Consolidated ART 12 to Last

7/24/2019 Consolidated ART 12 to Last

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Art 12 - SECTION 3

Director of Lands V Aquino

FACTS: In this case, majority of the land that was bought by Abra Industrial Corporation (AIC for the purpose of settingup a cement factory was put into !uestion because the said land was still part of Central Cordillera Forest "eser#e whichhad not yet been released as alienable and disposable land pursuant to the $ublic %aw %and& 'n the other hand, therespondents contended that upon the application of AIC for registration of the disputed lands, nobody from the petitionersherein objected thereby, a #alid purchased&

ISS): *hether the land in !uestion can be alienated from public domain

"%I+ - I.$'"TA+T $'I+T 'F T/) CAS): The SC ruled that it cannot since the power to e0clude or reclassify areafrom the forest 1one belongs to the $resident of the $hilippines upon the recommendation of the Secretary of Agricultureand +atural "esources and not to the 2istrict Forester or e#en the 2irector of Forestry where AIC filed such registrationpursuant to %and "egistration Act&

Furthermore, although a forest has been denuded, its classification from being such does not mean that it has ceases tobe a forest land, thus, still part of the public domain&

Repu!ic V CA

FACTS: The subject of this case is the registration of a parcel of land by 3ose dela "osa on his own behalf and of hischildren which was allegedly challenged by 4enguet Consolidated Inc&, Ato5 4ig *edge Corporation on the grounds of

being successors of 3ames 6elly and /arrison and "eynolds as the locators of such land earlier than the claims of 3osedela "osa& The CA affirmed the rights of pri#ate purchaser while at the same time reser#ing the rights of the two pri#atemining companies& /owe#er, the "epublic of the $hilippines interposed and said that neither of the claimants ha#e theright to such land since it7s co#ered by the Central Cordillera Forest "eser#e under $roclamation 89& Also, by reason ofits nature, it is not subject to alienation under 9;

"%I+: It belongs to the two pri#ate companies& The Court ruled that the enactment of 9;


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I.$'"TA+T $'I+T 'F T/) CAS): "ecogni1ing the importance of the country7s natural resources, not only for nationaeconomic de#elopment, but also for its security and national defense, Section = of "epublic Act +o& ;8 empowers the$resident, when the national interest so re!uires, to establish mineral reser#ations where mining operations shall beunderta5en directly by the State or through a contractor

Director of Lands V IAC (Inter)ediate Appe!!ate Court*

FACTS: Acme $lywood - Beneer Co& Inc& purchased = parcel of land amounting to more than 9,@@@ hectares from Infielsof 2umagat tribe which possession dates bac5 before the $hilippineswas disco#ered by .agellan& .oro#er, suchland sold to the company was considered as pri#ate land pursuant to the pro#isions of "A


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"%I+: +o& The 3S.A area as part of the whole 9=,;98,H?s!uare meter area under $roclamation 8< whichestablished a military reser#ation 5nown as Fort Andres 4onifacio .ilitary "eser#ation (F4." was still considered aspublic domain, thus, not subject to alienation&

I.$'"TA+T $'I+T 'F T/) CAS): ntil a gi#en parcel of land is released from its classificationas part of the militaryreser#ation 1one and reclassified by law or by presidential proclamation as disposable andalienable, its status as part of amilitary reser#ation remains,e#en if incidentally it is de#oted for a purpose other thanas a military camp or for defense&

Repu!ic V T'A'N' /roperties Inc'- &'R' No' 1003

FACTS: In 9;;;, T&A&+& $roperties filed in the "TC of 4atangas an application for the registration of a land, located at Sto&Tomas 4atangas and with an area of =H&@@& To support its application, it submitted two certificates, issued by C)+"'(Certification by the Community )n#ironment and +atural "esources 'ffices and F.S?2)+" (Forest .anagementSer#ices of the 2)+" and both certifying that the land applied for was alienable and disposable

ISS): *hether the certificates pro#ided by the respondent were enough to dispose the said land&

"%I+: +o& C)+"' certification was insufficient to pro#e the alienable and disposable character of the land sought tobe registered& The applicant must also show sufficient proof that the 2)+" Secretary appro#ed the land classification andreleased the land in !uestion as alienable and disposable&

I.$'"TA+T $'I+T 'F T/) CAS): Since the said land was still a public domain, pri#ate corporationscannot apply forregistration of the land as it is prohibited under Sec < of Article GII

SECTION (/erodapat Section 2 to*

La 4u$a!-45!aan Tria! Assn' V DENR

FACTS: 'n 3uly 8=, 9;, then $resident Cora1on C& A!uino issued )0ecuti#e 'rder ()&'& +o& 8;H authori1ing the2)+" Secretary to accept, consider and e#aluate proposals from foreign?owned corporations or foreign in#estors forcontracts or agreements in#ol#ing either technical or financial assistance for large?scale e0ploration, de#elopment, andutili1ation of minerals, which, upon appropriate recommendation of the Secretary, the $resident may e0ecute with theforeign proponent&

'n .arch


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Section 6' Co))on &ood

Te!eco) .' CO#ELEC7 28 SCRA 339 (18*

Facts: $etitioner Telecommunications and 4roadcast Attorneys of the $hilippines, Inc& and .A +etwor5, Inc& operates

radio and tele#ision broadcasting stations throughout the $hilippines under a franchise granted by Congress& They

challenge the #alidity of ;8 on the ground that it is in e0cess of the power gi#en to the C'.)%)C to super#ise or regulate

the operation of media of communication or information during the period of election& $etitioners contend that C'.)%)Cs

re!uirement that radio and tele#ision stations pro#ide at least


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Facts: 3ose )ugenio "amire1, a Filipino national, died in Spain on 2ecember 99, 9;H, with only his widow as compulsoryheir& /is will was admitted to probate by the Court of First Instance of .anila, 4ranch G, on 3uly 8, 9;H=& .aria %uisa$alacios was appointed administratri0 of the estate& In due time she submitted an in#entory of the estate and one third(9J


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+rene! . Catito

Facts: $etitioner Alfred Frit1 Fren1el is an Australian citi1en of erman descent had amorous relationship with )rlinda)derlina Catito, a Filipina and a nati#e of 4ajada, 2a#ao City who then married to a erman national& 2uring the period oftheir common?law relationship, plaintiff through his own efforts and resources ac!uired in the $hilippines real and personaproperties and were named after )rlinda& *hen their relationship began deteriorating when the latter failed to obtaineddi#orce, the petitioner started to li#e apart with the respondent to a#oid complications& /e filed a case in "TC for thereco#ery of real and personal properties located in 2a#ao, Oue1on City and .anila& The petitioner contends that hepurchased the three parcels of land subject of his complaint because of his desire to marry the respondent&

Issue: *hether or not an alien can claim compensation for the sale of properties he bought named after his Filipinocommon law wife

"uling: %ands of the public domain, which include pri#ate lands, may be transferred or con#eyed only to indi#iduals or

entities !ualified to ac!uire or hold pri#ate lands or lands of the public domain& Aliens, whether indi#iduals or corporations

ha#e been dis!ualified from ac!uiring lands of the public domain& /ence, they ha#e also been dis!ualified from ac!uiring

pri#ate lands&

)#en if, as claimed by the petitioner, the sales in !uestion were entered into by him as the real #endee, the said

transactions are in #iolation of the ConstitutionM hence, are null and #oid ab initio& A contract that #iolates the Constitution

and the law, is null and #oid and #ests no rights and creates no obligations& It produces no legal effect at all& The

petitioner, being a party to an illegal contract, cannot come into a court of law and as5 to ha#e his illegal objecti#e carried

out& 'ne who loses his money or property by 5nowingly engaging in a contract or transaction which in#ol#es his own

moral turpitude may not maintain an action for his losses&

Lentfer . =o!f

Facts: The petitioners are unter %entfer, a erman citi1enM his Filipina wife, Bictoria .oreo?%entferM and 3ohn

Craigie oung Cross, an Australian citi1en&& "espondent /ans 3urgen *olff is a erman citi1en&

$etitioners alleged that with respondent, they engaged the notarial ser#ices of Atty& "odrigo C& 2imayacyac for: (9

the sale of a beach house owned by petitioner Cross in Sabang, $uerto alera, 'riental .indoro, and (8 the assignment

of Cross contract of lease on the land where the house stood& The sale of the beach house and the assignment of the

lease right would be in the name of petitioner Bictoria .oreo?%entfer, but the total consideration of 88@,@@@ 2eutschmar5s(2. would be paid by respondent /ans 3urgen *olff&

According to respondent, howe#er, the %entfer spouses were his confidants who held in trust for him, a time deposit

account in the amount of 2. 8@@,@@@ at Solid 4an5 Corporation& Apprised of his interest to own a house along a beach,

the %entfer couple urged him to buy petitioner Cross beach house and lease rights in $uerto alera& "espondent agreed

and through a ban5?to?ban5 transaction, he paid Cross the amount of 2. 889,@@ as total consideration for the sale and

assignment of the lease rights& /owe#er, Cross, .oreo?%entfer and Atty& 2imayacyac surreptitiously e0ecuted a deed of

sale whereby the beach house was made to appear as sold to .oreo?%entfer for only $9@@,@@@& The assignment of the

lease right was li5ewise made in fa#or of .oreo?%entfer& pon learning of this, respondent filed a Co)p!aint doc5eted as

Ci#il Case +o& "?89; with the lower court for annulment of sale and recon#eyance of property with damages and prayer

for a writ of attachment&

Issue: *hether or not a foreign national can see5 for an annulment of sale and recon#eyance of property

