Garcia v. The Board of Investments, et al., G.R. No.

88637, 07 September 1989
05MAR
[GRINO-AQUINO, J.]
FACTS
Congressman Garcia assails the approval by the Board of Investments (BOI) and the
Department of Trade and Industry (DTI) of the amended application for registration of the
Bataan Petrochemical Corporation (BPC), which seeks to transfer the site of its petrochemical
complex from Bataan, the original situs of choice, to the province of Batangas. The BPC’s
original application for registration was published in Philippine Daily Inquirer but the
amended application, changing the site from Bataan to Batangas, was not.
ISSUE
Is there still a need to publish the amended application in a newspaper of general circulation?
 
HELD
YES. The law requires the “publication of applications for registration,” hence, the payment of
publication and other necessary fees … prior to the processing and approval of such
applications (Art. 7, subpar. 3, Omnibus Investments Code).Since the BPC’s amended
application (particularly the change of location from Bataan to Batangas) was in effect a new
application, it should have been published so that whoever may have any objection to the
transfer may be heard. The BOI’s failure to publish such notice and to hold a hearing on the
amended application deprived the oppositors, like the petitioner, of due process and
amounted to a grave abuse of discretion on the part of the BOI.
Lee Hong Hok v. David
FACTS:

 Aniano David acquired lawful title pursuant to his miscellaneous sales application in

accordance with which an order of award and for issuance of a sales patent (*similar to
public auction) was made by the Director of Lands on June 18, 1958, covering Lot 2892.

 On the basis of the order of award of the Director of Lands the Undersecretary of
Agriculture and Natural Resources issued on August 26, 1959, Miscellaneous Sales Patent
No. V-1209 pursuant to which OCT No. 510 was issued by the Register of Deeds of Naga
City on October 21, 1959. 

 Land in question is not a private property as the Director of Lands and the Secretary of
Agriculture and Natural Resources have always sustained the public character for having
been formed by reclamation (as opposed to peittioners contention that it is accretion)
 The only remedy: action for reconveyance on the ground of fraud - But there was no
fraud in this case

ISSUES: 

1. W/N Lee Hong Kok can question the grant. - NO 

2. W/N David has original acquisition of title. - YES

HELD: Court of Appeals Affirmed. (no legal justification for nullifying the right of David to the
disputed lot arising from the grant made in his favor by respondent officials)
 Only the Government, represented by the Director of Lands, or the Secretary of
Agriculture and Natural Resources, can bring an action to cancel a void certificate of title
issued pursuant to a void patent. The legality of the grant is a question between the grantee
and the government.  Private parties like the plaintiffs cannot claim that the patent and title
issued for the land involved are void since they are not the registered owners thereof nor had
they been declared as owners in the cadastral proceedings of Naga Cadastre after claiming it
as their private property. 

 Well-settled Rule : no public land can be acquired by private persons without any grant,
express or implied, from the government

 Cabacug v. Lao:  holder of a land acquired under a free patent is more favorably situated
than that of an owner of registered property. Not only does a free patent have a force and
effect of a Torrens Title, but in addition the person to whom it is granted has likewise in his
favor the right to repurchase within a period of 5 years.

 Imperium v. Dominium

1. Imperium - government authority possessed by the state which is appropriately embraced

in the concept of sovereignty

2. Dominium - capacity to own or acquire property.  The use of this term is appropriate with
reference to lands held by the state in its proprietary character.  In such capacity, it may
provide for the exploitation and use of lands and other natural resources, including their
disposition, except as limited by the Constitution. 

Carino v. Insular Government

Facts:
Mateo Cariño, on  February 23 , 1904, filed his petition in the Court of Land Registration for a
title to a parcel of land consisting of 40 hectares, 1 are, and 13 centares in the town of Baguio,
Province of Benguet. This was heard with a petition for a title for a portion of the land.
The Insular Government opposed the granting of these petitions, because they alleged that
the whole parcel of land is public property of the Government and that the same was never
acquired in any manner or through any title of egresion from the State.
According to Carino, in 1884, he erected and utilized as a domicile a house on the property
situated to the north of that property now in question. They said that during the year
1893 Cariño sold said house to one Cristobal Ramos, who in turn sold the same to Donaldson
Sim. Carino abandoned the house and lived on the land in question.
The court of land registration ruled against their favor. They also ruled that the land was
"used for pasture and sowing," and belongs to the class called public land.

Issue: Is Carino the rightful possessor of the land?

Held: No, petition denied.

Ratio:
Under the express provisions of law, a parcel of land being of common origin, presumptively
belonged to the State during its sovereignty, and, in order to perfect the
legitimate acquisition of such land by private persons, it was necessary that the possession of
the same pass from the State.
There was no proof of title of egresion of this land from the domain of the Spanish
Government.
The possessory information was not the one authorized in substitution for the one in
adjustment of the royal decree of February 13, 1894. This was due to:
1. the land has been in an uninterrupted state of cultivation during a period of six years last
past; or that the same has been possessed without interruption during a period of twelve
years and has been in a state of cultivation up to the date of the information and during the
three years immediately preceding such information; or that such land had been possessed
openly without interruption during a period of thirty or more years, notwithstanding the land
had not been cultivated
Or such land had been possessed openly without interruption during a period of thirty or
more years, notwithstanding the land had not been cultivated
2. Under Spanish law, there was a period of one year allowable to verify the possessory
information. After the expiration of this period of the right of the cultivators and persons in
possession to obtain gratuitous title thereto lapses and the land together with full possession
reverts to the state, or, as the case may be, to the community, and the said possessors and
cultivators or their assigns would simply have rights under universal or general title of
average in the event that the land is sold within a period of five years immediately following
the cancellation. The possessors not included under this chapter can only acquire by time the
ownership and title to unappropriated or royal lands in accordance with common law.
In accordance with the preceding provisions, the right that remained to Cariño, if it be certain
that he was the true possessor of the land in question, was the right of average in case the
Government or State could have sold the same within the period of five years immediately
following for example, if the denouncement of purchase had been carried out by Felipe Zafra
or any other person, from the record of the case
The right of possession in accordance with civil law remained at all times subordinate to the
Spanish administrative law, inasmuch as it could only be of force when pertaining to royal
transferable or alienable lands even until after February 13, 1894.
3. The advent of American sovereignty necessarily brought a new method of dealing with
lands and particularly as to the classification and manner of transfer and acquisition of royal
or common lands then appropriated, which were thenceforth merely called public lands, the
alienation of which was reserved to the Government, in accordance with the Organic Act of
1902 and other laws like Act No. 648, herein mentioned by the petitioner.
Section 6 of Act No. 627 admits prescription, as a basis for obtaining the right of ownership.
"The petitioners claim the title under the period of prescription of ten years established by
that act, as well as by reason of his occupancy and use from time immemorial. But said act
admits such prescription for the purpose of obtaining title and ownership to lands not
exceeding more that 16 hectares in extent." Under Sec. 6 of said act. The land claimed
by Cariño is 40 hectares in extent, if we take into consideration his petition, or an extension
of 28 hectares, therefore it follows that the judgment denying the petition herein and now
appealed from was strictly in accordance with the law invoked.
 And of the 28 hectares of land as set out in the possessory information, one part of same,
according to the testimony of Cariño, belongs to Vicente Valpiedad, the extent of which is not
determined. From all of which it follows that the precise extent has not been determined in
the trial of this case on which judgment might be based in the event that the judgment and
title be declared in favor of the petitioner, Mateo Cariño. And we should not lose sight of the
fact that, considering the intention of Congress in granting ownership and title to 16 hectares,
that Mateo Cariño and his children have already exceeded such amount in various
acquirements of lands, all of which is shown in different cases decided by the said Court of
Land Registration.
Republic v. Quasha
Facts:
William R. Quasha, an American citizen, had acquired by purchase on 26 November 1954 a
parcel of land with the permanent improvements thereon, situated at 22 Molave Place, in
Forbes Park, Municipality of Makati, Province of Rizal. Quasha averred the acquisition of the
real estate aforesaid; that the Republic of the Philippines, through its officials, claimed that
upon expiration of the Parity Amendment on 3 July 1974, rights acquired by citizens of the
United States of America shall cease and be of no further force and effect; that such claims
necessarily affect the rights and interest of the plaintiff, and that continued uncertainty as to
the status of plaintiff's property after 3 July 1974 reduces the value thereof, and precludes
further improvements being introduced thereon, for which reason plaintiff Quasha sought a
declaration of his rights under the Parity Amendment, said plaintiff contending that the
ownership of properties during the effectivity of the Parity Amendment continues
notwithstanding the termination and effectivity of the Amendment.

Then Solicitor General Antonio P. Barredo (and later on his successors in office, Felix V.
Makasiar and Felix Q. Antonio) contended that the land acquired by plaintiff constituted private
agricultural land and that the acquisition violated section 5, Article XIII, of the Constitution of
the Philippines, which prohibits the transfer of private agricultural land to non-Filipinos, except
by hereditary succession; and assuming, without conceding, that Quasha's acquisition was valid,
any and all rights by him so acquired "will expire ipso facto and ipso jure at the end of the day
on 3 July 1974, if he continued to hold the property until then, and will be subject to escheat or
reversion proceedings" by the Republic.

CFI of Rizal declared that acquisition by the plaintiff on 26 November 1954 of, the private
agricultural land.

Issue:
Whether or not under or by virtue of the so-called Parity Amendment to the Philippine
Constitution respondent Quasha could validly acquire ownership of the private residential land
in Forbes Park, Makati, Rizal, which is concededly classified private agricultural land.

Held:
As originally drafted by the framers of the Constitution, the privilege to acquire and exploit
agricultural lands of the public domain, and other natural resources of the Philippines, and to
operate public utilities, were reserved to Filipinos and entities owned or controlled by them:
but the "Parity Amendment" expressly extended the privilege to citizens of the United States of
America and/or to business enterprises owned or controlled by them.No other provision of our
Constitution was referred to by the "Parity Amendment"; not Section 2 of Article XIII limiting
the maximum area of public agricultural lands that could be held by individuals or corporations
or associations; nor Section 5 restricting the transfer or assignment of private agricultural lands
to those qualified to acquire or hold lands of the public domain (which under the original
Section 1 of Article XIII meant Filipinos exclusively), save in cases of hereditary succession.

As ruled in Commissioner of Internal Revenue vs. Guerrero, et al., L-20942, 22 September 1967,

21 SCRA 181, per Justice Enrique M. Fernando:
"'While good faith, no less than adherence to the categorical wording of the Ordinance,
requires that all the rights and privileges thus granted to Americans and business enterprises
owned and controlled by them be respected, anything further would not be warranted.
Nothing less would suffice but anything more is not justified.'"

The basis for the strict interpretation was given by former President of the University of the
Philippines, Hon. Vicente G. Sinco (Congressional Record, House of Representatives, Volume 1,
No. 26, page 561):
"'It should be emphatically stated that the provisions of our Constitution which limit to Filipinos
the rights to develop the natural resources and to operate the public utilities of the Philippines
is one of the bulwarks of our national integrity. The Filipino people decided to include it in our
Constitution in order that it may have the stability and permanency that its importance
requires. It is written in our Constitution so that it may neither be the subject of barter nor be
impaired in the give and take of politics. With our natural resources, our sources of power and
energy, our public lands, and our public utilities, the material basis of the nation's existence, in
the hands of aliens over whom the Philippine Government does not have complete control, the
Filipinos may soon find themselves deprived of their patrimony and living as it were, in a house
that no longer belongs to them.'"

