FREEDOM OF RELIGION CASES

Case No. 1: Ebralinag vs. Division Superintendent of Schools of Cebu,

GR Nos. 95770 and 95887 March 1, 1993

DOCTRINE: Religious freedom is a fundamental right of highest priority and the amplest protection
among human rights, for it involves the relationship of man to his Creator.

- Free Exercise Clause -

The right to religious profession and worship has a two-fold aspect, vis., freedom to believe and freedom
to act on one’s belief. The first is absolute as long as the belief is confined within the realm of thought.
The second is subject to regulation where the belief is translated into external acts that affect the public
welfare.

The only limitation to religious freedom is the existence of grave and present danger to public safety,
morals, health and interests where State has right to prevent.

Nachura: (Free Exercise Clause. Right to act according to one’s belief)

The case reversed Gerona v. Secretary of Education (Gerona Doctrine), the court upheld the right of
students, to refuse to salute the Philippine flag on account of their religious beliefs.

FACTS

Two special civil actions for certiorari, Mandamus and Prohibition were filed and consolidated raising the
same issue whether school children who are members or a religious sect known as Jehovah’s Witnesses
may be expelled from school (both public and private), for refusing, on account of their religious beliefs,
to take part in the flag ceremony which includes playing (by a band) or singing the Philippine national
anthem, saluting the Philippine flag and reciting the patriotic pledge.

Petitioner’s Contention: All of the petitioners in both consolidated cases were expelled from their
classes by the public school authorities for refusing to salute the flag, sing the national anthem and recite
the patriotic pledge as required by Republic Act No. 1265 (An Act making flag ceremony compulsory in
all educational institutions), and by Department Order No. 8 (Rules and Regulations for Conducting the
Flag Ceremony in All Educational Institutions) making the flag ceremony compulsory in all educational
institutions.

Jehovah's Witnesses who admittedly teach their children not to salute the flag, sing the national anthem,
and recite the patriotic pledge for they believe that those are "acts of worship" or "religious devotion”
which they "cannot conscientiously give . . . to anyone or anything except God". They feel bound by the
Bible's command to "guard ourselves from idols — 1 John 5:21". They consider the flag as an image or
idol representing the State. They contend that the action of the local authorities in compelling the flag
salute and pledge transcends constitutional limitations on the State's power and invades the sphere of the
intellect and spirit which the Constitution protect against official control.

Respondent’s Contention: Gerona et al v. Secretary of Education where the Court upheld the
expulsions. Gerona doctrine provides that we are a system of separation of the church and state and the
flag is devoid of religious significance and it doesn’t involve any religious ceremony. The children of
Jehovah’s Witnesses cannot be exempted from participation in the flag ceremony.

Petitioner’s Contention: Petitioners stressed that while they do not take part in the compulsory flag
ceremony, they do not engage in ‘external acts’ or behavior that would offend their countrymen who
believe in expressing their love of country through observance of the flag ceremony. They quietly stand at
attention during the flag ceremony to show their respect for the right of those who choose to participate in
the solemn proceedings.

ISSUE & RULING

Whether school children who are members or a religious sect may be expelled from school for
refusing, on account of their religious beliefs, to take part in the flag ceremony.

NO. The court upheld the petitioners' right under the Constitution to refuse to salute the Philippine flag on
account of their religious beliefs. Religious freedom as a fundamental right deserving the "highest priority
and amplest protection among human rights. It reversed the expulsion orders made by the public
respondents therein as violative of both the free exercise of religion clause and the right of citizens to
education under the 1987 Constitution.

Religious freedom is a fundamental right of highest priority. The two fold aspect of right to religious
worship is: 1.) Freedom to believe which is an absolute act within the realm of thought. 2.) Freedom to
act on one’s belief regulated and translated to external acts. The only limitation to religious freedom is the
existence of grave and present danger to public safety, morals, health and interests where State has right
to prevent.

The 30 year old previous GERONA decision of expelling and dismissing students and teachers who
refuse to obey RA1265 is violates exercise of freedom of speech and religious profession and worship.
Jehovah’s Witnesses may be exempted from observing the flag ceremony but this right does not give
them the right to disrupt such ceremonies. In the case at bar, the Students expelled were only standing
quietly during ceremonies. By observing the ceremonies quietly, it doesn’t present any danger so evil and
imminent to justify their expulsion. The expulsion of the students by reason of their religious beliefs is
also a violation of a citizen’s right to free education. The non-observance of the flag ceremony does not
totally constitute ignorance of patriotism and civic consciousness. Love for country and admiration for
national heroes, civic consciousness and form of government are part of the school curricula. Therefore,
expulsion due to religious beliefs is unjustified

Case No. 2: Estrada vs. Escritor,

A.M. No. P-02-1651, June 22, 2006

DOCTRINE: The Court recognizes that state interests must be upheld in order that freedoms –
including religious freedom – may be enjoyed. In the area of religious exercise as a preferred freedom,
however, man stands accountable to an authority higher than the state, and so the state interest sought to
be upheld must be so compelling that its violation will erode the very fabric of the state that will also
protect the freedom. In the absence of a showing that such state interest exists, man must be allowed to
subscribe to the Infinite.

Nachura: (Free Exercise Clause. Benevolent Neutrality. The compelling State interest test)
Benevolent Neutrality recognizes that government must pursue its secular goals and interests, but at the
same time, strive to uphold religious liberty to the greatest extent possible within flexible constitutional
limits. This could allow for accommodation of morality based on religion, provided it does not offend
compelling state interest.

FACTS

Petitioner’s Contention: Petitioner Estrada seeks for the investigation of Respondent Escritor, a court
interpreter, for living with a man not her husband, and having borne a child within the live-in arrangement
which commits an immoral act that tarnishes the image of the court (disgraceful and immoral conduct).
Thus, she should not be employed.

Respondent’s Contention: Respondent Escritor testified that when she entered the judiciary in 1999, she
was already a widow, her husband having died in 1998. She admitted that she started living with a man
without the benefit of marriage more than twenty years ago and had a son. But as a member of Jehovah’s
Witnesses, she asserted the approval of her congregation with a "Declaration of Pledging Faithfulness."

Past Ruling:
The case is remanded. The Solicitor General is ordered to intervene in the case where it will be given the
opportunity (a) to examine the sincerity and centrality of respondent’s claimed religious belief and
practice; (b) to present evidence on the state’s "compelling interest" to override respondent’s religious
belief and practice; and (c) to show that the means the state adopts in pursuing its interest is the least
restrictive to respondent’s religious freedom.

The Compelling Interest Test:

As previously stated, the compelling state interest test involves a three-step process. We explained this
process in detail, by showing the questions which must be answered in each step, viz:

First: “Has the statute or government action created a burden on the free exercise of religion?"
The courts often look into the sincerity of the religious belief, but without inquiring into the truth
of the belief because the Free Exercise Clause prohibits inquiring about its truth. The sincerity of
the claimant’s belief is ascertained to avoid the mere claim of religious beliefs to escape a
mandatory regulation.

Second: “Is there a sufficiently compelling state interest to justify this infringement of religious
liberty?"
In this step, the government has to establish that its purposes are legitimate for the state and that
they are compelling. Government must do more than assert the objectives at risk if exemption is
given; it must precisely show how and to what extent those objectives will be undermined if
exemptions are granted.

Third: Has the state in achieving its legitimate purposes used the least intrusive means possible
so that the free exercise is not infringed any more than necessary to achieve the legitimate goal
of the state?"
The analysis requires the state to show that the means in which it is achieving its legitimate state
objective is the least intrusive means, i.e., it has chosen a way to achieve its legitimate state end
that imposes as little as possible on religious liberties.

Three kinds of accommodation:

The application of the compelling state interest test could result to three situations of accommodation:
(1) Mandatory accommodation would result if the Court finds that accommodation is required by the
Free Exercise Clause.
(2) Permissive accommodation results, if the Court finds that the State may, but is not required to,
accommodate religious interests.
(3) Accommodation is prohibited, if the Court finds that establishment concerns prevail over
potential accommodation interests.

The cases of American Bible Society, Ebralinag, and Victoriano demonstrate that our application of the
doctrine of benevolent neutrality-accommodation covers not only the grant of permissive, or legislative
accommodations, but also mandatory accommodations. Thus, an exemption from a law of general
application is possible, even if anchored directly on an invocation of the Free Exercise Clause alone,
rather than a legislative exemption.