"uling: es& The subject properties consist of a beach house and the lease right o#er the land where the beach housestands is not included in the constitutional prohibition against aliens from owning land in the $hilippines& A clear distinctione0ists between the ownership of a piece of land and the mere lease of the land where the foreigners7 house stands& Thuswe see no legal reason why recon#eyance could not be allowed& Since recon#eyance is the proper remedy, respondentse0penses for the maintenance and repair of the beach house is for his own account as owner thereof&

#u!!er . #u!!er


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Facts: $etitioner )lena 4uena#entura .uller and respondent /elmut .uller were married in /amburg, ermany on

September 88, 9;;& "espondent had inherited a house in ermany from his parents which he sold and used the

proceeds for the purchase of a parcel of land in Antipolo, "i1al and the construction of a house& The Antipolo property was

registered in the name of petitioner& 2ue to incompatibilities and respondent7s alleged womani1ing, drin5ing, and

maltreatment, the spouses e#entually separated& 'n September 8H, 9;;, respondent filed a petition for separation o

properties before the "egional Trial Court of Oue1on City& *ith regard to the Antipolo property, the court held that it was

ac!uired using paraphernal funds of the respondent& /owe#er, it ruled that respondent cannot reco#er his funds because

the property was purchased in #iolation of Section , Article GII of the Constitution& The petitioner now is see5ing for

reimbursement&

Issue: *hether respondent is entitled to reimbursement of the funds used for the ac!uisition of the Antipolo property&

"uling: +o& The respondent cannot see5 reimbursement on the ground of e!uity where it is clear that he willingly and

5nowingly bought the property despite the constitutional prohibition also it would in effect permit respondent to enjoy the

fruits of a property which he is not allowed to own& Thus, it is li5ewise proscribed by law&

Aliens, whether indi#iduals or corporations, are dis!ualified from ac!uiring lands of the public domain& /ence, they arealso dis!ualified from ac!uiring pri#ate lands& The primary purpose of the constitutional pro#ision is the conser#ation ofthe national patrimony&

#att%e>s . Ta,!or Spouses

Facts: "espondent 4enjamin A& Taylor (4enjamin, a 4ritish subject, married 3oselyn C& Taylor (3oselyn, a 9?year old

Filipina& *hile their marriage was subsisting, 3oselyn bought from 2iosa .& .artin a 9,8; s!uare?meter lot (4oracay

property situated at .anoc?.anoc, 4oracay Island and con#erted the property to a #acation and tourist resort&

/owe#er, 4enjamin and 3oselyn had a falling out, and 3oselyn ran away with 6im $hilippsen& 'n 3une , 9;;8, 3oselyn

e0ecuted a Special $ower of Attorney (S$A in fa#or of 4enjamin, authori1ing the latter to maintain, sell, lease, and sub?

lease and otherwise enter into contract with third parties with respect to their 4oracay property& 'n 3uly 8@, 9;;8, 3oselyn

as lessor and petitioner $hilip .atthews as lessee, entered into an Agreement of %ease (Agreement in#ol#ing the

4oracay property for a period of 8= years, with an annual rental of $98,@@@&@@& The agreement was signed by the parties

and e0ecuted before a +otary $ublic& $etitioner thereafter too5 possession of the property and renamed the resort as

.usic arden "esort&

Claiming that the Agreement was null and #oid since it was entered into by 3oselyn without his (4enjamin7s consent,

4enjamin instituted an action for 2eclaration of +ullity of Agreement of %ease with 2amages against 3oselyn and the

petitioner& 4enjamin claimed that his funds were used in the ac!uisition and impro#ement of the 4oracay property, and

coupled with the fact that he was 3oselyn7s husband, any transaction in#ol#ing said property re!uired his consent&

Issue: *hether or not 4enjamin has a right to nullify the Agreement of %ease between 3oselyn and petitioner&

"uling: no& 4enjamin has no right to nullify the Agreement of %ease between 3oselyn and petitioner& 4enjamin, being analien, is absolutely prohibited from ac!uiring pri#ate and public lands in the $hilippines& Considering that 3oselynappeared to be the designated #endee in the 2eed of Sale of said property, she ac!uired sole ownership thereto& This istrue e#en if we sustain 4enjamin7s claim that he pro#ided the funds for such ac!uisition& 4y entering into such contract5nowing that it was illegal, no implied trust was created in his fa#orM no reimbursement for his e0penses can be allowedMand no declaration can be made that the subject property was part of the conjugalJcommunity property of the spouses&

+ACTS ISS?E


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The $etitioner and his spouse, both 2utch +ationals,entered into a Contract to Sell with $"4uilders, Inc& to purchase a 89@?s! mresidential unit in the respondentNstownhouse project in 4atangas&*hen respondent fai!ed to co)p!, >it%its .era! pro)ise to complete theproject by 3une 9;;=, the spouses /ulstfiled before the /ousing and %and se"egulatory 4oard (/%"4 a complaintfor rescission of contract with interest,damages and attorneyNs fees

damages is

actionable

It is significant to notethat the agreemente0ecuted by the parties inthis case is a Contract toSell and not a contract ofsale& A distinctionbetween the two ismaterial in the

determination of whenownership is deemed toha#e been transferred tothe buyer or #endee and,ultimately, the resolutionof the !uestion onwhether the constitutionalproscription has beenbreached&

This rule, howe#er, is subjeto e0ceptions that permit threturn of that which may ha#been gi#en under a #ocontract to: the parrepudiating the #oid contraefore t%e i!!e$a! purpose acco)p!is%ed or eforda)a$e is caused to a t%irperson and if pu!ic interesis su ser.ed , a!!o>inreco.er, (Art& 99, Ci#Code

PA foreigner may own a unit a condo because thpro%iition on a!iens is onfro) acquirin$ !and& The lanwhich the condo stands owned by condo corp&

TIN& ners%ip in trust is

a!!o>ed'

OS#ENA .' OS#ENA

The parties to this case are descendantsof spouses Ouintin Chiong 'smeQa andChiong Tan Sy& $etitioner is the couple7sdaughter while respondents +icasio and3ose 'smeQa are their grandchildren&The dispute re#ol#es around two parcelsof land, %ots and =, and the ancestralhouse standing on %ot &

Assuming arguendo that the litigated lotswere actually the properties of Chiong

Tan Sy and that the same were only putin the name of respondents7 fatherbecause he was the only Filipino citi1enin the family at the time the propertieswere purchased&

*hether or notthe saidproperty

should beincluded in theestate of the

deceased

Chiong Tan Sy

Instant petition is herebydenied&

4y signing the deed ofsale dated April 8H, 9;8(where petitioner transferred her share inthe ancestral house torespondents father,petitioner would ha#ebeen a party to thealleged simulateddocument& Thus, ma5ing

it clear that the disputedproperty is owned byrespondent7s father withthe consent of thepetitioners&

Court will not consent to any#iolation of the constitutiona

prohibition on foreignownership of land&

4E?R#ER .' A#ORES

*illem (4eumer, a 2utch national,married A#elina (Amores on .arch 8;,9;@& Their marriage was declared a

*hether or not*illem is

entitled to thewhole or at

least one halfof the purchase

Instant petition is herebydenied&

*here it is clear that hewillingly and 5nowinglybought the propertydespite the prohibition

The Constitution itself whichdemarcates the rights of

citi1ens and non?citi1ens inowning $hilippine land& To besure, the constitutional ban

against foreigners applies on


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nullity by the "TC on +o#ember 9@, 8@@@by reason of psychological incapacity,thus *illem filed a petition for dissolutionof conjugal partnership and distribution ofproperties which he claimed wereac!uired during their marriage&

price of the lotssubject of the

case&

against foreign ownershipof land8 enshrined underSection , Article GII ofthe 9; $hilippineConstitution

to ownership of $hilippine lanand not to the impro#ements

built thereon&

S)C&

RE/?4LIC V CA (230 scra 069*

'n 3une 9, 9;, respondent spouses

bought %ots


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S)C& 9@

AR#B AND NAVB CL?4 .' CA

City of .anila is the owner of a parcel ofland with an area of 98,@=&


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@& Su))it .' CA

2uring bidding, 6awasa5iJ$/I Consortiumis the losing bidder& )#en so, because ofthe right to top by =R percent the highestbid, it was able to top 3 Summit7s bid& 3Summit protested, contending that$/I%S)C', as a shipyard is a public utilityand, hence, must obser#e the H@R?@RFilipino?foreign capitali1ation& 4y buying&HR of $/I%S)C'7s capital stoc5 atbidding, 6awasa5iJ$/I in effect now ownsmore than @R of the stoc5&

*hether or not6awasa5iJ$/Ican

purchase

beyond@R of$/I%S)

C'7sstoc5s

A shipyard such as $/I%S)C'being a public utility aspro#ided by law is thereforere!uired to comply with theH@R?@R capitali1ation underthe Constitution& %i5ewise, the3BA between +I2C and6awasa5i manifests anintention of the parties to abideby this constitutional mandate&

Foreign citi1ens, corporation orassociation cannot purchasebeyond @R of the capitali1atioof the joint #enture on account both constitutional andcontractual proscriptions&

4a$atsin$ .' Co))ittee on /ri.atiation

$)T"'+ was originally registered withthe Securities and

)0change Commission (S)Cin 9;HH under the corporate name )sso$hilippines, Inc& &)SS' became a wholly?owned company of the go#ernmentunder the corporate name $)T"'+ and asa subsidiary of$+'C&$)T"'+ owns the largest, most modern comple0 refineryin the $hilippines& It is listed as the+o& 9corporation in terms of assets and income in the $hilippines in 9;;i!! e t%e one to operate' T%e, >i!! ust pa, rent to t%e EDSALRT Consortiu) for 20 ,ears as pa,)ent for ui!din$ t%e rai! transit'

