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SUPREME COURT
Manila
EN BANC
G.R. No. 179271 April 21, 2009
BARANGAY ASSOCIATION FOR NATIONAL ADVANCEMENT AND TRANSPARENCY (BANAT), Petitioner,
vs.
COMMISSION ON ELECTIONS (sitting as the National Board of Canvassers), Respondent.
ARTS BUSINESS AND SCIENCE PROFESSIONALS, Intervenor.
AANGAT TAYO, Intervenor.
COALITION OF ASSOCIATIONS OF SENIOR CITIZENS IN THE PHILIPPINES, INC. (SENIOR CITIZENS),Intervenor.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 179295 April 21, 2009
BAYAN MUNA, ADVOCACY FOR TEACHER EMPOWERMENT THROUGH ACTION, COOPERATION AND
HARMONY TOWARDS EDUCATIONAL REFORMS, INC., and ABONO, Petitioners,
vs.
COMMISSION ON ELECTIONS, Respondent.
D E C I S I O N
CARPIO, J.:
The Case
Petitioner in G.R. No. 179271 — Barangay Association for National Advancement and Transparency (BANAT) — in a
petition for certiorari and mandamus,1 assails the Resolution2 promulgated on 3 August 2007 by the Commission on
Elections (COMELEC) in NBC No. 07-041 (PL). The COMELEC’s resolution in NBC No. 07-041 (PL) approved the
recommendation of Atty. Alioden D. Dalaig, Head of the National Board of Canvassers (NBC) Legal Group, to deny the
petition of BANAT for being moot. BANAT filed before the COMELEC En Banc, acting as NBC, a Petition to Proclaim the
Full Number of Party-List Representatives Provided by the Constitution.
The following are intervenors in G.R. No. 179271: Arts Business and Science Professionals (ABS), AangatTayo (AT), and
Coalition of Associations of Senior Citizens in the Philippines, Inc. (Senior Citizens).
Petitioners in G.R. No. 179295 — Bayan Muna, Abono, and Advocacy for Teacher Empowerment Through Action,
Cooperation and Harmony Towards Educational Reforms (A Teacher) — in a petition for certiorari with mandamus and
prohibition,3 assails NBC Resolution No. 07-604 promulgated on 9 July 2007. NBC No. 07-60 made a partial proclamation
of parties, organizations and coalitions that obtained at least two percent of the total votes cast under the Party-List
System. The COMELEC announced that, upon completion of the canvass of the party-list results, it would determine the
total number of seats of each winning party, organization, or coalition in accordance with Veterans Federation Party v.
COMELEC5 (Veterans).
Estrella DL Santos, in her capacity as President and First Nominee of the Veterans Freedom Party, filed a motion to
intervene in both G.R. Nos. 179271 and 179295.
The Facts

The 14 May 2007 elections included the elections for the party-list representatives. The COMELEC counted 15,950,900
votes cast for 93 parties under the Party-List System.6
On 27 June 2002, BANAT filed a Petition to Proclaim the Full Number of Party-List Representatives Provided by the
Constitution, docketed as NBC No. 07-041 (PL) before the NBC. BANAT filed its petition because "[t]he Chairman and the
Members of the [COMELEC] have recently been quoted in the national papers that the [COMELEC] is duty bound to and
shall implement the Veterans ruling, that is, would apply the Panganiban formula in allocating party-list seats."7 There
were no intervenors in BANAT’s petition before the NBC. BANAT filed a memorandum on 19 July 2007.
On 9 July 2007, the COMELEC, sitting as the NBC, promulgated NBC Resolution No. 07-60. NBC Resolution No. 07-60
proclaimed thirteen (13) parties as winners in the party-list elections, namely: BuhayHayaanYumabong (BUHAY), Bayan
Muna, Citizens’ Battle Against Corruption (CIBAC), Gabriela’s Women Party (Gabriela), Association of Philippine Electric
Cooperatives (APEC), A Teacher, Akbayan! Citizen’s Action Party (AKBAYAN), Alagad, Luzon Farmers Party (BUTIL),
Cooperative-Natco Network Party (COOP-NATCCO), AnakPawis, Alliance of Rural Concerns (ARC), and Abono. We
quote NBC Resolution No. 07-60 in its entirety below:
WHEREAS, the Commission on Elections sitting en banc as National Board of Canvassers, thru its Sub-Committee for
Party-List, as of 03 July 2007, had officially canvassed, in open and public proceedings, a total of fifteen million two
hundred eighty three thousand six hundred fifty-nine (15,283,659) votes under the Party-List System of
Representation, in connection with the National and Local Elections conducted last 14 May 2007;
WHEREAS, the study conducted by the Legal and Tabulation Groups of the National Board of Canvassers reveals that
the projected/maximum total party-list votes cannot go any higher than sixteen million seven hundred twenty three
thousand one hundred twenty-one (16,723,121) votes given the following statistical data:
Projected/Maximum Party-List Votes for May 2007 Elections
i. Total party-list votes already canvassed/tabulated 15,283,659
ii. Total party-list votes remaining uncanvassed/
untabulated (i.e. canvass deferred)
1,337,032
iii. Maximum party-list votes (based on 100% outcome)
from areas not yet submitted for canvass (Bogo, Cebu;
Bais City; Pantar, Lanao del Norte; and Pagalungan,
Maguindanao)
102,430
Maximum Total Party-List Votes 16,723,121
WHEREAS, Section 11 of Republic Act No. 7941 (Party-List System Act) provides in part:
The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for the party -list
system shall be entitled to one seat each: provided, that those garnering more than two percent (2%) of the votes shall be
entitled to additional seats in proportion to their total number of votes: provided, finally, that each party, organization, or
coalition shall be entitled to not more than three (3) seats.
WHEREAS, for the 2007 Elections, based on the above projected total of party-list votes, the presumptive two percent
(2%) threshold can be pegged at three hundred thirty four thousand four hundred sixty-two (334,462) votes;
WHEREAS, the Supreme Court, in Citizen’s Battle Against Corruption (CIBAC) versus COMELEC, reiterated its ruling
in Veterans Federation Party versus COMELEC adopting a formula for the additional seats of each party, organization or
coalition receving more than the required two percent (2%) votes, stating that the same shall be determined only after all
party-list ballots have been completely canvassed;
WHEREAS, the parties, organizations, and coalitions that have thus far garnered at least three hundred thirty four
thousand four hundred sixty-two (334,462) votes are as follows:
RANK PARTY/ORGANIZATION/
COALITION
VOTES
RECEIVED
1 BUHAY 1,163,218
2 BAYAN MUNA 972,730
3 CIBAC 760,260
4 GABRIELA 610,451
5 APEC 538,971
6 A TEACHER 476,036

7 AKBAYAN 470,872
8 ALAGAD 423,076
9 BUTIL 405,052
10 COOP-NATCO 390,029
11 BATAS 386,361
12 ANAK PAWIS 376,036
13 ARC 338,194
14 ABONO 337,046
WHEREAS, except for BagongAlyansangTagapagtaguyodngAdhikaingSambayanan (BATAS), against which anURGENT
PETITION FOR CANCELLATION/REMOVAL OF REGISTRATION AND DISQUALIFICATION OF PARTY-LIST
NOMINEE (With Prayer for the Issuance of Restraining Order) has been filed before the Commission, docketed as SPC
No. 07-250, all the parties, organizations and coalitions included in the aforementioned list are therefore entitled to at least
one seat under the party-list system of representation in the meantime.
NOW, THEREFORE, by virtue of the powers vested in it by the Constitution, the Omnibus Election Code, Executive Order
No. 144, Republic Act Nos. 6646, 7166, 7941, and other election laws, the Commission on Elections, sittingenbanc as the
National Board of Canvassers, hereby RESOLVES to PARTIALLY PROCLAIM, subject to certain conditions set forth
below, the following parties, organizations and coalitions participating under the Party-List System:
1 BuhayHayaanYumabong BUHAY
2 Bayan Muna BAYAN MUNA
3 Citizens Battle Against Corruption CIBAC
4 Gabriela Women’s Party GABRIELA
5 Association of Philippine Electric Cooperatives APEC
6 Advocacy for Teacher Empowerment Through
Action, Cooperation and Harmony Towards
Educational Reforms, Inc.
A TEACHER
7 Akbayan! Citizen’s Action Party AKBAYAN
8 Alagad ALAGAD
9 Luzon Farmers Party BUTIL
10 Cooperative-Natco Network Party COOP-NATCCO
11 AnakPawis ANAKPAWIS
12 Alliance of Rural Concerns ARC
13 Abono ABONO
This is without prejudice to the proclamation of other parties, organizations, or coalitions which may later on be
established to have obtained at least two percent (2%) of the total actual votes cast under the Party-List System.
The total number of seats of each winning party, organization or coalition shall be determined pursuant toVeterans
Federation Party versus COMELEC formula upon completion of the canvass of the party-list results.
The proclamation of BagongAlyansangTagapagtaguyodngAdhikaingSambayanan (BATAS) is hereby deferred until final
resolution of SPC No. 07-250, in order not to render the proceedings therein moot and academic.
Finally, all proclamation of the nominees of concerned parties, organizations and coalitions with pending disputes shall
likewise be held in abeyance until final resolution of their respective cases.
Let the Clerk of the Commission implement this Resolution, furnishing a copy thereof to the Speaker of the House of
Representatives of the Philippines.
SO ORDERED.8 (Emphasis in the original)
Pursuant to NBC Resolution No. 07-60, the COMELEC, acting as NBC, promulgated NBC Resolution No. 07-72, which
declared the additional seats allocated to the appropriate parties. We quote from the COMELEC’s interpretation of
the Veterans formula as found in NBC Resolution No. 07-72:

WHEREAS, on July 9, 2007, the Commission on Elections sitting en banc as the National Board of Canvassers
proclaimed thirteen (13) qualified parties, organization[s] and coalitions based on the presumptive two percent (2%)
threshold of 334,462 votes from the projected maximum total number of party-list votes of 16,723,121, and were thus
given one (1) guaranteed party-list seat each;
WHEREAS, per Report of the Tabulation Group and Supervisory Committee of the National Board of Canvassers, the
projected maximum total party-list votes, as of July 11, 2007, based on the votes actually canvassed, votes canvassed but
not included in Report No. 29, votes received but uncanvassed, and maximum votes expected for Pantar, Lanao del
Norte, is 16,261,369; and that the projected maximum total votes for the thirteen (13) qualified parties, organizations and
coalition[s] are as follows:
Party-List Projected total number of votes
1 BUHAY 1,178,747
2 BAYAN MUNA 977,476
3 CIBAC 755,964
4 GABRIELA 621,718
5 APEC 622,489
6 A TEACHER 492,369
7 AKBAYAN 462,674
8 ALAGAD 423,190
9 BUTIL 409,298
10 COOP-NATCO 412,920
11 ANAKPAWIS 370,165
12 ARC 375,846
13 ABONO 340,151
WHEREAS, based on the above Report, BuhayHayaanYumabong (Buhay) obtained the highest number of votes among
the thirteen (13) qualified parties, organizations and coalitions, making it the "first party" in accordance withVeterans
Federation Party versus COMELEC, reiterated in Citizen’s Battle Against Corruption (CIBAC) versus COMELEC;
WHEREAS, qualified parties, organizations and coalitions participating under the party-list system of representation that
have obtained one guaranteed (1) seat may be entitled to an additional seat or seats based on the formula prescribed by
the Supreme Court in Veterans;
WHEREAS, in determining the additional seats for the "first party", the correct formula as expressed in Veterans, is:
Number of votes of first party
Total votes for party-list system
=
Proportion of votes of first
party relative to total votes for
party-list system
wherein the proportion of votes received by the first party (without rounding off) shall entitle it to additional seats:
Proportion of votes received
by the first party
Additional seats
Equal to or at least 6% Two (2) additional seats
Equal to or greater than 4% but less than 6% One (1) additional seat
Less than 4% No additional seat
WHEREAS, applying the above formula, Buhay obtained the following percentage:
1,178,747
16,261,369
= 0.07248 or 7.2%
which entitles it to two (2) additional seats.

WHEREAS, in determining the additional seats for the other qualified parties, organizations and coalitions, the correct
formula as expressed in Veterans and reiterated in CIBAC is, as follows:
Additional seats for
a concerned party
=
No. of votes of
concerned party
No. of votes of
first party
x
No. of additional
seats allocated
to first party
WHEREAS, applying the above formula, the results are as follows:
Party List Percentage Additional Seat
BAYAN MUNA 1.65 1
CIBAC 1.28 1
GABRIELA 1.05 1
APEC 1.05 1
A TEACHER 0.83 0
AKBAYAN 0.78 0
ALAGAD 0.71 0
BUTIL 0.69 0
COOP-NATCO 0.69 0
ANAKPAWIS 0.62 0
ARC 0.63 0
ABONO 0.57 0
NOW THEREFORE, by virtue of the powers vested in it by the Constitution, Omnibus Election Code, Executive Order No.
144, Republic Act Nos. 6646, 7166, 7941 and other elections laws, the Commission on Elections en banc sitting as the
National Board of Canvassers, hereby RESOLVED, as it hereby RESOLVES, to proclaim the following parties,
organizations or coalitions as entitled to additional seats, to wit:
Party List Additional Seats
BUHAY 2
BAYAN MUNA 1
CIBAC 1
GABRIELA 1
APEC 1
This is without prejudice to the proclamation of other parties, organizations or coalitions which may later on be established
to have obtained at least two per cent (2%) of the total votes cast under the party-list system to entitle them to one (1)
guaranteed seat, or to the appropriate percentage of votes to entitle them to one (1) additional seat.
Finally, all proclamation of the nominees of concerned parties, organizations and coalitions with pending disputes shall
likewise be held in abeyance until final resolution of their respective cases.
Let the National Board of Canvassers Secretariat implement this Resolution, furnishing a copy hereof to the Speaker of
the House of Representatives of the Philippines.
SO ORDERED.9
Acting on BANAT’s petition, the NBC promulgated NBC Resolution No. 07-88 on 3 August 2007, which reads as follows:
This pertains to the Petition to Proclaim the Full Number of Party-List Representatives Provided by the Constitution filed
by the Barangay Association for National Advancement and Transparency (BANAT).

Acting on the foregoing Petition of the Barangay Association for National Advancement and Transparency (BANAT) party-
list, Atty. Alioden D. Dalaig, Head, National Board of Canvassers Legal Group submitted his comments/observations and
recommendation thereon [NBC 07-041 (PL)], which reads:
COMMENTS / OBSERVATIONS:
Petitioner Barangay Association for National Advancement and Transparency (BANAT), in its Petition to Proclaim the Full
Number of Party-List Representatives Provided by the Constitution prayed for the following reliefs, to wit:
1. That the full number -- twenty percent (20%) -- of Party-List representatives as mandated by Section 5, Article
VI of the Constitution shall be proclaimed.
2. Paragraph (b), Section 11 of RA 7941 which prescribes the 2% threshold votes, should be harmonized with
Section 5, Article VI of the Constitution and with Section 12 of the same RA 7941 in that it should be applicable
only to the first party-list representative seats to be allotted on the basis of their initial/first ranking.
3. The 3-seat limit prescribed by RA 7941 shall be applied; and
4. Initially, all party-list groups shall be given the number of seats corresponding to every 2% of the votes they
received and the additional seats shall be allocated in accordance with Section 12 of RA 7941, that is, in
proportion to the percentage of votes obtained by each party-list group in relation to the total nationwide votes
cast in the party-list election, after deducting the corresponding votes of those which were allotted seats under the
2% threshold rule. In fine, the formula/procedure prescribed in the "ALLOCATION OF PARTY-LIST SEATS,
ANNEX "A" of COMELEC RESOLUTION 2847 dated 25 June 1996, shall be used for [the] purpose of
determining how many seats shall be proclaimed, which party-list groups are entitled to representative seats and
how many of their nominees shall seat [sic].
5. In the alternative, to declare as unconstitutional Section 11 of Republic Act No. 7941 and that the procedure in
allocating seats for party-list representative prescribed by Section 12 of RA 7941 shall be followed.
R E C O M M E N D A T I O N:
The petition of BANAT is now moot and academic.
The Commission En Banc in NBC Resolution No. 07-60 promulgated July 9, 2007 re "In the Matter of the Canvass of
Votes and Partial Proclamation of the Parties, Organizations and Coalitions Participating Under the Party-List System
During the May 14, 2007 National and Local Elections" resolved among others that the total number of seats of each
winning party, organization or coalition shall be determined pursuant to the Veterans Federation
Party versus COMELEC formula upon completion of the canvass of the party-list results."1awphi1
WHEREFORE, premises considered, the National Board of Canvassers RESOLVED, as it hereby RESOLVES, to
approve and adopt the recommendation of Atty. Alioden D. Dalaig, Head, NBC Legal Group, to DENY the herein petition
of BANAT for being moot and academic.
Let the Supervisory Committee implement this resolution.
SO ORDERED.10
BANAT filed a petition for certiorari and mandamus assailing the ruling in NBC Resolution No. 07-88. BANAT did not file a
motion for reconsideration of NBC Resolution No. 07-88.
On 9 July 2007, Bayan Muna, Abono, and A Teacher asked the COMELEC, acting as NBC, to reconsider its decision to
use the Veterans formula as stated in its NBC Resolution No. 07-60 because the Veterans formula is violative of the
Constitution and of Republic Act No. 7941 (R.A. No. 7941). On the same day, the COMELEC denied reconsideration
during the proceedings of the NBC.11
Aside from the thirteen party-list organizations proclaimed on 9 July 2007, the COMELEC proclaimed three other party-list
organizations as qualified parties entitled to one guaranteed seat under the Party-List System: Agricultural Sector Alliance
of the Philippines, Inc. (AGAP),12 Anak Mindanao (AMIN),13 and An Waray.14 Per the certification15 by COMELEC, the
following party-list organizations have been proclaimed as of 19 May 2008:
Party-List No. of Seat(s)
1.1 Buhay 3
1.2 Bayan Muna 2
1.3 CIBAC 2
1.4 Gabriela 2
1.5 APEC 2

1.6 A Teacher 1
1.7 Akbayan 1
1.8 Alagad 1
1.9 Butil 1
1.10 Coop-Natco [sic] 1
1.11 AnakPawis 1
1.12 ARC 1
1.13 Abono 1
1.14 AGAP 1
1.15 AMIN 1
The proclamation of BagongAlyansangTagapagtaguyodngAdhikaingSambayanan (BATAS), against which an Urgent
Petition for Cancellation/Removal of Registration and Disqualification of Party-list Nominee (with Prayer for the Issuance
of Restraining Order) has been filed before the COMELEC, was deferred pending final resolution of SPC No. 07-250.
Issues
BANAT brought the following issues before this Court:
1. Is the twenty percent allocation for party-list representatives provided in Section 5(2), Article VI of the
Constitution mandatory or is it merely a ceiling?
2. Is the three-seat limit provided in Section 11(b) of RA 7941 constitutional?
3. Is the two percent threshold and "qualifier" votes prescribed by the same Section 11(b) of RA 7941
constitutional?
4. How shall the party-list representatives be allocated?16
Bayan Muna, A Teacher, and Abono, on the other hand, raised the following issues in their petition:
I. Respondent Commission on Elections, acting as National Board of Canvassers, committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it promulgated NBC Resolution No. 07-60 to
implement the First-Party Rule in the allocation of seats to qualified party-list organizations as said rule:
A. Violates the constitutional principle of proportional representation.
B. Violates the provisions of RA 7941 particularly:
1. The 2-4-6 Formula used by the First Party Rule in allocating additional seats for the "First
Party" violates the principle of proportional representation under RA 7941.
2. The use of two formulas in the allocation of additional seats, one for the "First Party" and
another for the qualifying parties, violates Section 11(b) of RA 7941.
3. The proportional relationships under the First Party Rule are different from those required
under RA 7941;
C. Violates the "Four Inviolable Parameters" of the Philippine party-list system as provided for under the
same case of Veterans Federation Party, et al. v. COMELEC.
II. Presuming that the Commission on Elections did not commit grave abuse of discretion amounting to lack or
excess of jurisdiction when it implemented the First-Party Rule in the allocation of seats to qualified party-list
organizations, the same being merely in consonance with the ruling in Veterans Federations Party, et al. v.
COMELEC, the instant Petition is a justiciable case as the issues involved herein are constitutional in nature,
involving the correct interpretation and implementation of RA 7941, and are of transcendental importance to our
nation.17
Considering the allegations in the petitions and the comments of the parties in these cases, we defined the
following issues in our advisory for the oral arguments set on 22 April 2008:
1. Is the twenty percent allocation for party-list representatives in Section 5(2), Article VI of the
Constitution mandatory or merely a ceiling?