The true extent of the Parity Amendment, as understood by its proponents in the Philippine
Congress, was clearly expressed by one of its advocates, Senator Lorenzo Sumulong:
'It is a misconception to believe that under this amendment Americans will be able to acquire
all kinds of natural resources of this country, and even after the expiration of 28 years their
acquired rights cannot be divested from them. If we read carefully the language of
thisamendment which is taken verbatim from the provisions of the Bell Act, and, which in turn,
is taken also verbatim from certain sections of theConstitution, you will find out that the
equality of rights granted under this amendment refers only to two subjects. Firstly, it refers to
exploitation of natural resources, and secondly, it refers to the operation of public utilities . Now,
when it comes to exploitation of natural resources, it must be pointed out here that under our
Constitution and under this amendment, only public agricultural land may be acquired, may be
bought, so that on the supposition that we give way to this amendment and on the further
supposition that it is approved by our people, let not the mistaken belief be entertained that all
kinds of natural resources may be acquired by Americans because under our Constitution forest
lands cannot be bought, mineral lands cannot be bought, because by explicit provision of the
Constitution they belong to the State, they belong to our Government, they belong to our
people. That is why we call them rightly the patrimony of our race. Even if the Americans
should so desire, they can have no further privilege than to ask for a lease of concession of
forest lands and mineral lands because it is so commanded in the Constitution. And under the
Constitution, such a concession is given only for a limited period. It can be extended only for 25
years, renewable for another 25. So that with respect to mineral or forest lands, all they can do
is to lease it for 25 years, and after the expiration of the original 25years they will have to
extend it, and I believe it can be extended provided that it does not exceed 28 years because this
agreement is to be effected only as an ordinance and for the express period of 28 years . So that
it is my humble belief that there is nothing to worry about insofar as our forest and mineral
lands are concerned.
Now, coming to the operation of public utilities, as every member of the Congress knows, it is
also for a limited period, under our Constitution, for a period not exceeding 50 years. And since
this amendment is intended to endure only for 28 years, it is my humble opinion that when
Americans try to operate public utilities they cannot take advantage of the maximum provided
in the Constitution but only the 28 years which is expressly provided to be the life of this
amendment.
There remains for us to consider the case of our public agricultural lands. To be sure, they may
be bought, and if we pass this amendment, Americans may buy our public agricultural lands,
but the very same Constitution applying even to Filipinos, provides that the sale of public
agricultural lands to a corporation can never exceed one thousand and twenty-four hectares.
That is to say, if an American corporation, and American enterprise, should decide to invest its
money in public agricultural lands, it will be limited to the amount of 1,024 hectares, no more
than 1,024 hectares' (Italics supplied)."

Thus, whether from the Philippine or the American side, the intention was to secure parity for
United States citizens only in two matters: (1) exploitation, development and utilization of
public lands, and other natural resources of the Philippines; and (2) the operation of public
utilities. That and nothing else.

Under the "Parity Amendment" to our Constitution, citizens of the United States and
corporations and business enterprises owned or controlled by them can not acquire and own,
save in cases of hereditary succession, private agricultural lands in the Philippines and that all
other rights acquired by them under said Amendment will expire on 3 July 1974.

Krivenko v. Register of Deeds

FACTS:

Alexander Krivenko, an alien, bought a residential lot in December of 1941. The registration
was interrupted by war. In 1945, he sought to accomplish the registration but was denied by
the register of deed on ground that, being an alien, he cannot acquire land within the
jurisdiction. Krivenko appealed to the Court.

ISSUES:
1. Whether or not an alien under our Constitution may acquire residential land?
2. Whether or not the prohibitions of the rights to acquire residential lot that was already of
private ownership prior to the approval of this Constitutions is applicable at the case at bar?

RULING:

1. NO. Under the Article XIII, Section 1, of the Constitution states that: All agricultural, timber,
and mineral lands of the public domain, water, minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, and other natural resources of the Philippines belong to
the State, and their disposition, exploitation, development, or utilization shall be limited to
citizens of the Philippines, or to corporations or associations at least sixty per centum of the
capital of which is owned by such citizens, subject to any existing right, grant, lease, or
concession at the time of the inauguration of the Government established under this
Constitution. This means to say that, under the provisions of the Constitutions, aliens are not
allowed to acquire the ownership of urban or residential lands in the Philippines and, as
consequence, all acquisitions made in contravention of the prohibitions since the
fundamental law became effective are null and void per se and ab initio.

2. Prior to the Constitution, there were in the Public Land Act No. 2874 sections 120 and 121
which granted aliens the right to acquire private only by way of reciprocity. It is to be
observed that the pharase "no land" used in this section refers to all private lands, whether
strictly agricultural, residential or otherwise, there being practically no private land which had
not been acquired by any of the means provided in said two sections. Therefore, the
prohibition contained in these two provisions was, in effect, that no private land could be
transferred to aliens except "upon express authorization by the Philippine Legislature, to
citizens of Philippine Islands the same right to acquire, hold, lease, encumber, dispose of, or
alienate land." In other words, aliens were granted the right to acquire private land merely by
way of reciprocity.

Laurel v. Garcia

Facts:
Petitioners seek to stop the Philippine Government to sell the Roppongi Property, which
is located in Japan. It is one of the properties given by the Japanese Government as
reparations for damage done by the latter to the former during the war.

Petitioner argues that under Philippine Law, the subject property is property of public
dominion. As such, it is outside the commerce of men. Therefore, it cannot be alienated.

Respondents aver that Japanese Law, and not Philippine Law, shall apply to the case
because the property is located in Japan. They posit that the principle of lex situs
applies.

Issues and Held:

1. WON the subject property cannot be alienated.

The answer is in the affirmative.

Under Philippine Law, there can be no doubt that it is of public dominion unless it is
convincingly shown that the property has become patrimonial. This, the respondents
have failed to do. As property of public dominion, the Roppongi lot is outside the
commerce of man. It cannot be alienated.

2. WON Philippine Law applies to the case at bar.

The answer is in the affirmative.

We see no reason why a conflict of law rule should apply when no conflict of law
situation exists. A conflict of law situation arises only when: (1) There is a dispute over
the title or ownership of an immovable, such that the capacity to take and transfer
immovables, the formalities of conveyance, the essential validity and effect of the
transfer, or the interpretation and effect of a conveyance, are to be determined; and (2)
A foreign law on land ownership and its conveyance is asserted to conflict with a
domestic law on the same matters. Hence, the need to determine which law should
apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question
that the property belongs to the Philippines. The issue is the authority of the respondent
officials to validly dispose of property belonging to the State. And the validity of the
procedures adopted to effect its sale. This is governed by Philippine Law. The rule of lex
situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance of
the lex situs rule is misplaced. The opinion does not tackle the alienability of the real
properties procured through reparations nor the existence in what body of the authority
to sell them. In discussing who are capable of acquiring the lots, the Secretary merely
explains that it is the foreign law which should determine who can acquire the
properties so that the constitutional limitation on acquisition of lands of the public
domain to Filipino citizens and entities wholly owned by Filipinos is inapplicable.

CHEESMAN VS. IAC

FACTS: THOMAS CHEESMAN AND CRISELDA P. CHEESMAN WERE MARRIED ON DECEMBER 4,

1970 BUT HAVE BEEN SEPARATED SINCE FEBRUARY 15,1981.1

ON JUNE 4, 1974, A "DEED OF SALE AND TRANSFER OF POSSESSORY RIGHTS" WAS

EXECUTED BY ARMANDO ALTARES CONVEYING A PARCEL OF UNREGISTERED LAND AND THE
HOUSE THEREON (AT NO. 7 NEPTUNE STREET, GORDON HEIGHTS, OLONGAPO CITY) IN
FAVOR OF "CRISELDA P. CHEESMAN, OF LEGAL AGE, FILIPINO CITIZEN, MARRIED TO THOMAS
CHEESMAN, AND RESIDING AT LOT NO. 1, BLK. 8, FILTRATION ROAD, STA. RITA, OLONGAPO
CITY . . ." THOMAS CHEESMAN, ALTHOUGH AWARE OF THE DEED, DID NOT OBJECT TO THE
TRANSFER BEING MADE ONLY TO HIS WIFE.

THEREAFTER—AND AGAIN WITH THE KNOWLEDGE OF THOMAS CHEESMAN AND ALSO

WITHOUT ANY PROTEST BY HIM—TAX DECLARATIONS FOR THE PROPERTY PURCHASED WERE
ISSUED IN THE NAME ONLY OF CRISELDA CHEESMAN AND CRISELDA ASSUMED EXCLUSIVE
MANAGEMENT AND ADMINISTRATION OF SAID PROPERTY, LEASING IT TO TENANTS.

ON JULY 1, 1981, CRISELDA CHEESMAN SOLD THE PROPERTY TO ESTELITA M. PADILLA,

WITHOUT THE KNOWLEDGE OR CONSENT OF THOMAS CHEESMAN. THE DEED DESCRIBED
CRISELDA AS BEING " . . . OF LEGAL AGE, MARRIED TO AN AMERICAN CITIZEN,. . ."

THIRTY DAYS LATER, OR ON JULY 31, 1981, THOMAS CHEESMAN BROUGHT SUIT IN THE
COURT OF FIRST INSTANCE AT OLONGAPO CITY AGAINST HIS WIFE, CRISELDA, AND ESTELITA
PADILLA, PRAYING FOR THE ANNULMENT OF THE SALE ON THE GROUND THAT THE
TRANSACTION HAD BEEN EXECUTED WITHOUT HIS KNOWLEDGE AND CONSENT. AN ANSWER
WAS FILED IN THE NAMES OF BOTH DEFENDANTS, ALLEGING THAT (1) THE PROPERTY SOLD
WAS PARAPHERNAL, HAVING BEEN PURCHASED BY CRISELDA WITH FUNDS EXCLUSIVELY
BELONGING TO HER ("HER OWN SEPARATE MONEY"); (2) THOMAS CHEESMAN, BEING AN
AMERICAN, WAS DISQUALIFIED TO HAVE ANY INTEREST OR RIGHT OF OWNERSHIP IN THE
LAND; AND (3) ESTELITA PADILLA WAS A BUYER IN GOOD FAITH.

CFI: DECLARED THAT THE SALE EXECUTED BY CRISELDA CHEESMAN IN FAVOR OF PADILLA IS

VOID AB INITIO  AND ORDERING THE DELIVERY OF THE PROPERTY TO THOMAS CHEESMAN AS
ADMINISTRATOR OF THE CONJUGAL PARTNERSHIP PROPERTY.
TRIAL COURT’S SUMMARY JUDGMENT: THE SALE BETWEEN CRISELDA CHEESMAN AND
PADILLA IS VALID. THOMAS CHEESMAN’S COMPLAINT IS DISMISSED AND IS ORDERED TO
IMMEDIATELY TURN OVER THE POSSESSION OF THE HOUS AND LOT TO PADILLA.

IAC: FOUND ALL OF THOMAS CHEESMAN’S CONTENTION TO BE WITHOUT MERIT. IAC

AFFIRMED SUMMARY JUDGMENT HAVING FOUND NO REVERSIBLE ERROR.

ISSUE: WHETHER OR NOT THOMAS CHEESMAN HAS A RIGHT OVER THE ALLEGED CONJUGAL
PROPERTY SOLD BY HIS FILIPINO WIFE WITHOUT HIS CONSENT DESPIITE HIM BEING AN
AMERICAN CITIZEN.

HELD: NO.

RATIO: THE FUNDAMENTAL LAW PROHIBITS THE SALE TO ALIENS OF RESIDENTIAL LAND.

SECTION 14, ARTICLE XIV OF THE 1973 CONSTITUTION ORDAINS THAT, "SAVE IN CASES OF
HEREDITARY SUCCESSION, NO PRIVATE LAND SHALL BE TRANSFERRED OR CONVEYED EXCEPT
TO INDIVIDUALS, CORPORATIONS, OR ASSOCIATIONS QUALIFIED TO ACQUIRE OR HOLD LANDS
OF THE PUBLIC DOMAIN." PETITIONER THOMAS CHEESMAN WAS, OF COURSE, CHARGED WITH
KNOWLEDGE OF THIS PROHIBITION. THUS, ASSUMING THAT IT WAS HIS INTENTION THAT THE
LOT IN QUESTION BE PURCHASED BY HIM AND HIS WIFE, HE ACQUIRED NO RIGHT WHATEVER
OVER THE PROPERTY BY VIRTUE OF THAT PURCHASE; AND IN ATTEMPTING TO ACQUIRE A
RIGHT OR INTEREST IN LAND, VICARIOUSLY AND CLANDESTINELY, HE KNOWINGLY VIOLATED
THE CONSTITUTION; THE SALE AS TO HIM WAS NULL AND VOID. IN ANY EVENT, HE HAD AND
HAS NO CAPACITY OR PERSONALITY TO QUESTION THE SUBSEQUENT SALE OF THE SAME
PROPERTY BY HIS WIFE ON THE THEORY THAT IN SO DOING HE IS MERELY EXERCISING THE
PREROGATIVE OF A HUSBAND IN RESPECT OF CONJUGAL PROPERTY . TO SUSTAIN SUCH A
THEORY WOULD PERMIT INDIRECT CONTROVERSION OF THE CONSTITUTIONAL PROHIBITION. IF
THE PROPERTY WERE TO BE DECLARED CONJUGAL, THIS WOULD ACCORD TO THE ALIEN
HUSBAND A NOT INSUBSTANTIAL INTEREST AND RIGHT OVER LAND, AS HE WOULD THEN HAVE
A DECISIVE VOTE AS TO ITS TRANSFER OR DISPOSITION. THIS IS A RIGHT THAT THE
CONSTITUTION DOES NOT PERMIT HIM TO HAVE.

