September 2010 Philippine Supreme Court Decisions on Political Law

Here are selected September 2010 rulings of the Supreme Court of the Philippines on political law:

Constitutional Law

Constitutionality; Presidential Proclamation 310; inalienable lands.  The Court declared as unconstitutional Presidential Proclamation 310, which took 670 hectares from petitioner’s registered lands for distribution to indigenous peoples and cultural communities, on the basis that such lands are inalienable, being part of the functions of an educational institution.  It did not matter that it was President Arroyo who, in this case, attempted by proclamation to appropriate the lands for distribution to indigenous peoples and cultural communities.  The lands by their character have become inalienable from the moment President Garcia dedicated them for petitioner’s use in scientific and technological research in the field of agriculture.  They have ceased to be alienable public lands.  Central Mindanao University, etc. vs. The Hon. Executive Secretary, et al. G.R. No. 184869, September 21, 2010.

Constitutionality; Retail Trade Liberalization Act of 2000.  The Court dismissed petitioners’ argument that Republic Act No. 8762, known as the Retail Trade Liberalization Act of 200, violates the mandate of the 1987 Constitution for the State to develop a self-reliant and independent national economy effectively controlled by Filipinos.  The provisions of Article II of the 1987 Constitution, the declarations of principles and state policies, are not self-executing.  Legislative failure to pursue such policies cannot give rise to a cause of action in the courts.  Further, while Section 19, Article II of the 1987 Constitution requires the development of a self-reliant and independent national economy effectively controlled by Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the economic environment.  The objective is simply to prohibit foreign powers or interests from maneuvering our economic policies and ensure that Filipinos are given preference in all areas of development.  The 1987 Constitution takes into account the realities of the outside world as it requires the pursuit of a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity; and speaks of industries which are competitive in both domestic and foreign markets as well as of the protection of Filipino enterprises against unfair foreign competition and trade practices.  Thus, while the Constitution mandates a bias in favor of Filipino goods, services, labor and enterprises, it also recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and trade practices that are unfair.  In other words, the 1987 Constitution does not rule out the entry of foreign investments, goods, and services. While it does not encourage their unlimited entry into the country, it does not prohibit them either.  In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair. The key, as in all economies in the world, is to strike a balance between protecting local businesses and allowing the entry of foreign investments and services.  More important, Section 10, Article XII of the 1987 Constitution gives Congress the discretion to reserve to Filipinos certain areas of investments upon the recommendation of the National Economic and Development Authority and when the national interest requires.  Thus, Congress can determine what policy to pass and when to pass it depending on the economic exigencies.  It can enact laws allowing the entry of foreigners into certain industries not reserved by the Constitution to Filipino citizens.  In this case, Congress has decided to open certain areas of the retail trade business to foreign investments instead of reserving them exclusively to Filipino citizens.

The control and regulation of trade in the interest of the public welfare is of course an exercise of the police power of the State.  A person’s right to property, whether he is a Filipino citizen or foreign national, cannot be taken from him without due process of law.  In 1954, Congress enacted the Retail Trade Nationalization Act (RA 1180) that restricts the retail business to Filipino citizens.  In denying the petition assailing the validity of such Act for violation of the foreigner’s right to substantive due process of law, the Supreme Court held that the law constituted a valid exercise of police power. The State had an interest in preventing alien control of the retail trade and R.A. 1180 was reasonably related to that purpose.  That law is not arbitrary.  Here, to the extent that RA 8762 lessens the restraint on the foreigners’ right to property or to engage in an ordinarily lawful business, it cannot be said that the law amounts to a denial of the Filipinos’ right to property and to due process of law.  Filipinos continue to have the right to engage in the kinds of retail business to which the law in question has permitted the entry of foreign investors.  Certainly, it is not within the province of the Court to inquire into the wisdom of RA 8762 save when it blatantly violates the Constitution.  But as the Court has said, there is no showing that the law has contravened any constitutional mandate. The Court is not convinced that the implementation of RA 8762 would eventually lead to alien control of the retail trade business.  Petitioners have not mustered any concrete and strong argument to support its thesis.  The law itself has provided strict safeguards on foreign participation in that business.  Representatives Gerardo S. Espina, et al. vs. Hon. Ronaldo Zamora, Jr., et al.  G.R. No. 143855, September 21, 2010.

