Philippines," and

2) to refuse to recognize their "tax-exempt status . . . under the pertinent
provisions of the RP-US Military Bases Agreement."
The provision alleged to have been violated by the petitioners, Section 45 of
the National Internal Revenue Code, as amended, reads as follows:
"SEC. 45. Individual returns. (a) Requirements. (1) The following
individuals are required to file an income tax return, if they have a gross income
of at least One Thousand Eight Hundred Pesos for the taxable year; . . .
(b) If alien residing in the Philippines, regardless of whether the gross
income was derived from sources within or outside the Philippines."
The sanction for breach thereof is prescribed by Section 73 of the same code,
to wit:
"SEC. 73. Penalty for failure to file return or to pay tax. Anyone
liable to pay the tax, to make a return or to supply information required under
this code, who refuses or neglects to pay such tax, to make such return or to
supply such information at the time or times herein specified each year, shall be
punished by a fine of not more than Two Thousand Pesos or by imprisonment
for not more than six months, or both . . ."
The provision under which the petitioners claim exemption, on the other hand,
is contained in the Military Bases Agreement between the Philippines and the United
States, 4 (35)reading as follows:
llcd
"2. No national of the United States serving in or employed in the

Philippines in connection with construction, maintenance, operation or defense
of the bases and reside in the Philippines by reason only of such employment, or
his spouse and minor children and dependents, parents or her spouse, shall be
liable to pay income tax in the Philippines except in regard to income derived
from Philippine sources or sources other than the US sources."
The petitioners claim that they are covered by this exempting provision of the
Bases Agreement since, as is admitted on all sides, they are all U.S. nationals, all
employed in the American Naval Base at Subic Bay (involved in some way or other in
"construction, maintenance, operation or defense" thereof), and receive salary
therefrom exclusively and from no other source in the Philippines; and it is their
intention, as is shown by the unrebutted evidence, to return to the United States on
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termination of their employment.

That claim had been rejected by the Court of Appeals with the terse statement
that the Bases Agreement "speaks of exemption from the payment of income tax, not
from the filing of the income tax returns . . ." 5(36)
To be sure, the Bases Agreement very plainly identifies the persons NOT
"liable to pay income tax in the Philippines except in regard to income derived from
Philippine sources or sources other than the US sources." They are the persons in
whom concur the following requisites, to wit:
1)
nationals of the United States serving in or employed in the

Philippines;
2)
their service or employment is "in connection with construction,

maintenance, operation or defense of the bases;"
3)
they reside in the Philippines by reason only of such employment;

and
4)
their income is derived exclusively from "U.S. sources."
Now, there is no question (1) that the petitioners are U.S. nationals serving or
employed in the Philippines; (2) that their employment is "in connection with
construction, maintenance, operation or defense" of a base, Subic Bay Naval Base; (3)
they reside in the Philippines by reason only of such employment since, as is
undisputed, they all intend to depart from the country on termination of their
employment; and (4) they earn no income from Philippine sources or sources other
than the U.S. sources. Therefore, by the explicit terms of the Bases Agreement, none
of them "shall be liable to pay income tax in the Philippines . . . ." Indeed, the
petitioners' claim for exemption pursuant to this Agreement had been sustained by the
Court of Tax Appeals which set aside and cancelled the assessments made against
said petitioners by the BIR for deficiency income taxes for the taxable years
1969-1972 6 (37)The decision of the Court of Tax Appeals to this effect was
contested in this Court by the Commissioner of Internal Revenue, 7 (38)but the same
was nonetheless affirmed on August 12, 1986. 8(39)
But even if exempt from paying income tax, said petitioners were, it is
contended by the respondents, not excused from filing income tax returns. For the
Internal Revenue Code (Sec. 45, supra) requires the filing of an income tax return
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also by any "alien residing in the Philippines, regardless of whether the gross income
was derived from sources within or outside the Philippines;" and since the petitioners,
although aliens residing within the Philippines, had failed to do so, they had been
properly prosecuted and convicted for having thus violated the Code.
"What the law requires," states the challenged judgment of the Court of
Appeals, "is merely physical or bodily presence in a given place for a period of time,
not the intention to make it a permanent place of abode. It is on this proposition, taken
in the light of the established facts on record to the effect that almost all of the
appellants were born here, repatriated to the US and to come back, in the latest in
1967, and to stay in the Philippines up to the present time, that makes appellants
resident aliens not merely transients or sojourners which residence for quite a long
period of time, coupled with the amount and source of income within the Philippines,
renders immaterial, for purposes of filing the income tax returns as
contra-distinguished from the payment of income tax, their intention to go back to the
United States."
Each of the petitioners does indeed fall within the letter of the codal precept
that an "alien residing in the Philippines" is obliged "to file an income tax return."
None of them may be considered a non-resident alien, "a mere transient or sojourner,"
who is not under any legal duty to file an income tax return under the Philippine Tax
Code. This is made clear by Revenue Regulations No. 2 of the Department of Finance
of February 10, 1940, 9 (40)which lays down the relevant standards on the matter:
"An alien actually present in the Philippines who is not a mere transient
or sojourner is a resident of the Philippines for purposes of income tax. Whether
he is a transient or not is determined by his intentions with regards to the length
and nature of his stay. A mere floating intention indefinite as to time, to return
to another country is not sufficient to constitute him as transient. If he lives in
the Philippines and has no definite intention as to his stay, he is a resident. One
who comes to the Philippines for a definite purpose which in its nature may be
promptly accomplished is a transient. But if his purpose is of such a nature that
an extended stay may be necessary to its accomplishment, and to that end the
alien makes his home temporarily in the Philippines, he becomes a resident,
though it may be his intention at all times to return to his domicile abroad when
the purpose for which he came has been consummated or abandoned."
The petitioners concede that the foregoing standards have been "a good
yardstick," and are in fact not at substantial variance from American jurisprudence. 10
(41)They acknowledge, too, that "their exemption under the Bases Agreement relates
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simply to non-liability for the payment of income tax, not to the filing of . . . (a
return)." But, they argue 11(42)
". . . after having expressly recognized that petitioners need not pay
income tax here, there appears to be no logic in requiring them to file income
tax returns which anyhow would serve no practical purpose since their liability
on the amounts stated thereon can hardly be exacted. The more practical view,
taking into account policy considerations that prompted the Government of the
Republic of the Philippines to exempt the petitioners, as well as other American
citizens similarly situated, from the payment of income tax here, is to recognize
the lesser act of filing within the exemption granted. This is simply being
consistent with the reason behind the grant of tax-exempt status to petitioners."
Pointing out further to what they consider "the administrative implementation of that
(tax-exemption) provision (of the Bases Agreement) by both governments for about
22 years (which did not require the filing of income tax returns by American citizen
employees holding 9-A special visas like petitioners), and to "the higher plane of
political realities which prompted the Philippine Government to partially surrender its
inherent right to tax," petitioners submit that "the particular problem involved in these
cases is a matter that has to find solution and ought to be dealt with in conference
tables rather than before the court of law." 12(43)
Quite apart from the evidently distinct and different character of the
requirement to pay income tax in contrast to the requirement to file a tax return, it
appears that the exemption granted to the petitioners by the Bases Agreement from
payment of income tax is not absolute. By the explicit terms of the Bases Agreement,
it exists only as regards income derived from their employment "in the Philippines in
connection with construction, maintenance, operation or defense of the bases;" it does
not exist in respect of other income, i.e., "income derived from Philippine sources or
sources other than the US sources." Obviously, with respect to the latter form of
income, i.e., that obtained or proceeding from "Philippine sources or sources other
than the US sources," the petitioners, and all other American nationals who are
residents of the Philippines, are legally bound to pay tax thereon. In other words, so
that American nationals residing in the country may be relieved of the duty to pay
income tax for any given year, it is incumbent on them to show the Bureau of Internal
Revenue that in that year they had derived income exclusively from their employment
in connection with the U S. bases, and none whatever "from Philippine sources or
sources other than the US sources." They have to make this known to the Government
authorities. It is not in the first instance the latter's duty or burden to make unaided
verification of the sources of income of American residents. The duty rests on the
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U.S. nationals concerned to invoke and prima facie establish their tax-exempt status.
It cannot simply be presumed that they earned no income from any other sources than
their employment in the American bases and are therefore totally exempt from income
tax. The situation is no different from that of Filipino and other resident
income-earners in the Philippines who, by reason of the personal exemptions and
permissible deductions under the Tax Code, may not be liable to pay income tax year
for any particular year; that they are not liable to pay income tax, no matter how plain
or irrefutable such a proposition might be, does not exempt them from the duty to file
an income tax return.
LLphil
These considerations impel affirmance of the judgments of the Court of

Appeals and the Trial Court.
WHEREFORE, the petition for review on certiorari is DENIED, and the
challenged decision of the Court of Appeals is AFFIRMED. Costs against petitioners.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.
Footnotes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Rendered on May 17, 1976, the ponente being Lim, J., with whom concurred
Gatmaitan and Domondon, JJ .
Rendered on May 28, 1983 by Judge Augusto M. Amores (Branch I).
In turn adopted from the Trial Court. Rollo, pp. 10-12; 27-29.
ART. XII, L.-par 2, part 2, see Rollo, p. 32.
Rollo, pp. 31-32.
Decision dated Dec. 14, 1984, written for the Court by Associate Judge Alex Z.
Reyes.
G.R. Nos. 70116-19.
143 SCRA 397; the decision having been written for the Second Division of the
Court by Paras, J., with whom concurred Feria, Fernan, Alampay, and Gutierrez, Jr.,
JJ.
SEC. 5.
Petitioners' brief (Rollo, p. 90), pp. 10-11.
Id., p. 11.
Id., pp. 14-15.
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EN BANC
[G.R. No. 78742. July 14, 1989.]
ASSOCIATION OF SMALL LANDOWNERS IN THE
PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B.
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE,
CANUTO RAMIR B. CABRITO, ISIDRO T. GUICO, FELISA I.
LLAMIDO, FAUSTO J. SALVA, REYNALDO G. ESTRADA,
FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B.
MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA,
FELICISIMA C. APRESTO, CONSUELO M. MORALES,
BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S.
FERRER, petitioners, vs. HONORABLE SECRETARY OF
AGRARIAN REFORM, respondent.
[G.R. No. 79310. July 14, 1989.]

ARSENIO AL. ACUA, NEWTON JISON, VICTORINO
FERRARIS, DENNIS JEREZA, HERMINIGILDO GUSTILO,
PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC.,
Victorias Mill District, Victorias, Negros Occidental, petitioners, vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL
AGRARIAN REFORM COUNCIL, respondents.
[G.R. No. 79744. July 14, 1989.]
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INOCENTES PABICO, petitioner, vs. HON. PHILIP E. JUICO,

SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, HON. JOKER ARROYO, EXECUTIVE SECRETARY
OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR
TALENTO, JAIME ABOGADO, CONRADO AVANCEA, and
ROBERTO TAAY, respondents.
[G.R. No. 79777. July 14, 1989.]

NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs. HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform,
and LAND BANK OF THE PHILIPPINES, respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; SUPREME COURT; ROLE. Although
holding neither purse nor sword and so regarded as the weakest of the three
departments of the government, the judiciary is nonetheless vested with the power to
annul the acts of either the legislative or the executive or of both when not
conformable to the fundamental law. This is the reason for what some quarters call the
doctrine of judicial supremacy.
2. ID.; SEPARATION OF POWERS; CONSTRUED. The doctrine of
separation of powers imposes upon the courts a proper restraint, born of the nature of
their functions and of their respect for the other departments, in striking down the acts
of the legislative and the executive as unconstitutional. The policy, indeed, is a blend
of courtesy and caution. To doubt is to sustain. The theory is that before the act was
done or the law was enacted, earnest studies were made by Congress or the President,
or both, to insure that the Constitution would not be breached.
3. ID.; SUPREME COURT; POWER TO DECLARE AN ACT OR LAW
UNCONSTITUTIONAL; CONDITIONS. The Constitution itself lays down
stringent conditions for a declaration of unconstitutionality, requiring therefor the
concurrence of a majority of the members of the Supreme Court who took part in the
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deliberations and voted on the issue during their session en banc.

