Arceta vs Mangrobang

8/11/2019 Arceta vs Mangrobang

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ARCETA VS MANGROBANG

EN BANC

[G.R. No. 152895. June 15, 2004]

OFELIA V. ARCETA, peti t ioner, vs. The HonorableMA. CELESTINA C. MANGROBANG, Presiding Judge, Branch 54,Metropolitan Trial Court of Navotas, Metro Manila, respondent .

[G.R. No. 153151. June 15, 2004]

GLORIA S. DY, peti t ioner, vs. The Honorable EDWIN B. RAMIZO,Presiding Judge, Branch 53, Metropolitan Trial Court ofCaloocan City, respondent .

R E S O L U T I O N

QUISUMBING, J.:

For resolution are two consolidated[1]petitions under Rule 65 of the Rulesof Court, for certiorari, prohibition and mandamus, with prayers for atemporary restraining order. Both assail the constitutionality of the BouncingChecks Law, also known as Batas Pambansa Bilang 22.

In G.R. No. 152895, petitioner Ofelia V. Arceta prays that we order theMetropolitan Trial Court (MeTC) of Navotas, Metro Manila, Branch 54, tocease and desist from hearing Criminal Case No. 1599-CR for violation ofB.P. Blg. 22, and then dismiss the case against her. In G.R. No. 153151,petitioner Gloria S. Dy also prays that this Court order the MeTC of CaloocanCity to cease and desist from proceeding with Criminal Case No. 212183, andsubsequently dismiss the case against her. In fine, however, we find thatwhat both petitioners seek is that the Court should revisit and abandon thedoctrine laid down in Lozano v. Martinez,[2]which upheld the validity of theBouncing Checks Law.

The facts of these cases are not in dispute.

1. G.R. No. 152895
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The City Prosecutor of Navotas, Metro Manila charged OfeliaV. Arceta with violating B.P. Blg. 22 in an Information, which was docketed asCriminal Case No. 1599-CR. The accusatory portion of said Informationreads:

That on or about the 16thday of September 1998, in Navotas, Metro Manila, andwithin the jurisdiction of this Honorable Court, the above-named accused, did thenand there wilfully, unlawfully and feloniously make or draw and issue to OSCAR R.CASTRO, to apply on account or for value the check described below:

Check No : 00082270

Drawn Against : The Region Bank

In the Amount of : P740,000.00

Date : December 21, 1998

Payable to : Cash

said accused well-knowing that at the time of issue Ofelia V. Arceta did not havesufficient funds or credit with the drawee bank for the payment, which check whenpresented for payment within ninety (90) days from the date thereof was subsequentlydishonored by the drawee bank for reason DRAWN AGAINST INSUFFICIENTFUNDS, and despite receipt of notice of such dishonor, the accused failed to pay said

payee with the face amount of said check or to make arrangement for full paymentthereof within five (5) banking days after receiving notice.

CONTRARY TO LAW.[3]

Arceta did not move to have the charge against her dismissed or theInformation quashed on the ground that B.P. Blg. 22 wasunconstitutional. She reasoned out that with the Lozanodoctrine still in place,such a move would be an exercise in futility for it was highly unlikely that thetrial court would grant her motion and thus go against prevailing

jurisprudence.On October 21, 2002,[4]Arceta was arraigned and pleaded not guilty to

the charge. However, she manifested that her arraignment should be withoutprejudice to the present petition or to any other actions she would take tosuspend proceedings in the trial court.

Arceta then filed the instant petition.
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2. G.R. No. 153151

The Office of the City Prosecutor of Caloocan filed a charge sheet againstGloria S. Dy for violation of the Bouncing Checks Law, docketed by the MeTCof Caloocan City as Criminal Case No. 212183. Dy allegedly committed the

offense in this wise:

That on or about the month of January 2000 in Caloocan City, Metro Manila,Philippines and within the jurisdiction of this Honorable Court, the above-namedaccused, did then and there wilfully, unlawfully and feloniously make and issueCheck No. 0000329230 drawn against PRUDENTIAL BANK in the amountof P2,500,000.00 dated January 19, 2000 to apply for value in favor of ANITA CHUAwell knowing at the time of issue that she has no sufficient funds in or credit with thedrawee bank for the payment of such check in full upon its presentment which checkwas subsequently dishonored for the reason ACCOUNT CLOSED and with intent

to defraud failed and still fails to pay the said complainant the amountof P2,500,000.00 despite receipt of notice from the drawee bank that said check hasbeen dishonored and had not been paid.

Contrary to Law.[5]

Like Arceta, Dy made no move to dismiss the charges against her on theground that B.P. Blg. 22 was unconstitutional. Dy likewise believed that anymove on her part to quash the indictment or to dismiss the charges on saidground would fail in view of the Lozano ruling. Instead, she filed a petition

with this Court invoking its power of judicial review to have the said law voidedfor Constitutional infirmity.

Both Arceta and Dy raise the following identical issues for our resolution:

[a] Does section 1 really penalize the act of issuing a check subsequentlydishonored by the bank for lack of funds?

[b] What is the effect if the dishonored check is not paid pursuant to section 2 ofBP 22?

[c] What is the effect if it is so paid?

[d] Does section 2 make BP 22 a debt collecting law under threat of imprisonment?

[e] Does BP 22 violate the constitutional proscription against imprisonment fornon-payment of debt?
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[f] Is BP 22 a valid exercise of the police power of the state? [6]

After minute scrutiny of petitioners submissions, we find that the basicissue being raised in these special civil actions for certiorari, prohibition, andmandamus concern the unconstitutionality or invalidity of B.P. Blg.

22. Otherwise put, the petitions constitute an oblique attack on theconstitutionality of the Bouncing Checks Law, a matter already passed uponby the Court through Justice (later Chief Justice) Pedro Yap almost twodecades ago. Petitioners add, however, among the pertinent issues onebased on the observable but worrisome transformation of certain metropolitantrial courts into seeming collection agencies of creditors whose complaintsnow clog the court dockets.

But let us return to basics. When the issue of unconstitutionality of alegislative act is raised, it is the established doctrine that the Court may

exercise its power of judicial review only if the following requisites are present:(1) an actual and appropriate case and controversy exists; (2) a personal andsubstantial interest of the party raising the constitutional question; (3) theexercise of judicial review is pleaded at the earliest opportunity; and (4) theconstitutional question raised is the very lis mota of the case.[7]Only whenthese requisites are satisfied may the Court assume jurisdiction over aquestion of unconstitutionality or invalidity of an act of Congress. With dueregard to counsels spirited advocacy in both cases, we are unable to agreethat the abovecited requisites have been adequately met.