TELECO# V' CO#ELEC7 28 SCRA 339 (18*

+acts.A is saying that they ha#e lost millions of pesos in 9;;8 and 9;;= because the C'.)%)C re!uired it tobroadcast free?of?charge through tele#ision or radio the campaigns of candidates (the C'.)%)C times will be di#idede!ually and impartially to all candidates& .A is saying that Sec ;8 of 4$ 9 (the law re!uiring it to broadcast ads isunjust&

Doctrine .A does not own the airwa#es for which they broadcast& The franchise gi#en is only temporary use of theairwa#es& It is not unjust to re!uire .A to broadcast free?of?charge on behalf of the State&

NoteTelecommunications and 4roadcast Attorneys of the $hilippines, Inc& (T)%)4A$ is an organi1ation of lawyers ofradio and tele#ision broadcasting companies& It was declared to be without legal standing to sue in this case as, amongother reasons, it was not able to show that it was to suffer from actual or threatened injury as a result of the subject law&

@& S?##IT


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+actsIn 8@@@, the SC has decided that $AC'" was bereft of any franchise to operate, maintain or manage jai?alaigames whether by itself alone or in conjunction with its co?respondents& $AC'" is see5ing for reconsideration&

Doctrine The franchise gi#en to $AC'" is to operate jai?alai games only by itself& It cannot include others in operatingsuch games&

Note$etition is $A"TIA%% granted in that $AC'" alone is allowed to operate jai?alai games&

/TC V' NTC7 &R 138207 A?&' 287 2;;3

+actsThe +ational Telecommunications Commission (+TC has granted the International Communications Corporation(ICC its application for $ro#isional Authority ($A to construct, operate and maintain local e0change ser#ices in some ofthe areas co#ered by $I%T)%s $A&$iltel is opposed to the grant&

The areas co#ered by $I%T)%s $A included Sulu, Uamboanga del +orte, Uamboanga del Sur, Tawi?Tawi, .isamis'ccidental, 2a#ao del Sur, South Cotabato, Saranggani and 2a#ao City while among the areas included in ICCsapplication were .isamis 'ccidental, Uamboanga del Sur, 2a#ao del Sur, South Cotabato and Saranggani&

Doctrine$I%T)%7s $A is not e0clusi#e for e0clusi#e franchises are prohibited& $I%T)% cannot oppose the application andthe grant of $A to ICC e#en if .isamis 'ccidental, Uamboangadel Sur, 2a#ao del Sur, South Cotabato and Sarangganiare ser#ice areas of $I%T)% already&

ASSOCIATED CO##?NICATIONS V' NTC7 &R NO' 11;7 +E4R?ARB 197 2;;3

+actsAssociated Communications - *ireless Ser#ices nited 4roadcasting +etwor5, Inc& (AC*S was granted byCongress a =@?year franchise to construct, install, maintain and operate public radiotelephone and radiotelegraph coastastations, and public fi0ed and public based and land mobile stations within the $hilippines for the reception andtransmission of radiotelephone and radiotelegraph for domestic communications and pro#incial telephone systems incertain pro#inces&

*hen $&2& +o& =H?A was enacted, all franchises to operate radio or tele#ision broadcasting systems are terminate on2ecember


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DoctrineAll the e0ecuti#e and managing officers of such corporation or association must be citi1ens of the $hilippinespursuant to Sec 99&

+ote: The permit of "CC e0pired before final resolution was drawn& The petition was dismissed& Still, it would ha#e lostanyway&

.etropolitan #& Adala V =8H SC"A H= K8@@L

Facts:

The .etropolitan Cebu *ater 2istrict, a public corporation, appealed the decision of "TC in fa#or of .argarita A& Adala bythe +ational *ater "esources 4oard (+*"4, granting her a permit to supply water to three sitios in 4ulacao, Cebu city&.C*2 was the e0clusi#e distributor of water in the district& .C*2 argued that the proposed waterwor5s would interferewith their water supply which it has the right to protect, and the water needs of the residents in the subject area wasalready being well ser#ed by petitioner& They also claim that they were granted by Section of $residential 2ecree 9;,granting e0clusi#e franchise only to public utilities& .C*2 alleged that the 4oard of 2irectors of .C*2 did not gi#econsent to the issuance of the franchise applied for by the respondent and that consent is a mandatory re!uirement ase0pressed in the $&2& 9;&

Issue:

*hether or not Section of $residential 2ecree 9; grants e0clusi#e franchise to public utilities&

/eld:

The court dismissed the petition for the reason that the section of $residential 2ecree 9; is unconstitutional& ArticleGIB Section = of the 9;< Constitution which was ratified on 3anuary 9, 9;< the constitution in force when $&2& 9; wasissued on .ay 8=, 9;


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*hether or not Section 9 (c of "&A& +o& ;


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Issue:

*hether or not the term DcapitalE in Section 99, Article GII of the Constitution refers to the total common shares only, or tothe total outstanding capital stoc5 (combined total of common and non?#oting preferred shares of $%2T, a public utility

/eld:

The Court partly granted the petition and held that the term DcapitalE in Section 99, Article GII of the Constitution refers onlyto shares of stoc5 entitled to #ote in the election of directors of a public utility (to the total common shares in $%2T&

The "espondent Chairperson of the Securities and )0change Commission was 2I")CT)2 by the Court to apply theforegoing definition of the term DcapitalE in determining the e0tent of allowable foreign ownership in respondent $hilippine%ong 2istance Telephone Company, and if there is a #iolation of Section 99, Article GII of the Constitution, to impose theappropriate sanctions under the law&

+otes:

Definition of capita! refers on!, to s%are of stocH entit!ed to .ote in t%e e!ection of directors7 and t%us in t%epresent case on!, to co))on s%are7 and not t%e tota! outstandin$ capita! stocH co)prisin$

)0press In#estment #& 4ayantel V H SC"A =@ K8@98L

Facts:

In this case, The 4an5 of +ew or5 filed a creditor?initiated petition to rehabilitate 4ayantel& In due course, the recei#errecommended the rehabilitation of 4ayantel by, among others, con#erting part of the company7s debt into e!uity& /owe#erthe rehabilitation recei#er imposed, as a condition, that the resulting e!uity ownership of foreign creditors should note0ceed the @?percent foreign ownership limit under the 9; Constitution&

The 4an5 of +ew or5 disagreed, e0plaining that the ac!uisition of shares by foreign creditors would be done, bothdirectly and indirectly, to meet the control test under "A @8, or the Foreign In#estments Act of 9;;9 (FIA&

nder the proposed structure for 4ayantel, the foreign creditors would con#ert part of 4ayantel7s debt to common stoc5 ofthe company& As a result, they would own @ percent of the outstanding capital stoc5 of 4ayantel, while the remaining @percent of the shares would be registered to a holding company that would retain the other H@ percent e!uity reser#ed forFilipino citi1ens& According to The 4an5 of +ew or5, this structure would comply with the control test under the FIA and,therefore, would not #iolate the Filipini1ation re!uirement prescribed by the Constitution for public utilities&

Issue:

*hether or not the proposed structure would #iolate the foreign ownership limit imposed by the Constitution for publicutilities

/eld:

The SC ruled out that the proposed structure would #iolate Article GII, Sec 99 of the 9; Constitution& SC stated that if weindulge petitioners on their proposal, the 'mnibus Creditors which are foreign corporations, shall ha#e control o#er &Rof 4ayantel, a public utility company& This is precisely the scenario proscribed by the Filipini1ation pro#ision of theConstitution& Therefore, the Court of Appeals acted correctly in sustaining the @R debt?to?e!uity ceiling on con#ersion&

Section 98& Filipino First $olicy

Tanada #& Angara, 88 SC"A 9 (9;;

Facts:

'n April 9=, 9;;, "i1alino +a#arro, representing the o#ernment of the $hilippines, signed in .arra5esh, .oricco, theFinal Act )mbodying the "esults of the ruguay "ound of .ultilateral +egotiations&

'n August 98, 9;;, the members of the $hilippine Senate recei#ed a letter from the $resident of the $hilippines, statingamong others that the ruguay "ound Final Act was submitted to the Senate for its concurrence pursuant to Section 89,

Article BII of the Constitution& A day after, the members of the $hilippine Senate recei#ed another letter from the $residentof the $hilippines which stated among others that the ruguay "ound Final Act, the Agreement )stablishing the *orldTrade 'rgani1ation, the .inisterial 2eclarations and 2ecisions, and the nderstanding on Commitments in FinancialSer#ices are submitted to the Senate for its concurrence pursuant to Section 89, Article BII of the Constitution&


17/63

The $hilippine Senate adopted "esolution +o& ; where it resol#ed the ratification by the $resident of the $hilippines ofthe Agreement )stablishing the *orld Trade 'rgani1ation&

It is petitioners position that the national treatment and parity pro#isions of the *T' Agreement place nationals andproducts of member countries on the same footing as Filipinos and local products, in contra#ention of the Filipino Firstpolicy of the Constitution&

Issue:

*hether or not the pro#isions of the Agreement )stablishing the *orld Trade 'rgani1ation contra#ene the pro#isions of

Sec& 9;, Article II, and Secs&9@ and 98, Article GII, of the 9; $hilippine Constitution&

/eld:

The petition was dismissed for the lac5 of merit& The principles in Article II are not intended to be self?e0ecuting principlesready for enforcement through the courts& They are used by the judiciary as aids or as guides in the e0ercise of its powerof judicial re#iew, and by the legislature in its enactment of laws& The principles and state policies enumerated in Article IIand some sections of Article GII are not self?e0ecuting pro#isions, the disregard of which can gi#e rise to a cause of actionin the courts& They do not embody judicially enforceable constitutional rights but guidelines for legislation&

Sections 9@ and 98 of Article GII, apart from merely laying down general principles relating to the national economy andpatrimony, should be read and understood in relation to the other sections in said article, especially Sections 9 and 9s an e"c%an$e on t%e asis of equa!it, andreciprocit,7 de)andin$ on!, on forei$n co)petition t%at is unfair'