AS ALREADY OBSERVED, THE FINDING THAT HIS WIFE HAD USED HER OWN MONEY TO
PURCHASE THE PROPERTY CANNOT, AND WILL NOT, AT THIS STAGE OF THE PROCEEDINGS BE
REVIEWED AND OVERTURNED. BUT EVEN IF IT WERE A FACT THAT SAID WIFE HAD USED
CONJUGAL FUNDS TO MAKE THE ACQUISITION, THE CONSIDERATIONS JUST SET OUT MILITATE,
ON HIGH CONSTITUTIONAL GROUNDS, AGAINST HIS RECOVERING AND HOLDING THE PROPERTY
SO ACQUIRED OR ANY PART THEREOF. AND WHETHER IN SUCH AN EVENT, HE MAY RECOVER
FROM HIS WIFE ANY SHARE OF THE MONEY USED FOR THE PURCHASE OR CHARGE HER WITH
UNAUTHORIZED DISPOSITION OR EXPENDITURE OF CONJUGAL FUNDS IS NOT NOW INQUIRED
INTO; THAT WOULD BE, IN THE PREMISES, A PURELY ACADEMIC EXERCISE. AN EQUALLY
DECISIVE CONSIDERATION IS THAT ESTELITA PADILLA IS A PURCHASER IN GOOD FAITH, BOTH
THE TRIAL COURT AND THE APPELLATE COURT HAVING FOUND THAT CHEESMAN'S OWN
CONDUCT HAD LED HER TO BELIEVE THE PROPERTY TO BE EXCLUSIVE PROPERTY OF THE
LATTER'S WIFE, FREELY DISPOSABLE BY HER WITHOUT HIS CONSENT OR INTERVENTION. AN
INNOCENT BUYER FOR VALUE, SHE IS ENTITLED TO THE PROTECTION OF THE LAW IN HER
PURCHASE, PARTICULARLY AS AGAINST CHEESMAN, WHO WOULD ASSERT RIGHTS TO THE
PROPERTY DENIED HIM BY BOTH LETTER AND SPIRIT OF THE CONSTITUTION ITSELF.

RULING: WHEREFORE, THE APPEALED DECISION IS AFFIRMED, WITH COSTS AGAINST

PETITIONER.

SO ORDERED.

HULST VS PR BUILDER

Facts:
Petitioner filed the present Motion for Partial Reconsideration[3] insofar as he was
ordered to return to respondent the amount of P2,125,540.00 in excess of the proceeds
of the auction sale delivered to petitioner.
Petitioner contends that the Contract to
Sell between petitioner and respondent involved a condominium unit and did not violate
the Constitutional proscription against ownership of land by aliens. He argues that the
contract to sell will not transfer to the buyer ownership of the land on which the unit is
situated;... thus, the buyer will not get a transfer certificate of title but merely a
Condominium Certificate of Title as evidence of ownership; a perusal of the contract will
show that what the buyer acquires is the seller's title and rights to and interests in the
unit and the common... areas.
Issues:
This resolves petitioner's Motion for Partial Reconsideration.
Ruling:
Under Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act, foreign
nationals can own Philippine real estate through the purchase of condominium units or
townhouses constituted under the Condominium principle with Condominium
Certificates of Title.
Where the common areas in a condominium project are held by a corporation, no
transfer or conveyance of a unit shall be valid if the concomitant transfer of the
appurtenant... membership or stockholding in the corporation will cause the alien
interest in such corporation to exceed the limits imposed by existing laws.
The law provides that no condominium unit can be sold without at the same time selling
the corresponding amount of rights, shares or other interests in the condominium
management body, the Condominium Corporation; and no one can buy shares in a
Condominium Corporation without at... the same time buying a condominium unit.
It expressly allows foreigners to acquire condominium units and shares in condominium
corporations up to not more than 40% of the total and outstanding capital stock of a
Filipino-owned or controlled corporation.
Under this set up, the... ownership of the land is legally separated from the unit itself.
The land is owned by a Condominium Corporation and the unit owner is simply a
member in this Condominium Corporation.

Philippine Banking Corp. v. Lui She

FACTS: JUSTINA SANTOS Y CANON FAUSTINO AND HER SISTER LORENZO WERE THE OWNERS
IN COMMON OF A PIECE OF LAND IN MANILA. THIS PARCEL, WITH AN AREA OF 2,582.30
SQUARE METERS, IS LOCATED ON RIZAL AVENUE AND OPENS INTO FLORENTINO TORRES
STREET AT THE BACK AND KATUBUSAN STREET ON ONE SIDE. IN IT ARE TWO RESIDENTIAL
HOUSES WITH ENTRANCE ON FLORENTINO TORRES STREET AND THE HEN WAH RESTAURANT
WITH ENTRANCE ON RIZAL AVENUE. THE SISTERS LIVED IN ONE OF THE HOUSES, WHILE
WONG HENG, A CHINESE, LIVED WITH HIS FAMILY IN THE RESTAURANT. WONG HAD BEEN A
LONG-TIME LESSEE OF A PORTION OF THE PROPERTY, PAYING A MONTHLY RENTAL OF
P2,620.

ON SEPTEMBER 22, 1957 JUSTINA SANTOS BECAME THE OWNER OF THE ENTIRE PROPERTY
AS HER SISTER DIED WITH NO OTHER HEIR. THEN ALREADY WELL ADVANCED IN YEARS, BEING
AT THE TIME 90 YEARS OLD, BLIND, CRIPPLED AND AN INVALID, SHE WAS LEFT WITH NO
OTHER RELATIVE TO LIVE WITH. HER ONLY COMPANIONS IN THE HOUSE WERE HER 17 DOGS
AND 8 MAIDS. HER OTHERWISE DREARY EXISTENCE WAS BRIGHTENED NOW AND THEN BY THE
VISITS OF WONG'S FOUR CHILDREN WHO HAD BECOME THE JOY OF HER LIFE. WONG HIMSELF
WAS THE TRUSTED MAN TO WHOM SHE DELIVERED VARIOUS AMOUNTS FOR SAFEKEEPING,
INCLUDING RENTALS FROM HER PROPERTY AT THE CORNER OF ONGPIN AND SALAZAR
STREETS AND THE RENTALS WHICH WONG HIMSELF PAID AS LESSEE OF A PART OF THE RIZAL
AVENUE PROPERTY. WONG ALSO TOOK CARE OF THE PAYMENT; IN HER BEHALF, OF TAXES,
LAWYERS' FEES, FUNERAL EXPENSES, MASSES, SALARIES OF MAIDS AND SECURITY GUARD,
AND HER HOUSEHOLD EXPENSES.

JUSTINA SANTOS THEN EXECUTED ON A CONTRACT OF LEASE IN FAVOR OF WONG, COVERING

THE PORTION THEN ALREADY LEASED TO HIM AND ANOTHER PORTION FRONTING FLORENTINO
TORRES STREET. THE LEASE WAS FOR 50 YEARS, ALTHOUGH THE LESSEE WAS GIVEN THE
RIGHT TO WITHDRAW AT ANY TIME FROM THE AGREEMENT.

ON DECEMBER 21 SHE EXECUTED ANOTHER CONTRACT GIVING WONG THE OPTION TO BUY
THE LEASED PREMISES FOR P120,000, PAYABLE WITHIN TEN YEARS AT A MONTHLY
INSTALLMENT OF P1,000. THE OPTION, WRITTEN IN TAGALOG, IMPOSED ON HIM THE
OBLIGATION TO PAY FOR THE FOOD OF THE DOGS AND THE SALARIES OF THE MAIDS IN HER
HOUSEHOLD, THE CHARGE NOT TO EXCEED P1,800 A MONTH. THE OPTION WAS CONDITIONED
ON HIS OBTAINING PHILIPPINE CITIZENSHIP, A PETITION FOR WHICH WAS THEN PENDING IN
THE COURT OF FIRST INSTANCE OF RIZAL.

ITAPPEARS, HOWEVER, THAT THIS APPLICATION FOR NATURALIZATION WAS WITHDRAWN

WHEN IT WAS DISCOVERED THAT HE WAS NOT A RESIDENT OF RIZAL. ON OCTOBER 28, 1958
SHE FILED A PETITION TO ADOPT HIM AND HIS CHILDREN ON THE ERRONEOUS BELIEF THAT
ADOPTION WOULD CONFER ON THEM PHILIPPINE CITIZENSHIP. THE ERROR WAS DISCOVERED
AND THE PROCEEDINGS WERE ABANDONED.

IN TWO WILLS EXECUTED ON AUGUST 24 AND 29, 1959, SHE BADE HER LEGATEES TO
RESPECT THE CONTRACTS SHE HAD ENTERED INTO WITH WONG, BUT IN A CODICIL OF A
LATER DATE (NOVEMBER 4, 1959) SHE APPEARS TO HAVE A CHANGE OF HEART. CLAIMING
THAT THE VARIOUS CONTRACTS WERE MADE BY HER BECAUSE OF MACHINATIONS AND
INDUCEMENTS PRACTICED BY HIM, SHE NOW DIRECTED HER EXECUTOR TO SECURE THE
ANNULMENT OF THE CONTRACTS.

ISSUE: WHETHER OR NOT THE CONTRACTS WITH WONG WERE VALID

HELD: NO.

RATIO: THE CONTRACTS SHOW NOTHING THAT IS NECESSARILY ILLEGAL, BUT CONSIDERED
COLLECTIVELY, THEY REVEAL AN INSIDIOUS PATTERN TO SUBVERT BY INDIRECTION WHAT THE
CONSTITUTION DIRECTLY PROHIBITS. TO BE SURE, A LEASE TO AN ALIEN FOR A REASONABLE
PERIOD IS VALID. SO IS AN OPTION GIVING AN ALIEN THE RIGHT TO BUY REAL PROPERTY ON
CONDITION THAT HE IS GRANTED PHILIPPINE CITIZENSHIP.
            BUT IF AN ALIEN IS GIVEN NOT ONLY A LEASE OF, BUT ALSO AN OPTION TO BUY, A
PIECE OF LAND, BY VIRTUE OF WHICH THE FILIPINO OWNER CANNOT SELL OR OTHERWISE
DISPOSE OF HIS PROPERTY, THIS TO LAST FOR 50 YEARS, THEN IT BECOMES CLEAR THAT
THE ARRANGEMENT IS A VIRTUAL TRANSFER OF OWNERSHIP WHEREBY THE OWNER DIVESTS
HIMSELF IN STAGES NOT ONLY OF THE RIGHT TO ENJOY THE LAND BUT ALSO OF THE RIGHT
TO DISPOSE OF IT— RIGHTS THE SUM TOTAL OF WHICH MAKE UP OWNERSHIP. IF THIS CAN BE
DONE, THEN THE CONSTITUTIONAL BAN AGAINST ALIEN LANDHOLDING IN THE PHILIPPINES, IS
INDEED IN GRAVE PERIL.