Perusal of these petitions reveals that they are primarily anchored on Rule65, Section 1[8]of the 1997 Rules of Civil Procedure. In a special civil action ofcertiorari the only question that may be raised is whether or not therespondent has acted without or in excess of jurisdiction or with grave abuseof discretion.[9]Yet nowhere in these petitions is there any allegation that therespondent judges acted with grave abuse of discretion amounting to lack orexcess of jurisdiction. A special civil action for certiorari will prosper only if agrave abuse of discretion is manifested.[10]

Noteworthy, the instant petitions are conspicuously devoid of anyattachments or annexes in the form of a copy of an order, decision, or

resolution issued by the respondent judges so as to place themunderstandably within the ambit of Rule 65. What are appended to thepetitions are only copies of the Informations in the respective cases, nothingelse. Evidently, these petitions for a writ of certiorari, prohibition andmandamus do not qualify as the actual and appropriate cases contemplatedby the rules as the first requisite for the exercise of this Courts power of
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judicial review. For as the petitions clearly show on their faces petitionershave not come to us with sufficient cause of action.

Instead, it appears to us that herein petitioners have placed the cart beforethe horse, figuratively speaking. Simply put, they have ignored the hierarchy

of courts outlined in Rule 65, Section 4[11]

of the 1997 Rules of CivilProcedure. Seeking judicial review at the earliest opportunity does not meanimmediately elevating the matter to this Court. Earliest opportunity meansthat the question of unconstitutionality of the act in question should have beenimmediately raised in the proceedings in the court below. Thus, thepetitioners should have moved to quash the separate indictments or moved todismiss the cases in the proceedings in the trial courts on the ground ofunconstitutionality of B.P. Blg. 22. But the records show that petitioners failedto initiate such moves in the proceedings below. Needless to emphasize, thisCourt could not entertain questions on the invalidity of a statute where that

issue was not specifically raised, insisted upon, and adequatelyargued.[12]Taking into account the early stage of the trial proceedings below,the instant petitions are patently premature.

Nor do we find the constitutional question herein raised to be thevery lis motapresented in the controversy below. Every law has in its favorthe presumption of constitutionality, and to justify its nullification, there mustbe a clear and unequivocal breach of the Constitution, and not one that isdoubtful, speculative or argumentative.[13]We have examined the contentionsof the petitioners carefully; but they still have to persuade us that B.P. Blg. 22

by itself or in its implementation transgressed a provision of theConstitution. Even the thesis of petitioner Dythat the present economic andfinancial crisis should be a basis to declare the Bouncing Checks Lawconstitutionally infirm deserves but scant consideration. As we stressedin Lozano, it is precisely during trying times that there exists a mostcompelling reason to strengthen faith and confidence in the financial systemand any practice tending to destroy confidence in checks as currencysubstitutes should be deterred, to prevent havoc in the trading and financialcommunities. Further, while indeed the metropolitan trial courts may beburdened immensely by bouncing checks cases now, that fact is immaterial to

the alleged invalidity of the law being assailed. The solution to the clogging ofdockets in lower courts lies elsewhere.

WHEREFORE,the instant petitions are DISMISSED for utter lack ofmerit.

SO ORDERED.
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YAP VS THENAMARIS

Republic of the Philippines

Supreme CourtManila

SECOND DIVISION

CLAUDIO S. YAP,

Petitioner,

- versus -

THENAMARIS SHIPS MANAGEMENT

and INTERMARE MARITIME AGENCIES,

INC., Respondents.

G.R. No. 179532

Present:

CARPIO,J.,Chairperson,

NACHURA,PERALTA,ABAD, andMENDOZA,JJ.

Promulgated:

May 30, 2011

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

DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of

the Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA)

Decision[2]dated February 28, 2007, which affirmed with modification the National

Labor Relations Commission (NLRC) resolution[3]dated April 20, 2005.
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The undisputed facts, as found by the CA, are as follows:

[Petitioner] Claudio S. Yap was employed as electrician of thevessel, M/T SEASCOUT on 14 August 2001 by Intermare MaritimeAgencies, Inc. in behalf of its principal, Vulture Shipping Limited. Thecontract of employment entered into by Yap and Capt. Francisco B.Adviento, the General Manager of Intermare, was for a duration of 12months. On 23 August 2001,Yap boarded M/T SEASCOUT andcommenced his job as electrician. However, on or about 08 November2001, the vessel was sold. The Philippine Overseas EmploymentAdministration (POEA) was informed about the sale on 06 December2001 in a letter signed by Capt. Adviento. Yap, along with the othercrewmembers, was informed by the Master of their vessel that the same

was sold and will be scrapped. They were also informed abouttheAdvisorysent by Capt. Constatinou, which states, among others:

PLEASE ASK YR OFFICERS AND RATINGS IF THEYWISH TO BE TRANSFERRED TO OTHER VESSELS AFTERVESSEL S DELIVERY (GREEK VIA ATHENS-PHILIPINOSVIA MANILA

FOR CREW NOT WISH TRANSFER TO DECLARE THEIRPROSPECTED TIME FOR REEMBARKATION IN ORDER TOSCHEDULE THEM ACCLY

Yap received his seniority bonus, vacation bonus, extra bonusalong with the scrapping bonus. However, with respect to the paymentof his wage, he refused to accept the payment of one-month basicwage. He insisted that he was entitled to the payment of the unexpiredportion of his contract since he was illegally dismissed fromemployment. He alleged that he opted for immediate transfer but nonewas made.

[Respondents], for their part, contended that Yap was not

illegally dismissed. They alleged that following the sale of the M/TSEASCOUT, Yap signed off from the vessel on 10 November 2001 andwas paid his wages corresponding to the months he worked or until 10November 2001 plus his seniority bonus, vacation bonus and extrabonus. They further alleged that Yaps employment contract wasvalidly terminated due to the sale of the vessel and no arrangement wasmade for Yaps transfer to Thenamaris other vessels.[4]
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Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal

with Damages and Attorneys Fees before the Labor Arbiter (LA). Petitioner

claimed that he was entitled to the salaries corresponding to the unexpired portionof his contract. Subsequently, he filed an amended complaint, impleading Captain

Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare)

and Thenamaris Ships Management (respondents), together with C.J. Martionos,

Interseas Trading and Financing Corporation, and Vulture Shipping Limited/Stejo

Shipping Limited.

On July 26, 2004, the LA rendered a decision [5]in favor of petitioner,

finding the latter to have been constructively and illegally dismissed by

respondents. Moreover, the LA found that respondents acted in bad faith when

they assured petitioner of re-embarkation and required him to produce an

electrician certificate during the period of his contract, but actually he was not able

to board one despite of respondents numerous vessels. Petitioner made several

follow-ups for his re-embarkation but respondents failed to heed his plea; thus,

petitioner was forced to litigate in order to vindicate his rights. Lastly, the LA

opined that since the unexpired portion of petitioners contract was less than one

year, petitioner was entitled to his salaries for the unexpired portion of his contract

for a period of nine months. The LA disposed, as follows:

WHEREFORE, in view of the foregoing, a decision is herebyrendered declaring complainant to have been constructivelydismissed. Accordingly, respondents Intermare Maritime AgencyIncorporated, Thenamaris Ships Mgt., and Vulture Shipping Limited areordered to pay jointly and severally complainant Claudio S. Yap the sumof $12,870.00 or its peso equivalent at the time of payment. In addition,moral damages of ONE HUNDRED THOUSAND PESOS

(P100,000.00) and exemplary damages of FIFTY THOUSANDPESOS (P50,000.00) are awarded plus ten percent (10%) of the totalaward as attorneys fees.