Constitutionality; standing to sue.  The long settled rule is that he who challenges the validity of a law must have a standing to do so.  Legal standing or locus standi refers to the right of a party to come to a court of justice and make such a challenge. More particularly, standing refers to his personal and substantial interest in that he has suffered or will suffer direct injury as a result of the passage of that law.  The party must show 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 law he complains of.  In this case, there is no clear showing that the implementation of the Retail Trade Liberalization Act of 2000 prejudices petitioners or inflicts damages on them, either as taxpayers or as legislators.  Still the Court will resolve the question they raise since the rule on standing can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators when, as here, the public interest so requires or the matter is of transcendental importance, of overarching significance to society, or of paramount public interest. Representatives Gerardo S. Espina, et al. vs. Hon. Ronaldo Zamora, Jr., et al.  G.R. No. 143855, September 21, 2010.

Court decisions; statement of fact and law. The Constitution commands that “[n]o decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based.”  Judges are expected to make complete findings of fact in their decisions and scrutinize closely the legal aspects of the case in the light of the evidence presented.  They should avoid the tendency to generalize and form conclusions without detailing the facts from which such conclusions are deduced.  The Court has sustained decisions of lower courts as having substantially or sufficiently complied with the constitutional injunction, notwithstanding the laconic and terse manner in which they were written; and even if “there (was left) much to be desired in terms of (their) clarity, coherence and comprehensibility,” provided that they eventually set out the facts and the law on which they were based, as when they stated the legal qualifications of the offense constituted by the facts proved, the modifying circumstances, the participation of the accused, the penalty imposed and the civil liability; or discussed the facts comprising the elements of the offense that was charged in the information, and accordingly rendered a verdict and imposed the corresponding penalty; or quoted the facts narrated in the prosecution’s memorandum, but made their own findings and assessment of evidence, before finally agreeing with the prosecution’s evaluation of the case. On the other hand, the Court has expressed concern over the possible denial of due process when an appellate court failed to provide the appeal the attention it rightfully deserved, thus depriving the appellant of a fair opportunity to be heard by a fair and responsible magistrate.  The parties to a litigation should be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the trial court.  The losing party is entitled to know why he lost, so he may appeal to the higher court, if permitted, should he believe that the decision should be reversed.  A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal.

The Court of Appeals (CA) decision in this case cannot be deemed constitutionally infirm, as it clearly stated the facts and law on which the ruling was based, and while it did not specifically address each and every assigned error raised by appellants, it cannot be said that the appellants were left in the dark as to how the CA reached its ruling affirming the trial court’s judgment of conviction. The principal arguments raised in their Memorandum submitted before the Supreme Court actually referred to the main points of the CA rulings, such as the alleged sufficiency of prosecution evidence, their common defense of alibi, allegations of torture, probative value of ballistic and fingerprint test results, circumstances qualifying the offense and modification of penalty imposed by the trial court. Lenido Lumanog, et al. vs. People of the Philippines/Cesar Fortuna vs. People of the Philippines/People of the Philippines vs. SPO2 Cesar Fortuna y Abudo, et al.  G.R. Nos. 182555/G.R. No. 185123/G.R. No. 187745, September 7, 2010.

Custodial investigation; right to counsel. Custodial investigation refers to the critical pre-trial stage when the investigation is no longer a general inquiry into an unsolved crime, but has begun to focus on a particular person as a suspect. The police officers here claimed that upon arresting one of the accused and before questioning him, they informed him of his constitutional rights to remain silent, that any information he would give could be used against him, and that he had the right to a competent and independent counsel, preferably of his own choice, and if he cannot afford the services of counsel he will be provided with one.  However, since these rights can only be waived in writing and with the assistance of counsel, there could not have been such a valid waiver by the accused, who was presented by the police investigators to the lawyer of the IBP Office, Quezon City Hall, for the taking of his formal statement only the following day and stayed overnight at the police station before he was brought to said counsel. Thus, the constitutional requirement had not been observed.  Settled is the rule that the moment a police officer tries to elicit admissions or confessions or even plain information from a suspect, the latter should, at that juncture, be assisted by counsel, unless he waives this right in writing and in the presence of counsel.

