Article xii compiled case digests and bar questions (complete)


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Article xii compiled case digests and bar questions (complete)

  1. 1. Article XII - DigestsSection 2: EDU of Natural Resources:MAGALONA VS. ERMITA, G.R. 187167, August 16, 2011FACTS :The antecedent facts of this case emerged upon the passing of Republic Act 3046 in 1961. The law’s purpose isto demarcate themaritime baselines of the Philippines as it was deemed to be an archipelago. RA 3046 stoodunchallenged until 2009, when Congress amended it and passed RA9522. This amending law shortened one baseline and determined new base points of the archipelago. Moreso, it has identified the KalayaanIslandGroup and theScarborough Shoal, as "regimes of islands", generating their own maritime zones.The petitioners filed a case assailing the constitutionality of RA 9522. To theiropinion, the law has effectivelyreduced the maritime territory of the country. With this, Article I of the 1987 Constitution will be violated. The petitioners also worriedthat that because of the suggested changes in the maritime baselines will allow for foreign aircrafts and vessels to traverse the Philippine territoryfreely. In effect, it steps on the state’ssovereignty and national security. Meanwhile, the Congress insisted that in no way will the amendments affect anypertinent power of the state. It also deferred to agree that the law impliedly relinquishes the Philippines claims over Sabah. Lastly, they have questioned thenormative force of the notion that all the waters within the rectangular boundaries in the Treaty of Paris. Now, because this treaty still has undeterminedcontroversies, the Congress believes that in the perspective of international law, it did not see any binding obligation to honor it. Thus, this case of prayer for writs ofcertiorari and prohibition is filed before the court, assailing the constitutionality of RA 9522.ISSUE: Is R.A. 9522, the amendatory Philippine Baseline Law, violative of Section 2, paragraph 2, Article XII of the Constitution?RULING: No. The Court dismissed the case. It upheld the constitutionality of the law and made it clear that it has merely demarcated the country’smaritime zones and continental shelves in accordance to UNCLOS III. Secondly, theCourt found that the framework of the regime of islandssuggested by the law is not incongruent with the Philippines’ enjoyment of territorial sovereignty over the areas of Kalayaan Group of Islands and theScarborough. Third, the court reiterated that the claims over Sabah remained even with the adoption of the amendments. Further, the Court importantly stressedthat the baseline laws are mere mechanisms for the UNCLOS III to precisely describe the delimitations. It serves as a notice to the international family of states andit is in no way affecting or producing any effect like enlargement or diminution of territories. With regard to the petitioners’ assertion that RA 9522 hasconverted the internal waters into archipelagicwaters, the Court did not appear to be persuaded. Instead, the Court suggested that the political branches of Government can pass domestic laws that will aid in thecompetent security measures and policies that will regulate innocent passage. Since the Court emphasized innocent passage as a right based on customary law, italso believes that no state can validly invoke sovereignty to deny a right acknowledged by modern states. In the case of archipelagic states such as ours, UNCLOS IIIrequired the imposition of innocent passage as a concession in lieu of their right to claim the entire waters landward baseline. It also made it possible for archipelagicstates to be recognized as a cohesive entity under the UNCLOS III.Dizon Copper vs. Dr. Dizon, GR 183573, July 16, 2012Facts: CelestinoDizon (Celestino) filed with Declarations of Location over 57 mining claims in Zambales. In 1966, herein petitionerDizon Copper-Silver Mines, Inc. was organized. Among its incorporators were Celestino and his son, herein respondent Dr. Luis D.Dizon. Celestino assigned their 57 mining claims to petitioner. Petitioner entered into an Operating Agreement with BenguetCorporation (Benguet). In such agreement, petitioner authorized Benguet to, among others, ―explore, equip, develop and operate‖the 57 mining claims. In 1978, the 57 mining claims became the subject of a mining lease application with the Bureau of Mines.Consequently, the government issued 5 Mining Lease Contracts (MLCs) covering 6 out of the 57 mining claims. Benguet filed anMPSA application with the DENR. Benguet and petitioner terminated their Operating Agreement. In 2004, Benguet assigned MPSA-P-III-16 in favor of the latter. And this was recorded in the name of petitioner. Petitioner sent a letter to the DENR MGB RO-III,requesting the said office to include the 6 mining claims under MLCs in MPSA-P-III-16. The request was approved. Despite thependency of MPSA-P-III-16, petitioner nonetheless filed with the DENR another MPSA application designated as MPSA-P-III-03-05and covers all 57 of its mining claims, inclusive of the 6 under MLCs. On the other hand, respondent filed with the DENR his