4. ID.; ID.; ID.; JUDICIAL INQUIRY; REQUISITES. The Court will
assume jurisdiction over a constitutional question only if it is shown that the essential
requisites of a judicial inquiry into such a question are first satisfied. Thus, there must
be an actual case or controversy involving a conflict of legal rights susceptible of
judicial determination, the constitutional question must have been opportunely raised
by the proper party, and the resolution of the question is unavoidably necessary to the
decision of the case itself.
5. REMEDIAL LAW; ACTIONS; PROPER PARTY; CASE AT BAR.
With particular regard to the requirement of proper party as applied in the cases before
us, we hold that the same is satisfied by the petitioners and intervenors because each
of them has sustained or is in danger of sustaining an immediate injury as a result of
the acts or measures complained of.
6. CONSTITUTIONAL LAW; SUPREME COURT; POWER TO
DECLARE AN ACT OR LAW UNCONSTITUTIONAL; TRIBUNAL WITH WIDE
DISCRETION TO WAIVE REQUIREMENT. Even if, strictly speaking, they are
not covered by the definition, it is still within the wide discretion of the Court to
waive the requirement and so remove the impediment to its addressing and resolving
the serious constitutional questions raised.
7. ID.; ID.; JUDICIAL SUPREMACY. . . . When the judiciary mediates
to allocate constitutional boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act of the Legislature, but
only asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to establish for
the parties in an actual controversy the rights which that instrument secures and
guarantees to them. This is in truth all that is involved in what is termed "judicial
supremacy" which properly is the power of judicial review under the Constitution.
8. ID.; 1973 CONSTITUTION; PRESIDENT; EXERCISE OF
LEGISLATIVE POWER DURING MARTIAL LAW, SUSTAINED. The
promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under
martial law has already been sustained in Gonzales v. Estrella and we find no reason
to modify or reverse it on that issue.
9. ID.; 1987 CONSTITUTION; PRESIDENT; LEGISLATIVE POWER,
AUTHORIZED. As for the power of President Aquino to promulgate Proc. No.
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131 and E.O. Nos. 228 and 229, the same was authorized under Section 6 of the
Transitory Provisions of the 1987 Constitution, quoted above. The said measures were
issued by President Aquino before July 27, 1987, when the Congress of the
Philippines was formally convened and took over legislative power from her. They are
not "midnight" enactments intended to pre-empt the legislature because E.O. No. 228
was issued on July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No.
229, were both issued on July 22, 1987.
10. ID.; ID.; ID.; MEASURES PROMULGATED REMAINS VALID EVEN
AFTER LOSS OF LEGISLATIVE POWER; RATIONALE. Neither is it correct to
say that these measures ceased to be valid when she lost her legislative power for, like
any statute, they continue to be in force unless modified or repealed by subsequent
law or declared invalid by the courts. A statute does not ipso facto become inoperative
simply because of the dissolution of the legislature that enacted it. By the same token,
President Aquino's loss of legislative power did not have the effect of invalidating all
the measures enacted by her when and as long as she possessed it.
11. ID.; STATUTES; PROCLAMATION REMAINS VALID EVEN AFTER
LOSS OF LEGISLATIVE POWER; RATIONALE. Proc. No. 131 is not an
appropriation measure even if it does provide for the creation of said fund, for that is
not its principal purpose. An appropriation law is one the primary and specific
purpose of which is to authorize the release of public funds from the treasury. The
creation of the fund is only incidental to the main objective of the proclamation,
which is agrarian reform.
12. ID.; ID.; PROCLAMATION NO. 131 AND EXECUTIVE ORDER NO.
229; ABSENCE OF RETENTION LIMIT PROVIDED FOR IN REPUBLIC ACT
NO. 6657. The argument of some of the petitioners that Proc. No. 131 and E.O.
No. 229 should be invalidated because they do not provide for retention limits as
required by Article XIII, Section 4 of the Constitution is no longer tenable. R.A. No.
6657 does provide that in no case shall retention by the landowner exceed five (5)
hectares. three (3) hectares may be awarded to each child of the landowner, subject to
two (2) qualification which is now in Section 6 of the law.
13. ID.; ID.; TITLE OF A BILL NEED NOT BE CATALOGUED. The
title of the bill does not have to be a catalogue of its contents and will suffice if the
matters embodied in the text are relevant to each other and may be inferred from the
title.
14. CIVIL LAW; EFFECT AND APPLICATION OF LAWS; ISSUANCES
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FROM THE PRESIDENT REQUIRE PUBLICATION FOR EFFECTIVITY. But

for all their peremptoriness, these issuances from the President Marcos still had to
comply with the requirement for publication as this Court held in Taada v. Tuvera.
Hence, unless published in the Official Gazette in accordance with Article 2 of the
Civil Code, they could not have any force and effect if they were among those
enactments successfully challenged in that case. (LOI 474 was published, though, in
the Official Gazette dated November 29, 1976.)
15. REMEDIAL LAW; SPECIAL CIVIL ACTION; MANDAMUS;
OFFICE. Mandamus will lie to compel the discharge of the discretionary duty
itself but not to control the discretion to be exercised. In other words, mandamus can
issue to require action only but not specific action.
16. ID.; ID.; ID.; GENERALLY NOT AVAILABLE WHERE THERE IS A
PLAIN, SPEEDY REMEDY; EXCEPTION. While it is true that as a rule the writ
will not be proper as long as there is still a plain, speedy and adequate remedy
available from the administrative authorities, resort to the courts may still be permitted
if the issue raised is a question of law.
17. POLITICAL LAW; POLICE POWER AND EMINENT DOMAIN;
TRADITIONAL DISTINCTIONS. There are traditional distinctions between the
police power and the power of eminent domain that logically preclude the application
of both powers at the same time on the same subject. The cases before us present no
knotty complication insofar as the question of compensable taking is concerned. To
the extent that the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation of private
property in accordance with the Constitution. But where, to carry out such regulation,
it becomes necessary to deprive such owners of whatever lands they may own in
excess of the maximum area allowed, there is definitely a taking under the power of
eminent domain for which payment of just compensation is imperative. The taking
contemplated is not a mere limitation of the use of the land. What is required is the
surrender of the title to and the physical possession of the said excess and all
beneficial rights accruing to the owner in favor of the farmer-beneficiary. This is
definitely an exercise not of the police power but of the power of eminent domain.
18. BILL
OF
RIGHTS;
EQUAL
PROTECTION
CLAUSE;
CLASSIFICATION; DEFINED. Classification has been defined as the grouping of
persons or things similar to each other in certain particulars and different from each
other in these same particulars.
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19. ID.; ID.; ID.; REQUISITES.; EQUAL PROTECTION CLAUSE;

CLASSIFICATION; DEFINED. To be valid, it must conform to the following
requirements: (1) it must be based on substantial distinctions; (2) it must be germane
to the purposes of the law; (3) it must not be limited to existing conditions only; and
(4) it must apply equally to all the members of the class.
20. ID.; ID.; ID.; MEANING. Equal protection simply means that all
persons or things similarly situated must be treated alike both as to the rights
conferred and the liabilities imposed.
21. POLITICAL LAW; EMINENT DOMAIN; NATURE. Eminent
domain is an inherent power of the State that enables it to forcibly acquire private
lands intended for public use upon payment of just compensation to the owner.
22. ID.; ID.; WHEN AVAILED OF. Obviously, there is no need to
expropriate where the owner is willing to sell under terms also acceptable to the
purchaser, in which case an ordinary deed of sale may be agreed upon by the parties.
It is only where the owner is unwilling to sell, or cannot accept the price or other
conditions offered by the vendee, that the power of eminent domain will come into
play to assert the paramount authority of the State over the interests of the property
owner. Private rights must then yield to the irresistible demands of the public interest
on the time-honored justification, as in the case of the police power, that the welfare
of the people is the supreme law.
23. ID.; ID.; REQUIREMENTS. Basically, the requirements for a proper
exercise of the power are: (1) public use and (2) just compensation.
24. ID.; POLITICAL QUESTION; DEFINED. The term "political
question" connotes what it means in ordinary parlance, namely, a question of policy. It
refers to "those questions which, under the Constitution, are to be decided by the
people in their sovereign capacity; or in regard to which full discretionary authority
has been delegated to the legislative or executive branch of the government." It is
concerned with issues dependent upon the wisdom, not legality, of a particular
measure. (Taada vs. Cuenco, 100 Phil. 1101)
25. ID.; EMINENT DOMAIN JUST COMPENSATION; DEFINED. Just
compensation is defined as the full and fair equivalent of the property taken from its
owner by the expropriator.
26. ID.; ID.; ID.; WORD "JUST", EXPLAINED. It has been repeatedly
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stressed by this Court that the measure is not the taker's gain but the owner's loss. The
word "just" is used to intensify the meaning of the word "compensation" to convey the
idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full, ample.
27. ID.; ID.; ID.; COMPENSABLE TAKING; CONDITIONS. There is
compensable taking when the following conditions concur: (1) the expropriator must
enter a private property; (2) the entry must be for more than a momentary period; (3)
the entry must be under warrant or color of legal authority; (4) the property must be
devoted to public use or otherwise informally appropriated or injuriously affected; and
(5) the utilization of the property for public use must be in such a way as to oust the
owner and deprive him of beneficial enjoyment of the property.
28. ID.; ID.; ID.; DEPOSIT NOT NECESSARY WHERE THE
EXPROPRIATOR IS THE ESTATE. Where the State itself is the expropriator, it
is not necessary for it to make a deposit upon its taking possession of the condemned
property, as "the compensation is a public charge, the good faith of the public is
pledged for its payment, and all the resources of taxation may be employed in raising
the amount."
29. ID.; ID.; ID.; DETERMINATION THEREOF, ADDRESSED TO THE
COURTS OF JUSTICE. The determination of just compensation is a function
addressed to the courts of justice and may not be usurped by any other branch or
official of the government.
30. ID.; ID.; ID.; EMINENT DOMAIN UNDER THE COMPREHENSIVE
AGRARIAN REFORM LAW; DETERMINATION MADE BY THE
DEPARTMENT OF AGRARIAN RELATIONS, ONLY PRELIMINARY. The
determination of the just compensation by the DAR is not by any means final and
conclusive upon the landowner or any other interested party, for Section 16 (f) clearly
provides: Any party who disagrees with the decision may bring the matter to the court
of proper jurisdiction for final determination of just compensation. The determination
made by the DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts of justice will still have the right to review with finality the said
determination in the exercise of what is admittedly a judicial function.
31. ID.; ID.; ID.; PAYMENT IN MONEY ONLY NOT APPLICABLE IN
REVOLUTIONARY KIND OF EXPROPRIATION. We do not deal here with the
traditional exercise of the power of eminent domain. This is not an ordinary
expropriation where only a specific property of relatively limited area is sought to be
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taken by the State from its owner for a specific and perhaps local purpose. What we
deal with here is a revolutionary kind of expropriation. The expropriation before us
affects all private agricultural lands whenever found and of whatever kind as long as
they are in excess of the maximum retention limits allowed their owners. Such a
program will involve not mere millions of pesos. The cost will be tremendous.
Considering the vast areas of land subject to expropriation under the laws before us,
we estimate that hundreds of billions of pesos will be needed, far more indeed than
the amount of P50 billion initially appropriated, which is already staggering as it is by
our present standards. The Court has not found in the records of the Constitutional
Commission any categorical agreement among the members regarding the meaning to
be given the concept of just compensation as applied to the comprehensive agrarian
reform program being contemplated. On the other hand, there is nothing in the records
either that militates against the assumptions we are making of the general sentiments
and intention of the members on the content and manner of the payment to be made to
the landowner in the light of the magnitude of the expenditure and the limitations of
the expropriator. Therefore, payment of the just compensation is not always required
to be made fully in money.
32. ID.; ID.; ID.; PRINCIPLE THAT TITLE SHALL PASS ONLY UPON
FULL PAYMENT OF JUST COMPENSATION, NOT APPLICABLE. Title to
the property expropriated shall pass from the owner to the expropriator only upon full
payment of the just compensation. The CARP Law, for its part, conditions the transfer
of possession and ownership of the land to the government on receipt by the
landowner of the corresponding payment or the deposit by the DAR of the
compensation in cash or LBP bonds with an accessible bank. Until then, title also
remains with the landowner. No outright change of ownership is contemplated either.
Hence, that the assailed measures violate due process by arbitrarily transferring title
before the land is fully paid for must also be rejected.
33. ADMINISTRATIVE LAW; EXHAUSTION OF ADMINISTRATIVE
REMEDIES; CASE AT BAR. It does not appear in G.R. No. 78742 that the appeal
filed by the petitioners with the Office of the President has already been resolved.
Although we have said that the doctrine of exhaustion of administrative remedies need
not preclude immediate resort to judicial action, there are factual issues that have yet
to be examined on the administrative level, especially the claim that the petitioners are
not covered by LOI 474 because they do not own other agricultural lands than the
subjects of their petition. Obviously, the Court cannot resolve these issues.
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DECISION
CRUZ, J :
p
In ancient mythology, Antaeus was a terrible giant who blocked and challenged
Hercules for his life on his way to Mycenae after performing his eleventh labor. The
two wrestled mightily and Hercules flung his adversary to the ground thinking him
dead, but Antaeus rose even stronger to resume their struggle. This happened several
times to Hercules' increasing amazement. Finally, as they continued grappling, it
dawned on Hercules that Antaeus was the son of Gaea and could never die as long as
any part of his body was touching his Mother Earth. Thus forewarned, Hercules then
held Antaeus up in the air, beyond the reach of the sustaining soil, and crushed him to
death.
Mother Earth. The sustaining soil. The giver of life, without whose
invigorating touch even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell
of the elemental forces of life and death, of men and women who, like Antaeus, need
the sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the
distribution of this precious resource among our people. But it is more than a slogan.
Through the brooding centuries, it has become a battlecry dramatizing the increasingly
urgent demand of the dispossessed among us for a plot of earth as their place in the
sun.
cdasia
Recognizing this need, the Constitution in 1935 mandated the policy of social
justice to "insure the well-being and economic security of all the people," 1
(44)especially the less privileged. In 1973, the new Constitution affirmed this goal,
adding specifically that "the State shall regulate the acquisition, ownership, use,
enjoyment and disposition of private property and equitably diffuse property
ownership and profits.' 2 (45)Significantly, there was also the specific injunction to
"formulate and implement an agrarian reform program aimed at emancipating the
tenant from the bondage of the soil." 3(46)
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The Constitution of 1987 was not to be outdone. Besides echoing these

