Equal Protection Of Law Full.docx

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-7995

May 31, 1957

LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations and partnerships adversely affected. by Republic Act No. 1180, petitioner, vs. JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City Treasurer of Manila,respondents. Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for petitioner. Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for respondent Secretary of Finance. City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent City Treasurer. Dionisio Reyes as Amicus Curiae. Marcial G. Mendiola as Amicus Curiae. Emiliano R. Navarro as Amicus Curiae. LABRADOR, J.: I. The case and issue, in general This Court has before it the delicate task of passing upon the validity and constitutionality of a legislative enactment, fundamental and far-reaching in significance. The enactment poses questions of due process, police power and equal protection of the laws. It also poses an important issue of fact, that is whether the conditions which the disputed law purports to remedy really or actually exist. Admittedly springing from a deep, militant, and positive nationalistic impulse, the law purports to protect citizen and country from the alien retailer. Through it, and within the field of economy it regulates, Congress attempts to translate national aspirations for economic independence and national security, rooted in the drive and urge for national survival and welfare, into a concrete and tangible measures designed to free the national retailer from the competing dominance of the alien, so that the country and the nation may be free from a supposed economic dependence and bondage. Do the facts and circumstances justify the enactment? II. Pertinent provisions of Republic Act No. 1180 Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it nationalizes the retail trade business. The main provisions of the Act are: (1) a prohibition against persons, not citizens of the Philippines, and against associations, partnerships, or corporations the capital of which are not wholly owned by citizens of the Philippines, from engaging directly or indirectly in the retail trade; (2) an exception from the above prohibition in favor of aliens actually engaged in said business on May 15, 1954, who are allowed to continue to engaged therein, unless their licenses are forfeited in accordance with the law, until their death or voluntary retirement in case of natural persons, and for ten years after the approval of the Act or until the expiration of term in case of juridical persons; (3) an exception therefrom in favor of citizens and juridical entities of the United States; (4) a provision for the forfeiture of licenses (to engage in the retail business) for violation of the laws on nationalization, control weights and measures and labor and other laws relating to trade, commerce and industry; (5) a prohibition against the establishment or opening by aliens actually engaged in the retail business of additional stores or branches of retail business, (6) a provision requiring aliens actually engaged in the retail business to present for registration with the proper authorities a verified statement concerning their businesses, giving, among other matters, the nature of the business, their assets and liabilities and their offices and principal offices of judicial entities; and (7) a provision allowing the heirs of aliens now engaged in the retail business who die, to continue such business for a period of six months for purposes of liquidation. III. Grounds upon which petition is based-Answer thereto

Petitioner, for and in his own behalf and on behalf of other alien residents corporations and partnerships adversely affected by the provisions of Republic Act. No. 1180, brought this action to obtain a judicial declaration that said Act is unconstitutional, and to enjoin the Secretary of Finance and all other persons acting under him, particularly city and municipal treasurers, from enforcing its provisions. Petitioner attacks the constitutionality of the Act, contending that: (1) it denies to alien residents the equal protection of the laws and deprives of their liberty and property without due process of law ; (2) the subject of the Act is not expressed or comprehended in the title thereof; (3) the Act violates international and treaty obligations of the Republic of the Philippines; (4) the provisions of the Act against the transmission by aliens of their retail business thru hereditary succession, and those requiring 100% Filipino capitalization for a corporation or entity to entitle it to engage in the retail business, violate the spirit of Sections 1 and 5, Article XIII and Section 8 of Article XIV of the Constitution. In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the Act was passed in the valid exercise of the police power of the State, which exercise is authorized in the Constitution in the interest of national economic survival; (2) the Act has only one subject embraced in the title; (3) no treaty or international obligations are infringed; (4) as regards hereditary succession, only the form is affected but the value of the property is not impaired, and the institution of inheritance is only of statutory origin. IV. Preliminary consideration of legal principles involved a. The police power. — There is no question that the Act was approved in the exercise of the police power, but petitioner claims that its exercise in this instance is attended by a violation of the constitutional requirements of due process and equal protection of the laws. But before proceeding to the consideration and resolution of the ultimate issue involved, it would be well to bear in mind certain basic and fundamental, albeit preliminary, considerations in the determination of the ever recurrent conflict between police power and the guarantees of due process and equal protection of the laws. What is the scope of police power, and how are the due process and equal protection clauses related to it? What is the province and power of the legislature, and what is the function and duty of the courts? These consideration must be clearly and correctly understood that their application to the facts of the case may be brought forth with clarity and the issue accordingly resolved. It has been said the police power is so far - reaching in scope, that it has become almost impossible to limit its sweep. As it derives its existence from the very existence of the State itself, it does not need to be expressed or defined in its scope; it is said to be co-extensive with self-protection and survival, and as such it is the most positive and active of all governmental processes, the most essential, insistent and illimitable. Especially is it so under a modern democratic framework where the demands of society and of nations have multiplied to almost unimaginable proportions; the field and scope of police power has become almost boundless, just as the fields of public interest and public welfare have become almost all-embracing and have transcended human foresight. Otherwise stated, as we cannot foresee the needs and demands of public interest and welfare in this constantly changing and progressive world, so we cannot delimit beforehand the extent or scope of police power by which and through which the State seeks to attain or achieve interest or welfare. So it is that Constitutions do not define the scope or extent of the police power of the State; what they do is to set forth the limitations thereof. The most important of these are the due process clause and the equal protection clause. b. Limitations on police power. — The basic limitations of due process and equal protection are found in the following provisions of our Constitution: SECTION 1.(1) No person shall be deprived of life, liberty or property without due process of law, nor any person be denied the equal protection of the laws. (Article III, Phil. Constitution) These constitutional guarantees which embody the essence of individual liberty and freedom in democracies, are not limited to citizens alone but are admittedly universal in their application, without regard to any differences of race, of color, or of nationality. (Yick Wo vs. Hopkins, 30, L. ed. 220, 226.) c. The, equal protection clause. —

The equal protection of the law clause is against undue favor and individual or class privilege, as well as hostile discrimination or the oppression of inequality. It is not intended to prohibit legislation, which is limited either in the object to which it is directed or by territory within which is to operate. It does not demand absolute equality among residents; it merely requires that all persons shall be treated alike, under like circumstances and conditions both as to privileges conferred and liabilities enforced. The equal protection clause is not infringed by legislation which applies only to those persons falling within a specified class, if it applies alike to all persons within such class, and reasonable grounds exists for making a distinction between those who fall within such class and those who do not. (2 Cooley, Constitutional Limitations, 824-825.) d. The due process clause. — The due process clause has to do with the reasonableness of legislation enacted in pursuance of the police power. Is there public interest, a public purpose; is public welfare involved? Is the Act reasonably necessary for the accomplishment of the legislature's purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient foundation or reason in connection with the matter involved; or has there not been a capricious use of the legislative power? Can the aims conceived be achieved by the means used, or is it not merely an unjustified interference with private interest? These are the questions that we ask when the due process test is applied. The conflict, therefore, between police power and the guarantees of due process and equal protection of the laws is more apparent than real. Properly related, the power and the guarantees are supposed to coexist. The balancing is the essence or, shall it be said, the indispensable means for the attainment of legitimate aspirations of any democratic society. There can be no absolute power, whoever exercise it, for that would be tyranny. Yet there can neither be absolute liberty, for that would mean license and anarchy. So the State can deprive persons of life, liberty and property, provided there is due process of law; and persons may be classified into classes and groups, provided everyone is given the equal protection of the law. The test or standard, as always, is reason. The police power legislation must be firmly grounded on public interest and welfare, and a reasonable relation must exist between purposes and means. And if distinction and classification has been made, there must be a reasonable basis for said distinction. e. Legislative discretion not subject to judicial review. — Now, in this matter of equitable balancing, what is the proper place and role of the courts? It must not be overlooked, in the first place, that the legislature, which is the constitutional repository of police power and exercises the prerogative of determining the policy of the State, is by force of circumstances primarily the judge of necessity, adequacy or reasonableness and wisdom, of any law promulgated in the exercise of the police power, or of the measures adopted to implement the public policy or to achieve public interest. On the other hand, courts, although zealous guardians of individual liberty and right, have nevertheless evinced a reluctance to interfere with the exercise of the legislative prerogative. They have done so early where there has been a clear, patent or palpable arbitrary and unreasonable abuse of the legislative prerogative. Moreover, courts are not supposed to override legitimate policy, and courts never inquire into the wisdom of the law. V. Economic problems sought to be remedied With the above considerations in mind, we will now proceed to delve directly into the issue involved. If the disputed legislation were merely a regulation, as its title indicates, there would be no question that it falls within the legitimate scope of legislative power. But it goes further and prohibits a group of residents, the aliens, from engaging therein. The problem becomes more complex because its subject is a common, trade or occupation, as old as society itself, which from the immemorial has always been open to residents, irrespective of race, color or citizenship. a. Importance of retail trade in the economy of the nation. — In a primitive economy where families produce all that they consume and consume all that they produce, the dealer, of course, is unknown. But as group life develops and families begin to live in communities producing more than what they consume and needing an infinite number of things they do not produce, the dealer comes into existence. As villages develop into big communities and specialization in production begins, the dealer's importance is enhanced. Under modern conditions and standards of living, in which man's needs have multiplied and diversified to unlimited extents and proportions, the retailer comes as essential as the producer, because thru him the infinite variety of articles, goods and needed for daily life are placed within the easy reach of consumers. Retail

dealers perform the functions of capillaries in the human body, thru which all the needed food and supplies are ministered to members of the communities comprising the nation. There cannot be any question about the importance of the retailer in the life of the community. He ministers to the resident's daily needs, food in all its increasing forms, and the various little gadgets and things needed for home and daily life. He provides his customers around his store with the rice or corn, the fish, the salt, the vinegar, the spices needed for the daily cooking. He has cloths to sell, even the needle and the thread to sew them or darn the clothes that wear out. The retailer, therefore, from the lowly peddler, the owner of a small sari-sari store, to the operator of a department store or, a supermarket is so much a part of day-to-day existence. b. The alien retailer's trait. — The alien retailer must have started plying his trades in this country in the bigger centers of population (Time there was when he was unknown in provincial towns and villages). Slowly but gradually be invaded towns and villages; now he predominates in the cities and big centers of population. He even pioneers, in far away nooks where the beginnings of community life appear, ministering to the daily needs of the residents and purchasing their agricultural produce for sale in the towns. It is an undeniable fact that in many communities the alien has replaced the native retailer. He has shown in this trade, industry without limit, and the patience and forbearance of a slave. Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of ill-bred and insolent neighbors and customers are made in his face, but he heeds them not, and he forgets and forgives. The community takes note of him, as he appears to be harmless and extremely useful. c. Alleged alien control and dominance. — There is a general feeling on the part of the public, which appears to be true to fact, about the controlling and dominant position that the alien retailer holds in the nation's economy. Food and other essentials, clothing, almost all articles of daily life reach the residents mostly through him. In big cities and centers of population he has acquired not only predominance, but apparent control over distribution of almost all kinds of goods, such as lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of other goods and articles. And were it not for some national corporations like the Naric, the Namarco, the Facomas and the Acefa, his control over principal foods and products would easily become full and complete. Petitioner denies that there is alien predominance and control in the retail trade. In one breath it is said that the fear is unfounded and the threat is imagined; in another, it is charged that the law is merely the result of radicalism and pure and unabashed nationalism. Alienage, it is said, is not an element of control; also so many unmanageable factors in the retail business make control virtually impossible. The first argument which brings up an issue of fact merits serious consideration. The others are matters of opinion within the exclusive competence of the legislature and beyond our prerogative to pass upon and decide. The best evidence are the statistics on the retail trade, which put down the figures in black and white. Between the constitutional convention year (1935), when the fear of alien domination and control of the retail trade already filled the minds of our leaders with fears and misgivings, and the year of the enactment of the nationalization of the retail trade act (1954), official statistics unmistakably point out to the ever-increasing dominance and control by the alien of the retail trade, as witness the following tables: Assets Year and Retailers Nationality

No.Establishments

Pesos

Gross Sales

Per cent Distribution

Pesos

Per cent Distribution

1941: Filipino ..........

106,671 200,323,138

55.82 174,181,924

51.74

Chinese ...........

15,356 118,348,692

32.98 148,813,239

44.21

Others ............

1,646 40,187,090

11.20 13,630,239

4.05

Filipino ..........

111,107 208,658,946

65.05 279,583,333

57.03

Chinese ...........

13,774 106,156,218

33.56 205,701,134

41.96

1947:

Others ...........

354

8,761,260

.49

4,927,168

1.01

1948: (Census) Filipino ..........

113,631 213,342,264

67.30 467,161,667

60.51

Chinese ..........

12,087 93,155,459

29.38 294,894,227

38.20

Others ..........

422 10,514,675

Filipino .......... Chinese ..........

3.32

9,995,402

1.29

113,659 213,451,602

60.89 462,532,901

53.47

16,248 125,223,336

35.72 392,414,875

45.36

Others ..........

486 12,056,365

3.39 10,078,364

1.17

Filipino .........

119,352 224,053,620

61.09 466,058,052

53.07

Chinese ..........

17,429 134,325,303

36.60 404,481,384

46.06

1949:

1951:

Others ..........

347

8,614,025

2.31

7,645,327

AVERAGE ASSETS AND GROSS SALES PER ESTABLISHMENT Year and Retailer's Nationality

Item Assets (Pesos)

Gross Sales (Pesos)

1941: Filipino .............................................

1,878

1,633

Chinese ..............................................

7,707

9,691

Others ...............................................

24,415

8,281

Filipino .............................................

1,878

2,516

Chinese ...........................................

7,707

14,934

Others ..............................................

24,749

13,919

1947:

1948:

(Census)

87

Filipino .............................................

1,878

4,111

Chinese .............................................

7,707

24,398

Others ..............................................

24,916

23,686

Filipino .............................................

1,878

4,069

Chinese ..............................................

7,707

24,152

Others ..............................................

24,807

20,737

Filipino .............................................

1,877

3,905

Chinese .............................................

7,707

33,207

Others ...............................................

24,824

22,033

1949:

1951:

(Estimated Assets and Gross Sales of Retail Establishments, By Year and Nationality of Owners, Benchmark: 1948 Census, issued by the Bureau of Census and Statistics, Department of Commerce and Industry; pp. 18-19 of Answer.) The above statistics do not include corporations and partnerships, while the figures on Filipino establishments already include mere market vendors, whose capital is necessarily small.. The above figures reveal that in percentage distribution of assests and gross sales, alien participation has steadily increased during the years. It is true, of course, that Filipinos have the edge in the number of retailers, but aliens more than make up for the numerical gap through their assests and gross sales which average between six and seven times those of the very many Filipino retailers. Numbers in retailers, here, do not imply superiority; the alien invests more capital, buys and sells six to seven times more, and gains much more. The same official report, pointing out to the known predominance of foreign elements in the retail trade, remarks that the Filipino retailers were largely engaged in minor retailer enterprises. As observed by respondents, the native investment is thinly spread, and the Filipino retailer is practically helpless in matters of capital, credit, price and supply. d. Alien control and threat, subject of apprehension in Constitutional convention. — It is this domination and control, which we believe has been sufficiently shown to exist, that is the legislature's target in the enactment of the disputed nationalization would never have been adopted. The framers of our Constitution also believed in the existence of this alien dominance and control when they approved a resolution categorically declaring among other things, that "it is the sense of the Convention that the public interest requires the nationalization of the retail trade; . . . ." (II Aruego, The Framing of the Philippine Constitution, 662-663, quoted on page 67 of Petitioner.) That was twenty-two years ago; and the events since then have not been either pleasant or comforting. Dean Sinco of the University of the Philippines College of Law, commenting on the patrimony clause of the Preamble opines that the fathers of our Constitution were merely translating the general preoccupation of Filipinos "of the dangers from alien interests that had already brought under their control the commercial and other economic activities of the country" (Sinco, Phil. Political Law, 10th ed., p. 114); and analyzing the concern of the members of the constitutional convention for the economic life of the citizens, in connection with the nationalistic provisions of the Constitution, he says: But there has been a general feeling that alien dominance over the economic life of the country is not desirable and that if such a situation should remain, political independence alone is no guarantee to national stability and strength. Filipino private capital is not big enough to wrest from alien hands the control of the national economy. Moreover, it is but of

recent formation and hence, largely inexperienced, timid and hesitant. Under such conditions, the government as the instrumentality of the national will, has to step in and assume the initiative, if not the leadership, in the struggle for the economic freedom of the nation in somewhat the same way that it did in the crusade for political freedom. Thus . . . it (the Constitution) envisages an organized movement for the protection of the nation not only against the possibilities of armed invasion but also against its economic subjugation by alien interests in the economic field. (Phil. Political Law by Sinco, 10th ed., p. 476.) Belief in the existence of alien control and predominance is felt in other quarters. Filipino businessmen, manufacturers and producers believe so; they fear the dangers coming from alien control, and they express sentiments of economic independence. Witness thereto is Resolution No. 1, approved on July 18, 1953, of the Fifth National convention of Filipino Businessmen, and a similar resolution, approved on March 20, 1954, of the Second National Convention of Manufacturers and Producers. The man in the street also believes, and fears, alien predominance and control; so our newspapers, which have editorially pointed out not only to control but to alien stranglehold. We, therefore, find alien domination and control to be a fact, a reality proved by official statistics, and felt by all the sections and groups that compose the Filipino community. e. Dangers of alien control and dominance in retail. — But the dangers arising from alien participation in the retail trade does not seem to lie in the predominance alone; there is a prevailing feeling that such predominance may truly endanger the national interest. With ample capital, unity of purpose and action and thorough organization, alien retailers and merchants can act in such complete unison and concert on such vital matters as the fixing of prices, the determination of the amount of goods or articles to be made available in the market, and even the choice of the goods or articles they would or would not patronize or distribute, that fears of dislocation of the national economy and of the complete subservience of national economy and of the consuming public are not entirely unfounded. Nationals, producers and consumers alike can be placed completely at their mercy. This is easily illustrated. Suppose an article of daily use is desired to be prescribed by the aliens, because the producer or importer does not offer them sufficient profits, or because a new competing article offers bigger profits for its introduction. All that aliens would do is to agree to refuse to sell the first article, eliminating it from their stocks, offering the new one as a substitute. Hence, the producers or importers of the prescribed article, or its consumers, find the article suddenly out of the prescribed article, or its consumers, find the article suddenly out of circulation. Freedom of trade is thus curtailed and free enterprise correspondingly suppressed. We can even go farther than theoretical illustrations to show the pernicious influences of alien domination. Grave abuses have characterized the exercise of the retail trade by aliens. It is a fact within judicial notice, which courts of justice may not properly overlook or ignore in the interests of truth and justice, that there exists a general feeling on the part of the public that alien participation in the retail trade has been attended by a pernicious and intolerable practices, the mention of a few of which would suffice for our purposes; that at some time or other they have cornered the market of essential commodities, like corn and rice, creating artificial scarcities to justify and enhance profits to unreasonable proportions; that they have hoarded essential foods to the inconvenience and prejudice of the consuming public, so much so that the Government has had to establish the National Rice and Corn Corporation to save the public from their continuous hoarding practices and tendencies; that they have violated price control laws, especially on foods and essential commodities, such that the legislature had to enact a law (Sec. 9, Republic Act No. 1168), authorizing their immediate and automatic deportation for price control convictions; that they have secret combinations among themselves to control prices, cheating the operation of the law of supply and demand; that they have connived to boycott honest merchants and traders who would not cater or yield to their demands, in unlawful restraint of freedom of trade and enterprise. They are believed by the public to have evaded tax laws, smuggled goods and money into and out of the land, violated import and export prohibitions, control laws and the like, in derision and contempt of lawful authority. It is also believed that they have engaged in corrupting public officials with fabulous bribes, indirectly causing the prevalence of graft and corruption in the Government. As a matter of fact appeals to unscrupulous aliens have been made both by the Government and by their own lawful diplomatic representatives, action which impliedly admits a prevailing feeling about the existence of many of the above practices. The circumstances above set forth create well founded fears that worse things may come in the future. The present dominance of the alien retailer, especially in the big centers of population, therefore, becomes a potential source of danger on occasions of war or other calamity. We do not

have here in this country isolated groups of harmless aliens retailing goods among nationals; what we have are well organized and powerful groups that dominate the distribution of goods and commodities in the communities and big centers of population. They owe no allegiance or loyalty to the State, and the State cannot rely upon them in times of crisis or emergency. While the national holds his life, his person and his property subject to the needs of his country, the alien may even become the potential enemy of the State. f. Law enacted in interest of national economic survival and security. — We are fully satisfied upon a consideration of all the facts and circumstances that the disputed law is not the product of racial hostility, prejudice or discrimination, but the expression of the legitimate desire and determination of the people, thru their authorized representatives, to free the nation from the economic situation that has unfortunately been saddled upon it rightly or wrongly, to its disadvantage. The law is clearly in the interest of the public, nay of the national security itself, and indisputably falls within the scope of police power, thru which and by which the State insures its existence and security and the supreme welfare of its citizens. VI. The Equal Protection Limitation a. Objections to alien participation in retail trade. — The next question that now poses solution is, Does the law deny the equal protection of the laws? As pointed out above, the mere fact of alienage is the root and cause of the distinction between the alien and the national as a trader. The alien resident owes allegiance to the country of his birth or his adopted country; his stay here is for personal convenience; he is attracted by the lure of gain and profit. His aim or purpose of stay, we admit, is neither illegitimate nor immoral, but he is naturally lacking in that spirit of loyalty and enthusiasm for this country where he temporarily stays and makes his living, or of that spirit of regard, sympathy and consideration for his Filipino customers as would prevent him from taking advantage of their weakness and exploiting them. The faster he makes his pile, the earlier can the alien go back to his beloved country and his beloved kin and countrymen. The experience of the country is that the alien retailer has shown such utter disregard for his customers and the people on whom he makes his profit, that it has been found necessary to adopt the legislation, radical as it may seem. Another objection to the alien retailer in this country is that he never really makes a genuine contribution to national income and wealth. He undoubtedly contributes to general distribution, but the gains and profits he makes are not invested in industries that would help the country's economy and increase national wealth. The alien's interest in this country being merely transient and temporary, it would indeed be ill-advised to continue entrusting the very important function of retail distribution to his hands. The practices resorted to by aliens in the control of distribution, as already pointed out above, their secret manipulations of stocks of commodities and prices, their utter disregard of the welfare of their customers and of the ultimate happiness of the people of the nation of which they are mere guests, which practices, manipulations and disregard do not attend the exercise of the trade by the nationals, show the existence of real and actual, positive and fundamental differences between an alien and a national which fully justify the legislative classification adopted in the retail trade measure. These differences are certainly a valid reason for the State to prefer the national over the alien in the retail trade. We would be doing violence to fact and reality were we to hold that no reason or ground for a legitimate distinction can be found between one and the other. b. Difference in alien aims and purposes sufficient basis for distinction. — The above objectionable characteristics of the exercise of the retail trade by the aliens, which are actual and real, furnish sufficient grounds for legislative classification of retail traders into nationals and aliens. Some may disagree with the wisdom of the legislature's classification. To this we answer, that this is the prerogative of the law-making power. Since the Court finds that the classification is actual, real and reasonable, and all persons of one class are treated alike, and as it cannot be said that the classification is patently unreasonable and unfounded, it is in duty bound to declare that the legislature acted within its legitimate prerogative and it can not declare that the act transcends the limit of equal protection established by the Constitution. Broadly speaking, the power of the legislature to make distinctions and classifications among persons is not curtailed or denied by the equal protection of the laws clause. The legislative power admits of a wide scope of discretion, and a law can be violative of the constitutional limitation only

when the classification is without reasonable basis. In addition to the authorities we have earlier cited, we can also refer to the case of Linsey vs. Natural Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined the application of equal protection clause to a law sought to be voided as contrary thereto: . . . . "1. The equal protection clause of the Fourteenth Amendment does not take from the state the power to classify in the adoption of police laws, but admits of the exercise of the wide scope of discretion in that regard, and avoids what is done only when it is without any reasonable basis, and therefore is purely arbitrary. 2. A classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety, or because in practice it results in some inequality. 3. When the classification in such a law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed. 4. One who assails the classification in such a law must carry the burden of showing that it does not rest upon any reasonable basis but is essentially arbitrary." c. Authorities recognizing citizenship as basis for classification. — The question as to whether or not citizenship is a legal and valid ground for classification has already been affirmatively decided in this jurisdiction as well as in various courts in the United States. In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136, where the validity of Act No. 2761 of the Philippine Legislature was in issue, because of a condition therein limiting the ownership of vessels engaged in coastwise trade to corporations formed by citizens of the Philippine Islands or the United States, thus denying the right to aliens, it was held that the Philippine Legislature did not violate the equal protection clause of the Philippine Bill of Rights. The legislature in enacting the law had as ultimate purpose the encouragement of Philippine shipbuilding and the safety for these Islands from foreign interlopers. We held that this was a valid exercise of the police power, and all presumptions are in favor of its constitutionality. In substance, we held that the limitation of domestic ownership of vessels engaged in coastwise trade to citizens of the Philippines does not violate the equal protection of the law and due process or law clauses of the Philippine Bill of Rights. In rendering said decision we quoted with approval the concurring opinion of Justice Johnson in the case of Gibbons vs. Ogden, 9 Wheat., I, as follows: "Licensing acts, in fact, in legislation, are universally restraining acts; as, for example, acts licensing gaming houses, retailers of spirituous liquors, etc. The act, in this instance, is distinctly of that character, and forms part of an extensive system, the object of which is to encourage American shipping, and place them on an equal footing with the shipping of other nations. Almost every commercial nation reserves to its own subjects a monopoly of its coasting trade; and a countervailing privilege in favor of American shipping is contemplated, in the whole legislation of the United States on this subject. It is not to give the vessel an American character, that the license is granted; that effect has been correctly attributed to the act of her enrollment. But it is to confer on her American privileges, as contra distinguished from foreign; and to preserve the Government from fraud by foreigners; in surreptitiously intruding themselves into the American commercial marine, as well as frauds upon the revenue in the trade coastwise, that this whole system is projected." The rule in general is as follows: Aliens are under no special constitutional protection which forbids a classification otherwise justified simply because the limitation of the class falls along the lines of nationality. That would be requiring a higher degree of protection for aliens as a class than for similar classes than for similar classes of American citizens. Broadly speaking, the difference in status between citizens and aliens constitutes a basis for reasonable classification in the exercise of police power. (2 Am., Jur. 468-469.) In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the licensing of hawkers and peddlers, which provided that no one can obtain a license unless he is, or has declared his intention, to become a citizen of the United States, was held valid, for the following reason: It may seem wise to the legislature to limit the business of those who are supposed to have regard for the welfare, good order and happiness of the community, and the court cannot question this judgment and conclusion. In Bloomfield vs. State, 99 N. E. 309 (Ohio, 1912), a statute which prevented certain persons, among them aliens, from engaging in the traffic of liquors, was found not to be the result of race hatred, or in hospitality, or a deliberate purpose to discriminate, but was based on the belief that

an alien cannot be sufficiently acquainted with "our institutions and our life as to enable him to appreciate the relation of this particular business to our entire social fabric", and was not, therefore, invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115 (1926), the U.S. Supreme Court had under consideration an ordinance of the city of Cincinnati prohibiting the issuance of licenses (pools and billiard rooms) to aliens. It held that plainly irrational discrimination against aliens is prohibited, but it does not follow that alien race and allegiance may not bear in some instances such a relation to a legitimate object of legislation as to be made the basis of permitted classification, and that it could not state that the legislation is clearly wrong; and that latitude must be allowed for the legislative appraisement of local conditions and for the legislative choice of methods for controlling an apprehended evil. The case of State vs. Carrol, 124 N. E. 129 (Ohio, 1919) is a parallel case to the one at bar. In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922), the business of pawn brooking was considered as having tendencies injuring public interest, and limiting it to citizens is within the scope of police power. A similar statute denying aliens the right to engage in auctioneering was also sustained in Wright vs. May, L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs. Van Winkle, 297 F. 340 (Oregon, 1924), the court said that aliens are judicially known to have different interests, knowledge, attitude, psychology and loyalty, hence the prohibitions of issuance of licenses to them for the business of pawnbroker, pool, billiard, card room, dance hall, is not an infringement of constitutional rights. In Templar vs. Michigan State Board of Examiners, 90 N.W. 1058 (Michigan, 1902), a law prohibiting the licensing of aliens as barbers was held void, but the reason for the decision was the court's findings that the exercise of the business by the aliens does not in any way affect the morals, the health, or even the convenience of the community. In Takahashi vs. Fish and Game Commission, 92 L. ed. 1479 (1947), a California statute banning the issuance of commercial fishing licenses to person ineligible to citizenship was held void, because the law conflicts with Federal power over immigration, and because there is no public interest in the mere claim of ownership of the waters and the fish in them, so there was no adequate justification for the discrimination. It further added that the law was the outgrowth of antagonism toward the persons of Japanese ancestry. However, two Justices dissented on the theory that fishing rights have been treated traditionally as natural resources. In Fraser vs. McConway & Tarley Co., 82 Fed. 257 (Pennsylvania, 1897), a state law which imposed a tax on every employer of foreign-born unnaturalized male persons over 21 years of age, was declared void because the court found that there was no reason for the classification and the tax was an arbitrary deduction from the daily wage of an employee. d. Authorities contra explained. — It is true that some decisions of the Federal court and of the State courts in the United States hold that the distinction between aliens and citizens is not a valid ground for classification. But in this decision the laws declared invalid were found to be either arbitrary, unreasonable or capricious, or were the result or product of racial antagonism and hostility, and there was no question of public interest involved or pursued. In Yu Cong Eng vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme Court declared invalid a Philippine law making unlawful the keeping of books of account in any language other than English, Spanish or any other local dialect, but the main reasons for the decisions are: (1) that if Chinese were driven out of business there would be no other system of distribution, and (2) that the Chinese would fall prey to all kinds of fraud, because they would be deprived of their right to be advised of their business and to direct its conduct. The real reason for the decision, therefore, is the court's belief that no public benefit would be derived from the operations of the law and on the other hand it would deprive Chinese of something indispensable for carrying on their business. In Yick Wo vs. Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on officials to withhold consent in the operation of laundries both as to persons and place, was declared invalid, but the court said that the power granted was arbitrary, that there was no reason for the discrimination which attended the administration and implementation of the law, and that the motive thereof was mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine, 1900), a law prohibiting aliens to engage as hawkers and peddlers was declared void, because the discrimination bore no reasonable and just relation to the act in respect to which the classification was proposed. The case at bar is radically different, and the facts make them so. As we already have said, aliens do not naturally possess the sympathetic consideration and regard for the customers with whom they come in daily contact, nor the patriotic desire to help bolster the nation's economy, except in so far as it enhances their profit, nor the loyalty and allegiance which the national owes to the land. These limitations on the qualifications of the aliens have been shown on many occasions and instances, especially in times of crisis and emergency. We can do no better than borrow the language of Anton vs. Van Winkle, 297 F. 340, 342, to drive home the reality and significance of the distinction between the alien and the national, thus:

. . . . It may be judicially known, however, that alien coming into this country are without the intimate knowledge of our laws, customs, and usages that our own people have. So it is likewise known that certain classes of aliens are of different psychology from our fellow countrymen. Furthermore, it is natural and reasonable to suppose that the foreign born, whose allegiance is first to their own country, and whose ideals of governmental environment and control have been engendered and formed under entirely different regimes and political systems, have not the same inspiration for the public weal, nor are they as well disposed toward the United States, as those who by citizenship, are a part of the government itself. Further enlargement, is unnecessary. I have said enough so that obviously it cannot be affirmed with absolute confidence that the Legislature was without plausible reason for making the classification, and therefore appropriate discriminations against aliens as it relates to the subject of legislation. . . . . VII. The Due Process of Law Limitation. a. Reasonability, the test of the limitation; determination by legislature decisive. — We now come to due process as a limitation on the exercise of the police power. It has been stated by the highest authority in the United States that: . . . . And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the subject sought to be attained. . . . . xxx

xxx

xxx

So far as the requirement of due process is concerned and in the absence of other constitutional restriction a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio. . . . (Nebbia vs. New York, 78 L. ed. 940, 950, 957.) Another authority states the principle thus: . . . . Too much significance cannot be given to the word "reasonable" in considering the scope of the police power in a constitutional sense, for the test used to determine the constitutionality of the means employed by the legislature is to inquire whether the restriction it imposes on rights secured to individuals by the Bill of Rights are unreasonable, and not whether it imposes any restrictions on such rights. . . . xxx

xxx

xxx

. . . . A statute to be within this power must also be reasonable in its operation upon the persons whom it affects, must not be for the annoyance of a particular class, and must not be unduly oppressive. (11 Am. Jur. Sec. 302., 1:1)- 1074-1075.) In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held: . . . . To justify the state in thus interposing its authority in behalf of the public, it must appear, first, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals. . . . Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of constitutionality: In determining whether a given act of the Legislature, passed in the exercise of the police power to regulate the operation of a business, is or is not constitutional, one of the first questions to be considered by the court is whether the power as exercised has a sufficient foundation in reason in connection with the matter involved, or is an arbitrary, oppressive,

and capricious use of that power, without substantial relation to the health, safety, morals, comfort, and general welfare of the public. b. Petitioner's argument considered. — Petitioner's main argument is that retail is a common, ordinary occupation, one of those privileges long ago recognized as essential to the orderly pursuant of happiness by free men; that it is a gainful and honest occupation and therefore beyond the power of the legislature to prohibit and penalized. This arguments overlooks fact and reality and rests on an incorrect assumption and premise, i.e., that in this country where the occupation is engaged in by petitioner, it has been so engaged by him, by the alien in an honest creditable and unimpeachable manner, without harm or injury to the citizens and without ultimate danger to their economic peace, tranquility and welfare. But the Legislature has found, as we have also found and indicated, that the privilege has been so grossly abused by the alien, thru the illegitimate use of pernicious designs and practices, that he now enjoys a monopolistic control of the occupation and threatens a deadly stranglehold on the nation's economy endangering the national security in times of crisis and emergency. The real question at issue, therefore, is not that posed by petitioner, which overlooks and ignores the facts and circumstances, but this, Is the exclusion in the future of aliens from the retail trade unreasonable. Arbitrary capricious, taking into account the illegitimate and pernicious form and manner in which the aliens have heretofore engaged therein? As thus correctly stated the answer is clear. The law in question is deemed absolutely necessary to bring about the desired legislative objective, i.e., to free national economy from alien control and dominance. It is not necessarily unreasonable because it affects private rights and privileges (11 Am. Jur. pp. 1080-1081.) The test of reasonableness of a law is the appropriateness or adequacy under all circumstances of the means adopted to carry out its purpose into effect (Id.) Judged by this test, disputed legislation, which is not merely reasonable but actually necessary, must be considered not to have infringed the constitutional limitation of reasonableness. The necessity of the law in question is explained in the explanatory note that accompanied the bill, which later was enacted into law: This bill proposes to regulate the retail business. Its purpose is to prevent persons who are not citizens of the Philippines from having a strangle hold upon our economic life. If the persons who control this vital artery of our economic life are the ones who owe no allegiance to this Republic, who have no profound devotion to our free institutions, and who have no permanent stake in our people's welfare, we are not really the masters of our destiny. All aspects of our life, even our national security, will be at the mercy of other people. In seeking to accomplish the foregoing purpose, we do not propose to deprive persons who are not citizens of the Philippines of their means of livelihood. While this bill seeks to take away from the hands of persons who are not citizens of the Philippines a power that can be wielded to paralyze all aspects of our national life and endanger our national security it respects existing rights. The approval of this bill is necessary for our national survival. If political independence is a legitimate aspiration of a people, then economic independence is none the less legitimate. Freedom and liberty are not real and positive if the people are subject to the economic control and domination of others, especially if not of their own race or country. The removal and eradication of the shackles of foreign economic control and domination, is one of the noblest motives that a national legislature may pursue. It is impossible to conceive that legislation that seeks to bring it about can infringe the constitutional limitation of due process. The attainment of a legitimate aspiration of a people can never be beyond the limits of legislative authority. c. Law expressly held by Constitutional Convention to be within the sphere of legislative action. — The framers of the Constitution could not have intended to impose the constitutional restrictions of due process on the attainment of such a noble motive as freedom from economic control and domination, thru the exercise of the police power. The fathers of the Constitution must have given to the legislature full authority and power to enact legislation that would promote the supreme happiness of the people, their freedom and liberty. On the precise issue now before us, they expressly made their voice clear; they adopted a resolution expressing their belief that the legislation in question is within the scope of the legislative power. Thus they declared the their Resolution:

That it is the sense of the Convention that the public interest requires the nationalization of retail trade; but it abstain from approving the amendment introduced by the Delegate for Manila, Mr. Araneta, and others on this matter because it is convinced that the National Assembly is authorized to promulgate a law which limits to Filipino and American citizens the privilege to engage in the retail trade. (11 Aruego, The Framing of the Philippine Constitution, quoted on pages 66 and 67 of the Memorandum for the Petitioner.) It would do well to refer to the nationalistic tendency manifested in various provisions of the Constitution. Thus in the preamble, a principle objective is the conservation of the patrimony of the nation and as corollary the provision limiting to citizens of the Philippines the exploitation, development and utilization of its natural resources. And in Section 8 of Article XIV, it is provided that "no franchise, certificate, or any other form of authorization for the operation of the public utility shall be granted except to citizens of the Philippines." The nationalization of the retail trade is only a continuance of the nationalistic protective policy laid down as a primary objective of the Constitution. Can it be said that a law imbued with the same purpose and spirit underlying many of the provisions of the Constitution is unreasonable, invalid and unconstitutional? The seriousness of the Legislature's concern for the plight of the nationals as manifested in the approval of the radical measures is, therefore, fully justified. It would have been recreant to its duties towards the country and its people would it view the sorry plight of the nationals with the complacency and refuse or neglect to adopt a remedy commensurate with the demands of public interest and national survival. As the repository of the sovereign power of legislation, the Legislature was in duty bound to face the problem and meet, through adequate measures, the danger and threat that alien domination of retail trade poses to national economy. d. Provisions of law not unreasonable. — A cursory study of the provisions of the law immediately reveals how tolerant, how reasonable the Legislature has been. The law is made prospective and recognizes the right and privilege of those already engaged in the occupation to continue therein during the rest of their lives; and similar recognition of the right to continue is accorded associations of aliens. The right or privilege is denied to those only upon conviction of certain offenses. In the deliberations of the Court on this case, attention was called to the fact that the privilege should not have been denied to children and heirs of aliens now engaged in the retail trade. Such provision would defeat the law itself, its aims and purposes. Beside, the exercise of legislative discretion is not subject to judicial review. It is well settled that the Court will not inquire into the motives of the Legislature, nor pass upon general matters of legislative judgment. The Legislature is primarily the judge of the necessity of an enactment or of any of its provisions, and every presumption is in favor of its validity, and though the Court may hold views inconsistent with the wisdom of the law, it may not annul the legislation if not palpably in excess of the legislative power. Furthermore, the test of the validity of a law attacked as a violation of due process, is not its reasonableness, but its unreasonableness, and we find the provisions are not unreasonable. These principles also answer various other arguments raised against the law, some of which are: that the law does not promote general welfare; that thousands of aliens would be thrown out of employment; that prices will increase because of the elimination of competition; that there is no need for the legislation; that adequate replacement is problematical; that there may be general breakdown; that there would be repercussions from foreigners; etc. Many of these arguments are directed against the supposed wisdom of the law which lies solely within the legislative prerogative; they do not import invalidity. VIII. Alleged defect in the title of the law A subordinate ground or reason for the alleged invalidity of the law is the claim that the title thereof is misleading or deceptive, as it conceals the real purpose of the bill which is to nationalize the retail business and prohibit aliens from engaging therein. The constitutional provision which is claimed to be violated in Section 21 (1) of Article VI, which reads: No bill which may be enacted in the law shall embrace more than one subject which shall be expressed in the title of the bill. What the above provision prohibits is duplicity, that is, if its title completely fails to appraise the legislators or the public of the nature, scope and consequences of the law or its operation (I Sutherland, Statutory Construction, Sec. 1707, p. 297.) A cursory consideration of the title and the provisions of the bill fails to show the presence of duplicity. It is true that the term "regulate" does not and may not readily and at first glance convey the idea of "nationalization" and "prohibition", which

terms express the two main purposes and objectives of the law. But "regulate" is a broader term than either prohibition or nationalization. Both of these have always been included within the term regulation. Under the title of an act to "regulate", the sale of intoxicating liquors, the Legislature may prohibit the sale of intoxicating liquors. (Sweet vs. City of Wabash, 41 Ind., 7; quoted in page 41 of Answer.) Within the meaning of the Constitution requiring that the subject of every act of the Legislature shall be stated in the tale, the title to regulate the sale of intoxicating liquors, etc." sufficiently expresses the subject of an actprohibiting the sale of such liquors to minors and to persons in the habit of getting intoxicated; such matters being properly included within the subject of regulating the sale. (Williams vs. State, 48 Ind. 306, 308, quoted in p. 42 of Answer.) The word "regulate" is of broad import, and necessarily implies some degree of restraint and prohibition of acts usually done in connection with the thing to be regulated. While word regulate does not ordinarily convey meaning of prohibit, there is no absolute reason why it should not have such meaning when used in delegating police power in connection with a thing the best or only efficacious regulation of which involves suppression. (State vs. Morton, 162 So. 718, 182 La. 887, quoted in p. 42 of Answer.) The general rule is for the use of general terms in the title of a bill; it has also been said that the title need not be an index to the entire contents of the law (I Sutherland, Statutory Construction, See. 4803, p. 345.) The above rule was followed the title of the Act in question adopted the more general term "regulate" instead of "nationalize" or "prohibit". Furthermore, the law also contains other rules for the regulation of the retail trade which may not be included in the terms "nationalization" or "prohibition"; so were the title changed from "regulate" to "nationalize" or "prohibit", there would have been many provisions not falling within the scope of the title which would have made the Act invalid. The use of the term "regulate", therefore, is in accord with the principle governing the drafting of statutes, under which a simple or general term should be adopted in the title, which would include all other provisions found in the body of the Act. One purpose of the constitutional directive that the subject of a bill should be embraced in its title is to apprise the legislators of the purposes, the nature and scope of its provisions, and prevent the enactment into law of matters which have received the notice, action and study of the legislators or of the public. In the case at bar it cannot be claimed that the legislators have been appraised of the nature of the law, especially the nationalization and the prohibition provisions. The legislators took active interest in the discussion of the law, and a great many of the persons affected by the prohibitions in the law conducted a campaign against its approval. It cannot be claimed, therefore, that the reasons for declaring the law invalid ever existed. The objection must therefore, be overruled. IX. Alleged violation of international treaties and obligations Another subordinate argument against the validity of the law is the supposed violation thereby of the Charter of the United Nations and of the Declaration of the Human Rights adopted by the United Nations General Assembly. We find no merit in the Nations Charter imposes no strict or legal obligations regarding the rights and freedom of their subjects (Hans Kelsen, The Law of the United Nations, 1951 ed. pp. 29-32), and the Declaration of Human Rights contains nothing more than a mere recommendation or a common standard of achievement for all peoples and all nations (Id. p. 39.) That such is the import of the United Nations Charter aid of the Declaration of Human Rights can be inferred the fact that members of the United Nations Organizations, such as Norway and Denmark, prohibit foreigners from engaging in retail trade, and in most nations of the world laws against foreigners engaged in domestic trade are adopted. The Treaty of Amity between the Republic of the Philippines and the Republic of China of April 18, 1947 is also claimed to be violated by the law in question. All that the treaty guarantees is equality of treatment to the Chinese nationals "upon the same terms as the nationals of any other country." But the nationals of China are not discriminating against because nationals of all other countries, except those of the United States, who are granted special rights by the Constitution, are all prohibited from engaging in the retail trade. But even supposing that the law infringes upon the said treaty, the treaty is always subject to qualification or amendment by a subsequent law (U. S. vs. Thompson, 258, Fed.

257, 260), and the same may never curtail or restrict the scope of the police power of the State (plaston vs. Pennsylvania, 58 L. ed. 539.) X. Conclusion Resuming what we have set forth above we hold that the disputed law was enacted to remedy a real actual threat and danger to national economy posed by alien dominance and control of the retail business and free citizens and country from dominance and control; that the enactment clearly falls within the scope of the police power of the State, thru which and by which it protects its own personality and insures its security and future; that the law does not violate the equal protection clause of the Constitution because sufficient grounds exist for the distinction between alien and citizen in the exercise of the occupation regulated, nor the due process of law clause, because the law is prospective in operation and recognizes the privilege of aliens already engaged in the occupation and reasonably protects their privilege; that the wisdom and efficacy of the law to carry out its objectives appear to us to be plainly evident — as a matter of fact it seems not only appropriate but actually necessary — and that in any case such matter falls within the prerogative of the Legislature, with whose power and discretion the Judicial department of the Government may not interfere; that the provisions of the law are clearly embraced in the title, and this suffers from no duplicity and has not misled the legislators or the segment of the population affected; and that it cannot be said to be void for supposed conflict with treaty obligations because no treaty has actually been entered into on the subject and the police power may not be curtailed or surrendered by any treaty or any other conventional agreement. Some members of the Court are of the opinion that the radical effects of the law could have been made less harsh in its impact on the aliens. Thus it is stated that the more time should have been given in the law for the liquidation of existing businesses when the time comes for them to close. Our legal duty, however, is merely to determine if the law falls within the scope of legislative authority and does not transcend the limitations of due process and equal protection guaranteed in the Constitution. Remedies against the harshness of the law should be addressed to the Legislature; they are beyond our power and jurisdiction. The petition is hereby denied, with costs against petitioner. Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.

Separate Opinions PADILLA, J., concurring and dissenting: I agree to the proposition, principle or rule that courts may not inquire into the wisdom of an the Act passed by the Congress and duly approved by the President of the Republic. But the rule does not preclude courts from inquiring and determining whether the Act offends against a provision or provisions of the Constitution. I am satisfied that the Act assailed as violative of the due process of law and the equal protection of the laws clauses of the Constitution does not infringe upon them, insofar as it affects associations, partnership or corporations, the capital of which is not wholly owned by the citizens of the Philippines, and aliens, who are not and have not been engaged in the retail business. I am, however, unable to persuade myself that it does not violate said clauses insofar as the Act applies to associations and partnerships referred to in the Act and to aliens, who are and have heretofore been engaged in said business. When they did engage in the retail business there was no prohibition on or against them to engage in it. They assumed and believed in good faith they were entitled to engaged in the business. The Act allows aliens to continue in business until their death or voluntary retirement from the business or forfeiture of their license; and corporations, associations or partnership, the capital of which is not wholly owned by the citizens of the Philippines to continue in the business for a period of ten years from the date of the approval of the Act (19 June 1954) or until the expiry of term of the existence of the association or partnership or corporation, whichever event comes first. The prohibition on corporations, the capital of which is not wholly owned by citizens of the Philippines, to engage in the retail business for a period of more than ten years from the date of the approval of the Act or beyond the term of their corporate existence, whichever event comes first, is valid and lawful, because the continuance of the existence of such corporations is subject to whatever the Congress may impose reasonably upon them by subsequent

legislation.1 But the prohibition to engage in the retail business by associations and partnerships, the capital of which is not wholly owned by citizen of the Philippines, after ten years from the date of the approval of the Act, even before the end of the term of their existence as agreed upon by the associates and partners, and by alien heirs to whom the retail business is transmitted by the death of an alien engaged in the business, or by his executor or administrator, amounts to a deprivation of their property without due process of law. To my mind, the ten-year period from the date of the approval of the Act or until the expiration of the term of the existence of the association and partnership, whichever event comes first, and the six-month period granted to alien heirs of a deceased alien, his executor or administrator, to liquidate the business, do not cure the defect of the law, because the effect of the prohibition is to compel them to sell or dispose of their business. The price obtainable at such forced sale of the business would be inadequate to reimburse and compensate the associates or partners of the associations or partnership, and the alien heirs of a deceased alien, engaged in the retail business for the capital invested in it. The stock of merchandise bought and sold at retail does not alone constitute the business. The goodwill that the association, partnership and the alien had built up during a long period of effort, patience and perseverance forms part of such business. The constitutional provisions that no person shall be deprived of his property without due process of law2 and that no person shall be denied the equal protection of the laws3 would have no meaning as applied to associations or partnership and alien heirs of an alien engaged in the retail business if they were to be compelled to sell or dispose of their business within ten years from the date of the approval of the Act and before the end of the term of the existence of the associations and partnership as agreed upon by the associations and partners and within six months after the death of their predecessor-in-interest. The authors of the Constitution were vigilant, careful and zealous in the safeguard of the ownership of private agricultural lands which together with the lands of the public domain constitute the priceless patrimony and mainstay of the nation; yet, they did not deem it wise and prudent to deprive aliens and their heirs of such lands.4 For these reasons, I am of the opinion that section 1 of the Act, insofar as it compels associations and partnership referred to therein to wind up their retail business within ten years from the date of the approval of the Act even before the expiry of the term of their existence as agreed upon by the associates and partners and section 3 of the Act, insofar as it compels the aliens engaged in the retail business in his lifetime his executor or administrator, to liquidate the business, are invalid, for they violate the due process of law and the equal protection of the laws clauses of the Constitution.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-45685

November 16, 1937

THE PEOPLE OF THE PHILIPPINE ISLANDS and HONGKONG & SHANGHAI BANKING CORPORATION,petitioners, vs. JOSE O. VERA, Judge . of the Court of First Instance of Manila, and MARIANO CU UNJIENG, respondents. Office of the Solicitor General Tuason and City Fiscal Diaz for the Government. De Witt, Perkins and Ponce Enrile for the Hongkong and Shanghai Banking Corporation. Vicente J. Francisco, Feria and La O, Orense and Belmonte, and Gibbs and McDonough for respondent Cu Unjieng. No appearance for respondent Judge.

LAUREL, J.: This is an original action instituted in this court on August 19, 1937, for the issuance of the writ of certiorari and of prohibition to the Court of First Instance of Manila so that this court may review the actuations of the aforesaid Court of First Instance in criminal case No. 42649 entitled "The People of the Philippine Islands vs. Mariano Cu Unjieng, et al.", more particularly the application of the defendant Mariano Cu Unjieng therein for probation under the provisions of Act No. 4221, and thereafter prohibit the said Court of First Instance from taking any further action or entertaining further the aforementioned application for probation, to the end that the defendant Mariano Cu Unjieng may be forthwith committed to prison in accordance with the final judgment of conviction rendered by this court in said case (G. R. No. 41200). 1 Petitioners herein, the People of the Philippine and the Hongkong and Shanghai Banking Corporation, are respectively the plaintiff and the offended party, and the respondent herein Mariano Cu Unjieng is one of the defendants, in the criminal case entitled "The People of the Philippine Islands vs. Mariano Cu Unjieng, et al.", criminal case No. 42649 of the Court of First Instance of Manila and G.R. No. 41200 of this court. Respondent herein, Hon. Jose O. Vera, is the Judge ad interim of the seventh branch of the Court of First Instance of Manila, who heard the application of the defendant Mariano Cu Unjieng for probation in the aforesaid criminal case. The information in the aforesaid criminal case was filed with the Court of First Instance of Manila on October 15, 1931, petitioner herein Hongkong and Shanghai Banking Corporation intervening in the case as private prosecutor. After a protracted trial unparalleled in the annals of Philippine jurisprudence both in the length of time spent by the court as well as in the volume in the testimony and the bulk of the exhibits presented, the Court of First Instance of Manila, on January 8, 1934, rendered a judgment of conviction sentencing the defendant Mariano Cu Unjieng to indeterminate penalty ranging from four years and two months of prision correccional to eight years of prision mayor, to pay the costs and with reservation of civil action to the offended party, the Hongkong and Shanghai Banking Corporation. Upon appeal, the court, on March 26, 1935, modified the sentence to an indeterminate penalty of from five years and six months of prision correccional to seven years, six months and twenty-seven days of prision mayor, but affirmed the judgment in all other respects. Mariano Cu Unjieng filed a motion for reconsideration and four successive motions for new trial which were denied on December 17, 1935, and final judgment was accordingly entered on December 18, 1935. The defendant thereupon sought to have the case elevated on certiorari to the Supreme Court of the United States but the latter denied the petition for certiorari in November, 1936. This court, on November 24, 1936, denied the petition subsequently filed by the defendant for leave to file a second alternative motion for reconsideration or new trial and thereafter remanded the case to the court of origin for execution of the judgment.

The instant proceedings have to do with the application for probation filed by the herein respondent Mariano Cu Unjieng on November 27, 1936, before the trial court, under the provisions of Act No. 4221 of the defunct Philippine Legislature. Herein respondent Mariano Cu Unjieng states in his petition, inter alia, that he is innocent of the crime of which he was convicted, that he has no criminal record and that he would observe good conduct in the future. The Court of First Instance of Manila, Judge Pedro Tuason presiding, referred the application for probation of the Insular Probation Office which recommended denial of the same June 18, 1937. Thereafter, the Court of First Instance of Manila, seventh branch, Judge Jose O. Vera presiding, set the petition for hearing on April 5, 1937. On April 2, 1937, the Fiscal of the City of Manila filed an opposition to the granting of probation to the herein respondent Mariano Cu Unjieng. The private prosecution also filed an opposition on April 5, 1937, alleging, among other things, that Act No. 4221, assuming that it has not been repealed by section 2 of Article XV of the Constitution, is nevertheless violative of section 1, subsection (1), Article III of the Constitution guaranteeing equal protection of the laws for the reason that its applicability is not uniform throughout the Islands and because section 11 of the said Act endows the provincial boards with the power to make said law effective or otherwise in their respective or otherwise in their respective provinces. The private prosecution also filed a supplementary opposition on April 19, 1937, elaborating on the alleged unconstitutionality on Act No. 4221, as an undue delegation of legislative power to the provincial boards of several provinces (sec. 1, Art. VI, Constitution). The City Fiscal concurred in the opposition of the private prosecution except with respect to the questions raised concerning the constitutionality of Act No. 4221. On June 28, 1937, herein respondent Judge Jose O. Vera promulgated a resolution with a finding that "las pruebas no han establecido de unamanera concluyente la culpabilidad del peticionario y que todos los hechos probados no son inconsistentes o incongrentes con su inocencia" and concludes that the herein respondent Mariano Cu Unjieng "es inocente por duda racional" of the crime of which he stands convicted by this court in G.R. No. 41200, but denying the latter's petition for probation for the reason that: . . . Si este Juzgado concediera la poblacion solicitada por las circunstancias y la historia social que se han expuesto en el cuerpo de esta resolucion, que hacen al peticionario acreedor de la misma, una parte de la opinion publica, atizada por los recelos y las suspicacias, podria levantarse indignada contra un sistema de probacion que permite atisbar en los procedimientos ordinarios de una causa criminal perturbando la quietud y la eficacia de las decisiones ya recaidas al traer a la superficie conclusiones enteramente differentes, en menoscabo del interes publico que demanda el respeto de las leyes y del veredicto judicial. On July 3, 1937, counsel for the herein respondent Mariano Cu Unjieng filed an exception to the resolution denying probation and a notice of intention to file a motion for reconsideration. An alternative motion for reconsideration or new trial was filed by counsel on July 13, 1937. This was supplemented by an additional motion for reconsideration submitted on July 14, 1937. The aforesaid motions were set for hearing on July 31, 1937, but said hearing was postponed at the petition of counsel for the respondent Mariano Cu Unjieng because a motion for leave to intervene in the case as amici curiae signed by thirty-three (thirty-four) attorneys had just been filed with the trial court. Attorney Eulalio Chaves whose signature appears in the aforesaid motion subsequently filed a petition for leave to withdraw his appearance as amicus curiae on the ground that the motion for leave to intervene as amici curiae was circulated at a banquet given by counsel for Mariano Cu Unjieng on the evening of July 30, 1937, and that he signed the same "without mature deliberation and purely as a matter of courtesy to the person who invited me (him)." On August 6, 1937, the Fiscal of the City of Manila filed a motion with the trial court for the issuance of an order of execution of the judgment of this court in said case and forthwith to commit the herein respondent Mariano Cu Unjieng to jail in obedience to said judgment. On August 7, 1937, the private prosecution filed its opposition to the motion for leave to intervene as amici curiae aforementioned, asking that a date be set for a hearing of the same and that, at all events, said motion should be denied with respect to certain attorneys signing the same who were members of the legal staff of the several counsel for Mariano Cu Unjieng. On August 10, 1937, herein respondent Judge Jose O. Vera issued an order requiring all parties including the movants for intervention as amici curiae to appear before the court on August 14, 1937. On the last-mentioned date, the Fiscal of the City of Manila moved for the hearing of his motion for execution of judgment in preference to the motion for leave to intervene as amici curiae but, upon objection of counsel for Mariano Cu Unjieng, he moved for the postponement of the hearing of both motions. The

respondent judge thereupon set the hearing of the motion for execution on August 21, 1937, but proceeded to consider the motion for leave to intervene as amici curiae as in order. Evidence as to the circumstances under which said motion for leave to intervene as amici curiae was signed and submitted to court was to have been heard on August 19, 1937. But at this juncture, herein petitioners came to this court on extraordinary legal process to put an end to what they alleged was an interminable proceeding in the Court of First Instance of Manila which fostered "the campaign of the defendant Mariano Cu Unjieng for delay in the execution of the sentence imposed by this Honorable Court on him, exposing the courts to criticism and ridicule because of the apparent inability of the judicial machinery to make effective a final judgment of this court imposed on the defendant Mariano Cu Unjieng." The scheduled hearing before the trial court was accordingly suspended upon the issuance of a temporary restraining order by this court on August 21, 1937. To support their petition for the issuance of the extraordinary writs of certiorari and prohibition, herein petitioners allege that the respondent judge has acted without jurisdiction or in excess of his jurisdiction: I. Because said respondent judge lacks the power to place respondent Mariano Cu Unjieng under probation for the following reason: (1) Under section 11 of Act No. 4221, the said of the Philippine Legislature is made to apply only to the provinces of the Philippines; it nowhere states that it is to be made applicable to chartered cities like the City of Manila. (2) While section 37 of the Administrative Code contains a proviso to the effect that in the absence of a special provision, the term "province" may be construed to include the City of Manila for the purpose of giving effect to laws of general application, it is also true that Act No. 4221 is not a law of general application because it is made to apply only to those provinces in which the respective provincial boards shall have provided for the salary of a probation officer. (3) Even if the City of Manila were considered to be a province, still, Act No. 4221 would not be applicable to it because it has provided for the salary of a probation officer as required by section 11 thereof; it being immaterial that there is an Insular Probation Officer willing to act for the City of Manila, said Probation Officer provided for in section 10 of Act No. 4221 being different and distinct from the Probation Officer provided for in section 11 of the same Act. II. Because even if the respondent judge originally had jurisdiction to entertain the application for probation of the respondent Mariano Cu Unjieng, he nevertheless acted without jurisdiction or in excess thereof in continuing to entertain the motion for reconsideration and by failing to commit Mariano Cu Unjieng to prison after he had promulgated his resolution of June 28, 1937, denying Mariano Cu Unjieng's application for probation, for the reason that: (1) His jurisdiction and power in probation proceedings is limited by Act No. 4221 to the granting or denying of applications for probation. (2) After he had issued the order denying Mariano Cu Unjieng's petition for probation on June 28, 1937, it became final and executory at the moment of its rendition. (3) No right on appeal exists in such cases. (4) The respondent judge lacks the power to grant a rehearing of said order or to modify or change the same. III. Because the respondent judge made a finding that Mariano Cu Unjieng is innocent of the crime for which he was convicted by final judgment of this court, which finding is not only presumptuous but without foundation in fact and in law, and is furthermore in contempt of this court and a violation of the respondent's oath of office as ad interim judge of first instance.