RULING: ACCORDINGLY, THE CONTRACTS IN QUESTION (PLFF EXHS. 3-7) ARE ANNULLED
AND SET ASIDE; THE LAND SUBJECT-MATTER OF THE CONTRACTS IS ORDERED RETURNED TO
THE ESTATE OF JUSTINA SANTOS AS REPRESENTED BY THE PHILIPPINE BANKING
CORPORATION; WONG HENG (AS SUBSTITUTED BY THE DEFENDANT-APPELLANT LUI SHE) IS
ORDERED TO PAY THE PHILIPPINE BANKING CORPORATION THE SUM OF P56,564.35, WITH
LEGAL INTEREST FROM THE DATE OF THE FILING OF THE AMENDED COMPLAINT; AND THE
AMOUNTS CONSIGNED IN COURT BY WONG HENG SHALL BE APPLIED TO THE PAYMENT OF
RENTAL FROM NOVEMBER 15, 1959 UNTIL THE PREMISES SHALL HAVE BEEN VACATED BY HIS
HEIRS. COSTS AGAINST THE DEFENDANT-APPELLANT.

La Bugal-B’Laan Tribal Association v. Ramos

LA BUGAL B’LAAN TRIBAL ASSOCIATION INC., et. al. v. V. O. RAMOS,

Secretary Department of Environment and Natural Resources; H. RAMOS,
Director, Mines and Geosciences Bureau (MGB-DENR); R. TORRES,
Executive Secretary; and WMC (PHILIPPINES) INC. 
The constitutional provision allowing the President to enter into FTAA is a exception to
the rule that participation in the nation’s natural resources is reserved exclusively to
Filipinos. Provision must be construed strictly against their enjoyment by non-Filipinos.
RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity
of RA 7942, or on March 30, 1995, the President signed a Financial and Technical
Assistance Agreement (FTAA) with WMCP, a corporation organized under Philippine
laws, covering close to 100,000 hectares of land in South Cotabato, Sultan Kudarat,
Davao del Sur and North Cotabato. On August 15, 1995, the Environment Secretary
Victor Ramos issued DENR Administrative Order 95-23, which was later repealed by
DENR Administrative Order 96-40, adopted on December 20, 1996.
Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the
government and WMCP be declared unconstitutional on ground that they allow fully
foreign owned corporations like WMCP to exploit, explore and develop Philippine
mineral resources in contravention of Article XII Section 2 paragraphs 2 and 4 of the
Charter.
In January 2001, WMC – a publicly listed Australian mining and exploration company –
sold its whole stake in WMCP to Sagittarius Mines, 60% of which is owned by Filipinos
while 40% of which is owned by Indophil Resources, an Australian company. DENR
approved the transfer and registration of the FTAA in Sagittarius‘ name but Lepanto
Consolidated assailed the same. The latter case is still pending before the Court of
Appeals.
EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to
accept, consider and evaluate proposals from foreign owned corporations or foreign
investors for contracts or agreements involving wither technical or financial assistance
for large scale exploration, development and utilization of minerals which upon
appropriate recommendation of the (DENR) Secretary, the President may execute with
the foreign proponent. WMCP likewise contended that the annulment of the FTAA
would violate a treaty between the Philippines and Australia which provides for the
protection of Australian investments.

ISSUES:

1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully
foreign-owned corporations to exploit the Philippine mineral resources. 2. Whether or
not the FTAA between the government and WMCP is a ―service contract that permits
fully foreign owned companies to exploit the Philippine mineral resources.

HELD:

First Issue: RA 7942 is Unconstitutional

RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully
foreign owned corporations to exploit the Philippine natural resources.
Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrine which
states that ―All lands of the public domain, waters, minerals, coal, petroleum, and other
minerals, coal, petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. The same section also states that, ―the exploration and
development and utilization of natural resources shall be under the full control and
supervision of the State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution
authorizing the State to grant licenses, concessions, or leases for the exploration,
exploitation, development, or utilization of natural resources. By such omission, the
utilization of inalienable lands of the public domain through license, concession or lease
is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a direct equity investment for
the purpose of exploiting a particular natural resource within a given area.
The concession amounts to complete control by the concessionaire over the country‘s
natural resource, for it is given exclusive and plenary rights to exploit a particular
resource at the point of extraction.
The 1987 Constitution, moreover, has deleted the phrase ―management or other forms
of assistance in the 1973 Charter. The present Constitution now allows only ―technical
and financial assistance. The management and the operation of the mining activities by
foreign contractors, the primary feature of the service contracts was precisely the evil
the drafters of the 1987 Constitution sought to avoid.
The constitutional provision allowing the President to enter into FTAAs is an exception
to the rule that participation in the nation‘s natural resources is reserved exclusively to
Filipinos. Accordingly, such provision must be construed strictly against their
enjoyment by non-Filipinos. Therefore, RA 7942 is invalid insofar as the said act
authorizes service contracts. Although the statute employs the phrase ―financial and
technical agreements in accordance with the 1987 Constitution, its pertinent provisions
actually treat these agreements as service contracts that grant beneficial ownership to
foreign contractors contrary to the fundamental law.
The underlying assumption in the provisions of the law is that the foreign contractor
manages the mineral resources just like the foreign contractor in a service contract. By
allowing foreign contractors to manage or operate all the aspects of the mining
operation, RA 7942 has, in effect, conveyed beneficial ownership over the nation‘s
mineral resources to these contractors, leaving the State with nothing but bare title
thereto.
The same provisions, whether by design or inadvertence, permit a circumvention of the
constitutionally ordained 60-40% capitalization requirement for corporations
or associations engaged in the exploitation, development and utilization of Philippine
natural resources.
When parts of a statute are so mutually dependent and connected as conditions,
considerations, inducements or compensations for each other as to warrant a belief that
the legislature intended them as a whole, then if some parts are unconstitutional, all
provisions that are thus dependent, conditional or connected, must fail with them.
Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited
only to merely technical or financial assistance to the State for large scale exploration,
development and utilization of minerals, petroleum and other mineral oils.
Second Issue: RP Government-WMCP FTAA is a Service Contract
The FTAA between he WMCP and the Philippine government is likewise
unconstitutional since the agreement itself is a service contract.
Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive
right to explore, exploit, utilize and dispose of all minerals and by-products that may be
produced from the contract area. Section 1.2 of the same agreement provides that EMCP
shall provide all financing, technology, management, and personnel necessary for the
Mining Operations.
These contractual stipulations and related provisions in the FTAA taken together, grant
WMCP beneficial ownership over natural resources that properly belong to the State
and are intended for the benefit of its citizens. These stipulations are abhorrent to the
1987 Constitution. They are precisely the vices that the fundamental law seeks to avoid,
the evils that it aims to suppress. Consequently, the contract from which they spring
must be struck down.

Cruz v. Sec. of DENR

FACTS:
Petitioners Isagani Cruz and Cesar Europa filed a suit for prohibition and mandamus as
citizens and taxpayers, assailing the constitutionality of certain provisions of Republic
Act No. 8371, otherwise known as the Indigenous People’s Rights Act of 1997 (IPRA)
and its implementing rules and regulations (IRR). The petitioners assail certain
provisions of the IPRA and its IRR on the ground that these amount to an unlawful
deprivation of the State’s ownership over lands of the public domain as well as minerals
and other natural resources therein, in violation of the regalian doctrine embodied in
section 2, Article XII of the Constitution.

ISSUE:
Do the provisions of IPRA contravene the Constitution?

HELD:
No, the provisions of IPRA do not contravene the Constitution. Examining the IPRA,
there is nothing in the law that grants to the ICCs/IPs ownership over the natural
resources within their ancestral domain. Ownership over the natural resources in the
ancestral domains remains with the State and the rights granted by the IPRA to the
ICCs/IPs over the natural resources in their ancestral domains merely gives them, as
owners and occupants of the land on which the resources are found, the right to the
small scale utilization of these resources, and at the same time, a priority in their large
scale development and exploitation.

Additionally, ancestral lands and ancestral domains are not part of the lands of the
public domain. They are private lands and belong to the ICCs/IPs by native title, which
is a concept of private land title that existed irrespective of any royal grant from the
State. However, the right of ownership and possession by the ICCs/IPs of their
ancestral domains is a limited form of ownership and does not include the right to
alienate the same. 

Boy Scouts of the Philippines v. COA

FACTS: This case arose when the COA issued Resolution No. 99-011on August 19, 1999
("the COA Resolution"), with the subject "Defining the Commissions policy with respect
to the audit of the Boy Scouts of the Philippines." In its whereas clauses, the COA
Resolution stated that the BSP was created as a public corporation under
Commonwealth Act No. 111, as amended by Presidential Decree No. 460 and Republic
Act No. 7278; that in Boy Scouts of the Philippines v. National Labor Relations
Commission, the Supreme Court ruled that the BSP, as constituted under its charter,
was a "government-controlled corporation within the meaning of Article IX(B)(2)(1) of
the Constitution"; and that "the BSP is appropriately regarded as a government
instrumentality under the 1987 Administrative Code." The COA Resolution also cited its
constitutional mandate under Section 2(1), Article IX (D).Finally, the COA Resolution
reads:

NOW THEREFORE, in consideration of the foregoing premises, the COMMISSION

PROPER HAS RESOLVED, AS IT DOES HEREBY RESOLVE,to conduct an annual
financial audit of the Boy Scouts of the Philippines in accordance with generally
accepted auditing standards, and express an opinion on whether the financial
statements which include the Balance Sheet, the Income Statement and the Statement
of Cash Flows present fairly its financial position and results of operations.

xxxx

BE IT RESOLVED FURTHERMORE, that for purposes of audit supervision,the Boy

Scouts of the Philippines shall be classified among the government corporations
belonging to the Educational, Social, Scientific, Civic and Research Sectorunder the
Corporate Audit Office I, to be audited, similar to the subsidiary corporations, by
employing the team audit approach
ISSUE: Does COA have jurisdiction over BSP?

HELD: After looking at the legislative history of its amended charter and carefully
studying the applicable laws and the arguments of both parties, [the Supreme Court
found] that the BSP is a public corporation and its funds are subject to the COA's audit
jurisdiction.

The BSP Charter (Commonwealth Act No. 111, approved on October 31, 1936), entitled
"An Act to Create a Public Corporation to be Known as the Boy Scouts of the Philippines,
and to Define its Powers and Purposes" created the BSP as a "public corporation"

There are three classes of juridical persons under Article 44 of the Civil Code and the
BSP, as presently constituted under Republic Act No. 7278,falls under the second
classification.Article 44 reads:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2)Other corporations,institutions and entities for public interest or purpose created by
law; their personality begins as soon as they have been constituted according to law;
(3) Corporations, partnerships and associations forprivate interest or purposeto which
the law grants a juridical personality, separate and distinct from that of each
shareholder, partner or member.

The BSP, which is a corporation created for a public interest or purpose, is subject to the
law creating it under Article 45 of the Civil Code, which provides:

Art. 45.Juridical persons mentioned in Nos. 1 and 2 of the preceding article are
governed by the laws creating or recognizing them.

Private corporations are regulated by laws of general application on the subject.

Partnerships and associations for private interest or purpose are governed by the
provisions of this Code concerning partnerships.

The purpose of the BSP as stated in its amended charter shows that it was created in
order to implement a State policy declared in Article II, Section 13 of the Constitution,
which reads:

Section 13. The State recognizes the vital role of the youth in nation-building and shall
promote and protect their physical, moral, spiritual, intellectual, and social well-being.
It shall inculcate in the youth patriotism and nationalism, and encourage their
involvement in public and civic affairs.

Evidently, the BSP, which was created by a special law to serve a public purpose in
pursuit of a constitutional mandate, comes within the class of "public corporations"
defined by paragraph 2, Article 44 of the Civil Code and governed by the law which
creates it, pursuant to Article 45 of the same Code. DENIED.