sentiments, it also adopted one whole and separate Article XIII on Social Justice and
Human Rights, containing grandiose but undoubtedly sincere provisions for the uplift
of the common people. These include a call in the following words for the adoption by
the State of an agrarian reform program:
SEC. 4.
The State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular farmworkers, who are
landless, to own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or equity
considerations and subject to the payment of just compensation. In determining
retention limits, the State shall respect the right of small landowners. The State
shall further provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land
Reform Code, had already been enacted by the Congress of the Philippines on August
8, 1963, in line with the above-stated principles. This was substantially superseded
almost a decade later by P.D. No. 27, which was promulgated on October 21, 1972,
along with martial law, to provide for the compulsory acquisition of private lands for
distribution among tenant-farmers and to specify maximum retention limits for
landowners.
The people power revolution of 1986 did not change and indeed even
energized the thrust for agrarian reform. Thus, on July 17, 1987, President Corazon C.
Aquino issued E.O. No. 228, declaring full land ownership in favor of the
beneficiaries of P.D. No. 27 and providing for the valuation of still unvalued lands
covered by the decree as well as the manner of their payment. This was followed on
July 22, 1987 by Presidential Proclamation No. 131, instituting a comprehensive
agrarian reform program (CARP), and E.O. No. 229, providing the mechanics for its
implementation.
Subsequently, with its formal organization, the revived Congress of the
Philippines took over legislative power from the President and started its own
deliberations, including extensive public hearings, on the improvement of the interests
of farmers. The result, after almost a year of spirited debate, was the enactment of
R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
1988, which President Aquino signed on June 10, 1988. This law, while considerably
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changing the earlier mentioned enactments, nevertheless gives them suppletory effect
insofar as they are not inconsistent with its provisions. 4(47)
The above-captioned cases have been consolidated because they involve
common legal questions, including serious challenges to the constitutionality of the
several measures mentioned above. They will be the subject of one common
discussion and resolution. The different antecedents of each case will require separate
treatment, however, and will must be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos.
228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants
and owned by petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked
by four tenants and owned by petitioner Augustin Hermano, Jr. The tenants were
declared full owners of these lands by E.O. No. 228 as qualified farmers under P.D.
No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on
grounds inter alia of separation of powers, due process, equal protection and the
constitutional limitation that no private property shall be taken for public use without
just compensation.
They contend that President Aquino usurped legislative power when she
promulgated E.O. No. 228. The said measure is invalid also for violation of Article
XIII, Section 4, of the Constitution, for failure to provide for retention limits for small
landowners. Moreover, it does not conform to Article VI, Section 25(4) and the other
requisites of a valid appropriation.
In connection with the determination of just compensation, the petitioners
argue that the same may be made only by a court of justice and not by the President of
the Philippines. They invoke the recent cases of EPZA v. Dulay 5(48) and Manotok v.
National Food Authority. 6 (49)Moreover, the just compensation contemplated by the
Bill of Rights is payable in money or in cash and not in the form of bonds or other
things of value.
In considering the rentals as advance payment on the land, the executive order
also deprives the petitioners of their property rights as protected by due process. The
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equal protection clause is also violated because the order places the burden of solving
the agrarian problems on the owners only of agricultural lands. No similar obligation
is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No.
27 to be the owners of the lands occupied by them, E.O. No. 228 ignored judicial
prerogatives and so violated due process. Worse, the measure would not solve the
agrarian problem because even the small farmers are deprived of their lands and the
retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already
been upheld in the earlier cases of Chavez v. Zobel, 7 (50)Gonzales v. Estrella, 8
(51)and Association of Rice and Corn Producers of the Philippines, Inc. v. the National
Land Reform council. 9 (52)The determination of just compensation by the executive
authorities conformably to the formula prescribed under the questioned order is at best
initial or preliminary only. It does not foreclose judicial intervention whenever sought
or warranted. At any rate, the challenge to the order is premature because no valuation
of their property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do not exceed
the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does
not provide for retention limits on tenanted lands and that in any event their petition is
a class suit brought in behalf of landowners with landholdings below 24 hectares.
They maintain that the determination of just compensation by the administrative
authorities is a final ascertainment. As for the cases invoked by the public respondent,
the constitutionality of P.D. No. 27 was merely assumed in Chavez, while what was
decided in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1988, it is contended that P.D.
No. 27, E.O. Nos. 228 and 229 (except Sections 20 and 21) have been impliedly
repealed by R.A. No. 6657. Nevertheless, this statute should itself also be declared
unconstitutional because it suffers from substantially the same infirmities as the
earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by
Vicente Cruz, owner of a 1.83-hectare land, who complained that the DAR was
insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite a
compromise agreement he had reached with his tenant on the payment of rentals. In a
subsequent motion dated April 10, 1989, he adopted the allegations in the basic
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amended petition that the above-mentioned enactments have been impliedly repealed
by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill
District, Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc. is an
organization composed of 1,400 planter-members. This petition seeks to prohibit the
implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian
Reform Program as decreed by the Constitution belongs to Congress and not the
President. Although they agree that the President could exercise legislative power
until the Congress was convened, she could do so only to enact emergency measures
during the transition period. At that, even assuming that the interim legislative power
of the President was properly exercised, Proc. No. 131 and E.O. No. 229 would still
have to be annulled for violating the constitutional provisions on just compensation,
due process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund. There is hereby created a special fund, to be
known as the Agrarian Reform Fund, an initial amount of FIFTY BILLION
PESOS (P50,000,000,000.00) to cover the estimated cost of the Comprehensive
Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts of
sale of ill-gotten wealth received through the Presidential Commission on Good
Government and such other sources as government may deem appropriate. The
amounts collected and accruing to this special fund shall be considered
automatically appropriated for the purpose authorized in this Proclamation.
the amount appropriated is in futuro, not in esse. The money needed to cover the cost
of the contemplated expropriation has yet to be raised and cannot be appropriated at
this time.
Furthermore, they contend that taking must be simultaneous with payment of
just compensation as it is traditionally understood, i.e., with money and in full, but no
such payment is contemplated in Section 5 of the E.O. No. 229. On the contrary,
Section 6, thereof provides that the Land Bank of the Philippines "shall compensate
the landowner in an amount to be established by the government, which shall be based
on the owner's declaration of current fair market value as provided in Section 4
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hereof, but subject to certain controls to be defined and promulgated by the

Presidential Agrarian Reform Council." This compensation may not be paid fully in
money but in any of several modes that may consist of part cash and part bond, with
interest, maturing periodically, or direct payment in cash or bond as may be mutually
agreed upon by the beneficiary and the landowner or as may be prescribed or
approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort
was made to make a careful study of the sugar planters' situation. There is no tenancy
problem in the sugar areas that can justify the application of the CARP to them. To the
extent that the sugar planters have been lumped in the same legislation with other
farmers, although they are a separate group with problems exclusively their own, their
right to equal protection has been violated.
A motion for intervention was filed on August 27, 1987 by the National
Federation of Sugarcane Planters (NASP) which claims a membership of at least
20,000 individual sugar planters all over the country. On September 10, 1987, another
motion for intervention was filed, this time by Manuel Barcelona, et al., representing
coconut and riceland owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian
Reform Program and that, in any event, the appropriation is invalid because of
uncertainty in the amount appropriated. Section 2 of Proc. No. 131 and Sections 20
and 21 of E.O. No. 229 provide for an initial appropriation of fifty billion pesos and
thus specifies the minimum rather than the maximum authorized amount. This is not
allowed. Furthermore, the stated initial amount has not been certified to by the
National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to
establish by clear and convincing evidence the necessity for the exercise of the powers
of eminent domain, and the violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is
the expropriation of the said land for an amount equal to the government assessor's
valuation of the land for tax purposes. On the other hand, if the landowner declares his
own valuation, he is unjustly required to immediately pay the corresponding taxes on
the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the
presumption of constitutionality in favor of Proc. No. 131 and E.O. No. 229. He also
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justifies the necessity for the expropriation as explained in the "whereas" clauses of
the Proclamation and submits that, contrary to the petitioner's contention, a pilot
project to determine the feasibility of CARP and a general survey on the people's
opinion thereon are not indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have
failed to show that they belong to a different class and should be differently treated.
The Comment also suggests the possibility of Congress first distributing public
agricultural lands and scheduling the expropriation of private agricultural lands later.
From this viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is
against the payment of public money without the corresponding appropriation. There
is no rule that only money already in existence can be the subject of an appropriation
law. Finally, the earmarking of fifty billion pesos as Agrarian Reform Fund, although
denominated as an initial amount, is actually the maximum sum appropriated. The
word "initial" simply means that additional amounts may be appropriated later when
necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his
own behalf, assailing the constitutionality of E.O. No. 229. In addition to the
arguments already raised, Serrano contends that the measure is unconstitutional
because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in
the title;
(3) The power of the President to legislate was terminated on July 2, 1987;
and
(4) The appropriation of a P50 billion special fund from the National
Treasury did not originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian
Reform, in violation of due process and the requirement for just compensation, placed
his landholding under the coverage of Operation Land Transfer. Certificates of Land
Transfer were subsequently issued to the private respondents, who then refused
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payment of lease rentals to him.