Section 9it% t%e rest of t%e >or!d and!i)its protection of +i!ipino enterprises on!, a$ainst forei$n co)petition and trade practices t%at are unfair'


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Section 9H& Corporations

+2C #& $B4, 9;8 SC"A 8= (9;;@

Facts:

The Agri0 .ar5eting, Inc& (A"IG had e0ecuted in fa#or of respondent $hilippine Beterans 4an5 a real estate mortgagedated 3uly , 9;, o#er three parcels of land located in %os 4aQos, %aguna& 2uring the e0istence of the mortgage,

A"IG went ban5rupt&Then $redisdential 2ecree +o& 99 was issued by $resident .arcos for the purpose of sal#agingthe agri0 companies& It ordered the rehabilitation of the Agri0 roup of Companies to be administered by the +ational

2e#elopment Company& The law outlined the procedure for filing claims against the Agri0 companies and created aClaims Committee to process these claims& )specially rele#ant to this case is the Sec& (9 of $&2& +o& 99 whichpro#ides that all mortgages and other liens presently attaching to any of the assets of the dissol#ed corporations arehereby e0tinguished& The pri#ate respondent filed a claim with the A"IG Claims Committee for the payment of its loancredit& Then the +ew Agri0, Inc& and the +ational 2e#elopment Company in#o5ing Sec& (9 of the decree, filed a petitionwith the "egional Trial Court of Calamba, %aguna, for the cancellation of the mortgage lien in fa#or of the pri#aterespondent&

Issue:

*hether or not the $&2& +o& 99 is unconstitutional

/eld:

$&2& +o& 99 is an in#alid e0ercise of the police power, not being in conformity with the traditional re!uirements of alawful subject and a lawful method& The e0tinction of the mortgage and other liens and of the interest and other chargespertaining to the legitimate creditors of A"IG constitutes ta5ing without due process of law, and this is compounded bythe reduction of the secured creditors to the category of unsecured creditors in #iolation of the e!ual protection clause& Italso interferes with purely pri#ate agreements without any demonstrated connection with the public interest, thus, itconstitute an impairment of the obligation of the contract&

+ote:

/'D' 1919 >as passed to re%ai!itate t%e A$ri" &roup of Co)panies >%ic% >as a corporation neit%er o>ned norcontro!!ed , t%e $o.ern)ent' As part of t%e re%ai!itation process7 t%e A$ri" &roup >as disso!.ed , t%e decreeand t%e decree created a Ne> A$ri"7 Inc'7 !iHe>ise neit%er o>ned nor contro!!ed , t%e $o.ern)ent' It .io!atesArtic!e IV7 Section of t%e 193 Constitution no> )odified as Artic!e II7 Section 16'

4oy Scouts of the $hilippines #& C'A, " 99


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Dissent of @ustice Carpio

T%e dissentin$ opinion of Associate @ustice Antonio T' Carpio7 citin$ a !ine of cases7 insists t%at t%e Constitutionreco$nies on!, t>o c!asses of corporations pri.ate corporations under a $enera! !a>7 and $o.ern)ent-o>nedor contro!!ed corporations created , specia! c%arters'

Note

Section 167 Artic!e II s%ou!d not e construed so as to pro%iit Con$ress fro) creatin$ pu!ic corporation' Infact7 Con$ress %as enacted nu)erous !a>s creatin$ pu!ic corporations or $o.ern)ent a$encies or

instru)enta!ities .ested >it% corporate po>ers' #oreo.er7 Section 167 Artic!e II7 >%ic% re!ates to Nationa!Econo), and /atri)on,7 cou!d not %a.e tied t%e %ands of Con$ress in creatin$ pu!ic corporation to ser.e an,of t%e constitutiona! po!icies or oecti.e'

Section 9& Temporary Ta5e?'#er

Agan #& $IATC', 8@ SC"A ==

Facts:

'n 'ctober =, 9;;, Asia7s )merging 2ragon Corp& (A)2C submitted an unsolicited proposal to the $hilippineo#ernment through the 2epartment of Transportation and Communication (2'TC and .anila International Airport

Authority (.IAA for the construction and de#elopment of the +AIA I$T III under a build?operate?and?transfer arrangementpursuant to "&A& +o& H;=, as amended by "&A& +o& 9 (4'T %aw& In accordance with the 4'T %aw and its

Implementing "ules and "egulations, the 2'TCJ.IAA in#ited the public for submission of competiti#e and comparati#eproposals to the unsolicited proposal of A)2C& A consortium composed of the $eoples Air Cargo and *arehousing Co&,Inc& ($aircargo, $hil& Air and rounds Ser#ices, Inc& ($AS and Security 4an5 Corp& (Security 4an5 (collecti#ely,$aircargo Consortium, submitted their competiti#e proposal to the $re!ualification 4ids and Awards Committee ($4AC&The $aircargo Consortium submitted a bid superior to the proposal of A)2C& The 2'TC issued the notice of award for the+AIA I$T III project to the $aircargo Consortium, which later organi1ed into $hilippine International Air Terminals Co&($IATC'& The 9;; Concession Agreement was superseded by the Amended and "estated Concession Agreement(A"CA containing certain re#isions and modifications from the original contract& A series of supplemental agreementswas also entered into by the o#ernment and $IATC'& 'n September 9, 8@@8, #arious petitions were filed before thisCourt to annul the 9;; Concession Agreement, the A"CA and the Supplements and to prohibit the public respondents2'TC and .IAA from implementing them&

Issue:

*hether or not $IATC' is entitled to just compensation for the temporary ta5eo#er of the terminal of the $hilippineo#ernment

/eld:

The motion for reconsideration of the respondents ($IATC' was denied by the Court& SC stated that $IATC' waserroneous in in#o5ing the principle of eminent domain whereas it is the police power of the state which is in#ol#ed in thiscase& Section 9, Article GII of the 9; Constitution grants the State in times of national emergency the right totemporarily ta5e o#er the operation of any business affected with public interest& This right is an e0ercise of police powerwhich is one of the inherent powers of the State&

$olice power has been defined as the state authority to enact legislation that may interfere with personal liberty orproperty in order to promote the general welfareE& It consists of two essential elements& First, it is an imposition of restraint

upon liberty or property& Second, the power is e0ercised for the benefit of the common good& It is and still is the mostessential, insistent, and illimitable of the States powers& nli5e the power of eminent domain, police power is e0ercisedwithout pro#ision for just compensation for its paramount consideration is public welfare&

Section =&9@(c, Article B of the A"CA pro#ides that respondent $IATC' shall be entitled to reasonable compensation forthe duration of the temporary ta5eo#er by o#ernment of the "epublic of the $hilippines, which compensation shall ta5einto account the reasonable cost for the use of the Terminal andJor Terminal Comple0& It clearly obligates the go#ernmentin the e0ercise of its police power to compensate respondent $IATC' and this obligation is offensi#e to the Constitution&$olice power cannot be diminished, let alone defeated by any contract for its paramount consideration is public welfareand interest&

+ote:


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/u!ic interest on t%e occasion of a nationa! e)er$enc, is t%e pri)ar, consideration >%en t%e $o.ern)entdecides to te)porari!, taHe o.er or direct t%e operation of a pu!ic uti!it, or a usiness affected >it% pu!icinterest' T%e nature and e"tent of t%e e)er$enc, is t%e )easure of t%e duration of t%e taHeo.er as >e!! as t%eter)s t%ereof' It is t%e State t%at prescries suc% reasona!e ter)s >%ic% >i!! $uide t%e i)p!e)entation of t%ete)porar, taHeo.er as dictated , t%e e"i$encies of t%e ti)e' T%is po>er of t%e State cannot e ne$ated , an,part, nor s%ou!d its e"ercise o!i$ate t%e State to co)pensate for t%e .a!ue of t%e propert,'

Da.id . Arro,o 2;;6

'n February 8, 8@@H, $resident Arroyo issued $$ +o& 9@9 declaring a state of emergency& 'n the same day, $.A

issued &'& +o& = implementing $$9@9, directing the members of the AF$ and $+$ to immediately carry out thenecessary and appropriate actions and measures to suppress and pre#ent acts of terrorism and lawless #iolence& Thirdpro#ision of the operati#e portion of $$9@9 reads: Das pro#ided in Section 9, Article GII of the Constitution do herebydeclare a State of +ational )mergency&E 2a#id et al !uestioned its constitutionality on < grounds (


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proscription that no franchise certificate or authori1ation shall be e0clusi#e in character or shall last longer than fifty (=@years& Additionally, the State is empowered to decide whether public interest demands that monopolies be regulated orprohibited (9; Constitution& Article GII, Section 9;&

/!dt . eastern te!eco) 12 (pareholang din nungnasataasna case, grabe& +aibalang e yung5inasuhanngpldttsa5adecision

The petition see5s to set aside and annul the decision of the +ational Telecommunications Commission (+TC signed byformer +TC Commissioner 3ose %uis Alcua1 dated +o#ember 9, 9;; as well as the order dated 3uly 9H, 9;;@ of the+TC )n 4anc&

)astern Telecommunications $hilippines, Inc& filed with the +TC an application for a Certificate of $ublic Con#enience and+ecessity (C$C+ to construct, maintain and operate an International 2igital ateway Facility (I2F& In its application,)astern alleged that it is a domestic corporation and that it has the franchise to land, construct, maintain and operatetelecommunications systems by cable, or any other means now 5nown to science or which in the future may bede#eloped for the reception and transmission of messages to and between any point in the $hilippines to point e0teriorthereto & & & ("&A& =@@8

'n 3une 8


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additional petroleum products retail outlet in Imelda .arcos A#enue, $araQa!ue& 2issatisfied, Shell appealed to the'ffice of )nergy Affairs (')A&