At this point, we must emphasize that the adoption of the benevolent neutrality accommodation approach
does not mean that the Court ought to grant exemptions every time a free exercise claim comes before it.
Although benevolent neutrality is the lens with which the Court ought to view religion clause cases, the
interest of the state should also be afforded utmost protection. This is precisely the purpose of the test—to
draw the line between mandatory, permissible and forbidden religious exercise.

ISSUE & RULING

Whether respondent should be found guilty of the administrative charge of "gross and immoral
conduct”

NO. The evidence that the OSG has presented fails to demonstrate "the gravest abuses, endangering
paramount interests" which could limit or override respondent’s fundamental right to religious freedom .
Neither did the government exert any effort to show that the means it seeks to achieve its legitimate state
objective is the least intrusive means.

The free exercise of religion is specifically articulated as one of the fundamental rights in our
Constitution. It is a fundamental right that enjoys a preferred position in the hierarchy of rights — "the
most inalienable and sacred of human rights," in the words of Jefferson. Hence, it is not enough to
contend that the state’s interest is important, because our Constitution itself holds the right to religious
freedom sacred. The State must articulate in specific terms the state interest involved in preventing the
exemption, which must be compelling, for only the gravest abuses, endangering paramount interests can
limit the fundamental right to religious freedom. To rule otherwise would be to emasculate the Free
Exercise Clause as a source of right by itself.

Thus, it is not the State’s broad interest in "protecting the institutions of marriage and the family," or even
"in the sound administration of justice" that must be weighed against respondent’s claim, but the State’s
narrow interest in refusing to make an exception for the cohabitation which respondent’s faith finds
moral. In other words, the government must do more than assert the objectives at risk if exemption is
given; it must precisely show how and to what extent those objectives will be undermined if exemptions
are granted. This, the Solicitor General failed to do.

As previously discussed, our Constitution adheres to the benevolent neutrality approach that gives room
for accommodation of religious exercises as required by the Free Exercise Clause. Thus, in arguing that
respondent should be held administratively liable as the arrangement she had was "illegal per se because,
by universally recognized standards, it is inherently or by its very nature bad, improper, immoral and
contrary to good conscience," the Solicitor General failed to appreciate that benevolent neutrality could
allow for accommodation of morality based on religion, provided it does not offend compelling state
interests.

Finally, even assuming that the OSG has proved a compelling state interest, it has to further demonstrate
that the state has used the least intrusive means possible so that the free exercise is not infringed any more
than necessary to achieve the legitimate goal of the state, i.e., it has chosen a way to achieve its legitimate
state end that imposes as little as possible on religious liberties. Again, the Solicitor General utterly failed
to prove this element of the test.

Thus, we find that in this particular case and under these distinct circumstances, respondent Escritor’s
conjugal arrangement cannot be penalized as she has made out a case for exemption from the law based
on her fundamental right to freedom of religion. The Court recognizes that state interests must be upheld
in order that freedoms - including religious freedom - may be enjoyed. In the area of religious exercise as
a preferred freedom, however, man stands accountable to an authority higher than the state, and so the
state interest sought to be upheld must be so compelling that its violation will erode the very fabric of the
state that will also protect the freedom. In the absence of a showing that such state interest exists, man
must be allowed to subscribe to the Infinite.

Case No. 3: Taruc vs. Bishop Dela Cruz,

G.R. No. 144801. March 10, 2005

DOCTRINE: In our jurisdiction, we hold the Church and the State to be separate and distinct from each
other.

In the leading case of Fonacier v. Court of Appeals, the court enunciated the doctrine that in disputes
involving religious institutions or organizations, in disputes involving religious institutions or
organizations, there is one area which the Court should not touch: doctrinal and disciplinary differences.

Nachura: (Non-establishment clause. Scope. Intramural religious dispute.)

The Supreme Court declared that the expulsion/excommunication of members of a religious
institution/organization is a matter best left to the discretion of the officials, and the laws and canons of
such institution/organization. It is not for the court to exercise control over church authorities in the
performance of their discretionary and official functions. Rather, it is for the members of religious
institutions/organizations to conform to just church regulations.

FACTS

Respondent Bishop declared petitioner Taruc expelled or excommunicated from the Philippine
Independent Church (PIC) because Taruc tried to organize an open mass to be celebrated by Fr. Ambong,
who is not a member of the clergy of the diocese of Surigao and his credentials as a parish priest were in
doubt. Respondent failed to stop the petitioner from carrying out his plan.

Petitioner’s Contention: Because of the order of expulsion/excommunication, petitioners filed a

complaint for damages with preliminary injunction against Bishop de la Cruz on the theory that they
conspired with the Bishop to have petitioners expelled and excommunicated from the PIC. They
contended that their expulsion was illegal because it was done without trial thus violating their right to
due process of law.

Respondent’s Contention: filed a motion to dismiss the case on the ground of lack of jurisdiction but it
was denied.

ISSUE & RULING

Whether or not the courts have jurisdiction to hear a case involving the expulsion/excommunication of
members of a religious institution.
NO. Section 5, Article III or the Bill of Rights of the 1987 Constitution specifically provides that:
Sec. 5. No law shall be made respecting an establishment of religion or prohibiting the free
exercise thereof. The free exercise and enjoyment of religious profession and worship, without
discrimination or preference, shall forever be allowed. No religious test shall be required for the
exercise of civil or political rights.

In our jurisdiction, we hold the Church and the State to be separate and distinct from each other.

We agree with the Court of Appeals that the expulsion/excommunication of members of a religious
institution/organization is a matter best left to the discretion of the officials, and the laws and canons, of
said institution/organization. It is not for the courts to exercise control over church authorities in the
performance of their discretionary and official functions. Rather, it is for the members of religious
institutions/organizations to conform to just church regulations.

Thus, The amendments of the constitution, restatement of articles of religion and abandonment of faith or
abjuration alleged by appellant, having to do with faith, practice, doctrine, form of worship, ecclesiastical
law, custom and rule of a church and having reference to the power of excluding from the church those
allegedly unworthy of membership, are unquestionably ecclesiastical matters which are outside the
province of the civil courts.

We would, however, like to comment on petitioners’ claim that they were not heard before they were
expelled from their church. The records show that Bishop de la Cruz pleaded with petitioners several
times not to commit acts inimical to the best interests of PIC. They were also warned of the consequences
of their actions, among them their expulsion/excommunication from PIC. Yet, these pleas and warnings
fell on deaf ears and petitioners went ahead with their plans to defy their Bishop and foment hostility and
disunity among the members of PIC in Socorro, Surigao del Norte. They should now take full
responsibility for the chaos and dissension they caused.

Case No. 4: Ang Ladlad LGBT Party v. Commission on Elections,

618 SCRA 32

Doctrine: Estrada v. Escritor: The morality referred to in the law is public and necessarily secular, not
religious as the dissent of Mr. Justice Carpio holds. "Religious teachings as expressed in public debate
may influence the civil public order but public moral disputes may be resolved only on grounds
articulable in secular terms."

Otherwise, if government relies upon religious beliefs in formulating public policies and morals, the
resulting policies and morals would require conformity to what some might regard as religious programs
or agenda. The non-believers would therefore be compelled to conform to a standard of conduct
buttressed by a religious belief, likewise, if government based its actions upon religious beliefs, it would
tacitly approve or endorse that belief and thereby also tacitly disapprove contrary religious or non-
religious views that would not support the policy. As a result, government will not provide full religious
freedom for all its citizens, or even make it appear that those whose beliefs are disapproved are second-
class citizens.

FACTS

COMELEC refused to recognize Ang Ladlad LGBT Party, an organization composed of men and women
who identify themselves as lesbians, gays, bisexuals, or trans-gendered individuals (LGBTs), as a party
list based on moral grounds. In the elevation of the case to the Supreme Court, Comelec alleged that
petitioner made misrepresentation in their application.

ISSUE & RULING

Whether Ang Ladlad's application for accreditation should be granted.

YES. The lesbian, gay, bisexual, and transgender have the same interest in participating in the party-list
system on the same basis as other political parties similarly situated. State intrusion in this case is equally
burdensome. Hence, laws of general application should apply with equal force to LGBTs, and they
deserve to participate in the party-list system on the same basis as other marginalized and under-
represented sectors.
Under our system of laws, every group has the right to promote its agenda and attempt to persuade society
of the validity of its position through normal democratic means. It is in the public square that deeply held
convictions and differing opinions should be distilled and deliberated upon.