IV. Because the respondent judge has violated and continues to violate his duty, which became imperative when he issued his order of June 28, 1937, denying the application for probation, to commit his co-respondent to jail. Petitioners also avers that they have no other plain, speedy and adequate remedy in the ordinary course of law. In a supplementary petition filed on September 9, 1937, the petitioner Hongkong and Shanghai Banking Corporation further contends that Act No. 4221 of the Philippine Legislature providing for a system of probation for persons eighteen years of age or over who are convicted of crime, is unconstitutional because it is violative of section 1, subsection (1), Article III, of the Constitution of the Philippines guaranteeing equal protection of the laws because it confers upon the provincial board of its province the absolute discretion to make said law operative or otherwise in their respective provinces, because it constitutes an unlawful and improper delegation to the provincial boards of the several provinces of the legislative power lodged by the Jones Law (section 8) in the Philippine Legislature and by the Constitution (section 1, Art. VI) in the National Assembly; and for the further reason that it gives the provincial boards, in contravention of the Constitution (section 2, Art. VIII) and the Jones Law (section 28), the authority to enlarge the powers of the Court of First Instance of different provinces without uniformity. In another supplementary petition dated September 14, 1937, the Fiscal of the City of Manila, in behalf of one of the petitioners, the People of the Philippine Islands, concurs for the first time with the issues raised by other petitioner regarding the constitutionality of Act No. 4221, and on the oral argument held on October 6, 1937, further elaborated on the theory that probation is a form of reprieve and therefore Act. No. 4221 is an encroachment on the exclusive power of the Chief Executive to grant pardons and reprieves. On October 7, 1937, the City Fiscal filed two memorandums in which he contended that Act No. 4221 not only encroaches upon the pardoning power to the executive, but also constitute an unwarranted delegation of legislative power and a denial of the equal protection of the laws. On October 9, 1937, two memorandums, signed jointly by the City Fiscal and the Solicitor-General, acting in behalf of the People of the Philippine Islands, and by counsel for the petitioner, the Hongkong and Shanghai Banking Corporation, one sustaining the power of the state to impugn the validity of its own laws and the other contending that Act No. 4221 constitutes an unwarranted delegation of legislative power, were presented. Another joint memorandum was filed by the same persons on the same day, October 9, 1937, alleging that Act No. 4221 is unconstitutional because it denies the equal protection of the laws and constitutes an unlawful delegation of legislative power and, further, that the whole Act is void: that the Commonwealth is not estopped from questioning the validity of its laws; that the private prosecution may intervene in probation proceedings and may attack the probation law as unconstitutional; and that this court may pass upon the constitutional question in prohibition proceedings. Respondents in their answer dated August 31, 1937, as well as in their oral argument and memorandums, challenge each and every one of the foregoing proposition raised by the petitioners. As special defenses, respondents allege: (1) That the present petition does not state facts sufficient in law to warrant the issuance of the writ of certiorari or of prohibition. (2) That the aforesaid petition is premature because the remedy sought by the petitioners is the very same remedy prayed for by them before the trial court and was still pending resolution before the trial court when the present petition was filed with this court. (3) That the petitioners having themselves raised the question as to the execution of judgment before the trial court, said trial court has acquired exclusive jurisdiction to resolve the same under the theory that its resolution denying probation is unappealable. (4) That upon the hypothesis that this court has concurrent jurisdiction with the Court of First Instance to decide the question as to whether or not the execution will lie, this court nevertheless cannot exercise said jurisdiction while the Court of First Instance has assumed jurisdiction over the same upon motion of herein petitioners themselves.

(5) That upon the procedure followed by the herein petitioners in seeking to deprive the trial court of its jurisdiction over the case and elevate the proceedings to this court, should not be tolerated because it impairs the authority and dignity of the trial court which court while sitting in the probation cases is "a court of limited jurisdiction but of great dignity." (6) That under the supposition that this court has jurisdiction to resolve the question submitted to and pending resolution by the trial court, the present action would not lie because the resolution of the trial court denying probation is appealable; for although the Probation Law does not specifically provide that an applicant for probation may appeal from a resolution of the Court of First Instance denying probation, still it is a general rule in this jurisdiction that a final order, resolution or decision of an inferior court is appealable to the superior court. (7) That the resolution of the trial court denying probation of herein respondent Mariano Cu Unjieng being appealable, the same had not become final and executory for the reason that the said respondent had filed an alternative motion for reconsideration and new trial within the requisite period of fifteen days, which motion the trial court was able to resolve in view of the restraining order improvidently and erroneously issued by this court. lawphi1.net

(8) That the Fiscal of the City of Manila had by implication admitted that the resolution of the trial court denying probation is not final and unappealable when he presented his answer to the motion for reconsideration and agreed to the postponement of the hearing of the said motion. (9) That under the supposition that the order of the trial court denying probation is not appealable, it is incumbent upon the accused to file an action for the issuance of the writ of certiorari with mandamus, it appearing that the trial court, although it believed that the accused was entitled to probation, nevertheless denied probation for fear of criticism because the accused is a rich man; and that, before a petition for certiorari grounded on an irregular exercise of jurisdiction by the trial court could lie, it is incumbent upon the petitioner to file a motion for reconsideration specifying the error committed so that the trial court could have an opportunity to correct or cure the same. (10) That on hypothesis that the resolution of this court is not appealable, the trial court retains its jurisdiction within a reasonable time to correct or modify it in accordance with law and justice; that this power to alter or modify an order or resolution is inherent in the courts and may be exercise either motu proprio or upon petition of the proper party, the petition in the latter case taking the form of a motion for reconsideration. (11) That on the hypothesis that the resolution of the trial court is appealable as respondent allege, said court cannot order execution of the same while it is on appeal, for then the appeal would not be availing because the doors of probation will be closed from the moment the accused commences to serve his sentence (Act No. 4221, sec. 1; U.S. vs. Cook, 19 Fed. [2d], 827). In their memorandums filed on October 23, 1937, counsel for the respondents maintain that Act No. 4221 is constitutional because, contrary to the allegations of the petitioners, it does not constitute an undue delegation of legislative power, does not infringe the equal protection clause of the Constitution, and does not encroach upon the pardoning power of the Executive. In an additional memorandum filed on the same date, counsel for the respondents reiterate the view that section 11 of Act No. 4221 is free from constitutional objections and contend, in addition, that the private prosecution may not intervene in probation proceedings, much less question the validity of Act No. 4221; that both the City Fiscal and the Solicitor-General are estopped from questioning the validity of the Act; that the validity of Act cannot be attacked for the first time before this court; that probation in unavailable; and that, in any event, section 11 of the Act No. 4221 is separable from the rest of the Act. The last memorandum for the respondent Mariano Cu Unjieng was denied for having been filed out of time but was admitted by resolution of this court and filed anew on November 5, 1937. This memorandum elaborates on some of the points raised by the respondents and refutes those brought up by the petitioners.

In the scrutiny of the pleadings and examination of the various aspects of the present case, we noted that the court below, in passing upon the merits of the application of the respondent Mariano Cu Unjieng and in denying said application assumed the task not only of considering the merits of the application, but of passing upon the culpability of the applicant, notwithstanding the final pronouncement of guilt by this court. (G.R. No. 41200.) Probation implies guilt be final judgment. While a probation case may look into the circumstances attending the commission of the offense, this does not authorize it to reverse the findings and conclusive of this court, either directly or indirectly, especially wherefrom its own admission reliance was merely had on the printed briefs, averments, and pleadings of the parties. As already observed by this court in Shioji vs. Harvey ([1922], 43 Phil., 333, 337), and reiterated in subsequent cases, "if each and every Court of First Instance could enjoy the privilege of overruling decisions of the Supreme Court, there would be no end to litigation, and judicial chaos would result." A becoming modesty of inferior courts demands conscious realization of the position that they occupy in the interrelation and operation of the intergrated judicial system of the nation. After threshing carefully the multifarious issues raised by both counsel for the petitioners and the respondents, this court prefers to cut the Gordian knot and take up at once the two fundamental questions presented, namely, (1) whether or not the constitutionality of Act No. 4221 has been properly raised in these proceedings; and (2) in the affirmative, whether or not said Act is constitutional. Considerations of these issues will involve a discussion of certain incidental questions raised by the parties. To arrive at a correct conclusion on the first question, resort to certain guiding principles is necessary. It is a well-settled rule that the constitutionality of an act of the legislature will not be determined by the courts unless that question is properly raised and presented inappropriate cases and is necessary to a determination of the case; i.e., the issue of constitutionality must be the very lis mota presented. (McGirr vs. Hamilton and Abreu [1915], 30 Phil., 563, 568; 6 R. C. L., pp. 76, 77; 12 C. J., pp. 780-782, 783.) The question of the constitutionality of an act of the legislature is frequently raised in ordinary actions. Nevertheless, resort may be made to extraordinary legal remedies, particularly where the remedies in the ordinary course of law even if available, are not plain, speedy and adequate. Thus, in Cu Unjieng vs. Patstone ([1922]), 42 Phil., 818), this court held that the question of the constitutionality of a statute may be raised by the petitioner in mandamus proceedings (see, also, 12 C. J., p. 783); and in Government of the Philippine Islands vs. Springer ([1927], 50 Phil., 259 [affirmed in Springer vs. Government of the Philippine Islands (1928), 277 U. S., 189; 72 Law. ed., 845]), this court declared an act of the legislature unconstitutional in an action of quo warranto brought in the name of the Government of the Philippines. It has also been held that the constitutionality of a statute may be questioned in habeas corpus proceedings (12 C. J., p. 783; Bailey on Habeas Corpus, Vol. I, pp. 97, 117), although there are authorities to the contrary; on an application for injunction to restrain action under the challenged statute (mandatory, see Cruz vs. Youngberg [1931], 56 Phil., 234); and even on an application for preliminary injunction where the determination of the constitutional question is necessary to a decision of the case. (12 C. J., p. 783.) The same may be said as regards prohibition and certiorari.(Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271 U. S., 500; 70 Law. ed., 1059; Bell vs. First Judicial District Court [1905], 28 Nev., 280; 81 Pac., 875; 113 A. S. R., 854; 6 Ann. Cas., 982; 1 L. R. A. [N. S], 843, and cases cited). The case of Yu Cong Eng vs. Trinidad, supra, decided by this court twelve years ago was, like the present one, an original action for certiorari and prohibition. The constitutionality of Act No. 2972, popularly known as the Chinese Bookkeeping Law, was there challenged by the petitioners, and the constitutional issue was not met squarely by the respondent in a demurrer. A point was raised "relating to the propriety of the constitutional question being decided in original proceedings in prohibition." This court decided to take up the constitutional question and, with two justices dissenting, held that Act No. 2972 was constitutional. The case was elevated on writ of certiorari to the Supreme Court of the United States which reversed the judgment of this court and held that the Act was invalid. (271 U. S., 500; 70 Law. ed., 1059.) On the question of jurisdiction, however, the Federal Supreme Court, though its Chief Justice, said: By the Code of Civil Procedure of the Philippine Islands, section 516, the Philippine supreme court is granted concurrent jurisdiction in prohibition with courts of first instance over inferior tribunals or persons, and original jurisdiction over courts of first instance, when such courts are exercising functions without or in excess of their jurisdiction. It has been held by that court that the question of the validity of the criminal statute must usually be raised by a defendant in the trial court and be carried regularly in review to the Supreme Court. (Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192). But in this case where a

new act seriously affected numerous persons and extensive property rights, and was likely to cause a multiplicity of actions, the Supreme Court exercised its discretion to bring the issue to the act's validity promptly before it and decide in the interest of the orderly administration of justice. The court relied by analogy upon the cases of Ex parte Young (209 U. S., 123;52 Law ed., 714; 13 L. R. A. [N. S.] 932; 28 Sup. Ct. Rep., 441; 14 Ann. Ca., 764; Traux vs. Raich, 239 U. S., 33; 60 Law. ed., 131; L. R. A. 1916D, 545; 36 Sup. Ct. Rep., 7; Ann. Cas., 1917B, 283; and Wilson vs. New, 243 U. S., 332; 61 Law. ed., 755; L. R. A. 1917E, 938; 37 Sup. Ct. Rep., 298; Ann. Cas. 1918A, 1024). Although objection to the jurisdiction was raise by demurrer to the petition, this is now disclaimed on behalf of the respondents, and both parties ask a decision on the merits. In view of the broad powers in prohibition granted to that court under the Island Code, we acquiesce in the desire of the parties. The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior jurisdiction and directed to an inferior court, for the purpose of preventing the inferior tribunal from usurping a jurisdiction with which it is not legally vested. (High, Extraordinary Legal Remedies, p. 705.) The general rule, although there is a conflict in the cases, is that the merit of prohibition will not lie whether the inferior court has jurisdiction independent of the statute the constitutionality of which is questioned, because in such cases the interior court having jurisdiction may itself determine the constitutionality of the statute, and its decision may be subject to review, and consequently the complainant in such cases ordinarily has adequate remedy by appeal without resort to the writ of prohibition. But where the inferior court or tribunal derives its jurisdiction exclusively from an unconstitutional statute, it may be prevented by the writ of prohibition from enforcing that statute. (50 C. J., 670; Ex parte Round tree [1874, 51 Ala., 42; In re Macfarland, 30 App. [D. C.], 365; Curtis vs. Cornish [1912], 109 Me., 384; 84 A., 799; Pennington vs. Woolfolk [1880], 79 Ky., 13; State vs. Godfrey [1903], 54 W. Va., 54; 46 S. E., 185; Arnold vs. Shields [1837], 5 Dana, 19; 30 Am. Dec., 669.) Courts of First Instance sitting in probation proceedings derived their jurisdiction solely from Act No. 4221 which prescribes in detailed manner the procedure for granting probation to accused persons after their conviction has become final and before they have served their sentence. It is true that at common law the authority of the courts to suspend temporarily the execution of the sentence is recognized and, according to a number of state courts, including those of Massachusetts, Michigan, New York, and Ohio, the power is inherent in the courts (Commonwealth vs. Dowdican's Bail [1874], 115 Mass., 133; People vs. Stickel [1909], 156 Mich., 557; 121 N. W., 497; People ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288; Weber vs. State [1898], 58 Ohio St., 616). But, in the leading case of Ex parte United States ([1916], 242 U. S., 27; 61 Law. ed., 129; L. R. A., 1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355), the Supreme Court of the United States expressed the opinion that under the common law the power of the court was limited to temporary suspension, and brushed aside the contention as to inherent judicial power saying, through Chief Justice White: Indisputably under our constitutional system the right to try offenses against the criminal laws and upon conviction to impose the punishment provided by law is judicial, and it is equally to be conceded that, in exerting the powers vested in them on such subject, courts inherently possess ample right to exercise reasonable, that is, judicial, discretion to enable them to wisely exert their authority. But these concessions afford no ground for the contention as to power here made, since it must rest upon the proposition that the power to enforce begets inherently a discretion to permanently refuse to do so. And the effect of the proposition urged upon the distribution of powers made by the Constitution will become apparent when it is observed that indisputable also is it that the authority to define and fix the punishment for crime is legislative and includes the right in advance to bring within judicial discretion, for the purpose of executing the statute, elements of consideration which would be otherwise beyond the scope of judicial authority, and that the right to relieve from the punishment, fixed by law and ascertained according to the methods by it provided belongs to the executive department. Justice Carson, in his illuminating concurring opinion in the case of Director of Prisons vs. Judge of First Instance of Cavite (29 Phil., 265), decided by this court in 1915, also reached the conclusion that the power to suspend the execution of sentences pronounced in criminal cases is not inherent in the judicial function. "All are agreed", he said, "that in the absence of statutory authority, it does not lie within the power of the courts to grant such suspensions." (at p. 278.) Both petitioner and respondents are correct, therefore, when they argue that a Court of First Instance sitting in probation proceedings is a court of limited jurisdiction. Its jurisdiction in such proceedings is conferred exclusively by Act No. 4221 of the Philippine Legislature.

It is, of course, true that the constitutionality of a statute will not be considered on application for prohibition where the question has not been properly brought to the attention of the court by objection of some kind (Hill vs. Tarver [1901], 130 Ala., 592; 30 S., 499; State ex rel. Kelly vs. Kirby [1914], 260 Mo., 120; 168 S. W., 746). In the case at bar, it is unquestionable that the constitutional issue has been squarely presented not only before this court by the petitioners but also before the trial court by the private prosecution. The respondent, Hon. Jose O Vera, however, acting as judge of the court below, declined to pass upon the question on the ground that the private prosecutor, not being a party whose rights are affected by the statute, may not raise said question. The respondent judge cited Cooley on Constitutional Limitations (Vol. I, p. 339; 12 C. J., sec. 177, pp. 760 and 762), and McGlue vs. Essex County ([1916], 225 Mass., 59; 113 N. E., 742, 743), as authority for the proposition that a court will not consider any attack made on the constitutionality of a statute by one who has no interest in defeating it because his rights are not affected by its operation. The respondent judge further stated that it may not motu proprio take up the constitutional question and, agreeing with Cooley that "the power to declare a legislative enactment void is one which the judge, conscious of the fallibility of the human judgment, will shrink from exercising in any case where he can conscientiously and with due regard to duty and official oath decline the responsibility" (Constitutional Limitations, 8th ed., Vol. I, p. 332), proceeded on the assumption that Act No. 4221 is constitutional. While therefore, the court a quo admits that the constitutional question was raised before it, it refused to consider the question solely because it was not raised by a proper party. Respondents herein reiterates this view. The argument is advanced that the private prosecution has no personality to appear in the hearing of the application for probation of defendant Mariano Cu Unjieng in criminal case No. 42648 of the Court of First Instance of Manila, and hence the issue of constitutionality was not properly raised in the lower court. Although, as a general rule, only those who are parties to a suit may question the constitutionality of a statute involved in a judicial decision, it has been held that since the decree pronounced by a court without jurisdiction is void, where the jurisdiction of the court depends on the validity of the statute in question, the issue of the constitutionality will be considered on its being brought to the attention of the court by persons interested in the effect to be given the statute.(12 C. J., sec. 184, p. 766.) And, even if we were to concede that the issue was not properly raised in the court below by the proper party, it does not follow that the issue may not be here raised in an original action of certiorari and prohibitions. It is true that, as a general rule, the question of constitutionality must be raised at the earliest opportunity, so that if not raised by the pleadings, ordinarily it may not be raised at the trial, and if not raised in the trial court, it will not considered on appeal. (12 C. J., p. 786. See, also, Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must state that the general rule admits of exceptions. Courts, in the exercise of sounds discretion, may determine the time when a question affecting the constitutionality of a statute should be presented. (In re Woolsey [1884], 95 N. Y., 135, 144.) Thus, in criminal cases, although there is a very sharp conflict of authorities, it is said that the question may be raised for the first time at any stage of the proceedings, either in the trial court or on appeal. (12 C. J., p. 786.) Even in civil cases, it has been held that it is the duty of a court to pass on the constitutional question, though raised for the first time on appeal, if it appears that a determination of the question is necessary to a decision of the case. (McCabe's Adm'x vs. Maysville & B. S. R. Co., [1910], 136 ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis Cordage Co. [1908], 214 Mo., 685; 113 S. W. 1108; Carmody vs. St. Louis Transit Co., [1905], 188 Mo., 572; 87 S. W., 913.) And it has been held that a constitutional question will be considered by an appellate court at any time, where it involves the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.) As to the power of this court to consider the constitutional question raised for the first time before this court in these proceedings, we turn again and point with emphasis to the case of Yu Cong Eng vs. Trinidad, supra. And on the hypotheses that the Hongkong & Shanghai Banking Corporation, represented by the private prosecution, is not the proper party to raise the constitutional question here — a point we do not now have to decide — we are of the opinion that the People of the Philippines, represented by the Solicitor-General and the Fiscal of the City of Manila, is such a proper party in the present proceedings. The unchallenged rule is that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustained, direct injury as a result of its enforcement. It goes without saying that if Act No. 4221 really violates the constitution, the People of the Philippines, in whose name the present action is brought, has a substantial interest in having it set aside. Of grater import than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the enforcement of an invalid statute. Hence, the well-settled rule that the state can challenge the validity of its own laws. In Government of the Philippine Islands vs. Springer ([1927]), 50 Phil., 259 (affirmed in Springer vs. Government of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed., 845), this court declared an act of the legislature unconstitutional in an action instituted in behalf of the Government of the Philippines. In Attorney General vs. Perkins ([1889], 73 Mich., 303, 311, 312; 41 N. W. 426, 428, 429), the State of Michigan, through its Attorney General, instituted quo warranto proceedings to test the right of the respondents to renew a mining corporation, alleging that the statute under which the respondents base their right was

unconstitutional because it impaired the obligation of contracts. The capacity of the chief law officer of the state to question the constitutionality of the statute was though, as a general rule, only those who are parties to a suit may question the constitutionality of a statute involved in a judicial decision, it has been held that since the decree pronounced by a court without jurisdiction in void, where the jurisdiction of the court depends on the validity of the statute in question, the issue of constitutionality will be considered on its being brought to the attention of the court by persons interested in the effect to begin the statute. (12 C.J., sec. 184, p. 766.) And, even if we were to concede that the issue was not properly raised in the court below by the proper party, it does not follow that the issue may not be here raised in an original action of certiorari and prohibition. It is true that, as a general rule, the question of constitutionality must be raised at the earliest opportunity, so that if not raised by the pleadings, ordinarily it may not be raised a the trial, and if not raised in the trial court, it will not be considered on appeal. (12 C.J., p. 786. See, also, Cadwallader-Gibson Lumber Co. vs. Del Rosario, 26 Phil., 192, 193-195.) But we must state that the general rule admits of exceptions. Courts, in the exercise of sound discretion, may determine the time when a question affecting the constitutionality of a statute should be presented. (In re Woolsey [19884], 95 N.Y., 135, 144.) Thus, in criminal cases, although there is a very sharp conflict of authorities, it is said that the question may be raised for the first time at any state of the proceedings, either in the trial court or on appeal. (12 C.J., p. 786.) Even in civil cases, it has been held that it is the duty of a court to pass on the constitutional question, though raised for first time on appeal, if it appears that a determination of the question is necessary to a decision of the case. (McCabe's Adm'x vs. Maysville & B. S. R. Co. [1910], 136 Ky., 674; 124 S. W., 892; Lohmeyer vs. St. Louis, Cordage Co. [1908], 214 Mo. 685; 113 S. W., 1108; Carmody vs. St. Louis Transit Co. [1905], 188 Mo., 572; 87 S. W., 913.) And it has been held that a constitutional question will be considered by an appellate court at any time, where it involves the jurisdiction of the court below (State vs. Burke [1911], 175 Ala., 561; 57 S., 870.) As to the power of this court to consider the constitutional question raised for the first time before this court in these proceedings, we turn again and point with emphasis to the case of Yu Cong Eng. vs. Trinidad, supra. And on the hypothesis that the Hongkong & Shanghai Banking Corporation, represented by the private prosecution, is not the proper party to raise the constitutional question here — a point we do not now have to decide — we are of the opinion that the People of the Philippines, represented by the Solicitor-General and the Fiscal of the City of Manila, is such a proper party in the present proceedings. The unchallenged rule is that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement. It goes without saying that if Act No. 4221 really violates the Constitution, the People of the Philippines, in whose name the present action is brought, has a substantial interest in having it set aside. Of greater import than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the enforcement of an invalid statute. Hence, the well-settled rule that the state can challenge the validity of its own laws. In Government of the Philippine Islands vs. Springer ([1927]), 50 Phil., 259 (affirmed in Springer vs. Government of the Philippine Islands [1928], 277 U.S., 189; 72 Law. ed., 845), this court declared an act of the legislature unconstitutional in an action instituted in behalf of the Government of the Philippines. In Attorney General vs. Perkings([1889], 73 Mich., 303, 311, 312; 41 N.W., 426, 428, 429), the State of Michigan, through its Attorney General, instituted quo warranto proceedings to test the right of the respondents to renew a mining corporation, alleging that the statute under which the respondents base their right was unconstitutional because it impaired the obligation of contracts. The capacity of the chief law officer of the state to question the constitutionality of the statute was itself questioned. Said the Supreme Court of Michigan, through Champlin, J.: . . . The idea seems to be that the people are estopped from questioning the validity of a law enacted by their representatives; that to an accusation by the people of Michigan of usurpation their government, a statute enacted by the people of Michigan is an adequate answer. The last proposition is true, but, if the statute relied on in justification is unconstitutional, it is statute only in form, and lacks the force of law, and is of no more saving effect to justify action under it than if it had never been enacted. The constitution is the supreme law, and to its behests the courts, the legislature, and the people must bow . . . The legislature and the respondents are not the only parties in interest upon such constitutional questions. As was remarked by Mr. Justice Story, in speaking of an acquiescence by a party affected by an unconstitutional act of the legislature: "The people have a deep and vested interest in maintaining all the constitutional limitations upon the exercise of legislative powers." (Allen vs. Mckeen, 1 Sum., 314.) In State vs. Doane ([1916], 98 Kan., 435; 158 Pac., 38, 40), an original action (mandamus) was brought by the Attorney-General of Kansas to test the constitutionality of a statute of the state. In disposing of the question whether or not the state may bring the action, the Supreme Court of Kansas said:

. . . the state is a proper party — indeed, the proper party — to bring this action. The state is always interested where the integrity of its Constitution or statutes is involved. "It has an interest in seeing that the will of the Legislature is not disregarded, and need not, as an individual plaintiff must, show grounds of fearing more specific injury. (State vs. Kansas City 60 Kan., 518 [57 Pac., 118])." (State vs. Lawrence, 80 Kan., 707; 103 Pac., 839.) Where the constitutionality of a statute is in doubt the state's law officer, its Attorney-General, or county attorney, may exercise his bet judgment as to what sort of action he will bring to have the matter determined, either by quo warranto to challenge its validity (State vs. Johnson, 61 Kan., 803; 60 Pac., 1068; 49 L.R.A., 662), by mandamus to compel obedience to its terms (State vs. Dolley, 82 Kan., 533; 108 Pac., 846), or by injunction to restrain proceedings under its questionable provisions (State ex rel. vs. City of Neodesha, 3 Kan. App., 319; 45 Pac., 122). Other courts have reached the same conclusion (See State vs. St. Louis S. W. Ry. Co. [1917], 197 S. W., 1006; State vs. S.H. Kress & Co. [1934], 155 S., 823; State vs. Walmsley [1935], 181 La., 597; 160 S., 91; State vs. Board of County Comr's [1934], 39 Pac. [2d], 286; First Const. Co. of Brooklyn vs. State [1917], 211 N.Y., 295; 116 N.E., 1020; Bush vs. State {1918], 187 Ind., 339; 119 N.E., 417; State vs. Watkins [1933], 176 La., 837; 147 S., 8, 10, 11). In the case last cited, the Supreme Court of Luisiana said: It is contended by counsel for Herbert Watkins that a district attorney, being charged with the duty of enforcing the laws, has no right to plead that a law is unconstitutional. In support of the argument three decisions are cited, viz.: State ex rel. Hall, District Attorney, vs. Judge of Tenth Judicial District (33 La. Ann., 1222); State ex rel. Nicholls, Governor vs. Shakespeare, Mayor of New Orleans (41 Ann., 156; 6 So., 592); and State ex rel., Banking Co., etc. vs. Heard, Auditor (47 La. Ann., 1679; 18 So., 746; 47 L. R. A., 512). These decisions do not forbid a district attorney to plead that a statute is unconstitutional if he finds if in conflict with one which it is his duty to enforce. In State ex rel. Hall, District Attorney, vs. Judge, etc., the ruling was the judge should not, merely because he believed a certain statute to be unconstitutional forbid the district attorney to file a bill of information charging a person with a violation of the statute. In other words, a judge should not judicially declare a statute unconstitutional until the question of constitutionality is tendered for decision, and unless it must be decided in order to determine the right of a party litigant. State ex rel. Nicholls, Governor, etc., is authority for the proposition merely that an officer on whom a statute imposes the duty of enforcing its provisions cannot avoid the duty upon the ground that he considers the statute unconstitutional, and hence in enforcing the statute he is immune from responsibility if the statute be unconstitutional. State ex rel. Banking Co., etc., is authority for the proposition merely that executive officers, e.g., the state auditor and state treasurer, should not decline to perform ministerial duties imposed upon them by a statute, on the ground that they believe the statute is unconstitutional. It is the duty of a district attorney to enforce the criminal laws of the state, and, above all, to support the Constitution of the state. If, in the performance of his duty he finds two statutes in conflict with each other, or one which repeals another, and if, in his judgment, one of the two statutes is unconstitutional, it is his duty to enforce the other; and, in order to do so, he is compelled to submit to the court, by way of a plea, that one of the statutes is unconstitutional. If it were not so, the power of the Legislature would be free from constitutional limitations in the enactment of criminal laws. The respondents do not seem to doubt seriously the correctness of the general proposition that the state may impugn the validity of its laws. They have not cited any authority running clearly in the opposite direction. In fact, they appear to have proceeded on the assumption that the rule as stated is sound but that it has no application in the present case, nor may it be invoked by the City Fiscal in behalf of the People of the Philippines, one of the petitioners herein, the principal reasons being that the validity before this court, that the City Fiscal is estopped from attacking the validity of the Act and, not authorized challenge the validity of the Act in its application outside said city. (Additional memorandum of respondents, October 23, 1937, pp. 8,. 10, 17 and 23.) The mere fact that the Probation Act has been repeatedly relied upon the past and all that time has not been attacked as unconstitutional by the Fiscal of Manila but, on the contrary, has been impliedly regarded by him as constitutional, is no reason for considering the People of the Philippines

estopped from nor assailing its validity. For courts will pass upon a constitutional questions only when presented before it in bona fide cases for determination, and the fact that the question has not been raised before is not a valid reason for refusing to allow it to be raised later. The fiscal and all others are justified in relying upon the statute and treating it as valid until it is held void by the courts in proper cases. It remains to consider whether the determination of the constitutionality of Act No. 4221 is necessary to the resolution of the instant case. For, ". . . while the court will meet the question with firmness, where its decision is indispensable, it is the part of wisdom, and just respect for the legislature, renders it proper, to waive it, if the case in which it arises, can be decided on other points." (Ex parte Randolph [1833], 20 F. Cas. No. 11, 558; 2 Brock., 447. Vide, also Hoover vs. wood [1857], 9 Ind., 286, 287.) It has been held that the determination of a constitutional question is necessary whenever it is essential to the decision of the case (12 C. J., p. 782, citing Long Sault Dev. Co. vs. Kennedy [1913], 158 App. Div., 398; 143 N. Y. Supp., 454 [aff. 212 N.Y., 1: 105 N. E., 849; Ann. Cas. 1915D, 56; and app dism 242 U.S., 272]; Hesse vs. Ledesma, 7 Porto Rico Fed., 520; Cowan vs. Doddridge, 22 Gratt [63 Va.], 458; Union Line Co., vs. Wisconsin R. Commn., 146 Wis., 523; 129 N. W., 605), as where the right of a party is founded solely on a statute the validity of which is attacked. (12 C.J., p. 782, citing Central Glass Co. vs. Niagrara F. Ins. Co., 131 La., 513; 59 S., 972; Cheney vs. Beverly, 188 Mass., 81; 74 N.E., 306). There is no doubt that the respondent Cu Unjieng draws his privilege to probation solely from Act No. 4221 now being assailed. Apart from the foregoing considerations, that court will also take cognizance of the fact that the Probation Act is a new addition to our statute books and its validity has never before been passed upon by the courts; that may persons accused and convicted of crime in the City of Manila have applied for probation; that some of them are already on probation; that more people will likely take advantage of the Probation Act in the future; and that the respondent Mariano Cu Unjieng has been at large for a period of about four years since his first conviction. All wait the decision of this court on the constitutional question. Considering, therefore, the importance which the instant case has assumed and to prevent multiplicity of suits, strong reasons of public policy demand that the constitutionality of Act No. 4221 be now resolved. (Yu Cong Eng vs. Trinidad [1925], 47 Phil., 385; [1926], 271 U.S., 500; 70 Law. ed., 1059. See 6 R.C.L., pp. 77, 78; People vs. Kennedy [1913], 207 N.Y., 533; 101 N.E., 442, 444; Ann. Cas. 1914C, 616; Borginis vs. Falk Co. [1911], 147 Wis., 327; 133 N.W., 209, 211; 37 L.R.A. [N.S.] 489; Dimayuga and Fajardo vs. Fernandez [1922], 43 Phil., 304.) In Yu Cong Eng vs. Trinidad, supra, an analogous situation confronted us. We said: "Inasmuch as the property and personal rights of nearly twelve thousand merchants are affected by these proceedings, and inasmuch as Act No. 2972 is a new law not yet interpreted by the courts, in the interest of the public welfare and for the advancement of public policy, we have determined to overrule the defense of want of jurisdiction in order that we may decide the main issue. We have here an extraordinary situation which calls for a relaxation of the general rule." Our ruling on this point was sustained by the Supreme Court of the United States. A more binding authority in support of the view we have taken can not be found. We have reached the conclusion that the question of the constitutionality of Act No. 4221 has been properly raised. Now for the main inquiry: Is the Act unconstitutional? Under a doctrine peculiarly American, it is the office and duty of the judiciary to enforce the Constitution. This court, by clear implication from the provisions of section 2, subsection 1, and section 10, of Article VIII of the Constitution, may declare an act of the national legislature invalid because in conflict with the fundamental lay. It will not shirk from its sworn duty to enforce the Constitution. And, in clear cases, it will not hesitate to give effect to the supreme law by setting aside a statute in conflict therewith. This is of the essence of judicial duty. This court is not unmindful of the fundamental criteria in cases of this nature that all reasonable doubts should be resolved in favor of the constitutionality of a statute. An act of the legislature approved by the executive, is presumed to be within constitutional limitations. The responsibility of upholding the Constitution rests not on the courts alone but on the legislature as well. "The question of the validity of every statute is first determined by the legislative department of the government itself." (U.S. vs. Ten Yu [1912], 24 Phil., 1, 10; Case vs. Board of Health and Heiser [1913], 24 Phil., 250, 276; U.S. vs. Joson [1913], 26 Phil., 1.) And a statute finally comes before the courts sustained by the sanction of the executive. The members of the Legislature and the Chief Executive have taken an oath to support the Constitution and it must be presumed that they have been true to this oath and that in enacting and sanctioning a particular law they did not intend to violate the Constitution. The courts cannot but cautiously exercise its power to overturn the solemn declarations of two of the three grand departments of the governments. (6 R.C.L., p. 101.) Then, there is that

peculiar political philosophy which bids the judiciary to reflect the wisdom of the people as expressed through an elective Legislature and an elective Chief Executive. It follows, therefore, that the courts will not set aside a law as violative of the Constitution except in a clear case. This is a proposition too plain to require a citation of authorities. One of the counsel for respondents, in the course of his impassioned argument, called attention to the fact that the President of the Philippines had already expressed his opinion against the constitutionality of the Probation Act, adverting that as to the Executive the resolution of this question was a foregone conclusion. Counsel, however, reiterated his confidence in the integrity and independence of this court. We take notice of the fact that the President in his message dated September 1, 1937, recommended to the National Assembly the immediate repeal of the Probation Act (No. 4221); that this message resulted in the approval of Bill No. 2417 of the Nationality Assembly repealing the probation Act, subject to certain conditions therein mentioned; but that said bill was vetoed by the President on September 13, 1937, much against his wish, "to have stricken out from the statute books of the Commonwealth a law . . . unfair and very likely unconstitutional." It is sufficient to observe in this connection that, in vetoing the bill referred to, the President exercised his constitutional prerogative. He may express the reasons which he may deem proper for taking such a step, but his reasons are not binding upon us in the determination of actual controversies submitted for our determination. Whether or not the Executive should express or in any manner insinuate his opinion on a matter encompassed within his broad constitutional power of veto but which happens to be at the same time pending determination in this court is a question of propriety for him exclusively to decide or determine. Whatever opinion is expressed by him under these circumstances, however, cannot sway our judgment on way or another and prevent us from taking what in our opinion is the proper course of action to take in a given case. It if is ever necessary for us to make any vehement affirmance during this formative period of our political history, it is that we are independent of the Executive no less than of the Legislative department of our government — independent in the performance of our functions, undeterred by any consideration, free from politics, indifferent to popularity, and unafraid of criticism in the accomplishment of our sworn duty as we see it and as we understand it. The constitutionality of Act No. 4221 is challenged on three principal grounds: (1) That said Act encroaches upon the pardoning power of the Executive; (2) that its constitutes an undue delegation of legislative power and (3) that it denies the equal protection of the laws. 1. Section 21 of the Act of Congress of August 29, 1916, commonly known as the Jones Law, in force at the time of the approval of Act No. 4221, otherwise known as the Probation Act, vests in the Governor-General of the Philippines "the exclusive power to grant pardons and reprieves and remit fines and forfeitures". This power is now vested in the President of the Philippines. (Art. VII, sec. 11, subsec. 6.) The provisions of the Jones Law and the Constitution differ in some respects. The adjective "exclusive" found in the Jones Law has been omitted from the Constitution. Under the Jones Law, as at common law, pardon could be granted any time after the commission of the offense, either before or after conviction (Vide Constitution of the United States, Art. II, sec. 2; In re Lontok [1922], 43 Phil., 293). The Governor-General of the Philippines was thus empowered, like the President of the United States, to pardon a person before the facts of the case were fully brought to light. The framers of our Constitution thought this undesirable and, following most of the state constitutions, provided that the pardoning power can only be exercised "after conviction". So, too, under the new Constitution, the pardoning power does not extend to "cases of impeachment". This is also the rule generally followed in the United States (Vide Constitution of the United States, Art. II, sec. 2). The rule in England is different. There, a royal pardon can not be pleaded in bar of an impeachment; "but," says Blackstone, "after the impeachment has been solemnly heard and determined, it is not understood that the king's royal grace is further restrained or abridged." (Vide, Ex parte Wells [1856], 18 How., 307; 15 Law. ed., 421; Com. vs. Lockwood [1872], 109 Mass., 323; 12 Am. Rep., 699; Sterling vs. Drake [1876], 29 Ohio St., 457; 23 am. Rep., 762.) The reason for the distinction is obvious. In England, Judgment on impeachment is not confined to mere "removal from office and disqualification to hold and enjoy any office of honor, trust, or profit under the Government" (Art. IX, sec. 4, Constitution of the Philippines) but extends to the whole punishment attached by law to the offense committed. The House of Lords, on a conviction may, by its sentence, inflict capital punishment, perpetual banishment, perpetual banishment, fine or imprisonment, depending upon the gravity of the offense committed, together with removal from office and incapacity to hold office. (Com. vs. Lockwood, supra.) Our Constitution also makes specific mention of "commutation" and of the power of the executive to impose, in the pardons he may grant, such conditions, restrictions and limitations as he may deem proper. Amnesty may be granted by the President under the Constitution but only with the concurrence of the National Assembly. We need not dwell at length on the significance of these fundamental changes. It is sufficient for our purposes

to state that the pardoning power has remained essentially the same. The question is: Has the pardoning power of the Chief Executive under the Jones Law been impaired by the Probation Act? As already stated, the Jones Law vests the pardoning power exclusively in the Chief Executive. The exercise of the power may not, therefore, be vested in anyone else. ". . . The benign prerogative of mercy reposed in the executive cannot be taken away nor fettered by any legislative restrictions, nor can like power be given by the legislature to any other officer or authority. The coordinate departments of government have nothing to do with the pardoning power, since no person properly belonging to one of the departments can exercise any powers appertaining to either of the others except in cases expressly provided for by the constitution." (20 R.C.L., pp., , and cases cited.) " . . . where the pardoning power is conferred on the executive without express or implied limitations, the grant is exclusive, and the legislature can neither exercise such power itself nor delegate it elsewhere, nor interfere with or control the proper exercise thereof, . . ." (12 C.J., pp. 838, 839, and cases cited.) If Act No. 4221, then, confers any pardoning power upon the courts it is for that reason unconstitutional and void. But does it? In the famous Killitts decision involving an embezzlement case, the Supreme Court of the United States ruled in 1916 that an order indefinitely suspending sentenced was void. (Ex parte United States [1916], 242 U.S., 27; 61 Law. ed., 129; L.R.A. 1917E, 1178; 37 Sup. Ct. Rep., 72; Ann. Cas. 1917B, 355.) Chief Justice White, after an exhaustive review of the authorities, expressed the opinion of the court that under the common law the power of the court was limited to temporary suspension and that the right to suspend sentenced absolutely and permanently was vested in the executive branch of the government and not in the judiciary. But, the right of Congress to establish probation by statute was conceded. Said the court through its Chief Justice: ". . . and so far as the future is concerned, that is, the causing of the imposition of penalties as fixed to be subject, by probation legislation or such other means as the legislative mind may devise, to such judicial discretion as may be adequate to enable courts to meet by the exercise of an enlarged but wise discretion the infinite variations which may be presented to them for judgment, recourse must be had Congress whose legislative power on the subject is in the very nature of things adequately complete." (Quoted in Riggs vs. United States [1926], 14 F. [2d], 5, 6.) This decision led the National Probation Association and others to agitate for the enactment by Congress of a federal probation law. Such action was finally taken on March 4, 1925 (chap. 521, 43 Stat. L. 159, U.S.C. title 18, sec. 724). This was followed by an appropriation to defray the salaries and expenses of a certain number of probation officers chosen by civil service. (Johnson, Probation for Juveniles and Adults, p. 14.) In United States vs. Murray ([1925], 275 U.S., 347; 48 Sup. Ct. Rep., 146; 72 Law. ed., 309), the Supreme Court of the United States, through Chief Justice Taft, held that when a person sentenced to imprisonment by a district court has begun to serve his sentence, that court has no power under the Probation Act of March 4, 1925 to grant him probation even though the term at which sentence was imposed had not yet expired. In this case of Murray, the constitutionality of the probation Act was not considered but was assumed. The court traced the history of the Act and quoted from the report of the Committee on the Judiciary of the United States House of Representatives (Report No. 1377, 68th Congress, 2 Session) the following statement: Prior to the so-called Killitts case, rendered in December, 1916, the district courts exercised a form of probation either, by suspending sentence or by placing the defendants under state probation officers or volunteers. In this case, however (Ex parte United States, 242 U.S., 27; 61 L. Ed., 129; L.R.A., 1917E, 1178; 37 Sup. Ct. Rep., 72 Ann. Cas. 1917B, 355), the Supreme Court denied the right of the district courts to suspend sentenced. In the same opinion the court pointed out the necessity for action by Congress if the courts were to exercise probation powers in the future . . . Since this decision was rendered, two attempts have been made to enact probation legislation. In 1917, a bill was favorably reported by the Judiciary Committee and passed the House. In 1920, the judiciary Committee again favorably reported a probation bill to the House, but it was never reached for definite action. If this bill is enacted into law, it will bring the policy of the Federal government with reference to its treatment of those convicted of violations of its criminal laws in harmony with that of the states of the Union. At the present time every state has a probation law, and in all but twelve states the law applies both to adult and juvenile offenders. (see, also, Johnson, Probation for Juveniles and Adults [1928], Chap. I.)

The constitutionality of the federal probation law has been sustained by inferior federal courts. In Riggs vs. United States supra, the Circuit Court of Appeals of the Fourth Circuit said: Since the passage of the Probation Act of March 4, 1925, the questions under consideration have been reviewed by the Circuit Court of Appeals of the Ninth Circuit (7 F. [2d], 590), and the constitutionality of the act fully sustained, and the same held in no manner to encroach upon the pardoning power of the President. This case will be found to contain an able and comprehensive review of the law applicable here. It arose under the act we have to consider, and to it and the authorities cited therein special reference is made (Nix vs. James, 7 F. [2d], 590, 594), as is also to a decision of the Circuit Court of Appeals of the Seventh Circuit (Kriebel vs. U.S., 10 F. [2d], 762), likewise construing the Probation Act. We have seen that in 1916 the Supreme Court of the United States; in plain and unequivocal language, pointed to Congress as possessing the requisite power to enact probation laws, that a federal probation law as actually enacted in 1925, and that the constitutionality of the Act has been assumed by the Supreme Court of the United States in 1928 and consistently sustained by the inferior federal courts in a number of earlier cases. We are fully convinced that the Philippine Legislature, like the Congress of the United States, may legally enact a probation law under its broad power to fix the punishment of any and all penal offenses. This conclusion is supported by other authorities. In Ex parte Bates ([1915], 20 N. M., 542; L.R.A. 1916A, 1285; 151 Pac., 698, the court said: "It is clearly within the province of the Legislature to denominate and define all classes of crime, and to prescribe for each a minimum and maximum punishment." And in State vs. Abbott ([1910], 87 S.C., 466; 33 L.R.A. [N. S.], 112; 70 S. E., 6; Ann. Cas. 1912B, 1189), the court said: "The legislative power to set punishment for crime is very broad, and in the exercise of this power the general assembly may confer on trial judges, if it sees fit, the largest discretion as to the sentence to be imposed, as to the beginning and end of the punishment and whether it should be certain or indeterminate or conditional." (Quoted in State vs. Teal [1918], 108 S. C., 455; 95 S. E., 69.) Indeed, the Philippine Legislature has defined all crimes and fixed the penalties for their violation. Invariably, the legislature has demonstrated the desire to vest in the courts — particularly the trial courts — large discretion in imposing the penalties which the law prescribes in particular cases. It is believed that justice can best be served by vesting this power in the courts, they being in a position to best determine the penalties which an individual convict, peculiarly circumstanced, should suffer. Thus, while courts are not allowed to refrain from imposing a sentence merely because, taking into consideration the degree of malice and the injury caused by the offense, the penalty provided by law is clearly excessive, the courts being allowed in such case to submit to the Chief Executive, through the Department of Justice, such statement as it may deem proper (see art. 5, Revised Penal Code), in cases where both mitigating and aggravating circumstances are attendant in the commission of a crime and the law provides for a penalty composed of two indivisible penalties, the courts may allow such circumstances to offset one another in consideration of their number and importance, and to apply the penalty according to the result of such compensation. (Art. 63, rule 4, Revised Penal Code; U.S. vs. Reguera and Asuategui [1921], 41 Phil., 506.) Again, article 64, paragraph 7, of the Revised Penal Code empowers the courts to determine, within the limits of each periods, in case the penalty prescribed by law contains three periods, the extent of the evil produced by the crime. In the imposition of fines, the courts are allowed to fix any amount within the limits established by law, considering not only the mitigating and aggravating circumstances, but more particularly the wealth or means of the culprit. (Art. 66, Revised Penal Code.) Article 68, paragraph 1, of the same Code provides that "a discretionary penalty shall be imposed" upon a person under fifteen but over nine years of age, who has not acted without discernment, but always lower by two degrees at least than that prescribed by law for the crime which he has committed. Article 69 of the same Code provides that in case of "incomplete selfdefense", i.e., when the crime committed is not wholly excusable by reason of the lack of some of the conditions required to justify the same or to exempt from criminal liability in the several cases mentioned in article 11 and 12 of the Code, "the courts shall impose the penalty in the period which may be deemed proper, in view of the number and nature of the conditions of exemption present or lacking." And, in case the commission of what are known as "impossible" crimes, "the court, having in mind the social danger and the degree of criminality shown by the offender," shall impose upon him either arresto mayor or a fine ranging from 200 to 500 pesos. (Art. 59, Revised Penal Code.) Under our Revised Penal Code, also, one-half of the period of preventive imprisonment is deducted form the entire term of imprisonment, except in certain cases expressly mentioned (art. 29); the death penalty is not imposed when the guilty person is more than seventy years of age, or where upon appeal or revision of the case by the Supreme Court, all the members thereof are not unanimous in their voting as to the propriety of the imposition of the death penalty (art. 47, see also,

sec. 133, Revised Administrative Code, as amended by Commonwealth Act No. 3); the death sentence is not to be inflicted upon a woman within the three years next following the date of the sentence or while she is pregnant, or upon any person over seventy years of age (art. 83); and when a convict shall become insane or an imbecile after final sentence has been pronounced, or while he is serving his sentenced, the execution of said sentence shall be suspended with regard to the personal penalty during the period of such insanity or imbecility (art. 79). But the desire of the legislature to relax what might result in the undue harshness of the penal laws is more clearly demonstrated in various other enactments, including the probation Act. There is the Indeterminate Sentence Law enacted in 1933 as Act No. 4103 and subsequently amended by Act No. 4225, establishing a system of parole (secs. 5 to 100 and granting the courts large discretion in imposing the penalties of the law. Section 1 of the law as amended provides; "hereafter, in imposing a prison sentence for an offenses punished by the Revised Penal Code, or its amendments, the court shall sentence the accused to an indeterminate sentence the maximum term of which shall be that which, in view of the attending circumstances, could be properly imposed under the rules of the said Code, and to a minimum which shall be within the range of the penalty next lower to that prescribed by the Code for the offense; and if the offense is punished by any other law, the court shall sentence the accused to an indeterminate sentence, the maximum term of which shall not exceed the maximum fixed by said law and the minimum shall not be less than the minimum term prescribed by the same." Certain classes of convicts are, by section 2 of the law, excluded from the operation thereof. The Legislature has also enacted the Juvenile Delinquency Law (Act No. 3203) which was subsequently amended by Act No. 3559. Section 7 of the original Act and section 1 of the amendatory Act have become article 80 of the Revised Penal Code, amended by Act No. 4117 of the Philippine Legislature and recently reamended by Commonwealth Act No. 99 of the National Assembly. In this Act is again manifested the intention of the legislature to "humanize" the penal laws. It allows, in effect, the modification in particular cases of the penalties prescribed by law by permitting the suspension of the execution of the judgment in the discretion of the trial court, after due hearing and after investigation of the particular circumstances of the offenses, the criminal record, if any, of the convict, and his social history. The Legislature has in reality decreed that in certain cases no punishment at all shall be suffered by the convict as long as the conditions of probation are faithfully observed. It this be so, then, it cannot be said that the Probation Act comes in conflict with the power of the Chief Executive to grant pardons and reprieves, because, to use the language of the Supreme Court of New Mexico, "the element of punishment or the penalty for the commission of a wrong, while to be declared by the courts as a judicial function under and within the limits of law as announced by legislative acts, concerns solely the procedure and conduct of criminal causes, with which the executive can have nothing to do." (Ex parteBates, supra.) In Williams vs. State ([1926], 162 Ga., 327; 133 S.E., 843), the court upheld the constitutionality of the Georgia probation statute against the contention that it attempted to delegate to the courts the pardoning power lodged by the constitution in the governor alone is vested with the power to pardon after final sentence has been imposed by the courts, the power of the courts to imposed any penalty which may be from time to time prescribed by law and in such manner as may be defined cannot be questioned." We realize, of course, the conflict which the American cases disclose. Some cases hold it unlawful for the legislature to vest in the courts the power to suspend the operation of a sentenced, by probation or otherwise, as to do so would encroach upon the pardoning power of the executive. (In re Webb [1895], 89 Wis., 354; 27 L.R.A., 356; 46 Am. St. Rep., 846; 62 N.W., 177; 9 Am. Crim., Rep., 702; State ex rel. Summerfield vs. Moran [1919], 43 Nev., 150; 182 Pac., 927; Ex parte Clendenning [1908], 22 Okla., 108; 1 Okla. Crim. Rep., 227; 19 L.R.A. [N.S.], 1041; 132 Am. St. Rep., 628; 97 Pac., 650; People vs. Barrett [1903], 202 Ill, 287; 67 N.E., 23; 63 L.R.A., 82; 95 Am. St. Rep., 230; Snodgrass vs. State [1912], 67 Tex. Crim. Rep., 615; 41 L. R. A. [N. S.], 1144; 150 S. W., 162; Ex parte Shelor [1910], 33 Nev., 361;111 Pac., 291; Neal vs. State [1898], 104 Ga., 509; 42 L. R. A., 190; 69 Am. St. Rep., 175; 30 S. E. 858; State ex rel. Payne vs. Anderson [1921], 43 S. D., 630; 181 N. W., 839; People vs. Brown, 54 Mich., 15; 19 N. W., 571; States vs. Dalton [1903], 109 Tenn., 544; 72 S. W., 456.) Other cases, however, hold contra. (Nix vs. James [1925; C. C. A., 9th], 7 F. [2d], 590; Archer vs. Snook [1926; D. C.], 10 F. [2d], 567; Riggs. vs. United States [1926; C. C. A. 4th], 14]) [2d], 5; Murphy vs. States [1926], 171 Ark., 620; 286 S. W., 871; 48 A. L. R., 1189; Re Giannini [1912], 18 Cal. App., 166; 122 Pac., 831; Re Nachnaber [1928], 89 Cal. App., 530; 265 Pac., 392; Ex parte De Voe [1931], 114 Cal. App., 730; 300 Pac., 874; People vs. Patrick [1897], 118 Cal., 332; 50 Pac., 425; Martin vs. People [1917], 69 Colo., 60; 168 Pac., 1171; Belden vs. Hugo [1914], 88 Conn., 50; 91 A., 369, 370, 371; Williams vs. State [1926], 162 Ga., 327; 133 S. E., 843; People vs. Heise [1913], 257 Ill., 443; 100 N. E., 1000; Parker vs. State [1893], 135 Ind., 534; 35 N. E., 179; 23 L. R. A., 859; St. Hillarie, Petitioner [1906], 101 Me., 522; 64 Atl., 882; People vs. Stickle [1909], 156

Mich., 557; 121 N. W., 497; State vs. Fjolander [1914], 125 Minn., 529; State ex rel. Bottomnly vs. District Court [1925], 73 Mont., 541; 237 Pac., 525; State vs. Everitt [1913], 164 N. C., 399; 79 S. E., 274; 47 L. R. A. [N. S.], 848; State ex rel. Buckley vs. Drew [1909], 75 N. H., 402; 74 Atl., 875; State vs. Osborne [1911], 79 N. J. Eq., 430; 82 Atl. 424; Ex parte Bates [1915], 20 N. M., 542; L. R. A., 1916 A. 1285; 151 Pac., 698; People vs. ex rel. Forsyth vs. Court of Session [1894], 141 N. Y., 288; 23 L. R. A., 856; 36 N. E., 386; 15 Am. Crim. Rep., 675; People ex rel. Sullivan vs. Flynn [1907], 55 Misc., 639; 106 N. Y. Supp., 928; People vs. Goodrich [1914], 149 N. Y. Supp., 406; Moore vs. Thorn [1935], 245 App. Div., 180; 281 N. Y. Supp., 49; Re Hart [1914], 29 N. D., 38; L. R. A., 1915C, 1169; 149 N. W., 568; Ex parte Eaton [1925], 29 Okla., Crim. Rep., 275; 233 P., 781; State vs. Teal [1918], 108 S. C., 455; 95 S. E., 69; State vs. Abbot [1910], 87 S. C., 466; 33 L.R.A., [N. S.], 112; 70 S. E., 6; Ann. Cas., 1912B, 1189; Fults vs. States [1854],34 Tenn., 232; Woods vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs. State [1814], 130 Tenn., 100; 169 S. W., 558; Baker vs. State [1913],70 Tex., Crim. Rep., 618; 158 S. W., 998; Cook vs. State [1914], 73 Tex. Crim. Rep., 548; 165 S. W., 573; King vs. State [1914], 72 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep., 394; 162 S. W., 890; Clare vs. State [1932], 122 Tex. Crim. Rep., 211; 54 S. W. [2d], 127; Re Hall [1927], 100 Vt., 197; 136 A., 24; Richardson vs. Com. [1921], 131 Va., 802; 109 S.E., 460; State vs. Mallahan [1911], 65 Wash., 287; 118 Pac., 42; State ex rel. Tingstand vs. Starwich [1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393; 396.) We elect to follow this long catena of authorities holding that the courts may be legally authorized by the legislature to suspend sentence by the establishment of a system of probation however characterized. State ex rel. Tingstand vs. Starwich ([1922], 119 Wash., 561; 206 Pac., 29; 26 A. L. R., 393), deserved particular mention. In that case, a statute enacted in 1921 which provided for the suspension of the execution of a sentence until otherwise ordered by the court, and required that the convicted person be placed under the charge of a parole or peace officer during the term of such suspension, on such terms as the court may determine, was held constitutional and as not giving the court a power in violation of the constitutional provision vesting the pardoning power in the chief executive of the state. (Vide, also, Re Giannini [1912], 18 Cal App., 166; 122 Pac., 831.) Probation and pardon are not coterminous; nor are they the same. They are actually district and different from each other, both in origin and in nature. In People ex rel. Forsyth vs. Court of Sessions ([1894], 141 N. Y., 288, 294; 36 N. E., 386, 388; 23 L. R. A., 856; 15 Am. Crim. Rep., 675), the Court of Appeals of New York said: . . . The power to suspend sentence and the power to grant reprieves and pardons, as understood when the constitution was adopted, are totally distinct and different in their nature. The former was always a part of the judicial power; the latter was always a part of the executive power. The suspension of the sentence simply postpones the judgment of the court temporarily or indefinitely, but the conviction and liability following it, and the civil disabilities, remain and become operative when judgment is rendered. A pardon reaches both the punishment prescribed for the offense and the guilt of the offender. It releases the punishment, and blots out of existence the guilt, so that in the eye of the law, the offender is as innocent as if he had never committed the offense. It removes the penalties and disabilities, and restores him to all his civil rights. It makes him, as it were, a new man, and gives him a new credit and capacity. (Ex parte Garland, 71 U. S., 4 Wall., 333; 18 Law. ed., 366; U. S. vs. Klein, 80 U. S., 13 Wall., 128; 20 Law. ed., 519; Knote vs. U. S., 95 U. S., 149; 24 Law. ed., 442.) The framers of the federal and the state constitutions were perfectly familiar with the principles governing the power to grant pardons, and it was conferred by these instruments upon the executive with full knowledge of the law upon the subject, and the words of the constitution were used to express the authority formerly exercised by the English crown, or by its representatives in the colonies. (Ex parte Wells, 59 U. S., 18 How., 307; 15 Law. ed., 421.) As this power was understood, it did not comprehend any part of the judicial functions to suspend sentence, and it was never intended that the authority to grant reprieves and pardons should abrogate, or in any degree restrict, the exercise of that power in regard to its own judgments, that criminal courts has so long maintained. The two powers, so distinct and different in their nature and character, were still left separate and distinct, the one to be exercised by the executive, and the other by the judicial department. We therefore conclude that a statute which, in terms, authorizes courts of criminal jurisdiction to suspend sentence in certain cases after conviction, — a power inherent in such courts at common law, which was understood when the constitution was adopted to be an ordinary judicial function, and which, ever since its adoption, has been exercised of legislative power under the constitution. It does not encroach, in any just sense, upon the powers of the executive, as they have been understood and practiced from the earliest times. (Quoted with approval in

Directors of Prisons vs. Judge of First Instance of Cavite [1915], 29 Phil., 265, Carson, J., concurring, at pp. 294, 295.) In probation, the probationer is in no true sense, as in pardon, a free man. He is not finally and completely exonerated. He is not exempt from the entire punishment which the law inflicts. Under the Probation Act, the probationer's case is not terminated by the mere fact that he is placed on probation. Section 4 of the Act provides that the probation may be definitely terminated and the probationer finally discharged from supervision only after the period of probation shall have been terminated and the probation officer shall have submitted a report, and the court shall have found that the probationer has complied with the conditions of probation. The probationer, then, during the period of probation, remains in legal custody — subject to the control of the probation officer and of the court; and, he may be rearrested upon the non-fulfillment of the conditions of probation and, when rearrested, may be committed to prison to serve the sentence originally imposed upon him. (Secs. 2, 3, 5 and 6, Act No. 4221.) The probation described in the act is not pardon. It is not complete liberty, and may be far from it. It is really a new mode of punishment, to be applied by the judge in a proper case, in substitution of the imprisonment and find prescribed by the criminal laws. For this reason its application is as purely a judicial act as any other sentence carrying out the law deemed applicable to the offense. The executive act of pardon, on the contrary, is against the criminal law, which binds and directs the judges, or rather is outside of and above it. There is thus no conflict with the pardoning power, and no possible unconstitutionality of the Probation Act for this cause. (Archer vs. Snook [1926], 10 F. [2d], 567, 569.) Probation should also be distinguished from reprieve and from commutation of the sentence. Snodgrass vs. State ([1912], 67 Tex. Crim. Rep., 615;41 L. R. A. [N. S.], 1144; 150 S. W., 162), is relied upon most strongly by the petitioners as authority in support of their contention that the power to grant pardons and reprieves, having been vested exclusively upon the Chief Executive by the Jones Law, may not be conferred by the legislature upon the courts by means of probation law authorizing the indefinite judicial suspension of sentence. We have examined that case and found that although the Court of Criminal Appeals of Texas held that the probation statute of the state in terms conferred on the district courts the power to grant pardons to persons convicted of crime, it also distinguished between suspensions sentence on the one hand, and reprieve and commutation of sentence on the other. Said the court, through Harper, J.: That the power to suspend the sentence does not conflict with the power of the Governor to grant reprieves is settled by the decisions of the various courts; it being held that the distinction between a "reprieve" and a suspension of sentence is that a reprieve postpones the execution of the sentence to a day certain, whereas a suspension is for an indefinite time. (Carnal vs. People, 1 Parker, Cr. R., 262; In re Buchanan, 146 N. Y., 264; 40 N. E., 883), and cases cited in 7 Words & Phrases, pp. 6115, 6116. This law cannot be hold in conflict with the power confiding in the Governor to grant commutations of punishment, for a commutations is not but to change the punishment assessed to a less punishment. In State ex rel. Bottomnly vs. District Court ([1925], 73 Mont., 541; 237 Pac., 525), the Supreme Court of Montana had under consideration the validity of the adult probation law of the state enacted in 1913, now found in sections 12078-12086, Revised Codes of 1921. The court held the law valid as not impinging upon the pardoning power of the executive. In a unanimous decision penned by Justice Holloway, the court said: . . . . the term "pardon", "commutation", and "respite" each had a well understood meaning at the time our Constitution was adopted, and no one of them was intended to comprehend the suspension of the execution of the judgment as that phrase is employed in sections 1207812086. A "pardon" is an act of grace, proceeding from the power intrusted with the execution of the laws which exempts the individual on whom it is bestowed from the punishment the law inflicts for a crime he has committed (United States vs. Wilson, 7 Pet., 150; 8 Law. ed., 640); It is a remission of guilt (State vs. Lewis, 111 La., 693; 35 So., 816), a forgiveness of the offense (Cook vs. Middlesex County, 26 N. J. Law, 326; Ex parte Powell, 73 Ala., 517; 49 Am. Rep., 71). "Commutation" is a remission of a part of the punishment; a substitution of a less penalty for the one originally imposed (Lee vs. Murphy, 22 Grat. [Va.] 789; 12 Am. Rep., 563; Rich vs. Chamberlain, 107 Mich., 381; 65 N. W., 235). A "reprieve" or "respite" is the withholding of the sentence for an interval of time (4 Blackstone's Commentaries, 394), a postponement of execution (Carnal vs. People, 1 Parker, Cr. R. [N. Y.], 272), a temporary suspension of execution (Butler vs. State, 97 Ind., 373).