MPSA-P-III-05-05, an MPSA application covering 281.9544 hectares of mineral location in Zambales. It includes the 6 mining claimsunder MLCs. Subsequently, the DENR MGB RO-III verified that several areas applied for by respondent in MPSA-P-III-05-05overlaps with those in petitioner’s application. The DENR Secretary issued an Order declaring petitioner’s MPSA-P-III-16 andMPSA-P-III-03-05 void ab initio.Issue:What is a mineral production sharing agreement? Is itviolative of sec. 2, par. 2g, Article 12 of the Constitution?Ruling:A Mineral Production Sharing Agreement (MPSA) is one of the mineral agreements innovated by the 1987 Constitution bywhich the State takes on a broader and more dynamic role in the exploration, development and utilization of the country’s mineralresources. By such agreements, the government does not become a mere licensor, concessor or lessor of mining resources—butactually assumes ―full control and supervision‖ in the exploration, development and utilization of the concerned mining claims, inconsonance with Section 2, Article XII of the Constitution.2006 BAR: True or FalseA law creating a state corporation to exploit, develop, and utilize compressed natural gas.SUGGESTED ANSWER: The law is valid as under Article XII, Section 2 of the 1987 Constitution, the exploration, development, and utilization ofnatural resources shall be under the full control and supervision of the State. It is also provided that the State may directly undertakesuch activities or it may enter into co-production, joint venture or sharing agreements with Filipino citizens or corporations orassociations, at least 60% Filipino-owned. Furthermore, the President may enter into agreements with foreign-owned corporations involving technical or financialassistance for large-scale exploration, development, and utilization of minerals, petroleum and other mineral oils, according to termsand conditions provided by law. A state corporation, unlike a private corporation, may be created by special law and placed under thecontrol of the President, subject to such conditions as the creating statute may provide.Section 3. Lands of Public Domain:Secreary of DENR vs. Yap, G.R. No. 167707, OCT. 8, 2008, 568 SCRA 164
  2. 2. FACTS: On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo issued Proclamation No.1064 classifying Boracay Island into four hundred (400) hectares of reserved forest land (protection purposes) and six hundredtwenty-eight and 96/100 (628.96) hectares of agricultural land (alienable and disposable). The Proclamation likewise provided for afifteen-meter buffer zone on each side of the centerline of roads and trails, reserved for right-of-way and which shall form part of thearea reserved for forest land protection purposes.On August 10, 2006, petitioners-claimants Dr. Sacay, WilfredoGelito, and otherlandowners in Boracay filed with this Court an original petition for prohibition, mandamus, and nullification of Proclamation No.1064. They allege that the Proclamation infringed on their "prior vested rights" over portions of Boracay. They have been incontinued possession of their respective lots in Boracay since time immemorial. They have also invested billions of pesos indeveloping their lands and building internationally renowned first class resorts on their lots. Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into agricultural land.Neither being classified as neither mineral nor timber land, the island is deemed agricultural pursuant to the Philippine Bill of 1902and Act No. 926, known as the first Public Land Act.Thus, their possession in the concept of owner for the required period entitledthem to judicial confirmation of imperfect title.Issue: Is PGMA’s Presidential Proclamation No. 1065 classifying Boracay Islands into 400 hectares of reserved forest land and 628hectares of agricultural land (alienable and disposable), valid and constitutional?Ruling: Yes. Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable and opened the same to privateownership. Sections 6 and 7 of CA No. 141 provide that it is only the President, upon the recommendation of the proper departmenthead, who has the authority to classify the lands of the public domain into alienable or disposable, timber and mineral lands. Inissuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the authority granted to her to classify lands ofthe public domain, presumably subject to existing vested rights. Classification of public lands is the exclusive prerogative of theExecutive Department, through the Office of the President. Courts have no authority to do so. Absent such classification, the landremains unclassified until released and rendered open to disposition. Proclamation No. 1064 classifies Boracay into 400 hectares ofreserved forest land and 628.96 hectares of agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on eachside of the center line of roads and trails, which are reserved for right of way and which shall form part of the area reserved for forestland protection purposes.Contrary to private claimants’ argument, there was nothing invalid or irregular, much lessunconstitutional, about the classification of Boracay Island made by the President through Proclamation No. 1064. It was within herauthority to make such classification, subject to existing vested rights.Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law.2004 BAR:EAP is a government corporation created for the purpose of reclaiming lands including foreshore and submerged areas,as well as to develop, improve, acquire, lease and sell any and all kinds of lands. A law was passed transferring title to EAP of landsalready reclaimed in the foreshore and offshore areas of MM Bay, particularly the so-called Liberty Islands, as alienable anddisposable lands of the public domain. Titles were duly issued in EAPs name. Subsequently, EAP entered into a joint ventureagreement (JVA) with ARI, a private foreign corporation, to develop Liberty Islands. Additionally, the JVA provided for thereclamation of 250 hectares of submerged land in the area surrounding Liberty Islands. EAP agreed to sell and transfer to ARI aportion of Liberty Islands and a portion of the area to be reclaimed as the consideration for ARIs role and participation in the jointventure, upon approval by the Office of the President. Is there any constitutional obstacle to the sale and transfer by EAP to ARI ofboth portions as provided for in the JVA?SUGGESTED ANSWER: ARI cannot acquire a portion of Liberty Islands because, although EAP has title to Liberty Islands and thus such lands arealienable and disposable land, they cannot be sold, only leased, to private corporations. The portion of the area to be reclaimedcannot be sold and transferred to ARI because the seabed is inalienable land of the public domain. (Section 3, Article XII of the 1987Constitution; Chavez v. Public Estates Authority, 384 SCRA 152 [2002]).Section 4. Forest Lands and Parks:Apex Mining vs SMGM Corp., G.R. No. 152613,November 20, 2009Facts: Southeast Mindanao Gold Mining Corporation (SMGM) assails the Court’s Decision dated 23 June 2006, which held thatthe assignment of Exploration Permit (EP) 133 in favor of SMGM violated one of the conditions stipulated in the permit, i.e., that thesame shall be for the exclusive use and benefit of Marcopper Mining Corporation (MMC) or its duly authorized agents. In view of this, and considering that under Section 5 of Republic Act No. 7942, otherwise known as the ―Mining Act of1995,‖ mining operations in mineral reservations may be undertaken directly by the State or through a contractor, the Court deemedthe issue of ownership of priority right over the contested Diwalwal Gold Rush Area as having been overtaken by the saidproclamation. Thus, it was held in the Assailed Decision that it is now within the prerogative of the Executive Department toundertake directly the mining operations of the disputed area or to award the operations to private entities including petitionersApex and Balite, subject to applicable laws, rules and regulations, and provided that these private entities are qualified.Issue: Is PP No. 297, declaring the Diwalwal Gold Rush Area as a mineral reservation, valid and constitutional, on the ground thatit lacks the concurrence of Congress as mandated by Section 4, Article XII of the Constitution?Ruling: PP No. 297 is valid and constitutional even without concurrence from Congress. The Court recognized that the questionedproclamation came from a co-equal branch of government, which entitled it to a strong presumption of constitutionality. Thepresumption of its constitutionality stands inasmuch as the parties in the instant cases did not question its validity, much lesspresent any evidence to prove that the same is unconstitutional. Section 4, Article XII of the Constitution provides that the area covered by forest lands and national parks may not beexpanded or reduced, unless pursuant to a law enacted by Congress. SEM does not allege nor present any evidence that Congress hadalready enacted a statute determining with specific limits forest lands and national parks. Considering the absence of such law,Proclamation No. 297 could not have violated Section 4, Article XII of the 1987 Constitution. In addition, there is nothing in the constitutional provision that prohibits the President from declaring a forest land as anenvironmentally critical area and from regulating the mining operations therein by declaring it as a mineral reservation in order toprevent the further degradation of the forest environment and to resolve the health and peace and order problems that beset thearea. **you can opt not to write the 3rd paragraph in the index card**