On September 3, 1986, the petitioner protested the erroneous inclusion of his
small landholding under Operation Land Transfer and asked for the recall and
cancellation of the Certificates of Land Transfer in the name of the private
respondents. He claims that on December 24, 1986, his petition was denied without
hearing. On February 17, 1987, he filed a motion for reconsideration, which had not
been acted upon when E.O. Nos. 228 and 229 were issued. These orders rendered his
motion moot and academic because they directly effected the transfer of his land to
the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the
Philippines.
(2) The said executive orders are violative of the constitutional provision that
no private property shall be taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for
under the 1987 Constitution.
The petitioner contends that the issuance of E.O Nos. 228 and 229 shortly
before Congress convened is anomalous and arbitrary, besides violating the doctrine
of separation of powers. The legislative power granted to the President under the
Transitory Provisions refers only to emergency measures that may be promulgated in
the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without
due process of law and to the retention of his small parcels of riceholding as
guaranteed under Article XIII, Section 4 of the Constitution. He likewise argues that,
besides denying him just compensation for his land, the provisions of E.O. No. 228
declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 shall be considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention that the
inclusion of even small landowners in the program along with other landowners with
lands consisting of seven hectares or more is undemocratic.
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In his Comment, the Solicitor General submits that the petition is premature
because the motion for reconsideration filed with the Minister of Agrarian Reform is
still unresolved. As for the validity of the issuance of E.O. Nos. 228 and 229, he
argues that they were enacted pursuant to Section 6, Article XVIII of the Transitory
Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers
until the first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was
promulgated on October 21, 1972, the tenant-farmer of agricultural land was deemed
the owner of the land he was tilling. The leasehold rentals paid after that date should
therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion
he filed was resolved on December 14, 1987. An appeal to the Office of the President
would be useless with the promulgation of E.O. Nos. 228 and 229, which in effect
sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27
to owners of rice and corn lands not exceeding seven hectares as long as they are
cultivating or intend to cultivate the same. Their respective lands do not exceed the
statutory limit but are occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D.
No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn
shall be ejected or removed from his farmholding until such time as the
respective rights of the tenant-farmers and the landowner shall have been
determined in accordance with the rules and regulations implementing P.D. No.
27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy
their right of retention because the Department of Agrarian Reform has so far not
issued the implementing rules required under the above-quoted decree. They therefore
ask the Court for a writ of mandamus to compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been
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amended by LOI 474 removing any right of retention from persons who own other
agricultural lands of more than 7 hectares in aggregate area or lands used for
residential, commercial, industrial or other purposes from which they derive adequate
income for their family. And even assuming that the petitioners do not fall under its
terms, the regulations implementing P.D. No. 27 have already been issued, to wit, the
Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small
Landowners, with an accompanying Retention Guide Table), Memorandum Circular
No. 11 dated April 21, 1978, (Implementation Guidelines of LOI No. 474),
Memorandum Circular No. 18-81 dated December 29, 1981 (Clarificatory Guidelines
on Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR
Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for
Landowners to Apply for Retention and/or to Protest the Coverage of their
Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For failure to
file the corresponding applications for retention under these measures, the petitioners
are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely
initiated this case notwithstanding the pendency of their appeal to the President of the
Philippines. Moreover, the issuance of the implementing rules, assuming this has not
yet been done, involves the exercise of discretion which cannot be controlled through
the writ of mandamus. This is especially true if this function is entrusted, as in this
case, to a separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not
applicable to them because they do not own more than seven hectares of agricultural
land. Moreover, assuming arguendo that the rules were intended to cover them also,
the said measures are nevertheless not in force because they have not been published
as required by law and the ruling of this Court in Taada v. Tuvera. 10 (53)As for
LOI 474, the same is ineffective for the additional reason that a mere letter of
instruction could not have repealed the presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of
the three departments of the government, the judiciary is nonetheless vested with the
power to annul the acts of either the legislative or the executive or of both when not
conformable to the fundamental law. This is the reason for what some quarters call the
doctrine of judicial supremacy. Even so, this power is not lightly assumed or readily
exercised. The doctrine of separation of powers imposes upon the courts a proper
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restraint, born of the nature of their functions and of their respect for the other
departments, in striking down the acts of the legislative and the executive as
unconstitutional. The policy, indeed, is a blend of courtesy and caution. To doubt is to
sustain. The theory is that before the act was done or the law was enacted, earnest
studies were made by Congress or the President, or both, to insure that the
Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a
declaration of unconstitutionality, requiring therefor the concurrence of a majority of
the members of the Supreme Court who took part in the deliberations and voted on the
issue during their session en banc. 11 (54)And as established by judge-made doctrine,
the Court will assume jurisdiction over a constitutional question only if it is shown
that the essential requisites of a judicial inquiry into such a question are first satisfied.
Thus, there must be an actual case or controversy involving a conflict of legal rights
susceptible of judicial determination, the constitutional question must have been
opportunely raised by the proper party, and the resolution of the question is
unavoidably necessary to the decision of the case itself. 12(55)
With particular regard to the requirement of proper party as applied in the cases
before us, we hold that the same is satisfied by the petitioners and intervenors because
each of them has sustained or is in danger of sustaining an immediate injury as a result
of the acts or measures complained of. 13 (56)And even if, strictly speaking, they are
not covered by the definition, it is still within the wide discretion of the Court to
waive the requirement and so remove the impediment to its addressing and resolving
the serious constitutional questions raised.
In the first Emergency Powers Cases, 14 (57)ordinary citizens and taxpayers
were allowed to question the constitutionality of several executive orders issued by
President Quirino although they were invoking only an indirect and general interest
shared in common with the public. The Court dismissed the objection that they were
not proper parties and ruled that "the transcendental importance to the public of these
cases demands that they be settled promptly and definitely, brushing aside, if we must,
technicalities of procedure." We have since then applied this exception in many other
cases. 15(58)
The other above-mentioned requisites have also been met in the present
petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not hesitate to
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declare a law or act invalid when it is convinced that this must be done. In arriving at
this conclusion, its only criterion will be the Constitution as God and its conscience
give it the light to probe its meaning and discover its purpose. Personal motives and
political considerations are irrelevancies that cannot influence its decision.
Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will
not hesitate to "make the hammer fall, and heavily," to use Justice Laurel's pithy
language, where the acts of these departments, or of any public official, betray the
people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that
. . . when the judiciary mediates to allocate constitutional boundaries, it
does not assert any superiority over the other departments; it does not in reality
nullify or invalidate an act of the Legislature, but only asserts the solemn and
sacred obligation assigned to it by the Constitution to determine conflicting
claims of authority under the Constitution and to establish for the parties in an
actual controversy the rights which that instrument secures and guarantees to
them. This is in truth all that is involved in what is termed "judicial supremacy"
which properly is the power of judicial review under the Constitution. 16(59)
The cases before us categorically raise constitutional questions that this Court
must categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving
the more serious challenges to the constitutionality of the several measures involved
in these petitions.
cdtai
The promulgation of P.D. No. 27 by President Marcos in the exercise of his

powers under martial law has already been sustained in Gonzales v. Estrella and we
find no reason to modify or reverse it on that issue. As for the power of President
Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the same was
authorized under Section 6 of the Transitory Provisions of the 1987 Constitution,
quoted above.
The said measures were issued by President Aquino before July 27, 1987, when
the Congress of the Philippines was formally convened and took over legislative
power from her. They are not "midnight" enactments intended to pre-empt the
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legislature because E.O. No. 228 was issued on July 17, 1987, and the other measures,
i.e., Proc. No. 131 and E.O. No. 229, were both issued on July 22, 1987. Neither is it
correct to say that these measures ceased to be valid when she lost her legislative
power for, like any statute, they continue to be in force unless modified or repealed by
subsequent law or declared invalid by the courts. A statute does not ipso facto become
inoperative simply because of the dissolution of the legislature that enacted it. By the
same token, President Aquino's loss of legislative power did not have the effect of
invalidating all the measures enacted by her when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but
in fact substantially affirmed the challenged measures and has specifically provided
that they shall be suppletory to R.A. No. 6657 whenever not inconsistent with its
provisions. 17 (60)Indeed, some portions of the said measures, like the creation of the
P50 billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No.
229, have been incorporated by reference in the CARP Law. 18(61)
That fund, as earlier noted, is itself being questioned on the ground that it does
not conform to the requirements of a valid appropriation as specified in the
Constitution. Clearly, however, Proc. No. 131 is not an appropriation measure even if
it does provide for the creation of said fund, for that is not its principal purpose. An
appropriation law is one the primary and specific purpose of which is to authorize the
release of public funds from the treasury. 19 (62)The creation of the fund is only
incidental to the main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit,
Section 24 and Section 25(4) of Article VI, are not applicable. With particular
reference to Section 24, this obviously could not have been complied with for the
simple reason that the House of Representatives, which now has the exclusive power
to initiate appropriation measures, had not yet been convened when the proclamation
was issued. The legislative power was then solely vested in the President of the
Philippines, who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229
should be invalidated because they do not provide for retention limits as required by
Article XIII, Section 4 of the Constitution is no longer tenable. R.A. No. 6657 does
provide for such limits now in Section 6 of the law, which in fact is one of its most
controversial provisions. This section declares:
Retention Limits. Except as otherwise provided in this Act, no person
may own or retain, directly or indirectly, any public or private agricultural land,
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the size of which shall vary according to factors governing a viable family-sized
farm, such as commodity produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council (PARC) created
hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least fifteen (15) years of
age; and (2) that he is actually tilling the land or directly managing the farm;
Provided, That landowners whose lands have been covered by Presidential
Decree No. 27 shall be allowed to keep the area originally retained by them
thereunder, further, That original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a
bill shall have only one subject, to be expressed in its title, deserves only short
attention. It is settled that the title of the bill does not have to be a catalogue of its
contents and will suffice if the matters embodied in the text are relevant to each other
and may be inferred from the title. 20(63)
The Court wryly observes that during the past dictatorship, every presidential
issuance, by whatever name it was called, had the force and effect of law because it
came from President Marcos. Such are the ways of despots. Hence, it is futile to
argue, as the petitioners do in G.R. No. 79744, that LOI 474 could not have repealed
P.D. No. 27 because the former was only a letter of instruction. The important thing is
that it was issued by President Marcos, whose word was law during that time.
LexLib
But for all their peremptoriness, these issuances from the President Marcos still
had to comply with the requirement for publication as this Court held in Taada v.
Tuvera. 21 (64)Hence, unless published in the Official Gazette in accordance with
Article 2 of the Civil Code, they could not have any force and effect if they were
among those enactments successfully challenged in that case. (LOI 474 was
published, though, in the Official Gazette dated November 29, 1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that
the writ of mandamus cannot issue to compel the performance of a discretionary act,
especially by a specific department of the government. That is true as a general
proposition but is subject to one important qualification. Correctly and categorically
stated, the rule is that mandamus will lie to compel the discharge of the discretionary
duty itself but not to control the discretion to be exercised. In other words, mandamus
can issue to require action only but not specific action.
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Whenever a duty is imposed upon a public official and an unnecessary