However, the Court rejected the appellants’ contention that the accused was not given a counsel of his own choice, as he never objected to the IBP lawyer when the latter was presented to him to be his counsel for the taking down of his statement.  The phrase “preferably of his own choice” does not convey the message that the choice of a lawyer by a person under investigation is exclusive as to preclude other equally competent and independent attorneys from handling the defense; otherwise the tempo of custodial investigation would be solely in the hands of the accused who can impede or obstruct the progress of the interrogation by simply selecting a lawyer who, for one reason or another, is not available to protect his interest.  Thus, while the choice of a lawyer in cases where the person under custodial interrogation cannot afford the services of counsel – or where the preferred lawyer is not available – is naturally lodged in the police investigators, the suspect has the final choice, as he may reject the counsel chosen for him and ask for another one. A lawyer provided by the investigators is deemed engaged by the accused when he does not raise any objection against the counsel’s appointment during the course of the investigation, and the accused thereafter subscribes to the veracity of the statement before the swearing officer.

The Constitution gives the person under custodial investigation the right to a competent and independent counsel. The modifier “competent and independent” is not an empty rhetoric.  It stresses the need to accord the accused, under the uniquely stressful conditions of a custodial investigation, an informed judgment on the choices explained to him by a diligent and capable lawyer.  An effective and vigilant counsel necessarily and logically requires that the lawyer be present and able to advise and assist his client from the time the confessant answers the first question asked by the investigating officer until the signing of the extrajudicial confession.  Moreover, the lawyer should ascertain that the confession is made voluntarily and that the person under investigation fully understands the nature and the consequence of his extrajudicial confession in relation to his constitutional rights.  A contrary rule would undoubtedly be antagonistic to the constitutional rights to remain silent, to counsel and to be presumed innocent. The right to counsel has been written into the Constitution in order to prevent the use of duress and other undue influence in extracting confessions from a suspect in a crime.  The lawyer’s role cannot be reduced to being that of a mere witness to the signing of a pre-prepared confession, even if it indicated compliance with the constitutional rights of the accused. The accused is entitled to effective, vigilant and independent counsel.  Where the prosecution failed to discharge the State’s burden of proving with clear and convincing evidence that the accused had enjoyed effective and vigilant counsel before he extrajudicially admitted his guilt, the extrajudicial confession  cannot be given any probative value. Lenido Lumanog, et al. vs. People of the Philippines/Cesar Fortuna vs. People of the Philippines/People of the Philippines vs. SPO2 Cesar Fortuna y Abudo, et al., G.R. Nos. 182555/G.R. No. 185123/G.R. No. 187745, September 7, 2010.

Immunity from suit. Petitioner here claimed that it could not be sued pursuant to the doctrine of state immunity without the consent of the Republic of the Philippines, on the basis that under Service Contract 38, it served merely as an agent of the Philippine government in the development of the Malampaya gas reserves. The Court ruled that petitioner cannot claim immunity from suit because it is not an agent of the Republic of the Philippines, but the latter’s service contractor for the exploration and development of one of the country’s natural gas reserves.  While the Republic of the Philippines appointed petitioner as the exclusive party to conduct petroleum operations in the Camago-Malampayo area under the State’s full control and supervision, it does not follow that petitioner has become the State’s “agent” within the meaning of the law. An agent is a person who binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.  The essence of an agency is the agent’s ability to represent his principal and bring about business relations between the latter and third persons.  An agent’s ultimate undertaking is to execute juridical acts that would create, modify or extinguish relations between his principal and third persons.  It is this power to affect the principal’s contractual relations with third persons that differentiates the agent from a service contractor.

Petitioner’s main undertaking under Service Contract 38 is to “[p]erform all petroleum operations and provide all necessary technology and finance” as well as other connected services to the Philippine government.  As defined under the contract, petroleum operation means the “searching for and obtaining Petroleum within the Philippines”, including the “transportation, storage, handling and sale” of petroleum whether for export or domestic consumption.  Petitioner’s primary obligation under the contract is not to represent the Philippine government for the purpose of transacting business with third persons. Rather, its contractual commitment is to develop and manage petroleum operations on behalf of the State. Consequently, it is not an agent of the Philippine government, but a provider of services, technology and financing for the Malampaya Natural Gas Project.  Notably, the Philippine government itself recognized that petitioner could be sued in relation to the project.  This is evident in the stipulations agreed upon by the parties under Service Contract 38. Shell Philippines Exploration B. V. vs. Efren Jalos, et al., G.R. No. 179918, September 8, 2010.