Our Constitution provides in Article III, Section 5 that "no law shall be made respecting an establishment
of religion, or prohibiting the free exercise thereof. " What our non-establishment clause calls for is
"government neutrality in religious matters." Clearly, "governmental reliance on religious justification is
inconsistent with this policy of neutrality." We thus find that it was grave violation of the non-
establishment clause for the COMELEC to utilize the Bible and the Koran to justify the exclusion of Ang
Ladlad.

A law could be religious or Kantian or Aquinian or utilitarian in its deepest roots, but it must have an
articulable and discernible secular purpose and justification to pass scrutiny of the religion clauses. x x x
Recognizing the religious nature of the Filipinos and the elevating influence of religion in society,
however, the Philippine constitution's religion clauses prescribe not a strict but a benevolent neutrality.
Benevolent neutrality recognizes that government must pursue its secular goals and interests but at the
same time strive to uphold religious liberty to the greatest extent possible within flexible constitutional
limits. Thus, although the morality contemplated by laws is secular, benevolent neutrality could allow for
accommodation of morality based on religion, provided it does not offend compelling state interests.

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

In this context, the principle of non-discrimination requires that laws of general application relating to
elections be applied equally to all persons, regardless of sexual orientation. Although sexual orientation is
not specifically enumerated as a status or ratio for discrimination in Article 26 of the ICCPR, the ICCPR
Human Rights Committee has opined that the reference to "sex" in Article 26 should be construed to
include "sexual orientation." Additionally, a variety of United Nations bodies have declared
discrimination on the basis of sexual orientation to be prohibited under various international agreements.

Case No. 5: Imbong vs. Ochoa

G.R. No. 204819, April 08, 2014

DOCTRINE: Freedom of religion was accorded preferred status by the framers of the Constitution. It
is designed to protect the broadest possible liberty of conscience, to allow each man to believe as his
conscience directs, to profess his beliefs, and to live as he believes he ought to live, consistent with the
liberty of others and with the common good.

The benevolent neutrality theory believes that with respect to these governmental actions, accommodation
of religion may be allowed, not to promote the government's favored form of religion, but to allow
individuals and groups to exercise their religion without hindrance.

Nachura: (RH Law Controversy.)

The court has the authority to determine whether the law contravenes the constitutional guarantee of
religious freedom.

The State-sponsored procurement of contraceptives does not violate religious freedom. The State may
pursue its legitimate secular objectives without being dictated upon by any religions. To allow religious
sects to dictate policy or restrict other groups would violate the non-establishment clause. This
would cause the State to adhere to a particular religion, and thus, amount to the establishment of a state
religion. The State can, therefore, enhance its population control program through the RH law even if the
promotion of contraceptive use is contrary to the religious beliefs of petitioners.

But Secs. 2, 23 and 24 of RH Law, which compel a hospital or medical practitioner to immediately refer
a person seeking health care and services under the law to another accessible health care provider despite
their conscientious objections based on religious or ethical beliefs, violate the religious belief and
conviction of a conscientious objector. – While penalties may be imposed by law to ensure compliance
therewith, a constitutionally-protected right must prevail over the effective implementation of the law.
In using the compelling state interest test, there is no compelling state interest to limit the free exercise of
conscientious objectors. There is no immediate danger to the life or health of an individual in the
perceived scenario of the foregoing provisions. X X X The respondent failed to show that the provisions
are the least intrusive means to achieve a legitimate state objective, since Congress has already taken
other secular steps to ensure that the right to health is protected. X X X The court recognized that
exception must be made in life-threatening cases that require the performance of emergency procedures.
In these cases, the life of the mother should be given preference considering that a referral by a medical
practitioner would amount to a denial of service resulting in an unnecessary and grave danger to the life
of the mother.

FACTS

In 2012, the Philippines enacted the Responsible Parenthood and Reproductive Health Act of 2012,
known as the Reproductive Health Law (RH Law), which guaranteed universal and free access to
nearly all modern contraceptives to all citizens, including those living in poverty, through
government health centers. The law also mandated reproductive health education in government schools
and recognized the right to post-abortion care as part of the right to reproductive healthcare.

The RH Law violates the right to religious freedom because it authorizes the use of public funds for the
procurement of contraceptives. For the petitioners, the use of public funds for purposes that are
believed to be contrary to their beliefs is included in the constitutional mandate ensuring religious
freedom.

ISSUE & RULING

Whether or not the RH Law violates the freedom of religion

YES, the RH law violates freedom of religion.

The constitutional assurance of religious freedom provides two guarantees: the Establishment Clause and
the Free Exercise Clause.

The establishment clause principally prohibits the State from sponsoring any religion or favoring any
religion as against other religions. It mandates a strict neutrality in affairs among religious groups.
Essentially, it prohibits the establishment of a state religion and the use of public resources for the
support or prohibition of a religion; on the other hand, the basis of the free exercise clause is the respect
for the inviolability of the human conscience. Under this part of religious freedom guarantee, the State
is prohibited from unduly interfering with the outside manifestations of one's belief and faith.

In case of conflict between the free exercise clause and the State, the Court adheres to the doctrine of
benevolent neutrality. The benevolent neutrality theory believes that with respect to these governmental
actions, accommodation of religion may be allowed, not to promote the government's favored form of
religion, but to allow individuals and groups to exercise their religion without hindrance.

The present case involves purely conduct arising from religious belief. The "compelling state interest"
test is proper where conduct is involved for the whole gamut of human conduct has different effects on
the state's interests: some effects may be immediate and short-term while others delayed and far-
reaching.

Only the gravest abuses endangering paramount interests can limit this fundamental right. A mere
balancing of interests which balances a right with just a colorable state interest is therefore not
appropriate. Instead, only a compelling interest of the state can prevail over the fundamental right to
religious liberty.

Matters dealing with faith, practice, doctrine, form of worship, ecclesiastical law, custom and rule of a
church are unquestionably ecclesiastical matters which are outside the province of the civil courts. The
jurisdiction of the Court extends only to public and secular morality. Whatever pronouncement the
Court makes in the case at bench should be understood only in this realm where it has authority.
The State is not precluded to pursue its legitimate secular objectives without being dictated upon by the
policies of any one religion. The obligation to refer imposed by the RH Law violates the religious belief
and conviction of a conscientious objector. Once the medical practitioner, against his will, refers a
patient seeking information on modem reproductive health products, services, procedures and methods,
his conscience is immediately burdened as he has been compelled to perform an act against his beliefs.

The religious freedom of health providers, whether public or private, should be accorded primacy.
Accordingly, a conscientious objector should be exempt from compliance with the mandates of the RH
Law. If he would be compelled to act contrary to his religious belief and conviction, it would be violative
of the principle of non-coercion enshrined in the constitutional right to free exercise of religion.

The same holds true with respect to non-maternity specialty hospitals and hospitals owned and operated
by a religious group and health care service providers. Considering that Section 24 of the RH Law
penalizes such institutions should they fail or refuse to comply with their duty to refer under Section 7
and Section 23(a)(3), the Court deems that it must be struck down for being violative of the freedom of
religion.

The same applies to Section 23(a)(l) and (a)(2) in relation to Section 24, considering that in the
dissemination of information regarding programs and services and in the performance of reproductive
health procedures, the religious freedom of health care service providers should be respected. The
punishment of a healthcare service provider, who fails and/or refuses to refer a patient to another, or who
declines to perform reproductive health procedure on a patient because incompatible religious beliefs, is a
clear inhibition of a constitutional guarantee which the Court cannot allow.

Case No. 6: In re: Letter of Tony Q. Valenciano

A.M. No. 10-4-19-SC, March 07, 2017

FACTS

Valenciano reported that the basement of the Hall of Justice (QC) had been converted into a Roman
Catholic Chapel. He believed that such practice violated the constitutional provision on the separation of
Church and State and the constitutional prohibition against the appropriation of public money or property
for the benefit of a sect, church, denomination, or any other system of religion.