and unreasonable delay in the exercise of such duty occurs, if it is a clear duty
imposed by law, the courts will intervene by the extraordinary legal remedy of
mandamus to compel action. If the duty is purely ministerial, the courts will
require specific action. If the duty is purely discretionary, the courts by
mandamus will require action only. For example, if an inferior court, public
official, or board should, for an unreasonable length of time, fail to decide a
particular question to the great detriment of all parties concerned, or a court
should refuse to take jurisdiction of a cause when the law clearly gave it
jurisdiction, mandamus will issue, in the first case to require a decision, and in
the second to require that jurisdiction be taken of the cause. 22(65)
And while it is true that as a rule the writ will not be proper as long as there is
still a plain, speedy and adequate remedy available from the administrative authorities,
resort to the courts may still be permitted if the issue raised is a question of law.
23(66)
III
There are traditional distinctions between the police power and the power of
eminent domain that logically preclude the application of both powers at the same
time on the same subject. In the case of City of Baguio v. NAWASA, 24 (67)for
example, where a law required the transfer of all municipal waterworks systems to the
NAWASA in exchange for its assets of equivalent value, the Court held that the
power being exercised was eminent domain because the property involved was
wholesome and intended for a public use. Property condemned under the police power
is noxious or intended for a noxious purpose, such as a building on the verge of
collapse, which should be demolished for the public safety, or obscene materials,
which should be destroyed in the interest of public morals. The confiscation of such
property is not compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 (68)Justice Holmes laid
down the limits of the police power in a famous aphorism: "The general rule at least is
that while property may be regulated to a certain extent, if regulation goes too far it
will be recognized as a taking." The regulation that went "too far" was a law
prohibiting mining which might cause the subsidence of structures for human
habitation constructed on the land surface. This was resisted by a coal company which
had earlier granted a deed to the land over its mine but reserved all mining rights
thereunder, with the grantee assuming all risks and waiving any damage claim. The
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Court held the law could not be sustained without compensating the grantor. Justice
Brandeis filed a lone dissent in which he argued that there was a valid exercise of the
police power. He said:
Every restriction upon the use of property imposed in the exercise of the
police power deprives the owner of some right theretofore enjoyed, and is, in
that sense, an abridgment by the State of rights in property without making
compensation. But restriction imposed to protect the public health, safety or
morals from dangers threatened is not a taking. The restriction here in question
is merely the prohibition of a noxious use. The property so restricted remains in
the possession of its owner. The state does not appropriate it or make any use of
it. The state merely prevents the owner from making a use which interferes with
paramount rights of the public. Whenever the use prohibited ceases to be
noxious as it may because of further changes in local or social conditions
the restriction will have to be removed and the owner will again be free to enjoy
his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the
police power and the power of eminent domain, with the latter being used as an
implement of the former like the power of taxation. The employment of the taxing
power to achieve a police purpose has long been accepted. 26 (69)As for the power of
expropriation, Prof. John J. Costonis of the University of Illinois College of Law
(referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which
sustained a zoning law under the police power) makes the following significant
remarks:
Euclid, moreover, was decided in an era when judges located the police
and eminent domain powers on different planets. Generally speaking, they
viewed eminent domain as encompassing public acquisition of private property
for improvements that would be available for "public use," literally construed.
To the police power, on the other hand, they assigned the less intrusive task of
preventing harmful externalities, a point reflected in the Euclid opinion's
reliance on an analogy to nuisance law to bolster its support of zoning. So long
as suppression of a privately authored harm bore a plausible relation to some
legitimate "public purpose," the pertinent measure need have afforded no
compensation whatever. With the progressive growth of government's
involvement in land use, the distance between the two powers has contracted
considerably. Today government often employs eminent domain
interchangeably with or as a useful complement to the police power a trend
expressly approved in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use" test to match that
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of the police power's standard of "public purpose." 27(70)
The Berman case sustained a redevelopment project and the improvement of

blighted areas in the District of Columbia as a proper exercise of the police power. On
the role of eminent domain in the attainment of this purpose, Justice Douglas
declared:
If those who govern the District of Columbia decide that the Nation's
Capital should be beautiful as well as sanitary, there is nothing in the Fifth
Amendment that stands in the way.
Once the object is within the authority of Congress, the right to realize it
through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end. 28(71)
In Penn Central Transportation Co. v. New York City, 29 (72)decided by a 6-3

vote in 1978, the U.S. Supreme Court sustained the respondent's Landmarks
Preservation Law under which the owners of the Grand Central Terminal had not been
allowed to construct a multi-story office building over the Terminal, which had been
designated a historic landmark. Preservation of the landmark was held to be a valid
objective of the police power. The problem, however, was that the owners of the
Terminal would be deprived of the right to use the airspace above it although other
landowners in the area could do so over their respective properties. While insisting
that there was here no taking, the Court nonetheless recognized certain compensatory
rights accruing to Grand Central Terminal which it said would "undoubtedly mitigate"
the loss caused by the regulation. This "fair compensation," as he called it, was
explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status,
Penn Central was authorized to transfer to neighboring properties the authorized
but unused rights accruing to the site prior to the Terminal's designation as a
landmark the rights which would have been exhausted by the 59-story
building that the city refused to countenance atop the Terminal. Prevailing bulk
restrictions on neighboring sites were proportionately relaxed, theoretically
enabling Penn Central to recoup its losses at the Terminal site by constructing or
selling to others the right to construct larger, hence more profitable buildings on
the transferee sites. 30(73)
The cases before us present no knotty complication insofar as the question of

compensable taking is concerned. To the extent that the measures under challenge
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merely prescribe retention limits for landowners, there is an exercise of the police
power for the regulation of private property in accordance with the Constitution. But
where, to carry out such regulation, it becomes necessary to deprive such owners of
whatever lands they may own in excess of the maximum area allowed, there is
definitely a taking under the power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a mere limitation of the
use of the land. What is required is the surrender of the title to and the physical
possession of the said excess and all beneficial rights accruing to the owner in favor
of the farmer-beneficiary. This is definitely an exercise not of the police power but of
the power of eminent domain.
Whether as an exercise of the police power or of the power of eminent domain,
the several measures before us are challenged as violative of the due process and
equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that
no retention limits are prescribed has already been discussed and dismissed. It is noted
that although they excited many bitter exchanges during the deliberation of the CARP
Law in Congress, the retention limits finally agreed upon are, curiously enough, not
being questioned in these petitions. We therefore do not discuss them here. The Court
will come to the other claimed violations of due process in connection with our
examination of the adequacy of just compensation as required under the power of
expropriation.
The argument of the small farmers that they have been denied equal protection
because of the absence of retention limits has also become academic under Section 6
of R.A. No. 6657. Significantly, they too have not questioned the area of such limits.
There is also the complaint that they should not be made to share the burden of
agrarian reform, an objection also made by the sugar planters on the ground that they
belong to a particular class with particular interests of their own. However, no
evidence has been submitted to the Court that the requisites of a valid classification
have been violated.
Classification has been defined as the grouping of persons or things similar to
each other in certain particulars and different from each other in these same
particulars. 31 (74)To be valid, it must conform to the following requirements: (1) it
must be based on substantial distinctions; (2) it must be germane to the purposes of
the law; (3) it must not be limited to existing conditions only; and (4) it must apply
equally to all the members of the class. 32(75) The Court finds that all these requisites
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have been met by the measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must
be treated alike both as to the rights conferred and the liabilities imposed. 33(76) The
petitioners have not shown that they belong to a different class and entitled to a
different treatment. The argument that not only landowners but also owners of other
properties must be made to share the burden of implementing land reform must be
rejected. There is a substantial distinction between these two classes of owners that is
clearly visible except to those who will not see. There is no need to elaborate on this
matter. In any event, the Congress is allowed a wide leeway in providing for a valid
classification. Its decision is accorded recognition and respect by the courts of justice
except only where its discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the
police power only if there is a concurrence of the lawful subject and the lawful
method. Put otherwise, the interests of the public generally as distinguished from
those of a particular class require the interference of the State and, no less important,
the means employed are reasonably necessary for the attainment of the purpose sought
to be achieved and not unduly oppressive upon individuals. 34 (77)As the subject and
purpose of agrarian reform have been laid down by the Constitution itself, we may say
that the first requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional goal.
LLphil
One of the basic principles of the democratic system is that where the rights of
the individual are concerned, the end does not justify the means. It is not enough that
there be a valid objective; it is also necessary that the means employed to pursue it be
in keeping with the Constitution. Mere expediency will not excuse constitutional
shortcuts. There is no question that not even the strongest moral conviction or the
most urgent public need, subject only to a few notable exceptions, will excuse the
bypassing of an individual's rights. It is no exaggeration to say that a person invoking
a right guaranteed under Article III of the Constitution is a majority of one even as
against the rest of the nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1
of Article III of the Constitution. With regard to his property, the owner enjoys the
added protection of Section 9, which reaffirms the familiar rule that private property
shall not be taken for public use without just compensation.
This brings us now to the power of eminent domain.
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IV
Eminent domain is an inherent power of the State that enables it to forcibly
acquire private lands intended for public use upon payment of just compensation to
the owner. Obviously, there is no need to expropriate where the owner is willing to
sell under terms also acceptable to the purchaser, in which case an ordinary deed of
sale may be agreed upon by the parties. 35 (78)It is only where the owner is unwilling
to sell, or cannot accept the price or other conditions offered by the vendee, that the
power of eminent domain will come into play to assert the paramount authority of the
State over the interests of the property owner. Private rights must then yield to the
irresistible demands of the public interest on the time-honored justification, as in the
case of the police power, that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means
absolute (as indeed no power is absolute). The limitation is found in the constitutional
injunction that "private property shall not be taken for public use without just
compensation" and in the abundant jurisprudence that has evolved from the
interpretation of this principle. Basically, the requirements for a proper exercise of the
power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310
that the State should first distribute public agricultural lands in the pursuit of agrarian
reform instead of immediately disturbing property rights by forcibly acquiring private
agricultural lands. Parenthetically, it is not correct to say that only public agricultural
lands may be covered by the CARP as the Constitution calls for "the just distribution
of all agricultural lands." In any event, the decision to redistribute private agricultural
lands in the manner prescribed by the CARP was made by the legislative and
executive departments in the exercise of their discretion. We are not justified in
reviewing that discretion in the absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political
departments when they decide what is known as the political question. As explained
by Chief Justice Concepcion in the case of Taada v. Cuenco: 3(79)6
The term "political question" connotes what it means in ordinary
parlance, namely, a question of policy. It refers to "those questions which, under
the Constitution, are to be decided by the people in their sovereign capacity; or
in regard to which full discretionary authority has been delegated to the
legislative or executive branch of the government." It is concerned with issues
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dependent upon the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been constricted with the
enlargement of judicial power, which now includes the authority of the courts "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." 37 (80)Even so, this should not be construed as a license for us to
reverse the other departments simply because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to
include in the CARP the redistribution of private landholdings (even as the
distribution of public agricultural lands is first provided for, while also continuing
space under the Public Land Act and other cognate laws). The Court sees no
justification to interpose its authority, which we may assert only if we believe that the
political decision is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company, 38 (81)it was held:
Congress having determined, as it did by the Act of March 3, 1909 that
the entire St. Mary's river between the American bank and the international line,
as well as all of the upland north of the present ship canal, throughout its entire
length, was "necessary for the purpose of navigation of said waters, and the
waters connected therewith," that determination is conclusive in condemnation
proceedings instituted by the United States under that Act, and there is no room
for judicial review of the judgment of Congress . . .
As earlier observed, the requirement for public use has already been settled for
us by the Constitution itself. No less than the 1987 Charter calls for agrarian reform,
which is the reason why private agricultural lands are to be taken from their owners,
subject to the prescribed maximum retention limits. The purposes specified in P.D.
No. 27, Proc. No. 131 and R.A. No. 6657 are only an elaboration of the constitutional
injunction that the State adopt the necessary measures "to encourage and undertake
the just distribution of all agricultural lands to enable farmers who are landless to own
directly or collectively the lands they till." That public use, as pronounced by the
fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer
and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property
taken from its owner by the expropriator. 39 (82)It has been repeatedly stressed by this
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Court that the measure is not the taker's gain but the owner's loss. 40 (83)The word "just"
is used to intensify the meaning of the word "compensation" to convey the idea that
the equivalent to be rendered for the property to be taken shall be real, substantial,
full, ample. 41(84)
It bears repeating that the measures challenged in these petitions contemplate
more than a mere regulation of the use of private lands under the police power. We
deal here with an actual taking of private agricultural lands that has dispossessed the
owners of their property and deprived them of all its beneficial use and enjoyment, to
entitle them to the just compensation mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 (85)there is compensable
taking when the following conditions concur: (1) the expropriator must enter a private
property; (2) the entry must be for more than a momentary period; (3) the entry must
be under warrant or color of legal authority; (4) the property must be devoted to public
use or otherwise informally appropriated or injuriously affected; and (5) the utilization
of the property for public use must be in such a way as to oust the owner and deprive
him of beneficial enjoyment of the property. All these requisites are envisioned in the
measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a
deposit upon its taking possession of the condemned property, as "the compensation is
a public charge, the good faith of the public is pledged for its payment, and all the
resources of taxation may be employed in raising the amount." 43 (86)Nevertheless,
Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case
of rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in cash or in LBP
bonds in accordance with this Act, the DAR shall take immediate possession of
the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the Philippines. The
DAR shall thereafter proceed with the redistribution of the land to the qualified
beneficiaries.
cdphil
Objection is raised, however, to the manner of fixing the just compensation,