Judiciary; seniority in appointment of Court of Appeals justices.  An appointment to a public office is the unequivocal act, of one who has the authority, of designating or selecting an individual to discharge and perform the duties and functions of an office or trust.  Where the power of appointment is absolute and the appointee has been determined upon, no further consent or approval is necessary and the formal evidence of the appointment, the commission, may issue at once.  The appointment is deemed complete once the last act required of the appointing authority has been complied with.  A written memorial that can render title to public office indubitable is required. This written memorial is known as the commission. For purposes of completion of the appointment process, the appointment is complete when the commission is signed by the executive, and sealed if necessary, and is ready to be delivered or transmitted to the appointee. Thus, transmittal of the commission is an act which is done after the appointment has already been completed. It is not required to complete the appointment but only to facilitate the effectiveness of the appointment by the appointee’s receipt and acceptance thereof.

For purposes of appointments to the judiciary, therefore, the date the commission has been signed by the President (which is the date appearing on the face of such document) is the date of the appointment.  Such date will determine the seniority of the members of the Court of Appeals in connection with Section 3, Chapter I of BP 129, as amended by RA 8246.  In other words, the earlier the date of the commission of an appointee, the more senior he is over the other subsequent appointees.  It is only when the appointments of two or more appointees bear the same date that the order of issuance of the appointments by the President becomes material.  This provision of statutory law (Section 3, Chapter I of BP 129, as amended by RA 8246) controls over the provisions of the 2009 Internal Rules of the Court of Appeals, which gives premium to the order of appointments as transmitted to this Court.  Rules implementing a particular law cannot override but must give way to the law they seek to implement. Re: Seniority among the four most recent appointments to the position of Associate Justices of the Court of Appeals.  A.M. No. 10-4-22-SC, September 28, 2010.

Police power; taxation versus regulation.  In distinguishing tax and regulation as a form of police power, the determining factor is the purpose of the implemented measure.  If the purpose is primarily to raise revenue, then it will be deemed a tax even though the measure results in some form of regulation.  On the other hand, if the purpose is primarily to regulate, then it is deemed a regulation and an exercise of the police power of the state, even though incidentally, revenue is generated.  In this case, the royalty fees were imposed by the Clark Development Corporation (CDC) primarily for regulatory purposes, and not for the generation of income or profits as petitioner claims.  These fees form part of the regulatory mandate of CDC to ensure “free flow or movement” of petroleum fuel to and from the Clark Special Economic Zone (CSEZ).  Being the administrator of CSEZ, CDC is responsible for ensuring the safe, efficient and orderly distribution of fuel products within the CSEZ. Addressing specific concerns demanded by the nature of goods or products involved is encompassed in the range of services which respondent CDC is expected to provide under the law, pursuant to its general power of supervision and control over the movement of all supplies and equipment into the CSEZ.  Chevron Philippines, Inc. vs. Bases conversion Development Authority and Clark Development Corporation.  G.R. No. 173863, September 15, 2010.

Right to speedy disposition of cases. Section 16, Article III of the Constitution provides that “all persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or administrative bodies.”  This protection extends to all citizens and covers the periods before, during and after trial, affording broader protection than Section 14(2), which guarantees merely the right to a speedy trial.  However, just like the constitutional guarantee of “speedy trial,” “speedy disposition of cases” is a flexible concept.  It is consistent with delays and depends upon the circumstances.  What the Constitution prohibits are unreasonable, arbitrary and oppressive delays, which render rights nugatory. The determination of whether the right to speedy disposition of cases has been violated, particular regard must be taken of the facts and circumstances peculiar to each case.  A mere mathematical reckoning of the time involved would not be sufficient.  Under the circumstances of this case, the Court held that the delay of four years during which the case remained pending with the Court of Appeals and the Supreme Court was not unreasonable, arbitrary or oppressive. Lenido Lumanog, et al. vs. People of the Philippines/Cesar Fortuna vs. People of the Philippines/People of the Philippines vs. SPO2 Cesar Fortuna y Abudo, et al.  G.R. Nos. 182555/G.R. No. 185123/G.R. No. 187745, September 7, 2010.