.eanwhile, on .ay , 9;, )0ecuti#e 'rder +o& 98 was issued creating the )nergy "egulatory 4oard ()"4 andtransferring to it the regulatory and adjudicatory functions of the 4)&

'n .ay ;, 9;, the ')A rendered a decision denying the appeal of Shell and affirming the 4) decision& Shell mo#edfor reconsideration and prayed for a new hearing or the remand of the case for further proceedings& In a supplement tosaid motion, Shell submitted a new feasibility study to justify its application& /owe#er, on September 9, 9;;9, the )"4rendered a 2ecision allowing Shell to establish the ser#ice station in 4enigno A!uino, 3r& A#enue&

&arcia . ES 1As a result of the Tatad decision declaring "A 9@ entitled An Act 2eregulating the 2ownstream 'il Industry and For'ther $urposes as unconstitutional, Congress enacted "epublic Act +o& ;, a new deregulation law without theoffending pro#isions of the earlier law& $etitioner )nri!ue T& arcia, a member of Congress, has now brought this petitionsee5ing to declare Section 9; thereof, which sets the time of full deregulation, unconstitutional& After failing in his attemptsto ha#e Congress incorporate in the law the economic theory he espouses, petitioner now as5s the Court, in the name ofupholding the Constitution, to undo a #iolation which he claims Congress has committed&The petition states that if the constitutional mandate against monopolies and combinations in restraint of trade is to beobeyed, there should be indefinite and open?ended price controls on gasoline and other oil products for as long asnecessary& This will allegedly pre#ent the 4ig < ??? Shell, Calte0 and $etron ??? from price?fi0ing and o#erpricing& $etitionercalls the indefinite retention of price controls as partial deregulation&*hether or not sec 9; of "A ; is unconstitutional for being pro?oligopoly, anti?competition and anti?people, in gross

#iolation of sec 9; art 0iiThe most important part of deregulation is freedom from price control& Indeed, the free play of mar5et forces throughderegulation and when to implement it represent one option to sol#e the problems of the oil?consuming public& There areother considerations which may be ta5en into account such as the reduction of ta0es on oil products, the reinstitution of an'il $rice Stabili1ation Fund, the choice between go#ernment subsidies ta5en from the regular ta0paying public on onehand and the increased costs being shouldered only by users of oil products on the other, and most important, theimmediate repeal of the oil deregulation law as wrong policy&"&A& ;, the present deregulation law, was enacted to implement Article GII, Section 9; of the Constitution whichpro#ides:The State shall regulate or prohibit monopolies when the public interest so re!uires& +o combinations in restraint of tradeor unfair competition shall be allowed&This is so because the o#ernment belie#es that deregulation will e#entually pre#ent monopoly& *here two or three or afew companies act in concert to control mar5et prices and resultant profits, the monopoly is called an oligopoly or cartel&

And before the start of deregulation, the three pri#ate respondents controlled the entire oil industry in the $hilippines&The CourtNs ruling in Tatad is categorical that the ConstitutionNs Article GII, Section 9;, is anti?trust in history and spirit& Itespouses competition& *e ha#e stated that only competition which is fair can release the creati#e forces of the mar5et&*e ruled that the principle which underlies the constitutional pro#ision (sec 9; is competition&

Tatad . Sec of Ener$, 19The petitioner challenges the constitutionality of "A +o& 9@ entitled DAn Act 2eregulating the 2ownstream 'il Industryand For 'ther $urposes&E The deregulation process has two phases: (a the transition phase (Aug& 98, 9;;H and the (bfull deregulation phase (Feb& , 9;; through )' +o&


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scheme, the paramount public interest in#ol#ed must be upheld& In any e#ent, all legitimate insurance companies areallowed to become members of the consortia& Thus, there is no restraint of trade or unfair competition in#ol#ed&The operation of monopolies is not totally banned by the Constitution& /owe#er, the State shall regulate them when publicinterest so re!uires& In the present case, the two consortia of insurance companies that ha#e been authori1ed to issuepassenger insurance policies are ade!uately regulated by the %and Transportation Franchising and "egulatory 4oard(%TF"4 to protect the riding public& *hile indi#idual insurance companies may somehow be ad#ersely affected by thisscheme, the paramount public interest in#ol#ed must be upheld& In any e#ent, all legitimate insurance companies areallowed to become members of the consortia& Thus, there is no restraint of trade or unfair competition in#ol#ed&4oth Shell and )"4 ele#ated the matter to this Court by way of these petitions, which were ordered consolidated by theCourt in a "esolution dated 3uly 8=,9;;&*hether or not C'"T 'F A$$)A%S "AB)% )"")2 I+ FI+2I+ T/AT T/) $"'$'S)2 S)"BIC) STATI'+ 'F$)TITI'+)" *'%2 $'S) "I+'S C'.$)TITI'+ T' $"IBAT) ")S$'+2)+TNS S)"BIC) STATI'+ 4AS)2.AI+% '+ )BI2)+C) S4.ITT)2 F'" T/) FI"ST TI.) *IT/ T/) SAI2 C'"T A+2 *IT/'T C'+2CTI+ A/)A"I+ T/)")'+&&The policy of the go#ernment in this regard has been to allow a free interplay of mar5et forces with minimal go#ernmentsuper#ision& The purpose of go#erning legislation is to liberali1e the downstream oil industry in order to ensure a trulycompetiti#e mar5et under a regime of fair prices, ade!uate and continuous supply, en#ironmentally clean and high?!ualitypetroleum products& Indeed, e0clusi#ity of any franchise has not been fa#ored by the Court, which is 5een on promotingfree competition and the de#elopment of a free mar5et consistent with the legislati#e policy of deregulation as an answerto the problems of the oil industry&*hile it is probable that the operation of the proposed Shell outlet may, to a certain e0tent, affect $2SCNs business,pri#ate respondent ne#ertheless failed to show that its business would not ha#e sufficient profit to ha#e a fair return of itsin#estment& The mere possibility of reduction in the earnings of a business is not sufficient to pro#e ruinous competition&

Indeed VIn order that the opposition based on ruinous competition may prosper, it must be shown that the opponent would bedepri#ed of fair profits on the capital in#ested in its business& The mere possibility of reduction in the earnings of abusiness is not sufficient to pro#e ruinous competition& It must be shown that the business would not ha#e sufficient gainsto pay a fair rate of interest on its capital in#estment& .ere allegations by the oppositor that its business would be ruinedby the establishment of the ice plants proposed by the applicants are not sufficient to warrant this Court to re#o5e theorder of the $ublic Ser#ice Commission&

All told, a climate of fear and pessimism generated by unsubstantiated claims of ruinous competition already rejected inthe past should not be made to retard free competition, consistently with legislati#e policy of deregulating and liberali1ingthe oil industry to ensure a truly competiti#e mar5et under a regime of fair prices, ade!uate and continuous supply,en#ironmentally clean and high?!uality petroleum products&

A.on . Luna

A#on Cosmetics, Inc& (A#on, ac!uired and too5 o#er the management and operations of 4eautifont, Inc& in 9;+onetheless, respondent %una continued wor5ing for said successor company& Thereafter, petitioner A#on andrespondent %una entered into an agreement, entitled Super#isor7s Agreement and by #irtue of the e0ecution of theaforementioned Super#isor7s Agreement, respondent %una became part of the independent sales force of petitioner

A#on&W%una became a roup Franchise 2irector of Sandre $hilippines, Inc& concurrently with being a roup Super#isor ofpetitioner A#on and began selling andJor promoting Sandre products to other A#on employees and friends& In 9;, shere!uested a law firm to render a legal opinion as to the legal conse!uence of the Super#isor7s Agreement she e0ecutedwith petitioner A#on& In response to her !uery, a lawyer of the firm opined that the Super#isor7s Agreement was contraryto law and public policy&*anting to share the legal opinion she obtained from her legal counsel, respondent %una wrote a letter to her colleaguesand attached mimeographed copies of the opinion and then circulated them& Afterwards, $etitioner A#on, through its$resident and eneral .anager, 3ose .ari Franco, notified respondent %una of the termination or cancellation of herSuper#isor7s Agreement with petitioner A#on& Aggrie#ed, respondent %una filed a complaint for damages and the "TCrendered judgment in fa#or of respondent %una which was assailed by the Court of appeals&*hether or not the Super#isor7s Agreement is #alid and not against public policy

W+o& S)ction = of the Agreement is called an e0clusi#ity clause& This e0clusi#ity clause is more often the subject of criticascrutiny when it is percei#ed to collide with the Constitutional proscription against reasonable restraint of trade oroccupation which is sec 9; of art 0ii of the constitution&First off, restraint of trade or occupation embraces acts, contracts, agreements or combinations which restrict competitionor obstruct due course of trade& From the wordings of the Constitution, truly then, what is brought about to lay the test onwhether a gi#en agreement constitutes an unlawful machination or combination in restraint of trade is whether under theparticular circumstances of the case and the nature of the particular contract in#ol#ed, such contract is, or is not, againstpublic interest&Thus, restrictions upon trade may be upheld when not contrary to public welfare and not greater than is necessary toafford a fair and reasonable protection to the party in whose fa#or it is imposed& )#en contracts which prohibit an


24/63

employee from engaging in business in competition with the employer are not necessarily #oid for being in restraint oftrade&In sum, contracts re!uiring e0clusi#ity are not per se #oid& )ach contract must be #iewed #is?X?#is all the circumstancessurrounding such agreement in deciding whether a restricti#e practice should be prohibited as imposing an unreasonablerestraint on competition&The main objection of e0clusi#e dealing (reflected in the AgreementNs e0clusi#ity clause is its tendency to foreclosee0isting competitors or new entrants from competition in the co#ered portion of the rele#ant mar5et during the term of theagreement& 'nly those arrangements whose probable effect is to foreclose competition in a substantial share of the line ofcommerce affected can be considered as #oid for being against public policy&WApplying the preceding principles to thecase at bar, there is nothing in#alid or contrary to public policy either in the objecti#es sought to be attained by paragraph=, the e0clusi#ity clause, in prohibiting respondent %una, and all other A#on super#isors, from selling products other thanthose manufactured by petitioner A#on&