  3. 3. Section 7. Private Land Ownership:Matthews vs. Taylor, G.R. 164584, June 22, 2009Facts: On June 20, 1988. Respondent Benjamin Taylor, a British, married a Filipina named Joselyn Taylor. Eventually, theybought a lot. The transaction was said to be financed by Benjamin. Joselyn and Benjamin constructed improvements and made aninn to the said lot. Permits and licenses were secured for the establishment. Three years passed and their relationship turned sourand Joselyn ran away with Philip Matthews. On July 20, 1992, Joselyn as lessor and petitioner Philip Matthews as lessee, entered into an Agreement of Lease (Agreement)involving the Boracay property for a period of 25 years, with an annual rental of P12,000.00. The agreement was signed by theparties and executed before a Notary Public. Petitioner thereafter took possession of the property and renamed the resort as MusicGarden Resort.Claiming that the Agreement was null and void since it was entered into by Joselyn without his (Benjamin’s) consent, Benjamininstituted an action for Declaration of Nullity of Agreement of Lease with Damages against Joselyn and the petitioner.Issue: Can an alien husband nullify a lease contract entered into by his Filipina wife over a land bought during their marriage?Ruling: The rule is clear and inflexible: aliens are absolutely not allowed to acquire public or private lands in the Philippines, saveonly in constitutionally recognized exceptions. There is no rule more settled than this constitutional prohibition, as more and morealiens attempt to circumvent the provision by trying to own lands through another. Benjamin has no right to nullify the Agreement of Lease between Joselyn and petitioner. Benjamin, being an alien, isabsolutely prohibited from acquiring private and public lands in the Philippines. Considering that Joselyn appeared to be thedesignated ―vendee‖ in the Deed of Sale of said property, she acquired sole ownership thereto. This is true even if we sustainBenjamin’s claim that he provided the funds for such acquisition. By entering into such contract knowing that it was illegal, noimplied trust was created in his favor; no reimbursement for his expenses can be allowed; and no declaration can be made that thesubject property was part of the conjugal/community property of the spouses. In any event, he had and has no capacity orpersonality to question the subsequent lease of the Boracay property by his wife on the theory that in so doing, he was merelyexercising the prerogative of a husband in respect of conjugal property.1998 BAR:Express your agreement or disagreement with any of the following statements. Begin your answer with the statement: "IAGREE" or "DISAGREE" as the case may be.1. Anyone, whether Individual, corporation or association, qualified to acquire private lands is also qualified to acquire public landsin the Philippines.2. A religious corporation is qualified to have lands in the Philippines on which it may build Its church and make otherimprovements provided these are actually, directly and exclusively used for religious purposes.3. A religious corporation cannot lease private lands In the Philippines.4. A religious corporation can acquire private lands in the Philippines provided all its members are citizens of the Philippines.5. A foreign corporation can only lease private lands in the Philippines.SUGGESTED ANSWER:1.) I disagree. Under Section 7, Article XII of the Constitution, a corporation or association which is sixty percent owned by Filipinocitizens can acquire private land, because it can lease public land and can therefore hold public land. However, it cannot acquirepublic land. Under Section 3, Article XII of the Constitution, private corporations and associations can only lease and cannot acquirepublic land. Under Section 8, Article XII of the Constitution, a natural-born Filipino citizen who lost his Philippine citizenship mayacquire private land only and cannot acquire public land.2.) I disagree. The mere fact that a corporation is religious does not entitle it to own public land. As held In Register of Deeds vs.UngSiu Si Temple, 97 Phil. 58, 61, land tenure is not indispensable to the free exercise and enjoyment of religious profession ofworship. The religious corporation can own private land only if it is at least sixty per cent owned by Filipino citizens.3.) I disagree. Under Section 1 of Presidential Decree No. 471, corporations and associations owned by aliens are allowed to leaseprivate lands up to twenty-five years, renewable for another period of twenty-five years upon agreement of the lessor and the lessee.Hence, even if the religious corporation is owned by aliens, it can lease private lands.4.) I disagree. For a corporation to qualify to acquire private lands in the Philippines, under Section 7, Article Xn of the Constitutionin relation to Section 2, Article XII of the Constitution, only sixty per cent (60%) of the corporation is required to be owned byFilipino citizens for it to qualify to acquire private lands.5.) I agree. A foreign corporation can lease private lands only and cannot lease public land. Under Section 2, Article XII of theConstitution, the exploration, development and utilization of public lands may be undertaken through co-production. Joint ventureor production-sharing agreements only with Filipino citizen or corporations or associations which are at least sixty per cent ownedby Filipino citizen.2009 BAR: True or FalseAliens are absolutely prohibited from owning private lands in the Philippines.SUGGESTED ANSWER:False, Aliens may own private lands in the Philippines if they acquire the property through hereditary succession. Also, natural-bornFilipino citizen who lost their Philippine citizenship may be transferees of private lands, subject to limitations provided by law.2011 BAR: Althea, a Filipino citizen, bought a lot in the Philippines in 1975. Herpredecessors-in-interest have been in open, continuous, exclusive and notoriouspossession of the lot since 1940, in the concept of owner. In 1988, Altheabecame a naturalized Australian citizen. Is she qualified to apply for registrationof the lot in her name? The answer is CA. Yes, provided she acquires back her Filipino citizenship.B. No, except when it can be proved that Australia has a counterpart domestic