Other money claims are DISMISSEDfor lack of merit.

SO ORDERED.[6]
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Aggrieved, respondents sought recourse from the NLRC.

In its decision[7]

dated January 14, 2005, the NLRC affirmed the LAsfindings that petitioner was indeed constructively and illegally dismissed; that

respondents bad faith was evident on their wilful failure to transfer petitioner to

another vessel; and that the award of attorneys fees was warranted. However, the

NLRC held that instead of an award of salaries corresponding to nine months,

petitioner was only entitled to salaries for three months as provided under Section

10[8]of Republic Act (R.A.) No. 8042,[9]as enunciated in our ruling inMarsaman

Manning Agency, Inc. v. National Labor Relations Commission.[10] Hence, the

NLRC ruled in this wise:

WHEREFORE, premises considered, the decision of the LaborArbiter finding the termination of complainant illegal is herebyAFFIRMED with a MODIFICATION. Complainant[s] salary for theunexpired portion of his contract should only be limited to three (3)months basic salary.

Respondents Intermare Maritime Agency, Inc.[,] VultureShipping Limited and Thenamaris Ship Management are hereby ordered

to jointly and severally pay complainant, the following:

1. Three (3) months basic salary US$4,290.00 or its pesoequivalent at the time of actual payment.

2. Moral damagesP100,000.003. Exemplary damagesP50,000.004. Attorneys fees equivalent to 10% of the total monetary

award.

SO ORDERED.[11]
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Respondents filed a Motion for Partial Reconsideration,[12]praying for the

reversal and setting aside of the NLRC decision, and that a new one be rendered

dismissing the complaint. Petitioner, on the other hand, filed his own Motion for

Partial Reconsideration,[13]praying that he be paid the nine (9)-month basic salary,

as awarded by the LA.

On April 20, 2005, a resolution[14]was rendered by the NLRC, affirming the

findings of Illegal Dismissal and respondents failure to transfer petitioner to

another vessel. However, finding merit in petitioners arguments, the NLRC

reversed its earlier Decision, holding that there can be no choice to grant only

three (3) months salary for every year of the unexpired termbecause there is no

full year of unexpired term which this can be applied. Hence

WHEREFORE, premises considered, complainants Motion forPartial Reconsideration is hereby granted. The award of three (3)months basic salary in the sum of US$4,290.00 is hereby modified inthat complainant is entitled to his salary for the unexpired portion ofemployment contract in the sum of US$12,870.00 or its peso equivalentat the time of actual payment.

All aspect of our January 14, 2005 Decision STANDS.

SO ORDERED.[15]

Respondents filed a Motion for Reconsideration, which the NLRC denied.

Undaunted, respondents filed a petition for certiorari[16] under Rule 65

of the Rules of Civil Procedure before the CA. On February 28, 2007, the CA

affirmed the findings and ruling of the LA and the NLRC that petitioner was

constructively and illegally dismissed. The CA held that respondents failed toshow that the NLRC acted without statutory authority and that its findings were not

supported by law, jurisprudence, and evidence on record. Likewise, the CA

affirmed the lower agencies findings that the advisory of Captain Constantinou,

taken together with the other documents and additional requirements imposed on

petitioner, only meant that the latter should have been re-embarked. In the same
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token, the CA upheld the lower agencies unanimous finding of bad faith,

warranting the imposition of moral and exemplary damages and attorneys fees.

However, the CA ruled that the NLRC erred in sustaining the LAs interpretation

of Section 10 of R.A. No. 8042. In this regard, the CA relied on the clause or for

three months for every year of the unexpired term, whichever is less provided inthe 5thparagraph of Section 10 of R.A. No. 8042 and held:

In the present case, the employment contract concerned has a termof one year or 12 months which commenced on August 14, 2001.However, it was preterminated without a valid cause. [Petitioner] waspaid his wages for the corresponding months he worked until the 10 thofNovember. Pursuant to the provisions of Sec. 10, [R.A. No.] 8042,therefore, the option of three months for every year of the unexpired

term is applicable.

[17]

Thus, the CA provided, to wit:

WHEREFORE,premises considered, this Petition for Certiorariis DENIED. TheDecisiondated January 14, 2005,and Resolutions, dated April 20, 2005 and July 29, 2005, respectively, ofpublic respondent National Labor Relations Commission-FourthDivision, Cebu City, in NLRC No. V-000038-04 (RAB VIII (OFW)-04-

01-0006) are hereby AFFIRMED with the MODIFICATION thatprivate respondent is entitled to three (3) months of basic salarycomputed at US$4,290.00 or its peso equivalent at the time of actualpayment.

Costs against Petitioners.[18]
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Both parties filed their respective motions for reconsideration, which the

CA, however, denied in its Resolution[19]

dated August 30, 2007.

Unyielding, petitioner filed this petition, raising the following issues:

1) Whether or not Section 10 of R.A. [No.] 8042, to the extent that itaffords an illegallydismissed migrant worker the lesser benefit ofsalaries for [the] unexpired portion of his employmentcontract orfor three (3) monthsfor every year of the unexpiredterm, whichever is less is constitutional; and

2) Assuming that it is, whether or not the Court of Appeals gravelyerred in granting petitioner only three (3) months backwages whenhis unexpired term of 9 months is far shortof the every yearof

the unexpired term threshold.[20]

In the meantime, while this case was pending before this Court, we declared

as unconstitutional the clause or for three months for every year of the unexpired

term, whichever is less provided in the 5thparagraph of Section 10 of R.A. No.

8042 in the case of Serrano v. Gallant Maritime Services, Inc.[21]on March 24,

2009.