Valenciano further averred that the holding of masses at the basement of the QC Hall of Justice showed
that it tended to favor Catholic litigants; that the rehearsals of the choir caused great disturbance to other
employees; that the public could no longer use the basement as resting place; that the employees and
litigants of the Public Attorney's Office (PAO) et. Al. could not attend to their personal necessities such as
going to the lavatories because they could not traverse the basement between 12:00 o'clock noontime and
1: 15 o'clock in the afternoon; that the court employees became hostile toward each other as they vied for
the right to read the epistle; and that the water supply in the entire building was cut off during the mass
because the generator was turned off to ensure silence.

ISSUE & RULING

Whether there is a violation on constitutional separation of church and state

NO.

FREE EXERCISE CLAUSE:

The State is aware of the existence of religious movements whose members believe in the divinity of Jose
Rizal. Yet, it does not implement measures to suppress the said religious sects. Such inaction or
indifference on the part of the State gives meaning to the separation of Church and State, and at the same
time, recognizes the religious freedom of the members of these sects to worship their own Supreme
Being.

Clearly, allowing the citizens to practice their religion is not equivalent to a fusion of Church and State.
 Free Exercise Clause – “it is designed to protect the broadest possible liberty of conscience, to allow each
man to believe as his conscience directs, to profess his beliefs, and to live as he believes he ought to live,
consistent with the liberty of others and with the common good."

"The right to religious profession and worship has a two-fold aspect - freedom to believe and freedom to
act on one's beliefs. The first is absolute as long as the belief is confined within the realm of thought. The
second is subject to regulation where the belief is translated into external acts that affect the public
welfare."

1) Freedom to believe – The individual is free to believe (or disbelieve) as he pleases concerning the
hereafter. He may indulge his own theories about life and death; worship any god he chooses, or
none at all; embrace or reject any religion; acknowledge the divinity of God or of any being that
appeals to his reverence; recognize or deny the immortality of his soul - in fact, cherish any
religious conviction as he and he alone sees fit. However absurd his beliefs may be to others, even
if they be hostile and heretical to the majority, he has full freedom to believe as he pleases. He
may not be required to prove his beliefs. He may not be punished for his inability to do so.
Religion, after all, is a matter of faith. "Men may believe what they cannot prove." Every one has a
right to his beliefs and he may not be called to account because he cannot prove what he believes.

2) Freedom to act on one’s belief – But where the individual externalizes his beliefs in acts or
omissions that affect the public, his freedom to do so becomes subject to the authority of the State.
As great as this liberty may be, religious freedom, like all other rights guaranteed in the
Constitution, can be enjoyed only with a proper regard for the rights of others.

It is error to think that the mere invocation of religious freedom will stalemate the State and render
it impotent in protecting the general welfare. The inherent police power can be exercised to
prevent religious practices inimical to society. And this is true even if such practices are pursued
out of sincere religious conviction and not merely for the purpose of evading the reasonable
requirements or prohibitions of the law.

COMPELLING STATE INTEREST:

As reported by the Executive Judges of Quezon City, the masses were being conducted only during noon
breaks and were not disruptive of public services . The court proceedings were not being distracted or
interrupted and that the performance of the judiciary employees were not being adversely affected .
Moreover, no Civil Service rules were being violated. As there has been no detrimental effect on the
public service or prejudice to the State, there is simply no state interest compelling enough to prohibit the
exercise of religious freedom in the halls of justice.

Compelling Interest – "Compelling state interest" test is proper where conduct is involved for the whole
gamut of human conduct has different effects on the state's interests: some effects may be immediate and
short-term while others delayed and far-reaching.”

“The test requires the state to carry a heavy burden, a compelling one, for to do otherwise would allow the
state to batter religion, especially the less powerful ones until they are destroyed. In determining which
shall prevail between the state's interest and religious liberty, reasonableness shall be the guide. The
"compelling state interest" serves the purpose of revering religious liberty while at the same time affording
protection to the paramount interests of the state.”

ACCOMMODATION, NOT ESTABLISHMENT OF RELIGION

“In order to give life to the constitutional right of freedom of religion, the State adopts a policy of accommodation.
Accommodation is a recognition of the reality that some governmental measures may not be imposed on a certain
portion of the population for the reason that these measures are contrary to their religious beliefs . As long as it can
be shown that the exercise of the right does not impair the public welfare, the attempt of the State to regulate or
prohibit such right would be an unconstitutional encroachment.”

POLICY OF BENEVOLENT NEUTRALITY

“With religion looked upon with benevolence and not hostility, benevolent neutrality allows accommodation of
religion under certain circumstances. Accommodations are government policies that take religion specifically into
account not to promote the government's favored form of religion, but to allow individuals and groups to exercise
their religion without hindrance. Their purpose or effect therefore is to remove a burden on, or facilitate the exercise
of, a person's or institution's religion. As Justice Brennan explained, the "government [may] take religion into
account ... to exempt, when possible, from generally applicable governmental regulation individuals whose religious
beliefs and practices would otherwise thereby be infringed, or to create without state involvement an atmosphere in
which voluntary religious exercise may flourish."

NON-ESTABLISHMENT CLAUSE:

It is our considered view that the holding of Catholic masses at the basement of the QC Hall of Justice is
not a case of establishment, but merely accommodation. First, there is no law, ordinance or circular
issued by any duly constitutive authorities expressly mandating that judiciary employees attend the
Catholic masses at the basement. Second, when judiciary employees attend the masses to profess their
faith, it is at their own initiative as they are there on their own free will and volition, without any coercion
from the judges or administrative officers. Third, no government funds are being spent because the
lightings and air conditioning continue to be operational even if there are no religious rituals there.
Fourth, the basement has neither been converted into a Roman Catholic chapel nor has it been
permanently appropriated for the exclusive use of its faithful. Fifth, the allowance of the masses has not
prejudiced other religions.

Non-Establishment Clause – “It simply means that the State cannot set up a Church; nor pass laws which
aid one religion, aid all religion, or prefer one religion over another nor force nor influence a person to go
to or remain away from church against his will or force him to profess a belief or disbelief in any religion ;
that the state cannot punish a person for entertaining or professing religious beliefs or disbeliefs, for church
attendance or nonattendance; that no tax in any amount, large or small, can be levied to support any
religious activity or institution whatever they may be called or whatever form they may adopt or teach or
practice religion; that the state cannot openly or secretly participate in the affairs of any religious
organization or group and vice versa.36 Its minimal sense is that the state cannot establish or sponsor an
official religion”

“In effect, non-establishment calls for is government neutrality in religious matters. Such government
neutrality may be summarized in four general propositions: (1) Government must not prefer one religion
over another or religion over irreligion because such preference would violate voluntarism and breed
dissension; (2) Government funds must not be applied to religious purposes because this too would
violate voluntarism and breed interfaith dissension; (3) Government action must not aid religion because
this too can violate voluntarism and breed interfaith dissension; [and] (4) Government action must not
result in excessive entanglement with religion because this too can violate voluntarism and breed
interfaith dissension."

NO APPROPRIATION OF PUBLIC MONEY OR PROPERTY FOR THE BENEFIT OF ANY

CHURCH:

The basement of the QC Hall of Justice is not appropriated, applied or employed for the sole purpose of
supporting the Roman Catholics.

Further, it has not been converted into a Roman Catholic chapel for the exclusive use of its faithful
contrary to the claim of Valenciana. Judge Maceren reported that the basement is also being used as a
public waiting area for most of the day and a meeting place for different employee organizations . The use
of the area for holding masses is limited to lunch break period from twelve (12) o'clock to one (1) o'clock
in the afternoon. Further, Judge Sagun, Jr. related that masses run for just a little over thirty (30) minutes.
It is, therefore, clear that no undue religious bias is being committed when the subject basement is
allowed to be temporarily used by the Catholics to celebrate mass, as the same area can be used by other
groups of people and for other purposes. Thus, the basement of the QC Hall of Justice has remained to be
a public property devoted for public use because the holding of Catholic masses therein is a mere
incidental consequence of its primary purpose.

No appropriation of public money or property for the benefit of any church – "No public money or
property shall be appropriated, applied, paid, or employed, directly or indirectly, for the use, benefit, or
support of any sect, church, denomination, sectarian institution, or system of religion, or of any priest,
preacher, minister, or other religious teacher, or dignitary as such, except when such priest, preacher,
minister, or dignitary is assigned to the armed forces, or to any penal institution, or government orphanage
or leprosarium."