2. Is the three-seat limit in Section 11(b) of RA 7941 constitutional?
3. Is the two percent threshold prescribed in Section 11(b) of RA 7941 to qualify for one seat
constitutional?
4. How shall the party-list representative seats be allocated?
5. Does the Constitution prohibit the major political parties from participating in the party-list elections? If
not, can the major political parties be barred from participating in the party-list elections?18
The Ruling of the Court
The petitions have partial merit. We maintain that a Philippine-style party-list election has at least four inviolable
parameters as clearly stated in Veterans. For easy reference, these are:
First, the twenty percent allocation — the combined number of all party-list congressmen shall not exceed twenty
percent of the total membership of the House of Representatives, including those elected under the party list;
Second, the two percent threshold — only those parties garnering a minimum of two percent of the total valid
votes cast for the party-list system are "qualified" to have a seat in the House of Representatives;
Third, the three-seat limit — each qualified party, regardless of the number of votes it actually obtained, is entitled
to a maximum of three seats; that is, one "qualifying" and two additional seats;
Fourth, proportional representation— the additional seats which a qualified party is entitled to shall be computed
"in proportion to their total number of votes."19
However, because the formula in Veterans has flaws in its mathematical interpretation of the term "proportional
representation," this Court is compelled to revisit the formula for the allocation of additional seats to party-list
organizations.
Number of Party-List Representatives:
The Formula Mandated by the Constitution
Section 5, Article VI of the Constitution provides:
Section 5. (1) The House of Representatives shall be composed of not more than two hundred and fifty members, unless
otherwise fixed by law, who shall be elected from legislative districts apportioned among the provinces, cities, and the
Metropolitan Manila area in accordance with the number of their respective inhabitants, and on the basis of a uniform and
progressive ratio, and those who, as provided by law, shall be elected through a party-list system of registered national,
regional, and sectoral parties or organizations.
(2) The party-list representatives shall constitute twenty per centum of the total number of representatives including those
under the party-list. For three consecutive terms after the ratification of this Constitution, one-half of the seats allocated to
party-list representatives shall be filled, as provided by law, by selection or election from the labor, peasant, urban poor,
indigenous cultural communities, women, youth, and such other sectors as may be provided by law, except the religious
sector.
The first paragraph of Section 11 of R.A. No. 7941 reads:
Section 11. Number of Party-List Representatives. — The party-list representatives shall constitute twenty per centum
(20%) of the total number of the members of the House of Representatives including those under the party-list.
x xx
Section 5(1), Article VI of the Constitution states that the "House of Representatives shall be composed of not more than
two hundred and fifty members, unless otherwise fixed by law." The House of Representatives shall be composed of
district representatives and party-list representatives. The Constitution allows the legislature to modify the number of the
members of the House of Representatives.1avvphi1.zw+
Section 5(2), Article VI of the Constitution, on the other hand, states the ratio of party-list representatives to the total
number of representatives. We compute the number of seats available to party-list representatives from the number of
legislative districts. On this point, we do not deviate from the first formula in Veterans, thus:
Number of seats
available to legislative districts
.80
x .20 =
Number of seats available to
party-list representatives

This formula allows for the corresponding increase in the number of seats available for party-list representatives whenever
a legislative district is created by law. Since the 14th Congress of the Philippines has 220 district representatives, there
are 55 seats available to party-list representatives.
220
.80
x .20 = 55
After prescribing the ratio of the number of party-list representatives to the total number of representatives, the
Constitution left the manner of allocating the seats available to party-list representatives to the wisdom of the
legislature.
Allocation of Seats for Party-List Representatives:
The Statutory Limits Presented by the Two Percent Threshold
and the Three-Seat Cap
All parties agree on the formula to determine the maximum number of seats reserved under the Party-List System, as well
as on the formula to determine the guaranteed seats to party-list candidates garnering at least two-percent of the total
party-list votes. However, there are numerous interpretations of the provisions of R.A. No. 7941 on the allocation
of "additional seats" under the Party-List System. Veterans produced the First Party Rule,20 and Justice Vicente V.
Mendoza’s dissent in Veterans presented Germany’s Niemeyer formula21 as an alternative.
The Constitution left to Congress the determination of the manner of allocating the seats for party-list representatives.
Congress enacted R.A. No. 7941, paragraphs (a) and (b) of Section 11 and Section 12 of which provide:
Section 11. Number of Party-List Representatives. — x xx
In determining the allocation of seats for the second vote,22 the following procedure shall be observed:
(a) The parties, organizations, and coalitions shall be ranked from the highest to the lowest based on the number
of votes they garnered during the elections.
(b) The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for the
party-list system shall be entitled to one seat each: Provided, That those garnering more than two percent
(2%) of the votes shall be entitled to additional seats in proportion to their total number of votes: Provided,
finally, That each party, organization, or coalition shall be entitled to not more than three (3) seats.
Section 12. Procedure in Allocating Seats for Party-List Representatives. — The COMELEC shall tally all the votes for the
parties, organizations, or coalitions on a nationwide basis, rank them according to the number of votes received and
allocate party-list representatives proportionately according to the percentage of votes obtained by each party,
organization, or coalition as against the total nationwide votes cast for the party-list system. (Emphasis supplied)
In G.R. No. 179271, BANAT presents two interpretations through three formulas to allocate party-list representative seats.
The first interpretation allegedly harmonizes the provisions of Section 11(b) on the 2% requirement with Section 12 of R.A.
No. 7941. BANAT described this procedure as follows:
(a) The party-list representatives shall constitute twenty percent (20%) of the total Members of the House of
Representatives including those from the party-list groups as prescribed by Section 5, Article VI of the
Constitution, Section 11 (1st par.) of RA 7941 and Comelec Resolution No. 2847 dated 25 June 1996. Since there
are 220 District Representatives in the 14th Congress, there shall be 55 Party-List Representatives. All seats shall
have to be proclaimed.
(b) All party-list groups shall initially be allotted one (1) seat for every two per centum (2%) of the total party-list
votes they obtained; provided, that no party-list groups shall have more than three (3) seats (Section 11, RA
7941).
(c) The remaining seats shall, after deducting the seats obtained by the party-list groups under the immediately
preceding paragraph and after deducting from their total the votes corresponding to those seats, the remaining
seats shall be allotted proportionately to all the party-list groups which have not secured the maximum three (3)
seats under the 2% threshold rule, in accordance with Section 12 of RA 7941.23
Forty-four (44) party-list seats will be awarded under BANAT’s first interpretation.
The second interpretation presented by BANAT assumes that the 2% vote requirement is declared unconstitutional, and
apportions the seats for party-list representatives by following Section 12 of R.A. No. 7941. BANAT states that the
COMELEC:
(a) shall tally all the votes for the parties, organizations, or coalitions on a nationwide basis;

(b) rank them according to the number of votes received; and,
(c) allocate party-list representatives proportionately according to the percentage of votes obtained by each party,
organization or coalition as against the total nationwide votes cast for the party-list system.24
BANAT used two formulas to obtain the same results: one is based on the proportional percentage of the votes rec eived
by each party as against the total nationwide party-list votes, and the other is "by making the votes of a party-list with a
median percentage of votes as the divisor in computing the allocation of seats."25 Thirty-four (34) party-list seats will be
awarded under BANAT’s second interpretation.
In G.R. No. 179295, Bayan Muna, Abono, and A Teacher criticize both the COMELEC’s original 2-4-6 formula and
the Veterans formula for systematically preventing all the party-list seats from being filled up. They claim that both
formulas do not factor in the total number of seats alloted for the entire Party-List System. Bayan Muna, Abono, and A
Teacher reject the three-seat cap, but accept the 2% threshold. After determining the qualified parties, a second
percentage is generated by dividing the votes of a qualified party by the total votes of all qualified parties only. The
number of seats allocated to a qualified party is computed by multiplying the total party-list seats available with the second
percentage. There will be a first round of seat allocation, limited to using the whole integers as the equivalent of the
number of seats allocated to the concerned party-list. After all the qualified parties are given their seats, a second round of
seat allocation is conducted. The fractions, or remainders, from the whole integers are ranked from highest to lowest and
the remaining seats on the basis of this ranking are allocated until all the seats are filled up.26
We examine what R.A. No. 7941 prescribes to allocate seats for party-list representatives.
Section 11(a) of R.A. No. 7941 prescribes the ranking of the participating parties from the highest to the lowest based on
the number of votes they garnered during the elections.
Table 1. Ranking of the participating parties from the highest to the lowest based on the number of votes garnered during
the elections.27
Rank Party
Votes
Garnered
Rank Party
Votes
Garnered
1 BUHAY 1,169,234 48 KALAHI 88,868
2 BAYAN MUNA 979,039 49 APOI 79,386
3 CIBAC 755,686 50 BP 78,541
4 GABRIELA 621,171 51 AHONBAYAN 78,424
5 APEC 619,657 52 BIGKIS 77,327
6 A TEACHER 490,379 53 PMAP 75,200
7 AKBAYAN 466,112 54 AKAPIN 74,686
8 ALAGAD 423,149 55 PBA 71,544
9 COOP-NATCCO 409,883 56 GRECON 62,220
10 BUTIL 409,160 57 BTM 60,993
11 BATAS 385,810 58 A SMILE 58,717
12 ARC 374,288 59 NELFFI 57,872
13 ANAKPAWIS 370,261 60 AKSA 57,012
14 ABONO 339,990 61 BAGO 55,846
15 AMIN 338,185 62 BANDILA 54,751
16 AGAP 328,724 63 AHON 54,522
17 AN WARAY 321,503 64 ASAHAN MO 51,722
18 YACAP 310,889 65 AGBIAG! 50,837
19 FPJPM 300,923 66 SPI 50,478
20 UNI-MAD 245,382 67 BAHANDI 46,612
21 ABS 235,086 68 ADD 45,624
22 KAKUSA 228,999 69 AMANG 43,062
23 KABATAAN 228,637 70 ABAY PARAK 42,282

24 ABA-AKO 218,818 71 BABAE KA 36,512
25 ALIF 217,822 72 SB 34,835
26 SENIOR CITIZENS 213,058 73 ASAP 34,098
27 AT 197,872 74 PEP 33,938
28 VFP 196,266 75 ABA ILONGGO 33,903
29 ANAD 188,521 76 VENDORS 33,691
30 BANAT 177,028 77 ADD-TRIBAL 32,896
31 ANG KASANGGA 170,531 78 ALMANA 32,255
32 BANTAY 169,801 79 AANGAT KA PILIPINO 29,130
33 ABAKADA 166,747 80 AAPS 26,271
34 1-UTAK 164,980 81 HAPI 25,781
35 TUCP 162,647 82 AAWAS 22,946
36 COCOFED 155,920 83 SM 20,744
37 AGHAM 146,032 84 AG 16,916
38 ANAK 141,817 85 AGING PINOY 16,729
39 ABANSE! PINAY 130,356 86 APO 16,421
40 PM 119,054 87 BIYAYANG BUKID 16,241
41 AVE 110,769 88 ATS 14,161
42 SUARA 110,732 89 UMDJ 9,445
43 ASSALAM 110,440 90 BUKLOD FILIPINA 8,915
44 DIWA 107,021 91 LYPAD 8,471
45 ANC 99,636 92 AA-KASOSYO 8,406
46 SANLAKAS 97,375 93 KASAPI 6,221
47 ABC 90,058 TOTAL 15,950,900
The first clause of Section 11(b) of R.A. No. 7941 states that "parties, organizations, and coalitions receiving at least two
percent (2%) of the total votes cast for the party-list system shall be entitled to one seat each." This clause guarantees a
seat to the two-percenters. In Table 2 below, we use the first 20 party-list candidates for illustration purposes. The
percentage of votes garnered by each party is arrived at by dividing the number of votes garnered by each party by
15,950,900, the total number of votes cast for all party-list candidates.
Table 2. The first 20 party-list candidates and their respective percentage of votes garnered over the total votes for the
party-list.28
Rank Party
Votes
Garnered
Votes Garnered over
Total Votes for Party-
List, in %
Guaranteed
Seat
1 BUHAY 1,169,234 7.33% 1
2 BAYAN MUNA 979,039 6.14% 1
3 CIBAC 755,686 4.74% 1
4 GABRIELA 621,171 3.89% 1
5 APEC 619,657 3.88% 1
6 A TEACHER 490,379 3.07% 1
7 AKBAYAN 466,112 2.92% 1
8 ALAGAD 423,149 2.65% 1
9 COOP-NATCCO 409,883 2.57% 1

10 BUTIL 409,160 2.57% 1
11 BATAS29 385,810 2.42% 1
12 ARC 374,288 2.35% 1
13 ANAKPAWIS 370,261 2.32% 1
14 ABONO 339,990 2.13% 1
15 AMIN 338,185 2.12% 1
16 AGAP 328,724 2.06% 1
17 AN WARAY 321,503 2.02% 1
Total 17
18 YACAP 310,889 1.95% 0
19 FPJPM 300,923 1.89% 0
20 UNI-MAD 245,382 1.54% 0
From Table 2 above, we see that only 17 party-list candidates received at least 2% from the total number of votes cast for
party-list candidates. The 17 qualified party-list candidates, or the two-percenters, are the party-list candidates that are
"entitled to one seat each," or the guaranteed seat. In this first round of seat allocation, we distributed 17 guaranteed
seats.
The second clause of Section 11(b) of R.A. No. 7941 provides that "those garnering more than two percent (2%) of the
votes shall be entitled to additional seats in proportion to their total number of votes." This is where petitioners’ and
intervenors’ problem with the formula in Veterans lies. Veterans interprets the clause "in proportion to their total number of
votes" to be in proportion to the votes of the first party. This interpretation is contrary to the express language of R.A.
No. 7941.
We rule that, in computing the allocation of additional seats, the continued operation of the two percent threshold for the
distribution of the additional seats as found in the second clause of Section 11(b) of R.A. No. 7941 is unconstitutional.
This Court finds that the two percent threshold makes it mathematically impossible to achieve the maximum number of
available party list seats when the number of available party list seats exceeds 50. The continued operation of the two
percent threshold in the distribution of the additional seats frustrates the attainment of the permissive ceiling that 20% of
the members of the House of Representatives shall consist of party-list representatives.
To illustrate: There are 55 available party-list seats. Suppose there are 50 million votes cast for the 100 participants in the
party list elections. A party that has two percent of the votes cast, or one million votes, gets a guaranteed seat. Let us
further assume that the first 50 parties all get one million votes. Only 50 parties get a seat despite the availability of 55
seats. Because of the operation of the two percent threshold, this situation will repeat itself even if we increase the
available party-list seats to 60 seats and even if we increase the votes cast to 100 million. Thus, even if the maximum
number of parties get two percent of the votes for every party, it is always impossible for the number of occupied party -list
seats to exceed 50 seats as long as the two percent threshold is present.
We therefore strike down the two percent threshold only in relation to the distribution of the additional seats as found in
the second clause of Section 11(b) of R.A. No. 7941. The two percent threshold presents an unwarranted obstacle to the
full implementation of Section 5(2), Article VI of the Constitution and prevents the attainment of "the broadest possible
representation of party, sectoral or group interests in the House of Representatives."30
In determining the allocation of seats for party-list representatives under Section 11 of R.A. No. 7941, the following
procedure shall be observed:
1. The parties, organizations, and coalitions shall be ranked from the highest to the lowest based on the number
of votes they garnered during the elections.
2. The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for the
party-list system shall be entitled to one guaranteed seat each.
3. Those garnering sufficient number of votes, according to the ranking in paragraph 1, shall be entitled to
additional seats in proportion to their total number of votes until all the additional seats are allocated.
4. Each party, organization, or coalition shall be entitled to not more than three (3) seats.
In computing the additional seats, the guaranteed seats shall no longer be included because they have already been
allocated, at one seat each, to every two-percenter. Thus, the remaining available seats for allocation as "additional seats"
are the maximum seats reserved under the Party List System less the guaranteed seats. Fractional seats are disregarded
in the absence of a provision in R.A. No. 7941 allowing for a rounding off of fractional seats.

In declaring the two percent threshold unconstitutional, we do not limit our allocation of additional seats in Table 3 below
to the two-percenters. The percentage of votes garnered by each party-list candidate is arrived at by dividing the number
of votes garnered by each party by 15,950,900, the total number of votes cast for party-list candidates. There are two
steps in the second round of seat allocation. First, the percentage is multiplied by the remaining available seats, 38, which
is the difference between the 55 maximum seats reserved under the Party-List System and the 17 guaranteed seats of
the two-percenters. The whole integer of the product of the percentage and of the remaining available seats corresponds
to a party’s share in the remaining available seats. Second, we assign one party-list seat to each of the parties next in
rank until all available seats are completely distributed. We distributed all of the remaining 38 seats in the second round of
seat allocation. Finally, we apply the three-seat cap to determine the number of seats each qualified party-list candidate is
entitled. Thus:
Table 3. Distribution of Available Party-List Seats
Rank Party
Votes
Garnered
Votes
Garnered
over
Total
Votes for
Party List,
in %
(A)
Guaranteed
Seat
(First
Round)
(B)
Additional
Seats
(Second
Round)
(C)
(B) plus
(C), in
whole
integers
(D)
Applying
the three
seat cap
(E)
1 BUHAY 1,169,234 7.33% 1 2.79 3 N.A.
2
BAYAN
MUNA
979,039 6.14% 1 2.33 3 N.A.
3 CIBAC 755,686 4.74% 1 1.80 2 N.A.
4 GABRIELA 621,171 3.89% 1 1.48 2 N.A.
5 APEC 619,657 3.88% 1 1.48 2 N.A.
6 A Teacher 490,379 3.07% 1 1.17 2 N.A.
7 AKBAYAN 466,112 2.92% 1 1.11 2 N.A.
8 ALAGAD 423,149 2.65% 1 1.01 2 N.A.
931 COOP-
NATCCO
409,883 2.57% 1 1 2 N.A.
10 BUTIL 409,160 2.57% 1 1 2 N.A.
11 BATAS 385,810 2.42% 1 1 2 N.A.
12 ARC 374,288 2.35% 1 1 2 N.A.
13 ANAKPAWIS 370,261 2.32% 1 1 2 N.A.
14 ABONO 339,990 2.13% 1 1 2 N.A.
15 AMIN 338,185 2.12% 1 1 2 N.A.
16 AGAP 328,724 2.06% 1 1 2 N.A.
17 AN WARAY 321,503 2.02% 1 1 2 N.A.
18 YACAP 310,889 1.95% 0 1 1 N.A.
19 FPJPM 300,923 1.89% 0 1 1 N.A.
20 UNI-MAD 245,382 1.54% 0 1 1 N.A.
21 ABS 235,086 1.47% 0 1 1 N.A.
22 KAKUSA 228,999 1.44% 0 1 1 N.A.
23 KABATAAN 228,637 1.43% 0 1 1 N.A.
24 ABA-AKO 218,818 1.37% 0 1 1 N.A.
25 ALIF 217,822 1.37% 0 1 1 N.A.
26
SENIOR
CITIZENS
213,058 1.34% 0 1 1 N.A.
27 AT 197,872 1.24% 0 1 1 N.A.