Article 0#i&

Sec


25/63

A4I got a T"' from the "TC, but upon its e0piration they were ejected as well& The Court of Appeals grants the petitionof A4I against +$2C chairman and all other persons in#ol#ed in the complaint they made and petitioner were held liableto indemnify the pri#ate respondent& The

Issue *hether or not the case filed against the petitioner is in effect a suit against the state, which cannot prosperwithout its consent>


26/63

Issue *hether or not Shell $hilippines cannot be sued merely because it is an agent of the state, and it is being barredby doctrine of state immunity>


27/63

lac% of &uridical personality, because it too5 o#er all the powers and assumed all the obligations of the defunct corporationwhich had entered into the contract in !uestion&


28/63

medium thru which the host go#ernment may interfere in their operations or e#en influence or control its policies anddecisions of the organi1ationM besides, such subjection to local jurisdiction would impair the capacity of such body todischarge its responsibilities impartially on behalf of its member?states&

+o, the A24 didnNt descend to the le#el of an ordinary party to a commercial transaction, which should ha#e constituted awai#er of its immunity from suit, by entering into ser#ice contracts with different pri#ate companies&

DOCTRINE: Certainly, the mere entering into a contract by a foreign state with a pri#ate party cannot be the ultimate testSuch an act can only be the start of the in!uiry& The logical !uestion is whether the foreign state is engaged in the acti#ityin the regular course of business& If the foreign state is not engaged regularly in a business or trade, the particular act or

transaction must then be tested by its nature& If the act is in pursuit of a so#ereign acti#ity, or an incident thereof, then it isan act jure imperii, especially when it is not underta5en for gain or profit&

Santos .' Santos

+ACTS An undi#ided parcel of land sit uate d in th e .u nic ip alit y of %as $i Qas was owned by the petitioners andthe respondent in the proportion of 9J undi#ided share for Teodora Santos and 9J9 undi#ided share each for 3osefinaSantos and )miliana Santos and =J undi#ided share for %eonci o Santos &

$et i t ioners complained that f rom 9;= to 9;; %eoncio Santos col lected from theArmy of thenited States of America rentals for the use and occupation of a parcel of land and later sold the lot the Administrator of

the Ci#il Aeronautics Administration on or about 9< .ay 9;;&$etitioners demand for the acc ou n t i ng o f t he pa yme nt s f o r t he ren ta l s o f t he l o t and t o

g i # e t o t h e p o rt i o n o f t h e f r u i t s o f t h e r e n t a l s according to their portion of the lot& They also prayed torestore to their ownership the portions of the land that belongs to them contending that the said contract ofsale is nul l and #oid because i t i s performed wi t h ou t th ei r co ns en t &

Adm in is t r a t or o f th e C i # i l Aeronaut ics Administ ra t ion mo#ed to d i smiss the complaint folac5 of jur isdict ion and insuff iciency of the complaint against him& This mot ion was granted on theground that the Ci#i l Aeronauti cs Administ ra tion not be in g a ju r i d i ca l pe rs on ha s no ca pa c i t y tosu e an d be su ed an d fo r th at re as on i t ca nn ot co me un de r th e jurisdiction of the court&

ISS?E*'+ the petitioners can sue the Ci#il Aeronautics Administration who is not a juridical entity


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DOCTRINE: A suit against the state is not permitted, e0cept upon a showing that the state has consented to be sued,either e0pressly or by implication through the use of statutory language too plain to be misinterpreted&

Repu!ic of Indonesia .' Vinons

+ACTS $etitioner, "epublic of Indonesia, represented by its Counsellor, Siti $artinah, entered into a .aintenanceAgreement in August 9;;= with respondent 3ames Bin1on, sole proprietor of Bin1on Trade and Ser#ices& The e!uipmenco#ered by the .aintenance Agreement are air conditioning units and was to ta5e effect in a period of four years&

*hen Indonesian .inister Counsellor 6asim assumed the position of Chief of Administration in .arch 8@@@, heallegedly found Bin1on7s wor5 and ser#ices unsatisfactory and not in compliance with the standards set in the.aintenance Agreement& /ence, the Indonesian )mbassy terminated the agreement in a letter dated August


30/63

/)%2: The members of the respondent %abor nion themsel#es are part of the people who ha#e freely formed that

go#ernment and participated in that solemn underta5ing& In this sense Z and a #ery real one it is Z they are in effect

attempting to sue themsel#es along with the rest of the people represented by their common go#ernment Z an

anomalous and absurd situation indeed&

The Supreme Court ruled that the proceedings in the Court of Industrial "elations and now subject of this appeal

are null and #oid and enjoined from ta5ing any further action&

2'CT"I+): In a republican state, li5e the $hilippines, go#ernment immunity from suit without its consent is deri#ed fromthe will of the people themsel#es in freely creating a go#ernment Dof the people, by the people, and for the peopleE Z a

representati#e go#ernment through which they ha#e agreed to e0ercise the powers and discharge the duties of their

so#ereignty for the common good and general welfare& In so agreeing, the citi1ens ha#e solemnly underta5en to surrender

some of their pri#ate rights and interest which were calculated to conflict with the higher rights and larger interests of the

people as a whole, represented by the go#ernment thus established by them all& 'ne of those Dhigher rights,E based upon

those Dlarger interestsE is that go#ernment immunity&

NAC .' Teodoro

+ACTS The +ational Airports Corporation was organi1ed under "epublic Act +o& 88, which e0pressly made the

pro#isions of the Corporation %aw applicable to the said corporation& It was abolished by )0ecuti#e 'rder +o&


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DOCTRINE +ot all go#ernment entities, whether corporate or non corporate, are immune from suits& The power to sueand be sued is implied from the power to transact pri#ate business&

#oi! /%i!ippines .' Custo)s Arrestre

+ACTS Four cases of rotary drill parts were shipped from abroad on S&S& %eo#ille, consigned to .obil $hilippines)0ploration, Inc&, .anila& The shipment was discharged to the custody of the Customs Arrastre Ser#ice, the unit of the4ureau of Customs then handling arrastre operations therein&

The Customs Arrastre Ser#ice later deli#ered to the bro5er of the consignee three cases only of the shipment.obil $hilippines )0ploration, Inc&, filed suit in the Court of First Instance of .anila against the Customs Arrastre Ser#iceand the 4ureau of Customs to reco#er the #alue of the undeli#ered case in the amount of $9,;


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+onetheless, the rule admits of an e0ception& It finds no application where a claimant institutes an action against afunctionary who fails to comply with his statutory duty to release the amount claimed from the public funds alreadyappropriated by statute for the benefit of the said claimant& As clearly discernible from the circumstances, the case at barfalls under the e0ception&

&OVERN#ENT O++ICERSRe$iona! Director Teofi!o &o)e VS CA

The pri#ate respondents, together with other +egros 'riental public school teachers, held, starting 9; September 9;;@and lasting until 89 September 9;;@, a mass action, or a stri5e from their school classes, to demand the release of theirsalaries by the 2epartment of 4udget&

A return?to?wor5 order was promptly issued by one of the petitioners, "egional 2irector Teofilo ome1 of the 2epartmenof )ducation, Culture and Sports (2)CS, with a warning that if the stri5ing school teachers were not to resume theirclasses within twenty?four hours, administrati#e charges would be filed& Since the order was not heeded, administrati#ecomplaints against the teachers concerned were thereupon filed& The teachers were each gi#en fi#e days from receipt ofsaid complaints within which to submit their respecti#e answers and supporting documents& An in#estigation panelcomposed of three 2)CS lawyers (the other petitioners herein, namely, .arcelo 4aclaso, +ie#a .ontes andenerosoCapuyan, was constituted to loo5 into the case&

.ain point: (8 $ublic officials are not necessarily immune from damages in their personal capacities arising from acts

done in bad faith, for if malice is indeed established, public officials can no longer be said to ha#e acted within the scopeof official authority so as to still find protection under the mantle of immunity for official actions

DO< .' /


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As regards petitioner 2'/, the defense of immunity from suit will not a#ail despite its being an unincorporated agency ofthe go#ernment, for the only causes of action directed against it are preliminary injunction and mandamus& nder Section9, "ule = of the "ules of Court, preliminary injunction may be directed against a party or a court, agency or a person&.oreo#er, the defense of state immunity from suit does not apply in causes of action which do not see5 to impose acharge or financial liability against the State&

/ence, the rule does not apply where the public official is charged in his official capacity for acts that are unauthori1ed orunlawful and injurious to the rights of others& +either does it apply where the public official is clearly being sued not in hisofficial capacity but in his personal capacity, although the acts complained of may ha#e been committed while he occupieda public position&

In the present case, suing indi#idual petitioners in their personal capacities for damages in connection with their allegedact of [illegally abusing their official positions to ma5e sure that plaintiff $harmawealth would not be awarded the4en1athine contract Kwhich act wasL done in bad faith and with full 5nowledge of the limits and breadth of their powersgi#en by law is permissible, in consonance with the foregoing principles& For an officer who e0ceeds the power conferredon him by law cannot hide behind the plea of so#ereign immunity and must bear the liability personally&

+OREI&N &OV4AER .s' TI:ON&"& +o& %?88;.ay


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Issue:*hether the nited States +a#al 4ase in bidding for said contracts e0ercise go#ernmentalfunctions to be able to in#o5estate immunity&