Few adjudicated cases are to be found in which the validity of a statute similar to our section 12078 has been determined; but the same objections have been urged against parole statutes which vest the power to parole in persons other than those to whom the power of pardon is granted, and these statutes have been upheld quite uniformly, as a reference to the numerous cases cited in the notes to Woods vs. State (130 Tenn., 100; 169 S. W.,558, reported in L. R. A., 1915F, 531), will disclose. (See, also, 20 R. C. L., 524.) We conclude that the Probation Act does not conflict with the pardoning power of the Executive. The pardoning power, in respect to those serving their probationary sentences, remains as full and complete as if the Probation Law had never been enacted. The President may yet pardon the probationer and thus place it beyond the power of the court to order his rearrest and imprisonment. (Riggs vs. United States [1926], 14 F. [2d], 5, 7.) 2. But while the Probation Law does not encroach upon the pardoning power of the executive and is not for that reason void, does section 11 thereof constitute, as contended, an undue delegation of legislative power? Under the constitutional system, the powers of government are distributed among three coordinate and substantially independent organs: the legislative, the executive and the judicial. Each of these departments of the government derives its authority from the Constitution which, in turn, is the highest expression of popular will. Each has exclusive cognizance of the matters within its jurisdiction, and is supreme within its own sphere. The power to make laws — the legislative power — is vested in a bicameral Legislature by the Jones Law (sec. 12) and in a unicamiral National Assembly by the Constitution (Act. VI, sec. 1, Constitution of the Philippines). The Philippine Legislature or the National Assembly may not escape its duties and responsibilities by delegating that power to any other body or authority. Any attempt to abdicate the power is unconstitutional and void, on the principle that potestas delegata non delegare potest. This principle is said to have originated with the glossators, was introduced into English law through a misreading of Bracton, there developed as a principle of agency, was established by Lord Coke in the English public law in decisions forbidding the delegation of judicial power, and found its way into America as an enlightened principle of free government. It has since become an accepted corollary of the principle of separation of powers. (5 Encyc. of the Social Sciences, p. 66.) The classic statement of the rule is that of Locke, namely: "The legislative neither must nor can transfer the power of making laws to anybody else, or place it anywhere but where the people have." (Locke on Civil Government, sec. 142.) Judge Cooley enunciates the doctrine in the following oft-quoted language: "One of the settled maxims in constitutional law is, that the power conferred upon the legislature to make laws cannot be delegated by that department to any other body or authority. Where the sovereign power of the state has located the authority, there it must remain; and by the constitutional agency alone the laws must be made until the Constitution itself is charged. The power to whose judgment, wisdom, and patriotism this high prerogative has been intrusted cannot relieve itself of the responsibilities by choosing other agencies upon which the power shall be devolved, nor can it substitute the judgment, wisdom, and patriotism of any other body for those to which alone the people have seen fit to confide this sovereign trust." (Cooley on Constitutional Limitations, 8th ed., Vol. I, p. 224. Quoted with approval in U. S. vs. Barrias [1908], 11 Phil., 327.) This court posits the doctrine "on the ethical principle that such a delegated power constitutes not only a right but a duty to be performed by the delegate by the instrumentality of his own judgment acting immediately upon the matter of legislation and not through the intervening mind of another. (U. S. vs. Barrias, supra, at p. 330.) The rule, however, which forbids the delegation of legislative power is not absolute and inflexible. It admits of exceptions. An exceptions sanctioned by immemorial practice permits the central legislative body to delegate legislative powers to local authorities. (Rubi vs. Provincial Board of Mindoro [1919], 39 Phil., 660; U. S. vs. Salaveria [1918], 39 Phil., 102; Stoutenburgh vs. Hennick [1889], 129 U. S., 141; 32 Law. ed., 637; 9 Sup. Ct. Rep., 256; State vs. Noyes [1855], 30 N. H., 279.) "It is a cardinal principle of our system of government, that local affairs shall be managed by local authorities, and general affairs by the central authorities; and hence while the rule is also fundamental that the power to make laws cannot be delegated, the creation of the municipalities exercising local self government has never been held to trench upon that rule. Such legislation is not regarded as a transfer of general legislative power, but rather as the grant of the authority to prescribed local regulations, according to immemorial practice, subject of course to the interposition of the superior in cases of necessity." (Stoutenburgh vs. Hennick, supra.) On quite the same principle, Congress is powered to delegate legislative power to such agencies in the territories of the

United States as it may select. A territory stands in the same relation to Congress as a municipality or city to the state government. (United States vs. Heinszen [1907], 206 U. S., 370; 27 Sup. Ct. Rep., 742; 51 L. ed., 1098; 11 Ann. Cas., 688; Dorr vs. United States [1904], 195 U.S., 138; 24 Sup. Ct. Rep., 808; 49 Law. ed., 128; 1 Ann. Cas., 697.) Courts have also sustained the delegation of legislative power to the people at large. Some authorities maintain that this may not be done (12 C. J., pp. 841, 842; 6 R. C. L., p. 164, citing People vs. Kennedy [1913], 207 N. Y., 533; 101 N. E., 442; Ann. Cas., 1914C, 616). However, the question of whether or not a state has ceased to be republican in form because of its adoption of the initiative and referendum has been held not to be a judicial but a political question (Pacific States Tel. & Tel. Co. vs. Oregon [1912], 223 U. S., 118; 56 Law. ed., 377; 32 Sup. Cet. Rep., 224), and as the constitutionality of such laws has been looked upon with favor by certain progressive courts, the sting of the decisions of the more conservative courts has been pretty well drawn. (Opinions of the Justices [1894], 160 Mass., 586; 36 N. E., 488; 23 L. R. A., 113; Kiernan vs. Portland [1910], 57 Ore., 454; 111 Pac., 379; 1132 Pac., 402; 37 L. R. A. [N. S.], 332; Pacific States Tel. & Tel. Co. vs. Oregon, supra.) Doubtless, also, legislative power may be delegated by the Constitution itself. Section 14, paragraph 2, of article VI of the Constitution of the Philippines provides that "The National Assembly may by law authorize the President, subject to such limitations and restrictions as it may impose, to fix within specified limits, tariff rates, import or export quotas, and tonnage and wharfage dues." And section 16 of the same article of the Constitution provides that "In times of war or other national emergency, the National Assembly may by law authorize the President, for a limited period and subject to such restrictions as it may prescribed, to promulgate rules and regulations to carry out a declared national policy." It is beyond the scope of this decision to determine whether or not, in the absence of the foregoing constitutional provisions, the President could be authorized to exercise the powers thereby vested in him. Upon the other hand, whatever doubt may have existed has been removed by the Constitution itself. The case before us does not fall under any of the exceptions hereinabove mentioned. The challenged section of Act No. 4221 in section 11 which reads as follows: This Act shall apply only in those provinces in which the respective provincial boards have provided for the salary of a probation officer at rates not lower than those now provided for provincial fiscals. Said probation officer shall be appointed by the Secretary of Justice and shall be subject to the direction of the Probation Office. (Emphasis ours.) In testing whether a statute constitute an undue delegation of legislative power or not, it is usual to inquire whether the statute was complete in all its terms and provisions when it left the hands of the legislature so that nothing was left to the judgment of any other appointee or delegate of the legislature. (6 R. C. L., p. 165.) In the United States vs. Ang Tang Ho ([1922], 43 Phil., 1), this court adhered to the foregoing rule when it held an act of the legislature void in so far as it undertook to authorize the Governor-General, in his discretion, to issue a proclamation fixing the price of rice and to make the sale of it in violation of the proclamation a crime. (See and cf. Compañia General de Tabacos vs. Board of Public Utility Commissioners [1916], 34 Phil., 136.) The general rule, however, is limited by another rule that to a certain extent matters of detail may be left to be filled in by rules and regulations to be adopted or promulgated by executive officers and administrative boards. (6 R. C. L., pp. 177-179.) For the purpose of Probation Act, the provincial boards may be regarded as administrative bodies endowed with power to determine when the Act should take effect in their respective provinces. They are the agents or delegates of the legislature in this respect. The rules governing delegation of legislative power to administrative and executive officers are applicable or are at least indicative of the rule which should be here adopted. An examination of a variety of cases on delegation of power to administrative bodies will show that the ratio decidendi is at variance but, it can be broadly asserted that the rationale revolves around the presence or absence of a standard or rule of action — or the sufficiency thereof — in the statute, to aid the delegate in exercising the granted discretion. In some cases, it is held that the standard is sufficient; in others that is insufficient; and in still others that it is entirely lacking. As a rule, an act of the legislature is incomplete and hence invalid if it does not lay down any rule or definite standard by which the administrative officer or board may be guided in the exercise of the discretionary powers delegated to it. (See Schecter vs. United States [1925], 295 U. S., 495; 79 L. ed., 1570; 55 Sup. Ct. Rep., 837; 97 A.L.R., 947; People ex rel. Rice vs. Wilson Oil Co. [1936], 364 Ill., 406; 4 N. E. [2d], 847; 107 A.L.R., 1500 and cases cited. See also R. C. L., title "Constitutional Law", sec 174.) In the case at bar, what rules are to guide the provincial boards in the exercise of their discretionary power to determine whether or not the Probation Act shall apply in their respective provinces? What standards are fixed by the Act? We do not find any and none has been pointed to us by the respondents. The probation Act does not, by the force of any of its

provisions, fix and impose upon the provincial boards any standard or guide in the exercise of their discretionary power. What is granted, if we may use the language of Justice Cardozo in the recent case of Schecter, supra, is a "roving commission" which enables the provincial boards to exercise arbitrary discretion. By section 11 if the Act, the legislature does not seemingly on its own authority extend the benefits of the Probation Act to the provinces but in reality leaves the entire matter for the various provincial boards to determine. In other words, the provincial boards of the various provinces are to determine for themselves, whether the Probation Law shall apply to their provinces or not at all. The applicability and application of the Probation Act are entirely placed in the hands of the provincial boards. If the provincial board does not wish to have the Act applied in its province, all that it has to do is to decline to appropriate the needed amount for the salary of a probation officer. The plain language of the Act is not susceptible of any other interpretation. This, to our minds, is a virtual surrender of legislative power to the provincial boards. "The true distinction", says Judge Ranney, "is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made." (Cincinnati, W. & Z. R. Co. vs. Clinton County Comrs. [1852]; 1 Ohio St., 77, 88. See also, Sutherland on Statutory Construction, sec 68.) To the same effect are the decision of this court in Municipality of Cardona vs. Municipality of Binangonan ([1917], 36 Phil., 547); Rubi vs. Provincial Board of Mindoro ([1919],39 Phil., 660) and Cruz vs. Youngberg ([1931], 56 Phil., 234). In the first of these cases, this court sustained the validity of the law conferring upon the Governor-General authority to adjust provincial and municipal boundaries. In the second case, this court held it lawful for the legislature to direct non-Christian inhabitants to take up their habitation on unoccupied lands to be selected by the provincial governor and approved by the provincial board. In the third case, it was held proper for the legislature to vest in the Governor-General authority to suspend or not, at his discretion, the prohibition of the importation of the foreign cattle, such prohibition to be raised "if the conditions of the country make this advisable or if deceased among foreign cattle has ceased to be a menace to the agriculture and livestock of the lands." It should be observed that in the case at bar we are not concerned with the simple transference of details of execution or the promulgation by executive or administrative officials of rules and regulations to carry into effect the provisions of a law. If we were, recurrence to our own decisions would be sufficient. (U. S. vs. Barrias [1908], 11 Phil., 327; U.S. vs. Molina [1914], 29 Phil., 119; Alegre vs. Collector of Customs [1929], 53 Phil., 394; Cebu Autobus Co. vs. De Jesus [1931], 56 Phil., 446; U. S. vs. Gomez [1915], 31 Phil., 218; Rubi vs. Provincial Board of Mindoro [1919], 39 Phil., 660.) It is connected, however, that a legislative act may be made to the effect as law after it leaves the hands of the legislature. It is true that laws may be made effective on certain contingencies, as by proclamation of the executive or the adoption by the people of a particular community (6 R. C. L., 116, 170-172; Cooley, Constitutional Limitations, 8th ed., Vol. I, p. 227). In Wayman vs. Southard ([1825], 10 Wheat. 1; 6 Law. ed., 253), the Supreme Court of the United State ruled that the legislature may delegate a power not legislative which it may itself rightfully exercise.(Vide, also, Dowling vs. Lancashire Ins. Co. [1896], 92 Wis., 63; 65 N. W., 738; 31 L. R. A., 112.) The power to ascertain facts is such a power which may be delegated. There is nothing essentially legislative in ascertaining the existence of facts or conditions as the basis of the taking into effect of a law. That is a mental process common to all branches of the government. (Dowling vs. Lancashire Ins. Co., supra; In re Village of North Milwaukee [1896], 93 Wis., 616; 97 N.W., 1033; 33 L.R.A., 938; Nash vs. Fries [1906], 129 Wis., 120; 108 N.W., 210; Field vs. Clark [1892], 143 U.S., 649; 12 Sup. Ct., 495; 36 Law. ed., 294.) Notwithstanding the apparent tendency, however, to relax the rule prohibiting delegation of legislative authority on account of the complexity arising from social and economic forces at work in this modern industrial age (Pfiffner, Public Administration [1936] ch. XX; Laski, "The Mother of Parliaments", foreign Affairs, July, 1931, Vol. IX, No. 4, pp. 569-579; Beard, "Squirt-Gun Politics", in Harper's Monthly Magazine, July, 1930, Vol. CLXI, pp. 147, 152), the orthodox pronouncement of Judge Cooley in his work on Constitutional Limitations finds restatement in Prof. Willoughby's treatise on the Constitution of the United States in the following language — speaking of declaration of legislative power to administrative agencies: "The principle which permits the legislature to provide that the administrative agent may determine when the circumstances are such as require the application of a law is defended upon the ground that at the time this authority is granted, the rule of public policy, which is the essence of the legislative act, is determined by the legislature. In other words, the legislature, as it its duty to do, determines that, under given circumstances, certain executive or administrative action is to be taken, and that, under other circumstances, different of no action at all is to be taken. What is thus left to the administrative official is not the legislative determination of what public policy demands, but simply the

ascertainment of what the facts of the case require to be done according to the terms of the law by which he is governed." (Willoughby on the Constitution of the United States, 2nd ed., Vol. II, p. 1637.) In Miller vs. Mayer, etc., of New York [1883], 109 U.S., 3 Sup. Ct. Rep., 228; 27 Law. ed., 971, 974), it was said: "The efficiency of an Act as a declaration of legislative will must, of course, come from Congress, but the ascertainment of the contingency upon which the Act shall take effect may be left to such agencies as it may designate." (See, also, 12 C.J., p. 864; State vs. Parker [1854], 26 Vt., 357; Blanding vs. Burr [1859], 13 Cal., 343, 258.) The legislature, then may provide that a contingencies leaving to some other person or body the power to determine when the specified contingencies has arisen. But, in the case at bar, the legislature has not made the operation of the Prohibition Act contingent upon specified facts or conditions to be ascertained by the provincial board. It leaves, as we have already said, the entire operation or non-operation of the law upon the provincial board. the discretion vested is arbitrary because it is absolute and unlimited. A provincial board need not investigate conditions or find any fact, or await the happening of any specified contingency. It is bound by no rule, — limited by no principle of expendiency announced by the legislature. It may take into consideration certain facts or conditions; and, again, it may not. It may have any purpose or no purpose at all. It need not give any reason whatsoever for refusing or failing to appropriate any funds for the salary of a probation officer. This is a matter which rest entirely at its pleasure. The fact that at some future time — we cannot say when — the provincial boards may appropriate funds for the salaries of probation officers and thus put the law into operation in the various provinces will not save the statute. The time of its taking into effect, we reiterate, would yet be based solely upon the will of the provincial boards and not upon the happening of a certain specified contingency, or upon the ascertainment of certain facts or conditions by a person or body other than legislature itself. The various provincial boards are, in practical effect, endowed with the power of suspending the operation of the Probation Law in their respective provinces. In some jurisdiction, constitutions provided that laws may be suspended only by the legislature or by its authority. Thus, section 28, article I of the Constitution of Texas provides that "No power of suspending laws in this state shall be exercised except by the legislature"; and section 26, article I of the Constitution of Indiana provides "That the operation of the laws shall never be suspended, except by authority of the General Assembly." Yet, even provisions of this sort do not confer absolute power of suspension upon the legislature. While it may be undoubted that the legislature may suspend a law, or the execution or operation of a law, a law may not be suspended as to certain individuals only, leaving the law to be enjoyed by others. The suspension must be general, and cannot be made for individual cases or for particular localities. In Holden vs. James ([1814], 11 Mass., 396; 6 Am. Dec., 174, 177, 178), it was said: By the twentieth article of the declaration of rights in the constitution of this commonwealth, it is declared that the power of suspending the laws, or the execution of the laws, ought never to be exercised but by the legislature, or by authority derived from it, to be exercised in such particular cases only as the legislature shall expressly provide for. Many of the articles in that declaration of rights were adopted from the Magna Charta of England, and from the bill of rights passed in the reign of William and Mary. The bill of rights contains an enumeration of the oppressive acts of James II, tending to subvert and extirpate the protestant religion, and the laws and liberties of the kingdom; and the first of them is the assuming and exercising a power of dispensing with and suspending the laws, and the execution of the laws without consent of parliament. The first article in the claim or declaration of rights contained in the statute is, that the exercise of such power, by legal authority without consent of parliament, is illegal. In the tenth section of the same statute it is further declared and enacted, that "No dispensation by non obstante of or to any statute, or part thereof, should be allowed; but the same should be held void and of no effect, except a dispensation be allowed of in such statute." There is an implied reservation of authority in the parliament to exercise the power here mentioned; because, according to the theory of the English Constitution, "that absolute despotic power, which must in all governments reside somewhere," is intrusted to the parliament: 1 Bl. Com., 160. The principles of our government are widely different in this particular. Here the sovereign and absolute power resides in the people; and the legislature can only exercise what is delegated to them according to the constitution. It is obvious that the exercise of the power in question would be equally oppressive to the subject, and subversive of his right to protection, "according to standing laws," whether exercised by one man or by a number of men. It cannot be supposed that the people when adopting this general principle from the English bill of rights and inserting it in our constitution, intended to bestow by implication on the general court one of the most odious and oppressive prerogatives of the ancient kings of England. It is manifestly contrary to the first principles of civil liberty and natural justice, and to the spirit

of our constitution and laws, that any one citizen should enjoy privileges and advantages which are denied to all others under like circumstances; or that ant one should be subject to losses, damages, suits, or actions from which all others under like circumstances are exempted. To illustrate the principle: A section of a statute relative to dogs made the owner of any dog liable to the owner of domestic animals wounded by it for the damages without proving a knowledge of it vicious disposition. By a provision of the act, power was given to the board of supervisors to determine whether or not during the current year their county should be governed by the provisions of the act of which that section constituted a part. It was held that the legislature could not confer that power. The court observed that it could no more confer such a power than to authorize the board of supervisors of a county to abolish in such county the days of grace on commercial paper, or to suspend the statute of limitations. (Slinger vs. Henneman [1875], 38 Wis., 504.) A similar statute in Missouri was held void for the same reason in State vs. Field ([1853, 17 Mo., 529;59 Am. Dec., 275.) In that case a general statute formulating a road system contained a provision that "if the county court of any county should be of opinion that the provisions of the act should not be enforced, they might, in their discretion, suspend the operation of the same for any specified length of time, and thereupon the act should become inoperative in such county for the period specified in such order; and thereupon order the roads to be opened and kept in good repair, under the laws theretofore in force." Said the court: ". . . this act, by its own provisions, repeals the inconsistent provisions of a former act, and yet it is left to the county court to say which act shall be enforce in their county. The act does not submit the question to the county court as an original question, to be decided by that tribunal, whether the act shall commence its operation within the county; but it became by its own terms a law in every county not excepted by name in the act. It did not, then, require the county court to do any act in order to give it effect. But being the law in the county, and having by its provisions superseded and abrogated the inconsistent provisions of previous laws, the county court is . . . empowered, to suspend this act and revive the repealed provisions of the former act. When the question is before the county court for that tribunal to determine which law shall be in force, it is urge before us that the power then to be exercised by the court is strictly legislative power, which under our constitution, cannot be delegated to that tribunal or to any other body of men in the state. In the present case, the question is not presented in the abstract; for the county court of Saline county, after the act had been for several months in force in that county, did by order suspend its operation; and during that suspension the offense was committed which is the subject of the present indictment . . . ." (See Mitchell vs. State [1901], 134 Ala., 392; 32 S., 687.) True, the legislature may enact laws for a particular locality different from those applicable to other localities and, while recognizing the force of the principle hereinabove expressed, courts in may jurisdiction have sustained the constitutionality of the submission of option laws to the vote of the people. (6 R.C.L., p. 171.) But option laws thus sustained treat of subjects purely local in character which should receive different treatment in different localities placed under different circumstances. "They relate to subjects which, like the retailing of intoxicating drinks, or the running at large of cattle in the highways, may be differently regarded in different localities, and they are sustained on what seems to us the impregnable ground, that the subject, though not embraced within the ordinary powers of municipalities to make by-laws and ordinances, is nevertheless within the class of public regulations, in respect to which it is proper that the local judgment should control." (Cooley on Constitutional Limitations, 5th ed., p. 148.) So that, while we do not deny the right of local selfgovernment and the propriety of leaving matters of purely local concern in the hands of local authorities or for the people of small communities to pass upon, we believe that in matters of general of general legislation like that which treats of criminals in general, and as regards the general subject of probation, discretion may not be vested in a manner so unqualified and absolute as provided in Act No. 4221. True, the statute does not expressly state that the provincial boards may suspend the operation of the Probation Act in particular provinces but, considering that, in being vested with the authority to appropriate or not the necessary funds for the salaries of probation officers, they thereby are given absolute discretion to determine whether or not the law should take effect or operate in their respective provinces, the provincial boards are in reality empowered by the legislature to suspend the operation of the Probation Act in particular provinces, the Act to be held in abeyance until the provincial boards should decide otherwise by appropriating the necessary funds. The validity of a law is not tested by what has been done but by what may be done under its provisions. (Walter E. Olsen & Co. vs. Aldanese and Trinidad [1922], 43 Phil., 259; 12 C. J., p. 786.) It in conceded that a great deal of latitude should be granted to the legislature not only in the expression of what may be termed legislative policy but in the elaboration and execution thereof. "Without this power, legislation would become oppressive and yet imbecile." (People vs. Reynolds, 5 Gilman, 1.) It has been said that popular government lives because of the inexhaustible reservoir of power behind it. It is unquestionable that the mass of powers of government is vested in the

representatives of the people and that these representatives are no further restrained under our system than by the express language of the instrument imposing the restraint, or by particular provisions which by clear intendment, have that effect. (Angara vs. Electoral Commission [1936], 35 Off. Ga., 23; Schneckenburger vs. Moran [1936], 35 Off. Gaz., 1317.) But, it should be borne in mind that a constitution is both a grant and a limitation of power and one of these time-honored limitations is that, subject to certain exceptions, legislative power shall not be delegated. We conclude that section 11 of Act No. 4221 constitutes an improper and unlawful delegation of legislative authority to the provincial boards and is, for this reason, unconstitutional and void. 3. It is also contended that the Probation Act violates the provisions of our Bill of Rights which prohibits the denial to any person of the equal protection of the laws (Act. III, sec. 1 subsec. 1. Constitution of the Philippines.) This basic individual right sheltered by the Constitution is a restraint on all the tree grand departments of our government and on the subordinate instrumentalities and subdivision thereof, and on many constitutional power, like the police power, taxation and eminent domain. The equal protection of laws, sententiously observes the Supreme Court of the United States, "is a pledge of the protection of equal laws." (Yick Wo vs. Hopkins [1886], 118 U. S., 356; 30 Law. ed., 220; 6 Sup. Ct. Rep., 10464; Perley vs. North Carolina, 249 U. S., 510; 39 Sup. Ct. Rep., 357; 63 Law. ed., 735.) Of course, what may be regarded as a denial of the equal protection of the laws in a question not always easily determined. No rule that will cover every case can be formulated. (Connolly vs. Union Sewer Pipe Co. [1902], 184, U. S., 540; 22 Sup. Ct., Rep., 431; 46 Law. ed., 679.) Class legislation discriminating against some and favoring others in prohibited. But classification on a reasonable basis, and nor made arbitrarily or capriciously, is permitted. (Finely vs. California [1911], 222 U. S., 28; 56 Law. ed., 75; 32 Sup. Ct. Rep., 13; Gulf. C. & S. F. Ry Co. vs. Ellis [1897], 165 U. S., 150; 41 Law. ed., 666; 17 Sup. Ct. Rep., 255; Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) The classification, however, to be reasonable must be based on substantial distinctions which make real differences; it must be germane to the purposes of the law; it must not be limited to existing conditions only, and must apply equally to each member of the class. (Borgnis vs. Falk. Co. [1911], 147 Wis., 327, 353; 133 N. W., 209; 3 N. C. C. A., 649; 37 L. R. A. [N. S.], 489; State vs. Cooley, 56 Minn., 540; 530-552; 58 N. W., 150; Lindsley vs. Natural Carbonic Gas Co.[1911], 220 U. S., 61, 79, 55 Law. ed., 369, 377; 31 Sup. Ct. Rep., 337; Ann. Cas., 1912C, 160; Lake Shore & M. S. R. Co. vs. Clough [1917], 242 U.S., 375; 37 Sup. Ct. Rep., 144; 61 Law. ed., 374; Southern Ry. Co. vs. Greene [1910], 216 U. S., 400; 30 Sup. Ct. Rep., 287; 54 Law. ed., 536; 17 Ann. Cas., 1247; Truax vs. Corrigan [1921], 257 U. S., 312; 12 C. J., pp. 1148, 1149.) In the case at bar, however, the resultant inequality may be said to flow from the unwarranted delegation of legislative power, although perhaps this is not necessarily the result in every case. Adopting the example given by one of the counsel for the petitioners in the course of his oral argument, one province may appropriate the necessary fund to defray the salary of a probation officer, while another province may refuse or fail to do so. In such a case, the Probation Act would be in operation in the former province but not in the latter. This means that a person otherwise coming within the purview of the law would be liable to enjoy the benefits of probation in one province while another person similarly situated in another province would be denied those same benefits. This is obnoxious discrimination. Contrariwise, it is also possible for all the provincial boards to appropriate the necessary funds for the salaries of the probation officers in their respective provinces, in which case no inequality would result for the obvious reason that probation would be in operation in each and every province by the affirmative action of appropriation by all the provincial boards. On that hypothesis, every person coming within the purview of the Probation Act would be entitled to avail of the benefits of the Act. Neither will there be any resulting inequality if no province, through its provincial board, should appropriate any amount for the salary of the probation officer — which is the situation now — and, also, if we accept the contention that, for the purpose of the Probation Act, the City of Manila should be considered as a province and that the municipal board of said city has not made any appropriation for the salary of the probation officer. These different situations suggested show, indeed, that while inequality may result in the application of the law and in the conferment of the benefits therein provided, inequality is not in all cases the necessary result. But whatever may be the case, it is clear that in section 11 of the Probation Act creates a situation in which discrimination and inequality are permitted or allowed. There are, to be sure, abundant authorities requiring actual denial of the equal protection of the law before court should assume the task of setting aside a law vulnerable on that score, but premises and circumstances considered, we are of the opinion that section 11 of Act No. 4221 permits of the denial of the equal protection of the law and is on that account bad. We see no difference between a law which permits of such denial. A law may appear to be fair on its face and impartial in appearance, yet, if it permits of unjust and illegal discrimination,

it is within the constitutional prohibitions. (By analogy, Chy Lung vs. Freeman [1876], 292 U. S., 275; 23 Law. ed., 550; Henderson vs. Mayor [1876], 92 U. S., 259; 23 Law. ed., 543; Ex parte Virginia [1880], 100 U. S., 339; 25 Law. ed., 676; Neal vs. Delaware [1881], 103 U. S., 370; 26 Law. ed., 567; Soon Hing vs. Crowley [1885], 113 U. S., 703; 28 Law. ed., 1145, Yick Wo vs. Hopkins [1886],118 U. S., 356; 30 Law. ed., 220; Williams vs. Mississippi [1897], 170 U. S., 218; 18 Sup. Ct. Rep., 583; 42 Law. ed., 1012; Bailey vs. Alabama [1911], 219 U. S., 219; 31 Sup. Ct. Rep. 145; 55 Law. ed., Sunday Lake Iron Co. vs. Wakefield [1918], 247 U. S., 450; 38 Sup. Ct. Rep., 495; 62 Law. ed., 1154.) In other words, statutes may be adjudged unconstitutional because of their effect in operation (General Oil Co. vs. Clain [1907], 209 U. S., 211; 28 Sup. Ct. Rep., 475; 52 Law. ed., 754; State vs. Clement Nat. Bank [1911], 84 Vt., 167; 78 Atl., 944; Ann. Cas., 1912D, 22). If the law has the effect of denying the equal protection of the law it is unconstitutional. (6 R. C. L. p. 372; Civil Rights Cases, 109 U. S., 3; 3 Sup. Ct. Rep., 18; 27 Law. ed., 835; Yick Wo vs. Hopkins, supra; State vs. Montgomery, 94 Me., 192; 47 Atl., 165; 80 A. S. R., 386; State vs. Dering, 84 Wis., 585; 54 N. W., 1104; 36 A. S. R., 948; 19 L. R. A., 858.) Under section 11 of the Probation Act, not only may said Act be in force in one or several provinces and not be in force in other provinces, but one province may appropriate for the salary of the probation officer of a given year — and have probation during that year — and thereafter decline to make further appropriation, and have no probation is subsequent years. While this situation goes rather to the abuse of discretion which delegation implies, it is here indicated to show that the Probation Act sanctions a situation which is intolerable in a government of laws, and to prove how easy it is, under the Act, to make the guaranty of the equality clause but "a rope of sand". (Brewer, J. Gulf C. & S. F. Ry. Co. vs. Ellis [1897], 165 U. S., 150 154; 41 Law. ed., 666; 17 Sup. Ct. Rep., 255.) lawph!1.net

Great reliance is placed by counsel for the respondents on the case of Ocampo vs. United States ([1914], 234 U. S., 91; 58 Law. ed., 1231). In that case, the Supreme Court of the United States affirmed the decision of this court (18 Phil., 1) by declining to uphold the contention that there was a denial of the equal protection of the laws because, as held in Missouri vs. Lewis (Bowman vs. Lewis) decided in 1880 (101 U. S., 220; 25 Law. ed., 991), the guaranty of the equality clause does not require territorial uniformity. It should be observed, however, that this case concerns the right to preliminary investigations in criminal cases originally granted by General Orders No. 58. No question of legislative authority was involved and the alleged denial of the equal protection of the laws was the result of the subsequent enactment of Act No. 612, amending the charter of the City of Manila (Act No. 813) and providing in section 2 thereof that "in cases triable only in the court of first instance of the City of Manila, the defendant . . . shall not be entitled as of right to a preliminary examination in any case where the prosecuting attorney, after a due investigation of the facts . . . shall have presented an information against him in proper form . . . ." Upon the other hand, an analysis of the arguments and the decision indicates that the investigation by the prosecuting attorney — although not in the form had in the provinces — was considered a reasonable substitute for the City of Manila, considering the peculiar conditions of the city as found and taken into account by the legislature itself. Reliance is also placed on the case of Missouri vs. Lewis, supra. That case has reference to a situation where the constitution of Missouri permits appeals to the Supreme Court of the state from final judgments of any circuit court, except those in certain counties for which counties the constitution establishes a separate court of appeals called St. Louis Court of Appeals. The provision complained of, then, is found in the constitution itself and it is the constitution that makes the apportionment of territorial jurisdiction. We are of the opinion that section 11 of the Probation Act is unconstitutional and void because it is also repugnant to equal-protection clause of our Constitution. Section 11 of the Probation Act being unconstitutional and void for the reasons already stated, the next inquiry is whether or not the entire Act should be avoided. In seeking the legislative intent, the presumption is against any mutilation of a statute, and the courts will resort to elimination only where an unconstitutional provision is interjected into a statute otherwise valid, and is so independent and separable that its removal will leave the constitutional features and purposes of the act substantially unaffected by the process. (Riccio vs. Hoboken, 69 N. J. Law., 649, 662; 63 L. R. A., 485; 55 Atl., 1109, quoted in Williams vs. Standard Oil Co. [1929], 278 U.S., 235, 240; 73 Law. ed., 287, 309; 49 Sup. Ct. Rep., 115; 60 A. L. R., 596.) In Barrameda vs. Moir ([1913], 25 Phil., 44, 47), this court stated the well-established rule concerning partial invalidity of statutes in the following language:

. . . where part of the a statute is void, as repugnant to the Organic Law, while another part is valid, the valid portion, if separable from the valid, may stand and be enforced. But in order to do this, the valid portion must be in so far independent of the invalid portion that it is fair to presume that the Legislative would have enacted it by itself if they had supposed that they could not constitutionally enact the other. (Mutual Loan Co. vs. Martell, 200 Mass., 482; 86 N. E., 916; 128 A. S. R., 446; Supervisors of Holmes Co. vs. Black Creek Drainage District, 99 Miss., 739; 55 Sou., 963.) Enough must remain to make a complete, intelligible, and valid statute, which carries out the legislative intent. (Pearson vs. Bass. 132 Ga., 117; 63 S. E., 798.) The void provisions must be eliminated without causing results affecting the main purpose of the Act, in a manner contrary to the intention of the Legislature. (State vs. A. C. L. R., Co., 56 Fla., 617, 642; 47 Sou., 969; Harper vs. Galloway, 58 Fla., 255; 51 Sou., 226; 26 L. R. A., N. S., 794; Connolly vs. Union Sewer Pipe Co., 184 U. S., 540, 565; People vs. Strassheim, 240 Ill., 279, 300; 88 N. E., 821; 22 L. R. A., N. S., 1135; State vs. Cognevich, 124 La., 414; 50 Sou., 439.) The language used in the invalid part of a statute can have no legal force or efficacy for any purpose whatever, and what remains must express the legislative will, independently of the void part, since the court has no power to legislate. (State vs. Junkin, 85 Neb., 1; 122 N. W., 473; 23 L. R. A., N. S., 839; Vide, also,. U. S., vs. Rodriguez [1918], 38 Phil., 759; Pollock vs. Farmers' Loan and Trust Co. [1895], 158 U. S., 601, 635; 39 Law. ed., 1108, 1125; 15 Sup. Ct. Rep., 912; 6 R.C.L., 121.) It is contended that even if section 11, which makes the Probation Act applicable only in those provinces in which the respective provincial boards provided for the salaries of probation officers were inoperative on constitutional grounds, the remainder of the Act would still be valid and may be enforced. We should be inclined to accept the suggestions but for the fact that said section is, in our opinion, is inseparably linked with the other portions of the Act that with the elimination of the section what would be left is the bare idealism of the system, devoid of any practical benefit to a large number of people who may be deserving of the intended beneficial result of that system. The clear policy of the law, as may be gleaned from a careful examination of the whole context, is to make the application of the system dependent entirely upon the affirmative action of the different provincial boards through appropriation of the salaries for probation officers at rates not lower than those provided for provincial fiscals. Without such action on the part of the various boards, no probation officers would be appointed by the Secretary of Justice to act in the provinces. The Philippines is divided or subdivided into provinces and it needs no argument to show that if not one of the provinces — and this is the actual situation now — appropriate the necessary fund for the salary of a probation officer, probation under Act No. 4221 would be illusory. There can be no probation without a probation officer. Neither can there be a probation officer without the probation system. Section 2 of the Acts provides that the probation officer shall supervise and visit the probationer. Every probation officer is given, as to the person placed in probation under his care, the powers of the police officer. It is the duty of the probation officer to see that the conditions which are imposed by the court upon the probationer under his care are complied with. Among those conditions, the following are enumerated in section 3 of the Act: That the probationer (a) shall indulge in no injurious or vicious habits; (b) Shall avoid places or persons of disreputable or harmful character; (c) Shall report to the probation officer as directed by the court or probation officers; (d) Shall permit the probation officer to visit him at reasonable times at his place of abode or elsewhere; (e) Shall truthfully answer any reasonable inquiries on the part of the probation officer concerning his conduct or condition; "(f) Shall endeavor to be employed regularly; "(g) Shall remain or reside within a specified place or locality; (f) Shall make reparation or restitution to the aggrieved parties for actual damages or losses caused by his offense; (g) Shall comply with such orders as the court may from time to time make; and (h) Shall refrain from violating any law, statute, ordinance, or any by-law or regulation, promulgated in accordance with law.

The court is required to notify the probation officer in writing of the period and terms of probation. Under section 4, it is only after the period of probation, the submission of a report of the probation officer and appropriate finding of the court that the probationer has complied with the conditions of probation that probation may be definitely terminated and the probationer finally discharged from supervision. Under section 5, if the court finds that there is non-compliance with said conditions, as reported by the probation officer, it may issue a warrant for the arrest of the probationer and said probationer may be committed with or without bail. Upon arraignment and after an opportunity to be heard, the court may revoke, continue or modify the probation, and if revoked, the court shall order the execution of the sentence originally imposed. Section 6 prescribes the duties of probation officers: "It shall be the duty of every probation officer to furnish to all persons placed on probation under his supervision a statement of the period and conditions of their probation, and to instruct them concerning the same; to keep informed concerning their conduct and condition; to aid and encourage them by friendly advice and admonition, and by such other measures, not inconsistent with the conditions imposed by court as may seem most suitable, to bring about improvement in their conduct and condition; to report in writing to the court having jurisdiction over said probationers at least once every two months concerning their conduct and condition; to keep records of their work; make such report as are necessary for the information of the Secretary of Justice and as the latter may require; and to perform such other duties as are consistent with the functions of the probation officer and as the court or judge may direct. The probation officers provided for in this Act may act as parole officers for any penal or reformatory institution for adults when so requested by the authorities thereof, and, when designated by the Secretary of Justice shall act as parole officer of persons released on parole under Act Number Forty-one Hundred and Three, without additional compensation." It is argued, however, that even without section 11 probation officers maybe appointed in the provinces under section 10 of Act which provides as follows: There is hereby created in the Department of Justice and subject to its supervision and control, a Probation Office under the direction of a Chief Probation Officer to be appointed by the Governor-General with the advise and consent of the Senate who shall receive a salary of four eight hundred pesos per annum. To carry out this Act there is hereby appropriated out of any funds in the Insular Treasury not otherwise appropriated, the sum of fifty thousand pesos to be disbursed by the Secretary of Justice, who is hereby authorized to appoint probation officers and the administrative personnel of the probation officer under civil service regulations from among those who possess the qualifications, training and experience prescribed by the Bureau of Civil Service, and shall fix the compensation of such probation officers and administrative personnel until such positions shall have been included in the Appropriation Act. But the probation officers and the administrative personnel referred to in the foregoing section are clearly not those probation officers required to be appointed for the provinces under section 11. It may be said, reddendo singula singulis, that the probation officers referred to in section 10 abovequoted are to act as such, not in the various provinces, but in the central office known as the Probation Office established in the Department of Justice, under the supervision of the Chief Probation Officer. When the law provides that "the probation officer" shall investigate and make reports to the court (secs. 1 and 4); that "the probation officer" shall supervise and visit the probationer (sec. 2; sec. 6, par. d); that the probationer shall report to the "probationer officer" (sec. 3, par. c.), shall allow "the probationer officer" to visit him (sec. 3, par. d), shall truthfully answer any reasonable inquiries on the part of "the probation officer" concerning his conduct or condition (sec. 3, par. 4); that the court shall notify "the probation officer" in writing of the period and terms of probation (sec. 3, last par.), it means the probation officer who is in charge of a particular probationer in a particular province. It never could have been intention of the legislature, for instance, to require the probationer in Batanes, to report to a probationer officer in the City of Manila, or to require a probation officer in Manila to visit the probationer in the said province of Batanes, to place him under his care, to supervise his conduct, to instruct him concerning the conditions of his probation or to perform such other functions as are assigned to him by law. That under section 10 the Secretary of Justice may appoint as many probation officers as there are provinces or groups of provinces is, of course possible. But this would be arguing on what the law may be or should be and not on what the law is. Between is and ought there is a far cry. The wisdom and propriety of legislation is not for us to pass upon. We may think a law better otherwise than it is. But much as has been said regarding progressive interpretation and judicial legislation we decline to amend the law. We are not permitted to read into the law matters and provisions which are not there. Not for any purpose — not even to save a statute from the doom of invalidity.

Upon the other hand, the clear intention and policy of the law is not to make the Insular Government defray the salaries of probation officers in the provinces but to make the provinces defray them should they desire to have the Probation Act apply thereto. The sum of P50,000, appropriated "to carry out the purposes of this Act", is to be applied, among other things, for the salaries of probation officers in the central office at Manila. These probation officers are to receive such compensations as the Secretary of Justice may fix "until such positions shall have been included in the Appropriation Act". It was the intention of the legislature to empower the Secretary of Justice to fix the salaries of the probation officers in the provinces or later on to include said salaries in an appropriation act. Considering, further, that the sum of P50,000 appropriated in section 10 is to cover, among other things, the salaries of the administrative personnel of the Probation Office, what would be left of the amount can hardly be said to be sufficient to pay even nominal salaries to probation officers in the provinces. We take judicial notice of the fact that there are 48 provinces in the Philippines and we do not think it is seriously contended that, with the fifty thousand pesos appropriated for the central office, there can be in each province, as intended, a probation officer with a salary not lower than that of a provincial fiscal. If this a correct, the contention that without section 11 of Act No. 4221 said act is complete is an impracticable thing under the remainder of the Act, unless it is conceded that in our case there can be a system of probation in the provinces without probation officers. Probation as a development of a modern penology is a commendable system. Probation laws have been enacted, here and in other countries, to permit what modern criminologist call the "individualization of the punishment", the adjustment of the penalty to the character of the criminal and the circumstances of his particular case. It provides a period of grace in order to aid in the rehabilitation of a penitent offender. It is believed that, in any cases, convicts may be reformed and their development into hardened criminals aborted. It, therefore, takes advantage of an opportunity for reformation and avoids imprisonment so long as the convicts gives promise of reform. (United States vs. Murray [1925], 275 U. S., 347 357, 358; 72 Law. ed., 309; 312, 313; 48 Sup. Ct. Rep., 146; Kaplan vs. Hecht, 24 F. [2d], 664, 665.) The Welfare of society is its chief end and aim. The benefit to the individual convict is merely incidental. But while we believe that probation is commendable as a system and its implantation into the Philippines should be welcomed, we are forced by our inescapable duty to set the law aside because of the repugnancy to our fundamental law. In arriving at this conclusion, we have endeavored to consider the different aspects presented by able counsel for both parties, as well in their memorandums as in their oral argument. We have examined the cases brought to our attention, and others we have been able to reach in the short time at our command for the study and deliberation of this case. In the examination of the cases and in then analysis of the legal principles involved we have inclined to adopt the line of action which in our opinion, is supported better reasoned authorities and is more conducive to the general welfare. (Smith, Bell & Co. vs. Natividad [1919], 40 Phil., 136.) Realizing the conflict of authorities, we have declined to be bound by certain adjudicated cases brought to our attention, except where the point or principle is settled directly or by clear implication by the more authoritative pronouncements of the Supreme Court of the United States. This line of approach is justified because: (a) The constitutional relations between the Federal and the State governments of the United States and the dual character of the American Government is a situation which does not obtain in the Philippines; (b) The situation of s state of the American Union of the District of Columbia with reference to the Federal Government of the United States is not the situation of the province with respect to the Insular Government (Art. I, sec. 8 cl. 17 and 10th Amendment, Constitution of the United States; Sims vs. Rives, 84 Fed. [2d], 871), (c) The distinct federal and the state judicial organizations of the United States do not embrace the integrated judicial system of the Philippines (Schneckenburger vs. Moran [1936], 35 Off. Gaz., p. 1317); (d) "General propositions do not decide concrete cases" (Justice Holmes in Lochner vs. New York [1904], 198 U. S., 45, 76; 49 Law. ed., 937, 949) and, "to keep pace with . . . new developments of times and circumstances" (Chief Justice Waite in Pensacola Tel. Co. vs. Western Union Tel. Co. [1899], 96 U. S., 1, 9; 24 Law. ed., 708; Yale Law Journal, Vol. XXIX, No. 2, Dec. 1919, 141, 142), fundamental principles should be interpreted having in view existing local conditions and environment.

Act No. 4221 is hereby declared unconstitutional and void and the writ of prohibition is, accordingly, granted. Without any pronouncement regarding costs. So ordered. Avanceña, C.J., Imperial, Diaz and Concepcion, JJ., concur. Villa-real and Abad Santos, JJ., concur in the result.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-45987

May 5, 1939

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. CAYAT, defendant-appellant. Sinai Hamada y Cariño for appellant. Office of the Solicitor-General Tuason for appellee. MORAN, J.: Prosecuted for violation of Act No. 1639 (secs. 2 and 3), the accused, Cayat, a native of Baguio, Benguet, Mountain Province, was sentenced by the justice of the peace court of Baguio to pay a fine of five pesos (P5) or suffer subsidiary imprisonment in case of insolvency. On appeal of the Court of First Instance, the following information was filed against him: That on or about the 25th day of January, 1937, in the City of Baguio, Commonwealth of the Philippines, and within the jurisdiction of this court, the above-named accused, Cayat, being a member of the non-Christian tribes, did then and there willfully, unlawfully, and illegally receive, acquire, and have in his possession and under his control or custody, one bottle of A-1-1 gin, an intoxicating liquor, other than the so-called native wines and liquors which the members of such tribes have been accustomed themselves to make prior to the passage of Act No. 1639. Accused interposed a demurrer which was overruled. At the trial, he admitted all the facts alleged in the information, but pleaded not guilty to the charge for the reasons adduced in his demurrer and submitted the case on the pleadings. The trial court found him guilty of the crime charged and sentenced him to pay a fine of fifty pesos (P50) or supper subsidiary imprisonment in case of insolvency. The case is now before this court on appeal. Sections 2 and 3 of Act No. 1639 read: SEC. 2. It shall be unlawful for any native of the Philippine Islands who is a member of a non-Christian tribe within the meaning of the Act Numbered Thirteen hundred and ninetyseven, to buy, receive, have in his possession, or drink any ardent spirits, ale, beer, wine, or intoxicating liquors of any kind, other than the so-called native wines and liquors which the members of such tribes have been accustomed themselves to make prior to the passage of this Act, except as provided in section one hereof; and it shall be the duty of any police officer or other duly authorized agent of the Insular or any provincial, municipal or township government to seize and forthwith destroy any such liquors found unlawfully in the possession of any member of a non-Christian tribe. SEC. 3. Any person violating the provisions of section one or section two of this Act shall, upon conviction thereof, be punishable for each offense by a fine of not exceeding two hundred pesos or by imprisonment for a term not exceeding six months, in the discretion of the court. The accused challenges the constitutionality of the Act on the following grounds: (1) That it is discriminatory and denies the equal protection of the laws; (2) That it is violative of the due process clause of the Constitution: and. (3) That it is improper exercise of the police power of the state. Counsel for the appellant holds out his brief as the "brief for the non-Christian tribes." It is said that as these less civilized elements of the Filipino population are "jealous of their rights in a democracy," any attempt to treat them with discrimination or "mark them as inferior or less capable rate or less entitled" will meet with their instant challenge. As the constitutionality of the Act here involved is

questioned for purposes thus mentioned, it becomes imperative to examine and resolve the issues raised in the light of the policy of the government towards the non-Christian tribes adopted and consistently followed from the Spanish times to the present, more often with sacrifice and tribulation but always with conscience and humanity. As early as 1551, the Spanish Government had assumed an unvarying solicitous attitude toward these inhabitants, and in the different laws of the Indies, their concentration in so-called "reducciones" (communities) have been persistently attempted with the end in view of according them the "spiritual and temporal benefits" of civilized life. Throughout the Spanish regime, it had been regarded by the Spanish Government as a sacred "duty to conscience and humanity" to civilize these less fortunate people living "in the obscurity of ignorance" and to accord them the "the moral and material advantages" of community life and the "protection and vigilance afforded them by the same laws." (Decree of the Governor-General of the Philippines, Jan. 14, 1887.) This policy had not been deflected from during the American period. President McKinley in his instructions to the Philippine Commission of April 7, 1900, said: In dealing with the uncivilized tribes of the Islands, the Commission should adopt the same course followed by Congress in permitting the tribes of our North American Indians to maintain their tribal organization and government, and under which many of those tribes are now living in peace and contentment, surrounded by civilization to which they are unable or unwilling to conform. Such tribal government should, however, be subjected to wise and firm regulation; and, without undue or petty interference, constant and active effort should be exercised to prevent barbarous practices and introduce civilized customs. Since then and up to the present, the government has been constantly vexed with the problem of determining "those practicable means of bringing about their advancement in civilization and material prosperity." (See, Act No. 253.) "Placed in an alternative of either letting them alone or guiding them in the path of civilization," the present government "has chosen to adopt the latter measure as one more in accord with humanity and with the national conscience." (Memorandum of Secretary of the Interior, quoted in Rubi vs. Provincial Board of Mindoro, 39 Phil., 660, 714.) To this end, their homes and firesides have been brought in contact with civilized communities through a network of highways and communications; the benefits of public education have to them been extended; and more lately, even the right of suffrage. And to complement this policy of attraction and assimilation, the Legislature has passed Act No. 1639 undoubtedly to secure for them the blessings of peace and harmony; to facilitate, and not to mar, their rapid and steady march to civilization and culture. It is, therefore, in this light that the Act must be understood and applied. It is an established principle of constitutional law that the guaranty of the equal protection of the laws is not equal protection of the laws is not violated by a legislation based on reasonable classification. And the classification, to be reasonable, (1) must rest on substantial distinctions; (2) must be germane to the purposes of the law; (3) must not be limited to existing conditions only; and (4) must apply equally to all members of the same class. (Borgnis vs. Falk Co., 133 N.W., 209; Lindsley vs. Natural Carbonic Gas Co., 220 U.S. 61; 55 Law. ed., Rubi vs. Provincial Board of Mindoro, 39 Phil., 660; People and Hongkong & Shanghai Banking Corporation vs. Vera and Cu Unjieng, 37 Off. Gaz ., 187.) Act No. 1639 satisfies these requirements. The classification rests on real and substantial, not merely imaginary or whimsical, distinctions. It is not based upon "accident of birth or parentage," as counsel to the appellant asserts, but upon the degree of civilization and culture. "The term 'nonChristian tribes' refers, not to religious belief, but, in a way, to the geographical area, and, more directly, to natives of the Philippine Islands of a low grade of civilization, usually living in tribal relationship apart from settled communities." (Rubi vs. Provincial Board of Mindoro, supra.) This distinction is unquestionably reasonable, for the Act was intended to meet the peculiar conditions existing in the non-Christian tribes. The exceptional cases of certain members thereof who at present have reached a position of cultural equality with their Christian brothers, cannot affect the reasonableness of the classification thus established. That it is germane to the purposes of law cannot be doubted. The prohibition "to buy, receive, have in his possession, or drink any ardent spirits, ale, beer, wine, or intoxicating liquors of any kind, other than the so-called native wines and liquors which the members of such tribes have been accustomed themselves to make prior to the passage of this Act.," is unquestionably designed to insure peace and order in and among the non-Christian tribes. It has been the sad experience of the past, as the observations of the lower court disclose, that the free use of highly intoxicating liquors by

the non-Christian tribes have often resulted in lawlessness and crimes, thereby hampering the efforts of the government to raise their standard of life and civilization. The law is not limited in its application to conditions existing at the time of its enactment. It is intended to apply for all times as long as those conditions exist. The Act was not predicated, as counsel for appellant asserts, upon the assumption that the non-Christians are "impermeable to any civilizing influence." On the contrary, the Legislature understood that the civilization of a people is a slow process and that hand in hand with it must go measures of protection and security. Finally, that the Act applies equally to all members of the class is evident from a perusal thereof. That it may be unfair in its operation against a certain number non-Christians by reason of their degree of culture, is not an argument against the equality of its application. Appellants contends that that provision of the law empowering any police officer or other duly authorized agent of the government to seize and forthwith destroy any prohibited liquors found unlawfully in the possession of any member of the non-Christian tribes is violative of the due process of law provided in the Constitution. But this provision is not involved in the case at bar. Besides, to constitute due process of law, notice and hearing are not always necessary. This rule is especially true where much must be left to the discretion of the administrative officials in applying a law to particular cases. (McGehee, Due Process of Law p. 371, cited with approval in Rubi vs.Provincial Board of Mindoro, supra.) Due process of law means simply: (1) that there shall be a law prescribed in harmony with the general powers of the legislative department of the government; (2) that it shall be reasonable in its operation; (3) that it shall be enforced according to the regular methods of procedure prescribed; and (4) that it shall be applicable alike to all citizens of the state or to all of the class. (U.S. vs. Ling Su Fan, 10 Phil., 104, affirmed on appeal by the United States Supreme Court, 218 U.S., 302: 54 Law. ed., 1049.) Thus, a person's property may be seized by the government in payment of taxes without judicial hearing; or property used in violation of law may be confiscated (U.S. vs. Surla, 20 Phil., 163, 167), or when the property constitutes corpus delicti, as in the instant case (Moreno vs. Ago Chi, 12 Phil., 439, 442). Neither is the Act an improper exercise of the police power of the state. It has been said that the police power is the most insistent and least limitable of all powers of the government. It has been aptly described as a power co-extensive with self-protection and constitutes the law of overruling necessity. Any measure intended to promote the health, peace, morals, education and good order of the people or to increase the industries of the state, develop its resources and add to its wealth and prosperity (Barbier vs. Connolly, 113 U.S., 27), is a legitimate exercise of the police power, unless shown to be whimsical or capricious as to unduly interfere with the rights of an individual, the same must be upheld. Act No. 1639, as above stated, is designed to promote peace and order in the non-Christian tribes so as to remove all obstacles to their moral and intellectual growth and, eventually, to hasten their equalization and unification with the rest of their Christian brothers. Its ultimate purpose can be no other than to unify the Filipino people with a view to a greater Philippines. The law, then, does not seek to mark the non-Christian tribes as "an inferior or less capable race." On the contrary, all measures thus far adopted in the promotion of the public policy towards them rest upon a recognition of their inherent right to equality in tht enjoyment of those privileges now enjoyed by their Christian brothers. But as there can be no true equality before the law, if there is, in fact, no equality in education, the government has endeavored, by appropriate measures, to raise their culture and civilization and secure for them the benefits of their progress, with the ultimate end in view of placing them with their Christian brothers on the basis of true equality. It is indeed gratifying that the non-Christian tribes "far from retrograding, are definitely asserting themselves in a competitive world," as appellant's attorney impressively avers, and that they are "a virile, up-and coming people eager to take their place in the world's social scheme." As a matter of fact, there are now lawyers, doctors and other professionals educated in the best institutions here and in America. Their active participation in the multifarious welfare activities of community life or in the delicate duties of government is certainly a source of pride and gratification to people of the Philippines. But whether conditions have so changed as to warrant a partial or complete abrogation of the law, is a matter which rests exclusively within the prerogative of the National Assembly to determine. In the constitutional scheme of our government, this court can go no farther than to inquire whether the Legislature had the power to enact the law. If the power exists, and we hold it does exist, the wisdom of the policy adopted, and the adequacy under existing conditions of the measures enacted to forward it, are matters which this court has no authority to pass upon. And, if in the application of the law, the educated non-Christians shall incidentally suffer, the justification still exists in the all-

comprehending principle of salus populi suprema est lex. When the public safety or the public morals require the discontinuance of a certain practice by certain class of persons, the hand of the Legislature cannot be stayed from providing for its discontinuance by any incidental inconvenience which some members of the class may suffer. The private interests of such members must yield to the paramount interests of the nation (Cf. Boston Beer Co. vs. Mass., 97 U.S., 25; 24 law. ed., 989). Judgment is affirmed, with costs against appellant. Avanceña, C.J., Villa-Real, Imperial, Diaz, Laurel, and Conception, JJ., concur.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 163583