Republic v. Heirs of Maxima Lachica Lim WALA

Power Sector Assets and Liabilities Management Corporation v. Pozzolanic Philippines

Incorporated WALA

Narra Nickel Mining Corp., et. al., v. Redmont Consolidated Mines Corp

FACTS
Redmont Consolidated Mines, Inc. (Redmont) filed before the Panel of Arbitrators (POA) of the
DENR separate petitions for denial of McArthur Mining, Inc. (McArthur), Tesoro and Mining and
Development, Inc. (Tesoro), and Narra Nickel Mining and Development Corporation (Narra)
applications Mineral Production Sharing Agreement (MPSA) on the ground that they are not
“qualified persons” and thus disqualified from engaging in mining activities through MPSAs
reserved only for Filipino citizens.
McArthur Mining, Inc., is composed, among others, by Madridejos Mining Corporation (Filipino)
owning 5,997 out of 10,000 shares, and MBMI Resources, Inc. (Canadian) owning 3,998 out of
10,000 shares; MBMI also owns 3,331 out of 10,000 shares of Madridejos Mining Corporation;
Tesoro and Mining and Development, Inc., is composed, among others, by Sara Marie Mining,
Inc. (Filipino) owning 5,997 out of 10,000 shares, and MBMI Resources, Inc. (Canadian) owning
3,998 out of 10,000 shares; MBMI also owns 3,331 out of 10,000 shares of Sara Marie Mining,
Inc.;
Narra Nickel Mining and Development Corporation, is composed, among others, by Patricia
Louise Mining & Development Corporation (Filipino) owning 5,997 out of 10,000 shares, and
MBMI Resources, Inc. (Canadian) owning 3,998 out of 10,000 shares; MBMI also owns 3,396
out of 10,000 shares of Patricia Louise Mining & Development Corporation;
ISSUES
(1) Is the Grandfather Rule applicable?
(2) Whether McArthur, Tesoro and Narra are Filipino nationals.
RULINGS
(1) YES.
The instant case presents a situation which exhibits a scheme employed by stockholders to
circumvent the law, creating a cloud of doubt in the Court’s mind. To determine, therefore, the
actual participation, direct or indirect, of MBMI, the grandfather rule must be used.
The Strict Rule or the Grandfather Rule pertains to the portion in Paragraph 7 of the 1967 SEC
Rules which states, “but if the percentage of Filipino ownership in the corporation or
partnership is less than 60%, only the number of shares corresponding to such percentage shall
be counted as of Philippine nationality.” Under the Strict Rule or Grandfather Rule Proper, the
combined totals in the Investing Corporation and the Investee Corporation must be traced (i.e.,
“grandfathered”) to determine the total percentage of Filipino ownership.
(2) NO.
[P]etitioners McArthur, Tesoro and Narra are not Filipino since MBMI, a 100% Canadian
corporation, owns 60% or more of their equity interests. Such conclusion is derived from
grandfathering petitioners’ corporate owners. xxx Noticeably, the ownership of the “layered”
corporations boils down to xxx group wherein MBMI has joint venture agreements with,
practically exercising majority control over the corporations mentioned. In effect, whether
looking at the capital structure or the underlying relationships between and among the
corporations, petitioners are NOT Filipino nationals and must be considered foreign since 60%
or more of their capital stocks or equity interests are owned by MBMI.

Alyansa para sa Bagong Pilipinas, Inc. (ABP) v. Energy Regulatory Commission, et. Al WALA

Agusan Wood Industries v. Tutaan

Jose M. Roy III v. Herbosa

Facts:
Before the Court is the Motion for Reconsideration dated January 19, 2017 (the Motion) filed
by petitioner Jose M. Roy III (movant) seeking the reversal and setting aside of the Decision
dated November 22, 2016 (the Decision) which denied the movant's petition, and declared
that the Securities and Exchange Commission (SEC) did not commit grave abuse of discretion
in issuing Memorandum Circular No. 8, Series of 2013 (SEC-MC No. 8) as the same was in
compliance with, and in fealty to, the decision of the Court in Gamboa v. Finance Secretary
Teves (Gamboa Decision) and the resolution denying the Motion for Reconsideration therein
(Gamboa Resolution).

The Motion presents no compelling and new arguments to justify the reconsideration of the
Decision.
The Decision has already exhaustively discussed and directly passed upon these grounds.
Movant's petition was dismissed based on both procedural and substantive grounds.

Issue:

Whether or not SEC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it issued SEC-MC No. 8.

Held:

SEC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when
it issued SEC-MC No. 8. The Court finds SEC-MC No. 8 to have been issued in fealty to the
Gamboa Decision and Resolution.

Pursuant to the Court's constitutional duty to exercise judicial review, the Court has
conclusively found no grave abuse of discretion on the part of SEC in issuing SEC-MC No. 8.
The Decision has painstakingly explained why it considered as obiter dictum that
pronouncement in the Gamboa Resolution that the constitutional requirement on Filipino
ownership should "apply uniformly and across the board to all classes of shares, regardless of
nomenclature and category, comprising the capital of a corporation." The Court stated that:
The fallo or decretal/dispositive portions of both the Gamboa Decision and Resolution are
definite, clear and unequivocal. While there is a passage in the body of the Gamboa
Resolution that might have appeared contrary to the fallo of the Gamboa Decision, the
definiteness and clarity of the fallo of the Gamboa Decision must control over the obiter
dictum in the Gamboa Resolution regarding the application of the 60-40 Filipino-foreign
ownership requirement to "each class of shares, regardless of differences in voting rights,
privileges and restrictions."

To the Court's mind and, as exhaustively demonstrated in the Decision, the dispositive
portion of the Gamboa Decision was in no way modified by the Gamboa Resolution.
The heart of the controversy is the interpretation of Section 11, Article XII of the Constitution,
which provides: "No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines at least sixty per
centum of whose capital is owned by such citizens."

The Gamboa Decision already held, in no uncertain terms, that what the Constitution requires
is full and legal beneficial ownership of 60 percent of the outstanding capital stock, coupled
with 60 percent of the voting rights must rest in the hands of Filipino nationals. And, precisely
that is what SEC-MC No. 8 provides; For purposes of determining compliance with the
constitutional or statutory ownership, the required percentage of Filipino ownership shall be
applied to both the total number of outstanding shares of stock entitled to vote in the
election of directors; and (b) the total number of outstanding shares of stock, whether or not
entitled to vote.

In conclusion, the basic issues raised in the Motion having been duly considered and passed
upon by the Court in the Decision and no substantial argument having been adduced to
warrant the reconsideration sought, the Court resolves to deny the Motion with finality.

Gamboa v. Finance Secretary Teves

FACTS: In 1969, General Telephone and Electronics Corporation (GTE), sold 26

percent of the outstanding common shares of PLDT to Philippine Telecommunications
Investment Corporation (PTIC). In 1977, Prime Holdings, Inc. (PHI) became the owner
of 111,415 shares of stock of PTIC. In 1986, the 111,415 shares of stock of PTIC held by
PHI were sequestered by the Presidential Commission on Good Government (PCGG).
The 111,415 PTIC shares, which represent about 46.125 percent of the outstanding
capital stock of PTIC, were later declared by this Court to be owned by the Republic of
the Philippines.
In 1999, First Pacific, a Bermuda-registered acquired the remaining 54 percent of the
outstanding capital stock of PTIC. On 20 November 2006, the Inter-Agency
Privatization Council (IPC) of the Philippine Government through a public bidding sold
the same shares to Parallax Venture who won with a bid of P25.6 billion or US$510
million.

Thereafter, First Pacific announced that it would exercise its right of first refusal as a
PTIC stockholder and buy the 111,415 PTIC shares by matching the bid price of Parallax.
On 14 February 2007, First Pacific, through its subsidiary, MPAH, entered into a
Conditional Sale and Purchase Agreement of the 111,415 PTIC shares, or 46.125 percent
of the outstanding capital stock of PTIC, with the Philippine Government for the price of
P25,217,556,000 or US$510,580,189. The sale was completed on 28 February 2007.

Since PTIC is a stockholder of PLDT, the sale by the Philippine Government of 46.125
percent of PTIC shares is actually an indirect sale of 12 million shares or about 6.3
percent of the outstanding common shares of PLDT. With the sale, First Pacific common
shareholdings in PLDT increased from 30.7 percent to 37 percent, thereby increasing
the common shareholdings of foreigners in PLDT to about 81.47 percent. This,
according to petitioner, violates Section 11, Article XII of the 1987 Philippine
Constitution which limits foreign ownership of the capital of a public utility to not more
than 40 percent.

On 28 February 2007, petitioner filed the instant petition for prohibition, injunction,
declaratory relief, and declaration of nullity of sale of the 111,415 PTIC shares.

ISSUE: Does the term "capital" in Section 11, Article XII of the Constitution
refer to the total common shares only or to the total outstanding capital
stock of PLDT, a public utility?

HELD: Section 11, Article XII (National Economy and Patrimony) of the
1987 Constitution mandates the Filipinization of public utilities, to wit:

Section 11. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to corporations
or associations organized under the laws of the Philippines, at least sixty per centum of
whose capital is owned by such citizens; nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than fifty years. Neither
shall any such franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when the common good so
requires. The State shall encourage equity participation in public utilities by the general
public. The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its capital, and all the
executive and managing officers of such corporation or association must be citizens of
the Philippines.

The intent of the framers of the Constitution in imposing limitations and restrictions on
fully nationalized and partially nationalized activities is for Filipino nationals to be
always in control of the corporation undertaking said activities. Otherwise, if the Trial
Court ruling upholding respondent's arguments were to be given credence, it would be
possible for the ownership structure of a public utility corporation to be divided into one
percent (1%) common stocks and ninety-nine percent (99%) preferred stocks. Following
the Trial Court ruling adopting respondent's arguments, the common shares can be
owned entirely by foreigners thus creating an absurd situation wherein foreigners, who
are supposed to be minority shareholders, control the public utility corporation.

The term "capital" in Section 11, Article XII of the Constitution refers only to shares of
stock entitled to vote in the election of directors, and thus in the present case only to
common shares, and not to the total outstanding capital stock comprising both common
and non-voting preferred shares.

Indisputably, one of the rights of a stockholder is the right to participate in the control
or management of the corporation. This is exercised through his vote in the election of
directors because it is the board of directors that controls or manages the corporation.
In the absence of provisions in the articles of incorporation denying voting rights to
preferred shares, preferred shares have the same voting rights as common shares.
However, preferred shareholders are often excluded from any control, that is, deprived
of the right to vote in the election of directors and on other matters, on the theory that
the preferred shareholders are merely investors in the corporation for income in the
same manner as bondholders. In fact, under the Corporation Code only preferred or
redeemable shares can be deprived of the right to vote. Common shares cannot be
deprived of the right to vote in any corporate meeting, and any provision in the articles
of incorporation restricting the right of common shareholders to vote is invalid.

Considering that common shares have voting rights which translate to control, as
opposed to preferred shares which usually have no voting rights, the term "capital" in
Section 11, Article XII of the Constitution refers only to common shares. However, if the
preferred shares also have the right to vote in the election of directors, then the term
"capital" shall include such preferred shares because the right to participate in the
control or management of the corporation is exercised through the right to vote in the
election of directors. In short, the term "capital" in Section 11, Article XII of the
Constitution refers only to shares of stock that can vote in the election of directors.

This interpretation is consistent with the intent of the framers of the Constitution to
place in the hands of Filipino citizens the control and management of public utilities.
Thus, 60 percent of the "capital" assumes, or should result in, "controlling interest" in
the corporation and thus in the present case, only to common shares, and not to the
total outstanding capital stock (common and non-voting preferred shares).