Administrative Law

Administrative agencies; findings of fact.  Findings of facts and conclusions of law of the Securities and Exchange Commission are controlling on the reviewing authority.  The rule is that findings of fact of administrative bodies, if based on substantial evidence, are controlling on the reviewing authority.  It is not for the appellate court to substitute its own judgment for that of the administrative agency on the sufficiency of the evidence and the credibility of the witnesses.  It is not the function of this Court to analyze or weigh all over again the evidence and the credibility of witnesses presented before the lower court, tribunal, or office, as we are not a trier of facts.  Our jurisdiction is limited to reviewing and revising errors of law imputed to the lower court, the latter’s findings of fact being conclusive and not reviewable by this Court.  The SEC Hearing Officer had the optimum opportunity to review the pieces of evidence presented before him and to observe the demeanor of the witnesses.  Administrative decisions on matters within his jurisdiction are entitled to respect and can only be set aside on proof of grave abuse of discretion, fraud, or error of law, which has not been shown by petitioner in this case.  Queensland-Tokyo Commodities, Inc., et al. vs. Thomas George.  G.R. No. 172727, September 8, 2010.

Administrative investigation; right to counsel; admission.  The right to counsel under Section 12 of the Bill of Rights is meant to protect a suspect during custodial investigation.  The exclusionary rule under paragraph 2, Section 12 of the Bill of Rights applies only to admissions made in a criminal investigation but not to those made in an administrative investigation.  While investigations conducted by an administrative body may at times be akin to a criminal proceeding, the rule under existing laws is that a party in an administrative inquiry may or may not be assisted by counsel, irrespective of the nature of the charges and of petitioner’s capacity to represent herself, and no duty rests on such body to furnish the person being investigated with counsel.  The right to counsel is not always imperative in administrative investigations because such inquiries are conducted merely to determine whether there are facts that merit the imposition of disciplinary measures against erring public officers and employees, with the purpose of maintaining the dignity of government service.  As such, the admissions made by petitioner during the investigation may be used as evidence to justify her dismissal.  Clarita J. Carbonel vs. Civil Service Commission. G.R. No. 187689, September 7, 2010.

Administrative remedies; exhaustion.  The doctrine of exhaustion of administrative remedies requires that when an administrative remedy is provided by law, relief must be sought by exhausting this remedy before judicial intervention may be availed of.  No recourse can be had until all such remedies have been exhausted, and the special civil actions against administrative officers should not be entertained if there are superior administrative officers who could grant relief.  This doctrine is a judicial recognition of certain matters that are peculiarly within the competence of the administrative agency to address.  It operates as a shield that prevents the overarching use of judicial power and thus hinders courts from intervening in matters of policy infused with administrative character.  Dimson (Manila), Inc. and Phesco, Inc. vs. Local Water Utilities Administration.  G.R. No. 168656, September 22, 2010.

Administrative remedies; exhaustion.  Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the intervention of the court, he or she should have availed himself or herself of all the means of administrative processes afforded him or her.  Hence, if resort to a remedy within the administrative machinery can still be made by giving the administrative officer concerned every opportunity to decide on a matter that comes within his or her jurisdiction, then such remedy should be exhausted first before the court’s judicial power can be sought.  The premature invocation of the intervention of the court is fatal to one’s cause of action.  The doctrine of exhaustion of administrative remedies is based on practical and legal reasons.  Resort to administrative remedy entails lesser expenses and provides for a speedier disposition of controversies.  Furthermore, courts of justice, for reasons of comity and convenience, will shy away from a dispute until the system of administrative redress has been completed and complied with, so as to give the administrative agency concerned every opportunity to correct its error and dispose of the case.  While the doctrine of exhaustion of administrative remedies is subject to several exceptions, the Court finds that the instant case does not fall under any of them.  Public Hearing Committee of the Laguna Lake Development Authority, et al. vs. SM Prime Holdings, Inc. G.R. No. 170599, September 22, 2010.

Laguna Lake Development Authority; powers. The Laguna Lake Development Authority (LLDA) has power to impose fines in the exercise of its function as a regulatory and quasi-judicial body with respect to pollution cases in the Laguna Lake region.  Adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAB), except where a special law, such as the LLDA Charter, provides for another forum.  Although the PAB assumed the powers and functions of the National Pollution Control Commission with respect to adjudication of pollution cases, this does not preclude the LLDA from assuming jurisdiction of pollution cases within its area of responsibility and to impose fines as penalty. Public Hearing Committee of the Laguna Lake Development Authority, et al. vs. SM Prime Holdings, Inc.  G.R. No. 170599, September 22, 2010.