  4. 4. law that also favors former Filipino citizens residing there.C. Yes, the lot is already private in character and as a former natural-bornFilipino, she can buy the lot and apply for its registration in her name.D. No, foreigners are not allowed to own lands in the Philippines.Section 8. Property Rights of former natural born Filipinos:2000 BAR:State whether or not the following law is constitutional. Explain briefly. No XVIII. – a) Andy Lim, an ethnic Chinese, became a naturalized Filipino in 1935. But later he lost his Filipino citizenshipwhen he became a citizen of Canada in 1971. Wanting the best of both worlds, he bought, in 1987, a residential lot in Forbes Park anda commercial lot in Binondo. Are these sales valid? Why? (3%)Answer: No, the sales are not valid. Under Section 8, Article XII of the Constitution, only a natural-born citizen of the Philippineswho lost his Philippine citizenship may acquire private land. Since Andy Lim was a former naturalized Filipino citizen, he is notqualified to acquire private lands.___________________________________________________________________Section 10.Filipinized Areas of Investments:Espina vs. Bautista, G.R. 143855, Sept. 21, 2010 On March 7, 2000 President Joseph E. Estrada signed into law Republic Act (R.A.) 8762, also known as the Retail TradeLiberalization Act of 2000. It expressly repealed R.A. 1180, which absolutely prohibited foreign nationals from engaging in the retailtrade business. R.A. 8762 also allows natural-born Filipino citizens, who had lost their citizenship and now reside in the Philippines,to engage in the retail trade business with the same rights as Filipino citizens. On October 11, 2000 petitioners filed the presentpetition, assailing the constitutionality of R.A. 8762 on the grounds that the implementation of R.A. 8762 would lead to alien controlof the retail trade, which taken together with alien dominance of other areas of business, would result in the loss of effective Filipinocontrol of the economy, foreign retailers like Walmart and K-Mart would crush Filipino retailers and sari-sari store vendors, destroyself-employment, and bring about more unemployment.Issue: Does R.A. 8762 [Retail Trade Liberalization Act of 2000], violate the constitutional mandate in Filipinization of areas ofinvestments?Ruling: No, there is no showing that the law has contravened any constitutional mandate. The Court is not convinced that theimplementation of R.A. 8762 would eventually lead to alien control of the retail trade business. Petitioners have not mustered anyconcrete and strong argument to support its thesis. The law itself has provided strict safeguards on foreign participation in thatbusiness. The the Court explained in Tañada v. Angara, the provisions of Article II of the 1987 Constitution, the declarations ofprinciples and state policies, are not self-executing. Legislative failure to pursue such policies cannot give rise to a cause of action inthe courts. While Section 19, Article II of the 1987 Constitution requires the development of a self-reliant and independent nationaleconomy effectively controlled by Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the economicenvironment. The objective is simply to prohibit foreign powers or interests from maneuvering our economic policies and ensurethat Filipinos are given preference in all areas of development. More importantly, Section 10, Article XII of the 1987 Constitutiongives Congress the discretion to reserve to Filipinos certain areas of investments upon the recommendation of the NEDA and whenthe national interest requires. Thus, Congress can determine what policy to pass and when to pass it depending on the economicexigencies. It can enact laws allowing the entry of foreigners into certain industries not reserved by the Constitution to Filipinocitizens. In this case, Congress has decided to open certain areas of the retail trade business to foreign investments instead ofreserving them exclusively to Filipino citizens. The NEDA has not opposed such policy.2006 BAR:State whether or not the following laws are constitutional. Explain briefly.A law prohibiting Chinese citizens from engaging in retail trade. (2%)SUGGESTED ANSWER: The law is invalid as it singles out and deprives Chinese citizens from engaging in retail trade. In Ichong v. Hernandez, G.R.No. L-7995, May 31,1957, the court held that the Treaty of Amity between the Republic of the Philippines and the Republic of Chinaguarantees equality of treatment to the Chinese nationals ―upon the same terms as the nationals of any other country.‖ Thus, thecourt ruled therein that the nationals of China are not discriminated against because nationals of all other countries, except those ofthe United States, who are granted special rights by the Constitution, are all prohibited from engaging in the retail trade. In the caseat bar, the law discriminates only against Chinese citizens and thus violates the equal protection clause.___________________________________________________________________