Maynilad v. Secretary of DENR WALA

Council of Teachers v. Secretary of Education

Facts:
History of the Philippines' Basic Education System On January 21, 1901, the Philippine
Commission created the Department of Public Instruction[4] through Act No. 74[5]. All
schools established under the auspices of the Military Government were made under the
control of the officers of the Department of Public Instruction[6] and as early as this law, the
primary education established through it was considered free.[7] Act No. 74 also made
English language as the basis of all public school instruction[8] and allowed optional religious
instruction in all schools.[9] On March 10, 1917, Act No. 2706[10] was passed mandating the
recognition and inspection of private schools and colleges by the Secretary of Public
Instruction in order to maintain a general standard of efficiency in all private schools and
colleges.[11] The authority of the Secretary over private schools and colleges was later on
expanded under Commonwealth Act (CA) No. 180[12]. The Secretary was vested with the
power "to supervise, inspect and regulate said schools and colleges in order to determine the
efficiency of instruction given in the same."[13] The concept of free public primary instruction
was also enshrined in the 1935 Philippine Constitution. Specifically, the State's interest in a
complete and adequate system of public education was stated in Section 5, Article XIV: SEC.
5. All educational institutions shall be under the supervision of and subject to regulation by
the State. The Government shall establish and maintain a complete and adequate system of
public education, and shall provide at least free public primary instruction, and citizenship
training to adult citizens. All schools shall aim to develop moral character, personal discipline,
civic conscience, and vocational efficiency, and to teach the duties of citizenship. Optional
religious instruction shall be maintained in the public schools as now authorized by law.
Universities established by the State shall enjoy academic freedom. The State shall create
scholarships in arts, science, and letters for specially gifted citizens. (Emphasis supplied) On
August 7, 1940, CA No. 586,[14] otherwise known as the Educational Act of 1940, was
enacted to comply with the constitutional mandate on free public primary education. This
resulted in the revision of the public elementary system,[15] which had the following
objectives: x x x (a) to simplify, shorten, and render more practical and economical both the
primary and intermediate courses of instruction so as to place the same within the reach of
the largest possible number of school children; (b) to afford every child of school age
adequate facilities to commence and complete at least the primary course of instruction; (c)
to give every child completing the primary course an adequate working knowledge of reading
and writing, the fundamentals of arithmetic, geography, Philippine history and government,
and character and civic training; and (d) to insure that all children attending the elementary
schools shall remain literate and become useful, upright and patriotic citizens.[16] To give
effect to the foregoing objectives, the Department of Public Instructions was authorized to
revise the elementary school curriculum, to be approved by the President, and adjust the
academic school calendar to coincide with the working season in the Philippines.[17] In
addition, Section 4 set standards for the age of admission to public elementary schools and
the minimum length of time for the completion of primary and intermediate courses, to wit:
SEC. 4. With the approval of the President of the Philippines, the required age for admission
to the public elementary schools may be raised to not more than nine years and the length of
time required for the completion of the elementary instruction comprising both the primary
and intermediate courses reduced to not less than five years. Any increase that may be
approved in accordance with this section regarding the minimum age of school children shall
not affect those already enrolled before the school year 1940-1941. The law also made
compulsory the attendance and completion of elementary education, except when the child
was mentally or physically incapable of attending school or when it was inconvenient to do so
considering the means of transportation available or on account of economic condition of the
parents the child could not afford to continue in school.[18] The parents or guardians or those
having control of children therein required to attend school without justification were liable
to a fine of not less than twenty nor more than fifty pesos.[19] In 1947, Executive Order (EO)
No. 94[20] was issued renaming the Department of Instructions to the Department of
Education. In 1953, RA No. 896[21] or the Elementary Education Act of 1953 was passed,
again revising the elementary school system and instituting a primary course composed of
Grades I to IV, and an intermediate course composed of Grades V to VII, thus: SEC. 3. To put
into effect the educational policy established by this Act, the Department of Education is
hereby authorized to revise the elementary-school system on the following basis: The
primary course shall be composed of four grades (Grades I to IV) and the intermediate course
of three grades (Grade V to VII). Pupils who are in the sixth grade of the time this Act goes
into effect will not be required to complete the seventh grade before being eligible to enroll
in the first year of the secondary school: Provided, That they shall be allowed to elect to
enroll in Grade VII if they so desire. This law also made the enrollment and completion of
elementary education mandatory.[22] Every parent or guardian or other person having
custody of any child was required to enroll such child in a public school upon attaining seven
years of age except when: (1) the child enrolled in or transferred in a private school, (2) the
distance from the home of the child to the nearest public school exceeded three kilometers
or the said public school was not safely or conveniently accessible, (3) on account of
indigence, the child could not afford to be in school, (4) child could not be accommodated
because of excess enrollment, and (5) child was being homeschooled, under the conditions
prescribed by the Secretary of Education.[23] The revision of the elementary school system
was guided by the policy stated in Section 5, Article XIV of the 1935 Philippine Constitution
and with the consideration that it was "the main function of the elementary school to
develop healthy citizens of good moral character, equipped with the knowledge, habits, and
ideals needed for a happy and useful home and community life."[24] In 1972, the
Department of Education was again renamed to Department of Education and Culture,
through Proclamation No. 1081;[25] and was later on converted to Ministry of Education and
Culture in 1978.[26] The 1973 Philippine Constitution maintained the State's interest in a free
public elementary education. This concept of free education was, however, expanded to the
secondary level, if the finances of the State permitted it, thus: Article XV SEC. 8. (1) All
educational institutions shall be under the supervision of, and subject to regulation by, the
State. The State shall establish and maintain a complete, adequate, and integrated system of
education relevant to the goals of national development. x x x x (5) The State shall maintain a
system of free public elementary education and, in areas where finances permit, establish
and maintain a system of free public education at least up to the secondary level. (Emphasis
supplied) Legislations under the 1973 Philippine Constitution implemented the foregoing
policies. In Batas Pambansa (BP) Blg. 232,[27] or the Education Act of 1982, it was declared as
a policy of the State "to establish and maintain a complete, adequate and integrated system
of education relevant to the goals of national development."[28] And under BP Blg. 232,
"Formal Education" was defined as the hierarchically structured and chronologically graded
learnings organized and provided by the formal school system and for which certification was
required in order for the learner to progress through the grades or move to higher
levels."[29] It corresponded to (1) elementary education, which was primarily concerned with
providing basic education and usually corresponds to six or seven years, including the
preschool programs;[30] and (2) secondary education as "the state of formal education
following the elementary level concerned primarily with continuing basic education and
expanding it to include the learning of employable gainful skills, usually corresponding to four
years of high school."[31] This law also created the Ministry of Education, Culture and Sports,
[32] which later on became the Department of Education Culture and Sports by virtue of EO
No. 117.[33] As shown above, both the 1935 and 1973 Philippine Constitution did not state
that education at any level was compulsory. This changed in the 1987 Philippine Constitution,
which made elementary education mandatory, thus: Article XIV SEC. 1. The State shall protect
and promote the right of all citizens to quality education at all levels and shall take
appropriate steps to make such education accessible to all. SEC. 2. The State shall: x x x x (2)
Establish and maintain a system of free public education in the elementary and high school
levels. Without limiting the natural right of parents to rear their children, elementary
education is compulsory for all children of school age[.] (Emphasis supplied) Subsequent
legislations implemented the policies stated in the 1987 Philippine Constitution. Thus,
secondary education was provided for free in RA No. 6655,[34] otherwise known as the Free
Public Secondary Education Act of 1988. Under RA No. 6655, students in public high schools
were free from payment of tuition and other school fees.[35] And in response to the mandate
of the Constitution to promote and make quality education accessible to all Filipino citizens,
RA No. 6728,[36] otherwise known as Government Assistance To Students and Teachers In
Private Education Act, was enacted in 1989 where the voucher system under the Private
Education Student Financial Assistance Program (PESFA)[37] was implemented as follows:
SEC. 5. Tuition Fee Supplement for Student in Private High School. — (1) Financial assistance
for tuition for students in private high schools shall be provided by the government through a
voucher system in the following manner: (a) For students enrolled in schools charging less
than one thousand five hundred pesos (P1,500) per year in tuition and other fees during
school year 1988-1989 or such amount in subsequent years as may be determined from time
to time by the State Assistance Council: The Government shall provide them with a voucher
equal to two hundred ninety pesos (P290.00): Provided, That the student pays in the 1989-
1990 school year, tuition and other fees equal to the tuition and other fees paid during the
preceding academic year: Provided, further, That the Government shall reimburse the
vouchers from the schools concerned within sixty (60) days from the close of the registration
period: Provided, furthermore, That the student's family resides in the same city or province
in which the high school is located unless the student has been enrolled in that school during
the previous academic year. (b) For students enrolled in schools charging above one thousand
five hundred pesos (P1,500) per year in tuition and other fees during the school year 1988-
1989 or such amount in subsequent years as may be determined from time to time by the
State Assistance Council, no assistance for tuition fees shall be granted by the Government:
Provided, however, That the schools concerned may raise their tuition fees subject to Section
10 hereof. (2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be granted and
tuition fees under subparagraph (c) may be increased, on the condition that seventy percent
(70%) of the amount subsidized allotted for tuition fee or of the tuition fee increases shall go
to the payment of salaries, wages, allowances and other benefits of teaching and non-
teaching personnel except administrators who are principal stockholders of the school, and
may be used to cover increases as provided for in the collective bargaining agreements
existing or in force at the time when this Act is approved and made effective: Provided, That
government subsidies are not used directly for salaries of teachers of non-secular subjects. At
least twenty percent (20%) shall go to the improvement or modernization of buildings,
equipment, libraries, laboratories, gymnasia and similar facilities and to the payment of other
costs of operation. For this purpose, school shall maintain a separate record of accounts for
all assistance received from the government, any tuition fee increase, and the detailed
disposition and use thereof, which record shall be made available for periodic inspection as
may be determined by the State Assistance Council, during business hours, by the faculty, the
non-teaching personnel, students of the school concerned, the Department of Education,
Culture and Sports and other concerned government agencies. The voucher system was
expanded in RA No. 8545,[38] or the Expanded Government Assistance to Students and
Teachers in Private Education Act, as follows: SEC. 5. Tuition Fee Supplements for Students in
Private High Schools.— (1) Financial Assistance for tuition for students in private high schools
shall be provided by the government through a voucher system in the following manner: (a)
For students enrolled in schools charging an amount as may be determined by the State
Assistance Council, the government shall provide them with a voucher in such an amount as
may be determined by the council: Provided, That the government shall reimburse the
vouchers from the schools concerned within one hundred twenty (120) days from the close of
the registration period. (2) Assistance under paragraph (1), subparagraph (a) shall be
guaranteed to all private high schools participating in the program for a number of slots as of
the effectivity of this Act as the total number of students who availed of tuition fee
supplements for school year 1997-1998: Provided, That the State Assistance Council may in
subsequent years determine additional slots and/or additional participating high schools as
may be deemed necessary. In the same law, elementary and secondary education were
redefined. Elementary education was the first six (6) years of basic education, excluding pre-
school and grade seven;[39] while secondary education was the next four (4) years after
completion of basic education.[40] In 2001, RA No. 8980[41] or the Early Childhood Care and
Development (ECCD) Act was implemented. This law established a national ECCD system
which "refers to the full range of health, nutrition, early education and social services
programs that provide for the basic holistic needs of young children from birth to age six (6),
to promote their optimum growth and development."[42] These programs include, among
others, optional center-based and home-based early childhood education.[43] In the same
year, RA No. 9155[44] or the Governance of Basic Education Act of 2001 was enacted. Section
2 thereof declared it as a State policy "to protect and promote the right of all citizens to
quality basic education and to make such education accessible to all by providing all Filipino
children a free and compulsory education in the elementary level and free education in the