The words "pay" and "employ" should be understood to mean that what is prohibited is the use of public
money or property for the sole purpose of benefiting or supporting any church. The prohibition
contemplates a scenario where the appropriation is primarily intended for the furtherance of a particular
church.

It has also been held that the aforecited constitutional provision "does not inhibit the use of public property
for religious purposes when the religious character of such use is merely incidental to a temporary use
which is available indiscriminately to the public in general." Hence, a public street may be used for a
religious procession even as it is available for a civic parade, in the same way that a public plaza is not
barred to a religious rally if it may also be used for a political assemblage

Case No. 7: Union International School vs. Dagdag

G.R. No. 234186, November 21, 2018

Doctrine: Jurisprudence has already set the standard of morality with which an act should be gauged—it
is public and secular, not religious.

FACTS
Jane Dagdag filed a case for illegal dismissal against Union School International alleging that she was
forced to resign therein on the ground that she was pregnant out of wedlock. The school asked her to
resign instead rather than being dismissed. She agreed.

Labor arbiter ruled in favor of Dagdag and maintained that Union School committed acts of persecution,
discrimination, insensitivity and disdain when she was coerced into resigning from her job. CA affirmed.

ISSUE & RULING

Weather pregnancy out of wedlock constitutes gross immorality, hence justify dismissal of an
employee?

No. It was found that Dagdag had been constructively dismissed.

The determination of whether a conduct is disgraceful or immoral, “a consideration of the totality of the
circumstances surrounding the conduct and an assessment of the said circumstances vis-à-vis the
prevailing norms of conduct, i.e., what the society generally considers moral and respectable, are
necessary.”

Citing Capin-Cadiz v. Brent Hospital and Colleges, Inc. the Court stressed that “Jurisprudence has
already set the standard of morality with which an act should be gauged — it is public and secular,
not religious.” Whether a conduct is considered disgraceful or immoral should be made in accordance
with the prevailing norms of conduct, which, as stated in Leus, refer to those conducts which are
proscribed because they are detrimental to conditions upon which depend the existence and progress of
human society. The fact that a particular act does not conform to the traditional moral views of a certain
sectarian institution is not sufficient reason to qualify such act as immoral unless it, likewise, does not
conform to public and secular standards. More importantly, there must be substantial evidence to
establish that premarital sexual relations and pregnancy out of wedlock is considered disgraceful or
immoral.

The Court thus concluded that the totality of evidence in this case does not justify the dismissal of
Dagdag from her employment considering that there was no legal impediment to marry between Dagdag
and the father of her child at the time of conception.

LIBERTY OF ABODE AND FREEDOM OF MOVEMENT CASES

Case No. 1: Villavicencio vs. Lukban

39 Phil 778

Doctrine: The forcible taking of these women from Manila by officials of that city, who handed them
over to other parties, who deposited them in a distant region, deprived these women of freedom of
locomotion just as effectively as if they had been imprisoned.

Nachura: (Limitation on liberty of abode: lawful order of the court)

The deportation of some 170 women of ill repute to Davao on orders of the Mayor of Manila was held
unlawful.

FACTS

The Mayor of the city of Manila, Justo Lukban ordered the segregated district for women of ill repute,
which had been permitted for a number of years in the city of Manila, closed.  The women were kept
confined to their houses in the district by the police.  The city authorities quietly perfected arrangements
with the Bureau of Labor for sending the women to Davao, Mindanao, as laborers without their
knowledge and consent; with some government office for the use of the coastguard
cutters Corregidor and Negros, and with the Constabulary for a guard of soldiers. The Counsel for the
deportees presented an application for habeas corpus in SC.

ISSUE & RULING

Whether the respondents had authority to deport the women

YES. No official, no matter how high, is above the law. Lukban committed a grave abuse of discretion by
deporting the prostitutes to a new domicile against their will. There is no law expressly authorizing his
action. The courts are the forum which functionate to safeguard individual liberty and to punish official
transgressors. A prime specification of an application for a writ of habeas corpus is restraint of liberty.
The essential objects and purpose of the writ of habeas corpus is to inquire into all manner of involuntary
restraint as distinguished from voluntary, and to relieve a person therefrom if such restraint is illegal. Any
restraint which will preclude freedom of action is sufficient.

The forcible taking of these women from Manila by officials of that city, who handed them over to other
parties, who deposited them in a distant region, deprived these women of freedom of locomotion just as
effectively as if they had been imprisoned. The restraint of liberty which began in Manila continued until
the aggrieved parties were returned to Manila and released or until they freely and truly waived this right.
These women, despite their being in a sense lepers of society, are nevertheless not chattles, but
Philippine citizens protected by the same constitutional guaranties as are other citizens.

Case No. 2: Marcos vs. Manglapus

177 SCRA 668

Constitutional Law; Bill of Rights: Right to return to one’s country, not among the rights guaranteed. –
The right to return to one’s country is not among the rights specifically guaranteed in the Bill of Rights,
which treats only of the liberty of abode and the right to travel.

The request or demand of the Marcoses to be allowed to return to the Philippines cannot be considered in
the light solely of the constitutional provisions guaranteeing liberty of abode and the right to travel,
subject to certain exceptions, or of case law which clearly never contemplated situations even remotely
similar to the present one. It must be treated as a matter that is appropriately addressed to those residual
unstated powers of the President which are implicit in and correlative to the paramount duty residing in
that office to safeguard and protect general welfare. In that context, such request or demand should
submit to the exercise of a broader discretion on the part of the President to determine whether it must be
granted or denied.

Nachura: (Limitation on right to travel: interest of national security, public safety or public health, as
may provide by law.)
The SC sustained the refusal of the government to allow the petitioner’s return to the Philippines, on the
ground that it would endanger national security.

FACTS

This case involves a petition of mandamus and prohibition asking the court to order the respondents
Secretary of Foreign Affairs, etc. To issue a travel documents to former Pres. Marcos and the immediate
members of his family and to enjoin the implementation of the President's decision to bar their return to
the Philippines. Petitioners assert that the right of the Marcoses to return in the Philippines is guaranteed
by the Bill of Rights. They contended that Pres. Aquino is without power to impair the liberty of abode of
the Marcoses because only a court may do so within the limits prescribed by law . Nor the President
impair their right to travel because no law has authorized her to do so.

They further assert that under "international law, their right "to return "to the Philippines is guaranteed
particularly by the Universal Declaration of Human Rights and the International Covenant on "Civil "and
Political Rights, which has been ratified by the Philippines.

ISSUE & RULING

Whether or not, in the exercise of the powers granted by "the constitution, the President (Aquino) may
prohibit the Marcoses from returning to the Philippines.

YES. Provided such return may pose a serious threat.

It must be emphasized that the individual right involved is not the right to travel from the Philippines to
other countries or within the Philippines. These are what the right to travel would normally connote. 

Essentially, the right involved in this case at bar is the right "to return" to one's country, a distinct right
under "international law, independent from although related to the right to travel. Thus, the Universal
Declaration of Human Rights and the International Covenant on "Civil "and Political Rights treat the right
to freedom of "movement "and abode within the territory of a state, the right to leave the country, and the
right to enter one's country as separate and distinct rights.

What the Declaration speaks of is the "right to freedom of "movement "and residence within the borders
of each state". On the other hand, the Covenant guarantees the right to liberty of "movement" and
freedom to choose his residence and the right to be free to leave any country, including his own. Such
rights may only be restricted by laws protecting the "national security, public order, "public health "or
morals or the separate rights of others. However, right to enter one's country cannot be arbitrarily
deprived. It would be therefore inappropriate to construe the limitations to the right "to return" to ones
country in the same context as those pertaining to the liberty of abode and the right to travel.

The Bill of rights "treats only the liberty of abode and the right to travel, but it is a well-considered view
that the right "to return" may be considered, as a generally accepted principle of "International Law "and
under our Constitution as part of the law of the land. "

The court held that President did not act arbitrarily or with grave abuse of discretion in
determining that the return of the Former Pres. Marcos and his family poses a serious threat to
national interest and welfare. President Aquino has determined that the destabilization caused by
the return of the Marcoses would wipe away the gains achieved during the past few years after the
Marcos regime.

The return of the Marcoses poses a serious threat and therefore prohibiting their return to the Philippines,
the instant petition is hereby DISMISSED.