August 20, 2008

BRITISH AMERICAN TOBACCO, petitioner, vs. JOSE ISIDRO N. CAMACHO, in his capacity as Secretary of the Department of Finance and GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner of the Bureau of Internal Revenue, respondents. Philip Morris Philippines Manufacturing, Inc., fortune tobacco, corp., MIGHTY CORPORATION, and JT InTERNATIONAL, S.A., respondents-in-intervention. DECISION YNARES-SANTIAGO, J.: This petition for review assails the validity of: (1) Section 145 of the National Internal Revenue Code (NIRC), as recodified by Republic Act (RA) 8424; (2) RA 9334, which further amended Section 145 of the NIRC on January 1, 2005; (3) Revenue Regulations Nos. 1-97, 9-2003, and 22-2003; and (4) Revenue Memorandum Order No. 6-2003. Petitioner argues that the said provisions are violative of the equal protection and uniformity clauses of the Constitution. RA 8240, entitled "An Act Amending Sections 138, 139, 140, and 142 of the NIRC, as Amended and For Other Purposes," took effect on January 1, 1997. In the same year, Congress passed RA 8424 or The Tax Reform Act of 1997, re-codifying the NIRC. Section 142 was renumbered as Section 145 of the NIRC. Paragraph (c) of Section 145 provides for four tiers of tax rates based on the net retail price per pack of cigarettes. To determine the applicable tax rates of existing cigarette brands, a survey of the net retail prices per pack of cigarettes was conducted as of October 1, 1996, the results of which were embodied in Annex "D" of the NIRC as the duly registered, existing or active brands of cigarettes. Paragraph (c) of Section 145, 1 states – SEC. 145. Cigars and cigarettes. – xxxx (c) Cigarettes packed by machine. – There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below: (1) If the net retail price (excluding the excise tax and the value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be Thirteen pesos and forty-four centavos (P13.44) per pack; (2) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six pesos and fifty centavos (P6.50) but does not exceed Ten pesos (10.00) per pack, the tax shall be Eight pesos and ninety-six centavos (P8.96) per pack; (3) If the net retail price (excluding the excise tax and the value-added tax) is Five pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack, the tax shall be Five pesos and sixty centavos (P5.60) per pack; (4) If the net retail price (excluding the excise tax and the value-added tax) is below Five pesos (P5.00) per pack, the tax shall be One peso and twelve centavos (P1.12) per pack. Variants of existing brands of cigarettes which are introduced in the domestic market after the effectivity of this Act shall be taxed under the highest classification of any variant of that brand. xxxx

New brands shall be classified according to their current net retail price. For the above purpose, net retail price shall mean the price at which the cigarette is sold on retail in 20 major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed only outside Metro Manila, the net retail price shall mean the price at which the cigarette is sold in five major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax. The classification of each brand of cigarettes based on its average net retail price as of October 1, 1996, as set forth in Annex "D" of this Act, shall remain in force until revised by Congress. (Emphasis supplied) As such, new brands of cigarettes shall be taxed according to their current net retail price while existing or "old" brands shall be taxed based on their net retail price as of October 1, 1996. To implement RA 8240, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 197,2 which classified the existing brands of cigarettes as those duly registered or active brands prior to January 1, 1997. New brands, or those registered after January 1, 1997, shall be initially assessed at their suggested retail price until such time that the appropriate survey to determine their current net retail price is conducted. Pertinent portion of the regulations reads – SECTION 2. Definition of Terms. xxxx 3. Duly registered or existing brand of cigarettes – shall include duly registered, existing or active brands of cigarettes, prior to January 1, 1997. xxxx 6. New Brands – shall mean brands duly registered after January 1, 1997 and shall include duly registered, inactive brands of cigarette not sold in commercial quantity before January 1, 1997. Section 4. Classification and Manner of Taxation of Existing Brands, New Brands and Variant of Existing Brands. xxxx B. New Brand New brands shall be classified according to their current net retail price. In the meantime that the current net retail price has not yet been established, the suggested net retail price shall be used to determine the specific tax classification. Thereafter, a survey shall be conducted in 20 major supermarkets or retail outlets in Metro Manila (for brands of cigarette marketed nationally) or in five (5) major supermarkets or retail outlets in the region (for brands which are marketed only outside Metro Manila) at which the cigarette is sold on retail in reams/cartons, three (3) months after the initial removal of the new brand to determine the actual net retail price excluding the excise tax and value added tax which shall then be the basis in determining the specific tax classification. In case the current net retail price is higher than the suggested net retail price, the former shall prevail. Any difference in specific tax due shall be assessed and collected inclusive of increments as provided for by the National Internal Revenue Code, as amended. In June 2001, petitioner British American Tobacco introduced into the market Lucky Strike Filter, Lucky Strike Lights and Lucky Strike Menthol Lights cigarettes, with a suggested retail price of P9.90 per pack.3 Pursuant to Sec. 145 (c) quoted above, the Lucky Strike brands were initially assessed the excise tax at P8.96 per pack. On February 17, 2003, Revenue Regulations No. 9-2003,4 amended Revenue Regulations No. 1-97 by providing, among others, a periodic review every two years or earlier of the current net retail price of new brands and variants thereof for the purpose of establishing and updating their tax classification, thus: For the purpose of establishing or updating the tax classification of new brands and variant(s) thereof, their current net retail price shall be reviewed periodically through the conduct of survey or any other appropriate activity, as mentioned above, every two (2) years unless earlier ordered

by the Commissioner. However, notwithstanding any increase in the current net retail price, the tax classification of such new brands shall remain in force until the same is altered or changed through the issuance of an appropriate Revenue Regulations. Pursuant thereto, Revenue Memorandum Order No. 6-20035 was issued on March 11, 2003, prescribing the guidelines and procedures in establishing current net retail prices of new brands of cigarettes and alcohol products. Subsequently, Revenue Regulations No. 22-20036 was issued on August 8, 2003 to implement the revised tax classification of certain new brands introduced in the market after January 1, 1997, based on the survey of their current net retail price. The survey revealed that Lucky Strike Filter, Lucky Strike Lights, and Lucky Strike Menthol Lights, are sold at the current net retail price of P22.54, P22.61 and P21.23, per pack, respectively.7 Respondent Commissioner of the Bureau of Internal Revenue thus recommended the applicable tax rate of P13.44 per pack inasmuch as Lucky Strike’s average net retail price is above P10.00 per pack. Thus, on September 1, 2003, petitioner filed before the Regional Trial Court (RTC) of Makati, Branch 61, a petition for injunction with prayer for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction, docketed as Civil Case No. 03-1032. Said petition sought to enjoin the implementation of Section 145 of the NIRC, Revenue Regulations Nos. 1-97, 9-2003, 22-2003 and Revenue Memorandum Order No. 6-2003 on the ground that they discriminate against new brands of cigarettes, in violation of the equal protection and uniformity provisions of the Constitution. Respondent Commissioner of Internal Revenue filed an Opposition8 to the application for the issuance of a TRO. On September 4, 2003, the trial court denied the application for TRO, holding that the courts have no authority to restrain the collection of taxes.9 Meanwhile, respondent Secretary of Finance filed a Motion to Dismiss,10 contending that the petition is premature for lack of an actual controversy or urgent necessity to justify judicial intervention. In an Order dated March 4, 2004, the trial court denied the motion to dismiss and issued a writ of preliminary injunction to enjoin the implementation of Revenue Regulations Nos. 1-97, 9-2003, 22-2003 and Revenue Memorandum Order No. 6-2003.11 Respondents filed a Motion for Reconsideration12 and Supplemental Motion for Reconsideration.13 At the hearing on the said motions, petitioner and respondent Commissioner of Internal Revenue stipulated that the only issue in this case is the constitutionality of the assailed law, order, and regulations.14 On May 12, 2004, the trial court rendered a decision 15 upholding the constitutionality of Section 145 of the NIRC, Revenue Regulations Nos. 1-97, 9-2003, 22-2003 and Revenue Memorandum Order No. 6-2003. The trial court also lifted the writ of preliminary injunction. The dispositive portion of the decision reads: WHEREFORE, premises considered, the instant Petition is hereby DISMISSED for lack of merit. The Writ of Preliminary Injunction previously issued is hereby lifted and dissolved. SO ORDERED.16 Petitioner brought the instant petition for review directly with this Court on a pure question of law. While the petition was pending, RA 9334 (An Act Increasing The Excise Tax Rates Imposed on Alcohol And Tobacco Products, Amending For The Purpose Sections 131, 141, 143, 144, 145 and 288 of the NIRC of 1997, As Amended), took effect on January 1, 2005. The statute, among others,– (1) increased the excise tax rates provided in paragraph (c) of Section 145; (2) mandated that new brands of cigarettes shall initially be classified according to their suggested net retail price, until such time that their correct tax bracket is finally determined under a specified period and, after which, their classification shall remain in force until revised by Congress; (3) retained Annex "D" as tax base of those surveyed as of October 1, 1996 including the classification of brands for the same products which, although not set forth in said Annex "D," were registered on or before January 1, 1997 and were being commercially produced and marketed on or after October 1, 1996, and which continue to be commercially produced and marketed after the effectivity of this Act. Said classification shall remain in force until revised by Congress; and

(4) provided a legislative freeze on brands of cigarettes introduced between the period January 2, 199717 to December 31, 2003, such that said cigarettes shall remain in the classification under which the BIR has determined them to belong as of December 31, 2003, until revised by Congress. Pertinent portions, of RA 9334, provides: SEC. 145. Cigars and Cigarettes. – xxxx (C) Cigarettes Packed by Machine. – There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below: (1) If the net retail price (excluding the excise tax and the value-added tax) is below Five pesos (P5.00) per pack, the tax shall be: Effective on January 1, 2005, Two pesos (P2.00) per pack; Effective on January 1, 2007, Two pesos and twenty-three centavos (P2.23) per pack; Effective on January 1, 2009, Two pesos and forty-seven centavos (P2.47) per pack; and Effective on January 1, 2011, Two pesos and seventy-two centavos (P2.72) per pack. (2) If the net retail price (excluding the excise tax and the value-added tax) is Five pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack, the tax shall be: Effective on January 1, 2005, Six pesos and thirty-five centavos (P6.35) per pack; Effective on January 1, 2007, Six pesos and seventy-four centavos (P6.74) per pack; Effective on January 1, 2009, Seven pesos and fourteen centavos (P7.14) per pack; and Effective on January 1, 2011, Seven pesos and fifty-six centavos (P7.56) per pack. (3) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack, the tax shall be: Effective on January 1, 2005, Ten pesos and thirty-five centavos (10.35) per pack; Effective on January 1, 2007, Ten pesos and eighty-eight centavos (P10.88) per pack; Effective on January 1, 2009, Eleven pesos and forty-three centavos (P11.43) per pack; and Effective on January 1, 2011, Twelve pesos (P12.00) per pack. (4) If the net retail price (excluding the excise tax and the value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be: Effective on January 1, 2005, Twenty-five pesos (P25.00) per pack; Effective on January 1, 2007, Twenty-six pesos and six centavos (P26.06) per pack; Effective on January 1, 2009, Twenty-seven pesos and sixteen centavos (P27.16) per pack; and Effective on January 1, 2011, Twenty-eight pesos and thirty centavos (P28.30) per pack. xxxx New brands, as defined in the immediately following paragraph, shall initially be classified according to their suggested net retail price. New brands shall mean a brand registered after the date of effectivity of R.A. No. 8240.

Suggested net retail price shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported cigarettes are intended by the manufacturer or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket under which a particular new brand of cigarette, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Internal Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket under which a particular new brand of cigarettes shall be classified; Provided however, That brands of cigarettes introduced in the domestic market between January 1, 1997 [should be January 2, 1997] and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31, 2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress. Net retail price, as determined by the Bureau of Internal Revenue through a price survey to be conducted by the Bureau of Internal Revenue itself, or the National Statistics Office when deputized for the purpose by the Bureau of Internal Revenue, shall mean the price at which the cigarette is sold in retail in at least twenty (20) major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed only outside Metro Manila, the "net retail price" shall mean the price at which the cigarette is sold in at least five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and value-added tax. The classification of each brand of cigarettes based on its average net retail price as of October 1, 1996, as set forth in Annex "D", including the classification of brands for the same products which, although not set forth in said Annex "D", were registered and were being commercially produced and marketed on or after October 1, 1996, and which continue to be commercially produced and marketed after the effectivity of this Act, shall remain in force until revised by Congress. (Emphasis added) Under RA 9334, the excise tax due on petitioner’s products was increased to P25.00 per pack. In the implementation thereof, respondent Commissioner assessed petitioner’s importation of 911,000 packs of Lucky Strike cigarettes at the increased tax rate of P25.00 per pack, rendering it liable for taxes in the total sum of P22,775,000.00.18 Hence, petitioner filed a Motion to Admit Attached Supplement19 and a Supplement20 to the petition for review, assailing the constitutionality of RA 9334 insofar as it retained Annex "D" and praying for a downward classification of Lucky Strike products at the bracket taxable at P8.96 per pack. Petitioner contended that the continued use of Annex "D" as the tax base of existing brands of cigarettes gives undue protection to said brands which are still taxed based on their price as of October 1996 notwithstanding that they are now sold at the same or even at a higher price than new brands like Lucky Strike. Thus, old brands of cigarettes such as Marlboro and Philip Morris which, like Lucky Strike, are sold at or more than P22.00 per pack, are taxed at the rate of P10.88 per pack, while Lucky Strike products are taxed at P26.06 per pack. In its Comment to the supplemental petition, respondents, through the Office of the Solicitor General (OSG), argued that the passage of RA 9334, specifically the provision imposing a legislative freeze on the classification of cigarettes introduced into the market between January 2, 1997 and December 31, 2003, rendered the instant petition academic. The OSG claims that the provision in Section 145, as amended by RA 9334, prohibiting the reclassification of cigarettes introduced during said period, "cured’ the perceived defect of Section 145 considering that, like the cigarettes under Annex "D," petitioner’s brands and other brands introduced between January 2, 1997 and December 31, 2003, shall remain in the classification under which the BIR has placed them and only Congress has the power to reclassify them. On March 20, 2006, Philip Morris Philippines Manufacturing Incorporated filed a Motion for Leave to Intervene with attached Comment-in-Intervention.21 This was followed by the Motions for Leave to Intervene of Fortune Tobacco Corporation,22Mighty Corporation, 23 and JT International, S.A., with their respective Comments-in-Intervention. The Intervenors claim that they are parties-in-interest who stand to be affected by the ruling of the Court on the constitutionality of Section 145 of the NIRC and its Annex "D" because they are manufacturers of cigarette brands which are included in the said Annex. Hence, their intervention is proper since the protection of their interest cannot be addressed in a separate proceeding.

According to the Intervenors, no inequality exists because cigarettes classified by the BIR based on their net retail price as of December 31, 2003 now enjoy the same status quo provision that prevents the BIR from reclassifying cigarettes included in Annex "D." It added that the Court has no power to pass upon the wisdom of the legislature in retaining Annex "D" in RA 9334; and that the nullification of said Annex would bring about tremendous loss of revenue to the government, chaos in the collection of taxes, illicit trade of cigarettes, and cause decline in cigarette demand to the detriment of the farmers who depend on the tobacco industry. Intervenor Fortune Tobacco further contends that petitioner is estopped from questioning the constitutionality of Section 145 and its implementing rules and regulations because it entered into the cigarette industry fully aware of the existing tax system and its consequences. Petitioner imported cigarettes into the country knowing that its suggested retail price, which will be the initial basis of its tax classification, will be confirmed and validated through a survey by the BIR to determine the correct tax that would be levied on its cigarettes. Moreover, Fortune Tobacco claims that the challenge to the validity of the BIR issuances should have been brought by petitioner before the Court of Tax Appeals (CTA) and not the RTC because it is the CTA which has exclusive appellate jurisdiction over decisions of the BIR in tax disputes. On August 7, 2006, the OSG manifested that it interposes no objection to the motions for intervention.24 Therefore, considering the substantial interest of the intervenors, and in the higher interest of justice, the Court admits their intervention. Before going into the substantive issues of this case, we must first address the matter of jurisdiction, in light of Fortune Tobacco’s contention that petitioner should have brought its petition before the Court of Tax Appeals rather than the regional trial court. The jurisdiction of the Court of Tax Appeals is defined in Republic Act No. 1125, as amended by Republic Act No. 9282. Section 7 thereof states, in pertinent part: Sec. 7. Jurisdiction. — The CTA shall exercise: a. Exclusive appellate jurisdiction to review by appeal, as herein provided: 1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue; 2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial; xxx. 25 While the above statute confers on the CTA jurisdiction to resolve tax disputes in general, this does not include cases where the constitutionality of a law or rule is challenged. Where what is assailed is the validity or constitutionality of a law, or a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts. This is within the scope of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of the acts of the political departments. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.26 In Drilon v. Lim,27 it was held: We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law. Specifically, B.P. 129 vests in the regional trial courts jurisdiction over all civil

cases in which the subject of the litigation is incapable of pecuniary estimation, even as the accused in a criminal action has the right to question in his defense the constitutionality of a law he is charged with violating and of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. The petition for injunction filed by petitioner before the RTC is a direct attack on the constitutionality of Section 145(C) of the NIRC, as amended, and the validity of its implementing rules and regulations. In fact, the RTC limited the resolution of the subject case to the issue of the constitutionality of the assailed provisions. The determination of whether the assailed law and its implementing rules and regulations contravene the Constitution is within the jurisdiction of regular courts. The Constitution vests the power of judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial courts.28 Petitioner, therefore, properly filed the subject case before the RTC. We come now to the issue of whether petitioner is estopped from assailing the authority of the Commissioner of Internal Revenue. Fortune Tobacco raises this objection by pointing out that when petitioner requested the Commissioner for a ruling that its Lucky Strike Soft Pack cigarettes was a "new brand" rather than a variant of an existing brand, and thus subject to a lower specific tax rate, petitioner executed an undertaking to comply with the procedures under existing regulations for the assessment of deficiency internal revenue taxes. Fortune Tobacco argues that petitioner, after invoking the authority of the Commissioner of Internal Revenue, cannot later on turn around when the ruling is adverse to it. Estoppel, an equitable principle rooted in natural justice, prevents persons from going back on their own acts and representations, to the prejudice of others who have relied on them.29 The principle is codified in Article 1431 of the Civil Code, which provides: Through estoppel, an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon. Estoppel can also be found in Rule 131, Section 2 (a) of the Rules of Court, viz: Sec. 2. Conclusive presumptions. — The following are instances of conclusive presumptions: (a) Whenever a party has by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission be permitted to falsify it. The elements of estoppel are: first, the actor who usually must have knowledge, notice or suspicion of the true facts, communicates something to another in a misleading way, either by words, conduct or silence; second, the other in fact relies, and relies reasonably or justifiably, upon that communication; third, the other would be harmed materially if the actor is later permitted to assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or foresees that the other would act upon the information given or that a reasonable person in the actor's position would expect or foresee such action.30 In the early case of Kalalo v. Luz,31 the elements of estoppel, as related to the party to be estopped, are: (1) conduct amounting to false representation or concealment of material facts; or at least calculated to convey the impression that the facts are other than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent, or at least expectation that this conduct shall be acted upon by, or at least influence, the other party; and (3) knowledge, actual or constructive, of the real facts. We find that petitioner was not guilty of estoppel. When it made the undertaking to comply with all issuances of the BIR, which at that time it considered as valid, petitioner did not commit any false misrepresentation or misleading act. Indeed, petitioner cannot be faulted for initially undertaking to comply with, and subjecting itself to the operation of Section 145(C), and only later on filing the subject case praying for the declaration of its unconstitutionality when the circumstances change and the law results in what it perceives to be unlawful discrimination. The mere fact that a law has been relied upon in the past and all that time has not been attacked as unconstitutional is not a ground for considering petitioner estopped from assailing its validity. For courts will pass upon a constitutional question only when presented before it in bona fide cases for determination, and the fact that the question has not been raised before is not a valid reason for refusing to allow it to be raised later.32

Now to the substantive issues. To place this case in its proper context, we deem it necessary to first discuss how the assailed law operates in order to identify, with precision, the specific provisions which, according to petitioner, have created a grossly discriminatory classification scheme between old and new brands. The pertinent portions of RA 8240, as amended by RA 9334, are reproduced below for ready reference: SEC. 145. Cigars and Cigarettes. – xxxx (C) Cigarettes Packed by Machine. – There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below: (1) If the net retail price (excluding the excise tax and the value-added tax) is below Five pesos (P5.00) per pack, the tax shall be: Effective on January 1, 2005, Two pesos (P2.00) per pack; Effective on January 1, 2007, Two pesos and twenty-three centavos (P2.23) per pack; Effective on January 1, 2009, Two pesos and forty-seven centavos (P2.47) per pack; and Effective on January 1, 2011, Two pesos and seventy-two centavos (P2.72) per pack. (2) If the net retail price (excluding the excise tax and the value-added tax) is Five pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack, the tax shall be: Effective on January 1, 2005, Six pesos and thirty-five centavos (P6.35) per pack; Effective on January 1, 2007, Six pesos and seventy-four centavos (P6.74) per pack; Effective on January 1, 2009, Seven pesos and fourteen centavos (P7.14) per pack; and Effective on January 1, 2011, Seven pesos and fifty-six centavos (P7.56) per pack. (3) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack, the tax shall be: Effective on January 1, 2005, Ten pesos and thirty-five centavos (10.35) per pack; Effective on January 1, 2007, Ten pesos and eighty-eight centavos (P10.88) per pack; Effective on January 1, 2009, Eleven pesos and forty-three centavos (P11.43) per pack; and Effective on January 1, 2011, Twelve pesos (P12.00) per pack. (4) If the net retail price (excluding the excise tax and the value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be: Effective on January 1, 2005, Twenty-five pesos (P25.00) per pack; Effective on January 1, 2007, Twenty-six pesos and six centavos (P26.06) per pack; Effective on January 1, 2009, Twenty-seven pesos and sixteen centavos (P27.16) per pack; and Effective on January 1, 2011, Twenty-eight pesos and thirty centavos (P28.30) per pack. xxxx

New brands, as defined in the immediately following paragraph, shall initially be classified according to their suggested net retail price. New brands shall mean a brand registered after the date of effectivity of R.A. No. 8240. Suggested net retail price shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported cigarettes are intended by the manufacturer or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket under which a particular new brand of cigarette, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Internal Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket under which a particular new brand of cigarettes shall be classified; Provided however, That brands of cigarettes introduced in the domestic market between January 1, 1997 [should be January 2, 1997] and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31, 2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress. Net retail price, as determined by the Bureau of Internal Revenue through a price survey to be conducted by the Bureau of Internal Revenue itself, or the National Statistics Office when deputized for the purpose by the Bureau of Internal Revenue, shall mean the price at which the cigarette is sold in retail in at least twenty (20) major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed only outside Metro Manila, the "net retail price" shall mean the price at which the cigarette is sold in at least five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and value-added tax. The classification of each brand of cigarettes based on its average net retail price as of October 1, 1996, as set forth in Annex "D", including the classification of brands for the same products which, although not set forth in said Annex "D", were registered and were being commercially produced and marketed on or after October 1, 1996, and which continue to be commercially produced and marketed after the effectivity of this Act, shall remain in force until revised by Congress. As can be seen, the law creates a four-tiered system which we may refer to as the low-priced,33 mediumpriced,34 high-priced,35 and premium-priced36 tax brackets. When a brand is introduced in the market, the current net retail price is determined through the aforequoted specified procedure. The current net retail price is then used to classify under which tax bracket the brand belongs in order to finally determine the corresponding excise tax rate on a per pack basis. The assailed feature of this law pertains to the mechanism where, after a brand is classified based on its current net retail price, the classification is frozen and only Congress can thereafter reclassify the same. From a practical point of view, Annex "D" is merely a by-product of the whole mechanism and philosophy of the assailed law. That is, the brands under Annex "D" were also classified based on their current net retail price, the only difference being that they were the first ones so classified since they were the only brands surveyed as of October 1, 1996, or prior to the effectivity of RA 8240 on January 1, 1997.37 Due to this legislative classification scheme, it is possible that over time the net retail price of a previously classified brand, whether it be a brand under Annex "D" or a new brand classified after the effectivity of RA 8240 on January 1, 1997, would increase (due to inflation, increase of production costs, manufacturer’s decision to increase its prices, etc.) to a point that its net retail price pierces the tax bracket to which it was previously classified.38 Consequently, even if its present day net retail price would make it fall under a higher tax bracket, the previously classified brand would continue to be subject to the excise tax rate under the lower tax bracket by virtue of the legislative classification freeze. Petitioner claims that this is what happened in 2004 to the Marlboro and Philip Morris brands, which were permanently classified under Annex "D." As of October 1, 1996, Marlboro had net retail prices ranging from P6.78 to P6.84 while Philip Morris had net retail prices ranging from P7.39 to P7.48. Thus, pursuant to RA 8240,39 Marlboro and Philip Morris were classified under the high-priced tax bracket and subjected to an excise tax rate of P8.96 per pack. Petitioner then presented evidence showing that after the lapse of about seven years or sometime in 2004, Marlboro’s and Philip Morris’ net retail prices per pack both increased to about P15.59.40 This meant that they would fall under the premium-priced tax bracket, with a higher excise tax rate of P13.44 per pack,41 had they been classified based on their 2004 net retail prices.

However, due to the legislative classification freeze, they continued to be classified under the high-priced tax bracket with a lower excise tax rate. Petitioner thereafter deplores the fact that its Lucky Strike Filter, Lucky Strike Lights, and Lucky Strike Menthol Lights cigarettes, introduced in the market sometime in 2001 and validated by a BIR survey in 2003, were found to have net retail prices of P11.53, P11.59 and P10.34,42 respectively, which are lower than those of Marlboro and Philip Morris. However, since petitioner’s cigarettes were newly introduced brands in the market, they were taxed based on their current net retail prices and, thus, fall under the premium-priced tax bracket with a higher excise tax rate of P13.44 per pack. This unequal tax treatment between Marlboro and Philip Morris, on the one hand, and Lucky Strike, on the other, is the crux of petitioner’s contention that the legislative classification freeze violates the equal protection and uniformity of taxation clauses of the Constitution. It is apparent that, contrary to its assertions, petitioner is not only questioning the undue favoritism accorded to brands under Annex "D," but the entire mechanism and philosophy of the law which freezes the tax classification of a cigarette brand based on its current net retail price. Stated differently, the alleged discrimination arising from the legislative classification freeze between the brands under Annex "D" and petitioner’s newly introduced brands arose only because the former were classified based on their "current" net retail price as of October 1, 1996 and petitioner’s newly introduced brands were classified based on their "current" net retail price as of 2003. Without this corresponding freezing of the classification of petitioner’s newly introduced brands based on their current net retail price, it would be impossible to establish that a disparate tax treatment occurred between the Annex "D" brands and petitioner’s newly introduced brands. This clarification is significant because, under these circumstances, a declaration of unconstitutionality would necessarily entail nullifying the whole mechanism of the law and not just Annex "D." Consequently, if the assailed law is declared unconstitutional on equal protection grounds, the entire method by which a brand of cigarette is classified would have to be invalidated. As a result, no method to classify brands under Annex "D" as well as new brands would be left behind and the whole Section 145 of the NIRC, as amended, would become inoperative.43 To simplify the succeeding discussions, we shall refer to the whole mechanism and philosophy of the assailed law which freezes the tax classification of a cigarette brand based on its current net retail price and which, thus, produced different classes of brands based on the time of their introduction in the market (starting with the brands in Annex "D" since they were the first brands so classified as of October 1, 1996) as the classification freeze provision.44 As thus formulated, the central issue is whether or not the classification freeze provision violates the equal protection and uniformity of taxation clauses of the Constitution. In Sison, Jr. v. Ancheta,45 this Court, through Chief Justice Fernando, explained the applicable standard in deciding equal protection and uniformity of taxation challenges: Now for equal protection. The applicable standard to avoid the charge that there is a denial of this constitutional mandate whether the assailed act is in the exercise of the police power or the power of eminent domain is to demonstrate "that the governmental act assailed, far from being inspired by the attainment of the common weal was prompted by the spirit of hostility, or at the very least, discrimination that finds no support in reason. It suffices then that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumstances, which if not identical are analogous. If law be looks upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding on the rest." That same formulation applies as well to taxation measures. The equal protection clause is, of course, inspired by the noble concept of approximating the ideal of the laws's benefits being available to all and the affairs of men being governed by that serene and impartial uniformity, which is of the very essence of the idea of law. There is, however, wisdom, as well as realism, in these words of Justice Frankfurter: "The equality at which the 'equal protection' clause aims is not a disembodied equality. The Fourteenth Amendment enjoins 'the equal protection of the laws,' and laws are not abstract propositions. They do not relate to abstract units A, B and C, but are expressions of policy arising out of specific difficulties, addressed to the attainment of specific ends by the use of specific remedies. The Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same." Hence the constant reiteration of the view that classification if rational in character is allowable. As a matter of fact, in a leading case of Lutz v. Araneta, this Court, through Justice J.B.L. Reyes, went so far as to hold "at any rate, it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that

'inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation.'" Petitioner likewise invoked the kindred concept of uniformity. According to the Constitution: "The rule of taxation shall be uniform and equitable." This requirement is met according to Justice Laurel in Philippine Trust Company v. Yatco, decided in 1940, when the tax "operates with the same force and effect in every place where the subject may be found." He likewise added: "The rule of uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable." The problem of classification did not present itself in that case. It did not arise until nine years later, when the Supreme Court held: "Equality and uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation, . . . As clarified by Justice Tuason, where "the differentiation" complained of "conforms to the practical dictates of justice and equity" it "is not discriminatory within the meaning of this clause and is therefore uniform." There is quite a similarity then to the standard of equal protection for all that is required is that the tax "applies equally to all persons, firms and corporations placed in similar situation."46 (Emphasis supplied) In consonance thereto, we have held that "in our jurisdiction, the standard and analysis of equal protection challenges in the main have followed the ‘rational basis’ test, coupled with a deferential attitude to legislative classifications and a reluctance to invalidate a law unless there is a showing of a clear and unequivocal breach of the Constitution."47 Within the present context of tax legislation on sin products which neither contains a suspect classification nor impinges on a fundamental right, the rational-basis test thus finds application. Under this test, a legislative classification, to survive an equal protection challenge, must be shown to rationally further a legitimate state interest.48 The classifications must be reasonable and rest upon some ground of difference having a fair and substantial relation to the object of the legislation.49 Since every law has in its favor the presumption of constitutionality, the burden of proof is on the one attacking the constitutionality of the law to prove beyond reasonable doubt that the legislative classification is without rational basis.50 The presumption of constitutionality can be overcome only by the most explicit demonstration that a classification is a hostile and oppressive discrimination against particular persons and classes, and that there is no conceivable basis which might support it. 51 A legislative classification that is reasonable does not offend the constitutional guaranty of the equal protection of the laws. The classification is considered valid and reasonable provided that: (1) it rests on substantial distinctions; (2) it is germane to the purpose of the law; (3) it applies, all things being equal, to both present and future conditions; and (4) it applies equally to all those belonging to the same class. 52 The first, third and fourth requisites are satisfied. The classification freeze provision was inserted in the law for reasons of practicality and expediency. That is, since a new brand was not yet in existence at the time of the passage of RA 8240, then Congress needed a uniform mechanism to fix the tax bracket of a new brand. The current net retail price, similar to what was used to classify the brands under Annex "D" as of October 1, 1996, was thus the logical and practical choice. Further, with the amendments introduced by RA 9334, the freezing of the tax classifications now expressly applies not just to Annex "D" brands but to newer brands introduced after the effectivity of RA 8240 on January 1, 1997 and any new brand that will be introduced in the future.53 (However, as will be discussed later, the intent to apply the freezing mechanism to newer brands was already in place even prior to the amendments introduced by RA 9334 to RA 8240.) This does not explain, however, why the classification is "frozen" after its determination based on current net retail price and how this is germane to the purpose of the assailed law. An examination of the legislative history of RA 8240 provides interesting answers to this question. RA 8240 was the first of three parts in the Comprehensive Tax Reform Package then being pushed by the Ramos Administration. It was enacted with the following objectives stated in the Sponsorship Speech of Senator Juan Ponce Enrile (Senator Enrile), viz: First, to evolve a tax structure which will promote fair competition among the players in the industries concerned and generate buoyant and stable revenue for the government. Second, to ensure that the tax burden is equitably distributed not only amongst the industries affected but equally amongst the various levels of our society that are involved in various markets that are going to be affected by the excise tax on distilled spirits, fermented liquor, cigars and cigarettes. In the case of firms engaged in the industries producing the products that we are about to tax, this means relating the tax burden to their market share, not only in terms of quantity, Mr. President, but in terms of value.

In case of consumers, this will mean evolving a multi-tiered rate structure so that low-priced products are subject to lower tax rates and higher-priced products are subject to higher tax rates. Third, to simplify the tax administration and compliance with the tax laws that are about to unfold in order to minimize losses arising from inefficiencies and tax avoidance scheme, if not outright tax evasion.54 In the initial stages of the crafting of the assailed law, the Department of Finance (DOF) recommended to Congress a shift from the then existing ad valorem taxation system to a specific taxation system with respect to sin products, including cigarettes. The DOF noted that the ad valorem taxation system was a source of massive tax leakages because the taxpayer was able to evade paying the correct amount of taxes through the undervaluation of the price of cigarettes using various marketing arms and dummy corporations. In order to address this problem, the DOF proposed a specific taxation system where the cigarettes would be taxed based on volume or on a per pack basis which was believed to be less susceptible to price manipulation. The reason was that the BIR would only need to monitor the sales volume of cigarettes, from which it could easily compute the corresponding tax liability of cigarette manufacturers. Thus, the DOF suggested the use of a three-tiered system which operates in substantially the same manner as the four-tiered system under RA 8240 as earlier discussed. The proposal of the DOF was embodied in House Bill (H.B.) No. 6060, the pertinent portions of which states— SEC. 142. Cigars and cigarettes.— (c) Cigarettes packed by machine.— There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below: (1) If the manufacturer’s or importer’s wholesale price (net of excise tax and value-added tax) per pack exceeds four pesos and twenty centavos (P4.20), the tax shall be seven pesos and fifty centavos (P7.50); (2) If the manufacturer’s or importer’s wholesale price (net of excise tax and value-added tax) per pack exceeds three pesos and ninety centavos (P3.90) but does not exceed four pesos and twenty centavos (P4.20), the tax shall be five pesos and fifty centavos (P5.50): provided, that after two (2) years from the effectivity of this Act, cigarettes otherwise subject to tax under this subparagraph shall be taxed under subparagraph (1) above. (3) If the manufacturer’s or importer’s wholesale price (net of excise tax and value-added tax) per pack does not exceeds three pesos and ninety centavos (P3.90), the tax rate shall be one peso (P1.00). Variants of existing brands and new brands of cigarettes packed by machine to be introduced in the domestic market after the effectivity of this Act, shall be taxed under paragraph (c)(1) hereof. The rates of specific tax on cigars and cigarettes under paragraphs (a), (b), and (c) hereof, including the price levels for purposes of classifying cigarettes packed by machine, shall be revised upward two (2) years after the effectivity of this Act and every two years thereafter by the Commissioner of Internal Revenue, subject to the approval of the Secretary of Finance, taking into account the movement of the consumer price index for cigars and cigarettes as established by the National Statistics Office: provided, that the increase in taxes and/or price levels shall be equal to the present change in such consumer price index for the two-year period: provided, further, that the President, upon the recommendation of the Secretary of Finance, may suspend or defer the adjustment in price levels and tax rates when the interest of the national economy and general welfare so require, such as the need to obviate unemployment, and economic and social dislocation: provided, finally, that the revised price levels and tax rates authorized herein shall in all cases be rounded off to the nearest centavo and shall be in force and effect on the date of publication thereof in a newspaper of general circulation. x x x (Emphasis supplied) What is of particular interest with respect to the proposal of the DOF is that it contained a provision for the periodic adjustment of the excise tax rates and tax brackets, and a corresponding periodic resurvey and reclassification of cigarette brands based on the increase in the consumer price index as determined by the Commissioner of Internal Revenue subject to certain guidelines. The evident intent was to prevent inflation from eroding the value of the excise taxes that would be collected from cigarettes over time by adjusting the tax rate and tax brackets based on the increase in the consumer price index. Further, under this proposal, old brands as well as new brands introduced thereafter would be subjected to a resurvey and reclassification based on their respective values at the end of every two years in order to align them

with the adjustment of the excise tax rate and tax brackets due to the movement in the consumer price index.55 Of course, we now know that the DOF proposal, insofar as the periodic adjustment of tax rates and tax brackets, and the periodic resurvey and reclassification of cigarette brands are concerned, did not gain approval from Congress. The House and Senate pushed through with their own versions of the excise tax system on beers and cigarettes both denominated as H.B. No. 7198. For convenience, we shall refer to the bill deliberated upon by the House as the House Version and that of the Senate as the Senate Version. The House’s Committee on Ways and Means, then chaired by Congressman Exequiel B. Javier (Congressman Javier), roundly rejected the DOF proposal. Instead, in its Committee Report submitted to the plenary, it proposed a different excise tax system which used a specific tax as a basic tax with an ad valorem comparator. Further, it deleted the proposal to have a periodic adjustment of tax rates and the tax brackets as well as periodic resurvey and reclassification of cigarette brands, to wit: The rigidity of the specific tax system calls for the need for frequent congressional intervention to adjust the tax rates to inflation and to keep pace with the expanding needs of government for more revenues. The DOF admits this flaw inherent in the tax system it proposed. Hence, to obviate the need for remedial legislation, the DOF is asking Congress to grant to the Commissioner the power to revise, one, the specific tax rates: and two, the price levels of beer and cigarettes. What the DOF is asking, Mr. Speaker, is for Congress to delegate to the Commissioner of Internal Revenue the power to fix the tax rates and classify the subjects of taxation based on their price levels for purposes of fixing the tax rates. While we sympathize with the predicament of the DOF, it is not for Congress to abdicate such power. The power sought to be delegated to be exercised by the Commissioner of Internal Revenue is a legislative power vested by the Constitution in Congress pursuant to Section 1, Article VI of the Constitution. Where the power is vested, there it must remain— in Congress, a body of representatives elected by the people. Congress may not delegate such power, much less abdicate it. xxxx Moreover, the grant of such power, if at all constitutionally permissible, to the Commissioner of Internal Revenue is fraught with ethical implications. The debates on how much revenue will be raised, how much money will be taken from the pockets of taxpayers, will inexorably shift from the democratic Halls of Congress to the secret and non-transparent corridors of unelected agencies of government, the Department of Finance and the Bureau of Internal Revenue, which are not accountable to our people. We cannot countenance the shift for ethical reasons, lest we be accused of betraying the trust reposed on this Chamber by the people. x x x A final point on this proposal, Mr. Speaker, is the exercise of the taxing power of the Commissioner of Internal Revenue which will be triggered by inflation rates based on the consumer price index. Simply stated, Mr. Speaker, the specific tax rates will be fixed by the Commissioner depending on the price levels of beers and cigarettes as determined by the consumers’ price index. This is a novel idea, if not necessarily weird in the field of taxation. What if the brewer or the cigarette manufacturer sells at a price below the consumers’ price index? Will it be taxed on the basis of the consumer’s price index which is over and above its wholesale or retail price as the case may be? This is a weird form of exaction where the tax is based not on what the brewer or manufacturer actually realized but on an imaginary wholesale or retail price. This amounts to a taxation based on presumptive price levels and renders the specific tax a presumptive tax. We hope, the DOF and the BIR will also honor a presumptive tax payment. Moreover, specific tax rates based on price levels tied to consumer’s price index as proposed by the DOF engenders anti-trust concerns. The proposal if enacted into law will serve as a barrier to the entry of new players in the beer and cigarette industries which are presently dominated by shared monopolies. A new player in these industries will be denied business flexibility to fix its price levels to promote its product and penetrate the market as the price levels are dictated by the consumer price index. The proposed tax regime, Mr. Speaker, will merely enhance the stranglehold of the oligopolies in the beer and cigarette industries, thus, reversing the government’s policy of dismantling monopolies and combinations in restraint of trade. 56 For its part, the Senate’s Committee on Ways and Means, then chaired by Senator Juan Ponce Enrile (Senator Enrile), developed its own version of the excise tax system on cigarettes. The Senate Version consisted of a four-tiered system and, interestingly enough, contained a periodic excise tax rate and tax bracket adjustment as well as a periodic resurvey and reclassification of brands provision ("periodic adjustment and reclassification provision," for brevity) to be conducted by the DOF in coordination with

the BIR and the National Statistics Office based on the increase in the consumer price index— similar to the one proposed by the DOF, viz: SEC. 4 Section 142 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows: "SEC. 142. Cigars and cigarettes. – xxxx (c) Cigarettes packed by machine. – There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below: (1) If the net retail price (excluding the excise tax and the value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be Twelve pesos (P12.00) per pack; (2) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six pesos and fifty centavos (P6.50) per pack, the tax shall be Eight pesos (P8.00) per pack; (3) If the net retail price (excluding the excise tax and the value-added tax) is Five pesos (P5.00) up to Six pesos and fifty centavos (P6.50) per pack, the tax shall be Five pesos (P5.00) per pack; (4) If the net retail price (excluding the excise tax and the value-added tax) is below Five pesos (P5.00) per pack, the tax shall be One peso (P1.00) per pack. Variants of existing brands of cigarettes which are introduced in the domestic market after the effectivity of this Act shall be taxed under the highest classification of any variant of that brand. xxx The rates of specific tax on cigars and cigarettes under subparagraph (a), (b) and (c) hereof, including the net retail prices for purposes of classification, shall be adjusted on the sixth of January three years after the effectivity of this Act and every three years thereafter. The adjustment shall be in accordance with the inflation rate measured by the average increase in the consumer price index over the three-year period. The adjusted tax rates and net price levels shall be in force on the eighth of January. Within the period hereinabove mentioned, the Secretary of Finance shall direct the conduct of a survey of retail prices of each brand of cigarettes in coordination with the Bureau of Internal Revenue and the National Statistics Office. For purposes of this Section, net retail price shall mean the price at which the cigarette is sold on retail in 20 major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed only outside Metro Manila, the net retail price shall mean the price at which the cigarette is sold in five major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax. The classification of each brand of cigarettes in the initial year of implementation of this Act shall be based on its average net retail price as of October 1, 1996. The said classification by brand shall remain in force until January 7, 2000. New brands shall be classified according to their current net retail price. 57 (Emphasis supplied) During the period of interpellations, the late Senator Raul S. Roco (Senator Roco) expressed doubts as to the legality and wisdom of putting a periodic adjustment and reclassification provision: Senator Enrile: This will be the first time that a tax burden will be allowed to be automatically adjusted upwards based on a system of indexing tied up with the Consumers Price Index (CPI). Although I must add that we have adopted a similar system in adjusting the personal tax exemption from income tax of our individual taxpayers. Senator Roco: They are not exactly the same, Mr. President. But even then, we do note that this the first time we are trying to put an automatic adjustment. My concern is, why do we propose

now this automatic adjustment? What is the reason that impels the committee? Maybe we can be enlightened and maybe we shall embrace it forthwith. But what is the reason? Senator Enrile: Mr. President, we will recall that in the House of Representatives, it has adopted a tax proposal on these products based on a specific tax as a basic tax with an ad valorem comparator. The Committee on Ways and Means of the Senate has not seen it fit to adopt this system, but it recognized the possibility that there may be an occasion where the price movement in the country might unwarrantedly move upwards, in which case, if we peg the government to a specific tax rate of P6.30, P9.30 and P12.30 for beer, since we are talking of beer, 58 the government might lose in the process. In order to consider the interest of the government in this, Mr. President, and in order to obviate the possibility that some of these products categorized under the different tiers with different specific tax rates from moving upwards and piercing their own tiers and thereby expose themselves to an incremental tax of higher magnitude, it was felt that we should adopt a system where, in spite of any escalation in the price of these products in the future, the tax rates could be adjusted upwards so that none of these products would leave their own tier. That was the basic principle under which we crafted this portion of the tax proposal. Senator Roco: Mr. President, we certainly share the judgment of the distinguished gentleman as regards the comparator provision in the House of Representatives and we appreciate the reasons given. But we are under the impression that the House also, aside from the comparator, has an adjustment clause that is fixed. It has fixed rates for the adjustment. So that one of the basic differences between the Senate proposed version now and the House version is that, the House of Representatives has manifested its will and judgment as regards the tax to which we will adjust, whereas the Senate version relegates fundamentally that judgment to the Department of Finance. Senator Enrile: That is correct, Mr. President, because we felt that in imposing a fixed adjustment, we might be fixing an amount that is either too high or too low. We cannot foresee the economic trends in this country over a period of two years, three years, let alone ten years. So we felt that a mechanism ought to be adopted in order to serve the interest of the government, the interest of the producers, and the interest of the consuming public. Senator Roco: This is where, Mr. President, my policy difficulties start. Under the Constitution— I think it is Article VI, Section 24, and it was the distinguished chairman of the Committee on Ways and Means who made this Chamber very conscious of this provision— revenue measures and tariff measures shall originate exclusively from the House of Representatives. The reason for this, Mr. President, is, there is a long history why the House of Representatives must originate judgments on tax. The House members represent specific districts. They represent specific constituencies, and the whole history of parliamentarism, the whole history of Congress as an institution is founded on the proposition that the direct representatives of the people must speak about taxes. Mr. President, while the Senate can concur and can introduce amendments, the proposed change here is radical. This is the policy difficulty that I wish to clarify with the gentleman because the judgment call now on the amount of tax to be imposed is not coming from Congress. It is shifted to the Department of Finance. True, the Secretary of Finance may have been the best finance officer two years ago and now the best finance officer in Asia, but that does not make him qualified to replace the judgment call of the House of Representatives. That is my first difficulty. Senator Enrile: Mr. President, precisely the law, in effect, authorizes this rate beforehand. The computation of the rate is the only thing that was left to the Department of Finance as a tax implementor of Congress. This is not unusual because we have already, as I said, adopted a system similar to this. If we adjust the personal exemption of an individual taxpayer, we are in effect adjusting the applicable tax rate to him. Senator Roco: But the point I was trying to demonstrate, Mr. President, is that we depart precisely from the mandate of the Constitution that judgment on revenue must emanate from Congress. Here, it is shifted to the Department of Finance for no visible or patent reason insofar as I could understand. The only difference is, who will make the judgment? Should it be Congress? Senator Enrile: Mr. President, forgive me for answering sooner than I should. My understanding of the Constitution is that all revenue measures must emanate from the House. That is all the Constitution says.

Now, it does not say that the judgment call must belong to the House. The judgment call can belong both to the House and to the Senate. We can change whatever proposal the House did. Precisely, we are now crafting a measure, and we are saying that this is the rate subject to an adjustment which we also provide. We are not giving any unusual power to the Secretary of Finance because we tell him, "This is the formula that you must adopt in arriving at the adjustment so that you do not have to come back to us."59 Apart from his doubts as to the legality of the delegation of taxing power to the DOF and BIR, Senator Roco also voiced out his concern about the possible abuse and corruption that will arise from the periodic adjustment and reclassification provision. Continuing— Senator Roco: Mr. President, if that is the argument, that the distinguished gentleman has a different legal interpretation, we will then now examine the choice. Because his legal interpretation is different from mine, then the issues becomes: Is it more advantageous that this judgment be exercised by the House? Should we not concur or modify in terms of the exercise by the House of its power or are we better off giving this judgment call to the Department of Finance? Let me now submit, Mr. President, that in so doing, it is more advantageous to fix the rate so that even if we modify the rates identified by Congress, it is better and less susceptible to abuse. For instance, Mr. President, would the gentlemen wish to demonstrate to us how this will be done? On page 8, lines 5 to 9, there is a provision here as to when the Secretary of Finance shall direct the conduct of survey of retail prices of each brand of fermented liquor in coordination with the Bureau of Internal Revenue and the National Statistics Office. These offices are not exactly noted, Mr. President, for having been sanctified by the Holy Spirit in their noble intentions. x x x60 (Emphasis supplied) Pressing this point, Senator Roco continued his query: Senator Roco: x x x [On page 8, lines 5 to 9] it says that during the two-year period, the Secretary of Finance shall direct the conduct of the survey. How? When? Which retail prices and what brand shall he consider? When he coordinates with the Bureau of Internal Revenue, what is the Bureau of Internal Revenue supposed to be doing? What is the National Statistics Office supposed to be doing, and under what guides and standards? May the gentleman wish to demonstrate how this will be done? My point, Mr. President, is, by giving the Secretary of Finance, the BIR and the National Statistics Office discretion over a two-year period will invite corruption and arbitrariness, which is more dangerous than letting the House of Representatives and this Chamber set the adjustment rate. Why not set the adjustment rate? Why should Congress not exercise that judgment now? x x x Senator Enrile: x x x Senator Roco: x x x We respectfully submit that the Chairman consider choosing the judgment of this Chamber and the House of Representatives over a delegated judgment of the Department of Finance. Again, it is not to say that I do not trust the Department of Finance. It has won awards, and I also trust the undersecretary. But that is beside the point. Tomorrow, they may not be there.61 (Emphasis supplied) This point was further dissected by the two senators. There was a genuine difference of opinion as to which system— one with a fixed excise tax rate and classification or the other with a periodic adjustment of excise tax rate and reclassification— was less susceptible to abuse, as the following exchanges show: Senator Enrile: Mr. President, considering the sensitivity of these products from the viewpoint of exerted pressures because of the understandable impact of this measure on the pockets of the major players producing these products, the committee felt that perhaps to lessen such pressures, it is best that we now establish a norm where the tax will be adjusted without incurring too much political controversy as has happened in the case of this proposal.

Senator Roco: But that is exactly the same reason we say we must rely upon Congress because Congress, if it is subjected to pressure, at least balances off because of political factors. When the Secretary of Finance is now subjected to pressure, are we saying that the Secretary of Finance and the Department of Finance is better-suited to withstand the pressure? Or are we saying "Let the Finance Secretary decide whom to yield"? I am saying that the temptation and the pressure on the Secretary of Finance is more dangerous and more corruption-friendly than ascertaining for ourselves now a fixed rate of increase for a fixed period. Senator Enrile: Mr. President, perhaps the gentleman may not agree with this representation, but in my humble opinion, this formulation is less susceptible to pressure because there is a definite point of reference which is the consumer price index, and that consumer price index is not going to be used only for this purpose. The CPI is used for a national purpose, and there is less possibility of tinkering with it.62 Further, Senator Roco, like Congressman Javier, expressed the view that the periodic adjustment and reclassification provision would create an anti-competitive atmosphere. Again, Senators Roco and Enrile had genuine divergence of opinions on this matter, to wit: Senator Roco: x x x On the marketing level, an adjustment clause may, in fact, be disadvantageous to both companies, whether it is the Lucio Tan companies or the San Miguel companies. If we have to adjust our marketing position every two years based on the adjustment clause, the established company may survive, but the new ones will have tremendous difficulty. Therefore, this provision tends to indicate an anticompetitive bias. It is good for San Miguel and the Lucio Tan companies, but the new companies— assuming there may be new companies and we want to encourage them because of the old point of liberalization— will be at a disadvantage under this situation. If this observation will find receptivity in the policy consideration of the distinguished Gentleman, maybe we can also further, later on, seek amendments to this automatic adjustment clause in some manner. Senator Enrile: Mr. President, I cannot foresee any anti-competitiveness of this provision with respect to a new entrant, because a new entrant will not just come in without studying the market. He is a lousy businessman if he will just come in without studying the market. If he comes in, he will determine at what retail price level he will market his product, and he will be coming under any of the tiers depending upon his net retail price. Therefore, I do not see how this particular provision will affect a new entrant. Senator Roco: Be that as it may, Mr. President, we obviously will not resort to debate until this evening, and we will have to look for other ways of resolving the policy options. Let me just close that particular area of my interpellation, by summarizing the points we were hoping could be clarified. 1. That the automatic adjustment clause is at best questionable in law. 2. It is corruption-friendly in the sense that it shifts the discretion from the House of Representatives and this Chamber to the Secretary of Finance, no matter how saintly he may be. 3. There is,— although the judgment call of the gentleman disagrees— to our view, an anticompetitive situation that is geared at… 63 After these lengthy exchanges, it appears that the views of Senator Enrile were sustained by the Senate Body because the Senate Version was passed on Third Reading without substantially altering the periodic adjustment and reclassification provision. It was actually at the Bicameral Conference Committee level where the Senate Version underwent major changes. The Senate Panel prevailed upon the House Panel to abandon the basic excise tax rate and ad valorem comparator as the means to determine the applicable excise tax rate. Thus, the Senate’s fourtiered system was retained with minor adjustments as to the excise tax rate per tier. However, the House Panel prevailed upon the Senate Panel to delete the power of the DOF and BIR to periodically adjust the

excise tax rate and tax brackets, and periodically resurvey and reclassify the cigarette brands based on the increase in the consumer price index. In lieu thereof, the classification of existing brands based on their average net retail price as of October 1, 1996 was "frozen" and a fixed across-the-board 12% increase in the excise tax rate of each tier after three years from the effectivity of the Act was put in place. There is a dearth of discussion in the deliberations as to the applicability of the freezing mechanism to new brands after their classification is determined based on their current net retail price. But a plain reading of the text of RA 8240, even before its amendment by RA 9334, as well as the previously discussed deliberations would readily lead to the conclusion that the intent of Congress was to likewise apply the freezing mechanism to new brands. Precisely, Congress rejected the proposal to allow the DOF and BIR to periodically adjust the excise tax rate and tax brackets as well as to periodically resurvey and reclassify cigarettes brands which would have encompassed old and new brands alike. Thus, it would be absurd for us to conclude that Congress intended to allow the periodic reclassification of new brands by the BIR after their classification is determined based on their current net retail price. We shall return to this point when we tackle the second issue. In explaining the changes made at the Bicameral Conference Committee level, Senator Enrile, in his report to the Senate plenary, noted that the fixing of the excise tax rates was done to avoid confusion.64 Congressman Javier, for his part, reported to the House plenary the reasons for fixing the excise tax rate and freezing the classification, thus: Finally, this twin feature, Mr. Speaker, fixed specific tax rates and frozen classification, rejects the Senate version which seeks to abdicate the power of Congress to tax by pegging the rates as well as the classification of sin products to consumer price index which practically vests in the Secretary of Finance the power to fix the rates and to classify the products for tax purposes.65 (Emphasis supplied) Congressman Javier later added that the frozen classification was intended to give stability to the industry as the BIR would be prevented from tinkering with the classification since it would remain unchanged despite the increase in the net retail prices of the previously classified brands.66 This would also assure the industry players that there would be no new impositions as long as the law is unchanged.67 From the foregoing, it is quite evident that the classification freeze provision could hardly be considered arbitrary, or motivated by a hostile or oppressive attitude to unduly favor older brands over newer brands. Congress was unequivocal in its unwillingness to delegate the power to periodically adjust the excise tax rate and tax brackets as well as to periodically resurvey and reclassify the cigarette brands based on the increase in the consumer price index to the DOF and the BIR. Congress doubted the constitutionality of such delegation of power, and likewise, considered the ethical implications thereof. Curiously, the classification freeze provision was put in place of the periodic adjustment and reclassification provision because of the belief that the latter would foster an anti-competitive atmosphere in the market. Yet, as it is, this same criticism is being foisted by petitioner upon the classification freeze provision. To our mind, the classification freeze provision was in the main the result of Congress’s earnest efforts to improve the efficiency and effectivity of the tax administration over sin products while trying to balance the same with other state interests. In particular, the questioned provision addressed Congress’s administrative concerns regarding delegating too much authority to the DOF and BIR as this will open the tax system to potential areas for abuse and corruption. Congress may have reasonably conceived that a tax system which would give the least amount of discretion to the tax implementers would address the problems of tax avoidance and tax evasion. To elaborate a little, Congress could have reasonably foreseen that, under the DOF proposal and the Senate Version, the periodic reclassification of brands would tempt the cigarette manufacturers to manipulate their price levels or bribe the tax implementers in order to allow their brands to be classified at a lower tax bracket even if their net retail prices have already migrated to a higher tax bracket after the adjustment of the tax brackets to the increase in the consumer price index. Presumably, this could be done when a resurvey and reclassification is forthcoming. As briefly touched upon in the Congressional deliberations, the difference of the excise tax rate between the medium-priced and the high-priced tax brackets under RA 8240, prior to its amendment, was P3.36. For a moderately popular brand which sells around 100 million packs per year, this easily translates to P336,000,000.68 The incentive for tax avoidance, if not outright tax evasion, would clearly be present. Then again, the tax implementers may use the power to periodically adjust the tax rate and reclassify the brands as a tool to unduly oppress the taxpayer in order for the government to achieve its revenue targets for a given year. Thus, Congress sought to, among others, simplify the whole tax system for sin products to remove these potential areas of abuse and corruption from both the side of the taxpayer and the government. Without doubt, the classification freeze provision was an integral part of this overall plan. This is in line with one of

the avowed objectives of the assailed law "to simplify the tax administration and compliance with the tax laws that are about to unfold in order to minimize losses arising from inefficiencies and tax avoidance scheme, if not outright tax evasion."69 RA 9334 did not alter this classification freeze provision of RA 8240. On the contrary, Congress affirmed this freezing mechanism by clarifying the wording of the law. We can thus reasonably conclude, as the deliberations on RA 9334 readily show, that the administrative concerns in tax administration, which moved Congress to enact the classification freeze provision in RA 8240, were merely continued by RA 9334. Indeed, administrative concerns may provide a legitimate, rational basis for legislative classification.70 In the case at bar, these administrative concerns in the measurement and collection of excise taxes on sin products are readily apparent as afore-discussed. Aside from the major concern regarding the elimination of potential areas for abuse and corruption from the tax administration of sin products, the legislative deliberations also show that the classification freeze provision was intended to generate buoyant and stable revenues for government. With the frozen tax classifications, the revenue inflow would remain stable and the government would be able to predict with a greater degree of certainty the amount of taxes that a cigarette manufacturer would pay given the trend in its sales volume over time. The reason for this is that the previously classified cigarette brands would be prevented from moving either upward or downward their tax brackets despite the changes in their net retail prices in the future and, as a result, the amount of taxes due from them would remain predictable. The classification freeze provision would, thus, aid in the revenue planning of the government.71 All in all, the classification freeze provision addressed Congress’s administrative concerns in the simplification of tax administration of sin products, elimination of potential areas for abuse and corruption in tax collection, buoyant and stable revenue generation, and ease of projection of revenues. Consequently, there can be no denial of the equal protection of the laws since the rationalbasis test is amply satisfied. Going now to the contention of petitioner that the classification freeze provision unduly favors older brands over newer brands, we must first contextualize the basis of this claim. As previously discussed, the evidence presented by the petitioner merely showed that in 2004, Marlboro and Philip Morris, on the one hand, and Lucky Strike, on the other, would have been taxed at the same rate had the classification freeze provision been not in place. But due to the operation of the classification freeze provision, Lucky Strike was taxed higher. From here, petitioner generalizes that this differential tax treatment arising from the classification freeze provision adversely impacts the fairness of the playing field in the industry, particularly, between older and newer brands. Thus, it is virtually impossible for new brands to enter the market. Petitioner did not, however, clearly demonstrate the exact extent of such impact. It has not been shown that the net retail prices of other older brands previously classified under this classification system have already pierced their tax brackets, and, if so, how this has affected the overall competition in the market. Further, it does not necessarily follow that newer brands cannot compete against older brands because price is not the only factor in the market as there are other factors like consumer preference, brand loyalty, etc. In other words, even if the newer brands are priced higher due to the differential tax treatment, it does not mean that they cannot compete in the market especially since cigarettes contain addictive ingredients so that a consumer may be willing to pay a higher price for a particular brand solely due to its unique formulation. It may also be noted that in 2003, the BIR surveyed 29 new brands 72 that were introduced in the market after the effectivity of RA 8240 on January 1, 1997, thus negating the sweeping generalization of petitioner that the classification freeze provision has become an insurmountable barrier to the entry of new brands. Verily, where there is a claim of breach of the due process and equal protection clauses, considering that they are not fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead to such a conclusion. Absent such a showing, the presumption of validity must prevail.73 Be that as it may, petitioner’s evidence does suggest that, at least in 2004, Philip Morris and Marlboro, older brands, would have been taxed at the same rate as Lucky Strike, a newer brand, due to certain conditions (i.e., the increase of the older brands’ net retail prices beyond the tax bracket to which they were previously classified after the lapse of some time) were it not for the classification freeze provision. It may be conceded that this has adversely affected, to a certain extent, the ability of petitioner to competitively price its newer brands vis-à-vis the subject older brands. Thus, to a limited extent, the assailed law seems to derogate one of its avowed objectives, i.e. promoting fair competition among the players in the industry. Yet, will this occurrence, by itself, render the assailed law unconstitutional on equal protection grounds? We answer in the negative. Whether Congress acted improvidently in derogating, to a limited extent, the state’s interest in promoting fair competition among the players in the industry, while pursuing other state interests regarding the simplification of tax administration of sin products, elimination of potential areas for abuse and corruption

in tax collection, buoyant and stable revenue generation, and ease of projection of revenues through the classification freeze provision, and whether the questioned provision is the best means to achieve these state interests, necessarily go into the wisdom of the assailed law which we cannot inquire into, much less overrule. The classification freeze provision has not been shown to be precipitated by a veiled attempt, or hostile attitude on the part of Congress to unduly favor older brands over newer brands. On the contrary, we must reasonably assume, owing to the respect due a co-equal branch of government and as revealed by the Congressional deliberations, that the enactment of the questioned provision was impelled by an earnest desire to improve the efficiency and effectivity of the tax administration of sin products. For as long as the legislative classification is rationally related to furthering some legitimate state interest, as here, the rational-basis test is satisfied and the constitutional challenge is perfunctorily defeated. We do not sit in judgment as a supra-legislature to decide, after a law is passed by Congress, which state interest is superior over another, or which method is better suited to achieve one, some or all of the state’s interests, or what these interests should be in the first place. This policy-determining power, by constitutional fiat, belongs to Congress as it is its function to determine and balance these interests or choose which ones to pursue. Time and again we have ruled that the judiciary does not settle policy issues. The Court can only declare what the law is and not what the law should be. Under our system of government, policy issues are within the domain of the political branches of government and of the people themselves as the repository of all state power.74 Thus, the legislative classification under the classification freeze provision, after having been shown to be rationally related to achieve certain legitimate state interests and done in good faith, must, perforce, end our inquiry. Concededly, the finding that the assailed law seems to derogate, to a limited extent, one of its avowed objectives (i.e. promoting fair competition among the players in the industry) would suggest that, by Congress’s own standards, the current excise tax system on sin products is imperfect. But, certainly, we cannot declare a statute unconstitutional merely because it can be improved or that it does not tend to achieve all of its stated objectives.75 This is especially true for tax legislation which simultaneously addresses and impacts multiple state interests.76 Absent a clear showing of breach of constitutional limitations, Congress, owing to its vast experience and expertise in the field of taxation, must be given sufficient leeway to formulate and experiment with different tax systems to address the complex issues and problems related to tax administration. Whatever imperfections that may occur, the same should be addressed to the democratic process to refine and evolve a taxation system which ideally will achieve most, if not all, of the state’s objectives. In fine, petitioner may have valid reasons to disagree with the policy decision of Congress and the method by which the latter sought to achieve the same. But its remedy is with Congress and not this Court. As succinctly articulated in Vance v. Bradley:77 The Constitution presumes that, absent some reason to infer antipathy, even improvident decisions will eventually be rectified by the democratic process, and that judicial intervention is generally unwarranted no matter how unwisely we may think a political branch has acted. Thus, we will not overturn such a statute unless the varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that we can only conclude that the legislature's actions were irrational.78 We now tackle the second issue. Petitioner asserts that Revenue Regulations No. 1-97, as amended by Revenue Regulations No. 9-2003, Revenue Regulations No. 22-2003 and Revenue Memorandum Order No. 6-2003, are invalid insofar as they empower the BIR to reclassify or update the classification of new brands of cigarettes based on their current net retail prices every two years or earlier. It claims that RA 8240, even prior to its amendment by RA 9334, did not authorize the BIR to conduct said periodic resurvey and reclassification. The questioned provisions are found in the following sections of the assailed issuances: (1) Section 4(B)(e)(c), 2nd paragraph of Revenue Regulations No. 1-97, as amended by Section 2 of Revenue Regulations 9-2003, viz: For the purpose of establishing or updating the tax classification of new brands and variant(s) thereof, their current net retail price shall be reviewed periodically through the conduct of survey or any other appropriate activity, as mentioned above, every two (2) years unless earlier ordered by the Commissioner. However, notwithstanding any increase in the current net retail price, the tax classification of such new brands shall remain in force until the same is altered or changed through the issuance of an appropriate Revenue Regulations.