high school level."[45] Basic education was defined in this law as "the education intended to
meet basic learning needs which lays the foundation on which subsequent learning can be
based. It encompasses early childhood, elementary and high school education as well as
alternative learning systems for out-of-school youth and adult learners and includes
education for those with special needs."[46] It was also in this law where the then
Department of Education Culture and Sports was renamed the DepEd.[47] Education for All
2015 and the Kindergarten Education Act In 2000, at the World Education Forum in Dakar,
Senegal, one hundred sixty four (164) governments, including the Philippines, pledged to
achieve, by 2015, the following six (6) Education for All (EFA) goals: (1) expansion and
improvement of early childhood care and education; (2) universal access to complete free
and compulsory primary education of good quality; (3) equitable access to appropriate
learning and life skills program for youth and adult; (4) improvement of levels of adult
literacy, especially for women; (5) gender parity and equality in education; and (6)
improvement of all aspects of the quality of education and ensuring their excellence.[48] In
consonance with the country's agreement to achieve these goals, the DepEd, in 2002,
undertook the preparation of the Philippine EFA 2015 Plan of Action, in collaboration with
various stakeholders at the national and field levels, including relevant government agencies
and civil society groups.[49] The primary goal of the Philippine EFA 2015 Plan of Action, which
the government officially adopted in 2006,[50] is to provide "basic competencies for all that
will bring about functional literacy."[51] The Philippine EFA 2015 Plan of Action translated the
sic (6) Dakar goals into four (4) objectives and nine (9) critical tasks, to wit: Universal Goals
and Objectives of Philippine EFA 2015 Universal Coverage of out of school youth and adults in
providing learning needs; Universal school participation and total elimination of dropouts and
repeaters in grades 1-3; Universal completion of the full basic education cycle with
satisfactory annual achievement levels; andTotal community commitment to attain basic
education competencies for all. Nine Urgent and Critical Tasks Make every school
continuously improve its performance. Expand early childhood care and development
coverage to yield more EFA benefits. Transform existing non-formal and informal learning
options into a truly viable alternative learning system yielding more EFA benefits;Get all
teachers to continuously improve their teaching practices. Increase the cycle of schooling to
reach 12 years of formal basic education.Continue enrichment of curriculum development in
the context of pillars of new functional literacy; Provide adequate and stable public funding
for country-wide attainment of EFA goals; Create network of community-based groups for
local attainment of EFA goals; Monitor progress in effort towards attainment of EFA goals.[52]
On January 20, 2012, the Philippine Congress took a pivotal step towards the realization of
the country's EFA goals with the enactment of the Kindergarten Education Act. Section 2
thereof declared it the policy of the State "to provide equal opportunities for all children to
avail of accessible mandatory and compulsory kindergarten education that effectively
promotes physical, social, intellectual, emotional and skills stimulation and values formation
to sufficiently prepare them for formal elementary schooling" and "to make education
learner-oriented and responsive to the needs, cognitive and cultural capacity, the
circumstances and diversity of learners, schools and communities through the appropriate
languages of teaching and learning." The Kindergarten Education Act institutionalized
kindergarten education, which is one (1) year of preparatory education for children at least
five years old,[53] as part of basic education, and is made mandatory and compulsory for
entrance to Grade 1.[54] It also mandated the use of the learner's mother tongue, or the
language first learned by a child,[55] as the primary medium of instruction in the
kindergarten level in public schools, except for the following cases wherein the primary
medium of instruction would be determined by the DepEd: When the pupils in the
kindergarten classroom have different mother tongues or when some of them speak another
mother tongue; When the teacher does not speak the mother tongue of the learners; When
resources, in line with the use of the mother tongue, are not yet available; and When
teachers are not yet trained how to use the Mother Tongue Based Multilingual Education
(MTB-MLE) program.[56] On April 17, 2012, DepEd, in consultation with the Department of
Budget and Management, issued DepEd Order (DO) No. 32,[57] the Kindergarten Education
Act's implementing rules and regulations. DO No. 32 provides that the Kindergarten
Education General Curriculum (KEGC) shall focus on the child's total development according
to his/her individual needs and socio-cultural background. The KEGC shall be executed in a
play-based manner and shall address the unique needs of diverse learners, including gifted
children, children with disabilities, and children belonging to indigenous groups.[58] The K to
12 Law and related issuances. Before the enactment of the K to 12 Law, the Philippines was
the only country in Asia and among the three remaining countries in the world that had a 10-
year basic education program.[59] The expansion of the basic education program, however, is
an old proposal dating to 1925. The studies are as follows: (a) the Monroe Survey (1925)
stated that secondary education did not prepare for life and recommended training in
agriculture, commerce, and industry; (b) the Prosser Survey (1930) recommended to improve
phases of vocational education such as 7th grade shopwork, provincial schools, practical arts
training in the regular high schools, home economics, placement work, gardening, and
agricultural education; (c) the UNESCO Mission Survey (1949) recommended the restoration
of Grade 7; (d) the Education Act of 1953 mandated that the primary course be composed of
four grades (Grades I to IV) and the intermediate course of three grades (Grade V to VII); (e)
the Swanson Survey (1960) recommended the restoration of Grade 7; (f) Presidential
Commission to Survey Philippine Education (PCSPE) (1970) gave high priority to the
implementation of an 11-year program, consisting of six years of compulsory elementary
education and five years of secondary education; (g) Congressional Commission on Education
(EDCOM) Report (1991), recommended that if one year was to be added, it might either be
seven years of elementary education or five years of secondary education; (h) Presidential
Commission on Educational Reforms (2000) proposed to include the establishment of a one-
year pre-baccalaureate system that would also bring the Philippines at par with other
countries; and (i) Presidential Task Force on Education (2008) emphasized that in a 12-year
pre-university program, it was important "to specify the content of the 11th and the 12th
years and benchmark these with programs abroad."[60] Despite these proposals, the 10-year
basic education cycle remained in force. Thus, prior to the enactment of the K to 12 Law, the
Philippines, joined only by Djibouti and Angola, were the only countries in the world with a
10-year basic education system.[61] To be at par with international standards and in line with
the country's commitment in EFA 2015, the Philippine Congress, on May 15, 2013, passed the
K to 12 Law, which took effect on June 8, 2013. The K to 12 Law seeks to achieve, among
others, the following objectives: (1) decongest the curriculum; (2) prepare the students for
higher education; (3) prepare the students for the labor market; and (4) comply with global
standards.[62] One of the salient features of the K to 12 Law is the expansion of basic
education from ten (10) years to thirteen (13) years, encompassing "at least one (1) year of
kindergarten education, six (6) years of elementary education, and six (6) years of secondary
education x x x. Secondary education includes four (4) years of junior high school and two (2)
years of senior high school education."[63] The K to 12 Law also adopts the following key
changes in the Basic Education Curriculum (BEC): (1) Mother Tongue (MT) will be used as a
primary medium of instruction from Kindergarten to Grade 3 and an additional learning area
in Grades 1 to 3;[64] (2) the time allotted per learning area in elementary will generally be
reduced to allow off-school learning experiences at home or in the community; while the
time allotment in secondary level will generally increase in view of the additional two (2)
years in Senior High School;[65] (3) the spiral progression approach will be used in Science,
Mathematics, Araling Panlipunan, MAPEH and Edukasyon sa Pagpapakatao, wherein the
learning process is built upon previously learned knowledge for students to master their
desired competencies by revisiting the subject several times and relating new knowledge or
skills with the previous one;[66] and (4) specialization courses will be offered to prepare
students for employment or engage in profitable enterprise after high school.[67] Apart from
mastering core subjects, the additional two (2) years of Senior High School will allow students
to choose among academic, technical-vocational, or sports and arts, as specialization, based
on aptitude, interest and school capacity.[68] Hence, graduates of Senior High School under
the K to 12 BEC are envisioned to already be prepared for employment, entrepreneurship, or
middle-level skills development should they opt not to pursue college education.[69]
Furthermore, the K to 12 Law extends the benefits provided under RA No. 8545 to qualified
students.[70] DepEd is mandated to engage the services of private education institutions and
non-DepEd schools offering Senior High School through the programs under RA No. 8545 and
other financial arrangements based on the principle of public-private partnership. The K to 12
Law also imposes upon the DepEd, CHED, and TESDA, the task to promulgate the
implementing rules and regulations, which shall provide, among others, appropriate
strategies and mechanisms to ensure the smooth transition from the existing 10-year basic
education cycle to the K to 12 cycle addressing issues such as multi-year low enrollment and
displacement of faculty of Higher Education Institutions (HEIs) and Technical Vocational
Institutions (TVIs).[71] DepEd is likewise mandated to coordinate with TESDA and CHED in
designing the enhanced BEC to ensure college readiness and avoid remedial and duplication
of basic education subjects;[72] and to consult other national government agencies and other
stakeholders in developing the K to 12 BEC, which shall adhere to the following standards: (a)
The curriculum shall be learner-centered, inclusive and developmentally appropriate;     (b)
The curriculum shall be relevant, responsive and research-based;     (c) The curriculum shall be
culture-sensitive;     (d) The curriculum shall be contextualized and global;     (e) The
curriculum shall use pedagogical approaches that are constructivist, inquiry-based, reflective,
collaborative and integrative;     (f) The curriculum shall adhere to the principles and
framework of Mother Tongue-Based Multilingual Education (MTB-MLE) which starts from
where the learners are and from what they already knew proceeding from the known to the
unknown; instructional materials and capable teachers to implement the MTB-MLE
curriculum shall be available;     (g) The curriculum shall use the spiral progression approach
to ensure mastery of knowledge and skills after each level; and     (h) The curriculum shall be
flexible enough to enable and allow schools to localize, indigenize and enhance the same
based on their respective educational and social contexts. The production and development
of locally produced teaching materials shall be encouraged and approval of these materials
shall devolve to the regional and division education units.[73] On September 4, 2013, the K to
12 implementing rules and regulation (K to 12 IRR) were issued.[74] Rule VI of the K to 12 IRR
covers the implementation of RA No. 8545 for qualified students enrolled in senior high
school. The programs of assistance are available primarily to students who complete junior
high school in public schools and taking into consideration other factors such as income
background and financial needs of the students.[75] The forms of assistance that the DepEd
may provide include a voucher system, "where government issues a coupon directly to
students to enable them to enroll in eligible private education institutions or non-DepEd
public schools of their choice under a full or partial tuition or schooling subsidy".[76] Further,
Section 31 of the K to 12 IRR confers upon the DepEd, in collaboration with the DOLE, CHED
and TESDA, the duty to promulgate the appropriate joint administrative issuance to ensure
the sustainability of the private and public educational institutions, and the promotion and
protection of the rights, interests and welfare of teaching and non-teaching personnel. For
this purpose, the DOLE was tasked to convene a technical panel with representatives from
the DepEd, CHED, TESDA and representatives from both teaching and non-teaching personnel
organizations, and administrators of educational institutions.[77] In compliance with the
foregoing mandate, DOLE organized three area-wide tripartite education fora on K to 12 in
Luzon, Visayas and Mindanao. DOLE also conducted regional consultations with HEIs,
teaching and non teaching personnel.[78] As a result of the tripartite consultations, DOLE,
DepEd, TESDA and CHED issued on May 30, 2014 the Joint Guidelines on the Implementation
of the Labor and Management Component of Republic Act No. 10533 (Joint Guidelines). The
Joint Guidelines was issued to (a) ensure the sustainability of private and public educational
institutions; (b) protect the rights, interests, and welfare of teaching and non-teaching
personnel; and (c) optimize employment retention or prevent, to the extent possible,
displacement of faculty and non-academic personnel in private and public HEIs during the
transition from the existing 10 years basic education cycle to the enhanced K to 12 basic
education.[79] To achieve these goals, the Joint Guidelines provides that the following, in the
exercise of management prerogative, shall be observed: ensure the participation of workers
in decision and policy making processes affecting their rights, duties, and welfare; the DepEd
and private educational institutions may hire, as may be relevant to the particular subject,
graduates of science, mathematics, statistics, engineering, music and other degree courses
needed to teach in their specialized subjects in elementary and secondary education,
provided they passed the Licensure Examination for Teachers; graduates of technical-
vocational courses may teach in their specialized subjects in secondary education, provided
that they possess the necessary certification from TESDA and undergo in-service training; the
DepEd and private educational institutions may hire practitioners, with expertise in the
specialized learning areas, to teach in the secondary level, provided that they teach on part-
time basis only; faculty of HEIs offering secondary education shall be given priority in hiring,
provided said faculty is a holder of a relevant Bachelor's degree and must have satisfactorily