  5. 5. Section 11. Public Utilities:Francisco vs. TRB, G.R. No. 166910, Oct. 19, 2010Facts: In 1977, Pres. Marcos issued P.D. 1112, authorizing the establishment of toll facilities on public improvements. Itacknowledged the huge financial requirements and the need to tap into the resources of the private sector to implement the program.In order to attract the private sector, P.D. 1112 created the Toll Regulatory Board (TRB) and allowed the collection of toll fees for theuse of certain public improvements, allowing a reasonable rate of ROI. P.D.1113 was also issued, granting to PNCC a franchise toconstruct toll facilities with a right to collect fees as the TRB may fix. TRB and PNCC signed an agreement for the operation of theexpressway. In 1983, PNCC was granted a franchise over MMEX. As stated in the previous P.D.s. PNCC may sell its franchise uponthe President’s approval, then came the 1987 Constitution with its franchise provision. Petitioners assail the constitutionality ofSections 3 (a) and (d) of P.D. 1112 in relation to Section 8 (b) of P.D. 1894 insofar as they vested the TRB, on one hand,toll operationawarding power while, on the other hand, granting it also the power to issue, modify and promulgate toll rate charges. The TRB, sopetitioners bemoan, cannot be an awarding party of a TOA and, at the same time, be the regulator of the toll way industry and anadjudicator of rate exactions disputes.Issue: Is the authority to grant public utility franchise an exclusive legislative power? Can it be delegated? Is a congressionalfranchise necessary before a public utility may operate?Ruling: A franchise is basically a legislative grant of a special privilege to a person, which includes not only authorizations issuingdirectly from Congress in the form of statute, but also those granted by administrative agencies to which the power to grant franchisehas been delegated by Congress. The power to authorize and control a public utility is admittedly a prerogative that stems from theLegislature. Any suggestion, however, that only Congress has the authority to grant a public utility franchise is less than accurate. Asstressed in Albano v. Reyes, there is nothing in the Constitution remotely indicating the necessity of a congressional franchise beforeeach and every public utility may operate. That the Constitution provides that the issuance of a franchise, certificate or other form ofauthorization for the operation of a public utility shall be subject to amendment, alteration or repeal by Congress does notnecessarily imply that only Congress has the power to grant such authorization. In such a case, therefore, a special franchise directlyemanating from Congress is not necessary if the law already specifically authorizes an administrative body to grant a franchise or toaward a contract. Under the 1987 Constitution, Congress has an explicit authority to grant a public utility franchise. However, it mayvalidly delegate its legislative authority, under the power of subordinate legislation, to issue franchises of certain public utilities tosome administrative agencies.Gamboa vs. Teves, G.R. No. 176579, June 28, 2011 This is a petition to nullify the sale of shares of stock of Philippine Telecommunications Investment Corporation (PTIC) bythe government of the Republic of the Philippines, acting through the Inter-Agency Privatization Council (IPC), to Metro PacificAssets Holdings, Inc. (MPAH), an affiliate of First Pacific Company Limited (First Pacific), a Hong Kong-based investmentmanagement and holding company and a shareholder of the Philippine Long Distance Telephone Company (PLDT). The petitioner questioned the sale on the ground that it also involved an indirect sale of 12 million shares (or about 6.3percent of the outstanding common shares) of PLDT owned by PTIC to First Pacific. With the this sale, First Pacific’s commonshareholdings in PLDT increased from 30.7 percent to 37 percent, thereby increasing the total common shareholdings of foreignersin PLDT to about 81.47%. This, according to the petitioner, violates Section 11, Article XII of the 1987 Philippine Constitution whichlimits foreign ownership of the capital of a public utility to not more than 40%.Issue: Is section 11, Article XII, enabling or self-executing? Does the term ―capital‖ in Section 11, Article refer to the total commonshares only or to the total outstanding capital stock (combined total of common and non-voting preferred shares) of PLDT, a publicutility?Ruling:a.) Self-executing. Section 11, Article XII of the Constitution, like other provisions of the Constitution expressly reserving toFilipinos specific areas of investment, such as the development of natural resources and ownership of land, educational institutionsand advertising business, is self-executing. There is no need for legislation to implement these self-executing provisions of theConstitution. The rationale why these constitutional