Apparently, unaware of our ruling in Serrano, petitioner claims that the

5thparagraph of Section 10, R.A. No. 8042, is violative of Section 1,[22]Article III

and Section 3,[23]Article XIII of the Constitution to the extent that it gives an

erring employer the option to pay an illegally dismissed migrant worker only three

months for every year of the unexpired term of his contract; that said provision of

law has long been a source of abuse by callous employers against migrant workers;

and that said provision violates the equal protection clause under the Constitution

because, while illegally dismissed local workers are guaranteed under the Labor

Code of reinstatement with full backwages computed from the time compensationwas withheld from them up to their actual reinstatement, migrant workers, by

virtue of Section 10 of R.A. No. 8042, have to waive nine months of their

collectible backwages every time they have a year of unexpired term of contract to

reckon with. Finally, petitioner posits that, assuming said provision of law is

constitutional, the CA gravely abused its discretion when it reduced petitioners
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backwages from nine months to three months as his nine-month unexpired term

cannot accommodate the lesser relief of three months for every year of the

unexpired term.[24]

On the other hand, respondents, aware of our ruling in Serrano, aver that ourpronouncement of unconstitutionality of the clause or for three months for every

year of the unexpired term, whichever is less provided in the 5thparagraph of

Section 10 of R.A. No. 8042 in Serrano should not apply in this case because

Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and

obligations of the parties in case of Illegal Dismissal of a migrant worker and is not

merely procedural in character. Thus, pursuant to the Civil Code, there should be

no retroactive application of the law in this case. Moreover, respondents asseverate

that petitioners tanker allowance of US$130.00 should not be included in thecomputation of the award as petitioners basic salary, as provided under his

contract, was only US$1,300.00. Respondents submit that the CA erred in its

computation since it included the said tanker allowance. Respondents opine that

petitioner should be entitled only to US$3,900.00 and not to US$4,290.00, as

granted by the CA. Invoking Serrano, respondents claim that the tanker allowance

should be excluded from the definition of the term salary. Also, respondents

manifest that the full sum ofP878,914.47 in Intermares bank account was

garnished and subsequently withdrawn and deposited with the NLRC Cashier of

Tacloban City on February 14, 2007. On February 16, 2007, while this case waspending before the CA, the LA issued an Order releasing the amount

of P781,870.03 to petitioner as his award, together with the sum of P86,744.44 to

petitioners former lawyer as attorneys fees, and the amount ofP3,570.00 as

execution and deposit fees. Thus, respondents pray that the instant petition be

denied and that petitioner be directed to return to Intermare the sum of

US$8,970.00 or its peso equivalent.[25]

On this note, petitioner counters that this new issue as to the inclusion of thetanker allowance in the computation of the award was not raised by respondents

before the LA, the NLRC and the CA, nor was it raised in respondents pleadings

other than in their Memorandum before this Court, which should not be allowed

under the circumstances.[26]

The petition is impressed with merit.
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Prefatorily, it bears emphasis that the unanimous finding of the LA, the

NLRC and the CA that the dismissal of petitioner was illegal is not disputed.

Likewise not disputed is the tribunals unanimous finding of bad faith on the part

of respondents, thus, warranting the award of moral and exemplary damages andattorneys fees. What remains in issue, therefore, is the constitutionality of the

5thparagraph of Section 10 of R.A. No. 8042 and, necessarily, the proper

computation of the lump-sum salary to be awarded to petitioner by reason of his

illegal dismissal.

Verily, we have already declared in Serranothat the clause or for three

months for every year of the unexpired term, whichever is less provided in the

5

th

paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violativeof the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws.

In an exhaustive discussion of the intricacies and ramifications of the said clause,

this Court, in Serrano, pertinently held:

The Court concludes that the subject clause contains a suspect

classif ication in that, in the computation of the monetary benefi ts of

fixed-term employees who are illegally discharged, it imposes a 3-

month cap on the claim of OFWs with an unexpired porti on of one

year or more in their contracts, but none on the claims of other OFWs

or local workers with fixed-term employment. The subject clause

singles out one classif ication of OFWs and burdens it with a pecul iar

disadvantage.[27]

Moreover, this Court held therein that the subject clause does not state or

imply any definitive governmental purpose; hence, the same violates not just

therein petitioners right to equal protection, but also his right to substantive due

process under Section 1, Article III of the Constitution.[28]Consequently, petitioner

therein was accorded his salaries for the entire unexpired period of nine months

and 23 days of his employment contract, pursuant to law and jurisprudence prior to

the enactment of R.A. No. 8042.

We have already spoken. Thus, this case should not be different

from Serrano.


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As a general rule, an unconstitutional act is not a law; it confers no rights; it

imposes no duties; it affords no protection; it creates no office; it is inoperative as

if it has not been passed at all. The general rule is supported by Article 7 of the

Civil Code, which provides:

Art. 7. Laws are repealed only by subsequent ones, and theirviolation or non-observance shall not be excused by disuse or custom orpractice to the contrary.

The doctrine of operative fact serves as an exception to the aforementioned

general rule. InPlanters Products, Inc. v. Fertiphil Corporation,[29]we held:

The doctrine of operative fact, as an exception to the general rule,only applies as a matter of equity and fair play. It nullifies the effects ofan unconstitutional law by recognizing that the existence of a statuteprior to a determination of unconstitutionality is an operative fact andmay have consequences which cannot always be ignored. The pastcannot always be erased by a new judicial declaration.

The doctrine is applicable when a declaration ofunconstitutionality will impose an undue burden on those who have

relied on the invalid law. Thus, it was applied to a criminal case when adeclaration of unconstitutionality would put the accused in doublejeopardy or would put in limbo the acts done by a municipality inreliance upon a law creating it.[30]

Following Serrano, we hold that this case should not be included in the

aforementioned exception. After all, it was not the fault of petitioner that he lost

his job due to an act of illegal dismissal committed by respondents. To rule

otherwise would be iniquitous to petitioner and other OFWs, and would, in effect,send a wrong signal that principals/employers and recruitment/manning agencies

may violate an OFWs security of tenure which an employment contract embodies

and actually profit from such violation based on an unconstitutional provision of

law.


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In the same vein, we cannot subscribe to respondents postulation that the

tanker allowance of US$130.00 should not be included in the computation of the

lump-sum salary to be awarded to petitioner.

First. It is only at this late stage, more particularly in their Memorandum,that respondents are raising this issue. It was not raised before the LA, the NLRC,

and the CA. They did not even assail the award accorded by the CA, which

computed the lump-sum salary of petitioner at the basic salary of US$1,430.00,

and which clearly included the US$130.00 tanker allowance. Hence, fair play,

justice, and due process dictate that this Court cannot now, for the first time on

appeal, pass upon this question. Matters not taken up below cannot be raised for

the first time on appeal. They must be raised seasonably in the proceedings before

the lower tribunals. Questions raised on appeal must be within the issues framed bythe parties; consequently, issues not raised before the lower tribunals cannot be

raised for the first time on appeal.[31]

Second. Respondents invocation ofSerranois unavailing. Indeed, we made

the following pronouncements in Serrano, to wit:

The word salaries in Section 10(5) does not include overtimeand leave pay. For seafarers like petitioner, DOLE Department Order

No. 33, series 1996, provides a Standard Employment Contract ofSeafarers, in which salary is understood as the basic wage, exclusiveof overtime, leave pay and other bonuses; whereas overtime pay iscompensation for all work performed in excess of the regular eighthours, and holiday pay is compensation for any work performed ondesignated rest days and holidays.[32]

A close perusal of the contract reveals that the tanker allowance of

US$130.00 was not categorized as a bonus but was rather encapsulated in the basic

salary clause, hence, forming part of the basic salary of petitioner. Respondents

themselves in their petition for certioraribefore the CA averred that petitioners

basic salary, pursuant to the contract, was US$1,300.00+US$130.00 tanker

allowance.[33]If respondents intended it differently, the contractper seshould

have indicated that said allowance does not form part of the basic salary or, simply,

the contract should have separated it from the basic salary clause.
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A final note.