28 VFP 196,266 1.23% 0 1 1 N.A.
29 ANAD 188,521 1.18% 0 1 1 N.A.
30 BANAT 177,028 1.11% 0 1 1 N.A.
31
ANG
KASANGGA
170,531 1.07% 0 1 1 N.A.
32 BANTAY 169,801 1.06% 0 1 1 N.A.
33 ABAKADA 166,747 1.05% 0 1 1 N.A.
34 1-UTAK 164,980 1.03% 0 1 1 N.A.
35 TUCP 162,647 1.02% 0 1 1 N.A.
36 COCOFED 155,920 0.98% 0 1 1 N.A.
Total 17 55
Applying the procedure of seat allocation as illustrated in Table 3 above, there are 55 party-list representatives from the
36 winning party-list organizations. All 55 available party-list seats are filled. The additional seats allocated to the parties
with sufficient number of votes for one whole seat, in no case to exceed a total of three seats for each party, are shown in
column (D).
Participation of Major Political Parties in Party-List Elections
The Constitutional Commission adopted a multi-party system that allowed all political partiesto participate in the
party-list elections. The deliberations of the Constitutional Commission clearly bear this out, thus:
MR. MONSOD. Madam President, I just want to say that we suggested or proposed the party list sy stem because we
wanted to open up the political system to a pluralistic society through a multiparty system. x xx We are for opening up
the system, and we would like very much for the sectors to be there. That is why one of the ways to do that is to
put a ceiling on the number of representatives from any single party that can sit within the 50 allocated under the
party list system. x xx.
x xx
MR. MONSOD. Madam President, the candidacy for the 198 seats is not limited to political parties. My question is this:
Are we going to classify for example Christian Democrats and Social Democrats as political parties? Can they run under
the party list concept or must they be under the district legislation side of it only?
MR. VILLACORTA. In reply to that query, I think these parties that the Commissioner mentioned can field candidates for
the Senate as well as for the House of Representatives. Likewise, they can also field sectoral candidates for the 20
percent or 30 percent, whichever is adopted, of the seats that we are allocating under the party list system.
MR. MONSOD. In other words, the Christian Democrats can field district candidates and can also participate in the party
list system?
MR. VILLACORTA. Why not? When they come to the party list system, they will be fielding only sectoral
candidates.
MR. MONSOD. May I be clarified on that? Can UNIDO participate in the party list system?
MR. VILLACORTA. Yes, why not? For as long as they field candidates who come from the different marginalized
sectors that we shall designate in this Constitution.
MR. MONSOD. Suppose Senator Tañada wants to run under BAYAN group and says that he represents the farmers,
would he qualify?
MR. VILLACORTA. No, Senator Tañada would not qualify.
MR. MONSOD. But UNIDO can field candidates under the party list system and say Juan dela Cruz is a farmer. Who
would pass on whether he is a farmer or not?
MR. TADEO. Kay Commissioner Monsod, gusto kolamanglinawinito. Political parties, particularly minority political
parties, are not prohibited to participate in the party list election if they can prove that they are also organized
along sectoral lines.

MR. MONSOD. What the Commissioner is saying is that all political parties can participate because it is precisely the
contention of political parties that they represent the broad base of citizens and that all sectors are represented in them.
Would the Commissioner agree?
MR. TADEO. Angpuntolamangnamin, pagpinayaganmoang UNIDO naisang political party, it will dominate the party list at
mawawalangsaysay din yung sector. Lalamuninmismong political partiesang party list system. Gusto
kolamangbigyanngdiinang "reserve." Hindi ito reserve seat sa marginalized sectors. Kung titingnannatinitong 198 seats,
reserved din itosa political parties.
MR. MONSOD. Hindi po reserved iyonkasi anybody can run there. But my question to Commissioner Villacorta and
probably also to Commissioner Tadeo is that under this system, would UNIDO be banned from running under the party list
system?
MR. VILLACORTA. No, as I said, UNIDO may field sectoral candidates. On that condition alone, UNIDO may be
allowed to register for the party list system.
MR. MONSOD. May I inquire from Commissioner Tadeo if he shares that answer?
MR. TADEO. The same.
MR. VILLACORTA. Puwedepoang UNIDO, perosasectoral lines.
x xxx
MR. OPLE. x xxIn my opinion, this will also create the stimulus for political parties and mass organizations to seek
common ground. For example, we have the PDP-Laban and the UNIDO. I see no reason why they should not be able to
make common goals with mass organizations so that the very leadership of these parties can be transformed through the
participation of mass organizations. And if this is true of the administration parties, this will be true of others like the
Partidong Bayan which is now being formed. There is no question that they will be attractive to many mass organizations.
In the opposition parties to which we belong, there will be a stimulus for us to contact mass organizations so that with thei r
participation, the policies of such parties can be radically transformed because this amendment will create conditions that
will challenge both the mass organizations and the political parties to come together. And the party list system is certainly
available, although it is open to all the parties. It is understood that the parties will enter in the roll of the COMELEC the
names of representatives of mass organizations affiliated with them. So that we may, in time, develop this excellent
system that they have in Europe where labor organizations and cooperatives, for example, distribute themselves either in
the Social Democratic Party and the Christian Democratic Party in Germany, and their very presence there has a
transforming effect upon the philosophies and the leadership of those parties.
It is also a fact well known to all that in the United States, the AFL-CIO always vote with the Democratic Party. But the
businessmen, most of them, always vote with the Republican Party, meaning that there is no reason at all why political
parties and mass organizations should not combine, reenforce, influence and interact with each other so that the very
objectives that we set in this Constitution for sectoral representation are achieved in a wider, more lasting, and more
institutionalized way. Therefore, I support this [Monsod-Villacorta] amendment. It installs sectoral representation as a
constitutional gift, but at the same time, it challenges the sector to rise to the majesty of being elected representatives
later on through a party list system; and even beyond that, to become actual political parties capable of contesting political
power in the wider constitutional arena for major political parties.
x xx 32 (Emphasis supplied)
R.A. No. 7941 provided the details for the concepts put forward by the Constitutional Commission. Section 3 of R.A. No.
7941 reads:
Definition of Terms. (a) The party-list system is a mechanism of proportional representation in the election of
representatives to the House of Representatives from national, regional and sectoral parties or organizations or coalitions
thereof registered with the Commission on Elections (COMELEC). Component parties or organizations of a coalition may
participate independently provided the coalition of which they form part does not participate in the party -list system.
(b) A party means either a political party or a sectoral party or a coalition of parties.
(c) A political party refers to an organized group of citizens advocating an ideology or platform, principles and
policies for the general conduct of government and which, as the most immediate means of securing their
adoption, regularly nominates and supports certain of its leaders and members as candidates for public office.
It is a national party when its constituency is spread over the geographical territory of at least a majority of the
regions. It is a regional party when its constituency is spread over the geographical territory of at least a majority
of the cities and provinces comprising the region.
(d) A sectoral party refers to an organized group of citizens belonging to any of the sectors enumerated in Section
5 hereof whose principal advocacy pertains to the special interests and concerns of their sector,

(e) A sectoral organization refers to a group of citizens or a coalition of groups of citizens who share similar
physical attributes or characteristics, employment, interests or concerns.
(f) A coalition refers to an aggrupation of duly registered national, regional, sectoral parties or organizations for
political and/or election purposes.
Congress, in enacting R.A. No. 7941, put the three-seat cap to prevent any party from dominating the party-list elections.
Neither the Constitution nor R.A. No. 7941 prohibits major political parties from participating in the party-list system. On
the contrary, the framers of the Constitution clearly intended the major political parties to participate in party -list elections
through their sectoral wings. In fact, the members of the Constitutional Commission voted down, 19-22, any permanent
sectoralseats, and in the alternative the reservation of the party-list system to the sectoral groups.33 In defining a "party"
that participates in party-list elections as either "a political party or a sectoral party," R.A. No. 7941 also clearly intended
that major political parties will participate in the party-list elections. Excluding the major political parties in party-list
elections is manifestly against the Constitution, the intent of the Constitutional Commission, and R.A. No. 7941. This Court
cannot engage in socio-political engineering and judicially legislate the exclusion of major political parties from the party-
list elections in patent violation of the Constitution and the law.
Read together, R.A. No. 7941 and the deliberations of the Constitutional Commission state that major political parties are
allowed to establish, or form coalitions with, sectoral organizations for electoral or political purposes. There should not be
a problem if, for example, the Liberal Party participates in the party-list election through the Kabataang Liberal ngPilipinas
(KALIPI), its sectoral youth wing. The other major political parties can thus organize, or affiliate with, their chosen sector or
sectors. To further illustrate, the Nacionalista Party can establish a fisherfolk wing to participate in the party -list election,
and this fisherfolk wing can field its fisherfolk nominees. KabalikatngMalayang Pilipino (KAMPI) can do the same for the
urban poor.
The qualifications of party-list nominees are prescribed in Section 9 of R.A. No. 7941:
Qualifications of Party-List Nominees. — No person shall be nominated as party-list representative unless he is a natural
born citizen of the Philippines, a registered voter, a resident of the Philippines for a period of not less than one (1) year
immediately preceding the day of the elections, able to read and write, bona fide member of the party or organization
which he seeks to represent for at least ninety (90) days preceding the day of the election, and is at least twenty -five (25)
years of age on the day of the election.
In case of a nominee of the youth sector, he must at least be twenty-five (25) but not more than thirty (30) years of age on
the day of the election. Any youth sectoral representative who attains the age of thirty (30) during his term shall be
allowed to continue until the expiration of his term.
Under Section 9 of R.A. No. 7941, it is not necessary that the party-list organization’s nominee "wallow in poverty,
destitution and infirmity"34 as there is no financial status required in the law. It is enough that the nominee of the sectoral
party/organization/coalition belongs to the marginalized and underrepresented sectors,35 that is, if the nominee represents
the fisherfolk, he or she must be a fisherfolk, or if the nominee represents the senior citizens, he or she must be a senior
citizen.
Neither the Constitution nor R.A. No. 7941 mandates the filling-up of the entire 20% allocation of party-list representatives
found in the Constitution. The Constitution, in paragraph 1, Section 5 of Article VI, left the determination of the number of
the members of the House of Representatives to Congress: "The House of Representatives shall be composed of not
more than two hundred and fifty members, unless otherwise fixed by law, x xx." The 20% allocation of party -list
representatives is merely a ceiling; party-list representatives cannot be more than 20% of the members of the House of
Representatives. However, we cannot allow the continued existence of a provision in the law which will systematically
prevent the constitutionally allocated 20% party-list representatives from being filled. The three-seat cap, as a limitation to
the number of seats that a qualified party-list organization may occupy, remains a valid statutory device that prevents any
party from dominating the party-list elections. Seats for party-list representatives shall thus be allocated in accordance
with the procedure used in Table 3 above.
However, by a vote of 8-7, the Court decided to continue the ruling in Veterans disallowing major political parties from
participating in the party-list elections, directly or indirectly. Those who voted to continue disallowing major political parties
from the party-list elections joined Chief Justice Reynato S. Puno in his separate opinion. On the formula to allocate party -
list seats, the Court is unanimous in concurring with this ponencia.
WHEREFORE, we PARTIALLY GRANT the petition. We SET ASIDE the Resolution of the COMELEC dated 3 August
2007 in NBC No. 07-041 (PL) as well as the Resolution dated 9 July 2007 in NBC No. 07-60. We declare unconstitutional
the two percent threshold in the distribution of additional party-list seats. The allocation of additional seats under the
Party-List System shall be in accordance with the procedure used in Table 3 of this Decision. Major political parties are
disallowed from participating in party-list elections. This Decision is immediately executory. No pronouncement as to
costs.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice

WE CONCUR:
REYNATO S. PUNO
Chief Justice
LEONARDO A. QUISUMBING
Associate Justice
CONSUELO YNARES-SANTIAGO
Associate Justice
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
RENATO C. CORONA
Associate Justice
CONCHITA CARPIO MORALES
Associate Justice
DANTE O. TINGA
Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
PRESBITERO J. VELASCO, JR.
Associate Justice
ANTONIO EDUARDO B. NACHURA
Associate Justice
ARTURO D. BRION
Associate Justice
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
DIOSDADO M. PERALTA
Associate Justice
LUCAS P. BERSAMIN
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the Court.
REYNATO S. PUNO
Chief Justice
Footnotes
1 Under Rule 65 of the 1997 Rules of Civil Procedure.
2 Rollo (G.R. No. 179271), pp. 86-87. Signed by Chairman Benjamin S. Abalos, Sr., Commissioners Resurreccion
Z. Borra, Florentino A. Tuason, Jr., Romeo A. Brawner, Rene V. Sarmiento, and Nicodemo T. Ferrer.
3 Under Rule 65 of the 1997 Rules of Civil Procedure.
4 Rollo (G.R. No. 179295), pp. 103-108. Signed by Chairman Benjamin S. Abalos, Sr., Commissioners
Resurreccion Z. Borra, Florentino A. Tuason, Jr., Romeo A. Brawner, Rene V. Sarmiento, and Nicodemo T.
Ferrer.
5 396 Phil. 419 (2000).
6 Rollo (G.R. No. 179271), pp. 969-986; rollo (G.R. No. 179295), pp. 798-815. Party-List Canvass Report No. 32,
as of 31 August 2007, 6:00 p.m.
7 Rollo (G.R. No. 179271), p. 70.
8 Rollo (G.R. No. 179271), pp. 88-92.
9 Id. at 150-153.
10 Id. at 86-87.
11 Rollo (G.R. No. 179295), p. 112.
12 Rollo (G.R. No. 179271), pp. 158-159. NBC Resolution No. 07-74, 24 July 2007.

13 Id. at 160-161. NBC Resolution No. 07-87, 3 August 2007.
14 NBC Resolution No. 07-97, 4 September 2007.
15 Rollo (G.R. No. 179295), pp. 816-817. This COMELEC certification should have included An Waray, which was
proclaimed on 4 September 2007 under NBC Resolution No. 07-97.
16 Rollo (G.R. No. 179271), p. 14.
17 Rollo (G.R. No. 179295), pp. 21-22.
18 Rollo (G.R. No. 179271), p. 553; rollo (G. R. No. 179295), p. 341.
19 Supra note 5 at 424.
20 Id. at 446-451. We quote below the discussion in Veterans explaining the First Party Rule:
Formula for Determining
Additional Seats for the First Party
Now, how do we determine the number of seats the first party is entitled to? The only basis given by the
law is that a party receiving at least two percent of the total votes shall be entitled to one seat.
Proportionally, if the first party were to receive twice the number of votes of the second party, it should be
entitled to twice the latter’s number of seats and so on. The formula, therefore, for computing the number
of seats to which the first party is entitled is as follows:
Number of votes
of first party
Total votes for
party-list system
=
Proportion of votes of first party relative to
total votes for party-list system
If the proportion of votes received by the first party without rounding it off is equal to at least six percent of
the total valid votes cast for all the party list groups, then the first party shall be entitled to two additional
seats or a total of three seats overall. If the proportion of votes without a rounding off is equal to or greater
than four percent, but less than six percent, then the first party shall have one additional or a total of two
seats. And if the proportion is less than four percent, then the first party shall not be entitled to any
additional seat.
We adopted this six percent bench mark, because the first party is not always entitled to the maximum
number of additional seats. Likewise, it would prevent the allotment of more than the total number of
available seats, such as in an extreme case wherein 18 or more parties tie for the highest rank and are
thus entitled to three seats each. In such scenario, the number of seats to which all the parties are
entitled may exceed the maximum number of party-list seats reserved in the House of Representatives.
x xx
Note that the above formula will be applicable only in determining the number of additional seats the first
party is entitled to. It cannot be used to determine the number of additional seats of the other qualified
parties. As explained earlier, the use of the same formula for all would contravene the proportional
representation parameter. For example, a second party obtains six percent of the total number of votes
cast. According to the above formula, the said party would be entitled to two additional seats or a total of
three seats overall. However, if the first party received a significantly higher amount of votes — say,
twenty percent — to grant it the same number of seats as the second party would violate the statutory
mandate of proportional representation, since a party getting only six percent of the votes will have an
equal number of representatives as the one obtaining twenty percent. The proper solution, therefore, is to
grant the first party a total of three seats; and the party receiving six percent, additional seats in
proportion to those of the first party.
Formula for Additional
Seats of Other Qualified Parties
Step Three The next step is to solve for the number of additional seats that the other qualified parties are
entitled to, based on proportional representation. The formula is encompassed by the following complex
fraction:
Additional seats
for concerned party
=
No. of votes of
concerned party x
No. of additional
seats allocated
to the first party

Total No. of votes
of party-list system
No. of votes
of first party
Total No. of votes
of party-list system
In simplified form, it is written as follows:
Additional seats
for concerned party
=
No. of votes of
concerned party
No. of votes
of first party
x
No. of additional
seats allocated to
the first party
x xx
Incidentally, if the first party is not entitled to any additional seat, then the ratio of the number of votes for
the other party to that for the first one is multiplied by zero. The end result would be zero additional seat
for each of the other qualified parties as well.
The above formula does not give an exact mathematical representation of the number of additional seats
to be awarded since, in order to be entitled to one additional seat, an exact whole number is necessary.
In fact, most of the actual mathematical proportions are not whole numbers and are not rounded off for
the reasons explained earlier. To repeat, rounding off may result in the awarding of a number of seats in
excess of that provided by the law. Furthermore, obtaining absolute proportional representation is
restricted by the three-seat-per-party limit to a maximum of two additional slots. An increase in the
maximum number of additional representatives a party may be entitled to would result in a more accurate
proportional representation. But the law itself has set the limit: only two additional seats. Hence, we need
to work within such extant parameter.
21 Id. at 475-481.
22 The second vote cast by a registered voter is for the party-list candidates as provided in Section 10 of R.A. No.
7941.
23 Rollo (G.R. No. 179271), p. 47.
24 Id. at 48.
25 Id. at 1076.
26 Rollo (G.R. No. 179295), pp. 66-81.
27 Rollo (G.R. No. 179271), pp. 969-974; rollo (G.R. No. 179295), pp. 798-803. Party-List Canvass Report No. 32,
as of 31 August 2007, 6:00 p.m.
28 Id.
29 Proclamation deferred by COMELEC.
30 Section 2, R.A. No. 7941.
31 The product of the percentage and the remaining available seats of all parties ranked nine and below is less
than one.
32 II Record, Constitutional Commission 256-257 (25 July 1986), 568 (1 August 1986).
33 Id. at 584 (1 August 1986). Dissenting opinion of Justice Jose C. Vitug in AngBagongBayani- OFW Labor Party
v. COMELEC, 412 Phil. 308, 350 (2001).
34 AngBagongBayani-OFW Labor Party v. COMELEC, 412 Phil. 308, 336 (2001).
35 Section 2, R.A. No. 7941.

Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 160032 November 11, 2005
ESTELA L. BERBA, Petitioner,
vs.
JOSEPHINE PABLO and THE HEIRS OF CARLOS PALANCA, Respondents.
D E C I S I O N
CALLEJO, SR., J.:
Assailed before the Court on a petition for review on certiorari is the Decision1 of the Court of Appeals (CA) in CA-G.R. SP
No. 73531, affirming the Decision2 of the Regional Trial Court (RTC) of Manila in Civil Case No. 170639.
Estela L. Berba, a resident of 978 Maligaya Street, Malate, Manila, was the owner of a parcel of land located at No. 2338
M. Roxas Street, Sta. Ana, Manila covered by Transfer Certificate of Title (TCT) No. 63726. A house was constructed on
the lot, which she leased to Josephine Pablo* and the Heirs of Carlos Palanca sometime in 1976. The lease was covered
by a lease contract. Upon its expiration, the lessees continued leasing the house on a month-to-month basis.
By 1999, the monthly rental on the property was P3,450.00. The lessees failed to pay the rentals due, and by May 1999,
their arrears amounted to P81,818.00. Berba then filed a complaint for eviction and collection of unpaid rentals only
against Pablo in the Office of the Punong Barangay. On June 5, 1999, Berba and Pablo executed an Agreement
approved by the pangkat, as follows:
Akosi Josephine Pablo, naninirahansa 2338 M. Roxas St., Sta. Ana, Manila, nanasasakopng Barangay 873, Zone 96, ay
nangangakokay GG Robert Berbananagmamay-aringakingtinitirahan ay
maghuhulognghalagangTatlongLibongPiso P3,000.00kadaika-sampungbuwanbilanghulogsaakingpagkakautangkay GG
Berbanaumaabotsahalagang P81,818.00 naangnasabinghalagangito ay
akinghuhuluganhanggangakingmabayaranngbuoangakingpagkakautang. Akorin, si Josephine Pablo, ay
nangangakonaanghindikopagsunod o pagbayadngbuwananghulog, ako ay kusangaalissaakingtinitirahan. Bukod pa
sahulogsaakingpagkakautang, akorin ay magbabayadnghalagang P3,450.00bilangakingupasaaking tinitirahan.3
By May 2000, Pablo and the lessees still had a balance of P71,716.00. As of May 1, 2001, the total arrearages of the
lessees amounted to P135,115.63.4 On May 2, 2001, Berba, through counsel, wrote the lessees, demanding payment of
the said amount and to vacate the house within 30 days from notice, otherwise she will sue them.5 The lessees ignored
the demand. On June 21, 2001, Berba filed a complaint6 against Josephine Pablo and the Heirs of Carlos Palanca in the
Metropolitan Trial Court (MTC) of Manila for unlawful detainer. She prayed that, after due proceedings, judgment be
rendered in her favor:
WHEREFORE, it is most respectfully prayed for that judgment be rendered in favor of plaintiff ordering defendant (sic) –
a) to vacate the premises situated at 2338 M. Roxas Street, Sta. Ana, City of Manila;
b) to pay plaintiff the sum of One Hundred Thirty-Five Thousand One Hundred Fifteen and 63/100 Pesos (P135,115.63)
representing monthly rentals in arrears to the present;
c) to pay plaintiff the amount of Four Thousand Five Hundred Sixty-Two and 63/100 Pesos (P4,562.63) per month
representing monthly rent on the premises for the year 2001 until finality of the judgment;
d) to pay plaintiff the sum of Twenty Thousand Pesos (P20,000.00) by way of attorney’s fees;
e) to reimburse plaintiff all expenses for litigation estimated in the amount of Ten Thousand Pesos;

f) to pay costs of suit.
Other reliefs just and equitable are, likewise, prayed for under the premises.7
Berba, however, failed to append to her complaint a certification from the LuponngTagapamayapa that no conciliation or
settlement had been reached.
In their answer to the complaint, the defendants admitted to have stopped paying rentals because of financial distress.
They also alleged that they were not certain if the plaintiff was the owner of the property. By way of special and affirmative
defenses, they averred that the plaintiff had no cause of action against them as she failed to secure a Certificate to File
Action from the Lupon.8
During the pre-trial conference, the parties manifested to the court that, despite earnest efforts, no amicable settlement
was reached. They defined the main issue as whether or not the plaintiff had a valid cause of action for unlawful detainer
against the defendants.9
In her position paper, Berba appended an Agreement dated June 5, 1999 between her and Pablo, which appeared to
have been approved by Punong Barangay Cayetano L. Gonzales of Barangay 873, as well as other members of
the Lupon,10 duly approved by the Pangkat. She also appended a Statement of Account indicating that the defendants’
back rentals amounted to P135,115.63.11
In their position paper, the defendants insisted that the dispute did not go through the LuponngTagapamayapaprior to the
filing of the complaint; hence, Berba’s complaint was premature. They also averred that the increase in the rental rates
imposed by the plaintiff was unjustified and illegal.
In her reply, the plaintiff alleged that there was no more need for her to secure a Certificate to File Action because she
was a resident of No. 978 Maligaya Street, Malate, Manila, while the defendants were residing in Barangay873, Zone 6 in
Sta. Ana, Manila.
On March 14, 2002, the MTC rendered judgment in favor of Berba. The fallo of the decision reads:
WHEREFORE, judgment is rendered in favor of the plaintiff and ordering the defendants and all persons claiming rights
under them to vacate the premises at 2338 M. Roxas St., Sta. Ana, Manila and restore possession thereof to the plaintiff.
Ordering the defendant to pay the amount of P135,115.63 representing monthly rentals since 1999 until December 2000.
Ordering the defendant to pay the plaintiff the sum of P4,562.63 per month beginning January 2001 and for the
succeeding months until finally vacated. Ordering the defendant to pay the reduced amount of P10,000.00 as attorney’s
fees plus the costs of suit.
SO ORDERED.12
The defendants appealed the decision to the RTC. On motion of the plaintiff, the RTC issued an order for the execution of
the decision pending appeal.13 The defendants filed a motion for the recall of the Order,14 but before the court could
resolve the motion, the Sheriff turned over the physical possession of the property to Berba on May 20, 2002. 15
In their Appeal Memorandum, Pablo and the heirs of Palanca insisted that Berba’s action in the MTC was premature
because of the absence of Certificate to File Action issued by the Lupon. They also claimed that Berba unlawfully
increased the rentals for the house.16 Berba, on the other hand, averred that there was no need of a prior referral to
the Lupon before filing her complaint. The petitioner cited Section 408(f) of the Local Government Code, pointing out that
she resided in a Barangay in Malate, 8 kilometers away from Barangay 873 in Sta. Ana, where Pablo and the Palanca
heirs resided.17
On August 20, 2002, the RTC rendered judgment granting the appeal and setting aside the appealed decision.
The fallo of the decision reads:
WHEREFORE, the decision of the Court a quo is ordered set aside. The complaint is also ordered DISMISSED
WITHOUT PREJUDICE. The Writ of Execution issued by the Court a quo pending appeal is also set aside.
SO ORDERED.18
The RTC ruled that under Section 408 of the Local Government Code, parties who reside in the same city or municipality
although in different barangays are mandated to go through conciliation proceedings in the Lupon.19The court cited the
rulings of this Court in Morata v. Go,20 and Vda. deBorromeo v. Pogoy.21
Berba filed a motion for the reconsideration22 of the decision, which the RTC denied in its Order23 dated October 2, 2002.
She then elevated the case to the CA via petition for review, where she averred:
a) The raising of other affirmative defenses apart from the non-referral to the Barangay Court by the respondents
constitute a waiver of such requirement; and
b) There was substantial compliance on the part of the petitioner with respect to referring her complaint before
theBarangay Court.24

Citing the ruling of this Court in Diu v. Court of Appeals,25 Berba claimed that Section 408 of the Local Government Code
should be construed liberally together with Section 412. She further averred that she had complied substantially with the
requisites of the law, and recalls that conciliation proceedings before the Luponresulted in the execution of an Agreement
on June 5, 1999. Upon failure to comply with the agreement, all chances of amicable settlement were effectively
foreclosed. Hence, Pablo and the Heirs of Palanca were estopped from claiming that she failed to comply with the Local
Government Code’s requirement of prior referral of their dispute to the Lupon.
After due proceedings, the CA rendered judgment dismissing the petition and affirming the RTC decision. Berba moved
for a reconsideration of the decision, which proved futile.
In the instant petition for review on certiorari, the petitioner alleges that:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THE DECISION OF
THIS HONORABLE COURT IN THE CASE OF DIU VS. COURT OF APPEALS (251 SCRA 478) AND IN DECLARING
THAT THERE WAS NO SUBSTANTIAL COMPLIANCE WITH THE MANDATE OF PD 1508 (NOW R.A. 7160) WITH
RESPECT TO PRIOR REFERRAL TO THE BARANGAY COURT, THEREBY DECIDING THE CASE NOT IN ACCORD
WITH LAW AND APPLICABLE DECISIONS OF THE COURT.26
The petitioner avers that she is a sickly widow, in the twilight of her years, and whose only source of income are the
rentals generated from the property, which she also uses to pay her medical expenses. She avers that the continued
denial of her right to the fruits of the subject property is highly unjust and contrary to the spirit behind the enactment of
Presidential Decree (P.D.) No. 1508.27
The petitioner also points out that, for her to pay obeisance to the decision of the CA, she would have to go through the
tedious, not to mention horrendous, process of going back to square one; that is, referring the dispute to
the barangay which, in all likelihood, would be rendered useless considering that respondents had already been validly
and effectively ejected from the leased premises. She would then have to go through the rungs of the judicial ladder a
second time to vindicate her trampled rights. She further claims that the CA’s affirmation of the RTC decision is equivalent
to sanctioning a "legal anomaly." She points out that the very purpose of barangayconciliation is to abbreviate disputes
between members of the same or adjacent barangays to the end that their disputes will not reach the doors of the courts.
Clearly, it does not contemplate a protracted process as suggested by the RTC ruling and affirmed by the CA. 28
In their comment on the petition, the respondents aver that the petitioner was estopped from relying on the June 5, 1999
Agreement between her and respondent Josephine Pablo before the Lupon because the respondent Heirs of Carlos
Palanca were not parties thereto. The respondents maintained that the petitioner must bear the blame for her failure to
comply with the Local Government Code. At first, she insisted that there was no need for prior referral of the dispute to
the Lupon, claiming that she resided in a barangay other than where the respondents resided. Thereafter, she made
a volte face and invoked the June 5, 1999 Agreement between her and respondent Josephine Pablo. Moreover, the
respondents aver, the MTC had no jurisdiction over the petitioner’s action for unlawful detainer because it was filed only
on June 21, 2001, or more than one year from June 5, 1999 when the petitioner and respondent Josephine Pablo
executed the agreement. As such, the action should be one for recovery of possession of property (accionpubliciana).
On June 2, 2004, the Court resolved to give due course to the petition and required the parties to file their respective
memoranda.29 The parties complied.
The Court rules that the CA cannot be faulted for affirming the decision of the RTC reversing the decision of the MTC and
ordering the dismissal of the complaint for unlawful detainer without prejudice.
The records show that petitioner and respondent Josephine Pablo executed an Agreement on June 5, 1999, which was
approved by the Lupon. Respondent Josephine Pablo did not repudiate the agreement; hence, such agreement of the
parties settling the case had the force and effect of a final judgment. As the Court declared inVidal v. Escueta,30 the
settlement of the parties may be enforced by the Lupon, through the punong barangay, within
six months; and if the settlement is not enforced after the lapse of said period, it may be enforced by an action in the
proper city or municipal court, as provided in Section 417 of the Local Government Code:
We also agree that the Secretary of the Lupon is mandated to transmit the settlement to the appropriate city or municipal
court within the time frame under Section 418 of the LGC and to furnish the parties and the LuponChairman with copies
thereof. The amicable settlement which is not repudiated within the period therefor may be enforced by execution by
the Lupon through the Punong Barangay within a time line of six months, and if the settlement is not so enforced by
the Lupon after the lapse of said period, it may be enforced only by an action in the proper city or municipal court as
provided for in Section 417 of the LGC of 1991, as amended, which reads:
SEC. 417. Execution. – The amicable settlement or arbitration award may be enforced by execution by the Luponwithin
six (6) months from the date of the settlement. After the lapse of such time, the settlement may be enforced by action in
the proper city or municipal court. (Italics supplied).
Section 417 of the Local Government Code provides a mechanism for the enforcement of a settlement of the parties
before the Lupon. It provides for a two-tiered mode of enforcement of an amicable settlement executed by the parties
before the Lupon, namely, (a) by execution of the Punong Barangay which is quasi-judicial and summary in nature on
mere motion of the party/parties entitled thereto; and (b) by an action in regular form, which remedy is judicial. Under the
first remedy, the proceedings are covered by the LGC and the KatarungangPambarangay Implementing Rules and
Regulations. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of

the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation
under the settlement. Under the second remedy, the proceedings are governed by the Rules of Court, as amended. The
cause of action is the amicable settlement itself, which, by operation of law, has the force and effect of a final judgment.
Section 417 of the LGC grants a period of six months to enforce the amicable settlement by the Lupon through thePunong
Barangay before such party may resort to filing an action with the MTC to enforce the settlement. Theraisond’etre of the
law is to afford the parties during the six-month time line, a simple, speedy and less expensive enforcement of their
settlement before the Lupon.31
In the present case, respondent Josephine Pablo failed to comply with her obligation of repaying the back rentals
of P81,818.00 and the current rentals for the house. Hence, the petitioner had the right to enforce the Agreement against
her and move for her eviction from the premises. However, instead of filing a motion before the Lupon for the enforcement
of the agreement, or (after six months), an action in the Metropolitan Trial Court (MTC) for the enforcement of the
settlement, the petitioner filed an action against respondent Josephine Pablo for unlawful detainer and the collection of
unpaid rentals, inclusive of those already due before the June 5, 1999 Agreement was executed. The action of the
petitioner against respondent Pablo was barred by the Agreement of June 5, 1999.
The Court notes that the petitioner even submitted with the MTC a copy of her June 5, 1999 Agreement with respondent
Josephine Pablo. Instead of dismissing the complaint as against such respondent, the MTC rendered judgment against
her and ordered her eviction from the leased premises.
The Court thus rules that the petitioner’s complaint against respondent Heirs of Carlos Palanca was premature. It bears
stressing that they were not impleaded by the petitioner as parties-respondents before the Lupon. The petitioner filed her
complaint solely against respondent Josephine Pablo. Moreover, the said respondent heirs were not privy to the said
agreement, and, as such, were not bound by it. Section 412 of the Local Government Code, sets forth the precondition to
filing of complaints in court, to wit:
SEC. 412 Conciliation.- (a) Pre-condition to filing of complaint in court. – No complaint, petition, action, or proceeding
involving any matter within the authority of the lupon shall be filed or instituted directly in court or any other government
office for adjudication, unless there has been a confrontation between the parties before thelupon chairman or
the pangkat, and that no conciliation or settlement has been reached as certified by the luponsecretary
or pangkat secretary as attested to by the lupon chairman or pangkat chairman or unless the settlement has been
repudiated by the parties thereto.
(b) Where parties may go directly to court. – The parties may go directly to court in the following instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings;
(3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal
property, and support pendente lite; and
(4) Where the action may otherwise be barred by the statute of limitations.
(c) Conciliation among members of indigenous cultural communities. – The customs and traditions of indigenous cultural
communities shall be applied in settling disputes between members of the cultural communities.
Under Sec. 408 of the same Code, parties actually residing in the same city or municipality are bound to submit their
disputes to the Lupon for conciliation/amicable settlement, unless otherwise provided therein:
SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. – The lupon of each barangay shall have authority
to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes
except:
(a) Where one party is the government or any subdivision or instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five Thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree
to submit their differences to amicable settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where
such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by
an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of justice or upon the
recommendation of the Secretary of Justice.
The court in which non-criminal cases not falling within the authority of the lupon under this Code are filed may, at any
time before trial, motuproprio refer the case to the lupon concerned for amicable settlement.
If the complainant/plaintiff fails to comply with the requirements of the Local Government Code, such complaint filed with
the court may be dismissed for failure to exhaust all administrative remedies.32
The petitioner’s reliance on the ruling of this Court in Diu v. Court of Appeals33 is misplaced. In that case, there was a
confrontation by the parties before the Barangay Chairman and no agreement was reached. Although nopangkat was
formed, the Court held in that instance that there was substantial compliance with the law. In any event, the issue in that
case was whether the failure to specifically allege that there was no compliance with thebarangay conciliation procedure
constitutes a waiver of that defense. Moreover, no such confrontation before theLupon occurred with respect to the
unlawful detainer suit against Josephine Pablo before the MTC.34
In this case, the petitioner and the respondent Heirs of Carlos Palanca resided in the City of Manila, albeit in different
barangays. The dispute between the petitioner and the respondent heirs was thus a matter within the authority of
the Lupon. Hence, the petitioner’s complaint for unlawful detainer and the collection of back rentals should have been first
filed before
the Lupon for mandatory conciliation, to afford the parties an opportunity to settle the case amicably. However, the
petitioner filed her complaint against the respondent Heirs of Carlos Palanca directly with the MTC. Clearly then, her
complaint was premature. The execution of the June 5, 1999 Agreement between petitioner and respondent Josephine
Pablo does not amount to substantial compliance to the requirements of the Local Government Code on
mandatory barangay conciliation proceedings.
Indeed, considering that the MTC had already rendered a decision on the merits of the case, it is not without reluctance
that the Court reaches this conclusion which would require the petitioner to start again from the beginning. The facts of the
present case, however, do not leave us any choice. To grant the petition under these circumstances would amount to
refusal to give effect to the Local Government Code and to wiping it off the statute books insofar as ejectment and other
cases governed by the Rule on Summary Procedure are concerned. This Court has no authority to do that. 35
IN LIGHT OF ALL THE FOREGOING, the Petition is DENIED.
SO ORDERED.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 162084 June 28, 2005
APRIL MARTINEZ, FRITZ DANIEL MARTINEZ and MARIA OLIVIA MARTINEZ, petitioners,
vs.
RODOLFO G. MARTINEZ, respondent.
D E C I S I O N
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 59420 setting
aside and reversing the decision of the Regional Trial Court (RTC) of Manila, Branch 30, in Civil Case No. 00-96962
affirming, on appeal, the decision of the Metropolitan Trial Court (MTC) of Manila in Civil Case No. 164761 (CV) for
ejectment.
The Antecedents
The spouses Daniel P. Martinez, Sr. and Natividad de Guzman-Martinez were the owners of a parcel of land identified as
Lot 18-B-2 covered by Transfer Certificate of Title (TCT) No. 54334, as well as the house constructed thereon.2 On March
6, 1993, Daniel, Sr. executed a Last Will and Testament3 directing the subdivision of the property into three lots, namely,
Lots 18-B-2-A, 18-B-2-B and 18-B-2-C. He then bequeathed the three lots to each of his sons, namely, Rodolfo, Manolo
and Daniel, Jr.; Manolo was designated as the administrator of the estate.
In May 1995, Daniel, Sr. suffered a stroke which resulted in the paralysis of the right side of his body. Natividad died on
October 26, 1996.4 Daniel, Sr. passed away on October 6, 1997.5
On September 16, 1998, Rodolfo found a deed of sale purportedly signed by his father on September 15, 1996, where t he
latter appears to have sold Lot 18-B-2 to Manolo and his wife Lucila.6 He also discovered that TCT No. 237936 was
issued to the vendees based on the said deed of sale.7
Rodolfo filed a complaint8 for annulment of deed of sale and cancellation of TCT No. 237936 against his brother Manolo
and his sister-in-law Lucila before the RTC. He also filed a criminal complaint for estafa through falsification of a public
document in the Office of the City Prosecutor against Manolo, which was elevated to the Department of Justice.9
On motion of the defendants, the RTC issued an Order10 on March 29, 1999, dismissing the complaint for annulment of
deed of sale on the ground that the trial court had no jurisdiction over the action since there was no allegation in the
complaint that the last will of Daniel Martinez, Sr. had been admitted to probate. Rodolfo appealed the order to the CA.11
On October 4, 1999, Rodolfo filed a Petition with the RTC of Manila for the probate of the last will of the deceased Daniel
Martinez, Sr.12
In the meantime, the spouses Manolo and Lucila Martinez wrote Rodolfo, demanding that he vacate the property. Rodolfo
ignored the letter and refused to do so. This prompted the said spouses to file a complaint for unlawful detainer against
Rodolfo in the MTC of Manila. They alleged that they were the owners of the property covered by TCT No. 237936, and
that pursuant to Presidential Decree (P.D.) No. 1508, the matter was referred to thebarangay for conciliation and
settlement, but none was reached. They appended the certification to file action executed by the barangay chairman to
the complaint.
In his Answer13 to the complaint filed on October 11, 1999, Rodolfo alleged, inter alia, that the complaint failed to state a
condition precedent, namely, that earnest efforts for an amicable settlement of the matter between the parties had been
exerted, but that none was reached. He also pointed out that the dispute had not been referred to the barangay before the
complaint was filed.