which it is claimed is entrusted to the administrative authorities in violation of judicial
prerogatives. Specific reference is made to Section 16(d), which provides that in case
of the rejection or disregard by the owner of the offer of the government to buy his
land
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. . . the DAR shall conduct summary administrative proceedings to

determine the compensation for the land by requiring the landowner, the LBP
and other interested parties to submit evidence as to the just compensation for
the land, within fifteen (15) days from the receipt of the notice. After the
expiration of the above period, the matter is deemed submitted for decision. The
DAR shall decide the case within thirty (30) days after it is submitted for
decision.
To be sure, the determination of just compensation is a function addressed to

the courts of justice and may not be usurped by any other branch or official of the
government. EPZA v. Dulay 44 (87)resolved a challenge to several decrees
promulgated by President Marcos providing that the just compensation for property
under expropriation should be either the assessment of the property by the government
or the sworn valuation thereof by the owner, whichever was lower. In declaring these
decrees unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited
decrees constitutes impermissible encroachment on judicial prerogatives. It
tends to render this Court inutile in a matter which under this Constitution is
reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically
would still have the power to determine the just compensation for the property,
following the applicable decrees, its task would be relegated to simply stating
the lower value of the property as declared either by the owner or the assessor.
As a necessary consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court. Moreover, the need to
satisfy the due process clause in the taking of private property is seemingly
fulfilled since it cannot be said that a judicial proceeding was not had before the
actual taking. However, the strict application of the decrees during the
proceedings would be nothing short of a mere formality or charade as the court
has only to choose between the valuation of the owner and that of the assessor,
and its choice is always limited to the lower of the two. The court cannot
exercise its discretion or independence in determining what is just or fair. Even
a grade school pupil could substitute for the judge insofar as the determination
of constitutional just compensation is concerned.
xxx
xxx
xxx
In the present petition, we are once again confronted with the same
question of whether the courts under P.D. No. 1533, which contains the same
provision on just compensation as its predecessor decrees, still have the power
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and authority to determine just compensation, independent of what is stated by

the decree and to this effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
xxx
xxx
It is violative of due process to deny the owner the opportunity to prove

that the valuation in the tax documents is unfair or wrong. And it is repulsive to
the basic concepts of justice and fairness to allow the haphazard work of a
minor bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the property,
after evidence and arguments pro and con have been presented, and after all
factors and considerations essential to a fair and just determination have been
judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not
suffer from the arbitrariness that rendered the challenged decrees constitutionally
objectionable. Although the proceedings are described as summary, the landowner
and other interested parties are nevertheless allowed an opportunity to submit
evidence on the real value of the property. But more importantly, the determination of
the just compensation by the DAR is not by any means final and conclusive upon the
landowner or any other interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the
court of proper jurisdiction for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all
parties concerned. Otherwise, the courts of justice will still have the right to review
with finality the said determination in the exercise of what is admittedly a judicial
function.
The second and more serious objection to the provisions on just compensation
is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18.
Valuation and Mode of Compensation. The LBP shall
compensate the landowner in such amount as may be agreed upon by the
landowner and the DAR and the LBP, in accordance with the criteria provided
for in Sections 16 and 17, and other pertinent provisions hereof, or as may be
finally determined by the court, as the just compensation for the land.
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The compensation shall be paid in one of the following modes, at the

option of the landowner:
(1)
Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess
hectarage is concerned Twenty-five percent (25%) cash, the balance
to be paid in government financial instruments negotiable at any time.
(b) For lands above twenty-four (24) hectares and up to fifty
(50) hectares Thirty percent (30%) cash, the balance to be paid in
government financial instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below
Thirty-five percent (35%) cash, the balance to be paid in government
financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations,
LBP preferred shares, physical assets or other qualified investments in
accordance with guidelines set by the PARC;
(3)
Tax credits which can be used against any tax liability;
(4)
LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates.
Ten percent (10%) of the face value of the bonds shall mature every year
from the date of issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash portion, whether in full
or in part, he shall be paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be
used by the landowner, his successors-in-interest or his assigns, up to the
amount of their face value, for any of the following:
(i) Acquisition of land or other real properties of
the government, including assets under the Asset
Privatization Program and other assets foreclosed by
government financial institutions in the same province or
region where the lands for which the bonds were paid are
situated;
(ii)
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owned or controlled corporations or shares of stock owned

by the government in private corporations;
(iii) Substitution for surety or bail bonds for the
provisional release of accused persons, or for performance
bonds;
(iv) Security for loans with any government
financial institution, provided the proceeds of the loans
shall be invested in an economic enterprise, preferably in a
small and medium-scale industry, in the same province or
region as the land for which the bonds are paid;
(v) Payment for various taxes and fees to
government: Provided, That the use of these bonds for
these purposes will be limited to a certain percentage of the
outstanding balance of the financial instruments; Provided,
further, That the PARC shall determine the percentages
mentioned above;
(vi) Payment for tuition fees of the immediate
family of the original bondholder in government
universities, colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of
the original bondholder in government hospital; and
(viii) Such other uses as the PARC may from time
to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision
is unconstitutional insofar as it requires the owners of the expropriated properties to
accept just compensation therefor in less than money, which is the only medium of
payment allowed. In support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the
property expropriated is entitled to a just compensation, which should be neither
more nor less, whenever it is possible to make the assessment, than the money
equivalent of said property. Just compensation has always been understood to be
the just and complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation. 45 (88)(Emphasis
supplied.)
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In J.M. Tuazon Co. v. Land Tenure Administration, 46(89) this Court held:
It is well-settled that just compensation means the equivalent for the
value of the property at the time of its taking. Anything beyond that is more, and
anything short of that is less, than just compensation. It means a fair and full
equivalent for the loss sustained, which is the measure of the indemnity, not
whatever gain would accrue to the expropriating entity. The market value of the
land taken is the just compensation to which the owner of condemned property
is entitled, the market value being that sum of money which a person desirous,
but not compelled to buy, and an owner, willing, but not compelled to sell,
would agree on as a price to be given and received for such property. (Emphasis
supplied.)
In the United States, where much of our jurisprudence on the subject has been
derived, the weight of authority is also to the effect that just compensation for
property expropriated is payable only in money and not otherwise. Thus
The medium of payment of compensation is ready money or cash. The
condemnor cannot compel the owner to accept anything but money, nor can the
owner compel or require the condemnor to pay him on any other basis than the
value of the property in money at the time and in the manner prescribed by the
Constitution and the statutes. When the power of eminent domain is resorted to,
there must be a standard medium of payment, binding upon both parties, and the
law has fixed that standard as money in cash. 47 (90)(Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of
things, be regarded as a reliable and constant standard of compensation. 4(91)8
"Just compensation" for property taken by condemnation means a fair
equivalent in money, which must be paid at least within a reasonable time after
the taking, and it is not within the power of the Legislature to substitute for such
payment future obligations, bonds, or other valuable advantage. 49 (92)
It cannot be denied from these cases that the traditional medium for the
payment of just compensation is money and no other. And so, conformably, has just
compensation been paid in the past solely in that medium. However, we do not deal
here with the traditional exercise of the power of eminent domain. This is not an
ordinary expropriation where only a specific property of relatively limited area is
sought to be taken by the State from its owner for a specific and perhaps local
purpose. What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever
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found and of whatever kind as long as they are in excess of the maximum retention
limits allowed their owners. This kind of expropriation is intended for the benefit not
only of a particular community or of a small segment of the population but of the
entire Filipino nation, from all levels of our society, from the impoverished farmer to
the land-glutted owner. Its purpose does not cover only the whole territory of this
country but goes beyond in time to the foreseeable future, which it hopes to secure
and edify with the vision and the sacrifice of the present generation of Filipinos.
Generations yet to come are as involved in this program as we are today, although
hopefully only as beneficiaries of a richer and more fulfilling life we will guarantee to
them tomorrow through our thoughtfulness today. And, finally, let it not be forgotten
that it is no less than the Constitution itself that has ordained this revolution in the
farms, calling for "a just distribution" among the farmers of lands that have heretofore
been the prison of their dreams but can now become the key at least to their
deliverance.
Such a program will involve not mere millions of pesos. The cost will be
tremendous. Considering the vast areas of land subject to expropriation under the laws
before us, we estimate that hundreds of billions of pesos will be needed, far more
indeed than the amount of P50 billion initially appropriated, which is already
staggering as it is by our present standards. Such amount is in fact not even fully
available at this time.
We assume that the framers of the Constitution were aware of this difficulty
when they called for agrarian reform as a top priority project of the government. It is a
part of this assumption that when they envisioned the expropriation that would be
needed, they also intended that the just compensation would have to be paid not in the
orthodox way but a less conventional if more practical method. There can be no doubt
that they were aware of the financial limitations of the government and had no
illusions that there would be enough money to pay in cash and in full for the lands
they wanted to be distributed among the farmers. We may therefore assume that their
intention was to allow such manner of payment as is now provided for by the CARP
Law, particularly the payment of the balance (if the owner cannot be paid fully with
money), or indeed of the entire amount of the just compensation, with other things of
value. We may also suppose that what they had in mind was a similar scheme of
payment as that prescribed in P.D. No. 27, which was the law in force at the time they
deliberated on the new Charter and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any
categorical agreement among the members regarding the meaning to be given the
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concept of just compensation as applied to the comprehensive agrarian reform

program being contemplated. There was the suggestion to "fine tune" the requirement
to suit the demands of the project even as it was also felt that they should "leave it to
Congress" to determine how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such innovations as
"progressive compensation" and "State-subsidized compensation" were also proposed.
In the end, however, no special definition of the just compensation for the lands to be
expropriated was reached by the Commission. 50(93)
On the other hand, there is nothing in the records either that militates against
the assumptions we are making of the general sentiments and intention of the
members on the content and manner of the payment to be made to the landowner in
the light of the magnitude of the expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner
of the just compensation provided for in the afore-quoted Section 18 of the CARP
Law is not violative of the Constitution. We do not mind admitting that a certain
degree of pragmatism has influenced our decision on this issue, but after all this Court
is not a cloistered institution removed from the realities and demands of society or
oblivious to the need for its enhancement. The Court is as acutely anxious as the rest
of our people to see the goal of agrarian reform achieved at last after the frustrations
and deprivations of our peasant masses during all these disappointing decades. We are
aware that invalidation of the said section will result in the nullification of the entire
program, killing the farmer's hopes even as they approach realization and resurrecting
the spectre of discontent and dissent in the restless countryside. That is not in our view
the intention of the Constitution, and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always
required to be made fully in money, we find further that the proportion of cash
payment to the other things of value constituting the total payment, as determined on
the basis of the areas of the lands expropriated, is not unduly oppressive upon the
landowner. It is noted that the smaller the land, the bigger the payment in money,
primarily because the small landowner will be needing it more than the big
landowners, who can afford a bigger balance in bonds and other things of value. No
less importantly, the government financial instruments making up the balance of the
payment are "negotiable at any time." The other modes, which are likewise available
to the landowner at his option, are also not unreasonable because payment is made in
shares of stock, LBP bonds, other properties or assets, tax credits, and other things of
value equivalent to the amount of just compensation.
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Admittedly, the compensation contemplated in the law will cause the