(2) Sections II(1)(b), II(4)(b), II(6), II(7), III (Large Tax Payers Assistance Division II) II(b) of Revenue Memorandum Order No. 6-2003, insofar as pertinent to cigarettes packed by machine, viz: II. POLICIES AND GUIDELINES 1. The conduct of survey covered by this Order, for purposes of determining the current retail prices of new brands of cigarettes and alcohol products introduced in the market on or after January 1, 1997, shall be undertaken in the following instances: xxxx b. For reclassification of new brands of said excisable products that were introduced in the market after January 1, 1997. xxxx 4. The determination of the current retail prices of new brands of the aforesaid excisable products shall be initiated as follows: xxxx b. After the lapse of the prescribed two-year period or as the Commissioner may otherwise direct, the appropriate tax reclassification of these brands based on the current net retail prices thereof shall be determined by a survey to be conducted upon a written directive by the Commissioner. For this purpose, a memorandum order to the Assistant Commissioner, Large Taxpayers Service, Heads, Excise Tax Areas, and Regional Directors of all Revenue Regions, except Revenue Region Nos. 4, 5, 6, 7, 8 and 9, shall be issued by the Commissioner for the submission of the list of major supermarkets/retail outlets where the above excisable products are being sold, as well as the list of selected revenue officers who shall be designated to conduct the said activity(ies). xxxx 6. The results of the survey conducted in Revenue Region Nos. 4 to 9 shall be submitted directly to the Chief, LT Assistance Division II (LTAD II), National Office for consolidation. On the other hand, the results of the survey conducted in Revenue Regions other than Revenue Region Nos. 4 to 9, shall be submitted to the Office of the Regional Director for regional consolidation. The consolidated regional survey, together with the accomplished survey forms shall be transmitted to the Chief, LTAD II for national consolidation within three (3) days from date of actual receipt from the survey teams. The LTAD II shall be responsible for the evaluation and analysis of the submitted survey forms and the preparation of the recommendation for the updating/revision of the tax classification of each brand of cigarettes and alcohol products. The said recommendation, duly validated by the ACIR, LTS, shall be submitted to the Commissioner for final review within ten (10) days from the date of actual receipt of complete reports from all the surveying Offices. 7. Upon final review by the Commissioner of the revised tax classification of the different new brands of cigarettes and alcohol products, the appropriate revenue regulations shall be prepared and submitted for approval by the Secretary of Finance. xxxx III. PROCEDURES xxxx Large Taxpayers Assistance Division II xxxx 1. Perform the following preparatory procedures on the identification of brands to be surveyed, supermarkets/retail outlets where the survey shall be conducted, and the personnel selected to conduct the survey. xxxx

b. On the tax reclassification of new brands i. Submit a master list of registered brands covered by the survey pursuant to the provisions of Item II.2 of this Order containing the complete description of each brand, existing net retail price and the corresponding tax rate thereof. ii. Submit to the ACIR, LTS, a list of major supermarkets/retail outlets within the territorial jurisdiction of the concerned revenue regions where the survey will be conducted to be used as basis in the issuance of Mission Orders. Ensure that the minimum number of establishments to be surveyed, as prescribed under existing revenue laws and regulations, is complied with. In addition, the names and designations of revenue officers selected to conduct the survey shall be clearly indicated opposite the names of the establishments to be surveyed. There is merit to the contention. In order to implement RA 8240 following its effectivity on January 1, 1997, the BIR issued Revenue Regulations No. 1-97, dated December 13, 1996, which mandates a one-time classification only.79 Upon their launch, new brands shall be initially taxed based on their suggested net retail price. Thereafter, a survey shall be conducted within three (3) months to determine their current net retail prices and, thus, fix their official tax classifications. However, the BIR made a turnaround by issuing Revenue Regulations No. 9-2003, dated February 17, 2003, which partly amended Revenue Regulations No. 1-97, by authorizing the BIR to periodically reclassify new brands (i.e., every two years or earlier) based on their current net retail prices. Thereafter, the BIR issued Revenue Memorandum Order No. 6-2003, dated March 11, 2003, prescribing the guidelines on the implementation of Revenue Regulations No. 9-2003. This was patent error on the part of the BIR for being contrary to the plain text and legislative intent of RA 8240. It is clear that the afore-quoted portions of Revenue Regulations No. 1-97, as amended by Section 2 of Revenue Regulations 9-2003, and Revenue Memorandum Order No. 6-2003 unjustifiably emasculate the operation of Section 145 of the NIRC because they authorize the Commissioner of Internal Revenue to update the tax classification of new brands every two years or earlier subject only to its issuance of the appropriate Revenue Regulations, when nowhere in Section 145 is such authority granted to the Bureau. Unless expressly granted to the BIR, the power to reclassify cigarette brands remains a prerogative of the legislature which cannot be usurped by the former. More importantly, as previously discussed, the clear legislative intent was for new brands to benefit from the same freezing mechanism accorded to Annex "D" brands. To reiterate, in enacting RA 8240, Congress categorically rejected the DOF proposal and Senate Version which would have empowered the DOF and BIR to periodically adjust the excise tax rate and tax brackets, and to periodically resurvey and reclassify cigarette brands. (This resurvey and reclassification would have naturally encompassed both old and new brands.) It would thus, be absurd for us to conclude that Congress intended to allow the periodic reclassification of new brands by the BIR after their classification is determined based on their current net retail price while limiting the freezing of the classification to Annex "D" brands. Incidentally, Senator Ralph G. Recto expressed the following views during the deliberations on RA 9334, which later amended RA 8240: Senator Recto: Because, like I said, when Congress agreed to adopt a specific tax system [under R.A. 8240], when Congress did not index the brackets, and Congress did not index the rates but only provided for a one rate increase in the year 2000, we shifted from ad valorem which was based on value to a system of specific which is based on volume. Congress then, in effect, determined the classification based on the prices at that particular period of time and classified these products accordingly. Of course, Congress then decided on what will happen to the new brands or variants of existing brands. To favor government, a variant would be classified as the highest rate of tax for that particular brand. In case of a new brand, Mr. President, then the BIR should classify them. But I do not think it was the intention of Congress then to give the BIR the authority to reclassify them every so often. I do not think it was the intention of Congress to allow the BIR to classify a new brand every two years, for example, because it will be arbitrary for the BIR to do so. x x x80 (Emphasis supplied) For these reasons, the amendments introduced by RA 9334 to RA 8240, insofar as the freezing mechanism is concerned, must be seen merely as underscoring the legislative intent already in place then, i.e. new brands as being covered by the freezing mechanism after their classification based on their current net retail prices.

Unfortunately for petitioner, this result will not cause a downward reclassification of Lucky Strike. It will be recalled that petitioner introduced Lucky Strike in June 2001. However, as admitted by petitioner itself, the BIR did not conduct the required market survey within three months from product launch. As a result, Lucky Strike was never classified based on its actual current net retail price. Petitioner failed to timely seek redress to compel the BIR to conduct the requisite market survey in order to fix the tax classification of Lucky Strike. In the meantime, Lucky Strike was taxed based on its suggestednet retail price of P9.90 per pack, which is within the high-priced tax bracket. It was only after the lapse of two years or in 2003 that the BIR conducted a market survey which was the first time that Lucky Strike’s actual current net retail price was surveyed and found to be from P10.34 to P11.53 per pack, which is within the premiumpriced tax bracket. The case of petitioner falls under a situation where there was no reclassification based on its current net retail price which would have been invalid as previously explained. Thus, we cannot grant petitioner’s prayer for a downward reclassification of Lucky Strike because it was never reclassified by the BIR based on its actual current net retail price. It should be noted though that on August 8, 2003, the BIR issued Revenue Regulations No. 22-2003 which implemented the revised tax classifications of new brands based on their current net retail prices through the market survey conducted pursuant to Revenue Regulations No. 9-2003. Annex "A" of Revenue Regulations No. 22-2003 lists the result of the market survey and the corresponding recommended tax classification of the new brands therein aside from Lucky Strike. However, whether these other brands were illegally reclassified based on their actual current net retail prices by the BIR must be determined on a case-to-case basis because it is possible that these brands were classified based on their actual current net retail price for the first time in the year 2003 just like Lucky Strike. Thus, we shall not make any pronouncement as to the validity of the tax classifications of the other brands listed therein. Finally, it must be noted that RA 9334 introduced changes in the manner by which the current net retail price of a new brand is determined and how its classification is permanently fixed, to wit: New brands, as defined in the immediately following paragraph, shall initially be classified according to their suggested net retail price. New brands shall mean a brand registered after the date of effectivity of R.A. No. 8240 [on January 1, 1997]. Suggested net retail price shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported cigarettes are intended by the manufacture or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket under which a particular new brand of cigarette, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Internal Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket under which a particular new brand of cigarettes shall be classified; Provided however, That brands of cigarettes introduced in the domestic market between January 1, 1997 and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31, 2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress. (Emphasis supplied) Thus, Revenue Regulations No. 9-2003 and Revenue Memorandum Order No. 6-2003 should be deemed modified by the above provisions from the date of effectivity of RA 9334 on January 1, 2005. In sum, Section 4(B)(e)(c), 2nd paragraph of Revenue Regulations No. 1-97, as amended by Section 2 of Revenue Regulations 9-2003, and Sections II(1)(b), II(4)(b), II(6), II(7), III (Large Tax Payers Assistance Division II) II(b) of Revenue Memorandum Order No. 6-2003, as pertinent to cigarettes packed by machine, are invalid insofar as they grant the BIR the power to reclassify or update the classification of new brands every two years or earlier. Further, these provisions are deemed modified upon the effectivity of RA 9334 on January 1, 2005 insofar as the manner of determining the permanent classification of new brands is concerned. We now tackle the last issue.

Petitioner contends that RA 8240, as amended by RA 9334, and its implementing rules and regulations violate the General Agreement on Tariffs and Trade (GATT) of 1947, as amended, specifically, Paragraph 2, Article III, Part II: 2. The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1. It claims that it is the duty of this Court to correct, in favor of the GATT, whatever inconsistency exists between the assailed law and the GATT in order to prevent triggering the international dispute settlement mechanism under the GATT-WTO Agreement. We disagree. The classification freeze provision uniformly applies to all newly introduced brands in the market, whether imported or locally manufactured. It does not purport to single out imported cigarettes in order to unduly favor locally produced ones. Further, petitioner’s evidence was anchored on the alleged unequal tax treatment between old and new brands which involves a different frame of reference vis-à-vis local and imported products. Petitioner has, therefore, failed to clearly prove its case, both factually and legally, within the parameters of the GATT. At any rate, even assuming arguendo that petitioner was able to prove that the classification freeze provision violates the GATT, the outcome would still be the same. The GATT is a treaty duly ratified by the Philippine Senate and under Article VII, Section 2181 of the Constitution, it merely acquired the status of a statute.82 Applying the basic principles of statutory construction in case of irreconcilable conflict between statutes, RA 8240, as amended by RA 9334, would prevail over the GATT either as a later enactment by Congress or as a special law dealing with the taxation of sin products. Thus, in Abbas v. Commission on Elections,83 we had occasion to explain: Petitioners premise their arguments on the assumption that the Tripoli Agreement is part of the law of the land, being a binding international agreement. The Solicitor General asserts that the Tripoli Agreement is neither a binding treaty, not having been entered into by the Republic of the Philippines with a sovereign state and ratified according to the provisions of the 1973 or 1987 Constitutions, nor a binding international agreement. We find it neither necessary nor determinative of the case to rule on the nature of the Tripoli Agreement and its binding effect on the Philippine Government whether under public international or internal Philippine law. In the first place, it is now the Constitution itself that provides for the creation of an autonomous region in Muslim Mindanao. The standard for any inquiry into the validity of R.A. No. 6734 would therefore be what is so provided in the Constitution. Thus, any conflict between the provisions of R.A. No. 6734 and the provisions of the Tripoli Agreement will not have the effect of enjoining the implementation of the Organic Act. Assuming for the sake of argument that the Tripoli Agreement is a binding treaty or international agreement, it would then constitute part of the law of the land. But as internal law it would not be superior to R.A. No. 6734, an enactment of the Congress of the Philippines, rather it would be in the same class as the latter [SALONGA, PUBLIC INTERNATIONAL LAW 320 (4th ed., 1974), citing Head Money Cases, 112 U.S. 580 (1884) and Foster v. Nelson, 2 Pet. 253 (1829)]. Thus, if at all, R.A. No. 6734 would be amendatory of the Tripoli Agreement, being a subsequent law. Only a determination by this Court that R.A. No. 6734 contravenes the Constitution would result in the granting of the reliefs sought. (Emphasis supplied) WHEREFORE, the petition is PARTIALLY GRANTED and the decision of the Regional Trial Court of Makati, Branch 61, in Civil Case No. 03-1032, is AFFIRMED with MODIFICATION. As modified, this Court declares that: (1) Section 145 of the NIRC, as amended by Republic Act No. 9334, is CONSTITUTIONAL; and that (2) Section 4(B)(e)(c), 2nd paragraph of Revenue Regulations No. 1-97, as amended by Section 2 of Revenue Regulations 9-2003, and Sections II(1)(b), II(4)(b), II(6), II(7), III (Large Tax Payers Assistance Division II) II(b) of Revenue Memorandum Order No. 6-2003, insofar as pertinent to cigarettes packed by machine, are INVALID insofar as they grant the BIR the power to reclassify or update the classification of new brands every two years or earlier. SO ORDERED.

CONSUELO YNARES-SANTIAGO Associate Justice

WE CONCUR: REYNATO S. PUNO Chief Justice LEONARDO A. QUISUMBING Associate Justice

ANTONIO T. CARPIO Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

RENATO C. CORONA Associate Justice

CONCHITA CARPIO MORALES Associate Justice

ADOLFO S. AZCUNA Associate Justice

DANTE O. TINGA Associate Justice

MINITA V. CHICO-NAZARIO Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice

RUBEN T. REYES Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice ARTURO D. BRION Associate Justice

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. REYNATO S. PUNO Chief Justice

Footnotes 1

Based on the updated rates, effective January 1, 2000.

2

Rollo, pp. 50-113.

3

Annex "A," Revenue Regulations No. 22-2003.

4

Rollo, pp. 114-120.

5

Id. at 121-134.

6

Id. at 135.

7

Id. at 136.

8

Id. at 162-166.

9

Id. at 167-168.

10

Id. at 169-181.

11

Id. at 201-203.

12

Id. at 204-218.

13

Id. at 219-233.

14

Id. at 281.

15

Id. at 42-47.

16

Id. at 47; penned by Judge Romeo F. Barza.

17

New brands as defined are those introduced into the market after the effectivity of R.A. 8240 on January 1, 1997, meaning, on January 2, 1997; while existing brands for purposes of inclusion in Annex "D" are those registered on or before January 1, 1997. 18

Id. at 828.

19

Id. at 805-814.

20

Id. at 818-836.

21

Id. at 912-952.

22

Id. at 992-1001.

23

Id. at 1116-1119.

24

Id. at 1157.

25

Republic Act No. 9282.

26

Smart Communications, Inc. v. National Telecommunications Commission, G.R. No. 151908, August 12, 2003, 408 SCRA 678, 689. 27

G.R. No. 112497, August 4, 1994, 235 SCRA 135.

28

Smart Communications, Inc. v. National Telecommunications Commission, supra.

29

Philippine National Bank v. Palma, G.R. No. 157279, August 9, 2005, 466 SCRA 307, 324.

30

Philippine Bank of Communications v. Court of Appeals, 352 Phil. 1, 9 (1998).

31

G.R. No. L-27782, July 31, 1970, 34 SCRA 337, 347.

32

People v. Vera, 65 Phil. 56, 93 (1937).

33

If the net retail price (excluding the excise tax and the value-added tax) of a brand is below Five pesos (P5.00) per pack. 34

If the net retail price (excluding the excise tax and the value-added tax) of a brand is Five pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack. 35

If the net retail price (excluding the excise tax and the value-added tax) of a brand exceeds Six pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack. 36

If the net retail price (excluding the excise tax and the value-added tax) of a brand is above Ten pesos (P10.00) per pack.

37

Upon the request of the Senate Committee on Ways and Means and prior to the effectivity of R.A. 8240 on January 1, 1997, the BIR conducted a survey on the average net retail prices of existing brands of cigarettes as of October 1, 1996 which is now embodied in Annex "D" and which became the basis for determining the applicable specific excise tax rates of said brands. 38

The exception, of course, would be those brands classified under the premium-priced tax bracket (or the highest tax bracket). No matter how high their net retail price increases in the future, they would still remain in the premium-priced bracket. Further, the assumption is that the norm in the future is inflation. If it were deflation, than the older brands would possibly be the ones which would encounter a tax disadvantage after the lapse of some time. 39

SEC. 145. Cigars and cigarettes. – xxxx (c) Cigarettes packed by machine. – There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below: x x x (2) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six pesos and fifty centavos (P6.50) but does not exceed Ten pesos (10.00) per pack, the tax shall be Eight pesos and ninety-six centavos (P8.96) per pack; x x x

40

This was computed as follows: Net Retail Price (P15.59) = Gross Retail Price (P27.00)*- ValueAdded Tax (P2.45) – Excise Tax (8.96) *The gross retail price was established through the receipt of purchase of Marlboro and Philip Morris from a grocery store. (Exhibit "B," records, vol. II, p. 407. See also TSN, February 20, 2004, records, vol. II, pp. 614-617) 41

SEC. 145. Cigars and cigarettes. – xxxx (c) Cigarettes packed by machine. – There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below: x x x (1) If the net retail price (excluding the excise tax and the value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be Thirteen pesos and forty-four centavos (P13.44) per pack;

42

Annex "A," Revenue Regulations No. 22-2003.

43

It may be argued that, perhaps, only the freezing mechanism of the law may be declared unconstitutional so that the current net retail price can still be used to determine the corresponding tax brackets of old and new brands. This becomes problematic since there is no guide as to when or how frequent the current net retail prices shall be determined precisely because the freezing mechanism assumes this function in the assailed law. This Court cannot fill this void that will be created in the law; otherwise, it would be tantamount to judicial legislation. In short, the freezing mechanism is an integral and indispensable part of the classification scheme devised by Congress, without which, it cannot function. Thus, the whole of Section 145(C) of the NIRC, as amended, becomes unavoidably inoperative should a declaration of unconstitutionality be decreed. This result is in accordance with the ruling case law on the matter: The general rule is that where part of a statute is void as repugnant to the Constitution, while another part is valid, the valid portion, if separable from the invalid, may stand and be enforced. The presence of a separability clause in a statute creates the presumption that the legislature intended separability, rather than complete nullity of the statute. To justify this result, the valid portion must be so far independent of the invalid portion that it is fair to presume that the legislature would have enacted it by itself if it had supposed that it could not constitutionally enact the other. Enough must remain to make a complete, intelligible and valid statute, which carries out the legislative intent. x x x

The exception to the general rule is that when the 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, the nullity of one part will vitiate the rest. In making the parts of the statute dependent, conditional, or connected with one another, the legislature intended the statute to be carried out as a whole and would not have enacted it if one part is void, in which case if some parts are unconstitutional, all the other provisions thus dependent, conditional, or connected must fall with them. (Agpalo, Statutory Construction, 1986 ed., pp. 28-29) 44

The practical effect of the operation of the classification freeze provision may be visualized as a timeline starting with brands in Annex "D" which were classified based on their net retail prices as of October 1, 1996. As new brands were introduced in the market, new classes of brands were likewise created depending on the time they were introduced and the time their classifications were finally fixed by the BIR pursuant to the relevant revenue regulations. The characterization of petitioner that the classification freeze provision merely created two classes of brands, i.e., old brands under Annex "D" and new brands introduced after the effectivity of R.A. 8240 is thus, inaccurate. In line with this observation, the succeeding discussions shall make use as point of comparison older brands vis-à-vis newer brands and not old brands (under Annex "D") vis-à-vis new brands. In concrete terms, the disparate tax treatment that appears to have taken place between brands in Annex "D" classified in 1996 and petitioner’s new brands classified in 2003 may, under the same conditions (i.e., piercing of the tax bracket by the older brand through increase of net retail price over time), occur between an older brand classified in 2004 (assuming that it is not classified under the highest tax bracket) and a newer brand that will be classified, say, in 2010. 45

215 Phil. 582 (1984).

46

Id. at 589-590.

47

Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas, G.R. No. 148208, December 15, 2004, 446 SCRA 299, 370. 48

Nordlinger v. Hahn, 505 U.S. 1 (1992).

49

F.S. Royster Guano Co. v. Commonwealth of Virginia, 253 U.S. 412, 415 (1920).

50

See Basco v. Philippine Amusements and Gaming Corp., 274 Phil. 323, 334-335 (1991).

51

Madden v. Commonwealth of Kentucky, 309 U.S. 83, 88 (1940).

52

Government Service Insurance System v. Montesclaros, G.R. No. 146494, July 14, 2004, 434 SCRA 441, 451-452. 53

The application of the freezing mechanism to newer brands is reflected in the following amendments introduced by R.A. No. 9334 to R.A. No. 8240, to wit: Suggested net retail price shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported cigarettes are intended by the manufacturer or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket under which a particular new brand of cigarette, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Internal Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket under which a particular new brand of cigarettes shall be classified; Provided however, That brands of cigarettes introduced in the domestic market between January 1, 1997 and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31, 2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress.

xxxx The classification of each brand of cigarettes based on its average net retail price as of October 1, 1996, as set forth in Annex "D", including the classification of brands for the same products which, although not set forth in said Annex "D", were registered and were being commercially produced and marketed on or after October 1, 1996, and which continue to be commercially produced and marketed after the effectivity of this Act, shall remain in force until revised by Congress. (Emphasis supplied) 54

II Record, Senate 10th Congress (October 15, 1996).

55

It may be noted that after six (6) years from the passage of R.A. No. 8240 or in 2003, several bills were filed in Congress seeking to amend the classification freeze provision by shifting to a periodic adjustment of tax rate and tax brackets as well as periodic resurvey and reclassification of old and new brands to be conducted by the BIR. This was intended to address the perceived unfair differential tax treatment between old and new brands that occurs over the lapse of time. Petitioner views these bills as the remedy to solve the alleged unfair tax treatment arising from the classification freeze provision (See petitioner’s petition before the trial court, records, vol. I, p. 21) Interestingly, these bills filed in 2003 are substantially the same as the above discussed DOF proposal which was rejected by Congress in enacting R.A. No. 8240 for reasons that will be discussed in what follows. 56

Record, House 10th Congress (March 11, 1996).

57

Senator Enrile explained how this periodic adjustment and reclassification provision would operate, thusly: Since 1996 is the year during which we are adopting this law— and it will take effect January of next year— the two-year period covered will be 1997 and 1998. So in order to find out the rate of adjustment both of the cutoff point price (tax bracket), retail price and the corresponding specific tax rate, we divide the CPI of 1998 by the CPI of 1996 and then we get a factor or a quotient which is 1.1272. The figure "one(1)" before the decimal point represents the CPI of 1996 and the numbers after the decimal point would represent the rate of increase. So, in effect, what I am saying is, if we take 100% out of 1.1272 which is the quotient of dividing 257, the CPI of 1998 by 228, the CPI of 1996, then, we end up with .1272 or 12%, a little less than 13%. If we multiply the net retail price now, which is the cut off point (of the tax brackets) established by law as of the time we enact this law, by approximately 13%, that will be the cutoff point price, and we increase the net retail price used as a base when we adopted this law by 13%. It increases the corresponding specific tax by 13% and this will be the adjusted cutoff point and adjusted specific tax as of 1999. 58

The discussion is in reference to the periodic adjustment and reclassification provision of beer. However, under the Senate Version, the same periodic adjustment and reclassification provision is applied to cigarettes so that the same reasoning is applicable to cigarettes. 59

II Record, Senate 10th Congress (November 4, 1996).

60

Id.

61

Id.

62

Id.

63

Id.

64

II Record, Senate 10th Congress (November 21, 1996).

65

Record, House 10th Congress (November 21, 1996).

66

Id.

67

Id.

68

To give a better perspective of the cigarette market based on volume, in 2003 alone, sales volume was as follows: 2.1 billion packs under the low-priced segment, 898 million packs under the medium-priced segment, 1.3 billion packs under the high-priced segment. [Record, Senate 13th Congress (November 17, 2004)] 69

Supra note 47.

70

AMJUR STATELOCL § 122 citing Chicago Freight Car Leasing Co. v. Limbach, 62 Ohio St. 3d 489, 584 N.E.2d 690 (1992); Sandy Springs Water Co. v. Department of Health and Environmental Control, 324 S.C. 177, 478 S.E.2d 60 (1996). See also Skyscraper Corporation v. County of Newberry, 323 S.C. 412, 475 S.E.2d 764 (1996). 71

II Record, Senate 10th Congress (October 15, 1996).

72

See Annex "A," Revenue Regulations No. 22-2003.

73

Supra note 40 at 588-589.

74

Valmonte v. Belmonte, Jr., G.R. No. 74930, February 13, 1989, 170 SCRA 256, 268.

75

Cf. Roschen v. Ward, 279 U.S. 337, 339 (1929).

76

It may be observed that tax legislation is not solely a revenue-generating measure as it also functions as a regulatory tool, a policy instrument to affect consumer behavior (e.g., sumptuary effect), etc.. 77

440 U.S. 93 (1979).

78

Id. at 97.

79

Section 4(B) of Revenue Regulations No. 1-97 provides: Section 4. Classification and Manner of Taxation of Existing Brands, New Brands and Variant of Existing Brands. xxx B. New Brand New brands shall be classified according to their current net retail price. In the meantime that the current net retail price has not yet been established, the suggested net retail price shall be used to determine the specific tax classification. Thereafter, a survey shall be conducted in 20 major supermarkets or retail outlets in Metro Manila (for brands of cigarette marketed nationally) or in five (5) major supermarkets or retail outlets in the region (for brands which are marketed only outside Metro Manila) at which the cigarette is sold on retail in reams/carton, three (3) months after the initial removal of the new brand to determine the actual net retail price excluding the excise tax and value added tax which shall then be the basis in determining the specific tax classification. In case the current net retail price is higher than the suggested net retail price, the former shall prevail. Otherwise, the suggested net retail price shall prevail. Any difference in the specific tax due shall be assessed and collected inclusive of increments as provided for by the National Internal Revenue Code, as amended. The survey contemplated herein to establish the current net retail price on locally manufactured and imported cigarettes shall be conducted by the duly authorized representatives of the Commissioner of Internal Revenue together with a representative of the Regional Director from each Regional Office having jurisdiction over the retail outlet within the Region being surveyed, and who shall submit, without delay, their consolidated written report to the Commissioner of Internal Revenue.

80

Record, Senate 13th Congress (December 6, 2004).

81

Section 21. No treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the Members of the Senate. 82

The Philippine Senate ratified the GATT on December 14, 1994. See Merlin M. Magallona, Fundamentals of Public International Law, 2005 ed., pp. 545-546. 83

G.R. No. 89651, November 10, 1989, 179 SCRA 287, 294 cited in Magallona, supra at 552.

G.R. No. 167614 ANTONIO M. SERRANO, petitioner, versus GALLANT MARITIME SERVICES, INC. AND MARLOW NAVIGATION CO., INC., respondents. Promulgated on: March 24, 2009 --------------------------------------------------------------------------------------------

CONCURRING OPINION BRION, J.: I concur with the ponencias conclusion that Section 10 of Republic Act No. 8042, or the Migrant Workers and Overseas Filipinos Act (R.A. No. 8042), is unconstitutional insofar as it provides that In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

My conclusion, however, proceeds from a different reason and constitutional basis. I believe that this provision should be struck down for violations of the constitutional provisions in favor of labor[1] and of the substantive aspect of the due process clause.[2] Given these bases, I see no necessity in invoking the equal protection clause.Underlying this restraint in invoking the equal protection clause is my hesitation to join the ponencia in declaring a classification as suspect and in using the strict scrutiny standard without clearly defined parameters on when this approach applies. I begin by reading the assailed provision Section 10, R.A. No. 8042 in its constitutional context. Section 18, Article II of the Constitution declares it a state policy to affirm labor as a primary social economic force and to protect the rights of workers and promote their welfare. This policy is emphatically given more life and vitality under Article XIII, Section 3 of the Constitution which reads: Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling

disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.

On June 7, 1995, Congress enacted R.A. No. 8042 to establish a higher standard of protection and promotion of the welfare of migrant workers, their families and of overseas Filipinos in distress.[3] The express policy declarations of R.A. No. 8042 show that its purposes are reiterations of the very same policies enshrined in the Constitution. R.A. No. 8042, among others, recites that: (b) The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. Towards this end, the State shall provide adequate and timely social, economic and legal services to Filipino migrant workers.[4] xxx (e) Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of poverty. In this regard, it is imperative that an effective mechanism be instituted to ensure that the rights and interests of distressed overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or undocumented, are adequately protected and safeguarded.

These declared purposes patently characterize R.A. No. 8042 as a direct implementation of the constitutional objectives on Filipino overseas work so that it must be read and understood in terms of these policy objectives. Under this interpretative guide, any provision in R.A. No. 8042 inimical to the interest of an overseas Filipino worker (OFW) cannot have any place in the law. Further examination of the law shows that while it acknowledges that the State shall promote full employment, it states at the same time that the State does not promote overseas employment as a means to sustain economic growth and national development. The existence of overseas employment program rests solely on the assurance that the dignity and fundamental human rights and freedoms of Filipino citizens shall not, at any time, be compromised or violated. In blunter terms, the overseas employment program exists only for OFW protection. Having said all these, the law concludes its Declaration of Policies with a statement the lawmakers may have perceived as an exception to the laws previously declared policies, by stating [n]onetheless, the deployment of Filipino overseas workers, whether land-based or sea-based, by local service contractors and manning agencies employing them shall be encouraged. Appropriate incentives may be extended to them. Thus, in express terms, the law recognizes that there can be incentives to service contractors and manning agencies in the spirit of encouraging greater deployment efforts. No mention at all, however, was made of incentives to the contractors and agencies principals, i.e., the foreign employers in whose behalf the contractors and agencies recruit OFWs.

The matter of money claims the immediate subject of the present case is governed by Section 10 of the law. This section grants the National Labor Relations Commission (NLRC) jurisdiction over OFW money claims. On liability for money claims, the sections states: SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract. Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid within four (4) months from the approval of the settlement by the appropriate authority. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

Under these terms, the law protects the OFW as against the employer and the recruitment agency in case of illegal termination of service, but limits this liability to the reimbursement of the placement fee and interest, and the payment of his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. After earlier declaring the principal/employer and the contractor/recruitment agency jointly and solidarily liable, the limitation of liability appears to be a step backward that can only be justified, under the terms of the law, if it is an appropriate incentive. To be appropriate, the incentive must necessarily relate to the laws purpose with reasonable expectation that it would serve this purpose; it must also accrue to its intended beneficiaries (the recruitment/placement agencies), and not to parties to whom the reason for the grant does not apply.

These considerations bring us to the question can the disputed portion of Section 10 stand constitutional scrutiny? I submit that it cannot as it violates the constitutional provisions in favor of labor, as well as the requirements of substantive due process. The best indicator of the effect of the disputed portion of Section 10 on OFWs can be seen from the results of the pre-R.A. No. 8042 rulings of this Court that the ponencia painstakingly arranged in tabular form. The ponencias table shows that by our own past rulings, before R.A. No. 8042, all illegal dismissals merited the payment of the salaries that the OFWs would have received for the unexpired portion of their contracts.[5] After R.A. No. 8042, our rulings vary on the computation of what should be paid to illegally dismissed OFWs, but in all cases the principals/agencys adjudged liability was for less than the unexpired portion of the OFWs contract.[6] Anyway viewed, the situation of illegally dismissed OFWs changed for the worse after R.A. No. 8042. In this sense, the disputed portion of Section 10 is one that goes against the interests of labor, based on R.A. No. 8042s own declared purposes and, more importantly, on constitutional standards. Section 10 diminished rather than enhanced the protection the Constitution envisions for OFWs. The more significant violation, however, that the disputed portion of Section 10 spawns relates to its character as a police power measure, and its failure to meet the substantive due process requirements of Article III, Section 1 of the Constitution. By the Office of the Solicitor Generals (OSG) own representations, the disputed Section 10 is a police power measure adopted to mitigate the solidary liability of placement agencies. It redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions. [7] To constitutionally test the validity of this measure, substantive due process requires that there be: (1) a lawful purpose; and (2) lawful means or method to achieve the lawful purpose.[8] I see nothing inherently unconstitutional in providing incentives to local service contractors and manning agencies; they are significant stakeholders in the overseas employment program and providing them with encouragement as R.A. No. 8042 apparently envisions in its Declaration of Policies will ultimately redound to the benefit of the OFWs they recruit and deploy for overseas work. The Constitution itself also expressly recognizes the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.[9] As entities acting for the principals/employers in the overseas employment program, the recruitment/manning agencies deserve no less. Viewed from this perspective, the purpose of encouraging greater efforts at securing work for OFWs cannot but be

constitutionally valid. Thus, the issue before us in considering substantive due process is reduced to whether the means taken to achieve the purpose of encouraging recruitment efforts (i.e., the incentive granted limiting the liability of recruitment/manning agencies for illegal dismissals) is reasonable. The first significant consideration in examining this issue is the question of liability who is liable when a foreign principal/employer illegally terminates the services of an OFW? Under Philippine law, the employer, as the contracting party who violated the terms of the contract, is primarily liable.[10] In the overseas employment situation, the protective measures adopted under the law and the Philippine Overseas Employment Administration (POEA) rules to protect the OFW in his or her overseas contract best tell us how we regard liability under this contract. First, POEA Rules require, as a condition precedent to an OFW deployment, the execution of a master contract signed by a foreign principal/employer before it can be accredited by the POEA as an entity who can source its manpower needs from the Philippines under its overseas employment program.[11] The master contract contains the terms and conditions the foreign principal/employer binds itself to in its employment relationship with the OFWs it will employ. Second, signed individual contracts of employment between the foreign principal/employer or its agent and the OFW, drawn in accordance with the master contract, are required as well.[12] Third, the foreign aspects or incidents of these contracts are submitted to the Philippine labor attachs for verification at site.[13] This is a protective measure to ensure the existence and financial capability of the foreign principal/employer. Labor attaches verify as well the individual employment contracts signed by foreign principals/employers overseas. Fourth, the POEA Rules require the issuance by the foreign principal-employer of a special power of attorney authorizing the recruitment/manning agency to sign for and its behalf, and allowing itself to sue or be sued on the employment contracts in the Philippines through its authorized recruitment/manning agency.[14] Fifth, R.A. No. 8042 itself and its predecessor laws have always provided that the liability between the principal and its agent (the recruitment/manning agency) is joint and solidary,[15]thus ensuring that either the principal or the agent can be held liable for obligations due to OFWs. Finally, OFWs themselves can sue at the host countries with the assistance of Philippine embassies and labor offices.[16] These measures collectively protect OFWs by ensuring the integrity of their contracts; by establishing the responsible parties; and by providing the mechanisms for their enforcement. In all these, the primary recourse is with the foreign principal employer who has direct and primary responsibility under the employment contract. Section 10 of R.A. No. 8042 affects these well-laid rules and measures, and in fact provides a hidden twist affecting the principal/employers liability. While intended as an incentive accruing to recruitment/manning agencies, the law, as worded, simply limits the OFWs recovery in wrongful dismissal situations. Thus, it redounds to the benefit of whoever may be liable, including the principal/employer the direct employer primarily liable for the wrongful dismissal. In this sense,

Section 10 read as a grant of incentives to recruitment/manning agencies oversteps what it aims to do by effectively limiting what is otherwise the full liability of the foreign principals/employers.Section 10, in short, really operates to benefit the wrong party and allows that party, without justifiable reason, to mitigate its liability for wrongful dismissals. Because of this hidden twist, the limitation of liability under Section 10 cannot be an appropriate incentive, to borrow the term that R.A. No. 8042 itself uses to describe the incentive it envisions under its purpose clause. What worsens the situation is the chosen mode of granting the incentive: instead of a grant that, to encourage greater efforts at recruitment, is directly related to extra efforts undertaken, the law simply limits their liability for the wrongful dismissals of already deployed OFWs. This is effectively a legallyimposed partial condonation of their liability to OFWs, justified solely by the laws intent to encourage greater deployment efforts. Thus, the incentive, from a more practical and realistic view, is really part of a scheme to sell Filipino overseas labor at a bargain for purposes solely of attracting the market. Ironically, the OSG unabashedly confirmed this view in its Comment when it represented that [b]y limiting the liability to three months, Filipino seafarers have better chance of getting hired by foreign employees.[17] The so-called incentive is rendered particularly odious by its effect on the OFWs - the benefits accruing to the recruitment/manning agencies and their principals are taken from the pockets of the OFWs to whom the full salaries for the unexpired portion of the contract rightfully belong. Thus, the principals/employers and the recruitment/manning agencies even profit from their violation of the security of tenure that an employment contract embodies. Conversely, lesser protection is afforded the OFW, not only because of the lessened recovery afforded him or her by operation of law, but also because this same lessened recovery renders a wrongful dismissal easier and less onerous to undertake; the lesser cost of dismissing a Filipino will always be a consideration a foreign employer will take into account in termination of employment decisions. This reality, unfortunately, is one that we cannot simply wish away with the disputed Section 10 in place. Thus, this inherently oppressive, arbitrary, confiscatory and inimical provision should be struck down for its conflict with the substantive aspect of the constitutional due process guarantee. Specifically, the phrasefor three (3) months for every year of the unexpired terms, whichever is less in the fifth and final paragraph of Section 10 of R.A. 8042 should be declared unconstitutional. With these conclusions, I see no need to further test the validity of the assailed clause under the equal protection guarantee. My restraint in this regard rests on two reasons. First, I believe that the ponencias use of the strict scrutiny standard of review on the premise that the assailed clause established a suspect classification is misplaced.Second, I do not see the present case as an occasion to further expand the use of the strict scrutiny standard which the Court first expanded in Central Bank Employees Association, Inc. v. Bangko Sentral ng Pilipinas,[18]

A suspect classification is one where distinctions are made based on the most invidious bases for classification that violate the most basic human rights, i.e., on the basis of race, national origin, alien status, religious affiliation, and to a certain extent, sex and sexual orientation.[19] With a suspect classification, the scrutiny of the classification is raised to its highest level: the ordinary presumption of constitutionality is reversed and government carries the burden of proving that its challenged policy is constitutional. To withstand strict scrutiny, the government must show that its policy is necessary to achieve a compelling state interest; if this is proven, the state must then demonstrate that the legislation is narrowly tailored to achieve the intended result.[20] In the present case, I do not see the slightest indication that Congress actually intended to classify OFWs between and among themselves, and in relation with local workers when it adopted the disputed portion of Section 10. The congressional intent was to merely grant recruitment and manning agencies an incentive and thereby encourage them into greater deployment efforts, although, as discussed above, the incentive really works for the foreign principals benefit at the expense of the OFWs. Even assuming that a classification resulted from the law, the classification should not immediately be characterized as a suspect classification that would invite the application of the strict scrutiny standard. The disputed portion of Section 10 does not, on its face, restrict or curtail the civil and human rights of any single group of OFWs. At best, the disputed portion limits the monetary award for wrongful termination of employment a tort situation affecting an OFWs economic interest. This characterization and the unintended classification that unwittingly results from the incentive scheme under Section 10, to my mind, render a strict scrutiny disproportionate to the circumstances to which it is applied. I believe, too, that we should tread lightly in further expanding the concept of suspect classification after we have done so in Central Bank,[21] where we held that classifications that result in prejudice to persons accorded special protection by the Constitution[22] requires a stricter judicial scrutiny. The use of a suspect classification label cannot depend solely on whether the Constitution has accorded special protection to a specified sector. While the Constitution specially mentions labor as a sector that needs special protection, the involvement of or relationship to labor, by itself, cannot automatically trigger a suspect classification and the accompanying strict scrutiny; much should depend on the circumstances of the case, on the impact of the illegal differential treatment on the sector involved, on the needed protection, and on the impact of recognizing a suspect classification on future situations. In other words, we should carefully calibrate our moves when faced with an equal protection situation so that we do not misappreciate the essence of what a suspect classification is, and thereby lessen its jurisprudential impact and value. Reserving this approach to the worst cases of unacceptable classification and discrimination highlights the importance of striking at these types of unequal treatment and is a lesson that will not be lost on all concerned, particularly the larger public. There is the added reason, too, that the reverse onus that a strict scrutiny brings directly strikes, in the most glaring manner, at the regularity of the performance of functions of a co-equal branch of government;

inter-government harmony and courtesy demand that we reserve this type of treatment to the worst violations of the Constitution. Incidentally, I believe that we can arrive at the same conclusion and similarly strike down the disputed Section 10 by using the lowest level of scrutiny, thereby rendering the use of the strict scrutiny unnecessary. Given the OSGs positions, the resulting differential treatment the law fosters between Philippinebased workers and OFWs in illegal dismissal situations does not rest on substantial distinctions that are germane to the purpose of the law. No reasonable basis for classification exists since the distinctions the OSG pointed out do not justify the different treatment of OFWs and Philippine-based workers, specifically, why one class should be excepted from the consequences of illegal termination under the Labor Code, while the other is not. To be sure, the difference in work locations and working conditions that the OSG pointed out are not valid grounds for distinctions that should matter in the enforcement of employment contracts. Whether in the Philippines or elsewhere, the integrity of contracts be they labor, commercial or political is a zealously guarded value that we in the Philippines should not demean by allowing a breach of OFW contracts easy to undertake. This is true whatever may be the duration or character of employment; employment contracts, whatever their term and conditions may be subject only to their consistency with the law, must be respected during the whole contracted term and under the conditions agreed upon. Significantly, the OSG could not even point to any reason other than the protection of recruitment agencies and the expansion of the Philippine overseas program as justification for the limitation of liability that has effectively distinguished OFWs from locally-based workers. These reasons, unfortunately, are not on the same plane as protection to labor in our constitutional hierarchy of values. Even RA 8042 repeats that the State does not promote overseas employment as a means to sustain economic growth and national development. Under RA 8042s own terms, the overseas employment program exists only for OFW protection. Thus viewed, the expansion of the Philippine overseas deployment program and the need for incentives to achieve results are simply not valid reasons to justify a classification, particularly when the incentive is in the form of oppressive and confiscatory limitation of liability detrimental to labor. No valid basis for classification thus exists to justify the differential treatment that resulted from the disputed Section 10. In light of all these, I vote to strike down the disputed portion of Section 10 of R.A. No. 8042.

EN BANC LOUIS BAROK C. BIRAOGO, Petitioner,

G.R. No. 192935

- versus THE PHILIPPINE TRUTH COMMISSION OF 2010, Respondent. x-----------------------x REP. EDCEL C. LAGMAN, REP. RODOLFO B. ALBANO, JR., REP. SIMEON A. DATUMANONG, and REP. ORLANDO B. FUA, SR., Petitioners,

- versus -

EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR. and DEPARTMENT OF BUDGET AND MANAGEMENT SECRETARY FLORENCIO B. ABAD, Respondents.

G.R. No. 193036 Present: CORONA, C.J., CARPIO, CARPIO MORALES, VELASCO, JR., NACHURA, LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN, DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA, and SERENO, JJ. Promulgated: December 7, 2010

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

DECISION MENDOZA, J.: When the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the

legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them. --- Justice Jose P. Laurel[1] The role of the Constitution cannot be overlooked. It is through the Constitution that the fundamental powers of government are established, limited and defined, and by which these powers are distributed among the several departments. [2] The Constitution is the basic and paramount law to which all other laws must conform and to which all persons, including the highest officials of the land, must defer.[3] Constitutional doctrines must remain steadfast no matter what may be the tides of time. It cannot be simply made to sway and accommodate the call of situations and much more tailor itself to the whims and caprices of government and the people who run it.[4] For consideration before the Court are two consolidated cases[5] both of which essentially assail the validity and constitutionality of Executive Order No. 1, dated July 30, 2010, entitled Creating the Philippine Truth Commission of 2010.

The first case is G.R. No. 192935, a special civil action for prohibition instituted by petitioner Louis Biraogo (Biraogo) in his capacity as a citizen and taxpayer. Biraogo assails Executive Order No. 1 for being violative of the legislative power of Congress under Section 1, Article VI of the Constitution[6] as it usurps the constitutional authority of the legislature to create a public office and to appropriate funds therefor.[7] The second case, G.R. No. 193036, is a special civil action for certiorari and prohibition filed by petitioners Edcel C. Lagman, Rodolfo B. Albano Jr., Simeon A. Datumanong, and Orlando B. Fua, Sr. (petitioners-legislators) as incumbent members of the House of Representatives. The genesis of the foregoing cases can be traced to the events prior to the historic May 2010 elections, when then Senator Benigno Simeon Aquino III declared his staunch condemnation of graft and corruption with his slogan, Kung walang corrupt, walang mahirap. The Filipino people, convinced of his sincerity and of his ability to carry out this noble objective, catapulted the good senator to the presidency. To transform his campaign slogan into reality, President Aquino found a need for a special body to investigate reported cases of graft and corruption allegedly committed during the previous administration.

Thus, at the dawn of his administration, the President on July 30, 2010, signed Executive Order No. 1 establishing the Philippine Truth Commission of 2010 (Truth Commission). Pertinent provisions of said executive order read: EXECUTIVE ORDER NO. 1 CREATING THE PHILIPPINE TRUTH COMMISSION OF 2010 WHEREAS, Article XI, Section 1 of the 1987 Constitution of the Philippines solemnly enshrines the principle that a public office is a public trust and mandates that public officers and employees, who are servants of the people, must at all times be accountable to the latter, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice, and lead modest lives; WHEREAS, corruption is among the most despicable acts of defiance of this principle and notorious violation of this mandate; WHEREAS, corruption is an evil and scourge which seriously affects the political, economic, and social life of a nation; in a very special way it inflicts untold misfortune and misery on the poor, the marginalized and underprivileged sector of society; WHEREAS, corruption in the Philippines has reached very alarming levels, and undermined the peoples trust and confidence in the Government and its institutions; WHEREAS, there is an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the Government and in their public servants; WHEREAS, the Presidents battlecry during his campaign for the Presidency in the last elections kung walang corrupt, walang mahirap expresses a solemn pledge that if elected, he would end corruption and the evil it breeds; WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all; WHEREAS, Book III, Chapter 10, Section 31 of Executive Order No. 292, otherwise known as the Revised Administrative Code of the Philippines, gives the President the continuing authority to reorganize the Office of the President. NOW, THEREFORE, I, BENIGNO SIMEON AQUINO III, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order: SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor. The Commission shall be composed of a Chairman and four (4) members who will act as an independent collegial body.

SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough factfinding investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and higher, their co-principals, accomplices and accessories from the private sector, if any, during the previous administration and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. In particular, it shall: a) Identify and determine the reported cases of such graft and corruption which it will investigate; b) Collect, receive, review and evaluate evidence related to or regarding the cases of large scale corruption which it has chosen to investigate, and to this end require any agency, official or employee of the Executive Branch, including government-owned or controlled corporations, to produce documents, books, records and other papers; c) Upon proper request or representation, obtain information and documents from the Senate and the House of Representatives records of investigations conducted by committees thereof relating to matters or subjects being investigated by the Commission; d) Upon proper request and representation, obtain information from the courts, including the Sandiganbayan and the Office of the Court Administrator, information or documents in respect to corruption cases filed with the Sandiganbayan or the regular courts, as the case may be; e) Invite or subpoena witnesses and take their testimonies and for that purpose, administer oaths or affirmations as the case may be; f) Recommend, in cases where there is a need to utilize any person as a state witness to ensure that the ends of justice be fully served, that such person who qualifies as a state witness under the Revised Rules of Court of the Philippines be admitted for that purpose; g) Turn over from time to time, for expeditious prosecution, to the appropriate prosecutorial authorities, by means of a special or interim report and recommendation, all evidence on corruption of public officers and employees and their private sector co-principals, accomplices or accessories, if any, when in the course of its investigation the Commission finds that there is reasonable ground to believe that they are liable for graft and corruption under pertinent applicable laws; h) Call upon any government investigative or prosecutorial agency such as the Department of Justice or any of the agencies under it, and the Presidential AntiGraft Commission, for such assistance and cooperation as it may require in the discharge of its functions and duties; i) Engage or contract the services of resource persons, professionals and other personnel determined by it as necessary to carry out its mandate; j) Promulgate its rules and regulations or rules of procedure it deems necessary to effectively and efficiently carry out the objectives of this Executive Order and to ensure the orderly conduct of its investigations, proceedings and hearings, including the presentation of evidence; k) Exercise such other acts incident to or are appropriate and necessary in connection with the objectives and purposes of this Order. SECTION 3. Staffing Requirements. x x x. SECTION 4. Detail of Employees. x x x.

SECTION 5. Engagement of Experts. x x x SECTION 6. Conduct of Proceedings. x x x. SECTION 7. Right to Counsel of Witnesses/Resource Persons. x x x. SECTION 8. Protection of Witnesses/Resource Persons. x x x. SECTION 9. Refusal to Obey Subpoena, Take Oath or Give Testimony. Any government official or personnel who, without lawful excuse, fails to appear upon subpoena issued by the Commission or who, appearing before the Commission refuses to take oath or affirmation, give testimony or produce documents for inspection, when required, shall be subject to administrative disciplinary action. Any private person who does the same may be dealt with in accordance with law. SECTION 10. Duty to Extend Assistance to the Commission. x x x. SECTION 11. Budget for the Commission. The Office of the President shall provide the necessary funds for the Commission to ensure that it can exercise its powers, execute its functions, and perform its duties and responsibilities as effectively, efficiently, and expeditiously as possible. SECTION 12. Office. x x x. SECTION 13. Furniture/Equipment. x x x. SECTION 14. Term of the Commission. The Commission shall accomplish its mission on or before December 31, 2012. SECTION 15. Publication of Final Report. x x x. SECTION 16. Transfer of Records and Facilities of the Commission. x x x. SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

SECTION 18. Separability Clause. If any provision of this Order is declared unconstitutional, the same shall not affect the validity and effectivity of the other provisions hereof. SECTION 19. Effectivity. This Executive Order shall take effect immediately. DONE in the City of Manila, Philippines, this 30th day of July 2010. (SGD.) BENIGNO S. AQUINO III By the President: (SGD.) PAQUITO N. OCHOA, JR. Executive Secretary

Nature of the Truth Commission As can be gleaned from the above-quoted provisions, the Philippine Truth Commission (PTC) is a mere ad hoc body formed under the Office of the President with the primary task to investigate reports of graft and corruption committed by third-level public officers and employees, their co-principals, accomplices and accessories during the previous administration, and thereafter to submit its finding

and recommendations to the President, Congress and the Ombudsman. Though it has been described as an independent collegial body, it is essentially an entity within the Office of the President Proper and subject to his control. Doubtless, it constitutes a public office, as an ad hoc body is one.[8] To accomplish its task, the PTC shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987. It is not, however, a quasi-judicial body as it cannot adjudicate, arbitrate, resolve, settle, or render awards in disputes between contending parties. All it can do is gather, collect and assess evidence of graft and corruption and make recommendations. It may have subpoena powers but it has no power to cite people in contempt, much less order their arrest. Although it is a fact-finding body, it cannot determine from such facts if probable cause exists as to warrant the filing of an information in our courts of law. Needless to state, it cannot impose criminal, civil or administrative penalties or sanctions. The PTC is different from the truth commissions in other countries which have been created as official, transitory and non-judicial fact-finding bodies to establish the facts and context of serious violations of human rights or of international humanitarian law in a countrys past.[9] They are usually established by states emerging from periods of internal unrest, civil strife or authoritarianism to serve as mechanisms for transitional justice. Truth commissions have been described as bodies that share the following characteristics: (1) they examine only past events; (2) they investigate patterns of abuse committed over a period of time, as opposed to a particular event; (3) they are temporary bodies that finish their work with the submission of a report containing conclusions and recommendations; and (4) they are officially sanctioned, authorized or empowered by the State.[10] Commissions members are usually empowered to conduct research, support victims, and propose policy recommendations to prevent recurrence of crimes. Through their investigations, the commissions may aim to discover and learn more about past abuses, or formally acknowledge them. They may aim to prepare the way for prosecutions and recommend institutional reforms.[11] Thus, their main goals range from retribution to reconciliation. The Nuremburg and Tokyo war crime tribunals are examples of a retributory or vindicatory body set up to try and punish those responsible for crimes against humanity. A form of a reconciliatory tribunal is the Truth and Reconciliation Commission of South Africa, the principal function of which was to heal the wounds of past violence and to prevent future conflict by providing a cathartic experience for victims. The PTC is a far cry from South Africas model. The latter placed more emphasis on reconciliation than on judicial retribution, while the marching order of

the PTC is the identification and punishment of perpetrators. As one writer [12] puts it: The order ruled out reconciliation. It translated the Draconian code spelled out by Aquino in his inaugural speech: To those who talk about reconciliation, if they mean that they would like us to simply forget about the wrongs that they have committed in the past, we have this to say: There can be no reconciliation without justice. When we allow crimes to go unpunished, we give consent to their occurring over and over again.