Case No. 3: Office of Administrative Services-Office of the Court Administrator v. Macarine,

677 SCRA 1

The right to travel is guaranteed by the Constitution. However, the exercise of such right is not absolute.
Section 6, Article III of the 1987 Constitution allows restrictions on one's right to travel provided that
such restriction is in the interest of national security, public safety or public health as may be provided by
law.

Nachura: (Limitation on right to travel: interest of national security, public safety or public health, as
may provide by law.)
The constitutional guarantee of the right to travel has never been considered absolute. The Constitution
itself allows restrictions, provided that such restrictions are in the interest of national security, public
safety or public health, as may provide by law.

FACTS

The Office of the Court Administrator (OCA) filed the present administrative case against Judge Ignacio
B. Macarine (respondent) for violation of OCA Circular No. 49-2003 which requires that all foreign
travels of judges and court personnel, regardless of the number of days, must be with prior permission
from the Court. Judges and personnel who shall cave the country without travel authority issued by the
OCA shall be subject to disciplinary action.

The respondent wrote to Associate Justice Jose Portugal Perez, requesting for authority to travel to Hong
Kong with his family for the period of Sept. 10 - 14, 2009 where he would celebrate his 65th birthday.
The respondent stated that his travel abroad shall be charged to his annual forced leave. However, he did
not submit the corresponding application for leave. The respondent proceeded with his travel abroad
without the required authority from the OCA. The respondent was informed by the OCA that his leave of
absence had been disapproved and his travel considered unauthorized by the Court. The OCA found the
respondent guilty of violation of OCA Circular No. 49-2003 for traveling out of the country without filing
the necessary application without first securing a travel authority from the Court.

ISSUE & RULING

Whether or not the OCA Circular No. 49-2003 restricts freedom of movement

NO, the right to travel is guaranteed by the Constitution. However, the exercise of such right is not
absolute. Section 6, Article III of the 1987 Constitution allows restrictions on one's right to travel
provided that such restriction is in the interest of national security, public safety or public health as may
be provided by law. This, however, should by no means be construed as limiting the Court's inherent
power of administrative supervision over lower courts. OCA Circular No. 49-2003 does not restrict but
merely regulates, by providing guidelines to be complied by judges and court personnel, before they can
go on leave to travel abroad. To "restrict" is to restrain or prohibit a person from doing something; to
"regulate" is to govern or direct according to rule. To ensure management of court dockets and to avoid
disruption in the administration of justice, OCA Circular No. 49-2003 requires a judge who wishes to
travel abroad to submit, together with his application for leave of absence duly recommended for
approval by his Executive Judge.

Respondent Judge Ignacio B. Macarine, is hereby given the ADMONITION that he acted irresponsibly
when he opted not to immediately secure a travel authority and is saved only from the full force that his
violation carries by the attendant mitigating circumstances. He is also WARNED that the commission of
a similar violation in the future will merit a more severe penalty. The recommendation of the Office of the
Court Administration that his absences, which were unauthorized, shall not be deducted from his leave
credits but from his salary is hereby APPROVED.

Case No. 4: Genuino vs. De Lima G.R. No. 197930, April 17, 2018

Doctrine: There is no law particularly providing for the authority of the secretary of justice to curtail the
exercise of the right to travel, in the interest of national security, public safety or public health.

Before there can even be a valid administrative issuance, there must first be a showing that the delegation
of legislative power is itself valid. It is valid only if:
(a) There is a law that is complete in itself, setting forth therein the policy to be executed, carried
out, or implemented by the delegate; and
(b) There is a law that fixes a standard the limits of which are sufficiently determinate and
determinable to which the delegate must conform in the performance of his functions.

There must be an enabling law from which DOJ Circular No. 41 must derive its life. Unfortunately, all of
the supposed statutory authorities relied upon by the DOJ did not pass the completeness test and sufficient
standard test. The DOJ miserably failed to establish the existence of the enabling law that will justify the
issuance of the questioned circular.

FACTS

The petitioners impute the respondents of violating their constitutional right to travel through the
enforcement of DOJ Circular No. 41. They claim that the issuance unnecessarily places a restraint on the
right to travel even in the absence of the grounds provided in the Constitution.

GMA a Petition for Certiorari and Prohibition under Rule 65 of the Rules of Court with Prayer for the
Issuance of a TRO and/or Writ of Preliminary Injunction to annul and set aside DOJ Circular No. 41 and
Watch List Orders issued against her for allegedly being unconstitutional.

While the petitioners invoke their right to travel under Section 6, Article III of the 1987 Constitution, it
was alleged that the said right is not absolute. That, one of the limitations on the right to travel is DOJ
Circular No. 41, which was issued pursuant to the rule-making powers of the DOJ in order to keep
individuals under preliminary investigation within the jurisdiction of the Philippine criminal justice
system.

ISSUE & RULING

Whether or not DOJ Circular No. 41 is violative of the constitutional right to travel

Yes. Liberty under the foregoing clause includes the right to choose one's residence, to leave it whenever
he pleases and to travel wherever he wills.

It is apparent, however, that the right to travel is not absolute. There are constitutional, statutory and
inherent limitations regulating the right to travel. Section 6 itself provides that the right to travel may be
impaired only in the interest of national security, public safety or public health, as may be provided by
law.

Clearly, under the provision, there are only three considerations that may permit a restriction on the right
to travel: national security, public safety or public health. As a further requirement, there must be an
explicit provision of statutory law or the Rules of Court providing for the impairment.

It is clear from the foregoing that the liberty of abode may only be impaired by a lawful order of the court
and, on the one hand, the right to travel may only be impaired by a law that concerns national security,
public safety or public health. Therefore, when the exigencies of times call for a limitation on the right to
travel, the Congress must respond to the need by explicitly providing for the restriction in a law . This is in
deference to the primacy of the right to travel, being a constitutionally-protected right and not simply a
statutory right, that it can only be curtailed by a legislative enactment.

To begin with, there is no law particularly providing for the authority of the secretary of justice to curtail
the exercise of the right to travel, in the interest of national security, public safety or public health. As it
is, the only ground of the former DOJ Secretary in restraining the petitioners, at that time, was the
pendency of the preliminary investigation of the Joint DOJ-COMELEC Preliminary Investigation
Committee on the complaint for electoral sabotage against them.

To be clear, DOJ Circular No. 41 is not a law. It is not a legislative enactment which underwent the
scrutiny and concurrence of lawmakers, and submitted to the President for approval. It is a mere
administrative issuance apparently designed to carry out the provisions of an enabling law which the
former DOJ Secretary believed to be Executive Order (E.O.) No. 292, otherwise known as the
"Administrative Code of 1987." She opined that DOJ Circular No. 41 was validly issued pursuant to the
agency's rule-making powers provided in Sections 1 and 3, Book IV, Title III, Chapter 1 of E.O. No. 292
and Section 50, Chapter 11, Book IV of the mentioned Code.

It is, however, important to stress that before there can even be a valid administrative issuance, there must
first be a showing that the delegation of legislative power is itself valid. It is valid only if there is a law
that (a) is complete in itself, setting forth therein the policy to be executed, carried out, or implemented by
the delegate; and (b) fixes a standard the limits of which are sufficiently determinate and determinable to
which the delegate must conform in the performance of his functions.
A painstaking examination of the provisions being relied upon by the former DOJ Secretary will disclose
that they do not particularly vest the DOJ the authority to issue DOJ Circular No. 41 which effectively
restricts the right to travel through the issuance of WLOs and HDOs.

A plain reading of the foregoing provisions shows that they are mere general provisions designed to lay
down the purposes of the enactment and the broad enumeration of the powers and functions of the DOJ.
In no way can they be interpreted as a grant of power to curtail a fundamental right as the language of the
provision itself does not lend to that stretched construction.

In the same way, Section 3 does not authorize the DOJ to issue WLOs and HDOs to restrict the
constitutional right to travel. There is even no mention of the exigencies stated in the Constitution that
will justify the impairment.

The provision simply grants the DOJ the power to investigate the commission of crimes and prosecute
offenders, which are basically the functions of the agency. However, it does not carry with it the power to
indiscriminately devise all means it deems proper in performing its functions without regard to
constitutionally-protected rights.