provisions are self-executing was explained in Manila Prince Hotel v. GSIS. To treat Section 11, Article XII of the Constitution as not self-executing would mean that since the 1935 Constitution, or overthe last 75 years, not one of the constitutional provisions expressly reserving specific areas of investments to corporations, at least 60percent of the ―capital‖ of which is owned by Filipinos, was enforceable. In short, the framers of the 1935, 1973 and 1987Constitutions miserably failed to effectively reserve to Filipinos specific areas of investment, like the operation by corporations ofpublic utilities, the exploitation by corporations of mineral resources, the ownership by corporations of real estate, and theownership of educational institutions. All the legislatures that convened since 1935 also miserably failed to enact legislations toimplement these vital constitutional provisions that determine who will effectively control the national economy, Filipinos orforeigners. This Court cannot allow such an absurd interpretation of the Constitutionb.) It refers to the total Common shares. The petition and rule that the term ―capital‖ in Section 11, Article XII of the 1987Constitution refers only to shares of stock entitled to vote in the election of directors, and thus in the present case only to commonshares, and not to the total outstanding capital stock (common and non-voting preferred shares). Respondent Chairperson of theSecurities and Exchange Commission is directed to apply this definition of the term ―capital‖ in determining the extent of allowableforeign ownership in respondent Philippine Long Distance Telephone Company, and if there is a violation of Section 11, Article XII ofthe Constitution, to impose the appropriate sanctions under the law. **Indisputably, construing the term ―capital‖ in Section 11,Article XII of the Constitution to include both voting and non-voting shares will result in the abject surrender of ourtelecommunications industry to foreigners, amounting to a clear abdication of the State’s constitutional duty to limit control ofpublic utilities to Filipino citizens. Such an interpretation certainly runs counter to the constitutional provision reserving certainareas of investment to Filipino citizens, such as the exploitation of natural resources as well as the ownership of land, educationalinstitutions and advertising businesses. The Court should never open to foreign control what the Constitution has expressly reservedto Filipinos for that would be a betrayal of the Constitution and of the national interest. The Court must perform its solemn duty todefend and uphold the intent and letter of the Constitution to ensure, in the words of the Constitution, ―a self-reliant andindependent national economy effectively controlled by Filipinos.‖**
  6. 6. Section 16. GOCC and Economic Viability:BSP vs. COA, G.R. No. 177131, June 7, 2011Facts: The COA issued a resolution in 1999 defining its policy with respect to the audit of the Boy Scouts of the Philippine, whichwas created as a public corporation and that in BSP vs.NLRC, the SC ruled that the BSP, as constituted under its charter, was aGOCC within the meaning of Art. IX (B) (2) (1) of the Constitution, and that the BSP is regarded as a government instrumentalityunder the Administrative Code. For the purposes of audit supervision, the BSP shall be classified among the governmentcorporations to be audited by employing the team audit approach. The BSP sought reconsideration of the COA Resolution in a lettersigned by then BSP National President Jejomar C. Binay, saying that it is not subject to the COA’s jurisdiction.Issues: a.) Is CA. no. 111, as amended by R.A. 7278 constitutional and consistent with section 16, Article XII of the constitution? b.) Does the test of economic viability apply to public corporations dealing with governmental functions?Ruling: a.) Yes. The BSP (CA no. 111, as amended by RA 7278) is a public corporation or a government agency or instrumentalitywith juridical personality, which does not fall within the constitutional prohibition in Article XII, Section 16, notwithstanding theamendments to its charter. Not all corporations, which are not government owned or controlled, are ipso facto to be consideredprivate corporations as there exist another distinct class of corporations or chartered institutions which are otherwise known as"public corporations." These corporations are treated by law as agencies or instrumentalities of the government which are not subjectto the tests of ownership or control and economic viability but to different criteria relating to their public purposes/interests orconstitutional policies and objectives and their administrative relationship to the government or any of its Departments or Offices. b.) No. Section 16, Article XII deals with ―the formation, organization, or regulation of privatecorporations,‖ which should be done through a general law enacted by Congress, provides for an exception, that is: if thecorporation is government owned or controlled; its creation is in the interest of the common good; and it meets the test of economicviability. The rationale behind Article XII, Section 16 of