On October 20, 1999, the spouses Martinez filed an Amended Complaint in which they alleged that earnest efforts toward
a settlement had been made, but that the same proved futile. Rodolfo filed his opposition thereto, on the ground that there
was no motion for the admission of the amended complaint. The trial court failed to act on the matter.
The spouses Martinez alleged in their position paper that earnest efforts toward a compromise had been made and/or
exerted by them, but that the same proved futile.14 No amicable settlement was, likewise, reached by the parties during
the preliminary conference because of irreconcilable differences. The MTC was, thus, impelled to terminate the
conference.15
On February 21, 2000, the trial court rendered judgment in favor of the spouses Martinez. The fallo of the decision reads:
WHEREFORE, premises considered, judgment is rendered in favor of plaintiff. The defendant, including any person
claiming right under him, is ordered:
1) To vacate the subject premises;
2) To pay plaintiff the sum of P10,000.00 a month starting July 17, 1999, the date of last demand until he vacates
the same;
3) To pay the sum of P10,000.00 as and for attorney’s fees; and
4) Costs of suit.
SO ORDERED.16
The trial court declared that the spouses Martinez had substantially complied with Article 151 of the Family Code of the
Philippines17 based on the allegations of the complaint and the appended certification to file action issued by
the barangay captain.
Rodolfo appealed the decision to the RTC. On May 31, 2000, the RTC rendered judgment affirming the appealed
decision. He then filed a petition for review of the decision with the CA, alleging that:
1. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH FOUND WITHOUT MERIT THE DEFENSE
OF PETITIONER THAT THERE IS NO ALLEGATION IN THE COMPLAINT THAT PETITIONER HAS UNLAWFULLY
WITHHELD POSSESSION OF THE PROPERTY FROM RESPONDENTS – A REQUIREMENT IN [AN] UNLAWFUL
DETAINER SUIT.
2. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH FOUND THAT PETITIONER’S
POSSESSION OF THE PROPERTY IS BY MERE TOLERANCE OF RESPONDENTS.
3. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH FOUND THAT THE RESPONDENTS HAVE
A CAUSE OF ACTION.
4. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH DID NOT RESOLVE THE SIXTH ISSUE, TO
WIT, "Whether or not this Court has jurisdiction over this case considering that the allegations in the complaint makes out
a case of accionpubliciana."
5. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH HAS NO JURISDICTION OVER THE CASE.
6. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH FOUND THAT THE MANDATORY
REQUIREMENT OF CONCILIATION HAS BEEN COMPLIED WITH.
7. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH FOUND THAT THERE WAS SUBSTANTIAL
COMPLIANCE WITH THE KATARUNGANG PAMBARANGAY LAW.
8. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH FOUND THAT THE PENDENCY OF CIVIL
CASE NO. 98-91147 AND SPECIAL PROCEEDINGS NO. 99-95281, INVOLVING THE PETITIONER AND
RESPONDENTS AND INVOLVING THE SAME PROPERTY DID NOT DIVEST THE MTC OF AUTHORITY TO DECIDE
THE CASE.
9. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC WHICH GRANTED THE RELIEF PRAYED FOR BY
THE RESPONDENTS.
10. THE RTC ERRED IN AFFIRMING THE DECISION OF THE MTC.18
On November 27, 2003, the CA rendered judgment granting the petition and reversing the decision of the RTC. The
appellate court ruled that the spouses Martinez had failed to comply with Article 151 of the Family code. The CA also held
that the defect in their complaint before the MTC was not cured by the filing of an amended complaint because the latter
pleading was not admitted by the trial court.

Upon the denial of their motion for reconsideration of the said decision, the spouses Martinez filed the present petition for
review on certiorari, in which they raise the following issues:
I.
WHETHER OR NOT THE CERTIFICATION TO FILE ACTION AND THE ALLEGATIONS IN THE COMPLAINT THAT
THE CASE PASSED [THROUGH] THE BARANGAY BUT NO SETTLEMENT WAS REACHED, ARE SUFFICIENT
COMPLIANCE TO PROVE THAT, INDEED, EARNEST EFFORTS WERE, IN FACT, MADE BUT THE SAME HAVE
FAILED PRIOR TO THE FILING OF THE COMPLAINT.
II.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY AND SERIOUSLY ERRED IN FINDING THAT THERE WAS
NON-COMPLIANCE WITH THE REQUIREMENT PROVIDED FOR UNDER ARTICLE 151 OF THE FAMILY CODE,
CONSIDERING THAT ONE OF THE PARTIES TO A SUIT IN THIS CASE IS NOT A MEMBER OF THE SAME
FAMILY.19
The petitioners alleged that they substantially complied with Article 151 of the Family Code, since they alleged the
following in their original complaint:
2. In compliance with P.D. 1508, otherwise known as the "KatarungangPambarangay," this case passed [through] the
Barangay and no settlement was forged between plaintiffs and defendant as a result of which Certification to File Action
was issued by Barangay 97, Zone 8, District I, Tondo, Manila. xxx" (Underscoring supplied)20
Further, the petitioners averred, they alleged in their position paper that they had exerted earnest efforts towards a
compromise which proved futile. They also point out that the MTC resolved to terminate the preliminary conference due to
irreconcilable difference between the parties. Besides, even before they filed their original complaint, animosity already
existed between them and the respondent due to the latter’s filing of civil and criminal cases against them; hence, the
objective of an amicable settlement could not have been attained. Moreover, under Article 150 of the Family Code,
petitioner Lucila Martinez had no familial relations with the respondent, being a mere sister-in-law. She was a stranger to
the respondent; hence, there was no need for the petitioners21 to comply with Article 151 of the Family Code.
The petition is meritorious.
Article 151 of the Family Code provides:
Art. 151. No suit between members of the same family shall prosper unless it should appear from the verified complaint or
petition that earnest efforts toward a compromise have been made, but that the same have failed. If it is shown that no
such efforts were, in fact, made, the case must be dismissed.
This rule shall not apply to cases which may not be the subject of compromise under the Civil Code.
The phrase "members of the family" must be construed in relation to Article 150 of the Family Code, to wit:
Art. 150. Family relations include those:
(1) Between husband and wife;
(2) Between parents and children;
(3) Among other ascendants and descendants; and
(4) Among brothers and sisters, whether of the full or half-blood.
Article 151 of the Family code must be construed strictly, it being an exception to the general rule. Hence, a sister-in-law
or brother-in-law is not included in the enumeration.22
As pointed out by the Code Commission, it is difficult to imagine a sadder and more tragic spectacle than a litigation
between members of the same family. It is necessary that every effort should be made toward a compromise before a
litigation is allowed to breed hate and passion in the family and it is known that a lawsuit between close relatives
generates deeper bitterness than between strangers.23
Thus, a party’s failure to comply with Article 151 of the Family Code before filing a complaint against a family member
would render such complaint premature.
In this case, the decision of the CA that the petitioners were mandated to comply with Article 151 of the Family code and
that they failed to do so is erroneous.
First. Petitioner Lucila Martinez, the respondent’s sister-in-law, was one of the plaintiffs in the MTC. The petitioner is not a
member of the same family as that of her deceased husband and the respondent:

As regards plaintiff’s failure to seek a compromise, as an alleged obstacle to the present case, Art. 222 of our Civil Code
provides:
"No suit shall be filed or maintained between members of the same family unless it should appear that earnest efforts
toward a compromise have been made, but that the same have failed, subject to the limitations in Article 2035."
It is noteworthy that the impediment arising from this provision applies to suits "filed or maintained betweenmembers of
the same family." This phrase, "members of the same family," should, however, be construed in the light of Art. 217 of the
same Code, pursuant to which:
"Family relations shall include those:
(1) Between husband and wife;
(2) Between parent and child;
(3) Among other ascendants and their descendants;
(4) Among brothers and sisters."
Mrs. Gayon is plaintiff’s sister-in-law, whereas her children are his nephews and/or nieces. Inasmuch as none of them is
included in the enumeration contained in said Art. 217 – which should be construed strictly, it being an exception to the
general rule – and Silvestre Gayon must necessarily be excluded as party in the case at bar, it follows that the same does
not come within the purview of Art. 222, and plaintiff’s failure to seek a compromise before filing the complaint does not
bar the same.24
Second. The petitioners were able to comply with the requirements of Article 151 of the Family Code because they
alleged in their complaint that they had initiated a proceeding against the respondent for unlawful detainer in
theKatarungangPambarangay, in compliance with P.D. No. 1508; and that, after due proceedings, no amicable settlement
was arrived at, resulting in the barangay chairman’s issuance of a certificate to file action.25 The Court rules that such
allegation in the complaint, as well as the certification to file action by the barangay chairman, is sufficient compliance with
article 151 of the Family Code. It bears stressing that under Section 412(a) of Republic Act No. 7160, no complaint
involving any matter within the authority of the Lupon shall be instituted or filed directly in court for adjudication unless
there has been a confrontation between the parties and no settlement was reached.26
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No.
59420 is REVERSED AND SET ASIDE. The Decision of the Metropolitan Trial Court of Manila, as affirmed on appeal by
the Regional Trial Court of Manila, Branch 30, in Civil Case No. 164761(CV) is REINSTATED. No costs.
SO ORDERED.

SUPREME COURT
Manila
EN BANC
G.R. No. L-21897 October 22, 1963
RAMON A. GONZALES, petitioner,
vs.
RUFINO G. HECHANOVA, as Executive Secretary, MACARIO PERALTA, JR., as Secretary of Defense, PEDRO
GIMENEZ, as Auditor General, CORNELIO BALMACEDA, as Secretary of Commerce and Industry, and
SALVADOR MARINO, Secretary of Justice, respondents.
Ramon A. Gonzales in his own behalf as petitioner.
Office of the Solicitor General and Estanislao Fernandez for respondents.
CONCEPCION, J.:
This is an original action for prohibition with preliminary injunction.
It is not disputed that on September 22, 1963, respondent Executive Secretary authorized the importation of 67,000 tons
of foreign rice to be purchased from private sources, and created a rice procurement committee composed of the other
respondents herein1 for the implementation of said proposed importation. Thereupon, or September 25, 1963, herein
petitioner, Ramon A. Gonzales — a rice planter, and president of the Iloilo Palay and Corn Planters Association, whose
members are, likewise, engaged in the production of rice and corn — filed the petition herein, averring that, in making or
attempting to make said importation of foreign rice, the aforementioned respondents "are acting without jurisdiction or in
excess of jurisdiction", because Republic Act No. 3452 which allegedly repeals or amends Republic Act No. 220 —
explicitly prohibits the importation of rice and corn "the Rice and Corn Administration or any other government agency;"
that petitioner has no other plain, speedy and adequate remedy in the ordinary course of law; and that a preliminary
injunction is necessary for the preservation of the rights of the parties during the pendency this case and to prevent the
judgment therein from coming ineffectual. Petitioner prayed, therefore, that said petition be given due course; that a writ of
preliminary injunction be forthwith issued restraining respondent their agents or representatives from implementing the
decision of the Executive Secretary to import the aforementioned foreign rice; and that, after due hearing, judgment be
rendered making said injunction permanent.
Forthwith, respondents were required to file their answer to the petition which they did, and petitioner's pray for a writ of
preliminary injunction was set for hearing at which both parties appeared and argued orally. Moreover, a memorandum
was filed, shortly thereafter, by the respondents. Considering, later on, that the resolution said incident may require some
pronouncements that would be more appropriate in a decision on the merits of the case, the same was set for hearing on
the merits thereafter. The parties, however, waived the right to argue orally, although counsel for respondents filed their
memoranda.
I. Sufficiency of petitioner's interest.
Respondents maintain that the status of petitioner as a rice planter does not give him sufficient interest to file the petition
herein and secure the relief therein prayed for. We find no merit in this pretense. Apart from prohibiting the importation of
rice and corn "by the Rice and Corn Administration or any other government agency". Republic Act No. 3452 declares, in
Section 1 thereof, that "the policy of the Government" is to "engage in the purchase of these basic foods directly from
those tenants, farmers, growers, producers and landowners in the Philippines who wish to dispose of their products at a
price that will afford them a fair and just return for their labor and capital investment. ... ." Pursuant to this provision,
petitioner, as a planter with a rice land of substantial proportion,2 is entitled to a chance to sell to the Government the rice
it now seeks to buy abroad. Moreover, since the purchase of said commodity will have to be effected with public funds
mainly raised by taxation, and as a rice producer and landowner petitioner must necessarily be a taxpayer, it follows that
he has sufficient personality and interest to seek judicial assistance with a view to restraining what he believes to be an
attempt to unlawfully disburse said funds.
II. Exhaustion of administrative remedies.

Respondents assail petitioner's right to the reliefs prayed for because he "has not exhausted all administrative remedies
available to him before coming to court". We have already held, however, that the principle requiring the previous
exhaustion of administrative remedies is not applicable where the question in dispute is purely a legal one", 3 or where the
controverted act is "patently illegal" or was performed without jurisdiction or in excess of jurisdiction,4 or where the
respondent is a department secretary, whose acts as an alter-ego of the President bear the implied or assumed approval
of the latter,5 unless actually disapproved by him,6 or where there are circumstances indicating the urgency of judicial
intervention.7 The case at bar fails under each one of the foregoing exceptions to the general rule. Respondents'
contention is, therefore, untenable.
III. Merits of petitioner's cause of action.
Respondents question the sufficiency of petitioner's cause of action upon the theory that the proposed importation in
question is not governed by Republic Acts Nos. 2207 and 3452, but was authorized by the President as Commander-in-
Chief "for military stock pile purposes" in the exercise of his alleged authority under Section 2 of Commonwealth Act No.
1;8 that in cases of necessity, the President "or his subordinates may take such preventive measure for the restoration of
good order and maintenance of peace"; and that, as Commander-in-Chief of our armed forces, "the President ... is duty-
bound to prepare for the challenge of threats of war or emergency withoutwaiting for any special authority".
Regardless of whether Republic Act No. 3452 repeals Republic Act No. 2207, as contended by petitioner herein - on
which our view need not be expressed — we are unanimously of the opinion - assuming that said Republic Act No. 2207
is still in force — that the two Acts are applicable to the proposed importation in question because the language of said
laws is such as to include within the purview thereof all importations of rice and corn into the Philippines". Pursuant to
Republic Act No. 2207, "it shall be unlawful for any person, association, corporation orgovernment agency to import rice
and corn into any point in the Philippines", although, by way of exception, it adds, that "the President of the
Philippines may authorize the importation of these commodities through any government agency that he may designate",
is the conditions prescribed in Section 2 of said Act are present. Similarly, Republic Act No. 3452 explicitly enjoins "the
Rice and Corn Administration or any government agency" from importing rice and corn.
Respondents allege, however, that said provisions of Republic Act Nos. 2207 and 3452, prohibiting the importation of rice
and corn by any "government agency", do not apply to importations "made by the Government itself", because the latter is
not a "government agency". This theory is devoid of merit. The Department of National Defense and the Armed Forces of
the Philippines, as well as respondents herein, and each and every officer and employee of our Government, our
government agencies and/or agents. The applicability of said laws even to importations by the Government as such,
becomes more apparent when we consider that:
1. The importation permitted in Republic Act No. 2207 is to be authorized by the "President of the Philippines" and, hence,
by or on behalf of the Government of the Philippines;
2. Immediately after enjoining the Rice and Corn administration and any other government agency from importing rice and
corn, Section 10 of Republic Act No. 3452 adds "that the importation of rice and corn is left to private parties upon
payment of the corresponding taxes", thus indicating that only "private parties" may import rice under its provisions; and
3. Aside from prescribing a fine not exceeding P10,000.00 and imprisonment of not more than five (5) years for those who
shall violate any provision of Republic Act No. 3452 or any rule and regulation promulgated pursuant thereto, Section 15
of said Act provides that "if the offender is a public official and/or employees", he shall be subject to the additional penalty
specified therein. A public official is an officer of the Government itself, as distinguished from officers or employees of
instrumentalities of the Government. Hence, the duly authorized acts of the former are those of the Government, unlike
those of a government instrumentality which may have a personality of its own, distinct and separate from that of the
Government, as such. The provisions of Republic Act No. 2207 are, in this respect, even more explicit. Section 3 thereof
provides a similar additional penalty for any "officer or employee of the Government" who "violates, abets or tolerates the
violation of any provision" of said Act. Hence, the intent to apply the same to transactions made by the very government is
patent.
Indeed, the restrictions imposed in said Republic Acts are merely additional to those prescribed in Commonwealth Act No.
138, entitled "An Act to give native products and domestic entities the preference in the purchase of articles for the
Government." Pursuant to Section 1 thereof:
The Purchase and Equipment Division of the Government of the Philippines and other officers and employees of
the municipal and provincial governments and the Government of the Philippines and of chartered cities, boards,
commissions, bureaus, departments, offices, agencies, branches, and bodies of any description, including
government-owned companies, authorized to requisition, purchase, or contract or make disbursements for
articles, materials, and supplies for public use, public buildings, or public works shall give preference to
materials ... produced ... in the Philippines or in the United States, and to domestic entities, subject to the
conditions hereinbelow specified. (Emphasis supplied.)
Under this provision, in all purchases by the Government, including those made by and/or for the armed forces,preference
shall be given to materials produced in the Philippines. The importation involved in the case at bar violates this general
policy of our Government, aside from the provisions of Republic Acts Nos. 2207 and 3452.
The attempt to justify the proposed importation by invoking reasons of national security — predicated upon the "worsening
situation in Laos and Vietnam", and "the recent tension created by the Malaysia problem" - and the alleged powers of the
President as Commander-in-Chief of all armed forces in the Philippines, under Section 2 of the National Defense Act