served as a full time HEI faculty; if it is impossible for the affected HEI faculty members and
academic support personnel to be placed within the institution, they shall be prioritized in
hiring in other private and public senior high schools (SHS); faculty of HEIs may be allowed to
teach in their general education or subject specialties in secondary education, provided said
faculty is a holder of a relevant Bachelor's degree and must have satisfactorily served as a full
time HEI faculty; without prejudice to existing collective bargaining agreements or
institutional policies, HEI faculty and non-teaching personnel who may not be considered may
avail of the retrenchment program pursuant to the provisions of the Labor Code; and in
educational institutions where there is no collective agreement or organized labor union,
management may adopt policies in consultation with faculty or non-academic clubs or
associations in the school consistent and in accordance with the aforementioned criteria.[80]
K to 12 Program Implementation and CHED Memorandum Order (CMO) No. 20, Series of 2013
The K to 12 basic education was implemented in parts. Universal kindergarten was offered
starting School Year (SY) 2011-2012.[81] In 2012, DepEd started unclogging the BEC to
conform to the K to 12 Curriculum. Thus, DO No. 31 was issued setting forth policy guidelines
in the implementation of the Grades 1 to 10 of the K to 12 Curriculum. DO No. 31 provides
that effective SY 2012-2013, the new K to 12 BEC, which follows a spiral approach across
subjects and uses the mother tongue as a medium of instruction from Grades 1 to 3, shall be
first implemented in Grades 1 and 7 of all public elementary and secondary schools; and
while private schools are enjoined to do the same, they may further enhance the curriculum
to suit their school's vision/mission.[82] Five (5) school years from SY 2012-2013, the
implementation of the K to 12 basic education was to be completed. In 2018, the first group
of Grade 6 and Grade 12 students under the K to 12 BEC are set to graduate. Accordingly, to
accommodate the changes brought about by the K to 12 Law, and after several public
consultations with stakeholders were held,[83] CMO No. 20, entitled General Education
Curriculum: Holistic Understandings, Intellectual and Civic Competencies was issued on June
28, 2013. CMO No. 20 provides the framework and rationale of the revised General Education
(GE) curriculum. It sets the minimum standards for the GE component of all degree programs
that applies to private and public HEIs in the country.[84] Previously, there were two General
Education Curricula (GECs), GEC-A and GEC-B. CMO No. 59, Series of 1996 provided for GEC-A,
which required 63 units divided into 24 units of language and literature, 15 units of
mathematics and natural sciences, 6 units of humanities, 12 units of social sciences, and 6
units of mandated subjects. This was taken by students majoring in the humanities, social
sciences, or communication. Meanwhile, CMO No. 4, series of 1997 implemented GEC-B,
which was taken by all other students. GEC-B required 51 units divided into 21 units of
language and humanities, 15 units of mathematics, natural sciences, and information
technology, 12 units of social sciences, and 3 units of mandated subjects. Under CMO No. 20,
the GE curriculum became outcome-oriented and categorized into: (a) Intellectual
Competencies; (b) Personal and Civic Competencies; and (c) Practical Responsibilities.[85]
This GE curriculum requires the completion of 36 units as compared to the previous 63/51
units requirement. These 36 units are distributed as follows: 24 units of core courses; 9 units
of elective courses; and 3 units on the life and works of Rizal.[86] The required GE core
courses are: (1) Understanding the Self; (2) Readings in Philippine History; (3) The
Contemporary World; (4) Mathematics in the Modern World; (5) Purposive Communication;
(6) Art Appreciation; (7) Science, Technology and Society; and (8) Ethics.[87] Further, the GE
curriculum provided an element of choice[88] through elective courses which include the
following: (1) Mathematics, Science and Technology; (2) Social Sciences and Philosophy; and
(3) Arts and Humanities.[89]
Issues:
The Issues Culled from the submissions of petitioners, public respondents, through the Office
of the Solicitor General (OSG), and respondent Miriam College, the following are the issues
for the Court's resolution: A. Procedural: Whether the Court may exercise its power of judicial
review over the controversy;Whether certiorari, prohibition and mandamus are proper
remedies to assail the laws and issuances. B. Substantive: Whether the K to 12 Law was duly
enacted; Whether the K to 12 Law constitutes an undue delegation of legislative power;
Whether DO No. 31 is valid and enforceable; Whether the K to 12 Law, K to 12 IRR, DO No. 31
and/or the Joint Guidelines contravene provisions of the Philippine Constitution on:
establishing and maintaining a system of free elementary and high school education and
making elementary education compulsory for all children of school age (Section 2[2], Article
XIV); the right to accessible and quality education at all levels and duty of the State to make
such education accessible to all (Section 1, Article XIV); the primary duty of parents to rear
and prepare their children (Section 2[2], Article XIV);the right of every citizen to select a
profession or course of study (Section 5[3], Article XIV); patriotism and nationalism (Sections
13 and 17, Article II, Section 3[1] and [2], Article XIV); the use of Filipino as medium of official
communication and as language of instruction in the educational system (Section 6, Article
XIV); and regional languages as auxiliary media of instruction (Section 7, Article XIV);
academic freedom (Section 5[2], Article XIV); and the right of labor to full protection (Section
18, Article II, Section 3, Article XIII and Section 5[4], Article XIV); Whether CMO No. 20
contravenes provisions of the Philippine Constitution on: the use of Filipino as medium of
official communication and as language of instruction in the educational system (Section 6,
Article XIV); preservation, enrichment, and dynamic evolution of a Filipino national culture
(Sections 14, 15, and 16, Article XIV); inclusion of the study of the Philippine Constitution as
part of the curriculum of all educational institutions (Section 3[1], Article XIV); giving priority
to education to foster patriotism and nationalism (Section 17, Article II and Sections 2 and 3,
Article XIV); and the protection of the rights of workers and promotion of their welfare
(Section 18, Article II and Section 3, Article XIII). Whether CMO No. 20 violates the following
laws: RA No. 7104 or the Commission on the Filipino Language Act; BP Blg. 232 or the
Education Act of 1982; and RA No. 7356 or the Act Creating the National Commission for
Culture and the Arts, Establishing National Endowment Fund for Culture and the Arts and For
Other Purposes. Whether the K to 12 Law violates petitioners' right to substantive due
process and equal protection of the laws.
SEC. 2. The State shall: (1) Establish, maintain, and support a complete, adequate, and
integrated system of education relevant to the needs of the people and society[.]
Ruling:
THE COURT'S RULING Procedural Issues Power of Judicial Review and the Remedies of
Certiorari, Prohibition and Mandamus The OSG submits that the cases filed by petitioners
involve the resolution of purely political questions which go into the wisdom of the law: they
raise questions that are clearly political and non-justiciable and outside the power of judicial
review.[103] The OSG further asserts that the remedies of certiorari and prohibition sought
by petitioners are unwarranted because Congress, DepEd and CHED did not exercise judicial,
quasi-judicial or ministerial function, nor did they unlawfully neglect the performance of an
act which the law specifically enjoins as a duty, with regard to the assailed issuances.[104]
The Court disagrees. The political question doctrine is "no longer the insurmountable obstacle
to the exercise of judicial power or the impenetrable shield that protects executive and
legislative actions from judicial inquiry or review"[105] under the expanded definition of
judicial power of the 1987 Philippine Constitution. Section 1, Article VIII thereof authorizes
courts of justice not only "to settle actual case controversies involving rights which are legally
demandable and enforceable" but also "to determine whether there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government." In determining whether grave abuse of discretion
amounting to excess or lack of jurisdiction has been committed by any branch or
instrumentality of the government, the Court is guided primarily, by the Constitution, and
secondarily, by existing domestic and international law, which set limits or conditions to the
powers and functions conferred upon these political bodies.[106] Thus, when a case is
brought before the Court with serious allegations that a law or executive issuance infringes
upon the Constitution, as in these consolidated cases, it becomes not only the right but in fact
the duty of the Court to settle the dispute.[107] In doing so, the Court is "not judging the
wisdom of an act of a coequal department, but is merely ensuring that the Constitution is
upheld."[108] And, if after said review, the Court does not find any constitutional
infringement, then, it has no more authority to proscribe the actions under review.[109]
Moreover, that the assailed laws and executive issuances did not involve the exercise of
judicial or quasi-judicial function is of no moment. Contrary to the Solicitor General's
assertion, it has long been judicially settled that under the Court's expanded jurisdiction, the
writs of certiorari and prohibition are appropriate remedies to raise constitutional issues and
to review and/or prohibit or nullify, on the ground of grave abuse of discretion, any act of any
branch or instrumentality of the government, even if the latter does not exercise judicial,
quasi-judicial or ministerial functions.[110] That said, the Court's power is not unbridled
authority to review just any claim of constitutional violation or grave abuse of discretion. The
following requisites must first be complied with before the Court may exercise its power of
judicial review, namely: (1) there is an actual case or controversy calling for the exercise of
judicial power; (2) the petitioner has standing to question the validity of the subject act or
issuance, i.e., he has a personal and substantial interest in the case that he has sustained, or
will sustain, direct injury as a result of the enforcement of the act or issuance; (3) the
question of constitutionality is raised at the earliest opportunity; and (4) the constitutional
question is the very lis mota of the case.[111] Of these four, the most important are the first
two requisites, and thus will be the focus of the following discussion. Actual case or
controversy An actual case or controversy is one which involves a conflict of legal rights, an
assertion of opposite legal claims, susceptible of judicial resolution as distinguished from a
hypothetical or abstract difference or dispute since the courts will decline to pass upon
constitutional issues through advisory opinions, bereft as they are of authority to resolve
hypothetical or moot questions.[112] Related to the requirement of an actual case or
controversy is the requirement of "ripeness," and a question is ripe when the act being
challenged has a direct effect on the individual challenging it.[113] For a case to be
considered ripe for adjudication, it is a prerequisite that an act had been accomplished or
performed by either branch of government before a court may interfere, and the petitioner
must allege the existence of an immediate or threatened injury to himself as a result of the
challenged action.[114] Relevantly, in Sps. Imbong v. Ochoa, Jr.,[115] (Imbong) where the
constitutionality of the Reproductive Health Law was challenged, the Court found that an
actual case or controversy existed and that the same was ripe for judicial determination
considering that the RH Law and its implementing rules had already taken effect and that
budgetary measures to carry out the law had already been passed. Moreover, the petitioners
therein had sufficiently shown that they were in danger of sustaining some direct injury as a
result of the act complained of.[116] Similar to Imbong, these consolidated cases present an
actual case or controversy that is ripe for adjudication. The assailed laws and executive
issuances have already taken effect and petitioners herein, who are faculty members,
students and parents, are individuals directly and considerably affected by their
implementation. Legal Standing Legal standing refers to a personal and substantial interest in
a case such that the party has sustained or will sustain direct injury as a result of the
challenged governmental act.[117] In constitutional cases, which are often brought through
public actions and the relief prayed for is likely to affect other persons,[118] non-traditional
plaintiffs have been given standing by this Court provided specific requirements have been
met.[119] When suing as a concerned citizen, the person complaining must allege that he has
been or is about to be denied some right or privilege to which he is lawfully entitled or that
he is about to be subjected to some burdens or penalties by reason of the statute or act
complained of.[120] In the case of taxpayers, they are allowed to sue where there is a claim
that public funds are illegally disbursed or that public money is being deflected to any
improper purpose, or that public funds are wasted through the enforcement of an invalid or
unconstitutional law.[121] On the other hand, legislators have standing to maintain inviolate
the prerogatives, powers, and privileges vested by the Constitution in their office and are
allowed to sue to question the validity of any official action which infringe upon their
legislative prerogatives.[122] An organization, asserting the rights of its members, may also
be granted standing by the Court.[123] Petitioners in G.R. Nos. 216930 and 218465 include
organizations/federations duly organized under the laws of the Philippines, representing the
interest of the faculty and staff of their respective colleges and universities, who allegedly are
threatened to be demoted or removed from employment with the implementation of the K
to 12 Law. Petitioners in G.R. Nos. 217752 and 218045 are suing as citizens, taxpayers and in
their personal capacities as parents whose children would be directly affected by the law in
question. Petitioners in G.R. Nos. 218123 and 217451 are suing in their capacities as teachers
who allegedly are or will be negatively affected by the implementation of the K to 12 Law and
CMO No. 20, respectively, through job displacement and diminution of benefits; and as
taxpayers who have the right to challenge the K to 12 Law and CMO No. 20 as public funds
are spent and will be spent for its implementation. Under the circumstances alleged in their
respective petitions, the Court finds that petitioners have sufficient legal interest in the
outcome of the controversy. And, considering that the instant cases involve issues on
education, which under the Constitution the State is mandated to promote and protect, the
stringent requirement of direct and substantial interest may be dispensed with, and the mere
fact that petitioners are concerned citizens asserting a public right, sufficiently clothes them
with legal standing to initiate the instant petition.[124]