We ought to be reminded of the plight and sacrifices of our

OFWs. In Olarte v. Nayona,[34]this Court held that:

Our overseas workers belong to a disadvantaged class. Most ofthem come from the poorest sector of our society. Their profile showsthey live in suffocating slums, trapped in an environment of crimes.Hardly literate and in ill health, their only hope lies in jobs they find withdifficulty in our country. Their unfortunate circumstance makes themeasy prey to avaricious employers. They will climb mountains, cross theseas, endure slave treatment in foreign lands just to survive. Out of

despondence, they will work under sub-human conditions and acceptsalaries below the minimum. The least we can do is to protect them withour laws.

WHEREFORE, the Petition is GRANTED. The Court of Appeals

Decision dated February 28, 2007 and Resolution dated August 30, 2007 are

hereby MODIFIEDto the effect that petitioner is AWARDEDhis salaries for the

entire unexpired portion of his employment contract consisting of nine months

computed at the rate of US$1,430.00 per month. All other awards arehereby AFFIRMED. No costs.

SO ORDERED.

PLANTERS PRODUCT INC. VS FERTIPHIL CORP

Republic of the Philippines

Supreme CourtManila

THIRD DIVISION
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PLANTERS PRODUCTS, INC., G.R. No. 166006Petitioner,

Present:

YNARES-SANTIAGO,J.,Chairperson,

AUSTRIA-MARTINEZ,- versus - CHICO-NAZARIO,

NACHURA, andREYES,JJ.

Promulgated:FERTIPHIL CORPORATION,

Respondent. March 14, 2008

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

D E C I S I O N

REYES, R.T., J.:

THE Regional Trial Courts (RTC) have the authority and jurisdiction to

consider the constitutionality of statutes, executive orders, presidential decrees and

other issuances. The Constitution vests that power not only in the Supreme Court

but in all Regional Trial Courts.

The principle is relevant in this petition for review on certiorariof the

Decision[1]of the Court of Appeals (CA) affirming with modification that of
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the RTC in Makati City,[2]finding petitioner Planters Products, Inc. (PPI) liable to

private respondent Fertiphil Corporation (Fertiphil) for the levies it paid under

Letter of Instruction (LOI) No. 1465.

The Facts

Petitioner PPI and private respondent Fertiphil are private corporations

incorporated under Philippine laws.[3] They are both engaged in the importation

and distribution of fertilizers, pesticides and agricultural chemicals.

On June 3, 1985, then President Ferdinand Marcos, exercising his legislative

powers, issued LOI No. 1465 which provided, among others, for the imposition of

a capital recovery component (CRC) on the domestic sale of all grades offertilizers in the Philippines.[4] The LOI provides:

3. The Administrator of the Fertilizer Pesticide Authority to include inits fertilizer pricing formula a capital contribution component of notless than P10 per bag. This capital contribution shall be collecteduntil adequate capital is raised to make PPI viable. Such capitalcontribution shall be applied by FPA to all domestic sales offertilizers in the Philippines.[5](Underscoring supplied)

Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer it sold in

the domestic market to the Fertilizer and Pesticide Authority (FPA). FPA then

remitted the amount collected to the Far East Bank and Trust Company, the

depositary bank of PPI. Fertiphil paid P6,689,144 to FPA from July 8,

1985 to January 24, 1986.[6]

After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of

the P10 levy. With the return of democracy, Fertiphil demanded from PPI a refund

of the amounts it paid under LOI No. 1465, but PPI refused to accede to thedemand.[7]

Fertiphil filed a complaint for collection and damages[8]against FPA and PPI

with the RTC in Makati. It questioned the constitutionality of LOI No. 1465 for

being unjust, unreasonable, oppressive, invalid and an unlawful imposition that
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amounted to a denial of due process of law.[9] Fertiphil alleged that the LOI solely

favored PPI, a privately owned corporation, which used the proceeds to maintain

its monopoly of the fertilizer industry.

In its Answer,[10]FPA, through the Solicitor General, countered that theissuance of LOI No. 1465 was a valid exercise of the police power of the State in

ensuring the stability of the fertilizer industry in the country. It also averred that

Fertiphil did not sustain any damage from the LOI because the burden imposed by

the levy fell on the ultimate consumer, not the seller.

RTC Disposition

On November 20, 1991, the RTC rendered judgment in favor of Fertiphil,disposing as follows:

WHEREFORE, in view of the foregoing, the Court herebyrenders judgment in favor of the plaintiff and against the defendantPlanters Product, Inc., ordering the latter to pay the former:

1) the sum of P6,698,144.00 with interest at 12% fromthe time of judicial demand;

2) the sum of P100,000 as attorneys fees;

3) the cost of suit.

SO ORDERED.[11]

Ruling that the imposition of the P10 CRC was an exercise of the States

inherent power of taxation, the RTC invalidated the levy for violating the basic

principle that taxes can only be levied for public purpose, viz.:

It is apparent that the imposition of P10 per fertilizer bag sold inthe country by LOI 1465 is purportedly in the exercise of the power oftaxation. It is a settled principle that the power of taxation by the state isplenary. Comprehensive and supreme, the principal check upon itsabuse resting in the responsibility of the members of the legislature to
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their constituents. However, there are two kinds of limitations on thepower of taxation: the inherent limitations and the constitutionallimitations.

One of the inherent limitations is that a tax may be levied only

for public purposes:

The power to tax can be resorted to only for aconstitutionally valid public purpose. By the same token,taxes may not be levied for purely private purposes, forbuilding up of private fortunes, or for the redress of privatewrongs. They cannot be levied for the improvement ofprivate property, or for the benefit, and promotion ofprivate enterprises, except where the aid is incident to thepublic benefit. It is well-settled principle of constitutionallaw that no general tax can be levied except for the purposeof raising money which is to be expended for publicuse. Funds cannot be exacted under the guise of taxation topromote a purpose that is not of public interest. Withoutsuch limitation, the power to tax could be exercised oremployed as an authority to destroy the economy of thepeople. A tax, however, is not held void on the ground ofwant of public interest unless the want of such interest isclear. (71 Am. Jur. pp. 371-372)

In the case at bar, the plaintiff paid the amount of P6,698,144.00to the Fertilizer and Pesticide Authority pursuant to the P10 per bag offertilizer sold imposition under LOI 1465 which, in turn, remitted theamount to the defendant Planters Products, Inc. thru the lattersdepository bank, Far East Bank and Trust Co. Thus, by virtue of LOI1465 the plaintiff, Fertiphil Corporation, which is a private domesticcorporation, became poorer by the amount of P6,698,144.00 and thedefendant, Planters Product, Inc., another private domestic corporation,became richer by the amount of P6,698,144.00.