the 1987 Constitution was explained in Feliciano v. Commission on Audit,Art. XII, Sec. 16 bans the creation of private corporations by special law, however said constitutional provision should not beconstrued so as to prohibit the creation of public corporations or a corporate agency or instrumentality of the government intendedto serve a public interest or purpose. This should not be measured on the basis of economic viability, but according to the publicinterest or purpose it serves as envisioned by par. 2, Art. 44 of the Civil Code, and of the Administrative Code.Republic vs. City of Paranaque, G.R. no. 191109, July 18, 2012 This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, on pure questions of law,assailing the January 8, 2010 Order of the Regional Trial Court, Branch 195, Parafiaque City (RTC), which ruled that petitionerPhilippine Reclamation Authority (PRA) is a government-owned and controlled corporation (GOCC), a taxable entity, and, therefore,. not exempt from payment of real property taxes. The pertinent portion of the said order reads: In view of the finding of this courtthat petitioner is not exempt from payment of real property taxes, respondent Parañaque City Treasurer Liberato M. Carabeo did notact xxx without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or in excess of jurisdiction in issuingthe warrants of levy on the subject properties. On August 3, 2009, after an exchange of several pleadings and the failure of both parties to arrive at a compromiseagreement, PRA filed a Motion for Leave to File and Admit Attached Supplemental Petition which sought to declare as null and voidthe assessment for real property taxes, the levy based on the said assessment, the public auction sale conducted on April 7, 2003, andthe Certificates of Sale issued pursuant to the auction sale. On January 8, 2010, the RTC rendered its decision dismissing PRA’spetition. In ruling that PRA was not exempt from payment of real property taxes, the RTC reasoned out that it was a GOCC underSection 3 of P.D. No. 1084. It was organized as a stock corporation because it had an authorized capital stock divided into no parvalue shares. Not in conformity, PRA filed this petition for certiorari assailing the January 8, 2010 RTC Order based on the followingGROUNDSIssue: Is the Philippine Reclamation Authority a government-owned and controlled corporation (GOCC) under Sec. 16, Article XII?Ruling: A GOCC must have been organized as a stock or non-stock corporation. The Philippine Reclamation Authority is neither. Itis not a GOCC.When the law vests in a government instrumentality corporate powers, the instrumentality does not necessarily become acorporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a governmentinstrumentality exercising not only governmental but also corporate powers. In the case at bench, PRA is not a GOCC because it isneither a stock nor a non-stock corporation. Furthermore, there is another reason why the PRA cannot be classified as a GOCC.Section 16, Article XII of the 1987 Constitution provides as follows: ―Section 16. The Congress shall not, except by general law,provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may becreated or established by special charters in the interest of the common good and subject to the test of economic viability.‖**The fundamental provision above authorizes Congress to create GOCCs through special charters on two conditions: 1) the GOCCmust be established for the common good; and 2) the GOCC must meet the test of economic viability. In this case, PRA may havepassed the first condition of common good but failed the second one – economic viability. Undoubtedly, the purpose behind thecreation of PRA was not for economic or commercial activities. Neither was it created to compete in the market place consideringthat there were no other competing reclamation companies being operated by the private sector. As mentioned earlier, PRA wascreated essentially to perform a public service considering that it was primarily responsible for a coordinated, economical andefficient reclamation, administration and operation of lands belonging to the government with the object of maximizing theirutilization and hastening their development consistent with the public interest.**Section 17. Temporary Take – Over:2011 BAR:The President issued an executive order directing all department heads to secure his consent before agreeing to appear duringquestion hour before Congress on matters pertaining to their departments. Is the executive order unconstitutional for suppressinginformation of public concern? The answer is D.
  7. 7. (A) No, because those department heads are his alter egos and he is but exercising his right against self-incrimination. (B) Yes, the President cannot control the initiative of the department heads to conform with the oversight function of Congress. (C) Yes, the President cannot withhold consent to the initiative of his department heads as it will violate the principle of check and balance. (D) No, the President has the power to withhold consent to appearance by his department heads during question hour.___________________________________________________________________