Election Law

Automated election system; source code. The pertinent portion of Section 12 of Republic Act No. 9369 is clear in that “once an [automated election system] technology is selected for implementation, the [COMELEC] shall promptly make the source code of that technology available and open to any interested political party or groups which may conduct their own review thereof.”  The COMELEC has offered no reason not to comply with this requirement of the law.  Indeed, its only excuse for not disclosing the source code was that it was not yet available when petitioner asked for it and, subsequently, that the review had to be done, apparently for security reason, under a controlled environment.  The elections had passed and that reason is already stale. The Court here ruled on the petition notwithstanding the fact that the elections for which the subject source code was to be used had already been held.  It accepted petitioner’s claim that the source code remained important and relevant not only for compliance with the law, and the purpose thereof, but especially in the backdrop of numerous admissions of errors and claims of fraud in the May 2010 elections. Center for People Empowerment in Governance vs. Commission on Elections, G.R. No. 189546, September 21, 2010.

Local Government

Salary standardization; President’s power over local governments. The Court here reversed the ruling of the Commission on Audit (COA), which disallowed the premium payment for hospitalization and health care insurance benefits granted by petitioner to its officials and employees. COA held that such benefits disregarded Section 2 of Administrative Order No. 103, series of 1994 (AO 103), which prohibits all heads of government offices and agencies from granting productivity incentive benefits or any and all similar forms of allowances and benefits without the President’s prior approval. The Court ruled that petitioner did not violate the rule of prior Presidential approval since Section 2 of AO 103 states that the prohibition applies only to “government offices/agencies, including government-owned and/or controlled corporations, as well as their respective governing boards.”  Nowhere is it indicated in Section 2 that the prohibition also applies to local government units.   The approval requirement must be observed by government offices under the President’s control, i.e., departments, bureaus, offices and government-owned and controlled corporations under the Executive branch. Being an LGU, petitioner is merely under the President’s general supervision pursuant to Section 4, Article X of the Constitution.  

The President’s power of general supervision means the power of a superior officer to see to it that subordinates perform their functions according to law.  This is distinguished from the President’s power of control which is the power to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the President over that of the subordinate officer.  The power of control gives the President the power to revise or reverse the acts or decisions of a subordinate officer involving the exercise of discretion. Since LGUs are subject only to the power of general supervision of the President, the President’s authority is limited to seeing to it that rules are followed and laws are faithfully executed.  The President may only point out that rules have not been followed but the President cannot lay down the rules, neither does he have the discretion to modify or replace the rules.  Thus, the grant of additional compensation like hospitalization and health care insurance benefits in this case does not need the approval of the President to be valid. The Province of Negros Occidental vs. The Commissioners, Commission on Audit, et al. G.R. No. 182574, September 28, 2010.

Special Laws

Agrarian reform; just compensation. The Supreme Court here reiterated its previous rulings that the factors for determining just compensation under Section 17 of Republic Act No. 6657 (the Comprehensive Agrarian Reform Law), which have been translated into a formula through DAR Administrative Order No. 6, series of 1992, as amended by DAR Administrative Order No. 11, series of 1994, are mandatory and should be strictly complied with. In this case, Land Bank’s valuation correctly reflected the actual use and produce of the subject properties and did not factor in potential use as what respondent’s appraiser did. (Note that DAR AO No. 6, as amended by DAR A.O. No. 11, has been superseded by DAR Administrative Order No. 5, series of 1998.)  Land Bank of the Philippines vs. Conrado O. Colarina, G.R. No. 176410, September 1, 2010.

Agrarian reform; just compensation. For purposes of just compensation, the fair market value of an expropriated property is determined by its character and its price at the time of taking.  There are three important concepts in this definition – the character of the property, its price, and the time of actual taking.  The time of taking is the time when the landowner was deprived of the use and benefit of his property, such as when title is transferred to the Republic.  