The Thrusts of the Petitions Barely a month after the issuance of Executive Order No. 1, the petitioners asked the Court to declare it unconstitutional and to enjoin the PTC from performing its functions. A perusal of the arguments of the petitioners in both cases shows that they are essentially the same. The petitioners-legislators summarized them in the following manner: (a) E.O. No. 1 violates the separation of powers as it arrogates the power of the Congress to create a public office and appropriate funds for its operation. (b) The provision of Book III, Chapter 10, Section 31 of the Administrative Code of 1987 cannot legitimize E.O. No. 1 because the delegated authority of the President to structurally reorganize the Office of the President to achieve economy, simplicity and efficiency does not include the power to create an entirely new public office which was hitherto inexistent like the Truth Commission. (c) E.O. No. 1 illegally amended the Constitution and pertinent statutes when it vested the Truth Commission with quasi-judicial powers duplicating, if not superseding, those of the Office of the Ombudsman created under the 1987 Constitution and the Department of Justice created under the Administrative Code of 1987. (d) E.O. No. 1 violates the equal protection clause as it selectively targets for investigation and prosecution officials and personnel of the previous administration as if corruption is their peculiar species even as it excludes those of the other administrations, past and present, who may be indictable. (e) The creation of the Philippine Truth Commission of 2010 violates the consistent and general international practice of four decades wherein States constitute truth commissions to exclusively investigate human rights violations, which customary practice forms part of the generally accepted principles of international law which the Philippines is mandated to adhere to pursuant to the Declaration of Principles enshrined in the Constitution.

(f) The creation of the Truth Commission is an exercise in futility, an adventure in partisan hostility, a launching pad for trial/conviction by publicity and a mere populist propaganda to mistakenly impress the people that widespread poverty will altogether vanish if corruption is eliminated without even addressing the other major causes of poverty. (g) The mere fact that previous commissions were not constitutionally challenged is of no moment because neither laches nor estoppel can bar an eventual question on the constitutionality and validity of an executive issuance or even a statute.[13]

In their Consolidated Comment,[14] the respondents, through the Office of the Solicitor General (OSG), essentially questioned the legal standing of petitioners and defended the assailed executive order with the following arguments: 1] E.O. No. 1 does not arrogate the powers of Congress to create a public office because the Presidents executive power and power of control necessarily include the inherent power to conduct investigations to ensure that laws are faithfully executed and that, in any event, the Constitution, Revised Administrative Code of 1987 (E.O. No. 292), [15] Presidential Decree (P.D.) No. 1416[16] (as amended by P.D. No. 1772), R.A. No. 9970,[17] and settled jurisprudence that authorize the President to create or form such bodies. 2] E.O. No. 1 does not usurp the power of Congress to appropriate funds because there is no appropriation but a mere allocation of funds already appropriated by Congress. 3] The Truth Commission does not duplicate or supersede the functions of the Office of the Ombudsman (Ombudsman) and the Department of Justice (DOJ), because it is a fact-finding body and not a quasi-judicial body and its functions do not duplicate, supplant or erode the latters jurisdiction. 4] The Truth Commission does not violate the equal protection clause because it was validly created for laudable purposes. The OSG then points to the continued existence and validity of other executive orders and presidential issuances creating similar bodies to justify the creation of the PTC such as Presidential Complaint and Action Commission (PCAC) by President Ramon B. Magsaysay, Presidential Committee on Administrative Performance Efficiency (PCAPE) by President Carlos P. Garcia

and Presidential Agency on Reform and Government Operations (PARGO) by President Ferdinand E. Marcos.[18] From the petitions, pleadings, transcripts, and memoranda, the following are the principal issues to be resolved: 1. Whether or not the petitioners have the legal standing to file their respective petitions and question Executive Order No. 1; 2. Whether or not Executive Order No. 1 violates the principle of separation of powers by usurping the powers of Congress to create and to appropriate funds for public offices, agencies and commissions; 3. Whether or not Executive Order No. 1 supplants the powers of the Ombudsman and the DOJ; 4. Whether or not Executive Order No. 1 violates the equal protection clause; and 5. Whether or not petitioners are entitled to injunctive relief. Essential requisites for judicial review Before proceeding to resolve the issue of the constitutionality of Executive Order No. 1, the Court needs to ascertain whether the requisites for a valid exercise of its power of judicial review are present. Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging the act must have the standing to question the validity of the subject act or issuance; otherwise stated, he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.[19] Among all these limitations, only the legal standing of the petitioners has been put at issue. Legal Standing of the Petitioners The OSG attacks the legal personality of the petitioners-legislators to file their petition for failure to demonstrate their personal stake in the outcome of the case. It argues that the petitioners have not shown that they have sustained or are in danger of sustaining any personal injury attributable to the creation of the PTC.

Not claiming to be the subject of the commissions investigations, petitioners will not sustain injury in its creation or as a result of its proceedings.[20] The Court disagrees with the OSG in questioning the legal standing of the petitioners-legislators to assail Executive Order No. 1. Evidently, their petition primarily invokes usurpation of the power of the Congress as a body to which they belong as members. This certainly justifies their resolve to take the cudgels for Congress as an institution and present the complaints on the usurpation of their power and rights as members of the legislature before the Court. As held in Philippine Constitution Association v. Enriquez,[21] To the extent the powers of Congress are impaired, so is the power of each member thereof, since his office confers a right to participate in the exercise of the powers of that institution. An act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial injury, which can be questioned by a member of Congress. In such a case, any member of Congress can have a resort to the courts.

Indeed, legislators have a legal standing to see to it that the prerogative, powers and privileges vested by the Constitution in their office remain inviolate. Thus, they are allowed to question the validity of any official action which, to their mind, infringes on their prerogatives as legislators. [22] With regard to Biraogo, the OSG argues that, as a taxpayer, he has no standing to question the creation of the PTC and the budget for its operations. [23] It emphasizes that the funds to be used for the creation and operation of the commission are to be taken from those funds already appropriated by Congress. Thus, the allocation and disbursement of funds for the commission will not entail congressional action but will simply be an exercise of the Presidents power over contingent funds. As correctly pointed out by the OSG, Biraogo has not shown that he sustained, or is in danger of sustaining, any personal and direct injury attributable to the implementation of Executive Order No. 1. Nowhere in his petition is an assertion of a clear right that may justify his clamor for the Court to exercise judicial power and to wield the axe over presidential issuances in defense of the Constitution. The case of David v. Arroyo[24] explained the deep-seated rules on locus standi. Thus: Locus standi is defined as a right of appearance in a court of justice on a given question. In private suits, standing is governed by the realparties-in interest rule as contained in Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. It provides that every action must be prosecuted or defended in the name of the real party in interest. Accordingly, the real-party-in interest is the party who stands to be benefited or injured

by the judgment in the suit or the party entitled to the avails of the suit. Succinctly put, the plaintiffs standing is based on his own right to the relief sought. The difficulty of determining locus standi arises in public suits. Here, the plaintiff who asserts a public right in assailing an allegedly illegal official action, does so as a representative of the general public. He may be a person who is affected no differently from any other person. He could be suing as a stranger, or in the category of a citizen, or taxpayer. In either case, he has to adequately show that he is entitled to seek judicial protection. In other words, he has to make out a sufficient interest in the vindication of the public order and the securing of relief as a citizen or taxpayer. Case law in most jurisdictions now allows both citizen and taxpayer standing in public actions. The distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayers suit is in a different category from the plaintiff in a citizens suit. In the former, the plaintiff is affected by the expenditure of public funds, while in the latter, he is but the mere instrument of the public concern. As held by the New York Supreme Court in People ex rel Case v. Collins: In matter of mere public right, howeverthe people are the real partiesIt is at least the right, if not the duty, of every citizen to interfere and see that a public offence be properly pursued and punished, and that a public grievance be remedied. With respect to taxpayers suits, Terr v. Jordan held that the right of a citizen and a taxpayer to maintain an action in courts to restrain the unlawful use of public funds to his injury cannot be denied. However, to prevent just about any person from seeking judicial interference in any official policy or act with which he disagreed with, and thus hinders the activities of governmental agencies engaged in public service, the United State Supreme Court laid down the more stringent direct injury test in Ex Parte Levitt, later reaffirmed in Tileston v. Ullman. The same Court ruled that for a private individual to invoke the judicial power to determine the validity of an executive or legislative action, he must show that he has sustained a direct injury as a result of that action, and it is not sufficient that he has a general interest common to all members of the public. This Court adopted the direct injury test in our jurisdiction. In People v. Vera, it held that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustain direct injury as a result. The Vera doctrine was upheld in a litany of cases, such as, Custodio v. President of the Senate, Manila Race Horse Trainers Association v. De la Fuente, Pascual v. Secretary of Public Works and Anti-Chinese League of the Philippines v. Felix. [Emphases included. Citations omitted]

Notwithstanding, the Court leans on the doctrine that the rule on standing is a matter of procedure, hence, can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators when the public interest so requires, such as when the matter is of transcendental importance, of overreaching significance to society, or of paramount public interest.[25]

Thus, in Coconut Oil Refiners Association, Inc. v. Torres,[26] the Court held that in cases of paramount importance where serious constitutional questions are involved, the standing requirements may be relaxed and a suit may be allowed to prosper even where there is no direct injury to the party claiming the right of judicial review. In the first Emergency Powers Cases,[27] ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders although they had only an indirect and general interest shared in common with the public. The OSG claims that the determinants of transcendental importance [28] laid down in CREBA v. ERC and Meralco[29] are non-existent in this case. The Court, however, finds reason in Biraogos assertion that the petition covers matters of transcendental importance to justify the exercise of jurisdiction by the Court. There are constitutional issues in the petition which deserve the attention of this Court in view of their seriousness, novelty and weight as precedents. Where the issues are of transcendental and paramount importance not only to the public but also to the Bench and the Bar, they should be resolved for the guidance of all.[30] Undoubtedly, the Filipino people are more than interested to know the status of the Presidents first effort to bring about a promised change to the country. The Court takes cognizance of the petition not due to overwhelming political undertones that clothe the issue in the eyes of the public, but because the Court stands firm in its oath to perform its constitutional duty to settle legal controversies with overreaching significance to society. Power of the President to Create the Truth Commission In his memorandum in G.R. No. 192935, Biraogo asserts that the Truth Commission is a public office and not merely an adjunct body of the Office of the President.[31] Thus, in order that the President may create a public office he must be empowered by the Constitution, a statute or an authorization vested in him by law. According to petitioner, such power cannot be presumed[32] since there is no provision in the Constitution or any specific law that authorizes the President to create a truth commission.[33] He adds that Section 31 of the Administrative Code of 1987, granting the President the continuing authority to reorganize his office, cannot serve as basis for the creation of a truth commission considering the aforesaid provision merely uses verbs such as reorganize, transfer, consolidate, merge, and abolish.[34] Insofar as it vests in the President the plenary power to reorganize the Office of the President to the extent of creating a public office, Section 31 is inconsistent with the principle of separation of powers enshrined in the Constitution and must be deemed repealed upon the effectivity thereof.[35] Similarly, in G.R. No. 193036, petitioners-legislators argue that the creation of a public office lies within the province of Congress and not with the executive branch of government. They maintain that the delegated authority of the President

to reorganize under Section 31 of the Revised Administrative Code: 1) does not permit the President to create a public office, much less a truth commission; 2) is limited to the reorganization of the administrative structure of the Office of the President; 3) is limited to the restructuring of the internal organs of the Office of the President Proper, transfer of functions and transfer of agencies; and 4) only to achieve simplicity, economy and efficiency.[36] Such continuing authority of the President to reorganize his office is limited, and by issuing Executive Order No. 1, the President overstepped the limits of this delegated authority. The OSG counters that there is nothing exclusively legislative about the creation by the President of a fact-finding body such as a truth commission. Pointing to numerous offices created by past presidents, it argues that the authority of the President to create public offices within the Office of the President Proper has long been recognized.[37] According to the OSG, the Executive, just like the other two branches of government, possesses the inherent authority to create factfinding committees to assist it in the performance of its constitutionally mandated functions and in the exercise of its administrative functions.[38] This power, as the OSG explains it, is but an adjunct of the plenary powers wielded by the President under Section 1 and his power of control under Section 17, both of Article VII of the Constitution.[39] It contends that the President is necessarily vested with the power to conduct fact-finding investigations, pursuant to his duty to ensure that all laws are enforced by public officials and employees of his department and in the exercise of his authority to assume directly the functions of the executive department, bureau and office, or interfere with the discretion of his officials.[40] The power of the President to investigate is not limited to the exercise of his power of control over his subordinates in the executive branch, but extends further in the exercise of his other powers, such as his power to discipline subordinates,[41] his power for rule making, adjudication and licensing purposes[42] and in order to be informed on matters which he is entitled to know.[43] The OSG also cites the recent case of Banda v. Ermita,[44] where it was held that the President has the power to reorganize the offices and agencies in the executive department in line with his constitutionally granted power of control and by virtue of a valid delegation of the legislative power to reorganize executive offices under existing statutes. Thus, the OSG concludes that the power of control necessarily includes the power to create offices. For the OSG, the President may create the PTC in order to, among others, put a closure to the reported large scale graft and corruption in the government.[45]

The question, therefore, before the Court is this: Does the creation of the PTC fall within the ambit of the power to reorganize as expressed in Section 31 of the Revised Administrative Code? Section 31 contemplates reorganization as limited by the following functional and structural lines: (1) restructuring the internal organization of the Office of the President Proper by abolishing, consolidating or merging units thereof or transferring functions from one unit to another; (2) transferring any function under the Office of the President to any other Department/Agency or vice versa; or (3) transferring any agency under the Office of the President to any other Department/Agency or vice versa. Clearly, the provision refers to reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions. These point to situations where a body or an office is already existent but a modification or alteration thereof has to be effected. The creation of an office is nowhere mentioned, much less envisioned in said provision. Accordingly, the answer to the question is in the negative. To say that the PTC is borne out of a restructuring of the Office of the President under Section 31 is a misplaced supposition, even in the plainest meaning attributable to the term restructure an alteration of an existing structure. Evidently, the PTC was not part of the structure of the Office of the President prior to the enactment of Executive Order No. 1. As held in Buklod ng Kawaning EIIB v. Hon. Executive Secretary,[46] But of course, the list of legal basis authorizing the President to reorganize any department or agency in the executive branch does not have to end here. We must not lose sight of the very source of the power that which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292 (otherwise known as the Administrative Code of 1987), "the President, subject to the policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have the continuing authority to reorganize the administrative structure of the Office of the President." For this purpose, he may transfer the functions of other Departments or Agencies to the Office of the President. In Canonizado v. Aguirre [323 SCRA 312 (2000)], we ruled that reorganization "involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions." It takes place when there is an alteration of the existing structure of government offices or units therein, including the lines of control, authority and responsibility between them. The EIIB is a bureau attached to the Department of Finance. It falls under the Office of the President. Hence, it is subject to the Presidents continuing authority to reorganize. [Emphasis Supplied]

In the same vein, the creation of the PTC is not justified by the Presidents power of control. Control is essentially the power to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former with that of the latter.[47] Clearly, the

power of control is entirely different from the power to create public offices. The former is inherent in the Executive, while the latter finds basis from either a valid delegation from Congress, or his inherent duty to faithfully execute the laws. The question is this, is there a valid delegation of power from Congress, empowering the President to create a public office? According to the OSG, the power to create a truth commission pursuant to the above provision finds statutory basis under P.D. 1416, as amended by P.D. No. 1772.[48] The said law granted the President the continuing authority to reorganize the national government, including the power to group, consolidate bureaus and agencies, to abolish offices, to transfer functions, to create and classify functions, services and activities, transfer appropriations, and to standardize salaries and materials. This decree, in relation to Section 20, Title I, Book III of E.O. 292 has been invoked in several cases such as Larin v. Executive Secretary.[49] The Court, however, declines to recognize P.D. No. 1416 as a justification for the President to create a public office. Said decree is already stale, anachronistic and inoperable. P.D. No. 1416 was a delegation to then President Marcos of the authority to reorganize the administrative structure of the national government including the power to create offices and transfer appropriations pursuant to one of the purposes of the decree, embodied in its last Whereas clause: WHEREAS, the transition towards the parliamentary form of government will necessitate flexibility in the organization of the national government.

Clearly, as it was only for the purpose of providing manageability and resiliency during the interim, P.D. No. 1416, as amended by P.D. No. 1772, became functus oficio upon the convening of the First Congress, as expressly provided in Section 6, Article XVIII of the 1987 Constitution. In fact, even the Solicitor General agrees with this view. Thus: ASSOCIATE JUSTICE CARPIO: Because P.D. 1416 was enacted was the last whereas clause of P.D. 1416 says it was enacted to prepare the transition from presidential to parliamentary. Now, in a parliamentary form of government, the legislative and executive powers are fused, correct? SOLICITOR GENERAL CADIZ: Yes, Your Honor. ASSOCIATE JUSTICE CARPIO: That is why, that P.D. 1416 was issued. Now would you agree with me that

P.D. 1416 should not be considered effective anymore upon the promulgation, adoption, ratification of the 1987 Constitution. SOLICITOR GENERAL CADIZ: Not the whole of P.D. [No.] 1416, Your Honor. ASSOCIATE JUSTICE CARPIO: The power of the President to reorganize the entire National Government is deemed repealed, at least, upon the adoption of the 1987 Constitution, correct. SOLICITOR GENERAL CADIZ: Yes, Your Honor.[50]

While the power to create a truth commission cannot pass muster on the basis of P.D. No. 1416 as amended by P.D. No. 1772, the creation of the PTC finds justification under Section 17, Article VII of the Constitution, imposing upon the President the duty to ensure that the laws are faithfully executed. Section 17 reads: Section 17. The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that the laws be faithfully executed. (Emphasis supplied).

As correctly pointed out by the respondents, the allocation of power in the three principal branches of government is a grant of all powers inherent in them. The Presidents power to conduct investigations to aid him in ensuring the faithful execution of laws in this case, fundamental laws on public accountability and transparency is inherent in the Presidents powers as the Chief Executive. That the authority of the President to conduct investigations and to create bodies to execute this power is not explicitly mentioned in the Constitution or in statutes does not mean that he is bereft of such authority.[51] As explained in the landmark case of Marcos v. Manglapus:[52] x x x. The presidential system legislative, executive among three distinct and balances.

1987 Constitution, however, brought back the of government and restored the separation of and judicial powers by their actual distribution branches of government with provision for checks

It would not be accurate, however, to state that "executive power" is the power to enforce the laws, for the President is head of state as well as head of government and whatever powers inhere in such positions pertain to the office unless the Constitution itself withholds it. Furthermore, the Constitution itself provides that the execution of the laws is only one of the powers of the President. It also grants the President other powers that do not involve the execution of any provision of law, e.g., his power over the country's foreign relations.

On these premises, we hold the view that although the 1987 Constitution imposes limitations on the exercise of specific powers of the President, it maintains intact what is traditionally considered as within the scope of "executive power." Corollarily, the powers of the President cannot be said to be limited only to the specific powers enumerated in the Constitution. In other words, executive power is more than the sum of specific powers so enumerated. It has been advanced that whatever power inherent in the government that is neither legislative nor judicial has to be executive. x x x.

Indeed, the Executive is given much leeway in ensuring that our laws are faithfully executed. As stated above, the powers of the President are not limited to those specific powers under the Constitution.[53] One of the recognized powers of the President granted pursuant to this constitutionally-mandated duty is the power to create ad hoccommittees. This flows from the obvious need to ascertain facts and determine if laws have been faithfully executed. Thus, in Department of Health v. Camposano,[54]the authority of the President to issue Administrative Order No. 298, creating an investigative committee to look into the administrative charges filed against the employees of the Department of Health for the anomalous purchase of medicines was upheld. In said case, it was ruled: The Chief Executives power to create the Ad hoc Investigating Committee cannot be doubted. Having been constitutionally granted full control of the Executive Department, to which respondents belong, the President has the obligation to ensure that all executive officials and employees faithfully comply with the law. With AO 298 as mandate, the legality of the investigation is sustained. Such validity is not affected by the fact that the investigating team and the PCAGC had the same composition, or that the former used the offices and facilities of the latter in conducting the inquiry. [Emphasis supplied]

It should be stressed that the purpose of allowing ad hoc investigating bodies to exist is to allow an inquiry into matters which the President is entitled to know so that he can be properly advised and guided in the performance of his duties relative to the execution and enforcement of the laws of the land. And if history is to be revisited, this was also the objective of the investigative bodies created in the past like the PCAC, PCAPE, PARGO, the Feliciano Commission, the Melo Commission and the Zenarosa Commission. There being no changes in the government structure, the Court is not inclined to declare such executive power as non-existent just because the direction of the political winds have changed. On the charge that Executive Order No. 1 transgresses the power of Congress to appropriate funds for the operation of a public office, suffice it to say that there will be no appropriation but only an allotment or allocations of existing funds already appropriated. Accordingly, there is no usurpation on the part of the Executive of the power of Congress to appropriate funds. Further, there is no need to specify the amount to be earmarked for the operation of the commission

because, in the words of the Solicitor General, whatever funds the Congress has provided for the Office of the President will be the very source of the funds for the commission.[55] Moreover, since the amount that would be allocated to the PTC shall be subject to existing auditing rules and regulations, there is no impropriety in the funding. Power of the Truth Commission to Investigate The Presidents power to conduct investigations to ensure that laws are faithfully executed is well recognized. It flows from the faithful-execution clause of the Constitution under Article VII, Section 17 thereof.[56] As the Chief Executive, the president represents the government as a whole and sees to it that all laws are enforced by the officials and employees of his department. He has the authority to directly assume the functions of the executive department.[57] Invoking this authority, the President constituted the PTC to primarily investigate reports of graft and corruption and to recommend the appropriate action. As previously stated, no quasi-judicial powers have been vested in the said body as it cannot adjudicate rights of persons who come before it. It has been said that Quasijudicial powers involve the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by law itself in enforcing and administering the same law. [58] In simpler terms, judicial discretion is involved in the exercise of these quasi-judicial power, such that it is exclusively vested in the judiciary and must be clearly authorized by the legislature in the case of administrative agencies. The distinction between the power to investigate and the power to adjudicate was delineated by the Court in Cario v. Commission on Human Rights.[59] Thus: "Investigate," commonly understood, means to examine, explore, inquire or delve or probe into, research on, study. The dictionary definition of "investigate" is "to observe or study closely: inquire into systematically: "to search or inquire into: x x to subject to an official probe x x: to conduct an official inquiry." The purpose of investigation, of course, is to discover, to find out, to learn, obtain information. Nowhere included or intimated is the notion of settling, deciding or resolving a controversy involved in the facts inquired into by application of the law to the facts established by the inquiry. The legal meaning of "investigate" is essentially the same: "(t)o follow up step by step by patient inquiry or observation. To trace or track; to search into; to examine and inquire into with care and accuracy; to find out by careful inquisition; examination; the taking of evidence; a legal inquiry;" "to inquire; to make an investigation," "investigation" being in turn described as "(a)n administrative function, the exercise of which ordinarily does not require a hearing. 2 Am J2d Adm L Sec. 257; x x an inquiry, judicial or otherwise, for the discovery and collection of facts concerning a certain matter or matters."

"Adjudicate," commonly or popularly understood, means to adjudge, arbitrate, judge, decide, determine, resolve, rule on, settle. The dictionary defines the term as "to settle finally (the rights and duties of the parties to a court case) on the merits of issues raised: x x to pass judgment on: settle judicially: x x act as judge." And "adjudge" means "to decide or rule upon as a judge or with judicial or quasi-judicial powers: x x to award or grant judicially in a case of controversy x x." In the legal sense, "adjudicate" means: "To settle in the exercise of judicial authority. To determine finally. Synonymous with adjudge in its strictest sense;" and "adjudge" means: "To pass on judicially, to decide, settle or decree, or to sentence or condemn. x x. Implies a judicial determination of a fact, and the entry of a judgment." [Italics included. Citations Omitted]

Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or even a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom the facts of a controversy is not a judicial function. To be considered as such, the act of receiving evidence and arriving at factual conclusions in a controversy must be accompanied by the authority of applying the law to the factual conclusions to the end that the controversy may be decided or resolved authoritatively, finally and definitively, subject to appeals or modes of review as may be provided by law.[60] Even respondents themselves admit that the commission is bereft of any quasi-judicial power.[61] Contrary to petitioners apprehension, the PTC will not supplant the Ombudsman or the DOJ or erode their respective powers. If at all, the investigative function of the commission will complement those of the two offices. As pointed out by the Solicitor General, the recommendation to prosecute is but a consequence of the overall task of the commission to conduct a fact-finding investigation.[62] The actual prosecution of suspected offenders, much less adjudication on the merits of the charges against them,[63] is certainly not a function given to the commission. The phrase, when in the course of its investigation, under Section 2(g), highlights this fact and gives credence to a contrary interpretation from that of the petitioners. The function of determining probable cause for the filing of the appropriate complaints before the courts remains to be with the DOJ and the Ombudsman.[64] At any rate, the Ombudsmans power to investigate under R.A. No. 6770 is not exclusive but is shared with other similarly authorized government agencies. Thus, in the case of Ombudsman v. Galicia,[65] it was written: This power of investigation granted to the Ombudsman by the 1987 Constitution and The Ombudsman Act is not exclusive but is shared with other similarly authorized government agencies such as the PCGG and judges of municipal trial courts and municipal circuit trial courts. The power to conduct preliminary investigation on charges against public employees and officials is likewise concurrently shared with the Department of Justice. Despite the passage of the Local Government Code

in 1991, the Ombudsman retains concurrent jurisdiction with the Office of the President and the local Sanggunians to investigate complaints against local elective officials. [Emphasis supplied].

Also, Executive Order No. 1 cannot contravene the power of the Ombudsman to investigate criminal cases under Section 15 (1) of R.A. No. 6770, which states: (1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of its primary jurisdiction, it may take over, at any stage, from any investigatory agency of government, the investigation of such cases. [Emphases supplied]

The act of investigation by the Ombudsman as enunciated above contemplates the conduct of a preliminary investigation or the determination of the existence of probable cause. This is categorically out of the PTCs sphere of functions. Its power to investigate is limited to obtaining facts so that it can advise and guide the President in the performance of his duties relative to the execution and enforcement of the laws of the land. In this regard, the PTC commits no act of usurpation of the Ombudsmans primordial duties. The same holds true with respect to the DOJ. Its authority under Section 3 (2), Chapter 1, Title III, Book IV in the Revised Administrative Code is by no means exclusive and, thus, can be shared with a body likewise tasked to investigate the commission of crimes. Finally, nowhere in Executive Order No. 1 can it be inferred that the findings of the PTC are to be accorded conclusiveness. Much like its predecessors, the Davide Commission, the Feliciano Commission and the Zenarosa Commission, its findings would, at best, be recommendatory in nature. And being so, the Ombudsman and the DOJ have a wider degree of latitude to decide whether or not to reject the recommendation. These offices, therefore, are not deprived of their mandated duties but will instead be aided by the reports of the PTC for possible indictments for violations of graft laws. Violation of the Equal Protection Clause Although the purpose of the Truth Commission falls within the investigative power of the President, the Court finds difficulty in upholding the constitutionality of Executive Order No. 1 in view of its apparent transgression of the equal protection clause enshrined in Section 1, Article III (Bill of Rights) of the 1987 Constitution.Section 1 reads:

Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

The petitioners assail Executive Order No. 1 because it is violative of this constitutional safeguard. They contend that it does not apply equally to all members of the same class such that the intent of singling out the previous administration as its sole object makes the PTC an adventure in partisan hostility.[66] Thus, in order to be accorded with validity, the commission must also cover reports of graft and corruption in virtually all administrations previous to that of former President Arroyo.[67] The petitioners argue that the search for truth behind the reported cases of graft and corruption must encompass acts committed not only during the administration of former President Arroyo but also during prior administrations where the same magnitude of controversies and anomalies[68] were reported to have been committed against the Filipino people. They assail the classification formulated by the respondents as it does not fall under the recognized exceptions because first, there is no substantial distinction between the group of officials targeted for investigation by Executive Order No. 1 and other groups or persons who abused their public office for personal gain; and second, the selective classification is not germane to the purpose of Executive Order No. 1 to end corruption.[69] In order to attain constitutional permission, the petitioners advocate that the commission should deal with graft and grafters prior and subsequent to the Arroyo administration with the strong arm of the law with equal force.[70] Position of respondents According to respondents, while Executive Order No. 1 identifies the previous administration as the initial subject of the investigation, following Section 17 thereof, the PTC will not confine itself to cases of large scale graft and corruption solely during the said administration.[71] Assuming arguendo that the commission would confine its proceedings to officials of the previous administration, the petitioners argue that no offense is committed against the equal protection clause for the segregation of the transactions of public officers during the previous administration as possible subjects of investigation is a valid classification based on substantial distinctions and is germane to the evils which the Executive Order seeks to correct.[72] To distinguish the Arroyo administration from past administrations, it recited the following: First. E.O. No. 1 was issued in view of widespread reports of large scale graft and corruption in the previous administration which have eroded public confidence in public institutions. There is, therefore, an urgent call for the determination of the truth regarding certain reports of large scale graft and corruption in the government

and to put a closure to them by the filing of the appropriate cases against those involved, if warranted, and to deter others from committing the evil, restore the peoples faith and confidence in the Government and in their public servants. Second. The segregation of the preceding administration as the object of fact-finding is warranted by the reality that unlike with administrations long gone, the current administration will most likely bear the immediate consequence of the policies of the previous administration. Third. The classification of the previous administration as a separate class for investigation lies in the reality that the evidence of possible criminal activity, the evidence that could lead to recovery of public monies illegally dissipated, the policy lessons to be learned to ensure that anti-corruption laws are faithfully executed, are more easily established in the regime that immediately precede the current administration. Fourth. Many administrations subject the transactions of their predecessors to investigations to provide closure to issues that are pivotal to national life or even as a routine measure of due diligence and good housekeeping by a nascent administration like the Presidential Commission on Good Government (PCGG), created by the late President Corazon C. Aquino under Executive Order No. 1 to pursue the recovery of ill-gotten wealth of her predecessor former President Ferdinand Marcos and his cronies, and the Saguisag Commission created by former President Joseph Estrada under Administrative Order No, 53, to form an ad-hoc and independent citizens committee to investigate all the facts and circumstances surrounding Philippine Centennial projects of his predecessor, former President Fidel V. Ramos.[73] [Emphases supplied] Concept of the Equal Protection Clause One of the basic principles on which this government was founded is that of the equality of right which is embodied in Section 1, Article III of the 1987 Constitution. The equal protection of the laws is embraced in the concept of due process, as every unfair discrimination offends the requirements of justice and fair play. It has been embodied in a separate clause, however, to provide for a more specific guaranty against any form of undue favoritism or hostility from the government. Arbitrariness in general may be challenged on the basis of the due process clause. But if the particular act assailed partakes of an unwarranted partiality or prejudice, the sharper weapon to cut it down is the equal protection clause.[74]

According to a long line of decisions, equal protection simply requires that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed.[75] It requires public bodies and institutions to treat similarly situated individuals in a similar manner.[76] The purpose of the equal protection clause is to secure every person within a states jurisdiction against intentional and arbitrary discrimination, whether occasioned by the express terms of a statue or by its improper execution through the states duly constituted authorities.[77] In other words, the concept of equal justice under the law requires the state to govern impartially, and it may not draw distinctions between individuals solely on differences that are irrelevant to a legitimate governmental objective.[78] The equal protection clause is aimed at all official state actions, not just those of the legislature.[79] Its inhibitions cover all the departments of the government including the political and executive departments, and extend to all actions of a state denying equal protection of the laws, through whatever agency or whatever guise is taken. [80] It, however, does not require the universal application of the laws to all persons or things without distinction. What it simply requires is equality among equals as determined according to a valid classification. Indeed, the equal protection clause permits classification. Such classification, however, to be valid must pass the test of reasonableness. The test has four requisites: (1) The classification rests on substantial distinctions; (2) It is germane to the purpose of the law; (3) It is not limited to existing conditions only; and (4) It applies equally to all members of the same class.[81] Superficial differences do not make for a valid classification.[82] For a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class. [83] The classification will be regarded as invalid if all the members of the class are not similarly treated, both as to rights conferred and obligations imposed. It is not necessary that the classification be made with absolute symmetry, in the sense that the members of the class should possess the same characteristics in equal degree. Substantial similarity will suffice; and as long as this is achieved, all those covered by the classification are to be treated equally. The mere fact that an individual belonging to a class differs from the other members, as long as that class is substantially distinguishable from all others, does not justify the non-application of the law to him.[84] The classification must not be based on existing circumstances only, or so constituted as to preclude addition to the number included in the class. It must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. It must not leave out or underinclude those that

should otherwise fall into a certain classification. As elucidated in Victoriano v. Elizalde Rope Workers' Union[85] and reiterated in a long line of cases,[86] The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate. The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. [Citations omitted]

Applying these precepts to this case, Executive Order No. 1 should be struck down as violative of the equal protection clause. The clear mandate of the envisioned truth commission is to investigate and find out the truth concerning the reported cases of graft and corruption during the previous administration[87] only. The intent to single out the previous administration is plain, patent and manifest. Mention of it has been made in at least three portions of the questioned executive order. Specifically, these are: WHEREAS, there is a need for a separate body dedicated solely to investigating and finding out the truth concerning the reported cases of graft and corruption during the previous administration, and which will recommend the prosecution of the offenders and secure justice for all; SECTION 1. Creation of a Commission. There is hereby created the PHILIPPINE TRUTH COMMISSION, hereinafter referred to as the COMMISSION, which shall primarily seek and find the truth on, and toward this end, investigate reports of graft and corruption of such scale and magnitude that shock and offend the moral and ethical sensibilities of the people, committed by public officers and employees, their coprincipals, accomplices and accessories from the private sector, if any, during the previous administration; and thereafter recommend the

appropriate action or measure to be taken thereon to ensure that the full measure of justice shall be served without fear or favor. SECTION 2. Powers and Functions. The Commission, which shall have all the powers of an investigative body under Section 37, Chapter 9, Book I of the Administrative Code of 1987, is primarily tasked to conduct a thorough fact-finding investigation of reported cases of graft and corruption referred to in Section 1, involving third level public officers and higher, their coprincipals, accomplices and accessories from the private sector, if any, during the previous administration and thereafter submit its finding and recommendations to the President, Congress and the Ombudsman. [Emphases supplied]

In this regard, it must be borne in mind that the Arroyo administration is but just a member of a class, that is, a class of past administrations. It is not a class of its own. Not to include past administrations similarly situated constitutes arbitrariness which the equal protection clause cannot sanction. Such discriminating differentiation clearly reverberates to label the commission as a vehicle for vindictiveness and selective retribution. Though the OSG enumerates several differences between the Arroyo administration and other past administrations, these distinctions are not substantial enough to merit the restriction of the investigation to the previous administration only. The reports of widespread corruption in the Arroyo administration cannot be taken as basis for distinguishing said administration from earlier administrations which were also blemished by similar widespread reports of impropriety. They are not inherent in, and do not inure solely to, the Arroyo administration. As Justice Isagani Cruz put it, Superficial differences do not make for a valid classification.[88]

The public needs to be enlightened why Executive Order No. 1 chooses to limit the scope of the intended investigation to the previous administration only. The OSG ventures to opine that to include other past administrations, at this point, may unnecessarily overburden the commission and lead it to lose its effectiveness.[89] The reason given is specious. It is without doubt irrelevant to the legitimate and noble objective of the PTC to stamp out or end corruption and the evil it breeds.[90] The probability that there would be difficulty in unearthing evidence or that the earlier reports involving the earlier administrations were already inquired into is beside the point. Obviously, deceased presidents and cases which have already prescribed can no longer be the subjects of inquiry by the PTC. Neither is the PTC expected to conduct simultaneous investigations of previous administrations, given the bodys limited time and resources. The law does not require the impossible (Lex non cogit ad impossibilia).[91]

Given the foregoing physical and legal impossibility, the Court logically recognizes the unfeasibility of investigating almost a centurys worth of graft cases.However, the fact remains that Executive Order No. 1 suffers from arbitrary classification. The PTC, to be true to its mandate of searching for the truth, must not exclude the other past administrations. The PTC must, at least, have the authority to investigate all past administrations. While reasonable prioritization is permitted, it should not be arbitrary lest it be struck down for being unconstitutional. In the often quoted language of Yick Wo v. Hopkins,[92]

Though the law itself be fair on its face and impartial in appearance, yet, if applied and administered by public authority with an evil eye and an unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the constitution. [Emphasis supplied] It could be argued that considering that the PTC is an ad hoc body, its scope is limited. The Court, however, is of the considered view that although its focus is restricted, the constitutional guarantee of equal protection under the laws should not in any way be circumvented. The Constitution is the fundamental and paramount law of the nation to which all other laws must conform and in accordance with which all private rights determined and all public authority administered.[93] Laws that do not conform to the Constitution should be stricken down for being unconstitutional.[94] While the thrust of the PTC is specific, that is, for investigation of acts of graft and corruption, Executive Order No. 1, to survive, must be read together with the provisions of the Constitution. To exclude the earlier administrations in the guise of substantial distinctions would only confirm the petitioners lament that the subject executive order is only an adventure in partisan hostility. In the case of US v. Cyprian,[95] it was written: A rather limited number of such classifications have routinely been held or assumed to be arbitrary; those include: race, national origin, gender, political activity or membership in a political party, union activity or membership in a labor union, or more generally the exercise of first amendment rights. To reiterate, in order for a classification to meet the requirements of constitutionality, it must include or embrace all persons who naturally belong to the class.[96]Such a classification must not be based on existing circumstances only, or so constituted as to preclude additions to the number included within a class, but must be of such a nature as to embrace all those who may thereafter be in similar circumstances and conditions. Furthermore, all who are in situations and circumstances which are relative to the discriminatory legislation and which are indistinguishable from those of the members of the class must be brought under the

influence of the law and treated by it in the same way as are the members of the class.[97] The Court is not unaware that mere underinclusiveness is not fatal to the validity of a law under the equal protection clause.[98] Legislation is not unconstitutional merely because it is not all-embracing and does not include all the evils within its reach.[99] It has been written that a regulation challenged under the equal protection clause is not devoid of a rational predicate simply because it happens to be incomplete.[100] In several instances, the underinclusiveness was not considered a valid reason to strike down a law or regulation where the purpose can be attained in future legislations or regulations. These cases refer to the step by step process.[101] With regard to equal protection claims, a legislature does not run the risk of losing the entire remedial scheme simply because it fails, through inadvertence or otherwise, to cover every evil that might conceivably have been attacked.[102] In Executive Order No. 1, however, there is no inadvertence. That the previous administration was picked out was deliberate and intentional as can be gleaned from the fact that it was underscored at least three times in the assailed executive order. It must be noted that Executive Order No. 1 does not even mention any particular act, event or report to be focused on unlike the investigative commissions created in the past. The equal protection clause is violated by purposeful and intentional discrimination.[103] To disprove petitioners contention that there is deliberate discrimination, the OSG clarifies that the commission does not only confine itself to cases of large scale graft and corruption committed during the previous administration.[104] The OSG points to Section 17 of Executive Order No. 1, which provides:

SECTION 17. Special Provision Concerning Mandate. If and when in the judgment of the President there is a need to expand the mandate of the Commission as defined in Section 1 hereof to include the investigation of cases and instances of graft and corruption during the prior administrations, such mandate may be so extended accordingly by way of a supplemental Executive Order.

The Court is not convinced. Although Section 17 allows the President the discretion to expand the scope of investigations of the PTC so as to include the acts of graft and corruption committed in other past administrations, it does not guarantee that they would be covered in the future. Such expanded mandate of the commission will still depend on the whim and caprice of the President. If he would decide not to include them, the section would then be meaningless. This will only fortify the fears of the petitioners that the Executive Order No. 1 was crafted to

tailor-fit the prosecution of officials and personalities of the Arroyo administration.[105]

The Court tried to seek guidance from the pronouncement in the case of Virata v. Sandiganbayan,[106] that the PCGG Charter (composed of Executive Orders Nos. 1, 2 and 14) does not violate the equal protection clause. The decision, however, was devoid of any discussion on how such conclusory statement was arrived at, the principal issue in said case being only the sufficiency of a cause of action. A final word The issue that seems to take center stage at present is - whether or not the Supreme Court, in the exercise of its constitutionally mandated power of Judicial Review with respect to recent initiatives of the legislature and the executive department, is exercising undue interference. Is the Highest Tribunal, which is expected to be the protector of the Constitution, itself guilty of violating fundamental tenets like the doctrine of separation of powers? Time and again, this issue has been addressed by the Court, but it seems that the present political situation calls for it to once again explain the legal basis of its action lest it continually be accused of being a hindrance to the nations thrust to progress. The Philippine Supreme Court, according to Article VIII, Section 1 of the 1987 Constitution, is vested with Judicial Power that includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave of abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government. Furthermore, in Section 4(2) thereof, it is vested with the power of judicial review which is the power to declare a treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation unconstitutional. This power also includes the duty to rule on the constitutionality of the application, or operation of presidential decrees, proclamations, orders, instructions, ordinances, and other regulations. These provisions, however, have been fertile grounds of conflict between the Supreme Court, on one hand, and the two co-equal bodies of government, on the other. Many times the Court has been accused of asserting superiority over the other departments. To answer this accusation, the words of Justice Laurel would be a good source of enlightenment, to wit: And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other

departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them.[107] Thus, the Court, in exercising its power of judicial review, is not imposing its own will upon a co-equal body but rather simply making sure that any act of government is done in consonance with the authorities and rights allocated to it by the Constitution. And, if after said review, the Court finds no constitutional violations of any sort, then, it has no more authority of proscribing the actions under review. Otherwise, the Court will not be deterred to pronounce said act as void and unconstitutional. It cannot be denied that most government actions are inspired with noble intentions, all geared towards the betterment of the nation and its people. But then again, it is important to remember this ethical principle: The end does not justify the means. No matter how noble and worthy of admiration the purpose of an act, but if the means to be employed in accomplishing it is simply irreconcilable with constitutional parameters, then it cannot still be allowed.[108] The Court cannot just turn a blind eye and simply let it pass. It will continue to uphold the Constitution and its enshrined principles. The Constitution must ever remain supreme. All must bow to the mandate of this law. Expediency must not be allowed to sap its strength nor greed for power debase its rectitude.[109]

Lest it be misunderstood, this is not the death knell for a truth commission as nobly envisioned by the present administration. Perhaps a revision of the executive issuance so as to include the earlier past administrations would allow it to pass the test of reasonableness and not be an affront to the Constitution. Of all the branches of the government, it is the judiciary which is the most interested in knowing the truth and so it will not allow itself to be a hindrance or obstacle to its attainment.It must, however, be emphasized that the search for the truth must be within constitutional bounds for ours is still a government of laws and not of men.[110] WHEREFORE, the petitions are GRANTED. Executive Order No. 1 is hereby declared UNCONSTITUTIONAL insofar as it is violative of the equal protection clause of the Constitution. As also prayed for, the respondents are hereby ordered to cease and desist from carrying out the provisions of Executive Order No. 1.

SO ORDERED.

JOSE CATRAL MENDOZA Associate Justice

WE CONCUR:

See separate opinion (concurring) RENATO C. CORONA Chief Justice

See dissenting opinion Please see dissenting opinion

ANTONIO T. CARPIO CONCHITA CARPIO MORALES Associate Justice Associate Justice

I certify that Justice Velasco left his concurring vote See concurring & dissenting opinion PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA Associate Justice Associate Justice

See separate concurring opinion See separate opinion (concurring) TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION Associate Justice Associate Justice

See separate concurring opinion see my separate concurring opinion DIOSDADO M. PERALTA LUCAS P. BERSAMIN Associate Justice Associate Justice

See separate dissenting opinion MARIANO C. DEL CASTILLO ROBERTO A. ABAD Associate Justice Associate Justice

See separate opinion (concurring) MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ Associate Justice Associate Justice

See dissenting opinion MARIA LOURDES P.A. SERENO Associate Justice

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA Chief Justice

EN BANC

[G.R. No. 148208. December 15, 2004]

CENTRAL BANK (now Bangko Sentral ng Pilipinas) EMPLOYEES ASSOCIATION, INC., petitioner, vs. BANGKO SENTRAL NG PILIPINAS and the EXECUTIVE SECRETARY, respondents. DECISION PUNO, J.:

Can a provision of law, initially valid, become subsequently unconstitutional, on the ground that its continued operation would violate the equal protection of the law? We hold that with the passage of the subsequent laws amending the charter of seven (7) other governmental financial institutions (GFIs), the continued operation of the last proviso of Section 15(c), Article II of Republic Act (R.A.) No. 7653, constitutes invidious discrimination on the 2,994 rank-and-file employees of the Bangko Sentral ng Pilipinas (BSP). I.

The Case First the facts. On July 3, 1993, R.A. No. 7653 (the New Central Bank Act) took effect. It abolished the old Central Bank of the Philippines, and created a new BSP. On June 8, 2001, almost eight years after the effectivity of R.A. No. 7653, petitioner Central Bank (now BSP) Employees Association, Inc., filed a petition for prohibition against BSP and the Executive Secretary of the Office of the President, to restrain respondents from further implementing the last proviso in Section 15(c), Article II of R.A. No. 7653, on the ground that it is unconstitutional. Article II, Section 15(c) of R.A. No. 7653 provides: Section 15. Exercise of Authority - In the exercise of its authority, the Monetary Board shall: xxx xxx xxx (c) establish a human resource management system which shall govern the selection, hiring, appointment, transfer, promotion, or dismissal of all personnel. Such system shall aim to establish professionalism and excellence at all levels of the Bangko Sentral in accordance with sound principles of management. A compensation structure, based on job evaluation studies and wage surveys and subject to the Boards approval, shall be instituted as an integral component of the Bangko Sentrals human resource development program: Provided, That the Monetary Board shall make its own system conform as closely as possible with the principles provided for under Republic Act No. 6758 [Salary Standardization Act]. Provided, however, That compensation and wage structure of employees whose positions fall under salary grade 19 and

below shall be in accordance with the rates prescribed under Republic Act No. 6758. [emphasis supplied] The thrust of petitioners challenge is that the above proviso makes an unconstitutional cut between two classes of employees in the BSP, viz: (1) the BSP officers or those exempted from the coverage of the Salary Standardization Law (SSL) (exempt class); and (2) the rank-and-file (Salary Grade [SG] 19 and below), or those not exempted from the coverage of the SSL (non-exempt class). It is contended that this classification is a classic case of class legislation, allegedly not based on substantial distinctions which make real differences, but solely on the SG of the BSP personnels position. Petitioner also claims that it is not germane to the purposes of Section 15(c), Article II of R.A. No. 7653, the most important of which is to establish professionalism and excellence at all levels in the BSP.[1] Petitioner offers the following sub-set of arguments: a. the legislative history of R.A. No. 7653 shows that the questioned proviso does not appear in the original and amended versions of House Bill No. 7037, nor in the original version of Senate Bill No. 1235; [2] b. subjecting the compensation of the BSP rank-and-file employees to the rate prescribed by the SSL actually defeats the purpose of the law[3] of establishing professionalism and excellence at all levels in the BSP; [4] (emphasis supplied) c. the assailed proviso was the product of amendments introduced during the deliberation of Senate Bill No. 1235, without showing its relevance to the objectives of the law, and even admitted by one senator as discriminatory against low-salaried employees of the BSP;[5] d. GSIS, LBP, DBP and SSS personnel are all exempted from the coverage of the SSL; thus within the class of rank-and-file personnel of government financial institutions (GFIs), the BSP rank-and-file are also discriminated upon;[6] and e. the assailed proviso has caused the demoralization among the BSP rank-and-file and resulted in the gross disparity between their compensation and that of the BSP officers.[7]

In sum, petitioner posits that the classification is not reasonable but arbitrary and capricious, and violates the equal protection clause of the Constitution. [8] Petitioner also stresses: (a) that R.A. No. 7653 has a separability clause, which will allow the declaration of the unconstitutionality of the proviso in question without affecting the other provisions; and (b) the urgency and propriety of the petition, as some 2,994 BSP rank-and-file employees have been prejudiced since 1994 when the proviso was implemented. Petitioner concludes that: (1) since the inequitable proviso has no force and effect of law, respondents implementation of such amounts to lack of jurisdiction; and (2) it has no appeal nor any other plain, speedy and adequate remedy in the ordinary course except through this petition for prohibition, which this Court should take cognizance of, considering the transcendental importance of the legal issue involved. [9] Respondent BSP, in its comment,[10] contends that the provision does not violate the equal protection clause and can stand the constitutional test, provided it is construed in harmony with other provisions of the same law, such as fiscal and administrative autonomy of BSP, and the mandate of the Monetary Board to establish professionalism and excellence at all levels in accordance with sound principles of management. The Solicitor General, on behalf of respondent Executive Secretary, also defends the validity of the provision. Quite simplistically, he argues that the classification is based on actual and real differentiation, even as it adheres to the enunciated policy of R.A. No. 7653 to establish professionalism and excellence within the BSP subject to prevailing laws and policies of the national government.[11] II.

Issue Thus, the sole - albeit significant - issue to be resolved in this case is whether the last paragraph of Section 15(c), Article II of R.A. No. 7653, runs afoul of the constitutional mandate that "No person shall be. . . denied the equal protection of the laws."[12] III.

Ruling

A. UNDER THE PRESENT STANDARDS OF EQUAL PROTECTION, SECTION 15(c), ARTICLE II OF R.A. NO. 7653 IS VALID. Jurisprudential standards for equal protection challenges indubitably show that the classification created by the questioned proviso, on its face and in its operation, bears no constitutional infirmities. It is settled in constitutional law that the "equal protection" clause does not prevent the Legislature from establishing classes of individuals or objects upon which different rules shall operate - so long as the classification is not unreasonable. As held in Victoriano v. Elizalde Rope Workers Union,[13] and reiterated in a long line of cases:[14] The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate. The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based on substantial distinctions which make for real differences, that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. In the exercise of its power to make classifications for the purpose of enacting laws over matters within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not necessary that the classification be based on scientific or marked differences of things or in their relation. Neither is it necessary that the classification be made with mathematical nicety. Hence, legislative classification may in many cases properly rest on narrow distinctions, for the equal protection guaranty does not preclude

the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as they may appear. (citations omitted) Congress is allowed a wide leeway in providing for a valid classification. [15] The equal protection clause is not infringed by legislation which applies only to those persons falling within a specified class.[16] If the groupings are characterized by substantial distinctions that make real differences, one class may be treated and regulated differently from another.[17] The classification must also be germane to the purpose of the law and must apply to all those belonging to the same class. [18] In the case at bar, it is clear in the legislative deliberations that the exemption of officers (SG 20 and above) from the SSL was intended to address the BSPs lack of competitiveness in terms of attracting competent officers and executives. It was not intended to discriminate against the rank-and-file. If the end-result did in fact lead to a disparity of treatment between the officers and the rank-and-file in terms of salaries and benefits, the discrimination or distinction has a rational basis and is not palpably, purely, and entirely arbitrary in the legislative sense. [19] That the provision was a product of amendments introduced during the deliberation of the Senate Bill does not detract from its validity. As early as 1947 and reiterated in subsequent cases,[20] this Court has subscribed to the conclusiveness of an enrolled bill to refuse invalidating a provision of law, on the ground that the bill from which it originated contained no such provision and was merely inserted by the bicameral conference committee of both Houses. Moreover, it is a fundamental and familiar teaching that all reasonable doubts should be resolved in favor of the constitutionality of a statute. [21] An act of the legislature, approved by the executive, is presumed to be within constitutional limitations.[22] To justify the nullification of a law, there must be a clear and unequivocal breach of the Constitution, not a doubtful and equivocal breach.[23]

B. THE ENACTMENT, HOWEVER, OF SUBSEQUENT LAWS EXEMPTING ALL OTHER RANK-AND-FILE EMPLOYEES OF GFIs FROM THE SSL - RENDERS THE CONTINUED APPLICATION OF THE CHALLENGED PROVISION A VIOLATION OF THE EQUAL PROTECTION CLAUSE. While R.A. No. 7653 started as a valid measure well within the legislatures power, we hold that the enactment of subsequent laws exempting all rank-and-file employees of other GFIs leeched all validity out of the challenged proviso. 1. The concept of relative constitutionality. The constitutionality of a statute cannot, in every instance, be determined by a mere comparison of its provisions with applicable provisions of the Constitution, since the statute may be constitutionally valid as applied to one set of facts and invalid in its application to another.[24] A statute valid at one time may become void at another time because of altered circumstances.[25] Thus, if a statute in its practical operation becomes arbitrary or confiscatory, its validity, even though affirmed by a former adjudication, is open to inquiry and investigation in the light of changed conditions.[26] Demonstrative of this doctrine is Vernon Park Realty v. City of Mount Vernon,[27] where the Court of Appeals of New York declared as unreasonable and arbitrary a zoning ordinance which placed the plaintiff's property in a residential district, although it was located in the center of a business area. Later amendments to the ordinance then prohibited the use of the property except for parking and storage of automobiles, and service station within a parking area. The Court found the ordinance

to constitute an invasion of property rights which was contrary to constitutional due process. It ruled: While the common council has the unquestioned right to enact zoning laws respecting the use of property in accordance with a well-considered and comprehensive plan designed to promote public health, safety and general welfare, such power is subject to the constitutional limitation that it may not be exerted arbitrarily or unreasonably and this is so whenever the zoning ordinance precludes the use of the property for any purpose for which it is reasonably adapted. By the same token, an ordinance valid when adopted will nevertheless be stricken down as invalid when, at a later time, its operation under changed conditions proves confiscatory such, for instance, as when the greater part of its value is destroyed, for which the courts will afford relief in an appropriate case.[28] (citations omitted, emphasis supplied) In the Philippine setting, this Court declared the continued enforcement of a valid law as unconstitutional as a consequence of significant changes in circumstances. Rutter v. Esteban[29] upheld the constitutionality of the moratorium law - its enactment and operation being a valid exercise by the State of its police power[30] - but also ruled that the continued enforcement of the otherwise valid law would be unreasonable and oppressive. It noted the subsequent changes in the countrys business, industry and agriculture. Thus, the law was set aside because its continued operation would be grossly discriminatory and lead to the oppression of the creditors. The landmark ruling states:[31] The question now to be determined is, is the period of eight (8) years which Republic Act No. 342 grants to debtors of a monetary obligation contracted before the last global war and who is a war sufferer with a claim duly approved by the Philippine War Damage Commission reasonable under the present circumstances? It should be noted that Republic Act No. 342 only extends relief to debtors of prewar obligations who suffered from the ravages of the last war and who filed a claim for their losses with the Philippine War Damage Commission. It is therein provided that said obligation shall not be due and demandable for a period of eight (8) years from and after settlement of the claim filed by the debtor with said Commission. The purpose of the law is to afford to prewar debtors an opportunity to rehabilitate themselves by giving them a reasonable time within which to pay their prewar debts so as to prevent them from being victimized by their creditors. While it is admitted in said law that since liberation conditions have gradually returned to normal, this is not so with regard to those who have suffered the ravages of war and so it was therein declared as a policy that as to them the debt moratorium should be continued in force (Section 1). But we should not lose sight of the fact that these obligations had been pending since 1945 as a result of the issuance of Executive Orders Nos. 25 and 32 and at present their enforcement is still inhibited because of the enactment of Republic Act No. 342 and would continue to be unenforceable during the eight-year period granted to prewar debtors to afford them an opportunity to rehabilitate themselves, which in plain language means that the creditors would have to observe a vigil of at least twelve (12) years before they could effect a liquidation of their investment dating as far back as 1941. his period seems to us unreasonable, if not oppressive. While the purpose of Congress is plausible, and should be commended, the relief accorded works injustice to creditors who are practically left at the mercy of the debtors. Their hope to effect collection becomes extremely remote, more so if the credits are unsecured. And the injustice is more patent when, under the law, the debtor is not even required to pay interest during the operation of the relief, unlike similar statutes in the United States. xxx xxx xxx

In the face of the foregoing observations, and consistent with what we believe to be as the only course dictated by justice, fairness and righteousness, we feel that the only way open to us under the present circumstances is to declare that the continued operation and enforcement of Republic Act No. 342 at the present time is unreasonable and oppressive, and should not be prolonged a minute longer, and, therefore, the same should be declared null and void and without effect. (emphasis supplied, citations omitted) 2. Applicability of the equal protection clause. In the realm of equal protection, the U.S. case of Atlantic Coast Line R. Co. v. Ivey[32] is illuminating. The Supreme Court of Florida ruled against the continued application of statutes authorizing the recovery of double damages plus attorney's fees against railroad companies, for animals killed on unfenced railroad right of way without proof of negligence. Competitive motor carriers, though creating greater hazards, were not subjected to similar liability because they were not yet in existence when the statutes were enacted. The Court ruled that the statutes became invalid as denying equal protection of the law, in view of changed conditions since their enactment. In another U.S. case, Louisville & N.R. Co. v. Faulkner,[33] the Court of Appeals of Kentucky declared unconstitutional a provision of a statute which imposed a duty upon a railroad company of proving that it was free from negligence in the killing or injury of cattle by its engine or cars. This, notwithstanding that the constitutionality of the statute, enacted in 1893, had been previously sustained. Ruled the Court: The constitutionality of such legislation was sustained because it applied to all similar corporations and had for its object the safety of persons on a train and the protection of property. Of course, there were no automobiles in those days. The subsequent inauguration and development of transportation by motor vehicles on the public highways by common carriers of freight and passengers created even greater risks to the safety of occupants of the vehicles and of danger of injury and death of domestic animals. Yet, under the law the operators of that mode of competitive transportation are not subject to the same extraordinary legal responsibility for killing such animals on the public roads as are railroad companies for killing them on their private rights of way. The Supreme Court, speaking through Justice Brandeis in Nashville, C. & St. L. Ry. Co. v. Walters, 294 U.S. 405, 55 S.Ct. 486, 488, 79 L.Ed. 949, stated, A statute valid when enacted may become invalid by change in the conditions to which it is applied. The police power is subject to the constitutional limitation that it may not be exerted arbitrarily or unreasonably. A number of prior opinions of that court are cited in support of the statement. The State of Florida for many years had a statute, F.S.A. 356.01 et seq. imposing extraordinary and special duties upon railroad companies, among which was that a railroad company was liable for double damages and an attorney's fee for killing livestock by a train without the owner having to prove any act of negligence on the part of the carrier in the operation of its train. In Atlantic Coast Line Railroad Co. v. Ivey, it was held that the changed conditions brought about by motor vehicle transportation rendered the statute unconstitutional since if a common carrier by motor vehicle had killed the same animal, the owner would have been required to prove negligence in the operation of its equipment. Said the court, This certainly is not equal protection of the law.[34] (emphasis supplied) Echoes of these rulings resonate in our case law, viz: [C]ourts are not confined to the language of the statute under challenge in determining whether that statute has any discriminatory effect. A statute nondiscriminatory on its face may be grossly discriminatory in its operation. Though the law itself be fair on its face and impartial in appearance, yet, if it is applied and administered by public

authority with an evil eye and unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the Constitution. [35] (emphasis supplied, citations omitted) [W]e see no difference between a law which denies equal protection and a law which permits of such denial. A law may appear to be fair on its face and impartial in appearance, yet, if it permits of unjust and illegal discrimination, it is within the constitutional prohibition.. In other words, statutes may be adjudged unconstitutional because of their effect in operation. If a law has the effect of denying the equal protection of the law it is unconstitutional. .[36] (emphasis supplied, citations omitted 3. Enactment of R.A. Nos. 7907 + 8282 + 8289 + 8291 + 8523 + 8763 + 9302 = consequential unconstitutionality of challenged proviso. According to petitioner, the last proviso of Section 15(c), Article II of R.A. No. 7653 is also violative of the equal protection clause because after it was enacted, the charters of the GSIS, LBP, DBP and SSS were also amended, but the personnel of the latter GFIs were all exempted from the coverage of the SSL. [37] Thus, within the class of rankand-file personnel of GFIs, the BSP rank-and-file are also discriminated upon. Indeed, we take judicial notice that after the new BSP charter was enacted in 1993, Congress also undertook the amendment of the charters of the GSIS, LBP, DBP and SSS, and three other GFIs, from 1995 to 2004, viz: 1. R.A. No. 7907 (1995) for Land Bank of the Philippines (LBP); 2. R.A. No. 8282 (1997) for Social Security System (SSS); 3. R.A. No. 8289 (1997) for Small Business Guarantee and Finance Corporation, (SBGFC); 4. R.A. No. 8291 (1997) for Government Service Insurance System (GSIS); 5. R.A. No. 8523 (1998) for Development Bank of the Philippines (DBP); 6. R.A. No. 8763 (2000) for Home Guaranty Corporation (HGC);[38] and 7. R.A. No. 9302 (2004) for Philippine Deposit Insurance Corporation (PDIC).

