G.R. No. 203133 - Yulim International Co., Ltd. vs. International Exchange Bank

Case Summary (G.R. No. 203133)

Factual Background and Memorandum of Agreement

PhilPost issued a commemorative stamp marking INC’s centennial that depicted a photograph of Felix Y. Manalo, his life dates and designation, the INC Central Temple facade in the background, and the INC centennial logo. PhilPost and INC executed a Memorandum of Agreement (MOA) dated May 7, 2014 providing that INC would pay for the stamps it ordered; PhilPost printed a total of 1,200,000 stamps, of which the MOA expressly covers 50,000 stamps paid for by INC; the remaining stamps were printed and circulated by PhilPost and offered for sale to postal clients. Proclamation No. 815 (issued by President Benigno Aquino III) authorized the issuance. PhilPost described the printing as part of its philatelic products, advancing tourism and philatelic interest, and asserted that proceeds did not inure solely to INC.

Procedural Posture

Peralta filed an injunction suit in the RTC seeking to enjoin printing, issuance, and distribution of the stamps on constitutional grounds. The RTC denied injunctive relief and dismissed the complaint. The CA treated the action as a taxpayer’s suit but upheld constitutionality and dismissed the appeal. The CA denied reconsideration. Peralta filed a Petition for Review on Certiorari under Rule 45 to the Supreme Court, which reviewed the CA’s decision en banc.

Issues Raised

The principal legal questions were: (1) whether the printing, issuance, and distribution of the INC commemorative stamp violated the non-establishment clause (Article III, Section 5) and Article VI, Section 29(2) of the 1987 Constitution by using public money or property for the benefit of a religious sect; (2) whether petitioner had standing as a taxpayer to bring the suit; and (3) whether the suit remained justiciable given respondents’ contention that the acts were already consummated and therefore moot.

Parties’ Arguments

Petitioner’s position: the stamp design was primarily religious (commemorating the INC and Felix Y. Manalo) and therefore constituted unconstitutional support or sponsorship of a religion; the MOA evidenced a sectarian purpose; printing the larger number of stamps necessarily involved public funds or public property, triggering Article VI, Section 29(2). Respondents’ position: the MOA shows that INC paid for the stamps it ordered (50,000 pieces), PhilPost bore no illegal public disbursement, and any benefit to INC was incidental; the issuance was a philatelic exercise with secular purposes (tourism, cultural recognition); petitioner lacked direct injury and the acts were largely fait accompli; Section 29(2) was argued by respondents to concern legislative appropriations (a contention ultimately addressed by the Court).

Justiciability, Mootness, and Standing — Court’s Analysis

The Supreme Court found an actual case or controversy and ripeness because PhilPost’s printing, issuance, and sale created concrete assertions that the constitutional provisions were violated. Although injunctive relief might no longer be effective because the acts were already accomplished, the Court observed established exceptions to the mootness doctrine (grave constitutional question, public interest, need for controlling principles, or cases capable of repetition yet evading review) and concluded the constitutional issues warranted adjudication. On standing, the Court applied taxpayer-suit doctrine: a taxpayer who alleges illegal disbursement of public funds may sue if the act directly involves such funds and the plaintiff would sustain direct injury. The Court held that petitioner made sufficient prima facie allegations — notably that only 50,000 of 1,200,000 stamps were paid for by INC — to confer capacity to sue as a taxpayer at the pleadings stage.

Substantive Constitutional Analysis — Non‑Establishment and §29(2)

The Court applied the 1987 Constitution and developed its analysis under the doctrine of “benevolent neutrality.” It reiterated that the constitutional separation of Church and State coexists with a robust protection of religious freedom; government actions with incidental religious connections are not automatically unconstitutional. The Court reviewed Philippine precedent (including Aglipay v. Ruiz) and persuasive U.S. jurisprudence (Lemon, Lynch) to explain that a government act is permissible if it has a secular purpose, does not principally advance or inhibit religion, and avoids excessive entanglement. Applying these principles, the Court found: (a) the MOA shows that INC paid for the 50,000 stamps specifically ordered by INC, so that portion did not involve public money or property in a manner violating §29(2); (b) the remaining stamps printed and offered for sale by PhilPost were part of PhilPost’s ordinary philatelic activities, had an articulated secular purpose (promoting tourism, commemorating a Filipino institution), and did not effect a requirement or mandate for public adoption of INC beliefs; (c) the incidental use of government machinery to print a commercially sold philatelic product was de minimis and does not amount to state sponsorship; (d) proceeds from stamp sales went to PhilPost and did not inure exclusively to INC; and (e) PhilPost had a history of issuing stamps recognizing religious and nonreligious persons or events (e.g., National Artists, past Presidents, Catholic heritage churches), supporting the conclusion that issuance here was not a special endorsement favoring a religion. On this basis, the Court concluded there was no violation of the non-establishment clause or Article VI, Section 29(2), and that any sectarian benefit was incidental rather t

Case Syllabus (G.R. No. 203133)

Citation and Court

Supreme Court of the Philippines, En Banc.
Reported at 844 Phil. 603; 115 OG No. 45, 12577 (November 11, 2019).
G.R. No. 223395, decided December 4, 2018 (Decision penned by Justice Tijam).
Appeal from Court of Appeals decision in CA-G.R. CV No. 103151 (Decision dated July 24, 2015; Resolution dated March 8, 2016).

Parties

Petitioner: Renato V. Peralta.
Respondents: Philippine Postal Corporation (PhilPost), represented by Ma. Josefina Mdelacruz in her capacity as Postmaster General and Chief Executive Officer; The Board of Directors of PhilPost, represented by its Chairman Cesar N. Sarino.
Other entities referenced: Iglesia ni Cristo (INC); Office of the President (Proclamation No. 815).