landowners, big and small, not a little inconvenience. As already remarked, this
cannot be avoided. Nevertheless, it is devoutly hoped that these countrymen of ours,
conscious as we know they are of the need for their forebearance and even sacrifice,
will not begrudge us their indispensable share in the attainment of the ideal of
agrarian reform. Otherwise, our pursuit of this elusive goal will be like the quest for
the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No.
229 does not seem to be viable any more as it appears that Section 4 of the said Order
has been superseded by Section 14 of the CARP Law. This repeats the requisites of
registration as embodied in the earlier measure but does not provide, as the latter did,
that in case of failure or refusal to register the land, the valuation thereof shall be that
given by the provincial or city assessor for tax purposes. On the contrary, the CARP
Law says that the just compensation shall be ascertained on the basis of the factors
mentioned in its Section 17 and in the manner provided for in Section 16.
dctai
The last major challenge to CARP is that the landowner is divested of his
property even before actual payment to him in full of just compensation, in
contravention of a well-accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass
from the owner to the expropriator only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here and in other democratic
jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does
not vest the condemnor until the judgment fixing just compensation is entered
and paid, but the condemnor's title relates back to the date on which the petition
under the Eminent Domain Act, or the commissioner's report under the Local
Improvement Act, is filed. 51 (94)
. . . although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in the owner
until payment is actually made. 52(95) (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 (96)the US Supreme Court cited several cases

holding that title to property does not pass to the condemnor until just compensation
had actually been made. In fact, the decisions appear to be uniformly to this effect. As
early as 1838, in Rubottom v. McLure, 54 (97)it was held that "actual payment to the
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owner of the condemned property was a condition precedent to the investment of the
title to the property in the State" albeit "not to the appropriation of it to public use." In
Rexford v. Knight, 55 (98)the Court of Appeals of New York said that the construction
upon the statutes was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land was
complete prior to the payment. Kennedy further said that "both on principle and
authority the rule is . . . that the right to enter on and use the property is complete, as
soon as the property is actually appropriated under the authority of law for a public
use, but that the title does not pass from the owner without his consent, until just
compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and
Paredes, 56 (99)that:
If the laws which we have exhibited or cited in the preceding discussion
are attentively examined it will be apparent that the method of expropriation
adopted in this jurisdiction is such as to afford absolute reassurance that no
piece of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid . . . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer

as October 21, 1972 and declared that he shall "be deemed the owner" of a portion of
land consisting of a family-sized farm except that "no title to the land owned by him
was to be actually issued to him unless and until he had become a full-fledged
member of a duly recognized farmers' cooperative." It was understood, however, that
full payment of the just compensation also had to be made first, conformably to the
constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of
October 21, 1972 of the land they acquired by virtue of Presidential Decree No.
27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after
proof of full-fledged membership in the farmers' cooperatives and full payment of just
compensation. Hence, it was also perfectly proper for the Order to also provide in its
Section 2 that the "lease rentals paid to the landowner by the farmer-beneficiary after
October 21, 1972 (pending transfer of ownership after full payment of just
compensation), shall be considered as advance payment for the land."
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The CARP Law, for its part, conditions the transfer of possession and
ownership of the land to the government on receipt by the landowner of the
corresponding payment or the deposit by the DAR of the compensation in cash or
LBP bonds with an accessible bank. Until then, title also remains with the landowner.
57(100) No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by
arbitrarily transferring title before the land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer
under P.D. No. 27, as recognized under E.O. No. 228, are retained by him even now
under R.A. No. 6657. This should counterbalance the express provision in Section 6
of the said law that "the landowners whose lands have been covered by Presidential
Decree No. 27 shall be allowed to keep the area originally retained by them
thereunder, further, That original homestead grantees or direct compulsory heirs who
still own the original homestead at the time of the approval of this Act shall retain the
same areas as long as they continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742
that the appeal filed by the petitioners with the Office of the President has already
been resolved. Although we have said that the doctrine of exhaustion of
administrative remedies need not preclude immediate resort to judicial action, there
are factual issues that have yet to be examined on the administrative level, especially
the claim that the petitioners are not covered by LOI 474 because they do not own
other agricultural lands than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that
the petitioners have not yet exercised their retention rights, if any, under P.D. No. 27,
the Court holds that they are entitled to the new retention rights provided for by R.A.
No. 6657, which in fact are on the whole more liberal than those granted by the
decree.
V
The CARP Law and the other enactments also involved in these cases have
been the subject of bitter attack from those who point to the shortcomings of these
measures and ask that they be scrapped entirely. To be sure, these enactments are less
than perfect; indeed, they should be continuously re-examined and rehoned, that they
may be sharper instruments for the better protection of the farmer's rights. But we
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have to start somewhere. In the pursuit of agrarian reform, we do not tread on familiar
ground but grope on terrain fraught with pitfalls and expected difficulties. This is
inevitable. The CARP Law is not a tried and tested project. On the contrary, to use
Justice Holmes' words, "it is an experiment, as all life is an experiment," and so we
learn as we venture forward, and, if necessary, by our own mistakes. We cannot
expect perfection although we should strive for it by all means. Meantime, we struggle
as best we can in freeing the farmer from the iron shackles that have unconscionably,
and for so long, fettered his soul to the soil.
LexLib
By the decision we reach today, all major legal obstacles to the comprehensive
agrarian reform program are removed, to clear the way for the true freedom of the
farmer. We may now glimpse the day he will be released not only from want but also
from the exploitation and disdain of the past and from his own feelings of inadequacy
and helplessness. At last his servitude will be ended forever. At last the farm on which
he toils will be his farm. It will be his portion of the Mother Earth that will give him
not only the staff of life but also the joy of living. And where once it bred for him only
deep despair, now can he see in it the fruition of his hopes for a more fulfilling future.
Now at last can he banish from his small plot of earth his insecurities and dark
resentments and "rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229
are SUSTAINED against all the constitutional objections raised in the herein
petitions.
2. Title to all expropriated properties shall be transferred to the State only
upon full payment of compensation to their respective owners.
3. All rights previously acquired by the tenant-farmers under P.D. No. 27 are
retained and recognized.
4. Landowners who were unable to exercise their rights of retention under
P.D. No. 27 shall enjoy the retention rights granted by R.A. No. 6657 under the
conditions therein prescribed.
5. Subject to the above-mentioned rulings, all the petitions are DISMISSED,
without pronouncement as to costs.
SO ORDERED.
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Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano,

Gancayco, Padilla, Bidin, Sarmiento, Cortes, Grio-Aquino, Medialdea and
Regalado, JJ., concur.
Footnotes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Art. II, Sec. 5.

1973 Constitution, Art. II, Sec. 6.
Ibid., Art. XIV, Sec. 12.
R.A No. 6657, Sec. 15.
149 SCRA 305.
150 SCRA 89.
55 SCRA 26.
91 SCRA 294.
113 SCRA 798.
136 SCRA 27; 146 SCRA 446.
Art. VIII, Sec. 4(2).
Dumlao v. COMELEC, 95 SCRA 392.
Ex Parte Levitt, 303 US 633.
Araneta v. Dinglasan, 84 Phil. 368.
Pascual v. Secretary of Public Works, 110 Phil. 331; PHILCONSA v. Gimenez, 15
SCRA 479; Sanidad v. COMELEC, 73 SCRA 333.
Angara v. Electoral Commission, 63 Phil. 139.
R.A. No. 6657, Sec. 75.
Ibid., Sec. 63.
Bengzon v. Secretary of Justice, 299 US 410.
Alalayan v. NPC, 24 SCRA 172; Sumulong v. COMELEC, 73 Phil. 288; Tio v.
Videogram Regulatory Board, 151 SCRA 208.
Supra.
Lamb v. Phipps, 22 Phil. 456.
Malabanan v. Ramento, 129 SCRA 359; Espaol v. Chairman, Philippine Veterans
Administration, 137 SCRA 314.
106 Phil. 144.
260 US 393.
Powell v. Pennsylvania, 127 US 678; Lutz v. Araneta, 98 Phil. 148; Tio v. Videogram
Regulatory Board, supra.
John J. Costonis, "The Disparity Issue: A Context for the Grand Central Terminal
Decision, "Harvard Law Review, Vol. 91:40, 1977, p. 404.
348 US 1954.
438 US 104.
See note 27.
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31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
International Harvester Co. v. Missouri, 234 US 199.

People v. Cayat, 68 Phil. 12.
Ichong v. Hernandez, 101 Phil. 1155.
US v. Toribio, 15 Phil. 85; Fabie v. City of Manila, 21 Phil. 486; Case v. Board of
Health, 24 Phil. 256.
Noble v. City of Manila, 67 Phil. 1.
100 Phil. 1101.
1987 Constitution, Art. VIII, Sec. 1.
57 L ed. 1063.
Manila Railroad Co. v. Velasques, 32 Phil. 286.
Province of Tayabas v. Perez, 66 Phil. 467; J.M. Tuazon & Co., Inc. v. Land Tenure
Administration, 31 SCRA 413; Municipality of Daet v. Court of Appeals, 93 SCRA
503; Manotok v. National Housing Authority, 150 SCRA 89.
City of Manila v. Estrada, 25 Phil. 208.
58 SCRA 336.
Lewis, Law of Eminent Domain, 3rd Edition, pp. 1166-1167.
149 SCRA 305.
Manila Railroad Co. v. Velasquez, 32 Phil. 286; Province of Tayabas v. Perez, supra,
at note 40.
31 SCRA 413.
Mandl v. City of Phoenix, 18 P 2d 273.
Sacramento Southern R. Co. v. Heilbron, 156 Cal. 408, 104 pp. 979, 980.
City of Waterbury v. Platt Bros. & Co., 56 A 856, 76 Conn, 435 citing Butler v.
Ravine Road Sewer Com'rs, 39 N.J.L. 665; Bloodgood v. Mohawk v. H.R.R. Co., N.Y.
18 Wend. 9 35, 31 Am. Dec. 313; Sanborn v. Helden, 51 Cal 266; Burlington & C.R.
Co. v. Schweikart, 14 P. 329, 10 Colo, 178; 23 Words and Phrases, pl. 460.
Record of the Constitutional Commission, Vol. 2, pp. 647, 704; Vol. 3, pp. 16-20,
243-247.
Chicago Park Dist. v. Downey Coal Co., 1 Ill. 2d 54.
Kennedy v. Indianapolis, 103 US 599, 26 L ed 550.
Ibid.
4 Blkf., 508.
11 NY 314.
40 Phil. 550.
Sec. 16 (d).
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Endnotes
1 (Popup - Popup)
1.
Penned by Associate Justice Luis A. Javellana, ponente; Minerva P. Gonzaga Reyes