It is noteworthy, as petitioner points out, that the subsequent charters of the seven other GFIs share this common proviso: a blanket exemption of all their employeesfrom the coverage of the SSL, expressly or impliedly, as illustrated below: 1. LBP (R.A. No. 7907) Section 10. Section 90 of [R.A. No. 3844] is hereby amended to read as follows: Section 90. Personnel. xxx xxx xxx All positions in the Bank shall be governed by a compensation, position classification system and qualification standards approved by the Banks Board of Directors based on a comprehensive job analysis and audit of actual duties and responsibilities. The compensation plan shall be comparable with the prevailing compensation plans in the private sector and shall be subject to periodic review by the Board no more than once every two (2) years without prejudice to yearly merit reviews or increases based on productivity and profitability. The Bank shall therefore be exempt from existing laws, rules and regulations on compensation, position classification and qualification standards. It shall however endeavor to make its system conform as closely as possible with the principles under Republic Act No. 6758. (emphasis supplied)

xxx xxx xxx 2. SSS (R.A. No. 8282) Section 1. [Amending R.A. No. 1161, Section 3(c)]: xxx xxx xxx (c)The Commission, upon the recommendation of the SSS President, shall appoint an actuary and such other personnel as may [be] deemed necessary; fix their reasonable compensation, allowances and other benefits; prescribe their duties and establish such methods and procedures as may be necessary to insure the efficient, honest and economical administration of the provisions and purposes of this Act: Provided, however, That the personnel of the SSS below the rank of Vice President shall be appointed by the SSS President: Provided, further, That the personnel appointed by the SSS President, except those below the rank of assistant manager, shall be subject to the confirmation by the Commission; Provided further, That the personnel of the SSS shall be selected only from civil service eligibles and be subject to civil service rules and regulations: Provided, finally, That the SSS shall be exempt from the provisions of Republic Act No. 6758 and Republic Act No. 7430. (emphasis supplied) 3. SBGFC (R.A. No. 8289) Section 8. [Amending R.A. No. 6977, Section 11]: xxx xxx xxx The Small Business Guarantee and Finance Corporation shall: xxx xxx xxx (e) notwithstanding the provisions of Republic Act No. 6758, and Compensation Circular No. 10, series of 1989 issued by the Department of Budget and Management, the Board of Directors of SBGFC shall have the authority to extend to the employees and personnel thereof the allowance and fringe benefits similar to those extended to and currently enjoyed by the employees and personnel of other government financial institutions. (emphases supplied) 4. GSIS (R.A. No. 8291) Section 1. [Amending Section 43(d)]. xxx xxx xxx Sec. 43. Powers and Functions of the Board of Trustees. - The Board of Trustees shall have the following powers and functions: xxx xxx xxx (d) upon the recommendation of the President and General Manager, to approve the GSIS organizational and administrative structures and staffing pattern, and to establish, fix, review, revise and adjust the appropriate compensation package for the officers and employees of the GSIS with reasonable allowances, incentives, bonuses, privileges and other benefits as may be necessary or proper for the effective management, operation and administration of the GSIS, which shall be exempt from Republic Act No. 6758, otherwise known as the Salary Standardization Law and Republic Act No. 7430, otherwise known as the Attrition Law. (emphasis supplied)

xxx xxx xxx 5. DBP (R.A. No. 8523) Section 6. [Amending E.O. No. 81, Section 13]: Section 13. Other Officers and Employees. - The Board of Directors shall provide for an organization and staff of officers and employees of the Bank and upon recommendation of the President of the Bank, fix their remunerations and other emoluments. All positions in the Bank shall be governed by the compensation, position classification system and qualification standards approved by the Board of Directors based on a comprehensive job analysis of actual duties and responsibilities. The compensation plan shall be comparable with the prevailing compensation plans in the private sector and shall be subject to periodic review by the Board of Directors once every two (2) years, without prejudice to yearly merit or increases based on the Banks productivity and profitability. The Bank shall, therefore, be exempt from existing laws, rules, and regulations on compensation, position classification and qualification standards. The Bank shall however, endeavor to make its system conform as closely as possible with the principles under Compensation and Position Classification Act of 1989 (Republic Act No. 6758, as amended). (emphasis supplied) 6. HGC (R.A. No. 8763) Section 9. Powers, Functions and Duties of the Board of Directors. - The Board shall have the following powers, functions and duties: xxx xxx xxx (e) To create offices or positions necessary for the efficient management, operation and administration of the Corporation: Provided, That all positions in the Home Guaranty Corporation (HGC) shall be governed by a compensation and position classification system and qualifications standards approved by the Corporations Board of Directors based on a comprehensive job analysis and audit of actual duties and responsibilities: Provided, further, That the compensation plan shall be comparable with the prevailing compensation plans in the private sector and which shall be exempt from Republic Act No. 6758, otherwise known as the Salary Standardization Law, and from other laws, rules and regulations on salaries and compensations; and to establish a Provident Fund and determine the Corporations and the employees contributions to the Fund; (emphasis supplied) xxx xxx xxx 7. PDIC (R.A. No. 9302) Section 2. Section 2 of [Republic Act No. 3591, as amended] is hereby further amended to read: xxx xxx xxx 3. xxx xxx xxx A compensation structure, based on job evaluation studies and wage surveys and subject to the Boards approval, shall be instituted as an integral component of the Corporations human resource development program: Provided, That all positions in the Corporation shall be governed by a compensation, position classification system and

qualification standards approved by the Board based on a comprehensive job analysis and audit of actual duties and responsibilities. The compensation plan shall be comparable with the prevailing compensation plans of other government financial institutions and shall be subject to review by the Board no more than once every two (2) years without prejudice to yearly merit reviews or increases based on productivity and profitability. The Corporation shall therefore be exempt from existing laws, rules and regulations on compensation, position classification and qualification standards. It shall however endeavor to make its system conform as closely as possible with the principles under Republic Act No. 6758, as amended. (emphases supplied) Thus, eleven years after the amendment of the BSP charter, the rank-and-file of seven other GFIs were granted the exemption that was specifically denied to the rank-and-file of the BSP. And as if to add insult to petitioners injury, even the Securities and Exchange Commission (SEC) was granted the same blanket exemption from the SSL in 2000![39] The prior view on the constitutionality of R.A. No. 7653 was confined to an evaluation of its classification between the rank-and-file and the officers of the BSP, found reasonable because there were substantial distinctions that made real differences between the two classes. The above-mentioned subsequent enactments, however, constitute significant changes in circumstance that considerably alter the reasonability of the continued operation of the last proviso of Section 15(c), Article II of Republic Act No. 7653, thereby exposing the proviso to more serious scrutiny. This time, the scrutiny relates to the constitutionality of the classification - albeit made indirectly as a consequence of the passage of eight other laws - between the rank-and-file of the BSP and the seven other GFIs. The classification must not only be reasonable, but must also apply equally to all members of the class. The proviso may be fair on its face and impartial in appearance but it cannot be grossly discriminatory in its operation, so as practically to make unjust distinctions between persons who are without differences.[40] Stated differently, the second level of inquiry deals with the following questions: Given that Congress chose to exempt other GFIs (aside the BSP) from the coverage of the SSL, can the exclusion of the rank-and-file employees of the BSP stand constitutional scrutiny in the light of the fact that Congress did not exclude the rank-andfile employees of the other GFIs? Is Congress power to classify so unbridled as to sanction unequal and discriminatory treatment, simply because the inequity manifested itself, not instantly through a single overt act, but gradually and progressively, through seven separate acts of Congress? Is the right to equal protection of the law bounded in time and space that: (a) the right can only be invoked against a classification made directly and deliberately, as opposed to a discrimination that arises indirectly, or as a consequence of several other acts; and (b) is the legal analysis confined to determining the validity within the parameters of the statute or ordinance (where the inclusion or exclusion is articulated), thereby proscribing any evaluation vis--vis the grouping, or the lack thereof, among several similar enactments made over a period of time? In this second level of scrutiny, the inequality of treatment cannot be justified on the mere assertion that each exemption (granted to the seven other GFIs) rests on a policy determination by the legislature. All legislative enactments necessarily rest on a policy determination - even those that have been declared to contravene the Constitution. Verily, if this could serve as a magic wand to sustain the validity of a statute, then no due process and equal protection challenges would ever prosper. There is nothing inherently sacrosanct in a policy determination made by Congress or by the Executive; it cannot run riot and overrun the ramparts of protection of the Constitution.

In fine, the policy determination argument may support the inequality of treatment between the rank-and-file and the officers of the BSP, but it cannot justify the inequality of treatment between BSP rank-and-file and other GFIs who are similarly situated. It fails to appreciate that what is at issue in the second level of scrutiny is not the declared policy of each law per se, but the oppressive results of Congress inconsistent and unequal policy towards the BSP rank-and-file and those of the seven other GFIs. At bottom, the second challenge to the constitutionality of Section 15(c), Article II of Republic Act No. 7653 is premised precisely on the irrational discriminatory policy adopted by Congress in its treatment of persons similarly situated. In the field of equal protection, the guarantee that "no person shall be denied the equal protection of the laws includes the prohibition against enacting laws that allow invidious discrimination, directly or indirectly. If a law has the effect of denying the equal protection of the law, or permits such denial, it is unconstitutional.[41] It is against this standard that the disparate treatment of the BSP rank-and-file from the other GFIs cannot stand judicial scrutiny. For as regards the exemption from the coverage of the SSL, there exist no substantial distinctions so as to differentiate, the BSP rank-and-file from the other rank-and-file of the seven GFIs. On the contrary, our legal history shows that GFIs have long been recognized as comprising one distinct class, separate from other governmental entities. Before the SSL, Presidential Decree (P.D.) No. 985 (1976) declared it as a State policy (1) to provide equal pay for substantially equal work, and (2) to base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of the positions. P.D. No. 985 was passed to address disparities in pay among similar or comparable positions which had given rise to dissension among government employees. But even then, GFIs and government-owned and/or controlled corporations (GOCCs) were already identified as a distinct class among government employees. Thus, Section 2 also provided, [t]hat notwithstanding a standardized salary system established for all employees, additional financial incentives may be established by government corporation and financial institutions for their employees to be supported fully from their corporate funds and for such technical positions as may be approved by the President in critical government agencies. [42] The same favored treatment is made for the GFIs and the GOCCs under the SSL. Section 3(b) provides that one of the principles governing the Compensation and Position Classification System of the Government is that: [b]asic compensation for all personnel in the government and government-owned or controlled corporations and financial institutions shall generally be comparable with those in the private sector doing comparable work, and must be in accordance with prevailing laws on minimum wages. Thus, the BSP and all other GFIs and GOCCs were under the unified Compensation and Position Classification System of the SSL, [43] but rates of pay under the SSL were determined on the basis of, among others, prevailing rates in the private sector for comparable work. Notably, the Compensation and Position Classification System was to be governed by the following principles: (a) just and equitable wages, with the ratio of compensation between pay distinctions maintained at equitable levels;[44] and (b) basic compensation generally comparable with the private sector, in accordance with prevailing laws on minimum wages.[45] Also, the Department of Budget and Management was directed to use, as guide for preparing the Index of Occupational Services, the Benchmark Position Schedule, and the following factors: [46] (1) the education and experience required to perform the duties and responsibilities of the positions; (2) the nature and complexity of the work to be performed; (3) the kind of supervision received; (4) mental and/or physical strain required in the completion of the work; (5) nature and extent of internal and external relationships;

(6) kind of supervision exercised; (7) decision-making responsibility; (8) responsibility for accuracy of records and reports; (9) accountability for funds, properties and equipment; and (10) hardship, hazard and personal risk involved in the job.

The Benchmark Position Schedule enumerates the position titles that fall within Salary Grades 1 to 20. Clearly, under R.A. No. 6758, the rank-and-file of all GFIs were similarly situated in all aspects pertaining to compensation and position classification, in consonance with Section 5, Article IX-B of the 1997 Constitution.[47] Then came the enactment of the amended charter of the BSP, implicitly exempting the Monetary Board from the SSL by giving it express authority to determine and institute its own compensation and wage structure. However, employees whose positions fall under SG 19 and below were specifically limited to the rates prescribed under the SSL. Subsequent amendments to the charters of other GFIs followed. Significantly, each government financial institution (GFI) was not only expressly authorized to determine and institute its own compensation and wage structure, but also explicitly exempted - without distinction as to salary grade or position - all employees of the GFI from the SSL. It has been proffered that legislative deliberations justify the grant or withdrawal of exemption from the SSL, based on the perceived need to fulfill the mandate of the institution concerned considering, among others, that: (1) the GOCC or GFI is essentially proprietary in character; (2) the GOCC or GFI is in direct competition with their [sic] counterparts in the private sector, not only in terms of the provisions of goods or services, but also in terms of hiring and retaining competent personnel; and (3) the GOCC or GFI are or were [sic] experiencing difficulties filling up plantilla positions with competent personnel and/or retaining these personnel. The need for the scope of exemption necessarily varies with the particular circumstances of each institution, and the corresponding variance in the benefits received by the employees is merely incidental. The fragility of this argument is manifest. First, the BSP is the central monetary authority,[48] and the banker of the government and all its political subdivisions.[49] It has the sole power and authority to issue currency; [50] provide policy directions in the areas of money, banking, and credit; and supervise banks and regulate finance companies and non-bank financial institutions performing quasi-banking functions, including the exempted GFIs.[51] Hence, the argument that the rank-and-file employees of the seven GFIs were exempted because of the importance of their institutions mandate cannot stand any more than an empty sack can stand. Second, it is certainly misleading to say that the need for the scope of exemption necessarily varies with the particular circumstances of each institution. Nowhere in the deliberations is there a cogent basis for the exclusion of the BSP rank-and-file from the exemption which was granted to the rank-and-file of the other GFIs and the SEC. As point in fact, the BSP and the seven GFIs are similarly situated in so far as Congress deemed it necessary for these institutions to be exempted from the SSL. True, the SSLexemption of the BSP and the seven GFIs was granted in the amended charters of each GFI, enacted separately and over a period of time. But it bears emphasis that, while each GFI has a mandate different and distinct from that of another, the deliberations show that the raison dtre of the SSL-exemption was inextricably linked to and for the most part based on factors common to the eight GFIs, i.e., (1) the pivotal role they play in the economy; (2) the necessity of hiring and retaining qualified and effective personnel to carry out the GFIs mandate; and (3) the recognition that the

compensation package of these GFIs is not competitive, and fall substantially below industry standards. Considering further that (a) the BSP was the first GFI granted SSL exemption; and (b) the subsequent exemptions of other GFIs did not distinguish between the officers and the rank-and-file; it is patent that the classification made between the BSP rank-and-file and those of the other seven GFIs was inadvertent, and NOT intended, i.e., it was not based on any substantial distinction vis--vis the particular circumstances of each GFI. Moreover, the exemption granted to two GFIs makes express reference to allowance and fringe benefits similar to those extended to and currently enjoyed by the employees and personnel of other GFIs,[52] underscoring that GFIs are a particular class within the realm of government entities. It is precisely this unpremeditated discrepancy in treatment of the rank-and-file of the BSP - made manifest and glaring with each and every consequential grant of blanket exemption from the SSL to the other GFIs - that cannot be rationalized or justified. Even more so, when the SEC - which is not a GFI - was given leave to have a compensation plan that shall be comparable with the prevailing compensation plan in the [BSP] and other [GFIs],[53] then granted a blanket exemption from the SSL, and its rank-and-file endowed a more preferred treatment than the rank-and-file of the BSP. The violation to the equal protection clause becomes even more pronounced when we are faced with this undeniable truth: that if Congress had enacted a law for the sole purpose of exempting the eight GFIs from the coverage of the SSL, the exclusion of the BSP rank-and-file employees would have been devoid of any substantial or material basis. It bears no moment, therefore, that the unlawful discrimination was not a direct result arising from one law. Nemo potest facere per alium quod non potest facere per directum. No one is allowed to do indirectly what he is prohibited to do directly. It has also been proffered that similarities alone are not sufficient to support the conclusion that rank-and-file employees of the BSP may be lumped together with similar employees of the other GOCCs for purposes of compensation, position classification and qualification standards. The fact that certain persons have some attributes in common does not automatically make them members of the same class with respect to a legislative classification. Cited is the ruling in Johnson v. Robinson:[54] this finding of similarity ignores that a common characteristic shared by beneficiaries and nonbeneficiaries alike, is not sufficient to invalidate a statute when other characteristics peculiar to only one group rationally explain the statutes different treatment of the two groups. The reference to Johnson is inapropos. In Johnson, the US Court sustained the validity of the classification as there were quantitative and qualitative distinctions, expressly recognized by Congress, which formed a rational basis for the classification limiting educational benefits to military service veterans as a means of helping them readjust to civilian life. The Court listed the peculiar characteristics as follows: First, the disruption caused by military service is quantitatively greater than that caused by alternative civilian service. A conscientious objector performing alternative service is obligated to work for two years. Service in the Armed Forces, on the other hand, involves a six-year commitment xxx xxx xxx Second, the disruptions suffered by military veterans and alternative service performers are qualitatively different. Military veterans suffer a far greater loss of personal freedom during their service careers. Uprooted from civilian life, the military veteran becomes part of the military establishment, subject to its discipline and potentially hazardous duty. Congress was acutely aware of the peculiar disabilities caused by military service, in consequence of which military servicemen have a special need for readjustment benefits[55](citations omitted)

In the case at bar, it is precisely the fact that as regards the exemption from the SSL, there are no characteristics peculiar only to the seven GFIs or their rankand-file so as to justify the exemption which BSP rank-and-file employees were denied (not to mention the anomaly of the SEC getting one). The distinction made by the law is not only superficial,[56] but also arbitrary. It is not based on substantial distinctions that make real differences between the BSP rank-and-file and the seven other GFIs. Moreover, the issue in this case is not - as the dissenting opinion of Mme. Justice Carpio-Morales would put it - whether being an employee of a GOCC or GFI is reasonable and sufficient basis for exemption from R.A. No. 6758. It is Congress itself that distinguished the GFIs from other government agencies, not once but eight times, through the enactment of R.A. Nos. 7653, 7907, 8282, 8289, 8291, 8523, 8763, and 9302. These laws may have created a preferred sub-class within government employees, but the present challenge is not directed at the wisdom of these laws. Rather, it is a legal conundrum involving the exercise of legislative power, the validity of which must be measured not only by looking at the specific exercise in and by itself (R.A. No. 7653), but also as to the legal effects brought about by seven separate exercises - albeit indirectly and without intent. Thus, even if petitioner had not alleged a comparable change in the factual milieu as regards the compensation, position classification and qualification standards of the employees of the BSP (whether of the executive level or of the rank-and-file) since the enactment of the new Central Bank Act is of no moment. In GSIS v. Montesclaros,[57] this Court resolved the issue of constitutionality notwithstanding that claimant had manifested that she was no longer interested in pursuing the case, and even when the constitutionality of the said provision was not squarely raised as an issue, because the issue involved not only the claimant but also others similarly situated and whose claims GSIS would also deny based on the challenged proviso. The Court held that social justice and public interest demanded the resolution of the constitutionality of the proviso. And so it is with the challenged proviso in the case at bar. It bears stressing that the exemption from the SSL is a privilege fully within the legislative prerogative to give or deny. However, its subsequent grant to the rank-andfile of the seven other GFIs and continued denial to the BSP rank-and-file employees breached the latters right to equal protection. In other words, while the granting of a privilege per se is a matter of policy exclusively within the domain and prerogative of Congress, the validity or legality of the exercise of this prerogative is subject to judicial review.[58] So when the distinction made is superficial, and not based on substantial distinctions that make real differences between those included and excluded, it becomes a matter of arbitrariness that this Court has the duty and the power to correct.[59] As held in the United Kingdom case of Hooper v. Secretary of State for Work and Pensions,[60] once the State has chosen to confer benefits, discrimination contrary to law may occur where favorable treatment already afforded to one group is refused to another, even though the State is under no obligation to provide that favorable treatment. [61] The disparity of treatment between BSP rank-and-file and the rank-and-file of the other seven GFIs definitely bears the unmistakable badge of invidious discrimination no one can, with candor and fairness, deny the discriminatory character of the subsequent blanket and total exemption of the seven other GFIs from the SSL when such was withheld from the BSP. Alikes are being treated as unalikes without any rational basis. Again, it must be emphasized that the equal protection clause does not demand absolute equality but it requires that all persons shall be treated alike, under like circumstances and conditions both as to privileges conferred and liabilities enforced. Favoritism and undue preference cannot be allowed. For the principle is that

equal protection and security shall be given to every person under circumstances which, if not identical, are analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same fashion; whatever restrictions cast on some in the group is equally binding on the rest.[62] In light of the lack of real and substantial distinctions that would justify the unequal treatment between the rank-and-file of BSP from the seven other GFIs, it is clear that the enactment of the seven subsequent charters has rendered the continued application of the challenged proviso anathema to the equal protection of the law, and the same should be declared as an outlaw. IV.

Equal Protection Under International Lens In our jurisdiction, the standard and analysis of equal protection challenges in the main have followed the rational basis test, coupled with a deferential attitude to legislative classifications[63] and a reluctance to invalidate a law unless there is a showing of a clear and unequivocal breach of the Constitution. [64] A. Equal Protection in the United States In contrast, jurisprudence in the U.S. has gone beyond the static rational basis test. Professor Gunther highlights the development in equal protection jurisprudential analysis, to wit: [65] Traditionally, equal protection supported only minimal judicial intervention in most contexts. Ordinarily, the command of equal protection was only that government must not impose differences in treatment except upon some reasonable differentiation fairly related to the object of regulation. The old variety of equal protection scrutiny focused solely on the means used by the legislature: it insisted merely that the classification in the statute reasonably relates to the legislative purpose. Unlike substantive due process, equal protection scrutiny was not typically concerned with identifying fundamental values and restraining legislative ends. And usually the rational classification requirement was readily satisfied: the courts did not demand a tight fit between classification and purpose; perfect congruence between means and ends was not required. xxx xxx xxx [From marginal intervention to major cutting edge: The Warren Courts new equal protection and the two-tier approach.] From its traditional modest role, equal protection burgeoned into a major intervention tool during the Warren era, especially in the 1960s. The Warren Court did not abandon the deferential ingredients of the old equal protection: in most areas of economic and social legislation, the demands imposed by equal protection remained as minimal as everBut the Court launched an equal protection revolution by finding large new areas for strict rather than deferential scrutiny. A sharply differentiated two-tier approach evolved by the late 1960s: in addition to the deferential old equal protection, a new equal protection, connoting strict scrutiny, arose. The intensive review associated with the new equal protection imposed two demands - a demand not only as to means but also one as to ends. Legislation qualifying for strict scrutiny required a far closer fit between classification and statutory purpose than the rough and ready flexibility traditionally tolerated by the old equal protection: means had to be shown necessary to achieve statutory ends, not merely reasonably related ones. Moreover, equal protection became a source of ends scrutiny as well: legislation

in the areas of the new equal protection had to be justified by compelling state interests, not merely the wide spectrum of legitimate state ends. The Warren Court identified the areas appropriate for strict scrutiny by searching for two characteristics: the presence of a suspect classification; or an impact on fundamental rights or interests. In the category of suspect classifications, the Warren Courts major contribution was to intensify the strict scrutiny in the traditionally interventionist area of racial classifications. But other cases also suggested that there might be more other suspect categories as well: illegitimacy and wealth for example. But it was the fundamental interests ingredient of the new equal protection that proved particularly dynamic, open-ended, and amorphous.. [Other fundamental interests included voting, criminal appeals, and the right of interstate travel .] xxx xxx xxx The Burger Court and Equal Protection. The Burger Court was reluctant to expand the scope of the new equal protection, although its best established ingredient retains vitality. There was also mounting discontent with the rigid two-tier formulations of the Warren Courts equal protection doctrine. It was prepared to use the clause as an interventionist tool without resorting to the strict language of the new equal protection. [Among the fundamental interests identified during this time were voting and access to the ballot, while suspect classifications included sex, alienage and illegitimacy.] xxx xxx xxx Even while the two-tier scheme has often been adhered to in form, there has also been an increasingly noticeable resistance to the sharp difference between deferential old and interventionist new equal protection. A number of justices sought formulations that would blur the sharp distinctions of the two-tiered approach or that would narrow the gap between strict scrutiny and deferential review. The most elaborate attack came from Justice Marshall, whose frequently stated position was developed most elaborately in his dissent in the Rodriguez case: [66] The Court apparently seeks to establish [that] equal protection cases fall into one of two neat categories which dictate the appropriate standard of review - strict scrutiny or mere rationality. But this (sic) Courts [decisions] defy such easy categorization. A principled reading of what this Court has done reveals that it has applied a spectrum of standards in reviewing discrimination allegedly violative of the equal protection clause. This spectrum clearly comprehends variations in the degree of care with which Court will scrutinize particular classification, depending, I believe, on the constitutional and societal importance of the interests adversely affected and the recognized invidiousness of the basis upon which the particular classification is drawn. Justice Marshalls sliding scale approach describes many of the modern decisions, although it is a formulation that the majority refused to embrace. But the Burger Courts results indicate at least two significant changes in equal protection law: First, invocation of the old equal protection formula no longer signals, as it did with the Warren Court, an extreme deference to legislative classifications and a virtually automatic validation of challenged statutes. Instead, several cases, even while voicing the minimal rationality hands-off standards of the old equal protection, proceed to find the statute unconstitutional. Second, in some areas the modern Court has put forth standards for equal protection review that, while clearly more intensive than the deference of the old equal protection, are less demanding than the strictness of the new equal protection. Sex discrimination is the best established example of an intermediate level of review. Thus, in one case, the Court said that classifications by gender must

serve important governmental objectives and must be substantially related to achievement of those objectives. That standard is intermediate with respect to both ends and means: where ends must be compelling to survive strict scrutiny and merely legitimate under the old mode, important objectives are required here; and where means must be necessary under the new equal protection, and merely rationally related under the old equal protection, they must be substantially related to survive the intermediate level of review. (emphasis supplied, citations omitted) B. Equal Protection in Europe The United Kingdom and other members of the European Community have also gone forward in discriminatory legislation and jurisprudence. Within the United Kingdom domestic law, the most extensive list of protected grounds can be found in Article 14 of the European Convention on Human Rights (ECHR). It prohibits discrimination on grounds such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. This list is illustrative and not exhaustive. Discrimination on the basis of race, sex and religion is regarded as grounds that require strict scrutiny. A further indication that certain forms of discrimination are regarded as particularly suspect under the Covenant can be gleaned from Article 4, which, while allowing states to derogate from certain Covenant articles in times of national emergency, prohibits derogation by measures that discriminate solely on the grounds of race, colour, language, religion or social origin.[67] Moreover, the European Court of Human Rights has developed a test of justification which varies with the ground of discrimination. In the Belgian Linguistics case[68] the European Court set the standard of justification at a low level: discrimination would contravene the Convention only if it had no legitimate aim, or there was no reasonable relationship of proportionality between the means employed and the aim sought to be realised.[69] But over the years, the European Court has developed a hierarchy of grounds covered by Article 14 of the ECHR, a much higher level of justification being required in respect of those regarded as suspect (sex, race, nationality, illegitimacy, or sexual orientation) than of others. Thus, in Abdulaziz, [70] the European Court declared that: . . . [t]he advancement of the equality of the sexes is today a major goal in the member States of the Council of Europe. This means that very weighty reasons would have to be advanced before a difference of treatment on the ground of sex could be regarded as compatible with the Convention. And in Gaygusuz v. Austria,[71] the European Court held that very weighty reasons would have to be put forward before the Court could regard a difference of treatment based exclusively on the ground of nationality as compatible with the Convention.[72] The European Court will then permit States a very much narrower margin of appreciation in relation to discrimination on grounds of sex, race, etc., in the application of the Convention rights than it will in relation to distinctions drawn by states between, for example, large and small land-owners. [73] C. Equality under International Law The principle of equality has long been recognized under international law. Article 1 of the Universal Declaration of Human Rights proclaims that all human beings are born free and equal in dignity and rights. Non-discrimination, together with equality before the law and equal protection of the law without any discrimination, constitutes basic principles in the protection of human rights. [74]

Most, if not all, international human rights instruments include some prohibition on discrimination and/or provisions about equality.[75] The general international provisions pertinent to discrimination and/or equality are the International Covenant on Civil and Political Rights (ICCPR);[76] the International Covenant on Economic, Social and Cultural Rights (ICESCR); the International Convention on the Elimination of all Forms of Racial Discrimination (CERD);[77] the Convention on the Elimination of all Forms of Discrimination against Women (CEDAW); and the Convention on the Rights of the Child (CRC). In the broader international context, equality is also enshrined in regional instruments such as the American Convention on Human Rights; [78] the African Charter on Human and People's Rights;[79] the European Convention on Human Rights;[80] the European Social Charter of 1961 and revised Social Charter of 1996; and the European Union Charter of Rights (of particular importance to European states). Even the Council of the League of Arab States has adopted the Arab Charter on Human Rights in 1994, although it has yet to be ratified by the Member States of the League. [81] The equality provisions in these instruments do not merely function as traditional "first generation" rights, commonly viewed as concerned only with constraining rather than requiring State action. Article 26 of the ICCPR requires guarantee[s] of equal and effective protection against discrimination while Articles 1 and 14 of the American and European Conventions oblige States Parties to ensure ... the full and free exercise of [the rights guaranteed] ... without any discrimination and to secure without discrimination the enjoyment of the rights guaranteed. [82] These provisions impose a measure of positive obligation on States Parties to take steps to eradicate discrimination. In the employment field, basic detailed minimum standards ensuring equality and prevention of discrimination, are laid down in the ICESCR[83] and in a very large number of Conventions administered by the International Labour Organisation, a United Nations body. [84] Additionally, many of the other international and regional human rights instruments have specific provisions relating to employment.[85] The United Nations Human Rights Committee has also gone beyond the earlier tendency to view the prohibition against discrimination (Article 26) as confined to the ICCPR rights.[86] In Broeks[87] and Zwaan-de Vries,[88] the issue before the Committee was whether discriminatory provisions in the Dutch Unemployment Benefits Act (WWV) fell within the scope of Article 26. The Dutch government submitted that discrimination in social security benefit provision was not within the scope of Article 26, as the right was contained in the ICESCR and not the ICCPR. They accepted that Article 26 could go beyond the rights contained in the Covenant to other civil and political rights, such as discrimination in the field of taxation, but contended that Article 26 did not extend to the social, economic, and cultural rights contained in ICESCR. The Committee rejected this argument. In its view, Article 26 applied to rights beyond the Covenant including the rights in other international treaties such as the right to social security found in ICESCR: Although Article 26 requires that legislation should prohibit discrimination, it does not of itself contain any obligation with respect to the matters that may be provided for by legislation. Thus it does not, for example, require any state to enact legislation to provide for social security. However, when such legislation is adopted in the exercise of a State's sovereign power, then such legislation must comply with Article 26 of the Covenant.[89] Breaches of the right to equal protection occur directly or indirectly. A classification may be struck down if it has the purpose or effect of violating the right to equal protection. International law recognizes that discrimination may occur indirectly, as the Human Rights Committee[90] took into account the definitions of discrimination adopted by CERD and CEDAW in declaring that:

. . . discrimination as used in the [ICCPR] should be understood to imply any distinction, exclusion, restriction or preference which is based on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status, and which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise by all persons, on an equal footing, of all rights and freedoms. [91] (emphasis supplied) Thus, the two-tier analysis made in the case at bar of the challenged provision, and its conclusion of unconstitutionality by subsequent operation, are in cadence and in consonance with the progressive trend of other jurisdictions and in international law. There should be no hesitation in using the equal protection clause as a major cutting edge to eliminate every conceivable irrational discrimination in our society. Indeed, the social justice imperatives in the Constitution, coupled with the special status and protection afforded to labor, compel this approach.[92] Apropos the special protection afforded to labor under our Constitution and international law, we held in International School Alliance of Educators v. Quisumbing: [93] That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy against these evils. The Constitution in the Article on Social Justice and Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce social, economic, and political inequalities." The very broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and observe honesty and good faith." International law, which springs from general principles of law, likewise proscribes discrimination. General principles of law include principles of equity, i.e., the general principles of fairness and justice, based on the test of what is reasonable. The Universal Declaration of Human Rights, the International Covenant on Economic, Social, and Cultural Rights, the International Convention on the Elimination of All Forms of Racial Discrimination, the Convention against Discrimination in Education, the Convention (No. 111) Concerning Discrimination in Respect of Employment and Occupation - all embody the general principle against discrimination, the very antithesis of fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part of its national laws. In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and discrimination by the employer are all the more reprehensible. The Constitution specifically provides that labor is entitled to "humane conditions of work." These conditions are not restricted to the physical workplace - the factory, the office or the field - but include as well the manner by which employers treat their employees. The Constitution also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of employment. xxx xxx xxx

Notably, the International Covenant on Economic, Social, and Cultural Rights, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and [favorable] conditions of work, which ensure, in particular: a. Remuneration which provides all workers, as a minimum, with: i. Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; xxx xxx xxx The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. (citations omitted) Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and respect by the courts of justice except when they run afoul of the Constitution.[94] The deference stops where the classification violates a fundamental right, or prejudices persons accorded special protection by the Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of constitutional guaranties, and require a stricter and more exacting adherence to constitutional limitations. Rational basis should not suffice. Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter judicial scrutiny finds no support in American or English jurisprudence. Nevertheless, these foreign decisions and authorities are not per se controlling in this jurisdiction. At best, they are persuasive and have been used to support many of our decisions.[95] We should not place undue and fawning reliance upon them and regard them as indispensable mental crutches without which we cannot come to our own decisions through the employment of our own endowments. We live in a different ambience and must decide our own problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and always with our own concept of law and justice.[96] Our laws must be construed in accordance with the intention of our own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related thereto. More importantly, they must be construed to serve our own public interest which is the be-all and the endall of all our laws. And it need not be stressed that our public interest is distinct and different from others.[97] In the 2003 case of Francisco v. House of Representatives, this Court has stated that: [A]merican jurisprudence and authorities, much less the American Constitution, are of dubious application for these are no longer controlling within our jurisdiction and have only limited persuasive merit insofar as Philippine constitutional law is concerned....[I]n resolving constitutional disputes, [this Court] should not be beguiled by foreign jurisprudence some of which are hardly applicable because they have been dictated by different constitutional settings and needs.[98] Indeed, although the Philippine Constitution can trace its origins to that of the United States, their paths of development have long since diverged. [99] Further, the quest for a better and more equal world calls for the use of equal protection as a tool of effective judicial intervention.

Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims equality as an ideal precisely in protest against crushing inequities in Philippine society. The command to promote social justice in Article II, Section 10, in all phases of national development, further explicitated in Article XIII, are clear commands to the State to take affirmative action in the direction of greater equality. [T]here is thus in the Philippine Constitution no lack of doctrinal support for a more vigorous state effort towards achieving a reasonable measure of equality.[100] Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society, including labor.[101] Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law.[102]And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches but also on the judiciary to translate this pledge into a living reality.[103] Social justice calls for the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated.[104] V.

A Final Word Finally, concerns have been raised as to the propriety of a ruling voiding the challenged provision. It has been proffered that the remedy of petitioner is not with this Court, but with Congress, which alone has the power to erase any inequity perpetrated by R.A. No. 7653. Indeed, a bill proposing the exemption of the BSP rank-and-file from the SSL has supposedly been filed. Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be based on the rational basis test, and the legislative discretion would be given deferential treatment. [105] But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice against persons favored by the Constitution with special protection, judicial scrutiny ought to be more strict. A weak and watered down view would call for the abdication of this Courts solemn duty to strike down any law repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a private person or the government itself or one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of the actor. [106] Accordingly, when the grant of power is qualified, conditional or subject to limitations, the issue on whether or not the prescribed qualifications or conditions have been met, or the limitations respected, is justiciable or non-political, the crux of the problem being one of legality or validity of the contested act, not its wisdom. Otherwise, said qualifications, conditions or limitations - particularly those prescribed or imposed by the Constitution - would be set at naught. What is more, the judicial inquiry into such issue and the settlement thereof are the main functions of courts of justice under the Presidential form of government adopted in our 1935 Constitution, and the system of checks and balances, one of its basic predicates. As a consequence, We have neither the authority nor the discretion to decline passing upon said issue, but are under the ineluctable obligation - made particularly more exacting and peremptory by our oath, as members of the highest Court of the land, to support and defend the Constitution - to settle it. This explains why, in Miller v. Johnson, it was held that courts have a "duty, rather than a power", to determine whether another branch of the government has "kept within constitutional limits." Not satisfied with this postulate, the

court went farther and stressed that, if the Constitution provides how it may be amended - as it is in our 1935 Constitution - "then, unless the manner is followed, the judiciary as the interpreter of that constitution, will declare the amendment invalid." In fact, this very Court - speaking through Justice Laurel, an outstanding authority on Philippine Constitutional Law, as well as one of the highly respected and foremost leaders of the Convention that drafted the 1935 Constitution - declared, as early as July 15, 1936, that "(i)n times of social disquietude or political excitement, the great landmarks of the Constitution are apt to be forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial department is the only constitutional organ which can be called upon to determine the proper allocation of powers between the several departments" of the government.[107] (citations omitted; emphasis supplied) In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin to a distinction based on economic class and status,with the higher grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP now receive higher compensation packages that are competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank - possessing higher and better education and opportunities for career advancement - are given higher compensation packages to entice them to stay. Considering that majority, if not all, the rank-and-file employees consist of people whose status and rank in life are less and limited, especially in terms of job marketability, it is they - and not the officers - who have the real economic and financial need for the adjustment This is in accord with the policy of the Constitution "to free the people from poverty, provide adequate social services, extend to them a decent standard of living, and improve the quality of life for all.[108]Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can pass muster. To be sure, the BSP rank-and-file employees merit greater concern from this Court. They represent the more impotent rank-and-file government employees who, unlike employees in the private sector, have no specific right to organize as a collective bargaining unit and negotiate for better terms and conditions of employment, nor the power to hold a strike to protest unfair labor practices. Not only are they impotent as a labor unit, but their efficacy to lobby in Congress is almost nil as R.A. No. 7653 effectively isolated them from the other GFI rank-and-file in compensation. These BSP rank-and-file employees represent the politically powerless and they should not be compelled to seek a political solution to their unequal and iniquitous treatment. Indeed, they have waited for many years for the legislature to act. They cannot be asked to wait some more for discrimination cannot be given any waiting time. Unless the equal protection clause of the Constitution is a mere platitude, it is the Courts duty to save them from reasonless discrimination. IN VIEW WHEREOF, we hold that the continued operation and implementation of the last proviso of Section 15(c), Article II of Republic Act No. 7653 is unconstitutional. Davide, Jr., C.J., Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, AustriaMartinez, Azcuna, Tinga, and Chico-Nazario, JJ., concur. Panganiban, Carpio, Carpio-Morales, and Garcia, JJ., see dissenting. Corona, and Callejo, Sr., JJ., on leave.

[1]

Rollo, p. 7.

[2]

Id., p. 9.

[3]

i.e., (1) make the salary of the BSP personnel competitive to attract highly competent personnel; (2) establish professionalism and excellence at all levels in the BSP; and (3) ensure the administrative autonomy of the BSP as the central monetary authority

[4]

Rollo, pp. 8-10.

[5]

Id., pp. 10-12, quoting Former Senator Maceda, Record of the Senate, First Regular Session, March 15 to June 10, 1993, Vol. IV, No. 86, p. 1087.

[6]

Id., pp. 12-14.

[7]

Id., p. 14.

[8]

Id., pp. 2-5.

[9]

Id., pp. 14-15.

[10]

Id., pp. 62-75.

[11]

Id., pp. 76-90.

[12]

1987 Constitution, Art. III, 1.

[13]

No. L-25246, 59 SCRA 54, 77-78 (September 12, 1974).

[14]

Basa v. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas (FOITAF), No. L-27113, 61 SCRA 93, 110-111 (November 19, 1974); Anucension v. National Labor Union, No. L-26097, 80 SCRA 350, 372-373 (November 29, 1977); Villegas v. Hiu Chiong Tsai Pao Ho, No. L-29646, 86 SCRA 270, 275 (November 10, 1978); Dumlao v. Comelec, No. L-52245, 95 SCRA 392, 404 (January 22, 1980); Ceniza v. Comelec, G.R. No. L-52304, 95 SCRA 763, 772-773 (January 28, 1980); Himagan v. People, G.R. No. 113811, 237 SCRA 538 (October 7, 1994); The Conference of Maritime Manning Agencies, Inc. v. POEA, G.R. No. 114714, 243 SCRA 666, 677 (April 21, 1995); JMM Promotion and Management, Inc. v. Court of Appeals, G.R. No. 120095, 260 SCRA 319, 331332 (August 5, 1996); and Tiu v. Court of Appeals, G.R. No. 127410, 301 SCRA 278, 288-289 (January 20, 1999). See also Ichong v. Hernandez, No. L-7995, 101 Phil. 1155 (May 31, 1957); Vera v. Cuevas, Nos. L-33693-94, 90 SCRA 379, 388 (May 31, 1979); and Tolentino v. Secretary of Finance, G.R. Nos. 115455, 115525, 115543, 115544, 115754, 115781, 115852, 115873, and 115931, 235 SCRA 630, 684 (August 25, 1994).

[15]

Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, G.R. Nos. 78742, 79310, 79744, and 79777, 175 SCRA 343 (July 14, 1989). See Tiu v. Court of Appeals, G.R. No. 127410, 301 SCRA 278 (January 20, 1999).

[16]

Ichong, etc., et al. v. Hernandez, etc. and Sarmiento, No. L-7995, 101 Phil. 1155 (May 31, 1957), citing 2 Cooley, Constitutional Limitations, pp. 824-825.

[17]

Tiu v. Court of Appeals, G.R. No. 127410, 301 SCRA 278 (January 20, 1999); Dumlao v. Comelec, No. L-52245, 95 SCRA 392, 404 (January 22, 1980); and Himagan v. People, G.R. No. 113811, 237 SCRA 538 (October 7, 1994). See also JMM Promotion and Management, Inc. v. Court of Appeals, G.R. No. 120095, 260 SCRA 319, 331-332 (August 5, 1996); The Conference of Maritime Manning Agencies, Inc. v. POEA, G.R. No. 114714, 243 SCRA 666, 677 (April 21, 1995); Ceniza v. Comelec, No. L-52304, 95 SCRA 763, 772 (January 28, 1980); Vera v. Cuevas, Nos. L-33693-94, 90 SCRA 379 (May 31, 1979); and Tolentino v. Secretary of Finance, G.R. Nos. 115455, 115525, 115543, 115544, 115754, 115781, 115852, 115873 and 115931, 235 SCRA 630 (August 25, 1994).

[18]

Dumlao v. Comelec, No. L-52245, 95 SCRA 392, 405 (January 22, 1980), citing Peralta v. Comelec, No. L-47771, No. L-47803, No. L-47816, No. L-47767, No. L-47791 and No. L-47827, 82 SCRA 30 (March 11, 1978); Rafael v. Embroidery and Apparel Control and Inspection Board, No. L19978, 21 SCRA 336 (September 29, 1967); and Ichong, etc., et al. v. Hernandez, etc. and Sarmiento, No. L-7995, 101 Phil 1155 (May 31, 1957). See also JMM Promotion and Management, Inc. v. Court of Appeals, G.R. No. 120095, 260 SCRA 319 (August 5, 1996); Philippine Judges Association v. Prado, G.R. No. 105371, 227 SCRA 703 (November 11, 1993); and Villegas v. Hiu Chiong Tsai Pao Ho, No. L-29646, 86 SCRA 270, 275 (November 10, 1978).

[19]

People v. Carlos, No. L-239, 78 Phil. 535 (June 30, 1947).

[20]

See Mabanag v. Lopez Vito, No. L-1123, 78 Phil. 1 (March 5, 1947); Casco Philippine Chemical Co., Inc. v. Gimenez, No. L-17931, 7 SCRA 347 (February 28, 1963); Morales v. Subido, No. L-29658, 27 SCRA 131 (February 27, 1969); and Philippine Judges Association v. Prado, G.R. No. 105371, 227 SCRA 703 (November 11, 1993).

[21]

People v. Vera, No. 45685, 65 Phil. 56 (November 16, 1937).

[22]

Id., citing U. S. v. Ten Yu, 24 Phil. 1, 10 (December 28, 1912); Case v. Board of Health, 24 Phil. 250, 276 (February 4, 1913); and U. S. v. Joson, No. 7019, 26 Phil. 1 (October 29, 1913).

[23]

Dumlao v. COMELEC, No. L-52245, 95 SCRA 392, 404 (January 22, 1980).

[24]

Medill v. State, 477 N.W.2d 703 (Minn. 1991) (followed with reservations by, In re Cook, 138 B.R. 943 [Bankr. D. Minn. 1992]).

[25]

Nashville, C. & St. L. Ry. v. Walters, 294 U.S. 405, 55 S. Ct. 486, 79 L. Ed. 949 (1935); Atlantic Coast Line R. Co. v. Ivey, 148 Fla. 680, 5 So. 2d 244, 139 A.L.R. 973 (1941); Louisville & N. R. Co. v. Faulkner, 3G.R. No. L-29646 07 S.W.2d 196 (Ky. 1957); and Vernon Park Realty v. City of Mount Vernon, 307 N.Y. 493, 121 N.E.2d 517 (1954).

[26]

Murphy v. Edmonds, 325 Md. 342, 601 A.2d 102 (1992)

[27]

307 N.Y. 493, 121 N.E.2d 517 (1954).

[28]

Id.

[29]

No. L-3708, 93 Phil. 68 (May 18, 1953).

[30]

On the constitutionality of Republic Act No. 342, Section 2 provides that all debts and other monetary obligations contracted before December 8, 1941, any provision in the contract creating the same or in any subsequent agreement affecting such obligation to the contrary notwithstanding, shall not be due and demandable for a period of eight (8) years from and after settlement of the war damage claim of the debtor by the Philippine War Damage Commission; and Section 3 of said Act provides that should the provision of Section 2 be declared void and unenforceable, then as regards the obligation affected thereby, the provisions of Executive Order No. 25 dated November 18, 1944, as amended by Executive Order No. 32, dated March 10, 1945, relative to debt moratorium, shall continue to be in force and effect, any contract affecting the same to the contrary notwithstanding, until subsequently repealed or amended by a legislative enactment. It thus clearly appears in said Act that the nullification of its provisions will have the effect of reviving the previous moratorium orders issued by the President of the Philippines.

[31]

Rutter v. Esteban, G.R. No. L-3708, 93 Phil. 68 (May 18, 1953).

[32]

148 Fla. 680, 5 So. 2d 244, 139 A.L.R. 973 (1941).

[33]

307 S.W.2d 196 (Ky. 1957).

[34]

Id.

[35]

People v. Dela Piedra, G.R. No. 121777, 350 SCRA 163 (January 24, 2001).

[36]

People v. Vera, No. 45685, 65 Phil. 56 (November 16, 1937). Parenthetically, this doctrine was first enunciated in the 1886 case of Yick Wo v. Hopkins (118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220), wherein the U.S. Supreme Court, speaking through Justice Matthews, declared: Though the law itself be fair on its face and impartial in appearances, yet, if it is applied and administered by public authority with an evil eye and an unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the Constitution.

[37]

Rollo, pp. 12-14.

[38]

Formerly the Home Insurance and Guaranty Corporation (HIGC).

[39]

R.A. No. 8799 (2000), Section 7.2 provides: All positions of the Commission shall be governed by a compensation and position classification systems and qualification standards approved by the Commission based on a comprehensive job analysis and audit of actual duties and responsibilities. The compensation plan shall be comparable with the prevailing compensation plan in the Bangko Sentral ng Pilipinas and other government financial institutions and shall be subject to periodic review by the Commission no more than once every two (2) years without prejudice to yearly merit reviews or increases based on productivity and efficiency. The Commission shall, therefore, be exempt from laws, rules, and regulations on compensation, position classification and qualification standards. The Commission shall, however, endeavor to make its system conform as closely as possible with the principles under the Compensation and Position Classification Act of 1989 (Republic Act No. 6758, as amended).

[40]

People v. Dela Piedra, G.R. No. 121777, 350 SCRA 163 (January 24, 2001).

[41]

People v. Vera, No. 45685, 65 Phil. 56 (November 16, 1937).

[42]

P.D. No. 985 (August 22, 1976).

[43]

R.A. No. 6758, Section 2, the policy of which is to provide equal pay for substantially equal work and to base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of the positions.

[44]

Section 3(a) provides that All government personnel shall be paid just and equitable wages; and while pay distinctions must necessarily exist in keeping with work distinctions, the ratio of compensation for those occupying higher ranks to those at lower ranks should be maintained at equitable levels giving due consideration to higher percentages of increases to lower level positions and lower percentage increases to higher level positions.

[45]

Section 3(b) states that Basic compensation for all personnel in the government, and governmentowned or controlled corporations (GOCCs) and financial institutions (GFIs) shall generally be comparable with those in the private sector doing comparable work, and must be in accordance with prevailing laws on minimum wages.

[46]

Id., Section 9.

[47]

Section 5 of the 1987 Constitution provides: The Congress shall provide for the standardization of compensation of government officials, including those in government-owned or controlled corporations with original charters, taking into account the nature of the responsibilities pertaining to, and the qualifications required for their positions.

[48]

R.A. No. 7653, Sections 1 and 3.

[49]

Id., Sections 110 and 113.

[50]

R.A. No. 7653, Section 50.

[51]

Id., Sections 1 and 3.

[52]

R.A. No. 8289 [SBGFC], Section 8; R.A. No. 9302 [PDIC], Section 2.

[53]

R.A. No. 8799 (2000), Section 7.2.

[54]

415 U.S. 361 (1974).

[55]

Id.

[56]

Philippine Judges Association v. Prado, G.R. No. 105371, 227 SCRA 703 (November 11, 1993).

[57]

G.R. No. 146494 ( July 14, 2004).

[58]

Constitution, Article VIII, Section 1.

[59]

See Philippine Judges Association v. Prado, G.R. No. 105371, 227 SCRA 703, 713-715 (November 11, 1993).

[60]

[2002] EWHC 191 (Admin).

[61]

Id. The significance of international human rights instruments in the European context should not be underestimated. In Hooper for example, the case was brought on the alleged denial of a right guaranteed by the ECHR, given domestic effect in the U.K. through its Human Rights Act 1998 (HRA), and the ECHR, as one of the contracting parties. Also, in Wilson v United Kingdom, (30668/96) (2002) 35 E.H.R.R. 20 (ECHR), the European Court of Human Rights took into account the requirements of ILO Conventions Nos. 87 and 98, and of the European Social Charter of 1961, in ruling that the United Kingdom had breached the applicants' freedom of association. See Aileen McColgan, Principles of Equality and Protection from Discrimination, 2 E.H.R.L.R. 157 (2003).

[62]

J.M. Tuason and Co., Inc. v. Land Tenure Administration, No. L-21064, 31 SCRA 413, 435 (February 18, 1970).

[63]

See Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform, G.R. Nos. 78742, 79310, 79744, and 79777 (July 14, 1989).

[64]

People v. Vera, supra, citing U. S. v. Ten Yu, 24 Phil. 1, 10 (December 28, 1912); Case v. Board of Health and Heiser, supra; and U. S. v. Joson, supra. See Peralta v. COMELEC, No. L-47771, No. L-47803, No. L-47816, No. L-47767, No. L-47791 and No. L-47826, 82 SCRA 30 (March 11, 1978), citing Cooper v. Telfair, 4 Dall. 14; DODD, CASES ON CONSTITUTIONAL LAW 56 (3rd ed. 1942).

[65]

GERALD GUNTHER, CONSTITUTIONAL LAW 586-589 (11TH ed. 1985).

[66]

San Antonio Independent School District v. Rodriguez, 411 U.S. 1 (1973).

[67]

See Gay Moon, Complying with Its International Human Rights Obligations: The United Kingdom and Article 26 of the International Covenant on Civil and Political Rights, 3 E.H.R.L.R. 283-307 (2003).

[68]

(No.2) (A/6) 1 E.H.R.R. 252 (1979-80) (ECHR).

[69]

The European Court has also taken an even more restricted approach to Article 14, asking only whether the treatment at issue had a justified aim in view or whether the authorities pursued other and ill-intentioned designs. National Union of Belgian Police v. Belgium, 1 E.H.R.R. 578 (197980); and Swedish Engine Drivers' Union v. Sweden 1 E.H.R.R. 617 (1979-80).

[70]

Abdulaziz v. United Kingdom, (A/94) 7 E.H.R.R. 471 (1985) (ECHR).

[71]

23 E.H.R.R. 364 (1997).

[72]

Id.

[73]

Aileen McColgan, Principles of Equality and Protection from Discrimination, 2 E.H.R.L.R. 157 (2003).

[74]

Aileen McColgan, Principles of Equality and Protection from Discrimination, 2 E.H.R.L.R. 157 (2003). See Tufyal Choudhury, Interpreting the Right to Equality under Article 26 of the International Covenant on Civil and Political Rights, 1 E.H.R.L.R. 24-52 (2003).

[75]

Aileen McColgan, Principles of Equality and Protection from Discrimination, 2 E.H.R.L.R. 157 (2003).

[76]

Article 26 of the ICCPR provides that: "All persons are equal before the law and are entitled without any discrimination to the equal protection of the law. In this respect, the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status."

[77]

Article 5(b) of CERD requires States to protect individuals from (racially discriminatory) violence "whether inflicted by government officials or by any individual group or institution."

[78]

Article 1 of the American Conventions on Human Rights provides that: The States Parties to this Convention undertake to respect the rights and freedoms recognized herein and to ensure to all persons subject to their jurisdiction the free and full exercise of those rights and freedoms, without any discrimination for reasons of race, color, sex, language, religion, political or other opinion, national or social origin, economic status, birth, or any other social condition;

[79]

Article 26 of the ICCPR is echoed in its broad proscription of discrimination by Article 3 of the African Charter which provides that: 1. Every individual shall be equal before the law. 2. Every individual shall be entitled to equal protection of the law.

[80]

Article 14 of the European Conventions on Human Rights provides that: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.

[81]

See Aileen McColgan, Principles of Equality and Protection from Discrimination, 2 E.H.R.L.R. 157 (2003); and Tufyal Choudhury, Interpreting the Right to Equality under Article 26 of the International Covenant on Civil and Political Rights, 1 E.H.R.L.R. 24-52 (2003).

[82]

Also, Articles 2 and 3 of the ICCPR require that Contracting States agree to "respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognized in the present Covenant, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status," and (Article 3) "to ensure the equal right of men and women to the enjoyment of all civil and political rights set forth in the present may not involve discrimination solely on the ground of race, colour, sex, language, religion or social origin." Other examples include: Article 2 of CEDAW, which require States Parties to the Convention not only to "embody the principle of the equality of men and women in their national constitutions or other appropriate legislation" but also "to ensure, through law and other appropriate means, the practical realization of this principle"; and Article 5(b) of CERD requires States to protect individuals from (racially discriminatory) violence "whether inflicted by government officials or by any individual group or institution." See also Articles 2 and 3 CSECR, and Article 2 of the African Charter, which is similar to Article 2 of the ICCPR. Aileen McColgan, Principles of Equality and Protection from Discrimination, 2 E.H.R.L.R. 157 (2003).

[83]

Article 7 of the ICESCR provides the right:

. . . to the enjoyment of just and favourable conditions of work ... in particular ... fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work [and] ... equal opportunity for everyone to be promoted in his employment to an appropriate higher level, subject to no considerations other than those of seniority and competence. [84]

See Convention Nos. 100 of 1951, 103 of 1952, 111 of 1958, 118 of 1962 and 156 of 1981 which deal respectively with equal pay for men and women; maternity rights; discrimination in employment and occupation; equality of treatment in social security; and workers with family responsibilities. Convention No. 100 has been ratified by no less than 159 countries and Convention No. 111 by 156 (these being two of the eight fundamental Conventions the ratification of which is all but compulsory). Conventions Nos. 103, 118 and 156 have been ratified by 40, 38 and 34 countries, respectively.

[85]

For example, Articles 11, 12 and 13 of CEDAW require the taking of "all appropriate measures" to eliminate discrimination against women in the fields of employment, health care, and other areas of economic life including the right to benefits and financial services. Article 15 of the African Charter provides a right for "every individual" to "equal pay for equal work," which, like Article 7 of the ICESCR, applies whether an individual is employed by the state or by a private body. The Council of Europe's Revised Social Charter provides for the "right to equal opportunities and equal treatment in matters of employment and occupation without discrimination on the grounds of sex" and to the protection of workers with family responsibilities. The Social Charter of the Council of Europe also incorporates a commitment on the part of Contracting States to "recognise the right of men and women workers to equal pay for work of equal value" as well as that of children, young persons and women to protection in employment (the latter group in connection with pregnancy and childbirth), and rights for migrant workers. Article 5 CERD does not merely require Contracting States to eliminate race discrimination in their own practices but also obliges them to prohibit race discrimination "in all its forms and to guarantee the right of everyone, without distinction as to race, colour, or national or ethnic origin, to equality before the law, notably in the enjoyment of economic, social and cultural rights," in particular, employment rights including rights to "just and favourable conditions of work", protection against unemployment, "just and favourable remuneration" and to form and join trade unions. See Aileen McColgan, Principles of Equality and Protection from Discrimination, 2 E.H.R.L.R. 157 (2003).

[86]

Tufyal Choudhury, Interpreting the Right to Equality under Article 26 of the International Covenant on Civil and Political Rights, 1 E.H.R.L.R. 24-52 (2003).

[87]

SWM Broeks v. the Netherlands (172/1984).

[88]

F.H. Zwaan-de Vries v. the Netherlands (182/1984).

[89]

S.W.M. Broeks v. Netherlands (172/1984), paragraph 12.4.

[90]

Human Rights Committee, General Comment No. 18 (1989).

[91]

Id. In the Belgian Linguistics case, (No.2) (A/6) (1979-80) 1 E.H.R.R. 252 (ECHR), the European Court of Human Rights referred to the aims and effects of the measure challenged under Article14 of the European Convention, implying that indirect as well as direct discrimination could be contrary to the provision. And in Thlimmenos v Greece, 31 E.H.R.R. 15 (2001), the European Court ruled that discrimination contrary to the European Convention had occurred when a man who had been criminalised because of his refusal (as a Jehovah's Witness and, therefore, a pacifist) to wear a military uniform during compulsory military service, was subsequently refused access to the chartered accountancy profession because of a rule which barred those with criminal convictions from being chartered. According to the Court: [We have] so far considered that the right under Article 14 not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is violated when States treat differently persons in analogous situations without providing an objective and reasonable justification ... However, the Court considers that this is not the only facet of the prohibition of discrimination in Article 14. The right not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is also violated when States without an objective and reasonable justification fail to treat differently persons whose situations are significantly different. See also Jordan v. United Kingdom (App. No. 24746/94), para.154. Aileen McColgan, Principles of Equality and Protection from Discrimination, 2 E.H.R.L.R. 157 (2003).