Subject Matter and Relief Sought

Nature of case: Petition for Review on Certiorari under Rule 45 challenging constitutionality of printing, issuance and distribution of an INC Centennial commemorative postage stamp.
Relief prayed: Injunctive relief to restrain respondents from issuing and distributing the commemorative stamps on grounds that issuance involved disbursement or use of public funds and violated separation of Church and State and the non-establishment clause (Section 29(2), Article VI and Article III, Section 5 of the 1987 Constitution).

Antecedent Facts — Stamp Description and Issuance

On May 10, 2014, PhilPost issued a stamp commemorating Iglesia ni Cristo’s (INC) Centennial Celebration.
Design elements: a photo of INC founder, the late Felix Y. Manalo, with the designation on the left containing the words "Felix Y. Manalo, 1886-1963 First Executive Minister of Iglesia ni Cristo"; the Central Temple of the INC in the background; on the right side, INC’s centennial logo containing a torch enclosed by two concentric circles with the words "IGLESIA NI CRISTO CENTENNIAL 1914-2014."
Total stamps printed: 1,200,000 pieces (as alleged in petitioner’s complaint and record).
Memorandum of Agreement (MOA) dated May 7, 2014 executed between PhilPost and INC concerning the production, purchase and payment terms for commemorative stamps and related philatelic products.

Procedural History

June 16, 2014: Petitioner filed an injunction complaint with the Regional Trial Court (RTC), Branch 33, Manila, alleging constitutional violations and improper use of public funds.
RTC denied petitioner’s application for Temporary Restraining Order (TRO) in an Order dated June 23, 2014.
Respondents filed an Answer, asserting no public funds were disbursed, citing the MOA with INC whereby costs of printing would be borne by INC; contending the prints were part of PhilPost’s philatelic products and any religious benefit was incidental.
July 25, 2014: RTC issued an Order denying preliminary injunction and dismissed the action, ruling it was not a taxpayer’s suit and that Section 29(2), Article VI was not violated.
Petitioner appealed to the Court of Appeals (CA); CA denied the appeal in its July 24, 2015 Decision, finding the action was a taxpayer’s suit but concluding the printing and issuance did not violate the Constitution.
Petitioner filed a motion for reconsideration with the CA; CA denied the motion in a March 8, 2016 Resolution.
Petitioner filed the present Petition for Review on Certiorari under Rule 45 before the Supreme Court.

Issues Presented to the Supreme Court

Whether there exists an actual justiciable controversy and whether petitioner has legal standing as a taxpayer to challenge the issuance, printing and distribution of the INC commemorative stamps.
Whether the printing, issuance and distribution of the INC commemorative stamp violated Section 29(2), Article VI (prohibition on appropriating public money or property for the use, benefit or support of any religion) and Article III, Section 5 (non-establishment clause / separation of Church and State) of the 1987 Constitution.
Whether the acts sought to be enjoined had become moot or rendered the injunction remedy unavailable because the acts were already accomplished (fait accompli).

Petitioner’s Principal Contentions

The design of the INC stamp is “purely religious,” commemorating INC’s 100th founding anniversary, emphasizing INC Central Temple and centennial logo, and therefore constitutes state sponsorship of a religious activity.
The issuance and distribution involved disbursement or use of public funds and property (petitioner alleged that only 50,000 of the 1,200,000 printed stamps were shouldered by INC under the MOA, leaving 1,150,000 pieces produced using public funds and property).
The CA erred in regarding the stamp as "more historical than religious" and failed to properly analyze the stamp design in light of precedents such as Aglipay v. Ruiz.
Petitioner sought injunctive relief on the grounds of violation of the separation of Church and State and the non-establishment clause.

Respondents’ (PhilPost) Principal Contentions

The printing, issuance, and distribution cannot be enjoined because the acts are already fait accompli; therefore, injunction would be ineffective.
No illegal disbursement of public funds occurred: the MOA provided that costs of printing would be borne by INC, and the 50,000 pieces were paid for by INC in accordance with MOA payment terms.
Proceeds from sales did not redound to INC’s sole benefit; PhilPost treated the stamps as philatelic products to promote tourism and the Philippines, and any sectarian benefit to INC was merely incidental.
PhilPost asserted it is a government-owned and controlled corporation (GOCC) operating on its own capital and that the printing was part of ordinary business/fund-raising activity, not state sponsorship of the INC.
Respondents argued petitioner failed to demonstrate irreparable injury or direct injury as required for taxpayer standing to enjoin.

Court’s Holding — Disposition

Petition DENIED.
Supreme Court AFFIRMED the Court of Appeals Decision (July 24, 2015) and Resolution (March 8, 2016) in CA-G.R. CV No. 103151.
The Court concluded that the printing and issuance of the INC commemorative stamps did not contravene Section 29(2), Article VI nor the non-establishment clause of the Constitution.

Court’s Analysis — Procedural Aspects: Justiciability, Mootness and Standing

Judicial review limited to actual cases or controversies: Court reiterated the four limitations on exercise of judicial review (actual case/controversy; proper party with standing; question raised at earliest opportunity; constitutionality is the lis mota).
Actual case or controversy present: PhilPost, under Proclamation No. 815, printed, issued and sold the stamps; petitioner alleged specific constitutional violations (Section 29(2), Art. VI and non-establishment clause), which are concrete legal claims susceptible to adjudication.
Mootness/Fait accompli: Court acknowledged issuance, printing and sale may render injunctive relief no longer viab