The property’s character refers to its actual use at the time of taking, not its potential uses.  Where, as here, it has been conclusively decided by final judgment in the earlier cases filed by respondent that his property was validly acquired under the Comprehensive Agrarian Reform Law (RA 6657) and validly distributed to agrarian reform beneficiaries, the property should be conclusively treated as an agricultural land and valued as such. The lower courts erred in ruling that the character or use of the property has changed from agricultural to residential, because there is no allegation or proof that the property was approved for conversion to other uses by the Department of Agrarian Reform.  In the absence of such approval, it cannot be said that the character or use of the property has changed from agricultural to residential.  Respondent’s property remains agricultural and should be valued as such. Respondent’s evidence of the value of his land as residential property (which the lower courts found to be preponderant) could, at most, refer to the potential use of the property.  While the potential use of an expropriated property is sometimes considered in cases where there is a great improvement in the general vicinity of the expropriated property, it should never control the determination of just compensation.  The potential use of a property should not be the principal criterion for determining just compensation for this will be contrary to the well-settled doctrine that the fair market value of an expropriated property is determined by its character and its price at the time of taking, not its potential uses. The proper approach should have been to value respondent’s property as an agricultural land, which value may be adjusted in light of the improvements in the locality where it is situated.  

As to the price, the factors and requirements set out in Section 17 of RA 6657 must be applied. Here, the Land Bank’s authority to value the land is only preliminary and the landowner who disagrees with petitioner’s valuation may bring the matter to court for a judicial determination of just compensation.  The Regional Trial Courts, organized as special agrarian courts, are the final adjudicators on the issue of just compensation. Land Bank must substantiate its valuation. It is not enough that the landowner fails to prove a higher valuation for the property; Land Bank must still prove the correctness of its claims. Land Bank of the Philippines vs. Enrique Livioco, G.R. No. 170685, September 22, 2010.

Agrarian reform; retention rights. The right of retention, as protected and enshrined in the Constitution, balances the effect of compulsory land acquisition by granting the landowner the right to choose the area to be retained subject to legislative standards.  Thus, landowners who have not yet exercised their retention rights under Presidential Decree No. 27 are entitled to new retention rights provided for by Republic Act No. 6657.  However, the limitations under Letter of Instruction No. 474 still apply to a landowner who filed an application for retention under RA 6657.  LOI 474 amended PD 27 by removing any right of retention from persons who own other agricultural lands of more than 7 hectares, or lands used for residential, commercial, industrial or other purpose from which they derive adequate income to support themselves and their families.  Section 9 (d) of DAR Administrative Order No. 05 is inconsistent with PD No. 27, as amended by LOI 474, insofar as it removed the limitations to a landowner’s retention rights.  It is well-settled that administrative officials are empowered to promulgate rules and regulations in order to implement a statute.  The power, however, is restricted such that an administrative regulation cannot go beyond what is provided in the legislative enactment.   It must always be in harmony with the provisions of the law; hence, any resulting discrepancy between the two will always be resolved in favor of the statute.  Celestio Santiago substituted by Lauro Santiago and Isidro Gutierrez substituted by Rogelio Gutierez vs. Amada R. Ortiz-Luis substituted by Juan Ortiz-Luiz, Jr. G.R. No. 186184 & G.R. No. 186988, September 20, 2010.

Government Procurement Reform Act; jurisdiction; appeal from decisions of bids and awards committee.  Under Republic Act No. 9184, or the Government Procurement Reform Act (GPRA), the proper recourse to a court action from decisions of the Bids and Awards Committee (BAC) is to file a certiorari not before the Supreme Court but before the regional trial court, which is vested by the GPRA with jurisdiction to entertain the same.  Compliance with the mandatory protest mechanisms of the GPRA is jurisdictional in character.  Section 58 of that law requires that there be exhaustion of the statutorily available remedies at the administrative level as a precondition to the filing of a certiorari petition.  This requirement points to the mechanisms for protest against decisions of the BAC in all stages of the procurement process that are outlined in both the provisions of Section 55 of the GPRA as well in Section 55 of the implementing rules.  Under these relevant sections of the law and the rules, resort to the judicial remedy of certiorari must be made only after the filing of a motion for reconsideration of the BAC’s decision before the said body.  Subsequently, from the final denial of the motion for reconsideration, the aggrieved party must then lodge a protest before the head of the procuring entity through a verified position paper that formally complies with requirements in Section 55.2 of the GPRA’s Implementing Rules and Regulations – Part A.  Only upon the final resolution of the protest can the aggrieved party be said to have exhausted the available remedies at the administrative level.  In other words, only then can he viably avail of the remedy of certiorari before the proper courts.  Non-compliance with this statutory requirement, under Section 58 of the GPRA, constitutes a ground for the dismissal of the action for lack of jurisdiction.  Dimson (Manila), Inc. and Phesco, Inc. vs. Local Water Utilities Administration.  G.R. No. 168656, September 22, 2010.