Tested by the standards of constitutionality as set forth in theafore-quoted jurisprudence, it is quite evident that LOI 1465 insofar as itimposes the amount of P10 per fertilizer bag sold in the country andorders that the said amount should go to the defendant Planters Product,Inc. is unlawful because it violates the mandate that a tax can be levied


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only for a public purpose and not to benefit, aid and promote a privateenterprise such as Planters Product, Inc.[12]

PPI moved for reconsideration but its motion was denied.[13]

PPI then filed a

notice of appeal with the RTC but it failed to pay the requisite appeal docketfee. In a separate but related proceeding, this Court[14]allowed the appeal of PPI

and remanded the case to the CA for proper disposition.

CA Decision

On November 28, 2003, the CA handed down its decision affirming with

modification that of the RTC, with the followingfallo:

IN VIEW OF ALL THE FOREGOING, the decision appealedfrom is hereby AFFIRMED, subject to the MODIFICATIONthat theaward of attorneys fees is herebyDELETED.[15]

In affirming the RTC decision, the CA ruled that the lis motaof the

complaint for collection was the constitutionality of LOI No. 1465, thus:

The question then is whether it was proper for the trial court toexercise its power to judicially determine the constitutionality of the

subject statute in the instant case.

As a rule, where the controversy can be settled on other grounds,the courts will not resolve the constitutionality of a law (Lim v.

Pacquing, 240 SCRA 649 [1995]). The policy of the courts is to avoidruling on constitutional questions and to presume that the acts ofpolitical departments are valid, absent a clear and unmistakable showingto the contrary.

However, the courts are not precluded from exercising such

power when the following requisites are obtaining in a controversybefore it: First, there must be before the court an actual case calling forthe exercise of judicial review. Second, the question must be ripe foradjudication. Third, the person challenging the validity of the act musthave standing to challenge. Fourth, the question of constitutionalitymust have been raised at the earliest opportunity; and lastly, the issue of
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constitutionality must be the very lis motaof the case (Integrated Bar ofthe Philippines v. Zamora,338 SCRA 81 [2000]).

Indisputably, the present case was primarily instituted forcollection and damages. However, a perusal of the complaint also

reveals


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that the instant action is founded on the claim that the levy imposed wasan unlawful and unconstitutional special assessment. Consequently, therequisite that the constitutionality of the law in question be the very lismotaof the case is present, making it proper for the trial court to rule onthe constitutionality of LOI 1465.[16]

The CA held that even on the assumption that LOI No. 1465 was issued

under the police power of the state, it is still unconstitutional because it did not

promote public welfare. The CA explained:

In declaring LOI 1465 unconstitutional, the trial court held thatthe levy imposed under the said law was an invalid exercise of theStates power of taxation inasmuch asit violated the inherent andconstitutional prescription that taxes be levied only for public

purposes. It reasoned out that the amount collected under the levy wasremitted to the depository bank ofPPI, which the latter used to advanceits private interest.

On the other hand, appellant submits that the subject statutespassage was a valid exercise of police power. In addition, it disputes thecourt a quos findings arguing that the collections under LOI 1465 wasfor the benefit of Planters Foundation, Incorporated (PFI), a foundationcreated by law to hold in trust for millions of farmers, the stockownership of PPI.

Of the three fundamental powers of the State, the exercise ofpolice power has been characterized as the most essential, insistent andthe least limitable of powers, extending as it does to all the great publicneeds. It may be exercised as long as the activity or the property soughtto be regulated has some relevance to public welfare (ConstitutionalLaw, by Isagani A. Cruz, p. 38, 1995 Edition).

Vast as the power is, however, it must be exercised within the

limits set by the Constitution, which requires the concurrence of a lawfulsubject and a lawful method. Thus, our courts have laid down the test todetermine the validity of a police measure as follows: (1) the interests ofthe public generally, as distinguished from those of a particular class,requires its exercise; and (2) the means employed are reasonablynecessary for the accomplishment of the purpose and not unduly
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oppressive upon individuals (National Development Company v.Philippine Veterans Bank,192 SCRA 257 [1990]).

It is upon applying this established tests that We sustain the trialcourts holding LOI 1465 unconstitutional. To be sure, ensuring the

continued supply and distribution of fertilizer in the country is anundertaking imbued with public interest. However, the method by whichLOI 1465 sought to achieve this is by no means a measure that willpromote the public welfare. The governments commitment to supportthe successful rehabilitation and continued viability of PPI, a privatecorporation, is an unmistakable attempt to mask the subject statutesimpartiality. There is no way to treat the self-interest of a favored entity,


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like PPI, as identical with the general interest of the countrys farmers oreven the Filipino people in general. Well to stress, substantive dueprocess exacts fairness and equal protection disallows distinction wherenone is needed. When a statutes public purpose is spoiled by privateinterest, the use of police power becomes a travesty which must be

struck down for being an arbitrary exercise of government power. Torule in favor of appellant would contravene the general principle thatrevenues derived from taxes cannot be used for purely private purposesor for the exclusive benefit of private individuals.[17]

The CA did not accept PPIs claim that the levy imposed under LOI No.

1465 was for the benefit of Planters Foundation, Inc., a foundation created to hold

in trust the stock ownership of PPI. The CA stated:

Appellant next claims that the collections under LOI 1465 wasfor the benefit of Planters Foundation, Incorporated (PFI), a foundationcreated by law to hold in trust for millions of farmers, the stockownership of PFI on the strength of Letter of Undertaking (LOU) issuedby then Prime Minister Cesar Virata on April 18, 1985 and affirmed bythe Secretary of Justice in an Opinion dated October 12, 1987, to wit:

2. Upon the effective date of this Letter ofUndertaking, the Republic shall cause FPA to include in itsfertilizer pricing formula a capital recovery component, theproceeds of which will be used initially for the purpose offunding the unpaid portion of the outstanding capital stockof Planters presently held in trust by Planters Foundation,Inc. (Planters Foundation), which unpaid capital isestimated at approximately P206 million (subject tovalidation by Planters and Planters Foundation) (suchunpaid portion of the outstanding capital stock of Plantersbeing hereafter referred to as the Unpaid Capital), andsubsequently for such capital increases as may be required

for the continuing viability of Planters.

The capital recovery component shall be in theminimum amount of P10 per bag, which will be added tothe price of all domestic sales of fertilizer inthe Philippines by any importer and/or fertilizer mothercompany. In this connection, the Republic hereby


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acknowledges that the advances by Planters to PlantersFoundation which were applied to the payment of thePlanters shares now held in trust by Planters Foundation,have been assigned to, among others, theCreditors. Accordingly, the Republic, through FPA, hereby

agrees to deposit the proceeds of the capital recoverycomponent in the special trust account designated in thenotice dated April 2, 1985, addressed by counsel for theCreditors to Planters Foundation. Such proceeds shall bedeposited by FPA on or before the 15 thday of each month.