(Commonwealth Act No. 1), overlooks the fact that the protection of local planters of rice and corn in a manner that would
foster and accelerate self-sufficiency in the local production of said commodities constitutes a factor that is vital to our
ability to meet possible national emergency. Even if the intent in importing goods in anticipation of such emergency were
to bolster up that ability, the latter would, instead, be impaired if the importation were so made as to discourage our
farmers from engaging in the production of rice.
Besides, the stockpiling of rice and corn for purpose of national security and/or national emergency is within the purview
of Republic Act No. 3452. Section 3 thereof expressly authorizes the Rice and Corn Administration "to accumulate stocks
as a national reserve in such quantities as it may deem proper and necessary to meet any contingencies". Moreover, it
ordains that "the buffer stocks held as a national reserve ... be deposited by the administration throughout the country
under the proper dispersal plans ... and may be released only upon the occurrence of calamities or emergencies ...".
(Emphasis applied.)
Again, the provisions of Section 2 of Commonwealth Act No. 1, upon which respondents rely so much, are not self-
executory. They merely outline the general objectives of said legislation. The means for the attainment of those objectives
are subject to congressional legislation. Thus, the conditions under which the services of citizens, as indicated in said
Section 2, may be availed of, are provided for in Sections 3, 4 and 51 to 88 of said Commonwealth Act No. 1. Similarly,
Section 5 thereof specifies the manner in which resources necessary for our national defense may be secured by the
Government of the Philippines, but only "during a national mobilization",9which does not exist. Inferentially, therefore, in
the absence of a national mobilization, said resources shall be produced in such manner as Congress may by other laws
provide from time to time. Insofar as rice and corn are concerned, Republic Acts Nos. 2207 and 3452, and
Commonwealth Act No. 138 are such laws.
Respondents cite Corwin in support of their pretense, but in vain. An examination of the work cited10 shows that Corwin
referred to the powers of the President during "war time"11 or when he has placed the country or a part thereof under
"martial law".12 Since neither condition obtains in the case at bar, said work merely proves that respondents' theory, if
accepted, would, in effect, place the Philippines under martial law, without a declaration of the Executive to that effect.
What is worse, it would keep us perpetually under martial law.
It has been suggested that even if the proposed importation violated Republic Acts Nos. 2207 and 3452, it should,
nevertheless, be permitted because "it redounds to the benefit of the people". Saluspopuliestsupremalex, it is said.
If there were a local shortage of rice, the argument might have some value. But the respondents, as officials of this
Government, have expressly affirmed again and again that there is no rice shortage. And the importation is avowedly for
stockpile of the Army — not the civilian population.
But let us follow the respondents' trend of thought. It has a more serious implication that appears on the surface. It implies
that if an executive officer believes that compliance with a certain statute will not benefit the people, he is at liberty to
disregard it. That idea must be rejected - we still live under a rule of law.
And then, "the people" are either producers or consumers. Now — as respondents explicitly admit — Republic Acts Nos.
2207 and 3452 were approved by the Legislature for the benefit of producers and consumers, i.e., the people, it must
follow that the welfare of the people lies precisely in the compliance with said Acts.
It is not for respondent executive officers now to set their own opinions against that of the Legislature, and adopt means or
ways to set those Acts at naught. Anyway, those laws permit importation — but under certain conditions, which have not
been, and should be complied with.
IV. The contracts with Vietnam and Burma —
It is lastly contended that the Government of the Philippines has already entered into two (2) contracts for the Purchase of
rice, one with the Republic of Vietnam, and another with the Government of Burma; that these contracts constitute valid
executive agreements under international law; that such agreements became binding effective upon the signing thereof by
representatives the parties thereto; that in case of conflict between Republic Acts Nos. 2207 and 3452 on the one hand,
and aforementioned contracts, on the other, the latter should prevail, because, if a treaty and a statute are inconsistent
with each other, the conflict must be resolved — under the American jurisprudence — in favor of the one which is latest in
point of time; that petitioner herein assails the validity of acts of the Executive relative to foreign relations in the conduct of
which the Supreme Court cannot interfere; and the aforementioned contracts have already been consummated, the
Government of the Philippines having already paid the price of the rice involved therein through irrevocable letters of
credit in favor of the sell of the said commodity. We find no merit in this pretense.
The Court is not satisfied that the status of said tracts as alleged executive agreements has been sufficiently established.
The parties to said contracts do not pear to have regarded the same as executive agreements. But, even assuming that
said contracts may properly considered as executive agreements, the same are unlawful, as well as null and void, from a
constitutional viewpoint, said agreements being inconsistent with the provisions of Republic Acts Nos. 2207 and 3452.
Although the President may, under the American constitutional system enter into executive agreements without previous
legislative authority, he may not, by executive agreement, enter into a transaction which is prohibited by statutes enacted
prior thereto. Under the Constitution, the main function of the Executive is to enforce laws enacted by Congress. The
former may not interfere in the performance of the legislative powers of the latter, except in the exercise of his veto power.
He may not defeat legislative enactments that have acquired the status of law, by indirectly repealing the same through an
executive agreement providing for the performance of the very act prohibited by said laws.

The American theory to the effect that, in the event of conflict between a treaty and a statute, the one which is latest in
point of time shall prevail, is not applicable to the case at bar, for respondents not only admit, but, alsoinsist that the
contracts adverted to are not treaties. Said theory may be justified upon the ground that treaties to which the United
States is signatory require the advice and consent of its Senate, and, hence, of a branch of the legislative department. No
such justification can be given as regards executive agreements not authorized by previous legislation, without completely
upsetting the principle of separation of powers and the system of checks and balances which are fundamental in our
constitutional set up and that of the United States.
As regards the question whether an international agreement may be invalidated by our courts, suffice it to say that the
Constitution of the Philippines has clearly settled it in the affirmative, by providing, in Section 2 of Article VIII thereof, that
the Supreme Court may not be deprived "of its jurisdiction to review, revise, reverse, modify, or affirm on
appeal, certiorari, or writ of error as the law or the rules of court may provide, final judgments and decrees of inferior
courts in — (1) All cases in which the constitutionality or validity of any treaty, law, ordinance, or executive order or
regulation is in question". In other words, our Constitution authorizes the nullification of a treaty, not only when it conflicts
with the fundamental law, but, also, when it runs counter to an act of Congress.
The alleged consummation of the aforementioned contracts with Vietnam and Burma does not render this case academic,
Republic Act No. 2207 enjoins our Government not from entering into contracts for the purchase of rice, but
from importing rice, except under the conditions Prescribed in said Act. Upon the other hand, Republic Act No. 3452 has
two (2) main features, namely: (a) it requires the Government to purchase rice and corn directly from our local planters,
growers or landowners; and (b) it prohibits importations of rice by the Government, and leaves such importations to
private parties. The pivotal issue in this case is whether the proposed importation — which has not been consummated as
yet — is legally feasible.
Lastly, a judicial declaration of illegality of the proposed importation would not compel our Government to default in the
performance of such obligations as it may have contracted with the sellers of the rice in question, because, aside from the
fact that said obligations may be complied with without importing the commodity into the Philippines, the proposed
importation may still be legalized by complying with the provisions of the aforementioned laws.
V. The writ of preliminary injunction.
The members of the Court have divergent opinions on the question whether or not respondents herein should be enjoined
from implementing the aforementioned proposed importation. However, the majority favors the negative view, for which
reason the injunction prayed for cannot be granted.
WHEREFORE, judgment is hereby rendered declaring that respondent Executive Secretary had and has no power to
authorize the importation in question; that he exceeded his jurisdiction in granting said authority; said importation is not
sanctioned by law and is contrary to its provisions; and that, for lack of the requisite majority, the injunction prayed for
must be and is, accordingly denied. It is so ordered.
Bengzon, CJ, Padilla, Labrador, Reyes, J.B.L., Dizon and Makalintal, JJ., concur.
Paredes and Regala, JJ., concur in the result.
Separate Opinions
BAUTISTA ANGELO, J., concurring:
Under Republic Act No. 2207, which took effect on May 15, 1959, it is unlawful for any person, association, corporation or
government agency to import rice and corn into any point in the Philippines. The exception is if there is an existing or
imminent shortage of such commodity of much gravity as to constitute national emergency in which case an importation
may be authorized by the President when so certified by the National Economic Council.
However, on June 14, 1962, Republic Act 3452 was enacted providing that the importation of rice and corn canonly be
made by private parties thereby prohibiting from doing so the Rice and Corn Administration or any other government
agency. Republic Act 3452 does not expressly repeal Republic Act 2207, but only repeals or modified those parts thereof
that are inconsistent with its provisions. The question that now arises is: Has the enactment of Republic Act 3452 the
effect of prohibiting completely the government from importing rice and corn into the Philippines?
My answer is in the negative. Since this Act does not in any manner provide for the importation of rice and corn in case of
national emergency, the provision of the former law on that matter should stand, for that is not inconsistent with any
provision embodied in Republic Act 3452. The Rice and Corn Administration, or any other government agency, may
therefore still import rice and corn into the Philippines as provided in Republic Act 2207 if there is a declared national
emergency.
The next question that arises is: Can the government authorize the importation of rice and corn regardless of Republic Act
2207 if that is authorized by the President as Commander-in-Chief of the Philippine Army as a military precautionary
measure for military stockpile?

Respondents answer this question in the affirmative. They advance the argument that it is the President's duty to see to it
that the Armed Forces of the Philippines are geared to the defenses of the country as well as to the fulfillment of our
international commitments in Southeast Asia in the event the peace and security of the area are in danger. The stockpiling
of rice, they aver, is an essential requirement of defense preparation in view of the limited local supply and the probable
disruption of trade and commerce with outside countries in the event of armed hostilities, and this military precautionary
measure is necessary because of the unsettled conditions in the Southeast Asia bordering on actual threats of armed
conflicts as evaluated by the Intelligence Service of the Military Department of our Government. This advocacy, they
contend, finds support in the national defense policy embodied in Section 2 of our National Defense Act (Commonwealth
Act No. 1), which provides:
(a) The preservation of the State is the obligation of every citizen. The security of the Philippines and the freedom,
independence and perpetual neutrality of the Philippine Republic shall be guaranteed by the employment of all
citizens, without distinction of sex or age, and all resources.
(b) The employment of the nation's citizens and resources for national defense shall be effected by a national
mobilization.
(c) The national mobilization shall include the execution of all measures necessary to pass from a peace to a war
footing.
(d) The civil authority shall always be supreme. The President of the Philippines as the Commander-in-Chief of all
military forces, shall be responsible that mobilization measures are prepared at all times.(Emphasis supplied)
Indeed, I find in that declaration of policy that the security of the Philippines and its freedom constitutes the core of the
preservation of our State which is the basic duty of every citizen and that to secure which it is enjoined that the President
employ all the resources at his command. But over and above all that power and duty, fundamental as they may seem,
there is the injunction that the civil authority shall always be supreme. This injunction can only mean that while all
precautions should be taken to insure the security and preservation of the State and to this effect the employment of all
resources may be resorted to, the action must always be taken within the framework of the civil authority. Military authority
should be harmonized and coordinated with civil authority, the only exception being when the law clearly ordains
otherwise. Neither Republic Act 2207, nor Republic Act 3452, contains any exception in favor of military action concerning
importation of rice and corn. An exception must be strictly construed.
A distinction is made between the government and government agency in an attempt to take the former out of the
operation of Republic Act 2207. I disagree. The Government of the Republic of the Philippines under the Revised
Administrative Code refers to that entity through which the functions of government are exercised, including the various
arms through which political authority is made effective whether they be provincial, municipal or other form of local
government, whereas a government instrumentality refers to corporations owned or controlled by the government to
promote certain aspects of the economic life of our people. A government agency, therefore, must necessarily refer to the
government itself of the Republic, as distinguished from any government instrumentality which has a personality distinct
and separate from it (Section 2).
The important point to determine, however, is whether we should enjoin respondents from carrying out the importation of
the rice which according to the record has been authorized to be imported on government to government level, it
appearing that the arrangement to this effect has already been concluded, the only thing lacking being its implementation.
This is evident from the manifestation submitted by the Solicitor General wherein it appears that the contract for the
purchase of 47,000 tons of rice from had been sign on October 5, 1963, and for the purchase of 20,000 tons from Burma
on October 8, 1963, by the authorized representatives of both our government and the governments of Vietnam and
Burma, respectively. If it is true that, our government has already made a formal commitment with the selling countries
there arises the question as to whether the act can still be impeded at this stage of the negotiations. Though on this score
there is a divergence of opinion, it is gratifying to note that the majority has expressed itself against it. This is a plaus ible
attitude for, had the writ been issued, our government would have been placed in a predicament where, as a necessary
consequence, it would have to repudiate a duly formalized agreement to its great embarrassment and loss of face. This
was avoided by the judicial statesmanship evinced by the Court.

SUPREME COURT
Manila
EN BANC
G.R. No. L-7995 May 31, 1957
LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations and partnerships
adversely affected. by Republic Act No. 1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City Treasurer of Manila, respondents.
Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for respondent Secretary of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent City Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.
LABRADOR, J.:
I. The case and issue, in general
This Court has before it the delicate task of passing upon the validity and constitutionality of a legislative enactment,
fundamental and far-reaching in significance. The enactment poses questions of due process, police power and equal
protection of the laws. It also poses an important issue of fact, that is whether the conditions which the disputed law
purports to remedy really or actually exist. Admittedly springing from a deep, militant, and positive nationalistic impulse,
the law purports to protect citizen and country from the alien retailer. Through it, and within the field of economy it
regulates, Congress attempts to translate national aspirations for economic independence and national security, rooted in
the drive and urge for national survival and welfare, into a concrete and tangible measures designed to free the national
retailer from the competing dominance of the alien, so that the country and the nation may be free from a supposed
economic dependence and bondage. Do the facts and circumstances justify the enactment?
II. Pertinent provisions of Republic Act No. 1180
Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it nationalizes the retail trade
business. The main provisions of the Act are: (1) a prohibition against persons, not citizens of the Philippines, and against
associations, partnerships, or corporations the capital of which are not wholly owned by citizens of the Philippines, from
engaging directly or indirectly in the retail trade; (2) an exception from the above prohibition in favor of aliens actually
engaged in said business on May 15, 1954, who are allowed to continue to engaged therein, unless their licenses are
forfeited in accordance with the law, until their death or voluntary retirement in case of natural persons, and for ten years
after the approval of the Act or until the expiration of term in case of juridical persons; (3) an exception therefrom in favor
of citizens and juridical entities of the United States; (4) a provision for the forfeiture of licenses (to engage in the ret ail
business) for violation of the laws on nationalization, control weights and measures and labor and other laws relating to
trade, commerce and industry; (5) a prohibition against the establishment or opening by aliens actually engaged in the
retail business of additional stores or branches of retail business, (6) a provision requiring aliens actually engaged in the
retail business to present for registration with the proper authorities a verified statement concerning their businesses,
giving, among other matters, the nature of the business, their assets and liabilities and their offices and principal offices of
judicial entities; and (7) a provision allowing the heirs of aliens now engaged in the retail business who die, to continue
such business for a period of six months for purposes of liquidation.
III. Grounds upon which petition is based-Answer thereto
Petitioner, for and in his own behalf and on behalf of other alien residents corporations and partnerships adversely
affected by the provisions of Republic Act. No. 1180, brought this action to obtain a judicial declaration that said Act is
unconstitutional, and to enjoin the Secretary of Finance and all other persons acting under him, particularly city and
municipal treasurers, from enforcing its provisions. Petitioner attacks the constitutionality of the Act, contending that: (1) it
denies to alien residents the equal protection of the laws and deprives of their liberty and property without due process of

law ; (2) the subject of the Act is not expressed or comprehended in the title thereof; (3) the Act violates international and
treaty obligations of the Republic of the Philippines; (4) the provisions of the Act against the transmission by aliens of their
retail business thru hereditary succession, and those requiring 100% Filipino capitalization for a corporation or entity to
entitle it to engage in the retail business, violate the spirit of Sections 1 and 5, Article XIII and Section 8 of Article XIV of
the Constitution.
In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the Act was passed in the valid
exercise of the police power of the State, which exercise is authorized in the Constitution in the interest of national
economic survival; (2) the Act has only one subject embraced in the title; (3) no treaty or international obligations are
infringed; (4) as regards hereditary succession, only the form is affected but the value of the property is not impaired, and
the institution of inheritance is only of statutory origin.
IV. Preliminary consideration of legal principles involved
a. The police power. —
There is no question that the Act was approved in the exercise of the police power, but petitioner claims that its exercise
in this instance is attended by a violation of the constitutional requirements of due process and equal protection of the
laws. But before proceeding to the consideration and resolution of the ultimate issue involved, it would be well to bear in
mind certain basic and fundamental, albeit preliminary, considerations in the determination of the ever recurrent conflict
between police power and the guarantees of due process and equal protection of the laws. What is the scope of police
power, and how are the due process and equal protection clauses related to it? What is the province and power of the
legislature, and what is the function and duty of the courts? These consideration must be clearly and correctly understood
that their application to the facts of the case may be brought forth with clarity and the issue accordingly resolved.
It has been said the police power is so far - reaching in scope, that it has become almost impossible to limit its sweep. As
it derives its existence from the very existence of the State itself, it does not need to be expressed or defined in its scope;
it is said to be co-extensive with self-protection and survival, and as such it is the most positive and active of all
governmental processes, the most essential, insistent and illimitable. Especially is it so under a modern democratic
framework where the demands of society and of nations have multiplied to almost unimaginable proportions; the field and
scope of police power has become almost boundless, just as the fields of public interest and public welfare have become
almost all-embracing and have transcended human foresight. Otherwise stated, as we cannot foresee the needs and
demands of public interest and welfare in this constantly changing and progressive world, so we cannot delimit
beforehand the extent or scope of police power by which and through which the State seeks to attain or achieve interest
or welfare. So it is that Constitutions do not define the scope or extent of the police power of the State; what they do is to
set forth the limitations thereof. The most important of these are the due process clause and the equal protection clause.
b. Limitations on police power. —
The basic limitations of due process and equal protection are found in the following provisions of our Constitution:
SECTION 1.(1) No person shall be deprived of life, liberty or property without due process of law, nor any person
be denied the equal protection of the laws. (Article III, Phil. Constitution)
These constitutional guarantees which embody the essence of individual liberty and freedom in democracies, are not
limited to citizens alone but are admittedly universal in their application, without regard to any differences of race, of color,
or of nationality. (YickWo vs. Hopkins, 30, L. ed. 220, 226.)
c. The, equal protection clause. —
The equal protection of the law clause is against undue favor and individual or class privilege, as well as hostile
discrimination or the oppression of inequality. It is not intended to prohibit legislation, which is limited either in the object to
which it is directed or by territory within which is to operate. It does not demand absolute equality among residents; it
merely requires that all persons shall be treated alike, under like circumstances and conditions both as to privileges
conferred and liabilities enforced. The equal protection clause is not infringed by legislation which applies only to those
persons falling within a specified class, if it applies alike to all persons within such class, and reasonable grounds exists
for making a distinction between those who fall within such class and those who do not. (2 Cooley, Constitutional
Limitations, 824-825.)
d. The due process clause. —
The due process clause has to do with the reasonableness of legislation enacted in pursuance of the police power. Is
there public interest, a public purpose; is public welfare involved? Is the Act reasonably necessary for the accomplishment
of the legislature's purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient foundation or reason in
connection with the matter involved; or has there not been a capricious use of the legislative power? Can the aims
conceived be achieved by the means used, or is it not merely an unjustified interference with private interest? These are
the questions that we ask when the due process test is applied.
The conflict, therefore, between police power and the guarantees of due process and equal protection of the laws is more
apparent than real. Properly related, the power and the guarantees are supposed to coexist. The balancing is the essence
or, shall it be said, the indispensable means for the attainment of legitimate aspirations of any democratic society. There
can be no absolute power, whoever exercise it, for that would be tyranny. Yet there can neither be absolute liberty, for that