Indigenous Peoples’ Rights Act; vested property rights.  When Congress enacted the Indigenous Peoples’ Rights Act (IPRA) or Republic Act 8371 in 1997, it provided in Section 56 that “property rights within the ancestral domains already existing and/or vested” upon its effectiveness “shall be recognized and respected.”  In this case, ownership over the subject lands had been vested in petitioner as early as 1958.  Consequently, a Presidential proclamation transferring the lands in 2003 to the indigenous peoples around the area is not in accord with the IPRA.  Central Mindanao University, etc. vs. The Hon. Executive Secretary, et al. G.R. No. 184869, September 21, 2010.

 Republic Act No. 8975; government ICT projects. This is the first time that the Court is confronted with the question of whether a government information and communication technology project is covered by Republic Act No. 8975, which prohibits trial courts from issuing a temporary restraining order, preliminary injunction or mandatory injunction against the bidding or awarding of a contract or project of the national government. The term “national government projects” means (i) national government infrastructure projects, engineering works and service contracts, (ii) all projects covered by the Build-Operate-and-Transfer (BOT) Law, and (iii) other related and necessary activities, such as site acquisition, supply and/or installation of equipment and materials, implementation, construction, completion, operation, maintenance, improvement repair and rehabilitation. The purpose of RA 8975 is to ensure the expeditious implementation and completion of government infrastructure projects.

Undeniably, under the BOT Law, the entire information technology project, including the civil works component and the technological aspect thereof, is considered an infrastructure or development project and treated similarly as traditional infrastructure projects. Such information technology project is therefore covered by RA 8975.   

On the other hand, under Republic Act No. 9184 or the Government Procurement Reform Act (GPRA), which contemplates projects to be funded by public funds, the term “infrastructure project” is limited to the “civil works component” of information technology projects.  The non-civil works component of information technology projects is treated as an acquisition of goods or consulting services. Thus, the civil works component of information technology projects are subject to the provisions of the GPRA and its implementing regulations on infrastructure projects, while the technological and other components would be covered by the provisions on procurement of goods or consulting services as the circumstances may warrant. When Congress adopted a limited definition of what is to be considered “infrastructure” in relation to information technology projects under the GPRA, legislators are presumed to have taken into account previous laws concerning infrastructure projects, including the BOT Law and RA 8975, and deliberately adopted the limited definition.   

Taking into account the different treatment of information technology projects under the BOT Law and the GPRA, petitioners’ contention the trial court had no jurisdiction to issue a writ of preliminary injunction (because of the prohibition under RA 8975) would have been correct if the e-Passport Project was pursued under the BOT Law. However, petitioners presented no proof that the e-Passport Project was a BOT project.  On the contrary, evidence adduced by both sides tended to show that the e-Passport Project was a procurement contract under the GPRA. Accordingly, only the civil works component of the e-Passport Project would be considered an infrastructure project that may not be the subject of a lower court-issued writ of injunction under RA 8975.

Could the e-Passport Project be considered as “engineering works or a service contract” or as “related and necessary activities” under RA 8975. The Court ruled in the negative.  Under that law, a “service contract” refers to “infrastructure contracts entered into by any department, office or agency of the national government with private entities and nongovernment organizations for services related or incidental to the functions and operations of the department, office or agency concerned.”  On the other hand, the phrase “other related and necessary activities” refers to activities related to a government infrastructure, engineering works, service contract or project under the BOT Law.  In other words, to be considered a service contract or related activity, petitioners must show that the e-Passport Project is an infrastructure project or necessarily related to an infrastructure project.  This, petitioners failed to do as they saw fit not to present any evidence on the details of the e-Passport Project before the trial court and this Court.  There is nothing on record to indicate that the e-Passport Project has a civil works component or is necessarily related to an infrastructure project. In fact, the BSP’s request for interest and to bid confirms that the e-Passport Project is a procurement of goods and not an infrastructure project.  Thus, within the context of the GPRA – which is the governing law for the e-Passport Project – the said Project is not an infrastructure project that is protected from lower court issued injunctions. Department of Foreign Affairs and Bangko Sentral ng Pilipinas vs. Hon. Franco T. Falcon,  G.R. No. 176657, September 1, 2010.

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