The capital recovery component shall continue to becharged and collected until payment in full of (a) theUnpaid Capital and/or (b) any shortfall in the payment ofthe Subsidy Receivables, (c) any carrying cost accruingfrom the date hereof on the amounts which may beoutstanding from time to time of the Unpaid Capital and/orthe Subsidy Receivables and (d) the capital increasescontemplated in paragraph 2 hereof. For the purpose of theforegoing clause (c), the carrying cost shall be at such rateas will represent the full and reasonable cost to Planters ofservicing its debts, taking into account both its peso and

foreign currency-denominated obligations. (Records, pp.42-43)

Appellants proposition is open to question, to say the least. TheLOU issued by then Prime Minister Virata taken together with theJustice Secretarys Opinion does not preponderantly demonstrate that thecollections made were held in trust in favor of millions offarmers. Unfortunately for appellant, in the absence of sufficientevidence to establish its claims, this Court is constrained to rely on whatis explicitly provided in LOI 1465 that one of the primary aims in

imposing the levy is to support the successful rehabilitation andcontinued viability of PPI.[18]

PPI moved for reconsideration but its motion was denied.[19] It then filed the

present petition with this Court.
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Issues

Petitioner PPI raises four issues for Our consideration, viz.:

ITHE CONSTITUTIONALITY OF LOI 1465 CANNOT BECOLLATERALLY ATTACKED AND BE DECREED VIA ADEFAULT JUDGMENT IN A CASE FILED FORCOLLECTIONAND DAMAGES WHERE THE ISSUE OFCONSTITUTIONALITY IS NOT THE VERYLIS MOTAOF THECASE. NEITHER CAN LOI 1465 BE CHALLENGED BY ANYPERSON OR ENTITY WHICH HAS NO STANDING TO DO SO.

II

LOI 1465, BEING A LAW IMPLEMENTED FOR THE PURPOSE OFASSURING THE FERTILIZER SUPPLY AND DISTRIBUTION INTHE COUNTRY, AND FOR BENEFITING A FOUNDATIONCREATED BY LAW TO HOLD IN TRUST FOR MILLIONS OFFARMERS THEIR STOCK OWNERSHIP IN PPI CONSTITUTES AVALID LEGISLATION PURSUANT TO THE EXERCISE OFTAXATION AND POLICE POWER FOR PUBLIC PURPOSES.

IIITHE AMOUNT COLLECTED UNDER THE CAPITAL RECOVERY

COMPONENT WAS REMITTED TO THEGOVERNMENT, AND BECAME GOVERNMENT FUNDSPURSUANT TO AN EFFECTIVE AND VALIDLY ENACTED LAWWHICH IMPOSED DUTIES AND CONFERRED RIGHTS BYVIRTUE OF THE PRINCIPLE OF OPERATIVEFACTPRIOR TOANY DECLARATION OF UNCONSTITUTIONALITY OF LOI 1465.

IVTHE PRINCIPLE OF UNJUST VEXATION (SHOULD BEENRICHMENT) FINDS NO APPLICATION IN THE INSTANTCASE.[20] (Underscoring supplied)

Our Ruling

We shall first tackle the procedural issues of locus standiand the jurisdiction

of the RTC to resolve constitutional issues.


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Fertiphil has locus standi because it

suf fered direct injury; doctr ine of standing

is a mere procedural technicality which

may be waived.

PPI argues that Fertiphil has no locus standito question the constitutionality

of LOI No. 1465 because it does not have a personal and substantial interest in the

case or will sustain direct injury as a result of its enforcement. [21] It asserts that

Fertiphil did not suffer any damage from the CRC imposition because incidence

of the levy fell on the ultimate consumer or the farmers themselves, not on the

seller fertilizer company.[22]

We cannot agree. The doctrine of locus standior the right of appearance ina court of justice has been adequately discussed by this Court in a catena of

cases. Succinctly put, the doctrine requires a litigant to have a material interest in

the outcome of a case. In private suits, locus standirequires a litigant to be a real

party in interest, which is defined as the
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party who stands to be benefited or injured by the judgment in the suit or the party

entitled to the avails of the suit.[23]

In public suits, this Court recognizes the difficulty of applying the doctrine

especially when plaintiff asserts a public right on behalf of the general publicbecause of conflicting public policy issues.[24]On one end, there is the right of the

ordinary citizen to petition the courts to be freed from unlawful government

intrusion and illegal official action. At the other end, there is the public policy

precluding excessive judicial interference in official acts, which may unnecessarily

hinder the delivery of basic public services.

In this jurisdiction, We have adopted the direct injury test to

determine locus standiin public suits. InPeople v. Vera,

[25]

it was held thata person who impugns the validity of a statute must have a personal and

substantial interest in the case such that he has sustained, or will sustain direct

injury as a result. The direct injury test in public suits is similar to the real

party in interest rule for private suits under Section 2, Rule 3of the 1997 Rules of

Civil Procedure.[26]

Recognizing that a strict application of the direct injury test may hamper

public interest, this Court relaxed the requirement in cases of transcendental

importance or with far reaching implications. Being a mere proceduraltechnicality, it has also been held that locus standimay be waived in the public

interest.[27]

Whether or not the complaint for collection is characterized as a private or

public suit, Fertiphil has locus standi to file it. Fertiphil suffered a direct injuryfrom the enforcement of LOI No. 1465. It was required, and it did pay, the P10

levy imposed for every bag of fertilizer sold on the domestic market. It may be

true that Fertiphil has passed some or all of the levy to the ultimate consumer, but

that does not disqualify it from attacking the constitutionality of the LOI or from

seeking a refund. As seller, it bore the ultimate burden of paying the levy. It faced
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the possibility of severe sanctions for failure to pay the levy. The fact of payment

is sufficient injury to Fertiphil.

Moreover, Fertiphil suffered harm from the enforcement of the LOI because

it was compelled to factor in its product the levy. The levy certainly rendered thefertilizer products of Fertiphil and other domestic sellers much more

expensive. The harm to their business consists not only in fewer clients because of

the increased price, but also in adopting alternative corporate strategies to meet the

demands of LOI No. 1465. Fertiphil and other fertilizer sellers may have

shouldered all or part of the levy just to be competitive in the market. The harm

occasioned on the business of Fertiphil is sufficient injury for purposes of locus

standi.

Even assuming arguendothat there is no direct injury, We find that the

liberal policy consistently adopted by this Court on locus standi must apply. The

issues raised by Fertiphil are of paramount public importance. It involves not only

the constitutionality of a tax law but, more importantly, the use of taxes for public

purpose. Former President Marcos issued LOI No. 1465 with the intention of

rehabilitating an ailing private company. This is clear from the text of the

LOI. PPI is expressly named in the LOI as the direct beneficiary of the

levy. Worse, the levy was made dependent and conditional upon PPI becoming

financially viable. The LOI provided that the capital contribution shall becollected until adequate capital is raised to make PPI viable.