/eld:The traditional rule of State immunity e0empts a state from being sued in the courts of anotherstate without its consent orwai#er& This rule is a necessary conse!uence of the principles of independence and e!uality of states& /owe#er, the rulesof international law are not petrifiedM theyare constantly de#eloping and e#ol#ing& And because the acti#ities of states ha#emultiplied, it hasbeen necessary to distinguish themZbetween so#ereign and go#ernmental acts and pri#ate,commercialand proprietary acts& The result is that state immunity now e0tends only to so#ereign andgo#ernmental acts&The restricti#eapplication of state immunity is proper only when the proceedings arise out of commercial transactions of the foreignso#ereign, its commercial acti#ities or economic affairs& A statemay be said to ha#e descended to the le#el of an indi#iduaand can thus be deemed to ha#e tacitlygi#en its consent to be sued only when it enters into business contracts& It doesnot apply where thecontract relates the e0ercise of its so#ereign function& In this case, the projects are an integral part ofthe na#al base which is de#oted to the defense of both the S and the $hilippines, indisputably afunction of thego#ernment of the highest orderM they are not utili1ed for nor dedicated to commercialor business purposes&

DALE SANDERS7 AND A'S' #OREA?7 @R .s'


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FACTS:$ri#ate respondent, hereinafter referred to as .ontoya, is an American citi1en who, at thetime material to thiscase, was employed as an identification (I&2& chec5er at the &S& +a#y)0change (+)G at the 3oint nited States .ilitary

Assistance roup (3S.A head!uarters inOue1on City& She is married to one )dgardo /& .ontoya, a Filipino?American ser#iceman employedby the &S& +a#y and stationed in San Francisco, California& $etitioner .a0ine 4radford,hereinafterreferred to as 4radford, is li5ewise an American citi1en who was the acti#ity e0change manager atthe said3S.A /ead!uarters&As a conse!uence of an incident which occurred on 88 3anuary 9; whereby her bodyandbelongings were searched after she had bought some items from the retail store of the +)G3S.A, where she hadpurchasing pri#ileges, and while she was already at the par5ing area,.ontoya filed on .ay 9; a complaint 9 with the"egional Trial Court of her place of residenceZCa#iteZ against 4radford for damages due to the oppressi#e anddiscriminatory acts committed by the latterin e0cess of her authority as store manager of the +)G3S.A&In support ofthe motion, the petitioners claimed that 3S.A, composed of an Army, +a#y and Airroup, had been established undethe $hilippine?nited States .ilitary Assistance Agreemententered into on 89 .arch 9; to implement the nited Statesprogram of rendering military assistance to the $hilippines& Its head!uarters in Oue1on City is considered a temporaryinstallationunder the pro#isions of Article GGI of the .ilitary 4ases Agreement of 9;& Thereunder, it ismutually agreedthat the nited States shall ha#e the rights, power and authority within the baseswhich are necessary for theestablishment, use and operation and defense thereof or appropriate forthe control thereof& The 9;; amendment of the.ilitary 4ases Agreement made it clear that thenited States shall ha#e the use of certain facilities and areas within thebases and shall ha#eeffecti#e command and control o#er such facilities and o#er nited States personnelemployees,e!uipment and material& 3S.A maintains, at its Oue1on City head!uarters, a +a#y )0changereferred toas the +)G?3S.A& Chec5ing of purchases at the +)G is a routine procedureobser#ed at base retail outlets to protectand safeguard merchandise, cash and e!uipment pursuantto paragraphs 8 and (b of +AB")SA%)ACT S4IC I+ST==@@&9& Thus, 4radfordNs order toha#e purchases of all employees chec5ed on 88 3anuary 9; was made in thee0ercise of herduties as .anager of the +)G?3S.A&

ISS?ESwhether or not the trial court committed gra#e abuse of discretion in denying the motion to dismiss based on the followinggrounds:

(a the complaint in Ci#il Case +o& 88? is in effect a suit against the public petitioner, a foreign so#ereign immune fromsuit which has not gi#en consent to such suit and

(b 4radford is immune from suit for acts done by her in the performance of her official functions as manager of the &S+a#y )0change of 3S.A pursuant to the $hilippines?nited States .ilitary Assistance Agreement of 9; and the.ilitary 4ases Agreement of 9;, as amended&


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/)%2: )S& The logical !uestion is whether the foreign state is engaged in the acti#ity in the regular course of business& Ifthe foreign state is not engaged regularly in a business or trade, the particular act or transaction must then be tested byits nature& If the act is in pursuit of a so#ereign acti#ity, or an incident thereof, then it is an actjureimperii , especially when it is not underta5en for gain or profit& %ot=?A was ac!uired by petitioner as a donation fromthe Archdiocese of .anila& The donation was made not for commercial purpose, but for the use of petitioner to constructthereon the official place of residence of the $apal +uncio& The right of a foreign so#ereign to ac!uire property, real orpersonal, in a recei#ing state, necessary for the creation and maintenance of its diplomatic mission, is recogni1ed in the9;H9 Bienna Con#ention on 2iplomatic "elations& In Article


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'n August 98, 9;, pri#ate respondents filed a complaint with the "egional Arbitration4ranch +o& III of the +%"C, SanFernando, $ampanga for illegal dismissal andunderpayment of wages&

Charges were against petitionerTJSgtAldora %ar5inswho was a member of the nitedStates Air Force (SAF assigned too#ersee the dormitories of the Third Aircrafteneration S!uadron (< AS at Clar5 Air 4ase, $ampanga&,%t& ColFran5hauster, and3oselito Cunanan, the new contractor (3AC .aintenance Ser#ices employed for < AS

$etitioner and %t& Col& Fran5hauserfailed to answer the complaint and to appear at thehearings& They, li5ewise, failed tosubmit their position paper, which the%abor Arbiter deemed a wai#er on their part to do so& The case was thereforesubmitted for decisionon the basis of pri#ate respondentsN position paper and supporting documentswhichtherefore on+o#ember 89, 9;, the %abor Arbiter rendered a decision granting all theclaims of pri#ate respondents& /e found both %tCol& Fran5hauser and petitionerguiltyof illegal dismissaland ordered them to reinstate pri#ate respondents with fullbac5wages, or if that is no longer possible, to pay pri#ate respondentsN separation pay&

$etitioner appealed to the +%"C claiming that the %abor Arbiter ne#er ac!uired jurisdiction o#er her person because nosummons or copies of the complaints, bothoriginal and amended, were e#er ser#ed on her& In her Supplemental.emorandum of Appeal, petitioner argued that the attempts to ser#e her with notices of hearing werenot in accordancewith the pro#isions of the"&$& V&S& .ilitary 4ases Agreement of 9;&

/eld: $etitionerNs contention that the !uestioned resolutions arenu!! and .oid because respondent %abor Arbiter did not ac!uire jurisdiction to entertain and decide the case&$etitioneralleges that she ne#er recei#ed nor was ser#ed, any summons or copies of theoriginal and amended complaints, andtherefore the %abor Arbiter had no jurisdictiono#er her person under Article GIB of the "&$&V&S& .ilitary 4ases

Agreement&& & & K+Lo process, ci#il or criminal, shall be ser#ed within any base e0cept with thepermission of thecommanding officer of such baseM but should the commanding officerrefuse to grant such permission he shall forthwithta5e the necessary steps & & & to ser#esuch process, as the case may be, and to pro#ide the attendance of the ser#erof suchprocess before the appropriate court in the $hilippines or procure such ser#er to ma5ethe necessary affida#it ordeclaration to pro#e such ser#ice as the case may re!uire&

"uling:%abor Arbiter has no jurisdiction o#er the case as summonses and other processesissued by $hilippine courtsand administrati#e agencies for nited States Armed Forcespersonnel within any &S& base in the $hilippines could beser#ed therein only with thepermission of the 4ase Commander& If he withholds gi#ing his permission, he shouldinsteaddesignate another person to ser#e the process, and obtain the ser#erNs affida#it for filing with the appropriate court&"espondent %abor Arbiter did not followSaidprocedure& /e instead, addressed the summons to %t& Col& Fran5hauser and not the 4aseCommander&

"espondents do not dispute petitionerNs claim that no summons was e#er issued andser#ed on her& They contend,howe#er, that they sent notices of the hearings to her4?Tas contended notices of hearing are not summonses& Thepro#isions and re#ailing jurisprudence in Ci#il $rocedure may be applied by analogy to +%"C proceedings("e#ised "ulesof the +%"C, "ule I, Sec&


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Article GIB &ENERAL /ROVISIONS

Sec'3 I))unit, fro) Sui

$+" #& IAC

FACTS: In this case $+" train and 4aliwag 4us collided at the railroad crossing resulting damage and ta5e li#es of theirrespecti#e passengers where9 died and =< are injured in the incident& The plantiff?.along (respondent alleged that itwas due to the negligence of $+" for not operating the crossing at its precautionary measures howe#er the trial court

dismissed the case because it has no jurisdiction o#er $+" for being go#ernment instrumentality and the action will beagainst the state&

ISS): *hether $+" is immune from suit&

/)%2: +o, the $+" is not immune from suit as to its predecessor charter the .anila "oad Company with the samecarrier under Act +o&9=9@ as a purely go#ernment owned and controlled corporation duly registered and e0isting #irtue of$residential 2ecree +o& 9, with capacity to sue and be sued, and is li5ewise engaged in transporting passengers andcargoes by trains and buses and that, it operate&

Doctrine+ Implied powers to the effect that the power to sue and be sued is implicit from the faculty to transact privatebusiness the railroad company as a private entity created not to discharge a governmental function but, among otherthings, to operate a transport service which is essentially a business concern, and thus barred from invo%ing immunityfrom suit.