and Consuelo Ynares-Santiago, concurring.
2 (Popup - Popup)
2.
Rollo, pp. 18-27; Decision, pp. 1-6.
3 (Popup - Popup)
3.
Record, pp. 564-577. Penned by the Honorable Julio R. Logarta, Presiding Judge of
the Regional Trial Court of the National Capital Judicial Region, Branch LXIII,
Makati, Metro Manila.
4 (Popup - Popup)
4.
Exhs. "M", "K" and "L", pp. 1-3 and 7-8, Folder of Exhibits.
5 (Popup - Popup)
5.
Exh. "H" and Annex "1", pp. 21-25, Record.
6 (Popup - Popup)
6.
Exhs. "P" up to "P-180", pp. 9-89, Folder of Exhibits and Exhs. "I" and "J", pp. 13
and 17, Record.
7 (Popup - Popup)
7.
TSN, 23 June 1988, pp. 5-9, and TSN, 20 April 1989, pp. 7-8.
8 (Popup - Popup)
8.
Record, pp. 1-4 and 55-60.
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9 (Popup - Popup)
9.
Ibid., pp. 81-83.
10 (Popup - Popup)
10.
Ibid., p. 99.
11 (Popup - Popup)
11.
Ibid., pp. 88-89 and 218-219.
12 (Popup - Popup)
12.
Ibid., pp. 113-116 and 125-128.
13 (Popup - Popup)
13.
Ibid., pp. 202, 162-165 and 149-150.
14 (Popup - Popup)
14.
Ibid., pp. 272-273 and 318-320; and TSN, 14 May 1990.
15 (Popup - Popup)
15.
Ibid., pp. 301-302.
16 (Popup - Popup)
16.
Ibid., p. 219.
17 (Popup - Popup)
17.
Ibid., pp. 360 and 578-579.
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18 (Popup - Popup)
18.
Ibid., pp. 507-509 (87 O.G. No. 5, 4 February 1991, pp. 733-734).
19 (Popup - Popup)
19.
Ibid., pp. 536-561.
20 (Popup - Popup)
20.
Ibid., p. 570.
21 (Popup - Popup)
21.
Ibid., pp. 580-584.
22 (Popup - Popup)
22.
Ibid., pp. 581-583 and 585.
23 (Popup - Popup)
23.
Director of Lands vs. Iglesia ni Kristo, 200 SCRA 606, 609.
24 (Popup - Popup)
24.
Court of Appeals Decision, p. 7.
25 (Popup - Popup)
25.
Heirs of Severino Legaspi, Sr. vs. Vda. de Dayot, 188 SCRA 508, 517; G.R. No.
83904, August 13, 1990.
26 (Popup - Popup)
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26.
Director of Lands vs. IAC, 209 SCRA 214; G.R. No. 68948, May 22, 1992.
27 (Popup - Popup)
27.
Court of Appeals Decision, p. 9; Rollo, p. 26.
28 (Popup - Popup)
28.
Geronimo vs. Court of Appeals, 224 SCRA 494; G.R. No. 105540, July 5, 1993.
29 (Popup - Popup)
29.
Embrado vs. Court of Appeals, 233 SCRA 335; G.R. No. 51457, June 27, 1994.
30 (Popup - Popup)
30.
Republic vs. Court of Appeals, 235 SCRA 567; G.R. No. 108998, August 24, 1994.
31 (Popup - Popup)
31.
Court of Appeals Decision, pp. 9 & 10; Rollo, pp. 26-27.
32 (Popup - Popup)
1.
Rendered on May 17, 1976, the ponente being Lim, J., with whom concurred
Gatmaitan and Domondon, JJ.
33 (Popup - Popup)
2.
Rendered on May 28, 1983 by Judge Augusto M. Amores (Branch I).
34 (Popup - Popup)
3.
In turn adopted from the Trial Court. Rollo, pp. 10-12; 27-29.
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35 (Popup - Popup)
4.
ART. XII, L.-par 2, part 2, see Rollo, p. 32.
36 (Popup - Popup)
5.
Rollo, pp. 31-32.
37 (Popup - Popup)
6.
Decision dated Dec. 14, 1984, written for the Court by Associate Judge Alex Z.
Reyes.
38 (Popup - Popup)
7.
G.R. Nos. 70116-19.
39 (Popup - Popup)
8.
143 SCRA 397; the decision having been written for the Second Division of the
Court by Paras, J., with whom concurred Feria, Fernan, Alampay, and Gutierrez, Jr.,
JJ.
40 (Popup - Popup)
9.
SEC. 5.
41 (Popup - Popup)
10.
Petitioners' brief (Rollo, p. 90), pp. 10-11.
42 (Popup - Popup)
11.
Id., p. 11.
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43 (Popup - Popup)
12.
Id., pp. 14-15.
44 (Popup - Popup)
1.
Art. II, Sec. 5.
45 (Popup - Popup)
2.
1973 Constitution, Art. II, Sec. 6.
46 (Popup - Popup)
3.
Ibid., Art. XIV, Sec. 12.
47 (Popup - Popup)
4.
R.A No. 6657, Sec. 15.
48 (Popup - Popup)
5.
149 SCRA 305.
49 (Popup - Popup)
6.
150 SCRA 89.
50 (Popup - Popup)
7.
55 SCRA 26.
51 (Popup - Popup)
8.
91 SCRA 294.
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52 (Popup - Popup)
9.
113 SCRA 798.
53 (Popup - Popup)
10.
136 SCRA 27; 146 SCRA 446.
54 (Popup - Popup)
11.
Art. VIII, Sec. 4(2).
55 (Popup - Popup)
12.
Dumlao v. COMELEC, 95 SCRA 392.
56 (Popup - Popup)
13.
Ex Parte Levitt, 303 US 633.
57 (Popup - Popup)
14.
Araneta v. Dinglasan, 84 Phil. 368.
58 (Popup - Popup)
15.
Pascual v. Secretary of Public Works, 110 Phil. 331; PHILCONSA v. Gimenez, 15

SCRA 479; Sanidad v. COMELEC, 73 SCRA 333.
59 (Popup - Popup)
16.
Angara v. Electoral Commission, 63 Phil. 139.
60 (Popup - Popup)
17.
R.A. No. 6657, Sec. 75.
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61 (Popup - Popup)
18.
Ibid., Sec. 63.
62 (Popup - Popup)
19.
Bengzon v. Secretary of Justice, 299 US 410.
63 (Popup - Popup)
20.
Alalayan v. NPC, 24 SCRA 172; Sumulong v. COMELEC, 73 Phil. 288; Tio v.

Videogram Regulatory Board, 151 SCRA 208.
64 (Popup - Popup)
21.
Supra.
65 (Popup - Popup)
22.
Lamb v. Phipps, 22 Phil. 456.
66 (Popup - Popup)
23.
Malabanan v. Ramento, 129 SCRA 359; Espaol v. Chairman, Philippine Veterans

Administration, 137 SCRA 314.
67 (Popup - Popup)
24.
106 Phil. 144.
68 (Popup - Popup)
25.
260 US 393.
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69 (Popup - Popup)
26.
Powell v. Pennsylvania, 127 US 678; Lutz v. Araneta, 98 Phil. 148; Tio v. Videogram
Regulatory Board, supra.
70 (Popup - Popup)
27.
John J. Costonis, "The Disparity Issue: A Context for the Grand Central Terminal
Decision, "Harvard Law Review, Vol. 91:40, 1977, p. 404.
71 (Popup - Popup)
28.
348 US 1954.
72 (Popup - Popup)
29.
438 US 104.
73 (Popup - Popup)
30.
See note 27.
74 (Popup - Popup)
31.
International Harvester Co. v. Missouri, 234 US 199.
75 (Popup - Popup)
32.
People v. Cayat, 68 Phil. 12.
76 (Popup - Popup)
33.
Ichong v. Hernandez, 101 Phil. 1155.
77 (Popup - Popup)
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34.
US v. Toribio, 15 Phil. 85; Fabie v. City of Manila, 21 Phil. 486; Case v. Board of
Health, 24 Phil. 256.
78 (Popup - Popup)
35.
Noble v. City of Manila, 67 Phil. 1.
79 (Popup - Popup)
36.
100 Phil. 1101.
80 (Popup - Popup)
37.
1987 Constitution, Art. VIII, Sec. 1.
81 (Popup - Popup)
38.
57 L ed. 1063.
82 (Popup - Popup)
39.
Manila Railroad Co. v. Velasques, 32 Phil. 286.
83 (Popup - Popup)
40.
Province of Tayabas v. Perez, 66 Phil. 467; J.M. Tuazon & Co., Inc. v. Land Tenure
Administration, 31 SCRA 413; Municipality of Daet v. Court of Appeals, 93 SCRA
503; Manotok v. National Housing Authority, 150 SCRA 89.
84 (Popup - Popup)
41.
City of Manila v. Estrada, 25 Phil. 208.
85 (Popup - Popup)
42.
58 SCRA 336.
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86 (Popup - Popup)
43.
Lewis, Law of Eminent Domain, 3rd Edition, pp. 1166-1167.
87 (Popup - Popup)
44.
149 SCRA 305.
88 (Popup - Popup)
45.
Manila Railroad Co. v. Velasquez, 32 Phil. 286; Province of Tayabas v. Perez, supra,
at note 40.
89 (Popup - Popup)
46.
31 SCRA 413.
90 (Popup - Popup)
47.
Mandl v. City of Phoenix, 18 p 2d 273.
91 (Popup - Popup)
48.
Sacremento Southern R. Co. v. Heilbron, 156 Cal. 408, 104 pp. 979, 980.
92 (Popup - Popup)
49.
City of Waterbury v. Platt Bros. & Co., 56 A 856, 76 Conn, 435 citing Butler v.
Ravine Road Sewer Com'rs, 39 N.J.L. 665; Bloodgood v. Mohawk v. H.R.R. Co.,
N.Y. 18 Wend. 9 35, 31 Am. Dec. 313; Sanborn v. Helden, 51 Cal 266; Burlington &
C.R. Co. v. Schweikart, 14 p. 329, 10 Colo, 178; 23 Words and Phrases, pl. 460.
93 (Popup - Popup)
50.
Record of the Constitutional Commission, Vol. 2, pp. 647, 704; Vol. 3, pp. 16-20,
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243-247.
94 (Popup - Popup)
51.
Chicago Park Dist. v. Downey Coal Co., 1 Ill. 2d 54.
95 (Popup - Popup)
52.
Kennedy v. Indianapolis, 103 US 599, 26 L ed 550.
96 (Popup - Popup)
53.
Ibid.
97 (Popup - Popup)
54.
4 Blkf., 508.
98 (Popup - Popup)
55.
11 NY 314.
99 (Popup - Popup)
56.
40 Phil. 550.
100 (Popup - Popup)

57.
Sec. 16 (d).
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SECOND DIVISION

[G.R. No. 108926. July 12, 1996.]

CD Technologies Asia, Inc.

"According to petitioner-appellee, the subject property situated at

CD Technologies Asia, Inc.

by virtue of the deed of sale, he is the owner thereof:

he and his predecessors-in-interest have been in open,

other than himself, there is no other person occupying, or having

there are no tenants or agricultural lessees thereon. 8(8)

"On 24 February 1988, oppositor-appellant, the Republic of the

CD Technologies Asia, Inc.

sufficient evidence of a bona fide acquisition of the land by petitioner-appellee

Arsenio Medina who withdrew his opposition on 29 May 1989;

Emilio, Leopoldo and Abraham, all surnamed Borbon; Heirs of

the Heirs of Santos de la Cruz and the Kadakilaan Estate. Upon

"The Heirs of Santos de la Cruz argue that: (1) their

the Heirs of Hermogenes Rodriguez. They allege, among others,

CD Technologies Asia, Inc.

Phase II Laong Plaza Settlers Association, Inc. It filed a motion

"On 13 March 1990, the Community Environment and Natural

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

by private respondent from the premises.

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

Penned by Associate Justice Luis A. Javellana, ponente; Minerva P. Gonzaga Reyes

CD Technologies Asia, Inc.

[G.R. No. 115525. October 30, 1995.]

[G.R. No. 115543. October 30, 1995.]

CD Technologies Asia, Inc.

PHILIPPINES, petitioners, vs. THE SECRETARY OF THE

[G.R. No. 115544. October 30, 1995.]

[G.R. No. 115754. October 30, 1995.]

[G.R. No. 115781. October 30, 1995.]

CD Technologies Asia, Inc.

SECRETARY OF FINANCE, THE

[G.R. No. 115852. October 30, 1995.]

[G.R. No. 115873. October 30, 1995.]

[G.R. No. 115931. October 30, 1995.]

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

AMENDMENT OF SEC. 103 OF THE NATIONAL INTERNAL REVENUE CODE

5. ID.; ID.; ID.; TAXATION AND FREEDOM OF THE PRESS,

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

CD Technologies Asia, Inc.

These are motions seeking reconsideration of our decision dismissing the

The Solicitor General, representing the respondents, filed a consolidated

CD Technologies Asia, Inc.

The contention has no merit.

R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER

R.A. No. 7642

CD Technologies Asia, Inc.

NATIONAL INTERNAL REVENUE CODE (December 28, 1992)

House Bill No. 2165, October 5, 1992

R.A. No. 7643

R.A. No. 7646

R.A. No. 7649

CD Technologies Asia, Inc.