would mean license and anarchy. So the State can deprive persons of life, liberty and property, provided there is due
process of law; and persons may be classified into classes and groups, provided everyone is given the equal protection of
the law. The test or standard, as always, is reason. The police power legislation must be firmly grounded on public interest
and welfare, and a reasonable relation must exist between purposes and means. And if distinction and classification has
been made, there must be a reasonable basis for said distinction.
e. Legislative discretion not subject to judicial review. —
Now, in this matter of equitable balancing, what is the proper place and role of the courts? It must not be overlooked, in
the first place, that the legislature, which is the constitutional repository of police power and exercises the prerogative of
determining the policy of the State, is by force of circumstances primarily the judge of necessity, adequacy or
reasonableness and wisdom, of any law promulgated in the exercise of the police power, or of the measures adopted to
implement the public policy or to achieve public interest. On the other hand, courts, although zealous guardians of
individual liberty and right, have nevertheless evinced a reluctance to interfere with the exercise of the legislative
prerogative. They have done so early where there has been a clear, patent or palpable arbitrary and unreasonable abuse
of the legislative prerogative. Moreover, courts are not supposed to override legitimate policy, and courts never inquire
into the wisdom of the law.
V. Economic problems sought to be remedied
With the above considerations in mind, we will now proceed to delve directly into the issue involved. If the disputed
legislation were merely a regulation, as its title indicates, there would be no question that it falls within the legitimate scope
of legislative power. But it goes further and prohibits a group of residents, the aliens, from engaging therein. The problem
becomes more complex because its subject is a common, trade or occupation, as old as society itself, which from the
immemorial has always been open to residents, irrespective of race, color or citizenship.
a. Importance of retail trade in the economy of the nation. —
In a primitive economy where families produce all that they consume and consume all that they produce, the dealer, of
course, is unknown. But as group life develops and families begin to live in communities producing more than what they
consume and needing an infinite number of things they do not produce, the dealer comes into existence. As villages
develop into big communities and specialization in production begins, the dealer's importance is enhanced. Under modern
conditions and standards of living, in which man's needs have multiplied and diversified to unlimited extents and
proportions, the retailer comes as essential as the producer, because thru him the infinite variety of articles, goods and
needed for daily life are placed within the easy reach of consumers. Retail dealers perform the functions of capillaries in
the human body, thru which all the needed food and supplies are ministered to members of the communities comprising
the nation.
There cannot be any question about the importance of the retailer in the life of the community. He ministers to the
resident's daily needs, food in all its increasing forms, and the various little gadgets and things needed for home and daily
life. He provides his customers around his store with the rice or corn, the fish, the salt, the vinegar, the spices needed for
the daily cooking. He has cloths to sell, even the needle and the thread to sew them or darn the clothes that wear out. The
retailer, therefore, from the lowly peddler, the owner of a small sari-sari store, to the operator of a department store or, a
supermarket is so much a part of day-to-day existence.
b. The alien retailer's trait. —
The alien retailer must have started plying his trades in this country in the bigger centers of population (Time there was
when he was unknown in provincial towns and villages). Slowly but gradually be invaded towns and villages; now he
predominates in the cities and big centers of population. He even pioneers, in far away nooks where the beginnings of
community life appear, ministering to the daily needs of the residents and purchasing their agricultural produce for sale in
the towns. It is an undeniable fact that in many communities the alien has replaced the native retailer. He has shown in
this trade, industry without limit, and the patience and forbearance of a slave.
Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of ill-bred and insolent neighbors
and customers are made in his face, but he heeds them not, and he forgets and forgives. The community takes note of
him, as he appears to be harmless and extremely useful.
c. Alleged alien control and dominance. —
There is a general feeling on the part of the public, which appears to be true to fact, about the controlling and dominant
position that the alien retailer holds in the nation's economy. Food and other essentials, clothing, almost all articles of daily
life reach the residents mostly through him. In big cities and centers of population he has acquired not only predominance,
but apparent control over distribution of almost all kinds of goods, such as lumber, hardware, textiles, groceries, drugs,
sugar, flour, garlic, and scores of other goods and articles. And were it not for some national corporations like the Naric,
the Namarco, the Facomas and the Acefa, his control over principal foods and products would easily become full and
complete.
Petitioner denies that there is alien predominance and control in the retail trade. In one breath it is said that the fear is
unfounded and the threat is imagined; in another, it is charged that the law is merely the result of radicalism and pure and
unabashed nationalism. Alienage, it is said, is not an element of control; also so many unmanageable factors in the retail
business make control virtually impossible. The first argument which brings up an issue of fact merits serious

consideration. The others are matters of opinion within the exclusive competence of the legislature and beyond our
prerogative to pass upon and decide.
The best evidence are the statistics on the retail trade, which put down the figures in black and white. Between the
constitutional convention year (1935), when the fear of alien domination and control of the retail trade already filled the
minds of our leaders with fears and misgivings, and the year of the enactment of the nationalization of the retail trade act
(1954), official statistics unmistakably point out to the ever-increasing dominance and control by the alien of the retail
trade, as witness the following tables:
Assets Gross Sales
Year and Retailers
Nationality
No.-
Establishments
Pesos
Per cent
Distribution
Pesos
Per cent
Distribution
1941:
Filipino
..........
106,671 200,323,138 55.82 174,181,924 51.74
Chinese
...........
15,356 118,348,692 32.98 148,813,239 44.21
Others
............
1,646 40,187,090 11.20 13,630,239 4.05
1947:
Filipino
..........
111,107 208,658,946 65.05 279,583,333 57.03
Chinese
...........
13,774 106,156,218 33.56 205,701,134 41.96
Others
...........
354 8,761,260 .49 4,927,168 1.01
1948: (Census)
Filipino
..........
113,631 213,342,264 67.30 467,161,667 60.51
Chinese
..........
12,087 93,155,459 29.38 294,894,227 38.20
Others
..........
422 10,514,675 3.32 9,995,402 1.29
1949:
Filipino
..........
113,659 213,451,602 60.89 462,532,901 53.47
Chinese
..........
16,248 125,223,336 35.72 392,414,875 45.36
Others
..........
486 12,056,365 3.39 10,078,364 1.17
1951:
Filipino
.........
119,352 224,053,620 61.09 466,058,052 53.07
Chinese
..........
17,429 134,325,303 36.60 404,481,384 46.06
Others
..........
347 8,614,025 2.31 7,645,327 87
AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT
Year and Retailer's
Nationality
Item
Assets
(Pesos)
Gross
Sales
(Pesos)
1941:
Filipino ............................................. 1,878 1,633
Chinese .............................................. 7,707 9,691
Others ............................................... 24,415 8,281

1947:
Filipino ............................................. 1,878 2,516
Chinese ........................................... 7,707 14,934
Others .............................................. 24,749 13,919
1948: (Census)
Filipino ............................................. 1,878 4,111
Chinese ............................................. 7,707 24,398
Others .............................................. 24,916 23,686
1949:
Filipino ............................................. 1,878 4,069
Chinese .............................................. 7,707 24,152
Others .............................................. 24,807 20,737
1951:
Filipino ............................................. 1,877 3,905
Chinese ............................................. 7,707 33,207
Others ............................................... 24,824 22,033
(Estimated Assets and Gross Sales of Retail Establishments, By Year and Nationality of Owners, Benchmark:
1948 Census, issued by the Bureau of Census and Statistics, Department of Commerce and Industry; pp. 18-19
of Answer.)
The above statistics do not include corporations and partnerships, while the figures on Filipino establishments already
include mere market vendors, whose capital is necessarily small..
The above figures reveal that in percentage distribution of assests and gross sales, alien participation has steadily
increased during the years. It is true, of course, that Filipinos have the edge in the number of retailers, but aliens more
than make up for the numerical gap through their assests and gross sales which average between six and seven times
those of the very many Filipino retailers. Numbers in retailers, here, do not imply superiority; the alien invests more
capital, buys and sells six to seven times more, and gains much more. The same official report, pointing out to the known
predominance of foreign elements in the retail trade, remarks that the Filipino retailers were largely engaged in minor
retailer enterprises. As observed by respondents, the native investment is thinly spread, and the Filipino retailer is
practically helpless in matters of capital, credit, price and supply.
d. Alien control and threat, subject of apprehension in Constitutional convention. —
It is this domination and control, which we believe has been sufficiently shown to exist, that is the legislature's target in the
enactment of the disputed nationalization would never have been adopted. The framers of our Constitution also believed
in the existence of this alien dominance and control when they approved a resolution categorically declaring among other
things, that "it is the sense of the Convention that the public interest requires the nationalization of the retail trade; . . . ." (II
Aruego, The Framing of the Philippine Constitution, 662-663, quoted on page 67 of Petitioner.) That was twenty-two years
ago; and the events since then have not been either pleasant or comforting. Dean Sinco of the University of the
Philippines College of Law, commenting on the patrimony clause of the Preamble opines that the fathers of our
Constitution were merely translating the general preoccupation of Filipinos "of the dangers from alien interests that had
already brought under their control the commercial and other economic activities of the country" (Sinco, Phil. Political Law,
10th ed., p. 114); and analyzing the concern of the members of the constitutional convention for the economic life of the
citizens, in connection with the nationalistic provisions of the Constitution, he says:
But there has been a general feeling that alien dominance over the economic life of the country is not desirable
and that if such a situation should remain, political independence alone is no guarantee to national stability and
strength. Filipino private capital is not big enough to wrest from alien hands the control of the national economy.
Moreover, it is but of recent formation and hence, largely inexperienced, timid and hesitant. Under such
conditions, the government as the instrumentality of the national will, has to step in and assume the initiative, if
not the leadership, in the struggle for the economic freedom of the nation in somewhat the same way that it did in
the crusade for political freedom. Thus . . . it (the Constitution) envisages an organized movement for the
protection of the nation not only against the possibilities of armed invasion but also against its economic
subjugation by alien interests in the economic field. (Phil. Political Law by Sinco, 10th ed., p. 476.)
Belief in the existence of alien control and predominance is felt in other quarters. Filipino businessmen, manufacturers
and producers believe so; they fear the dangers coming from alien control, and they express sentiments of economic

independence. Witness thereto is Resolution No. 1, approved on July 18, 1953, of the Fifth National convention of Filipino
Businessmen, and a similar resolution, approved on March 20, 1954, of the Second National Convention of Manufacturers
and Producers. The man in the street also believes, and fears, alien predominance and control; so our newspapers, which
have editorially pointed out not only to control but to alien stranglehold. We, therefore, find alien domination and control to
be a fact, a reality proved by official statistics, and felt by all the sections and groups that compos e the Filipino community.
e. Dangers of alien control and dominance in retail. —
But the dangers arising from alien participation in the retail trade does not seem to lie in the predominance alone; there is
a prevailing feeling that such predominance may truly endanger the national interest. With ample capital, unity of purpose
and action and thorough organization, alien retailers and merchants can act in such complete unison and concert on such
vital matters as the fixing of prices, the determination of the amount of goods or articles to be made available in the
market, and even the choice of the goods or articles they would or would not patronize or distribute, that fears of
dislocation of the national economy and of the complete subservience of national economy and of the consuming public
are not entirely unfounded. Nationals, producers and consumers alike can be placed completely at their mercy. This is
easily illustrated. Suppose an article of daily use is desired to be prescribed by the aliens, because the producer or
importer does not offer them sufficient profits, or because a new competing article offers bigger profits for its introduction.
All that aliens would do is to agree to refuse to sell the first article, eliminating it from their stocks, offering the new one as
a substitute. Hence, the producers or importers of the prescribed article, or its consumers, find the article suddenly out of
the prescribed article, or its consumers, find the article suddenly out of circulation. Freedom of trade is thus curtailed and
free enterprise correspondingly suppressed.
We can even go farther than theoretical illustrations to show the pernicious influences of alien domination. Grave abuses
have characterized the exercise of the retail trade by aliens. It is a fact within judicial notice, which courts of justice may
not properly overlook or ignore in the interests of truth and justice, that there exists a general feeling on the part of the
public that alien participation in the retail trade has been attended by a pernicious and intolerable practices, the mention of
a few of which would suffice for our purposes; that at some time or other they have cornered the market of essential
commodities, like corn and rice, creating artificial scarcities to justify and enhance profits to unreasonable proportions; that
they have hoarded essential foods to the inconvenience and prejudice of the consuming public, so much so that the
Government has had to establish the National Rice and Corn Corporation to save the public from their continuous
hoarding practices and tendencies; that they have violated price control laws, especially on foods and essential
commodities, such that the legislature had to enact a law (Sec. 9, Republic Act No. 1168), authorizing their immediate and
automatic deportation for price control convictions; that they have secret combinations among themselves to control
prices, cheating the operation of the law of supply and demand; that they have connived to boycott honest merchants and
traders who would not cater or yield to their demands, in unlawful restraint of freedom of trade and enterprise. They are
believed by the public to have evaded tax laws, smuggled goods and money into and out of the land, violated import and
export prohibitions, control laws and the like, in derision and contempt of lawful authority. It is also believed that they have
engaged in corrupting public officials with fabulous bribes, indirectly causing the prevalence of graft and corruption in the
Government. As a matter of fact appeals to unscrupulous aliens have been made both by the Government and by their
own lawful diplomatic representatives, action which impliedly admits a prevailing feeling about the existence of many of
the above practices.
The circumstances above set forth create well founded fears that worse things may come in the future. The present
dominance of the alien retailer, especially in the big centers of population, therefore, becomes a potential source of
danger on occasions of war or other calamity. We do not have here in this country isolated groups of harmless aliens
retailing goods among nationals; what we have are well organized and powerful groups that dominate the distribution of
goods and commodities in the communities and big centers of population. They owe no allegiance or loyalty to the State,
and the State cannot rely upon them in times of crisis or emergency. While the national holds his life, his person and his
property subject to the needs of his country, the alien may even become the potential enemy of the State.
f. Law enacted in interest of national economic survival and security. —
We are fully satisfied upon a consideration of all the facts and circumstances that the disputed law is not the product of
racial hostility, prejudice or discrimination, but the expression of the legitimate desire and determination of the people, thru
their authorized representatives, to free the nation from the economic situation that has unfortunately been saddled upon
it rightly or wrongly, to its disadvantage. The law is clearly in the interest of the public, nay of the national security itself,
and indisputably falls within the scope of police power, thru which and by which the State insures its existence and
security and the supreme welfare of its citizens.
VI. The Equal Protection Limitation
a. Objections to alien participation in retail trade. — The next question that now poses solution is, Does the law deny the
equal protection of the laws? As pointed out above, the mere fact of alienage is the root and cause of the distinction
between the alien and the national as a trader. The alien resident owes allegiance to the country of his birth or his
adopted country; his stay here is for personal convenience; he is attracted by the lure of gain and profit. His aim or
purpose of stay, we admit, is neither illegitimate nor immoral, but he is naturally lacking in that spirit of loyalty and
enthusiasm for this country where he temporarily stays and makes his living, or of that spirit of regard, sympathy and
consideration for his Filipino customers as would prevent him from taking advantage of their weakness and exploiting
them. The faster he makes his pile, the earlier can the alien go back to his beloved country and his beloved kin and
countrymen. The experience of the country is that the alien retailer has shown such utter disregard for his customers and
the people on whom he makes his profit, that it has been found necessary to adopt the legislation, radical as it may seem.

Another objection to the alien retailer in this country is that he never really makes a genuine contribution to national
income and wealth. He undoubtedly contributes to general distribution, but the gains and profits he makes are not
invested in industries that would help the country's economy and increase national wealth. The alien's interest in this
country being merely transient and temporary, it would indeed be ill-advised to continue entrusting the very important
function of retail distribution to his hands.
The practices resorted to by aliens in the control of distribution, as already pointed out above, their secret manipulations of
stocks of commodities and prices, their utter disregard of the welfare of their customers and of the ultimate happiness of
the people of the nation of which they are mere guests, which practices, manipulations and disregard do not attend the
exercise of the trade by the nationals, show the existence of real and actual, positive and fundamental differences
between an alien and a national which fully justify the legislative classification adopted in the retail trade measure. These
differences are certainly a valid reason for the State to prefer the national over the alien in the retail trade. We would be
doing violence to fact and reality were we to hold that no reason or ground for a legitimate distinction can be found
between one and the other.
b. Difference in alien aims and purposes sufficient basis for distinction. —
The above objectionable characteristics of the exercise of the retail trade by the aliens, which are actual and real, furnish
sufficient grounds for legislative classification of retail traders into nationals and aliens. Some may disagree with the
wisdom of the legislature's classification. To this we answer, that this is the prerogative of the law-making power. Since
the Court finds that the classification is actual, real and reasonable, and all persons of one class are treated alike, and as
it cannot be said that the classification is patently unreasonable and unfounded, it is in duty bound to declare that the
legislature acted within its legitimate prerogative and it can not declare that the act transcends the limit of equal protection
established by the Constitution.
Broadly speaking, the power of the legislature to make distinctions and classifications among persons is not curtailed or
denied by the equal protection of the laws clause. The legislative power admits of a wide scope of discretion, and a law
can be violative of the constitutional limitation only when the classification is without reasonable basis. In addition to the
authorities we have earlier cited, we can also refer to the case of Linsey vs. Natural Carbonic Fas Co. (1911), 55 L. ed.,
369, which clearly and succinctly defined the application of equal protection clause to a law sought to be voided as
contrary thereto:
. . . . "1. The equal protection clause of the Fourteenth Amendment does not take from the state the power to
classify in the adoption of police laws, but admits of the exercise of the wide scope of discretion in that regard,
and avoids what is done only when it is without any reasonable basis, and therefore is purely arbitrary. 2. A
classification having some reasonable basis does not offend against that clause merely because it is not made
with mathematical nicety, or because in practice it results in some inequality. 3. When the classification in such a
law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of
that state of facts at the time the law was enacted must be assumed. 4. One who assails the classification in such
a law must carry the burden of showing that it does not rest upon any reasonable basis but is essentially
arbitrary."
c. Authorities recognizing citizenship as basis for classification. —
The question as to whether or not citizenship is a legal and valid ground for classification has already been affirmatively
decided in this jurisdiction as well as in various courts in the United States. In the case of Smith Bell & Co. vs. Natividad,
40 Phil. 136, where the validity of Act No. 2761 of the Philippine Legislature was in issue, because of a condition therein
limiting the ownership of vessels engaged in coastwise trade to corporations formed by citizens of the Philippine Islands
or the United States, thus denying the right to aliens, it was held that the Philippine Legislature did not violate the equal
protection clause of the Philippine Bill of Rights. The legislature in enacting the law had as ultimate purpose the
encouragement of Philippine shipbuilding and the safety for these Islands from foreign interlopers. We held that this was a
valid exercise of the police power, and all presumptions are in favor of its constitutionality. In substance, we held that the
limitation of domestic ownership of vessels engaged in coastwise trade to citizens of the Philippines does not violate the
equal protection of the law and due process or law clauses of the Philippine Bill of Rights. In rendering said decision we
quoted with approval the concurring opinion of Justice Johnson in the case of Gibbons vs. Ogden, 9 Wheat., I, as follows:
"Licensing acts, in fact, in legislation, are universally restraining acts; as, for example, acts licensing gaming
houses, retailers of spirituous liquors, etc. The act, in this instance, is distinctly of that character, and forms part of
an extensive system, the object of which is to encourage American shipping, and place them on an equal footing
with the shipping of other nations. Almost every commercial nation reserves to its own subjects a monopoly of its
coasting trade; and a countervailing privilege in favor of American shipping is contemplated, in the whole
legislation of the United States on this subject. It is not to give the vessel an American character, that the license
is granted; that effect has been correctly attributed to the act of her enrollment. But it is to confer on her American
privileges, as contra distinguished from foreign; and to preserve the Government from fraud by foreigners; in
surreptitiously intruding themselves into the American commercial marine, as well as frauds upon the revenue in
the trade coastwise, that this whole system is projected."
The rule in general is as follows:
Aliens are under no special constitutional protection which forbids a classification otherwise justified simply
because the limitation of the class falls along the lines of nationality. That would be requiring a higher degree of
protection for aliens as a class than for similar classes than for similar classes of American citizens. Broadly