")$4%IC #& +'%ASC'

FACTS: A petition made by +olasco alleging the anomaly between the 2$*/ and 4AC(4ids and Award Committee forawarding a contract 2A)*'' that the contract is putati#e, illegal and prejudicial to the go#ernment and Filipinota0payers& /owe#er 4AC resol#ed the issue that 2A)*'' has lowest bid

ISS): *hether the petition was a suit against the State&

/)%2:es, the petition is against the State because 2$*/ is unincorporated agency that has no separate juridicacapacity of its own and hence enjoys immunity from suit&

Doctrine:The unincorporated agency is so called because it has no separate &uridical personality but is merged in thegeneral machinery of the government.

")$4%IC #& +I.)G

FACTS: A petition was filed by the +I.)G against 4'C (4ureau of Customs as the Customs sei1ed and forfeited theshipment of the +I.)G howe#er CTA (Court of Ta0 Appeals ordered the release of the shipment or to pay thecommercial #alue of the goods with interest&

ISS): *hether the state is immune from suit and damages incurred&

/)%2:+o, because 4'C7s ineptitude and gross negligence in the safe5eeping of respondent7s goods& *e are not li5ewiseunaware of its lac5adaisical attitude in failing to pro#ide a cogent e0planation on the goods7 disappearance, consideringthat they were in its custody and that they were in fact the subject of litigation&

Doctrine The doctrine of state immunity must be fairly observed and the State should not avail itself of this prerogative tota%e undue advantage of parties that may have legitimate claims against it.

$"'F)SSI'+A% BI2)' #& T)S2A

FACTS:A petition was made by $"'BI against T)S2A as its bidder for ma5ing the $BC I27s allegedly T)S2A didn7t pay$"'BI for corresponding amount that they ha#e contracted and the petition as5 for the writ of preliminary attachment forT)S2A7s public funds&


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ISS): *hether the suit is against the state&

/)%2: es, T)S2A is unincorporated instrumentality attached to 2'%) operating under the go#ernment and e!uippedwith e0press and implied powers and state immunities apply to it&

Doctrine: The unincorporated agency is so called because it has no separate &uridical personality but is merged in thegeneral machinery of the government.

&o.ern)ent Officers

.I+IST)"' #& CFI

FACTS:$etitioners sought the payment of just compensation for registered lot alleging that 9;8 the +ational o#ernmentthrough its authori1ed representati#es too5 physical and material possession of its used for road widening and theydemand the payment for its price but $ublic /ighways refused&

ISS): *hether the $ublic /ighway Commissioner is immune for suit&

/)%2: +o, the state immunity cannot be an instrument to prejudice petitioners who was legally owned the lot and ta5ingway property from a pri#ate landowner for public use without through the legal process of e0propriation or negotiated saleit #iolates the doctrine of immunity from suit

Doctrine: The doctrine of governmental immunity from suit cannot serve as an instrument for perpetrating an in&ustice ona citizen.

SOIA #& A%.)2A?%'$)U

FACTS:$etitioners are owner of an apartment in City of .anila and contracted with the &S& go#ernment for the lease ofthe apartment accommodating &S& soldiers allegedly the &S& go#ernment upon after the 3apanese war incurreddamages and unpaid rent from the petitioner

ISS): *hether the &S& go#ernment with its agents can be held liable for the suit and damages&

/)%2: +o, The & S& o#ernment has not gi#en its consent to the filing of this suit which is essentially against her, thoughnot in name& .oreo#er, this is not only a case of a citi1en filing a suit against his own o#ernment without the latterNsconsent but it is of citi1en filing an action against a foreign go#ernment without said go#ernmentNs consent, which rendersmore ob#ious the lac5 of jurisdiction of the courts of his country&

Doctrine: hen the state enters into a private contract the consent to be sued is given, however if the contract is merelyincidental to the performance of a governmental function.

F)ST)3' #& F)"+A+2'

FACTS:The petitioner comes to court contending that the 2irector of the 4ureau of $ublic *or5s too5 possession of her %ere7 as %erea re)ed, is a.ai!a!e >it%in t%e ad)inistrati.e )ac%iner,7 t%is s%ou!d first e resorted to' /etition Dis)issed'

VII A#END#ENT AND REVISION

Section 1 A)end)ent and Re.ision

I#4ON& VS CO#ELEC &R 3232 19;FACTS : This is a petition for declaratory judgment& These are 8 separate but related petitions of running candidates fordelegates to the Constitutional Con#ention assailing the #alidity of "A H9


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ISS?E Does t%e Con$ress %a.e t%e ri$%t to ca!! for a constitutiona! con.ention and set t%e para)eters of suc%con.ention/)%2 : 9& The Congress has authority to call a constitutional con#ention as the constituent assembly& The Congress alsohas the authority to enact implementing details, contained in "es& +os& 8 and &and "&A& H9rote, a clear distinction between amendment andre#ision of the Constitution& The framers intended7 and >rote, that only Congress or a constitutional con#ention maypropose re#isions to the Constitution& The framers intended, and wrote, that a people@s initiative may propose onlyamendments to the onstitution.There can be no dispute that a peopleNs initiati#e can only propose amendments to theConstitution since the Constitution itself limits initiati#es to amendments& There can be no de#iation from theconstitutionally prescribed modes of re.isin$the Constitution& A popular clamor, e#en one bac5ed by H&< millionsignatures, cannot justify a de#iation from the specific modes prescribed in the Constitution itself. )nly ongress or a

constitutional convention may propose revisions to the onstitution

SECTION 2 INITIATIVE

DE+ENSOR SANTIA&O VS CO#ELEC 19

"elated %aw : H


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S)CTI'+ "ATIFICATI'+

&ON:ALES VS CO#ELEC &'R' No' L-2816 169

FACTS: This case is composed of consolidated cases filed separately by $etitioner on1ale1 and $/I%C'+SA assailing

for the declaration of nullity of "A& +o& ;9< and "&4&/& +o& 9 and


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In the morning of September 8, 9;@, the Con#ention appro#ed 'rganic "esolution +o& 9 which is entitled as, A")S'%TI'+ A.)+2I+ S)CTI'+ 9 'F A"TIC%) B 'F T/) C'+STITTI'+ S' AS T' %'*)" T/) B'TI+ A)T' 9& 'n September


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+ACTS: The petitioners !uestioned their separation from the 4ureau of Customs as a result of the reorgani1ationunderta5en by the respondent Commissioner of Customs pursuant to )' 98

ISS?E: *hether or not the reorgani1ation was #alid


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does not fall under the "e#iew CommitteeNs jurisdiction because his separation from the ser#ice was not in conse!uenceof the re?organi1ation of the go#ernment, as pro#ided in the $ro#isional (also 5nown as the Freedom Constitution, butwas for causeM hence, appeal lies with the CSC&

ISS?E *hether or not petitioner7s case falls under the "e#iew CommitteeNs jurisdiction or CSC


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DIt is inconse!uential whether the S treats the BFA only as an e0ecuti#e agreement because, under international law, ane0ecuti#e agreement is as binding as a treaty& They are e!ually binding obligations upon nations&E

Sec 26

@o,a .' /C&&7 220 SCRA 068 (13*

+ACTSThe "epublic of the $hilippines through the $C entered into a Consignment Agreement with Christie7s of +ewor5, selling 8 'ld .asters $aintings and anti!ue sil#erware sei1ed from .alacanang and the .etropolitan .useum of.anila alleged to be part of the ill?gotten wealth of the late $res& .arcos, his relati#es and cronies& $rior to the auctionsale, C'A !uestioned the Consignment Agreement, there was already opposition to the auction sale& +e#ertheless, itproceeded as scheduled and the proceeds of 9ers of /C&&*

+ACTSThe four ( herein consolidated petitions ha#e as their common prayer the nullification of the already appro#edand partially implemented compromise agreement dated +o#ember ers*

A careful reading of Sections 8(a and


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(a The in#estigation and prosecution of the ci#il action for the reco#ery of ill?gotten wealth under "epublic Act +o&9


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9& The authority to issue such orders was made operati#e for not more than eighteen months after ratification of & & &(the ConstitutionM i&e&, not beyond 9 months form February 8, 9;, unless e0tended by the Congress on the nationalinterest, as certified by the $residentM 8& Said orders could issue only upon showing of a prima facie caseM


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The issue s!uarely presented by the petitioners is whether or not the $residential Commission on ood o#ernment($C may #ote the se!uestered shares of stoc5 of San .iguel Corporation (S.C and elect its members of the boardof directors& Sandiganbayan held that the $C can #ote&

SC held that The $C cannot perform acts of strict ownership of se!uestered property& It is a mere conser#ator& It maynot #ote the shares in a corporation and elect the members of the board of directors&& $C has no right to #ote these!uestered shares of petitioners including the se!uestered corporate shares& 'nly their owners, duly authori1edrepresentati#es or pro0ies may #ote the said shares

It is through the right to #ote that the stoc5holder participates in the management of the corporation& The right to #ote,

unli5e the rights to recei#e di#idends and li!uidating distributions, is not a passi#e thing because management oradministration is, under the Corporation Code, #ested in the board of directors, with certain reser#ed powers residing in

the stoc5holders directly& The board of directors and e0ecuti#e committee (or management committee and the corporate

officers selected by the board may ma5e it #ery difficult if not impossible for the $C to carry out its duties as

conser#ator if the 4oard or officers do not cooperate, are hostile or antagonistic to the conser#atorNs objecti#es&

Thus, it is necessary to achie#e a balancing of or reconciliation between the stoc5holderNs right to #ote and the

conser#atorNs statutory duty to reco#er and in the process thereof, to conser#e assets, thought to be ill?gotten wealth, until

final judicial determination of the character of such assets or until a final compromise agreement between the parties is

reached

Documents

Consolidated ART 12 to Last