[92]

The 1987 Constitutional provisions pertinent to social justice and the protection granted to Labor are: PREAMBLE: We, the sovereign Filipino people, imploring the aid of Almighty God, in order to build a just and humane society and establish a Government that shall embody our ideals and aspirations,

promote the common good, conserve and develop our patrimony, and secure to ourselves and our posterity the blessings of independence and democracy under the rule of law and a regime of truth, justice, freedom, love, equality and peace, do ordain and promulgate this Constitution. ARTICLE II: DECLARATION OF PRINCIPLES AND STATE POLICIES: PRINCIPLES SECTION 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. SECTION 10. The State shall promote social justice in all phases of national development. SECTION 11. The State values the dignity of every human person and guarantees full respect for human rights. SECTION 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. ARTICLE III: BILL OF RIGHTS SECTION 1. No person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws. ARTICLE IX: CONSTITUTIONAL COMMISSIONS B. THE CIVIL SERVICE COMMISSION SECTION 5. The Congress shall provide for the standardization of compensation of government officials and employees, including those in government-owned or controlled corporations with original charters, taking into account the nature of the responsibilities pertaining to, and the qualifications required for their positions. ARTICLE XII: NATIONAL ECONOMY AND PATRIMONY SECTION 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices. In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership. SECTION 22. Acts which circumvent or negate any of the provisions of this Article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law. ARTICLE XIII: SOCIAL JUSTICE AND HUMAN RIGHTS SECTION 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. LABOR SECTION 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., Petitioner, v. HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas Employment Administration, Respondents. Gutierrez & Alo Law Offices for petitioner. G.R. No. L-81958. June 30, 1988

DECISION

SARMIENTO, J.:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in the recruitment of Filipino workers, male and female, for overseas placement," 1 challenges the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. Specifically, the measure is assailed for "discrimination against males or females;" 2 that it "does not apply to all Filipino workers but only to domestic helpers and females with similar skills;" 3 and that it is violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking power, police power being legislative, and not executive, in character. In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing for worker participation "in policy and decision-making processes affecting their rights and benefits as may be provided by law." 4 Department Order No. 1, it is contended, was passed in the absence of prior consultations. It is claimed, finally, to be in violation of the Charter’s non-impairment clause, in addition to the "great and irreparable injury" that PASEI members face should the Order be further enforced. On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and Administrator of the Philippine Overseas Employment Administration, filed a Comment informing the Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and Switzerland. ** In submitting the validity of the challenged "guidelines," the Solicitor General invokes the police power of the Philippine State. It is admitted that Department Order No. 1 is in the nature of a police power measure. The only question is whether or not it is valid under the Constitution. The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare." 5 As defined, it consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace. chanroble s virtual law lib rary

"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest benefits." 6 It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the Charter. Along with the taxing power and eminent domain, it is inborn in the very fact of statehood and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most vital functions of governance. Marshall, to whom the expression has been credited, 7 refers to it succinctly as the plenary power of the State "to govern its citizens." 8 "The police power of the State . . . is a power coextensive with self-protection, and it is not inaptly termed the ‘law of overwhelming necessity.’ It may be said to be that inherent and plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society." 9 It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the conception that men in organizing the state and imposing upon its government limitations to safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of citizens to obstruct unreasonably the enactment of such salutary measures calculated to ensure communal peace, safety, good order, and welfare." 10 Significantly, the Bill of Rights itself does not purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the greatest of all rights, is not unrestricted license to act according to one’s will." 11 It is subject to the far more overriding demands and requirements of the greater number. Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in that event, it defeats the purpose for which it is exercised, that is, to advance the public good. Thus, when the power is used to further private interests at the expense of the citizenry, there is a clear misuse of the power. 12 In the light of the foregoing, the petition must be dismissed.

As a general rule, official acts enjoy a presumed validity. 13 In the absence of clear and convincing evidence to the contrary, the presumption logically stands. The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no question that Department Order No. 1 applies only to "female contract workers," 14 but it does not thereby make an undue discrimination between the sexes. It is well-settled that "equality before the law" under the Constitution 15 does not import a perfect identity of rights among all men and women. It admits of classifications, provided that (1) such classifications rest on substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they apply equally to all members of the same class. 16 The Court is satisfied that the classification made — the preference for female workers — rests on substantial distinctions. As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force abroad, especially domestic servants, amid exploitative working conditions marked by, in not a few cases, physical and personal abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by testimonies of returning workers, are compelling motives for urgent Government action. As precisely the caretaker of Constitutional rights, the Court is called upon to protect victims of exploitation. In fulfilling that duty, the Court sustains the Government’s efforts. chanrob les vi rtual lawlib rary

The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps for isolated instances, our men abroad have been afflicted with an identical predicament. The petitioner has proffered no argument that the Government should act similarly with respect to male workers. The Court, of course, is not impressing some male chauvinistic notion that men are superior to women. What the Court is saying is that it was largely a matter of evidence (that women domestic workers are being ill-treated abroad in massive instances) and not upon some fanciful or arbitrary yardstick that the Government acted in this case. It is evidence capable indeed of unquestionable demonstration and evidence this Court accepts. The Court cannot, however, say the same thing as far as men are concerned. There is simply no evidence to justify such an inference. Suffice it to state, then, that insofar as classifications are concerned, this Court is content that distinctions are borne by the evidence. Discrimination in this case is justified. As we have furthermore indicated, executive determinations are generally final on the Court. Under a republican regime, it is the executive branch that enforces policy. For their part, the courts decide, in the proper cases, whether that policy, or the manner by which it is implemented, agrees with the Constitution or the laws, but it is not for them to question its wisdom. As a co-equal body, the judiciary has great respect for determinations of the Chief Executive or his subalterns, especially when the legislature itself has specifically given them enough room on how the law should be effectively enforced. In the case at bar, there is no gainsaying the fact, and the Court will deal with this at greater length shortly, that Department Order No. 1 implements the rule-making powers granted by the Labor Code. But what should be noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that prevailing conditions indeed call for a deployment ban. There is likewise no doubt that such a classification is germane to the purpose behind the measure. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the protection for Filipino female overseas workers." 17 This Court has no quarrel that in the midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their own good and welfare. The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so long as those conditions exist. This is clear from the Order itself ("Pending review of the administrative and legal measures, in the Philippines and in the host countries . . ." 18), meaning to say that should the authorities arrive at a means impressed with a greater degree of permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary malleability, depending on the circumstances of each case. Accordingly, it provides: chan rob1e s virtual 1aw lib rary

9. LIFTING OF SUSPENSION. — The Secretary of Labor and Employment (DOLE) may, upon recommendation of the Philippine Overseas Employment Administration (POEA), lift the suspension in countries where there are: c hanro b1es vi rtu al 1aw lib rary

1. Bilateral agreements or understanding with the Philippines, and/or, 2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers. 19 The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas workers. That it does not apply to "all Filipina workers" 20 is not an argument for unconstitutionality. Had the ban been given universal applicability, then it would have been unreasonable and arbitrary. For obvious reasons, not all of them are similarly circumstanced. What the Constitution prohibits is the singling out of a select person or group of persons within an existing class, to the prejudice of such a person or group or resulting in an unfair advantage to another person or group of persons. To apply the ban, say exclusively to workers deployed by A, but not to those recruited by B, would obviously clash with the equal protection clause of the Charter. It would be a classic case of what Chase refers to as a law that "takes property from A and gives it to B." 21 It would be an unlawful invasion of property rights and freedom of contract and needless to state, an invalid act. 22 (Fernando says: "Where the classification is based on such distinctions that make a real

difference as infancy, sex, and stage of civilization of minority groups, the better rule, it would seem, is to recognize its validity only if the young, the women, and the cultural minorities are singled out for favorable treatment. There would be an element of unreasonableness if on the contrary their status that calls for the law ministering to their needs is made the basis of discriminatory legislation against them. If such be the case, it would be difficult to refute the assertion of denial of equal protection." 23 In the case at bar, the assailed Order clearly accords protection to certain women workers, and not the contrary.) It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From scattered provisions of the Order, it is evident that such a total ban has not been contemplated. We quote:

chan rob1e s

virtua l 1aw lib rary

5. AUTHORIZED DEPLOYMENT — The deployment of domestic helpers and workers of similar skills defined herein to the following [sic] are authorized under these guidelines and are exempted from the suspension. chanrob les.co m:cra law:red

5.1 Hirings by immediate members of the family of Heads of State and Government; 5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and 5.3 Hirings by senior officials of the diplomatic corps and duly accredited international organizations. 5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral labor agreements or understanding. x

x

x

7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS — Vacationing domestic helpers and/or workers of similar skills shall be allowed to process with the POEA and leave for worksite only if they are returning to the same employer to finish an existing or partially served employment contract. Those workers returning to worksite to serve a new employer shall be covered by the suspension and the provision of these guidelines. x

x

x

9. LIFTING OF SUSPENSION — The Secretary of Labor and Employment (DOLE) may, upon recommendation of the Philippine Overseas Employment Administration (POEA), lift the suspension in countries where there are: chan rob1es v irt ual 1aw l ibra ry

1. Bilateral agreements or understanding with the Philippines, and/or, 2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers. 24 x

x

x

The consequence the deployment ban has on the right to travel does not impair the right. The right to travel is subject, among other things, to the requirements of "public safety," "as may be provided by law." 25 Department Order No. 1 is a valid implementation of the Labor Code, in particular, its basic policy to "afford protection to labor," 26 pursuant to the respondent Department of Labor’s rule-making authority vested in it by the Labor Code. 27 The petitioner assumes that it is unreasonable simply because of its impact on the right to travel, but as we have stated, the right itself is not absolute. The disputed Order is a valid qualification thereto. Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative power. It is true that police power is the domain of the legislature, but it does not mean that such an authority may not be lawfully delegated. As we have mentioned, the Labor Code itself vests the Department of Labor and Employment with rule-making powers in the enforcement whereof. 28 The petitioners’s reliance on the Constitutional guaranty of worker participation "in policy and decisionmaking processes affecting their rights and benefits." 29 is not well-taken. The right granted by this provision, again, must submit to the demands and necessities of the State’s power of regulation.

chan roble s virtualawli bra ry cha nrob les.com: chan roble s.com.p h

The Constitution declares that:

chanrob 1es vi rtual 1aw lib rary

Sec 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. 30 "Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and economically, while away from home. In this case, the Government has evidence, an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite ban on

deployment. The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that it has in fact removed the prohibition with respect to certain countries as manifested by the Solicitor General. The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targetted by the Government. 31 Freedom of contract and enterprise, like all other freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life. This Court understands the grave implications the questioned Order has on the business of recruitment. The concern of the Government, however, is not necessarily to maintain profits of business firms. In the ordinary sequence of events, it is profits that suffer as a result of Government regulation. The interest of the State is to provide a decent living to its citizens. The Government has convinced the Court in this case that this is its intent. We do not find the impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief prayed for. chanrobles law lib rary

WHEREFORE, the petition is DISMISSED. No costs.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-23794

February 17, 1968

ORMOC SUGAR COMPANY, INC., plaintiff-appellant, vs. THE TREASURER OF ORMOC CITY, THE MUNICIPAL BOARD OF ORMOC CITY, HON. ESTEBAN C. CONEJOS as Mayor of Ormoc City and ORMOC CITY, defendants-appellees. Ponce Enrile, Siguion Reyna, Montecillo & Belo and Teehankee, Carreon & Tañada for plaintiffappellant. Ramon O. de Veyra for defendants-appellees. BENGZON, J.P., J.: On January 29, 1964, the Municipal Board of Ormoc City passed 1 Ordinance No. 4, Series of 1964, imposing "on any and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Inc., in Ormoc City a municipal tax equivalent to one per centum (1%) per export sale to the United States of America and other foreign countries." 2 Payments for said tax were made, under protest, by Ormoc Sugar Company, Inc. on March 20, 1964 for P7,087.50 and on April 20, 1964 for P5,000, or a total of P12,087.50. On June 1, 1964, Ormoc Sugar Company, Inc. filed before the Court of First Instance of Leyte, with service of a copy upon the Solicitor General, a complaint 3 against the City of Ormoc as well as its Treasurer, Municipal Board and Mayor, alleging that the afore-stated ordinance is unconstitutional for being violative of the equal protection clause (Sec. 1[1], Art. III, Constitution) and the rule of uniformity of taxation (Sec. 22[1]), Art. VI, Constitution), aside from being an export tax forbidden under Section 2287 of the Revised Administrative Code. It further alleged that the tax is neither a production nor a license tax which Ormoc City under Section 15-kk of its charter and under Section 2 of Republic Act 2264, otherwise known as the Local Autonomy Act, is authorized to impose; and that the tax amounts to a customs duty, fee or charge in violation of paragraph 1 of Section 2 of Republic Act 2264 because the tax is on both the sale and export of sugar. Answering, the defendants asserted that the tax ordinance was within defendant city's power to enact under the Local Autonomy Act and that the same did not violate the afore-cited constitutional limitations. After pre-trial and submission of the case on memoranda, the Court of First Instance, on August 6, 1964, rendered a decision that upheld the constitutionality of the ordinance and declared the taxing power of defendant chartered city broadened by the Local Autonomy Act to include all other forms of taxes, licenses or fees not excluded in its charter. Appeal therefrom was directly taken to Us by plaintiff Ormoc Sugar Company, Inc. Appellant alleges the same statutory and constitutional violations in the aforesaid taxing ordinance mentioned earlier. Section 1 of the ordinance states: "There shall be paid to the City Treasurer on any and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Incorporated, in Ormoc City, a municipal tax equivalent to one per centum (1%) per export sale to the United States of America and other foreign countries." Though referred to as a tax on the export of centrifugal sugar produced at Ormoc Sugar Company, Inc. For production of sugar alone is not taxable; the only time the tax applies is when the sugar produced is exported. Appellant questions the authority of the defendant Municipal Board to levy such an export tax, in view of Section 2287 of the Revised Administrative Code which denies from municipal councils the power to impose an export tax. Section 2287 in part states: "It shall not be in the power of the municipal council to impose a tax in any form whatever, upon goods and merchandise carried into the municipality, or out of the same, and any attempt to impose an import or export tax upon such goods in the guise of an unreasonable charge for wharfage use of bridges or otherwise, shall be void."

Subsequently, however, Section 2 of Republic Act 2264 effective June 19, 1959, gave chartered cities, municipalities and municipal districts authority to levy for public purposes just and uniform taxes, licenses or fees. Anent the inconsistency between Section 2287 of the Revised Administrative Code and Section 2 of Republic Act 2264, this Court, in Nin Bay Mining Co. v. Municipality of Roxas 4 held the former to have been repealed by the latter. And expressing Our awareness of the transcendental effects that municipal export or import taxes or licenses will have on the national economy, due to Section 2 of Republic Act 2264, We stated that there was no other alternative until Congress acts to provide remedial measures to forestall any unfavorable results. The point remains to be determined, however, whether constitutional limits on the power of taxation, specifically the equal protection clause and rule of uniformity of taxation, were infringed. The Constitution in the bill of rights provides: ". . . nor shall any person be denied the equal protection of the laws." (Sec. 1 [1], Art. III) In Felwa vs. Salas, 5 We ruled that the equal protection clause applies only to persons or things identically situated and does not bar a reasonable classification of the subject of legislation, and a classification is reasonable where (1) it is based on substantial distinctions which make real differences; (2) these are germane to the purpose of the law; (3) the classification applies not only to present conditions but also to future conditions which are substantially identical to those of the present; (4) the classification applies only to those who belong to the same class. A perusal of the requisites instantly shows that the questioned ordinance does not meet them, for it taxes only centrifugal sugar produced and exported by the Ormoc Sugar Company, Inc. and none other. At the time of the taxing ordinance's enactment, Ormoc Sugar Company, Inc., it is true, was the only sugar central in the city of Ormoc. Still, the classification, to be reasonable, should be in terms applicable to future conditions as well. The taxing ordinance should not be singular and exclusive as to exclude any subsequently established sugar central, of the same class as plaintiff, for the coverage of the tax. As it is now, even if later a similar company is set up, it cannot be subject to the tax because the ordinance expressly points only to Ormoc City Sugar Company, Inc. as the entity to be levied upon. Appellant, however, is not entitled to interest; on the refund because the taxes were not arbitrarily collected (Collector of Internal Revenue v. Binalbagan). 6 At the time of collection, the ordinance provided a sufficient basis to preclude arbitrariness, the same being then presumed constitutional until declared otherwise. WHEREFORE, the decision appealed from is hereby reversed, the challenged ordinance is declared unconstitutional and the defendants-appellees are hereby ordered to refund the P12,087.50 plaintiff-appellant paid under protest. No costs. So ordered.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 56515 April 3, 1981 UNITED DEMOCRATIC OPPOSITION (UNIDO), petitioner, vs. COMMISSION ON ELECTIONS (COMELEC), respondent.

BARREDO, J.: Appeal by the UNIDO, a political organization or aggrupation campaigning for "NO" votes to the amendments to the Constitution of the Philippines of 1973 proposed by the Batasang Pambansa, from the resolutions of the respondent Commission on Elections dated March 18 and March 22, 1981. As alleged in the petition: 3. Respondent COMELEC issued three (3) Resolutions all dated March 5, 1981, to wit: (1) Resolution No. 1467 providing for Rules and Regulations for 'equal opportunity' on public discussions and debates on the plebiscite questions to be submitted to the people on April 7, 1981; (2) Resolution No.1468 providing "equal time on the use of the broadcast media (radio and television) in the plebiscite campaign"; and (3) Resolution No.1469 providing for "equal space on the use of the print media in the 1981 plebiscite of April 7, 1981". The pertinent portions of said Resolutions Nos. 1467, 1468 and 1469 are attached to this Petition as Annexes "A", "A- l" and "A-2" respectively; (P. 2, Petition.) The questioned resolutions are as follows: RESOLUTION NO. 1467 RULES AND REGULATIONS ON PUBLIC DISCUSSIONS AND DEBATES ON THE PLEBISCITE QUESTIONS The Commission on Elections, pursuant to the powers vested in it by the Constitution, the 1978 Election Code and pertinent enactments of the Batasang Pambansa, RESOLVED to promulgate the following rules and regulations governing free discussions and debates on the plebiscite questions to be submitted to the people on April 7, 1981. (Annex "A", Petition.) xxx xxx xxx RESOLUTION NO. 1468 The Commission on Elections, by virtue of the powers conferred upon it by the Constitution, the 1978 Election Code and pertinent enactments of the Batasang Pambansa, RESOLVED to promulgate, as it hereby promulgates, the following rules and regulations to govern the use of broadcast media in the 1981 plebiscite.

I. GENERAL PROVISIONS SECTION 1. Policy. – (1) These rules and regulations are intended to insure that broadcast time for campaign purposes equal as to duration and quality shall be available to all supporters or oppositors, political parties, groups or aggrupations at the same rates or given free of charge. (2) Radio and television stations shall not be allowed to schedule any non-political program or permit any sponsor to manifestly favor or oppose any side of the 1981 plebiscite issues or to unduly or repeatedly refer to or include in the program or broadcast any supporter or oppositor and/or political party, group or aggrupation favoring or opposing any side of the 1981 plebiscite issues. (3) In all instances, the right of radio and television stations to broadcast accounts of significant or newsworthy events and views on matters of public interest shall not be unpaired. (Annex "A-1", Petition.) xxx xxx xxx RESOLUTION NO. 1469 The Commission on Elections, pursuant to its powers under the Constitution, the 1978 Election Code, and pertinent enactments of the Batasang Pambansa, RESOLVED to promulgate, as it hereby promulgates, the following rules and regulations on the use of the print media, the printing and dissemination of printed political propaganda in the campaign for or against the 1981 plebiscite questions. I. GENERAL PROVISIONS SECTION 1. Policy – The policy herein is to enable individual supporters, oppositors, political parties, groups or aggrupations when they so desire, to purchase or avail of advertising space for campaign purposes under the following rules and regulations which assure that available advertising space in the print media shall be, as far as practicable, equitably allocated. SECTION 2. Comelec Supervision. – The Commission on Elections shall recognize the principle of self-regulation in the print media and shall exercise as far as practicable only minimal supervision over the print media leaving the enforcement of these rules and regulations largely to the Ministry of Public Information. (Annex "A-2", Petition.) 4. Petitioner UNIDO addressed a letter dated 10 March 1981 to respondent COMELEC, which reads: Your Resolutions Nos. 1467, 1468 and 1469, all promulgated on March 5, 1981, provided for equal opportunity "on public discussion and debates on the plebiscite", equal time "on the use of the broadcast media in the plebiscite campaign" and equal space "on the use of the print media in the 1981 plebiscite". The newspapers this morning have announced that President Marcos will lead the campaign for "Yes" votes on the proposed constitutional amendments in the April 7 plebiscite in his nationwide "PulongPulong sa Pangulo" radio-television program on Thursday, March 12, from 9:30 to 11:30 P.M., which will be carried live by 26 television and 248 radio stations throughout the country. The undersigned, in behalf of the United Democratic Opposition (UNIDO), hereby demand exactly the same number of TV and radio stations all over the country at the earliest possible date, to campaign for 'No' votes in the forthcoming plebiscite.

Likewise, on 17 March 1981, petitioner thru its undersigned legal counsel addressed its second letter to respondent Commission on Elections, which reads: Pursuant to the letter of UNIDO dated 10 March 1981 requesting for equal opportunity, the same prime time and number of TV and radio stations all over the country which were utilized by President Marcos last March 12 from 9:30 to 11:30 P.M., we wish to state that on Saturday, March 21, the UNIDO will hold a public meeting at the Plaza Miranda, Quiapo, Manila, and we hereby request that the same be covered by radio and television from 9:30 to 11:30 P.M. We trust that the radio and. television facilities win be directed to comply with this request. 5. Respondent COMELEC issued its Resolution of March 18, 1981 quoting the above letters of petitioner UNIDO, but held that they "cannot be granted and the same is hereby denied." Said COMELEC Resolution appears as Excerpts from the Minutes of the Session of the Commission Held on March 19, 1981', a copy of which is hereto attached to form an integral part of this Petition as Annex "B"; (Pp. 2-3, Petition.) Said Annex "B" reads thus: EXCERPT FROM THE MINUTES OF THE SESSION OF THE COMMISSION HELD ON MARCH 18,1981 (UNDER THE SAME QUORUM) xxx xxx xxx 81-54. In the matter of the letter-request of the United Democratic Opposition (UNIDO) for free coverage by "TV and Radio Stations all over the country" of its campaign for "No" votes in the forthcoming plebiscite. Before the Commission is a "demand" of the United Democratic Opposition (UNIDO) for coverage by 'TV and radio stations all over the country' of its campaign for 'No' votes in the forthcoming plebiscite. This 'demand' is contained in a letter dated 10 March 1981, received by the Commission on Elections on March 11, 1981, signed by Gerardo Roxas and J.B. Laurel, Jr., quoted in full as follows: 10 March 1981 The Commission on Elections Manila Gentlemen: Your Resolution Nos. 1467, 1468 and 1469, all promulgated on March 5, 1981, provide for equal opportunity "on public discussion and debate on the plebiscite", equal time on the use of the broadcast media in the plebiscite campaign and equal space on the use of the print media in the 1981 plebiscite The newspapers this morning have announced that President Marcos will lead the campaign for "Yes" votes on the proposed constitutional amendments in the April 7 plebiscite in his nationwide "Pulong-Pulong sa Pangulo" radio television program on Thursday, March 12, from 9:30 to 11:30 P.M., which will be carried five by 26 television and 248 radio stations throughout the country. The undersigned, in behalf of the United Democratic Opposition (UNIDO), hereby demand exactly the same opportunity, the same prime tune and the same number of

TV and radio stations all over the country at the earliest possible date, to campaign for 'No' votes in the forthcoming plebiscite. Very truly yours, (SGD.) GERA RDO ROXA S (SGD.) J. B. LAURE L, JR. Subsequently, on 17 March 1981, the Legal Counsel of the UNIDO, Ambrosio Padilla, reiterated the UNIDO desire for coverage by media, "the same prime time and number of TV and radio stations all over the country which were utilized by President Marcos last March 12 from 9:30 to 11:30 P.M." In this letter, the legal counsel manifested that the UNIDO wants media coverage for its projected "public meeting at the Plaza Miranda, Quiapo, Manila . . . . from 9:30 to 11:30 P.M." on Saturday, March 21. The letter of the UNIDO Legal Counsel reads 17 March 1981 The Commission on Elections Manila Attention: CHAIRMAN VICENTE M. SANTIAGO, JR. Gentlemen: Pursuant to the letter of UNIDO dated 10 March 1981 requesting for equal opportunity, the same prime time and number of TV and radio stations all over the country which were utilized by President Marcos last March 12 from 9:30 to 11:30 P.M., we wish to state that on Saturday, March 21, the UNIDO will hold a public meeting at the Plaza Miranda, Quiapo, Manila, and we hereby request that the same be covered by radio television from 9:30 to 11:30 P.M. We trust that the radio and television facilities will be directed to comply with this request. Very truly yours, (SGD.) AMBR OSIO PADIL LA L e g

a l C o u n s e l , U N I D O After due and careful deliberation, this Commission holds, and hereby rules, that the demand of the UNIDO cannot be granted and the same is hereby denied. It is the considered view of this Commission that when President Marcos conducted his 'pulong-pulong' or consultation with the people on March 12, 1981, he did so in his capacity as President Prime Minister of the Philippines and not as the head of any political party. Under the Constitution, the 'Prime Minister and the Cabinet shall be responsible . . . . for the program of government and shall determine the guidelines of national policy' (Art. IX, Sec. 2 ). 'This Commission takes judicial notice of the fact that the proposed amendments, subject of the President's remarks in the 'Pulong-Pulong Pambansa' last March 12, 1981, were initiated under the leadership of Mr. Marcos as President/Prime Minister in the exercise of his constitutional prerogative aforecited. In fact, it was President/Prime Minister Ferdinand E. Marcos who issued the special call for the Batasang Pambansa to convene as a constituent assembly to propose amendments to the Constitution (Proclamation No. 2040 dated December 5, 1980). It cannot be denied that seeking constitutional changes through the means sanctioned by the Constitution constitutes a program of government imbued with the nature of highest importance. The President/Prime Minister initiated this program of constitutional remaking. It is, therefore, his corrollary prerogative to enlighten the people on the sense, significance, necessity and nuance of the constitutional amendments which he wanted the people to support. It would be an Idle, if not absurd proposition, to declare that the President/Prime Minister is 'responsible for the program of government and the guidelines of policy' and yet deprive him of the right and opportunity to inform and enlighten the people of the rationale of such initiatives without at the same time granting the same right to the opposition. Under our Constitution the President/Prime Minister has no counter-part, not even the Opposition still waiting in the uncertain wings of power. This, precisely, was what President Marcos sought to accomplish through the "Pulong-Pulong Pambansa" last March 12, 1981. In the letter dated March 10, 1981 by Messrs. Roxas and Laurel, it was claimed that the program was the nationwide "Pulong-Pulong sa Pangulo" (Emphasis supplied). This is an admission that the "Pulong-Pulong" was for the "Pangulo", not as head of a political party but as President/Prime Minister. This program "Pulong-Pulong sa Pangulo" is of long standing and has been used by President/Prime Minister Marcos to bring to the attention of the people certain matters that need to be understood by them. For instance, the President used this program once to explain to the people the increase in the price of gasoline and other petroleum products. The program 'Pulong-Pulong sa Pangulo' is not a political or partisan vehicle but an innovative system of participatory democracy where the President as leader of the nation enunciates certain programs or policies and thereafter subjected to interrogation by panelists (common men and women) in

various strategic places. This is why the title is 'Pulong-Pulong'. It is not a one way arrangements; its format is intended to result in effective multi-way consultation between the leader of the nation and the people. The UNIDO or any of its leaders does not have the same constitutional prerogatives vested in the President/Prime Minister as above discussed. As such, it has no right to 'demand' equal coverage by media accorded President Marcos. The UNIDO, however, is free to enter into appropriate contracts with the TV or radio stations concerned. This Commission, however, cannot direct these media to grant free use of their facilities. First of all, the Comelec cannot assume dictatorial powers and secondly, the rule of equal time for campaigning as to duration and quality is not applicable under the circumstances of this case, for the reasons above-stated. WHEREFORE, premises considered, the "demand" of the UNIDO is hereby denied. Let the Executive Director cause the implementation of this resolution. SO ORDERED. xxx xxx xxx This is to certify that the foregoing is a true and correct excerpt from the minutes of the Session of the Commission held on March 18, 1981. (Sgd). RUPERTO P. EVANGELISTA Secret ary of the Commi ssion. 6. Petitioner UNIDO thru its undersigned counsel addressed its letter dated March 20, 1981 as its "motion for reconsideration" of the COMELEC Resolution of March 18, 1981 (Annex "B") and submitted six (6) reasons why said Resolution should be reconsidered, and the request or demand of petitioner should be granted for nationwide coverage of its public meeting at Plaza Miranda on Saturday, March 21, 1981, similar or equal to the nationwide coverage of the "Pulong-Pulong" of March 12, 1981. A copy of said letter of March 20, 1981 as petitioner's motion for reconsideration is hereto attached to form an integral part of this Petition as Annex 'C'; Annex "C" follows: M a r c h 2 0 , 1 9 8 1 The Commission on Elections

Manila Gentlemen: UNIDO respectfully submits this Motion for Reconsideration of the COMELEC Resolution of March 18, 1981, which denied the letters of UNIDO dated March 10 and 17, 1981 on the following considerations: 1. The Resolution states that the coverage of the "Pulong-Pulong" on March 12, 1981 was extended to Pres. Marcos "in his capacity as President/Prime Minister and not as head of any political party", who is "responsible ... for the program of government and shall determine the guidelines of national policy". But the radio and television coverage on March 12th, did not deal with any "program of government" nor any 'guideline of national policy". The subject matter of said "Pulong-Pulong" were a campaign for the approval of the constitutional amendments proposed by the Interim Batasang Pambansa, for ratification of the people with their "YES" votes. 2. As announced by President Marcos himself and as stated in the letter of UNIDO of March 10, "President Marcos will lead the campaign for "YES" votes on the proposed constitutional amendments in the April 7 plebiscite". The radio and television facilities throughout the country on March 12 was used by President Marcos in his capacity as political leader of the KBL political party, and not in his capacity as President/Prime Minister. 3. The Resolution states that Mr. Marcos 'initiated the amendments, he convened the Batasang Pambansa as a constituent assembly, and he initiated this program of constitutional remaking'. When the proposed amendments were passed by the Batasan under his leadership, his function as President/Prime Minister was completed. His campaign for the ratification by the people of said amendments was no longer President/Prime Minister, but as the political leader of KBL as the dominant political party in the Interim Batasang Pambansa. 4. The Resolution states that the name "Pulong-Pulong sa Pangulo" is an admission that the television and radio coverage of said program on March 12, was utilized by Mr. Marcos 'not as head of a political party but as President/Prime Minister. The nature of said program is not determined by its name but by the subject matter thereof. In fact, it may be considered as a misuse of said program as political campaign for the purpose of inducing "YES" votes. 5. The Resolution states that COMELEC "cannot direct these media to grant free use of their facilities", but UNIDO "is free to enter into appropriate contracts with the TV or radio stations concerned". But Pres. Marcos campaigning for "YES" votes did not enter into such contracts, but had "free use" of said facilities. For the Resolution to require UNIDO to pay for time in a national radio and TV coverage is to impose an "impossible" financial condition. 6. The Resolution states that "COMELEC can not assume dictatorial powers". The COMELEC as a constitutional body has the constitutional right and power to have its Resolutions Nos. 1497, 1498 and 1499 on equal opportunity, equal space and equal time respected and obeyed by all. Otherwise, said Resolutions will be only in form without any substance. In view of the foregoing, UNIDO respectfully prays that the Resolution of March 19, 1981 denying the request and demand of UNIDO for equal time, be reconsidered. It is likewise prayed that the letter requests of UNIDO be granted for nationwide coverage of its public meeting at Plaza Miranda on Saturday, March 21, 1981. Very truly yours,

SGD.) AMBR OSIO PADIL LA L e g a l C o u n s e l , U N I D O 7. Respondent COMELEC RESOLVED TO DENY for lack of merit' the letter-motion for reconsideration (Annex "C") in its Resolution of March 22, 1981 as per its "Excerpts from the Minutes of the Session of the Commission Held on March 21, 1981". A copy of said Excerpt-Resolution of March 21, 1981 is hereto attached to form an integral part of this Petition as Annex "D"; Annex "D" reads thus: EXCERPT FROM THE MINUTES OF THE SESSION OF THE COMMISSION HELD ON MARCH 21, 1981 (UNDER THE SAME QUORUM) xxx xxx xxx 81.56. Considering the allegations in the letter-motion for reconsideration, dated and filed on March 20, 1981, by the UNIDO thru counsel, and there being no strong or cogent reasons to disturb the findings and conclusions in the Resolution sought to be reconsidered, the Commission RESOLVED to DENY the said letter-motion for reconsideration for lack of merit. Let the Executive Director inform the parties concerned of this resolution. SO ORDERED. xxx xxx xxx This is to certify that the foregoing is a true and correct excerpt from the minutes of the session of the Commission held on March 21, 1981. (SGD.) RUPERTO P. EVANGELISTA Secret ary of the

Commi ssion The basic grounds of the present appeal are stated in the petition thus: 9. Said COMELEC Resolutions. Annexes "B" and "D", are also contrary to the Constitution and the law, and moreover, are unjust, unfair and inequitable, for said Resolutions violate the basic principles of equality, good faith and fair play, and they are not conducive to insure free, orderly and honest elections; 10. The request and/or demand of petitioner for equal broadcast media of its public meeting or rally at the Plaza Miranda last Saturday, March 21, 1981 (ante par. 4) was arbitrarily denied by respondent COMELEC in its Resolutions (Annexes "B" and "D"). As the political campaign of the Kilusan ng Bagong Lipunan (KBL) for "YES" votes used all the radios and televisions in the Pulong Pulong of its political leader, President Ferdinand E. Marcos, the political campaign for "NO" votes of petitioner UNIDO should and must be granted the same right and equal use of the same facilities for the remaining days of the political campaign for "NO" votes up to the plebiscite on April 7, 1981; These grounds were eloquently expanded by distinguished counsel for petitioner, Senator Ambrosio Padilla, during the hearing held in the afternoon of Tuesday, March 31, 1981. Much as it is indeed desirable and idealistic that the widest and fullest opportunity to be heard and explain their side should be given to those opposed to the proposed constitutional amendments, there are certain inexorable rules and principles that govern the situation at hand which, no matter in what direction one's sympathies may be inclined, have to be observed in the best interests of all concerned as this Court sees them. Indubitably, the proposed changes of the Charter are of deep and transcendental importance, since they will affect not only the structure of government and the democratic institutions and ideals vis-a-vis the presidential and parliamentary systems to which our people have been exposed up to the present, and they could outlast most of us and our children and our children's children. Quite a number of those Ideals and institutions are fondly cherished and enshrined as sacred by some respectable elements in the country, admittedly as knowledgeable and patriotic as those who are advocating their alteration or modification. It is obvious that the proposed constitutional changes are purported to establish rather drastic innovations in the distribution of at least the executive and legislative powers of the national government, in an avowedly indigenous manner more responsive and attuned not only to the mores, modes and idiosyncracies of our people and the prevailing national and international circumstances, which evidently require unusual means to preserve and defend the state and the territorial integrity of the country, albeit such proposed reforms maintain fundamentally the republican and democratic character of our system of government. Thus, We reiterate, that the more the people are adequately informed about the proposed amendments, their exact meaning, implications and nuances, the better. Herein lies the apparent plausibility of petitioner's pose. There are, however, certain norms which even petitioner and those that compose it know very well that this Court, all the amplitude of its prerogatives notwithstanding cannot disregard. Denial of due process is considered generally as the first and the most valued right of everyone under the Bill of Rights. For this Court to mandate the Comelec, assuming We had such power, having in view the constriction of the Supreme Court's authority over the actuations of the Comelec under the new constitution as discoursed by Us in Aratuc vs. Comelec, G.R. Nos. L-49705-09, February 8, 1979, 88 SCRA 251, petitioner evidently overlooks the fact that the television and radio stations they refer to in their petition who will be directly affected by any injunction of the Comelec upon Our orders are not parties to this case. It is elementary, to state the obvious, that in the premises, We would be over-reaching the bounds of our constitutional powers if We acceded to petitioner request, absent such indispensable parties. In fact, petitioner has not shown, for apparently they have not done so, that they have requested any TV or radio station to give them the same time and style of "pulongpulong" as that which they afforded the President on March 21, 1981 and that their request has been denied. No doubt the Constitution and the Election Code provisions as well as the general Comelec resolution cited by petitioner's counsel may be availed of, but since, We have not been informed of the circumstances under which the President was accorded the privilege which petitioner wants to be equally granted to them, We are not even in a position to determine under what definite terms the order prayed for should be issued by Us, considering there are other groups and aggrupations not to speak of individuals who are similarly situated as petitioner who would also want to be heard. We are afraid We would be expecting from the TV and radio networks more than what conceivably the

Charter, the law and the Comelec resolutions contemplate, if We granted what UNIDO wants and did less for those other oppositors to the amendments who may come to Us. Anent the equal time, equal space and equal quality of exposure claimed by petitioner, it should be informative to quote the pertinent constitutional provisions, laws and Comelec resolutions: Section 5 of Article XII-C of the Constitution circumscribes the relevant powers of the Comelec this wise: SEC. 5. The enjoyment or utilization of all franchises or permits for the operation of transportation and other public utilities, media of communication or information, all grants, special privileges, or concessions granted by the Government, or any subdivision, agency, or instrumentality thereof, including any government-owned or controlled corporation, may be supervised or regulated by the Commission during the election period for the purpose of ensuring free, orderly, and honest elections. Section 41 of the Election Code of 1978 pertinently reads as follows: SEC. 41. Regulation of election propaganda through mass media. – (a) The Commission shall promulgate rules and regulations regarding the sale of air time for political purposes during the campaign period to insure that time equal as to duration and quality is available to all candidates for the same office or political parties, groups or aggrupations at the same rates or given free of charge; that such rates are reasonable and not higher than those charged other buyers or users of air time for non-political purposes; that the provisions of this Code regarding the limitation of expenditures by candidates and contributions by private persons and certain classes of corporations, entities and institutions are effectively enforced; that said radio broadcasting and television stations shall not be allowed to schedule any program or permit any sponsor to manifestly favor or oppose any candidate or political party, group or aggrupation by unduly or repeatedly referring to or including said candidate and/or political party, group or aggrupation respecting, however in all instances the right of said stations to broadcast accounts of significant or newsworthy events and views on matters of public interest. Sections 7 and 8 of Comelec Resolution No. 1468 read thus: SEC. 7. Free air time. – Any radio broadcasting or television station that grants free of charge the use of air time to any supporter, oppositors political party, group or aggritpution shall also give similar air time free of charge to other supporters, oppositors, political party group or aggrupations except when such use of air -time is part of a news program or coverage involving a newsworthy event. A radio, television station giving air time free of charge to any supporter, oppositor, political party/group for campaign purposes shall inform the Commission of such fact within two days from the use of such free time. SEC. 8. Failure to agree on equal time. – In case the supporter, oppositor, political party group and the radio-television station, despite mediation by the Ministry of Public Information, cannot agree on the equal time to be sold or given free, the controversy shall be referred to the Commission whose decision on the matter shall be final and immediately executory. To begin with, We cannot agree with the restrictive literal interpretation the Solicitor General would want to give to the "free orderly and honest elections" clause of Section 5, Article XII- C abovequoted. Government Counsel posits that the said clause refers exclusively to the manner in which the elections are conducted, that is to say, with the manner in which the voters are supposed to be allowed to vote. Perhaps, such a theory may hold insofar as ordinary elections of officials are concerned. But the Court views the provision as applicable also to plebiscites, particularly one relative to constitutional amendments. Be it borne in mind that it has been one of the most steadfast rulings of this Court in connection with such plebiscites that it is indispensable that they be properly characterized to be fair submission – by which is meant that the voters must of necessity have had adequate opportunity, in the light of conventional wisdom, to cast their votes with sufficient understanding of what they are voting on. We are of the firm conviction that the charter's reference to honest elections connotes fair submission in a plebiscite. It cannot be otherwise, for then the

importance of suffrage for the election of officials would be more significantly valued than voting on the ratification of the constitution or any amendment thereof. We cannot yield to such an unorthodox constitutional concept that relegates the fundamental law of the land which is the source of all powers of the government to a level less valued than the men who would run the same. When a voter either gives or denies his assent to a change of the existing charter of his rights and liberties and the existing governmental form as well as the powers of those who are to govern him, he virtually contributes his little grain of sand to the building of the nation and renders his share in shaping the future of its people, including himself, his family and those to come after them. Indeed, nothing can be of more transcerdental importance than to vote in a constitutional plebiscite. In consequence of the foregoing considerations, We opine and so hold that the provisions of all election laws regulating propaganda through the mass media, for example, Section 41 of the Election Code of 1978, must be deemed applicable to plebiscites. Therefore, it is the duty of the Comelec to see to it that the sale of air time by TV and radio stations insures that time equal as to duration and quality is available to all candidates for the same office or political parties, groups or aggrupations at the same rates or given free of charge. We cannot share the Solicitor General's submission that the above view would subvert or curtail correspondingly the freedom of speech and of the press to which the TV and radio station owners are entitled. Rather, it is Our considered opinion and We so hold that if such be the effect of the Comelec regulations, it is because they must have been contemplated to precisely constitute an exception to freedom of speech and press clause, on account of considerations more paramount for the general welfare and public interest, which exceptions after all would operate only during limited periods, that is, during the duration of the election Campaign fixed in the charter itself and/or by law. The Solicitor General points, however, to the explicit proviso in Section 41 to the effect that the equal-time-equal-space privilege must "respect, – in all instances the right of said stations to broadcast accounts of significant or newsworthy events and views on matters of public interest", and suggests that the TV and radio stations may not be blamed for considering the "Pulong-Pulong sa Pangulo" as coming within said proviso. In other words, it is contended that such choice by them may not then be subjected to the equal time equal space regulations. On the other hand, counsel for petitioner maintains that it is not fair to deem the President's "Pulong-Pulong" as a "significant and noteworthy (an) events and views on matters of public interest" just because the President campaigned for "Yes" votes, while a "Pulong-Pulong" by those who would appeal for "No" votes cannot be similarly characterized. Our holding in respect to such conflicting contentions is that, while it may not be exactly proper to say, as the Comelec resolution in question puts it, that "(u)nder our Constitution, the President-Prime Minister has no counterpart, not even the Opposition still waiting in the uncertain wings of power", it is undeniable and but natural that the head of state of every country in the world must from the very nature of his position, be accorded certain privileges not equally available to those who are opposed to him in the sense that, since the head of state has the grave and tremendous responsibility of planning and implementing the plan of government itself, either by virtue of the popular mandate given to him under the corresponding provisions of the Constitution and the laws or any other duly recognized grant of power and authority, the opposition cannot be placed at par with him, since logically the opposition can only fiscalize the administration and punctualize its errors and shortcomings to the end that when the duly scheduled time for the people to exercise their inalienable power to make a better choice, the opposition may have the chance to make them accept the alternative they can offer. Therefore, when the head of state is afforded the opportunity or when he feels it incumbent upon him to communicate and dialogue with the people on any matter affecting the plan of government or any other matter of public interest, no office or entity of the government is obliged to give the opposition the same facilities by which its contrary views may be ventilated. lf the opposition leaders feel any sense of responsibility in the premises to counter the administration, it is up to them – and they are free – to avail of their own resources to accomplish their purpose. But surely, it is not for the administration to hand them on a silver platter the weapon they need. We are not aware that there is any existing system of government anywhere in the world which is mandated to be so accommodating and generous to the opponents of the current administrators of the national affairs. In instances where the head of state is at the same time the president of the political party that is in power, it does not necessarily follow that he speaks with two voices when he dialogues with the governed. Unquestionably, there are matters of vital public interest wherein partisan considerations could in some degree be involved, but then such partisan interest would be purely secondary. The

President/Prime Minister of the Philippines is the political head of all the people. His is the sacred responsibility to protect and defend the security of all the people, the stability of the government and the integrity of the national territory, not only for the tenure to which he has been elected but for all times. When, as in the instant situation, he deems it warranted by the circumstances to present to them a plan of government which includes the modification of the existing structure of government together with its concomitant allocation of governmental powers, it is not only his right but his duty to take the people directly into his confidence and impart to them to the fullest measure of his capacity and by all available adequate means the reasons therefor and the corrollarily advantages thereof to their welfare. The opposition, if it opines otherwise, has naturally the indisputable right to make every effort to thwart his objective. But, surely, this is far from saying that it is the duty of the administration to generously grant to them the means to wage their campaign against it. The long and short of the foregoing is that it is not true that in speaking as he did in the "PulongPulong sa Pangulo" on March 21, 1981, he spoke not only as President-Prime Minister but also as head of the KBL, the political party now in power. It was in the former capacity that he did so. If in any way, what he said would induce the people to accept the proposed amendments, his exposition of the advantages thereof was not to promote the interest of that party but to improve the quality of the government thereby to enable him or anyone who may be chosen by the people to take his place to better serve the welfare not only of the KBL but of all of us, including those who are minded, for reasons of their own, to oppose the amendments. In any event, petitioner has failed to persuade Us that the grant of the prayer in its petition compellingly pertains to it under the provisions of the Constitution, the Election Code of 1978 and the general resolutions and regulations of respondent Comelec regarding equal opportunity among contending political parties, groups, aggrupations or individuals. The Comelec has indeed the power to supervise and regulate the mass media in such respect, but such authority arises only when there is a showing that any sector or member of the media has denied to any party or person the right to which it or he is entitled. What is more, there are other political parties similarly situated as petitioner. To grant to petitioner what it wants, it must necessarily follow that such other parties should also be granted. As already indicated earlier, that would be too much to expect from the media that has also its own right to earn its wherewithal. But most importantly, the Comelec is not supposed to dictate to the media when its prerogatives in the premises is not invoked in the proper manner, that is, after denial to the petitioner by the media is shown. And then, it is an inalienable right of the sector or member of the media concerned to be duly heard as an indispensable party. Thus, for being beyond what the charter, the laws and pertinent Comelec regulations contemplate, for being more than what the opposition is duly entitled vis-a-vis the duty, obligation and/or privilege inherent in the head of state to directly dialogue with the sovereign people when the occasion demands, for being impractical under prevailing circumstances, and for its failure to join in the instant petition indispensable parties, thereby depriving the Court of jurisdiction to act, and for these alone among other reasons which there is hardly time to state herein, the prayer in the instant petition cannot be granted. WHEREFORE, the appeal herein is dismissed, without costs.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-29646 November 10, 1978 MAYOR ANTONIO J. VILLEGAS, petitioner, vs. HIU CHIONG TSAI PAO HO and JUDGE FRANCISCO ARCA, respondents. Angel C. Cruz, Gregorio A. Ejercito, Felix C. Chaves & Jose Laureta for petitioner. Sotero H. Laurel for respondents.

FERNANDEZ, J.: This is a petition for certiorari to review tile decision dated September 17, 1968 of respondent Judge Francisco Arca of the Court of First Instance of Manila, Branch I, in Civil Case No. 72797, the dispositive portion of winch reads. Wherefore, judgment is hereby rendered in favor of the petitioner and against the respondents, declaring Ordinance No. 6 37 of the City of Manila null and void. The preliminary injunction is made permanent. No pronouncement as to cost. SO ORDERED. Manila, Philippines, September 17, 1968. (SGD.) FRAN CISCO ARCA J u d g e 1

The controverted Ordinance No. 6537 was passed by the Municipal Board of Manila on February 22, 1968 and signed by the herein petitioner Mayor Antonio J. Villegas of Manila on March 27, 1968. 2 City Ordinance No. 6537 is entitled: AN ORDINANCE MAKING IT UNLAWFUL FOR ANY PERSON NOT A CITIZEN OF THE PHILIPPINES TO BE EMPLOYED IN ANY PLACE OF EMPLOYMENT OR TO BE ENGAGED IN ANY KIND OF TRADE, BUSINESS OR OCCUPATION WITHIN THE CITY OF MANILA WITHOUT FIRST SECURING AN EMPLOYMENT PERMIT FROM THE MAYOR OF MANILA; AND FOR OTHER PURPOSES. 3 Section 1 of said Ordinance No. 6537 4 prohibits aliens from being employed or to engage or participate in any position or occupation or business enumerated therein, whether permanent, temporary or casual, without first securing an employment permit from the Mayor of Manila and paying the permit fee of P50.00 except persons employed in the diplomatic or consular missions of foreign countries, or in the technical assistance programs of both the Philippine Government and any foreign government, and those working in their respective households, and members of religious orders or congregations, sect or denomination, who are not paid monetarily or in kind.

Violations of this ordinance is punishable by an imprisonment of not less than three (3) months to six (6) months or fine of not less than P100.00 but not more than P200.00 or both such fine and imprisonment, upon conviction. 5 On May 4, 1968, private respondent Hiu Chiong Tsai Pao Ho who was employed in Manila, filed a petition with the Court of First Instance of Manila, Branch I, denominated as Civil Case No. 72797, praying for the issuance of the writ of preliminary injunction and restraining order to stop the enforcement of Ordinance No. 6537 as well as for a judgment declaring said Ordinance No. 6537 null and void. 6 In this petition, Hiu Chiong Tsai Pao Ho assigned the following as his grounds for wanting the ordinance declared null and void: 1) As a revenue measure imposed on aliens employed in the City of Manila, Ordinance No. 6537 is discriminatory and violative of the rule of the uniformity in taxation; 2) As a police power measure, it makes no distinction between useful and non-useful occupations, imposing a fixed P50.00 employment permit, which is out of proportion to the cost of registration and that it fails to prescribe any standard to guide and/or limit the action of the Mayor, thus, violating the fundamental principle on illegal delegation of legislative powers: 3) It is arbitrary, oppressive and unreasonable, being applied only to aliens who are thus, deprived of their rights to life, liberty and property and therefore, violates the due process and equal protection clauses of the Constitution.7 On May 24, 1968, respondent Judge issued the writ of preliminary injunction and on September 17, 1968 rendered judgment declaring Ordinance No. 6537 null and void and making permanent the writ of preliminary injunction. 8 Contesting the aforecited decision of respondent Judge, then Mayor Antonio J. Villegas filed the present petition on March 27, 1969. Petitioner assigned the following as errors allegedly committed by respondent Judge in the latter's decision of September 17,1968: 9 I THE RESPONDENT JUDGE COMMITTED A SERIOUS AND PATENT ERROR OF LAW IN RULING THAT ORDINANCE NO. 6537 VIOLATED THE CARDINAL RULE OF UNIFORMITY OF TAXATION. II RESPONDENT JUDGE LIKEWISE COMMITTED A GRAVE AND PATENT ERROR OF LAW IN RULING THAT ORDINANCE NO. 6537 VIOLATED THE PRINCIPLE AGAINST UNDUE DESIGNATION OF LEGISLATIVE POWER. III RESPONDENT JUDGE FURTHER COMMITTED A SERIOUS AND PATENT ERROR OF LAW IN RULING THAT ORDINANCE NO. 6537 VIOLATED THE DUE PROCESS AND EQUAL PROTECTION CLAUSES OF THE CONSTITUTION. Petitioner Mayor Villegas argues that Ordinance No. 6537 cannot be declared null and void on the ground that it violated the rule on uniformity of taxation because the rule on uniformity of taxation applies only to purely tax or revenue measures and that Ordinance No. 6537 is not a tax or revenue measure but is an exercise of the police power of the state, it being principally a regulatory measure in nature. The contention that Ordinance No. 6537 is not a purely tax or revenue measure because its principal purpose is regulatory in nature has no merit. While it is true that the first part which requires that the alien shall secure an employment permit from the Mayor involves the exercise of discretion and judgment in the processing and approval or disapproval of applications for employment permits and

therefore is regulatory in character the second part which requires the payment of P50.00 as employee's fee is not regulatory but a revenue measure. There is no logic or justification in exacting P50.00 from aliens who have been cleared for employment. It is obvious that the purpose of the ordinance is to raise money under the guise of regulation. The P50.00 fee is unreasonable not only because it is excessive but because it fails to consider valid substantial differences in situation among individual aliens who are required to pay it. Although the equal protection clause of the Constitution does not forbid classification, it is imperative that the classification should be based on real and substantial differences having a reasonable relation to the subject of the particular legislation. The same amount of P50.00 is being collected from every employed alien whether he is casual or permanent, part time or full time or whether he is a lowly employee or a highly paid executive Ordinance No. 6537 does not lay down any criterion or standard to guide the Mayor in the exercise of his discretion. It has been held that where an ordinance of a municipality fails to state any policy or to set up any standard to guide or limit the mayor's action, expresses no purpose to be attained by requiring a permit, enumerates no conditions for its grant or refusal, and entirely lacks standard, thus conferring upon the Mayor arbitrary and unrestricted power to grant or deny the issuance of building permits, such ordinance is invalid, being an undefined and unlimited delegation of power to allow or prevent an activity per se lawful. 10 In Chinese Flour Importers Association vs. Price Stabilization Board, 11 where a law granted a government agency power to determine the allocation of wheat flour among importers, the Supreme Court ruled against the interpretation of uncontrolled power as it vested in the administrative officer an arbitrary discretion to be exercised without a policy, rule, or standard from which it can be measured or controlled. It was also held in Primicias vs. Fugoso 12 that the authority and discretion to grant and refuse permits of all classes conferred upon the Mayor of Manila by the Revised Charter of Manila is not uncontrolled discretion but legal discretion to be exercised within the limits of the law. Ordinance No. 6537 is void because it does not contain or suggest any standard or criterion to guide the mayor in the exercise of the power which has been granted to him by the ordinance. The ordinance in question violates the due process of law and equal protection rule of the Constitution. Requiring a person before he can be employed to get a permit from the City Mayor of Manila who may withhold or refuse it at will is tantamount to denying him the basic right of the people in the Philippines to engage in a means of livelihood. While it is true that the Philippines as a State is not obliged to admit aliens within its territory, once an alien is admitted, he cannot be deprived of life without due process of law. This guarantee includes the means of livelihood. The shelter of protection under the due process and equal protection clause is given to all persons, both aliens and citizens. 13 The trial court did not commit the errors assigned. WHEREFORE, the decision appealed from is hereby affirmed, without pronouncement as to costs. SO ORDERED. Barredo, Makasiar, Muñoz Palma, Santos and Guerrero, JJ., concur. Castro, C.J., Antonio and Aquino, Fernando, JJ., concur in the result. Concepcion, Jr., J., took no part.

Separate Opinions

TEEHANKEE, J., concurring: I concur in the decision penned by Mr. Justice Fernandez which affirms the lower court's judgment declaring Ordinance No. 6537 of the City of Manila null and void for the reason that the employment of aliens within the country is a matter of national policy and regulation, which properly pertain to the national government officials and agencies concerned and not to local governments, such as the City of Manila, which after all are mere creations of the national government. The national policy on the matter has been determined in the statutes enacted by the legislature, viz, the various Philippine nationalization laws which on the whole recognize the right of aliens to obtain gainful employment in the country with the exception of certain specific fields and areas. Such national policies may not be interfered with, thwarted or in any manner negated by any local government or its officials since they are not separate from and independent of the national government. As stated by the Court in the early case of Phil. Coop. Livestock Ass'n. vs. Earnshaw, 59 Phil. 129: "The City of Manila is a subordinate body to the Insular (National Government ...). When the Insular (National) Government adopts a policy, a municipality is without legal authority to nullify and set at naught the action of the superior authority." Indeed, "not only must all municipal powers be exercised within the limits of the organic laws, but they must be consistent with the general law and public policy of the particular state ..." (I McQuillin, Municipal Corporations, 2nd sec. 367, P. 1011). With more reason are such national policies binding on local governments when they involve our foreign relations with other countries and their nationals who have been lawfully admitted here, since in such matters the views and decisions of the Chief of State and of the legislature must prevail over those of subordinate and local governments and officials who have no authority whatever to take official acts to the contrary.

Separate Opinions TEEHANKEE, J., concurring: I concur in the decision penned by Mr. Justice Fernandez which affirms the lower court's judgment declaring Ordinance No. 6537 of the City of Manila null and void for the reason that the employment of aliens within the country is a matter of national policy and regulation, which properly pertain to the national government officials and agencies concerned and not to local governments, such as the City of Manila, which after all are mere creations of the national government. The national policy on the matter has been determined in the statutes enacted by the legislature, viz, the various Philippine nationalization laws which on the whole recognize the right of aliens to obtain gainful employment in the country with the exception of certain specific fields and areas. Such national policies may not be interfered with, thwarted or in any manner negated by any local government or its officials since they are not separate from and independent of the national government. As stated by the Court in the early case of Phil. Coop. Livestock Ass'n. vs. Earnshaw, 59 Phil. 129: "The City of Manila is a subordinate body to the Insular (National Government ...). When the Insular (National) Government adopts a policy, a municipality is without legal authority to nullify and set at naught the action of the superior authority." Indeed, "not only must all municipal powers be exercised within the limits of the organic laws, but they must be consistent with the general law and public policy of the particular state ..." (I McQuillin, Municipal Corporations, 2nd sec. 367, P. 1011). With more reason are such national policies binding on local governments when they involve our foreign relations with other countries and their nationals who have been lawfully admitted here, since in such matters the views and decisions of the Chief of State and of the legislature must prevail over those of subordinate and local governments and officials who have no authority whatever to take official acts to the contrary.

Footnotes 1 Annex "F", Petition, Rollo, p. 64. 2 Petition, Rollo, p. 28. 3 Annex "A", of Petition, Rollo, p. 37-38. 4 Section 1. It shall he unlawful for any person not a citizen of the Philippines to be employed in any kind of position or occupation or allowed directly or indirectly to participate in the functions, administration or management in any office, corporation, store, restaurant, factory, business firm, or any other place of employment either as consultant, adviser, clerk, employee, technician, teacher, actor, actress, acrobat, singer or other theatrical performer, laborer, cook, etc., whether temporary, casual, permanent or otherwise and irrespective of the source or origin of his compensation or number of hours spent in said office, store, restaurant, factory, corporation or any other place of employment, or to engage in any kind of business and trade within the City of Manila, without first securing an employment permit from the Mayor of Manila, and paying the necessary fee therefor to the City the City Treasurer: PROVIDED, HOWEVER, That persons employed in diplomatic and consular missions of foreign countries and in technical assistance programs agreed upon by the Philippine Government and any foreign government, and those working in their respective households, and members of different congregations or religious orders of any religion, sect or denomination, who are not paid either monetarily or in kind shag be exempted from the provisions of this Ordinance. 5 Section 4. Any violation of this Ordinance shall upon conviction, be punished by imprisonment of not less than three (3) months but not more than six (6) months or by a fine of not less than one hundred pesos (P100.00) but not more than two hundred pesos (P200.00), or by both such fine and imprisonment, in the discretion of the Court: PROVIDED, HOWEVER, That in case of juridical persons, the President, the Vice-President or the person in charge shall be liable.