speaking, the difference in status between citizens and aliens constitutes a basis for reasonable classification in
the exercise of police power. (2 Am., Jur. 468-469.)
In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the licensing of hawkers and peddlers,
which provided that no one can obtain a license unless he is, or has declared his intention, to become a citizen of the
United States, was held valid, for the following reason: It may seem wise to the legislature to limit the business of those
who are supposed to have regard for the welfare, good order and happiness of the community, and the court cannot
question this judgment and conclusion. In Bloomfield vs. State, 99 N. E. 309 (Ohio, 1912), a statute which prevented
certain persons, among them aliens, from engaging in the traffic of liquors, was found not to be the result of race hatred,
or in hospitality, or a deliberate purpose to discriminate, but was based on the belief that an alien cannot be sufficiently
acquainted with "our institutions and our life as to enable him to appreciate the relation of this particular business to our
entire social fabric", and was not, therefore, invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115
(1926), the U.S. Supreme Court had under consideration an ordinance of the city of Cincinnati prohibiting the issuance of
licenses (pools and billiard rooms) to aliens. It held that plainly irrational discrimination against aliens is prohibited, but it
does not follow that alien race and allegiance may not bear in some instances such a relation to a legitimate object of
legislation as to be made the basis of permitted classification, and that it could not state that the legislation is clearly
wrong; and that latitude must be allowed for the legislative appraisement of local conditions and for the legislative choice
of methods for controlling an apprehended evil. The case of State vs. Carrol, 124 N. E. 129 (Ohio, 1919) is a parallel case
to the one at bar. In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922), the business of pawn brooking was
considered as having tendencies injuring public interest, and limiting it to citizens is within the scope of police power. A
similar statute denying aliens the right to engage in auctioneering was also sustained in Wright vs. May, L.R.A., 1915 P.
151 (Minnesota, 1914). So also in Anton vs. Van Winkle, 297 F. 340 (Oregon, 1924), the court said that aliens are
judicially known to have different interests, knowledge, attitude, psychology and loyalty, hence the prohibitions of issuance
of licenses to them for the business of pawnbroker, pool, billiard, card room, dance hall, is not an infringement of
constitutional rights. In Templar vs. Michigan State Board of Examiners, 90 N.W. 1058 (Michigan, 1902), a law prohibiting
the licensing of aliens as barbers was held void, but the reason for the decision was the court's findings that the exercise
of the business by the aliens does not in any way affect the morals, the health, or even the convenience of the communit y.
In Takahashi vs. Fish and Game Commission, 92 L. ed. 1479 (1947), a California statute banning the issuance of
commercial fishing licenses to person ineligible to citizenship was held void, because the law conflicts with Federal power
over immigration, and because there is no public interest in the mere claim of ownership of the waters and the fish in
them, so there was no adequate justification for the discrimination. It further added that the law was the outgrowth of
antagonism toward the persons of Japanese ancestry. However, two Justices dissented on the theory that fishing rights
have been treated traditionally as natural resources. In Fraser vs. McConway&Tarley Co., 82 Fed. 257 (Pennsylvania,
1897), a state law which imposed a tax on every employer of foreign-born unnaturalized male persons over 21 years of
age, was declared void because the court found that there was no reason for the classification and the tax was an
arbitrary deduction from the daily wage of an employee.
d. Authorities contra explained. —
It is true that some decisions of the Federal court and of the State courts in the United States hold that the distinction
between aliens and citizens is not a valid ground for classification. But in this decision the laws declared invalid were
found to be either arbitrary, unreasonable or capricious, or were the result or product of racial antagonism and hostility,
and there was no question of public interest involved or pursued. In Yu Cong Eng vs. Trinidad, 70 L. ed. 1059 (1925), the
United States Supreme Court declared invalid a Philippine law making unlawful the keeping of books of account in any
language other than English, Spanish or any other local dialect, but the main reasons for the decisions are: (1) that if
Chinese were driven out of business there would be no other system of distribution, and (2) that the Chinese would fall
prey to all kinds of fraud, because they would be deprived of their right to be advised of their business and to direct its
conduct. The real reason for the decision, therefore, is the court's belief that no public benefit would be derived from the
operations of the law and on the other hand it would deprive Chinese of something indispensable for carrying on their
business. In YickWo vs. Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on officials to withhold consent in
the operation of laundries both as to persons and place, was declared invalid, but the court said that the power granted
was arbitrary, that there was no reason for the discrimination which attended the administration and implementation of the
law, and that the motive thereof was mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine, 1900), a law
prohibiting aliens to engage as hawkers and peddlers was declared void, because the discrimination bore no reasonable
and just relation to the act in respect to which the classification was proposed.
The case at bar is radically different, and the facts make them so. As we already have said, aliens do not naturally
possess the sympathetic consideration and regard for the customers with whom they come in daily contact, nor the
patriotic desire to help bolster the nation's economy, except in so far as it enhances their profit, nor the loyalty and
allegiance which the national owes to the land. These limitations on the qualifications of the aliens have been shown on
many occasions and instances, especially in times of crisis and emergency. We can do no better than borrow the
language of Anton vs. Van Winkle, 297 F. 340, 342, to drive home the reality and significance of the distinction between
the alien and the national, thus:
. . . . It may be judicially known, however, that alien coming into this country are without the intimate knowledge of
our laws, customs, and usages that our own people have. So it is likewise known that certain classes of aliens are
of different psychology from our fellow countrymen. Furthermore, it is natural and reasonable to suppose that the
foreign born, whose allegiance is first to their own country, and whose ideals of governmental environment and
control have been engendered and formed under entirely different regimes and political systems, have not the
same inspiration for the public weal, nor are they as well disposed toward the United States, as those who by
citizenship, are a part of the government itself. Further enlargement, is unnecessary. I have said enough so that
obviously it cannot be affirmed with absolute confidence that the Legislature was without plausible reason for
making the classification, and therefore appropriate discriminations against aliens as it relates to the subject of
legislation. . . . .

VII. The Due Process of Law Limitation.
a. Reasonability, the test of the limitation; determination by legislature decisive. —
We now come to due process as a limitation on the exercise of the police power. It has been stated by the highest
authority in the United States that:
. . . . And the guaranty of due process, as has often been held, demands only that the law shall not be
unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the
subject sought to be attained. . . . .
x xx x xx x xx
So far as the requirement of due process is concerned and in the absence of other constitutional restriction a
state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to
enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such
policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable
relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due
process are satisfied, and judicial determination to that effect renders a court functus officio. . . . (Nebbia vs. New
York, 78 L. ed. 940, 950, 957.)
Another authority states the principle thus:
. . . . Too much significance cannot be given to the word "reasonable" in considering the scope of the police
power in a constitutional sense, for the test used to determine the constitutionality of the means employed by the
legislature is to inquire whether the restriction it imposes on rights secured to individuals by the Bill of Rights are
unreasonable, and not whether it imposes any restrictions on such rights. . . .
x xx x xx x xx
. . . . A statute to be within this power must also be reasonable in its operation upon the persons whom it affects,
must not be for the annoyance of a particular class, and must not be unduly oppressive. (11 Am. Jur. Sec. 302.,
1:1)- 1074-1075.)
In the case of Lawton vs. Steele, 38 L. ed. 385, 388.it was also held:
. . . . To justify the state in thus interposing its authority in behalf of the public, it must appear, first, that the
interests of the public generally, as distinguished from those of a particular class, require such interference; and
second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly
oppressive upon individuals. . . .
Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of constitutionality:
In determining whether a given act of the Legislature, passed in the exercise of the police power to regulate the
operation of a business, is or is not constitutional, one of the first questions to be considered by the court is
whether the power as exercised has a sufficient foundation in reason in connection with the matter involved, or is
an arbitrary, oppressive, and capricious use of that power, without substantial relation to the health, safety,
morals, comfort, and general welfare of the public.
b. Petitioner's argument considered. —
Petitioner's main argument is that retail is a common, ordinary occupation, one of those privileges long ago recognized as
essential to the orderly pursuant of happiness by free men; that it is a gainful and honest occupation and therefore beyond
the power of the legislature to prohibit and penalized. This arguments overlooks fact and reality and rests on an incorrect
assumption and premise, i.e., that in this country where the occupation is engaged in by petitioner, it has been so
engaged by him, by the alien in an honest creditable and unimpeachable manner, without harm or injury to the citizens
and without ultimate danger to their economic peace, tranquility and welfare. But the Legislature has found, as we have
also found and indicated, that the privilege has been so grossly abused by the alien, thru the illegitimate use of pernicious
designs and practices, that he now enjoys a monopolistic control of the occupation and threatens a deadly stranglehold on
the nation's economy endangering the national security in times of crisis and emergency.
The real question at issue, therefore, is not that posed by petitioner, which overlooks and ignores the facts and
circumstances, but this, Is the exclusion in the future of aliens from the retail trade unreasonable. Arbitrary capricious,
taking into account the illegitimate and pernicious form and manner in which the aliens have heretofore engaged therein?
As thus correctly stated the answer is clear. The law in question is deemed absolutely necessary to bring about the
desired legislative objective, i.e., to free national economy from alien control and dominance. It is not necessarily
unreasonable because it affects private rights and privileges (11 Am. Jur. pp. 1080-1081.) The test of reasonableness of a
law is the appropriateness or adequacy under all circumstances of the means adopted to carry out its purpose into effect
(Id.) Judged by this test, disputed legislation, which is not merely reasonable but actually necessary, must be considered
not to have infringed the constitutional limitation of reasonableness.

The necessity of the law in question is explained in the explanatory note that accompanied the bill, which later was
enacted into law:
This bill proposes to regulate the retail business. Its purpose is to prevent persons who are not citizens of the
Philippines from having a strangle hold upon our economic life. If the persons who control this vital artery of our
economic life are the ones who owe no allegiance to this Republic, who have no profound devotion to our free
institutions, and who have no permanent stake in our people's welfare, we are not really the masters of our
destiny. All aspects of our life, even our national security, will be at the mercy of other people.
In seeking to accomplish the foregoing purpose, we do not propose to deprive persons who are not citizens of the
Philippines of their means of livelihood. While this bill seeks to take away from the hands of persons who are not
citizens of the Philippines a power that can be wielded to paralyze all aspects of our national life and endanger
our national security it respects existing rights.
The approval of this bill is necessary for our national survival.
If political independence is a legitimate aspiration of a people, then economic independence is none the less legitimate.
Freedom and liberty are not real and positive if the people are subject to the economic control and domination of others,
especially if not of their own race or country. The removal and eradication of the shackles of foreign economic control and
domination, is one of the noblest motives that a national legislature may pursue. It is impossible to conceive that
legislation that seeks to bring it about can infringe the constitutional limitation of due process. The attainment of a
legitimate aspiration of a people can never be beyond the limits of legislative authority.
c. Law expressly held by Constitutional Convention to be within the sphere of legislative action. —
The framers of the Constitution could not have intended to impose the constitutional restrictions of due process on the
attainment of such a noble motive as freedom from economic control and domination, thru the exercise of the police
power. The fathers of the Constitution must have given to the legislature full authority and power to enact legislation that
would promote the supreme happiness of the people, their freedom and liberty. On the precise issue now before us, they
expressly made their voice clear; they adopted a resolution expressing their belief that the legislation in question is within
the scope of the legislative power. Thus they declared the their Resolution:
That it is the sense of the Convention that the public interest requires the nationalization of retail trade; but it
abstain from approving the amendment introduced by the Delegate for Manila, Mr. Araneta, and others on this
matter because it is convinced that the National Assembly is authorized to promulgate a law which limits to
Filipino and American citizens the privilege to engage in the retail trade. (11 Aruego, The Framing of the
Philippine Constitution, quoted on pages 66 and 67 of the Memorandum for the Petitioner.)
It would do well to refer to the nationalistic tendency manifested in various provisions of the Constitution. Thus in the
preamble, a principle objective is the conservation of the patrimony of the nation and as corollary the provision limiting to
citizens of the Philippines the exploitation, development and utilization of its natural resources. And in Section 8 of Artic le
XIV, it is provided that "no franchise, certificate, or any other form of authorization for the operation of the public utility
shall be granted except to citizens of the Philippines." The nationalization of the retail trade is only a continuance of the
nationalistic protective policy laid down as a primary objective of the Constitution. Can it be said that a law imbued with
the same purpose and spirit underlying many of the provisions of the Constitution is unreasonable, invalid and
unconstitutional?
The seriousness of the Legislature's concern for the plight of the nationals as manifested in the approval of the radical
measures is, therefore, fully justified. It would have been recreant to its duties towards the country and its people would it
view the sorry plight of the nationals with the complacency and refuse or neglect to adopt a remedy commensurate with
the demands of public interest and national survival. As the repository of the sovereign power of legislation, the
Legislature was in duty bound to face the problem and meet, through adequate measures, the danger and threat that
alien domination of retail trade poses to national economy.
d. Provisions of law not unreasonable. —
A cursory study of the provisions of the law immediately reveals how tolerant, how reasonable the Legislature has been.
The law is made prospective and recognizes the right and privilege of those already engaged in the occupation to
continue therein during the rest of their lives; and similar recognition of the right to continue is accorded associations of
aliens. The right or privilege is denied to those only upon conviction of certain offenses. In the deliberations of the Court
on this case, attention was called to the fact that the privilege should not have been denied to children and heirs of aliens
now engaged in the retail trade. Such provision would defeat the law itself, its aims and purposes. Beside, the exercise of
legislative discretion is not subject to judicial review. It is well settled that the Court will not inquire into the motives of the
Legislature, nor pass upon general matters of legislative judgment. The Legislature is primarily the judge of the necessity
of an enactment or of any of its provisions, and every presumption is in favor of its validity, and though the Court may hold
views inconsistent with the wisdom of the law, it may not annul the legislation if not palpably in excess of the legislative
power. Furthermore, the test of the validity of a law attacked as a violation of due process, is not its reasonableness, but
its unreasonableness, and we find the provisions are not unreasonable. These principles also answer various other
arguments raised against the law, some of which are: that the law does not promote general welfare; that thousands of
aliens would be thrown out of employment; that prices will increase because of the elimination of competition; that there is
no need for the legislation; that adequate replacement is problematical; that there may be general breakdown; that there

would be repercussions from foreigners; etc. Many of these arguments are directed against the supposed wisdom of the
law which lies solely within the legislative prerogative; they do not import invalidity.
VIII. Alleged defect in the title of the law
A subordinate ground or reason for the alleged invalidity of the law is the claim that the title thereof is misleading or
deceptive, as it conceals the real purpose of the bill which is to nationalize the retail business and prohibit aliens from
engaging therein. The constitutional provision which is claimed to be violated in Section 21 (1) of Article VI, which reads:
No bill which may be enacted in the law shall embrace more than one subject which shall be expressed in the title
of the bill.
What the above provision prohibits is duplicity, that is, if its title completely fails to appraise the legislators or the public of
the nature, scope and consequences of the law or its operation (I Sutherland, Statutory Construction, Sec. 1707, p. 297.)
A cursory consideration of the title and the provisions of the bill fails to show the presence of duplicity. It is true that the
term "regulate" does not and may not readily and at first glance convey the idea of "nationalization" and "prohibition",
which terms express the two main purposes and objectives of the law. But "regulate" is a broader term than either
prohibition or nationalization. Both of these have always been included within the term regulation.
Under the title of an act to "regulate", the sale of intoxicating liquors, the Legislature may prohibit the sale of
intoxicating liquors. (Sweet vs. City of Wabash, 41 Ind., 7; quoted in page 41 of Answer.)
Within the meaning of the Constitution requiring that the subject of every act of the Legislature shall be stated in
the tale, the title to regulate the sale of intoxicating liquors, etc." sufficiently expresses the subject of an
act prohibiting the sale of such liquors to minors and to persons in the habit of getting intoxicated; such matters
being properly included within the subject of regulating the sale. (Williams vs. State, 48 Ind. 306, 308, quoted in p.
42 of Answer.)
The word "regulate" is of broad import, and necessarily implies some degree of restraint and prohibition of acts
usually done in connection with the thing to be regulated. While word regulate does not ordinarily convey meaning
of prohibit, there is no absolute reason why it should not have such meaning when used in delegating police
power in connection with a thing the best or only efficacious regulation of which involves suppression. (State vs.
Morton, 162 So. 718, 182 La. 887, quoted in p. 42 of Answer.)
The general rule is for the use of general terms in the title of a bill; it has also been said that the title need not be an index
to the entire contents of the law (I Sutherland, Statutory Construction, See. 4803, p. 345.) The above rule was followed
the title of the Act in question adopted the more general term "regulate" instead of "nationalize" or "prohibit". Furthermore,
the law also contains other rules for the regulation of the retail trade which may not be included in the terms
"nationalization" or "prohibition"; so were the title changed from "regulate" to "nationalize" or "prohibit", there would have
been many provisions not falling within the scope of the title which would have made the Act invalid. The use of the term
"regulate", therefore, is in accord with the principle governing the drafting of statutes, under which a simple or general
term should be adopted in the title, which would include all other provisions found in the body of the Act.
One purpose of the constitutional directive that the subject of a bill should be embraced in its title is to apprise the
legislators of the purposes, the nature and scope of its provisions, and prevent the enactment into law of matters which
have received the notice, action and study of the legislators or of the public. In the case at bar it cannot be claimed that
the legislators have been appraised of the nature of the law, especially the nationalization and the prohibition provisions.
The legislators took active interest in the discussion of the law, and a great many of the persons affected by the
prohibitions in the law conducted a campaign against its approval. It cannot be claimed, therefore, that the reasons for
declaring the law invalid ever existed. The objection must therefore, be overruled.
IX. Alleged violation of international treaties and obligations
Another subordinate argument against the validity of the law is the supposed violation thereby of the Charter of the United
Nations and of the Declaration of the Human Rights adopted by the United Nations General Assembly. We find no merit in
the Nations Charter imposes no strict or legal obligations regarding the rights and freedom of their subjects (Hans Kelsen,
The Law of the United Nations, 1951 ed. pp. 29-32), and the Declaration of Human Rights contains nothing more than a
mere recommendation or a common standard of achievement for all peoples and all nations (Id. p. 39.) That such is the
import of the United Nations Charter aid of the Declaration of Human Rights can be inferred the fact that members of the
United Nations Organizations, such as Norway and Denmark, prohibit foreigners from engaging in retail trade, and in most
nations of the world laws against foreigners engaged in domestic trade are adopted.
The Treaty of Amity between the Republic of the Philippines and the Republic of China of April 18, 1947 is also claimed to
be violated by the law in question. All that the treaty guarantees is equality of treatment to the Chinese nationals "upon the
same terms as the nationals of any other country." But the nationals of China are not discriminating against because
nationals of all other countries, except those of the United States, who are granted special rights by the Constitution, are
all prohibited from engaging in the retail trade. But even supposing that the law infringes upon the said treaty, the treaty is
always subject to qualification or amendment by a subsequent law (U. S. vs. Thompson, 258, Fed. 257, 260), and the
same may never curtail or restrict the scope of the police power of the State (plaston vs. Pennsylvania, 58 L. ed. 539.)
X. Conclusion

Resuming what we have set forth above we hold that the disputed law was enacted to remedy a real actual threat and
danger to national economy posed by alien dominance and control of the retail business and free citizens and country
from dominance and control; that the enactment clearly falls within the scope of the police power of the State, thru which
and by which it protects its own personality and insures its security and future; that the law does not violate the equal
protection clause of the Constitution because sufficient grounds exist for the distinction between alien and citizen in the
exercise of the occupation regulated, nor the due process of law clause, because the law is prospective in operation and
recognizes the privilege of aliens already engaged in the occupation and reasonably protects their privilege; that the
wisdom and efficacy of the law to carry out its objectives appear to us to be plainly evident — as a matter of fact it seems
not only appropriate but actually necessary — and that in any case such matter falls within the prerogative of the
Legislature, with whose power and discretion the Judicial department of the Government may not interfere; that the
provisions of the law are clearly embraced in the title, and this suffers from no duplicity and has not misled the legislators
or the segment of the population affected; and that it cannot be said to be void for supposed conflict with treaty obligations
because no treaty has actually been entered into on the subject and the police power may not be curtailed or surrendered
by any treaty or any other conventional agreement.
Some members of the Court are of the opinion that the radical effects of the law could have been made less harsh in its
impact on the aliens. Thus it is stated that the more time should have been given in the law for the liquidation of existing
businesses when the time comes for them to close. Our legal duty, however, is merely to determine if the law falls within
the scope of legislative authority and does not transcend the limitations of due process and equal protection guaranteed in
the Constitution. Remedies against the harshness of the law should be addressed to the Legislature; they are beyond our
power and jurisdiction.
The petition is hereby denied, with costs against petitioner.
Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.

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