The constitutionality of the levy is already in doubt on a plain reading of the

statute. It is Our constitutional duty to squarely resolve the issue as the final

arbiter of all justiciable controversies. The doctrine of standing, being a mere

procedural technicality, should be waived, if at all, to adequately thresh out an

important constitutional issue.

RTC may resolve consti tuti onal issues; the

constitutional issue was adequately raised

in the complaint; it i s the lis mota of the

case.


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PPI insists that the RTC and the CA erred in ruling on the constitutionality

of the LOI. It asserts that the constitutionality of the LOI cannot be collaterally

attacked in a complaint for collection.[28] Alternatively, the resolution of the

constitutional issue is not necessary for a determination of the complaint for

collection.[29]

Fertiphil counters that the constitutionality of the LOI was adequately

pleaded in its complaint. It claims that the constitutionality of LOI No. 1465 is the

very lis motaof the case because the trial court cannot determine its claim without

resolving the issue.[30]

It is settled that the RTC has jurisdiction to resolve the constitutionality of a

statute, presidential decree or an executive order. This is clear from Section 5,Article VIII of the 1987 Constitution, which provides:

SECTION 5. The Supreme Court shall have the followingpowers:

x x x x

(2) Review, revise, reverse, modify, or affirm on appealor certiorari, as the law or the Rules of Court may provide, finaljudgments and orders of lower courts in:

(a) All cases in which the constitutionality orvalidity of any treaty, international or executive agreement,law, presidential decree, proclamation, order, instruction,ordinance, or regulation is in question. (Underscoring

supplied)

InMirasol v. Court of Appeals,[31]this Court recognized the power of

the RTC to resolve constitutional issues, thus:

On thefirst issue. It is settled that Regional Trial Courts have theauthority and jurisdiction to consider the constitutionality of a statute,
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presidential decree, or executive order. The Constitution vests the powerof judicial review or the power to declare a law, treaty, international orexecutive agreement, presidential decree, order, instruction, ordinance,or regulation not only in this Court, but in all Regional Trial Courts.[32]

In the recent case ofEqui-Asia Placement, Inc. v. Department of Foreign

Affairs,[33]this Court reiterated:

There is no denying that regular courts have jurisdiction overcases involving the validity or constitutionality of a rule or regulationissued by administrative agencies. Such jurisdiction, however, is notlimited to the Court of Appeals or to this Court alone for even theregional trial courts can take cognizance of actions assailing a specificrule or set of rules promulgated by administrative bodies. Indeed, the

Constitution vests the power of judicial review or the power to declare alaw, treaty, international or executive agreement, presidential decree,order, instruction, ordinance, or regulation in the courts, including theregional trial courts.[34]

Judicial review of official acts on the ground of unconstitutionality may be

sought or availed of through any of the actions cognizable by courts of justice, not

necessarily in a suit for declaratory relief. Such review may be had in criminal

actions, as inPeople v. Ferrer[35]involving the constitutionality of the now defunct

Anti-Subversion law, or in ordinary actions, as inKrivenko v. Register ofDeeds

[36]involving the constitutionality of laws prohibiting aliens from acquiring

public lands. The constitutional issue, however, (a) must be properly raised

and presented in the case, and (b) its resolution is necessary to a determination of

the case, i.e., the issue of constitutionality must be the very lis motapresented.[37]

Contrary to PPIs claim, the constitutionality of LOI No. 1465 was properly

and adequately raised in the complaint for collection filed with the RTC. The

pertinent portions of the complaint allege:

6. The CRC of P10 per bag levied under LOI 1465 on domesticsales of all grades of fertilizer in the Philippines, is unlawful, unjust,uncalled for, unreasonable, inequitable and oppressive because:

x x x x
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(c) It favors only one private domestic corporation,

i.e., defendant PPPI, and imposed at the expense anddisadvantage of the other fertilizer importers/distributorswho were themselves in tight business situation and were

then exerting all efforts and maximizing management andmarketing skills to remain viable;

x x x x

(e) It was a glaring example of crony capitalism, aforced program through which the PPI, having beenpresumptuously masqueraded as the fertilizer industryitself, was the sole and anointed beneficiary;

7. The CRC was an unlawful; and unconstitutional specialassessment and its imposition is tantamount to illegal exactionamounting to a denial of due process since the persons of entities whichhad to bear the burden of paying the CRC derived no benefit therefrom;that on the contrary it was used by PPI in trying to regain its formerdespicable monopoly of the fertilizer industry to the detriment of otherdistributors and importers.[38] (Underscoring supplied)

The constitutionality of LOI No. 1465 is also the very lis motaof the

complaint for collection. Fertiphil filed the complaint to compel PPI to refund thelevies paid under the statute on the ground that the law imposing the levy is

unconstitutional. The thesis is that an unconstitutional law is void. It has no legal

effect. Being void, Fertiphil had no legal obligation to pay the levy. Necessarily,

all levies duly paid pursuant to an unconstitutional law should be refunded under

the civil code principle against unjust enrichment. The refund is a mere

consequence of the law being declared unconstitutional. The RTC surely cannot

order PPI to refund Fertiphil if it does not declare the LOI unconstitutional. It is the

unconstitutionality of the LOI which triggers the refund. The issue ofconstitutionality is the very lis motaof the complaint with the RTC.

The P10 levy under LOI No. 1465 is an

exercise of the power of taxation.


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At any rate, the Court holds that the RTC and the CA did not err in ruling

against the constitutionality of the LOI.

PPI insists that LOI No. 1465 is a valid exercise either of the police power or

the power of taxation. It claims that the LOI was implemented for the purpose ofassuring the fertilizer supply and distribution in the country and for benefiting a

foundation created by law to hold in trust for millions of farmers their stock

ownership in PPI.

Fertiphil counters that the LOI is unconstitutional because it was enacted to

give benefit to a private company. The levy was imposed to pay the corporate debt

of PPI. Fertiphil also argues that, even if the LOI is enacted under the police

power, it is still unconstitutional because it did not promote the general welfare ofthe people or public interest.

Police power and the power of taxation are inherent powers of the

State. These powers are distinct and have different tests for validity. Police power

is the power of the State to enact legislation that may interfere with personal liberty

or property in order to promote the general welfare,[39]while the power of taxation

is the power to levy taxes to be used for public purpose. The main purpose of

police power is the regulation of a behavior or conduct, while taxation is revenue

generation. The lawful subjects and lawful means tests are used to determinethe validity of a law enacted under the police power.[40] The power of taxation, on

the other hand, is circumscribed by inherent and constitutiona

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Arceta vs Mangrobang

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