It does not speak of any authority or power but rather a mere clarification on the nature of the issuances
that may be issued by a secretary or head of agency.
The questioned circular does not come under the inherent power of the executive department to adopt
rules and regulations as clearly the issuance of HDO and WLO is not the DOJ's business.

As such, it is a compulsory requirement that there be an existing law, complete and sufficient in itself,
conferring the expressed authority to the concerned agency to promulgate rules.

Consistent with the foregoing, there must be an enabling law from which DOJ Circular No. 41 must
derive its life. Unfortunately, all of the supposed statutory authorities relied upon by the DOJ did not pass
the completeness test and sufficient standard test. The DOJ miserably failed to establish the existence of
the enabling law that will justify the issuance of the questioned circular.

NON-IMPAIRMENT OF CONTRACTS CASES

Case No. 1: Stone vs. Mississippi 101 US 814

Doctrine: The contracts which the Constitution protects are those that relate to property rights, not
governmental.

FACTS

In 1867, the legislature of Mississippi chartered Mississippi Agricultural, Educational and Manufacturing
Aid Society to which granted a lottery company for twenty-five years in consideration of a stipulated sum
in cash, an annual payment of a further sum, and a percentage of receipts from the sale of tickets. A
provision of the Constitution adopted in 1868 declares that 'the legislature shall never authorize any
lottery, nor shall the sale of lottery tickets be allowed, nor shall any lottery heretofore authorized be
permitted to be drawn, or tickets therein to be sold.' John Stone claimed that the charter bound the State
irrevocably by contract to permit a lottery. It further claimed that its right to conduct the lottery was
protected by the Contracts Clause of the Federal Constitution. The State Supreme Court ruled for
Mississipi.

ISSUE & RULING

Whether or not the state of Mississippi violated the contract clause by repealing the Society’s grant

It was upheld that the constitutional provision that nullified the charter, even though the charter
constituted a contract. The legislature cannot bargain away the police power of a state. The contracts
which the Constitution protects are those that relate to property rights, not governmental. It is not always
easy to tell on which side of the line which separates governmental from property rights a particular case
is to be put; but in respect to lotteries there can be no difficulty. They are not, in the legal acceptation of
the term, mala in se, but, as we have just seen, may properly be made mala prohibita. They are a species
of gambling, and wrong in their influences. They disturb the checks and balances of a well-ordered
community. Society built on such a foundation would almost of necessity bring forth a population of
speculators and gamblers, living on the expectation of what, 'by the casting of lots, or by lot, chance, or
otherwise,' might be 'awarded' to them from the accumulations of others. Certainly the right to suppress
them is governmental, to be exercised at all times by those in power, at their discretion. Any one,
therefore, who accepts a lottery charter does so with the implied understanding that the people, in their
sovereign capacity, and through their properly constituted agencies, may resume it at any time when the
public good shall require, whether it be paid for or not. All that one can get by such a charter is a
suspension of certain governmental rights in his favor, subject to withdrawal at will. He has in legal effect
nothing more than a license to enjoy the privilege on the terms named for the specified time, unless it be
sooner abrogated by the sovereign power of the State. It is a permit, good as against existing laws, but
subject to future legislative and constitutional control or withdrawal.

Case No. 2: Rutter vs. Esteban

93 Phil 68

Doctrine on non-impairment of contracts: Moratorium laws are valid and constitutional because they
are valid exercises of police power. Thus, as a general rule, the clause on non-impairment of contracts
cannot be invoked to invalidate them, provided that there was a legitimate purpose for the moratorium,
and that the period is reasonable under the present circumstances. If the period is unreasonable, the
moratorium is unconstitutional.

FACTS

Rutter sold lands to Esteban on August 20, 1941. The price was to be paid in 2 installments. Esteban
failed to pay. Rutter then filed an action for recovery of the balance plus interests.

Esteban admitted the facts in the complaint but set up the defense that there was a moratorium via RA
342. This law states that “all debts and other monetary obligations contracted before December 8, 1941,
any provision in the contract creating the same or any subsequent agreement affecting such obligation to
the contrary notwithstanding, shall not due and demandable for a period of eight (8) years from and after
settlement of the war damage claim of the debtor by the Philippine War Damage Commission”. Thus,
Esteban claimed that the debt in question is covered by the moratorium.
The lower court ruled in favor of Esteban (debtor). Hence this appeal by Rutter, the creditor, who argues
that the moratorium law is unconstitutional for violating the non-impairment clause of the Constitution.

ISSUE & RULING

Whether the moratorium law (RA 342 in this case) which puts all debts due before December 8, 1941
“on hold” (such that they are not demandable) for a certain period (8 years), violates the constitutional
provision on non-impairment of contracts.

Yes, because the period of 8 years (which became 12 years because of subsequent EOs) is unreasonable.

Discussion on what moratorium laws are, and why they exist: For some 1,400 years western civilization
has made use of extraordinary devices for saving the credit structure, devices generally known as
moratoria. The moratorium is postponement of fulfillment of obligations decreed by the state through the
medium of the courts or the legislature. Its essence is the application of the sovereign power. In the
United States, many state legislatures have adopted moratorium laws "during times of financial distress,
especially when incident to, or caused by, a war". Thus, such laws "were passed by many state
legislatures at the time of the civil war suspending the rights of creditors for a definite and reasonable
time . . . whether they suspend the right of action or make dilatory the remedy”. The laws were declared
constitutional. However, some courts have also declared that "such statutes are void as to contracts made
before their passage where the suspension of remedied prescribed is indefinite or unreasonable in
duration”.

When can moratorium laws be valid and what are the limitations? Moratorium laws are justified as a
valid exercise by the State of its police powe r, as it is often because of legitimate public economic
emergency (like the aftermath of war).
Thus, it can be said that the exercise of police power may trump the non-impairment clause, because in
executing a contract, all laws are deemed written in it. But, of course, there is a limitation: “the
application of the power of the State to protect the integrity of the government and the security of the
people should be limited to its proper bounds and must be addressed to a legitimate purpose. More
specifically, the limitations are:

1. The impairment should only refer to the remedy and not to a substantive right . The State may
postpone the enforcement of the obligation but cannot destroy it by making the remedy futile.
2. The alteration or change that the new legislation desires to write into an existing contract
must not be burdened with restrictions and conditions that would make the remedy hardly
pursuing.

In other words, the protective power of the State, the police power, may only be invoked and justified by
an emergency, temporary in nature, and can only be exercised upon reasonable conditions in order that it
may not infringe the constitutional provision against impairment of contracts .

So, is the period of eight (8) years reasonable under the present circumstances? No. The purpose of the
law is to give prewar debtors an opportunity to rehabilitate themselves by giving them a reasonable time
within which to pay their prewar debts so as to prevent them from being victimized by their creditors.
The debt has been pending since 1945 as a result of the issuance of other Executive Orders, which in
plain language means that the creditors would have to observe a vigil of at least twelve (12) years before
they could effect a liquidation of their investment dating as far back as 1941. The court found this period
unreasonable, if not oppressive. It is injustice to creditors who are practically left at the mercy of the
debtors. Their hope to effect collection becomes extremely remote, more so if the credits are unsecured.
And the injustice is more patent when, under the law, the debtor is not even required to pay interest
during the operation of the relief.

In this case, the external circumstances (improved economy, increase in national income, “a better-
sheltered, better-clothed, better-fed, and healthier population”) show that there is no longer any
legitimate reason why debts should continue to be on hold . The continued operation of RA 342 would
be unreasonable and oppressive
Cited cases where moratorium was declared unconstitutional for violating non-impairment of clauses (for
more context on what constitutes as unreasonable period):

1. A statute with an exemption: "without limitation as to amount or restriction with respect to

particular circumstances or relations, of all moneys paid or payable to any resident of the state
under any life, sick, accident or disability insurance policy, from liability for the payment of the
debts of the recipient" – SC held that this constitutes “an unwarranted interference with the
obligation of contracts in violation of the constitutional provision", and cannot be sustained even
as emergency legislation, because it contains no limitation as to time, amount, circumstances or
need.
2. A statute that makes changes in the remedies available for creditors under the former statutes
– SC held that changes in the remedies available for the enforcement of a mortgage may not, even
when the public welfare is invoked as an excuse, be pressed so far as to cut down the security of a
mortgage without moderation or reason or in a spirit of oppression”
3. A statute that violates mortgage rights – SC held it is unconstitutional if applied to farm
mortgages already existing, holding that "property rights of holders of farm mortgages are
unconstitutionally taken”.
4. Statues that give unreasonable periods of extension.

Case No. 3: PNB vs. CA

G.R. No. 165571, January 20, 2009

Doctrine: The approval of the Rehabilitation plan does not violate the constitutional right to non-
impairment of contracts and that the liens over the mortgaged properties are merely suspended.
The creditors’ preferred status over the unsecured creditors relative to the mortgage liens is
retained. The loan agreements between the parties have not been set aside and creditors may still
enforce its preference when the assets will be liquidated. Considering that the provisions of the
loan agreements are merely suspended, there is no impairment of contracts, specifically its lien in
the mortgaged properties.

FACTS

PNB and Equitable PCI Bank are members of a consortium of creditor banks. The SBDC or the ASB
Group are corporations engaged in real estate development. PNB and Equitable PCI Bank granted a loan
of PhP 1,081,000,000 to ASBDC secured by a mortgage of five parcels of land with improvements. The
ASB Group filed with the SEC a verified petition for rehabilitation with prayer for suspension of actions
and proceedings pending rehabilitation pursuant to Presidential Decree No. 902-A.

SEC Hearing Panel issued an order suspending for 60 days all actions for claims against the ASB Group,
enjoining the latter from disposing its properties in any manner. The consortium of creditor banks,
opposed praying for the dismissal of the petition but was denied and allowed the filing of the petition for
rehabilitation. Since the ASB Group foresees its inability to meet its obligations within one year, it was
considered technically insolvent and, thus, qualified for rehabilitation under Sec. 4-1 of the Rules of
Procedure on Corporate Recovery.

The panel also held that suspension of payment is necessarily an effect of the filing of the petition. Upon
motion by the ASB Group, the suspension period was extended through an order. The creditor banks
appealed before the SEC En Banc. Subsequently, the Hearing Panel approved the Rehabilitation Plan.

The SEC En Banc dismissed the petition and its supplement, thus affirming the orders of the Hearing
Panel. The Consortium filed a petition for review before the CA. The CA upheld the ruling of the SEC En
Banc explaining that the Rules does not preclude a solvent corporation, like the ASB Group, to file a
petition for rehabilitation instead of just a petition for suspension of payments because such temporary
inability to pay obligations may extend beyond one year or the corporation may become insolvent in the
interim.

It stated that the determination of the sufficiency of the petition and the question of propriety of the
petition filed by the ASB Group are matters within the technical competence and administrative
discretion of the SEC.

ISSUE & RULING

Whether the approval of the Rehabilitation plan violates the constitutional right to non-impairment of
contracts
No. The approval of the Rehabilitation plan does not violate the constitutional right to non-impairment of
contracts and that the liens over the mortgaged properties are merely suspended.

Section 6 [c] of P.D. No. 902-A provides that "upon appointment of a management committee,
rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations,
partnerships or associations under management or receivership pending before any court, tribunal, board
or body shall be suspended."

By that statutory provision, it is clear that the approval of the Rehabilitation Plan and the appointment of a
rehabilitation receiver merely suspend the actions for claims against ASB Group. The creditor banks’
preferred status over the unsecured creditors relative to the mortgage liens is retained, but the
enforcement of such preference is suspended. The loan agreements between the parties have not been set
aside and petitioner bank may still enforce its preference when the assets of ASB Group of Companies
will be liquidated. Considering that the provisions of the loan agreements are merely suspended, there is
no impairment of contracts, specifically its lien in the mortgaged properties.

Such suspension "shall not prejudice or render ineffective the status of a secured creditor as compared to a
totally unsecured creditor," for what P.D. No. 902-A merely provides is that all actions for claims against
the distressed corporation, partnership or association shall be suspended. This arrangement provided by
law is intended to give the receiver a chance to rehabilitate the corporation if there should still be a
possibility for doing so, without being unnecessarily disturbed by the creditors’ actions against the
distressed corporation. However, in the event that rehabilitation is no longer feasible and the claims
against the distressed corporation would eventually have to be settled, the secured creditors, like
petitioner bank, shall enjoy preference over the unsecured creditors.

Contrary to the banks’ belief, they are not forced to accept the terms of the Rehabilitation Plan. As held in
Metropolitan Bank & Trust Company, they are merely proposals for the creditors to accept.

Case No. 4: SWS vs. COMELEC

G.R. No. 208062, April 07, 2015

It is a basic rule in contracts that the law is deemed written into the contract between the parties. The
incorporation of regulations into contracts is a postulate of the police power of the State.

FACTS

COMELEC’s Resolution No. 9674 directed Social Weather Stations, Inc. (SWS) and Pulse Asia, Inc.
(Pulse Asia), as well as "other survey firms of similar circumstance" to submit to COMELEC the names
of all commissioners and payors of all surveys published from February 12, 2013 to April 23, 2013,
including those of their "subscribers." A violation of the rules in the resolution shall constitute an election
offense as provided in Republic Act no. 9006, or the Fair Election Act.

Petitioners informed COMELEC Chairman Brillantes that they had not received a copy of Resolution No.
9674. They also articulated their view that Resolution No. 9674 was tainted with irregularities, having
been issued ultra vires (i.e., in excess of what the Fair Election Act allows) and in violation of the non-
impairment of contracts clause of the Constitution. They claim that it "unduly interferes with [their]
existing contracts . . . by forcing [them] to disclose information that, under the contracts, is confidential or
privileged.”

COMELEC issued a Subpoena notifying SWS and Pulse Asia that a complaint for violation of Section
264, par. 1 and 2 of the Omnibus Election Code in relation to R.A. 9006 (Fair Election Act) was filed
against them. 

For its part, COMELEC argues that "the non-impairment clause of the Constitution must yield to the
loftier purposes sought to be achieved by the government”. It adds that petitioners' existing contracts with
third parties must be understood to have been made in reference to the possible exercise of the
COMELEC's regulatory powers.
 ISSUE & RULING

Whether Resolution No. 9674, insofar as it compels petitioners to submit the names of their
subscribers, violates the constitutional proscription against the impairment of contracts (Article II,
Section 10).

No. As a valid exercise of COMELEC's regulatory powers, Resolution No. 9674 is correctly deemed
written into petitioners' existing contracts. It is settled that "the constitutional guaranty of non-impairment
is limited by the exercise of the police power of the State, in the interest of public health, safety, morals
and general welfare. It is a basic rule in contracts that the law is deemed written into the contract between
the parties. The incorporation of regulations into contracts is "a postulate of the police power of the
State”.

The relation of the state's police power to the principle of non-impairment of contracts was thoroughly
explained in Ortigas and Co. V. Feati Bank:

While non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since
it has to be reconciled with the legitimate exercise of police power, i.e., "the power to prescribe
regulations to promote the health, morals, peace, education, good order or safety and general welfare
of the people." Invariably described as "the most essential, insistent, and illimitable of powers" and
"in a sense, the greatest and most powerful attribute of government," the exercise of the
power may be judicially inquired into and corrected only if it is capricious, whimsical, unjust or
unreasonable, there having been a denial of due process or a violation of any other applicable
constitutional guarantee. As this Court held through Justice Jose P. Bengzon in Philippine Long
Distance Company vs. City of Davao, et al. police power "is elastic and must be responsive to
various social conditions; it is not confined within narrow circumscriptions of precedents resting on
past conditions; it must follow the legal progress of a democratic way of life." We were even
more emphatic in Vda. de Genuino vs. The Court of Agrarian Relations, et al, when We declared:
"We do not see why public welfare when clashing with the individual right to property should not be
made to prevail through the state's exercise of its police power."

This case does not involve a "capricious, whimsical, unjust or unreasonable regulation. The Court has
demonstrated that not only an important or substantial state interest, but even a compelling one anchors
Resolution No. 9674's requirement of disclosing subscribers to election surveys. It effects the
constitutional policy of "guaranteeing equal access to opportunities for public service" and is impelled by
the imperative of "fair" elections.

Parenthetically, the obligations of agreements manifested in the concept of contracts are creations of law.
This right to demand performance not only involves its requisites, privileges, and regulation in the Civil
Code or special laws, but is also subject to the Constitution. The expectations inherent in a contract may
be compelling, but so are the normative frameworks demanded by law and the provisions of the
Constitution.